Obama’s Small Business Initiative

by Joy Johnson on July 11, 2012

President Obama instituted six new initiatives to help “small” business.  CNBC, on Facebook, asked for comments.  I’d like to comment on them here for clients, friends, and readers, of Success Center USA. We serve mico clients and the small end of the small business world.  Keep in mind that the government definition of “small” business runs up to 500 employees.  In today’s technology driven, minimum human capital world, that is quite a large world.  My contention is that nobody in government has a clue what micros need, and if nobody burps and changes diapers on the babies, there are no toddlers, no teens, and no new adults.   Here are the initiatives from CNBC:

What kind of incentives would help your small business?The measures are as follows:

  • Obama is directing government agencies to pay their bills on an accelerated timeline to all prime contractors for the next year — within 15 days as opposed to 30 days.
  • He is calling on Congress to let small businesses write off up to $250,000 in capital investments in 2013.
  • The Small Business Administration is revamping its Small Loan Advantage program to raise the maximum loan amount from $250,000 to $350,000 and streamline the loan process.
  • SBA is launching “QuickApp,” a streamlined application process for surety bonds.
  • The SBA’s Disaster Loan Program is streamlining its online application process to give families and businesses easier access to rebuilding funds.
  • The administration is working on regulatory reforms to the New Markets Tax Credit to make it easier to attract private sector funds for startups and small businesses in lower income communities.”

Here is my analysis:

  • Government paying their bills quickly:  I don’t know a single business that is actually going to benefit from this.  I know the government blows a ton of money, and I know they have a small business initiative, but it’s going to hit several rungs above any of our clients.  This is further weakened by the “Prime” contractor clause.  Most smaller businesses are not “prime.”  They may be in the supply chain further down.
  • Let small businesses write off up to $250,000 in capital investments in 2013:  The section 179 write-off limit was half a mil in ’10 and ’11 so this is a drop from those levels.  I doubt anybody I handle last year bought more than $50,000 -and that was an anomaly!  Clients aren’t buying equipment for the most part.  There are a few people starting new businesses, and perhaps this helps some, but this is not going to help any of my clients.  Micros and the smaller end of the “small” category just don’t buy this much in a year.  The business climate is too uncertain.  Good employees are impossible to find, and no one is sure of what it will cost to hire them.  Every aspect of the business environment is questionable.  In the meantime, there is no spending that isn’t absolutely necessary.
  • Revamping the Small Loan Advantage program and the QuickApp process.  While CNBC listed these separately, it’s really just making obtaining loans from the SBA easier.  The same comments apply as to the previous initiative.  Low demand and uncertainty make business owners hesitant to borrow.  If you’re interested in applying for a loan, here’s a link to the SBA.
  • Streamlining the Disaster Loan Program:  This is another SBA program and I don’t view this as a “small business initiative.”  This is a “disaster response initiative.”  Either way, you have to be pretty much wiped out before it matters. Most would rather not consider that.
  • Regulatory reforms to the New Markets Tax Credit:  This might be helpful but it’s still in the “working on it” stage – and I’m not sure but what it doesn’t actually benefit the investor class more than anyone else.  It had its roots in a Bush program from 2000 targeting development in low-income areas.  We’ll have to see if anything of value comes out of this.

If I were asked to “grade” these initiatives, I’d have to point out that these are “graduate school” courses and, by the numbers, most are in the freshman class.  Which of these initiatives are helping your or a business with which you are familiar?

Leave a Comment


Previous post:

Next post: