President Obama visited Cleveland to talk with small business leaders about their concerns.
During a forum Tuesday at Cleveland State University, Obama appeared alongside a roster of Cabinet members, including Treasury Secretary Timothy Geithner, SBA Administrator Karen Mills, Commerce Secretary Gary Locke, Labor Secretary Hilda Solis, Energy Secretary Steven Chu, Economic Council chairman Austan Goolsbee, National Economic Council director Gene Sperling, and Steve Case, the AOL co-founder who was recently tapped to chair a new public-private initiative on entrepreneurship, Startup America.
Obama and various Cabinet members listened to small business owners, including the owner of the local restaurant Bubba’s BBQ, and addressed some of the questions that had been sent by way of the White House Web site. One small business owner had asked about the difficulty of obtaining bank loans for working capital and speculative funding for anything other than purchases of fixed assets.
“One of the things we hear most frequently from small businesses is the problem of startup capital,” Obama acknowledged. “Obviously a lot of small businesses do get started with the entrepreneur—savings, family loans, credit cards. But over the last two years it’s been especially tough for small businesses because of the credit crunch, both in the banking industry as well as the fact that folks don’t have home equity loans that they could use potentially to start a business; their credit cards might have been maxed out.”
He pointed out that over the last two years, the Small Business Administration has tried to fill that gap by increasing the guarantees it provides to banks if they make a loan to a small business.
“We eliminated some of the fees that might be required,” Obama added. “And as a consequence, volume from the Small Business Administration went up substantially. The other thing that we did was we increased the limits on the loans that might be provided through the SBA. So the SBA has done a lot of good work. The Treasury Department has also tried to make sure that they set up funds that would help to facilitate lending to small businesses. That’s especially important in part because small businesses a lot of times have trouble getting loans when their collateral has gone down, the value of their holdings have gone down. And typically that’s been real estate for a lot of small businesses.”
Obama also highlighted some of the tax breaks his administration has been able to enact for small business, along with proposed tax breaks in his recently released budget for fiscal 2012.
“So you guys are leading the way, and we know there are some things government can do to help clear the way for your success,” he said. “We can make sure America remains the best place on Earth to do business by knocking down barriers that stand in the way of your growth. That’s why we passed 17 different tax cuts for small businesses, why I proposed lowering the corporate tax rate and eliminating unnecessary regulations to help larger businesses create jobs.”
He mentioned a proposed tax break that had been suggested by the audience at the forum.
“We also heard from you about some important ideas,” Obama said. “For example, right now we’re already giving a tax break, zero percent on capital gains for investors who invest in small businesses. But a few of you said that that works well. What we could also really use is some tax credits for angel investors because that early financing oftentimes may be what makes or breaks a company.”
Obama also highlighted the administration’s intention to invest more in research and development, clean energy, biotechnology and transportation infrastructure. “To facilitate your success, we’ve got to invest in cutting-edge research and technology,” he said. “We’ve also got to invest in the skills and training of our workers. And we’ve got to invest in the next transportation and communications networks that move goods and information as fast as possible, because if we don’t, tomorrow’s businesses won’t take root here and you’ll have a harder time competing with the rest of the world. So if we want to win the future, we’re going to have to out-innovate, out-educate, out-build, and yes, we are going to have to out-hustle the rest of the world. And it’s stories like yours and it’s places like Cleveland that make me absolutely confident that we’re going to be able to do that.”
