Government regulations are stifling small business growth, according to several industry experts. Linda McMahon, head of the Small Business Administration (SBA), told CNBC Monday that small business owners are “tired of regulation.”
“The regulatory environment really can be stifling to small businesses that are trying to start up. All [small-business owners are] saying is regulate the things that really need to be regulated, but let’s stop with the volumes of regulation that we have to comply with, McMahon said.
While she didn’t call out any specific regulations that need to be changed or removed, McMahon did note that the paperwork associated with compliance to government regulations can be burdensome to small business owners who are already busy working in their businesses.
“Regardless of what the paperwork is, it is just the volumes and the burden of having to comply with so much at a time,” McMahon said.
According to the 2017 National Small Business Association’s (NSBA) Small Business Regulations Survey, the top three most burdensome regulations for small business owners are the Affordable Care Act, the Federal Tax Code and the currently on-hold overtime rules. On average, small business owners spend $12,000 annually complying with regulations, and one in ten businesses are fined for regulatory violations, with an average cost of more than $30,000.
Robert G. Wilmers, CEO and chairman of M&T Bank Corp., called regulations “stymieing” to small business growth during the bank’s annual shareholders meeting Tuesday. According to Wilmers, government regulations are making it too burdensome for start-ups and new businesses to thrive.
Wilmers discussed the success of M&T customers Moog, Inc., New Era and Under Armour, all of which have grown from startups to successful large companies. “It’s no wonder that in an environment where the deck is seemingly stacked against small businesses, fewer of them are growing or even forming,” Wilmers said.
Currently, the average regulatory cost for start-ups is $83,019.23, according the the NSBA survey, which also reports that one in three small firms said they spend 80 or more hours a year dealing with federal regulations. The NSBA data shows small business owners are holding off on implementing growth strategies, hiring new employees and giving raises because of regulatory burdens.
Wilmers called for government policies that “favor the formation of small businesses and cultivate the human capital to sustain them.” While M&T offers SBA loans to its customers, Wilmers called out the SBA, saying it is “under-delivering on its mission to ensure the availability of capital to small businesses and strengthen their ability to contribute to the U.S. economy.”