From Businessweek: Make the Next Bailout Serve Small Business
It’s an oldie, but still very relevant. Why has there been such a huge failure by the architects of the these bailouts at making them work for small and medium businesses? Mr. Shane talks about a number of problems with trying to target the bail out billions to businesses other than Wall Street mega corporations. One issue he mentions is that we don’t even have a real definition of what defines a “small” business. WAIN Street has encountered a similar issue with the term “SMB” as people tend to forget that “M” means medium… and medium can include some pretty big businesses (see the previous post).
The critical point made however, is that broadly speaking people just don’t understand small and medium businesses because we don’t have enough data on them. The data isn’t accurate, it isn’t timely, and it’s not taking from a big enough sample of companies.
“During the financial crisis, policy makers were forced to make decisions without reliable numbers to gauge the degree to which supply and demand for credit had been affected. They didn’t know how such different factors as deteriorating small business balance sheets, bank loss of capital, or business owner sentiment were contributing to the decrease in small business lending.”
If the federal government doesn’t have the right data to understand and manage SMB’s, then how can we expect a regional bank or a credit union to be anything but driving blind when managing their own SMB loan portfolios. The fact is that even the big mega banks have a gap in knowledge when it comes to SMB credit health. WAIN Street helps fill this gap with robust timely data that can be broken down and analyzed; so you are not forced to make decisions without the right information.