Some Small Businesses Get Their Own Bailout
Small-business owners have griped for months that they’re being left out of the government’s massive bailout of big financial institutions and auto makers. They’re frustrated that the government is giving money to banks, and banks are stuffing it in their vaults instead of lending.
Now a few small businesses are finding out what it feels like to be bailed out. Two Southern California towns are offering low-interest loans to local car dealerships that have been pummeled by the weak economy and the area’s plunging real-estate market.
Victorville, Calif., is offering a $200,000 loan to a family-owned dealership called Victorville Motors. And Norco, Calif., has approved two $500,000 loans, to go to a local Dodge dealership and a local Mazda dealership. “The last thing we want is for them to shut down, leaving an empty building, an eyesore in the auto park, and more people unemployed,” Victorville’s mayor reasoned.
Some in the area worry that the cities have started traveling down a slippery slope - that other businesses will come looking for handouts, too. Cities and towns can’t offer financing to every business owner who comes knocking. And while local officials in these two towns say the dealerships are pillars of the community, selling cars these days is not exactly a growth business. As this story notes, thousands of dealerships are expected to close this year alone.
It’s not hard to see why these small businesses believe they deserve their own bailout. The city governments need the businesses’ tax revenue, too, so they have an incentive to help out. But is the answer to prop up businesses that may be doomed regardless? No one knows how long it’ll take U.S. consumers to get back on their feet and ready to buy new cars again.
Readers, what do you think? Should local governments prop up businesses in their town? Does small business deserve its own bailout? Or should these businesses accept that if they can’t muddle through the downturn, they need to restructure on their own?
Photo: Associated Press
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