Main Street Matters: Ideas for Improving Small Business Financing
Bipartisan Policy Center
First published August 2018
The Bipartisan Policy Center established the Task Force on Main Street Finance to find ways to make the financial system work better for small businesses and entrepreneurs, which are critical components of the U.S. economy. The task force focused on four key questions:
1. What kinds of data would help policymakers, researchers, and lenders to better understand small business financing, including potential inequities in the provision of small business credit, and how could that data best be collected and assessed?
2. How do financial regulations, especially those put into place following the 2007-2008 financial crisis, impact small business lending, and is there room for improvement?
3. Can capital markets better provide financing to small businesses?
4. How is technology changing the provision of credit to small businesses, and how should the government respond to these changes?
The report starts with background and context on the importance of small businesses to the U.S. economy as well as recent trends in small business health and access to credit. The first section discusses ways to improve the quality and quantity of data available on small business financing. Good data are necessary both to improve credit-application processes and to enable lawmakers and regulators to make better-informed decisions when developing government policy. The second section reviews the financial regulation that impacts access to credit for small businesses and recommends ways to recalibrate regulations to make them more efficient and effective. The third section delves into how to make U.S. capital markets work better for small businesses. The final section sets forth ideas on how policymakers can promote innovation in financial products and services and better integrate technology into financial markets.