In the United States, being an entrepreneur is like a religion. That’s why President Joe Biden’s administration is making a big deal out of the fact that more new businesses are being started lately, right before the election in November.
As of Wednesday, data showed that small business owners in the U.S. have officially applied to start 18.1 million new businesses since Biden took office in January 2021. The Census Bureau has been keeping track of this number since 2004 and that is the highest number for any similar time period.
Isabel Guzman, who runs the Small Business Administration, told MarketWatch in an exclusive interview that the pandemic and the work the SBA did to help American mom-and-pop businesses stay afloat may have had something to do with the rise in new businesses.
He said, “Small businesses were too big to fail.” “We really cared about our small businesses in neighbourhoods across the country and worked hard to save them. I think that has made more people want to start their own businesses.”
Guzman also said that Biden’s American Rescue Plan, the 2021 bipartisan infrastructure package, and the 2022 CHIPS and Science Act brought in new investment waves that helped entrepreneurs get new federal contracts and find ways to get their products to customers.
“Small businesses are looking for ways to make more money,” she said. “People are buying things, which is great for small businesses because it means more money for them to spend.”
Some people don’t want to blame Biden for the small business boom. Chris Edwards, an economist at the libertarian Cato Institute, told MarketWatch that the data shows that changes in society after the COVID-19 epidemic and advances in technology are more likely to have caused it.
Even though Obama and Trump had very different economic policies, there was no break in the trend of small business growth, he said. He also said that the post-COVID surge was so big that “it’s hard to believe” that Biden policies are the main cause.
A statement from Trump campaign National Press Secretary Karoline Leavitt to MarketWatch said, “President Trump is focused on rebuilding an economy where hardworking Americans can once again live the American Dream. He understands that business leaders have an important role to play in that effort.”
“President Trump’s America First economic plan will bring tax cuts for the middle class, record-setting cuts to regulations, fair trade, plenty of energy, low inflation, higher wages, and the return of the rule of law in the United States,” she said. “Both business leaders and busy families can’t wait for these sensible policies to come back because they will help everyone.”
The COVID revolution
People who study economics, make policy, and own small businesses all agree that the COVID-19 pandemic was a big reason for the small business boom.
Kyle Davis, a 38-year-old real estate lawyer from Dallas, told MarketWatch that the shock of the pandemic made her think about whether she likes her job enough to do it for the rest of her life.
Davis opened the Wesley Wellness Club in October of last year. It is a fitness centre and spa for parents and busy professionals who want to take care of all their health needs in one place.
“During COVID, I think a lot of people, including myself, went through something that made them want to take charge of their lives and do the things they’ve always dreamed of doing,” she said.
Davis used the Dallas Metropolitan Small Business Development Centre to help her find money for her business. This centre is part of a network of about 1,000 nonprofits that work with the SBA to help people who want to start their own businesses.
Davis was able to get an SBA-backed loan through the group’s help, which was essential for starting her business.
Keith Hall, president of the National Association for the Self-Employed, agreed that the pandemic was a big reason why so many people are starting their own businesses these days.
He said, “If the pandemic had any good effects, it was making people realise how much they can do from home.”
And Hall said that small business owners often work long hours. But if they can do their work from anywhere, they can often spend more time with their families than if they had a job in an office with a long commute.
Silicon Valley’s helping hand
People who study economics, make policy, and own small businesses all agree that the COVID-19 pandemic was a big reason for the small business boom.
Kyle Davis, a 38-year-old real estate lawyer from Dallas, told MarketWatch that the shock of the pandemic made her think about whether she likes her job enough to do it for the rest of her life.
Davis opened the Wesley Wellness Club in October of last year. It is a fitness centre and spa for parents and busy professionals who want to take care of all their health needs in one place.
“During COVID, I think a lot of people, including myself, went through something that made them want to take charge of their lives and do the things they’ve always dreamed of doing,” she said.
Davis used the Dallas Metropolitan Small Business Development Centre to help her find money for her business. This centre is part of a network of about 1,000 nonprofits that work with the SBA to help people who want to start their own businesses.
Davis was able to get an SBA-backed loan through the group’s help, which was essential for starting her business.
Keith Hall, president of the National Association for the Self-Employed, agreed that the pandemic was a big reason why so many people are starting their own businesses these days.
He said, “If the pandemic had any good effects, it was making people realise how much they can do from home.”
And Hall said that small business owners often work long hours. But if they can do their work from anywhere, they can often spend more time with their families than if they had a job in an office with a long commute.
A two-party embrace
People on both sides of the aisle are trying hard to claim credit for the small business boom. This shows that small business owners generally have connections in high places.
Hall of the NASE said, “The voice of small business today is more powerful than it has ever been in my lifetime.” “Everyone, on both sides of the aisle, agrees that small business growth is the most important thing for the economy of this country.”
The recent tax cuts, which included big tax breaks for small businesses set up as pass-through entities, and the huge role the SBA played in both the Trump and Biden administrations’ efforts to protect the economy from the effects of the pandemic show that this is how people feel.
Guzman said, “The SBA was often talked about as the best-kept secret” in the U.S. government. He also said that the agency’s role in running the Paycheck Protection Programme and “the chance to really serve America’s small businesses at scale” were what drew them to it.
The PPP started in the last year of Trump’s presidency. It gave businesses low-interest, forgiven loans so they could keep paying their workers when pandemic restrictions forced many of them to shut down.
As usual, the SBA handled these loans through partner banks. According to the Bipartisan Policy Centre, the agency backed up $800 billion in loans between April and May 2021, which is about 40 times its normal rate.
Guzman said that the SBA has continued to grow the number of loans it makes and the amount of money it lends. This is partly because of the attention the PPP gave the SBA.
MarketWatch talked to Juliette Buell, owner of Live Free Refillery, a zero-waste grocery store in New Hampshire. She said that she wished that local small-business development centres and SBA programmes like SCORE got more attention. SCORE connects would-be business owners with mentors who can help them write business plans and with banks that offer SBA-backed loans.
“As a small business owner, I couldn’t afford a chief financial officer, so I relied on my mentor and that free help a lot,” she said.
When Buell moved from Pennsylvania to New Hampshire to be closer to her family, it was hard for her to find work in her field of horticulture. There were many jobs she had that didn’t let her use her master’s degree, like waitressing and social work.
“My self-esteem dropped a lot because I have all this education and experience, but I’m working in an entry-level job with people who treat me like I’m fresh out of school,” she said.
Entrepreneurship is a great way to get out of a job that you don’t like, even though her store isn’t making money yet and she’s looking for outside investors. After failing to get money from other sources, the SBA loan “was the only way I could get this off the ground.”
She talked about her time as a Peace Corps volunteer in Africa and said, “We have so many chances in this country.” “I’ve always thought about how lucky we are, and I couldn’t miss the chance to do something great.”
