Like many of you reading this, I’ve heard it said time and again that small businesses are the engine of the economy. If that’s a fact, why aren’t we getting enough fuel?
While Wall Street proclaims the recession nearly over, small businesses throughout the nation are still running on empty. Here in the trenches, retailers, service providers and eateries are going out of business from the South Bay to Lake Arrowhead. These are the establishments tasked with reversing the local unemployment rate, now at a modern-era high. In our current economic scenario, small businesses can only hire new workers if their sputtering engines are stimulated by government financial mechanics.
One popular and key stimulus, the SBA 7(a) Loan Program, has generated 10 percent of all jobs created by stimulus funding – after being allocated less than 1 percent of all stimulus funds. While this longstanding program itself is not imperiled, the stimulus funding under the American Recovery Reinvestment Act – under which the SBA repays banks up to 90 percent of a defaulted loan’s value, up from 75 percent – has run out. Without the extra backing for SBA 7(a) loans, most small businesses will not qualify for a bank loan.
This program has clearly shown that America’s small businesses have delivered on their promises to hire, expand into new markets, and buy goods and services or real estate. But even though this program is working and generating even more loans to small businesses, legislation to extend its stimulus is stalled in the U.S. Senate, and it appears the program may be pushed back into the slow lane on the road to recovery.
Extend program
We need the White House, Senate, Congress and other elected officials to help extend the SBA 7(a) Loan Program now. We cannot afford to wait until next year. Many entrepreneurs and small businesses are living hand to mouth, and losing the extra stimulus of this loan program is like having a rescue mission called off with the victim still in sight and sending out an SOS.
According to a survey conducted by the Los Angeles County Business Federation, only 44 percent of businesses thought the economic outlook would improve next year. Thirty-three percent anticipated laying off workers. Are we really going to let America run out of gas?
Clearly, these small businesses can continue to grow, thrive and prosper with a fairer share of stimulus money. But what is also clear is that Wall Street itself has a full tank of government funds and – back to riding in gas-guzzling style – has failed to check its rear-view mirror and believes the entire country is recovering.
The irony is apparent, considering that the automakers were handed large checks to bail them out of the recession. Big businesses like Chrysler and General Motors were saved from potential ruin so the frame, the chassis and the luxury interior can still roll off the assembly lines. But if the engine of the economy – American small business – is starved, nobody’s going anywhere. So, to paraphrase a dare, I say to the White House, Senate and Congress: “Flow me the money!”
Realistically, the less than 1 percent of stimulus money allotted the SBA 7(a) Loan Program amounts to merely a drop in the gas tank. To actually see the needle move enough to help small businesses grow, we must not only continue to fund the stimulus provisions of this program, we must also raise the loan cap so small businesses can become middle-sized businesses, and middle-sized businesses can become big businesses.
Answering the president’s call for employment ideas, I say what’s good for small business is the same as what’s good for big business – fuel. But I haven’t been there for awhile and so I’m wondering: Are there any gas stations open on Wall Street? Because America needs a fill-up.
Luis Vasquez-Ajmac is president of Maya Advertising, a multicultural ad and public relations company with offices in Redondo Beach and Washington, D.C. He also is a board member of Entrepreneurs Organization of Los Angeles.
