Tax and lend: small-business subsidies.

Author:Howley, Kerry
Position:Small Business Administration regulation - Brief article

CONGRESS CREATED the Small Business Administration (SBA) in 1953 to fix a specific problem: Lenders allegedly pass over large numbers of creditworthy small businesses. An April study from the American Enterprise Institute (AEI) concludes there is no evidence such a problem exists.

The SBA distributes taxpayer-backed loans to entrepreneurs who have been rejected by at least one private lender. Veronique De Rugy--a resident fellow at AEI and a "French, Anti-American small business activist" according to the head of the American Small Business League--points out that if a large-scale market failure is holding back small American enterprises, business owners don't seem to have noticed. The nation's 25 million small-business owners access credit through a wide range of sources; those who can't find credit with banks turn to credit cards and friends. The vast majority of small businesses that go under do so because of low sales, not because they couldn't score a loan.

The SBA is also supposed to...

To continue reading