President Obama and others have used the words “small business” frequently, but I am not sure anyone in Washington understands what small business is, how it operates or what it needs.
According to the Small Business Administration, there are over eight million small businesses in the US with less than 100 employees, and of that group 70 percent are companies with less than five employees – super-small. We super-small businesses represent 99.7 percent of all employers. These statistics do not include home-based businesses.
President Obama keeps talking about helping small business. The Senate has passed a bill that gives tax breaks to companies who hire unemployed workers. That may help some companies, but let me explain the problems with that bill and the thinking that this is going to help super-small businesses.
Let’s look again at the fact that 70 percent of small businesses comprise less than five people. Do the president and the Congress think that small businesses struggling to stay afloat (after greedy Wall Street bankers and movers and shakers pulled the rug out from under the world economy) are even thinking about hiring? NOT! Super-small businesses are looking for a way to keep their doors open for the little bit of business there is. They are not going to hire someone just to get a tax break. That’s like saying, “I’ll spend $30,000 so I can get $1,000 back. Wow, what a deal!
Here is a reasonable three-step program that would actually help very small businesses.
1. Place a moratorium for one year on federal payroll taxes for super-small businesses (less than five employees). During this period, the federal government would make the contributions made by super-small businesses to keep state and local taxes coming in and not further impact state revenues. This needs to be done yesterday. Fiscal impact over several years would be negligible. If these businesses survive, the government would “get their money back” over future years of the businesses’ productivity and future taxes.
2. Make zero percent interest government loans of up to $50,000 (with reasonable repayment terms) available to small businesses (less than five employees). This would allow businesses that are having trouble with cash flow to stay afloat until the economy improves. Even though we keep hearing that money is available, the reality is that no money is available to super-small businesses. A little financial help could allow businesses to operate and not have to close their doors or file for bankruptcy. These loans could be funded from leftover TARP and Stimulus money without impacting the overall deficit. Some of this money could help to pay employee health insurance contributions from the business, employees or both. Businesses would be liable for repayment of this “loan” unless they went out of business or had to file bankruptcy.
Create a “Super-Small Business Advisory Board” with access to both the president and Congress so the voices of those companies can be heard and needed legislation can be discussed with real business owners and not in the vacuum of Congressional knowledge that is misinformation.
Our government says it is trying to help small businesses. Washington continues to bail out the biggest banks, automakers and big corporations, but is not helping the 70 percent of businesses in this country that make the wheels turn. We, the small business entrepreneurs, have been the backbone of our economy, and there are roughly 90 million workers employed by small businesses with less than five employees!
Super-Small business is not looking for a handout from taxpayers. What we are looking for is a program that will help us survive. Wall Street bankers have received more than $150 billion in bonuses so far this year. These are the same companies whose “producers” caused the worldwide economic meltdown. They should be in jail.
If Washington thinks super-small business is that unimportant, then don’t do anything. If our government is genuinely interested in keeping America first in the world of innovation at a time when we need innovation to stimulate the new economy, then something demonstrative must be done to keep super-small business alive to support this innovation.
The reason China is probably going to win the race to the new economy is that it is doing the type of small business stimulus America should be doing. The Chinese government is giving money to the super-small businesses that make China’s economy work. China understands that in order for the country to grow it must support the super-small companies that can make that happen.
You can bet that innovation in the areas of energy, global warming issues and technology aren’t going to be coming from Goldman Sachs, Merrill Lynch, Bank of America or AIG. All they are going to do is suck us dry, again. America can be the leader of the new economy, and our government has to get behind the super-small businesses that are going to make that happen or China is going to win the race and America is going to be in something other than first place.