Need more cheese??
How is our recovery going? Great! “Great” according to those living in some alternate universe and seeking to obtain political capital from a thriving recovery. Not so well according to a more sober examination in http://www.zerohedge.com/news/2016-09-20/we-havent-seen-great-depression-gallup-ceo-destroys-recovery-lie . From this article, two relevant quotes for small business:
“According to the U.S. Small Business Administration, 65% of all new jobs are created by small businesses, not large ones.”
“Here’s the crisis: The deaths of small businesses recently outnumbered the births of small businesses.”
Although the above article was written September 21, 2016, “recently” in the preceding quote (from the source cited) means “since 2008”, i.e., during the entire current administration. Dodd-Frank Act regulations, rammed through Congress by our Democrat friends, made it nearly impossible for a small business to borrow money either to start up or to expand. We know that directly. Of our five remaining small commercial properties, not a single one has a tenant that could have started their business in any way other than completely from their own resources. As long as they have no renewable money borrowed from a bank for their business, they do not fall under the Dodd-Frank regulation that income must be at least 1.25 times expenses or the renewable loan is in default.
Banking regulations imposed by Dodd-Frank have made it nearly impossible for banks to find “qualified” borrowers and have driven many small banks out of business rather than allowed them to fund startup businesses, even businesses backed by so much equity that the loan could not possibly be at risk. A startup business that economically breaks even during the first five years is a quite promising business, but under these regulations would be subject to foreclosure even though all debts were paid on time. A startup business that returns $1.25 income for every $1.00 of expense is outstanding and beyond anything I have personally encountered. Our last sale of commercial property was to a machinist with contracts and an excellent performance and credit history. He and his wife could not obtain bank financing to purchase the property. The private funding they were able to borrow (a bank would not loan them money) was paid off completely over five years from positive cash flow from their business. Albeit lethargic, much of the economic recovery we have had is due to private financing and innovative approaches that have not yet been completely shut off by government intervention.
Economic recovery could readily happen if our legislators had even a basic understanding of the environment necessary for small businesses to thrive. “Cheese” to constipation is much like regulation to business. We don’t need more government cheese. As long as our representatives can blame the nearly stagnant economy on the previous administration or on how severe the recession was, they can completely avoid their own complicity in formulating and tolerating regulations that simply shut our economy down. We do not need more government “help”, we need government to get its heavy boot off the necks of small business investors. To stop feeding the economy cheese and to get it moving again, an excellent first step would be excluding small banks from the massive Dodd-Frank regulations, some of which are still being written.
***Gary A. Howie MSc, PhD*** is business owner/rancher and a Life & Liberty News contributor
