Sonoma wine maker Vance Rose admits his timing was bad and isn’t happy that taxpayers are possibly left paying the debt.
Rose borrowed more than $1 million in September 2008 — with the Small Business Administration backing more than $756,000 of those loans — for his winery called Rose Wine Group, LLC, according to an SBA database of loan charge-offs.
“I bought the winery and its assets in late August, early September and the economy crashed,” he told Watchdog.org. “Distributors stopped taking on new products. I tried to make it work for three years but couldn’t get anything going, couldn’t get any more capital so I had to declare bankruptcy.”
He said his lender recommended the Small Business Administration-backed loan, but Rose defended taxpayer-backed loans for luxuries like wineries.
“The wine business is like anything else, but I’m not sure I’m qualified to sit here and tell (the SBA) where the money should go to and shouldn’t,” he said.
National Taxpayers Union president Pete Sepp didn’t have any reservations telling the SBA what to do, saying taxpayers shouldn’t be backing businesses that can’t get private funding, especially risky ventures like wine making.
“It seems to be a good time to reevaluate the mission and purpose and existence of the SBA,” he said. “It is a questionable function of government to underwrite or guarantee many of these loans.”Watchdog.org obtained a database of SBA-backed loans that were charged off, meaning lenders determined they would not be able to collect repayment.
That database shows that more than $4.5 million in 7a loans, which fund business operations, and 504 loans, which fund buildings and equipment, for wineries were charged off since 2009, which is when taxpayers started subsidizing the repayment of some of the SBA loans.
Since 2009, Congress has contributed about $835 million in tax dollars to the two biggest SBA loan programs though some say the 7a program returned more to the U.S. Treasury than was allocated because Congress miscalculated the default potential. Rose’s loans were charged off in 2011 and 2012.