Bush’s Budget Hits Small Businesses, Jobs in the Ocean State
WASHINGTON, Feb. 20–President Bush’s budget plan has a direct effect on the fate of small businesses and available jobs in Rhode Island, according to Lt. Gov. Charlie Fogarty.
Under the proposed budget plan, the amount of loans available to small businesses has been cut in half, making it more difficult for small businesses to obtain funding. Bush reduced section 7(a) of the Small Business Administration, which provides funding of General Business Loan and Small Business Investment Company Securities programs in half.
“This financing is a critical issue in Rhode Island,” Fogarty said. “The SBA loan guarantee is a critical part of helping expand jobs in the state. The future of Rhode Island business and economy is going to be in small companies.”
Fogarty, who is chairman of the Rhode Island Small Business Advisory Council, endorsed a resolution Wednesday that the council will send to the Rhode Island Congressional delegation and Senator John Kerry, chairman of the Senate Small Business Committee.
The resolution requests the Rhode Island members of Congress oppose the SBA 7(a) loan guarantee budget reductions proposed by the administration in an effort to help maintain the viability of Rhode Island small businesses.
“98 percent of our businesses are small businesses and one of the things I found is that access to capital is a critical things to these companies,” said Fogarty. “We are hopeful that members of Congress will rectify this situation. We need to stimulate the economy, not only in Rhode Island but nationally. We can’t do that if we have a 50 percent reduction of small business loans available.”
In the past 11 years the SBA has guaranteed just under $1 billion loans to Rhode Island, and without the 7(a) loan program there would be a serious lack of capital for small businesses, according to Mark S. Deion, president of Deion Associates and Strategies Inc.
“Rhode Island’s backbone is small businesses and its production is positive job growth. In this state, if the 7(a) loans aren’t there, you could eliminate thousands of dollars in loans to small business,” said Deion. “Every single small business in Rhode Island should be communicating with the House and Senate small businesses and appropriations committees.”
In 2001, Rhode Island small businesses received 961 loans statewide, totaling $94 million in loan guarantees. The net effect of the change from Bush’s proposed bill is a decrease of about $47 million, according to Fogarty.
“Our goal is to show support at a state level for small businesses around Rhode Island,” Fogarty said. “What we can do at a state level is point out the real impact this budget cut has on our economy. This budget cut could have a serious impact in turning our country’s economy around.”
Written for The New Bedford Standard-Times in New Bedford, Mass.
