This week marks the 48th annual National Small Business Week, a recognized time to celebrate the contributions of small businesses to the economic well-being of America. Republican Members of the House Small Business Committee will celebrate American small firms by holding forums and listening sessions in Congressional districts across America this week.
Small businesses create seven of every ten new jobs and employ over half of the country’s private sector work force. They are the key to solving our nation’s unemployment problem; and if we want to get our economy back on track, we must find ways to spur small business growth.
The economic downturn of the last few years has taken quite a toll on American entrepreneurs. Despite their hard work and determination, many small business owners struggled to make payroll and many were forced to close their doors for good. One of the most significant obstacles faced by our small companies during this tumultuous period has been access to capital.
Capital is critical for small business success. Small firms lack the resources of their larger counterparts and rely on financing to carry out their daily operations. Without it, they would be unable to replenish inventory or purchase new equipment and many would simply cease to exist. Small businesses need diverse ways to access capital to start their business, invest in their company, and meet unexpected challenges, and it’s important for banks to work closer with their small business customers to make sure they have the capital they need to accomplish these goals.
While the Obama administration claims that lending standards to small firms have loosened, the fiscal crisis and a stricter regulatory environment have left banks wary of lending to small businesses. Additionally, uncertainty over the direction of the economy, healthcare reform, taxes and regulations make small businesses more vulnerable as the compliance burden posed by complex rules and mandates grows.
A monumental piece of legislation that is impacting access to capital is the “Dodd-Frank Wall Street Reform and Consumer Protection Act,” which became law in July of 2010. The bill was designed to address the financial meltdown but it is creating many unintended negative consequences.
In order to help small businesses gain access to the credit and capital they need to run their business successfully, Congress must adopt policies that support functional capital markets without imposing undue restrictions on providers of debt and equity capital. Additionally, Congress must remove barriers that prevent participation in and utilization of the SBA financing programs.
Congress can protect small businesses by providing effective oversight over SBA policies and make sure they take into account the needs of small businesses while also protecting taxpayer dollars. Congress also needs to make sure that new banking regulations do not make it more costly for community banks to lend to small businesses.
As Chairman of the Small Business Committee, I intend to delve into the state of the economic environment for both banks and small businesses and the federal regulatory pressure on both entities.
In early June, my Committee will be holding a hearing on the issue of access to capital and we will explore innovative ways that banks are reaching out to small businesses and how the government can help create a better atmosphere for those financial relationships.
In addition, our Subcommittee on Economic Growth, Tax and Capital Access Chairman Joe Walsh (R-Ill.) will hold a hearing on the impact of Dodd-Frank this summer.
The precarious state of our economy, combined with unnecessary overregulation by the Obama administration, has restricted small business access to capital.
I have heard firsthand from several small business owners about their struggle to borrow and their fear of taking on additional debt. Government should stand aside and let the business community prosper, instead of imposing new regulations that will only stifle growth and limit access to capital. I am hopeful that the Senate and the president will join with the House and work to help more Americans start and grow their small businesses.
Republican Rep. Sam Graves of Missouri is chairman of the House Small Business Committee. To learn more about what Small Business Committee Republicans are doing for National Small Business Week visit www.smbiz.house.gov/About/NationalSmallBusinessWeek.htm.
Rep. Sam Graves represents Missouri’s 6th district and serves on the House Armed Services and Transportation and Infrastructure Committees.