On a Mission to Grow America's Small Businesses

The Obama administration kicked off National Small Business Week today by touting its efforts to help small firms through increased access to credit, targeted tax breaks, and new programs to support high-growth companies.

A rebuttal will come Wednesday, when the National Federation of Independent Business holds a conference call “about the real priorities of the small-business community, including real health insurance reform, reduced regulations, lower taxes, and creating an economic environment that allows America’s entrepreneurs to thrive.” NFIB has opposed much of President Barack Obama’s agenda, and has even joined a federal lawsuit challenging the constitutionality of health care reform.

Republican members of the House Small Business Committee, meanwhile, are holding forums in their districts this week to get feedback from business owners about government policies.

“High taxes, misguided regulatory decisions, and economic uncertainty harm small businesses disproportionately more than larger businesses,” said committee Chairman Sam Graves, of Missouri.

So even a feel-good event like National Small Business Week has become political. Regardless of your politics, though, the president called on “all Americans to recognize the contributions of small businesses to the competitiveness of the American economy.”

Half of all Americans either work for or run a small business. Starting your own business is an integral part of the American dream, whether you want to open a corner store or introduce an innovation that revolutionizes an industry.

That dream was in trouble when Obama took office in January 2009. Even small businesses with immaculate credit histories found it hard to get a loan. The Obama administration, with the help of Congress, addressed this credit crunch by making Small Business Administration loans more attractive to borrowers and lenders and by offering cheap capital available to community banks for use in making small-business loans.

The SBA loan breaks, first passed in 2009’s economic stimulus bill, had the desired effect. With a higher government guarantee and lower fees, SBA lending boomed. It’s slowed down some since those breaks went away in January, but as of May 13, the SBA had approved nearly $13.7 billion in 7(a) loans this fiscal year, which began October 1. That’s three times as much lending as the SBA was doing two years ago.

It’s too early to judge the success of the Obama administration’s other key program to boost lending to small businesses. Through the Small Business Lending Fund, the Treasury Department will provide cheap capital to community banks. With three weeks to go before the final deadline to apply for the program, about 650 community banks have requested more than $9.3 billion in capital.

“That is a pretty solid and strong response,” Sperling said.

The program was authorized, however, to provide up to $30 billion to community banks for use in making small businesses.

Besides credit programs, the Obama administration also noted it signed 17 tax cuts for small businesses into law. Most of these were highly targeted, such as allowing businesses to immediately write off the expense of new equipment instead of depreciating the cost over time. NFIB and several other small-business groups are more concerned about the president’s proposal to raise taxes on people who make more than $200,000. The vast majority of small-business owners don’t make that much money, but the most successful ones do. NFIB claims such a tax hike will leave these owners with less money to grow their businesses.

Obama also touted his Startup America initiative, which includes both government and private-sector programs aimed at boosting entrepreneurship. On Tuesday, the SBA and Kalpen Modi, the White House aide formerly known as actor Kal Penn, will host the Young Entrepreneur Summit in New York. AOL cofounder Steve Case, who chairs the Startup America Partnership, will speak at the SBA’s conference celebrating National Small Business Week.

The three-day SBA conference will be held at one of Washington, D.C.’s fanciest hotels, the Mandarin Oriental. Don’t worry—taxpayers aren’t footing the bill for this. Instead, the event has plenty of big-business underwriters—sponsors include AT&T, Microsoft, Office Depot, Sam’s Club, and Visa.

Everybody loves small business, especially this week.

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Kent Hoover is the Washington bureau chief for bizjournals.