The future of small businesses has been a major topic in the 2012 Presidential race, and the difficulty securing bank loans and regulatory and economic uncertainty is weighing down local business owners across Northern Virginia.
President Barack Obama and Republican candidate Mitt Romney will debate Wednesday on domestic issues, including the economy. These small business owners will be watching.
Small Business Loans, Health Care Costs Take a Toll
In July 2009, 29-year-old Danielle Romanetti opened her first business — Fibre Space, a knitting store in Old Town Alexandria. Months earlier, despite her good credit rating, she was unable to get a $95,000 loan from a bank to cover her start-up costs. Romanetti ended up borrowing $50,000 from a home equity line of credit from her parents' home.
"I have impeccable credit and I couldn't get a bank loan," said Romanetti. "The key to economic growth is through small businesses, but if you can't open your small business because you can't get a loan, I guess that means that only the wealthy can open new businesses. That needs to change."
The store, which employs 13 full and part-time employees, doubled its sales goals in its first year and earned $900,000.
"But I can't afford to pay for my own healthcare insurance, and I'm on my husband's plan. I usually end up hiring people like me, whose significant others have health insurance," said Romanetti. "I can't offer healthcare and it severely limits my hiring options. Healthcare reform actually needs to happen."
A knitting shop may be risky, but so is a restaurant. Cousins Sam and Jason Misleh opened Walker's Grille last year just west of Kingstowne, and opened three other restaurants in Northern Virginia over the past four years. Each eatery is located in an office building with a steady base of customers arriving from neighboring offices. Walker's is the only LEED gold-certified restaurant in the Commonwealth, and was recognized this week by the Fairfax County Board of Supervisors. But just like Romanetti, the Misleh cousins were unable to get a bank loan.
"We're almost 100 percent self-funded because the banks aren't lending us money," said Sam Misleh. "The government keeps lending money to banks, and the banks aren't lending to businesses. Some banks, if we wanted to borrow $500,000, we'd have to have $1 million in the bank so that they could use half of it as collateral."
Minority-owned businesses have been disproportionately affected by the recession and subsequent slow economic recovery, said Dr. Gerald Gordon, president and CEO of the Fairfax County Econonmic Development Authority.
"A slew of businesses are having problems accessing credit at times like this. Easing credit requirements or speeding up the process to get loans would be helpful.”
Political Uncertainty Remains a Factor
Jeanette Scott Moler and Jeffrey Connelly own Great Harvest Bread Co. locations in Burke and Lorton. The pair advocate less regulation on their business and lowering taxes.
“Taxes are my fourth highest expense. We pay taxes to so many places, and there are so many agencies that we have to report to,” said Connelly.
Moler and Connelly employ 30 people, and, at one time, the partners considered opening a third location.
“The uncertainty in the economy put a stop to that,” said Moler. “But our business is improving. We're constantly going after it. We're making it happen, and it's not just there waiting for us.”
"The economic environment needs to be stabilized," said Jason Misleh. "The Senate hasn't passed a budget in three years, and there are these Bush tax cuts that might expire, or they might not. We need to know if tax rates are going to be fixed 10 years down the road, and what our financial future will look like."
Maurice Clark opened Escape Nails & Day Spa in Lorton in 2010. "Business is growing, but it's ever difficult," he said. "I don't actually think the president can do anything to help my business that he hasn't already done. I look at it like the Titanic, a ship that was sinking, and somehow Obama's righted the ship. He's turned around the possibility of a depression, stabilized the economy and now he's saying, 'All hands on Deck.' That means Republicans and Democrats working together, because without all of us working in the same direction, it's like building a house without a foundation."
Improving small businesses boils down to consumer confidence, said Va. State Sen. Dave Marsden (D-37). "I think we need to know where we're going with Social Security, with regulation and with taxes, and that means continuity of leadership," he said. "I ultimately think it is a question of confidence. People need to know what the regulatory environment is going to be."
Republican Alexandria City Councilman Frank Fannon worked to defeat a commercial add-on tax last year. "The last thing we need to do is add taxes to business owners," he said. "Keeping taxation, regulation and litigation to a minimum and letting free enterprise succeed is the way we'll get the economy back on track."
What do you think needs to be done to help small businesses? Tell us in the comments box below!