Government Killed Small Biz Jobs on July 15

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And the SBA is non-responsive.

In April I shared Why Small Business is Fed Up With Government – both sides are addicted to “big”. That addiction continues to escalate and hurt small businesses nationwide. And a Washington Post surveysay you’re tired of it.

In early 2009 both sides declared the 19 largest banks “too big to fail”, and vowed at every photo op to change that. It was the political buzz-phrase de jour for a few months designed to make us “small” guys feel like someone was looking out for us while they gave hundreds of billions to their big business friends.

Today, three years later, those same few banks now control an even LARGERpercentage of the banking industry. That’s how big government dealt with the issue; with their handouts they made the banks even bigger and an even greater national security risk for us. They assumed we would go back to our pitiful little lives and ignore them.

In 2010, Olympia Snowe, the self-styled Republican Senate advocate for small business, introduced legislation to kill the only small business loan actually designed for very small businesses. She had championed the loan through Congress, but received strong opposition from her big bank friends as well as her big government friends. She showed that her allegiance is to the bigs.

And now, in the midst of the biggest recession in history, government is killing small businesses with new regulations. On July 15, the State Department introduced requirements that forced small businesses to put as much as $500,000 in escrow (a business I know would have had to escrow that amount), and leave it there for 12-24 months without touching it.

This drove thousands of small businesses under in only a few days. The big businesses swooped in behind like vultures on a wire and took over all the customers these small businesses had cultivated for decades. They couldn’t get back in business now if they wanted to. Big government now has fewer, bigger clients to regulate. All the bigs are happy.

How did our government help the little guy with this? The business owner and I approached the SBA Office of Advocacy on July 11 and sent repetitive requests for intervention, the very thing that this bureaucracy was designed to do. For 24 days we received no response to many emails until July 29, which was a very unprofessional reply making the SBA out to be the victim. Since asking us a question on August 4, we have again received no responses to many more emails over the last 15 days. Simply inexcusable for an agency supposedly designed to advocate for small business.

Giant business and giant government got us in this mess, then turned around and looked behind and asked us to get them out of it. But they don’t invite us to the table to help them see how to do it. We couldn’t possibly know – we’re small and they’re big, and big knows better than small. Washington has Jeffrey Immelt, former CEO of GE who paid no taxes last year, in charge of fixing this. He, too, has no clue what a small business looks like.

Talk to any banker who used to give small business loans, and they will tell you very quietly and in complete anonymity that the reason their lending standards are beyond the reach of most healthy small businesses is because the government regulators are putting such pressure on them that they can’t adopt REASONABLE(not loose) lending standards. 73% of small businesses who need capital haven’t even bothered to apply because they know it’s useless. 48% who do get rejected – astonishing statistics. The 25 biggest banks control 32 percent more deposits than they did in 2006, but made 30 percent fewer small business loans.

This is your small business advocacy in Washington. In case you wondered if anyone is looking out for you, the small business owner, on either side of the aisle or in any of the halls of the giant bureaucracies there, you might think again.

I’ve said this in dozens of places on the internet for three years – access to capital is the #1 issue for small business and has been since October 2008. #2 is predictability from our govt., and #3 is regulations that hurt small business and help the big ones. The SBA says the #1 job growth sector is businesses with 1-9 employees and the #2 job growth sector is 10-19 employees. Then they, the rest of the government, and the giant corporations who all got us into this mess, continue to use this crisis to help each other just get bigger. Expect large donations from giant corporations to both sides next year.

Small business doesn’t want a bailout. And I personally don’t have time for recessions – I have somewhere I need to be with my business. None of the above make it impossible to succeed, but it does make it harder. And when government proactively kills jobs and small businesses like the State Dept. did on July 15, that is interventionism in commerce that is unacceptable and needs to be addressed, even if the SBA doesn’t have the spine to do it (in case you wondered, the SBA isn’t focused on small businesses under 19 employees).

Caveat emptor – for too long we have bought that someone in Washington is looking out for us. Think again. You won’t get help and you don’t need it. You can succeed without their help; just know that they are not in Washington to make it easier for you, but to make it easier for themselves and their giant corporation donors. It’s time to expose the game for what it is, one “big” scratching the back of another “big”, all at the expense of 28 million small businesses and the American economy.

This isn’t a lack of courage to act. This is simple self-preservation at work – both bigs (giant government and giant business) will protect their “bigness” at any cost, even the worst recession in history. And certainly without blinking an eye at the demise of small businesses.

 

by Chuck Blakeman, Author of the #1 Rated Business Book of the Year, Making Money is Killing Your Business

www.ChuckBlakeman.com


About

Chuck Blakeman, founder of the Crankset Group - a worldwide business advisory, is the author of the #1 Rated Business Book of 2010 in the U.S., Making Money Is Killing Your Business.

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