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The SBA Should NOT Be Abolished…
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The SBA should not be abolishedThe Wall Street Journal announced last week that an upcoming special report will explore the pros and cons of abolishing the U.S. Small Business Administration. This comes in response to President Obama wanting to consolidate a handful of government agencies, and while I’m generally all for streamlining and simplifying government, I’m against what’s being proposed in this case.

My primary reason for opposing the abolition of the SBA is that America’s small business owners need (and deserve) the support of a government agency like the SBA. Small businesses have been responsible for about 70% of all net new job creation in the past 15 years. This fact alone (though there are many others) should be enough to convince anyone with half a brain that downgrading this fragmented sector’s representation in Washington would be a mistake.

Now, the SBA is far from perfect — I know it and you know it. I can think of more than a few ways to improve it, but the SBA has done more with less than just about any other government agency. Take the 504 loan program, for instance. It’s considered “zero-subsidy,” meaning it doesn’t cost taxpayers a dime despite having provided over $30 billion in loans in the last fiscal year alone. On top of that, a study conducted in 2007-08 found that the 504 program returns about $94 for each $1 of program cost. Pretty decent ROI if you ask me.

I could go on arguing this for days (and I probably will, just not in this particular blog post), but I want you to vote for yourself. Consider the evidence and the arguments, and then go here to vote whether you think the SBA should be abolished. As I write this, more than 3,000 people have voted (you’ll have to go see for yourself which side is “winning”).

After you vote (or before, for that matter), leave me a comment below to let me know what you think. Whether you agree with my views or you want to tear my arguments to pieces, I want to hear your two cents. I enjoy all the input we get from folks like you, so share what’s on your mind…but keep it civil.

Thanks for reading and keep an eye peeled for more from me on all this soon.

Dedicated to Your Continued Success,


P.S. If you or someone you know is looking to purchase commercial property, we’re here and ready to help. January and February were two of our most productive months in company history, so we know more and more business owners are beginning to step out and act on their desire to own commercial property. Call me any time at 1-866-622-4504 or email me at if you have questions or want to introduce us to someone. We look forward to working with you and/or anyone you refer to us. Thanks in advance!

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  1. NorWest Business Sales., Inc. says:

    With the SBA gone, who will support and guarantee small business loans…504 and 7A’s…who does Obama think employees the most people in this nation anyway?

    • Steve J says:

      A Long, Long, Long time ago in a place far away, the private sector did a much better job. Go figure. And anyway, it is still happening today, but much more limited, because the Government wishes to eliminate all it’s competitors.

      • Chris Hurn says:

        Perhaps, Steve, but the SBA has been around for over 50 years and the parts that I like the most (and support keeping) are the public-private partnership aspects — the loan programs that HAVE to work with private sector lenders in order to be delivered.

        • Steve J says:

          There is no doubt that there is some advantage to the SBA. The fact that the fees paid by the borrower allows them to make more risk, which still could be done as a Private entity. During the RTC crisis, I ran an equipment finance company, that specialized in start-ups. I did many loans and leases turned down by the SBA successfully.

          How does something like that happen? Because, of knowledge of specific regions and businesses, allows a more nimble private lender to understand the credit risks, rather that a “one size fits all” mentality of the Government.

  2. Mike Bauer says:

    Who cares? His performance with the DEPT. OF Energy loans and his impeachable performance with giving guns to Cartels in Mexico should make anything he recommends moot.

  3. shebert says:

    On the issue of the abolishment of the SBA, as a small business I am all for it! In the last 10 years of business my SBA representatives have told me to get out of our line of work, as it’s too corrupt. We have been refused opportuntiies by our local SBA representative, refused to be visited or supported by them, and even advised it’s there intent to ensure the failure of women in business. When reported the district office refused to investigate and to this date no support has been provided. When reporting corruption and fraud to the ombudsmen office in Washington they do nothing but pass along the comments, even if lies (and they agree) and then say they have no power and cannot do anything, so why even do this? It makes so sense. It does not seem to matter what level on the pole from Karen Mills who refuses to answer emails to the local representative to delibertly blocks opportunties. It’s a huge tax burden to the American people and something has to change.

    • Chris Hurn says:

      It sounds like you’ve had a terrible experience, one that is completely unjustified. It appears that the one thing you may not have done is go to the press. Perhaps you should do that next — corruption and fraud should ALWAYS be exposed.

      As for your statement that the SBA is a “tax burden,” that simply isn’t true. As you can read in my many other posts here and in other places, the agency produces a terrific ROI for the American taxpayer, in addition to having its loan programs be “zero-subsidy.” Just because you’ve been wronged by a select few at the agency, doesn’t mean the whole thing should go. That would be rather short-sighted.

      I wish you the best in pursuing the jackasses that have harmed you.

  4. Nelson Bardal says:

    I have to say there is so much bullshit out there I do not believe either side. My take on what your saying is that your making something sound worse that it is. Both side stretch the truth so much and do not give the full story that your totally unbelievable.
    Now quit wasting my time with your B.S. I could care less what either side does.
    Nelson Bardal

    • Chris Hurn says:

      I didn’t waste your time with this, Nelson — you somehow got on my list. The Wall Street Journal simply conducted the poll — I brought it to my readers attention. I don’t think I made it “sound worse than it is” — I simply pointed out facts, as I have for nearly six years on my blog. I also asked that comments be made civilly, so since you didn’t really do that, we’ll just remove you from any future communication from us. Sorry to have troubled you so.

  5. Steve J says:

    Yes. I personally think that the SBA should NOT be a Government Agency. It should be privatized. Nothing done by the Government has ever not been better done than the private sector.

    That goes for Freddy, Fannie, FHA, VA home loans and the USDA home loans.

    • Chris Hurn says:

      I’m not sure about those other agencies you cite (since I don’t make those types of loans), but with SBA loans, you may not realize that projected losses are PAID FOR with lender and borrower fees. In fact, until very recently, the agency produced a budgetary surplus of fees to offset future losses. I’d say that’s a pretty decent agency, and frankly, one that’s outside the norm… probably worth modeling rather than abolishing.

      As for your assertion that “nothing done by the government has ever not been better done than the private sector”… I don’t know, Steve… roads maybe? wars? various high-end research perhaps (like the one that enables us to communicate over the Arpanet, err, I mean internet).

      I just don’t agree that we should throw the baby out with the bathwater, as they say. Government HAS a place, Steve, albeit a limited place and selective and certainly in need of more accountability, but a place nonetheless.

      • Steve J says:

        Roads? In most rural areas the roads are created and maintained by the residences. There are a few county maintained roads and in many Urban settings, many toll roads are owned privately. Somehow the seem to function and get built for less.

        As to wars, yes that is a function of the Government. Government intervention in the housing industry, is precisely how we ended up where we are. Now 95.7% of all home loans are done by the Government. Is that market prospering?

        Because of regulatory compliance issues, the secondary market for business loans has been severely compromised, so that most loans if they can’t get SBA approval, now meet rates in excess of 18%.

        All this, brought to you by the Governments, need to command and control the financial industry.

        When the need for loans cannot be filled, unemployment persists for much longer periods.

        In 35 years, I have seen bankers, pull in the horns, after long periods of growth and take much more risk in times like this.

        The Government regulators have always been wrong by doing the opposite.

  6. sharon stewart says:

    I was just approved for an SBA loan and I’m in the RESTAURANT industry!! Self employed!! I am an absolute believer…and will create at least 6-10 jobs in the next 12 months! I am very grateful for this program, or else I would be out of work indefintiely!

  7. Tee Rowe says:

    Chris – Never anything but interesting around here, isn’t it.

  8. Nataraj Kote says:

    Thanks for the message.

  9. Arlis says:

    I think Obama and his people are the problem not the SBA.

  10. Markj says:

    There should be a major changes to the 7a program. My guess is if you look at all the losses with the 7a particularly with all the business ac loans that is what needs to change or go away. I would bet the 504 program because of hard assets likely performs reasonably well.

  11. Haskell Boring says:

    On 12 March 2012 Mr. Böring wrote:

    Everybody is for reducing government, and for consolidating all agencies except that they use. If you are a real conservative then the SBA and all the others must be abolished or their budget cut, including the one you like.

    • Chris Hurn says:

      Well, believe it or not, NOT everybody is, Haskell. Many want to see government grow even larger. Obviously, that doesn’t count you or I. You apparently didn’t click some of the other links in the email (where we linked to past blogs where I have spoken repeatedly about ways to cut government, consolidate functions, improve the SBA, and so forth. “If you are a real conservative”… give me a break, Haskell! Does that mean you are going to stop driving on federal highways next, because that shows your conservative “purity?” The SBA clearly needs improvements – I’ve pointed them out time and again (more so than most) – but what you fail to understand is that certain aspect of the agency are worth keeping… primarily because they’re paid for (with lender and borrower fees) and because their documented ROI is so significant. We should really WISH other areas of government did as much with so little as the SBA. I’m all for various cuts, but with a scalpel, not a chainsaw. And besides, the SBA’s budget is smaller than a mole on the back of a flea in Washington… perhaps you and others should aim their sights on programs that would have a more meaningful impact. Can anyone say “entitlements?” Oh yeah, both parties (liberals AND conservatives) lack the courage to touch those.

      • Steve J says:

        How about, DoEd, EPA, DOE, HSA to start with. Privatizing SSI and floating a bond to pay for the sever underfunding of the existing individuals with a means testing base.

        Compensation bonuses for Department heads, not based on how much they spend but how much they save.

        That will be my first 2 months work.

  12. John says:

    I have been working with the SBA for over a year and they have not helped me one bit to open my business. I am trying to open a florist and gift shop and have been in contact with the SBA on many occasions and they cannot help. As far as I can see, I don’t feel that they serve a purpose. You can imagine how you would feel after working with a government organization that is supposed to help Americana’s in obtaining the funding they need to open businesses and you don’t get anything. I am disabled from a drunk driver and have been on disability for over 12 years. I have been in the floral industry for over 30 years. I grew up in a flower shop. I have contacted my Senators and Congressmen over this and still no help. I do however find it strange that there was a large amount of money donated to Texas for the Jobs for Texas program and I have waited until they had the program up and running to get my funding. I was told to call these to companies that would get me the funding that I need to open. When I called them I was told that they could not help me because I did not need a million dollars to open. What has happened to the small business??? I don’t understand. I can’t believe that the ones that want to open a business have to open a business they size of Walmart to borrows money. With me being disabled, you would think that they would want me to open a business and come off of Social Security. Having a business I could afford my own insurance and afford to take care of myself. I bring $999.00 a month in Social Security and I get $200.00 a month in food stamps. I doubt anyone you know lives off of that kind of income. I have always thought very high of our government and have thought that being in America and being an American would benefit me. I guess I was wrong. I do not have my store open yet and I am not taking credit cards so I can;t get that kind of loan either. Why don’t you tell me what kind of financing you do and the programs that you are involved in and lets see if there is something we can come up with. I would sure love to open. I have already have customer accounts set up and waiting. I have standing orders ready to go as soon as I open. I just can’t find the help I need. Thanking you for your time…

    • Chris Hurn says:

      I’m sorry you’ve had so much trouble with this. I won’t say I feel sorry FOR you, because I suspect everyone else already does that and it does you little good. While we cannot help you DIRECTLY (because of our loan policy of rarely funding startups and not what we consider small loans – those under $250,000), I WILL give you an indirect suggestion. Go to your local SBDC office and draft a very clear business plan (you probably hustled when you wrote your response to me, but things like grammatical mistakes suggest a carelessness that could negatively sway bankers, which you do NOT want). You might also ask to be assisted by the local SCORE chapter. Once that is done, take the thorough plan to several local banks that have a growing SBA department (ask the SBDC or a local CDC for help with this). If you have a good plan, present it well, have good recommendations… you’ll have a much better shot. Nothing is guaranteed, of course, but this will put you in the best possible light. A few years from now, when you’re ready to buy the building your floral shop is in, contact us again and we’ll try to finance your commercial property (that’s the only thing we specialize in). I wish you all the best with this.

  13. Walter says:


    • Chris Hurn says:

      I suppose they are… I’m just not sure what you mean here, Walter. ????

      • Walter says:


  14. Joe says:

    They have never done anything for me! Called you folks about a loan under 250k and got the blow off.

    • Chris Hurn says:

      I sincerely doubt you “got the blow off,” Joe. We cannot make loans below $250,000, because we cannot charge enough to even cover our costs (can’t make a profit on these smaller loans, either) and still be competitive in the marketplace. Other apparently lenders can, but we cannot. I’m sure my staff suggested you try them. Since your comments seem so bitter, we’ll just remove you from future communication. All the best, Joe.

  15. Dan Norwood says:

    I read the article on the WSJ and Obama is just condensing not abolishing. In fact the article pointed out how President Obama plans to elevate the head of the SBA to a cabinet positions so now why in the world would you think this is abolishing the SBA?

    I’m sensing a bit of Politicking here from you and the WSJ. I don’t see an issue here.

    • Chris Hurn says:

      True, in one article it spoke about his plan for consolidating, but my email was about the poll that the Journal was conducting. I wasn’t suggesting that Obama wants to abolish the SBA (though I HAVE previously explained how the SBA will probably become marginalized in this proposed “consolidation”). Alerting my readers to a poll that someone else is conducting is somehow “politicking,” Dan? I don’t get that.

      • Dan Norwood says:

        You know what I like about you? You’re the CEO of a large lending operation yet talk to the people on a one on one basis. I do enjoy your thoughts.

        It seems the WSJ is politicking when they start taking a poll and the “Hook” is to vote on Abolishing the SBA but my comment wasn’t meant as negative so please don’t take it that way.

        I’m working to get SBA loans funded out here on the other side of the continent and am excited about working with your company. 1st I have to get some clients. I’m a Linkaholic – meaning I must have over 5000 websites in my folders. Today I make some calls and am putting together email campaigns for SBA loans.

        Thanks for responding.

        As soon as a 504 comes up that you may like, I’ll give you a shout out.

        • Chris Hurn says:

          Thanks, Dan. I appreciate your comments.

  16. Jack Weaver says:

    Chris – they may as well abolish it. I do not know of any small business in this area of Virginia that has “qualified” for a small business loan. If you recall your office and I have had various emails on trying to establish a winery and facility. We worked on it for two years. Finally I tossed in the towel. We have moved it to Australia and next one directly into China. Think of all of the revenue and jobs that we would have created not including the export as we developed a new type of wine product.

    It is absolutely totally amazing and both Democrats and Republicans talk about the need to establish export, established new industries and new technology. What can I say I am totally overwhelmed with the stupidity of those we elect to public office who in general are habitual liars, I do not know of a nicer way to say it.

    • Chris Hurn says:

      Well, Jack, just because you don’t know them personally, doesn’t necessarily make it so. The SBA helped provide over 60,000 loans in its last fiscal year — I can’t imagine they discriminated against your part of Virginia (wherever that is).

      I AM truly sorry that the credit markets weren’t such that we or others could have helped you, but as you know a startup winery isn’t the easily facility for a lender to finance. Many are done with equity capital instead. It’s certainly not a good thing for America that you moved to Australia to do this, but you have to don what you have to do. As an entrepreneur myself, I certainly understand that.

      I DO completely agree with you that both parties have a tremendous share of stupidity and liars — no argument from me there.

      I wish you all the best — make us proud!

      • Jack Weaver says:

        Thanks, Chris. I majored in finance at the University of Richmond and I understand what you say about start ups. However, in this start up the money was not for any start up capital but instead a building of which we had $650,000 in the land and we wanted to finance the building. We still have the farm and land. The building cost would have been $400,000. In addition our net worth were over $4,000,000. When I was majoring in finance and in a 40 year career in finance that would have financed such.

        Oh, well, we will make much. much more money offshore then in the USA.
        We just wanted to be a part of the “solution”.

        • Chris Hurn says:

          I appreciate that, Jack. It very well could have been the timing — the lending markets are only now starting to thaw. Keep up the good work. Hope to read about an ex-pat kicking butt in the Outback with his award-winning wines.

  17. James Rember says:

    Chris Hurn: I normally dont reply too these questions/but as far I am concerned they can abolish the SBA and thousands of other programs the Govt has developed. They have out lived their usefulness. The food stamp President wants too control an setup super Dept’s to control every aspect of business. They want too dole out money to BIG BANKS an Businesses. You work and he taxes an gives to the ??? too equal out incomes. Were in the Residential Real Estate Business. The govt is paying all those who have not made a mortgage payment in years. The Govt now has programs for Military people who sell their homes to pickup the difference between the owing amount an the sale price. They also have made a deal with a National Realtor to list an sell homes for Military People an not only do the sellers get a cash payment but USSA gets a cash payment from the Real Estate Firm who in turn bills the Govt for any short fall. What is this all about. Get rid of the Food Stamp President an equalization of incomes whether you work or not. File a false injury law suit an don’t work again ever. Get on Workmans Comp an never work again. See a Doctor an claim your mentally unable too work an never work again an collect SS for ever.

    Get Rid of the equal income an food stamp President. He may have gone to far too quickly an we now may have a reduced level of living standard unless one can find a way too supplement ones income by getting on the Govt dole or find a way too cheat the Govt and cash in like the Big Banks/Big Govt/Big Wall St/Big Fannie Mae/Freddie Mac. As far as I am concerned SBA is not their to help me. Its their too provide Funds for Big Cheaters an provide more High Priced Govt Employees. The whole thing is out of wack. I have never seen such cheating and govt handouts in my over 60 yrs in Business.

    • Chris Hurn says:

      James, the best I can understand your comments, I don’t think we disagree on much here, BUT the SBA isn’t like the rest of them that you don’t like. It ONLY helps small businesses. It’s a VERY small budget item. It’s main function is to provide better-term loans to entrepreneurs and does so by charging lender and borrowers fees that make these programs “zero-subsidy” (meaning projected losses are covered by these fees). I think THIS is a program you could get behind as it doesn’t involved the cheating, lying, and dependency that you otherwise have alluded to.

  18. Harriet Boghosian says:

    I would not like to see the SBA done away with. There are many other depts ,etc that should be done away with. I had worked with SCORE as a volunteer, that was part of the SBA. I am having computer problems or I would tell you more. I am in Ca. the worst.

  19. Gary DeTrano says:

    Probably the stupidest idea to come out of Washington. It just shows they don’t understand the job does for the small business and American industry. UNLESS of course you are trying to socialize America.

  20. William Tiller says:

    Chris my though is small business needs all the help they can find.
    My wife and I mfg. a class 2 medical device and last year we helped 40 individuals enter a profitable business helping the public last year. Previous to 08 we have put people in business in over 42 nations over 1000 individuals. Now we have survived but are just hanging on. This year we are 700 % ahead of last year. What we need is an SBA loan to pay off bank of america and expand our business, My wife applied to frost bank for a home loan and they said no. Because in 09 we had a motor home we could not pay the high interest and we ask if our neighbor could buy it for 25000. and issue a personal note for the balance of 36000. they refused to help and reposed . So her credit was shot. Funny we own our house free and clear it is valued at 500,000. 6000 thousand square feet. We need capital to continue helping people. We train , sell equipment,and then sell the supplies. 210-387-1687 cell Business 210 308-8888 check our web site then perhaps you might help us raise capital for improvements to our building . Main thing is to pay off bank of Who called our line of credit last year which makes our cost go up because we have to buy parts in smaller quantity .

  21. Carole "The Media Fairy" says:

    There seems to be a pervasive misconception that the SBA is a lender. That’s incorrect. They do, however, guarantee small business loans made by lenders, such as banks. And as with any lender, to qualify for any loan, you must prove yourself to be credit worthy.
    If not for SCORE, which is funded by the SBA, I’m not sure my company – Gelmtree Advertising – would be celebrating its 6th anniversary on April 1st. Mentoring and resources are all free for the asking, thanks to the SBA. It would be a disservice to America’s entrepreneurs and small business owners to abolish the program. It’s even more significant when you realize that over 65% of American jobs are in privately-owned small businesses.

  22. ted fields says:

    Use the “Bailed-out Wall Street but not Main Street”

    good job

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