Small businesses feel squeezed by Obama policies

"There's a direct correlation between access to capital and job growth," said Molly Brogan, spokeswoman for the National Small Business Association. "If people are able to get loans and financing, they're able to grow their business and that includes creating new jobs."

Obama, who wants to revive the program, last week urged Senate Republicans to support a Democratic proposal to cut taxes for small businesses and establish a $30 billion loan fund providing them easier access to credit.

"There's one thing we know we should do -- something that should be Congress's first order of business when it gets back -- and that is making it easier for our small businesses to grow and hire," Obama said in a Rose Garden speech. "We know that in the final few months of last year, small businesses accounted for more than 60 percent of the job losses in America."

Yet to date, existing loan programs haven't yet spurred much hiring. Surveys conducted by the National Federation of Independent Business and the National Small Business Association show owners much less optimistic in recent months about their prospects of hiring and growing than they were late last year and earlier this year.

Even supporters of loans say the government investment likely won't pay off until consumers start spending and business owners start feeling more confident. "If everyone is saving and not spending and their clients are hurting economically, small businesses have to be a bit more cautious" about hiring, Brogan said.

In the Washington region, hiring is picking up at small businesses experiencing an increase in demand for their goods and services. For Luc Brami, principal of Gelberg Signs in Northwest Washington, and Craig Savarick, director of executive recruiting firm Capital Search Group in Vienna, an incentive came in the form of an Obama initiative: a temporary exemption from payroll taxes on every unemployed person they hired.

"For four people we hired, it will be a $9,000 savings," Brami said.

"We got a [tax] break and put it back into the company," he added. "We can buy equipment and get a credit, too."

In all, the administration has implemented about a dozen small-business programs, including a health-care tax credit; more opportunities for women business owners to receive government contracts; and cuts in capital gains taxes.

"Our view is that the financial crisis put multiple barriers in the way of small businesses and the appropriate policy response has to be aggressive and multifaceted instead of looking for one silver bullet," said Gene Sperling, counselor to Treasury Secretary Timothy F. Geithner on small-business issues.

But Brian Bethune, chief U.S. financial economist at IHS Global Insight, asserts that the initiatives coupled with numerous other new regulations are making owners feel overburdened, overregulated and less secure about the economy.

"They may see it as more interference," Bethune said, "they see it as bureaucratic intrusion."

Some business owners and advocates complain that some of the programs contradict one another. Stephanie Cathcart, spokeswoman for the National Federation of Independent Business, said benefits from the payroll tax exemption business owners use when they hire unemployed people are mitigated by provisions in the health-care overhaul law that reduce a tax credit when businesses hire.

"It's counterintuitive," she said. "Frankly, a lot of these initiatives fall short."

Brogan of the National Small Business Administration said a new accounting regulation dramatically increases the requirements associated with providing documentation to the government on businesses' vendors, a rule that on average will multiply the average number of 1099 tax forms an owner files every year to 86 from 10.

"This will take the money they'd spend to hire a part- or full-time employee and give it to accountants," she said.

Dinesh Sharma, president of government contracting firm Washington Business Group in Chantilly, said he ruled out using the payroll tax exemption, believing the savings couldn't justify the tens of thousands of dollars he'd spend in salary and health insurance for a new employee.

"We're not large enough to hire someone just to take the benefit of a small tax break," he added. "The burden is more than the benefit."