Top Small Business Stories
The biggest small business stories of 2011
Bill O’Leary/WASHINGTON POST – Businesses owners faced a littany of challenges in 2011, but they also scored several victories in the nation’s capital.
J.D. Harrison, Published: December 30
Sadly, headlines coming out of the nation’s capital this year were inundated with words like gridlock, bickering and failure. Partisan rancor and economic uncertainty spawned a super flop by the supercommittee, a prolonged payroll tax debacle, and on more than one occasion, the near collapse of the federal government.
Still, there were moments to celebrate for entrepreneurs, as policy makers overturned burdensome healthcare reform measures, rescued a pair of small business research programs, and repealed burdensome regulations on federal contractors. The Small Business Administration even managed to set new lending records, and several arms of the government launched new programs to support and encourage entrepreneurship.
So before setting our sights squarely on 2012, we took a final look back at the year’s biggest small business stories coming out of Washington. Here are the top 11 for 2011.
11. Chamber opens entrepreneurship center: While commonly known as big businesses’ biggest advocate, the U.S. Chamber of Commerce announced plans to start a Center for Entrepreneurship back in February. The center later drafted an advisory council made up of entrepreneurs and plans to sponsor lobbying efforts on behalf of new and young companies. In the years ahead, the group also hopes to spur immigration reform that will make it easier for students from foreign countries to launch firms in the United States.
10. Payroll tax squabble prolonged: Lawmakers, lobbyists and the president spent the last month of the year battling over the extension of a payroll tax cut, which was set to expire at the end of 2011, potentially raising taxes for 160 million American workers. Democrats and Republicans eventually agreed on a two-month extension with plans to hash out a yearlong deal in January. However, the absence of a long-term extension and lingering disagreements over how to pay for the tax cut have left small business owners heading into the new year with a newfound level of uncertainty about potential tax rates.
9. Fed extends low interest rates: In response to unexpectedly slow economic growth, the Federal Reserve in August promised to maintain near-zero federal interest rates through at least the middle of 2013, ensuring that cheap borrowing rates would be available to those seeking loans in the coming years. The declaration of a specific time frame was an unusual move for the Fed, which tends to stick to more ambiguous terms like “extended period” in order to allow for flexibility as the economy ebbs and flows.
8. SBA breaks loan record: The Small Business Administration approved a record-high $30.5 billion in loans in fiscal 2011, evidence that employers are seeking capital to expand their businesses and increase hiring. The tally broke the previous record of $28.5 billion set in 2007 (before lending froze during the recession) and easily eclipses last year’s mark of $22.6 billion. However, the total number of loans increased only marginally from 60,771 in 2010 to 61,689 in 2011.
7. White House launches Startup America: On the heels of his State of the Union address, President Obama announced the formation of Startup America, a broad public-private program designed to encourage entrepreneurship and promote the interests of high-growth start-ups in the United States. The initiative is backed by companies like IBM and Intel Capital and headed by Steve Case, co-founder of AOL and chief executive of Revolution LLC. The group later added the likes of Michael Dell, Reed Hastings, Tory Burch and Magic Johnson to its board of directors.
6. House passes crowdfunding proposals: The House of Representatives in early November easily passed the Entrepreneurs Access to Capital Act, which would alter SEC rules to allow young companies to seek funding through online portals. The Senate is also considering two separate yet similar crowdfunding bills, and the president has expressed support for the proposals. The House also passed the Access to Capital for Job Creators Act in November, which would eliminate some of the SEC rules prohibiting the general solicitation of funding, setting the stage for further debate on the Hill in early 2012.
5. Fed settles on swipe fee limits: The Federal Reserve in June approved a roughly 24-cent limit on the fee debit-card providers can charge vendors for each card transaction. While the cap landed at about half of the current average of 44 cents per swipe, retailers large and small had expected a much lower limit after the board originally proposed a 12-cent cap back in December 2010. Moreover, the structure of the cap (a number of pennies rather than a percentage) left some small-ticket vendors paying even higher swipe fees after the rule was implemented in October.
4. Small business research programs reauthorized: After three years of short-term extensions, lawmakers in December agreed to reauthorize and expand the Small Business Innovation Research program and the Small Business Technology Transfer program, which require government agencies to set aside some of their annual research budgets for contracts and grants to small businesses. The compromise extended the programs for six more years, increased the small business allocation requirements and allowed venture-backed firms to compete for grants through the programs.
3. Withholding tax thrown out: In November, the president signed legislation overturning an earlier measure that would have required federal, state and local governments to withhold 3 percent of payments to contractors until they paid their federal taxes. President George W. Bush approved the original measure five years ago, but officials delayed implementation following heavy criticism from contractors and business groups across the country. The repeal also marked the first piece of Obama’s jobs plan to pass into law.
2 . Patent system overhauled: The president this fall signed the America Invents Act, radically altering the United States patent system for the first time in more than half century. The law moved the country from a first-to-invent to a first-to-file patent system, limiting expensive legal battles over patent rights and aligning the nation’s system with that of most other nations, helping American innovators protect their intellectual property in foreign courts.
1. Healthcare paperwork requirement abolished: Business owners around the country breathed a collective sigh of relief in April when lawmakers repealed a provision of the health care reform law that would have drastically expanded the 1099 information filing requirements. Under the proposed rule, companies would have been required to submit forms to the Internal Revenue Service any time they spent more than $600 a year with another business, meaning potentially hundreds of burdensome forms for firms that currently file only a handful of 1099’s each year.
President Obama speaks with CBS’ Steve Kroft in Osawatomie, Kan. (CBS)
