Many small business owners were anxiously awaiting President Obama’s announcement this week about the small business stimulus plan. But sadly, most were disappointed. The President’s plan focused mainly on shoring up the Small Business Administration loan guarantee programs so banks would loosen the purse strings and start lending to small business again.
Considering that small business is the economic engine of the US, you would think we would be able to get a piece of the stimulus pie. And just how big are our numbers anyway? Well, according to the SBA Office of Advocacy fact sheet, small business firms:
- Represent 99.7% of all employer firms
- Employ about half of the private sector employees
- Pay nearly 45% of US private sector payroll
- Have generated 60 to 80 percent of net new jobs annually over the last decade
Pretty impressive, huh? Well sure, until you start looking at the small business size standards set by the government and discover that in some industries a business that has as many as 1500 employees is considered small. I think the small business stimulus was targeted more at the “larger” small business without consideration of the “small” small businesses most of us own.
So what do “small” small businesses need?
1. Short term loans / Line of credit
A lot of small businesses just need the occasional safety net to get through a month or two of slow sales or small bump in inventory. This could be accomplished through a small bank loan or line of credit that is borrowed and paid back on a regular basis.
2. Access to credit cards with low interest rates
When the economy hit bottom, credit card companies started increasing interest rates on the majority of small businesses – even those that had great credit ratings and a history of good payment. Their excuse? They had to project their business interests given the current economic environment. Since many small businesses can’t get loans, access to credit is an absolute must to ensure their survival.
3. A lighter tax burden
The entire tax code is so convoluted it takes a “super” expert to navigate it. Just try to do your own business taxes or read a government publication explaining a tax item and you’ll know exactly what I’m talking about. Let’s make it simpler and less time consuming to comply.
4. Properly oversee federal small business contracts
The SBA was downsized to the core under the last administration, resulting in less contract auditing and compliance reviews. Making sure that small business is getting its share of these contracts is critical to small business survival.
So here’s what I’d like to propose to President Obama to stimulate “small” small businesses:
- Reduce the tax burden and tax code complexities. It’s time our government embraced the KISS (Keep It Simple Silly) approach.
- Require any bank that’s received bailout money from the government to use a percentage of loan funds specifically for “small” small business short term loans and lines of credit.
- Monitor, manage and penalize government agencies that have small business contracts which divert the money to large companies.
- Your suggestion here. What would you like to propose to President Obama for a small business stimulus package? Please leave a comment below.
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About the Author: Denise O’Berry is a small business expert who provides tools, tips and advice to help small business owners be successful. O’Berry is the author of “Small Business Cash Flow: Strategies for Making Your Business a Financial Success.” Her blog can be found at Just for Small Business.