President Obama and small business

I was once again impressed with President Obama’s clear thinking and oratory power as I listened last night to his talk to congress and the world. He was realistic and clear about the depth of our national and global problems, yet optimistic and hopeful about an economic recovery. While he does have an ambitious agenda, he also has the energy and support to carry out much of his program.

The president did brush briefly on the plight of small businesses and apparently his proposed assistance to them is to reduce taxes. This may help some of the larger “small businesses” who will be able to plow more of their retained earnings into capital and human investment, but will have a negligible, if any, effect on most small businesses. As I wrote in an earlier post, the government appears to be somewhat blinded to the needs of the majority of small businesses – those with fewer than 20 employees. I will restate that the administration and congress need to develop programs to encourage entrepreneurship and assist the very small businesses with financial resources and training to enable them to grow, employ, and survive. I again recommend and support a council or round-table discussion about very small business issues with the administration.

Funding for small businesses

This post is an open letter to President Obama, Governor Strickland of Ohio, and leaders all over the nation who are concerned about small businesses.

While it is well accepted that small business is the backbone of our economy, the definition of small business is a bit fuzzy. Some federal agencies specify that businesses with fewer than 200 employees are classified as small. I would submit that a business with 10 employees has issues that are foreign to a firm with 200 employees. These very small firms, and there are millions of them, are the real backbone, and combined, hire millions of workers across the United States.

These very small businesses are being hit especially hard by the recession. While it is true that many of them would not be in dire straits were they better managed, most are being deeply affected by the 2009 economic climate. They typically have no cash reserves and today are virtually unable to secure bank loans or other financing, and so are having to lay off employees or consider closing their doors. These businesses are not making the news as they are laying off one or two employees at a time.

Many folks who have lost their jobs from large and small companies are  budding entrepreneurs who could create jobs for themselves and others while contributing to the economy, but are unable to secure funding to get started.

So here is my, perhaps naive, suggestion to President Obama and other leaders.

You are currently spending billions of dollars to justifiably shore up some mega companies to prevent the whole house of cards from collapsing. While this is necessary and noble, please, please, don’t overlook the thousands of small businesses that are on the verge of failing. You can help them by making easily available low-interest loans – loans that might even be forgiven should the businesses reach certain economy-driving milestones.

I’m not talking about handouts. Establish criteria that will not result in a bureaucratic nightmare. The criteria should include numbers of jobs to be saved and potential job growth. The criteria might also require that business owners either enroll in and attend business management classes at local colleges, or be supported by approved business advisers, in order to improve their management skills. The funding should be open to new entrepreneurs and existing companies who can prove need in any industry.

Pass the money through local banks, and hold the banks accountable for responsibly distributing the funds to businesses in need who meet the criteria. Money should be distributed over time depending upon a business achieving specified milestones agreed to between the bank and the business owner.

Finally, I would challenge President Obama to immediately convene a very small committee of folks who really understand the plight, needs, and challenges of small businesses to come up with a workable program.