US News & World Report
February 28, 2013
Sequestration is the Wrong Kind of Certainty for Small Business
Beth Solomon is the president and CEO of the National Association of Development Companies, the trade association of Certified Development Companies.
According to the Office of Management and Budget, the sequester could mean a reduction of nearly $1 billion in small business loans. In addition, loan processors could be furloughed, which would mean even more delays to ongoing small business lending. The long-term damage to small businesses could be acute.
But since the recession began, U.S. commercial banks’ small business loan portfolios are down 17 percent. And loans under $100,000 have declined even more steeply, over 19 percent. During that same period, the Small Business Administration supported over $100 billion in new lending to over 218,000 small businesses. In better times considered the lender of last resort, the Small Business Administration, for many small businesses, has become the only option. The agency’s loans have become a lifeline for the franchise industry and other segments that weathered the recession better than most.
In 2012, nearly 10,000 businesses—many of whom couldn’t find adequate financing from banks, accessed over $6 billion through Small Business Administration’s 504 loans, financing real estate, construction, and equipment.
In Michigan, Fiber By-Products, a wood fiber recycling company, accessed the agency’s 504 financing to purchase 43,500 additional square feet of workspace, creating 28 new jobs as a result.
This kind of public-private partnership that the Small Business Administration’s loan programs represent are precisely the kind of smart government initiatives that we need.
Limiting job creators’ access to capital at this critical point in the life of our nation’s economy is a profoundly bad idea. We are depending on our small businesses to grow and put our communities back to work. They are depending on Small Business Administration loans to finance their physical growth: real estate and machinery. And we are all depending on our elected leaders to put aside their risky, partisan gamesmanship and come together to pass legislation and enact policy in a bipartisan, responsible way that reflects our national needs and priorities.