For the Good of Illinois

Watchdog: Small Business Administration pitting taxpayers against one another

March 31, 2015 04:40 AM
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Original Article, click here.
Watchdog
 
By Chris Butler | Tennessee Watchdog
 
NASHVILLE — Federal officials, through the Small Business Administration, are doling out billions of dollars in loans to wealthy business owners, some in Tennessee, who supposedly can’t start a business through traditional private lenders.
 
DOUBLE THEIR MONEY: Andrzejewski says public employees in Illinois double their pension contributions in four years.
 
BIG MONEY: Adam Andrzejewski says millions of dollars in loans are being guaranteed by taxpayers through the Small Business Administration.
 
SBA officials, according to Adam Andrzejewski, founder of OpenTheBooks.com, have somehow lost sight of their original mission and are loaning money to people who could easily get it elsewhere.
 
Openthebooks.com has records from all 50 states detailing which business owners took SBA loans.
 
In a recent Forbes article, Andrzejewski wrote that the feds aren’t good at picking and winners and losers and, through these loans, are pitting "one taxpaying business against another." 
 
But Dave Berggren, who owns three Furniture Connection stores in Clarksville, and took a $1.7 million SBA loan to open a fourth store in the city last year, said he disagrees with Andrzejewski’s interpretation.
 
Berggren opened his first store 15 years ago with a loan of only $40,000 and now has 95 "well-paid employees," he said.
 
Berggren also disagrees with Andrzejewski’s interpretation that the SBA exists to help small-time business owners who can’t get loans elsewhere.
 
"I think that’s bullshit," Berggren said of Andrzejewski ‘s Forbes piece.
 
Berggren said bypassing traditional lenders in favor of the SBA makes for smart business.
 
"I can get a loan anytime I want from a local bank. I don’t have any problem getting the loan. With an SBA, you typically have to put up 10 percent of a down payment whereas with most traditional institutions it’s 20 percent," Berggren said.
 
He said going the traditional lending route would not have stopped him from opening a fourth store, but it would have taken longer.
 
"When you start a new location you need money for other things, too. In our case you need money to buy furniture, display racks and accessories. In some cases I had the money. I just decided not to use the money for the down payment."
 
The $1.7 million Berggren took out as a loan is but a dribble compared to the $40 million loan the SBA gave the Chattanooga-based Tenth Street Capital last year, according to Open The Books.
 
According to its website and LinkedIn page, Tenth Street provides capital to companies in the lower-middle market and has formed six funds with more than $350 million of committed capital.
 
Tennessee Watchdog left several messages with company executives Monday, but a receptionist said they were unavailable for an interview.
 
According to the company’s official Twitter page, Tenth Street officials were in North Carolina and Colorado Monday scouting for new business Monday.
 
Photo courtesy Twitter
 
David Tiller, spokesman for the SBA’s Tennessee District office, did not immediately answer Tennessee Watchdog’s detailed questions submitted Monday in an email.
 
But Tiller did respond with an email saying businesses cannot qualify for an SBA loan unless they have a tangible net worth that exceeds $15 million. Tiller also said such businesses cannot have an average net income more than $5 million during the past two years.
 
The Nashville Neurosurgery Group, according to Open The Books, last year accepted a $2.5 million SBA loan.
 
Nashville Neurosurgery administrator Teresa Conquest said Monday the facility has four surgeons instead of one thanks to that loan.
 
"When we went to SunTrust Banking to apply for a loan, they said we fell within SBA guidelines for receiving an SBA loan," Conquest said.  Photo courtesy of the U.S. Small Business Administration.
 
"If we had not gotten the loan then we would have done it through other ways, but this was definitely a property that needed renovation and refurbishment."
 
Conquest said the facility has always met its loan payments on time.
 
"People get the idea because you’re a doctor that you’re wealthy. I would not consider them wealthy," Conquest said, adding she believes government officials are monitoring the SBA program more closely than they have in the past.
 
Andrzejewski, however, writes that is possibly not the case.
 
"Since 2007, there have been nearly 35,000 ‘small business’ loans between $1 million and $5 million, many to companies who may have been able to obtain credit elsewhere," Andrzejewski wrote, adding even country clubs are accepting SBA money.
 
"SBA loans and guarantees in excess of $1 million are common across America. In fact, there’s a loan of this amount or greater for every three communities across America."
 
President Barack Obama increased the SBA’s funding by $730 million as part of the 2009 stimulus bill, according to the Washington Times,
 
"As a result, the number of million-dollar loans the SBA backed spiked 37 percent from 2007 to 2013, according to Open the Books."
 
"Last year, the SBA dispensed $14.8 billion in seven-figure loans guaranteed by the administration, whereas in 2007 the amount was $9.3 billion," the Times reported.
 
Original Article, click here.
 

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