To paraphrase an old saying, when the American economy gets a cold, small businesses get pneumonia. Not only do small businesses face the same rising energy and healthcare costs as everyone else, they suffer twice over when hardworking Americans tighten their belts and stop spending money.

And unfortunately that is precisely what is happening today. We’re faced with the highest increase in inflation today that we’ve seen in the last 17 years. Healthcare costs are up. Retailers suffered their worst holiday sales in five years. The sinking housing market, credit crunch, higher gas and heating prices, and rising unemployment are putting the squeeze on American families.

That is why Washington must work together to produce an economic stimulus package that provides immediate help for families and small businesses everywhere. We’ll be working in a bipartisan way to pass a plan that’s temporary, timely and targeted to assist middle class families, help refinance mortgages and reduce the credit crunch for small businesses.

But in order to put our economy back on solid footing and ensure that small businesses continue to drive our economy and create two thirds of all jobs, long-term fixes are also needed.

Access to capital remains a top issue for entrepreneurs. According to the National Association of Government Guaranteed Lenders, loans are down 12 percent from this time last year in the largest government-backed small business loan program. Express loans — which are approved in weeks, not months, and therefore reflect current economic conditions more accurately — are down 23 percent. Loans to veterans, women and minorities are all down. This is troubling because according to a recent study by the Urban Institute, loan programs run by the Small Business Administration — which provide the largest source of long-term capital to small firms in this country — are more effective in reaching these underserved communities than conventional loans.

At least one in three small business owners say they are being adversely impacted by the credit crisis. Banks are becoming more risk averse and tightening up their loans for everyone, including entrepreneurs.

If these trends continue, small businesses will see capital dry up. That’s why I introduced the bipartisan Small Business Lending Reauthorization and Improvements Act with Sens. Olympia Snowe (R-Maine), Carl Levin (D-Mich.), Mary Landrieu (D-La.), Barack Obama (D-Ill.) and Jon Tester (D-Mont.). Our bill expands and improves loan programs to provide working capital and fixed asset financing, and strengthens micro-credit programs that, for the size of their programs, help more women and minorities than other programs.

One reason many small firms are cash-strapped is rising healthcare costs. I’ve introduced bills to give small firms that provide healthcare to their employees a 50 percent refundable tax credit and to reduce premiums by up to 10 percent by having the government share the cost of catastrophic cases. I also believe that as Congress considers bipartisan solutions to the healthcare crisis, we should have employer-based tax credits, pooling mechanisms that empower small employers, more choices for health care coverage through competition, and expanded opportunities for sole-proprietors to purchase health coverage.

In conjunction with strong financing programs and healthcare reform, Democrats will continue to work across the aisle to encourage investment in small firms through targeted tax incentives, spur technological development through the Small Business Innovation Research program, and keep small firms on the cutting edge of clean energy solutions.

Small businesses are the heart and engine of our American economy. Washington has a role to play to ensure that the entrepreneurial spirit that America was founded on flourishes in every corner of our country. By investing in small business, Democrats are investing in America’s economic future and keeping us competitive.

Kerry is chairman of the Committee on Small Business and Entrepreneurship.