America's small businesses are the backbone of our economy, helping to keep the country competitive through innovation, new ideas and new jobs. Democrats recognize that one of our nation's greatest assets is our diversity. Investing in minority-owned businesses, therefore, helps to increase the value of that asset and to promote economic growth and job creation. When minority-owned businesses succeed, the communities in which they operate benefit through increased job opportunities for local residents and economic development in the surrounding neighborhoods. As we move closer toward a new Administration, Democrats will continue to fight for the interests of minority-owned small businesses to promote and expand economic success.

 

Hispanic small business enterprises are growing. Over the last ten years, minority-owned business enterprises accounted for over 50 percent of the two million new businesses started in the United States, crossing every industrial sector from financial services and health care to construction and transportation. Today there are more than four million minority-owned companies in the country with annual sales totaling $694 billion. Between 1997 and 2002, the number of Hispanic-owned firms increased by 31 percent. (SBA Office of Advocacy, 4/2007)

 

 

A state-by-state report on the Hispanic small businesses is attached in Appendix A.

 

Minority-owned firms, however, make significantly less than their non-minority counterparts. The average gross receipts of minority firms were $162,000 - considerably lower than the $448,000 average gross receipts of non-minority firms. On average, for every dollar that a White-owned firm made, Hispanic-, Native American-, and Asian-owned businesses made 56 cents; Black-owned businesses made 43 cents; and Pacific Islander-owned firms made about 59 cents, according the Small Business Administration (SBA) (SBA Office of Advocacy, 4/2007).

 

Hispanic-owned firms receive a disproportionately low percentage of government-backed business loans. Hispanics represent 14.8 percent of the U.S. population. (Census Bureau, 5/2007) Government-backed small business loans to Hispanics, however, have remained stagnant over the last seven years, despite the fact that they comprise the largest group of minority business owners. Last year, Hispanics received about ten percent of 7(a) loans - the government's largest loan program for working capital - and only seven percent of total dollars lent. (SBA)

 

The Small Business Administration should be a resource for minority-owned firms. The SBA is supposed to reach out to more minorities, women and other underserved communities to market their financing, contracting, and training programs. For the last seven years, however, the Bush Administration has not made helping underserved communities a priority.

 

The continuing disparity between the number and earnings of minority firms in the United States and the continuing barriers many minorities face as they seek to start or expand a business demonstrates the need for targeted programs at the federal level for minority entrepreneurs. Despite signs that small businesses are facing increasingly difficult market conditions, President Bush's Fiscal Year 2009 budget proposal for the SBA raises fees on loans, provides no funding for microloans, fails to invest in more contracting oversight, and cuts funding for key business assistance programs like Women's Business Centers and Small Business Development Centers. 

 

Senate Democrats Are Committed to America's Small Businesses

 

Democrats support investing in small business programs to leverage resources and grow the economy. There are 27 million small businesses in the United States and 99.7 percent of all firms are small businesses.  Over the last 15 years, small businesses have been responsible for creating 93 percent of all new jobs and employing about half of the American workforce, totaling 58.6 million people.  Small firms account for about half of our economy. In 2006, small businesses generated $993 billion in income.  

 

The Democratic-led Senate has passed legislation that would support small businesses with tax relief, energy efficiency measures, new competitiveness programs, increased funding for small business assistance, and disaster preparation and recovery. Democrats have also exercised continuing leadership to expand contracting opportunities for small businesses, even in spite of Republican obstructionism. As the 111^th Congress approaches, Democrats remain committed to advancing small business growth, especially in underserved communities (minorities, women, veterans, and urban and rural areas).

 

Providing Tax Relief

 

The 110th Congress responded to the needs of the nation by passing a stimulus package that includes tax relief for small businesses.  On February 7, 2008, both Houses of Congress passed the Economic Stimulus Act of 2008 (H.R. 5140), by overwhelmingly bipartisan votes.  In passing this legislation so quickly, the Democratic-led Congress kept its promise to effectively mitigate an economic downturn.  The measure, signed into law on February 13 (P.L. 110-185), promotes job-creating business investments by providing tax relief for American businesses, especially small businesses.

 

Specifically, the new law will allow small businesses to elect to expense the cost of qualified assets they purchase in 2008, within certain limits in lieu of depreciation. The provision increases the expensing limit from $125,000 to $250,000 for firms with a threshold of up to $800,000.

 

Democrats enacted small business tax relief. The Small Business and Work Opportunity Tax Act, passed as a part of the 2007 Emergency Supplemental (P.L. 110-28), provides important tax relief for America's small businesses. These deficit-neutral tax incentives include measures to:

 

•        Encourage the hiring of low-income and disadvantaged workers (extension of the Work Opportunity Tax Credit);

 

•        Assist economic growth in the Gulf Opportunity Zone - the area still struggling to recover from Hurricanes Katrina, Rita, and Wilma (enhancement of GO Zone tax incentives);

 

•        Reduce reporting requirements for family businesses (family business tax simplification); and

 

•        Make sure employers don't lose current tax benefits when the minimum wage increases (enhanced tip credit).

 

Boosting Energy Efficiency In Small Businesses

 

The Energy Independence and Security Act of 2007, which was signed into law on December 19, 2008 (P.L. 110-140) will help provide America's small businesses with tools to join the fight to address global warming and to make America more energy independent. This legislation will:

 

•        Create incentives for small businesses to invest in green technologies;

 

•        Provide the resources to help entrepreneurs conduct energy audits; and

 

•        Ensure that the Bush Administration implements an energy efficiency information program that Congress enacted three years ago.

 

Enhancing and Ensuring the Competitiveness of
American Businesses

 

The Democratic-led Congress approved measures to ensure that our nation's small- and medium- sized businesses have the tools they need to compete. The America Creating Opportunities to Meaningfully Promote Excellence in Technology, Education, and Science Act (America COMPETES) (H.R. 2272), was signed into public law on August 9, 2007 (P.L. 110-69) and includes provisions to:

 

•        Create the Technology Innovation Program (TIP) at NIST (replacing the existing Advanced Technology Program or ATP) to fund high-risk, high-reward, pre-competitive technology development by small- and medium- sized companies with high potential for public benefit;

 

•        Put the Manufacturing Extension Partnership (MEP) funding on a path to doubling over 10 years;

 

•        Mandate Small Business Administration participation on the new President's Council on Innovation and Competitiveness authorized by America COMPETES; and

 

•        Require that small business representatives are included at the White House National Science and Technology summit authorized by America COMPETES.

 

Democrats secured added funding for research and development program for small firms. In November 2007, Democrats secured an additional $85 million in research and development funding for small firms seeking competitive grants through the Department of Defense's Small Business Innovation Research (SBIR) program. SBIR was established 25 years ago to provide funding to stimulate technological innovation in small businesses to meet federal agency research and development needs.

 

The added funding, contained in the Department of Defense appropriations bill that was signed into law (P.L. 110-116), will allow the military to increase the use of small, high-tech businesses to help the military develop the best technologies, diversify the supply base, and reduce costs.

 

Democrats move to reauthorize critical small business innovation program. SBIR and a similar program, the Small Business Technology Transfer (STTR) program, would be reauthorized for 14 years under a bill that passed unanimously out of the Senate Committee on Small Business and Entrepreneurship in July. The reauthorization bill gradually increases the allocations for the SBIR and STTR programs at most participating agencies and increases the award size guidelines for the SBIR and STTR programs. The bill awaits floor consideration.

 

Small businesses have 2.5 times as many innovations per employee as large businesses although large businesses are three times more likely to receive government assistance. Technologies developed through the SBIR and STTR programs are helping to keep our troops safe on the battleground, improving our health care, and expanding our ability to combat global warming.

 

Increasing Funding for Small Business Programs

 

Senate Democrats are seeking a $100 million increase for small business assistance for Fiscal Year 2009. The Budget Resolution for Fiscal Year 2009 (S. Con. Res. 70), approved by the Senate on March 14, 2008, included increases over President Bush's request for funding for financing, training and contracting programs for small firms. This includes increases for loan oversight and reduced fees, microloans, contracting assistance, Small Business Development Centers, Women's Business Centers, veterans outreach programs, and technical assistance programs.

 

Democrats provided funding to support small businesses for Fiscal Year 2008. The Consolidated Appropriations Act (H.R. 2764) made more than $40 million in additional funding for key SBA programs in Fiscal Year 2008 over the previous year's funding, the first funding increase for SBA programs in seven years. Each of the SBA's core programs, including Small Business Development Centers, Women's Business Centers and the Microloan program, received an increase. The $569 million in funding for SBA in Fiscal Year 2008 includes increases for:

 

• Small Business Development Centers (a nine percent increase from $89 million to $97.1 million);

 

• Women's Business Centers (a four percent increase from $12.5 million to $13 million);

 

• Microloan Technical Assistance Grants (a 15 percent increase from $13 million to $15 million);

 

• Microloans (a 53 percent increase from $1.3 million to $2 million in funds to leverage almost $20 million in loans - up from $12.7 million last year);
• Program for Investment in Microentrepreneurs (a 50 percent increase from $2 million to $3 million);

 

• 7(j) Technical Assistance (a 53 percent increase from $1.5 million to $2.3 million);

 

• HUBZone Program (a five percent increase from $2 million to $2.1 million);

 

• Surety Bond Program (a six percent increase from $2.8 million to $3 million); and

 

• Loans and Venture Capital. The SBA will be able to leverage up to $28 billion in loans and venture capital deals through the 7(a), 504, and Small Business Investment Company programs.

 

The Senate expanded assistance for women-owned small businesses, one of the fastest growing segments of our economy. In 2006, women owned over 40 percent, or 10.4 million, of non-farm businesses, up more than 42 percent from 1997. More than 85,000 of these women used the SBA's Women's Business Centers. In the 2007 Emergency Supplemental, Democrats were successful in including legislation to extend funding to all Women's Business Centers, which currently cannot receive federal funding after ten years. This legislation creates a permanent funding stream for Centers, helping them secure matching funds so they can continue to provide women-owned small businesses the tools they need to grow and flourish.

 

Recovering and Preparing for Disasters

 

The Democratic Congress extended a program to help American businesses and workers recover from terrorist attacks.  In November 2007, the Democratic-led Senate unanimously approved the Terrorism Risk Insurance Program Reauthorization Act of 2007 (H.R. 2761).  On December 18, the House agreed to the Senate-passed version, and the President signed the bill into law (P.L.110-160) on December 26.  This legislation extends for seven years a program that was originally passed by Congress and signed into law after the terrorist attacks of September 11. It provides a federal backstop against catastrophic losses in the property and casualty insurance marketplace associated with massive terrorism damages.  Without this extension, the program was scheduled to expire at the end of 2007.  Large and small businesses, labor unions, manufacturers, builders, lenders, universities, hospitals, as well as insurers, have all voiced their support for this initiative to stabilize the market and ensure the availability of affordable insurance against terrorist attacks. 

 

With the approach of the two-year anniversary of Hurricanes Katrina, Rita, and Wilma, the Democratic-led Senate unanimously passed critical disaster aid legislation.  In August 2007, the Senate unanimously approved the bipartisan Small Business Disaster Response and Loan Improvements Act (S. 163) to improve assistance to business owners and homeowners after a disaster. A version of this legislation was enacted as part of the Food, Conservation, and Energy Act of 2008 (P.L. 110-246, the Farm Bill) in June 2008. The small business disaster loan program provisions will:

 

•        Establish a private disaster loan program to be used in the aftermath of catastrophic disasters;

 

•        Create new expedited disaster assistance business loan programs;

 

• Expand disaster assistance to businesses outside the disaster area that have suffered direct economic injury because of a catastrophic disaster;

 

•        Improve the disaster loan application process; and

 

•        Increase the maximum size of a disaster loan and allow non-profit groups to be eligible for disaster loans.

 

Democrats also secured an additional $25 million for small business disaster assistance.  In the 2007 Emergency Supplemental, Democrats included recovery assistance for small businesses impacted by the 2005 hurricanes in an effort to revitalize the Gulf Coast economy. This additional $25 million in economic injury loans will provide disaster relief for some of the more than 125,000 businesses originally disrupted by Hurricanes Katrina and Rita.

 

While Democrats Work to Support America's Small Businesses, the 'Grand Obstructionist Party' Continues to Block Progress

 

Unfortunately, while Senate Democrats have been working to lead the way, Senate Republicans have been working to stand in the way. The following bipartisan bills, which were passed unanimously out of Committee, have been blocked by the Senate Republican leadership:

 

•        The Entrepreneurial Development Act of 2007 (S. 1671). This bill would provide increased training and business counseling assistance to entrepreneurs through SBA's resource partners, including a network of Small Business Development Centers and Women's Business Centers, as well as one-on-one volunteer counseling provided by SCORE.  In addition, the bill creates the Minority Entrepreneurship Program to target minority students in highly-skilled fields such as engineering, manufacturing, science and technology, and guide them towards entrepreneurship as a career option.

 

•        The Small Business Venture Capital Act of 2007 (S. 1662).  This bill would ensure the continued availability of venture capital for small firms through the Small Business Investment Company (SBIC) and New Markets Venture Capital (NMVC) programs, promote venture capital investment in rural, urban and low-income areas, simplify the programs' regulations, increase the amount of funds that can be invested in one business, and encourage new and existing investors to increase their involvement.

 

•        The Small Business Lending Reauthorization and Improvements Act of 2007 (S. 1256). This bill would improve the government-backed loan programs that are the largest source of long-term capital to small firms. The legislation would provide working capital to small businesses through the 7(a) loan program, loans for fixed assets and equipment through economic development corporations with a local focus through the 504 loan program, and would strengthen micro-credit programs which proportionally help more women and minorities than other programs.

 

Expanding Contracting Opportunities

 

Senate Democrats are fighting to expand contracting opportunities for women by pushing for implementation of the Woman's Procurement Program. Women own almost 30 percent of small businesses in the country, yet they receive only 3.4 percent of federal contracts. To improve women's access to federal contracts, the Women's Procurement Program was enacted into law in 2000 to create a set-aside program for women-owned businesses.  However, after delaying implementation of the program for seven years, the Small Business Administration proposed a rule that would allow set-asides for women in only four out of a possible 140 industries.  Democrats have demanded that the Bush Administration change the proposed rule and have attached language to the Fiscal Year 2008 Financial Services appropriations bill to prevent the Administration from going forward with this flawed approach.  The Bush Administration's failure to properly implement this program over the last seven years has cost women-owned businesses an estimated $6 billion in potential revenue.

 

Senate Democrats pressed federal agencies to increase contracting with minority-owned businesses. In August 2007, Democrats sent letters to the Departments of Defense and the Treasury expressing concern with their poor record of awarding contracts to minority and disadvantaged businesses and requesting that the agencies outline specific steps they are taking to increase contracts with minority advertising firms. Their action came in response to a report by the Government Accountability Office (GAO) released in July 2007 that found that federal agencies are falling short of the standards set by an Executive Order issued in 2000 calling on the government to "aggressively" reach out to minority and underserved firms. The Defense Department awarded minority advertising firms only 1.8 percent of contract dollars and paid them on average nearly 84 percent less per contract than majority firms, and the Treasury Department awarded minority advertising firms only 1.9 percent of contract dollars and paid them on average nearly 47 percent less per contract than majority firms. Defense and Treasury Department officials responded in September 2007, outlining steps they are taking to reach out to minority and disadvantaged businesses.

 

 

Appendix A

 

Hispanic-Owned Small Businesses

 

State	# Small Businesses	Jobs	Income	Hispanic-Owned Small Businesses
UNITED STATES	26,800,000	58.6 million	$992.5 billion	1,600,000
Alabama	368,500	826,200	$10.6 billion	2,500
Alaska	67,300	132,700	$2.4 billion	1,200
Arizona	473,000	1,000,000	$15.1 billion	35,100
Arkansas	247,700	499,800	$6.0 billion	2,100
California	3,675,700	6,900,000	$151 billion	427,700
Colorado	550,100	991,900	25.4 billion	24,100
Connecticut	347,600	774,800	$18.8 billion	9,400
Delaware	76,300	180,000	$2.5 billion	900
District of Columbia	65,200	207,200	$4.2 billion	2,200
Florida	1,942,200	3,100,000	$39.2 billion	266,700
Georgia	859,500	1,600,000	$25.6 billion	18,300
Hawaii	117,200	268,900	$3.1 billion	3,100
Idaho	151,300	284,700	$4.5 billion	2,800
Illinois	1,121,300	2,600,000	$42.5 billion	39,500
Indiana	486,400	1,300,000	$14.7 billion	5,500
Iowa	261,800	660,400	$6.4 billion	1,500
Kansas	246,900	609,800	$8.8 billion	4,200
Kentucky	346,200	759,200	$8.5 billion	2,100
Louisiana	364,900	895,600	$10.6 billion	7,600
Maine	154,000	302,700	$3.4 billion	700
Maryland	536,200	1,100,000	$16.8 billion	15,400
Massachusetts	651,100	1,500,000	$24.8 billion	15,900
Michigan	849,500	2,000,000	$28.4 billion	9,800
Minnesota	504,000	1,200,000	$13.1 billion	4,000
Mississippi	216,700	473,000	$5.8 billion	1,300
Missouri	508,900	1,200,000	$14.5 billion	3,700
Montana	115,700	224,700	$3.1 billion	1,000
Nebraska	161,800	400,700	$5.0 billion	2,000
Nevada	215,800	453,100	$6.7 billion	9,700
New Hampshire	145,900	311,500	$4.7 billion	900
New Jersey	828,400	1,800,000	$34.9 billion	49,800
New Mexico	158,200	338,700	$4.6 billion	29,700
New York	1,925,100	3,900,000	$85.4 billion	163,600
North Carolina	766,500	1,600,000	$19.1 billion	9,000
North Dakota	63,100	167,700	$1.7 billion	200
Ohio	920,500	2,400,000	$26.9 billion	7,100
Oklahoma	332,000	656,000	$16.4 billion	5,400
Oregon	350,500	771,400	$10.3 billion	6,400
Pennsylvania	1,006,900	77,800	$39.9 billion	11,000
Rhode Island	101,800	252,900	$2.8 billion	3,400
South Carolina	352,900	780,800	$8.1 billion	3,000
South Dakota	79,100	195,700	$2.3 billion	400
Tennessee	531,200	1,100,000	$23.3 billion	4,300
Texas	2,093,400	3,900,000	$122.6 billion	319,300
Utah	236,000	467,200	$7.0 billion	5,200
Vermont	80,300	162,800	$1.7 billion	500
Virginia	643,600	1,500,000	$20.7 billion	19,000
Washington	578,300	1,300,000	$19.4 billion	10,300
West Virginia	125,300	313,600	$3.6 billion	600
Wisconsin	447,200	1,300,000	$12.1 billion	3,800
Wyoming	61,900	129,000	$2.4 billion	1,300

 

Source: SBA Office of Advocacy, 2007. Minority-owned business data are from 2002, the most recent data available from SBA and the Department of Commerce. Statewide figures are from 2006, the most recent data available from SBA and the Department of Labor.