March 25, 2009
Politicians perennially say more about boosting small businesses, the backbone of the U.S. economy, but do less for them than anything else.
That’s why as the national economy has augured toward recession or worse, the plight of small business in this country has been overshadowed in the din of failing mega financial institutions brought down by their own greed, bad management, corruption and risky gambles with other people’s money.
While the federal government is printing billions upon trillions of dollars to bail out these self-destroying institutions feared to be too big to fail, life-sustaining loans for small businesses literally have dried up. Even those with impeccable credit are finding it impossible to get the loans they need to stay in business.
President Barack Obama, following up on one of his most consistent campaign pledges, this week proposed a number of steps to put new life into those small businesses left floundering in the wake of the economic tsunami sweeping across the country, actually the globe.
Obama temporarily raised the Small Business Administration’s loan guarantee program from 85 percent to 90 percent through the end of the year to encourage banks to extend credit to their small business customers. The president temporarily eliminated fees assessed borrowers as well as lenders in another step to help make more capital available quickly to small businesses. And he committed up to $15 billion from the $730 billion Troubled Asset Recovery Program to purchase small business loan securities thawing out the secondary market that normally buys up small business loans. If it works, banks would have more money to lend their smaller customers.
The 11 troubled banks that have soaked up so much taxpayer money to remain solvent also will be required to report the percentage of their bailout funds they are lending to small businesses each month.
Probably most controversial is a proposal to eliminate the capital gains tax for investment in small startup businesses. Critics say the tax elimination will reward venture capitalists without yielding much benefit to small businesses. That remains to be seen, but the issue should be debated thoroughly in Congress.
In addition, the president’s health care reforms propose new tax credits to small businesses that provide health care to their employees. Still to be resolved is a possible hit on small businesses that would be affected by the president’s proposed tax increase on individuals with income exceeding $250,000. Small businesses owners have to list their business income as personal income although a lot of it goes right back into the business.
Some, of course, will say “Here we go again, hemorrhaging the federal treasury.” Well, that just does not seem to be a valid criticism of the small business relief plan. The elimination of upfront fees for processing loans is victimless. The secondary market seed money already is appropriated by Congress and being spent on much less valid purposes.
Remember, as candidates always remind us when they want our votes but forget the day after the election, small businesses provide half of all private, non-government jobs — in fact, roughly 70 percent of those created in the past decade. Small businesses produce 13 times more patents per employee than large companies.
Remember also how many of the icons of successful entrepreneurship in this country began as small businesses in somebody’s garage or college dorm room or as a single restaurant. That’s reason enough to support small businesses that support your town and this state.
The cost is minimal, especially compared to the billions and trillions of taxpayer dollars being pumped into self-destructive financial institutions that have stalled the economic engine that drives the way of life so in jeopardy today. But the rewards could be maximal, demographically and geographically indiscriminate, and the widespread impact felt almost immediately.
Source: http://www.thenewsenterprise.com/ |
