The American people are currently witnessing long overdue bipartisan support for the engine that drives our nation’s economy, namely small business. The Trump administration in conjunction with bipartisan support from a long divided Congressional Legislature, is currently providing $50,000,000 in specifically ear marked funds to the Small Business Administration (SBA) during this extreme national and world-wide health crisis impacting our nation and worlds economy. This assistance is intended to provide aid to business owners in distress because of the impacts of the Covid-19 pandemic.
The SBA is one of the few federal programs that consistently generates profits to the taxpayers by being self-supporting while creating millions of new jobs and maintaining millions of others.
Small businesses are the lifeblood of the U.S. economy: they create two-thirds of net new jobs and drive U.S. innovation and competitiveness. A new report shows that they account for 47 percent of U.S. economic activity.
U.S. gross domestic product (GDP) is the market value of the goods and services produced by labor and property located in the United States. Across the 16 years from 2002 to 2018, the amount of small business GDP has grown by about 25 percent in real terms, or 1.9 percent annually.
“This useful benchmark shows us that small businesses continue to be big contributors to the U.S. economy,” Acting Chief Counsel for Advocacy Major L. Clark said. “While their contribution has grown at a slower rate than that of large businesses, small businesses continue to be at the forefront of driving innovation, jobs and economic growth.”
Nominal small business GDP measured $7.4 trillion in 2018, the most recent year for which small business GDP data are available. The three largest small business sectors contributing to it were (1) the real estate and rental and leasing industry; (2) wholesale and retail trade; and (3) the manufacturing and mining sector.
The 2008 recession played a small part in the reducing the small business share of total GDP, but structural changes may have played a part as well. These factors include long run declines in business dynamism, the rise of big-box stores, the changing regulatory environment and the critical role of credit availability.
**Tom Stadler-Finance Director/SBA Loan Specialist/Licensed Business Advisor/CMSBB
