As National Small Business week is underway, hiring is slow in parts of the economy when it should be accelerating according to a recent Real Clear report.
Out of $109,000 thousand jobs, sixty-five percent come from the small business private sector. Small businesses account for 99.9% of U.S. firms and create roughly two-thirds of net new jobs, according to the U.S. Small Business Administration. “They are not a segment of the economy. They are a primary engine of growth,” Economic Strategist and Author of Rethinking Economic Growth, Dan Varoney said. The problem is owners are tied up doing paperwork. “I’ve heard reports where presidents of companies are spending up to a full day a week trying to untangle regulations and permitting challenges.” He said.
Trump’s Big Beautiful Bill addresses the issue, but more support is needed. “While its important and effective, we need to give small businesses far more support. That’s why I’m suggesting an executive order that scales regulations and permitting for small businesses that will take less time and less money for them to get plants and projects approved.” Varoney said.
The Economic Strategist says the biggest constraint for small businesses is access to affordable capital. “Private capital firms and banks are better suited to give loans to small businesses. The Federal Government should back out of the loan businesses and instead to help streamline the process of cutting through regulatory compliance as owners of these companies are working on the business and instead of in the business.” He said.
In addition, the current federal reserve interest rate is sitting at 3.5 to 3.7 percent. Varoney says lowering the interest rate by one percent to 2.5 to 2.75 percent will also lower the loan rates that small businesses are paying that are between 8 or 9 percent which is way to high he says. “When Kevin Warsh, the new Federal Reserve Chair assumes office in the next month or so, my hope is he is going to reduce federal interest rates, that will help small businesses get access to capital.
Varoney encourages Americans to support their favorite local small businesses and to thank them this week. “To small business owners- congratulations to them. In “Rethinking Economic Growth” there’s a road map on how small businesses can overcome these regulatory challenges on a consistent basis.” He said.
The solution is not weaker rules, it is faster more predictable execution, so that small businesses can move with consumer demand and support a thriving economy as it plays a crucial role. If small businesses are doing well, so is the economy.