Access to Capital Conference - remarks by Suzanne P. Clark
Opening remarks by Suzanne Clark
Chief Operating Office & Executive Vice President, U.S. Chamber of Commerce
May 24, 2005
Thank you, Rita. I'm pleased to welcome all of you to the Chamber.
We're here to talk about capital-the difficulties small businesses face in acquiring it and how we can work together to increase access to it.
Without adequate access to capital-or credit-the role of small business as the backbone of our economy is greatly threatened.
Small firms create most new jobs and output as well as the ingenuity and innovation that make the U.S. economy the strongest and most dynamic in the world.
That's why the Chamber this past spring surveyed a diverse group of small business owners about their experiences and perceptions on acquiring credit.
We believe this survey is the first comprehensive look at access to capital across the entire small business community.
More than 1,000 business owners participated. Nearly half were women, and 18% were minorities. 95% run businesses with fewer than 100 employees.
The survey produced some revealing information about certain segments in the small business community.
For example, half of all minority business owners surveyed-and an even greater percentage of African Americans and Hispanics-said that availability of credit is among the top three business problems they face.
Of those who did not apply for credit over the past two years, minorities were more than twice as likely as Caucasians to say they needed credit but felt they would be denied if they applied for it. This sentiment was especially pronounced among Hispanics.
Also, the study shows that minority business owners rely heavily on credit cards-35% of them said they have used credit cards for funding. Caucasians, especially men, are far more likely to use bank loans for both initial and ongoing financing.
In addition, men and Caucasian respondents who needed a loan were much more likely to request business-rather than personal-lines of credit. On the contrary, women and minorities relied more often on personal lines of credit.
Finally, we were surprised to learn that only about a third said they believe a business plan plays a role in obtaining credit, indicating a great underappreciation of a strong business plan.
These are just a few preliminary findings you will find in the Executive Summary we've made available to you. We continue to analyze the data, and we will release the complete findings of our study later this year.
So, if we know there's a problem with small business access to capital, how do we fix it?
It's going to take a combination of building greater awareness, challenging common misperceptions about small businesses, particularly those owned by minorities and women; and implementing the right policies.
Small businesses must be made better aware of opportunities to access capital. Events such as these provide that.
Small businesses also need information and resources for growing their business, including information on how to devise a business plan, which our study shows is a greatly undervalued asset for obtaining capital.
The Chamber provides this type of information to its members through its online Small Business Center, which can be accessed through our Web site, uschamber.com.
Finally, small businesses need the government's assistance in ensuring guaranteed financing. The Chamber is a strong advocate of the Small Business Administration 7(a) and 504 guaranteed loan programs.
Our lobbying efforts helped to ensure that the program was expanded to $16 billion for the current fiscal year. The SBA, as you probably know, also has regional small business mentoring and training programs as well.
I should add that when a regulation that would have threatened eligibility for SBA's guaranteed loan program was proposed, the Chamber got involved and made sure that didn't happen.
Today's event is an important step toward more effectively linking small business owners with the capital they need to start or grow their businesses.
We'll learn from policymakers, lenders, and small business owners who have had success in acquiring capital.
For the sake of economic growth, prosperity, and competitiveness, we must eliminate obstacles to small business financing.
The Chamber looks forward to working with all of you to ensure that our nation's small businesses acquire the funding they need to be successful.
Thank you, and enjoy the program.