View from Main Street: The Need for Financial Reform
Truman, Mark, Kennedy School Review
In early 2009, I attempted to secure a loan through a new federal program designed to help entrepreneurs improve their cash flow by consolidating outstanding debt. As a cash-poor but profitable enterprise, my tutoring business, Omniac Education, seemed to be a perfect candidate for the program. Although we sometimes had trouble making rent, we had survived the enormous downturn brought on by the financial crash in 2008, and I knew that if we could get a loan to steady our cash flow, my company would be able to get back on its feet.
But it soon became clear that I was not actually eligible for the loan in question. While America's Recovery Capital loan program was designed to "help small businesses meet existing debt payments" to succeed in the long run, after going in to apply and completing two hours of paperwork, the bank agent informed me that Omniac would only be eligible if we had been profitable in 2008. I was furious. Who would ask for a loan if they had made money the year before?
Yet as I drove from the bank back to my struggling business, I felt strangely free. The idea that you needed to have money in order to borrow money seemed almost Kafkaesque, and somehow the realization of this absurdity released me from many of the self-imposed burdens I had been shouldering up to that point. I had spent years under the impression that the success of my company depended solely on my own effort; now I realized that I had reached the edge of my personal capacity, and that no matter how hard I worked I could not overcome the financing wall that my business was now facing.
I sent the Wells Fargo staff a card the next week. "Thank you for your time and energy," I wrote, "it has made a world of difference for myself and my company." I sent the note without malice or anger; the whole experience had finally let me face the reality of my situation, and I felt it was only fitting to thank the employees of the bank for the good deed they had done.
Unless you live in Albuquerque, New Mexico, and have a high school age kid you have probably never heard of Omniac Education. But for the past five years, my for-profit education firm has employed a dozen tutors and administrators who help New Mexican students prepare for college. We coach and advise kids from all parts of the economic spectrum, from wealthy high achievers who want to pay top dollar for exclusive, extensive programs to low-income students who work with us in programs subsidized by the city or state. While we are a for-profit company, we take great pride in making sure that each and every family we work with is ready for college by the time they leave us, and we are especially focused on the quality of our teachers and counselors. To that end, Omniac Education has paid out nearly half a million dollars to its employees and contractors over the last five years.
For most of the last five years I personally handled payroll for Omniac, collecting Excel sheets from tutors tracking the hours they worked, then painstakingly entering the information submitted into our accounting software before writing checks to the employees. Twice a month I would sit down to an oversized business checkbook filled with enormous, blank checks and sign away a few thousand dollars in revenues to tutors and administrators who earned every penny that they were paid. I grew to love the moment that I handed an employee a pay stub and a check: it was a tangible reminder that we had made a difference in a child's life and that the business had provided an opportunity for someone to be gainfully employed.
This past summer, I stepped out of my role as Omniac Education's executive director to enroll in the Master in Public Policy program at the Harvard Kennedy School. I considered closing down the business, but I did not have the heart to pull the plug on teachers who wanted to teach and students who wanted to learn. I spent most of the first half of the year preparing everyone for my impending departure, hiring a new executive director, and training other key workers to do new jobs. …