Good news for small businesses
Yesterday, President Obama announced a major boost for small businesses across the United States. The US Treasury is going to buy up to $15bn of Small Business Administration (SBA) loans in a bid to increase liquidity in the business loans market and provide a massive stimulus to small enterprises. President Obama said: “Small businesses are not only job generators, but the heart of the American dream. Too many entrepreneurs can’t access the business capital they need to start or grow their businesses.” Clearly, the objective of this new policy is to change this situation immediately. The point is that in this period of financial illiquidity, many firms are at risk of going under not because their businesses are inherently unprofitable, or even that they are experiencing a major downturn in sales. It is because they naturally experience sales cycles and that the usual access to bank funds to shore them up during the low points has been denied to them over the past 18 months. Let’s hope that the top-down directives of this new policy are implemented in a fair, proper and intelligent manner.
