By: Quantesa Roberts and Edward Wixler
August 3, 2010
What does a High School Musicalstar, an economist, and the owners of Georgetown Cupcake have in common? They were all witnesses at a Senate Committee on Small Business and Entrepreneurship discussion on the obstacles facing young entrepreneurs and the growth of small business.
The hearing was chaired by Sen. Mary Landrieu (D-La.) and included testimony by Monique Coleman of High School Musicaland founder of Gimme MO', an online talk show for teenagers, Erica Williams, Deputy Director of Progress 2050 of the Center for American Progress; Katherine Kallinis and Sophie LaMontagne, owners of Georgetown Cupcake; and Tim Kane, Senior Fellow of the Kaufman Foundation, among others.
The hearing was convened out of a concern for the low rates of entrepreneurship within the 20 to 30-year-old demographic. The witnesses examined why this may be the case and possible solutions. Several themes emerged from the testimony: lack of access to capital, high levels of student debt, credit issues, low levels of financial literacy among young business owners, and a lack of business education below the collegiate level.
The hearing highlighted mounting frustration about the lack of access to loans for those who want to start small businesses. Rachel Weeks, founder of School House, an ethical fashion company that provides collegiate apparel to universities, testified about the many obstacles to securing a loan for her company. This difficulty came in spite of the hundreds of thousands of dollars in purchase orders from universities she had secured.
Landrieu found it unacceptable that people with a clearly profitable business, like School House or Georgetown Cupcake, would be denied loans from banks. She went so far as to say that, "[the Senate] can make their [banks'] lives miserable" if they continue to deny loans to new small businesses.
Landrieu's proposed solution is the Small Business Jobs and Credit Actof 2010, currently being presented for debate on the Senate floor with a similar version already passed in the House,that would send funding to small community banks to the sum of 30 billion dollars to help entrepreneurs access capital. a recent Kaufman Institute studyfound that net growth in jobs is spurred primarily through start-up firms in their first year. Given the importance of new businesses in stimulating economic growth, hopefully the Senate will follow the example of the House and pass this bill quickly.