South Carolina fertile ground for small businesses

by Peter Hull, The Island Packet

January 21, 2005

With a revised federal loan program and a small-business friendly state that outperforms national growth, it’s a small-business world in South Carolina.
An increase in the number of landscapers, janitorial services, nail salons and real estate agents helped revenue from small businesses jump almost 8 percent to more than $9 billion in 2002, according to a report by the U.S. Census Bureau.

And the number of South Carolina businesses with one or more owners, but no paid employees, increased nearly 4.5 percent to 221,692, up from 212,413 in 2001.
Nationwide, the number of small businesses increased from 17 million in 2001 to more than 17.6 million in 2002, a growth of 3.9 percent, the report said. The rate of increase from 2000 to 2001 was 2.7 percent.

The report indicates that South Carolina’s small businesses have pulled clear of the economic downturn experienced after the Sept. 11 terrorist attacks, said Frank Knapp, president of the Small Business Chamber of Commerce in Columbia. While tourism locally suffered as a result of the 2001 attacks, across the state textile industry closures and government budget cuts also left many people out of work.

But a small-business-friendly state coupled with the state’s rapid growth has prompted many people to start their own businesses, Knapp said.

“We had a lot of people forced out of regular jobs and gave serious consideration to being their own boss,” he said.

Nevada led the nation in small-business growth with a 7.4 percent increase between 2001 and 2002, the report states. Georgia slipped from first to second place in 2002, with a 6.3 percent increase. Florida also experienced growth of 6.3 percent. South Carolina ranked 12th and North Carolina ranked 20th.

Nationally, small businesses make up more than 70 percent of all businesses, ringing up total receipts of $770 billion, up 5.5 percent from 2001, the report states. Real estate, rental and leasing agents were the biggest earners at $162 billion, followed by construction businesses at $115 billion, technical services at $96 billion and retail at $78 billion.

In October, a survey that ranks the states most friendly to small businesses placed South Carolina 13th in the Small Business Survival Index, an annual report by the Small Business and Entrepreneurship Council, a Washington-based nonprofit organization that evaluates the effects of government policies on entrepreneurship.

Low unemployment, a low gasoline tax and low workers’ compensation premiums helped South Carolina jump three places in the survey from last year.

And there is more good news for small business. The federal government recently overhauled the loan guarantee program that allows small businesses to borrow money for expansion or modernization.

The cap for loans was increased from $1 million to $1.5 million for regular loans. Public policy loans, including loans to minority- and women-owned businesses, increased from $1.3 million to $2 million, and loans for manufacturers increased from $1 million to $4 million. The new legislation creates a fund of $16 billion, $3.5 billion more than last year.

The financing is administered by the Small Business Administration and is designed to help small businesses acquire land, fund construction projects or purchase equipment.

“The SBA had a record-breaking year in the number of loans and technical assistance it provided to entrepreneurs last year, and we’re poised to do even better this year, particularly in our loan programs,” said Hector V. Barreto, SBA administrator.

“This is an important win for small businesses,” he said, “and will ensure long-term stability to the program.”

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