What do some top Myrtle Beach hotels, campgrounds, family entertainment venues, and several serial Myrtle Beach entrepreneurs all have in common? They were the beneficiaries of taxpayer subsidized SBA lending practices since 2007.
The motto of the Small Business Administration (SBA) supports entrepreneurial grit and the little guy: “The SBA helps Americans start, build and grow businesses.” Yet, proponents of Small Business Administration (SBA) loan programs will be hard pressed to justify many of the examples cited within our 2015 released OpenTheBooks Oversight Report - SBA Loans to the Wealthy Lifestyle.
In America, we should never demonize success, but we don’t need to subsidize it either. We identified taxpayer loans to luxury car companies selling Bentleys, Beverly Hills, California diamond suppliers, and upscale destination resorts in Palm Beach, Cape Cod and Lake Tahoe which do little to advance the common good.
SBA lending is supposed to “to aid small businesses which are unable to obtain financing in the private credit marketplace.” Yet, since 2007, there have been nearly 35,000 “small business” loans between $1 million and $5 million, many to companies who may have been able to obtain credit elsewhere.
SBA loans and guarantees in excess of $1 million are common. In fact, there’s a loan of this amount or greater for every three communities across America.
This week, our organization at OpenTheBooks.com took a closer look at Myrtle Beach and found that it has more than its fair share of million dollar SBA loans and guarantees. For example, the Acadian Driftwood Hotel at the Boardwalk received $4.7 million (2012), Family Kingdom obtained nearly $1 million (2012), Surf’s Up Family Fun collected $1.5 million (2007), and the Hollywood Wax Museum reaped $1.8 million (2013).
Like camping? Cypress Camping Resort received $3.7 million (2011). How about pizza? The Mellow Mushroom secured nearly $1 million (2007).
If your dog is sick, The Pet Doctor received $1.4 million on two separate transactions, the latest in 2015. If you’re sick, then go to Beach Urgent Care - subsidized twice for a grand total of $2.7 million (2015).
And how does Earthshirts – owned by Native Sons (one of the largest embroidery and screen-printers on the East Coast) – procure $2.4 million in taxpayer-subsidized, low-interest lending from the SBA (2012)? Sure looks like they could have found private financing in the regular marketplace.
But the deeper, more systemic, problem with the SBA is that the federal government just isn’t very good at picking winners and losers. When the SBA approves a loan, taxpayer money is used to pit one taxpaying business against another. Who decides? Not the market, but SBA bureaucrats who clearly have refined tastes.
High-end luxury jewelers receiving taxpayer-backed lending include M.K. Diamonds & Jewelry, Beverly Hills, Calif. ($3.894 million) and Bentrani Watches, Miami, FL ($5.0 million). $21 million flowed to Rolex jewelers and another $37 million to other upscale jewelers across America.
SBA also funded aesthetic enhancement - plastic surgery clinics ($41 million), Napa Valley wineries ($19 million) and luxury beauty spas ($92 million). The SBA didn’t leave out high-end limousine companies. Nearly $18 million flowed to 14 high-end limousine companies including Diva Limousine, Burbank, Calif. ($2.097 million) that has chauffeured Hollywood stars and starlets to functions such as the Academy Awards, Emmys, Grammys and Golden Globes.
Beyond these egregious examples the SBA’s private equity loan subsidy allowed $9.2 billion to flow to the some of the most successful investment banking and private investor funds in the world.
The public should be asking some hard questions: How were these industries and subsidies chosen? What’s the compelling public purpose to ask working and middle class citizens to subsidize these businesses?
Recipients should answer these questions. After all, it’s your money, not theirs.
Andrzejewski is the founder of OpenTheBooks.com. At the 5th Annual S.C. Tea Party Coalition Convention on Saturday, he will speak on “What on God’s Green Earth is Wrong?” For more information, go to www.southcarolinateapartycoalition.com.