Opinion: Help for Small Businesses

by US Senator Claire McCaskill

Too many people in Washington get caught up in the Beltway bubble and think that they know better than the people back in their home state. Since I’ve been elected, I’ve made it a habit to get back to Missouri as often as possible to talk with Missourians about the issues they are facing. Recently, I visited with small business owners across the state of Missouri. At meetings in St. Louis, New Madrid, Branson, Monett, Harrisonville, St. Joseph, Kirksville, and Columbia, I heard many of the same concerns raised at each location.

Small business owners are worried and rightfully so. There’s a lot of economic uncertainty out there about what the future will bring. We have made it through the worst of this economic crisis, and for the first time since 2008, we added jobs last month. I’m optimistic that things will continue to get better, but if we really want to get our economy back on stable footing, we’ve got to help small businesses expand.

Small businesses are the engine of our economy. They provide over half of the private sector jobs in the U.S. and they are key to adding new jobs for the millions of Americans looking for work. Many small businesses in Missouri are eager to grow, but they are still finding the economic environment difficult.

The primary concerns I heard from the small business community in Missouri had to do with the difficulties they are facing in securing loans and worries about how the new health insurance reform laws will affect businesses. With the cost of health insurance premiums skyrocketing, families and businesses have seen health insurance costs eat up their budgets. While the new health insurance reform law isn’t perfect, doing nothing was not an option because insurance was becoming unaffordable for too many businesses and families.

It was clear from my meetings that there is a lot of confusion about how the law affects small businesses. In reality, the law will provide small businesses with substantial tax breaks that will help make it possible for them to provide health insurance benefits to their employees.

Starting immediately, small businesses with 25 full time employees or less with an average salary of $50,000 or less will be eligible for a tax break on their health insurance costs. If an employer pays at least 50 percent of their employees’ insurance premiums, they will receive up to 35 percent of that investment back as a tax credit from 2010 to 2013. Starting in 2014, each state will set up an insurance exchange that will give small business owners a place to shop for insurance where they can pool risk with other small businesses in order to negotiate for lower premiums for their employees. Once the insurance exchanges are up and running, eligible small businesses that negotiate for insurance on the exchanges can receive up to 50 percent of their costs back.

While it was important for me to help clear up some of the worries about the new health reform legislation, I also heard from many small business owners and community banks that the biggest stumbling block to expansion is the difficulties they are having when it comes to getting credit. Credit standards have tightened for a variety of reasons, which means many businesses either can’t get credit or can’t get it on affordable terms. For businesses that are hoping to expand, not being able to borrow money is making it very difficult.

Now, I don’t believe the government should be in the business of telling banks when to lend money, but I do think there are steps that can be taken to address credit constraints. One thing we need to do is ensure that we support the community banks that make most small business loans. That means that Washington needs to be careful about adding any additional regulatory burden on community banks; they are highly regulated, and they steered clear of the risky and abusive mortgage loans that caused the financial crisis. Separately, there is a need to look at strengthening existing programs that help get credit to businesses. That’s why I am pleased that Congress is considering ideas like streamlining loan guarantee programs in the Small Business Administration (SBA) and aiding capital and collateral support programs operated by the states.

As your representative in Congress, it’s my number one job to help foster an environment that will encourage private sector job creation and help small businesses grow. Our economy depends on it.