It was a roller-coaster ride for small-business owners this year.
In Washington, during a year defined more by what didn’t get accomplished than what did, there were still high points for entrepreneurs. Many applauded as regulators removed some of the barriers to raising capital and approved another near-record volume of government-backed loans. However, they also watched as lawmakers pumped the brakes on bills to overhaul the tax code and immigration system and, at one point, brought the federal government to a halt.
And, of course, more than anything else, employers clamored to decipher and comply with the monumental new health-care law, which has been welcomed by some business owners and wholeheartedly reviled by many others.
So, before we turn our attention to the year ahead, we take a look at 2013’s most important stories for start-ups and small businesses.
Many small-business owners had their sights set on the first of October, when the health-care law’s online insurance exchanges were scheduled to launch. When 2013 began, employers were told that the Small Business Health Options Program (SHOP) marketplace would provide a one-stop shopping experience where they could find affordable plans, and that it would let them choose different plans for different workers.
A few months later, one by one, several of those promises started falling by the wayside. In April, the administration announced that employers using the portal operated by the federal government could choose only a single plan for the first year. Not long after, it delayed rules requiring some companies to start providing insurance. And in September, just five days before the SHOP exchange was slated to open, officials announced that the federal site wasn’t fully ready but that it would be by the start of November.
Days before that new deadline, it was pushed back to the end of November. A few weeks later, the deadline was pushed back again, this time to the fall of next year. Until then, many employers must use a paper application to enroll.
Despite the delays and technical problems, small-business owners can still sign up for plans offered through the new marketplace, and some states have reported that prices for those plans have come down, as expected. And in those states that are running their own exchanges, most employers have access to an online sign-up process and the multi-plan option for the first time.
In many states, however, particularly those using the federal exchange, premiums have continued to soar. It remains to be seen whether the new marketplace will help lower costs overall. In short, on the health-care front, there were as many new questions raised as answers provided in the past year.
It was our most important story last year, as a divided Congress came together to approve the Jumpstart Our Business Startups Act, paving the way for the Securities and Exchange Commission to remove some of the hurdles entrepreneurs say prevent them from raising capital and starting new firms. However, it was not until late this year that they began to see some of the key changes outlined in the legislation.
In September, after a leadership change at the agency had delayed the rule-making process, SEC officials lifted an 80-year ban on what is known as general solicitation, allowing entrepreneurs to start publicly advertising their need for funding. One of the reforms authorized by the law, the change allows companies to use social media channels and other outlets to target potential investors.
One month later, the agency took another step forward by formally proposing rules that would allow entrepreneurs to sell shares of their firms to virtually anyone through new online financing portals, commonly called “crowdfunding sites.” If approved (which experts expect to happen sometime in the summer), the rules would let entrepreneurs raise small sums from mom-and-pop investors, a move intended to help a greater number of promising young firms get off the ground.
It happened several times: Major legislative proposals were introduced and approved by the Senate, only to hit a dead end on the other side of the building.
In the spring, a bipartisan group of senators pushed through a historic package of immigration reforms meant to secure the border, provide a pathway to citizenship for undocumented residents and create more visas for highly skilled workers. It was that last part of the bill that garnered the attention of technology and start-up leaders, who have long complained that talented job candidates are in short supply in the United States.
The Senate approved the bill by a wide margin, but it was swiftly shot down in the House, where Republicans have insisted on tackling the nation’s immigration problems piece by piece, not with one comprehensive piece of legislation.
In the summer, it was online sales-tax legislation that hit a wall. The Senate approved a measure in May that would make it easier for states to collect taxes on online purchases, a move that was applauded by small, brick-and-mortar retailers who think online competitors have an unfair advantage in the tax department. That bill was pushed aside in the House, although some have recently tried to revive the debate in the lower chamber.
While that was happening, the top tax writers in the House and Senate spent much of the year trying to hash out a deal for comprehensive tax reform, hoping to overhaul the tax code for the first time in nearly three decades. The discussions, however, got held up by other partisan disputes, and though Sen. Max Baucus (D-Mont.) forged ahead with an outline of a proposal in the fall, his counterpart, Rep. Dave Camp (R-Mich.), conceded that he would not release a bill as planned before the end of 2013.
Not long into the new year, Small Business Administration chief Karen Mills announced plans to step down, roughly one year after President Obama had elevated her role to a Cabinet-level position.
During her four-year tenure, Mills had guided the agency to record lending years (about $30 billion per year each of the past three years) and led a charge to streamline the application process for various resources, such as federal contracting aid.
Mills planned to stay on until the administration found a successor, but seven months later, without a replacement nominated, she bolted for Harvard and appointed the agency’s head of capital access, Jeanne Hulit, to fill the position on an interim basis. Nearly a year after Mills’s announcement, the Obama administration has yet to nominate a replacement.
That has fueled suspicion among some small-business leaders that Obama might try to move forward with plans to consolidate the agency with several other departments, and it gives rise to one of many pressing questions as we turn the page to 2014: Will Hulit continue to serve as the leading voice of small businesses in Washington? Or will the administration nominate a permanent replacement for Mills?
Congressional inaction hit a low at the start of October, when party leaders failed to strike a deal to renew the federal government’s spending authority and prompted a shutdown. National parks closed their gates, many federal agencies closed their doors and, for more than two weeks, the economy suffered. Not until Oct. 17 did lawmakers reach an accord to turn the lights on.
During the closure, small firms, particularly those in tourism sectors or in heavily traveled regions of the country, saw business grind to a halt. In and around the nation’s capital, firms that rely on patrons who work for the federal government took a hit, too, as many of those customers were furloughed.
However, the most direct consequence on Main Street was the closure of the SBA. The agency’s lending operations were temporarily shuttered, delaying loans to employers around the country. And even after a temporary spending deal was forged in Congress, SBA officials returned to a backlog of $140 million worth of applications, which they said will take time to work through.
Its troubles notwithstanding, Congress ended the year on a positive note, as the House and Senate struck a deal in December to fund the government for the next two years. Signed days later by Obama, the plan provides a level of fiscal clarity the country has not seen since 2011, and it guarantees that another shutdown will not be among the top stories on this list next year.
Which developments mattered most to your company this past year, and what are you hoping will happen in 2014? Please share your take in the comments below.