For too long, small businesses have been struggling to bear the brunt of the recession. Lending has all but dried up for small employers, and too many lawmakers are spending more time playing politics than working to pass smart legislation to help them. If small businesses are going to help fix our country's employment problem, they need increased access to credit and smart jobs legislation. How do we know small business owners feel this way? We asked them.
According to a national poll of 500 small business owners released Jan. 26 by Small Business Majority, Main Street Alliance and the American Sustainable Business Council, an overwhelming 90 percent of small employers believe credit availability is a problem for small businesses. Employers also agree when it comes to lending, banks are less friendly than they were four years ago: 61 percent say it is harder to get a loan now than it was then.
Banks' loan portfolios have been reduced by more than $47 billion since the pre-recession peak--and that affects business owners across the country. Take Sandra Garratt, for instance. Since 1992, she has operated several organic clothing companies. As an early investor in innovative manufacturing--and one who has been named entrepreneur of the year, at that--she thought she'd be able to obtain a loan, or at least a line of credit for her business. She was wrong. She had to take time away from the business to care for aging parents, which negatively affected her credit. Despite her business acumen and accolades, every bank has turned her down. She's now forced to turn business away regularly because of an inability to stock fabric.
It's the experiences of real small business owners like Sandra that explain why 90 percent of entrepreneurs want community banks' and credit unions' lending authority expanded. And more than three-fourths of them support incentivizing community banks to boost their small business lending. Without these kinds of measures, many small business owners are forced to take extreme measures--like turning to credit cards.
Anyone familiar with credit cards knows their terms and conditions can make your head spin, and that debt can build in the blink of an eye. Yet despite the risk they pose, more than half of small business owners have used credit cards to help finance their business. But owners know they can cause problems, which is why four in five support requiring the credit card industry to provide clearer disclosure of terms and interest rates.
The bottom line is small business owners need increased cash flow to keep their doors open and hire more workers. But that can't happen without the help of smart policies that boost the private sector. Besides increased access to credit, small business owners also support current proposals being debated in Congress, and highlighted by the president in his 2012 State of the Union address, that aim to stimulate the economy and create jobs.
When asked about various provisions included in the president's American Jobs Act, small business owners were particularly supportive of investments in infrastructure: 69 percent favor investing $50 billion in projects to improve roads, bridges and water systems, and six in 10 small business owners support creation of a nationwide wireless network.
Innovation has historically been one of the driving forces behind entrepreneurship. It's no wonder small business owners recognize the potential and opportunity for innovation to stimulate the private sector. It's not just a select group of small business owners that feel this way, either--survey respondents' political views run the gamut: 50 percent of respondents identified as Republican, 32 percent as Democrat and 15 percent as independent.
Small businesses need a hand if they're going to help rebuild the economy. Today's credit barrier limits small business expansion and strains entrepreneurs' capacity to put America back to work. While lawmakers in Congress are using partisan rhetoric to dismantle proposals aimed at creating jobs, entrepreneurs are repeatedly voicing their support for these exact ideas. For their sake, legislators need to focus on bettering credit conditions and try to repair our jobs problem.
John Arensmeyer is the founder and CEO of Small Business Majority. Follow him on
Twitter at @SmlBizMajority.
Follow John Arensmeyer on Twitter: www.twitter.com/SmlBizMajority