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Small Business Advocates Plead for Help Recovering from the Pandemic

July 14, 2021 by Tom Ramstack
Small town, hard times. (Photo by Dan McCue)

WASHINGTON — Members of Congress threw their support Tuesday behind President Joe Biden’s goal of helping small and rural businesses but with different perspectives on how to achieve it.

Rep. Jared Golden, D-Maine, suggested that Congress provide a dedicated source of funding for the Small Business Administration’s Office of Rural Affairs. The office offers low-interest loans, counseling on business plans and assistance in getting government contracts.

“I think it’s a worthy investment,” said Golden, who chairs the House Small Business subcommittee on rural development, agriculture, trade and entrepreneurship.

He talked about the large role rural areas and small businesses play in employment, agriculture and manufacturing. About 46 million Americans live in rural areas, according to the Small Business Administration.

Small businesses — many in rural areas — produce 44% of the U.S. gross domestic product and employ nearly half of American workers.

The issue has taken on urgency in the past year-and-a-half as the COVID-19 pandemic devastated the already tenuous finances of small businesses.

Biden proposes higher taxes on households with annual incomes greater than $400,000. The revenue would help expand the nation’s social safety net under Biden’s American Families Plan, which is largely a program to help recover from the pandemic.

The president proposes raising the corporate tax for all corporations from 21% to 28%. He wants an additional tax on corporations with profits of at least $2 billion.

Although he does not deny the plan would put a dent in the profits of big corporations, redirecting the money and contracting opportunities toward small businesses would provide the biggest boost to employment and the economy, according to Biden.

Some Republicans, such as Rep. Roger Williams of Texas, say the Biden administration’s strategy is misguided.

Large corporations create the kinds of jobs and business opportunities that trickle down to small businesses, he said.

“The Biden administration is threatening the nation’s best job creators with tax increases,” Williams said.

No one among lawmakers or their witnesses from the business community disagreed on whether small and rural businesses need help to recover from the pandemic.

“The COVID-19 pandemic and resulting economic crisis has been prolonged and uneven, and disproportionately felt by small businesses in underserved communities,” according to a background memo from the congressional subcommittee.

In addition, a 5.4% increase in the past year in the U.S. consumer price index — which is a measure of inflation — has eroded the business’ profit margins.

“We don’t enjoy much pricing power on our products,” said Alan M. Crawford, owner of Rangaire Manufacturing Company in Cleburne, Texas. His company makes plastic products for the housing market.

The pandemic exacerbated his company’s difficulty in competing with foreign businesses that sell similar products, he told the subcommittee on rural development, agriculture, trade and entrepreneurship.

Nathan Ohle, chief executive officer of the nonprofit Rural Community Assistance Partnership, said more than 30% of rural households reported using up all or most of their savings during the pandemic.

He said the downturn could provide an opportunity for the federal government to institute programs that provide long-term support to small and rural businesses, or what he called putting “a stake in the ground.”

“If we don’t, we’ll never make up that gap,” Ohle said.

The Biden plan seeks a similar approach by requiring federal agencies to purchase more of the products and services they need from small businesses. The federal government spends nearly $600 billion a year on procurement of goods and resources.

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