Why We Need to Make Sure Small Businesses Can Thrive

Inc.com

Entrepreneurs are a crucial part of our economic fabric. They create jobs, challenge convention and find new ways to solve old problems. But U.S. entrepreneurship is on the decline. The number of companies less than a year old as a share of all businesses has fallen nearly 44 percent between 1978 and 2012, and in 2008, we hit a disturbing milestone: The percentage of new businesses created that year was smaller than the percentage of businesses that closed down. That’s a serious problem for our economy, which depends on new businesses to hire and pump new blood into our markets.

What prompted this turn for the worse? Many factors may have contributed, but one development is having a definite impact: It’s become harder for entrepreneurs to access loans or other sources of funding for their businesses. The recession choked off many traditional sources of financing, with a particular impact on bank loans. In fact, many banks, still cautious from the downturn, have reduced or eliminated loans valued below $250,000. Other banks simply won’t lend to businesses with annual revenues of less than $2 million. This change has hit small businesses particularly hard, as 68 percent of small businesses seek loans of $250,000 or less, and 50 percent seek loans of $100,000 or less.

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Small Business Majority: Washington Needs to Act for Small Business

Locavesting

Washington spends a lot of time talking about the importance of small businesses – but not nearly enough time passing legislation that actually helps small businesses grow and thrive.

Small businesses create two-thirds of all new jobs, and have supported 55 percent of all jobs since the 1970s. In cities hit hard by the recession, like Detroit, small employers have been particularly vital in rebuilding struggling neighborhoods. And, entrepreneurs continue to be leaders in innovating and finding better ways to solve old problems.

Clearly, small businesses are crucial to keeping our economy humming and our communities strong. Yet, Washington is more focused on paying lip service to small businesses than actually passing policies that help them thrive.

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