California, and the nation as a whole, still can seize economic opportunities, but only if both overcome these multiplying sets of challenges – challenges made even tougher by the ongoing economic downturn and lingering effects from the “Great Recession.”
Archives: Resources
Small Business Finance FAQ
This document sketches the ecosystem or life-cycle of small business financing. The FAQ format allows users to browse through topics and learn about specific issues. Small businesses, which include startups in such sectors as information technology, service, retail, and manufacturing, have varying financial needs.
Structure of Nonfinancial Industries
We exploit variation in commercial bank capital ratios across states to identify the impact of higher capital ratios on firm creation and size in the manufacturing industries. We control for omitted financial and nonfinancial variables that may affect firm dynamics by exploiting variation in external finance dependence across industries. Our panel regressions suggest that, for industries dependent on external finance, a percentage point increase in the capital ratio has no statistically significant effect on firm creation but leads to a decline in average firm size, as measured in employees, of 0.7 to 1.4 percent the following year and a decline of 4 to 6 percent in the long term. The number of firms might not necessarily decline in response to more limited access to finance as setting up a business may not be that costly and some of the displaced workers may actually establish new businesses. Our results highlight the potential effects that tightening capital adequacy standards, such as Basel III, may have on firm dynamics in the industries dependent on external finance.
Small Businesses in Recent Recoveries
Small businesses play a vital role in the U.S. economy. These firms produce half of private GDP, employ half the private workforce, and are the source of most job creation in the U.S., accounting for roughly two-thirds of new net private sector jobs over the past two decades.1 The importance of small firms to production and job creation makes their health fundamental to economic growth. Data from the National Federation of Independent Business’s (NFIB) 350,000 member businesses indicate that in the current recovery period, these firms are suffering from unusually low levels of sales and earnings, investing less, and hiring fewer workers than in previous recoveries, exacerbating the nation’s unemployment situation and contributing to a lackluster rebound from the most severe U.S. recession since the Great Depression. Statistics on the small business sector are not readily available, but the NFIB data suggest that this sector is dramatically underperforming. Because half of the economy is not growing, we have not enjoyed the kind of growth experienced in past recoveries.
What Do Small Businesses Do?
Substantial differences exists among U.S. small businesses owners; Erik Hurst and Benjamin Wild Pugsley show few small businesses intend to bring a new idea to market.
Economic Growth Agenda for CA
How California can retake control and drive forward again, moving California back into the lead on sustainable growth and real job creation—regaining our leadership role as America’s opportunity capital.
Unauthorized Immigrants in CA
Unauthorized immigrants have been a part of many California industries and communities for decades, but recent and comprehensive information about the numbers and location of this population within California—at the county and sub-county level—does not exist.
CDFI Growth & Sustainability
This report will increase our understanding of challenges CDFIs face at different points in their development.
WIA: How is Federal Funding Spent?
Hundreds of millions of dollars are allocated annually to California through the federal Workforce Investment Act, and most local Workforce Investment Boards report spending far less on job training than on employment services at One-Stop Career Centers.
Evaluating Mentorship Programs
Mentor-Protégé Programs exist in many federal agencies to help small businesses gain technical and business skills from large prime contractors and to build networks and experience that will help them compete and succeed in the federal contracting landscape. Started by the Department of Defense in 1991, there are now many versions of Mentor-Protégé Programs that share similar objectives but have different programmatic and incentive structures. The National Women’s Business Council conducted a research initiative to learn how well Mentor-Protégé Programs are serving women-owned businesses and how they might be strengthened to help women-owned businesses become an even greater engine driving economic recovery.