The Conservatives are on the side of small business

http://www.theguardian.com/commentisfree/2015/apr/27/conservatives-small-business-businesses

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When a storm hits, the smallest houses get hit the hardest. So it goes when a financial tornado reaches land. Large corporates weather the winds, but small firms often buckle. So it was during and after the financial crisis. Small businesses, which are heavily dependent on available credit, struggled due to falling sales, weakened collateral and growing risk aversion among lenders. As the leader of Barack Obama’s small business programmes during the height of the crisis, my job was to help America’s smallest firms not only weather the storm but, just as importantly, to have the chance to rebuild.

I have spent my career working to grow small businesses. Based on that experience, along with my work in the president’s cabinet, I believe there are four key things small businesses need in order to recover.

First, small businesses need access to credit. In the recession, small-business credit froze. In the United States even the stronger businesses could not get a loan. We used the loan guarantee programme of the US Small Business Administration (SBA) to help thousands of banks restart their small business lending. This led to record levels of more than $30bn of capital a year going into the hands of small business at the time they needed it most.

In Britain the government has also focused on improving access to capital, creating many innovative ways to get loans and start-up capital to more entrepreneurs. The Funding for Lending scheme has clearly helped, as has the StartUp loan scheme, which has created many opportunities for new entrepreneurs. A Federation of Small Businesses survey showed that lending to small firms has risen considerably in the past 12 months, with 60% of loan applications approved in the last three months compared with 45% a year ago.

Support for new kinds of lenders is also key. The future of small business finance isn’t going to come from solely the traditional banks. New innovations such as online lenders are filling the gap for small-dollar loans in the US and the UK government showed early leadership in deploying several rounds of funds through Funding Circle, a UK entrant which is now gaining share in America. These new entrants have the potential, if well overseen, to provide great benefit to small business borrowers in terms of easy applications, strong customer service and fast turnaround of funding.

Second, regulation is a concern for nearly every small business owner. Rules that work for bigger corporates are often overly burdensome to small firms. How to reduce the burden of regulation in a fair-minded manner, which protects employees, is a real challenge. The current government has taken on regulatory reform – looking at the opportunity to revisit old rules and create regulations that are in line with today’s realities, which creates a positive pressure to keep the burdens on businesses low.

Related: Election year: what can SMEs expect from the party manifestos?

A visit to a small mattress manufacturer in Norfolk two years ago – not the original East Anglian county but its younger American city – takes me to my third point: the importance of exports. The company, Paramount Sleep, is a third-generation, family-owned mattress manufacturer. It had 110 employees and had started selling products in China. I was there to see how Obama’s National Export Initiative had helped. Paramount anticipated 5% of sales to come from exports to China and other countries over the next five years. Proposed trade agreements for both Pacific and Atlantic nations will help open the door for more export success for small businesses.

Thousands of small firms in the UK have tremendous potential to sell in foreign markets. By 2030, more than 2 billion Asian consumers will have joined the global middle class. In 15 years, the Asian market is projected to be six times larger than that of the US. Small firms need to be able to access that. In Britain 3,000 medium-sized businesses are exporting due to government support, and the figure has the potential to grow even higher.

The final way to help small firms is to give them a fair opportunity to compete for and win government contracts. Governments buy millions of products every year – from tables and chairs to encrypted radios and satellites. In the past, large corporates have often had a stranglehold on procurement. At the SBA we worked across the federal bureaus to be sure innovative small businesses had the chance to compete for and win contracts. We found that small businesses often offered better pricing as well as more innovation and better customer service – a win for the government buyer and the taxpayers.

In 2013, the US government met its goal of ensuring that more than 23% of all federal contracts were awarded to small businesses. I was pleased to see in the UK a goal of 25% was instituted only five years ago and even more pleased to hear that the target was met last year and that business procurement, including indirect spending, is now at 26.1%. That’s good, but those figures can rise further – aiding small businesses and the country.

Small businesses today benefit from what some call the “economies of unscale”, meaning mass production and distribution systems are no longer the only path to success in global markets. Thanks to technological advances, small businesses are in a stronger position than ever before to meet demand for specialised goods and services. In the 21st century, nimbler small companies that tailor unique products for discerning consumers are finding a global demand for what they’re selling.

David Cameron and the Conservatives have made small business and entrepreneurs a priority in ways that have worked – helping them to get credit, get their goods to new markets, reduce the burden of regulations and get access to government contracts.

Their plans are making a difference. They are committed to continuing their focus, and that commitment to is critical to building economic growth and shared prosperity for UK citizens.