Esslie-Frenia Law June 2023 Leaderboard

EDITORIAL: Why SBA loans matter


WHAT A PLEASANT SURPRISE. In our post office box Tuesday morning, a check for $67,119.56. It was made out to this newspaper, though the Capital Alliance Group of Santa Ana, CA, the company named on the check, doesn’t owe us a penny. Talk about showing kindness to strangers.

The attached promotional flier offers five thoughtful suggestions for how to use the funds. The last suggestion advises using it for “Extra Cash” so you’ll have “more than enough money to get the things you need.” Gosh!

Deals that skate just inside the boundaries of the law confirm the existence of an unmet market for small businesses loans. That’s what Capital Alliance Group is pushing, although it doesn’t use the word loan anywhere on its promotional “checks.” Borrower beware.

From desperation, gullibility or greed, some folks pursue offers like this. Anonymously a handful of them have posted angry accounts online, alleging large, upfront fees and other questionable practices by Capital Alliance Group. The Better Business Bureau rates the company “C-“, for a list of complaints, including deceptive marketing.

Owners of small businesses are as wary of scams as anybody, but unless they have access to private wealth–their own or some financial angel’s–they face stiff odds against economic survival. Aside from the iffy proposition of online crowd source funding, the way many businesses grow is by borrowing from local banks and the federal Small Business Administration (SBA). So it was heartening to see New York’s junior U.S. senator, Kirsten Gillibrand (D), show up at the Chatham Brewing Company last week accompanied by the head of the SBA, Maria Contreras-Sweet.

Their visit included a discussion among local entrepreneurs and bank officers about the credit needs of small businesses. Both the senator and Ms. Contreras-Sweet said the SBA is trying to enhance the assistance it provides businesses. That’s welcome news. Also welcome is the way the SBA lends money to small businesses: It doesn’t.

Not directly. There are three major types of government backed small business loans, two of which go through private banks. The other type, MicroLoans, are handled by a local funding agency. In Columbia County, that would be the Columbia Economic Development Corporation (CEDC).
MicroLoans are capped at $50,000, though the average amount of MicroLoans in the county is $15,000. The national MicroLoan average is $11,000. In the most recent reporting period available the CEDC approved eight MicroLoans for $125,000. Much of that money flows directly into this community.

A disclosure is called for here. A few years ago the CEDC informed The Columbia Paper that the local MicroLoan committee would not consider a loan application from us. We got a loan from First Niagara instead. That’s business. It’s also proof that not every crazy idea gets a Microloan, even from the CEDC, which was named the region’s MicroLender of the Year in 2013.

The SBA has its roots in the Depression, when President Herbert Hoover, a Republican, set up a government lending agency at the beginning of the economic crisis. The modern SBA was created in 1953 by President Dwight D. Eisenhower, also a Republican. Makes you wonder why the recent budget proposed by another Republican, Wisconsin Congressman and former vice presidential candidate Paul Ryan, cuts $1.2 billion from SBA funding over the next decade.

Do Mr. Ryan and his supporters think small businesses will be less important to our economy in the near future? These are loans we’re talking about, not grants or emergency aid. They currently carry interest rates of up to 9% and the term is six years. Taxpayers get their money back with interest while building a stronger, more diverse economy in the bargain. All of this should make the country more resilient in the face of future downturns. What’s not to like?

Sen. Gillibrand is doing her part by connecting businesses with SBA programs. Local lenders are making credit available, although experts say it can still be tough to get a business loan. The CEDC is approving MicroLoans for new businesses in the county and helping train entrepreneurs in the basics of starting a business. It’s got a new MicroBusiness seminar starting September 23. Entrepreneurs should call 518 828-4718 before the session fills up.

In the last 7 months we’ve published notices announcing the formation of 29 new limited liability corporations. That’s one sure sign there’s plenty of entrepreneurial spirit around here. And while SBA loans don’t guarantee success, they do help new business owners pursue the American dream. This is no time to cut the SBA budget.

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