Why Small Business is Fed Up with Government

“what really grinds the gears of small business owners is the near-complete inattention by lawmakers on who creates jobs.”

So said Kimble Fletcher Ainslie in a Cato Institute article from December 20, 2001 titled “Bush Ignores Small Business.”

Eight years later under a different president, Catherine Clifford’s article in CNNMoney.com on September 30, 2009 continued the criticism of lawmakers ignoring small business:

“Business owners really bring out the pitchforks when they consider the speed with which billions of dollars were distributed to large Wall Street firms and banks.  That is what sticks in the small business owner’s throat more than anything”

Banks received $700 billion dollars in handouts in October 2008, with almost no regulations or restrictions.  In February 2009, big businesses and big state governments received $787 billion, an incomprehensible $1.5 trillion total dollars.  General Motors alone received $30 billion dollars when they would not have qualified for a credit card.  This is a big problem if you’re trying to solve a crisis.

The top job provider in the U.S. economy is businesses under 10 employees and those with 11-19 employees is second.  Seventy-nine percent (79%) of all business in America have less than 10 employees.  But the politicians clearly don’t understand this.

In February while big businesses and big state governments were receiving $787 billion, the politicians threw a $255 million bone to small businesses in the form of the SBA ARC loan program, providing a potential $35,000 for a business that could get one.  That’s 2/100th of one percent of the $1.5 trillion dedicated to the single largest job growth sector in our economy.

Almost a year later less than 50% of this paltry sum has been loaned.  Had the stringent ARC loan standards been applied to the big banks and big businesses, none of them would have received a dime.  Adding insult to injury, in December, Republican Senator Olympia Snowe, a self-proclaimed small business advocate, introduced legislation to kill the program and return the remaining 55% back to the Treasury immediately.

That $35,000 could have meant a lot to true small businesses. Of the 44,000 loans the SBA backed last year, fewer than 15,000 were for more than $150,000.

Small business owners are not fed up with the government because they don’t get handouts.  They are fed up with the special relationship between politicians, big business and big banks.  It’s hard enough to grow a small business.  Swimming upstream against the constant deluge of advantages, handouts, bailouts, special loan programs and preferential treatment given to big businesses is the real rub.

The mis-named Small Business Administration is of no help.  When the SBA was created in 1953 the big business lobby got their political friends to define small business as any business with under 500 employees, which is 99.7% of all businesses in America.  It’s like calling everyone under 7′ tall “short”.   So it’s no surprise that almost all of the SBA’s attention is on businesses that are 6-7′ tall.  Businesses under 5′ 4″ aren’t on the radar.  So even with the SBA true small businesses are on the outside looking in.

Australia recently passed the Fair Work Act of 2009 legally defining a small business as having fewer than 15 employees.  A similar law in the U.S. would be a good start.  Then small business needs the creation of a real SBA, not so they can get handouts, too, but so they have a seat at the table to level out what has been an un-level playing field for decades.


Chuck Blakeman Chuck Blakeman is a lifetime business practitioner who now uses his experience to help business owners create success. His company, The Crankset Group, provides outcome-based mentoring, peer advisory, and consulting for Business Owners, CEOs, and their growing businesses. He is the author of the book "Making Money is Killing Your Business."

21 Reactions
  1. Great post Chuck.

    The discrepancy is so wide that it’s almost farcical.

    Small businesses, and those involved in the ‘real economy’ are the ones who buy GM’s vehicles, and whose investment capital made the whole financial system what it is.

    Now those who actually built the institutions are being punished with extreme monetary inflation so the ‘managers’ can live a lifestyle the founders can only dream of.

    Something does not add up, and it would serve the government well to recognize this and attempt to restore the balance.

    Redefining ‘small business’ and offering an equal voice and rights would go a long way to doing that. I’m hopeful that things will change for the better, but so far, I’d say there isn’t a ton of light at the end of the tunnel.

    It’ll be interesting to see how it all progresses.

  2. Colin,

    You said “Something does not add up, and it would serve the government well to recognize this and attempt to restore the balance.”

    This is true, but until they see that giving big business and banks perks and advantages that promote them at the expense of small business, the politicians will continue to do it. We’re going to need the 27+ million business owners with under 20 employees to continue to increase the pressure on both the government and the big banks. I believe that groundswell is coming.

  3. Its true, Redefining ‘small business’ and offering an equal voice and rights would go a long way to doing that. I’m hopeful that things will change for the better, but so far, I’d say there isn’t a ton of light at the end of the tunnel.

  4. Chuck,

    Thank you for writing this much needed post. Small Business may provide the jobs and the entrepreneurial spirit, but big business provides the fuel to the lawmakers.

    In the form of high-powered lobbyists.


    The Franchise King

  5. Most people can detect hypocrisy and inequality as easily as a shark smells blood. I’m just surprised how few politicians have picked up on this groundswell of discontent (it would be a fantastic political platform).

  6. I agree that small business owners don’t want government handouts. Here’s why:

    (1) The business owners I know are mostly independent types, used to achieving goals through their own ingenuity and work ethic. Some business owners actually get offended hearing talk by government leaders implying we are so hapless we need handouts. Talk about tone deaf!

    (2) Government programs are a double-edge sword — and the one edge is much sharper. Someone has to pay for government programs, and unfortunately that’s usually small business and consumers in the form of higher taxes. That’s what I mean about one edge being sharper — because net net we are hurt more than we benefit when government spending gets out of control as it is now.

    The kind of government assistance I want to see is tax relief and regulatory relief; and educational resources that help make us better business owners.

    However, I am not a cynical type ready to blast government across the board and large companies. I believe small businesses benefit greatly from educational resources in the spirit of “give them a fish and you feed them for one day, but teach them to fish and they can eat forever.”

    So I for one LOVE the educational resources that government and big businesses provide to small businesses, and low cost products and services that we need. I support those kind of “teach them to fish” resources every day of the week! But that’s very very different from handouts.


  7. Anita,

    As you might guess I’m not a big fan of the educational resources of big government or big business either. While neither come with the indebtedness of a handout, both have serious problems because they are teaching things they have for the most part never experienced. Instead they are teaching from their own view of the world. Small business runs on an entirely different set of rules than big business, just like quantum physics and big particle physics. Might be a good post for next month. 🙂

    • Actually, a lot of them bring in people who do know what they’re talking about. So that is why I consider such resources very very valuable. Anyway, thanks for prompting a good hearty discussion, Chuck.

  8. Touche Chuck! You nailed it. What continues to amaze me is how they can consistently not listen to what people are saying. Maybe now is the time for more people to speak up.

  9. Great post Chuck- Small business is totally fed up with Washington, whether Democrat or Republican. The politicians are so out of touch that only a complete housecleaning will solve the problem. I hope the President reads your article. Maybe even he will learn something.

  10. Joel, Robert, Diane, Kip,

    Thanks for your further comments on this critical issue. One great thing that is coming out of this recession is that, unlike others, the decades old duology between big business and big government has been exposed like never before. It’s no different than it was 50 years ago, but the bailouts and handouts and backscratching between them has made it impossible to keep this behind the curtain any longer.

    This makes it a great time to begin to organize a true small business movement that requires a seat at the table, not to get our own handouts, but to stop the handouts and backscratching between the big dogs that create such a disadvantage for small businesses.

    The more we all contribute to the conversation, the more likely the politicians will listen. Let’s keep the conversation going.

  11. Very nicely put Chuck. The ARC loan is a prime example of a good idea that meets its demise upon implementation by the government. And they want to take on universal health care.

  12. Steve,

    LOL – Well put yourself. I will be doing a future opinion here on why such good ideas fall apart so badly when federal government takes them on. And my opinion will be that big business has the same flaw that they share in common – The Problem of Big. Stay tuned.

    • Chuck,

      Truly great insight. I appreciate somebody being able to articulate so clearly what so many small business owners are putting up with.

  13. http://www.alsupipe.com

    Thakn you for all, i understand this comment. Knowledges is perfect!

  14. Remarkably out of touch – it’s the only explanation for the administrations continuing attempts to solve the lending crisis for true small businesses.

    After having failed multiple times over the last year to stimulate lending by increasing SBA support and increasing the size of laons, they made the decision this morning to “increase support” for commercial real estate loans and “increase the cap” on SBA Express loans.

    The hostage now has more sandwiches that have been stacked up out of reach.

    The most remarkable part of all this is that the administration keeps repeating the same non-solutions and creating photo ops for themselves with small businesses as if we’re not actually paying attention to the results. They must think we have the IQ of a turnip to not see how much fanfare and how little substance there has been to anything they announce.

    The #1 job creation sector is businesses under 10 employees and businesses between 11-20 employees is second. Yet these two sectors have been left completely out of the job creation strategies of this administration.

    Doing the same thing over and over and expecting a different result is not the way out of the insane asylum. Today’s announcement once again won’t do anything to help the government get out, and it certainly won’t help small businesses.

  15. Thanks for this extension!

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