While the economy has yet to fully emerge from its downturn, we have begun to see signs in favor of fostering growth and development in bigger businesses within the last few months. But this begs the question, when will the progress and profits of Wall Street begin to benefit Main Street?
Since the 2008 market crash, the federal government has been stringent in their rules on awarding loans to businesses. While the intention of responsible lending has been to safeguard the economy from frivolous lending, this has, in turn, most negatively affected small and micro businesses. Many micro business owners have since struggled to access the capital necessary to aid them in their business ventures. According to Dun & Bradstreet Credibility Corp. CEO, Jeff Stibel, this creates a paradox for those with the highest growth in revenue per employee, micro businesses, and their shockingly low rate of obtaining loans. While opponents of this stance may assert that overall small business loans have been on the rise, they are unable to justify legislation’s neglecting the needs of the largest contributor to revenue growth. However, recent moves in legislation have begun to shed some light on future prospects. Senate Bill 1563, presented this year by the House and Senate Democrats, demonstrated a greater interest in the wellbeing of micro businesses in Oregon.
The state of Oregon currently issues a maximum of $70,000 in loans per year to micro businesses, each of which lasts about five years. For many burgeoning businesses, this cap is not nearly enough to ensure the security of their company. The proposed bill would increase that cap to $100,000, and extend the lifetime of those loans to ten years, which would not only support but also encourage the development of small businesses.
This campaign works closely with the Entrepreneurial Development Loan Fund, which distributes loans specifically tailored to small business owners. They work to help these companies through non-traditional lending markets by “[providing] direct loans (of up to $50,000) to help start-ups, micro-enterprises, and small businesses expand or become established in Oregon.” Applicants of these loans, amongst other criteria, must have either made less than $500,000 in the twelve month period prior, or be a businesses owned by someone who is severely disabled. This state agency is run by Business Oregon, which aims to help “create, retain, attract, and expand businesses,” as well as increase jobs in Oregon.
Diane Rosenbaum, Portland’s Senate Majority Leader, voiced her support of the proposed bill by saying, “Small businesses are where job growth needs to happen.” Two-thirds of the nation’s net new jobs are generated through small businesses. So passing this bill would not only benefit these companies, but might also assist in improving the job market, and therefore the overall economy. Taking action towards increasing small loans and microlending is a crucial in jumpstarting our employment rates and increasing our corresponding national GDP.
If you are a business owner in the Oregon area, keep an eye out for further developments that may benefit you.
Photo Credit: Reynermedia, Flickr