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.