Some small businesses received a belated Christmas present from the government earlier this month: A taste of uncertainty, gift wrapped in the suspension of the popular 7(a) loan program.

On Jan. 6, word went out that the Small Business Administration was suspending 7(a) because the program had run out of money.

The Finance Administration of Maine jumped into the breach to temporarily fill the gap. But those efforts, while a great reaction, proved unnecessary.

On Wednesday, a temporary solution was found that shifted $470 million into 7(a) and allowed the SBA to begin accepting new applications.

The popular program helps small businesses – which might not qualify for conventional, commercial loans – find financing. By guaranteeing between 50 and 85 percent of a loan’s value, the SBA program makes small business more attractive for commercial lenders by eliminating much of the risk.

Trouble began when Congress failed to pass the SBA appropriations bill before adjourning for the holidays and was complicated by poor communications from the agency. That left the SBA short of cash.

In the first quarter of 2004, 19,082 small business received loans valued at $3.2 billion through 7(a), up from 13,961 loans worth $2.3 billion last year. In Maine alone, 407 loans worth more than $10 million were made in 2003.

Demand is outpacing supply, even with the extra funding. According to the SBA, if loan volume continues at its current pace, the new allocation will run out before the end of the month.

Lower limits have been placed on loan guarantees to stretch available resources.

Small businesses, especially new ones, are particularly fragile. But they are also responsible for a great number of the new jobs created in the country. Only 1,000 jobs were added in the entire country during December. Government should not handicap successful programs that help start new businesses or expand existing ones.

It’s good news that the program has received an extension, but it should have never come to that.


Et tu, Subaru?
We’re disappointed in Subaru, not because they have used Australian actor Paul Hogan, aka Crocodile Dundee, as a spokesman.

According to the New York Times, Subaru is making minor changes to its popular Outback station wagons and sedans so they can qualify as “light trucks.” The changes, which include more ground clearance and a new bumper, are meant to subvert the federal fuel economy regulations that apply to cars. Light trucks, on average, are allowed to get fewer miles to the gallon.

Subaru is free to make and market its vehicles as it sees fit. The company obviously believes that turbo-charged station wagons with tinted back windows and sedans will be popular. They’re probably right.

But the company’s move is a great example of what’s wrong with the country’s current fuel economy regulations. They are too easy to subvert and allow too many vehicles to qualify for lenient mileage standards.

While the number of “light trucks,” which include SUVs and minivans, has increased – they make up about half of the vehicles sold today – the average fuel economy of all the vehicles on the road has steadily declined.

For what? So we can get a sedan that’s considered a light truck. Et tu, Subaru?


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