Washington D.C. — Today, U.S. Senator Marco Rubio (R-FL), Chairman of the Senate Committee on Small Business and Entrepreneurship, praised a coalition letter supporting the reforms proposed in the committee’s legislation to comprehensively reauthorize the Small Business Act. The last comprehensive reauthorization of the legislation that governs the Small Business Administration (SBA) was nearly two decades ago. The letter is led by Samuel Hammond of the Struggling Regions Initiative, Niskanen Center, and Robert D. Atkinson of the Information Technology Innovation Foundation.
“It is critical that we ensure the SBA fits the needs of the 21st century entrepreneur,” Rubio said. “In order to boost small business dynamism we must create policies that modernize resources and provide opportunities for small businesses to grow and compete globally against countries like China. While China seeks to undermine American industry and competitiveness, our reauthorization will give American small businesses the tools they need to compete in the global economy and drive economic strength by promoting American innovation. I appreciate the support from the leading experts on innovation, and look forward to continuing the committee’s bipartisan work towards reauthorizing the act.”
“It’s time small business policy focuses more on supporting high-growth technology firms and manufacturing firms, as these are critical to U.S. growth and competitiveness,” Robert D. Atkinson, President of the Information Technology and Innovation Foundation (ITIF) said. “The proposed Senate reauthorization of the Small Business Act would move the Small Business Administration significantly in that direction.”
“The last two decades have seen a disturbing decline in the formation of young, high-growth firms,” Samuel Hammond, Director of Poverty Welfare Policy for the Niskanen Center said. “The disappearance of small businesses that scale quickly does not bode well for the health and dynamism of the American economy. Fortunately, the bipartisan reauthorization before the Senate Committee on Small Business & Entrepreneurship contains a number of important reforms designed to reverse this trend, in addition to a suite of long-over modernizations.”
Additional co-signers include:
Dani Rodrik, Ford Foundation Professor of International Political Economy and Harvard University’s John F. Kennedy School of Government; John W. Lettieri, Co-founder and President of the Economic Innovation Group; John Dearie, Founder and President of the Center for American Entrepreneurship; Carrie Hines, President & CEO of the American Small Manufacturers Coalition; Sridhar Kota, Executive Director of MForesight: Alliance for Manufacturing Foresight; Oren Cass, Senior Fellow at the Manhattan Institute; Mark Muro, Senior Fellow and Policy Director of the Metropolitan Policy Program at the Brookings Institution; Andrew Stettner, Senior Fellow at The Century Foundation; and David Adler, Co-editor of “The Prosperity Puzzle: Restoring Economic Dynamism” for XA Investments.
The full text of the letter is below:
As Congress begins considering the first reauthorization of the Small Business Act in nearly two decades, we are encouraged to see bipartisan support for reforms that will bring the Small Business Administration (SBA) into the twenty-first century.
Since its creation in 1953, the SBA has supported small business development as a core component to the health and dynamism of the U.S. economy. New business formation makes our economy stronger, boosts competition, and creates good jobs for American workers. Yet for that very reason, we are deeply concerned by the sharp decline in U.S. business dynamism observed over the last three decades. The rate of new business formation is at an unprecedented low, while the role of small businesses in job creation has suffered in particular due to the disappearance of young, high-growth firms.
There are many forces behind the decline in U.S. small business dynamism, but high among them is underinvestment in the industries of the future amid a period of intensifying global competition. The United States cannot afford to lose its entrepreneurial edge to anti-democratic, mercantilist competitors like China. We therefore urge you to support the modernization of the SBA with reforms that address high-growth business formation directly. Doing so will not only help jumpstart U.S. productivity growth, competitiveness and job creation, but also create opportunities for struggling communities throughout the country.
Support Export Industries
Businesses that export are consistently more productive than businesses that don’t. Research suggests this is in part because the intensity of international competition forces export-oriented firms to invest in their workers and production processes. We therefore support Congress in consolidating the SBA’s duplicative and under-utilized export programs into a single streamlined and improved program. We also strongly support the focus on high value-added manufacturing industries that seek to scale-up and export, and applaud the innovative use of benchmarks to enforce accountability.
Expand Patient Capital
Small Business Investment Companies (SBICs) were early investors in many businesses that are now household names. But by helping catalyze America’s private venture capital (VC) industry, SBICs have become partial victims of their own success. In addition to reducing overhead and red-tape in the SBIC program, the proposed legislation ensures that SBICs fill genuine institutional gaps in patient capital, whether for underserved regions, or for capital-intensive industries like advanced manufacturing that the private VC industry has largely been unwilling to take on.
Strengthen Commercialization Pathways
The Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs are vital for small businesses engaged in research and development of new technologies. This legislation rightly builds on this success by making SBIR and STTR permanent, streamlining award timelines, and making it easier for small business contractors and awardees to raise capital, grow their businesses, and transform new technologies into commercial products and services.
Combined with a broader modernization, the above reforms will help breathe new life into the SBA’s mission and ensure American small businesses continue to thrive in the global marketplace. For this reason, we urge you to support the Small Business Act’s reauthorization, and help spawn a new generation of innovative entrepreneurs.