The Small Business Administration and their troubling Definition of “Small”

“Lumping 500-person companies and five-person gift shops together guaranteed that behemoths would trample the Main Street shops on their way to the front of the assistance line.” – Jake Ward, President of the Connected Commerce Council.

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I came upon an eye-opening letter to the Wall Street Journal from Jake Ward, President of the Connected Commerce Council. The letter, “The Really Small Business Administration,” challenges the Small Business Administration for categorizing “small businesses” that are eligible for the Payback Protection Program (PPP) loans as those with less than 500 people.

Five Hundred people are a lot of folks, particularly when we compare it to the large number of toy businesses that employ 2, 5, or 10 people. As Mr. Ward puts it: “Lumping 500-person companies and five-person gift shops together guaranteed that behemoths would trample the Main Street shops on their way to the front of the assistance line.”

Here is a list of publicly traded companies that the SBA classified  as “small businesses.” I found them in a Marketwatch article entitled: “Here are the public companies that got coronavirus aid meant for small businesses.” The list, compiled by Morgan Stanley Research, consists of public companies that secured loans of anywhere from $3 million to $15 million. How many truly small companies failed to secure the loan because these companies and others like them got there first.

Mom and Pop toy companies are struggling all across America. I think it is essential that we ask this question: “Is the Small Business Administration adequately focused on those businesses that are truly small?” Perhaps what we need is a “Tiny Business Administration” whose aim is to serve the truly little guy.

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