Op-Ed: Goldman Sachs CEO David Solomon What Does Main Street and the Economy Need From Congress?

The US economy is going through the most difficult phase in my 40-year career. Inflation, labor shortages, supply chain disruptions—all of which are making big business tough and small businesses even harder.

And so this week, at Goldman Sachs’ 10,000 Small Business Summit in Washington, DC, I’ll be joining leaders from across the country for a call to action. The pandemic posed new challenges for small businesses, but the federal programs they rely on are not well equipped to help. It’s time to upgrade those programs so that small businesses have the tools they need to navigate the upheaval ahead.

And instead of passing these reforms one by one, Congress should be putting them together in a single legislative package: the first re-authorization of the Small Business Administration (SBA) in more than 20 years.

Now, it’s true that the early days of the pandemic helped small businesses a lot. Just last year Congress passed the American Rescue Plan, which provided grants and loans to millions of small businesses to keep their doors open and their employees on their payrolls.

But now that the economy is heating up, the recovery is in jeopardy. According to a recent survey of 1,533 graduates of Goldman Sachs’ vocational education program, 10,000 small businesses93 percent are concerned that the United States will enter a recession within the next year. 89 percent of small business owners say economic trends such as inflation, supply chain issues and workforce challenges are negatively impacting their business. Eighty percent say inflationary pressures have increased over the past three months and 75 percent say inflation is hurting the financial health of their businesses.

We already have a wide range of federal programs designed to help, but they need to be improved to address the challenges ahead. Congress can extend its hand by taking action on the following four issues.

First, small businesses are struggling to find and keep good workers. Lawmakers should consider new programs to help small business compete with big business in order to retain and develop talent. For example, Congress can increase paid vacation programs and create new tax credits to support the hiring and retention efforts of small businesses.

Second, the pandemic not only increased the need for capital, but also clearly exposed credit markets, especially for black-owned small businesses. According to survey data from Goldman Sachs, 48 ​​percent of black small business owners say they expect to take out a loan or loan for their business in 2022 – yet only 19% lack their businesses’ ability to access capital. Very confident”. And so Congress must strengthen the ability of community development financial institutions (CDFIs) to provide more loans to small businesses in under-served communities.

Third, child care is one of the most significant economic vulnerabilities exposed by the pandemic. According to survey data from Goldman Sachs, 80 percent of small business owners support Congress to increase access to affordable child care. Congress can help by expanding and expanding programs designed to reduce the cost of child care and increase access to what is known as the “childcare desert” across the country.

Fourth, the barriers to entry for small businesses looking to win contracts with the federal government are very high. From 2010 to 2019, the number of small businesses providing general products and services to the federal government decreased by 38 percent. Even more worrying, the number of new small-businesses in the federal buying market declined by 79 percent.

The federal government already has targets for part of the contracts awarded to a variety of small businesses, including those owned by women and located in historically under-utilized business areas (HUBZones). Yet the women-owned small business federal contracting target has been met only twice since it was established in 1994 and the HubZone target has never been met.

A modernized SBA can help fix things. Congress must level the playing field by streamlining processes and expanding the scope of procurement opportunities, especially for minority and women-owned small businesses.

All these reforms will go a long way towards making small businesses as flexible and resilient as ever. Despite the challenges they face, 65% of small business owners remain optimistic about the financial trajectory of their business this year. With a modern SBA and other efforts from policymakers, Congress can help ensure that small businesses remain pillars of our economy and local communities.

The road ahead will be a bumpy one, no doubt about it, but if there’s one thing I know, it’s that you should never bet against America. It is our entrepreneurial spirit that drives the world’s most resilient economy. And if the public and private sectors work together, we can ensure that small business owners have the tools they need to keep the economy moving in the right direction.

,by David Solomon, CEO of Goldman Sachs