Outside Voices: Small Business

Small Businesses Not Seeing Impact of Stimulus Package

July 1, 2009 RSS Feed Print

Steve King

According to a recent survey by Intuit Corp., the vast majority of small businesses have not benefited from the stimulus plan—nor do they expect to.

Intuit (disclosure: Intuit is an Emergent Research client) surveyed more than 1,000 small businesses and found:

—98 percent have not received any money as a result of the stimulus plan.

—86 percent feel the stimulus plan will not directly benefit their business.

—84 percent do not believe the stimulus plan will help them grow their businesses in the coming year.

The stimulus plan—officially, the American Recovery and Reinvestment Act of 2009—was signed into law in February. It amounts to $787 billion in government spending, incentives, and tax cuts designed to kick-start the economy and create jobs.

But the roll out of the plan and spending has been slower than Congress and the Obama administration expected. Outside of road and bridge construction, where thousands of projects funded by the plan are currently underway, little of the money has been spent.

The government hopes to get the money flowing this summer and fall.

Despite the current pessimism about the stimulus package, we continue to believe many small businesses will benefit from the plan. We also expect the effect to be more widely felt starting in the fall. My recent article, "What the Stimulus Package Means for Small Business," covers this in more detail.

Steve King is a partner at Emergent Research , where he leads an ongoing research project to identify, analyze , and forecast the global trends and shifts affect ing small business. He blogs at www.smallbizlabs.com.

Tags:: small business,; economic stimulus

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Once again the trickle down concept (this time from Democrats) shows its failure to the people. Trowelling huge amounts of our and our children's money into the top of the system does not reach the critical economic body of small business. Why do intelligent politicians continue to think this is a viable solution? It's sad, disappointing, and disgusting.

Hunter Stanland of CA 10:37PM February 19, 2010

Time to check in again and see if Mr. King's assertions have panned out or if mine are closer to reality than his.
In May I claimed true small businesses under 20 employees were not going to see anything directly and almost nothing indirectly from the stimulus. Mr. King and Small Biz Labs claimed that "a lot of small businesses would benefit."
First, the ARC loan - the only loan created in the last 50 years by the SBA that is truly targeted at small businesses (under 20 employees). The $255 million program constituted 1/100th of one percent of the $1.5 trillion doled out in Oct 2008 and Feb. 2009 - the rest went DIRECTLY to big banks, big business, and big government (states, etc.)
Of that miniscule $255 million aimed at the 56% of GDP and 65% of job creation created by small business, $131 still has not been loaned ten months later!
Of the $124 million that has been loaned, almost all of it has gone to extremely healthy businesses with perfect credit who are laughing all the way from the bank. Karen Mills, head of the SBA, claimed ten months ago that the ARC loan would provide "immediate relief" for "distressed but viable" small businesses. Didn't happen.
It gets worse. Not only is the direct aid to small business 1/100 of one percent of the pie, not only has only half of the crumb been doled out, and not only has the half of a crumb gone to businesses that largely don't need it, the politicians are now hell-bent on shutting down that program immediately and cutting off everyone involved.
And what of the trickle down effect that SBL claimed as the "logic behind our forecast"?. We went from 8% to 10.2% unemployment - that's the only hard statistic we have as to how the stimulus has directly affected small business (small business accounts for 65-70% of all job creation - if job losses are going up, small businesses are not getting the "stimulus" they need to create jobs.)
SBL will likely respond with more anecdotal and theoretical "logic", but the statistics say something quite different. And if we randomly acquired 1,000 anecdotal stories of how the stimulus has affected small business, the negative stories would be very close to 1,000.

Chuck Blakeman of CO 12:36PM November 21, 2009

Chuck:
Please try to get your facts at least close to straight:
1. I never said very small businesses would not benefit from the stimulus package. What I said was there are programs within the stimulus package (mass transit, for example) where it is unlikely very small businesses will directly benefit.
Other programs - both spending programs and tax changes - will directly benefit very small businesses. For example, my own very small business (2 employees) is benefitting from the tax changes.
2. The broadly accepted defintion of a small business is less than 500 employees. There is no one correct defintion and there will always be disagreements on how to define small business. You think 500 is way too big, others feel companies up to 1000 or 2000 employees should be classified as small. As researchers we have to choose and choosing the commonly accepted defintion is the obvious choice.
3. I never said only 4% of small businesses will benefit nor do I have any idea where you got this.
4. Intuit had no involvement in this study.
It clear you don't like the stimulus package. Fine. But please don't misrepresent my position or the facts.
Also, I continue to urge you to read the actual study and get a better grasp on the legislation.
Steve

Steve of CA 12:59PM July 23, 2009

Small Businesses Not Seeing Impact of Stimulus Package

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