State of Union 2011: Small Businesses Hope Obama Will Address Their Concerns

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When President Obama presents his State of the Union speech this evening, small business leaders are hoping he will make good on promises they say were broken last year.

The costs and barriers to doing business are too high and most measures to address these issues have failed, experts and small business leaders say.

According to a new survey, more than 80 percent of small business owners said business stimulus measures last year unfairly benefited public companies.

The survey, conducted by Pepperdine University, also found that 62.5 percent of large private businesses feel publicly traded companies received an unfair allocation of resources.

John Paglia, finance professor and senior researcher with Pepperdine Private Capital Markets Project, said the disapproval for the stimulus is at an "all-time high" because enough time has passed since the measures were put forward to see their results.

"The thing I'd like to impress upon President Obama and Congress is that there is not a one-size fits all solution with regard to economic growth," Paglia said. "Interestingly, larger businesses are more confident (71 percent) than their smaller counterparts (64 percent) about the prospects for U.S. economic growth in 2011 versus one year ago, presumably because capital access is not a dominant concern for them."

The stimulus measures include the Federal Reserve's purchase of treasuries and mortgage-backed securities to reduce interest rates and improve market liquidity, tax incentives, government grants and lending programs, such as those from the Small Business Administration.

Paglia said the survey results show that small businesses are hoping the president will address the difficulty in accessing capital. The survey respondents represented 1,224 privately-held businesses, 45 percent of whom had revenues under $5 million. The responses were collected in early January.

Paglia said that historically, small businesses have been more optimistic about economic growth opportunities.

"It appears the lack of capital availability has soured their outlooks," Paglia said.

In the survey, small businesses said "increased access to capital" would contribute to the most job growth this year.

Despite having a growing approval rating, the president is expected to tread carefully in his speech before negotiations about overhauling the tax code, job creation and the deficit begin.

Bill Rys, tax counsel for the National Federation of Independent Businesses (NFIB), said he was not surprised by the level of discontent from small businesses.

"I think most of what we've seen from our membership, which is exclusively small businesses, is a lot of measures passed that did not reach small business owners," Rys said.

Rys said he hopes Congress and the president will begin to decrease the burdens and cost of doing business.

"The biggest problem policy-wise is we've seen more about taxes and regulation," said Rys, referring to business tax reporting and healthcare and environmental regulations. "Those are two of the bigger policy problems looking ahead."

The NFIB is pushing for Congress to repeal a requirement in the healthcare legislation that the business owner report every service from both unincorporated and incorporated companies on 1099 tax forms, Rys said.

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