Does President Donald Trump hate small business? If you examine his proposed budget for 2021, that’s the logical conclusion to reach.
Trump is proposing to eliminate or drastically cut aid for small businesses—even when such cuts result in insignificant savings. Trump’s draconian recommended budget cuts would stifle the health and growth of this critical sector of our economy.
Presidential budgets rarely get enacted as proposed, but they are widely seen as reflecting a president’s priorities and values. Taking a look at Trump’s 2021 proposed budget, there’s a clear message to the small businesses of America—whether in blue states or red states: “I’m just not that into you.”
In 2017, Trump proposed—and got enacted—sweeping tax changes, significantly reducing taxes on large corporations and the super-rich. Those tax reductions resulted in huge deficits, increasing the national debt. Trump needs to show that he’s doing something to help pay for his tax give-aways.
Now, you need to understand the scope of the federal budget. The 2021 fiscal year budget is $4.8 trillion. That’s TRILLION. America’s national debt is $22 trillion. Shaving off a few million dollars from a very small program does virtually nothing to reduce the debt. But those programs might help hundreds of thousands of small businesses.
Trump targeted a large number of very low-cost small business programs for elimination or drastic cuts in his budget. Make no mistake: These cuts will make virtually no impact on the debt caused by Trump’s tax cuts. Rather, they reflect the values of a president who just doesn’t care about small business.
“President Trump made clear his interest in serving Wall Street over Main Street when his administration enacted a corporate tax giveaway,” said House Small Business Committee Chairperson Nydia Velazquez. “Now as the deficit balloons, the president is further turning his back on hardworking Americans with a budget that cuts the Small Business Administration, slashes rural support programs, and eliminates economic development programs.”
Take a look at what Trump’s budget would do to mutilate small business programs:
• Eviscerates the Small Business Development Center (SBDC) budget with a 35% cut. SBDCs are incredible investments that basically pays for themselves. There are nearly 1000 SBDCs around the country, many in small or rural communities, helping create over 18,000 new business a year, assisting more than 250,000 business owners, and helping save or create tens of thousands of jobs. Studies show that for every dollar spent on the operation of an SBDC, $22 in private capital was generated for small businesses, fueling economic growth.
• Raises SBA loan fees by $80 million. The SBA 7(a) loan program makes it possible for small businesses that might not otherwise qualify for a bank loan to get financing to expand, creating and keeping jobs. Banks—not the government–give the loans—typically community banks, often in rural areas. In FY2019, the SBA 7(a) loan guaranty program provided more than 51,000 loans, totaling $23.2 billion—supporting 482,000 jobs. Raising rates not only makes it harder for business owners to apply for loans, additional lender fees may drive some banks—including in rural and suburban areas—to leave the program, making it harder for small businesses and small farms to get loans.
• Reduces money for Women’s Business Centers by 22.6% and SCORE by 22.6%. These programs help women and other entrepreneurs get free or low-cost counseling, training and mentoring. Once again, their current budgets are tiny — less than $23 million each this year — so cutting these programs don’t make much of a dent in the federal deficit. They, too, reflect an administration attitude that small business is just not a priority.
• Eliminates or drastically reduces a whole variety of small business and rural development programs. These include regional innovation clusters, growth accelerators, international trade promotions for small business, microloan programs and many more.
Remember, in Trump’s 2017 tax bill, he provided permanent tax cuts to huge corporations, but the limited tax breaks for some “pass through” small businesses expire in 2025. This means that while fat cats are still getting tax reductions, you and I will be paying higher taxes. And it reflects Trump’s limited commitment to small business owners.
These cuts save the federal government a ridiculously low amount — what someone once called ‘budget dust’— so cutting their budgets means little. It’s just Donald Trump saying to small businesses: “Take a hike.”
Rhonda Abrams is the author of “Successful Business Plan: Secrets & Strategies,” the best-selling business plan guide of all time, just released in its seventh edition. Connect with Rhonda on Facebook; Instagram and Twitter @RhondaAbrams. Register for Rhonda’s free business tips newsletter at www.PlanningShop.com