Small business seeks help in U.S. economic storm

NEW YORK/WASHINGTON Tue Jul 21, 2009 4:17am EDT

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NEW YORK/WASHINGTON (Reuters) - U.S. small businesses say they feel slighted by the Obama administration and efforts to shore up the economy, with large companies taking much of the government's attention and stimulus cash.

The government decision last week against bailing out small business lender CIT Group raised fears of thousands of companies left without funding for day-to-day operations, and the lack of support showed big corporations can get bailout cash but small business interests are less pressing, some say.

With only some potential relief buried in the healthcare reform proposals in Congress, small businesses feel pushed aside in the stimulus and recovery efforts, they say.

"There has been nothing really in all the stimulus package that has really helped small business in general," said Kelli Glasser, president of Exhibit Concepts in Dayton, Ohio, whose 87 employees build trade show and museum exhibits.

"Most of the help has been in the form of supporting loans, but we're not looking for loans right now," she said. "We're not looking to heavily invest in equipment. We're just trying to keep our doors open."

Small business is not that small, representing 99.7 percent of all U.S. employer firms.

The U.S. Small Business Administration got $730 million this year to recharge the small business lending market, nearly doubling its budget. However, some say the package was not well structured and dwarfed by the $180 billion the government committed to save insurer American International Group.

'HAVING A TOUGH TIME'

"Only $730 million going to the SBA didn't really help the small business owners," said James Tracy, president of America's Best Companies in Illinois, which represents small businesses nationwide.

"Small business owners are having a tough time financing themselves today because I believe that the stimulus plan should have allowed for more loans to small business owners," he said.

A $15 billion administration plan to buy small business loans for resale on the secondary lending market has not taken effect, in part because market activity picked up after the plan was announced in March, the administration says.

The Obama administration wants small businesses to come out ahead in the reform effort, said Melody Barnes, a domestic policy advisor at the White House.

"We absolutely want to make sure that small business owners and small business can continue to thrive," she said in an interview with Reuters Television.

But applying for a small business loan can be more trouble than it's worth, said Joe Olivo, owner of Perfect Printing in Moorestown, New Jersey, who said his bank advised against it.

"The paperwork was so onerous that my bank told me it was not worth my effort to try and get that money," Olivo said.

PROPOSED INSURANCE EXCHANGE

Where small businesses may benefit is in healthcare reform being considered in the House of Representatives, specifically a proposed insurance exchange through which businesses and individuals could shop for policies.

Small businesses have seen insurance premiums more than double in the last decade. Many Americans who lack insurance work for smaller firms that do not provide the benefit.

Small businessman Chris Link, who co-runs a promotional marketing distributorship in Nashville, said he is encouraged by the healthcare reform efforts.

"I am very impressed that the administration keeps pushing the matter," he said. "I know it is not easy, but it is not an option staying where we are."

In the proposed insurance exchange, businesses with 10 or fewer employees would have access in the first year. That would broaden to businesses with up to 20 workers in the second year, with a promise larger employers would gain access over time.

Those restrictions, plus mandates forcing businesses to provide health insurance or pay an 8 percent payroll fee, nevertheless make some small companies angry.

"We are irate," said Amanda Austin of the National Federal of Independent Business, which says the mandates would drive firms out of businesses. "Talk about an overreach."

Terry Gardiner of the Small Business Majority advocacy group advised patience. "It is way too early in the game to throw in the towel and oppose healthcare reform," he said.

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