The tagline “small businesses are the backbone of our economy” gets a lot of play, but the lack of state and federal policy support tells another story. In a video featuring Michael Barr, director of the Center for Finance, Law, and Policy and dean of the Ford School, titled “Consumer Protection for Small Businesses,” Barr explains the importance of supporting small businesses, detailing tangible ways the government and lenders may do so. The video was released in July by Business Forward, a research and education organization that takes a business-minded look at policy issues affecting America’s economic competitiveness, as part of its Solutions 2020 initiative.
Using whiteboard graphics to illustrate small business figures, Barr reinforces that “small businesses are essential to economic growth in the United States.” He notes that there are 30 million small businesses in the U.S., which account for 47.5% of U.S. employees, as well as two-thirds of net new jobs in the past 25 years. Despite the importance, it’s incredibly difficult to succeed as a small business. “One of the biggest reasons for small business failure is lack of adequate access to capital,” Barr states. This problem has grown since the Great Recession, with commercial loans and lending declining steadily.
Barr goes on to describe ways to better help small businesses. He says we need to “start by understanding that small businesses, like households, need some financial protection.”
Watch the full video here.
Michael S. Barr is the Joan and Sanford Weill Dean of the Gerald R. Ford School of Public Policy, the Frank Murphy Collegiate Professor of Public Policy, the Roy F. and Jean Humphrey Proffitt Professor of Law at the University of Michigan Law School, and the founder and Faculty Director of the University of Michigan's Center on Finance, Law, and Policy. He is also a nonresident senior fellow at the Center for American Progress. At the Law School, Barr taught Financial Regulation and International Finance, and co-founded the International Transactions Clinic and the Detroit Neighborhood Entrepreneurs Project.