Chuck Blakeman

Author, speaker, and founder of the Crankset Group.



Government Killed Small Biz Jobs on July 15

And the SBA is non-responsive.

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3% of all business owners make 84% of all private biz income. Why? They’re not covering for unknown weaknesseses.

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This article was published on August 16, 2011. So far, 3 people have left their thoughts. Share your own thoughts.

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In April I shared Why Small Business is Fed Up With Government – both sides are addicted to “big”. That addiction continues to escalate and hurt small businesses nationwide. And a Washington Post survey say you’re tired of it.

In early 2009 both sides declared the 19 largest banks “too big to fail”, and vowed at every photo op to change that. It was the political buzz-phrase de jour for a few months designed to make us “small” guys feel like someone was looking out for us while they gave hundreds of billions to their big business friends.

Today, three years later, those same few banks now control an even LARGER percentage of the banking industry. That’s how big government dealt with the issue; with their handouts they made the banks even bigger and an even greater national security risk for us. They assumed we would go back to our pitiful little lives and ignore them.

In 2010, Olympia Snowe, the self-styled Republican Senate advocate for small business, introduced legislation to kill the only small business loan actually designed for very small businesses. She had championed the loan through Congress, but received strong opposition from her big bank friends as well as her big government friends. She showed that her allegiance is to the bigs.

And now, in the midst of the biggest recession in history, government is killing small businesses with new regulations. On July 15, the State Department introduced requirements that forced small businesses to put as much as $500,000 in escrow (a business I know would have had to escrow that amount), and leave it there for 12-24 months without touching it.

This drove thousands of small businesses under in only a few days. The big businesses swooped in behind like vultures on a wire and took over all the customers these small businesses had cultivated for decades. They couldn’t get back in business now if they wanted to. Big government now has fewer, bigger clients to regulate. All the bigs are happy.

How did our government help the little guy with this? The business owner and I approached the SBA Office of Advocacy on July 11 and sent repetitive requests for intervention, the very thing that this bureaucracy was designed to do. For 24 days we received no response to many emails until July 29, which was a very unprofessional reply making the SBA out to be the victim. Since asking us a question on August 4, we have again received no responses to many more emails over the last 15 days. Simply inexcusable for an agency supposedly designed to advocate for small business.

Giant business and giant government got us in this mess, then turned around and looked behind and asked us to get them out of it. But they don’t invite us to the table to help them see how to do it. We couldn’t possibly know – we’re small and they’re big, and big knows better than small. Washington has Jeffrey Immelt, former CEO of GE who paid no taxes last year, in charge of fixing this. He, too, has no clue what a small business looks like.

Talk to any banker who used to give small business loans, and they will tell you very quietly and in complete anonymity that the reason their lending standards are beyond the reach of most healthy small businesses is because the government regulators are putting such pressure on them that they can’t adopt REASONABLE (not loose) lending standards. 73% of small businesses who need capital haven’t even bothered to apply because they know it’s useless. 48% who do get rejected – astonishing statistics. The 25 biggest banks control 32 percent more deposits than they did in 2006, but made 30 percent fewer small business loans.

This is your small business advocacy in Washington. In case you wondered if anyone is looking out for you, the small business owner, on either side of the aisle or in any of the halls of the giant bureaucracies there, you might think again.

I’ve said this in dozens of places on the internet for three years – access to capital is the #1 issue for small business and has been since October 2008. #2 is predictability from our govt., and #3 is regulations that hurt small business and help the big ones. The SBA says the #1 job growth sector is businesses with 1-9 employees and the #2 job growth sector is 10-19 employees. Then they, the rest of the government, and the giant corporations who all got us into this mess, continue to use this crisis to help each other just get bigger. Expect large donations from giant corporations to both sides next year.

Small business doesn’t want a bailout. And I personally don’t have time for recessions – I have somewhere I need to be with my business. None of the above make it impossible to succeed, but it does make it harder. And when government proactively kills jobs and small businesses like the State Dept. did on July 15, that is interventionism in commerce that is unacceptable and needs to be addressed, even if the SBA doesn’t have the spine to do it (in case you wondered, the SBA isn’t focused on small businesses under 19 employees).

Caveat emptor – for too long we have bought that someone in Washington is looking out for us. Think again. You won’t get help and you don’t need it. You can succeed without their help; just know that they are not in Washington to make it easier for you, but to make it easier for themselves and their giant corporation donors. It’s time to expose the game for what it is, one “big” scratching the back of another “big”, all at the expense of 28 million small businesses and the American economy.

This isn’t a lack of courage to act. This is simple self-preservation at work – both bigs (giant government and giant business) will protect their “bigness” at any cost, even the worst recession in history. And certainly without blinking an eye at the demise of small businesses.



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Lillly

08/17/11

In my attempts to grow and expand my business over two years ago I sought out a relatively small loan from my bank, Chase. The banker there was great to work with and assured me the SBA would no doubt have our back.

The rejection letter I received from the SBA included the fact that I was not in business long enough- um… 5 years wasn’t long enough? I thought most small businesses fail in the first year, picking up more over the following 5 years. I thought I was doing pretty well to still be in business, albeit scraping by in 2009.

The next reason for rejection was my supposed low-credit score. I have always had and continue to have an impressively high credit score considering I have not always had enough money to comfortably get by. Even the banker who gave me the letter said he thought that was confusing.

Overall, I found the letter insulting and embarrassing for the SBA to even have sent. Honestly, I believe they sent me a form letter, because if any person had processed the information I had provided they should have sent me a very different response.

It would be nice if the government would just own up to the fact that they do not support the little guy and corporate welfare is their economic strategy.

Fortunately, money comes in different ways and I was able to scrap in enough to go after my dreams of expanding.

Thank you Chuck for being an advocate. Maybe all of us small guys will join together and eventually be heard.


Chuck

08/17/11

Lilly,

Yours is a profound statement and a great objective for us:

“It would be nice if the government would just own up to the fact that they do not support the little guy and corporate welfare is their economic strategy.”

When we do finally fully expose this reality, and we will, the rest of the fix will be easy. The rest of the fix:

1) to stop the corporate welfare dependency between giant corporations and giant government

2) to get them responding and advocating for the 27 million businesses under 19 employees that actually drive the economy

3) failing #2, dismantle the SBA and other advocates of corporate welfare who daily masquerade as advocates of small business, but aren’t.

Great stuff!!


08/23/11

I have spent most of my professional career as a owner and supporter of small businesses. In 1988 I had the great fortune of beginning a career in the student exchange industry. I have worked with various programs within the J1 visa category seeing first hand the benefits these programs offer to both Americans and foreign participants. The US Department of State has recently taken the stand that a designated sponsor may not pass program functions to a third party organization (a non-designated organization). A designated sponsor is an organization who has been approved by the Department of State because they have submitted an application and met all criteria as required by the DOS. A third party organization ( in their view) is any organization operating in the exchange industry that has not submitted an application for designation and been approved by the DOS. They are therefore considered a “non-designated organization”. In order for a third party organization to operate in the industry (which many have for years) they need to have a partnership agreement with a designated sponsor. The designated sponsor is required to “supervise” and ensure the third party organization is adhering to all program regulations. What the DOS is failing to see here is any third party organization trying to operate in this industry is going to make every effort to adhere to the regulations in order to keep the existing agreement they have with their designated sponsor – otherwise without an agreement, they are out of business. But with this new regulation, the DOS has given notice that agreements between a designated sponsor and a third party organization are no longer viewed as acceptable. Additonally the DOS now requires (only verbally, they have yet to put it in writing as I suspect they realize how unreasonable it is) that any third party organization (or non-designated organization) who wishes to submit an application for designation now put into an escrow account (and not use it as operating capital for up to 24 months) the amount of $1000.00 for every DS 2019 form they require. A DS 2019 form is the form a student must have in order to apply for a J1 visa. If an organization is placing 500 students on a J1 visa program, they would be required to have $500K in an escrow account. The DOS claims this amount of $1000.00 per form is to ensure the organization can financially operate the program, but what small business has that kind of money to put in an account and not use it for 12 to 24 months? While I support and respect the need for regulations to ensure the original spirit and intent of these programs is kept in tact, instead of putting many small busineses like mine out of business, why not create a probationary period for these non-designated organizations and allow them to prove they can operate within the guidelines of the regulations. Additionally review the amount of money a non-designated organization is paying a designated sponsor for these forms and understand the amount of operating capital spent on purchasing these forms! It seems to me the DOS and specifically Bureau of Exchange Visitor Programs has elected to take the easy way out and not do what it is charged with doing – promote cultural exchange and support organizations who work hard to thrive in an environment that by their very existence promote acceptance of others and foster good will among people of the world. I am extremely disappointed that our government is actively taking measures to put small businesses out of business at a time when so many people are already unemployed. And have they also forgotten it is the small businesess that built this country? Thank you Chuck for caring about us little people out here who are trying to make a living and improve the world – apparently no one in Washington does!


Chuck

08/23/11

As of today, August 23, we have received no response from the SBA Office of Advocacy or the State Dept. One sentence from the SBA two weeks ago was simply that the State Dept. was looking into it.

If I had a customer or a whole range of customers in this case, who were affected negatively by a non-written whimsical decision, the first thing I would do is connect with a few of them to get their stories first hand.

True to form, the government doesn’t see themselves as having customers, or in this case being “of the people, by the people, or for the people”. There has been no contact from the State Dept. with anyone affected by this decision.

Is it any wonder that people find government to be more of an impediment than a help?


Chuck

08/29/11

Day 50 – still no response from the SBA, and not so much as an initial contact from the State Dept.


Chuck

08/31/11

Day 53 – the following email was sent today to Major Clark III, the person in charge:

Major,

We are now going into September with this request which was first sent on July 11, 53 days ago. To date we have only this response from August 16, 37 days after the initial request:

Department of state is reviewing our concern

- which was only sent in response to a blog post exposing the lack of communication or advocacy on this issue – http://chuckb.me/x4Z

It is simply unconscionable. There is no room for less strong language. You are the servants of the public who were given jobs by us (we, the people), to perform these specific advocacy duties, yet we are clearly nothing but an annoyance to you.

We will continue to push this issue forward aggressively on Facebook, LinkedIn, Twitter, my blog, and with news outlets until we have an extensive two-way conversation with the State Department on why they killed businesses on July 15 with an new, unwritten regulation, and what they plan to do to correct it.

Thomas Jefferson – “When the people fear their government, there is tyranny; when the government fears the people, there is liberty.” You sirs, have lost your healthy fear of the people, and while you see us as an annoying mosquito in the room, I see that nothing short of democracy is at stake here. You dismiss us at your own peril.

Gandhi – “Anyone who thinks that they are too small to make a difference has never been to bed with a mosquito”.

Chuck Blakeman


Chuck

08/31/11

Day 53 – the following email was sent today to Major Clark III, the person in charge:

Major,

We are now going into September with this request which was first sent on July 11, 53 days ago. To date we have only this response from August 16, 37 days after the initial request:

Department of state is reviewing our concern

- which was only sent in response to a blog post exposing the lack of communication or advocacy on this issue – http://chuckb.me/x4Z

It is simply unconscionable. There is no room for less strong language. You are the servants of the public who were given jobs by us (we, the people), to perform these specific advocacy duties, yet we are clearly nothing but an annoyance to you.

We will continue to push this issue forward aggressively on Facebook, LinkedIn, Twitter, my blog, and with news outlets until we have an extensive two-way conversation with the State Department on why they killed businesses on July 15 with an new, unwritten regulation, and what they plan to do to correct it.

Thomas Jefferson – “When the people fear their government, there is tyranny; when the government fears the people, there is liberty.” You sirs, have lost your healthy fear of the people, and while you see us as an annoying mosquito in the room, I see that nothing short of democracy is at stake here. You dismiss us at your own peril.

Gandhi – “Anyone who thinks that they are too small to make a difference has never been to bed with a mosquito”.

Chuck Blakeman


Chuck

09/04/11

Day 55 – I got this email from someone who’s business was destroyed by the Sate Dept. move and the lack of urgency by the SBA:

Chuck, Thank you. I can’t think of any other words. Yesterday I received an email from my long time partner for our DS forms. They simply said they cannot find a way around the new regulation… This regulation is costing companies like mine the partnerships we need to continue to operate. The DOS has really just cost hundreds of small business owners their livelihood. I am not able to generate revenue now needed to continue to operate and see no other option other than to close my company.

Thank you for being the voice for small businesses. I have no doubt your voice will be heard – in my case, we have just run out of time.


Chuck

09/08/11

Day 60 – no response from the seven SBA people I’ve been emailing approximately once a week. Today the SBA blocked me from emailing any of them, which creates the appearance of a cover up, not a resolution.

Would you email these seven people and ask them why they and the State Department have not responded in any way to the plight of these thousands of business owners whose businesses have been destroyed by this new regulation?

Khem.Sharma@sba.gov
greg.lopez@sba.gov
Major.Clark@sba.gov
john.hart@sba.gov
carl.jordan@sba.gov
nancy.ing@sba.gov
Daniel.Hannaher@sba.gov

We will continue to pursue them through other mediums, as well as pursuing inquiries as to the legality of blocking someone from communicating with a public servant employed by the people.




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