Globe articles target vital small business program that benefits Boston’s small businesses
Several Massachusetts public officials developed strategies to assist small business during the Great Recession. Their efforts undoubtedly contributed to the better economic performance in the state during a very challenging period. However, the Boston Globe chose to ignore this achievement in order to level another attack against the Bay State Banner.
When the nation’s financial system collapsed in 2008, the primary focus of attention was to rescue big banks. The bank bailout, called the Troubled Asset Relief Program (TARP), was signed into law by President George W. Bush on October 3, 2008. However, the law originally aided only those banks considered to be “too big to fail.”
Barney Frank, the former congressman from Newton, was then Chairman of the House Financial Services Committee. He knew that the banks serving Fortune 500 companies would benefit from TARP, but the smaller banks would fail, much to the detriment of the small business community. Therefore, he amended the plan to provide much wider access to TARP aid.
Nonetheless, stricter rules by the bank regulators made it more difficult for small businesses to obtain bank loans. Yet, it is generally conceded by economists that small businesses are a substantial source of jobs. Unemployment is to be expected if those businesses are unable to find the capital for growth.
Gov. Deval Patrick knows this. He signed into law the Massachusetts Growth Capital Corporation in 2010. The MGCC operates much like a federal Small Business Administration, but on a state level. The addition of state resources induced other financial institutions to become involved in a business project that would otherwise be “un-bankable.”
One of the first projects initiated by Steve Grossman when he became state treasurer was the Small Business Banking Partnership. He deposited $350 million of state funds into 54 community banks, provided that the banks agree to make small business loans. This plan has resulted in almost 8,000 loans with a value of more than $1 billion.
Tom Menino, the former mayor of Boston, has always been concerned about business development in the city. The Boston Local Development Corporation was established years ago, primarily to provide working capital for small businesses.
The BLDC is a 501(c)(3) corporation with an independent board of trustees to approve applications for loans and the administration of outstanding debt. The management of the program is by the Boston Redevelopment Authority. It is expected that most loan applicants would not be well received by the banks or other financial institutions. The BLDC is willing to accept great risk when the proposal provides Boston jobs and the development of an institution of importance to the city. The funds invested in these loans are not collected from taxes.
In addition to BLDC loans, Mayor Menino operated the Main Streets Foundation to make Boston’s 19 neighborhood commercial areas more attractive. Businesses can get help with signage design and plans to make their place of business more aesthetically appealing.
Technically, the Great Recession is over but the economy has not yet become robust. The data indicates that Massachusetts has indeed weathered the storm. In December 2009 unemployment in the U.S. was 10.0 percent. By the end of last June it had dropped to 6.1 percent. But Massachusetts did better than the national average during this same period — unemployment dropped from 9.1 percent to 5.5 percent. And Boston did even better — 8.2 percent unemployment to 5.2 percent.
Whenever elected public officials are involved, the press cannot be far behind. Americans expect that. But here we have a great success story that is ignored. Barney Frank, Deval Patrick, Steve Grossman and Tom Menino all had visionary strategies that successfully lifted business development in the state, and the only issues of interest to the Globe are the problems. Readers expect more from Morrissey Blvd than nitpicking negativity.
M.B. Miller is publisher and editor of the Bay State Banner which has an outstanding loan with the BLDC.