Concern for U.S. small businesses has taken on a stronger voice amid the hand-wringing over the country’s economic and financial turmoil. Less than a week after Congress passed and President Bush signed the Emergency Economic Stabilization Act of 2008, popularly known as the Wall Street bailout, Sen.
Charles Schumer (D.-N.Y.) called on the Bush administration to create a temporary direct-loan program for small businesses to serve as a bridge until funds kick in from the $700 billion bailout. Schumer said the federal government should step in immediately to help small businesses that may have trouble acquiring short-term loans to cover payroll or purchases because it will take a month for the bailout funds to enter the market.
“The lines of credit to small businesses in the New York area and on Long Island are frozen because when the big banks freeze their lines of credit, it affects the local banks. We’re already hearing of small businesses cutting back or going under,” Schumer said at the time. He said the federal government could make the loans through the U.S. Small Business Administration, which would not require congressional approval. He suggested the agency would require “in the tens of billions” to help small businesses over the course of two to three months.
Owners of small businesses are divided on how much good the bailout would do, but groups advocating on their behalf insist the measure will help them.
“While small-business owners have strong and conflicting feelings about the economic rescue package, in the end, their ability to grow their businesses depends upon stability and liquidity in the financial markets,” Todd Stottlemyer, president and CEO of the National Federation of Independent Business, said in a statement. “Small-business owners, whether or not they use credit to run or expand their own businesses, know that access to credit and a fully functioning financial market are important to them and to their customers, suppliers and vendors.”
John F. Robinson, president and CEO of the National Minority Business Council Inc., added that, by providing most of the country’s new jobs, small businesses are the engine of economic growth and therefore must be given priority under the bailout. He noted that Section 107 of the bill is especially critical for minority and women-owned business enterprises that depend on federal procurement contracts for all, if not most, of their revenue.
“Treasury Secretary Paulson must pay vigorous attention to Section 107, which allows him to waive, under specific conditions, provisions of the Federal Acquisition Regulation that stipulate that some federal contracting must go to minority, women- and veteran-owned businesses, but mandates that he develop alternate procedures to ensure the inclusion of minority contractors in such instances,” Robinson said.
Robinson also pressed Secretary Paulson to move quickly on a proposal in which the Treasury Department would buy the loans of small businesses, even though businessowners have not yet defaulted on the loans. “Buying up some of this commercial paper from the banks will free up money in the banks to loan back to the small, minority and women business community and help stimulate the economy,” he said.
In general, however, the NMBC has adopted a beyond-the-bailout stance. In the run-up to the Nov. 2 presidential elections, the organization’s board of directors called on candidates Barack Obama and John McCain to work assiduously to bolster minority and women-owned enterprises and recommended a six-point strategy to help the candidates do so. The strategy urges the candidates to take steps to:
• Establish a commission on minority, women- and veteran-owned businesses to identify the constraints facing these businesses and recommend innovative public and private initiatives to assure their survival and growth during and beyond the current economic crisis.
• Move the Minority Business Development Agency into the U.S. Small Business Administration, thereby removing its tenuous status as an Executive Order agency.
• Strengthen veteran-owned businesses by establishing a separate division within the SBA to address the needs of these businesses.
• Provide easier access to federal
procurement opportunities for minority, women- and veteran-owned businesses.
• Enhance access to equity and other forms of financing for minority and women-owned enterprises by, among other measures, streamlining regulations covering private placements and smaller public offerings and revitalizing the SBA’s Small Business Investment Company Program.
• Eliminate barriers to international trade and support innovative programs and partnerships that will enable small and medium-size companies to take advantage of opportunities for growth in global markets.