Something gnawed at me about the President’s proposal to use $30 billion of the TARP funds that have been repaid to lend to community banks so that they can lend it to small businesses in their community, and those small businesses can keep their doors open. While I oppose the idea in general, because banks should already be able to borrow money from the Federal Reserve to lend if they are so inclined. That was not what was grating on my nerves, however. I just realized what struck me as wrong. Small businesses shouldn’t be borrowing money to keep their doors open. Small businesses should be borrowing money so that they can engage in profitable business activity. Loaning money to a small business so that it can keep it’s doors open sounds like putting good money after bad.
I want to be an optimist and believe that sooner or later the economy will pick up. I’m a realist, and think that it’s probably going to be later at best given our reluctance to face the problems which caused the economy to be bad in the first place. I’ve worked for several businesses in my career, some big and some small, so I know a thing or two about business that those who haven’t worked outside the public sector don’t know. Every business either makes a profit or a loss. Working for a profitable business, large or small is far from perfect. However, it beats working for an unprofitable business hands down. I am currently happily employed by a small business, and hope they are a profitable enterprise. Not only that, I hope their sales and profits both continue to grow. I don’t know the financial details, but I hope my boss is richer than I am. I once had a boss who was poorer than I was and that was a rather unpleasant experience to say the least.
If my employer is not profitable, I have no job security. If my employer isn’t profitable, how can they give me a pay raise? A loan will just postpone the inevitable.