With National Small Business Week starting on May 20, a few thoughts about what small business owners should know about Capitol Hill these days.
I hope the thoughts will resonate since I really come at them from two points of view: credit union trade association CEO pushing for a bill to boost our industry's small-business lending capacity, and long-time small business advocate. Meaning, I've been around long enough to know the pitfalls for small business owners:
1. Everyone likes to talk about supporting small businesses. Sure, it sounds good to say, "We need legislation that will get people back to work, and we need small business to grow again." But empty talk has always been in abundant supply on Capitol Hill. The reality is we are not doing enough to support small business.
While our economy is showing signs of improvement, the small business lending environment is lagging. In fact, lender-approved small business loans fell from March to April this year. That, of course, is due to the belt tightening of the banks and in part to the current regulatory environment. In fact, since the beginning of the economic downturn in 2007, credit union business loans grew by nearly 45%, but bank business loans declined by roughly 15% in the same period. Moreover, current data show that the credit union approval rate for small business loans is five times higher than that of big banks. Again, I'm a credit union guy, but those stats tell you how the banks are falling short these days.
2. It's not all gridlock. Yes, this is a bitter election year, and many members face tough campaigns. Filibusters are threatened left and right. But even so, I think Sen. Mark Udall's legislation (S. 2231) to expand credit unions' small business lending authority has a strong shot of making it past a filibuster this year. Small business owners fall into that increasingly shrinking bipartisan group of coalitions that are well-received in Congressional offices and on both sides of the aisle.
3. Congress needs to hear from actual small business owners. The bank trade associations have powerful lobbyists and are expending vast resources to continue to tell Congress, "Don't increase the small business lending authority of credit unions." Our pending legislation would allow us to lend more money at no cost to the taxpayer, but the banking lobby keeps trying to thwart our effort because they feel threatened by our potential expansion. But, the good news is that members of Congress also still understand that small business owners play significant roles in their districts and that credit unions have been involved in small business lending since the early 1900's. It was only in the late 1990's that our lending was restricted, at the banks' urging.
Candidly, that's why my organization is relying on the visits of people like Michael and Trevor Tucci -- the founding brothers of Energy Interactive Fitness Center in St. James, New York -- who were turned away from nine banks before they turned to Bethpage Federal Credit Union and were granted a loan. We're also counting on folks like Doug Krussel of Omaha, Nebraska. Doug wanted to expand his security systems firm and was shown the door at six different banks. He then walked into his local credit union, where he was granted a loan. The funds helped these borrowers successfully expand their businesses.
4. Talk jobs, not just numbers. Job creation is on every member's mind right now. Every representative wants to return to his or her district and demonstrate votes and actions they took to help get people back to work. That's why I personally emphasize in every meeting that raising the cap on credit union small business lending would translate to 140,000 new jobs created in just year one. It's simple really. Issue more loans to businesses, and they'll spend more on new hiring. Oh and by the way, I have to get to that fact quickly, which is another imbedded lesson. Pick key points, stick to them and have them at the ready for a conversation in a hallway, elevator, or home district meeting. When you're dealing with Congress, you may only have a 30-second window to make your case.
5. Band together. You can't go it alone on Capitol Hill. It's imperative to have like-minded allies, and to be creative. Again, I'm a credit union veteran, but I'm working with leaders of more than 30 organizations that you wouldn't necessarily think fit our interests including the National Association of Realtors and the National Council of Textile Organizations. Also candidly, we may take different positions on issues, but we all agree that the Hill can do better and make more capital available for small business owners.
All in all, simple lessons. But they matter, especially now. If small business owners want to see more credit available, they need to keep their eye on Washington as much as their local lending institutions. And yes, we need the help. Sure, organizations like mine know the ins and outs and the daily machinations of the legislative process. But a small business owner really knows what it means to support a small business.
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