How Big Is a Micro-Business Loan?
Hanh mitakuyapi. Recently, I was helping some people apply for a startup loan for a micro-business when one of the bureaucrats asked me about the size of the loan we were seeking. He thought it was "awfully small, especially if these people are serious about building a business".
We told him that the business is intended to be a micro-business and its orientation is to keep a family solvent and off welfare, not build another General Motors or Toyota.
This upset him so, he nearly tossed the application in the trash!
There's a problem with his attitude, here, Houston.... and D.C...
The applicants and I are oriented to funding from within to the degree we can. I've been spearheading building "my" for-profit in this way since my last run-in with the bigots in the ND agency, APUC, in 2003, and it's how I've built every one of my businesses over the years.
That generally means slower going to build the business, because the "point guy(s)" take jobs doing other things in order to insure that existing bills are paid AND everyone has some measure of confidence in their ability to survive with whatever they have amassed, rather than constant stress over whether or not a given action will toss everything into the abyss or keep things moving forward. There's always stress associated with building a business, but for us, at least, there's less stress when we have confidence the bills are going to stay paid. We're willing to make haste more slowly.
How small was the loan we were looking for? Less than $2,000.
To members of the Majority Culture, $2,000 is pocket change on the scale of business-development money. To members of the minority population, it is the difference between success and failure and it is (for us) huge - and we generally do not have any resources to mortgage, sell, or otherwise 'attach' to raise funds with.
We have no credit cards. We have no credit scores. Most of us don't want them - debt is debt, and we don't incur debt if we can avoid it. We are the kings and queens of law-away, but not of credit cards.
We are not by nature bean counters, but we are sharp-pencil enthusiasts. We generally know - to the penny - the cost of whatever we need to do whatever we plan to do. Our problem is getting those few dollars to do it.
We live by 'halving and doubling' and we do pretty well with this system. We are skeptical and suspicious of $25,000 minimum "small business" loans with godjillion years' worth of tax returns and other verifications when we know full well we only need, say, $1,250.00.
I talked SBA into a micro-loan program for minorities for a short time.. $5,000 maximum with a 5-year payback. We only got it to last 2 years, and the 'reason' for dumping it?
The bureaucrats in SBA said, "it takes the same amount of paperwork to process as a $25,000 loan" (therefore, way too much paperwork); "they should be able to pay such a small amount (as $5,000) back in a year" (nonsense - we're talking about minority people, here, not wealthy or even 'middle-income' people); "we don't see why they can't just pool credit cards with friends and borrow such a small amount" (um - what credit cards? Which they were told, on paper.. and at what 'helpful, minority-friendly" interest rate? 24%?)
If people in the majority culture are really interested in minority business development, they need to adjust their view to ours and adjust their "requirements" to ones that WE - the minoritys - can and will work with. Anything else is just another kind of bigotry in which the 'haves' flaunt their 'having' to those who 'have not' and in which the 'haves' rub the noses of the 'have nots' in the fertilizer of backlash bigotry and resentment.
This does not build good business or community relations. It doesn't not further CO-operation. It does not further anyone's good. In the long run, it cheats everyone, and continues the burden of welfare on the 'haves', making them pay for their bigotry in taxes for welfare, and on the 'have nots', who suffer from despair and all manner of abuse, internal and external.
We need to develop a true micro-business loan system with a maximum of perhaps $5,000, not dependent on credit ratings and not from the government, with a 5-year maximum payback, tied to a business incubator so that there is maximum chance of success for the applicants. It would be available to any small business, not just startups.
Perhaps a second stage with a $10,000 maximum could become available later, to encourage expansion of existing small (probably minority) micro-businesses.
This would truly encourage micro-entrepreneurs to try their hands at business and help existing mmicro-businesses to expand. It would decrease welfare and all the nastiness that goes with it. It would generate some new tax monies over time. It would build pride and a spirit of real co-operation in all concerned.
It would work.