Commentary - Small businesses key to recovery
By U.S. Senator Amy Klobuchar, D-Minnesota Minnesota's 120,000 small businesses account for more than half of our state's private-sector employment, and their job growth rate exceeds that of large businesses. In other words, the success of Minnes...
By U.S. Senator Amy Klobuchar, D-Minnesota
Minnesota's 120,000 small businesses account for more than half of our state's private-sector employment, and their job growth rate exceeds that of large businesses. In other words, the success of Minnesota's small businesses is vital to the success of Minnesota's overall economy.
For the past few months I have traveled around the state to work with our innovative small businesses that are creating new jobs and holding their own in a tough economy. I believe that the agenda in Washington needs to match the determination of the workers I have met and focus on how to create jobs by promoting our home-grown businesses.
In Rushford, there's Rushford Hypersonic, a company that uses a high-tech process to apply microscopic friction-reducing coatings to high-end industrial tools. Started two years ago, it has a dozen employees.
In Duluth, there's Epicurean, a company that makes commercial and home kitchen cutting surfaces. With 40 employees, it has customers in 45 countries.
In Cohasset, I visited a Lonza plant that extracts a water-soluble polymer from larch trees for use in home healthcare products. It employs 16 people full time and supports about 30 spin-off jobs in our struggling local logging industry.
Small businesses like these are engines of job creation. Nationally, they were responsible for an estimated 64 percent of net new jobs during the past 15 years. Small businesses have led our economy out of past recessions, and we need them to do it again.
To fuel their growth, small businesses depend on access to both affordable credit and new markets.
Unfortunately, fallout from the financial crisis has made credit scarce for many small businesses. It's almost as though the skyscrapers of Wall Street collapsed on top of our Main Streets.
Many community banks have valiantly sought to maintain their lending in this difficult economy. The American Recovery and Reinvestment Act provided small business tax cuts as well as funding to the Small Business Administration (SBA). The agency's flagship lending program guaranteed 37 percent more loans in the fourth quarter of 2009 than it did a year earlier, totaling $3.8 billion.
But SBA lending remains well below what it was just two years ago, and these loans account for only a tiny fraction of overall small business lending. By contrast, the 22 large banks that received the most funding through the Troubled Assets Relief Program (TARP) actually cut their small business lending by $12.5 billion over the past eight months. One good exception is Minnesota-based US Bank, which is one of three large banks nationally that actually increased its small business lending since April.
It's about time Main Street got a portion of this credit. Specifically, along with Senator and former Governor Mark Warner, I am pushing for a targeted program with up to $40 billion in returned TARP money leveraging private investment to increase the flow of credit to small businesses with the help of our community banks.
In addition to better access to capital, our businesses need better access to potential customers, including the 95 percent of the world's customers who live outside the United States.
One example of a Minnesota small business achieving notable success in the export market is Mattracks. Located in Karlstad, the company manufactures rubber track systems for converting tire-equipped vehicles into track-equipped all-terrain vehicles. The business was inspired by the founder's young son, who had drawn a picture of a truck with tank tracks instead of tires.
Mattracks now sells its products in more than 50 countries and half of its business comes from international sales. You could say that Mattracks does business everywhere from Karlstad to Kazakhstan. In Karlstad, the moose capital of the Minnesota, employment at Mattracks has gone from six to more than 40.
A key factor in the company's international success has been export guidance provided by the U.S. and Foreign Commercial Service, a part of the U.S. Department of Commerce. I chair the committee on export promotion and believe small and medium-sized businesses should be able to compete internationally just like a big business. We need to step up our efforts to help.
Finally, we need to reduce the government deficit. I have been an early co-sponsor of legislation to get our financial house in order. To truly compete in a world economy we must transform ourselves from an economy dependent on consumption, imports, and debt and move towards an economy based on production, exports, and innovation. Our small businesses can lead the way.