RALEIGH – Brian Hamilton, who now runs the Brian Hamilton Foundation and Inmates to Entrepreneurs after founding and later selling software firm Sageworks, says he sees a big “glitch” in the new plan providing $349 billion in loans to help small businesses deal with the economic fallout of the coronavirus.
The glitch is banks.
“There is a glitch in the plan- it delegates authority to make and approve the small business loans to 7(a) lenders, banks like Wells Fargo who make SBA loans,” Hamilton wrote in a post published at The Hill.com.
“It is good that money is being provided for loans, but the vehicle for those loans is poor, as banks are not very agile and are slow to make loans in uncertain times. Anyone who has ever applied for a loan, even in a good economic climate, can attest to this fact. Today, we need a Ferrari, not a horse and buggy.”
Hamilton is concerned that small businesses don’t have financial reserves to survive the crisis.
“My particular worry is that many small businesses have little, if any, cash reserve and do not have time to spare. The government should get money directly to businesses that employ people under a promise not to lay off more than some small percentage of workers for at least the next year,” he wrote.
“Businesses, especially small businesses, need money right now, not three or six months from now as money crawls through the banking system in a traditional Keynesian approach.”