Boondoggle!

Monday's Rush Morning Update:
Dateline: 17 August 2009

"Last May, the Small Business Administration announced a new lending program to provide emergency bridge loans to small business owners. Armed with a quarter billion in Porkulus cash, Washington types gleefully predicted that the program would save jobs and keep businesses afloat. Money was designated for 10,000 loans at up to 35 grand apiece.

Well, here we are, three months later. And, according to the New York Times, "the program is off to a slow start." Only about 10 percent of the loans have been extended. Seems many banks that provide the actual lending are "reluctant to take part."

• Reason one: Banks have little incentive. The underwriting requirements are so stringent that it is more economical for banks to use their resources on larger loans, which yield more profit.

• Reason two: Congress set absurd terms. A small business has to be struggling, yet at the same time "viable"; it has to be on life support, but healthy. So small businesses struggling with debt -- because they've been hammered by the recession -- may not be sound enough to be rescued with Porkulus funds intended to help businesses hammered by the recession.

• Reason three: Banks fear the government will renege on the loan guarantees, and they'll get stuck with a bunch of bad debt. Again.

Yes. It's another government-sponsored boondoggle. But it makes perfect sense to Barack Obama and the Democrats in Congress -- the same people who want total control of our health care industry... and you're life."

Rush's Reference:

NYTimes: Small-Business Stimulus Loans Slow to Trickle

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