Op-ed: Goldman Sachs CEO David Solomon on what Primary Street and the economy need from Congress

The US economy goes through one of the difficult periods I even have seen in my 40-year profession. Inflation, labor shortages, supply chain disruptions all hit big businesses hard and small businesses even harder.

And so this week, on the Goldman Sachs 10,000 Small Business Summit in Washington, DC, I’ll join leaders across the country in calling for motion. The pandemic has created a ton of recent challenges for small businesses, however the federal programs they depend on aren’t well equipped to assist. Now is the time to update these programs in order that small businesses have the tools they should take care of the turmoil ahead.

And moderately than passing these reforms one after the other, Congress should mix them into one legislative package: the primary reauthorization of the Small Business Administration (SBA) in greater than 20 years.

It’s true that small businesses received a whole lot of assist in the early days of the pandemic. Only last yr did Congress pass the American Rescue Plan, which provided grants and loans to thousands and thousands of small businesses to maintain their doors open and keep staff on the payroll.

But now that the economy is hot, recovery is in jeopardy. According to a recent survey of 1,533 graduates of the Goldman Sachs business education program, 10,000 small businesses93 percent fear the US will enter a recession next yr. Eighty-nine percent of small business owners say economic trends resembling inflation, supply chain issues, and workforce challenges are having a negative impact on their business. Eighty percent say inflationary pressures have increased within the last three months, and 75 percent say inflation is hurting the financial health of their businesses.

We have already got a wide selection of federal programs designed to assist, but they must be reformed to fulfill the challenges ahead. Congress might help by taking motion on the next 4 issues.

First, small businesses struggle to seek out and retain good employees. Lawmakers should consider recent programs to assist small businesses compete with large firms to retain and develop talent. For example, Congress could refine paid vacation programs and create recent tax credits to support small businesses’ efforts to rent and retain staff.

Second, the pandemic has not only increased the necessity for capital, but has also clearly exposed the gaps in credit markets, especially for small black-owned businesses. According to Goldman Sachs survey data, 48 percent of black small business owners say they expect to take out a loan or line of credit for his or her business in 2022. Therefore, Congress should strengthen the flexibility of Community Development Financial Institutions (CDFIs) to supply more credit to small businesses in underserved communities.

Third, childcare is one of the necessary economic vulnerabilities highlighted by the pandemic. According to a Goldman Sachs survey, 80 percent of small business owners support Congress in increasing access to reasonably priced childcare. Congress could help by expanding and improving programs to scale back childcare costs and increase access to so-called “desert childcare facilities” across the country.

Fourth, the barriers to entry for small businesses searching for federal government contracts are too high. From 2010 to 2019, the variety of small businesses providing joint services and products to the federal government decreased by 38 percent. Even more worrying is the proven fact that the number of recent small businesses entering the federal procurement market has fallen by 79 percent.

The federal government already has targets for the share of contracts awarded to several types of small businesses, including those owned by women and situated in historically underutilized business zones (HUBZones). However, the goal of federal female-owned small business contracts has only been met twice since its inception in 1994, and the HUBZone goal has never been met.

A modernized SBA might help rectify the situation. Congress should level the playing field by streamlining processes and expanding the range of buying opportunities, especially for small, minority-owned and women-owned businesses.

All of those reforms would go a good distance towards making small businesses as resilient and resilient as ever. Despite the challenges they face, 65% of small business owners remain optimistic in regards to the financial trajectory of their business this yr. Through a modernized SBA and other efforts by policy makers, Congress might help be certain that small businesses remain pillars of our economy and native communities.

The path ahead will undoubtedly be a bumpy one, but when there’s one thing I do know, it’s that you must never bet against America. Our entrepreneurial spirit drives the world’s most resilient economy. And if the private and non-private sectors work together, we can provide small business owners the tools they should keep the economy on track.

—David Solomon, CEO of Goldman Sachs