Small Business Week Spotlights Key Challenges for Business Owners 

This blog is part of our “Road to Reauthorization” blog series, that builds off BPC’s latest small business report, Small Agency, Big Mandate: A Bipartisan Road Map to Modernizing SBA. The series provides small business owners, stakeholders, and advocates with updates and insight on congressional progress toward reauthorization of SBA. You can read the first two blogs in our series on congressional support for reauthorization here and here. 

Small businesses are impacted by a range of public policy issues. Many of them, including access to capital, government contracting, and business support services, can be addressed by modernizing the Small Business Administration (SBA) through congressional reauthorization. Others, however, lie outside the jurisdiction of the House and Senate Small Business Committees.

During National Small Business Week, BPC highlighted several of the pressing issues confronting entrepreneurs and small business owners, which we recap here.

Tightening Lending Market

Starting and growing a business takes money and one of the primary ways in which small businesses finance their operations is through external credit. There are multiple signs that the credit market continues to tighten.

The January release of the Federal Reserve’s Senior Loan Officer Opinion Survey on Bank Lending Practices showed that, in the last few months of 2022, banks were pulling back on business lending and reporting lower demand for loans from small businesses. With high interest rates and the recent turmoil in the banking sector following the collapse of several large banks this year, further tightening in credit for small businesses is expected.

In fact, small business owners are already saying this. In a recent survey of small business owners, Goldman Sachs 10,000 Small Businesses Voices reports that three-quarters of small business owners are concerned about their ability to access capital. That’s much different than a year ago, when the same proportion of small business owners reported being confident in their ability to access capital.

Small business lending is also a hot topic inside the Beltway. Members of Congress have expressed concern about the recently finalized SBA lending rules, including one that opens the 7(a) program to new lenders. The Senate Small Business and Entrepreneurship Committee held a hearing on the rules in April and the House Small Business Committee is scheduled to hold two hearings on the topic this month, which we’ll cover later in the “Road to Reauthorization” series.

Finding and Providing Child Care

A lack of access to affordable child care is a barrier to starting a business. It also impairs small business hiring and makes retaining employees more difficult.

Last year, BPC surveyed working mothers and found that, among those interested in starting a business, 44% said access to affordable child care was a barrier. The barrier is even more formidable for working mothers with children under 5 years old.

Small business owners with children face the dual challenge of finding and affording child care for their kids and the children of their employees. Eighty percent of small business owners believe access to child care is a barrier to workforce participation, with 8 in 10 expressing support for policymakers taking action to increase access to affordable child care.

Earlier this year, a bipartisan group of senators, led by Sens. Jacky Rose (D-NV) and Joni Ernst (R-IA), introduced legislation to allow nonprofit child care providers that qualify as small businesses to participate in SBA loan programs. With more credit options available to these providers, the bill sponsors argue the legislation would expand the availability of child care services.

Restricting Access to Talent

Surveys show that small businesses are hiring but many continue to face challenges finding qualified candidates. The latest Goldman Sachs 10,000 Small Businesses Voices survey found that 79% of those hiring report difficulty recruiting qualified candidates for open positions.

Prior BPC work has examined several small business workforce issues including paid leave and retirement benefits. Another way to help small businesses attract the talented workers they need is to expand legal pathways for immigrant entrepreneurs to work and live in the U.S.

Immigrants to the United States face a system that one immigration attorney called, “arbitrary, capricious, and irrational,” at a recent BPC event on skilled immigration and U.S. competitiveness.

Green cards can be difficult to come by and temporary visas are available in limited numbers for specific needs. Expanding immigration pathways and streamlining the process could help—a fact recognized by a majority of voters, who think that increasing high-skilled employment-based immigration would positively impact the economy.

The Road Ahead

While the economic outlook for small businesses may indicate a bumpy road over the next several months, the chances of bipartisan action to support small businesses seem likely. BPC will continue to track progress toward SBA reauthorization and highlight policy developments related to other issues of concern to small businesses.