The first year of the 118th Congress may not have included any big legislative achievements for small businesses, but it did include a lot of legislative activity aimed at strengthening federal support for America’s small businesses and entrepreneurs—including more than 30 small business committee hearings.
As the new year begins, let’s look back at two important small business developments from 2023 and ahead to what will undoubtedly be a consequential next 12 months.
SBA Modernization Gains Steam
Congress has made many meaningful improvements to small business lending, technical assistance, and other programs over the years, but it hasn’t passed a comprehensive Small Business Administration (SBA) reauthorization bill since Bill Clinton was president. While 2023 began with hopes that the reauthorization drought would end, SBA modernization appeared in jeopardy last spring when bipartisan opposition emerged against SBA rulemaking.
In keeping with longstanding bipartisan cooperation on small business issues, former Senate Small Business and Entrepreneurship Committee Chairman Ben Cardin, along with the committee’s ranking member, Sen. Joni Ernst (R-IA), guided legislation through a committee markup that reopened the door to SBA reauthorization by rolling back and revising some of the changes SBA was pursuing through the rulemaking process.
After the 18-1 vote in favor of S. 2482, the Community Advantage Loan Program Act, Sen. Cardin called the committee’s actions “historic” and said they “reflect the bipartisan spirit of our committee and our goal to remain laser-focused on codifying, modernizing and streamlining SBA programs.”
Last year, the Senate Small Business and Entrepreneurship Committee passed 10 additional bills, while the House Small Business Committee advanced 14 for further consideration. Although none of these bills has yet to make it through the legislative process, 11 have cleared the House; all comprise important components of what could become a comprehensive and bipartisan SBA modernization bill in 2024.
Small Business Contracting Reforms Hitch Ride on NDAA
As 2023 ended, Congress passed the 2024 National Defense Authorization Act (NDAA). Embedded within this extensive must-pass bill were several reforms pertaining to small business contracting, including the elimination of self-certification for service-disabled veteran-owned small businesses (SDVOSB) and an increase to the government-wide procurement goal for SDVOSBs from 3% to 5%. The latter provision mirrored the bipartisan and bicameral Investing in VETS Act (S. 2146 and H.R. 5147).
While increasing small business procurement goals can help more small businesses win contracts with the federal government, setting higher goals alone is insufficient. Fewer small businesses are providing products and services to the federal government today compared to just 10 to 15 years ago, despite the government meeting its 23% small business prime contracting goal for the past 10 years.
To further bolster small business contracting, the 2024 NDAA directed the Defense Department—the government’s largest purchaser of goods and services—to factor in the past performance of small businesses’ affiliate companies when evaluating bids. Doing so should help more small businesses establish a past performance track record, thereby improving their chances of winning government contracts.
For small businesses working as subcontractors on large government contracts, the 2024 NDAA also contained provisions to improve the timeliness of payments made to small business subcontractors.
‘Four in ‘24’
Bipartisan support for small businesses in not as certain as death and taxes, but it’s pretty darn close—perhaps in part due to Americans’ overwhelming esteem for small businesses. Even in an election year when control of Congress and the White House is up for grabs, small businesses and their supporters can expect members of both political parties to look for ways in which Washington can aid this important sector of the U.S. economy. Here are four key opportunities for Congress to support small businesses in 2024.
- SBA Reauthorization: Building off the momentum generated in 2023, Congress has an opportunity to pass the first comprehensive SBA reauthorization bill in more than 23 years. In doing so, Congress can help SBA double down on its strengths, make needed improvements, and modernize its services to meet the needs of a changing small business landscape.
- Workforce: Small businesses have faced a stubbornly persistent challenge in recent years when it comes to finding and hiring qualified workers. In November 2023, 40% percent of small businesses reported having job openings they could not fill, and surveys indicate that hiring has become more difficult than in the past. Whether it’s improvements to the nation’s education, training, and workforce systems or policies to help small businesses offer competitive benefits, there are numerous ways for Congress to address small businesses’ workforce needs.
- Digitalization: One of the ways in which the small business landscape differs dramatically from the time of the last SBA reauthorization is the growth in types and sophistication of digital tools. Small businesses leverage an array of digital tools for everything from advertising to project management, to collecting payments to accounting, and more. Many are already using or planning to integrate AI technology. Congress can play a role in helping ensure that the productivity gains associated with digital tools are widespread and available to all small businesses.
- Succession Planning: America’s population is getting older. In just six years, will be at or beyond retirement age. Aging small business owners are an overlooked vulnerability in the U.S. economy. What happens to aging owners’ small businesses is an open question and presents opportunities for policymakers to explore ways to help small business owners transition ownership of their companies or otherwise guard against widespread closures as small business owners retire.
With small business policymaking sure to continue this year, stakeholders can follow key developments by subscribing to BPC’s newsletter.
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