(This article originally appeared on The Hill)
There’s been talk recently in Congress about more small business funding that would target industries hit hardest by the pandemic. It’s always a great idea if you’re a politician in an election year to hand out more money. But — given the trillions already distributed (and all the reported misuse of these funds) — is more small business relief really necessary?
The answer is no.
Not that we don’t have our challenges, of course. Rising prices and labor shortages are creating headaches for just about every client I have. Independent repair shops can’t get inventory amid supply chain disruptions. Companies in the seafood business are being affected by the Russia-Ukraine war. And minority businesses continue to struggle.
Republicans want everyone to believe that things are going terribly for small businesses and it’s all the Democrats fault. Democrats, including the White House, say that there’s a “new small business boom” and their party is fueling it. Both sides can conjure up data to prove their points. But are they seeing what I’m seeing? I don’t’ think so.
My firm serves more than 600 small and mid-sized businesses around the country, and I talk to these business owners (and many others in my community) frequently. In the past few months, I’ve travelled to Florida, California, North Dakota, Wisconsin and other fine places where I’ve spoken to and with more than a dozen industry organizations representing businesses that sell corrugated containers, construction materials, financial services, foam, insulation, tires, auto parts and equipment and, here’s what I found: they’re fine.
Small businesses in America in 2022 are generally doing just fine.
Because I write a lot about small businesses, I read a lot of reports. Like the recent one from Ocrolus, a document automation platform, which says that across its customer base of multiple industries small businesses are sitting on average daily cash balances that are almost 80 percent greater than 2019 levels. Or the report from the Bureau of Economic Analysis, which found that corporate profits — big and small companies — “surged” 25 percent year over last year, the largest annual increase since 1976.
I read the latest Global State of Small Business report published recently by Facebook’s parent Meta, which found that approximately 54 percent of the 24,000 small and mid-sized business leaders across 30 countries and territories surveyed reported higher sales or steady sales compared to the previous year, a number that’s 6percentage points higher than July 2021 levels. I also saw in another report from small business funding provider Guidant Financial that 65 percent of business owners reported being profitable and 83 percent of them expected their business to survive the COVID-19 pandemic.
I closely follow the National Federation of Independent Businesses monthly reports, which are derived from its membership, and I know that small business optimism and earnings, although down from their historic highs, remain relatively strong and at levels similar to what we’ve seen over the past decade. I learn from this report that small businesses are increasing what they pay workers and are overwhelmingly looking to hire. The data that I read from payroll services ADP and Paychex also supports this.
I love looking at economic data, and while projected GDP growth has slowed, I still see that both the services and manufacturing industries are reporting growth, traffic at the airports are approaching pre-COVID levels, diners are going back to restaurants and the construction industry — which indirectly and directly impacts countless small firms — is strong.
Close to three-quarters of U.S. counties have seen a net gain of businesses since the start of the coronavirus pandemic, according to an analysis of federal datareleased Tuesday. Startups are also surging, with nearly 5.4 million new business applications filed in 2021, according to data released earlier this year by the U.S. Census Bureau, which is an all-time record and a 23 percent increase over 2020 (a record-setting year with 4.4 million new applications).
And how about access to capital? According to one recent report, small business loan funding surged 27 percent in 2021 with the average loan jumping to above $700,000. Bank approval rates continue to rise, according to a monthly analysis from small business financing firm Biz2Credit. Grants and local funding are available in areas from Maine to Missouri.
There are 30 million small businesses in this country. Six million of them are employer-owned firms. Believe me when I say they will always have problems. In the past people complained about lack of demand, excessive regulations, absence of capital and rising taxes. This year it’s inflation and labor. Next year it will be the same, plus rising interest rates. Some businesses will do better than others. Some industries will grow faster. Some businesses will go out of business. Some will prosper.
But the government can’t just hand out free money every time this happens. The unprecedent economic impact of the pandemic is over. The risks and uncertainties of running a business will never be. That’s why we chose this life. The best thing Congress can do is provide a better regulatory environment for us to profit — and let us take our chances to succeed or fail.