Business Advice for Bad Economic Times
Washington's Small Business Assistance: Truth or Fiction?
Written by Chris Martin for Gaebler Ventures
The Obama administration has pledged support for small businesses as they try to recover from the recession. But is Washington putting its money where its mouth is? Karen G. Mills, the head of the Small Business Administration, weighs in.
The recession has hurt Americans of all stripes. In response, the Obama administration has pushed for initiatives to help those who have been affected.
The federal bailout plan was designed to keep large companies from closing their doors and jettisoning their workers. Laws extending unemployment benefits were passed to help those who are unable to find a job.
But what is Washington doing to help small business owners?
That's the question that Karen G. Mills, the head of the Small Business Administration, is trying to answer. As the liaison between small businesses and the Obama administration, Mills is the most important voice in DC for entrepreneurs and the owners of smaller-sized companies.
Mills and her supporters note that Washington appears to be focusing its efforts away from big business and toward entrepreneurs and smaller shops. President Obama has gone on record several times as saying that small businesses will help drive economic recovery and growth in America in the near future.
But skeptics point to the $2.8 trillion that was showered on big business via the bailout and other targeted initiatives – almost six times the figure allocated for small businesses. Loans for small businesses were down 6% in the first quarter of 2010 from the same period in 2008. And some observers question the track record of Washington when it comes to backing up rhetoric with actions.
Mills does have some good news for small business owners. She notes that as part of the Recovery Act, the SBA was permitted to boost its loan guarantees to 90% on small business loans and decrease or eliminate many of the fees associated with these instruments. She is asking Congress to extend those guidelines through the end of 2010, and is also calling on lawmakers to raise SBA loan limits from $2 million to $5 million. Plus, Mills is promoting language that will help business owners refinance, for modernization or expansion purposes, real estate they are currently using or occupying.
Mills is also fighting for a piece of Uncle Sam's pie when it comes to government contracts. Her goal is that 23% of all federal contracts should be assigned to small businesses in the U.S. totaling $100 billion annually. Mills noted that in 2009, the SBA focused on getting specific Recovery Act contracts assigned to small businesses – and in doing so posted a 29% success rate, thereby succeeding their target.
And Mills isn't forgetting about entrepreneurs. Noting that high-growth entrepreneurs tend to create more jobs than typical Main Street businesses, she says that the SBA is focusing on counseling and capital issues that are specially tailored for this sector. Mills also has announced that her agency's Small Business Investment Companies program is on the fast-track, meaning that more applications for financial assistance are being processed so that funding can be allocated toward more small businesses.
Whether Washington listens to Mills' advice or follows through on its stated commitment to small businesses remains to be seen. But Mills promises that the SBA will continue to invest in its infrastructure and technology to help keep small businesses and entrepreneurs competitive and sustainable in the U.S. for years to come.
Chris Martin has been a professional writer for the last seven years. He is interested in franchises and equity acquisition.
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