Kelly Riddell – Small Business Government Loans Subsidized Rolex Dealerships, Country Clubs, Spas
http://www.washingtontimes.com/news/2014/dec/1/small-business-government-loans-subsidized-rolex-d/#ixzz3KpVF0AeR
Small business government loans subsidized Rolex dealerships, country clubs, spas
A federal program expanded by President Obama to help small businesses on Main Street recover from the financial crisis has backed loans to Rolex and Lamborghini dealerships, plastic surgery clinics, Napa Valley wineries, country clubs, and other industries servicing recession-proof clientele, government records show.
In all, the U.S. Small Business Administration has guaranteed since 2007 about 35,000 loans totaling $67 billion to businesses that primarily service an affluent lifestyle, according to government data compiled by American Transparency’s OpenTheBooks.com, an online portal aggregating 1.3 billion lines of federal, state and local spending records.
The loan guarantees to luxury industries — each $1 million or more in size — amount to about 20 percent of the total handed out by SBA during that period, the agency said.
Mr. Obama increased SBA’s funding by $730 million on the heels of the recession, packaging it as part of the 2009 stimulus bill, so it could guarantee more loans to small businesses to help alleviate the so-called credit crunch at the time.
The White House heralded the effort and subsequent actions — such as increasing the SBA’s maximum loan amounts from $2 million to $5 million — as “a crucial step in supporting economic recovery and job creation.”
As a result, the number of million-dollar loans the SBA backed spiked 37 percent from 2007 to 2013, according to Open the Books. Last year, the SBA dispensed $14.8 billion in seven-figure loans guaranteed by the administration, whereas in 2007 the amount was $9.3 billion.
Much of the money was guided to recession-proof industries, not the Main Street, mom-and-pop shops which form “the backbone of the American economy,” or that “lead the way to the industries of the future,” as was trumpeted by the White House at the time as reason for the additional funding.
From 2007 to 2013, the SBA-backed a $5 million loan to a country club on the outskirts of Atlanta with an membership initiation fee of $10,000; $4 million in loans was given to a Rolex dealer in an affluent suburb of Chicago, and $3 million in loans went to a plastic surgery clinic near Minneapolis, according to an Open the Books report released Tuesday.
The loan guarantees to luxury industries — each $1 million or more in size — amount to about 20 percent of the total handed out by SBA during that period, the agency said.
Mr. Obama increased SBA’s funding by $730 million on the heels of the recession, packaging it as part of the 2009 stimulus bill, so it could guarantee more loans to small businesses to help alleviate the so-called credit crunch at the time.
The White House heralded the effort and subsequent actions — such as increasing the SBA’s maximum loan amounts from $2 million to $5 million — as “a crucial step in supporting economic recovery and job creation.”
As a result, the number of million-dollar loans the SBA backed spiked 37 percent from 2007 to 2013, according to Open the Books. Last year, the SBA dispensed $14.8 billion in seven-figure loans guaranteed by the administration, whereas in 2007 the amount was $9.3 billion.
Much of the money was guided to recession-proof industries, not the Main Street, mom-and-pop shops which form “the backbone of the American economy,” or that “lead the way to the industries of the future,” as was trumpeted by the White House at the time as reason for the additional funding.
From 2007 to 2013, the SBA-backed a $5 million loan to a country club on the outskirts of Atlanta with an membership initiation fee of $10,000; $4 million in loans was given to a Rolex dealer in an affluent suburb of Chicago, and $3 million in loans went to a plastic surgery clinic near Minneapolis, according to an Open the Books report released Tuesday.
The findings are certain to spur new oversight of the SBA program on Capitol Hill.
“The purpose of SBA loan programs is to provide opportunities for growing small businesses that can’t otherwise obtain financing,” House Small Business Chairman Sam Graves, Missouri Republican, told the The Washington Times. “The Committee’s oversight and a recent Inspector General’s report have found that much improvement is needed in how the SBA manages its loan approval process. Congress has repeatedly asked the SBA to devote its resources to better management of core programs so that much-needed capital reaches the small firms that have the most promise.”
Overall, Open the Books found that $4.2 billion in federally-backed loans from the SBA went to high-end luxury vacation destinations for both people and pets alike; $760 million was given to businesses selling their clientele elite-brand cars, diamonds and other jewelry, wine, cigars, and face-lifts . Another $161 million was awarded to exclusive clubs for golf, yachting, thoroughbred horses and hunting. The other money went to help fund Fortune 100 companies and private equity firms, according to the report.
“In America, we should never demonize success, but we don’t need to subsidize it either,” said Adam Andrzejewski, founder of OpenTheBooks.com. “Loans to luxury limousine companies, private country clubs, Beverly Hills diamond suppliers, and upscale resort destinations serve no public purpose.”
The majority of the $1 million-plus loans — about 25,000 — were given through the SBA’s so-called 7(a) guarantees, which are extended to eligible borrowers for starting, acquiring and expanding a small business. About 9,000 loans were guaranteed through the SBA’s 504 program, which gives established businesses long-term fixed-rate financing on assets such as land and buildings.
The SBA doesn’t dispense loans itself, but rather provides financial guarantees to banks if a company backed by the SBA defaults. If none of the companies default, the government won’t owe anything. If the SBA-backed business goes under, however, the government is on the hook to repay a portion of the loan.
Currently, the fees and interest generated off of the loans is enough to cover any companies which default, leading to no cost to the taxpayer, said Miguel Ayala, an SBA spokesman.
The loan guarantees to luxury industries — each $1 million or more in size — amount to about 20 percent of the total handed out by SBA during that period, the agency said.
Mr. Obama increased SBA’s funding by $730 million on the heels of the recession, packaging it as part of the 2009 stimulus bill, so it could guarantee more loans to small businesses to help alleviate the so-called credit crunch at the time.
The White House heralded the effort and subsequent actions — such as increasing the SBA’s maximum loan amounts from $2 million to $5 million — as “a crucial step in supporting economic recovery and job creation.”
As a result, the number of million-dollar loans the SBA backed spiked 37 percent from 2007 to 2013, according to Open the Books. Last year, the SBA dispensed $14.8 billion in seven-figure loans guaranteed by the administration, whereas in 2007 the amount was $9.3 billion.
Much of the money was guided to recession-proof industries, not the Main Street, mom-and-pop shops which form “the backbone of the American economy,” or that “lead the way to the industries of the future,” as was trumpeted by the White House at the time as reason for the additional funding.
From 2007 to 2013, the SBA-backed a $5 million loan to a country club on the outskirts of Atlanta with an membership initiation fee of $10,000; $4 million in loans was given to a Rolex dealer in an affluent suburb of Chicago, and $3 million in loans went to a plastic surgery clinic near Minneapolis, according to an Open the Books report released Tuesday.
The findings are certain to spur new oversight of the SBA program on Capitol Hill.
“The purpose of SBA loan programs is to provide opportunities for growing small businesses that can’t otherwise obtain financing,” House Small Business Chairman Sam Graves, Missouri Republican, told the The Washington Times. “The Committee’s oversight and a recent Inspector General’s report have found that much improvement is needed in how the SBA manages its loan approval process. Congress has repeatedly asked the SBA to devote its resources to better management of core programs so that much-needed capital reaches the small firms that have the most promise.”
Overall, Open the Books found that $4.2 billion in federally-backed loans from the SBA went to high-end luxury vacation destinations for both people and pets alike; $760 million was given to businesses selling their clientele elite-brand cars, diamonds and other jewelry, wine, cigars, and face-lifts . Another $161 million was awarded to exclusive clubs for golf, yachting, thoroughbred horses and hunting. The other money went to help fund Fortune 100 companies and private equity firms, according to the report.
“In America, we should never demonize success, but we don’t need to subsidize it either,” said Adam Andrzejewski, founder of OpenTheBooks.com. “Loans to luxury limousine companies, private country clubs, Beverly Hills diamond suppliers, and upscale resort destinations serve no public purpose.”
The majority of the $1 million-plus loans — about 25,000 — were given through the SBA’s so-called 7(a) guarantees, which are extended to eligible borrowers for starting, acquiring and expanding a small business. About 9,000 loans were guaranteed through the SBA’s 504 program, which gives established businesses long-term fixed-rate financing on assets such as land and buildings.
The SBA doesn’t dispense loans itself, but rather provides financial guarantees to banks if a company backed by the SBA defaults. If none of the companies default, the government won’t owe anything. If the SBA-backed business goes under, however, the government is on the hook to repay a portion of the loan.
Currently, the fees and interest generated off of the loans is enough to cover any companies which default, leading to no cost to the taxpayer, said Miguel Ayala, an SBA spokesman.
Read more: http://www.washingtontimes.com/news/2014/dec/1/small-business-government-loans-subsidized-rolex-d/#ixzz3KpVbhD1N
Follow us: @washtimes on Twitter
The findings are certain to spur new oversight of the SBA program on Capitol Hill.
“The purpose of SBA loan programs is to provide opportunities for growing small businesses that can’t otherwise obtain financing,” House Small Business Chairman Sam Graves, Missouri Republican, told the The Washington Times. “The Committee’s oversight and a recent Inspector General’s report have found that much improvement is needed in how the SBA manages its loan approval process. Congress has repeatedly asked the SBA to devote its resources to better management of core programs so that much-needed capital reaches the small firms that have the most promise.”
Overall, Open the Books found that $4.2 billion in federally-backed loans from the SBA went to high-end luxury vacation destinations for both people and pets alike; $760 million was given to businesses selling their clientele elite-brand cars, diamonds and other jewelry, wine, cigars, and face-lifts . Another $161 million was awarded to exclusive clubs for golf, yachting, thoroughbred horses and hunting. The other money went to help fund Fortune 100 companies and private equity firms, according to the report.
“In America, we should never demonize success, but we don’t need to subsidize it either,” said Adam Andrzejewski, founder of OpenTheBooks.com. “Loans to luxury limousine companies, private country clubs, Beverly Hills diamond suppliers, and upscale resort destinations serve no public purpose.”
The majority of the $1 million-plus loans — about 25,000 — were given through the SBA’s so-called 7(a) guarantees, which are extended to eligible borrowers for starting, acquiring and expanding a small business. About 9,000 loans were guaranteed through the SBA’s 504 program, which gives established businesses long-term fixed-rate financing on assets such as land and buildings.
The SBA doesn’t dispense loans itself, but rather provides financial guarantees to banks if a company backed by the SBA defaults. If none of the companies default, the government won’t owe anything. If the SBA-backed business goes under, however, the government is on the hook to repay a portion of the loan.
Currently, the fees and interest generated off of the loans is enough to cover any companies which default, leading to no cost to the taxpayer, said Miguel Ayala, an SBA spokesman.
Read more: http://www.washingtontimes.com/news/2014/dec/1/small-business-government-loans-subsidized-rolex-d/#ixzz3KpVbhD1N
Follow us: @washtimes on Twitter
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