Dashboard: The Big Issues Looming for Small Businesses

[Music] welcome to another 21 hats dashboard brought to you by our sponsor the great game of business I'm Lauren Feldman I'm here with John ainm who is founder and CEO of small business majority and advocacy group for businesses and entrepreneurs welcome back John good to be here Lauren great to have you uh John there's a lot going on right now in terms of policy issues and economic issues that are likely to have an impact on business owners I'm eager to hear what you and your organization are thinking about some of them let's start with the uh labor Department's proposed new rule for uh overtime I'm hearing concerns from business owners that it's going to cost them a substantial amount of money because what it does is it it raises the salary threshold for exempt workers from I guess about $35,000 to about $55,000 do you have any thoughts about uh the impact of this well uh you're absolutely right this is definitely going to impact small businesses uh we need to realize that uh this level hasn't been um updated in a number of years they have not put indexing well it was actually by the Obama Administration but then it got blocked right well it got blocked and then there then they did it did get raised a little bit they I think proposed about 48,000 and then it had been in the 20s and then the Trump Administration um got it down to 35 um so uh it hasn't so it first of all there should be indexing uh for inflation in there in some form so we don't have to do this every so many years yeah that is actually part of the new of the new rule is that there would be indexing every three years but look this is going to have an impact at the same um and and definitely the the jump from 35 to 55 is big and we really shouldn't be making any of these changes with that big a jump you know that said there's probably a need to raise the amount uh we are still looking at the rule looking at all all of its factors and uh we're going to be uh we're talking to a lot of small business owners doing a little research as well and we will be um commenting on it I mean the the big focus of this is on salaried employees uh who are being expected to work more than um than 40 hours a week and not getting properly compensated for it uh you know I'm of two minds of this you know if you hire someone right out of college fairly Junior making less than the $55,000 and they're a real go-getter and they want to work extra and they want to stay late even if you tell them hey you know go home go home no I mean because we've all been that way in our in our early lives um you know I I hate to be in a position to discourage that at the same time if you're working in a store and you're it's a salary job and your expect expectations is 40 hours a week and there like well got to do inventory or go clean the floor or whatever um and you know that person should be properly compensated for the extra time and those are folks who are making um more than 35,000 a year um and they they're the ones that are that would would be affected by this so um the other thing I want to say say is that um I believe they have a fairly short um timeline after this passes to implement it and we would absolutely we going to be pushing for whatever the number ends up being we're going to be pushing for a longer ramp up time for small business owners to get adjusted so um I don't know exactly where we're going to end up uh but uh this is definitely having an impact on small business no question about it so it sounds like they're could possibly you might think be a uh a a way to ease this in a little more slowly and then once it's in if the rule goes uh as you describe it with the uh adjustment every 3 years there would never again be a a a huge leap like this um that seems like a fairly reasonable compromise position well I mean the that that makes all the sense in the world that we don't have don't have to come back to the table that we don't have a situation where you're jumping 20,000 uh in one Leap uh so uh that that makes all the sense the world but uh the big question is going to be where does the number end up and um you know I I think I as I said I don't know where we're going to end up uh there's we certainly talk to plenty of small business owners who understand uh that this is an issue and this the number may need to be raised so uh I think again the problem is because they didn't do an indexing we're facing a a pretty dramatic leap all right next issue uh I get the emails and newsletters you send out I know you're concerned about a potential crisis is when uh Government funding for child care runs out at the end of the month uh do you expect this to be a a difficult situation for businesses as well as for parents in our conversations with business owners this issue comes up constantly constantly and um the we're facing this Cliff this crisis on the pandemic level funds that supported uh Child Care um during the pandemic are running out at the end of the month and uh we're looking at a situation where 3 million kids are going to get knocked out of childcare um 230,000 childcare workers and 70,000 Child Care programs could be in Jeopardy um it there's this is an essential issue for two reasons for small business one small business owners and their employees cannot function without access to affordable quality Child Care we've done some research 36% of small business owners with children report that not having access to childcare was initially a barrier in starting their business and more than three in 10 employers report that employees family and childcare issues affect their job performance or productivity moreover the second reason I should point out is that childcare providers themselves are small businesses we spent a lot of time actually um helping them counseling them helping them understand regulations helping them figure out how they get access to Capital because they themselves are small businesses so this is going to have a devastating impact on businesses because because of the employers and the workers in childcare and it's going to have a devastating business uh impact on businesses that are in that are actually child care providers you know I hadn't really focused on the idea that this would have an impact on Child Care businesses um that's that just causes all kinds of Ripple effects right that means that if that business suffers or even has to shut down that will just expand the Imp on the number of kids families uh employees uh that suddenly have a problem absolutely I mean and look we're looking at an economy that is coming back um that is in many senses doing very well the the Congress and the ab Administration passed whole bunch of laws in the last Congress that are um that are actually pushing um forward the economy U providing opportunities through the inflation reduction act through the bipartisan um infrastructure act um through the chips Act um that um that uh are promoting the economy and and making the economy um Thrive we are putting that all in Jeopardy now that is going to be in severe Jeopardy if we if we hit this crisis and I think people are not fully realizing the impact on the broad economy not to mention on on the many individuals impacted do you have any any hope for this one do do you see promising any movement I mean this should this should be a bipartisan concern um and it's getting caught up in a sort of ideological views on government and government funding um probably getting caught up in um uh politics Uh current politics and um it's it's it's it's it's outrageous and uh so um am I hopeful yes am I realistic uh yes and and there's not we are not seeing signs at the moment that this is going to move forward in a bipartisan fashion uh and that's a big problem and um I think we you know I think those who are opposing this um uh need to need to really step back and figure out the impact it's going to have on families the impact it's going to have on businesses the impact it's going to have on our economy on another front I gather you do see some hope for a bipartisan solution uh to the issue of helping hospitals with uh outof control costs is that right I hope we're helping them I'm not I'm not sure they see it that way in the healthcare front and there's still so much more to do um uh the fact that this uh the stimulus level um the um pandemic level subsidies in the uh exchanges got extended in the inflation reduction Act was fantastic um and uh we're going to face that issue again in in a year and a half but that has done wonders for uh small business owners uh their employees and independent contractors that represent over 50% of the participants in the exchanges but that's kind of the the coverage side of things what's the bigger equally big if not bigger problem is the cost side and look there there a lot of different ways that we need to attack this but one of them is looking at hospital costs and understanding that um they are out of control and that we need to um we need to do something about it we're part of a of a broad Alli call The Alliance for fair um Health pricing of business large and small business bus organizations and um uh Academy of family physicians um first business group on health Etc that is working together on this and what we're seeing at the national level is a bipartisan effort um through the they just uh released the bill the lower cost more transparency act which would essentially uh boost transparency of Hospital prices and require hospitals to charge the same for a service regardless of where the services per form right now we're seeing tremendous Hospital consolidations they're able to drive pricing plans are not able to leave they're so big plans cannot negotiate with them to leave them out and this is going to um set up rules that um will will will govern will help to govern that some states are also working on on this area as well but this bill is bipartisan it's bipartisan in the house and it's bipartisan in the Senate and it is one of the few um efforts moving along with with a strong bipartisan base so um it's one piece of a of a puzzle around healthcare costs but something that um is is going to be critical to deal with it's funny I I don't think I've heard anything about that and I really try to stay up on these kinds of issues is is this is it me or is this flying a little bit below the radar are you telling me Lauren that the media um doesn't only covers stories where people are battling each other well the media talking I take your point uh but you know the media does tend to cover stories when something bizarre happens and these days a bipartisan solution to anything could be considered something bizarre uh so you'd think people would be paying attention if only for that reason yeah this is also playing out in the sort of the the the um uh Department of Justice and fttc just released merger um uh guidelines and um there's there's guidelines to um to address you know some of the U anticompetitive effects em mergers and a big area for that is in the hospital Arena and again this is an area in this Fair competition area that has gotten bipartisan attention and bipartisan support so um we um this is this is one area of of Cost Containment that I think people are just realizing across the board that this is unsustainable interesting all right another front uh on uh I guess this this past last week uh the Goldman Sachs 10,000 businesses organization released a survey that showed there's been a a leap in the percentage of business owners who say it's gotten too hard to get a business loan um I anecdotally I've heard some chatter about this I'm curious do you think uh I mean obviously rates are higher but do you think uh businesses are having a harder time getting loans and any thoughts about what might be done about that we're hearing the same thing it is if anything even more challenging and you know we have a we have a financial system where um the the economics are that financial institutions particularly ones making responsible loans want to do bigger and bigger loans it's not um they don't find it to be profitable to do smaller loans um those that have come in to provide smaller loans um many of them are um not engaged in responsible Lending practi um but we you know there's some things there's some opportunities here some of them we've already known about and some of them coming out of the pandemic there are programs uh that really do Target financing for businesses in under resource communities businesses that are going to struggle getting getting Capital through other means um first of all the SBA has been definitely modernizing and making some changes um they've expanded their uh small business uh lending um Corporation eligibility um they have um they're bringing the community Vantage program into that and they've also taken some steps to um uh to streamline eligibility for um SBA back loans and to add new fraud fraud review on loans so they're they're taking steps um you know we haven't had a fully um reauthorized small business administration for like 20 years and it's been a a signature issue of Senate small business committee chairman Senator Cen who um is uh along with the ranking member um Ernst is uh proposed a um uh a small business reauthorization modernization bill um uh the community Advantage Program itself needs to be made permanent so those are things that are happening with the um SBA um one of the things that we're keeping an eye on is in the um American Rescue plan uh there was a re re Rejuvenation of the state small business credit Initiative Program where the treasury Department provides uh $10 billion in in funding to um the states uh and then they run it through programs that they have focused on uh under uh um businesses and underresourced communities bipo businesses women-owned businesses and um you know a lot of money is going out the door and we are working uh with as many states as we can to help them figure out how to properly direct that money to make sure that they don't make the same mistake of making you know support of of financing larger loans to people who may not need it as much as people who need a larger number number of small loans but there is um and a lot by the way half a mill half a billion of that money is specifically for technical assistance so there's an opportunity to um expand the technical assistance that's being provided to the more under uh resourced businesses so there are programs like that states like California have some of their own loan programs that they're um that they're promoting you know at the end of the and by the way back to the issue of responsible lending uh we continue to push for both state and federal legis ation to tighten up the rules around that there's been pending legislation in Congress uh unfortunately it's not been able to move forward in the last two congresses that would um uh expand the requirements uh for disclosure requirements not restricting any loans to be made just expanding disclosure requirements particularly disclosure of APR in small business loans basically taking the truth and lending rules that apply to Consumer loans and applying them to small business loans that law is passed in California there's one that's passed in New York so um there are things that we're doing kind of uh to help this but it is a very deep fundamental problem and we need to keep pushing on um all all sides of this you referred to some of the changes at the SBA in terms of its lending one of the changes they made is to allow some of those online lenders to make SBA Loans and you know those are the kind of online lenders that have raised concerns about the responsible lending issues you're talking about such as disclosing what the actual cost of the loan the APR is going to be are you at all concerned about the SBA kind of endorsing those kinds of providers yeah we we have expressed that concern to the SBA directly and also in our comments on thec rules um and you know first of all the 7A program itself has its own guidelines our bigger concern is what you might call bid and switch is that you get um you get a financial institutions into the program who say well you know um you know we can get you the 7A loan but actually we have this other thing we can get you tomorrow and um so um the SBA through these rules um and through their practice has indicated they are going to be vigilant um in um in policing that so um yeah there is there is a concern but um I should add and I know I sort of started by saying well these other actors coming in um as we saw during the pandemic some of these alternative lending uh institutions actually did a much better job of reaching uh some of the more underserved communities um and making loans um beyond the sort of traditional lending box so um I think it's a mix I also think there's a there's a range of types of players in the fintech space uh we work some very responsible um fintech players like funding Circle um and then there are others that should not be participating in in these programs they they're they're they're not um they're not acting responsibly but yeah you're right that this is something we should be we should be wary of all right last issue uh we are once again it seems like you and I talk about this almost every time you're on uh facing a potential government shutdown I don't expect you to have a solution to that problem um but how big a concern do you think that is uh for businesses at this point it's a huge concern and we faced this before both either the threat or even the threat is a concern and certainly when it happens is a big concern obviously government contractors um of which you know we have many members and many folks in small business Community our government contractors they're directly affected um we talked about lending and SBA and anybody who's got a pending SBA loan um is going to be any anybody who's got uh trying to get a loan uh either directly from the government or where the government has to weigh in uh they're going to be adversely affected and the overall economy is going to be adversely affected certainly people who who support um the Government Contracting Community their their own communities but Commerce and their communities um it it is beyond outrageous that um we will keep facing this I mean it's it's we the laughing stock of the world uh we we can't we can't pass a budget um and there are you know there are people in Congress particularly in in the Republican Party who seem to not care and seem to they want to score political points uh they're going to uh Force the government to shut down and it's it yes this is this has a this is a terrible impact on small business and um you know I'd like to think that it's going to get resolved but as I said even the threat of this creates problems so we have to face the same thing with the debt ceiling quote unquote crisis uh earlier this year so um I don't have a solution other than people need to behave like adults and also understand as you just explained that the impact can be far greater than many people realize I mean I I think they're there's a percentage of people in the business Community who look at this and kind of almost cheer it on as if you know we all get frustrated with government bureaucracy from time to time but to just shut it down doesn't just affect a small group of people it can have a very broad impact as as I think you were suggesting I hadn't even thought about the the SBA loan nobody in the small business Community is is cheering this on I'm not sure um I mean anybody who's cheering this on is not is a irresponsible and B not um looking at this with any um fact-based lens is purely about the scorekeeping and politics and uh you know look I'm I'm not the only one saying this we we've got to dramatically move beyond that and anybody in the in the business Community large or small who's cheering this on is is doesn't deserve to be in business quite frankly well said fair enough John arensmeyer is founder and CEO of small business majority thanks for taking the time John thank you Lauren and have a great week everyone