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  • 02.01.09

How the Stimulus Package will help Small, Green Businesses Help us All

What’s small and green and will get the economy moving again?


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The importance of small businesses for the economy is often forgotten.  With the government moving swiftly to revive our economy and get it back on track, now is a good time to remember it.  Small businesses generate most of the jobs, and create a great deal of the innovation that drives economic growth.  According to the National Small Business Association, small businesses created 21.9 million jobs in the last 15 years, compared with 1.8 million for large businesses.  It is small businesses more than anything else that will get the economy going again, back on track to create jobs.  Small, green businesses may be the most important of all.

 

Why will small businesses turn the economy around?  Because they are hungry, move quickly, and are able to experiment.  When so many people lose their jobs, and it’s hard getting a new one, a great number of them take the plunge and start a business out of necessity.  When you have little to lose, the risk of starting a business seems not so great.  These newfound entrepreneurs are hungry, hunting down every last scrap of opportunity.   They are also agile, able to move and change course quickly without committees and CYA maneuvers to hold them back, just trying one idea after another until they hit a winning formula. 

 

Big businesses are feeling the pain as well, but their response is more conservative.  They are retrenching, pulling back, and conserving their cash.  They are laying off people, circling the wagons and hoping they can make it through to the other side. 

 

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As the government mobilizes its resources to stimulate the economy, it is moving to support small businesses, particularly green ones.  Stimulating small, green businesses is a winning move to knock the gears of the locked-up economy back into action and create opportunities for millions of people.

 

When I recently spoke with Byron Kennard, Executive Director of the Center for Small Business and the Environment in Washington DC, he described the importance of small, green businesses in the economy recovery.  He is preparing a report called “Greening the Engine of the Economy” that lays out policy initiatives to help green businesses help all of us, and working in Washington to ensure that this happens.  A number of proposals are being debated to help both small businesses and the environment, including the $800 stimulus package and other measures.  Whether the mix is loans, grants, or both, and whatever the department administering such a plan, the end result should be very positive. 

 

The American Recovery and Reinvestment Act of 2009, the stimulus package recently passed by the US House of Representatives, contains a number of provisions to help small businesses, as well as programs to move forward green initiatives such as renewable energy and energy efficiency.  The small business provisions include $30 billion in tax relief for small businesses and $13 billion in loans, lines of credit and equity capital.  The provisions include:

  • Increasing the SBA guarantee on loans up to 95% of loan value
  • Steps to improve the liquidity of small business lending markets
  • Allowing the SBA to refinance existing loans, including both those with the SBA and other loans
  • Increasing equity capital for high growth businesses
  • Lending assistance for borrowers locked out of traditional financing markets
  • Tax relief in several forms

 

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The stimulus package also contains significant new support to drive the growth of green businesses, including a variety of incentives to drive the growth of renewable energy, stimulate energy efficiency efforts, and update the national electrical grid.  President Obama is calling for the production of renewable energy to double in the next 3 years, continuing its rapid growth.  Among the provisions in the over $800 House version of the stimulus package:

  • $10 billion to weatherize low-income homes, saving energy
  • $8 billion to increase the efficiency of government and military buildings
  • $7 billion in energy efficiency grants by state governments
  • $11 for the updated electrical smart grid
  • $8 billion in new electrical lines for the improved electrical grid
  • $8 billion in loans for renewable energy projects
  • $2 billion for energy efficiency and renewable energy research
  • $2 billion for advanced battery research

 

Investment in renewable energy and energy efficiency will pay for itself many fold.  When you provide for better insulation of homes, this investment pays dividends to homeowners and businesses for many years by saving them money.  All of that saved money goes back into the economy rather than out into the atmosphere.  With a national commitment to transforming our economy to renewable energy, we stimulate innovation, create jobs, and restore our place as leaders in the world. 

 

The stimulus package is not a done deal yet, with a Senate version of the bill still in the works.  At the end of the day, maybe getting the economy back on the same old track is not the goal.  Maybe getting the economy on a better track is the way to go.  Small, green businesses are laying track leading forward to a better future. 

 

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About the author

Glenn Croston is the author of "75 Green Businesses" and "Starting Green", and the founder of Starting Up Green, helping green businesses to get started and grow.

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