With horror, I’m watching the Tea Party gain popularity through whitened teeth, attractive hair styles, lots of accusation and little substance. With shock, I’m watching the Democrats continue to play humble pie, too fearful to come out swinging for all they are worth. And with the rubber-necking fascination of seeing a roadside accident, I’m crumbling in despair as it seems the Republican policies that got us into a disastrous mess, gain ground. On October 1, Michael Moore penned an article on Huffington Post, that only he can author – on what the Dems needs do…must do…in order to turn around their own failing tide. As an insurance agent said to my sister after her home was red-tagged in the ’94 Northridge earthquake “The squeakier the wheel, the more oil it gets”, so, too must all those who believe in a strong middle class, with a leading government, make their voices heard. There is precious little time to November 2nd.
My experience – being a Canadian/America, and steeped in both cultures and economic setups – affords me, for better or worse, a unique perspective. So, I’d like to share two small examples of where the American system is failing the middle class, and in particular, small business owners.
1) In 2008, I left the corporate world and started my own business venture. With the interest rates low, and a desire to sell my home and purchase a different one, I contacted my mortgage lender, Bank of America, to whom I had been paying a mortgage without one late day of payment for over 10 years, to ask for a letter of approval so that I could use the exact same mortgage amount I currently had, to purchase a new home. I wasn’t asking for more credit…just the same as I’d had for 10 years – essentially transferring the debt allocation to a different address. I was turned down. Because I’d been in business for only 2 years, my situation made me ineligible to qualify.
The business practices small business owners employ put us at a disadvantage when it comes to getting a mortgage. Banks that are proud to partner with small business, would qualify me, so I’m in a positive position, however, how is it possible that this big hefty bank can so quickly dismiss the small business owner and 15 year client? (It’s not just me…there is more coming.)
There is a deep disconnect and a bit of a catch-22. The federal government freed up money specifically so that the banks would lend. However, the banks aren’t owned by the government, so law or no, the banks aren’t accountable to the government. Even if the spirit of TARP was to help get us back on our feet, in reality, the big bullies…umm….banks care not for us and will not share.
2) The Small Business Administration federally mandated a loan called the ARC (America’s Recovery Capital) loan program, intended to help small business pay off debt or notes in order to free up liquidity and stay in business, or pay staff, or buy new equipment. The loan (up to $35,000) was available through different, but not all, banks. The program went up to September 30, 2010 or when the funds ran out. Bank of America did not offer the program. Wells Fargo, who initially held the program open to all, eventually limited it to clients with a 2 year history with the bank. Chase, also open to all for awhile, ended up closing the program early (early September) in order to use the remaining time to process the applications. Gateway Bank was open to all and will continue running until government funds are gone. The loan was a 0 percent loan with a 5 year repayment program. And while the SBA didn’t charge any fees, the banks could – such as a lien verification – for about $600, which they can justify because the insurance that the federal government promises to guarantee the loans is based on the banks doing their due diligence in verifying the borrowers are capable of making restitution. Hmmm…therefore they can decide to lend or not lend based on what they think the risk is (ummm…I’d say very great for most small businesses right about now) and also add fees for verifications that end up adding 2-3% on the loan.
The excellent officer at Gateway took the time to really go through the program with me and it ended up not worth it for my purposes (too much work for very little cash influx), but through Gateway, I could have been approved. It took me about 10 hours of research, including speaking with the SBA representative at my local chapter, to even find a bank to work with. I’ve included here (from the SBA website), a copy of those lenders working the ARC loan program. In California 462 loans were given out. 462. California has 3,320,977 small businesses. Wells Fargo told me, unofficially, that they had received over 17,000 applications. They gave out 176 loans or .01 percent of those that had applied.
If the banks (or some of them) were federally owned, opting into the loan program would not be an…option. It would be mandated and followed, because the banks would be accountable to government. The coffers would have to open up. Do you see what I see? A decent program with lots of money allocated to it, is created. And in California ONLY 462 loans (or .0001 of California small businesses) are given out.
That is why big finance, big banks, big anything cannot continue to hold the seat of power – regardless of which party leads the country. Because middle America is falling, quickly and dramatically. It takes a long time to build up an empire, but even America can fail in the blink of an eye if it continues to forget the people. That is one of the reasons why I can never support the Republican party – it would be like stabbing my own self in the back.