Don't target small business: Make good policies universal.
Tiny startups – the ones most likely to hire – often don't qualify for Small Business Administration (SBA) loans. So instead of making SBA loans cheaper, improve conditions for everyone.
Slate's Jill Priluck has a good summary of the recently passed small biz legislation. I liked it even better when I saw that it references my summer research paper. But that's not why you should read it. It's not that the legislation is bad or will be ineffective. It's that entrepreneurs are impossible to target. Good policy needs to be universal (e.g. lower tax rates for all, not targets. Better roads for all. Better health care for all. You get the idea).Skip to next paragraph
Writer, Kauffman’s Growthology.org
Tim works in research and analysis at the Kauffman Foundation for Entrepeneurship. (Growthology)
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Startups drive job growth, but often, these high-impact firms rely not on debt-based lending like SBA loans, but rather angel-, VC-, or equity-based funding because lenders generally perceive them as too risky. Google's first outside funder, for example, was not a bank, but Sun Microsystems co-founder Andy Bechtolsheim.
In many cases, a startup won't be able to get a loan, even though the SBA is guaranteeing 90 percent of it. As a result, the SBA loans will help more mature small businesses that often don't recruit.
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