Everyone is looking for ways to create jobs in this Great Recession, and CAMEO is becoming a go-to place to find out how Micro Enterprise development can be a key strategy for mobilizing entrepreneurship and creating new jobs. Following are the highlights from briefings prepared for Speaker Nancy Pelosi, for the two Gubernatorial candidates, Meg Whitman and Jerry Brown and from testimony made to bank regulators at the CRA Hearing in Los Angeles on Aug. 17th. Proposals based on recent research from the CA State office of research, Kaufman foundation, and other sources sited on the CAMEO website.
- Create a $12.5 billion fund to support the 1.25 unemployed, potential entrepreneurs in the US, at an average of $10,000 per business for business assistance and loans. If only half of these micro businesses succeed, they will, over time create an average of 3 jobs, including owners, or 1.8 million jobs nationally. In CA, this would translate to 180,000 jobs from 48,000 new micro business owners.
- Convene the House Labor & Education Committee for a briefing by CAMEO members on how Self Employment and business assistance could be funded by the Workforce Investment Act within the Dept. of Labor.
- Expand SBA Loan Guarantees to non-depository CDFIs that are currently seeing a huge demand from both start ups and Main Street small businesses not being served by banks. The guarantee would exponentially increase the amount of lending, by leveraging more investment capital and decreasing the cost of this capital.
Governor Candidates: CAMEO recommends that the candidates adopt the following proposals that would create significant new jobs without spending additional state funds:
- Use the $73 million in Workforce Investment discretionary funding from DOL to the State to support micro business development, using the infrastructure of SBDCs and Micro Enterprise Development organizations. With these funds, 24,000 new businesses could start and grow, creating a projected 58,000 new jobs over time.
- Release $12 million in unallocated EDA loan funds, now held by the state due to lack of cash match, to nonprofit small business lenders to deploy in small business loans. These funds can be matched by bank grants and investments, e.g. B of A’s new loan loss reserve grants. This capital could assist an estimated 800 businesses and create another 1,000 jobs.
Bank Regulators (Federal Reserve, FDIC and Office of Comptroller of the Currency):
How can CRA be used to strengthen our local and state economies with new job creation:
- Treat grants from banks for business assistance services as Risk Mitigation for lending – an essential component for moving capital to qualified small businesses and for ensuring successful repayment of the loans. These grants should get the same CRA credit as capital investments.
- CRA should encourage bank investment in nonprofit lenders serving economically distressed communities by giving a higher CRA value to these investments.
- Currently low interest, long term EQ2 investments receive the same CRA credit as other bank investments that are collateralized and more profitable for banks to make. EQ2s need to be given a higher value by CRA examiners.