By Elaine Pofeldt
April 15, 2010
With the November Congressional elections on their minds, Senate Democrats are working on a bill that would reportedly help small businesses get more access to loans, government contracts and overseas markets.
The bill would potentially use money from the Troubled Asset Relief Program for loans made through community banks, The Washington Post reported yesterday. Also under consideration are provisions that would raise the limits on SBA-guaranteed loans from $2 million to $5 million, increase access to government contracts and research grants, and provide more support to export programs.
The timing is potentially spot-on for small businesses. We're finally seeing some signs that the economy is recovering, like increased retail sales figures for March. Given more funding and bigger markets, downturn-weary entrepreneurs might finally be able to move from survival mode to high gear.
But it's not all that easy for the government to make loans and sales opportunities available. If legislators are serious about offering real help, they will makes sure they anticipate any potential roadblocks before they pass the bill. That means paying careful attention to the details in a way that seems to be out of style in Washington right now.
Consider what happened when the Recovery Act authorized loan application fee waivers and higher government guarantees for SBA-backed loans. This program turned out to be very popular, given banks' reluctance to lend to small business during the credit crunch. The dollar amount of SBA-guaranteed loans doubled in the most recent quarter, compared to the same one last year, The Wall Street Journal reported. However, the program has come to a halt three times until Congress authorized additional funding. That left applicants grappling with whether to move ahead on their applications and pay the steep fees - which for one business amounted to $43,000 - or to put themselves on a waiting list with the hope that more funding for the program would be forthcoming.
While the federal government says it awarded a record number of government contracts to small business owners last year, small business advocates counter that many such contracts have, historically, actually gone to big corporations in entrepreneurial clothing. The American Small Business League is suing the General Services Administration to get access to data that would help in investigating whether big companies deliberately misrepresented themselves as small in the past decade so they could go after contracts intended for small firms, according to a Washington Post report on Monday.
This doesn't mean that government is incapable of offering real help to the small business community. It simply underlines how important it is for legislators to get this bill right, so it works as planned.
As a nation that is depending on hiring by small business to pave the way out of the recession, we can't afford any new measures to help them that don't work well and chip away their confidence. Usually known for perennial optimism, they are pretty pessimistic right now, especially about Washington. They need to see that legislators who know how to get things done right are on their side.
A survey of small business owners released Monday found that 49% see the federal government as moderately to highly unsupportive toward small business. Only 5% see it as very supportive, according to the findings by e-mail marketing company Constant Contact and collaborators such as the American Chamber of Commerce Executives, the Association of Small Business Development Centers, and SCORE.
It's going to take some smart policymaking to get small business owners feeling positive again. The National Federation of Independent Business's Index of Small Business Optimism which was released yesterday, fell in March, despite recent economic growth. "Poor sales and uncertainty continue to overwhelm any other good news about the economy," said Bill Dunkelberg, NFIB's chief economist.
If this new bill provides some real help, it could turn around the mood of the nation's entrepreneurs. Once they feel ready to start growing their businesses again, that will give other Americans something to feel optimistic about: more jobs.