Recently, the Bush Administration eliminated funding for the SBA's micro-loan program (see: "A Helping Hand Witheld"). Along the lines of the Grameen Bank, the SBA program was intended to promote entrepreneurship among the economically disadvantaged. Explaining the cut, an SBA spokesperson said the program was not cost effective and the administration wants to be 'judicious with taxpayer money' (What about today's $286 BILLION transportation bill, the biggest in history?). That's baloney. Grameen and its ilk actually have shown their investments in micro-economies around the world are cost effective.
Anyway, why is this bad for media entrepreneurship? After all, there is plenty of venture capital and other financing sources, including other SBA programs, available to the media entrepreneur with a solid business plan. It's a problem because most of that capital will go to entrepreneurs with big plans who need financing of more than a million dollars. There's not much out there, besides this SBA program, for the little media guy. Even small commercial lenders don't want to be bothered with micro-loans (up to $35,000) -- they can't make a profit for the cost of the paperwork.
It's these little guys who form an integral part of the media e-ship landscape and thereby assure the public a steady stream of innovation, diversity of viewpoints, quality and access. Sure, we need the bigger new entrants too, with their big ideas that need big money. But the little podcaster, newsletter publisher, tv producer or record label that wants to serve a small market or community, a micro-niche, is still going to need little loans to get going. You might say anyone can get into podcasting for the price of an iMac and some basic Radio Shack supplies. Yeah, but the most economically disadvantaged media entrepreneurs will lack the resources even for that small investment.
Bush says he's a friend of small business. If so, the SBA micro-loan program is the cheapest way I know to show it. I urge the Administration to reconsider.
Media E-ship (short for media entrepreneurship) keeps our media markets competitive and our choices in media broad, varied, accessible and innovative. There are over 110,000 media companies in the U.S. today, and 99% of them are small businesses. Moreover, there are thousands of media companies launching every year. I will post stories and research about media entrepreneurship and welcome responses to the ideas I share in this space.
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