Jan. 15, 2026

Subsidies, Strings, and Small Business: Inside the SBA Maze

Subsidies, Strings, and Small Business: Inside the SBA Maze
Spotify podcast player icon Spreaker podcast player icon Apple Podcasts podcast player icon
Spotify podcast player icon Spreaker podcast player icon Apple Podcasts podcast player icon

Main Street doesn’t get the same benefit of the doubt that Wall Street gets — and that double standard is killing trust, killing momentum, and crushing the builders who keep towns alive. In this episode, we unpack how SBA loans, federal grants, government-backed subsidies, and procurement incentives were created to be a bridge for real entrepreneurs… but too often get hijacked by fraudsters, insiders, pass-through schemes, and “paper” small businesses gaming the rules. We break down the programs that shape who gets a real shot at growth — and who gets shut out:

  • PPP & EIDL: why emergency speed created massive openings for fraud, and how fraud doesn’t just steal money — it steals trust.
  • SBA 7(a): how guarantees can turn “no” into “yes” for legit operators, but also how incentives can drift when underwriting weakens.
  • SBA 504: how fixed-asset financing can help a shop expand into a bigger building and create better jobs — and how valuations and projections have to be disciplined.
  • 8(a) & set-asides: when “small business” becomes a costume through pass-throughs and front-company schemes, stealing real opportunity from honest firms.
  • Reforms that actually bite: modern verification, transparency, real ownership/control enforcement, lender accountability, contract performance audits, and real consequences for cheaters — so the ladder stays for honest builders and the grifters get kicked off.
This episode is for the owner trying to make payroll without laying people off. It’s for the business outgrowing a small shop and wanting to expand to create quality jobs. It’s for the entrepreneur doing everything right — and watching the system reward the people who don’t. The message is simple: Main Street deserves the same seriousness, competence, and fair chance we’ve historically handed Wall Street.


If this episode hit you in the chest, don’t let it stop with you. 1) Share it
Send this to one small business owner, one builder, or one worker who’s tired of rigged systems. 2) Follow / Subscribe
Turn on notifications so you don’t miss the next episode in this series. 3) Leave a Rating + Review
  • Spotify: tap the rating
  • Apple Podcasts: write a quick review
    Reviews help this message reach more Main Street listeners.
4) Comment Your Story (Keep It Clean)
Have you used SBA loans, PPP, EIDL, 7(a), 504, or dealt with government contracting?
Tell your story — but don’t name private individuals and don’t dox anyone.

Become a supporter of this podcast: https://www.spreaker.com/podcast/world-of-payne--4732235/support.

🔗 Connect With Us
💼 Sponsored By
  • ValorBuilt Apparel – http://valorbuilt.us/P2S
  • GetSequence.io- https://sequence.pxf.io/WoP
WEBVTT

1
00:00:00.720 --> 00:00:04.400
Before we dive into tonight's episode, I want to remind

2
00:00:04.400 --> 00:00:06.559
you of something I'll say at the start of almost

3
00:00:06.599 --> 00:00:10.679
every show in this subsidy series. Every single one of

4
00:00:10.720 --> 00:00:15.560
these programs we're talking about tonight SBA loans, federal grants, PPP,

5
00:00:16.399 --> 00:00:20.960
eid L seven A, five oh four eight A, or

6
00:00:21.000 --> 00:00:25.519
procurement preferences. They did not begin as scams. They were

7
00:00:25.559 --> 00:00:31.480
created because someone somewhere saw real pain. They saw small

8
00:00:31.519 --> 00:00:35.039
businesses closing, They saw employees walking out with boxes because

9
00:00:35.079 --> 00:00:39.600
payroll ran out. They saw moms and dads lying awake,

10
00:00:39.799 --> 00:00:43.520
wondering how the bills were going to get paid, and

11
00:00:43.560 --> 00:00:45.920
they said, we can do something. We can build a

12
00:00:45.920 --> 00:00:48.159
bridge for people who are trying to do it right.

13
00:00:48.520 --> 00:00:50.759
Subsidies were built for the shop owner who was just

14
00:00:50.799 --> 00:00:54.960
trying to get some help to cover payroll in a

15
00:00:54.960 --> 00:00:59.640
hard month. They were built for businesses that's outgrown its

16
00:00:59.679 --> 00:01:03.479
tiny building and wants to create more good jobs. They

17
00:01:03.479 --> 00:01:06.680
were built for the daycare, the machine shop, the food truck,

18
00:01:06.840 --> 00:01:11.719
the farm service business that doesn't have rich investors but

19
00:01:11.799 --> 00:01:18.159
do have real value. They were not built for shell

20
00:01:18.200 --> 00:01:22.239
companies with fake employees. They were not built for politically

21
00:01:22.239 --> 00:01:25.799
connected firms. Who treat small business as a tax financed buffet.

22
00:01:26.599 --> 00:01:29.599
They were not built for scammers who spin up LLCs

23
00:01:29.640 --> 00:01:33.120
on their couch and loot relief funds while honest business

24
00:01:33.120 --> 00:01:36.599
owners drown. So when we talk about fraud and abuse,

25
00:01:36.799 --> 00:01:39.560
we're not attacking the idea of help. We're defending the

26
00:01:39.599 --> 00:01:42.760
real people these programs were meant to serve. We are

27
00:01:42.799 --> 00:01:47.400
here to say, stoploading hijackers, fly the plane, return those

28
00:01:47.439 --> 00:01:50.680
programs to the folks on Main Street who were supposed

29
00:01:50.719 --> 00:01:54.120
to be in those seats from day one. All right,

30
00:01:54.719 --> 00:02:00.439
let's get into it. When politicians say small business, you

31
00:02:00.480 --> 00:02:05.560
can hear the patriotic music swell from behind them. We

32
00:02:05.680 --> 00:02:08.879
picture the diner that opens before sunrise, the two bay

33
00:02:08.919 --> 00:02:12.120
repair shop that keeps farm equipment and work trucks alive,

34
00:02:13.759 --> 00:02:17.280
the little storefront with a couple who put every dime

35
00:02:17.960 --> 00:02:21.960
and every dream into a lease and a sign. We

36
00:02:22.080 --> 00:02:25.479
call them the backbone of America. We clap for them

37
00:02:25.479 --> 00:02:28.039
in speeches, We point at them when we say jobs.

38
00:02:28.240 --> 00:02:32.280
We roll out the phrase Main Street, mount Wall Street

39
00:02:32.719 --> 00:02:35.759
like it's a magic spell. And because we say we care,

40
00:02:36.479 --> 00:02:39.960
Washington built a whole machine that claims to exist just

41
00:02:40.000 --> 00:02:43.759
for them, SBA loans that are supposed to make no

42
00:02:44.639 --> 00:02:48.039
turn into yes. Federal grants that are supposed to fund

43
00:02:48.120 --> 00:02:52.719
innovation and growth, government backed subsidies that promise to share risk,

44
00:02:53.759 --> 00:02:59.199
special procurement programs that say, if you're small, disadvantaged, or

45
00:02:59.280 --> 00:03:04.199
veteran owned, will carve out a space for you. On paper,

46
00:03:04.280 --> 00:03:06.960
it sounds noble, It sounds like a country that actually

47
00:03:07.039 --> 00:03:10.439
wants its entrepreneurs to win. But if you peel back

48
00:03:10.479 --> 00:03:13.000
the press from the press release and look at the

49
00:03:13.080 --> 00:03:16.840
data and the scandals, you see a different story. You

50
00:03:16.879 --> 00:03:20.759
see fake businesses that never had a single employee pulling

51
00:03:20.800 --> 00:03:26.039
down six figure PPP loans. You see people using stolen

52
00:03:26.280 --> 00:03:31.159
social Security numbers and eins to open EIDL loans in

53
00:03:31.280 --> 00:03:35.280
other people's names. You see year's worth of seven A

54
00:03:35.400 --> 00:03:38.400
loans going bad at rates we haven't seen in over

55
00:03:38.439 --> 00:03:42.360
a decade, while certain lenders made a killing on fees

56
00:03:42.400 --> 00:03:47.520
and guarantees. You see SBA's own Inspector General and the

57
00:03:47.599 --> 00:03:52.639
GAO's estimating that more than two hundred billion dollars in

58
00:03:52.759 --> 00:03:58.199
PPP and COVID EIDL funds, which is about seventeen percent

59
00:03:58.199 --> 00:04:05.560
of the total once to potentially fraudulent actors, and those

60
00:04:05.599 --> 00:04:09.400
are just crazy numbers. You see. The A day program

61
00:04:09.439 --> 00:04:13.520
designed to lift up the disadvantaged business owners now under

62
00:04:13.560 --> 00:04:18.079
a full scale audit because of rampant fraud and increasingly

63
00:04:18.319 --> 00:04:23.600
egregious behavior, with SBA promising to reveal fifteen years of

64
00:04:23.680 --> 00:04:28.920
contracts and Treasury launching its own investigation into pass through schemes.

65
00:04:30.199 --> 00:04:33.120
And somewhere in the middle of that circus is the

66
00:04:33.199 --> 00:04:37.000
honest owner. The owner who stayed up late, filing, filing

67
00:04:37.000 --> 00:04:40.079
and filling out the forms right away. The owner who

68
00:04:40.120 --> 00:04:45.240
asked their accountant can I legitimately qualify for this? The

69
00:04:45.360 --> 00:04:49.800
owner who took only what they needed and planned to

70
00:04:49.839 --> 00:04:53.360
pay it back. They look around and think the system

71
00:04:53.399 --> 00:04:56.399
is supposed to be for me. Why does it feel

72
00:04:56.399 --> 00:05:01.279
like I'm just here to make the fraud statistic look smaller. Tonight,

73
00:05:01.279 --> 00:05:04.759
we're going straight into that tension. We're going to impact

74
00:05:04.800 --> 00:05:10.759
the SBA loans, federal grants, government backed subsidies, and procurement incentives.

75
00:05:11.600 --> 00:05:14.399
We're going to walk through PPP E I d L

76
00:05:14.800 --> 00:05:18.959
seven A, five oh four and eight A and what

77
00:05:18.959 --> 00:05:22.439
they're supposed to do versus what they actually did. We're

78
00:05:22.439 --> 00:05:25.480
going to tell the stories of owners trying to cover payroll,

79
00:05:25.759 --> 00:05:30.240
outgrow their shops and expand childcare who had to walk

80
00:05:30.279 --> 00:05:33.519
through this maze with a blindfold on. Then we're going

81
00:05:33.560 --> 00:05:38.600
to talk reform, real reforms, not feel good tweaks. Reforms

82
00:05:38.600 --> 00:05:45.160
that would eliminate favoritism, increase transparency, modernize verification, and slam

83
00:05:45.199 --> 00:05:48.000
the door on obvious fraud. At the end, we're going

84
00:05:48.040 --> 00:05:51.079
to talk and ask the hard question no one in

85
00:05:51.160 --> 00:05:56.439
DC likes. Could America and American small businesses actually thrive

86
00:05:56.519 --> 00:06:00.920
in a world with fewer subsidies if we built smarter rules,

87
00:06:02.240 --> 00:06:06.399
real accountability in an economic environment that didn't punish people

88
00:06:06.439 --> 00:06:09.800
for trying to grow. This isn't about burning it all down.

89
00:06:10.000 --> 00:06:13.199
It's about refusing to accept a rigged game as normal.

90
00:06:13.879 --> 00:06:17.759
Let's start where every honest policy conversation should start, not

91
00:06:17.879 --> 00:06:25.199
with agencies, not with acronyms, but with people. Me Ethan

92
00:06:26.519 --> 00:06:30.040
he runs a small equipment and diesel repair shop inside

93
00:06:31.120 --> 00:06:35.160
a small farm town. He's got eight employees, a building

94
00:06:35.199 --> 00:06:38.040
that's too small, and a parking lot full of customers

95
00:06:38.519 --> 00:06:42.680
who depend on him to keep moving. One month, a

96
00:06:42.800 --> 00:06:46.279
key customer delays paying a big invoice, fuel costs her

97
00:06:46.360 --> 00:06:49.800
up parts costs her up payrolls due Friday, and as

98
00:06:49.839 --> 00:06:55.160
a checking account says, not like this, you're not Ethan

99
00:06:55.879 --> 00:06:59.120
could cut hours, He could tell one of his guys,

100
00:06:59.360 --> 00:07:02.600
I can't keep you this month. But he's watched these

101
00:07:02.639 --> 00:07:05.879
men keep farmers running at midnight and answer phone calls

102
00:07:05.920 --> 00:07:09.399
on Saturdays, and the idea of letting them go makes

103
00:07:09.480 --> 00:07:18.560
him feel physically sick. He hears about SBA back loans,

104
00:07:18.920 --> 00:07:22.439
he sits down with his banker, hands over his financials,

105
00:07:22.560 --> 00:07:26.639
and hears, on our own, we'd probably pass, but with

106
00:07:26.720 --> 00:07:30.720
a seven a guarantee backing a short term working capital line,

107
00:07:31.319 --> 00:07:35.279
we might be able to keep you steady. In that moment,

108
00:07:35.759 --> 00:07:39.279
SBA is exactly what it was supposed to be. A bridge,

109
00:07:39.800 --> 00:07:43.439
not a bailout, a way to turn a no into

110
00:07:43.480 --> 00:07:47.399
a yes for a solid, scrappy shop that just hit

111
00:07:47.399 --> 00:07:55.240
a rough patch. Now meet Carla. Carla is starting in

112
00:07:55.279 --> 00:07:58.959
a rented bay with one welder in a dream. She

113
00:07:59.040 --> 00:08:02.839
did little jobs at first hand rails, brackets, small repairs,

114
00:08:03.879 --> 00:08:07.319
but word got around that she did clean, honest work.

115
00:08:08.680 --> 00:08:12.879
Soon she was building custom trailers, repairing frames and getting

116
00:08:12.920 --> 00:08:15.879
calls from farmers who needed something stronger than what comes

117
00:08:15.879 --> 00:08:19.680
out of a big box lot. Her shop is jammed,

118
00:08:21.360 --> 00:08:25.360
two elders, one plasma table, everything stacked on top of

119
00:08:25.399 --> 00:08:29.279
everything else. She's turning down work she knows she could

120
00:08:29.279 --> 00:08:32.159
do if she had the space. Down the road, an

121
00:08:32.200 --> 00:08:36.200
old building comes up for sale, perfect ceiling height, room

122
00:08:36.240 --> 00:08:39.559
for expansion and enough space for new equipment and a

123
00:08:39.600 --> 00:08:45.720
couple apprentice apprentices. Carla talks to her bank. They say,

124
00:08:46.000 --> 00:08:49.320
on a straight commercial loan, you'll need twenty to twenty

125
00:08:49.360 --> 00:08:52.240
five percent down and the debt service might be tight.

126
00:08:53.279 --> 00:08:56.879
Then they mentioned something different. The SBA five oh four

127
00:08:57.080 --> 00:09:01.279
loan program. Five O four loans are designed for exactly

128
00:09:01.360 --> 00:09:07.320
this kind of move, major fixed assets, buildings, big equipment

129
00:09:07.360 --> 00:09:10.960
that could drive growth in job creation. Most five h

130
00:09:11.039 --> 00:09:16.360
four deals are structured roughly fifty forty ten, about fifty

131
00:09:16.399 --> 00:09:20.559
percent from a bank, forty percent from a certified development

132
00:09:20.639 --> 00:09:24.960
company backed by SBA, and as little as ten percent

133
00:09:25.039 --> 00:09:30.000
down from the borrower. To Carla, that sounded like oxygen.

134
00:09:30.320 --> 00:09:33.279
She goes from, I'll never afford this building, so I

135
00:09:33.360 --> 00:09:36.639
might actually be able to buy it, not just rent

136
00:09:36.639 --> 00:09:42.120
it and rent forever. If the projections are honest and

137
00:09:42.200 --> 00:09:46.360
the unwriting is solid. This is a liftoff moment, more jobs,

138
00:09:46.720 --> 00:09:52.759
more apprenticeships, and more economic activity for her town. Again,

139
00:09:53.200 --> 00:09:56.480
that's the SBA being what it says on the label,

140
00:09:56.879 --> 00:10:01.399
not a handout, a structure that lets a good business

141
00:10:01.799 --> 00:10:06.240
scale up in a way the private market alone might

142
00:10:06.279 --> 00:10:12.799
never offer. Now, picture Jasmine. She runs a small childcare center.

143
00:10:13.559 --> 00:10:17.320
Her wait list is longer than her capacity because parents

144
00:10:17.399 --> 00:10:20.440
in her area have nowhere else to go. She's doing

145
00:10:20.480 --> 00:10:25.120
everything by the book, background checks, training, licensing, and she's

146
00:10:25.159 --> 00:10:30.120
still constantly short on space and staff. She wants to expand,

147
00:10:31.000 --> 00:10:34.279
maybe open a second location, maybe contract with the local

148
00:10:34.360 --> 00:10:41.399
school district for after school care, but she doesn't have

149
00:10:41.440 --> 00:10:45.080
the cash to renovate or expand. Local officials tell her

150
00:10:45.120 --> 00:10:48.679
there are grants, there are SBA programs, There are even

151
00:10:48.759 --> 00:10:53.360
small business preferences, and some government contracts for services like hers.

152
00:10:54.279 --> 00:10:56.840
So if she starts looking at the alphabet soup and thinking,

153
00:10:57.279 --> 00:11:00.440
if I could get just enough to help it spand

154
00:11:00.960 --> 00:11:04.279
I could have more kids, hire more staff, and give

155
00:11:04.360 --> 00:11:08.399
exhausted parents a little breathing room. Once again, in theory,

156
00:11:08.679 --> 00:11:13.039
these programs should slam open doors for her. They should

157
00:11:13.039 --> 00:11:15.559
reward the fact that she's carrying a community on her

158
00:11:15.639 --> 00:11:21.159
back with too little help for too long. Now what

159
00:11:21.240 --> 00:11:25.440
the SBA is supposed to do, and then plain English like,

160
00:11:25.519 --> 00:11:29.720
let's strip away the acronyms for just a second. The

161
00:11:29.759 --> 00:11:34.240
Small Business Administration is supposed to do one main thing,

162
00:11:34.840 --> 00:11:40.200
help viable small businesses get financing and opportunities that normeral

163
00:11:40.240 --> 00:11:46.000
banks and big procurement processes won't give them on their own.

164
00:11:47.159 --> 00:11:51.559
The seven A program is the flexible workhorse. It backs

165
00:11:51.600 --> 00:11:56.960
loans for working capital, buying businesses, refinancing some debts, and

166
00:11:57.039 --> 00:12:03.840
purchasing equipment, as well as much more. The government guarantees

167
00:12:03.840 --> 00:12:07.440
a chunk of the loan historically around seventy five to

168
00:12:07.480 --> 00:12:11.320
eighty five percent, depending on the size and category, so

169
00:12:11.480 --> 00:12:16.840
lenders can take reasonable risks without they normally avoid. The

170
00:12:16.879 --> 00:12:23.559
five O four programs is a fixed asset engine. It

171
00:12:23.600 --> 00:12:26.879
provides long term, fixed rate financing with as low as

172
00:12:27.480 --> 00:12:32.519
ten percent down for big assets like owner occupied commercial

173
00:12:33.840 --> 00:12:37.879
real estate and heavy machinery that promote growth and job creation.

174
00:12:39.200 --> 00:12:44.679
Then you have grant programs like sbr STTR for high risk,

175
00:12:45.240 --> 00:12:49.480
high rewarded ovation, and procurement preferences like aight A for

176
00:12:49.600 --> 00:12:55.200
socially and economically disadvantaged owners, plus other set asides for

177
00:12:55.320 --> 00:13:01.759
women owned, service disabled veterans, and hubzone firms. On paper,

178
00:13:01.799 --> 00:13:06.559
the mission is simple. If you're small, honest, and trying

179
00:13:06.600 --> 00:13:10.080
to build something real, these programs should make the difference

180
00:13:10.120 --> 00:13:15.440
between a slam door and a real shot. Here's where

181
00:13:15.440 --> 00:13:19.600
it starts to get twisted. Anytime the government says we've

182
00:13:19.600 --> 00:13:23.759
got special money and special treatment only for small and

183
00:13:23.799 --> 00:13:27.200
disadvantaged businesses and will take most of the risk for

184
00:13:27.240 --> 00:13:31.840
the lenders and contracting officers, you don't just attract Ethan's,

185
00:13:32.039 --> 00:13:35.559
Carla's and Jasmine's. You attract people who think in a

186
00:13:35.639 --> 00:13:38.639
very different way, people who look at those rules and ask,

187
00:13:38.799 --> 00:13:41.039
how do I bend this? How do I put my

188
00:13:41.120 --> 00:13:43.879
name on the right paperwork and tap into that flow

189
00:13:43.919 --> 00:13:47.360
of money, even if I'm not really the person that

190
00:13:47.399 --> 00:13:53.200
it was meant for. You create incentives to exaggerate how

191
00:13:53.279 --> 00:13:58.399
small or disadvantaged you are, hide who actually owns or

192
00:13:58.440 --> 00:14:04.679
controls a company. Create shell entities whose whole purpose is

193
00:14:04.720 --> 00:14:10.120
to chase subsidies and contracts. Then, when you layer it

194
00:14:10.279 --> 00:14:15.120
on a crisis like COVID until agencies speed first integrity later,

195
00:14:15.639 --> 00:14:20.600
you essentially have a sign that says fraudsters welcome, lines

196
00:14:20.639 --> 00:14:25.080
are open. That's how we ended up with the SBA's

197
00:14:25.240 --> 00:14:28.759
own watchdogs saying over two hundred billion dollars in PPP

198
00:14:29.519 --> 00:14:34.600
and EIDL money likely went to fraud about one out

199
00:14:34.600 --> 00:14:39.480
of every six dollars, never struggling businesses. And that's before

200
00:14:39.480 --> 00:14:42.440
we get into the everyday drift in programs like seven A,

201
00:14:42.759 --> 00:14:45.720
five oh four and eight A that never quite make

202
00:14:45.759 --> 00:14:53.879
the headlines but quietly till the field. And that's what's frustrating,

203
00:14:56.240 --> 00:15:00.600
because there are people during that time that could have

204
00:15:00.720 --> 00:15:08.159
used that money to help keep their businesses alive, who

205
00:15:08.240 --> 00:15:13.000
could have used that money to help keep servers employed,

206
00:15:13.679 --> 00:15:18.039
to help keep cashiers employed, to help keep things running.

207
00:15:18.720 --> 00:15:23.600
The whole COVID nineteen pandemic was handled terribly and just

208
00:15:23.639 --> 00:15:27.559
to be able to have it like this where you

209
00:15:27.639 --> 00:15:30.519
pretty much are saying speed first and we'll look at

210
00:15:30.559 --> 00:15:33.799
the integrity of the program later, a lot of that

211
00:15:33.879 --> 00:15:39.799
money went where it should have, over two hundred billion

212
00:15:39.919 --> 00:15:45.559
dollars where it shouldn't have. You know, if you run

213
00:15:45.600 --> 00:15:48.159
a business, have you ever sat at your desk and thought,

214
00:15:48.519 --> 00:15:51.600
if someone could just meet me halfway, I could make

215
00:15:51.639 --> 00:15:59.000
this work. Because the thing is is small businesses or

216
00:15:59.080 --> 00:16:01.879
the backbone are our country. Yeah, you might think that

217
00:16:02.200 --> 00:16:05.720
the Fortune five hundreds or the top one hundred countries

218
00:16:05.759 --> 00:16:09.320
and top one hundred companies in this country would be

219
00:16:10.320 --> 00:16:15.480
the backbones of this country because they might, as a

220
00:16:15.519 --> 00:16:20.159
single company, might employ the most people. But it's your

221
00:16:20.159 --> 00:16:25.080
mom and pop shops, your local diners, your local movie

222
00:16:25.120 --> 00:16:31.279
theaters who are independently owned, your local grocery stores that

223
00:16:31.399 --> 00:16:38.200
hire an employ the most people. It's the small businesses

224
00:16:39.480 --> 00:16:43.559
as a group that employ the most people. So helping

225
00:16:43.600 --> 00:16:49.360
to keep them around and to help them survive, programs

226
00:16:49.399 --> 00:16:56.200
like this are needed. When COVID hit, it wasn't just fear,

227
00:16:57.080 --> 00:17:01.919
it was when cash flows collapsed. Owners watched revenue drop

228
00:17:01.960 --> 00:17:06.319
in days, not months. And payroll doesn't care about your feelings.

229
00:17:07.319 --> 00:17:10.160
That's what people forget. Payroll is a date on the

230
00:17:10.200 --> 00:17:13.839
calendar that shows up, just like a debt collector. Rent

231
00:17:13.920 --> 00:17:17.720
is due whether customers come in or not. And for

232
00:17:17.799 --> 00:17:21.720
a lot of owners, the emergency wasn't politics. It was Friday.

233
00:17:22.200 --> 00:17:25.440
So Congress and the SBA tried to build a bridge.

234
00:17:25.880 --> 00:17:28.319
Two of the biggest beams in that bridge were PPP,

235
00:17:28.680 --> 00:17:36.799
the Paycheck Protection Program an EIDL. PPP was supposed to

236
00:17:36.920 --> 00:17:41.200
keep workers paid. EIDL was supposed to keep businesses alive

237
00:17:41.359 --> 00:17:45.599
long enough to reopen. That was the mission. PPP was

238
00:17:45.640 --> 00:17:50.559
sold as simple, if you keep people on payroll, we'll

239
00:17:50.599 --> 00:17:53.559
help you. If you use the money for eligible costs

240
00:17:53.559 --> 00:17:58.759
and documented it, the loan could be forgiven. That's why

241
00:17:58.799 --> 00:18:03.160
it moved so fat and felt so urgent. But speed

242
00:18:03.559 --> 00:18:06.400
always has a price, and the price is usually paid

243
00:18:06.440 --> 00:18:10.680
in verification. PPP ran through lenders, and the system leaned

244
00:18:10.720 --> 00:18:17.519
heavily on borrowers, certifications, and lender processing at scale in

245
00:18:17.559 --> 00:18:22.640
a crisis that can help good people fast, but can

246
00:18:22.680 --> 00:18:30.720
also help criminals faster. EIDL is older than COVID. It's

247
00:18:30.839 --> 00:18:34.880
SBA's disaster loan program working capital to survive a shock.

248
00:18:35.400 --> 00:18:39.640
During COVID, it expanded massively and money moved through online

249
00:18:39.720 --> 00:18:47.599
pipelines at breathtaking speeds. EIDL also included advances in certain forms,

250
00:18:47.960 --> 00:18:52.440
and when you combine online application, urgent need, and huge volumes,

251
00:18:54.000 --> 00:18:57.839
you create a perfect storm. Because scammers love two things,

252
00:18:58.160 --> 00:19:05.039
speed and chaos. COVID gave them both and we let

253
00:19:05.079 --> 00:19:11.000
them walk right through the front door. Now let's talk scale.

254
00:19:11.440 --> 00:19:15.480
The SBA Office of Inspector Generals estimates that SBA dispersed

255
00:19:15.519 --> 00:19:21.000
over two hundred billion dollars in potentially fraudulent COVID EIDL loans,

256
00:19:21.359 --> 00:19:25.759
advances and PPP loans. They estimate at least seventeen percent

257
00:19:25.839 --> 00:19:31.400
of all COVID, EIDL and PPP funds are going to

258
00:19:31.480 --> 00:19:36.000
potentially fraudulent. Actress let that sink in, not one percent,

259
00:19:36.319 --> 00:19:39.319
not a few bad apples, at least one out of

260
00:19:39.359 --> 00:19:47.480
every six dollars, possibly more flagged is potentially fraudulent. And

261
00:19:48.279 --> 00:19:52.640
the Office of the Inspector General didn't pull that out

262
00:19:52.640 --> 00:19:57.839
of thin air. They cite investigative casework, poor oversight, and

263
00:19:57.960 --> 00:20:04.240
advanced data analytics as the basis for the estimate. That's

264
00:20:04.279 --> 00:20:08.759
not partisan gossip. That's the watchdog on the inside saying

265
00:20:08.960 --> 00:20:14.960
this got hijacked. Meet Miguel. He runs a small restaurant

266
00:20:14.960 --> 00:20:19.440
that lives and dies by Friday nights, COVID hits, dining

267
00:20:19.480 --> 00:20:22.799
rooms shut down and the numbers go read. Immediately, he

268
00:20:22.839 --> 00:20:26.559
looks at his staff, people he's known for years, and

269
00:20:26.680 --> 00:20:31.759
he knows he's about to ruin lives. Miguel doesn't want

270
00:20:31.759 --> 00:20:34.519
a handout, He wants time. He wants to keep his

271
00:20:34.599 --> 00:20:37.440
cooks in a server's attached to a paycheck, so they

272
00:20:37.480 --> 00:20:41.799
don't lose their apartments in vehicles and hope. PPP is

273
00:20:41.839 --> 00:20:45.559
pitched as that bridge. So he applies. He does it

274
00:20:45.599 --> 00:20:48.519
the boring way. He calls his bank, he asks his

275
00:20:48.599 --> 00:20:54.680
CPA for what documentation is needed. He submits real payroll

276
00:20:54.720 --> 00:20:58.440
information because he's not trying to cheat, he's just trying

277
00:20:58.480 --> 00:21:02.319
to survive and help people out along the way. He

278
00:21:02.319 --> 00:21:05.240
gets approved, and he uses it the way it was intended.

279
00:21:05.559 --> 00:21:12.880
Payroll first, bill's second, so the lights stay on. That's

280
00:21:12.880 --> 00:21:16.839
what PPP was supposed to do. A stabilizer for honest

281
00:21:16.839 --> 00:21:20.480
people caught in a once in a century disruption, a

282
00:21:20.519 --> 00:21:23.319
way to avoid a wave of layoffs that would have

283
00:21:23.400 --> 00:21:29.079
shattered communities. Now meet Kyle, and I'm calling him Kyle

284
00:21:29.160 --> 00:21:33.279
because this isn't about one guy, It's about a type.

285
00:21:33.640 --> 00:21:37.079
Kyle doesn't have payroll. Kyle doesn't have a real operation.

286
00:21:37.799 --> 00:21:41.400
Kyle has a laptop, a halfway decent ability to fill

287
00:21:41.440 --> 00:21:44.440
out forms. In zero conscience, he forms an LLC that

288
00:21:44.480 --> 00:21:49.200
looks legitimate on paper. He inflates employee accounts, He submits

289
00:21:49.240 --> 00:21:54.200
applications through multiple channels, and money shows up. Now Miguel

290
00:21:54.319 --> 00:22:00.160
is sweating forgiveness, paperwork and documentation. Kyle is posting picture

291
00:22:00.240 --> 00:22:02.880
of new toys and telling people you're stupid if you

292
00:22:02.920 --> 00:22:06.759
didn't take advantage. That kind of story spreads like poison

293
00:22:06.799 --> 00:22:09.960
in a town because it teaches the honest that morality

294
00:22:10.000 --> 00:22:14.680
is for suckers. And once that belief spreads, your country

295
00:22:15.680 --> 00:22:20.880
starts to rot. Not because people stop loving America, because

296
00:22:20.880 --> 00:22:28.279
they stop trusting that honesty is rewarded. Now, let's talk mechanics.

297
00:22:28.599 --> 00:22:35.920
The OIG describes a landscape where fraudsters exploited programs meant

298
00:22:35.920 --> 00:22:41.480
to help those in need, using multiple schemes. The GAO

299
00:22:42.039 --> 00:22:46.279
also examined the SBA's anti fraud process and identified control

300
00:22:46.319 --> 00:22:52.039
weaknesses and how likely fraud was detected and referred. One

301
00:22:52.039 --> 00:22:55.759
of the most chilling patterns was identity based abuse. The

302
00:22:55.839 --> 00:23:01.440
Pandemic Response Accountability Committee flagged almost fourer point five billion

303
00:23:01.519 --> 00:23:07.359
dollars and potentially fraudulent PPP and EIDL loans disperse to

304
00:23:07.440 --> 00:23:15.359
applicants using suspicious security numbers and security number patterns. That's

305
00:23:15.400 --> 00:23:18.559
not creative accounting. That's an alarm bell. And the FBI

306
00:23:18.640 --> 00:23:21.920
has publicly cited that the OIG breakdown estimating about one

307
00:23:22.000 --> 00:23:26.640
hundred and thirty six billion an EIDL fraud and sixty

308
00:23:26.680 --> 00:23:33.720
four billion in PPP fraud. That's not small time theft.

309
00:23:35.240 --> 00:23:40.000
That's organized looting at a national scale. Now, to be clear,

310
00:23:40.079 --> 00:23:43.799
potentially fraudulent does not mean every dollar is proven criminal

311
00:23:43.920 --> 00:23:48.599
in court. But when watchdogs in law enforcement see patterns

312
00:23:48.599 --> 00:23:53.160
dis large, it means the system was porous. It means

313
00:23:53.480 --> 00:23:58.160
verification legged behind money movement, and it means honest businesses

314
00:23:58.160 --> 00:24:02.480
were competing with criminals at the same time in the

315
00:24:02.559 --> 00:24:08.519
same lines. Here's a detail that should haunt every single taxpayer.

316
00:24:08.680 --> 00:24:15.160
A Congressional Research Service summary noted that SBA didn't have

317
00:24:15.200 --> 00:24:18.799
a centralized entity for fraud protection and detection in its

318
00:24:18.839 --> 00:24:22.960
pandemic relief programs until two years after the first programs began.

319
00:24:23.559 --> 00:24:30.799
Two years. That means we fired the most money in

320
00:24:30.839 --> 00:24:36.720
the cannon first, then we asked where the aiming system was.

321
00:24:37.720 --> 00:24:43.519
Then we act shock when the neighborhood got hit. JO

322
00:24:44.480 --> 00:24:48.079
has repeatedly raised concerns about weaknesses and SBA's controls over

323
00:24:48.200 --> 00:24:52.680
pandemic relief programs. These aren't gotcha points, these are red

324
00:24:52.720 --> 00:25:01.000
flags saying fix this before the next crisis, But didn't

325
00:25:01.039 --> 00:25:04.799
we catch people? Yes, yes we did, and I'm going

326
00:25:04.839 --> 00:25:11.480
to give credit where it's due. The SBA OIG reported

327
00:25:11.480 --> 00:25:23.720
that collaboration with the Secret Service, other agencies, and financial

328
00:25:23.759 --> 00:25:27.640
institutions led to nearly thirty billion dollars in COVID, EIDL,

329
00:25:27.960 --> 00:25:31.240
and PPP funds being seized or returned to the SBA.

330
00:25:33.000 --> 00:25:36.920
That matters. That is real work. The Justice Department also

331
00:25:36.960 --> 00:25:42.119
pursued COVID fraud aggressively, charging hundreds of defendants early in

332
00:25:42.160 --> 00:25:45.920
the pandemic period for schemes tied to relief programs, and

333
00:25:46.000 --> 00:25:50.519
those cases continued to roll forward as investigators connected the dots.

334
00:25:50.920 --> 00:25:54.000
But here's the hard truth. Clawing back thirty billion dollars

335
00:25:54.039 --> 00:25:56.759
is meaningful, but it's still a fraction of over two

336
00:25:56.880 --> 00:26:06.599
hundred billion plus dollars and fraud estimated. You can't investigate

337
00:26:06.640 --> 00:26:09.240
your way out of a system that lets fraud in

338
00:26:09.480 --> 00:26:13.440
at scale. You have to design it so fraud can't

339
00:26:13.559 --> 00:26:19.559
easily enter. This didn't just drain the taxpayer funds. It

340
00:26:19.640 --> 00:26:26.480
drains something more fragile, trust. Because when Miguel hears about Kyle,

341
00:26:27.559 --> 00:26:30.799
he doesn't just get mad, he gets cynical. He starts

342
00:26:30.839 --> 00:26:36.599
asking himself if being honest is a disadvantage. And when

343
00:26:36.839 --> 00:26:40.880
people feel that, your society starts to lose its moral footing,

344
00:26:42.000 --> 00:26:46.839
the rules become for the suckers. The system becomes rigged anyways,

345
00:26:48.119 --> 00:26:56.119
and the system is not ready for another crisis, and

346
00:26:56.200 --> 00:27:01.440
it becomes even worse because cooperation breaks down. Fraud is

347
00:27:01.559 --> 00:27:05.839
not a victim's paperwork crime. Fraud is a cultural infection.

348
00:27:06.839 --> 00:27:10.279
It tells honest citizens your integrity is optional. And I'm

349
00:27:10.319 --> 00:27:17.240
telling you right now that message is deadly. Here are

350
00:27:17.319 --> 00:27:20.039
lessons that we cannot ignore. If you build a program

351
00:27:20.039 --> 00:27:24.240
that moves money faster than you can verify identity, you

352
00:27:24.319 --> 00:27:29.400
invite identity theft and synthetic businesses. If you build a

353
00:27:29.440 --> 00:27:33.119
program that relies on self reporting at massive scale with

354
00:27:33.319 --> 00:27:38.480
weak cross checking, you'll get inflated payrolls in fake firms.

355
00:27:39.000 --> 00:27:43.279
If you don't centralize fraud detection until years later, you

356
00:27:43.319 --> 00:27:48.680
are guaranteeing a backlog of damage you'll never fully undo.

357
00:27:49.720 --> 00:27:53.759
And if you don't punish the high volume facilitators who

358
00:27:53.880 --> 00:27:58.279
treat a relief program like a money factory, you guarantee

359
00:27:58.400 --> 00:28:01.839
it happens again, because the next time a crisis hits

360
00:28:02.240 --> 00:28:06.119
the same incentive structure will call the same predators out

361
00:28:06.119 --> 00:28:12.000
of the woods. This is not complicated. It's not anything

362
00:28:12.519 --> 00:28:16.880
other than uncomfortable for the people in power to admit

363
00:28:18.640 --> 00:28:24.839
PPP an eido with the emergency fire hose. Now we

364
00:28:24.880 --> 00:28:29.359
move to the everyday engine, the programs that quietly shape

365
00:28:29.519 --> 00:28:32.599
who gets to expand and who gets stuck. Because the

366
00:28:32.640 --> 00:28:39.759
crisis fraud was loud, but the everyday incentives, those are

367
00:28:39.799 --> 00:28:46.920
the ones that can distort in an economy. For decades now,

368
00:28:48.279 --> 00:28:54.119
places around me used PPP, and a lot of them

369
00:28:54.200 --> 00:28:57.680
used it. I would hope all of them use it, honestly,

370
00:29:00.839 --> 00:29:03.519
And it's not that I'm mad at you for using it.

371
00:29:03.519 --> 00:29:07.640
It's there's nothing again that I have against anyone around

372
00:29:07.640 --> 00:29:14.000
here that used it, because it kept jobs alive in

373
00:29:14.039 --> 00:29:19.599
an economy that was absolutely horrific. There was places that

374
00:29:19.640 --> 00:29:25.440
were shut down that had no income coming in. There

375
00:29:25.440 --> 00:29:28.319
were some that were still able to run, but they

376
00:29:28.319 --> 00:29:31.160
weren't able to run into full capacity that they would

377
00:29:31.519 --> 00:29:42.119
normally have. And in all honesty, that's what that system

378
00:29:42.200 --> 00:29:44.960
was set up for. It was set up for people

379
00:29:45.039 --> 00:29:53.720
who were wanting to keep people on payroll to be

380
00:29:53.839 --> 00:29:58.480
able to offset bills while the government figured their crap

381
00:29:58.519 --> 00:30:03.960
out while the government decided whether or not a business

382
00:30:03.960 --> 00:30:10.440
could be open or shut. When a government decided whether

383
00:30:10.559 --> 00:30:14.720
or not your business was deemed essential or not. Once

384
00:30:14.759 --> 00:30:19.200
almost every business owner were you deemed your own business

385
00:30:19.279 --> 00:30:24.440
essential because it's essential to your family, to your livelihood. Now,

386
00:30:27.039 --> 00:30:30.200
the big thing is is, as I've said, as I've

387
00:30:30.200 --> 00:30:32.160
said at the beginning, or have tried to say, it's

388
00:30:32.160 --> 00:30:35.960
the beginning. Sometimes I have forgot of all these podcasts.

389
00:30:37.799 --> 00:30:44.359
Subsidies used for the right purpose for in this case,

390
00:30:45.559 --> 00:30:51.319
to help protect payroll, to help protect people's paychecks is great.

391
00:30:52.920 --> 00:30:57.599
ACA subsidies for people who truly need them, who can't

392
00:30:57.599 --> 00:31:02.920
afford healthcare without them, or health insurance without them. That

393
00:31:03.079 --> 00:31:08.279
is the people that it's for Medicaid, for people who

394
00:31:08.319 --> 00:31:12.799
can't afford their healthcare because they don't make enough, maybe

395
00:31:12.799 --> 00:31:15.480
they have kids and they have to be able to

396
00:31:15.480 --> 00:31:18.920
take care of other bills. It's that type of stuff.

397
00:31:19.000 --> 00:31:24.240
I mean, everything has its purpose, and as you've seen here,

398
00:31:28.000 --> 00:31:32.440
stuff like the PPP where you have fraudulent actors who

399
00:31:32.480 --> 00:31:36.519
are taking advantage of these programs, put a bad light

400
00:31:36.599 --> 00:31:42.799
on those who truly need them, who truly need help

401
00:31:43.119 --> 00:31:45.720
to make sure that the rest of their bills are

402
00:31:45.759 --> 00:31:51.200
taken care of and their kids are fed. Help to

403
00:31:51.319 --> 00:31:54.160
make sure that they still have a car to get

404
00:31:54.160 --> 00:32:00.240
to and from work, Help to make sure that they're

405
00:32:00.240 --> 00:32:06.039
still healthy enough to go to and from work. Now,

406
00:32:09.160 --> 00:32:13.839
we're going to hopefully be able to rebuild a system

407
00:32:14.119 --> 00:32:18.319
where honesty is in a handicap, And that's my goal

408
00:32:18.359 --> 00:32:25.200
with these podcasts is to be able to get stuff

409
00:32:25.279 --> 00:32:30.519
back in the right order, to be able to get

410
00:32:31.359 --> 00:32:40.119
people back to the point where honesty is valued, where

411
00:32:41.599 --> 00:32:44.160
we can cut the fraud out enough that maybe we

412
00:32:44.240 --> 00:32:49.440
can sponsor other programs. Help lower the cost of daycare

413
00:32:50.440 --> 00:32:54.839
in this country, help lower the cost of healthcare in

414
00:32:54.920 --> 00:33:03.279
general in this country. Help increase infrastructure spending, and actually

415
00:33:03.319 --> 00:33:07.039
have the infrastructure be spending be spent on making sure

416
00:33:07.160 --> 00:33:11.279
roads are safe, bridges are safe, that type of stuff.

417
00:33:12.400 --> 00:33:17.599
That's the goal with these episodes. It's not to tear

418
00:33:17.640 --> 00:33:21.400
at people who are on these subsidies. It's it's never

419
00:33:22.839 --> 00:33:25.440
to tear down people who are truly in need of

420
00:33:25.480 --> 00:33:29.799
these subsidies to be able to work every day, to

421
00:33:29.839 --> 00:33:32.160
be able to do the things that they need to

422
00:33:32.240 --> 00:33:37.680
make sure that their life can continue. Now, back to

423
00:33:37.720 --> 00:33:43.440
the to the hard nitty gritty stuff PPP and E

424
00:33:43.599 --> 00:33:49.119
I d L, or the emergency fire hose. But seven

425
00:33:49.200 --> 00:33:53.559
A and five oh four are the everyday machines that

426
00:33:53.680 --> 00:33:59.759
run year after year. These programs quietly decide who gets

427
00:33:59.799 --> 00:34:02.839
to expand in whose stay is stuck. They shape main

428
00:34:02.880 --> 00:34:07.119
Street long before the headlines fade, and I need you

429
00:34:07.839 --> 00:34:11.440
to hear this clearly. These programs can be a blessing

430
00:34:11.599 --> 00:34:14.840
when they run with discipline. They can also become a

431
00:34:14.880 --> 00:34:21.880
trap when standards loosen and incentives get twisted. The difference

432
00:34:22.039 --> 00:34:26.760
is not politics. The difference is controls, accountability, and honesty.

433
00:34:27.840 --> 00:34:32.159
The seven A program is SBA's flagship. It's used for

434
00:34:32.239 --> 00:34:38.079
working capital, equipment, business acquisition, and more. The maximum loan

435
00:34:38.119 --> 00:34:48.239
amount is five million. The big feature is the guarantee

436
00:34:48.639 --> 00:34:51.719
eighty five percent on loans of one hundred and fifty

437
00:34:51.840 --> 00:34:57.159
thousand or less and seventy five percent on loans above

438
00:34:57.239 --> 00:35:01.400
one hundred and fifty thousand. In most cases, that guarantee

439
00:35:01.679 --> 00:35:03.800
is the whole game. It's the difference between a bank

440
00:35:03.880 --> 00:35:08.519
saying no and saying maybe. It's also the reason taxpayers

441
00:35:08.559 --> 00:35:12.199
need this program watched like a hawk, because when the

442
00:35:12.239 --> 00:35:19.559
government guarantees losses, behaviors change. Here's the good version of

443
00:35:19.599 --> 00:35:22.599
seven A. A borrower has a real business with real demand,

444
00:35:22.920 --> 00:35:26.960
but not enough collateral or perfect credit history. A leunder

445
00:35:26.960 --> 00:35:30.599
sees potential but also sees risk. SBA steps in and

446
00:35:30.679 --> 00:35:34.639
shares the risk so the loan can happen. That's how

447
00:35:34.679 --> 00:35:37.800
you keep towns alive. That's how you help an owner

448
00:35:37.880 --> 00:35:42.639
bridge a rough cash month without firing good people. That's

449
00:35:42.679 --> 00:35:45.920
how you let a buyer acquire a retiring owner's business

450
00:35:45.960 --> 00:35:49.599
instead of watching it die, instead of seeing those people

451
00:35:50.199 --> 00:35:53.440
who are employed by that business be let go, it

452
00:35:53.559 --> 00:36:02.199
become jobless. That is a legitimate public policy tool. Meet

453
00:36:02.199 --> 00:36:07.719
Ethan again, because this is where his story belongs. He

454
00:36:07.760 --> 00:36:11.280
has payroll Friday and receivables that won't hit until next week.

455
00:36:11.760 --> 00:36:14.199
He's not trying to get rich, He's trying to keep

456
00:36:14.239 --> 00:36:16.800
his crew employed. So he asks his bank about a

457
00:36:16.840 --> 00:36:21.599
seven A working capital alone. His banker explains the truth.

458
00:36:21.679 --> 00:36:25.559
Nobody puts in the brochure Without SBA guarantee, the bank

459
00:36:25.719 --> 00:36:30.440
might not touch it. With a guarantee, the risk shifts,

460
00:36:31.639 --> 00:36:34.920
and a no becomes a guess. Ethan leaves that meeting

461
00:36:35.039 --> 00:36:39.519
thinking okay, America still has my back. If I do

462
00:36:39.599 --> 00:36:44.159
this right, that's the moment. These programs are supposed to

463
00:36:44.239 --> 00:36:48.320
exist for, not for fraud, not for insiders, for the

464
00:36:48.360 --> 00:36:53.159
owner who's trying to protect jobs in their community. Seven

465
00:36:53.199 --> 00:36:57.000
A isn't just a loan program. It's also a financial

466
00:36:57.039 --> 00:37:02.119
product for lenders. And when something becomes a product, it

467
00:37:02.159 --> 00:37:09.079
attracts people who chase volume. That's not an insult, that's reality.

468
00:37:09.920 --> 00:37:15.880
There's an active secondary market for SBA backed seven A loans.

469
00:37:16.519 --> 00:37:20.639
Lenders can sell the guaranteed portion of a loan to investors,

470
00:37:21.400 --> 00:37:27.119
increasing liquidity and enabling them to issue more loans. An

471
00:37:27.159 --> 00:37:31.920
SBA's own oversight language, the lender can receive cash for

472
00:37:32.000 --> 00:37:39.440
the guaranteed portion plus a market driven PREVIEUW. The investor

473
00:37:39.559 --> 00:37:42.519
ends up holding an interest earning security backed by the

474
00:37:42.559 --> 00:37:46.599
government guarantee. So zoom out and feel the incentive. If

475
00:37:46.639 --> 00:37:49.559
you originate a lot of loans, you can generate fees

476
00:37:49.639 --> 00:37:53.000
and interest. Then you can sell the guaranteed slice for

477
00:37:53.159 --> 00:37:57.440
cash and a premium. And if the borrower defaults, the

478
00:37:57.519 --> 00:38:04.800
guarantee reduces the lenders loss exposure. That structure can expand credit.

479
00:38:05.719 --> 00:38:09.599
It can also distort behavior if underwriting gets sloppy, because

480
00:38:09.599 --> 00:38:14.079
when someone else eats most of the downside, people take

481
00:38:14.199 --> 00:38:18.840
risks they shouldn't take with their own money. SBA isn't

482
00:38:18.840 --> 00:38:22.000
supposed to be a casual about underwriting. It publishes a

483
00:38:22.039 --> 00:38:27.760
lender rule book Sop. Fifty ten, the governance Policies and

484
00:38:27.840 --> 00:38:31.800
Procedures for both seven A and five oh four. That's

485
00:38:31.800 --> 00:38:35.280
the playbook for how loans should be originated in controlled.

486
00:38:35.719 --> 00:38:39.920
If you loosen that playbook, you might boost volume. You

487
00:38:40.000 --> 00:38:43.960
might also boost losses. And the secondary market itself has

488
00:38:44.000 --> 00:38:48.960
been a control concern SBA's Inspector General has reported on

489
00:38:49.159 --> 00:38:53.960
corrective actions aimed at improving controls over seven A loans

490
00:38:54.039 --> 00:38:59.280
sold on a secondary market. Translation. When loans are packaged, sold,

491
00:38:59.400 --> 00:39:03.679
and traded, you better have strong oversight because opacity is

492
00:39:03.719 --> 00:39:08.519
where behavior lives. Now here's where the recent numbers start

493
00:39:08.559 --> 00:39:13.800
flashing red. An internal risk analysis discussed ahead of a

494
00:39:13.800 --> 00:39:18.880
Senate hearing indicated delinquencies and default surged in the seven

495
00:39:18.920 --> 00:39:22.920
A program, and the program experienced its first financial loss

496
00:39:23.039 --> 00:39:28.000
in thirteen years. That analysis cited delinquencies rising from about

497
00:39:28.000 --> 00:39:33.480
one point one percent to two point five percent over

498
00:39:33.559 --> 00:39:38.000
roughly two years, and early defaults tripling to above one

499
00:39:38.039 --> 00:39:42.679
percent in twenty twenty four. It also pointed to defaulted

500
00:39:42.719 --> 00:39:45.519
loans increasing from about five hundred and seventy million and

501
00:39:45.559 --> 00:39:49.719
twenty twenty one to about one point six billion in

502
00:39:49.760 --> 00:39:54.400
twenty twenty four. And here's what you should make. Here's

503
00:39:54.440 --> 00:39:58.639
what should make you furious. On behalf of honest owners

504
00:39:59.519 --> 00:40:03.599
one default rise. It can signal borrowers being put in

505
00:40:03.599 --> 00:40:07.559
their loans they can't realistically carry. That's not help. That's

506
00:40:07.599 --> 00:40:12.960
financial quicksand dressed up as opportunity. A separate Baron's report

507
00:40:14.119 --> 00:40:19.199
highlighted concerns that some lenders benefit while risks shift towards

508
00:40:19.519 --> 00:40:24.440
taxpayers and borrowers with profits tied to higher interest rates

509
00:40:24.480 --> 00:40:29.000
and secondary market sales of the guaranteed portion. You don't

510
00:40:29.039 --> 00:40:33.760
have to be anti bank to see the detention if

511
00:40:33.840 --> 00:40:38.840
lenders get paid no matter what, The system needs stronger discipline.

512
00:40:41.519 --> 00:40:44.960
Meet lea. She buys a small existing business from an

513
00:40:44.960 --> 00:40:49.400
owner retiring after thirty years. The numbers look decent, but

514
00:40:49.519 --> 00:40:52.679
the economy is tightening and interest rates are higher than

515
00:40:52.719 --> 00:40:57.800
she expected. She takes a seven a loan because it's

516
00:40:57.880 --> 00:41:03.960
the only path that opens in month six, sales soften

517
00:41:04.440 --> 00:41:08.639
and costs stay high. In month eight, the payment feels

518
00:41:08.679 --> 00:41:12.400
like a choke collar. In month twelve, she's not building

519
00:41:12.400 --> 00:41:18.599
a dream anymore. She's doing financial triage. Leah is not

520
00:41:18.679 --> 00:41:22.639
a fraudster. She's not lazy. She's simply over leveraged in

521
00:41:22.679 --> 00:41:27.400
an environment that punishes debt. And if underwriting didn't stress

522
00:41:27.639 --> 00:41:32.239
test her cash flow hard enough, the program didn't help her.

523
00:41:32.960 --> 00:41:36.239
It handed her a weight she couldnot lift. That's why

524
00:41:36.280 --> 00:41:40.519
defaults matter. They're not just statistics, they're real people getting

525
00:41:40.519 --> 00:41:48.719
crushed every single day. SBA does set maximum interest rules

526
00:41:48.760 --> 00:41:51.960
tied to a base rate, but in a high rate environment,

527
00:41:52.079 --> 00:41:56.199
even legal rates can still be brutal for a small operator.

528
00:41:57.079 --> 00:42:01.480
The barber doesn't feel base rate plus, they feel the

529
00:42:01.480 --> 00:42:06.400
monthly payment and whether cash flow can breathe. This is

530
00:42:06.400 --> 00:42:10.960
where policy gets personal. If the program structure notes borrowers

531
00:42:10.960 --> 00:42:18.199
into debt they can't service. We're not strengthening strengthening main street.

532
00:42:18.800 --> 00:42:22.800
We're turning small business into a default pipeline. And then

533
00:42:23.079 --> 00:42:28.000
taxpayers get told to cover the losses. Like its weather. Now,

534
00:42:28.440 --> 00:42:32.079
let's shift to five oh four because it's a different animal.

535
00:42:33.159 --> 00:42:36.880
SBA describes the five o four program as long term

536
00:42:37.159 --> 00:42:41.360
fixed strate financing for major fixed assets that promote business

537
00:42:41.360 --> 00:42:45.000
growth and job creation. Five O four loans are delivered

538
00:42:45.079 --> 00:42:52.239
through certified development companies SBA's community based nonprofit partners. The

539
00:42:52.400 --> 00:42:55.280
SBA says the maximum loan amount for a five O

540
00:42:55.400 --> 00:43:00.719
four loan is five point five million. This program is

541
00:43:00.719 --> 00:43:04.079
about buildings and big equipment. This is how you move

542
00:43:04.159 --> 00:43:07.400
from I rent a cramped shop to I own the

543
00:43:07.440 --> 00:43:10.320
place and I can hire more people. This is how

544
00:43:10.360 --> 00:43:16.800
communities get rooted businesses instead of revolving doors storefronts. When

545
00:43:16.840 --> 00:43:23.039
it's clean, it's powerful. A typical five O four project

546
00:43:23.280 --> 00:43:26.039
is structured like this. A bank finance is about fifty

547
00:43:26.079 --> 00:43:33.559
percent and holds the first lean. The CDC finance is

548
00:43:33.639 --> 00:43:38.079
up to forty percent, usually as a second lean, and

549
00:43:38.119 --> 00:43:41.400
that CDC piece is backed by one hundred percent SBA

550
00:43:41.519 --> 00:43:50.039
guaranteed deventure. The borrower often brings down about ten percent.

551
00:43:51.880 --> 00:43:53.880
That structure is the reason five oh four. It can

552
00:43:53.920 --> 00:43:57.039
be life changing. It lowers a down payment hurdle, It

553
00:43:57.079 --> 00:44:00.320
can lock in long term financing for growth assets. It

554
00:44:00.360 --> 00:44:04.239
can make expansion possible without a rich uncle writing a check.

555
00:44:05.320 --> 00:44:08.840
Now we go back to Carla, because this is her runway.

556
00:44:09.360 --> 00:44:12.679
She's outgrown her small bay and she's turned down work

557
00:44:13.880 --> 00:44:18.239
that she could be doing. She wants more welding situations

558
00:44:18.440 --> 00:44:23.360
in more stations, better equipment, and apprentices who can learn

559
00:44:23.360 --> 00:44:27.400
a trade. She wants to create jobs that people can

560
00:44:27.480 --> 00:44:31.639
build a life on. Carla finds a building that fits

561
00:44:31.719 --> 00:44:34.880
the dream, but the down payment on a straight commercial

562
00:44:34.880 --> 00:44:37.679
loan feels impossible. Then she learns about five oh four

563
00:44:37.840 --> 00:44:42.199
and realizes the structure could make the deal work. In

564
00:44:42.239 --> 00:44:45.440
her mind, this isn't about taking government money. This is

565
00:44:45.440 --> 00:44:50.719
about using a tool that finally lets a productive business scale.

566
00:44:52.239 --> 00:44:55.719
That's what we should be protecting, not the scammers, not

567
00:44:55.800 --> 00:45:02.039
the insiders, the honest builder. Even good tools could be abused.

568
00:45:02.320 --> 00:45:05.719
If appraisals are inflated, borrowers can get locked into debt

569
00:45:05.880 --> 00:45:09.400
on assets that aren't truly worth the price. If projected

570
00:45:09.440 --> 00:45:13.800
costs are padded, the barrower pays for someone else's extra profit.

571
00:45:14.880 --> 00:45:18.000
If oversight is weak, you can finance growth that isn't

572
00:45:18.079 --> 00:45:24.119
real demand. It's just leverage, and the danger is slow moving.

573
00:45:24.679 --> 00:45:29.280
Five O four deals don't always fail fast. They fail

574
00:45:29.400 --> 00:45:33.960
two or three years later when the market shifts, cost rise,

575
00:45:35.119 --> 00:45:40.559
or projections don't materialize, so the public doesn't see the problem.

576
00:45:40.679 --> 00:45:45.960
Until long after the ribbon cutting photos. So here's the

577
00:45:46.000 --> 00:45:50.360
honest summary. Seven A can be a lifeline, but the

578
00:45:50.400 --> 00:45:56.199
secondary market incentives and guarantees create moral hazard if underwriting slips.

579
00:45:56.679 --> 00:46:01.559
Five oh four can anchor job creation, but big asset

580
00:46:01.719 --> 00:46:08.159
financing requires tight valuations and discipline. Both programs can serve

581
00:46:08.199 --> 00:46:13.719
main street or they can become quiet pipelines for bad

582
00:46:13.800 --> 00:46:18.880
loans in future bailouts. Next up is where the money

583
00:46:18.880 --> 00:46:22.280
gets even bigger and the games get even dirtier, because

584
00:46:22.280 --> 00:46:25.960
the biggest subsidy for many companies isn't a loan, it's

585
00:46:26.000 --> 00:46:30.599
a government contract. Loans are a one lever, but for

586
00:46:30.679 --> 00:46:33.039
a lot of companies, the real rocket fuel is a

587
00:46:33.280 --> 00:46:38.119
government contract. A multi year contract can stabilize payroll, unlock hiring,

588
00:46:38.519 --> 00:46:45.960
and make a business bankable overnight. That's why procedures and

589
00:46:46.039 --> 00:46:51.920
procurement incentives matter so much, and that's why the cheating

590
00:46:52.039 --> 00:46:55.800
gets even uglier here. Because a loan usually has a

591
00:46:55.800 --> 00:47:00.159
ceiling in repayment terms, a contracting pipeline can become I'm

592
00:47:00.159 --> 00:47:03.400
a machine. Once you're in, the money can keep blowing,

593
00:47:03.840 --> 00:47:08.159
so the stakes get higher and the fraud gets more sophisticated.

594
00:47:08.920 --> 00:47:12.000
The eight A business development program is meant to help

595
00:47:12.079 --> 00:47:17.519
socially and economically disadvantaged entrepreneurs build real capacity. It's supposed

596
00:47:17.559 --> 00:47:21.440
to create opportunity where the system historically has slammed doors.

597
00:47:22.199 --> 00:47:25.119
It's meant to turn a small firm into a competitive firm,

598
00:47:25.599 --> 00:47:29.800
not a permanent war to the state. When it's clean,

599
00:47:30.599 --> 00:47:36.039
it can be a ladder. And this isn't small money

600
00:47:36.480 --> 00:47:40.880
at all. Federal News Network reported that eight A awards

601
00:47:41.400 --> 00:47:47.320
were forty billion dollars plus and contract awards. That's why

602
00:47:47.679 --> 00:47:50.800
everybody wants a piece of it. That's why oversight can't

603
00:47:50.840 --> 00:47:55.280
be casual, because the bigger the pot, the bigger the predators.

604
00:47:55.920 --> 00:47:59.239
Me Angela, she runs a small cybersecurity firm and she

605
00:47:59.320 --> 00:48:03.719
built it the heart years of late nights, certifications, proposals,

606
00:48:03.760 --> 00:48:06.239
and saying yes to jobs that didn't pay much, just

607
00:48:06.280 --> 00:48:09.320
to build credibility. She applies to a to A the

608
00:48:09.360 --> 00:48:14.800
honest way. She turns over financials, ownership documentation, and control proof.

609
00:48:15.199 --> 00:48:18.599
She gets in and she thinks, finally an on ramp

610
00:48:18.760 --> 00:48:23.639
to compete, not a guarantee, just a fair shot. Angela

611
00:48:23.719 --> 00:48:29.400
starts bidding. She hires one person, then another. She builds processes, compliance,

612
00:48:29.639 --> 00:48:33.079
and delivery, standards that small firms usually can't afford early on.

613
00:48:34.280 --> 00:48:38.639
This is exactly what the program is supposed to create. Now,

614
00:48:38.760 --> 00:48:42.239
let's talk about the scheme that wrecks everything to pass through.

615
00:48:42.559 --> 00:48:44.840
This is where a firm wins a contract because it

616
00:48:44.920 --> 00:48:49.840
qualifies for a preference, but the real work gets handed

617
00:48:49.840 --> 00:48:53.440
off to a non qualifying entity that couldn't win that

618
00:48:53.559 --> 00:48:58.639
contract directly. The small business becomes a costume or otherwise

619
00:48:58.679 --> 00:49:03.920
known as an invoice. The program becomes a laundering system,

620
00:49:04.159 --> 00:49:06.960
and the government already has rules designed to stop that.

621
00:49:08.000 --> 00:49:14.920
The fires eight day Rule emphasize limitations on subcontracting and

622
00:49:15.039 --> 00:49:20.079
explicitly state contracting officers can't waive those requirements. SBA's own

623
00:49:20.159 --> 00:49:25.840
Contracting guide explains that limitations on some subcontracting apply to

624
00:49:25.880 --> 00:49:30.280
set asides, including a day when the contract amount exceeds

625
00:49:30.280 --> 00:49:33.559
one hundred and fifty thousand dollars, but rules on paper

626
00:49:33.599 --> 00:49:36.840
don't matter if oversight is weak in real life. Here's

627
00:49:36.880 --> 00:49:40.679
how it plays out. Often, a large firm finds a

628
00:49:40.760 --> 00:49:46.159
small qualifying business to front the deal. They build a

629
00:49:46.159 --> 00:49:51.079
relationship that looks legitimate on paper, but functionally the prime

630
00:49:51.320 --> 00:49:54.800
is just to pass through, while the big firm does

631
00:49:54.840 --> 00:49:59.239
the primary and vital work. Sometimes it's not even subtle.

632
00:50:00.960 --> 00:50:05.000
The small business has a tiny staff, minimal equipment, and

633
00:50:05.039 --> 00:50:09.400
no real capacity for the scope, and somehow they keep winning,

634
00:50:09.679 --> 00:50:13.039
and everybody in the industry whispers, we know who really

635
00:50:13.119 --> 00:50:18.320
is doing the work. This isn't just unfair, it is

636
00:50:18.400 --> 00:50:21.880
theft of opportunity. It steals contracts from people like Angela

637
00:50:22.280 --> 00:50:26.039
who could actually perform and grow. It steals trust from

638
00:50:26.159 --> 00:50:29.519
taxpayers who are told these programs are building real capacity.

639
00:50:30.199 --> 00:50:33.800
If you want to understand how prosecutors view pass through fraud,

640
00:50:34.039 --> 00:50:39.760
look at what happened in the Supreme Court Quiesisis versus

641
00:50:40.719 --> 00:50:46.760
United States. That case involved contractors who use deception tied

642
00:50:46.800 --> 00:50:51.719
to disadvantaged business requirements, essentially using a disadvantaged firm as

643
00:50:51.719 --> 00:50:55.119
a pass through. The Supreme Court held that wire fraud

644
00:50:55.199 --> 00:50:59.280
does not require the proof the victim suffered net economic

645
00:50:59.360 --> 00:51:03.599
loss when deception is used to obtain money for or property.

646
00:51:04.519 --> 00:51:08.119
That matters for the mindset of the enforcement because the

647
00:51:08.159 --> 00:51:11.840
defense argument is often but the job got done. The

648
00:51:11.880 --> 00:51:15.320
Court's response is that's not the point. Lying to get

649
00:51:15.360 --> 00:51:19.280
the deal is just fraud in plain language. You don't

650
00:51:19.280 --> 00:51:21.159
get to cheat your way into a contract and call

651
00:51:21.199 --> 00:51:26.519
it harmless. Now here's where this gets very current and serious.

652
00:51:26.960 --> 00:51:30.719
The SBA has launched a comprehensive audit of the A

653
00:51:30.840 --> 00:51:36.400
Day program. SBA's own announcement says all forty three hundred

654
00:51:36.480 --> 00:51:40.679
eight day participants must provide financial records for the last

655
00:51:40.719 --> 00:51:44.679
three fiscal years. It also says the audit will examine

656
00:51:44.760 --> 00:51:49.480
high dollar in limited competition contracts going back fifteen years

657
00:51:49.480 --> 00:51:54.320
in coordination with federal agencies. This is not routine housekeeping.

658
00:51:54.800 --> 00:52:00.880
This is a red alert level response. That's what you

659
00:52:00.960 --> 00:52:04.519
do when leadership believes an integrity of the program is

660
00:52:04.559 --> 00:52:09.199
on the line. An SBA even references actions tied to

661
00:52:09.280 --> 00:52:12.119
allegations involving more than two hundred and fifty three million

662
00:52:12.159 --> 00:52:17.800
dollars in previously issued contract awards. Treasury isn't sitting still either.

663
00:52:18.320 --> 00:52:23.159
Treasury announced a department wide audit of preference level contracting

664
00:52:23.360 --> 00:52:28.599
across his bureaus, explicitly looking for misuse tied to a

665
00:52:28.719 --> 00:52:33.880
d A and passed through contracting indicators. So if anyone

666
00:52:33.960 --> 00:52:37.960
says this isn't real, they're lying. The government is telling

667
00:52:37.960 --> 00:52:45.440
you it's real. Now. Meet Ryan. Ryan is a service

668
00:52:45.480 --> 00:52:49.639
disabled veteran who started a small facility maintenance firm. He

669
00:52:49.679 --> 00:52:53.159
does good work, pays his people, and bids contracts he

670
00:52:53.199 --> 00:52:56.960
can realistically perform. He loses a contract to a firm

671
00:52:57.000 --> 00:53:00.559
that technically qualifies, but he hears rumors immediately. The winner

672
00:53:00.599 --> 00:53:03.480
is partnered with a bigger player that actually runs the work.

673
00:53:04.239 --> 00:53:07.280
Ryan watches the same name pop up again and again,

674
00:53:07.840 --> 00:53:10.920
and it never matches the capacity he seals and sees

675
00:53:10.960 --> 00:53:16.039
in real life. After the third loss, Ryan stops believing

676
00:53:16.039 --> 00:53:19.360
the system is about opportunity. He starts believing it's about

677
00:53:19.400 --> 00:53:23.599
paperwork tricks, and that's how you kill entrepreneurial spirit you

678
00:53:23.679 --> 00:53:29.440
claim to support. Pass Through fraud doesn't just steal money,

679
00:53:29.920 --> 00:53:33.519
It steals legitimacy from the very people the program is

680
00:53:33.559 --> 00:53:38.039
built to serve. It makes the public suspicious of all

681
00:53:38.079 --> 00:53:42.039
the disadvantaged business programs. It makes honest a day owners

682
00:53:42.239 --> 00:53:47.079
get side eyed, like they're gaming a system. It turns

683
00:53:47.119 --> 00:53:52.159
a ladder into a political punching bag, and the only

684
00:53:52.199 --> 00:53:55.840
winners are the insiders who know how to hide. If

685
00:53:55.880 --> 00:54:00.159
you care about real disadvantaged entrepreneurs, you should see and

686
00:54:00.239 --> 00:54:04.280
be ruthless about cleaning this up, because the scammers are

687
00:54:04.360 --> 00:54:09.039
using them as human shields. They're using identity and hardship

688
00:54:09.119 --> 00:54:13.480
as camouflage for greed, and that's vile. The point of

689
00:54:13.519 --> 00:54:18.559
limitations on subcontracting is straightforward. If the government sets aside

690
00:54:18.639 --> 00:54:22.480
a contract for a qualifying small business, the qualifying business

691
00:54:22.599 --> 00:54:28.559
must perform a meaningful portion of the work. That's why

692
00:54:28.920 --> 00:54:36.519
the FAR says contracting officers can't waive the requirement, and

693
00:54:36.559 --> 00:54:40.480
that's why legal analysis around the current eight A audit

694
00:54:41.559 --> 00:54:46.360
is focusing heavily on who performed what and whether firms

695
00:54:46.719 --> 00:54:50.800
became passed throughs instead of primes. So if you want

696
00:54:50.840 --> 00:54:55.159
to protect the program, we protect the principle. A preference

697
00:54:55.280 --> 00:55:00.880
is not a free pass, it's not a rent seat license.

698
00:55:02.039 --> 00:55:06.199
It's a chance to build capacity by actually doing the work.

699
00:55:07.360 --> 00:55:10.000
So here's the truth. At eight A can be a

700
00:55:10.079 --> 00:55:13.400
ladder for people like Angela. It can also be a

701
00:55:13.440 --> 00:55:17.119
costume party for insiders. If enforcement is weak, and when

702
00:55:17.119 --> 00:55:22.079
the government itself launches massive audits, that's proved we're past

703
00:55:22.119 --> 00:55:27.679
the point of minor cleanup. Next, we're going to talk

704
00:55:27.719 --> 00:55:33.039
about solutions that actually bite, not slogans will increase oversight fluff,

705
00:55:34.079 --> 00:55:39.320
real reforms that make fraud expensive, favoritism harder, and honest

706
00:55:39.360 --> 00:55:45.800
businesses the ones who win. Now, if you're a legit

707
00:55:46.000 --> 00:55:53.280
business owner, you really shouldn't have to compete with these closeted,

708
00:55:53.480 --> 00:56:00.800
costumed big businesses when you're talking about these programs, because

709
00:56:02.119 --> 00:56:09.079
if all that's really happening is a I guess really

710
00:56:09.119 --> 00:56:14.239
it is a costume a small business that really hides

711
00:56:14.360 --> 00:56:19.280
the fact that they're contracting it out to another entity.

712
00:56:19.360 --> 00:56:21.480
It makes it a lot harder for those who are

713
00:56:21.519 --> 00:56:25.159
actually trying to use this as a ladder to progress

714
00:56:25.199 --> 00:56:28.480
to the next big step, whether it's a one man

715
00:56:28.559 --> 00:56:37.599
band trying to upgrade and become an employer instead of

716
00:56:37.719 --> 00:56:46.599
a side hustle. Now, pastor schemes like that, they don't

717
00:56:46.639 --> 00:56:54.480
just steal money. It steals somebody's future, somebody's possibly someone's

718
00:56:54.559 --> 00:56:59.039
key to success because they might need that extra one

719
00:56:59.159 --> 00:57:01.760
hundred thousand dollars to be able to purchase the building

720
00:57:01.800 --> 00:57:09.199
they need. There's these pass throughs aren't victimless, is what

721
00:57:09.199 --> 00:57:13.480
I'm trying to get to. Yeah, they help the person

722
00:57:13.519 --> 00:57:16.440
who is doing the pass through and help the people

723
00:57:16.480 --> 00:57:20.320
on the back end and those bigger companies. But the

724
00:57:20.320 --> 00:57:23.119
whole point of this program is to help the companies

725
00:57:23.159 --> 00:57:28.599
who can't who need that extra help to get to

726
00:57:28.639 --> 00:57:34.639
the next step without just freely giving them the money.

727
00:57:34.760 --> 00:57:38.119
If we don't define the mission, we'll reform our way

728
00:57:38.400 --> 00:57:43.400
to the same mess mission. The mission is not move

729
00:57:43.480 --> 00:57:49.760
money fast. The mission is move money right. Because we

730
00:57:49.920 --> 00:57:54.280
already watched what happens when speed out runs verification, here

731
00:57:54.280 --> 00:57:57.639
are the non negotiables. Honest small businesses should be able

732
00:57:57.679 --> 00:58:01.559
to apply without hiring a lobbyist. Fraudsters should hit a

733
00:58:01.599 --> 00:58:06.880
wall on day one, not month twelve. And insiders should

734
00:58:06.920 --> 00:58:11.000
not be able to hide behind paperwork while they siphon

735
00:58:11.079 --> 00:58:17.199
opportunity away from the real owners. PPP and EIDL taught

736
00:58:17.239 --> 00:58:20.920
us a brutal lesson. The watchdog estimate wasn't a few

737
00:58:21.320 --> 00:58:25.480
bad loans, It was over two hundred billion dollars and

738
00:58:25.559 --> 00:58:33.119
potentially fraudulent. COVID and EIDL advances and PPP about seventeen

739
00:58:33.199 --> 00:58:37.920
percent of the funds. When you're bleeding on that level,

740
00:58:38.800 --> 00:58:42.719
your problem is an effort. Your problem is designed. So

741
00:58:42.800 --> 00:58:46.079
here's a fix. A verification stack that runs before the

742
00:58:46.079 --> 00:58:50.480
money leaves. Identity verification that is stronger than type your

743
00:58:50.559 --> 00:58:55.280
name and promise you're you business. Existence verification that confirms

744
00:58:55.320 --> 00:59:01.440
a real entity history, not a fresh shell, and payroll

745
00:59:01.480 --> 00:59:06.400
revenue verification that matches what applicants claim against actual filings.

746
00:59:08.000 --> 00:59:12.360
A system that can wire money in days can also

747
00:59:12.519 --> 00:59:17.320
cross check data in minutes. That's not science fiction, that's

748
00:59:17.480 --> 00:59:24.400
basic modernization. You can't make honest owners suffer, and just

749
00:59:24.400 --> 00:59:27.599
to be able to catch the crooks, you need targeted

750
00:59:27.679 --> 00:59:32.559
automated checks that screen for patterns fraudsters can't avoid. The

751
00:59:32.760 --> 00:59:38.920
SBA OIG said their fraud estimate was built using investigative casework,

752
00:59:39.239 --> 00:59:44.960
prior reporting, and advanced data analysis to identify schemes. So

753
00:59:45.280 --> 00:59:49.119
we stop acting like analytics are optional, and we make

754
00:59:49.199 --> 00:59:56.159
them the front gate risk scoring that creates speed for

755
00:59:56.239 --> 00:59:59.840
the honest and friction for the lyre. Not every applicant

756
01:00:00.639 --> 01:00:03.559
is equal risk. A twenty year local shop or the

757
01:00:03.639 --> 01:00:06.360
tax footprint is not the same as a brand new

758
01:00:06.480 --> 01:00:10.440
entity with weird patterns. A smart system should know the difference.

759
01:00:10.719 --> 01:00:16.920
Build a risk score that flags obvious nonsense, multiple applications

760
01:00:16.960 --> 01:00:20.519
tied to the same identifiers, strange social Security number patterns,

761
01:00:20.559 --> 01:00:27.320
suspicious addresses, addresses extreme outliers, and it payroll claims, and

762
01:00:27.400 --> 01:00:30.760
then you fast track the low risk document rich applications

763
01:00:30.760 --> 01:00:33.639
and slow down the weird stuff. You stop punishing the

764
01:00:33.679 --> 01:00:37.400
honest to be fair to the dishonest. Reform number four

765
01:00:37.960 --> 01:00:41.960
a one owner, one reality rule for control and ownership.

766
01:00:42.639 --> 01:00:46.400
Front companies strive because control is easy to hide. The

767
01:00:46.440 --> 01:00:50.119
solution is simple in principle. If you're getting benefits meant

768
01:00:50.119 --> 01:00:53.920
for small or disadvantaged owners, you must prove who truly

769
01:00:53.960 --> 01:00:58.920
controls decisions, finances, and delivery. This isn't about harassing legitimate

770
01:00:58.960 --> 01:01:03.119
business owners. This is about killing the figurehead arrangement where

771
01:01:03.159 --> 01:01:08.199
someone is owner on paper but powerless in the real life.

772
01:01:08.280 --> 01:01:11.360
If the government is awarding contracts and guarantees based on

773
01:01:11.440 --> 01:01:15.559
ownership and control, then ownership and control must be provable,

774
01:01:16.079 --> 01:01:18.840
and if you lie, you should be ejected and barred,

775
01:01:19.800 --> 01:01:25.039
not gently corrected. Here's where we go hard on reform

776
01:01:25.119 --> 01:01:28.559
number five procurement reform, because we need to stop paying

777
01:01:28.800 --> 01:01:35.559
the paper primes. A preference contract must buy real performance

778
01:01:35.639 --> 01:01:39.119
from the preferred firm, not a costume and a routing number.

779
01:01:39.960 --> 01:01:45.079
Treasury literally launched a department wide audit of preference based

780
01:01:45.119 --> 01:01:49.559
contracting about three billion dollars in contract value, specifically to

781
01:01:49.639 --> 01:01:54.679
examine the misuse of eight A in similar initiatives, SBA

782
01:01:54.800 --> 01:01:59.880
is simultaneously forcing all eight A participants to provide financial records,

783
01:02:00.079 --> 01:02:03.880
and the audit focuses on high dollar and limited competition

784
01:02:04.000 --> 01:02:08.559
contracts going back fifteen years. That tells you the system

785
01:02:08.800 --> 01:02:15.360
isn't theoretical and the problem isn't theoretical. It becomes systemic.

786
01:02:16.280 --> 01:02:20.400
It comes down to the foundations of the program. So

787
01:02:20.480 --> 01:02:25.800
well require receipts that prove performance, workshare reporting that's audible,

788
01:02:28.760 --> 01:02:35.719
not self certified fluff, staffing, reality checks, who is managing,

789
01:02:35.800 --> 01:02:38.519
who is directing, and who is delivering the primary and

790
01:02:38.639 --> 01:02:46.639
vital work. If AFFIRM functions primarily as an administrative intermediary,

791
01:02:47.199 --> 01:02:51.320
it should lose eligibility and the prime should be recompeted.

792
01:02:53.599 --> 01:02:59.840
Anytime competition is limited, the risk of favoritism arises, which

793
01:03:00.079 --> 01:03:04.480
is why we need to do reform six. Make limited

794
01:03:04.519 --> 01:03:09.039
competition a red flag category. That doesn't mean limited to

795
01:03:09.119 --> 01:03:14.760
competition is always wrong, It means demand It demands higher scrutiny.

796
01:03:15.760 --> 01:03:19.239
SBA current eight A audits is explicitly focused on high

797
01:03:19.320 --> 01:03:23.519
dollar in limited competition contracts, so we codify that mindset

798
01:03:23.559 --> 01:03:27.519
across agencies. If a contract is big and competition is limited,

799
01:03:28.239 --> 01:03:32.519
it triggers automatic review, not two years later, but now

800
01:03:33.039 --> 01:03:37.559
reform number seven lender accountability. That matches the risk when

801
01:03:37.639 --> 01:03:45.920
seven A defaults and delinquency surges, it matters who got

802
01:03:45.960 --> 01:03:51.159
paid on the way up. Reports tied to an internal

803
01:03:51.599 --> 01:03:58.800
risk analysis and Senate scrutiny highlighted that delinquencies rose sharply

804
01:03:59.119 --> 01:04:03.599
in early defaults tripled, contributing to the program's first loss

805
01:04:03.599 --> 01:04:09.480
in thirteen years. That's not just the economy. That's underwriting disciplines,

806
01:04:09.519 --> 01:04:15.719
slipping incentives, pulling the wrong way, or both. So here's

807
01:04:15.760 --> 01:04:20.840
what changes. Tiered guarantees based on lender performance, not just

808
01:04:20.920 --> 01:04:28.199
loan type clawbacks for repeat offenders who consistently originate early

809
01:04:28.239 --> 01:04:33.960
default garbage and consequences that are real loss of program authority,

810
01:04:34.480 --> 01:04:39.880
not risk slabs. If taxpayers are the backstop, taxpayers deserve teeth,

811
01:04:41.559 --> 01:04:48.400
reform a radical transparency, use sunlight as a deterrent. Fraud

812
01:04:48.440 --> 01:04:53.519
loves darkness, favoritism loves complexity. So we do what corrupt

813
01:04:53.559 --> 01:04:58.199
systems hate. We publish clean, searchable data, not to dos people,

814
01:04:58.639 --> 01:05:02.039
to create accountability. Who got the funds, how much, for

815
01:05:02.159 --> 01:05:05.840
what purpose and under what program? And on the contracting side,

816
01:05:06.079 --> 01:05:11.559
who performed, who subcontracted, and who actually delivered. Transparency doesn't

817
01:05:11.599 --> 01:05:16.119
solve everything, but it changes the psychology. When people know

818
01:05:16.239 --> 01:05:19.960
the public can see the flow, the crooks have less oxygen.

819
01:05:21.079 --> 01:05:26.280
Reformed Number nine. Simple rules for honest owners, brutal penalties

820
01:05:26.320 --> 01:05:29.559
for cheaters. Here's the balance. Make it easier to comply

821
01:05:30.039 --> 01:05:32.840
and much harder to cheat. If you're legitimate, the system

822
01:05:32.840 --> 01:05:36.480
should guide you with a pain with plain language steps.

823
01:05:37.920 --> 01:05:40.440
If you're lying, you should feel fear in your chest

824
01:05:40.480 --> 01:05:44.400
when you click submit. Because we're not talking about clever paperwork.

825
01:05:44.599 --> 01:05:47.760
We're talking about stealing money, an opportunity meant for your neighbors.

826
01:05:48.559 --> 01:05:53.320
The punishment has to fit the crime. Automatic debarment for

827
01:05:53.440 --> 01:06:00.280
proven fraud, lifetime bands for repeat offenders and people who

828
01:06:00.400 --> 01:06:08.760
orchestrate the front company's schemes, and fast referrals because justice

829
01:06:08.760 --> 01:06:14.960
delayed is fraud encouraged. Let's put this thing in human terms.

830
01:06:15.559 --> 01:06:18.199
Ethan applies for a seven a working capital loan to

831
01:06:18.280 --> 01:06:22.639
cover a payroll in a rough month. He uplods tax returns,

832
01:06:22.800 --> 01:06:26.880
payroll records, and bank statements, and the system verifies quickly

833
01:06:26.960 --> 01:06:30.679
because they can see that his story is real. He

834
01:06:30.719 --> 01:06:34.719
gets a decision fast and his guys get paid. That's

835
01:06:34.760 --> 01:06:39.199
speed for the honest. Now Chris tries the same scam

836
01:06:39.320 --> 01:06:45.880
as COVID fresh entity, weird identifiers, suspicious patterns, inflated numbers.

837
01:06:47.079 --> 01:06:50.639
The system flags him instantly, demands proof he can't produce,

838
01:06:51.440 --> 01:06:55.760
and routes it to a fraud review before a dying moves.

839
01:06:56.519 --> 01:07:01.000
That's friction for the liar. That's the whole philosophy. Fast

840
01:07:01.039 --> 01:07:04.679
for the builder, hard for the grifter. If we implement

841
01:07:04.719 --> 01:07:10.280
these reforms, we can keep what's good and cut out

842
01:07:10.320 --> 01:07:14.320
what's rotten. We can protect legitimate entrepreneurs while choking off

843
01:07:14.320 --> 01:07:18.039
fraud and favoritism, and we can stop training citizens to

844
01:07:18.079 --> 01:07:20.239
believe that the only way to win is to cheat.

845
01:07:20.960 --> 01:07:23.519
Now we ask the big question, if we clean this up,

846
01:07:23.719 --> 01:07:27.440
could small business thrive with less subsidies and smarter rules.

847
01:07:27.880 --> 01:07:30.880
Could we build an economy whether the default setting is

848
01:07:30.920 --> 01:07:38.599
opportunity not paperwork warfare? Now, the big thing with like

849
01:07:38.639 --> 01:07:41.800
I've said with subsidies is I'm not mad that they exist.

850
01:07:43.000 --> 01:07:45.519
I'm just trying to educate you guys on how these

851
01:07:45.519 --> 01:07:51.960
programs end up getting abused. And it's not necessarily to

852
01:07:53.480 --> 01:07:56.039
get you to try it, because I definitely don't want

853
01:07:56.039 --> 01:07:57.400
you to do that. I don't want anyone to get

854
01:07:57.400 --> 01:08:00.920
caught doing anything fraudulent, and I don't want you to

855
01:08:01.320 --> 01:08:07.360
commit fraud. It's not right, Like I said, when people

856
01:08:07.360 --> 01:08:11.840
who do this fraudulently, they're not only stealing money from

857
01:08:11.920 --> 01:08:14.960
your mouth because you're paying the taxes that are paying

858
01:08:14.960 --> 01:08:18.720
for these programs. They're stealing money from Maybe it's your

859
01:08:18.760 --> 01:08:21.359
neighbor's mouth, maybe it is your mouth a second time,

860
01:08:21.439 --> 01:08:23.439
because not only are you paying taxes on it, but

861
01:08:23.479 --> 01:08:29.199
you applied for the same program. Fraud is not just

862
01:08:29.319 --> 01:08:33.000
a theft of that money, it's a theft of the

863
01:08:33.079 --> 01:08:37.680
nation's trust. So as we allow fraud to continue, like

864
01:08:38.159 --> 01:08:43.279
the fraud that happened in Minnesota and then it gets

865
01:08:43.319 --> 01:08:46.239
backed by the governor's office because he said nothing happens,

866
01:08:47.880 --> 01:08:51.760
that's not right. Those people are stealing money from your mouth,

867
01:08:51.840 --> 01:08:59.279
your kid's mouths, your neighbor's mouth, everybody, everybody who pays taxes.

868
01:08:59.279 --> 01:09:03.680
There's taking them right out of your mouth. Now here's

869
01:09:03.680 --> 01:09:07.119
the question that makes people fe uncomfortable. Could small business

870
01:09:07.159 --> 01:09:12.479
thrive in America with less subsidy and less government help? Well,

871
01:09:15.600 --> 01:09:21.000
we are entangled in programs now, but could cutting them

872
01:09:22.880 --> 01:09:27.079
cause a collapse on Main Street. And I'm not asking

873
01:09:27.119 --> 01:09:31.000
it as a slogan. I'm asking it because the truth matters.

874
01:09:31.640 --> 01:09:34.119
And the honest answer is if you ripped away every

875
01:09:34.199 --> 01:09:39.760
SBA guarantee and every set aside away tomorrow, you'd hurt

876
01:09:39.760 --> 01:09:43.520
real people, not just the insiders, not the consultants. You'd

877
01:09:43.600 --> 01:09:46.800
hurt Ethan's and Carla's who use these tools the way

878
01:09:46.800 --> 01:09:51.560
they were intended to. So no, we're not doing a

879
01:09:51.600 --> 01:09:56.479
reckless pull the plug fantasy. But we also can't accept

880
01:09:56.479 --> 01:10:00.720
a system where fraud and favoritism become normal. Because the

881
01:10:00.760 --> 01:10:04.079
watchdogs estimate two hundred plus a billion dollars in potentially

882
01:10:04.119 --> 01:10:09.199
fraudulent PPP EIDL activity about seventeen percent of those funds.

883
01:10:10.479 --> 01:10:16.800
Something is structurally broken. A bridge doesn't look like that

884
01:10:17.079 --> 01:10:23.840
when it's working. It doesn't look like potholes and see

885
01:10:23.880 --> 01:10:28.159
through areas where it's been used and abused when it's

886
01:10:28.199 --> 01:10:35.560
working perfectly. Most small business owners aren't begging for subsidies.

887
01:10:35.640 --> 01:10:42.439
They're begging for fair environment. They want predictable rules, reasonable costs,

888
01:10:42.439 --> 01:10:45.520
and access to capital that doesn't feel like a trap.

889
01:10:46.039 --> 01:10:49.159
They want to grow without being punished for succeeding. So

890
01:10:49.239 --> 01:10:52.880
here's the truth we have to face. Subsidies often exist

891
01:10:53.279 --> 01:10:57.039
because the baseline environment is hostile. When the system is

892
01:10:57.079 --> 01:11:02.119
too expensive, too complex, and too volatile, government help becomes

893
01:11:02.119 --> 01:11:06.520
a patch, and patches pile up until nobody remembers what

894
01:11:06.560 --> 01:11:10.359
the original wound was. If we want fewer subsidies, we

895
01:11:10.399 --> 01:11:14.000
can't just cut programs. We have to reduce the pressures

896
01:11:14.039 --> 01:11:16.279
that force people under the tendency in the first place.

897
01:11:17.079 --> 01:11:21.880
That's tax complexity, that's a regulatory drag. That's healthcare costs

898
01:11:21.880 --> 01:11:29.880
for employers. That's uncertainty that makes lenders clamp down even

899
01:11:29.920 --> 01:11:34.840
on a good business meet Derek. He runs a small

900
01:11:34.840 --> 01:11:38.399
manufacturing shop, and he hates asking for help. He doesn't

901
01:11:38.439 --> 01:11:42.479
like paperwork, he doesn't like feeling like he owes somebody.

902
01:11:43.319 --> 01:11:49.079
He doesn't know what it's going to take to grow,

903
01:11:50.079 --> 01:11:53.920
But he also knows a new piece of equipment could

904
01:11:53.920 --> 01:11:59.399
double his output and let him hire two more people.

905
01:12:00.600 --> 01:12:03.239
Derek isn't chasing a grant because it's fun. He's chasing

906
01:12:03.239 --> 01:12:06.840
it because borrowing at high rates could choke him. He's

907
01:12:06.920 --> 01:12:10.800
chasing it because compliance costs and assurance costs already eat

908
01:12:10.880 --> 01:12:14.079
him alive. He's thinking if the government wants me to

909
01:12:14.119 --> 01:12:17.439
create jobs, Why does it make it so hard to breathe?

910
01:12:18.800 --> 01:12:23.960
That's the tension. A lot of voters don't love subsidies.

911
01:12:24.439 --> 01:12:30.119
They love survival, They love building something that lasts. A

912
01:12:30.239 --> 01:12:33.960
reduced subsidy America doesn't mean no support ever, it means

913
01:12:33.960 --> 01:12:39.840
support becomes narrower, cleaner, and more temporary. It means stop

914
01:12:39.880 --> 01:12:43.760
creating permanent programs that turn into insider playgrounds, and we

915
01:12:43.840 --> 01:12:47.760
stop designing systems where honest feel punished and the shady

916
01:12:47.920 --> 01:12:51.560
feel rewarded. Think about it like this. We keep the latter,

917
01:12:51.720 --> 01:12:54.359
but we remove the trap door. We keep the bridge,

918
01:12:54.680 --> 01:12:56.520
though we don't turn it into an all you can

919
01:12:56.520 --> 01:13:02.000
eat BFFET. We keep the tools but genuinely expand opportunity,

920
01:13:02.880 --> 01:13:06.800
but we harden them against abuse. That starts with verification

921
01:13:07.119 --> 01:13:12.199
and consequences. Because if SBAOIG is estimating two hundred plus

922
01:13:12.199 --> 01:13:15.359
a billion in potential fraud, the first reform is not

923
01:13:15.520 --> 01:13:19.600
another speech. The first reform is building systems that prevent

924
01:13:19.680 --> 01:13:24.199
the money from leaving until identity, business existence, and basic

925
01:13:24.239 --> 01:13:30.119
claims make sense. If we're serious about fewer subsidies, we

926
01:13:30.159 --> 01:13:32.600
need an off ramp, not an exit ramp that throws

927
01:13:32.600 --> 01:13:38.279
people into a ditch. A phase plan with goals and guardrails.

928
01:13:38.560 --> 01:13:43.279
Phase one is integrity, modern verification, fraud analytics, and strict

929
01:13:43.279 --> 01:13:46.680
ownership slash control enforcement. This is where you stop the

930
01:13:46.720 --> 01:13:50.920
bleeding before you argue about cutting programs, because you don't

931
01:13:50.960 --> 01:13:53.319
cut your way out of fraud if you keep leaving

932
01:13:53.359 --> 01:13:59.479
the vault open. Phase two is simplification, make the legitimate

933
01:13:59.520 --> 01:14:03.439
path easy year for honest owners, and make lying expensive.

934
01:14:04.640 --> 01:14:09.800
This includes contracting enforcement, so paper primes and pass through

935
01:14:09.800 --> 01:14:14.640
I entities get crushed. And Phase three is reduction with triggers.

936
01:14:15.079 --> 01:14:19.119
Programs should automatically shrink as the environment improves, not because

937
01:14:19.159 --> 01:14:24.199
politicians feel generous, because we put measurable triggers in place

938
01:14:26.000 --> 01:14:31.760
in the law, fraud rates, default rates, successful graduation rates,

939
01:14:31.880 --> 01:14:37.199
and private lending replacement on contracting, the government is already

940
01:14:37.239 --> 01:14:40.159
signaling that it knows that it has a problem. SBA

941
01:14:40.359 --> 01:14:43.560
ordered all forty three hundred eight DAY participants to provide

942
01:14:43.720 --> 01:14:48.119
significant financial and operational records with consequences for non compliance.

943
01:14:48.479 --> 01:14:52.880
Treasury announced a department wide audit of preference based contracting

944
01:14:53.039 --> 01:14:58.000
about nine billion dollars, including misuse tied to a day

945
01:14:58.239 --> 01:15:03.279
in pass through patterns. This is not a normal maintenance.

946
01:15:03.920 --> 01:15:09.199
That's a credibility crisis response. So here's what reduced subsidy

947
01:15:09.199 --> 01:15:13.560
looks like. In procurement. You'll keep set asides where they're needed,

948
01:15:14.239 --> 01:15:19.640
but you enforced performance like a hawk. You publish workshare data,

949
01:15:20.199 --> 01:15:25.520
you audit limited competition deals automatically, and you do bar

950
01:15:25.720 --> 01:15:30.439
cheaters fast. Because opportunity program that's easy to cheat is

951
01:15:30.479 --> 01:15:35.039
just a subsidy for corruption on lending. We have to

952
01:15:35.079 --> 01:15:38.640
stop pretending incentives don't matter. If the eight eight, if

953
01:15:38.640 --> 01:15:44.319
the seven A program is seeing delinquencies in early default surge,

954
01:15:44.600 --> 01:15:48.640
that's a sign that we need to tighten standards and

955
01:15:49.199 --> 01:15:56.159
have real accountability. If lenders are insulated by guarantees while

956
01:15:56.199 --> 01:15:59.840
barro wars get saddled that they can't manage, we're not

957
01:16:00.039 --> 01:16:05.800
helping main street. We're setting up future pain. A smarter

958
01:16:06.359 --> 01:16:12.159
reduced subsidy approach will look like this. Guarantees that reward

959
01:16:12.560 --> 01:16:18.039
good underwriting and punish repeated early default patterns. Borrow or

960
01:16:18.199 --> 01:16:23.039
education built into processes so people understand the terms and

961
01:16:23.079 --> 01:16:27.760
the risk. In a system that prioritizes stability over volume,

962
01:16:28.600 --> 01:16:32.640
Because when a program has its first financial loss in

963
01:16:32.760 --> 01:16:37.159
thirteen years. You don't just shrug. You fix the incentives

964
01:16:37.439 --> 01:16:41.840
before you expand the damage. Now go back to Carla.

965
01:16:42.000 --> 01:16:45.520
She wants to buy that building, ad equipment and trained apprentices.

966
01:16:46.399 --> 01:16:49.399
She doesn't want a free ride, She wants a fair

967
01:16:49.439 --> 01:16:53.079
shot at growth in a cleaner system. She applies for

968
01:16:53.119 --> 01:16:57.479
a five oh four. The valuation is solid to projections

969
01:16:57.479 --> 01:17:02.960
are stress tested, the bank and CDC do real underwriting,

970
01:17:03.800 --> 01:17:08.039
and she knows what she's signing for. That's a bridge.

971
01:17:08.079 --> 01:17:11.920
That's a program that creates jobs and roots businesses and communities.

972
01:17:14.600 --> 01:17:17.520
And if we run it with integrity, we don't need

973
01:17:17.560 --> 01:17:21.960
thousands of other subsidies stacked on top of it. Fraud

974
01:17:22.000 --> 01:17:24.800
doesn't just steal dollars, it steals trust, and trust is

975
01:17:24.840 --> 01:17:28.239
the glue holding this whole thing together. When honest owners

976
01:17:28.239 --> 01:17:33.439
watch scammers cash checks and post luxury photos, it changes them.

977
01:17:33.760 --> 01:17:37.319
It makes them cynical, It makes them question whether being

978
01:17:37.359 --> 01:17:42.680
honest is a disadvantage. And once enough citizens feel that way,

979
01:17:42.960 --> 01:17:48.680
the culture shifts. Rules then become a joke, Institutions become

980
01:17:48.720 --> 01:17:57.399
a punchline, and the next crisis becomes worse because cooperation collapses.

981
01:17:58.199 --> 01:18:02.000
That's why this matters, not because we love paperwork, because

982
01:18:02.039 --> 01:18:04.479
we love the kind of country where hard work and

983
01:18:04.560 --> 01:18:09.960
honesty actually means something. Now, let me land this plane

984
01:18:10.359 --> 01:18:12.840
with something that's been sitting on my chest this whole episode.

985
01:18:13.119 --> 01:18:15.960
Because you've listened this far, you already feel it too.

986
01:18:16.319 --> 01:18:19.439
This isn't about loan programs and contracts. This is about

987
01:18:19.479 --> 01:18:24.359
whether or not our country still believes in main Street

988
01:18:24.359 --> 01:18:27.239
the way it claims to. For decades, we've watched the

989
01:18:27.359 --> 01:18:30.159
rules bend to the powerful. We've watched Wall Street get

990
01:18:30.159 --> 01:18:34.600
treated like it's too big to fail. We've watched bailouts, backstops,

991
01:18:34.880 --> 01:18:39.319
special facilities, special carve outs, and quiet rescue missions that

992
01:18:39.439 --> 01:18:43.560
never get framed as welfare. But then when Main Street

993
01:18:43.760 --> 01:18:47.600
asks for a fair shot, suddenly everybody becomes a philosopher

994
01:18:47.720 --> 01:18:54.479
about personal personal responsibility. That double standard is poison because

995
01:18:54.520 --> 01:18:56.720
it teaches the working owner that the system is not

996
01:18:56.800 --> 01:19:00.479
built for builders, it's built for insiders. It teaches them canic,

997
01:19:01.199 --> 01:19:05.880
the manufacturer, the diner, the daycare provider, the small town

998
01:19:05.920 --> 01:19:10.239
contractor that their risk is their problem. And the powerful

999
01:19:11.399 --> 01:19:16.800
get to socialize losses while privatizing gains. And I'm not

1000
01:19:16.840 --> 01:19:20.840
saying every form of support is wrong. I'm saying the

1001
01:19:20.880 --> 01:19:24.159
direction of sympathy has been upside down for far too long.

1002
01:19:25.159 --> 01:19:28.439
We treat billion dollar balance sheets like fragile glass, and

1003
01:19:28.479 --> 01:19:33.319
we treat small businesses like disposable paper. We talk about

1004
01:19:33.399 --> 01:19:36.600
job creators while letting the people who actually create local

1005
01:19:36.680 --> 01:19:41.000
jobs fight a war on three fronts, taxes, regulation, and

1006
01:19:41.119 --> 01:19:45.840
access to capital. Main Street doesn't want special treatment. Main

1007
01:19:45.880 --> 01:19:49.680
Street wants equal treatment. Main Street wants the same benefit

1008
01:19:49.720 --> 01:19:54.439
of the doubt we have and give to hedge funds

1009
01:19:54.479 --> 01:20:00.720
and megabanks. Main Street wants the same speed, the same time, seriousness,

1010
01:20:02.119 --> 01:20:05.439
and the same competence. When the system claims it's helping,

1011
01:20:07.199 --> 01:20:10.680
when a small business fails, it's not a line item.

1012
01:20:11.279 --> 01:20:14.960
It's the diner where your kid got their first job.

1013
01:20:16.439 --> 01:20:18.840
It's a shop that fixed your truck when you had

1014
01:20:18.840 --> 01:20:22.560
no money. It's the owner who sponsored the local team,

1015
01:20:22.960 --> 01:20:27.119
donated to the fire department fundraiser, and still showed up

1016
01:20:27.359 --> 01:20:30.520
early the next morning to unknock the door. When a

1017
01:20:30.520 --> 01:20:33.039
small business dies, a town doesn't just lose a business.

1018
01:20:33.119 --> 01:20:37.119
It loses stability. It loses identity, It loses relationships and

1019
01:20:37.199 --> 01:20:40.600
routine and pride. And we should be furious that we

1020
01:20:40.720 --> 01:20:45.880
let systems get hijacked that we're supposed to protect those places.

1021
01:20:45.920 --> 01:20:48.920
Doing better means that we stop pretending fraud is just

1022
01:20:49.000 --> 01:20:54.319
paperwork issues. Fraud is theft from the honest owner who

1023
01:20:54.359 --> 01:20:58.239
didn't have time to learn loopholes. Fraud is theft from

1024
01:20:58.279 --> 01:21:03.159
the worker whose employer didn't get help in time. Fraud

1025
01:21:03.199 --> 01:21:06.840
is theft from taxpayer who wanted to help their neighbor,

1026
01:21:07.359 --> 01:21:10.960
not finance a scammer's lifestyle. Doing better means that we

1027
01:21:11.000 --> 01:21:15.079
build a system that treats honest owners like adults worth respecting,

1028
01:21:15.880 --> 01:21:21.439
fast verification, clear rules, real accountability, No more maize where

1029
01:21:21.439 --> 01:21:25.760
only insiders and consultants can win. And doing better means

1030
01:21:25.800 --> 01:21:28.399
that we stop acting like Wall Street is the only

1031
01:21:28.439 --> 01:21:32.079
engine that matters. Because Wall Street doesn't fix your neighbor's tractor.

1032
01:21:33.079 --> 01:21:36.239
Wall Street doesn't keep a daycare open so parents can

1033
01:21:36.279 --> 01:21:39.359
go to work. Wall Street doesn't keep a small town

1034
01:21:39.479 --> 01:21:41.840
alive when the factory shuts down and the only thing

1035
01:21:41.920 --> 01:21:45.760
left is the people who refuse to quit. Main Street

1036
01:21:46.039 --> 01:21:49.720
is not a hashtag. Main Street is not a campaign prop.

1037
01:21:50.039 --> 01:21:54.479
Main Street is America's daily grind and daily courage. Main

1038
01:21:54.560 --> 01:22:00.560
Street is people carrying weight most folks never see, and

1039
01:22:00.640 --> 01:22:02.840
if we're going to call them the backbone, then we

1040
01:22:02.840 --> 01:22:06.439
need to start treating them like the backbone. That means

1041
01:22:06.880 --> 01:22:10.199
real access to capital that isn't designed to trap them.

1042
01:22:10.600 --> 01:22:14.000
That means contracting systems that don't reward paper primes and

1043
01:22:14.079 --> 01:22:17.479
pass through games. That means removing the red tape that

1044
01:22:17.560 --> 01:22:22.239
suffocates small operators while giant firms hire teams to navigate

1045
01:22:22.680 --> 01:22:27.600
it like a sport. It means we stop letting the

1046
01:22:27.680 --> 01:22:32.880
politically connected treat small business programs like a buffet. Here's

1047
01:22:32.920 --> 01:22:35.680
the vision I want you to hold on to. In

1048
01:22:35.760 --> 01:22:41.560
America where the honest owner doesn't feel stupid for being honest.

1049
01:22:42.279 --> 01:22:46.039
In America where the builder has a fair shot without

1050
01:22:46.079 --> 01:22:51.239
needing a cousin in congress. In America where a kid

1051
01:22:51.439 --> 01:22:54.880
with a dream can open a shop, hire people, and

1052
01:22:55.000 --> 01:22:59.039
grow without being crushed by rules written for the biggest players.

1053
01:23:00.119 --> 01:23:02.760
If you've ever felt the rage in your chest, that

1054
01:23:02.920 --> 01:23:06.319
rage of doing everything right and still being told to wait,

1055
01:23:06.520 --> 01:23:10.039
still being told no, I want you to know you're

1056
01:23:10.079 --> 01:23:17.560
not alone. That anger isn't weakness, it's your conscious recognizing injustice.

1057
01:23:17.720 --> 01:23:24.720
So don't turn that emotion into bitterness. Turn it into demand. Demand, Transparency, demand, consequences.

1058
01:23:24.880 --> 01:23:30.079
Demand reforms that remove the insider advantage and protect the honest,

1059
01:23:30.760 --> 01:23:32.800
because if we can build a game that gives Wall

1060
01:23:32.880 --> 01:23:37.279
Street a safety net when it falls, we can damn

1061
01:23:37.399 --> 01:23:40.920
sure build a system that gives Main Street a fair

1062
01:23:41.000 --> 01:23:45.079
chance to stand, not a permanent crutch, not a political trophy,

1063
01:23:45.319 --> 01:23:48.600
but a fair shot. And that's what this whole series

1064
01:23:48.680 --> 01:23:52.279
is about, not tearing down the idea of help, because

1065
01:23:52.279 --> 01:23:55.760
everybody needs help every once in a while, but reclaiming

1066
01:23:55.760 --> 01:23:58.760
it from the hijackers. So the next time an owner

1067
01:23:58.840 --> 01:24:02.119
needs to help help to make payroll, the bridge is

1068
01:24:02.159 --> 01:24:06.000
there and it's clean. So the next time a shop

1069
01:24:06.079 --> 01:24:09.359
wants to expand and create jobs, it's a fair system,

1070
01:24:09.399 --> 01:24:13.479
not a rigged game. Main Street deserves the same seriousness

1071
01:24:13.479 --> 01:24:18.479
we give Wall Street. Main Street deserves the same competence,

1072
01:24:19.159 --> 01:24:22.600
the same urgency, and the same respect. And until they

1073
01:24:22.640 --> 01:24:25.159
get it, we're going to keep talking about it. We're

1074
01:24:25.199 --> 01:24:27.319
going to keep shining a light, and we're going to

1075
01:24:27.399 --> 01:24:32.439
keep demanding better because America works when main Street works,

1076
01:24:33.359 --> 01:24:39.359
not only when Wall Street works. If this episode hits

1077
01:24:39.359 --> 01:24:42.880
you hard in the chest, don't let it stop with you.

1078
01:24:43.479 --> 01:24:46.239
Send it to one small business owner. Respect Send it

1079
01:24:46.279 --> 01:24:49.039
to the person who signs paychecks before they pay themselves.

1080
01:24:49.800 --> 01:24:52.319
Send it to the builder who's tired of feeling like

1081
01:24:52.359 --> 01:24:55.079
the system only works for the insiders. If you want

1082
01:24:55.079 --> 01:24:57.880
to support this show in a real way, please leave

1083
01:24:57.920 --> 01:25:02.800
a review on Spotify. Please set that rating. You can

1084
01:25:02.840 --> 01:25:07.319
get five stars or leave. Leave the honest one. If

1085
01:25:07.359 --> 01:25:11.279
you didn't like it, it's four stars. However you want

1086
01:25:11.319 --> 01:25:14.680
to rate it on Apple Podcasts, write that quick review

1087
01:25:14.880 --> 01:25:17.560
and tell people what you got out of this episode.

1088
01:25:18.640 --> 01:25:23.000
Those reviews aren't vanity. Those reviews help this message reach

1089
01:25:23.399 --> 01:25:28.279
main street and take ten seconds to follow or subscribe

1090
01:25:28.359 --> 01:25:31.680
wherever you're listening. Turn on notifications so you don't miss

1091
01:25:31.720 --> 01:25:35.000
the next episode in the series. We're not doing one

1092
01:25:35.159 --> 01:25:39.560
and done. We're going program by program, exposing the rot

1093
01:25:39.880 --> 01:25:43.319
and fighting for reforms that actually protect honest people. Now,

1094
01:25:43.319 --> 01:25:45.279
if you want to share this episode and you don't

1095
01:25:45.319 --> 01:25:48.600
feel like writing a whole post, I already did the

1096
01:25:48.680 --> 01:25:52.000
work for you. Check the show notes right now. I

1097
01:25:52.039 --> 01:25:56.640
put it ready to copy. Social caption in there for Facebook, Instagram,

1098
01:25:57.039 --> 01:26:03.159
X and more. Pick one, paste it and hit post.

1099
01:26:03.880 --> 01:26:06.479
If you share it, please tag me, tag the show

1100
01:26:06.640 --> 01:26:09.640
so I can repost it and thank you, because the

1101
01:26:09.680 --> 01:26:12.279
whole point of this series is to get Mainstreet's voice

1102
01:26:12.319 --> 01:26:17.439
louder than the insider's excuses, and every single share helps

1103
01:26:17.560 --> 01:26:22.920
this message reach the people who need it most. Also

1104
01:26:22.960 --> 01:26:25.319
in the show notes, you'll find sponsor links. If you

1105
01:26:25.319 --> 01:26:28.479
can support the show, use those links so they know

1106
01:26:28.640 --> 01:26:33.039
where that you came from here. That's how we keep

1107
01:26:33.079 --> 01:26:37.039
this content independent, consistent, and growing. And if you're watching

1108
01:26:37.079 --> 01:26:39.920
on YouTube or listening on audio, drop a comment. Tell

1109
01:26:39.960 --> 01:26:44.359
me your story. Have you used SBA loans, PPP, EIDL

1110
01:26:44.600 --> 01:26:47.920
seven A five oh four or dealt with government contracting?

1111
01:26:48.720 --> 01:26:51.199
Does the system help you, hurt you or make you

1112
01:26:51.239 --> 01:26:55.680
feel like you needed a lawyer just to breathe? Just

1113
01:26:55.720 --> 01:26:57.960
don't name names or docs anyone. We don't need that.

1114
01:26:58.560 --> 01:27:02.359
Just tell your story all I need, all right. Social

1115
01:27:02.399 --> 01:27:04.920
captions are in the show notes. Sponsor links are on

1116
01:27:04.960 --> 01:27:09.319
the show notes. Grab one, post it and let's make

1117
01:27:09.359 --> 01:27:14.920
this conversation bigger than one episode. Thanks for sharing, Stay strong,

1118
01:27:15.199 --> 01:27:18.199
stay sharp, and take care of your people. I'll see

1119
01:27:18.199 --> 01:27:20.479
you in the next one as we are still working

1120
01:27:20.520 --> 01:27:26.520
through our subsidy master series. And don't forget drop a

1121
01:27:26.520 --> 01:27:30.319
follow on those socials to stay up to date. I

1122
01:27:30.399 --> 01:27:33.840
hope you guys have a great day in a great week.

1123
01:27:34.479 --> 01:27:38.880
You guys are amazing. Keep up the good work as

1124
01:27:38.880 --> 01:27:40.359
we fight for main Street