Congresswoman Nancy Pelosi offered few new solutions to the 15 small business owners who gathered in the Mission District last week to talk about their main ongoing concern: lack of access to loans and other financial resources.
Pelosi pointed to existing legislation, which has been largely unsuccessful in helping small businesses obtain loans, but promised, “We’re going to act upon your suggestions. … We don’t waste your time.”
The difficulty small businesses have in obtaining loans is not new, William Ortiz-Cartagena, who owns Gentle Parking LLC, told the congresswoman at the invitation-only event, which was held at the Florida Street Cafe. Credit has been tight ever since the financial collapse of 2008, he said.
“Knowing that our businesses are going through difficult economic times, not having access to credit is a great obstacle,” said Victor Bianco, who spoke on behalf of the Latin Business Network, a group of about 50 businesspeople in the Mission District. “The barriers we are facing are really enormous. Banks are not giving out credit so easily.”
As House minority leader, Pelosi has asked nearly 200 other congressional representatives to speak with small business owners in their districts about how the federal government can better serve small businesses. Pelosi hopes the suggestions can help direct President Barack Obama’s job creation efforts.
“Lending is the biggest issue,” said Erick Arguello, co-founder and president of the Lower 24th Street Merchants and Neighbors. “I hear from merchants that they would like the federal government to work with banks to loosen up on lending regulations or create a package where small businesses and banks can work together.”
Inducing banks to loan to small businesses has consistently eluded the Obama Administration. The Small Business Jobs Act, passed in 2010, attempted to offer some relief by promising to allocate $30 billion for small banks to lend to small businesses.
Yet it has been largely unsuccessful. Only about $4 billion had been allocated to small banks, which have not used the capital exclusively to loan to small businesses.
But after hearing concerns from the small business owners, the congresswoman pointed to the Small Business Jobs Act as a step in the right direction, and offered little else in the way of specific solutions.
“I’m not completely satisfied with the results, but at least it’s a good path to start with,” Pelosi said of the Small Business Lending Fund.
On average, it takes about $10,000 to start a small business, according to a 2006 Wells Fargo/Gallup Small Business Index study. That means the Small Business Lending Fund could have helped 400,000 aspiring small business owners, assuming that money was all loaned to small businesses.
“I want to make sure that whoever is getting that money in this area is using it for the correct purpose, not to make sure their bank has more resources, but to actually lend to the small businesses,” Pelosi said.
Speaking at Pelosi’s request, Mark Quinn, San Francisco district director of the U.S. Small Business Administration, added that the administration set a record this year by lending over $17 billion nationwide. Of that, over $4 billion was loaned in California and just shy of $1 billion in the Bay Area, Quinn said.
Yet he acknowledged that banks prefer to lend to bigger businesses.
“The challenge we all have is to find ways to get to the smaller credits,” Quinn said. “What we realize is when you put incentives to banks, they give out bigger loans. What we need is other players that can do it — micro-lenders, nonprofits — to really focus on trying to get to those smaller businesses.”
Other business owners voiced concerns over the lack of resources available to train employees. For Robert Sanchez, owner of Casa Sanchez, finding qualified employees has been difficult, and he can’t always invest the time and money to train new employees.
“Almost always we have an opening available that we can’t fill, sometimes because we just don’t have that person who meets our qualifications,” Sanchez said. “Even at entry level, a person has to make food products, we require a certain amount of English, and almost always competent computer skills.”
Pelosi acknowledged this concern, adding that it is important to give tax credits to businesses, which would be unable to train employees without assistance. But she did not point to any current programs that could reduce this burden.
“One of the discussions that we have frequently is if we give businesses credits for training people, would they be training these people anyway or not?” Pelosi said. “Rather than giving money to big businesses who are going to train people anyway, we should target it at small businesses.”
Whether any of the suggestions brought up at the meeting could actually materialize into substantive initiatives in Washington remains questionable, especially since President Obama’s American Jobs Bill has been thwarted by a Republican-controlled House of Representatives. But when confronted with this idea, Pelosi disagreed.
“I’m more optimistic than that, because what people are saying is that they support small businesses,” she said. “What we heard here today was very pragmatic … it was commonsense about what we need to do if we’re going to be committed to development of small businesses.”
The opportunity to speak with the congresswoman gave some business owners hope, as well. Erin Archuleta, co-owner of ICHI, a sushi company, said she felt that real change could come out of the meeting, since similar meetings are happening all over the country.
But Arguello acknowledged that any change would be difficult to achieve.
“I think it’s a challenge, and will take time and a lot of work to get things back on track,” he said. “But I think having a meeting like this, where we get to speak face to face, always has a greater impact.”