Access to capital is one of the biggest challenges facing Main Street. The Small Business Administration might not be the primary source of capital for many Main Street businesses, but anything that shuts off the flow of capital has the potential to slam the breaks on an already lackluster economic recovery. Small business is collectively the biggest job creator in the country and Main Street is a big part of that. Two out of every three jobs in the U.S. are created by small business and half of the workforce today works in small business.
There are other sources of capital, and business owners looking for a small business loan have a number of options—including Lendio. But the SBA is responsible for guaranteeing around $100 million a day in small business loans—a lot of capital to take out of the economy. In addition to the loss of capital, there are other less tangible, but just as important costs associated with the irresponsible behavior going on in Washington right now:
- Show me the money: $100 million a day funds a lot of business growth—as well as working capital. Over the last year I’ve spoken to a number of small business owners on the cusp of taking their businesses to the next level, but rely on financing to do it. Because of the beating they’ve taken over the last several years, some of them would likely be hesitant to turn to an SBA loan to fund their expansion (they’ve already been told ‘no’ by their local bank), but there are many who are still able (and have the patience) to access the lower interest loans associated with an SBA loan. We’re already talking about approximately $1 billion out of circulation today, I’m puzzled how the same Congressmen who talk about the importance of helping small business owners in their districts feel good about holding small business owners hostage in this ill-conceived battle of ideologues.
- Jamming the breaks on jobs: Many small business owners don’t have the cash flow to expand to meet the needs of a growing market, they rely on access to capital to help them ramp up. A diminished money supply effectively slams on the breaks of job creation and handicaps a small business owner’s ability to help local economies grow. You don’t even need to look very far to see the reality of the problem. In the course of my travels, I visit a lot of Main Streets all over the West and see far too many businesses that were strong and healthy just a few years ago struggling or gone as credit tightened over the last few years and fewer small business owners had access to the capital they needed.
- Confidence is contagious: Small business owners need to be confident that sticking their neck out to borrow money to fuel growth is a good idea. When backbiting and bickering in Washington rule the day, it doesn’t inspire much confidence on Main Street. Even more devastating than the fact that so much capital that would have otherwise gone through the SBA is now in limbo, is the concern that nobody knows when it will that capital will start flowing again. The unknown puts the kibosh on confidence.
In reality, the shut down doesn’t mean there isn’t capital available, but anything that makes it tougher isn’t a good idea. I saw a bumper sticker on my way into the office the other day, it said: Re-elect Nobody. Maybe the only way we can make a change is to follow that advice.