Wednesday, December 10, 2008
Small Business Credit Crunch Deserves Attention
Frustrations grow as the nation’s big three auto makers line up for another $17b. As the federal government focuses on damage control at the macro-economic level, it has ignored the micro-level small businesses. Meanwhile small businesses with stellar 800 credit ratings out of 850 cannot get a loan or their credit line has been reduced. Some economically respectable small businesses have had their credit lines cut in as much as half. Despite the fact as large companies are downsizing and outsourcing, small businesses have become the principal job generators in this country, accounting for almost all the net job gains in the United States.
A credit crunch on this job-generating sector of our economy should be a key part of any economic recovery plan and small business advocates have approached Washington on this very issue. Their quest was to meet with the Federal Reserve to ask for a relative pittance, $13 billion in bailout money, to go to the Small Business Administration to guarantee loans and provide small businesses with technical assistance. The SBA has had its budget slashed drastically over the past 30 years and by nearly 30 percent during the current president's terms alone. Their quest is a hopeful one as their hard work may leverage as much as $620 million for small businesses if a bill authored by Sen. John Kerry to provide SBA loan guarantees is passed and signed into law.
Entrepreneurs, along with the rest of the country, await the inauguration of a new President with an ambitious agenda. Obama’s inheritance of a badly wounded economy has become first priority and has already with his experienced team set down to put plans to work. Two important elements will undoubtedly be job and economic growth. President-elect Barack Obama and the new Congress are likely to view an economic stimulus package as a critical tool for restoring confidence in the economy.
The stimulus package expected pass, likely to hit $300 billion, and it is possible that a piece of it is passed before President George W. Bush leaves office. It is expected to see aid to states and cities facing budget shortfalls, extended unemployment benefits and food stamps, and big infrastructure spending. Overcoming pessimism that currently overshadows the markets and economic decision-making will require some symbolic moves. It is encouraging that so far, the President-elect seems to be surrounding himself with experienced advisers, many are from the Clinton Administration, who are seasoned pros who have been there and who understand the importance of business.
While help with the economy slowly trickles down to small businesses, cutting costs and pinching pennies can be stressful, and could use some support along the way there is no doubt that the resilience of small businesses is the steadfast heartbeat of America at it will survive.