Small business owners see U.S. economy improving

U.S. small business owners see an improving economy and point to the Small Business Index released Wednesday as proof. 

The Q3 MetLife and U.S. Chamber of Commerce Small Business Index reached its highest score since the start of the pandemic. Used to measure the confidence of small business owners, the Index score rose from 63.1 to 69.2, due to the number of small businesses believing the economy is in good shape. 

According to the Index, 66% of small businesses report that their business is in good health and 72% state that they are comfortable with their cash flow. Both measures increased several points from last month. 

“I think what we’re looking at now is trying to provide resources to help those businesses maintain that momentum and potentially scale and have our eyes on those big things such as rising interest rates and inflation,” said Ryan Unger, president and CEO of the Harrisburg Regional Chamber and CREDC. “I think those are the issues that could impact small business growth, so we want to make sure we can maintain that momentum going forward.” 

Unger added that inflation, if unchecked, would drive up interest rates, inhibiting the ability of small businesses to scale and grow. 

“I think we’ve got our eyes on those (factors) in the months ahead,” Unger said. 

Tom Sullivan, vice president of Small Business Policy at the U.S. Chamber of Commerce, cited the resiliency of main street employers. 

“With fears of a recession likely in the rear-view mirror and inflation starting to ease, small business owners are feeling a lot better than they were a year ago,” Sullivan said in a statement. 

Inflation and employee retention remain among the leading concerns for small business owners, according to a survey this quarter. Small business owners added that keeping pace with employees’ salary expectations is also a challenge. 

At the same time, small business owners point to what they feel are the unique benefits and advantages they can offer to employees. Nearly nine in 10 employers said in this quarter’s survey that their company feels like a family and that this environment has aided them in retaining employees. Roughly 82% of employers surveyed said small businesses are uniquely qualified to provide employees with connections to and support from upper management.

SBA proposes rule to increase returning citizens’ opportunities

The Small Business Administration (SBA) is proposing a rule that would aid in expansion of access to loan programs for people with criminal history records. 

American adults with a criminal history record would gain entrepreneurship opportunities under the proposed reforms. 

“America is about possibilities and second chances – and that includes justice-involved individuals who are working hard to rebuild their lives through entrepreneurship,” Administrator Isabella Casillas Guzman said in a statement. “SBA’s proposed rule would help returning citizens have better access to capital to start and grow their businesses and ensure our economy and society can benefit from their pursuit of the American dream of business ownership.” 

Current SBA regulations contain barriers for loan applicants with certain criminal history records. Some applicants are completely barred from SBA programs.  The proposed rule would expand access to capital for entrepreneurs by expanding eligibility and removing barriers to SBA’s loan and bond programs. It would also eliminate SBA application forms from asking applicants about their involvement with the criminal justice system. 

Individuals with a criminal history involvement identify employment as their most urgent need. A 2018 study reveals that formerly incarcerated people have a 27% unemployment rate, dramatically higher than the United States unemployment rate.  Substantial evidence exists of labor force discrimination against formerly incarcerated individuals, due to concerns about recidivism and gaps in work experience.

Entrepreneurship offers individuals with connections to the criminal justice system an alternative. The proposed regulations would clarify requirements across SBA capital programs and expand access to the capital necessary to start a business.

The rule change would do the following:

  • Standardize eligibility rules across SBA capital programs, including the 7(a) Loan Program, 504 Loan Program, Disaster Loan Program, Microloan Program, and Surety Bond Guarantee Program—which collectively provide over $40 billion in capital annually to small businesses. 
  • Reduce confusion and subjectivity (e.g., what is considered a “crime of moral turpitude”). 
  • Rather than rely on self-reporting from the applicant, SBA will eliminate detailed questions on the application and, instead ask a straightforward question on current incarceration status and then verify that status using the applicant’s SSN and a third-party database. SBA will also check against SBA internal data for those connected to pandemic fraud and other resources related fraud against the federal government. 
  • Continue to allow SBA lenders to follow their own policies on criminal background checks. 
  • Continue to deem businesses with owners who are currently incarcerated and all those who have previously committed fraud against the government as ineligible for all capital programs.

Guzman said the proposed rule “is not only the right thing to do to strengthen our economy and communities, but it is also the smart thing to do because research shows that employment helps people thrive during reentry and reduces the risk of recidivism.” 

Pa. awarded $500k for new small business export growth

Pennsylvania’s Department of Community & Economic Development’s Office of International Business Development has received $500,000 as part of the Small Business Administration’s State Trade Expansion Program (STEP). 

Small Business Administration (SBA) Administrator Isabella Casillas Guzman announced the award Wednesday. 

“For over ten years, the SBA’s State Trade Expansion Program has been an important federal and state partnership to get funding directly to small businesses seeking to grow their businesses and our economy with international trade opportunities,” Guzman said in a statement. “And with these funds, small businesses can get trade-ready, attend trade shows in foreign markets, and grow through global e-commerce.”

Guzman added that the award ensures U.S. small businesses can promote their products and services to over 95% of the world’s consumers who live abroad.

The STEP award will assist Pennsylvania’s entrepreneurs to compete globally by offsetting costs incurred by export related activities, including participating in foreign trade missions and export trade show exhibits, designing international marketing campaigns, and taking part in training workshops.

Awardees were selected following an application process. Individual STEP awards are managed at the local level by state government organizations and nonprofit entities.

Acting Associate Administrator for International Trade Claire Ehmann said STEP’s impact is testament to the SBA’s support of U.S. small businesses looking to grow their international footprint.

“As STEP matures beyond its first decade, the SBA will continue modernizing and marketing this signature program that helps small businesses enter and expand into the international marketplace,” said Ehmann.

Shapiro executive order seeks to increase opportunities for small diverse businesses

Opening new business opportunities for Pennsylvania’s small businesses and small diverse businesses and improving procurement practices are the aims of Executive Order 2023-18, signed Tuesday by Gov. Josh Shapiro. 

“We need to do more to help our small and small diverse businesses compete for state dollars,” Shapiro said in a statement. “That will require policies like those I’m announcing today, but most importantly, it will require a governor who gives a damn and makes sure these businesses are part of our collective progress. It’s not just the right thing to do – it’s the smart thing to do. 

“By supporting our small diverse businesses, we’ll not only grow our economy and strengthen our communities – we’ll also create more competition for commonwealth business and secure higher quality products and better results for all Pennsylvanians.” 

Lieutenant Gov. Austin Davis said he has seen firsthand that small businesses owned by women and Black and brown Pennsylvanians are vital to communities. 

 “We must support small-business owners by cutting red tape and putting resources into economic development and innovation,” said Davis. “That’s why today’s executive order is so important. We’re going to go out and actively encourage small businesses and small diverse business owners to compete for government contracts and become commonwealth vendors.” 

Shapiro’s executive order directs the Department of General Services (DGS) to coordinate efforts with agencies to increase their participation in the state’s Small Business Reserve (SBR) program, foster greater competitive procurement, and increase the amount of money directed to small and small diverse businesses.  

The order also establishes the Pennsylvania Advisory Council for Inclusive Procurement (PACIP) to advise agencies on ways to make state contracting opportunities more inclusive. 

“Actions like this will continue changing the narrative around doing business with the commonwealth and build up Pennsylvania’s small business community – and we are moving at the speed of business,” DGS Secretary Reggie McNeil said.

DGS and PennDOT will partner to improve Pennsylvania’s contracting environment to increase its small business and small diverse business spending as a percentage of all dollars paid for goods and services by the agencies for their respective programs.

Under the new order, both agencies will also conduct outreach to the small diverse business community and provide technical support to qualifying small businesses interested in competing for state contracts. DGS and PennDOT will also designate employees to serve on an interagency working group that will assist the PACIP.

Della Clark, president and CEO of The Enterprise Center, said lifting up small and diverse businesses requires institutional buy-in at all levels.

“We view this executive order as the first step to combining contracts, capital, and expertise to intentionally grow small and diverse led businesses across the commonwealth,” said Clark.

SBA increases federal support for natural disaster survivors 

Small businesses and disaster survivors will see increased federal support following a federally declared natural disaster. 

Citing an increased frequency of natural disasters, U.S. Small Business Administrator Isabella Casillas Guzman said the agency finalized a rule to increase support, effective for all disasters declared on or after July 31. 

“The Biden-Harris Administration has prioritized maximizing resources for disaster survivors so that they can successfully recover and build resilience to the effects of climate change that have led to more frequent and costly natural disasters,” Guzman said. 

 “The SBA’s disaster loan program rule modifications will ensure more flexible and affordable disaster loans are available for small businesses, nonprofits, renters, and homeowners,” Guzman added. 

Bailey DeVries, associate administrator for Investment and Innovation and acting associate administrator for Capital Access, said, “For the first time in nearly 30 years, accounting for decades of inflation and rising construction costs, SBA is more than doubling the caps for its home disaster loan program”. 

 Increasing the loan limits ensures that communities have access to sufficient funding to help them rebuild homes, replace personal property, and reopen businesses when disasters strike. DeVries said.   

“SBA’s bold new actions continue to reshape our disaster enterprise by unleashing more capital to help devastated communities rebuild and expanding avenues to mitigate against future damage in the face of increasingly frequent and catastrophic disasters,” said Fransisco Sanchez Jr., associate administrator, SBA’s Office of Disaster Recovery and Resilience.  

“While bringing the whole of SBA to the effort and inextricably tying recovery to resilience, SBA’s team is also boosting its presence in the field to lead from the ground up and ensure we are meeting the priorities of each community,” Sanchez said. 

 In 2022, Guzman announced that SBA would waive the interest rate for the first year and extend the initial payment deferment period automatically to 12 months for disasters declared on or after Sept. 21, 2022, through Sept. 30, 2023. 

This new rule makes the change permanent and means SBA will continue to provide relief to disaster loan borrowers by waiving interest and payments for the first year for all disaster loans beyond Sept. 30. 

Biden-Harris Administration aims to modernize small business program

Effective Aug. 17, Small Business Investment Company (SBIC) program modernization will increase access and diversity funding for the small business, start-up, and investment management communities, the Biden-Harris Administration announced. 

Administrator Isabella Casillas Guzman announced on Wednesday the U.S. Small Business Administration (SBA) finalizing a rule to modernize the SBIC program. The SBIC Investment Diversification and Growth final rule is designed to seed America’s next generation of fund managers and increase funding for underserved and undercapitalized markets. 

“SBIC-licensed funds have seeded and scaled some of the most innovative and successful businesses in the world and helped small businesses sustain operations across the country by helping them bridge capital gaps to build innovative and resilient businesses,” Guzman said in a statement. 

“This final rule will unlock unrealized potential and strengthen, diversify, and expand our network of SBIC licensed private funds to address capital deficiencies in underserved small businesses, startups, and critical U.S. industries impacting our nation’s security.” 

Historically, aspects of the SBIC Program have limited the flow of equity and growth-oriented debt investments from SBIC-licensed funds to small businesses and start-ups operating in underserved communities, capital-intensive industries, and technology areas critical to U.S. national security and economic development. The SBIC Investment Diversification and Growth Rule addresses communities, industries, and technologies not sufficiently financed by private market investors due to lack of access, duration of investment, risk/return profile, or magnitude of capital required. 

Bailey DeVries, associate administrator for Investment and Innovation and acting associate administrator for Capital Access, said public-private SBIC partnerships have advanced the growth of industries by financing start-ups and small businesses important to communities and the national supply chain.

“With the modernization of SBIC regulations, SBA will play an enabling role in partnering with return-seeking private investors to fund businesses in corners of the economy critical to our national security and economic success,” said DeVries.