Today, we can do more to increase the amount of capital that flows into the hands of entrepreneurs at every stage in the growth of their companies.
Helping these businesses grow is a top priority for the Obama Administration, as we know that small businesses create most of net new jobs that are added to the economy each year. We have an economic imperative to make sure we support these firms through creating an environment where they have access to capital markets to help facilitate growth at every stage.
Over the past three years, we have made great progress in helping small businesses. The President has signed into law 17 tax cuts for small businesses, from greater expensing provisions to the President’s signature call to eliminate capital gains taxes on certain investments in small businesses as well as two new small business lending funds. SBA loans also had an all-time record year. Right now, the President continues to call on Congress to cut payroll taxes in half for nearly 6 million small businesses, providing even more incentives for them to hire and grow.
Startups and high-growth firms – the biggest job creators – have different capital needs than other small businesses. That’s why almost a year ago, we launched Startup America, a White House initiative to create the best possible climate for high-growth entrepreneurs across the country. Today, at the Startup America Partnership board meeting hosted at the White House, we are announcing two important initiatives that show how we are working to specifically address the needs of startup businesses. And the President is calling on Congress to do more.
First, today we’re announcing that the Administration has taken action to create a new Early Stage Innovation Fund through SBA’s existing Small Business Investment Company (SBIC) program. We’re making $1 billion available over the next 5 years to match private capital in funds that invest in early-stage, high growth-potential startup companies. SBA’s existing SBIC program just had a record year of helping over 1,000 businesses get $2.6 billion in capital, and created new vehicles like SBA’s first Impact Investment Fund, which recently launched in Michigan.
At the same time, the independent Startup America Partnership has mobilized commitments from more than 50 private-sector partners to deliver over $1 billion in value – from free software to free consulting and legal services – to 100,000 startups over the next three years.
And there’s more action we can take. In September, when the President announced his American Jobs Act, he called on Congress to take specific steps to help small businesses raise the funds they need to innovate and grow. Consistent with this call to action, the President is urging Congress to work on a bipartisan basis to develop these ideas by passing legislation related to:
While moving quickly to pass these initiatives, Congress must develop these proposals in ways that will continue to protect American investors. Over the past few months, we have begun to make real progress. Members on both sides of the aisle have supported legislation consistent with the ideas that the President called for. Legislation has passed the House of Representatives with overwhelming bipartisan support. And last week, these issues were highlighted at a Senate Banking Committee hearing where Chairman Tim Johnson noted “This is an issue where I believe there is real potential for bipartisan cooperation.”
Overall, efforts like these could help improve liquidity for entrepreneurs, and help jump-start the innovative American companies of tomorrow. At the same time, we need to ensure that as we develop these initiatives we are taking necessary measures to ensure that investors are protected – and the Administration will continue working with Congress to achieve this outcome.
The President, both of us, and leaders across the private sector understand that “one size doesn’t fit all” when it comes to helping small businesses, especially startups and high-growth firms. Let’s make sure they can get access to the kinds of capital they need to grow and create the jobs we need now.