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5 Steps to help 'Main Street' businesses get back to work

Two of the five are for community banks…

President Obama recently ‘invited’ the ‘Big Bankers’ to the White House to admonish them…Start lending to small businesses! Sam Thacker in his blog at Allbusiness.com has a better idea. Invite 2 small business owners (those with 50 or fewer employees) from each congressional district to a White House Summit on Small Business.

Here is Sam Thacker’s prediction for what they might come up with:

  1. Provide $50,000 of
    stimulus money to any small business for each new job it creates and
    keeps for a year. That is about a years worth of salary and benefits
    for an average manufacturing employee. That will save $270,000 that the government is spending per job
    now with the stimulus plan. I promise the nation’s small business
    owners will spend their $50,000 per job more wisely than the government
    is spending its $270,000 per job.

 

  1. Keep the SBA loan
    guarantee enhancements on the books for two more years that were
    provided for in the original stimulus plan. That would give banks a 90%
    loan guarantee and borrowers no high loan guarantee fees. That has been
    a program that has worked. Actually, that has been about the only
    source of loans for small businesses.

 

  1. Instead of taking
    the big bank bankers to the woodshed and flogging them for not making
    small business loans, offer community banks (those banks with less than
    $1 billion in assets) tax incentives for making business loans to small
    businesses. Community bankers think in terms of “net interest margin”
    which is the spread between the cost of funds for a loan and the
    borrower’s rate of interest. Bankers think a big net interest margin is
    3%. With tax incentives raise the net interest margin to 5%. Community
    bankers won’t become fat cats but they will have big grins on their
    faces. While you can’t herd cats, you can bribe them with a little
    piece of cheese. Give small businesses fair access to capital and they
    will take you out of this recession and create jobs doing it.

 

  1. Commit $500 billion to helping small businesses that manufacture and sell consumer goods to U.S. customers reach overseas markets, especially China and India.
    Hasn’t Mr. Obama talked to his people at the U.S. Census Bureau? Baby
    boomers are growing old and won’t be buying consumer products like they
    have in the past. There are far fewer generation X and Y folks out
    there to take their places, so it makes since to sell overseas. We will
    achieve an added bonus of reducing the staggering trade deficit.

 

  1. Immediately stop
    spending all stimulus money that isn’t in the above four parts of the
    plan. Take whatever is left and provide it to job training programs at
    accredited community colleges. A trained worker is a productive
    efficient worker. Many workers are going to have to be retrained
    because their jobs are simply disappearing. Completely. Give these
    people direct help by training them to do something that is needed now.

I wonder if Sam is running for election. This makes a lot of sense!

What would you add?

About the Author
Linda Keith CPA is an expert in credit risk readiness and credit analysis. She trains banks and credit unions throughout the United States, both in-house and in open-enrollment sessions, on Tax Return and Financial Statement Analysis. She is in the trenches with lenders, analysts and underwriters helping them say "yes" to good loans. Creator of the Tax Return Analysis Virtual Classroom at www.LendersOnlineTraining.com, she speaks at banking associations on risk management, lending and director finance topics.