Back to Work - Bill Clinton [72]
As the Pepperdine and Gallup findings show, the evidence doesn’t support the ideology. SBA–backed investments have helped new businesses to grow into economic giants, including FedEx, Apple, Intel, Callaway Golf, Staples, Ben & Jerry’s, Outback Steakhouse, Costco, Pandora, and Sun Microsystems.
President George H. W. Bush was a big supporter of small business and the SBA. He expanded its operations, including giving it the capacity to guarantee microloans to very small enterprises.
When I took office, I elevated the SBA to the cabinet and appointed two able administrators in Erskine Bowles and Aída Álvarez. During our eight years a simplified, expedited process doubled the overall number of SBA loans while more than tripling those to women and minorities.
President George W. Bush returned to the Reagan policy, cutting the budget by nearly 50 percent, cutting the staff by more than 25 percent, and freezing the microloan program.
President Obama is committed to reviving the SBA. He moved the budget back toward its all-time high in 2000 and added almost $1 billion more as part of his recovery initiatives, partly to fund two new programs: America’s Recovery Capital (ARC) to provide up to $35,000 to help very small businesses get out of debt, and the Small Business Lending Fund (SBLF) to put money into struggling community banks so that they could lend to community businesses likely to be turned down by big banks. Neither program has been fully implemented, in part because of the erosion of the SBA’s capacity to organize and administer such efforts over the last decade, in part because a lot of banks aren’t interested in participating.
Getting loans to well-run businesses that want to increase hiring would make a significant contribution to our economy. I hope the president will put the SBA back in the cabinet, to make sure small businesses’ concerns are fully aired in his ongoing effort to create jobs and to streamline government regulation (he’s already proposed savings of $10 billion). To do its job well, the SBA must rebuild and modernize to make good decisions faster, starting with getting the ARC and the SBLF going full bore. If banks continue to resist making SBA–guaranteed loans, the SBA also should explore other ways to meet the demand. For example, it could broaden the definition of disaster loans to include the current economic emergency, so that loans of $100,000 or less could be made directly. Or it could increase the investment activity of the Small Business Investment Company, a public-private partnership administered by the SBA that puts long-term capital into private firms that invest in promising small and midsized businesses.
A lot of great companies started with SBA loans. It’s time to get the loans going again.
34. Promote “crowdfunding” to help small businesses raise needed capital. “Crowdfunding” is the term used for receiving small sums of money over the Internet. It allows start-ups or small businesses that are seeking to expand to raise money directly from individuals without going through a financial middleman. This has a real potential to fill the financing gap many small entrepreneurs face if they can’t get conventional venture capital or a bank loan. Under current U.S. securities laws, which date back to the 1930s, money can only be raised from wealthy, knowledgeable investors, unless the businesspeople seeking capital go through a regulatory process that would cost more than the sum of money they’re trying to raise.
President Obama has proposed an exemption from the securities laws for investments up to one million dollars. Representative Patrick McHenry, Republican of North Carolina, has a proposal to allow companies to raise up to five million dollars, with individual investments limited to ten thousand dollars or 10 percent of the investors’ income, whichever is smaller. In 2010, the Sustainable Economies Law Center petitioned the SEC to allow investors to