Let’s Reimagine Main Street: 5 Ways The Biden Administration Can Lift America’s Job Creators

Now it is time for politics to take a back seat and for the real work to begin. President-elect Biden made “Build Back Better” the mantra of his campaign. Since winning, he named the economy as one of his top priorities for the transition team. With dueling crises and one of the most troubled economies ever handed to a new president, serious work awaits us all.

One of the first, and most deeply challenging, tasks for the new Biden-Harris team will be rebuilding local Main Street economies all across America that have been hit hard by the Covid-19 pandemic—some 400,000 small businesses have already been lost, and counting. In fact, yesterday during remarks on the economy, President-elect Biden said, “We need to support small businesses and entrepreneurs that form the backbone of our communities but are teetering on the edge.” The impact has been particularly devastating in communities of color leading to greater challenges for Black, Hispanic, and Asian American business owners.

Small businesses are the engines that drive our economy, employing 47% of the U.S. workforce and creating two-thirds of new jobs. Likewise, they need to be the cornerstone of our economic recovery. A strong small business ecosystem is also an ideal target for reaching and rebuilding far beyond America’s traditional financial centers.

Here are five ways the incoming Administration can sustain Main Street economies through this crisis and lift up small businesses: 

1. Focus on Equity: We must do more to make sure access to government funds is equitable. Once the Covid-19 pandemic began, the inability to obtain Paycheck Protection Program (PPP) funding contributed to a disparity in small business closures. Between February and May of this year, 41% of Black-owned, 36% of Latin(x)-owned, 36% of immigrant-owned, and 25% of women-owned businesses closed compared to the national average of 22%. Yet even before Covid-19, minority- and women-owned businesses generally experienced greater struggles than White- and male-owned businesses, especially in accessing capital. The Kauffman Foundation effort “Start Us Up: America’s New Business Plan” reports, “Entrepreneurship has remained effectively flat for 20 years, in part because women, people of color, and rural residents lack equal access to the tools needed to start new businesses.” The incoming Administration already recognizes that a broad, diverse economy is more stable and resilient. For the new Administration to be fully effective in supporting minority and women business owners, it should take steps like conducting greater outreach to minority communities and also more bold measures like increasing funding for CDFIs and pushing for greater loan forgiveness in the PPP.

2. Make Contracting More Inclusive: The U.S. government is the largest purchaser of goods and services in the world. Federal contracting can play a larger role in the growth of minority- and women-owned small businesses, as well as small businesses in low-income areas. Unfortunately, not all eligible businesses benefit from this because of overly burdensome regulations. As authors of the recent report, “Big Ideas for Small Business,” noted, “The federal government can do more, including dedicating a higher overall percentage of procurement to small business generally and to each of the disadvantaged small business groups, expanding outreach efforts to bring more small businesses into the federal contracting marketplace, and simplifying the process for certification, bidding, and winning.” Even more so, President-elect Biden can use his leadership position to encourage local and state governments, anchor institutions, including hospitals and educational institutions, and private corporations to make stronger commitments to buying from small and underrepresented business owners. 

3. Reimagine the Ways we Move Capital: During the campaign, the Biden team made a commitment to overhaul the Paycheck Protection Program with a focus on grants versus loans. This is a critical step, but also speaks to why we may need to rethink how we move capital to small businesses. While Small Business Administration (SBA) loans are intended to support small businesses, they have not evolved as fast as our technology and our rapidly changing economy. SBA loans do not cover gig economy workers and many small employers, which represents the vast majority of small businesses. The Covid-19 pandemic demonstrated how easily these types of businesses can slip through the cracks. What makes this more tragic is the fact that the funding they need is often much less than the average SBA loan. The incoming Administration should consider assessing how the SBA could support these business owners.

Fortunately, it doesn’t have to start from scratch. There are some successes that can be replicated in how FinTech and CDFIs supported these types of businesses through PPP. Investing in new tools and programs to reflect the diversity and breadth of small business owners, including incentives for product development and credit enhancements for pools of small-dollar loans, will only net positive outcomes.

4. Get a Clearer Picture of Small Businesses and the People who Work for Them: We can’t solve problems if we don’t have the data to understand the issues. Small businesses are the financial livelihood of nearly 100 million Americans as business owners and the people who work for them. In order to craft policies and programs that support small businesses in the United States and the financial lives they inform (e.g., owners, employees, contractors, and the communities they serve), the government must generate timely, comprehensive, and granular data to yield insights into the size and structure of the small business sector, along with a deep understanding of barriers to entrepreneurship, business formation, capital access, and job creation. Data collected should include the race, ethnicity, and gender of the business owner. This was discussed at an event recently moderated by Maneet Ahuja, Senior Editor at Forbes with several small business experts discussing Small Business Policy Priorities In the Wake of the 2020 Election.

Gaps in this data contribute to disparate impact, continued underinvestment, and attempted solutions that do not meet the actual needs of small business owners. My organization is creating a Main Street Equity Barometer, purposefully constructed panels of business owners and workers designed to generate data driven insights into representative populations across the United States. The Biden Administration can accomplish this same goal 10-fold by broadening federal agencies’ mandate and giving them the resources to generate valuable data to advance and support all small businesses.

5. Name a Small Business Recovery Czar: The SBA and its leader — the SBA Administrator — may or may not be enough for this moment. In addition to ensuring the SBA Administrator has cabinet-level status as other Presidents have done, we need someone who can quarterback small business recovery across the government. Small business shows up in many places in the federal government, including the SBA, Treasury, Labor, Commerce, and Health and Human Services Departments, and Internal Revenue Service (IRS), to name a few. Often, the approach to lifting America’s small business community is to work agency by agency. This leads to confusion, inefficiency, and flawed execution of many well-intended and badly-needed programs. We saw this earlier this year when the Treasury Department created the Paycheck Protection Program and directed SBA to implement it. Our next Administration must invest the time and political capital necessary to build a stronger focus on small businesses with the real resources, personnel, and expertise that is often given to our constituencies.

As we approach the painful threshold of a half-million American small businesses lost in this pandemic, and as our leaders grapple with the harsh reality that we still may be social distancing for longer than we had hoped, the task of rebuilding must include a rapid and extensive repair to the foundation of federal support for Main Street businesses, both at SBA, across the federal government, and in partnership with the private sector.

The President-elect has committed to getting Covid-19 under control and working to rebuild our economy back better. While this pandemic has laid bare some weakness of our institutions, the entrepreneur in me says opportunity has arrived. In fact, these ideas are just a starting place. Entrepreneurs won’t let America down, but they need a partner in the federal government. Our economy and small businesses have emerged stronger from past crises because we adjusted and made bold steps to meet the challenge head on. This entrepreneurial spirit is still our bedrock and can lead us to the other side of this dilemma with a better, more equitable economy. Let’s rise up to meet this moment, and together, Reimagine Main Street.

This piece originally appeared in Forbes on November 17, 2020. You can view it online here.