SBA, You’re OK

Was it the Christmas Spirit? Were they just feeling generous? Or guilty? Or again pandering to the home district on feel-good programs? Not to be outdone by societal do-gooders, veterans’ charities, and the like, the Senate has approved a measure that will give veterans better and easier access to small business loans and other benefits. Lawmakers point to Senate studies that show the rate of unemployment among vets returning from Iraq and Afghanistan is twice that of the national average. Statistically significant? We’re not sure. We would expect this rate to be higher. On the up side, veterans traditionally have had reasonable access to Small Business Administration (SBA) programs and loans, though additional assistance and enhanced programs always are welcome. In one provision of S. 1784, a veteran may receive a loan of up to $50,000 without collateral. It’s anyone’s guess how this will play out, though it beats the arts-and-craft kits provided by so-called veterans’ charities.

Though most would like to see veterans get loans for small businesses, the judicious management of these funds is crucial. The failure rate of new businesses is high for a variety of reasons, and a slowing economy will make small business challenges more pronounced. Throwing feel-good funds at vets to show the government cares does little for veterans in the long term.

The bill seems to target reservists, a group that lost businesses when called to duty in Desert Storm. This is a nice, bipartisan try, but we’ll wait and see. Loans without collateral are unwise, unless the interest rate is higher to account for the increased risk. Details! Details!

SBA programs in general could be real winners if coupled with the training a veteran may receive in the VA’s vocational rehabilitation program.

It seems similar provisions to S. 1784 were in the 2008 Defense Authorization Bill but were stripped out in committee. (To fund those earmarks?) Again, we’ll wait and see.

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