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[Chair Cardin, 04/19/23]
Starting or running a small business can be a challenge in the best of times. It requires bravery and personal risk. The financial risk is very real: Almost 65% of entrepreneurs rely on personal and family savings for startup capital, and others rely on their personal credit cards.
If Congress fails to raise the debt ceiling, causing America to default on its bills for the first time in history, interest rates will skyrocket quickly – on credit cards, personal and business loans and more.
The credit market will squeeze tighter and tighter as accessible capital diminishes for many entrepreneurs. Our small businesses will have nowhere to turn, and without capital, many of the local shops we love will start to shut down. It will impact all entrepreneurs. In particular, entrepreneurs of color, women and underserved small-business owners who already face significant hurdles.
Minority-owned business pay higher interest rates on loans and are more likely to be denied credit. In fact, pre-pandemic, in 2018, only 64% and 65% of Black- and Hispanic-owned firms, respectively, were approved for business financing compared to 80% of white-owned firms.
It is my duty as chair of the Senate Small Business and Entrepreneurship Committee to sound the alarm on behalf of the entrepreneurial community. My congressional colleagues, especially those who seem intent on taking our country to the cliff’s edge yet again, should understand that a debt default will devastate small businesses nationwide, and with them, our local economies.
Default should be out of the question. We are talking about paying for spending previously approved by Congress – not new spending. The United States keeps its promises and pays its bills. That’s what we do. We have never defaulted on our obligations before, and we should not start now.
My grandfather was an entrepreneur, and his small grocery that turned into a wholesale food distribution business was my family’s ticket to the American Dream. He worked day and night to keep his business afloat, and his hard work and success is a constant reminder of the grit and courage it takes to make it as an entrepreneur. Like him, today’s small-business owners work extremely hard to serve their communities and pay their bills. The government should do the same to protect the American dream – and the livelihoods of local communities across the country.
America needs our small businesses, and their success, is our success. We cannot cut them off from affordable capital. Congress must raise the debt ceiling to prevent a default; the stakes are too high.