Small businesses make appeal to Geithner at jobs summit
More than a dozen small-business owners offered anecdotes Thursday to Treasury Secretary Timothy Geithner and Small Business Administration chief Karen Mills about their struggles trying to stay afloat amid the worst economic downturn in generations. Seated around a rectangular table on the fifth floor of the Eisenhower Executive Office Building, the business owners discussed credit problems and stringent government regulations that are hampering their operations.
Woody Hall, the chairman and president of Diversapack, a film manufacturing company operating in several states, said the credit crunch is hampering its growth. The company, which has 700 employees, has been growing at an annual rate of 20 percent the last few years.
"We just opened up a new manufacturing facility employing 50 employees and expected to grow to 150 over the next few years. We basically had no bank financing," Hall said, adding that he was only able to get financing mainly through state and local grants.
"You're not the only one having this issue," Mills said.
David Barber, whose company Barber Foods processes poultry products in Portland, Maine, said he has experienced difficulty borrowing to make his business compliant with various USDA regulations. "We're not able to get the funding we need to make our business more efficient and effective," Barber said. "We're all for food safety. We just want regulation to be agile and smart."
Joseph Stiglitz, a professor in the Columbia University graduate school of business and former chief economist for the World Bank, said exorbitant credit card fees are hurting small businesses. He suggested that the government find a way to bring down those fees.
"Our credit card system is broken in many ways," he said. The exchange fee on purchases is "a 2 percent tax on all small businesses. A lot of them have small margins. Imagine you're got a small margin and you're giving half of that to banks on exchange fees -- how aggravating."
Geithner acknowledged financial institutions' skittishness in extending loans to small businesses. "Banks, as you know, don't want to take capital from the government -- they're deeply concerned about the stigma," he said. "Our best way is to figure out how to get [Mills's] program more powerful and make it more compelling for banks to get involved in these programs."