Washington, D.C. – Small business owners and entrepreneurs are the backbone of the U.S economy but face daunting hurdles in accessing the capital needed to grow, thrive and create jobs.
The decline in startup formation in recent decades is a worrisome trend for the economic future of the country. New business ventures, as well as existing small businesses on our nation’s Main Streets and across all industry sectors, provide a path for upward mobility and opportunity. U.S. economic vitality depends on the success of the entrepreneurial spirit across the country and not just in a few geographic pockets.
The Bipartisan Policy Center’s Task Force on Main Street Finance in a new report, Main Street Matters: Ideas for Improving Small Business Financing, offers recommendations on how the financial system can better serve small business owners and entrepreneurs so they can continue to drive job creation and innovation.
The task force co-chairs — former Sen. Olympia Snowe, former U.S. Small Business Administration Administrator Karen Mills, former FirstMerit Corp. CEO Paul Greig, and angel investor Mark Walsh – met with small business owners, financial firms, and other experts across the country. Drawing on those conversations and other insights, they developed a set of recommendations for improving data on small business financing, recalibrating financial regulation, making U.S. capital markets work better for small business, and promoting innovation and integrating technology.
“It is critical that we respond to the needs and concerns of Main Street America. Small businesses are essential job generators and the major driver of economic growth and vibrancy for all regions of the country. Our pragmatic recommendations were developed to make the financial system work better for entrepreneurs regardless of their geographic location or business size,” Snowe said.
“Small business ownership has long been a path to the American Dream. Since the Great Recession, however, small businesses have seen gaps persist in accessing the capital they need to thrive, and with that, a threat to their ability to continue to drive economic opportunity and our nation’s competitiveness. As banks and fintechs push innovative approaches to fill these gaps and better meet the financing needs of small businesses, we must also be mindful of the risk of bad actors. This demands a thoughtful and effective response from policymakers to ensure we continue to empower our nation’s entrepreneurs and entrepreneurial spirit,” Mills said.
“There are many alternatives to providing credit these days, such as fintech businesses. But by far the most significant provider of credit is the banking industry which has been burdened by an enormous amount of regulation after the financial crisis. Tailoring regulation to the size, complexity, and risk of the regulated bank would help promote small business growth,” Greig said.
“We’re at an inflection point in our economy – with consolidation happening in many industries. It’s imperative that entrepreneurs and startups continue to get the encouragement and support necessary to succeed. One area of focus in our work was how to share data in a protected, controlled way. Rich data will help savvy small businesses get bigger,” Walsh said.