In The Economy It's The Little Guy

In a era of mega corporate profits and obscene Executive pay it has always been the small business owner and entrepreneur that really has been the bread and butter of the US economy. The biggest concern today in regaining the economic prominence that America enjoyed years ago centers of the rejuvenation of small business and entrepreneurs. When the Federal government bailed out the major financial institutions and "Big Auto" it failed to recognize that the little guy continues to pay the ultimate price for the failed policies of major banks that incidentally brought about the worst economic disaster since the Great Depression.


Unlike in years past where the basic rule of thumb for obtaining a home mortgage was, you could only qualify for that mortgage based upon only 25% of a persons gross income. That all changed even before the Sup-Prime mortgage crisis of 2008. Now, banks have made it harder for people to keep their homes just because you are able to qualify for a mortgage based on 33% or more of a persons gross income. When we factor in the rising cost of living where one is paying almost half of their disposable income for a mortgage it most always spells financial trouble. When the Federal Government sent billions of dollars to bail out these troubled financial institutions back in 2008 there wasn't a stipulation that these same financial institutions ease credit qualifications or revert back to that 25% rule. What resulted is that for small business owners having to meet their financial obligations securing the much needed capital was only getting harder. For a home owner whose won financial troubles have gotten worse when the government stepped in to intervene to allow homeowners to refinance their mortgages at lower interest rates, again, didn't specify that credit scores be lowered so that these people could receive that loan remodification. It wasn't until very recently that credit scores were lowered, but, not by all of the financial industry. What is still occurring today is that many banks still keep the credit score ratings purposely high which is reverberating all over the country with so many foreclosures and small business going under.


The business climate today has made it possible for so many business to have substituted an age old concept for business success. Instead of that tried and true rule of thumb regarding unpaid invoices where it was customary to pay all invoices before a 30 day period now over 70% of small business all around the country are having to wait over 60 days or longer to have their business invoices paid. Big business on the other had has the luxury of not being so financially strapped. The delinquency rate of unpaid invoices is increasing faster every day. This puts so much pressure on small business and entrepreneurs that are unable to keep pace and pay their own bills. In many instances state governments too are at fault. When the federal government dishes out funding for states Medicaid and Medicare allotments it is the state government that sits on this funding only to incur interest. This instead of allocating immediately to the state agencies that need that funding. In too many instances hospitals have suffered dire consequences just because the state didn't supply the funds with in a 30 to 60 day period. In many cases hospitals as well as other agencies that depend on their allocation of Medicare and Medicaid have to wait 90 days or longer to receive their funds.



Big business as well as state governments are finding it much easier to sit on the funding either to garnish more in interest rates or just keep it rather than paying their suppliers or agencies that qualify for these federal funds. We must remember that cash flow is the life blood of every small business and when there is a kink in that flow as so often now is the case it is the small guy that suffers. In many cases that stoppage of the cash flow is terminal. If bills aren't paid on time other means must be sought out to procure the necessary funding either to pay rent, utilities or to pay their employee. And, when banks continue to deny credit or to purposely hold the small business owner literally hostage just because one bill is late which lowers their credit score and is denied that further infusion of much need capital it only depresses and already depressed economy.


It has come to pass that the business climate in the United States continues to favor the "Big Guy" when in reality it is the little guy that is the engine that steam rolls the economy moving forward. When so many small businesses are continually faltering and when the entrepreneurial spirit is no longer a factor in the driving force of our economy one shutters to think of the consequences that will come about.