Small business owners across the country are hoping a pair of federal programs boosted by economic stimulus spending will get a second chance, in the form of new funding.
The Small Business Administration received $730 million from the Recovery Act. The SBA leveraged that money to support about $16 billion in lending, which increased small business loan volumes by 80 percent.
But, two hugely successful programs within this effort are now out of money and hundreds of small businesses are waiting for the program to pick up again. Specifically, the programs involve guaranteeing 90 percent of new loans and waiving loan fees.
Companies used the support and savings to do several things, not the least of which was hire new workers.
“As we look at the new jobs that are going to be created, a very high percentage of those are going to be in small business,” Sen. Jeanne Shaheen (D-NH) told CNBC. She sits on a key Senate committee for small business and entrepreneurship. “So, we need to make sure small businesses have what they need to succeed.”
President Obama’s latest plan to boost job growth would put new money into the programs well into 2010. Much of the small business support in terms of tax breaks and write-offs on investments might have to go through Congressional legislation, but under the plan to possibly spend unused TARP money, the U.S. Treasury might have some room to help small businesses before Congress can get something done.
Every state and every district has a small business, so there seems to be a good chance for bipartisan attention to this issue. Small business entrepreneurs including Tod Wilson, who runsMr. Tod’s Pie Factory in Somerset, New Jersey, used the money saved through the fee waivers to expand his business, buy new equipment and create new jobs.
“I went to a local credit union, Affinity Federal Credit Union, and I applied for $400,000—after having been turned down by some banks,” Tod Wilson told CNBC from his small but buzzing-with-activity pie factory. “I was fortuntate enough to get the loan done through the SBA and really changed my business.”
His story is not unlike hundreds all over the country, and if the U.S. manufacturing base has little chance to returning to its pre-globalization scale, the small business segment of the U.S. economy will be an even more substantial driver of job growth.
“What that stimulus money does for a person like me and a small business like mine is, we now become a spoke in the big wheel, which is the United States,” Wilson said. “(We) get the economy going because we're creating jobs. We're making a lot of pies, that's great, but we're putting people back to work.”
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