Small business owners blitz Capitol Hill over inflation, recession fears
Thousands of small-business owners descended on Capitol Hill this week in a bid for congressional support as they brace for a looming recession that threatens to wipe out numerous mom-and-pop stores.
Small-business owners, who employ nearly half of all U.S. workers, say they’re being hammered by inflation, hiring difficulties, supply chain snags, child care shortages and limited access to capital. Weathering the storm will get much harder if a recession dents consumer demand for their goods and services.
But it’s unclear to many business owners whether Congress is willing or able to help them overcome a slew of challenges. They point to the fact that lawmakers haven’t reauthorized the Small Business Administration (SBA) in two decades, inaction that has rendered key agency programs outdated and ineffective.
“I’m concerned about the upcoming recession, and I’m concerned about the lagging results that have been able to happen for the small-business world,” said Jill Bommarito, owner of Detroit-area gluten-free bakery Ethel’s Baking Co. “I think we’ve got a lot more coming at us, and we’re going to need the support.”
Supply chain troubles have forced Bommarito to carry double the usual inventory of raw materials, eating up the bakery’s cash reserves, and she said that she’s already maxed out her lines of credit with banks. Those issues, coupled with rising costs, forced Bommarito to carry out large price hikes.
She’s one of roughly 2,500 small-business owners who flew to Washington to meet with more than 400 lawmakers and federal government officials on Tuesday and Wednesday. The two-day summit is hosted by Goldman Sachs’s 10,000 Small Businesses program, which provides education and support to entrepreneurs.
The business owners are pushing lawmakers to reauthorize and modernize the SBA and enact tax credits and other incentives to help small businesses offer benefits, retain workers and access capital.
For many small-business owners, this week will be their first and only opportunity to share their concerns with members of Congress, who typically reserve face-to-face meetings for high-profile constituents, top donors and industry associations.
“We’re not big contributors to campaigns. None of us have the individual impact on any district or state that elected representatives will want to speak about for our opinion,” said Bryan Pate, owner of ElliptiGO, a Solana Beach, Calif., store that sells elliptical and stand-up bikes. “But collectively, we’re half the workforce, so we’re a super important part of the economy.”
Pate’s company enjoyed huge demand in the early months of the pandemic, when Americans couldn’t go to gyms and preferred outdoor activities. But supply chain challenges delayed the delivery of bikes for years, and when Pate finally received them, demand had slowed.
“I think we’re going to see a lot more bankruptcies as a result of this COVID-19 whiplash of not being able to really sell the product when there was demand for it because we couldn’t get it,” Pate said. “We placed a bunch of orders, and now we’re living with those orders. And we don’t have the cash.”
A recent survey of small-business owners in the Goldman Sachs program found that 38 percent reported a recent decline in consumer demand due to price hikes. Roughly one-third of business owners said that inflation is their top challenge, while 13 percent pointed to supply chain issues.
Consumer prices rose 9.1 percent over the past 12 months ending in June, while wholesale costs soared an even higher 11.3 percent, according to most recent Labor Department data, forcing most businesses to raise their prices.
Forty-five percent of small-business owners said that finding workers was their biggest challenge, with 78 percent reporting struggling to compete with larger employers when it comes to pay and benefits. They say Congress could help small businesses compete in the tight labor market by making it cheaper and less complicated for smaller employers to set up retirement and health care plans.
SBA reauthorization is the top priority for the lobbying campaign. Small-business owners say that the agency doesn’t have the tools to effectively implement its loan programs, something they say was demonstrated by numerous issues with the pandemic-era Paycheck Protection Program.
During Tuesday’s small-business summit, Sens. Kyrsten Sinema (D-Ariz.) and Tim Scott (R-S.C.) said that the agency needs to be simplified and expressed hope that lawmakers can come to an agreement on SBA reauthorization.
“I’m confident that it will happen,” Scott told small-business owners. “I hope it happens soon.”
Advocates acknowledge that Congress won’t reauthorize the SBA this year. They see it as one of the few issues both parties could find common ground on in the upcoming Congress, even though previous bipartisan reauthorization efforts have fallen flat.
“Our goal this week is to generate a lot of momentum so that heading into next year it’s a real priority,” said Joe Wall, director of Goldman Sachs’s small-business program. “So we’re just trying to push it and elevate it so it becomes something that both Republicans and Democrats alike are willing to spend political capital on.”
The Goldman survey found that despite an onslaught of challenges, 65 percent of the small-business owners are optimistic about the trajectory of their company this year.
“You have to be an optimist to start a small business,” Pate said. “On one hand, you have to recognize that the most likely outcome is failure. At the same time, you have to believe in yourself and say to yourself, ‘There’s no way I can fail.’ ”