Talking Business: Big issues face small companies

Small businesses - those employing 100 or fewer - have suffered during the recession as spending has dropped and borrowing has become more difficult.

But they need clout.

To help win more representation during these lean times, the S.C. Small Business Chamber of Commerce has given away free $199 annual memberships to about 2,000 businesses this year.

Frank Knapp heads the nine-year-old advocacy group that represents about 10,000 of the state's estimated 103,000 small businesses. He spoke with The State on Monday:

How is the recession different from the previous downturns for small businesses?

"In the '90s, we walked down into a little valley. This time, it's like we fell of the cliff, and we're clawing our way back up the other side of the mountain. ... Money is tight from the consumer and from lending institutions. Businesses would like to expand or to survive, but they can't find the money."

Banks are even balking at government-backed loans, he said: "Either they don't want to absorb any more risk or they already have a large amount of loans risks on the books." He called consumer demand "very depressed."

What signs do you look for that the economy has recovered?

"Construction is a good bellwether. It's an industry that comes back when people are more confident about their jobs. It means people are more interested in buying big-ticket items."

What is the biggest issue facing small businesses in Congress?

Health care reform. The House and Senate versions of the health care reform bill have requirements that 5 percent to 15 percent of S.C. small businesses must offer health insurance to workers.

Knapp would like to see those requirements eliminated in favor of some tax breaks for offering employee health plans.

However, the reform bills also would lower premiums by reducing the need to cover medical costs of the uninsured. "Let's make it more affordable," he said.

What are some of the issues the chamber wants addressed in the next state legislative session?

Raising the cigarette tax: Adding to the state 7-cent per pack tax could help pay for health care costs and Medicaid expansion - and not put such a burden on business taxes.

Bailing out the state unemployment fund: Knapp wants to avoid proposed across-the-board increases on business taxes to pay for shortfalls in South Carolina's unemployment coffers. Small businesses should not have to be responsible for a problem caused by a handful of large businesses that helped drain the fund with short-term furloughs, he said.