Why doesn't Congress come up with a Small Business Creation

[EC]

program, by making grants or loans for people with ideas to start a new small business? They could offer the grants of $10,000. or so as start-up for people to employ at least 5 people in a new small business. I'm sure there are many unemployed out there with ideas - but no cash to start up or buy into a franchise...

[Indydem]

1. 10K?

What kind of business are you planning on starting for 10k that can employ 5 people? I've been trying to get a business off the ground for several years, and all I can support is ONE employee and I don't always get a paycheck.

No, $10k will get you a good computer, some software, first month last month on a cheap building and some office supplies.

You want to talk about 100k or 250k, now you can do some major economic growth.

[rucky]

4. A combination of loans and grants should do the trick.

But even with SBA underwriting, banks won't lend.

[EC]

7. Whatever, the cost is irrelevant

it's the idea of creating jobs...

I have to confess I was thinking more the business card and a few tools type of thing. Or buying into a franchise...

[sandnsea]

12. The $10,000 is for an in-home business

When you get to the point you're at, with several years of income and credit established, you should be ready for a line of credit or larger SBA loan.

[leveymg]

2. That microfinance approach has worked well in Int'l development

There are some programs at the state and local level that do that, but no general program. I agree, it would be a great complement to the SBA.

One point - unfortunately, you can't employ one person with $10K in capital, much less 5. You would need about $500K invested to keep such a business running.

[county worker]

3. 9 out of 10 small businesses fail in the first year.

You need at least the cost of 1 to 2 years expenses in savings to open a small business. The reason is that you rarely generate any profit in the first two years. And that does not cover the cost of inventory. A small retail business needs about $1 million in inventory just to get people to come in and look around.
If we loaned money and the business failed we would get stuck with the cost.
I bet that less than 1% of DUers could write a business plan to apply for a loan or even know what a business plan is.

[WillyT]

6. So... What Happens When These 9 Out Of 10 Fail With Private Loans ???

Is it something different?

:shrug:

[Bonhomme Richard]

14. You don't get private loans without collateral.

Unless you are tapping family or friends. Nobody, and I mean nobody in the banking industry will give anyone starting a business a loan without the collateral to back it up. I started my business 10 years ago and it cracked me up when they would speak about loans for small businesses. Just to get a 10K line of credit when I started I had to jump through hoops, sit down with the local SBA S.C.O.R.E. representative with my business plan and still put my house up as collateral.

[WillyT]

16. Well... Being The Federal Government, Couldn't They...

using the IRS, make payments on the loan a required monthly deduction?

And all assets bought, part of the collateral?

I'm just guessin here...

:shrug:

[Bonhomme Richard]

17. If you don't make any money there is nothing to deduct.

Then to take what few assets you have, inventory, candy, whatever has to be sold. Chances are if you don't make any money you still owe on the inventory you bought. I don't think I want the IRTS in that business any more than they are now.

[WillyT]

18. So You Are Telling Me...

that there is NO INCOME until they turn a profit?

They don't take any monies in, pay themselves NO SALARY, make NO PAYMENTS TO SERVICE THEIR DEBTS...

Until they are successful???

Wow... no wonder most businesses take a dump early on.

:shrug:

[Bonhomme Richard]

21. That's right. There is no income until you turn a profit. What there is,...

if planned properly, funds to draw a salary from until you make a profit. In my case I took 80K (all I had from a profit sharing plan with my previous job) and used that to pay myself a modest salary and pay for inventory. I was lucky because my suppliers knew me from my previous job and they extended me 30 days credit. That is not usually the case. Typically you get zero credit initially. Also lucky for me I didn't have to keep much on the shelf because I was in Industrial supplies. It went like this...Customer orders a product, I order the product, product comes in with bill and 30 day credit, and I deliver it and present an invoice to customer which is always a few days behind the bill I have to pay. Hopefully I get paid in 30 days, pay my supplier and make a profit. My point is that it's a dicey thing at first. Some months are OK and some months suck but you weather it and, if lucky survive as you build the business.
Yes, the government could come in as your investor but at the end of the day they would be acting no differently than a bank that would lend you money. The difference is that if you fail, and the odds lay in that direction, the taxpayer is on the hook.
By the way, that 80K I invested? I blew through that the first year but built the business enough that I was able to hang on by my fingernails until I was able to start making money. At the end of the day I made a modest living and had some very good years. Currently I am back to hanging by my fingernails but I was smart enough to keep the good years money in the company rather than spend it.

[Bonhomme Richard]

23. On another note. One way to really help start new businesses

would be to really fix health care. I'm talking about universal coverage. The only reason I could even attempt to work for myself was that my wife's employer put us on his plan. Up until that point I have always provided the coverage through my employers and I would not have risked my kids health to start a business.
I truly believe that health care is one off, if not the biggest after capitol funding, reasons that a lot of people do not just go work for themselves. In our current system the risk is too great.

[county worker]

25. Reading the posts here it seems to me that you are the only one with understanding about

real life business people.

I think that it is a problem that most of us never really understand our own capitalist system. The thing that the OP is asking here is why doesn't the government act like an investment capitalist and invest in who ever wants to try being a business man. What no one wants to do is have to take the risk of failure.

If you talk about risk and reward or success and taking responsibility on this board you get kicked in the ass. A lot of people on the right understand this but a lot of people on the left don't. It's a shame.

[Bonhomme Richard]

26. LOL, there were two things that helped me personally decide...

to take the gamble. One was that I thought that no one that I had worked for was any smarter than me. They just had bigger balls. And two, If I fail then I just have to get a job like everyone else.
Having said that, it was critical that I had a wife that supported my decision and both of us are very low maintenance people as far as needs are concerned.
Also, I am crazy enough to commit to doing something that I had really no clue how to do and then sticking with it until it was finished. I used to say that I was too stupid to know that I couldn't possibly succeed.

[WillyT]

5. Ah Ha... Found You !!! - Huge K & R !!!

GMTA!

:shrug:

:hi:

[EC]

8. Hey!!!

:hi:

[Odin2005]

9. Because the elites don't like REAL compitition.

[Arctic Dave]

10. 10,000? I would say loans up to 1,000,000 do would the trick

[sandnsea]

11. They did. In the 90s n/t

[Johonny]

13. why don't they create small businesses themselves

non-profit American companies in areas America is currently lagging in. Just have communities apply for the loans to re-equip old businesses that have been outsourced. If the company is successful they can always be sold off by the community or remain no-profit with the company paying into the tax base of the community. If the private sector won't produce jobs or feels the need to move jobs overseas why shouldn't local communities create there own jobs. Seriously why isn't this done more? Communities go out of their way to bribe with low taxes and kick backs to private companies to remain in their community or move to their community, but very rarely do they use community funds to keep often perfectly good running companies working here in the US.

[EC]

15. I thought of that. We have an empty car plant here

that I thought the State should buy and come up with "The Wisconsin Auto" or some such thing to sell to help offset State finances...but of course that would be "socialism" to the idiot crowd...

[pitohui]

19. why should they just hand $ over to the GOP? most mom and pops are GOP

i would like this for myself but in the reality based universe almost every person i have to deal w. by a large majority as a self-employed/small business is fucking republican/semi-nazi

if i was a democratic leader i wouldn't give us money either, most of these fuckwits turn around and give it to david duke or whoever the fascist of the day is

small business DOESN'T support democrats, small business is usu. abt fucking the little guy out of fair pay/fair benefits...sorry to say it but down here on the ground it's true

$10K is nothing to start a business if you've never had one, it won't help you anyway, and for the long time mom & pop they've donated more than that over the years to david duke, david vitter, and the rest of the fuckwits...

i can't get behind this proposal even tho it would benefit me because it would benefit WAY more bad guys
than good guys

if you think $10K would help you start a business, i'm going to say very respectfully that you must have never had a business, $10K is a joke -- if all you needed was $10K we'd just do it on credit cards and nobody would hold a j-o-b job

[EC]

20. We have a lot of small businesses here that are liberal

granted they are health food stores, art galleries/studios, import gift shops, organic food restaurants, Montessori schools, dress shops, etc. but liberal

[whistler162]

22. Stalled by Republicans

http://personalmoneystore.com/moneyblog/2010/08/09/small-business-lending-bill/

[piratefish08]

24. ask yourself "how would this program aid corporations and/or banks?"

and you will find your answer.

[EC]

27. Well, I guess as usual they would consider it

competition they'd have to buy out and gut - therefore using it as an asset to increase their bottom line while also writing it off as a loss on their taxes.