- Report Published -
|Ways to Assist Small Business in Virginia|
|SJR 128 (Regular Session, 1994)|
|Small business is often described as the engine that drives the U.S. economy. Indeed, between 1977 and 1990, small businesses created the largest percentage of new jobs, according to a national survey. Because their size allows flexibility and dynamic decision-making, small companies are agents of economic change -- they serve as primary sources of innovation and have the ability to respond rapidly to changing conditions in the marketplace.|
Small businesses also play a critical role in Virginia's economic well-being. Firms with the very fewest employees (less than five) account for nearly 60 percent of the Commonwealth's businesses. About 98 percent of our companies have less than 100 employees, and together, these businesses employ nearly one-half of our private sector workforce.
Recognizing the importance of small business, the General Assembly established a Joint Subcommittee to Study Ways to Assist Small Business in Virginia. Continued in 1997 by Senate Joint Resolution No. 128, the joint subcommittee heard testimony over its two-year existence on many issues and problems confronting small businesses.
Small firms tend to have needs that exceed existing resources, including the need for capital, planning, technology and marketing. Small companies are also facing newer challenges -- perhaps disproportionately to their larger counterparts. Amount them: the availability and affordability of health care, job shortages due to defense downsizing, and increasing government regulation. Another obstacle for the small business community to overcome is its fragmented constituency. Because the number of small firms is large and the nature of these companies diverse, small businesses have difficulty delivering a focused message to policy makers and other government officials.
Acknowledging that the Commonwealth's economic vitality relies largely upon fostering the creation and growth of small businesses, the joint subcommittee focused its work on examining how to provide the small business community with additional resources and support. The joint subcommittee found that small businesses lack a forum within the legislative to express their concerns and assist in the development of public policy. The panel determined that the state's small business assistance programs are critically important and successful, yet found they are hindered by inadequate resources. It also learned that some small business entrepreneurs--especially low-income citizens, women and minorities--require particular kinds of support.
To provide greater attention to small business issues and concerns, the joint subcommittee recommends that legislation be enacted establishing a permanent legislative commission on small business. A small and focused body consisting of legislative members and gubernatorial appointees, the commission will evaluate the impact of existing statutes and proposed legislation affecting small businesses; assess Virginia's small business assistance programs and examine ways to enhance their effectiveness; and provide small business owners and advocates a forum in which to address their concerns.
Recognizing that increased funding for the state's small business assistance programs is needed to meet the growing demand and need for services, the Joint Subcommittee recommends that the 1995 Session of the General Assembly appropriate an additional $750,000 for the Virginia Small Business Development Center (VSBCD) and appropriate $500,000 for the Virginia Small Business Financing Authority (VSBFA) in the second year of the current biennium.
The VSBDC and VSBFA are the Commonwealth's primary small business assistance programs. Established in the late 1980's and funded at the federal, state and local levels, the VSBDC networks' 21 centers provide comprehensive technical assistance to small businesses throughout the Commonwealth. Despite its documented success and growth, the program's original annual appropriation of $250,000 from the General Assembly has not been adjusted. The VSBFA was created by the General Assembly in 1984 as the state's principal program to facilitate financing options for the small business community. Its loan guaranty program is designed to reduce the risk to banks in making loans and, thereby, increase the availability of short-term capital for small businesses. This program and an array of other creative ventures have filed gaps in the financing market for many small businesses. However, the VSBFA's one-time appropriation of $1 million in 1984 from the Genera Assembly has been leveraged to capacity.
Finally, the panel also recommends that the General Assembly adopt a resolution endorsing microenterprise initiatives for Virginia's low-income citizens. A microenterprise loan program would provide very small loans and mentoring to aspiring entrepreneurs who have not previously borrowed money. The resolution recognizes that access to credit and business skills training are critical factors in creating economic opportunity--particularly for low-income citizens of the Commonwealth--and expresses support for the microenterprise concept.
The importance of viable and successful new, growing and established small businesses to the Commonwealth's economy cannot be overstated. The Joint Subcommittee believes implementation of its recommendations will greatly assist the entrepreneurial efforts of our citizens and strengthen Virginia's competitive position in relation to other states, thereby creating and sustaining jobs for Virginians.