Statement by Elizabeth Warren - A Comprehensive Agenda to Boost America's Small Businesses

By Elizabeth Warren

Small businesses are the heart of our economy. And even though Americans are as entrepreneurial as ever, there are signs that it's getting harder to start and grow a small business. New business formation is down over the past decade, and small businesses are dropping in numbers and in market share.

The challenges are even greater for communities of color. We have a long history of small businesses owned by people of color. The businesses they've nurtured through years, and even decades, of hard work often serve as long standing pillars of their communities. But many of those businesses are under threat as wave after wave of gentrification brings skyrocketing costs. Today, Black and Latinx small business owners own less than 10% of businesses with employees.

This isn't a question of good ideas: Just look at the many successful examples of Black and Latinx-owned businesses that contribute more than a trillion in revenue to our economy. Entrepreneurs of color in particular are a powerful force, with Latinx-owned businesses growing at double the rate of all American businesses. But they face unique barriers to access: access to capital, resources, and markets. The typical Black entrepreneur starts a business with a third of the startup capital of the typical white entrepreneur. Assuming an entrepreneur can access capital, she then is less likely to have access to the informal business training and networks that can help her navigate the regulatory hurdles ahead. And finally, in an economy where market access is predicated on size and connections, she'll face even greater barriers to breaking into the market.

Part of the problem for small businesses is Washington. A lot of Washington politicians claim they are “pro-business.” What that often means, though, is that they're pro-big business, and they're willing to go to bat for every loophole, every tax break, and every other special favor that giant corporations want. And being pro big-business means, by and large, being pro-white male businesses. A lot of politicians may praise the entrepreneurs and the mom-and-pop shops in public, but their actions support the big guys that can hire armies of lobbyists and lawyers, and can hand out maximum campaign contributions.

That's not me. I'm pro-competition. I designed and set up a new federal agency — the Consumer Financial Protection Bureau — that promoted fair competition between financial companies. I want every person, no matter where they live, to be able to turn a great idea into a great business. I want small businesses to be able to compete on a level playing field. And I will fight tooth-and-nail against government favors that help big businesses insulate themselves from competition or get special advantages compared to their smaller competitors.

In the Senate, I used every tool available to help boost small businesses. I've supported funding for entrepreneurship programs, backed community banks and credit unions, and taken on the big banks, big Pharma, big ag, and big tech. I even created an annual small business matchmaker event, where small businesses from Massachusetts could meet with federal agencies and big companies with federal contracts that were looking for partners.

Entrepreneurs and small business owners consistently identify a handful of key concerns: attracting and retaining good employees, dealing with regulatory burdens, getting access to credit, and more. In a Warren administration, we will address those issues because we will focus on the needs of small businesses and entrepreneurs — especially from underrepresented backgrounds. My comprehensive agenda to boost America's small businesses will:

• Provide access to credit for entrepreneurs and small business owners
• Promote real competition and level the playing field for small businesses
• Help small businesses deal with regulatory requirements
• Foster clean small businesses to meet the challenge of the climate crisis
• Unleash the full purchasing power of the federal government to support small businesses
• Help small businesses attract and retain employees

Providing Access to Credit for Entrepreneurs and Small Business Owners

Many small business owners and entrepreneurs cite a lack of access to credit as a key stumbling block. And the playing field is especially tilted against entrepreneurs of color and women. Black, Latinx, and Native American entrepreneurs start out with a fraction of the wealth of their white counterparts. That means they have less of their own money to put into their business and less collateral to attract outside credit. This disparity in startup capital is the single biggest reason that promising Black-owned businesses on average are less profitable and bring on fewer employees than white-owned businesses. It's part of why entrepreneurs of color own less than 20% of businesses with paid employees despite making up almost 40% of the population. What's more, even though smart business ideas are spread across the country, opportunity isn't, because of geographical disparities in funding. My small business agenda will help unlock access to capital for creditworthy small businesses, ushering a new generation of entrepreneurs to take on the challenges ahead:

• Creating a first-of-its-kind Small Business Equity Fund to help close the startup capital gap for entrepreneurs of color and create 100,000 new minority-owned businesses. Because of the racial wealth gap and other systemic factors, Black, Latinx, and Native American entrepreneurs on average start businesses with far less capital than white entrepreneurs. To address that startup capital gap, the Equity Fund will have $7 billion in funding to provide grants to minority entrepreneurs, not loans or loan guarantees — so they can thrive from the beginning without having to worry about ongoing financial obligations or the risk of default. That $7 billion is enough to ensure that we could fully close the startup capital gap for every single one of these new businesses for the next ten years. This funding would support 100,000 new minority-owned businesses, which together would be expected to provide 1.1 million jobs. And I'll seek out a more diverse set of investment managers for both the Equity Fund and all federal pension and retirement funds to further close the financing gap.
• Cancelling the student loan debt that is holding back entrepreneurs and workers. Our skyrocketing student loan debt burden is leading to fewer people starting businesses, particularly small ones, and slowing the growth of those small businesses that are created. The burden doesn't fall evenly: Latinx students who receive a bachelor's degree on average still owe a staggering 79% of their original loan balance 12 years later, and Black students actually owed even more than they'd originally borrowed. I've promised to get rid of this anchor on our economy on day one of my presidency by using existing laws to implement my student loan debt cancellation plan, offering immediate cancellation of up to $50,000 in student loan debt to about 42 million Americans. My plan to cancel student debt will provide an enormous middle-class stimulus that can fuel a new wave of small business formation.
• Reforming America's Seed Fund to serve a more diverse group of entrepreneurs. The Small Business Innovation Research (SBIR) and the Small Business Technology Transfer (SBTTR) programs help small businesses get off the ground by funding R&D with the potential for commercialization. They have funded successful innovations in health care and environmental protection, and helped companies like Symantec and Qualcomm create new industries. The programs are the largest source of early-stage high-risk funding — but right now, only 11% of funds go to female business owners and 8% go to socially or economically disadvantaged business owners, and many go to repeat awardees instead of opening the door to new entrants. My administration will spread SBIR awards across a greater variety of small businesses and focus especially on increasing the diversity of awardees. And we'll put more weight behind the commercialization of the R&D, so that more Americans see the benefits.
• Bolstering small and local businesses in rural communities across America. Rural communities depend on small businesses — but too often, people in rural areas face barriers to accessing the capital and financial services to start, grow, and run their businesses. I'll invest half a billion dollars a year over the next decade in entrepreneurs who are building a sustainable farm and food system, including by funding food hubs, distribution centers, and points-of-sale that will boost the economy — and the health — of rural and small town communities. And I'll make sure that a diverse generation of farm and food workers have access to rural entrepreneurship opportunities by requiring the Farm Credit System to allocate 10% of its $5 billion in annual profits towards supporting new and diverse farmers through regional lending mechanisms.
• Supporting the community banks and credit unions that are the financial lifeblood of many small businesses. Community banks and credit unions traditionally played an outsized role in small business lending. Despite being a critical source of capital, community banks have been declining over the past few decades. The result is a hole in the small business lending market. I have supported community banks and credit unions throughout my time in office, and my Wall Street agenda will strip away the unfair advantages that giant banks have over their smaller competitors. By boosting these community banks and credit unions, we'll strengthen the source of most small business lending.
• Expanding support for the Community Development Financial Institutions that invest in underserved areas. Community development financial institutions (CDFIs) have played an especially important role fostering small businesses in communities of color. Most of their investments have gone towards majority-non white communities, which have been financially underserved by traditional lenders. Nearly half of the recipients of CDFI investments are women, and 48% are people of color. CDFIs provide an important source of funding to rural communities, too, with 25% of their investments going to them. But CDFIs are under threat, with Donald Trump repeatedly threatening to eliminate their funding. A Warren administration will strengthen lending to small businesses in underserved areas expanding support for CDFIs. That includes expanding their eligibility for funding and building on the SBA's 7(a) Community Advantage Program.
• Expanding access to self-employment assistance programs for potential entrepreneurs. The Middle Class Tax Relief and Jobs Creation Act offered states federal grants to set up self-employment assistance programs (SEAs), which allow unemployed workers to create their own jobs. Participants receive benefits equivalent to unemployment insurance while getting training and counseling on how to start a small business. Evidence suggests these programs help people transition into employment and could boost new business formation, too — but so far, few states have adopted them. I'll support state efforts to expand these programs. And I'll push to improve them, including by allowing participants to claim more of their compensation upfront to finance the start of their business, and pushing to direct them towards communities experiencing declines in small businesses.

Promoting Real Competition and Leveling the Playing Field for Small Businesses

The American economy depends on competitive markets, where companies are pushed to offer better products at better prices. But today, giant corporations abuse their market power to hurt their smaller competitors and shut out new players. That stifles innovation and hurts consumers. And it contributes to entrepreneurs of color facing higher barriers to accessing markets for their goods and services.

These trends aren't the result of inevitable market forces. Federal regulators have failed to enforce existing federal laws that promote competition and combat monopolies. This has led to incredible market concentration across our economy. More than 70% of online traffic goes through sites owned or run Google or Facebook. Two companies produce 70% of the beer we drink. Three big chicken companies control 90% of the market.

And in industry after industry, small businesses are suffering. Consolidation in the transportation sector has made it harder for small businesses in rural areas to compete economically. Consolidation in the banking sector has hurt community banks and made it more difficult for small businesses to get loans.

That's why I've pledged to stand up to mergers that reduce competition and make sure that the federal agencies tasked with enforcing our antitrust laws actually do their job. We've already got laws on the books that empower regulators to break up mergers that reduce competition. I'll appoint regulators who are committed to using those tools to support healthy competition for small businesses across industries — tech, agriculture, and beyond.

Here are just a few examples of how my plans to tackle consolidation head-on will help small businesses:

• My plan to break up Big Tech will make sure small businesses have a fair shot to sell their products on Amazon without having to worry that they'll get pushed out of business, or worry that Google will down-rank their products on Search.
• I strongly support a national right-to-repair law for farm equipment that will empower entrepreneurs to repair the equipment that their business depends on without having to spend exorbitant fees through authorized agents — and give new independent repair shops new opportunities, too.
• My plan to increase competition in agriculture will review and reverse anti-competitive mergers and restrict foreign ownership of American agriculture companies to give small farmers and their businesses a fair shot at an honest living.
• And my plan for rural America will address consolidation in health care that limits access to care and shuts out competitors, and will crack down on vertically integrated health care companies that are raising costs without improving the quality of care.

Helping Small Businesses Deal with Regulatory Requirements

Many entrepreneurs — especially those in communities with less access to resources and networks — struggle to navigate regulatory requirements. The biggest barriers exist at the state and local level, where intertwining requirements can weigh new small business owners down just when they most need a helping hand. And some of these barriers — like restrictions on licenses for people with criminal records — disproportionately hurt communities of color. It doesn't have to be this way: We can preserve important health, safety, and environmental standards while supporting small businesses, too. That's why I'm proposing a series of regulatory reforms to help small businesses actually focus their limited resources on their core business — without sacrificing public health and safety:

• Creating a first-of-its-kind competitive federal grant program for states and localities to cut unnecessary regulatory requirements and to help small business owners navigate necessary ones. Small business owners can face a broad array of state and local regulatory requirements. Some are unnecessary to protect the public interest, while others are important health, safety, and environmental requirements that protect customers, workers, and communities — but they are scattered across various state and local agencies and difficult for business owners to track down and attempt to comply with. A business owner might need to get multiple licenses to open a business, then work with different state and local agencies to get approvals. Under my program, states and localities will be able to apply for funding for programs that simplify the path for small businesses at every step of the way. That could include resources for states and localities to review, simplify, and centralize their regulations. I'll support the expansion of state “one-stop shops” that provide information for entrepreneurs at every step of the way, from registration to compliance and filing. And I'll fund pilots of state and local “navigators” — sources of high-quality advice and support for small businesses — as well as setting up small business hubs, co-working spaces, and cohorts.
• Tackling overly-broad occupational licensing requirements while upholding important standards that protect workers and consumers. More than a quarter of U.S. workers need a state license to do their job — a fivefold increase from fifty years ago. While many of these licenses ensure important safety and health standards for workers and consumers, some are unnecessary or overly onerous. What's more, these requirements differ substantially by state. This makes licensed workers 24% less likely to relocate, and punishes those who have to move, like military spouses. And the majority of state occupational licensing systems discriminate against people who have interacted with the criminal justice system. A Warren administration would dedicate real federal resources to encouraging states to remove licensing requirements that aren't about protecting health and occupational safety — including restriction relating to interactions with the criminal justice system — and to encourage them to recognize licenses from other states.
• Pushing the Small Business Administration to focus real resources towards actual small businesses. The Small Business Administration (SBA) is not doing as much as it should to prioritize actual small businesses. Huge corporations like Apple, Verizon, and Bank of America have gotten hundreds of millions in federal “small business contracts” through SBA — mostly through a combination of loopholes and tricky accounting. We can crack down on this miscategorization, and also reconsider the SBA's expansive official definition of a small business. And we will reform the Office of Advocacy within the SBA — a particularly egregious example of industry capture — so that it fights for entrepreneurs instead of opposing rules that could help them.

Fostering Green Small Businesses to Meet the Challenge of the Climate Crisis

The climate crisis is the challenge of our lifetime. Addressing it will require rapid innovation on par with the space race along with widespread domestic and international adoption of clean, renewable, and emission-free energy technologies. But like the challenges America has faced before, it is also an opportunity for American business: Transitioning the world to 100% renewable energy will require an estimated $70 trillion. My plans to defeat the climate crisis by transitioning the economy to 100% clean energy will also ensure that American small businesses and entrepreneurs have the tools they need to dominate this new market.

• Investing $10.7 trillion into the new clean energy economy. The combined public and private investment in my plans for a Green New Deal, coupled with the regulatory standards called for in my 100% Clean Energy for America plan, will create the market conditions to help small businesses and green entrepreneurs across a range of industries and will link American innovation directly to American jobs. According to an independent economic analysis from Data For Progress, my plan will meaningfully increase economic growth and create more than 10.6 million new jobs — many of them for new entrepreneurs and small businesses. And as we rebuild our infrastructure to withstand the impacts of climate change, we will need low-carbon alternatives to many industrial processes, which currently account for 22% of domestic emissions, such as cement, steel and asphalt production. It will take green entrepreneurs and small businesses from every corner of this country working together to rebuild our economy from the bottom up.
• Funding research and development so that American small businesses lead the global fight against climate change. My Green Apollo Program will invest $400 billion over ten years — more than ten times what we invested in the last ten years — to clean energy research and development. Federal dollars for cutting-edge R&D have provided seed funding for some of today's most transformative green companies. Sunfolding — a female-founded company that makes hardware that allows solar panels to track the sun more cheaply and efficiently — began with about $4 million in ARPA-E funding. Tesla — now the most valuable U.S. automaker in history — received a $465M loan from the Department of Energy's Loan Program Office. This seed funding was instrumental in allowing Tesla to innovate its way to the market giant it is today. These R&D investments spur entrepreneurship in every part of the country — not just the coasts — by sending money to rural areas and to communities that have seen the worst job losses in recent years. And my Green Marshall Plan will create a federal office dedicated to helping American green entrepreneurs sell clean, renewable, and emission-free energy products to foreign countries, ensuring a stable market for green technology produced here at home.
• Establishing a new Green Bank to fill the investment gap for clean small businesses. My administration will charter a new Green Bank to provide much-needed funding for small businesses and entrepreneurs who wouldn't otherwise qualify for traditional venture style investments. This new Green Bank will mobilize $1 trillion in climate and green infrastructure investments across the country over 30 years — funds that will go towards business ideas that serve the public interest but might not otherwise attract private capital due to risk-return thresholds. And it will expand opportunities for communities and the private sector by directing funds toward communities and businesses on the front lines of the climate crisis that have traditionally been left out of investment opportunities.

Unleashing the Full Purchasing Power of the Federal Government to Support Small Businesses

The federal government has a major role to play in creating markets: Every year, it spends hundreds of billions of dollars each year to purchase goods and services. But today, those billions of dollars pass over real small businesses, going instead to the same giant corporations that already have the market cornered — corporations that have spent millions in lobbying, too. Even procurement funds that are earmarked for small businesses end up going to wily corporations that use accounting tricks to qualify as “small.” And despite supplier diversity initiatives, small business owners of color still face discrimination in government contracting, keeping them shut out of important revenue streams.

• Deploying the federal government's purchasing power to support American small businesses — not just multinational giant corporations. In addition to requiring the government to purchase American-made products whenever possible, I will use federal procurement commitments as a tool to spur innovation and create demand for new American-made goods. My administration will place a special focus on supporting small businesses and entrepreneurs, especially from the Black and Brown communities that we have shut out for too long. As contracts come up for renewal, I'll direct federal agencies to look for opportunities to support new and diverse small businesses, rather than simply handing over giant sums to the same old corporations that have too often under-delivered for the American people.
• Ending corporate capture of our federal agencies so that giant corporations no longer have an unfair advantage in securing lucrative federal contracts. Today, the revolving door between Washington and Wall Street, the avalanche of lobbyists, and the weakness of our agency tools to fight back all give big business a big leg up. According to one report, the 25 companies getting the most federal contracting dollars (over $1.5 trillion) have spent over a billion dollars on lobbying over the course of a decade. That's not competition — it's corruption. My plan to end Washington corruption will level the playing field for small businesses, giving them a fair shot at the trillions that go out the door.
• Helping small businesses get their foot in the door by creating a national version of my Business Matchmaker initiative. I first launched the Business Matchmaker Event program in my home state of Massachusetts, where I brought together hundreds of small business owners with buyers ranging from government agencies to major contractors looking to subcontract. The event — which we've held four times already — makes sure that every hard working small business owner knows about the government opportunities available to them, and that potential contractors get to see the potential of partnering with small businesses firsthand. As president, I'll expand the matchmaker program nationally, aiming to set up similar events with small businesses in every state.

Helping Small Businesses Find and Retain A Talented Workforce

Despite the claims of a strong economy, our smallest businesses are struggling to grow — often because they can't find the necessary employees. Too often, that's because of racial disparities in the building blocks of opportunity, like safe and affordable housing, healthcare, and a quality public education. My agenda makes small businesses more attractive potential employers for jobseekers, makes it easier for small businesses to retain the good employees they have, and makes it easier for people to move to smaller communities and take positions at small businesses. And each of them takes aim at closing the racial wealth gap to ensure that all Americans have access to economic opportunity:

• Investing in public education for all Americans: Public education fuels entrepreneurship and provides small businesses with the skilled workers they need to get their businesses off the ground. My plans to invest in public education — by establishing universal free college, investing $800 billion in our K-12 schools, and providing early childhood education to all children — will help develop the talent that small businesses rely on.
• Making health care a right: Health care is a top concern for small businesses. Many small businesses don't offer employer-sponsored insurance, which can make it harder to recruit and retain employees. The small businesses that do offer it often must pay more per-person than larger businesses, putting them at a competitive disadvantage. My plan for Medicare for All addresses both problems. It provides universal, high-quality coverage for everyone, which means small businesses won't be hamstrung because they don't offer insurance. And it ensures that any small business that is paying more than the national average for health care per-employee will pay less over time.
• Providing universal child care for all parents: Study after study has shown that each dollar we invest in early education produces better employment outcomes and benefits our economy. Right now, nearly 60% of Latino families live in child care deserts. My plan to provide universal child care will give small businesses a boost by giving more parents in communities like these the flexibility to work more hours if they choose to. A generation of kids will get the early instruction they need to be healthier and more productive members of society, boosting the ranks of small business employees and entrepreneurs alike. And parents can take positions at small businesses, knowing that there will be affordable and high-quality child care options available to them.
• Ensuring safe and affordable housing: Right now, the cost of housing is a real obstacle to small businesses looking to attract workers in their communities. And the burden doesn't fall equally: Decades of federally-sanctioned discrimination contributed to the homeownership gap between Black and white Americans. More affordable housing in more communities means more opportunities for small businesses in those areas — especially in communities of color. My plan for affordable housing will be a boon for small businesses by giving them the opportunity to serve an expanded customer base with more spending power and hire an influx of talented new workers drawn to new affordable housing options across the country. And it will be a boon to Black and Brown businesspeople struggling to recover from the recession by helping them get another form of equity to secure small business loans, too.
• Overhauling our job training to better prepare American workers: Talent is especially important for small businesses, where each employee is an integral part of the process. But small businesses don't have the same resources as big companies to invest in workforce training. My administration will take aggressive steps to overhaul our worker training programs to produce better results for American workers and small businesses alike. I'll scale up apprenticeship programs tenfold, making a $20 billion commitment to apprenticeship programs for the next ten years. And I'll invest in new sectoral training programs that will help align training with the local job market and ensure that workers gain skills that are transferable across employers, so that all small businesses can share in the gains.

America is an entrepreneurial country — but we can do a better job of giving every American a fair shot at starting and growing their small business. I've often said the key question isn't big governments vs. small government, but who government works for. As president, I'll make sure our government works not just for the big businesses with big money to spend on lobbyists and lawyers, but for entrepreneurs and small business owners with big dreams — who put their own sweat and hard work and savings on the line for the satisfaction of being their own boss and turning their ideas into reality.