March 31, 2017 at 5:00 am ET
Imagine small business owners on Main Street America. They’re familiar faces to all of us: friends, family members and neighbors. They’re the people whose work brings energy to our hometowns and life to our economy.
On the surface, they make it look easy, but for each of those small business owners, there was a day before the sign was turned to “open” and before the shelves were stocked with product. There was a day when the business was run from the kitchen table and where the merchandise was just an idea they pitched in conversation with a friend.
What does it take to bring that business idea to fruition? A whole host of things, but most critical of all is access to capital. And what does it take to grow that business once it’s off the ground? The answer is the same: capital. How do we know? We asked.
In a recent survey of 500 small business executives, we found that businesses are reliant on financial services to start, maintain and grow their business. Four in five said the capital that banks provide is an important tool for helping their company succeed.
We hear stories every day about the essential role that financial services play in business. Take for example a case like Cuisine Unlimited. The small, family-owned catering company was offered a major contract in its home base of Salt Lake City, but as founder Maxine Turner and her team tried to capitalize on the opportunity by applying for a loan, they found themselves handcuffed by bureaucratic roadblocks and red tape due to Dodd-Frank and other regulations.
Turner isn’t the only one who’s confronted those choke points. Companies of all shapes and sizes face challenges every day, but the financial services industry stands as the bridge to overcoming those challenges and clearing those hurdles.
Businesses need access to credit and capital in order to grow. According to our survey, 61 percent of small business executives say access to affordable credit or loans has gotten worse or stayed the same over the past year, and the proportion of those saying access had not improved was most pronounced among business owners with 10 or fewer employees – the smallest companies.
Because small businesses have a harder time getting the access and flexibility they need, their path to growth can be more difficult, making it harder to become a bigger company that can drive even more economic growth and create even more jobs.
Consider another example, but one on the other side of the coin. Viking Masek, once a sales-driven organization, had a close partnership with its bank throughout the life cycle of their business. When an opportunity to expand came their way in 2006, their bank provided critical financing that Viking Masek needed in order to purchase new facilities, and later, to finance subsequent expansions as demand increased. The company operates today as an integrated manufacturer of custom automated packaging systems for a variety of industries, employing more than 50 people and serving other small businesses as a link in a broader supply chain.
When small companies grow and flourish, so does our economy. And frankly, our economy could use a boost right now, so we can’t allow small business leaders to be held down any longer. Every proposal that comes through Washington should be subject to the growth test: Will it speed growth or will it impede growth?
Government regulations should be the first to face that test. A majority of small business executives indicated in our survey that increasing government regulations on financial services would hurt Main Street American businesses. We know from the data – and from the business leaders who grapple with them every day – that regulations are a problem. It’s time to get serious about reform.
At the outset of this new administration, small business leaders are optimistic about what’s ahead. They’re operating with newfound confidence, and they expect pro-growth policies will prevail once again. But if Washington won’t deliver, Main Street can’t deliver either, so it’s up to our lawmakers and regulatory decision-makers to act decisively in favor of reform that protects and defends America’s critical financial services infrastructure.
David Hirschmann is president and CEO of the U.S. Chamber of Commerce Center for Capital Markets Competitiveness.
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