Small Firms Push for Better Bailout Bill
Many in the small business community are livid that Wall Street has put the nation's economy at risk and are urging Congress to get back to work after the House failed to pass a $700 billion financial bailout package Monday.
"The House action today is disappointing -- clearly there is more work to be done," said Sandy Baruah, acting administrator of the Small Business Administration. "The administration will redouble its efforts to ensure Americans and their representatives in Washington understand what is at stake. There is a real crisis happening in global financial markets that affects all Americans and businesses on Main Street."
Baruah went on to tell the Small Business blog: "One thing we don't want to do is overreact to the House vote. We should not allow the result to be changes in the bill that increase the size of government even further, or dilute the impact of this needed financial rescue package."
National Federation of Independent Business President and CEO Todd Stottlemyer said: "Small business owners...are angry and upset, and they have a right to be. Small business men and women did not create the financial mess on Wall Street."
He and other NFIB officials are "demanding that Congress get back to work" to deal with the crisis and protect Main Street.
Small businesses represent 99.7 percent of all employer firms, have generated close to 80 percent of net new jobs annually over the last decade, and pay nearly 45 percent of the total U.S. private payroll, according to the SBA's Office of Advocacy.
"While those on Wall Street were taking reckless risks and benefiting financially, small business owners across America continued to do what they have always done -- create jobs and serve as the leaders in our communities," Stottlemyer said.
A recent federal survey, which was conducted before a group of the nation's largest financial institutions began collapsing this month, found that more than 65 percent of U.S. banks have tightened their lending standards for loans to small businesses.
David French, vice president of government relations at the International Franchise Association, said he is disappointed that the package failed to pass in the House.
"Stakes are high for Main Street businesses that need a stable market in order to continue expanding their businesses," he said. "Franchise firms are beginning to feel the impact of the crisis right now, and the failure of the credit market will likely be felt by everyone in the coming weeks."
He urged congressional leaders to renegotiate and craft a workable bill. "Failure to do so would be catastrophic," French said.
Small Business and Entrepreneurship Council President and CEO Karen Kerrigan also urged for a better bill that would include proposals such as suspending the current capital gains tax rates for two years and returning rates to their current level when that two-year period expires.
Many small business owners are questioning why they and other taxpayers should bail out Wall Street giants in the first place. Kristie Darien, who heads legislative affairs for the National Association for the Self-Employed, said that "in a free market economy, NASE members have the opportunity to succeed or fail based on their own business acumen. When their business is not doing well, no one bails them out."
Deborah Markley, a rural entrepreneurship expert and researcher at the Center for Rural Entrepreneurship, said it's not clear what the economic turmoil is going to do to the psyche of small business people. "In the midst of this are they going to say 'yes, I'll build a new building' or 'I'll hire 10 people', or are they going to sit still and say 'I'm not going to be making investments right now or hire people'? That's a very rational thing to be doing even if it may not serve the national economy well," she said.
She added that as a few large banks remain in place shoring up the assets of others, Main Street businesses may see a lot of local branch turnover. "Local branches may change and a small business may have to deal with new lending officers," she said. Markley studied bank lending in New England in the early 1980s when there was national consolidation among the banking community. She said it can be a problem when national banks move into local branches because they may follow a set of national guidelines that do not necessarily reflect what is happening or what is best for a local community.
Despite their outrage, many small business owners were unsure of how a bailout package would impact them. The National Small Business Association conducted a poll last week asking its members if the bailout package would affect them positively or negatively. Forty-four percent of respondents said they weren't sure.
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