This, to me, isn't a criticism of the government but rather the criticism of banks and loaning institutions. The government can't really control the amount of paperwork banks need to process loans. Unless you're talking about the U.S. government subsidizing that processing. Which would require a raise in taxes to pay for. Or adding a tax to processing loans for overseas borrowers. Which would inhibit free trade and possibly cause a trade war with other nations, which would further hurt American businesses in the long run.
You're right. I'd rather the Small Business Administration be given more independence in supporting small businesses. I think that in the past it has been the tool of far too much abuse and corruption.
You're right in that more money needs to go directly to small businesses. However, the key is getting the banks and loaning institutions to give that money and credit out. I don't know the best way to get that done.
during the ronnie raygun regime, after the economic crisis was subsiding, the white house capitulated to banking interests and quit making direct loans to US small business. the reason was because the banks opposed SBA making loans which should have been made available thru the private sector
now, that premise sounds reasonable
- if you did not also know that to qualify for a direct loan from SBA you first had to seek the loan from a commercial lender (actually two, in urban areas). only if credit was not available elsewhere could the SBA make the direct loans
we see today that the credit is not being made available elsewhere but sba is no longer positioned to make direct loans to the small business sector
so the republican president ****canned the sba's loan making capacity by instead having the agency underwrite loan guaranties for credits that met sba's loan guaranty criteria
that is not a bad practice, of itself, as the federal dollars are thereby leveraged to many more small businesses that need it, to allow banks to make loans to the marginal credits
but banking has gone global and there are lots of foreign interests looking for large loans
as the economy of scale works against smaller loans and because the banks spend out their available capital with tightened reserve requirements these days, there is little left for small businesses to borrow. even the more creditworthy
sba should fund the direct lending (out of the unspent TARP monies) and allow the banks to buy any of the loans the sba books, now or later, for a nominal amount in excess of par. (the excess is to recover the agency's expense in originally processing the loan)
with that mechanism the lenders can no longer complain that sba is absorbing the small business loan situations it would otherwise lend to. and it will ramp up small business spending and hiring. the economic multiplier effect ranges from 4X to 8X of the cost of the job from borrowed funds as the wages get recycled into the economy
during the clinton years the sba was found to be a net revenue generator to the federal coffers. taxes paid by businesses formed, businesses expanded, and added employees far offset the cost of the agency's programs to the taxpayer