The Federal government's war on small business...

....is epitomized by President Obama's speech on the subject recently. Beyond the hilarious absurdity of lauding Michigan's Governor Granholm for her economic prowess (15% unemployment is something to brag about on President Obama's planet, I guess) is the tragedy of the Small Business Administration--the government entity that probably does the most harm to small business in general.

Now I concede that the SBA has some serious competition for the title of "most harmful to small business" from the IRS, EPA, and other regulatory agencies, but in my opinion, they win due to "small business loans" and related programs.

You may be confused; weren't those supposed to help entrepreneurs? Maybe, maybe not, but here's what actually happens with SBA loans; entrepreneurs apply for standard bank loans, get refused, and only then are they eligible for an SBA loan. In short, your business is only eligible for help from the SBA when bankers tell you that your business plan won't work, and your credit isn't too hot, either.

The end result; thousands of small businesses get started that shouldn't, imposing greater competition on those who actually should have been in business. Worse yet, an artificially high price for the goods and services used to start small businesses is established, and legitimate entrepreneurs must factor in these artificially high prices and low average returns into their business plans.

In other words, if you wanted to hamstring small business, you could hardly do better than to establish the SBA loan program. Like most government programs outside the Department of Defense and Department of Justice, it's time to end the SBA.