Transform SBA into a Microfinance Agency for startups

Rank 2127
Idea#82

Stage: Active

Campaign: Public-Private Partnerships

So far we've been spending trillions to try and resuscitate defunct DOW companies and a non-existent Wall Street.

I propose that we give Small a chance and let Big digest its trillions.

To wit, we need to transform the SBA from a place for dry cleaners to get loans into a dynamic, web driven micro-finance agency.

Citizens should be able to get grants and Government backed loans in the amount of $100,000, 1M or 10M, easily and with a minimum of paperwork and delay. Startup companies that will employ people should be fast tracked to funding.

The new SBA/MFA will have a website with a simple walk through web form that is basically a summary of the idea (page 1), a summary of needed finance (page 2) and an essay describing its metrics for success (page 3).

1-2-3 -- fast, quick and easy. Let's get capital flowing to business again...lets make micro-finance available to all!

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  1. Comment
    Unsubscribed User

    excellent idea, much needed

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  2. Comment
    lanny.loftis

    sba was a direct lender. until the regan administration.

    banks objected that sba was intruding on their market, making loans the banks would otherwise have made

    so the sba finance programs were instead focused on federal guarantees of the bank loans to small business - according to guidelines imposed to be eligible for the government/sba guaranty

    that worked well while lenders were making loans. not so much now that only those who do not need loans are the ones found eligible to receive them

    however, the agency does have a nationwide network of certified development companies which now process brick and mortar loans with sba backing. the agency should allow these CDCs to now be able to write 7(a) loans (what the banks normally write) in order to get critical funding into the small business community

    sba's ability to write direct loans atrophied with the guaranty program. there was no longer a need to staff sba offices with loan officers having that ability to underwrite sba guaranty loans. instead, its personal were used to market the guaranty program to the banks to promote that indirect lending. the reality is, sba now is without the talent to write a significant number of loans. and when the economy rebounds, the banking industry will again moan that sba is usurping its market

    no doubt small business financing is needed. but sba is not directly positioned to offer it. fortunately the CDCs are. it's amazing that the Obama administration has not recognized the positive aspects of this small business financing delivery system

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  3. Comment
    merveilleux24

    100k is not microfinance by any means. And "fast, quick and easy" sounds like you're throwing money at the problem, and we all know how well that works. True microfinance ($50+ loans, etc.) would be a good idea, though.

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  4. Comment
    jabailo ( Idea Submitter )

    With regard to CDC's my reading of them is that they are focused on

    (a) bricks and mortar businesses

    (b) that already have a profit model

    So, it's still the same old SBA once removed.

    My idea is true venture capital.

    I want the same deal as GM for all the technology start ups. I define Micro-finance here as as 100K, 1M and 10M.

    This would be money for businesses that have only a business plan and some people willing to work hard to make it a success and to hire others to help them.

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  5. Comment
    jabailo ( Idea Submitter )

    "And "fast, quick and easy" sounds like you're throwing money at the problem, and we all know how well that works."

    It can work very well if the money is spread around to many ideas. Some of these businesses will make orders of magnitude money back for the investment. Some a few times. Some will break even and some will fail.

    However, in the meantime they'll be employing lots of people in exciting breakthrough work as independent entrepreneurial companies.

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  6. Comment
    vipcottagellc

    The current issue is that the SBA only gives grants to government groups, research groups, not for profits. It does not give any grants, subsidies, etc to small for profit businesses or to individuals at all. Just ask them. This is a small business that is starting up, has a great business plan and just needs help to sustain in the start up phase. Not loans that will put us behind, but prudent grants or subsidies. The agency itself emailed us to say that this SBA agency does not give grants of any kind to for profit businesses or individuals at all!

    I thought, we are not a big company. We are only looking for start up help that will not bog us down in debt down the road. And isn't this agency named "Small Business Administration". Don't really understand what they have to do with the average small business that is the backbone of the country and make up the highest percent of businesses in this country.

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