During the presidential debate Tuesday evening, there were 17 uses of the phrase “small business.” Both John McCain and Barack Obama spoke in lofty terms about how they would be the best president to help small businesses though these tough economic times.
Obama first mentioned that small businesses couldn’t get loans in today’s credit climate, but he said nothing about how he was going to help the credit crisis on Main Street.
McCain mentioned that while 700,000 jobs have been lost in the economy during the last 12 months, 300,000 have been created by small business owners; but instead of saying how important this segment of our economy is, his comment was that Obama wanted to raise taxes on small business owners. Not a word was mentioned about assisting small business owners to survive. He further mentioned that, under an Obama administration, small businesses will have to cut jobs because of Obama’s proposed tax increase.
McCain stated that under the Obama plan, small business owners would be taxed for not providing health insurance coverage; still he said nothing about how his administration would work to help small business survive, let alone thrive.
Both candidates spent quite a bit of time discussing health care insurance and their various ideas on how employees of small business owners will afford and maintain coverage, yet neither failed to acknowledge the seriousness of the Main Street crisis that is affecting millions of small businesses around the country.
Throughout this campaign, neither candidate has voiced any tangible or detailed plan for helping small businesses, which employ 95 percent of the nation’s workforce.
Both candidates are senators and have had the opportunity to vote on appropriations and other matters regarding the Small Business Administration (SBA). Why hasn’t either of the candidates (or the Bush administration for that matter) mentioned the most obvious way to deliver support to Main Street? I am no rocket scientist, but it seems to me that if our government already has a small business finance and education delivery mechanism in place, why not use it to strengthen small businesses on Main Street?
The SBA has loan guarantee programs, but according to SBA records, demand for SBA loans has dropped drastically in the past two months. My theory is that the banks that have to originate those loans have chosen not to for the same reason they have chosen not to make other business loans — fear of loss of principal. A simple answer is for the SBA to temporarily raise their loan guarantees so more banks will be incentivized to make loans. I am not suggesting that banks make loans to non-creditworthy businesses, merely that there are creditworthy businesses that currently can’t get credit but might if the loan guarantee percentage were raised.
Secondly — and almost more important — the SBA has business education centers throughout the country known as Small Business Development Centers (SBDCs). These centers are jointly funded and operated by the SBA, universities, cities, and local nonprofit groups.