Beyond Small Business Loans: Fraud in the SBA
The Small Business Administration is the governmental agency responsible for backing small business loans and ensuring that small businesses get their fare share of government contracts. Legally, the SBA is responsible for ensuring that 23 percent of Federal contracts got to small businesses. Last year, the SBA claimed to have awarded 22.25% of contracting dollars to small businesses, falling just shy of their goal. However, The American Small Business League has forced the SBA to reveal information proving that they diverted contracts to 235 Fortune 500 companies. Originally, the SBA had attempted to deny the ASBL request, which they appealed under the freedom of information act. What was revealed was that the SBA intentionally fabricated statistics around the number and volume of contracts awarded to small businesses by including contracts awarded to major corporations in a breach of Federal law. The SBA has also come under fire for a lack of oversight for their pilot programs, including the Patriot express loan program for veterans that has cost taxpayers $31 million and may not even have been sufficiently monitored, meaning some of the loans may not have been give to actual veterans.
Mismanagement in the SBA has many predicting that, like Reagan before him, Obama will attempt to merge the SBA with the Department of Commerce, which represents the interests of the Fortune 500 companies in question. Small business owners in the financial climate of post recession America need all the allies they can get. While the mismanagement of funds at the SBA is regrettable, the closure of the agency could represent a much more grave blow to the interests of America’s primary job creators. Business funding, bad credit business loans and other funding sources are necessary for the continued growth of these economic producers. The continued growth of alternative funding sources, such as Horizon, attests to the need of reliable funding sources for business owners. With the SBA in disarray and possibly under the threat of dissolution, these sources are poised to become more important than ever.
Photo Credit to Shashibellamkonda on Flickr