After Blocking Small Business Jobs Bill, Congress Must Do Something to Help Entrepreneurs

John Arensmeyer

John Arensmeyer

Originally featured in The Huffington Post:

Lawmakers passed up a golden opportunity recently to shake the recession’s effects and put American small businesses back on the hiring track. Congress has a lot more work to do this summer if they plan to support entrepreneurship. Small businesses across the nation are poised for growth, and now is the time to facilitate their expansion by passing smart jobs legislation and helping them access capital.

Unfortunately, legislators failed on the first of these counts Tuesday when lawmakers in the Senate blocked the Small Business Jobs and Tax Relief Act. The bill would have done two things to help small businesses boost their bottom lines and hire.

First, it would have given them a 10 percent income tax credit on increased payroll in 2012. This credit was intended to encourage small business owners to hire or boost employee wages right now, and to reward them for doing so. The nonpartisan Congressional Budget Office said that compared to other proposals for incentivizing small business job creation, proposals like this one would have the greatest value per dollar of output. This tax credit could’ve had immediate benefits not only for our overall economy but also for communities everywhere that are struggling to enhance local economic growth through increased employment.

Another way the bill could have boosted small firms’ bottom lines was by extending the 100 percent deduction for equipment purchases. That would’ve lowered entrepreneurs’ after-tax costs, prompting them to make new investments and accelerate our overall economic recovery. This type of deduction is widely known to enjoy bipartisan support.

But small business owners won’t see these benefits. Too many lawmakers are spending more time playing politics than working to pass smart legislation to help small business owners who have been bearing the brunt of the recession for quite some time. Now that the Small Business Jobs and Tax Relief Act is off the table, Congress must get its act together and start putting policy before politics if they want small businesses to help fix our country’s employment problem.

Legislation aimed at helping small businesses access credit so they can grow and hire would be an excellent place to start — we know this because entrepreneurs have told us so. An overwhelming 90 percent of small employers believe credit availability is a problem for small businesses, according to opinion polling we released earlier this year. Small employers also agree that 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.

These entrepreneurs aren’t imagining things. Banks’ loan portfolios have been reduced by more than $47 billion since the pre-recession peak, and that affects small businesses from coast to coast. Lending has all but dried up for them, which is why, by more than a 2:1 ratio, small employers support increasing credit unions’ lending cap from 12.25 percent to 27.5 percent of their assets. This is exactly what the Small Business Lending Enhancement Act — a bill that’s been floating around Congress for months — would do. It’s time to act on it.

Today’s credit barrier limits small business expansion and strains entrepreneurs’ capacity to put America back to work. Whether legislators choose to focus on bettering the lending landscape for them or giving them incentives to hire, the bottom line is small business owners need increased cash flow to keep their doors open and help grow the economy. As lawmakers in Congress continue using partisan rhetoric to dismantle strong proposals that could have created jobs, entrepreneurs are repeatedly voicing their support for the exact policies being axed or stalled in Congress. For their sake, legislators need to focus on repairing our jobs problem and bettering credit conditions now.

Small Firms Create Majority of New Jobs in May; Robust Policies Can Help Keep it Up

John Arensmeyer

John Arensmeyer

Original statement issued on June 1, 2012:

Our nation’s smallest businesses—those with 1-49 employees—continue to outpace large businesses in the race to put America back to work. Businesses with fewer than 50 employees created more than half of all new jobs last month, and, from April to May, they boosted the actual number of jobs they generated by 16 percent, according to data released Thursday by Automatic Data Processing, Inc (ADP). Small businesses overall accounted for more than 93 percent of all new jobs last month, while large businesses created just 6.8 percent of new jobs.

These figures underscore the starring role small businesses have in helping lower the unemployment rate, and they’re a reminder that the smallest firms are our country’s primary job creators. These businesses can and will put our economy back on track, but they can’t do it singlehandedly. Legislators must continue pursuing pragmatic economic policies that ensure entrepreneurs have they tools they need to keep rebuilding the economy. We suggest:

  • Calling on the Federal Deposit Insurance Corporation (FDIC) to issue bank charters that would supply small firms with more credit. The agency has not issued a single charter this year, despite the dismal lending landscape entrepreneurs continue to face: our national opinion polling found 90 percent of small business owners view credit availability as a problem.
  • Passing the Small Business Jobs and Tax Relief Act, which would promote small business job creation by providing a 10 percent income tax credit for increased payroll in 2012 while also extending the 100 percent expense deduction for equipment that lowers owners’ after-tax costs.
  • Extending the Production Tax Credit for wind project development, as it supports 37,000 jobs that would be at risk if the credit expires. Not only would extending this credit protect existing jobs, small business owners also indicate it could help generate new jobs: 7 in 10 small business owners believe government investments in clean energy play an important role in boosting the economy and creating jobs now.
  • With ADP’s latest data highlighting small businesses as invaluable assets to the economy, it’s clear we must support them with pragmatic solutions that address their greatest concerns. We encourage lawmakers to pursue robust policies such as those listed above, as failing to do so would only hamper our fiscal recovery.

Small Businesses Create 15 Jobs in April to Every One Created by Big Business

John Arensmeyer

John Arensmeyer

Original statement issued on May 4, 2012:

ADP released data Wednesday revealing our nation’s smallest businesses—those with 1-49 employees—continue to outperform large businesses in the job creation arena. Businesses with fewer than 50 employees created roughly half of all new jobs in April, while small businesses overall accounted for a sweeping 96.7 percent of all new jobs last month. Conversely, large businesses created a mere 3.3 percent of new jobs.

These figures reinforce the notion that small businesses—and particularly those with fewer than 50 employees—are indeed the country’s primary job creators and remain the backbone of the American economy. Of the 119,000 new jobs created last month, the smallest businesses created 58,000, while those with 50-499 employees were responsible for another 57,000, according to ADP (Automatic Data Processing, Inc.). Only 4,000 jobs were generated by businesses with more than 500 employees in April.

We encourage lawmakers to continue focusing on policies conducive to small business job creation, such as investments in renewable energy, which 71 percent of small business owners believe would help create jobs immediately according to research we released last week. Boosting small firms’ access to credit is another surefire way to keep the momentum going. Small businesses can and will put our economy back on track, but they can’t do it singlehandedly. Legislators must continue pursuing pragmatic economic policies that can ensure entrepreneurs have they tools they need to keep rebuilding the economy.

Aid for Underwater Mortgages a Life Raft for Small Business

John Arensmeyer

John Arensmeyer

Statement by John Arensmeyer on February 9, 2012:

Today, in the biggest government-industry settlement since 1998, major mortgage lenders and the federal government struck a $25 billion deal that will bring relief to struggling homeowners across the nation, boosting demand for small businesses and stimulating the economy.

One in three small business owners report weak demand to be their top concern, according to national opinion polling commissioned by Small Business Majority, Main Street Alliance and the American Sustainable Business Council. What’s more, three-quarters of owners say their business has suffered from low demand directly related to the mortgage crisis.

Our scientific opinion poll also found that by a 2:1 ratio, the majority of owners believe reducing the principal on underwater mortgages to their current market value would boost consumer spending.

Entrepreneurs who have used their homes as collateral especially stand to benefit. A full quarter of small business owners have used their home as an equity line of credit in order to finance their business. Many of them can now re-pocket money they lost when the market crashed and use it to grow their business, in turn stimulating the economy.

Today’s deal between the federal government and top mortgage lenders is a step in the right direction for small business, and marks a historical step toward our overall economic recovery.

For the full results of our national opinion poll, click here.