Posts tagged with: small business loans

In last night’s State of the Union address, President Obama commented that “even though banks on Wall Street are lending again, they’re mostly lending to bigger companies. Financing remains difficult for small-business owners across the country, even though they’re making a profit.”

He then offered some of our tax dollars to help: “So tonight, I’m proposing that we take $30 billion of the money Wall Street banks have repaid and use it to help community banks give small businesses the credit they need to stay afloat.”

The irony is that our government helped create this problem in the first place, both Republicans and Democrats. By repeatedly bailing out big corporations, Washington signaled the markets that it will protect “too-big-to-fail” companies if they should falter. So is it any surprise that big companies are attracting the lion’s share of the available credit?

What else has the government done to help? Well, it’s gobbling up an obscene portion of the world’s available credit by borrowing unheard of amounts of money. And by holding interest rates artificially low, it’s preventing the price function from coordinating the supply and demand of credit.

With help like this from the federal government, it’s a wonder there’s any credit left over for small businesses.