Declining Government Investment Exacerbates an Uneven Playing Field for Ill. Small Businesses

When I was six years old, three of us climbed into a pillow-packed industrial bin and allowed ourselves to be pushed down steep stairs by my friend's older brother because we wanted to play rollercoaster. Predictably, it all went downhill – literally – from there as we flew out of the bin midway through our ride. After that tumble, my arm hurt. A lot. This was a big concern, because at that time my mom as a single parent of three children had no health insurance. We couldn't afford to see a doctor, so I spent two days in agony until I was finally taken to a public health clinic where it was confirmed that my arm was broken. Thankfully, I grew up in Illinois and benefitted from taxpayer investments that buttressed public health clinics and made care accessible to those who couldn't otherwise afford it. Without that public support, I might have had a lifelong disability today.

Just as taxpayer investments helped me access healthcare as a kid, taxpayer investments have long brought massive cost relief to small businesses, including programs that make healthcare affordable. This includes enhanced premium tax credits (EPTCs), which have allowed many small business owners and their employees to save on health insurance purchased through Affordable Care Act (ACA) Marketplaces, as well as Medicaid. In fact, an analysis conducted by Georgetown University and Small Business Majority found that one-third of all people enrolled in Medicaid nationwide are connected to small businesses. And when it comes to the enhanced premium tax credits, tax credits lowered costs for more than 90% of all Marketplace enrollees. Despite the success of these programs in noticeably reducing costs for small businesses, however, Congress allowed the EPTCs to expire last year and made drastic cuts to Medicaid that will impact small businesses and their workers who rely on the program.

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In other words, small businesses are losing access to many of the government investments that have long kept entrepreneurs afloat. I recently conducted research on behalf of Small Business Majority with support from the Chicago Community Trust showing outcomes that our partnership investments in low- and no-cost capital readiness create savings, reduce expenses, and increase their FICO credit score to secure capital; however, the Small Business Administration's new loan rules eliminated proven, traditional paths for funding for many small businesses – including those owned wholly or in part by green card holders. Now, taxpayer-backed, non-predatory capital and credit is more difficult to access at a time when Small Business Majority's research had already shown most small businesses struggle to access the capital needed to start or grow a business.

As federal funding for small businesses retreats, Illinois must become the field leader in strengthening support systems for small firms. This is especially true for women- and minority-owned small businesses, given that women-owned business growth has outpaced male-owned in recent years. To help these businesses not only survive but thrive, one goal for Illinois is to block the state loss of over $459 million in annual savings due to predatory loans and pass legislation that would ensure fair online lending practices. Such a bill would set clear and universal disclosure requirements, transparent pricing and clear APR terms that would especially hold the private, non-bank online lenders answerable to any slick practices that leave Illinois entrepreneurs repaying loans of 60% APR or more.

Second, Illinois can increase affordability and reduce healthcare costs by addressing corporate consolidation and holding hospitals and large medical service entities accountable for their resulting anti-competitive practices. Such monopolistic-like conditions impact not only the quality and cost of care, but also create negotiation disadvantages for budget-friendly insurance rates that could help save money for small business owners and their employees. These two actions would not undue all the harms caused by federal cutbacks and rule changes, but they would be significant plays toward the goal of securing the future of Illinois small businesses.

Geri Sanchez Aglipay is Senior Fellow at Small Business Majority, and the former U.S. Small Business Administration, Great Lakes Regional Administrator.