What happens when the government steps in to choose which struggling small businesses get to stay afloat?
You get stuck with the bill:
(Less) than six months into the (American Capital Recovery) loan program, default rates are approaching 60%. Why then, you might ask, did the House recently vote to continue the program. Fortunately, some in Washington are questioning the sanity of that decision. Earlier this week, Senator Snowe (R-ME), ranking Republican on the Small Business Entrepreneurship Committee, a wary supporter of the original bill, finally put her foot down and introduced legislation to close the program down.
To date, about half of the funds allocated to the ARC program have already been spent. That totals about $131 million in loans. At a default rate of 60%, that’s about $80 million in taxpayer money up in smoke.
American Capital Recovery, eh?
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