Small business vital to economic recovery

Consider these statistics from the U.S. Small Business Administration:
• Small businesses employ more than half of all private sector workers and account for 44 percent of the total U.S. private payroll.

        • Small businesses have generated 64 percent of net new jobs over the past 15 years.

        • Small businesses hire 40 percent of high-tech workers, such as scientists, engineers and computer programmers.

        • Small businesses produce 13 times more patents per employee than do large firms.

        Unfortunately, the deep recession has been especially rough on American companies, large and small.

        One intractable problem is the difficulty and frustration that small businesses face in obtaining credit, ironically from big banks bailed out by the federal government during the past year.

        It is refreshing, therefore, that the Obama administration is focusing its attention on the needs of small businesses. At Landover, Md., Wednesday the president announced initiatives that will use the Troubled Asset Relief Program to lower the cost of capital for smaller banks and community development financial institutions that submit plans to the Small Business Administration for increased lending. The new policy also will more than double the maximum size limit of guaranteed loans to small business owners.

        It’s about time. Obviously, Obama could gain politically from this major new approach. But far more important is the potential for helping a key economic sector that has been devastated by tight credit, loss of jobs, bankruptcies and failures.

        During his remarks in Landover, Obama noted that from the middle of 2007 through the end of 2008, small businesses lost 2.4 million jobs. “Because banks shrunk from lending in the midst of the financial crisis, it’s been difficult for entrepreneurs to take out the loans they need to start a business,” Obama said. “It’s been difficult to finance inventories and make payroll, or expand if things are going well. These companies are the engine of job growth in America. They fuel our prosperity. And that’s why they have to be at the forefront of our recovery.”

        Although unemployment remains high and could still escalate, many existing and would-be small businesspeople are chomping at the bit to expand, hire more people or start up their own enterprises.

        Washington seems to be getting the message that small-business success is crucial to our nation’s economic recovery. Folks in Lansing should pay attention and work for measures to make it easier to open, operate and expand small businesses, because that is crucial to our state’s recovery, too.