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Rescuing the SBA

October 11, 2010
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Last month, Professional Car Care Online reported proposed cuts to the Small Business Administration (SBA) that could hurt new car-care businesses.

The basis for this report was a February 7, 2005, press release from the office of US Senator Olympia J. Snowe (R-ME), who chairs the US Senate Committee on Small Business and Entrepreneurship.

In the press release, Senator Snowe basically criticized President Bush’s proposed budget cuts for the SBA in Fiscal Year 2006.

Reductions aren’t good for anyone
According to the report, the instruments that have the greatest risk of being eliminated or no longer supported include the micro-loan, technical assistance grants and the Woman’s Business Center programs.

Although these programs may have little to do with the funding of new car-care businesses, the trend in reducing the SBA’s entitlement (a 36 percent reduction over the last 5 years) will do nothing to improve the opportunity for carwash investors to borrow funds.

In light of President Bush’s proposed agenda for American Small Business, this is something that carwash operators and new investors should be concerned about.

The SBA was created through the Small Business Act (Public Law 85-536, as amended) as a way for the government to maintain and strengthen the nation’s economy by aiding, counseling, assisting and protecting the interests of small business.

Of particular interest to car-care professionals and investors are the:

  • Basic 7(a) Loan Guaranty;
  • Certified Development Company (CDC) 504 Loan Program;
  • Micro-loan 7(m) Loan Program; and
  • Loan Prequalification Program.

The 7(a) program can provide funding for up to 10 years for working capital and 25 years for fixed assets. The 7(a) is designed for start-up and existing small business and is administered through commercial lending institutions.

The 504 program can provide funding for real estate and equipment for expansion or modernization and is administered through private or non-profit certified development companies.

The micro program can provide up to $35,000 for small businesses that need small-scale assistance for start-up or expansion purposes and it is administered through specifically designated intermediate lenders.

The administration’s proposed budget cuts are aimed at eliminating, reducing or re-distributing entitlements for several SBA programs.

Moreover, the government has previously toyed with the idea of changing the role of the SBA by temporarily reducing the size of the maximum loan amount for the 7(a) program.

Bush’s agenda
In light of President Bush’s small business agenda, these activities do not bode well for carwash operators and new investors.

In his plan to create a more robust environment for small business, President Bush’ agenda is to provide new tax incentives, give small business owners more power to provide health care for uninsured employees, tear down regulatory barriers to job creation, give owners a voice in the complex regulatory process and save tax dollars by ensuring fair competition to government contracts and provide information.

These are certainly good things for small business, but Bush’s plan and its elements do not address the SBA funding issue.

The elimination of the SBA loan programs or a permanent and significant reduction in the maximum loan amounts would basically disenfranchise many investors from the opportunity to get into the carwash business.

What can be done?
Get on the horn and let your state legislators, the International Carwash Association (ICA), regional carwash association and lender know just how important the SBA loan programs are to small business investors like yourself.

The 7(a) and 504 programs have proven to be effective and efficient mechanisms for entrepreneurs to get into the carwash business and create new jobs. Unfortunately, these programs remain in danger of being moved in the wrong direction.

Robert Roman is a former carwash, express lube and detail shop operator and is president of RJR Enterprises (, a Clearwater, FL-based company that provides professional advisory services to the carwash industry. Roman is also a member of PC&D’s Advisory Board.

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