The American International Group Inc. (AIG) bonuses from bailout money have folks all over the country outraged. That’s all understandable, I suppose, though Senator Chris Dodd should probably be the face of this issue.
But that’s a whole other story.
Personally, I didn’t favor any bailouts, which brings me to the recent changes for the Small Business Administration’s loan programs.
In a continuation of bailout mania, President Barack Obama and Treasury Secretary Timothy Geithner recently announced big changes for the SBA’s loan programs.
The plan will also require that the largest 21 banks—that received federal bailout money—will now have to detail their small business loans on a monthly basis. Additional banks may be required to do this quarterly. In other words, this measure is meant to pressure lenders to make more loans.
Now I think this is needed for many small businesses, but I am concerned about the part where lenders are being pressured to make more loans.
I can’t help but think of the mortgage mess where banks were pressured to make more loans. And we saw how that ended.
The reality is that there are many, many businesses that shouldn’t get loans – their ideas and people don’t have what it takes to bring things to the next level.
I’m proud to say I’ve had many failures as an entrepreneur. I thought they were all good ideas at the time, but the market didn’t support them.
When I was in that mode, I was sure I had great affiliate ideas that would be huge if only I could get some funding. But in retrospect, they were flawed sites, plans, and ideas.
I sure hope the changes with SBA loans don’t work out to be bailouts of lousy affiliate ideas, and other companies that deserve to die quietly.