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How investing in microbusinesses can bring massive economic results

(AP Photo/Gosia Wozniacka)
HOLD FOR MOVEMENT THURSDAY MAY 1 – In this photo Tuesday, April 15, 2014 photo, Gaudencio Felipe Asuncion prepares a traditional Oaxacan dish of tamales with mole sauce at the Lloyd Farmers Market in Portland, Oregon. The young man’s mother, Paula Asuncion, started the food catering service after being part of a Portland micro-business development program for Spanish speakers run by Hacienda CDC. (AP Photo/Gosia Wozniacka)

Main Street America has weathered the worst of a triple threat: the COVID-19 pandemic, a workforce shortage and swiftly rising prices. Despite years of hardship for microbusinesses across the country — businesses with five or fewer employees—  legislators are urged to implement policies in 2023 that work to empower resiliency, growth and entrepreneurial development opportunities for microbusinesses in the face of huge layoffs from major employers in the first quarter of the year. 

2023 marks the start of a new Congress, new leaders and new initiatives to support the small business and microbusiness ecosystem. However, the 118th Congress remains strongly divided between a red House and a blue Senate, and the need for bipartisan solutions to support entrepreneurship has never been more critical.  

To continue along a path of economic resiliency and growth, America’s smallest businesses need bipartisan, ongoing support from Congress in 2023. The economic power of microbusinesses must not be ignored; according to research by the Association for Enterprise Opportunity (where I am president), microbusinesses represent 92 percent of all businesses in the U.S. and generate a whopping 41.3 million jobs with upwards of a $5 trillion economic impact. 

While Congress and the Biden administration did well to place Main Street at the center of COVID-19 relief efforts, microbusinesses continue to face challenges that will make operations difficult in the years ahead. Some of these barriers include securing low-cost, right-sized capital, receiving trusted guidance (technical assistance) from culturally competent service providers and a growing digital divide.  

To ensure that microbusinesses receive the support they need, this new Congress faces an opportunity to work together to address longstanding issues inhibiting the growth of entrepreneurs. In the 118th Congress, AEO is urging critical updates to Small Business Administration (SBA) programs; some of which have remained unauthorized and underfunded for over three decades. The SBA is not alone in its need for increased capacity and updated programs; to improve service delivery, increase entrepreneurial education and awareness and reduce administrative burdens of service providers, this Congress must double down on its commitment to making the American dream easier to achieve than ever before. Congress can do this by holding agencies accountable and investing in critical programs that support our work including SBA, the Department of Treasury, and the Department of Commerce to name a few.  

In the next two years, to bring Main Street America the heft to foster vibrant communities, Congress must work together to produce long-lasting, meaningful solutions for microbusinesses. We outline those solutions below:  

  1. Congress must work to codify the Community Advantage Loan Program, which provides low-cost capital to entrepreneurs in underserved areas. The Community Advantage program is in dire need of permanency as it stands as the only bridge between startup financing and far-away dreams for many entrepreneurs.  
  2. Congress must prioritize re-entry entrepreneurship programs across federal agencies to increase economic opportunity for individuals with criminal records or a history with the criminal justice system. AEO firmly believes in second chances, and we believe access to entrepreneurship can provide pathways to reduced recidivism, increased economic growth and more stable communities for individuals with non-violent criminal records. 
  3. Appropriators need to buck up and fully fund the Minority Business Development Agency. Congress authorized $110 million for the MBDA in 2021 and made the agency permanent for the first time in its history since the Richard Nixon administration. However, appropriators have failed to fully fund the agency. If Congress wants to help minority businesses thrive and create jobs, the MBDA must receive sufficient funding. 
  4. Congress should endeavor to provide entrepreneurs with the technology they need to thrive. Technology no longer enables business growth but abuts it. This investment requires that Congress work with technology leaders to increase their investment in entrepreneurs. Microbusinesses face blaring digital inequities when accessing the tools necessary to operate a modern, thriving business.  
  5. Congress must learn to prioritize cultural competency in economic development programming. Simply funding state programs will not be enough to reach entrepreneurs through economic development programming. AEO’s recent research suggests that Black communities in particular face a trust gap that inhibits their ability to utilize and benefit from entrepreneurial or community development programs. To mend broken trust between underserved communities and federal programs, Congress must prioritize cultural competency by ensuring that local, mission-based, organizations are at the center of development programming.  

Legislating in a divided Congress is far from easy, however, small business and entrepreneurship are one of the few issues that can create a bridge across party lines. Congress should ensure that any approach to delivering for America not only takes its smallest businesses into account but places them at the center of its legislative agenda. To get anything at all accomplished, the 118th Congress will have to find a common ground. American microbusinesses can bridge that gap. 

Connie E. Evans is president and CEO of the Association for Enterprise Opportunity (AEO)

Tags Community Advantage Loan Digital divide in the United States Entrepreneurial finance microbusinesses Minority Business Development Agency Politics of the United States SBA

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