Real help for small businesses comes at local level

By Steve Silverman
Monday, November 29, 2010

Wireless telecommunications company Alvarion is planning to relocate its North American headquarters from California to Montgomery County, and a number of other companies -- Microsoft, United Therapeutics and Qiagen -- are expanding or opening new offices here. But with 95 percent of our businesses employing 50 or fewer people, economic recovery will likely come from retaining and growing small businesses.

Any small business enterprise -- be it that of a doctor, a printer or a restaurateur -- requires mentoring and counseling to thrive. The real support for small business lies in the everyday programs provided by local economic development departments, not so much federal and state incentives.

At the federal level, talk of eliminating a year of Social Security payments by employers for new hires doesn't pass the laugh test. A small business won't hire because of a one-time 6 percent payroll tax break per employee. Where is the other 94 percent coming from, plus the money for benefits?

Federal loan programs sound good, if you want a loan. But our community banks say there's plenty of money to lend. And our credit-worthy businesses don't need more credit unless they get more customers.

Proposals at the state level to reduce the corporate income tax rate are a great sound bite, but are not a major factor in decisions to locate or expand, according to site selection consultants.

The federal and state programs operate at the macro level, not down in the trenches. Small businesses throughout the Washington region need more county business development centers where they can get one-on-one assistance. That's where the bang for the buck is, but these are very underfunded programs.

Through our Business Innovation Network, we offer tenants turnkey office or wet lab space, fully-integrated conference rooms and support services. The leases are low cost and short term, and that has provided an entryway for many start-ups. The program has graduated nearly 100 companies during its 10-year existence. With five facilities located throughout the county, we provide more than 150,000 square feet of incubator office and lab space to roughly 170 companies that support some 670 jobs.

Since the inception of the county's economic development fund in 1995, about $32 million in financial assistance has gone to nearly 300 local businesses to support job growth in Montgomery -- with nearly two-thirds being small businesses. Another program, the Small Business Revolving Loan Fund, has since 2002 distributed more than $2 million in loans to 37 local small businesses. We also have a local small business reserve program that gives opportunities for contracting to small office supply stores instead of giving it all to Staples and Office Depot.

Our department is an early supporter of the newly created Rockville Women's Business Center, launched this month to help Montgomery build successful women-owned enterprises positioned for long-term growth in our community. It will join our many strategic partners including the Maryland Small Business Development Center, the Latino Economic Development Corp., Rockville Economic Development Inc. and local chambers of commerce that provide direct counseling to support small businesses.

Despite the challenges of today's economy, our continuing commitment to a strong, vibrant and growing small business community is the best chance we have to come out of the Great Recession even stronger than before.

Steve Silverman is director of the Montgomery County Department of Economic Development.

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