BUSH CUTS HURT SMALL BUSINESS,
COST JOBS
Giveaways To Big Business,
Cuts to SBA, Loan Program Mean 189,000 Lost Small Business
Jobs
Small business is the heart and soul of America's communities
and one of the country's key economic engines. After all,
small business represents the best of our nation - opportunity,
freedom, economic independence, diversity - while also employing
a majority of the country's private sector workers and contributing
40 percent of our GDP.
The Bush Administration Favors BIG BUSINESS Over Small
Businesses
During his leadership, President Bush:
• Gave huge tax breaks - even a retroactive roll-back
- to the country's biggest and least deserving corporations
and CEOs while offering no targeted relief to small business.
• Proposed giving 16 corporations a total of $7.4 billion
in tax breaks, including $254 million to Enron.
• Slashed the budget of the Small Business Administration
(SBA) by nearly 40 percent while increasing the travel budget
of the new SBA administrator by more than 100 percent.
• Imposed massive cuts to successful small business
loan programs, undermining economic growth and costing $6.2
billion in lost capital and 189,000 lost small business jobs.
• Demoted the head of the SBA from his Cabinet, thereby
removing small business' voice from the table.
For most of the 1990s, small businesses enjoyed - and led
- America's economic boom. More than 98 percent of all net
job growth occurred in small business and millions of citizens
- from all regional and ethnic sectors - became entrepreneurs
and started their own small business.
Sadly, in under two years, much of this prosperity has vanished.
Consider where we are now: record job losses; weak economic
growth; declining business investment; spiraling stock market;
shrinking retirement accounts; deteriorating consumer confidence;
rising health care costs; escalating bankruptcies and foreclosures;
vanishing surpluses and higher resulting interest costs; stagnating
minimum wage. In all, 2.1 million private sector jobs have
been lost and millions of people have seen their retirement
funds dwindle or completely disappear.
Here are just some of the ways the Administration's policies
are hurting small businesses.
Slashing Small Business Financing Availability
For two years in a row, the Administration has slashed funding
for the SBA and proposed budget gimmicks to mask the impact.
For the Fiscal Year 2002 budget, the Administration proposed
a 40 percent cut to SBA, reducing its budget from almost $900
million to $546 million. At a time when the Federal Reserve
was reporting it was getting harder and more expensive for
small businesses to access loans through the private sector,
the Administration proposed eliminating all funding for SBA's
most popular lending program, 7(a). This program is the single
largest source of long-term loans for small business in the
nation, accounting for and estimated 40% of all financing
dollars. To make up for these cuts, the Administration has
proposed shifting the costs to small business borrowers and
lenders who already were paying more than necessary to access
and make loans. Congress did restore funding for FY2002 to
enable $10 billion in loans, but the Administration has put
the loan program on the chopping block and is seeking a 56
percent cut for the next fiscal year.
These small business loans are one of the best bargains around
for the taxpayers. For less than $2 for every $100 loaned,
the SBA is able to finance about 50,000 small businesses a
year, create more than 600,000 jobs and generate millions
in business and personal tax revenues. Cutting this program
is short-sighted and will hurt small businesses. These loans
have competitive interest rates and terms of up to 25 years,
which keep monthly payments low enough for small business
owners to repay the loans while keeping their businesses going.
Most small business owners agree that access to capital is
the number one challenge in starting and running a business.
The Administration's massive cuts to the SBA and its loan
programs, therefore, must be viewed as a direct assault on
the nation's entrepreneurs and small businesses.
Shrinking Small Business Loan Size
Making bad policies worse, the Administration has put the
lending community on alert that it may cut the individual
7(a) loan limit from $1 million to $500,000 in order to stretch
the inadequate funding it requested. The Administration's
proposal for capping the SBA's 7(a) loans is spreading panic
throughout the small business community because it would cut
the amount of money available to an already capital-starved
part of our economy. It is particularly bad for high-cost
areas which need the larger loans to keep their businesses
running. The cap proposal will hurt small businesses in every
state because it will increase the cost of loans for borrowers
and lenders; it will create an ever worsening situation for
FY2004; it will drive lenders away, particularly in high cost
areas; and, ultimately, it will limit credit opportunities,
especially for those small businesses owned by minorities
and women.
Muzzling the Voice of Small Business
It's no secret that large corporations have been granted unprecedented
access to this Administration and its top officials. So, who's
speaking up for small business? The head of the SBA certainly
is not. Just look at his priorities: while the agency and
its critical programs are facing enormous cuts, he's more
than doubled his travel budget - from $3.8 million to $7.9
million. On top of that, he sat by as his position was eliminated
from the President's Cabinet.
Cuts Mean 189,000 Lost Small Business Jobs
According to the SBA, one new small business job is created
or retained for each $33,000 loaned. The President has proposed
a $6.2 billion cut in the small business loan program which
translates to the loss of 189,037 American small business
jobs.
Click here to see a how many jobs each
state will lose as a result of the Bush cuts.
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