Monday, May 18, 2009

Verbatim: Leaders Address the Power of 'Necessity-Driven Entrepreneurship,' Recovery Act Funding, Eco-Friendly Vehicles, National Small Business Week

Periodically, GoodBiz113 presents diverse perspectives on small business and entrepreneurship from those who help shape small-business policies and practices. As we kick off National Small Business Week 2009, we highlight what some small-biz champions said last week...

"I think we’re going to see a lot of businesses started by people who otherwise would not have started businesses [in better times]... Necessity-driven entrepreneurship can be a powerful motivator.” -- Bo Fishback [pictured], vice president of entrepreneurship for the Ewing Marion Kauffman Foundation, a Kansas City entrepreneurial-research organization [May 11, "Starting Over -- as an Entrepreneur," The Wall Street Journal]

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"When a small manufacturer goes under, it sparks a ripple effect that resonates throughout the entire economy, shrinking a supplier base even further that can undermine large businesses like GM and Chrysler. If small manufacturers are cut out of the auto restructuring process, the result will only be further setbacks and large-scale job losses that reach far beyond the auto industry... It is critical that any restructuring accounts for small suppliers. Proposals to aid second-tier manufacturers, for example, would go a long way... Regardless of how the auto overhaul takes place, one thing is certain: it needs to be deep enough and comprehensive enough to reach small businesses." -- Rep. Nydia M. Velázquez [D-N.Y], chairwoman of the U.S. House Committee on Small Business

Auto suppliers told lawmakers they have seen little relief from efforts to shore up big automakers, and without help, many small-parts manufacturers will be forced out of business, sparking a ripple effect which will further undermine the entire automotive sector. During a House Small Business Committee hearing, small manufacturers appealed to Congress and the Obama administration to expand aid beyond major "first-tier" auto suppliers to stabilize an industry which employs millions across the country. [May 13, U.S. House Committee on Small Business]

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“As banks throughout the country continue to tighten credit for small businesses, our small businesses are increasingly turning to credit cards to keep their doors open. At the same time, credit card companies are cutting credit limits and cancelling some accounts altogether... When entrepreneurs with outstanding credit are unable to get bank loans and suffer skyrocketing interest rates on their credit cards, they run out of sources to finance their businesses and are less likely to succeed... I will continue to work with Ranking Member [Olympia] Snowe and the other members of this committee to find new ways of freeing up credit for small businesses struggling to survive, including Senate Amendment 1079 that I filed to the Credit Card bill that is moving through the Senate this week. Protections from abusive practices should apply to small businesses as well as individual consumers.” -- Sen. Mary Landrieu, chair of the U.S. Senate Committee on Small Business and Entrepreneurship

Landrieu's committee held a hearing to explore how the small-business provisions of the American Recovery and Reinvestment Act are being implemented, and to find alternative sources of financing for small-business owners. The committee heard from SBA Administrator Karen G. Mills and from the president of American Express’s OPEN program, the company’s division that handles small business; a community development credit union; a microlender; and a company specializing in capital for high-growth firms.

In addition to ensuring that credit cards used by small-business owners are covered, the Landrieu-Snowe amendment would increase the Truth in Lending Act exemption of cards with credit limits of $25,000 or more to cards with limits of $50,000 or more. Fifty-two percent of respondents to a National Small Business Association survey reported having a credit card limit of $25,000 or more, essentially eliminating them from any of the protections of the Credit Card Act without the Landrieu-Snowe amendment. [May 13, U.S. Senate Committee on Small Business and Entrepreneurship]

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"...The SBA-related provisions of the Recovery Act were designed not only to help entrepreneurs and small businesses keep the doors open… but also to help them grow and create jobs. I’m pleased to say that they are doing just that.

"First, of the SBA’s $730 million in Recovery Act funding, over half – $375 million – is targeted to temporarily increase the federal guarantees and reduce or eliminate fees on our two largest lending programs – the 7[a] and the 504... About 10,000 Recovery Act loans have been approved providing overall funding for about $3.3 billion in credit support to small businesses.

"Also, the average weekly loan volume is up over 25 percent compared to the weeks prior to the Recovery Act’s passage. This increased lending is partially due to the fact that lenders are returning to these SBA loan programs, or, in some cases, participating for the first time. More than 1,200 lenders have approved 7[a] loans as part of the Recovery Act. Of these, more than 360 lenders had not made a loan since October 2008, and about 40 percent of those lenders had not made a loan since at least 2007..." -- SBA Administrator Karen G. Mills, during her speech at the U.S. Chamber of Commerce's America's Small Business Summit 2009, in Washington, D.C. [May 13, U.S. Small Business Administration]

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Transit Connect is a brand-new offering for small business in the United States. We call it a ‘white space’ vehicle because there is nothing else like it on the market.” -- Len Deluca, Detroit-based Ford Motor Co.'s director of Commercial Vehicles, after Ford submitted a proposal to the U.S. Department of Energy [DOE] for economic stimulus funding that would bring a fleet of 66 all-electric Ford Transit Connect delivery vans and Ford Escape Hybrid Plug-ins to the Twin Cities by the end of 2010, cutting the municipalities’ use of gas and providing an energy-saving example to the public. The vehicles would be charged up at special stations installed by Xcel Energy on city streets and parking ramps, as well as several high-profile “marquee” locations.

DOE set aside $378 million in federal stimulus package funds for such projects; the Minneapolis-St. Paul area proposal could be one of 34 projects to receive funding. Under terms of the proposal, each government, non-profit or participating entity must invest $20,000 in electrical infrastructure to charge up the vehicles. Courtesy of the stimulus package funding, the Transit Connect and Escape models would be free, leaving only the cost of the per-vehicle electrical infrastructure. Thus, the 18 Fords that would go to the city of Minneapolis would cost $360,000. In turn, the city would receive rechargeable vehicles worth nearly $1.2 million.

Electric cars were a key part of President Barack Obama’s 2008 campaign; he wants at least 1 million battery-powered vehicles on U.S. roads by 2015. Ford’s proposal to the DOE coincides with the automaker’s campaign to have 3,000 small-business owners and consumers in 13 U.S. cities test-drive Transit Connect vans before the vehicles reach showroom floors this summer.

Among all the myriad partners in this transportation electrification program: Ford Motor Co.; Xcel Energy; cities of Minneapolis and St. Paul; Hennepin and Ramsey counties; Minnesota Pollution Control Agency and state Department of Administration; the University of Minnesota; American Lung Association; Fresh Energy; and car-rental venture Hourcar. [May 15, Finance and Commerce]

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"The entrepreneurial spirit lies at the core of our Nation's economy and identity. If Americans with good ideas can work hard, put their plan to the test, and succeed, the American economy will continue to create jobs and lead the world in innovation and productivity. During National Small Business Week, we honor the entrepreneurs and small-business owners who are the engine of our economy. Their ingenuity and hard work are critical to our Nation's prosperity... Our Nation's success depends on America's small businesses and entrepreneurs. Their contributions are necessary to rebuild our economy, so that it once again offers the opportunity to succeed to all who seek it. This week, we thank small-business owners, entrepreneurs, and employees for helping America achieve that promise..." -- President Barack Obama, proclaiming May 17 through May 23 as National Small Business Week 2009 [May 15, The White House]

SOURCES:, U.S. House Committee on Small Business, U.S. Senate Committee on Small Business and Entrepreneurship, U.S. Small Business Administration, The Wall Street Journal, The White House

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