Jay Challa - Minority Enterprise Executive Council

Feature ArticleSmall Businessand theGovernment Bailout:What is Needed?By Lurita DoanLurita Doan, former Adminsitrator, U.S. GeneralServices Administration, also a small/minoritybusiness ownerThe Federal government is giving out money, lots of money,to big companies and institutions. But the only result thesmall business community can expect is to foot the bill forthe huge government stimulus. What a pity.Whether we agreed with the rescue plans or not, ourCongress has committed over a trillion rescue dollars thatwill, ultimately, have to be paid with the hard-earned cash ofAmerican taxpayers. And, given thatAmerican small businesses pay most ofpayroll taxes and corporate taxes., thebailout means that small businessesstand to be hit with a double whammyfrom the U.S. government. Smallbusinesses face increased taxes atthe corporate level and, because somany small businesses are S-typecorporations and their business revenueflows to their personal taxes, they nowface the potential for increased taxesat the personal level too. Thus, it isall too clear that Congress will sticksmall businesses with the bill for newspending and bailouts.The Federal government has providedbailout assistance to banks, investmentfirms, insurance companies, motor vehicle manufacturers,home builders, mortgage companies, but has thus far failedto address the need to help small businesses.According to the Small Business Administration (SBA), thereare approximately 25.8 million businesses in the United States,and 99 percent of all employers are small businesses. Smallbusinesses do most of the hiring, creating most jobs in localcommunities throughout the United States. Small businessesare the source of most of the innovation in this country. But,small businesses are at a real disadvantage in the currentclimate. They can’t afford to hire high-flying, deal making,lobbyists. They can’t afford air time on television or radio to“First, Congressneeds to understandthat if our country isgoing to turn aroundthe current financialcrisis, handoutsare not enough.”advertise their needs or concerns. With big business clamoringabout hard times, it’s hard for small businesses to be heardover the din, much less find a seat at the table of opportunity.Let’s hope that the many different business associationsgeared towards small businesses will get into the fightand start working with members of Congress to find abetter balance. Most members of Congress support smallbusiness when they are running for reelection.Yet, these same members ofCongress are strangely silent regardingsmall business assistance the rest ofthe time. This inaction is disappointinggiven that it would not be too difficultto help small businesses through somecreative legislation, none of it requiringyet another multi-billion dollar subsidyor bailout such as large companiesare demanding. Moreover, the helpthat small businesses need is withinthe power of Congress. So, what aresome of the changes that Congress canimplement to help small businesses?First, Congress needs to understand thatif our country is going to turn around thecurrent financial crisis, handouts are notenough. New sources of revenue must also be generated,and the economy must be able to grow organically. To achievethis goal, Congress should make it attractive for entrepreneursto start and grow their businesses.Second, Congress needs to expand the tax incentives for smallbusiness, not tax them into oblivion. Congress should be doingeverything within its power to encourage small businesses toinvest in themselves. Immediately, Congress should increasethe capitalization credit for small businesses to $250,000.From this increased capitalization credit alone, Congress wouldsee an immediate stimulus for the economy, since smallbusinesses would be buying items from other businesses10 Minority En t e r p r i s e Adv o c at e • January / February 2009