by Todd Taskey on November 13, 2009
I’ve got to comment because this health care bill will shift the cost of a flawed plan to small business owners.
We are all quick to admit that “fixing heal care” is an enormous challenge facing our country and we will not solve this problem by asking the wrong set of questions. To date, most of the political rhetoric has been focused on changes required of the medical, business and insurance community. However, the real problems are the tort laws that impact health care.
Unfortunately for all tax payers, over one third of Nancy Pelosi’ congress is part of the problem, not part of the solution. 162 members of the 441 (36%) members of the 111th Congress are lawyers or have a law degree. They support a tort industry that thrives on the huge contingency fees and damage awards of the tort industry.
It has gotten so bad that 30 states have limited awards on medial law suits. Texas placed limits on malpractice awards in 2003 and has seen a 50% drop in malpractice premiums, few lawsuits and a surge of new doctors ready to serve those communities. Alabama has seen hospitals actually close ER services because of a doctor shortage.
Now, back to speaker Pelosi. Hidden in her 1,990 page health care bill is a provision that provides for incentive payments to states that develops an “alternative medial liability law”. The state will only qualify for these “incentives” if they “do not limit attorneys’ fees or impose caps on damages.”
The deeper you dig, the sicker you will feel, trust me.
Any healthcare bill that does not resolve the economic issues around healthcare (frivolous lawsuits) will never have any meaningful impact on real reform. Unfortunately, our leaders are more focused on protecting turf and political favors than improving health care.
by Todd Taskey on November 2, 2009
CIT has been an important participant in the small business loan marketplace for the past 100 years and today, they are in bankruptcy. A sign of the times but not a reason for panic.
In 2008 CIT was the largest Small Business Administration loan provider. However, CIT provided just $65 million of business loans in the first half of this year.
I am willing to bet, however, you are not familiar with CIT because they are not a lender to very small business owners like you as they tend to lend to much larger “small businesses”.
So, what will be the impact to American small business owners in need of working capital and small business loans? Let’s focus on the bullet points today as there will be time to speculate over the next few weeks.
1) The US Governments $2.3 billion equity position created from its cash infusion a few months ago has been entirely wiped out…Sorry.
2) 90% of creditors have already agreed to CIT’s restructuring plan and they expect to be out of bankruptcy in about 60 days. They will not disappear but there is no competitor looking to fill the void created by their lack of lending.
3) Their troubles stems from their SBA lending, so it is fair to assume some changes will be made in their business loan underwriting guidelines.
4) The “small business loans” CIT is well know for are typically to multi-million dollar businesses with dozens or hundreds of employees. They are not a significant provider of working capital or small business loans for very small businesses.
The macro economic impact is more concerning. In the short term as it is very likely businesses both small and large will hoard cash and reduce investment plans in the near term, which will not help our economy.
Have you every had a business loan with CIT? I’d love to hear what communications they have had regarding their business loans and any changes you can expect.
(Jason Kuffer photo (CC))
