This National Small Business Week I am pleased to introduce a bipartisan Senate resolution honoring the entrepreneurial spirit of small business owners throughout the United States. As Chair of the Senate Committee on Small Business and Entrepreneurship, I am proud to work with Senator Snowe from Maine, my Ranking Member, and the other Committee members who provide a voice for Main Street’s concerns each day.
Small firms pump almost a trillion dollars into the economy each year, create two-thirds of our nation’s new jobs annually and account for more than half of America’s workforce. They are the family businesses throughout the country whose thread still weaves the American Dream.
They are the technology start-ups that produce cutting-edge clean energy sources, lifesaving medical advances and safer equipment for our troops. And they are the construction companies that build our schools and our homes, and the businesses that fix our roads and our bridges.
Yet, small businesses are in trouble. As America’s consumers pinch pennies to pay the bills, small business owners scramble to pay their own. Worse, entrepreneurs are being turned away from all sources of capital financing. Many of these small businesses have never even missed a payment, like Robert Cockerham, whose story I heard at a recent hearing on small business lending.
Robert is President of Car World, a series of dealerships in New Mexico. Like many small business owners just starting out, Robert put all his savings into opening his own dealerships and became one of the highest selling dealers in New Mexico. But then consumers could no longer get loans. Last December Robert was forced to close some dealerships and lay off workers.
At the start of this year, Robert thought all the hard decisions were behind him. Then his lender canceled his credit line, cut back the amount of inventory they would finance and told Robert he had up to 90 days to find another bank. Again, Robert had never missed a payment. Car world is now on the verge of bankruptcy.
These are the stories we’ve heard from small businesses all over the country. When Main Street businesses can’t get credit, stores close and Americans lose jobs. Eighty percent of the jobs lost since November have come from small businesses. With more than 13 million people now out of work, we need our innovators and job creators now more than ever.
I’m proud to say we have made some significant progress to help small businesses. The American Recovery and Reinvestment Act took bold steps to increase access to capital for our nation’s entrepreneurs. In the Small Business Committee, we worked to temporarily eliminate fees on SBA-backed loans so that more business owners can afford to borrow. We also temporarily increased to 90 percent the guarantee on government-backed loans to encourage risk-weary banks to lend.
There are signs these provisions are starting to free up credit. The SBA has reported that its weekly loan volume is up by more than 25 percent since Congress passed the Recovery Act. The Recovery Act will also stimulate new lending to businesses that employ 10 or fewer workers through $50 million in microloans and management assistance, programs helping our smallest businesses adjust to the tough economy. The Act also helps unclog the secondary market and bolsters funding for the surety bond program to increase the number of small businesses competing for Federal contracts.
Overall, these provisions will pump about $16 billion in loans and venture capital into small businesses in our communities, creating or saving thousands of jobs.
But we must do more. In the Committee, we are dedicated to working together to provide entrepreneurs with the necessary tools to lead us out of this recession. We are working with the Administration to reauthorize the Small Business Administration and its critical programs. These initiatives assist entrepreneurs in starting and growing businesses and were responsible for creating more than 1.5 million jobs last year.
Small business owners have personally attested to the importance of SBA programs. One of these small business owners is Bob Baker, the owner of Baker Sales, a pipe and fence distributor in Louisiana and the state’s Small Business Owner of the Year. Bob encourages his employees to take advantage of the free classes the local Small Business Development Center offers and has taken advantage of the center’s counseling to cope with financial difficulties.
These days, Bob’s doing better than most small business owners. He has a stable credit line at a local Chase Bank, but knows he can’t expand because he would never get another line of credit in the current economy. And while this self-described eternal optimist has seen positive signs – as we all have since the Recovery Act passed – the cash register still isn’t ringing as much as it used to.
To help Bob Baker, Robert Cockerham and small business owners like them across the nation, we must work to get them more access to credit. This doesn’t mean just help getting loans, but includes credit cards, which have imposed unfair practices on consumers and small businesses alike. In the past year, 63 percent of small businesses have reported having their interest rates increased and 41 percent have said their credit limit was reduced – all while more and more small businesses turn to credit cards because they can’t get loans.
We must also help get more federal and state contracts into the hands of small businesses, especially the new contracts for transportation and green energy projects spurred by the Recovery Act. Small firms employ 41 percent of the nation's high-tech workers and generate 13 times more patents per employee than large firms. I’ve recently sent letters to the Departments of Defense, Energy and Health and Human Services, as well as the National Science Foundation, encouraging them to use their Recovery funds on innovative small business projects. I will also be chairing a hearing on Thursday on small business contracting.
While corporate giants get the headlines, we cannot forget the unwritten stories of our small businesses. I urge my colleagues to use this week to reflect on the need to strengthen the programs we have for our entrepreneurs. Our small businesses are key to revitalizing America’s economic prosperity and essential to restoring our nation’s innovative reputation and competitive spirit across the globe.