Economy Will Revive with Help from Entrepreneurs
Small Business Administration’s Office of Advocacy recently released its annual report The Small Business Economy. In an accompanying letter to the President, the report affirms that “the economy will revive, with help from America’s entrepreneurs.”
This new edition documents the effects of the 2008 recession on small businesses. Although average unincorporated self-employment fell from 10.4 million in 2007 to 10.1 million, incorporated self-employment remained steady at 5.8 million on average over the 2007-2008 period.
The entire second chapter examines the credit market for small firms as the crisis deepened last year. For example, total business borrowing decreased from $1.228 trillion in 2007 to $507 billion in 2008, as entrepreneurs faced widening interest rate spreads and tightening terms of lending, especially in the second half of 2008.
The report offers sections on other challenges for small businesses, such as health care, procurement regulation and globalization, and the ways entrepreneurs have confronted these challenges.
The Small Business Economy also documents the contributions of small firms to job creation (e.g., data showing that the smallest firms often create the most jobs in recessionary times) and innovation (e.g., small businesses are more likely to develop emerging technologies than their larger counterparts). The report also mentions of the contributions of immigrant entrepreneurs in these areas (e.g., 25 percent of new engineering and technology companies were started by immigrants).
If the past is an indication, the report suggests, small businesses will lead the economic recovery.
A summary of the report is also available.