Sunday, February 29, 2004

Bush plan unfair to little guy

Dwindling funding

By Rhonda Abrams
Gannett News Service

When it comes to pronouncements about small business, President Bush stands tall.

"Entrepreneurs create between 60 and 80 percent of the new jobs nationwide and generate more than 50 percent of the nation's gross domestic product," the president said last year. Without entrepreneurs, he continued, "the American dream would go unrealized."

But when it's time to put his money where his mouth is, the president is, as they say in Texas, all hat and no cattle.

The Bush administration's recently released federal budget is a travesty for small business. In the whopping $2.4 trillion budget, the Small Business Administration gets a measly $678.4 million - a decrease of $119.5 million, or 15 percent, from last year's already low level.

Here are some ways President Bush's budget slashes small-business assistance:

• Entirely eliminates the Microloan Program.

• Reduces government guarantees from 75 percent to 50 percent and increases fees on the SBA 7(a) loan program.

• Reduces funding for Small Business Development Centers.

• Slashes the Manufacturing Extension Partnership from $106 million to a paltry $39 million.

"This would be the first time in the 50-year history of SBA that zero appropriations would be provided the 7(a) program," said Anthony R. Wilkinson, president of the National Association of Government Guaranteed Lenders - a group of private-industry bankers.

Some make money

Keep in mind these programs are highly successful and cost efficient. In fact, there's solid evidence that SBA loans and SBDC assistance result in increased tax revenues.

"The small-business sector of America's economy is effectively the second largest economy in the world," said Donald Wilson, president of the Association of Small Business Development Centers. This exceeds the economies of Germany, France and Great Britain combined. "Our nation's gross domestic product for 2002 was $10.2 trillion ... the small-business sector was just over $5.3 trillion."

Finding reasons

So why, when small businesses create jobs and represent half the American economy, does the entire budget for small-business assistance amount to what would be a rounding error in other federal departments' funding?

Some might say it's because of Iraq and America's wartime commitments. But Wilson says otherwise.

"At the height of the Vietnam War, Congress allocated two-tenths of 1 percent (0.2 percent) of the 1968 Federal budget to the SBA," he said. "... The budget the administration submitted to the Congress (this year) allocates only three one-hundredths of 1 percent (0.03 percent) of federal resources to the SBA."

It's time the small-business community starts getting the respect - and the funding - we deserve.

Rhonda Abrams is author of "The Successful Business Plan: Secrets & Strategies" and president of The Planning Shop, publisher of books and other tools for business planning.

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