You are here
WASHINGTON -- In what analysts are calling a populist speech appealing to Main Street America, President Barack Obama's first State of the Union address outlined a number of measures aimed at fixing the struggling economy -- including promises of cash infusions and tax credits for small-business owners.
"Through sheer grit and determination, these companies have weathered the recession and are ready to grow," Obama was cited as saying by the U.S. World News and Report. "But when you talk to small-business owners in places like Allentown, Pa., or Elyria, Ohio, you find out that even though banks on Wall Street are lending again, they are mostly lending to bigger companies."
Obama proposed spending $30 billion to increase small businesses' access to credit, which would come from the funds Wall Street firms have paid back to the government following the $700 billion bank bailout, the report stated.
"It's certainly a good start, and it's something that we're very supportive of," Molly Brogan, a spokesperson for the National Small Business Association (NSBA), said in the report. "Small businesses are struggling. They're not getting any kind of capital; they can't get financed. So moving these kinds of funds through community banks, which are some of the few banks that are still making character-based loans and are still lending to small businesses, just makes sense, in our opinion."
The NSBA's 2009 year-end study found 78 percent of small-business owner respondents said that they had been hurt by the credit crisis, and more than one-third said that they couldn't get adequate financing.
Others feel small businesses need overall job creation, not access to money from community banks, which have adequate amounts of capital.
"Community banks don't need any money to loan to small businesses. They've got plenty of money; they're flush with cash," Jim Blasingame, a small-business expert and host of "The Small Business Advocate Show," a nationally syndicated radio show, said in the report. The real problem, according to Blasingame, is that not enough businesses are in a position to take out loans. "Small businesses aren't borrowing money," he added. "Small businesses aren't coming to the banks to ask for loans."
Small businesses need job creation in the broader economy, so consumers will have more money to spend on the products the businesses produce, he said.
And the National Retail Federation (NRF) welcomed Obama's emphasis on job creation, which the leader named the No. 1 priority to fix the economy.
"President Obama's focus on the economy and job creation needs to be Washington's highest priority," NRF President and CEO Tracy Mullin said in a statement. "As the industry that employs one out of every five Americans, we stand ready to work with the president and Congress to enact legislation that will allow our nation's economy to improve and put Americans back to work. Jobs are truly the key to economic recovery, and that is seen no more clearly than in the retail industry: consumers don't shop if they don't have jobs, and there's no market for the goods produced by other industries if consumers aren't shopping. The economy simply isn't going to get back on its feet until the employment situation improves."
Obama also touched on tax incentives, such as a tax credit for small businesses that hire new workers or raise wages, along with support for a plan to eliminate capital-gains taxes on small-business investment, according to the report.
"The idea to make hiring easier for small businesses is a good one," the NSBA said in a statement last night. "Unfortunately, when polling our members, few believe that a hiring tax credit -- which would likely be temporary -- would be incentive enough to take on new employees, particularly given costly benefits. In many cases, people who take advantage of this tax credit would have hired the new employee regardless."
ShopRite Owner Jeff Brown Lauded During State of the Union Address