Dear President Obama:
I’m pleased to hear that you took time out of your busy schedule yesterday to meet with 20 CEO’s of some of the top businesses in the country. I hope the CEO’s of General Electric, Google, Intel, Comcast, Dow Chemical, Cisco, Honeywell, PepsiCo, Motorola, Eli Lilly, DuPont, Boeing, Duke Energy, UPS, Pritzker, and Amex offered up some good economic solutions.
I read where you stated, “This morning I hope to elicit ideas from these business leaders that will help us not only climb out of recession but seize the promise of this moment.”
I’m not exactly sure what that means but I’m going to assume it means you believe that this point in time offers an opportunity to get the economy going. I hope that’s what you mean, sir, and with that in mind I’m going to make a couple of my own suggestions. First may I offer some information and statistics about small business.
I think you should know that the group of 20 companies you met with employs less than 3,000,000 people. According to an agency of the United States Government (Small Business Administration) small businesses employ approximately 60,000,000 people. There are about 23 million small businesses in the US so I don’t expect you’ll find time to meet with all of us. But maybe some of us?
The truth is we’re a very diverse group and you can’t count on us to agree on all things. Pretty much all of us are proud to be small business owners. We’re proud to be able to support ourselves, our families and our employees and their families. Oh, and just in case you’re thinking that we might employ a whole lot more people than big business but it is big business that is the major contributor to our Gross Domestic Product, I wouldn’t blame you. I figured the same thing before I looked it up. The SBA says that small business contributes more than 50 percent of the GDP. Pretty much all these numbers are in here.
We also make up 97 percent of exporters and produce 29 percent of all export value. How’s that for contributing to the balance of trade?
One last statistic that I find interesting – the latest figures show that small business creates 75 percent of the net new jobs in our economy. Kind of makes you proud of us, doesn’t it?
So here is my suggestion to help get this economy really going again. It’s based on talking to clients, customers and friends of mine who own small businesses.
Get the banks to lend them money again.
These big companies are sitting on trillions. Banks won’t lend to small business without making them jump through processes that make loan sharks look downright tempting. I know owners who need more equipment in order to expand and hire more people. They have the sales but they can’t accept them without expansion. And, the same banks that used to come to two of these particular companies begging for their business now won’t let them get to second base.
Besides meeting with these CEO’s yesterday, you also made an announcement that you are going to help get small business government loans into the hands of small business owners. That was right after the SBA quietly announced that the agency will end its existing Community Express loan program on April 30th.
Then according to the SBA’s announcement, it will replace Community Express with two new programs on March 15. One is called “Small Loan Advantage and the other is “Community Advantage.” Both programs will go up to $250,000 and carry SBA’s basic 7(a) program guaranty structure — 85 percent for loans up to $150,000 and 75 percent for those greater than $150,000. But the loan application process will be more streamlined than basic 7(a).
Then I read that Small Loan Advantage will only be made by the nation’s largest banks that are in the agency’s “Preferred Lender Program.” These banks have historically made larger loans that are 50 percent guaranteed up to $350,000 under the Express Loan Program, and 75 percent guaranteed up $5 million with basic 7(a).
From both personal and anecdotal experience, these big banks only want to make big loans. In over 40 years experience I have never met a small – small business owner who actually ever got an SBA loan. I do know quite a few people who have tried only to be turned down or turned off by the process and red tape.
Maybe you are familiar with Jerry Chautin, Mr. President. He is a volunteer SCORE business counselor, business columnist and SBA’s 2006 national “Journalist of the Year” award winner. He has a good article about the new programs and the death of the old one here.
He also says that “Small-business owners have reason to be a bit less merry this holiday season,” as a result of these changes that you
I don’t know who is getting these loans, Mr. President. But, I do know who isn’t getting them and they are business that have been around for years with good financial histories. The SBA programs aren’t getting out to everyone.
I think you need to spend some time with small business owners. And, please not only the larger ones. Home-based businesses now make up over 52 percent of all small business. It would be beneficial if you talk with some of them too.
One last thing, Mr. President, red tape is a big problem for small business. The Small Business Administration states that it costs us annually $1.75 trillion to meet federal regulatory compliance. We could create a lot of stimulus just by eliminating some of the federal regulations we have to live with. Let’s start with the 132,000 new ones that were added just since 1982.
So that’s about it for now. I appreciate you taking the time to read this. I’ve been a small business owner and entrepreneur most of my life. I’m 61 years old now and I still believe in the dream of owning your own business. At least 23 million other Americans agree with me.