Many small business owners say yes—the Small Business Administration is falling very short. First formed in 1953, the SBA’s stated mission is to “aid, counsel, assist and protect, insofar as is possible, the interest of small business concerns.” Today’s small businesses are struggling through a record-breaking recession.
Most entrepreneurs are combating such challenges as slow sales, a credit crunch and an unpredictable economy, and the SBA’s “assistance and protection” are sorely lacking. No wonder small business owners are so stressed out. Small business owners are refusing to stand for any more of Washington’s pick up lines and they are opening up about their problems. To get a better sense of what’s missing, let’s take a closer look at the complaints and criticisms small businesses are directing toward the SBA.
Is the SBA Failing Small Businesses?
Ineffective Tax Cuts
If we look at the most recent legislation, it appears that both Democrats and Republicans think that tax cuts are the best way to help small businesses. Granted, taxes can cost small businesses a pretty penny, but the current (and proposed) tax cuts are misdirected. As we saw in our review of each party’s stance on small business tax cuts, some of the largest tax cuts would benefit the biggest businesses. While mom-and-pop shops gain barely any benefit from the extra paperwork, Paris Hilton and Oprah Winfrey’s “small businesses” can save bundles.
Health Insurance Hardship
A study by the SBA itself illustrates that small business employees are less likely to be insured than workers for mid-size and large businesses, and those who are insured will cost more for both employer and employee. In short, health insurance remains an unaffordable albatross for small business employers, despite tax credits from the so-called Affordable Care Act.
Faced with these rising costs, small businesses are hard-pressed to provide the benefits that attract talented employees. Entrepeneur Magazine reports that one small business owner told SBA Chief Karen Mills directly, “I’ve got less employees. I had to dumb down the health-insurance plan. None of the tax cuts apply to us.”
According to the Kauffman Firm’s study of small businesses, 20 percent of small businesses didn’t even bother applying for credit this year. According to Entrepreneur, multiple individuals protested to Mills about lack of credit and loans. While some small businesses have lucked out in finding the right banks, many are unwilling or unable to take out credit. Limited credit often means limited capital and growth potential. The government does seem aware of this issue, providing SBA-backed loans and raising member lending limits for credit unions. Nonetheless, small business owners live in fear of their business line of credit drying up or their bank relationships souring.
A Rough Road to Retirement
Successful small business owners may love their work, but smart ones plan for its end. According to recent reports, as many as one-third of small business owners are ill-equipped for retirement. In addition to planning their own retirement, small business owners are faced with the challenges of maintaining employee retirement plans. While 78 percent of owners say they need a retirement plan to attract workers, only 36 percent of small business employees had access to a company retirement plan, reports USA Today. As small business owners and employees alike have less faith in government support and feel less secure in their future, challenges to retirement is a growing cause for concern.