Sheila and Kevin Nelson are obviously good at what they do. Since purchasing Groomingdale’s, an established pet grooming business, in November, they’ve boosted sales six percent, as Joan Tupponce tells the story in today’s Richmond Times-Dispatch. I wish the Nelsons all the luck in the world. I like to see small businesses succeed, especially in a heart-tugging instance like this: The flexibility of the business allows the couple to schedule appointments around the needs of their oldest daughter, who has cerebral palsy
But I really do wonder: Was there a public policy justification for the Small Business Administration to finance the Nelsons’ takeover of the business with $175,200 in loans?
As the SBA says on its website, it was formed in 1953 to “aid, counsel, assist and protect the interests of small business concerns, to preserve free competitive enterprise and to maintain and strengthen the overall economy of our nation.”
How did financing the Nelsons’ business “maintain and strengthen the overall economy of the nation”? Groomingdale’s had been in business since 1992. In other words, the SBA-guaranteed loans helped finance the purchase of an existing pet grooming business by a new owner. Are the owners creating new jobs or expand the tax base? Does the business serve new markets? Does it stimulate exports? Is it advancing a new technology? Does the enterprise complement, and help grow, a strategically important business cluster?
With Wall Street firms collapsing, with the federal government committing itself to gazillion-dollar bailouts of mortgage-securitization giants Freddie Mac and Fannie Mae, with the U.S. financial system imploding, foreign investors withdrawing their capital and lenders trimming their sales, is a pet-grooming service the kind of business into which the United States should be funneling scarce investment capital? Nothing personal against the Nelsons, whom I’m sure are wonderful people, but I reaaalllly don’t think so.
(This blog entry was adapted from a post on R’Biz.)