Liberals are internally squealing with glee upon the discovery by Fox31’s Eli Stokols that business owner Dave Leinweber, owner of Angler’s Covey, used a Small Business Administration loan to expand his business.
Leinweber explained his frustration with President Obama’s statement that small business owners didn’t build their small businesses:
“We’ve got a group of business people here – including myself – who really take offense to the idea that government builds businesses. We create the jobs. We’ve doubled our work force here because of our hard work, not because of some program or anything like that. We’ve just worked hard.”
Leinweber also admitted, according to FOX31 Denver, “he was only able to finance his business’s expansion to a new, larger location with a loan backed by a government program that enabled him to get a small business loan.”
The problem – he’s an anomaly, not the norm. According to the Ewing Marion Kauffman Foundation, established in the mid-1960s to encourage entrepreneurship, advance innovation, and improve the education of children and youth, banks “actually fund very, very few young companies.” The Kauffman Sketchbook clip below called “The Money Game” explains how young companies actually get their money.
According to the video, featuring finance blogger Paul Kedrowsky, the number one source of funding for start-ups is the owner’s savings, and then, the cash flow from the business itself. That accounts for 50% of funding. The second largest source of funding after savings is credit cards. Then, the third largest source of funding is the entrepreneur’s friends and family. And, THEN, we get to the banks. Kedrowsky explains the “weird situation” with banks:
“The next place [entrepreneurs seek funding] is banks and banks are actually a weird situation because banks get a lot of attention, but they actually fund very, very few young companies. But, it’s not their fault. You have to think about the way bank lending works and how shareholders want banks to lend. They want them to lend money against secured assets, and young companies don’t have any security – they have nothing to secure it against. The joke in the industry is ‘you can have all the funding in the world, as long as you don’t need it.’”
Look, we’re not trying to say that entrepreneurs and small business owners don’t have help along the way, but to dismiss the hard work and dedication it takes to make a small business successful, like President Obama and some members of the media have done, is just plain wrong.