Entrepreneurs aren’t afraid of taking risks and finding new ways to tackle old problems, which is a reason why small businesses create two-thirds of all new jobs and support 55 percent of all jobs. Without small businesses, our economy – and our local communities – would crumble. That’s why it’s important to take time to appreciate our country’s entrepreneurs during November, which is National Entrepreneurship Month.
Whether entrepreneurs are creating jobs, pushing important new ideas or simply brightening up the main street of town, their hard work is vital to our economic fabric. But small business owners face too many challenges that keep their businesses from thriving. During National Entrepreneurship Month, we should focus on what we can do to help fulfill the promise of the small business economy.
Improving access to capital for small business owners is one of the most crucial issues for entrepreneurs. At best, a shortage of capital can keep a small business from expanding and hiring. At worst, it can prevent a business from opening its doors at all. In fact, Small Business Majority’s polling found 90 percent of small business owners identify access to capital as a top concern.
This finding is no surprise considering the dismal statistics concerning small businesses and traditional bank loans. Many banks have eliminated loans valued below $250,000, which hurts entrepreneurs since the vast majority of small businesses owners seek loans of less than $250,000. Additionally, many banks have simply stopped issuing loans to businesses with annual revenues of less than $2 million. As a result, only 2 out of 10 small business loans requests are approved, and the small business share of total bank loans has dropped from 50 percent in 1995 to 30 percent in 2012.
If we want to ensure that small businesses can continue playing their important role in our nation’s economy, it’s crucial that policymakers find ways to create new access to capital opportunities for small businesses – particularly in new and evolving areas like online lending and crowdfunding. For instance, the U.S. Securities and Exchange Commission’s recent decision to finalize rules to broaden investment crowdfunding opportunities – in which individuals contribute to a business in exchange for a financial stake in the business – is an example of the type of movement needed for entrepreneurs.
It’s just as important that policymakers and lenders work together to implement common-sense protections in the evolving lending industry. Small Business Majority has led a coalition of lenders and small business leaders to create the Small Business Borrowers’ Bill of Rights, which aims to increase fairness for small business borrowers. This type of transparency is particularly important as small businesses are increasingly utilizing technologically-driven lending that is, in many cases, outside the purview of current lending regulations.
Increasing access to capital opportunities and enhancing lending protections are just two ways policymakers can support small business job creation and innovation. Small Business Majority has identified several additional areas where policymakers can take action to help small business owners in our annual Economic Agenda.
In addition to pushing for policies that support small businesses, one of the most basic steps anyone can take to support entrepreneurs is to put their money where their mouth is. Small Business Saturday, which takes place on November 28, is a perfect time to spend your hard-earned cash at local stores. Many small businesses will even be having special promotions and deals, and your support can make a real difference.
Whatever you’re doing this November, make sure to remember entrepreneurs. They support us – and they deserve our support in return.