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Policy Matters: Then We'll Build Our Own
a weekly column There really is a reason why I fell in love with microbusinesses. You can see that reason in the research I released last week, which I cover in this week's newsletter. Microbusinesses have transformed themselves from business tadpoles into game-changers. You see, up until recently, small businesses have had to grow to a certain point so they could transform themselves operationally into something approximating a large firm in order to "fit in" to the U.S. economy. That is why it is sometimes said, among us microbusiness advocate types, that a small business with 40 employees has a lot more in common with a "small business" that has 400 employees than it does with a small business that has 4 employees.
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This week's news briefs
White House Rolls Out Small Biz Jobs Proposals
As amazing as it may seem in a Washington that often seems collectively afflicted with ADHD, the Obama Administration spent the entire week last week talking about small businesses. And it's not even Small Business Week! Evidently, when the President said his renewed focus on job creation would start with small business, he meant it. Not that there was anything startlingly new or innovative in the proposals we heard last week. So far, the White House prescription for incentivizing job growth consists of tax cuts, tax credits and more lending. Administration officials started the week talking about the President's plan to transfer $30 billion from the Troubled Asset Relief Program into a separate Small Business Loan Fund that would be used to invest in small and community banks, upon terms that will create strong incentives to increase small business lending.
In addition, on the lending front, there were a few other tweaks announced, such as extending the Recovery Act provisions that eliminate fees and raises the guarantee on some SBA loans and raising the cap on SBA Express loans to $1 million. On the tax front, there's the tax cut for creating new jobs and the temporary payroll tax break for wage increases in excess of inflation. There are also extensions of increased expensing and bonus depreciation provisions, and the proposal to eliminate capital gains taxes on investments in small business stock. Some of this might be helpful for some microbusinesses but, of course, the Administration is only interested in helping small businesses that create jobs. Given that microbusinesses generate income but not necessarily jobs, there's not much point in looking to the feds for more broadly based support at this time.
Micros Don't Fit In With U.S. Economy
Living a reasonably cushy life in these United States (by international standards), we Americans are inclined to take certain things for granted. For example, one thing we take so utterly for granted that most have never even thought about the concept is the infrastructure of the U.S. economy. The economic infrastructure of the U.S. consists of that set of institutions, instruments and conventions that form the foundation upon which we are all expected to do business. It is worth thinking about, thanks to new research released last week by the Microbusiness Research Institute*, which found that microbusinesses have had to evolve their own way of doing business (thanks to their size) that seems to be a poor fit for that infrastructure.
The paper, entitled "A Profile of Microbusiness: The 2008 IssuesLive Minnesota Regional Pilot", documents and analyzes empirical information and survey data collected during IssuesLive, a series of public forums billed by its organizers as a public dialogue and needs assessment for microbusinesses with fewer than ten employees. According to survey results, microbusiness owners report that their primary challenges lie in the areas of time and money, while their top policy concerns are access to capital, the state of the economy and, in third place, health care reform. Microbusiness owner respondents expressed little interest in gaining better access to the policy making process; they appear to be largely disaffected with politicians and public policy. The entire report is currently available for download from the Microbusiness Research Institute web site here.
* Disclaimer: The Microbusiness Research Institute is the research division of Wahmpreneur Publishing, Inc., parent company of the Microbusiness News Briefs.
Another Hefty Increase in SBA FY11 Budget Proposal
President Obama may have proposed a three-year freeze on discretionary spending but among those items he considers worthy of increased investment is the U.S. Small Business Administration. The President's budget proposal for fiscal 2011 includes an increase of $170 million for the SBA, which would bring the agency's budget up to $994 million. Those on Capitol Hill who might have been expected to be happy about this budget proposal, were, and those who might have been expected to be unhappy about this budget proposal, also were. No surprises here.
In terms of the SBA's greatest hits, this budget supports $17.5 billion in 7(a) loans and $25 million in Microloans; it provides $10 million for Microloan technical assistance, $113 million for the Small Business Development Centers and $14 million for Women's Business Centers; and $3.5 million for the PRIME grant program. Under the category of "Possibly Interesting New Stuff," the President's budget also provides for $11 million in funding "to support the job growth potential found in regional clusters of businesses." It's difficult to say what, exactly, this means but it may be worth watching. The next movement in this annual dance begins later this week when the House Small Business Committee is scheduled to hold its FY2010 budget hearing. As of deadline, the Senate counterpart hearing has not yet been scheduled.
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