Small Businesses Find Chamber, Lobby Allies Mute on $30 Billion U.S. Aid
Senator Richard Shelby Small Business Credit
Joshua Roberts/Bloomberg
Senator Richard Shelby, a Republican from Alabama, said, “The lack of credit for small businesses is a problem that needs to be addressed.”
Senator Richard Shelby, a Republican from Alabama, said, “The lack of credit for small businesses is a problem that needs to be addressed.” Photographer: Joshua Roberts/Bloomberg
Small U.S. businesses pushing for a $30 billion federal lending fund are making their case without the support of some supposed allies: Washington lobbying groups that say they represent small businesses.
Three of the largest groups -- the U.S. Chamber of Commerce, National Federation of Independent Business and National Association of Manufacturers -- were mostly silent during a debate last week over an amendment authorizing the fund, which cleared a legislative hurdle late July 22. A final vote is planned for this week.
The neutrality of these organizations, which together spent more than $47 million lobbying in the first six months of this year, left car-parts makers, franchise owners and community banks on their own to argue for the funding.
“Credit is a terrible problem” for small businesses, said Fred Knapp, president of the South Carolina Small Business Chamber of Commerce, which is based in Columbia. “These groups are tied to big businesses. That’s all this is about.”
Knapp’s group, which is nonpartisan, isn’t a member of the U.S. Chamber of Commerce and broke with the manufacturers’ and independent business groups to support health-care and Wall Street legislation this year.
For the past month the Senate has debated a bill meant to help small businesses get the capital they need to expand and hire workers. The measure would ease terms for loans guaranteed by the Small Business Administration, provide $12 billion in tax breaks and issue grants to states to provide business loans.
$30 Billion Amendment
Its passage is crucial to boost employment because small businesses hire most workers, President Barack Obama said.
“I hope we can now finish the job and pass the small- business jobs plan without delay and without additional partisan wrangling,” Obama said at the White House July 23.
The previous night, the Senate voted 60-39 to proceed with an amendment offered by Louisiana Democrat Mary Landrieu that would provide $30 billion to banks with less than $10 billion in assets to encourage them to lend to small businesses. The cost of paying back those capital infusions would decline based on the level of small-business lending by the bank.
A second vote on that amendment is necessary when the bill comes up for a final debate this week. Landrieu, chairman of the Small Business and Entrepreneurship Committee, called it the most important part of the legislation.
“This is really the core of the small-business bill,” Landrieu said on the Senate floor before the vote. “But for some inexplicable reason this was going to be left on the cutting room floor.”
Risky Loans
Critics call it a replay of the $700 billion bank bailout in 2008, and say it could also induce banks to make risky loans.
“The lack of credit for small businesses is a problem that needs to be addressed,” Alabama Republican Richard Shelby said during the Senate debate. “I do not, however, believe that we should try and solve this problem with another expensive and bureaucratic government program.”
Companies with fewer than 500 workers employ about half of Americans and account for 60 percent of gross job creation, Federal Reserve Chairman Ben S. Bernanke said July 12 at a conference in Washington. One measure of banks’ loans to small businesses fell to $670 billion from $710 billion during the past two years, he said.
“Small businesses, which depend importantly on bank credit, have been particularly hard-hit,” Bernanke testified at a congressional hearing on July 21.
‘Home Run’
The National Federation of Independent Business reported this month that confidence among small businesses fell in June to the lowest level in three months as their projections for profits, sales and economic conditions weakened.
The Nashville, Tennessee-based group stayed neutral when the small-business bill was debated in the House of Representatives, where it passed on June 17, said Bill Rys, tax counsel for the group.
“There are parts of the bill we like, especially on the tax side,” Rys said. “We think the lending facility would help some small business, but we just don’t think it’s a home run.”
In a statement on the day of the Senate vote, the group said sales, not credit, is the top issue facing its members.
“Currently small-business optimism in the economy is very low,” the federation said. “Small-business owners are worried about the threat of increased taxes, new health-care mandates, higher energy costs and more regulations from Washington.”
The National Association of Manufacturers, a Washington- based group that says two-thirds of its members are small or medium-sized businesses, is also pushing for a provision that would cut taxes for companies that buy equipment, while staying neutral on the entire legislation, said Monica McGuire, policy director at the group.
‘Mixed Message’
The U.S. Chamber, which says 96 percent of its members are small businesses, is sending “somewhat of a mixed message,” Landrieu said at a Jobs Summit the group hosted July 14. “We’re having a hard time digesting the conflicting information we’re getting.”
Bruce Josten, top lobbyist for the Chamber, wrote lawmakers on July 23 saying Washington’s biggest business advocacy group supports the underlying tax and Small Business Administration provisions. The letter doesn’t mention the $30 billion fund, and the Chamber doesn’t have a position on it, spokesman J.P. Fielder said.
“We’re reluctant to support this until we see the final form,” Fielder said in an interview.
Critics say this silence shows the Chamber, which fought against the financial regulation measure signed by Obama last week, has its interests aligned with Wall Street banks, not Main Street businesses.
‘Lost Track’
“The Chamber has lost track of the small businesses they are supposed to help,” said Mike Gehrke, who runs an anti- Chamber watchdog group funded by the labor federation Change to Win. “If I were a local business I would ask for my dues money back.”
Fielder said its support for the rest of the bill and other measures shows the Chamber believes “access to capital through financial institutions is critical for small enterprises.”
To contact the reporter on this story: Mark Drajem in Washington at mdrajem@bloomberg.net
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