Small businesses drive this nation’s economy and make up the majority of our workforce; when they struggle, so too does the rest of the nation. With so many small businesses currently unable to receive the funds they need to hire new staff, it’s no wonder the unemployment rate remains dismally low. Ben Bernanke, Federal Reserve chairman and one of the world’s most respected financial voices, recently suggested that lenders need to increase loans to small business in an effort to decrease unemployment. Bernanke is right on target; let’s hope lawmakers take this idea and run with it.
A small business is any business with less than 500 employees; that’s more than 90 percent of American businesses and an overwhelming majority of American jobs. Loans to small businesses dropped from $700 billion in 2008 to $660 billion in 2010. Lending has decreased for several reasons, a key one being the new credit standards bank put into place after the financial market collapsed.
President Obama has proposed a $30 billion fund that will encourage community banks to support small business. The money would come from the U.S. Treasury Department and would go to small, community banks that want to increase their small business lending. Treasury officials say that the fund won’t cost taxpayers money in the long run, though we may pay for it in the first few years.
Knowing how important small businesses are to the economy, any responsibility placed on the taxpayers by the proposed fund would be a welcome one. Yes, we were outraged at having to bail out big financial institutions and major auto manufacturers, but only because corporate greed and excess put those companies in fragile positions. Additionally, many of us didn’t immediately understand how bailing out multi-billion dollar corporations would affect our daily lives. The impact of small businesses, however, is felt more directly and their financial health is directly linked to ours.
The president hopes Congress will make a decision on the proposed fund soon; if they delay, small businesses will continue to struggle and the economy will remain at a standstill. While this support should have come sooner, it is not too late for lawmakers step in and assist the nation’s small businesses. Help speed up the process by contacting your elected officials and urge them to quickly pass this legislation; the economy depends on it.
(Judge Greg Mathis is vice president of RainbowPUSH and a national board member of the Southern Christian Leadership Conference.)