Something is rotten in the state of Capitalism. Admit it, you can sense that this is the case.
(Sorry, comrades — not everything is rotten. Just something. The gearbox works overall, but one of the gears is slipping.)
I. The big problem
You have probably heard about how the Fed has been “printing money,” and that interest rates are historically low. But small businesses don’t see it that way.
A major corporation pays 2.3% to borrow (a 5-year “AA” bond). I pay 2.4% to borrow (a 5-year car loan). But a small business with $5 M in revenue pays 7-10% for a 5-year loan — that’s three to four times as much — if it can even get financing at all.
No financing for a small business == no growth == no hiring == no jobs.
HOW IS IT RIGHT that the capital flows easier to me to get spinner rims on an Escalade, than for a business to get a lathe or a convection oven or a new retail location? (Answer: it’s not right. It’s messed up.)
II. The root cause
(As it happens, the “why” here also goes a long way to explaining the 2007-2009 financial crisis — believe it or not.)
In the 1970s, the credit bureaus (consumer and business) switched over to using computers, giant databases that hoovered up data from banks, credit card companies, mortgage lenders, and other creditors.
But because of how consumers and businesses differ, the credit bureaus went on to become extremely good at expanding their breadth and depth on consumers — while remaining very poor at covering small businesses in the US. As a result, most solvent adults in the US have a FICO score, but almost no businesses have a useable credit report.
That stylin’ 1970s picture above? It’s not so far from the truth. The business credit industry still refers to the monthly data that forms business credit reports as the “trade tapes.” That’s right, tapes, like … reel-to-reel. Not even 8-track.
Capital — the sheer tsunami-force of Mammon — is mighty, but it is also mighty lazy. And it flows first where risk is low and information is high. So the great engine of American finance, turbocharged by the savings of a billion Chinese, sloshed the money into anything with a FICO score stamped on it. Mortgages, auto loans, student loans, credit card bills — all sliced and diced and rehypothecated because of how easy it is to check the FICO.
But any business too small to have a Moody’s or S&P bond rating was left out of the party. No FICO == no flood of capital.
Could it be, that if we’d only been pouring money into productive endeavors like building small businesses, the story of the 2008 crisis might have been different … or never have been at all?
III. Why this matters
So we ended up with a 30-year period where money got cheaper and cheaper, and more and more of it got printed, but it flowed preferentially to the very largest corporations and to individual consumption. And sure enough, we got what we paid for: large corporate profits and personal consumption expenditures are once again at an all-time high, as a proportion of our economy.
And now we have our McMansions, and our Escalades, and our S&P 500 peaks, but our small businesses remain choked off from capital.
(This is not the only way for a capitalist economy to work or even thrive; Germany, the healthiest economy in all Europe, treats their small businesses differently and it works out for everyone. In America, small businesses account for about half of jobs; in Germany, it’s 70%. That difference in the number of small business jobs is enough to completely wipe out unemployment. No joke.)
IV. What we’re going to do.
SimpleVerity is going to fix the economy. Since we don’t control the Federal Reserve, the next best thing is to fix the systematic lack of capital for small businesses. And we’re going to do that by creating a meaningful, useable credit report on every small business in America.
Will you join us?
 “Small Business…”:
(When we say “small business,” we mean really any company from a couple, up to a couple hundred, employees. There are about 5.9 million of these. So, everything from two guys doing consulting, to a thriving specialty manufacturer.)
 5-Year AA Bond yield (as of 2013):
 75% of US Adults have a credit score (as of 2004):
1) To facilitate faster processing, write the following
information on the external media label:
Number of Records
2) Mail Tapes, 3480 and 3490 Cartridges to:
Experian Information Solutions
Attn: AMC Tape Library
611 Experian Parkway
Allen, TX 75013
 “Great engine of finance…”:
(Of course, a vast amount of fraud and freeloading — mostly by brokers and bankers, actually — came along with the legitimate torrent of capital. When that rot was discovered, we had a financial crisis, and that rot had to be purged. The underlying structure and the sources of data, though, have not changed.)
 Corporate profits a % GDP
PCE as % GDP
 “Germany treats their small businesses…”
“it works out well…”:
See German’s AAA credit rating, higher than America’s: