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Small businesses are the key to U.S. economic recovery

Small businesses are the key to U.S. economic recovery

Small businesses play a major role in the American economy and with the proper incentives, small businesses can play a vital role in our economic recovery.

Many people are surprised to learn that the largest employer in the United States is the small business owner; the American small business community represents about 99 percent of all employer firms, employs about half of all private-sector employees, generates between 60 to 80 percent of all new jobs annually and creates more than half of the non-farm, private gross domestic product.

In times such as these, when our country is in economic crisis, small businesses are struggling the most. While the government has bailed out the automotive, banking and health care industries, it has overlooked an important part of the American commerce by failing to provide relief and assistance to small businesses. In the past, government implemented such programs as the Small Business Administration to assist the growth of small business in this country. Today, the financial industry has made it more difficult for these programs to actually be offered to small businesses.

And the strains on financial intuitions are posing one more challenge for small businesses, which are finding it increasingly tough to get loans. Lending to small business is pretty much frozen and the availability of credit to small companies is greatly limited. Growing costs in health care premiums make it harder for small business to provide insurance for employees.

These are just a few of the issues devastating small business in this country; the government should look for ways to instill confidence and boost sales for small businesses. One of the best ways to accomplish that goal is for Congress to pass a six-month payroll tax holiday as part of any economic stimulus package. This would free up cash for new investments and boost sales by putting more money in the hands of small business owners to invest in their businesses and giving employees more of their money. Another means to help would be for the government to provide small business owners better access to credit and help them to keep growing and hiring employees.

Congress appears more focused on helping large corporations, rather than the small business owner. Because of that, the small businesses have taken it upon themselves to rally for their survival through the National Federation of Independent Business (NFIB). The NFIB was founded in 1943; however, in the past two years it has seen its membership reach more than 350,000 members.

Congress and the president will need to make small business a priority if there is any hope in economic reform to pull our country out of this recession. This election year might have a huge impact on the survival of the small business owner. The major-party candidates claim to be concerned for this group. They have tax cut plans; however, it is unclear whether things will change much for the small business owner until after the election. Employees need to ensure they are informed before going to the polls in November because their vote will likely affect their employers and, eventually, their jobs.

Patricia B. Cole is a shareholder with Decker, Jones, McMackin, McClane, Hall & Bates P.C., with a practice area focus on estate planning, probate and business. Contact her at pcole@deckerjones.com.

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