Role in the Economy

Small businesses play a vital role in the United States economy.  Economic progress on the national front has provided for continued growth in the small business sector and the numbers prove that small businesses are more than just Main Street, USA.  There are about 25.4 million non-farm firms in the U.S., according to 2004 data.  Small businesses represent more than 99 percent of all employers, employing 51 percent of private-sector workers and 40 percent of workers in high-tech jobs. 

Small businesses are highly regarded for job creation, responsible for producing 60 to 80 percent of all the new jobs.  Between 2002 and 2003, small businesses added two million jobs.  They also produced 51 percent of private sector output as well as represented 97 percent of all exporters of goods. 

Women & Minority-Owned Enterprises

The numbers of women-owned businesses are on the rise.  According to the U.S. Census Bureau, between 1997 and 2002 women-owned businesses grew by 20 percent, twice as much as the national average.  The Small Business Administration’s Office of Women’s Business Ownership notes that 10.6 million women-owned businesses employ 19.1 million people and contribute $2.46 trillion to the economy. 

Minorities are contributing to our national economy and our communities in greater numbers every year.  The SBA’s Office of Advocacy published a report in April 2007 detailing the progress of minority-owned businesses.  In 2002, minorities owned 18 percent of all U.S. businesses.  African-American firms saw the most growth from 1997 to 2002, with Asian-owned firms following second.  Hispanics constituted the largest minority business community, owning 6.6 percent of all firms. 

*The Office of Advocacy report relied largely on data from the 2002 Survey of Business Owners

Our nation’s veterans have made America a safe, secure and thriving country throughout her history.  The proud tradition of our military extends beyond the battlefield and into our economic strength.  Though veterans make up 11 percent of the total population, they own an impressive 14 percent of all U.S. businesses.  To aid the growth of veteran entrepreneurship, the SBA instituted the Patriot Express Loan Initiative in June 2007, a loan program that features fast turnaround time for veteran loan approvals.

Small Business Share In GDP

At the close of 2005, the American economy ended its seventeenth consecutive quarter of real gross domestic product (GDP) growth.  Small businesses owners contributed to the country’s overall economic health by creating new jobs, investing in their companies, and developing innovative products and services. 

A 2007 study funded by the SBA found that between 1998 and 2004, small businesses produced approximately 50 percent of the nation’s private, non-farm GDP.  The 50 percent figure is comparable to the past two decades, as the GDP has fluctuated only slightly over time

Small Business Role in Federal Funding

Continued efforts to increase small business subcontracting, reduce contract bundling, increase transparency in contracting data, and improve access to federal procurement opportunities are working to level the playing field for small businesses.  In 2005, small firms were awarded more than $79.6 billion in prime federal contracts, according to statistics from the Federal Procurement Data System-Next Generation (FPDS–NG).

The Committee hopes to see small businesses have the opportunity to compete for more of the $314 billion federal prime contract budget.  In these efforts, Ranking Member Steve Chabot served as the lead Republican sponsor on legislation to reform the federal procurement process through expanded competition and transparency.  In May 2007, the Small Business Fairness in Contracting Act passed the House by a vote of 409 to 13. The legislation is designed to help expand competition and save tax dollars by providing greater opportunities to small businesses.

Sources:

The Small Business Economy: A Report to the President 2006

U.S. Census Bureau, Statistics of U.S. Businesses: 2004

2002 Survey of Business Owners

The Small Business Administration’s Office of Women’s Business Ownership

U.S. Census Bureau, Profile of U.S. Exporting Companies

The Small Business Administration’s Office of Advocacy, Minorities in Business: A Demographic Review of Minority Business Ownership