Business Best Divided Congress: Small Business First

Best Divided Congress: Small Business First

-

- Advertisment -

The closely divided government, even with Republicans taking control of the House of Representatives, will continue. The new Congress will need issues that can both gain bipartisan support and boost the economy. Here’s a suggestion: start with small businesses.

Prioritizing small businesses will loosen the political stalemate because they provide a way for both sides to support job creation, revitalize struggling communities and increase U.S. competitiveness.

Even after the scorching experience of COVID-19, small businesses remain the backbone of the US economy. They account for 99 percent of employer companies and employ about half of the country’s employees. Each year, young small businesses (which have been in business for less than five years) are responsible for the lion’s share of net new job creation.

To help small businesses, policymakers need to focus on three areas that business owners and entrepreneurs emphasize over and over in conversations and surveys. They are labour, capital and labor (again).

Address recruitment challenges

In a September survey by Goldman Sachs 10,000 Small Businesses Voices, 47 percent of small business owners surveyed said “difficulty finding and retaining” employees is the top problem they face. That was four points more than a few months earlier. Similarly, the National Federation of Independent Business (NFIB) found it that 46 percent of survey respondents have vacancies they can’t fill — and that’s not because of a lack of trying.

The NFIB finds that while the net share of small businesses that received higher compensation is ticking down slightly this year, it remains at an all-time high. According to the 10,000 Small Businesses Voices survey, one of the biggest challenges in hiring is that “large companies offer more generous retirement and health insurance.” That is not necessarily surprising. Big companies are, well, bigger and can spread the cost of retirement and health benefits over a larger group of employees.

The financial and administrative burden of this is high for small companies. In our conversations with dozens of small businesses over the past two years, we’ve heard repeated iterations of this observation: “tax credits are too expensive for small businesses to take advantage of.”

Hiring challenges are detrimental to job creation and company growth: nine in 10 respondents to the Voices survey say that hiring difficulties affect their bottom line. And while many small businesses offer these benefits — 52 percent of workers in companies with fewer than 50 employees have access to a retirement plan — more could be done. Congress could help by directing the Small Business Administration (SBA) and other agencies to raise awareness of what is already available to small businesses, reform existing tax credits for small employers and creating options that work better for small businesses. Promising, a series of bipartisan bills that could pass this year, known as “SAFE 2.0,” would expand the tax credit for small employers setting up retirement plans. This would send a strong signal of support for job creation in small businesses.

Expand access to capital

Financing is a perennial challenge for small businesses, many of whom operate on thin margins or with only a few weeks of cash buffer. They need external capital to hire staff, make investments and set aside for difficult times.

After the pandemic, small businesses are poised to grow. More than half of respondents in the NFIB survey have made a capital investment in the past six months and a quarter plan to do so in the coming months, numbers roughly comparable to pre-pandemic levels. Half of small businesses surveyed in a recent Bipartisan Policy Center report plans to invest in digital tools in the coming year.

However, many still suffer from a COVID hangover, with damaged balance sheets and perhaps lower credit scores. Some 40,000 small businesses also remain in a sort of purgatory, pleading with SBA to act on their applications for Loan Against Economic Injury (EIDL) filed before the May 2022 deadline but stuck in bureaucratic uncertainty. Congress could request that SBA clear this EIDL backlog.

SBA is also moving to expand access to capital, from to allow higher interest rates on small loans in its 7(a) loan guarantee program to propose changes to the underwriting criteria for government-guaranteed loans. Legislators can help by prompting SBA to answer questions about regulatory oversight and capacity to make sure changes work for both small businesses and lenders. Also helpful would be incentives to encourage lenders to work closely with small businesses to restore balance sheets in ways that don’t inadvertently create credit constraints.

Improve employee skills

Finding employees — and offering benefits — isn’t the only job-related challenge small businesses struggle with. Of companies actively recruiting in the 10,000 Small Businesses Voices survey, 86 percent say it is difficult to recruit qualified candidates. In the NFIB survey, quality of work has become relatively important in small employer companies. In this area, Congress has two major opportunities to improve staff training and ensure that the needs of small businesses are met.

Two key pieces of labor legislation must be re-approved by Congress in the coming years: the Workforce Innovation and Opportunity Act (WIOA) and the Perkins Career and Technical Education Act (Perkins Act). The first provides federal funding for staff training programs and public-private partnerships; the latter supports career and technical education programs at the secondary and postsecondary levels. While small business participation in these efforts is always desirable, applying for and benefiting from these programs is difficult. By streamlining and ensuring that small employers are involved in the design, employees can develop the skills they need.

Legislators should start with these top issues. Small businesses can remain an engine for growth – they just need a little spark.

Shreya Christinahttps://ukbusinessupdates.com
Shreya has been with ukbusinessupdates.com for 3 years, writing copy for client websites, blog posts, EDMs and other mediums to engage readers and encourage action. By collaborating with clients, our SEO manager and the wider ukbusinessupdates.com team, Shreya seeks to understand an audience before creating memorable, persuasive copy.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Latest news

David Metzler- Wiki, age, height, net worth, wife, ethnicity

David Metzler is a producer and director from the United States. He produced such projects as Catfish: The...

ChatGPT’s user experience and implementation ‘should scare Google’ • ukbusinessupdates.com

To get a roundup of ukbusinessupdates.com's biggest and most important stories delivered to your inbox every day at 3PM...

Amy Klobuchar- Wiki, age, height, net worth, husband, ethnicity

Amy Clobuchar is a well-known American lawyer and politician who serves as the senior United States Senator from Minnesota,...

For the next generation of farmers, developing the land trust structure is critical

With 400 million acres of land in the United States expected to change hands over the next two decades,...
- Advertisement -

AWS AI service cards signal Amazon’s responsible AI catch-up rate

Watch the Low-Code/No-Code Summit on-demand sessions to learn how to successfully innovate and achieve efficiencies by upskilling and scaling...

Software development jobs are a bright spot in uncertain economic times. Here’s what business leaders need to know.

Opinions expressed by ukbusinessupdates.com contributors are their own. Economic uncertainty, rising inflation, changing lifestyles and a volatile job market are...

Must read

- Advertisement -

You might also likeRELATED
Recommended to you