THE BLOG
02/07/2009 05:12 am ET | Updated May 25, 2011

ASBL's Lloyd Chapman Questions Whether Obama Stimulus Plan Will Favor Venture Capitalists

In a guest commentary published on The Exception Magazine's website, www.exceptionmag.com; the President and Founder of the American Small Business League (ASBL), Lloyd Chapman questioned whether the, "latest economic stimulus plan that will come from President-elect Barack Obama and the Democratic Congress will likely contain new loopholes in federal laws and policies that will benefit wealthy venture capitalists that contributed heavily to Obama's campaign and key Democratic leaders in Congress." (http://exceptionmag.com/news/business/000223/obamas-stimulus-plans-will-favor-venture-capitalists-over-middle-class)

According to Chapman, "The National Venture Capital Association (NVCA) and it's well-heeled members want the definition of a small business as "independently owned" changed to include firms that are actually not independently owned, but controlled by some of the wealthiest individual venture capitalists in the country and possibly even some of the country's largest venture capital firms."

Since the introduction of H.R. 3567, which as introduced would have allowed a single venture capital firm to own up to 51 percent of a small business and maintain status as an independently owned small business, the ASBL has fought to stop the inclusion of language it claims would destroy federal programs intended for small businesses.

The small business community at large seems to agree. After taking a strong stance against H.R. 3567, the ASBL has seen support from the Small Business Administration, the Bush White House, the U.S. Chamber of Commerce, the National Association of Government Contractors, and the National Small Businesses Association. (http://www.asbl.com/showmedia.php?id=624)

In his commentary, Chapman states, "Over the last few years, the NVCA and its members have spent millions of dollars lobbying Congress for changes in federal small business policies that would allow them to hijack billions of dollars in federal contracts earmarked for small businesses." An assertion that is backed up by data from Maplight.org (http://www.maplight.org/map/us/interest/F2500) and by an April 24, 2008 story by Keith Girard from AllBusiness.com, in which Girard states, "The most recent effort is a case study of how Velázquez has thrown the game to big pharma, through the BIO [Biotechnology Industry Organization]. Out of three hearings on the bill since January, 10 of the 16 witnesses had ties to biotech and/or venture capital interests, two had general biotech backgrounds, and the rest were government officials. No one spoke on behalf of small businesses, according to Rick Shindell, who writes a newsletter on the SBIR program." (http://www.allbusiness.com/company-activities-management/business-climate-conditions/9077284-1.html)

Chapman contends, "If President-elect Obama and Democratic leaders like House Speaker Nancy Pelosi are successful, the middle class economy could be damaged even further. Millions of middle class jobs could be lost as billions in federal contracts, which are currently flowing to legitimate small businesses, will be diverted to a small number of firms controlled by wealthy venture capitalists."

Since 2003, there have been more than 15 federal investigations that have found fraud, abuse, loopholes and a lack of oversight in federal small business contracting programs. For all intents and purposes, small business programs have enough problems without having to worry about Congress building more loopholes into the system.

If the 111th Congress and the Obama Administration prove Chapman right, our nation's nearly 27 million small businesses and the middle class economy will be the ones to suffer.