Wednesday, August 30, 2006

Hispanic Business - SBA's New Leader Faces Critics

I just finished reading the article "SBA's New Leader Faces Critics" on the website of Hispanic Business. Steven Preston, anointed the SBA's administrator in June, is dealing with the critics that always accompany leading a government agency inside the Beltway.

I found two items in the article more interesting than the criticism of the agency.

First, the statement that the default rate on SBA guaranteed loans ranges up to 7 percent in any given year, but that the SBA breaks even because of the fees it charges. I wonder if this reflects any recovery by the SBA or the lenders of collateral pledged in support of these loans which often includes the personal residences of the borrowers.

Second, the suggestion that the SBA is best known as the "financier of last resort" to small businesses. Frankly, I'm not sure I agree with this suggestion. The SBA may say "no" to providing a guarantee for reasons which don't prevent asset based lenders including purchase order financiers, factors and leasing companies from providing loans and financing to many small businesses.

What do you think?

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