On Saturdays, I like to walk around the commercial section of my community. It’s a bustling enclave of small businesses, stretching several blocks in either direction of the intersection of two of the borough’s busiest thoroughfares. Except for the banks and a new Walgreens, these businesses, including the fast-food franchises, are family owned. I like the timbre and energy of this commercial enclave — the Caribbean, Hispanic, African, Arab, East Indian, Korean and Chinese accents flavoring the wrangle-tangle of buying and selling; the four-generation age range; the aromas of Caribbean food going up against McDonald’s, Popeyes and Crown Fried Chicken and pizza; and street vendors selling everything from roasted corn and sliced mangoes with hot sauce to gaudy trinkets sporting home-country flags and smoke alarm systems. There are versions of it across the nation.
I thought of these businesses when President Obama signed the Small Business Jobs Act of 2010 in September. Just who will be the real beneficiaries? Are my community’s enterprises in the mix? The legislation gives small-business owners about $12 billion in tax cuts (for example, bigger deductions on startup expenses, health-care costs and cell phones, and bigger write-offs on capital investments in their businesses); more than doubles the size of loans guaranteed by the U.S. Small Business Administration, meaning more private finance would be available to businesses for expansion and hiring; creates a $30 billion fund to incentivize community banks to increase lending to local small businesses; removes enough red tape to encourage true small businesses to go after their fair share of federal contracts; and helps to strengthen “innovative” state programs for small businesses.
The SBA determines the legal definition of a “small business,” using criteria that include the number of workers employed, annual receipts and the nature of relationships with affiliates. The SBA establishes small business “size standards” for each industry: 500 or fewer employees for most manufacturing and mining industries; 100 or fewer employees for wholesale trade industries; annual sales receipts of $6 million for most retail and service industries; $27.5 million for most general and heavy construction industries; $11.5 million for special-trade contractors; $0.5 million for most agricultural, forestry and fishing industries.
The businesses in my community generally fall into the retail and service categories. On Saturdays, the owners tend to be around all day long and I stop to chat with some of them. I’ve learned that some of them are self- or private network-financed and plan to remain so. Those who use bank loans say they don’t see the point of making more credit available when banks still use pre-recession, one-size-fits-all standards for determining creditworthiness. Most of them employ fewer than 10 people, including family members, and don’t plan to do more hiring just yet. They may improve on their facilities — a new computer or shelf here, a piece of equipment there — but for now they don’t plan to expand beyond their current square footage. They’ve always been able to write off 100 percent of their capital improvements. Except, perhaps, for Bobby’s Department Store, $6 million in annual receipts is a wish. “But we’re doing OK. God is good.”
So about the Small Business Jobs Act of 2010? “It sounds nice.”
And therein lies the opportunity: helping to exploit the potential of community businesses to grow to the point where they can really benefit from the act.