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Over the past decade, America’s small businesses have faced no shortage of obstacles; among them, one of the worst recessions in our nation’s history, a slow and sluggish recovery, and a torrent of new and burdensome rules coming out of Washington. Now that the economy is finally starting to show signs of rebounding, it’s important that we start to break down some of the lingering roadblocks that past regulators and lawmakers have erected on Main Street.
One the biggest barriers to growth for small businesses – and one that has grown exponentially larger over the past decade – is access to capital. Coupled with good ideas and entrepreneurial drive, capital is the fuel that drives innovation and business growth. Unfortunately, new regulations linked to the 2010 Dodd-Frank law have had unintended consequence that limit small businesses’ access to capital -- consequences that my company has experienced firsthand.
Last year, my small, family-owned catering and events company was awarded a major contract for all food services at the new performing arts center in Salt Lake City, where we are based. This new contract required us to make a major investment in equipment and additional people; in fact, we were looking at doubling our staff from about 50 employees to more than 100. In order to secure the funding necessary to make those investments, we met with three banks as well as our local Small Business Administration representative. Keep in mind, our small business has had four very successful loans through SBA over the years, all of which we repaid ahead of schedule. And yet, we were turned away by all three.
We looked to other sources of revenue and discovered a local economic development grant offered by our city. We applied and received one third of the funds we needed. We found ways to make it work by buying less equipment, pulling used small wares from our catering operation, and postponing plans to remodel our main catering facility. This left us with little working capital and zero reserves.
I have met with many other small business owners who have run into these same dead ends lately. It simply should not be this hard for entrepreneurs to access the capital they need to grow, and our leaders in Washington must do more to break down these barriers.
It’s not just capital that we need to succeed, though. We need talented, qualified people, too, and this has become another difficult barrier to growth. For small businesses in particular, access to job seekers with the skillset needed is a tedious and time-consuming task. In fact, when the Goldman Sachs 10,000 Small Business initiative partnered with Babson College to study small business issues, they discovered that more than 70 percent of small business owners find it difficult to hire qualified employees.
Many business owners have forged innovative partnerships with local trade schools offering their students paid internships, and they are finding ways to get involved in the education system to help ensure that schools are preparing today’s students for the jobs of tomorrow. Still, there’s more that must be done at a national level to ensure companies of all sizes can access the talent they need.
Another area where small businesses are looking to Washington for support? Regulatory relief.
A supportive regulatory environment is essential to protect the general public and help guide sound business practices. However, overregulation is burdensome, and a recent upsurge in regulations has left small business owners feeling overwhelmed and concerned. New research conducted by the U.S. Chamber of Commerce Foundation explores the costs of red tape on Main Street businesses and spells out how the $1.9 trillion annual cost of federal mandates is a drag on the American economy. The study includes a survey of leaders from local chambers of commerce who are alarmed by the slump in new business startups and insist that federal regulations are largely to blame.
My company hasn’t been spared. In addition to the impact we felt from Dodd-Frank regulations, new complexities stemming from the Affordable Care Act and anticipation of new overtime regulations have prompted us to hire part-time staff instead of full-time, salaries positions with benefits. Our leaders in Washington must remove some of these most onerous regulations – and work to reform the entire regulatory process – in order to encourage more robust growth on Main Street.
These certainly aren’t the only steps policymakers could (and should) take to support America’s entrepreneurs and small businesses, but they’re a good place to start. In my role as chair of the U.S. Chamber’s Small Business Council, I look forward to working with leaders in the nation’s capital to help ensure that Washington really does work for the millions of Main Street companies like mine.
Maxine Turner will testify before the House Small Business Committee on Wednesday at 11:00 AM about these and other challenges facing the small business community. Watch live here.