SBA Help Not Getting Through to Businesses

The federal government's small business stimulus program isn't working say experts.

"We can't get a loan out of anybody to help these people," said Rich Jaeckle, chairman of the Orlando chapter of Score, a business-counseling group. Entrepreneurs approach the nonprofit organization for help, he said, but it can't provide it. "They're good ideas and they can't go anywhere."

Lawmakers hoped to solve that problem in part by offering enhanced loan guarantees, which were supposed to reduce the risk for financial institutions and encourage renewed lending. But some banks said they fear the SBA will subsequently deny claims for repayment of loans made to businesses that are already losing money because of the recession. Others lenders said an interest-rate cap on guaranteed loans — based on a prime rate that is currently extremely low — results in margins that are too thin to justify the risk of lending to small businesses and startup companies. [From Orlando Sentinal] 

Congress and the SBA are scratching their heads to figure out what's wrong and how to prime the small-business money pump.