Summary
Small businesses employ nearly half of all U.S. employees, but many still can’t get the financing they need. They also lose time to licensing and permitting delays and to a federal contracting system that favors larger firms. I support practical, bipartisan fixes: faster permits, simpler SBA lending, fair set-asides, prompt payment and workforce training.
Why does small business growth matter so much?
According to the SBA Office of Advocacy (2026), the United States has 36.2 million small businesses. Together they make up 99.9% of all businesses and employ 62.3 million people, or 45.9% of all U.S. employees. California alone has 4.3 million small businesses, which employ 47.4% of the state’s workers. Small firms also account for 97.1% of identified exporters. When they grow, the benefits reach every neighborhood. When they struggle, the losses show up as empty storefronts and fewer local jobs.
Can small businesses get the capital they need?
Often, only in part. The Federal Reserve’s Small Business Credit Survey (2026), which covers 2025, found that 38% of employer firms applied for a loan, line of credit or merchant cash advance. Among firms that applied for any financing, 42% received the full amount, 36% received some of it and 22% received nothing. Of firms with debt, 59% relied on a personal guarantee. Borrowers are also moving toward online lenders: 29% of applicants sought financing from an online fintech lender, up from 17% in the 2020 survey. Sixty percent of those who borrowed from online lenders said their actual borrowing costs were higher than they expected. Applicants at small banks were the most likely to be fully approved, at 57%.
SBA programs help fill the gap. These include 7(a) loans made through private lenders, long-term fixed-rate 504 loans made through Certified Development Companies, and microloans of $50,000 or less (SBA). I would keep these programs focused on firms that private lenders underserve, make the paperwork simpler for small-dollar loans, and require lenders to disclose borrowing costs plainly so owners can compare offers.
How much do licensing and permitting slow new businesses?
A lot. A 2015 report from the U.S. Treasury, the Council of Economic Advisers and the Department of Labor found that about 25% of U.S. workers were in occupations licensed at the state level. That was up from less than 5% in the early 1950s. Licensing makes sense where health and safety are really at stake. But requirements that differ widely from state to state make it harder for people to start businesses and to move for work. Permitting creates the same kind of drag. A restaurant, salon or contractor can pay rent for months while waiting for approvals. I would support fixing these problems without lowering safety standards:
- Publish permit timelines, and approve simple applications automatically if the agency misses its deadline.
- Offer one online portal so an owner can submit a single application to every agency involved.
- Recognize licenses from other states where the standards are comparable.
- Review licensing rules on a regular schedule to confirm each one still protects the public.
How can more small firms win federal contracts?
The federal government has a goal of awarding at least 23% of federal contracting dollars to small businesses, and each agency is graded on a public scorecard (SBA). The main tools are set-asides and certification programs. Under the long-standing “rule of two,” a contract is set aside for small businesses when a contracting officer expects offers from at least two responsible small firms at fair market prices (FAR 19.502-2). The SBA 8(a) Business Development program gives eligible firms up to nine years of business development support and access to set-aside and sole-source contracts. The program has strict eligibility limits on net worth, income and assets (SBA).
Setting these goals is the easy part. In practice, the hard part is the cost of competing: registration, compliance, proposal writing and long payment cycles. Federal rules set a goal of paying small business contractors within 15 days of a proper invoice. Prime contractors that receive accelerated payments must pass them on to their small subcontractors on the same timeline (FAR 32.009-1). I think this should be treated as a firm commitment and reported publicly. Slow payment is effectively an interest-free loan from a small firm to the government.
These programs also need strong oversight. When set-aside contracts go to firms that don’t qualify, or to pass-throughs that do little of the work, taxpayers and legitimate small businesses both lose. I would pair access with audits and real consequences for fraud.
What role do digital tools and workforce play?
The Federal Reserve’s 2025 report, covering 2024, found that reaching customers and growing sales was the most common operational challenge, cited by 57% of firms. In the 2026 report it was still the top challenge, with hiring and keeping qualified staff second. Many small firms don’t have the in-house skills to compete online, use modern accounting and payment tools, or protect themselves from cyber threats. Existing Small Business Development Centers, community colleges and SBA resource partners can close much of that gap with short, practical courses. I would also make it easier for small employers to join registered apprenticeships by sharing the administrative burden through industry groups or community colleges.
What I’d prioritize
- Set “shot clocks” on permits, with automatic approval for simple, low-risk applications when agencies miss their deadlines.
- Require plain-language disclosure of total costs on small business loans and cash advances.
- Track and publish how quickly agencies pay small business contractors against the 15-day goal.
- Pair set-aside access with audits and penalties for firms that don’t qualify.
- Fund short digital-skills, cybersecurity and apprenticeship programs through existing SBA partners and community colleges.
Frequently asked questions
How many small businesses are there in the U.S.?
The SBA Office of Advocacy (2026) counts 36.2 million small businesses, which employ 62.3 million people, or 45.9% of all U.S. employees.
What is the federal small business contracting goal?
The government aims to award at least 23% of federal contracting dollars to small businesses. Separate goals apply to certain categories, such as women-owned small businesses.
Isn’t cutting red tape just deregulation?
No. The goal is faster, more predictable government that keeps real health and safety protections in place. Deadlines, single portals and license recognition across states protect the public and save owners time.
Sources
- SBA Office of Advocacy, “2026 Small Business Profile: United States” (2026): advocacy.sba.gov
- SBA Office of Advocacy, “2026 Small Business Profile: California” (2026): advocacy.sba.gov
- Federal Reserve Banks, “2026 Report on Employer Firms: Findings from the 2025 Small Business Credit Survey” (2026): fedsmallbusiness.org
- Federal Reserve Banks, “2025 Report on Employer Firms” (2025): fedsmallbusiness.org
- U.S. Small Business Administration, “Loans”: sba.gov
- U.S. Treasury, Council of Economic Advisers and Department of Labor, “Occupational Licensing: A Framework for Policymakers” (2015): archives.gov
- U.S. Small Business Administration, “Certifications and contracting goals”: sba.gov
- Federal Acquisition Regulation 19.502-2, “Total small business set-asides”: acquisition.gov
- Federal Acquisition Regulation 32.009-1, “Accelerated payments to small business contractors”: acquisition.gov