The year 2011 will go down in history as the year in which we captured Osama bin Laden, the Great Recession teased us with the notion of a looming recovery and the U.S. formally declared an end to the Iraq War—truly historic, indeed. But which events will have the biggest impact on small business? Here's a look at our year-end wrap-up.
The all-year Arab Spring
Small and angry was the new black in 2011 as little people from New York to Athens to London railed against big business, big banks and big government. Taking tips from pro-democracy protesters in the Arab world, Americans staged massive sit-ins using social media, expanding the clout of Twitter and Facebook. Young people in tents hunkered down in New York's Zuccotti Park across from some of the nation’s biggest banks as some like-minded small business owners rushed in food and supplies to people who declared, “We are the 99 percent.’’ Other business owners, such as those in Oakland, Calif., demanded that cities stop the protests, saying they were scaring away customers.
The Euro’s fate
European residents, and Europe’s myriad economies, took a beating in 2011 as several countries—namely Greece, Ireland and Portugal—struggled to avoid defaulting on their debts. Meeting in Brussels in December, German Chancellor Angela Merkel arm-wrestled Euro leaders to accept tighter oversight of government spending as she pushed for a unified fiscal policy. Euro citizens, including small business owners, can be expected to pay starkly higher tax rates (or be forced to start paying taxes) while losing valued government services—a change that could crimp business starts and growth in the near future.
The year was supposed to be a hot one for new stock offerings, as companies regained some bounce after the recession-that-never-seemed-to-end. The market for public offerings started strong, but withered and many investors feared another tech bubble. Dozens of IPOs registered with the federal government were yanked. In September, data tracker Dealogic found that 63 percent of IPO listings had fallen beneath their initial price. The May debut for LinkedIn, the professional networking site, was initially fat, but soon deflated. For all the breathlessness over companies that included Groupon and Zynga, investors soured on many more, including FriendFinder and Imperial Holdings.
A promise to lend
Lending to small businesses remained tight, but some reports said that the picture was brightening. Lending, though, had yet to return to pre-2007 levels. FDIC data in June showed that the country’s banks held just over $605 billion of small-business loans, compared with more than $681 billion in June 2007, according to small-business loan adviser MultiFunding. In 2011, the Small Business Administration guaranteed more money in loans to small companies than ever before: $30.5 billion—an increase of $2 billion from the previous 2007 record of $28.5 billion.
The tenacious jobs bill
President Obama took a drubbing when his jobs bill failed to win Congressional support. Lawmakers nixed the parts that would have helped construction workers and governments keep public employees. But the limited version that was passed in November was expected to help small businesses, by awarding a payroll tax cut and offering tax breaks to those who employ military veterans. Let's see if it does.
A push to innovate
Numerous agencies and offices sought to foster new ideas by offering grants for small business innovation, including several contests run by community foundations. Congress then gave small businesses a Christmas present: after several years of squabbling, the House and Senate authorized Small Business Innovation Research money, opening the program to companies backed by venture capital. The program steers to small companies R&D money for ventures with commercial potential.
Jingle bells, indeed.
A win for the jobless, and for all?
After much griping, two months of emergency benefits for the long-term unemployed were extended just before Christmas, preventing an estimated six million people from falling off the dole. But reports say that some Americans might be eligible for just 79 weeks, and not the full 99 weeks offered to the jobless in the hardest hit states. The law will decide, based on whether the jobless rate in each state is much worse than it was during the previous three years.
After several of these recession-era extensions, however, the money is bound to dry up in 2012. And many of those unable to find work might start their own small businesses. Here’s to welcoming our new brethren.
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