All eyes may be on the crumbling titans of Wall Street, but rarely has the future been so uncertain for millions of current and would-be owners of small businesses.
The unfolding financial crisis and the election of Barack Obama as president are remaking the landscape of small business — a vast, sprawling area of economic activity that has been an engine of job creation and a bulwark of employment.
Small business includes a wide variety of enterprises like self-employed artists and writers; pint-sized flower shops and family roofing operations; real estate investors with dozens of rentals; and companies with hundreds of employees.
“Small businesses are particularly fragile, and they fail at a pretty high rate,” said Leonard Burman, director of the Urban-Brookings Tax Policy Center, a think tank in Washington. “Even if they get credit, they may not have time” to build themselves into sustainable businesses if consumer spending remains weak, he said.
In a survey in September of 4,200 small-business owners by MerchantCircle, a social networking Web site for small companies, four of five respondents said either that the federal bailout of financial institutions would not help them or that they were unsure whether it would.
At the same time, the election intensified scrutiny of Mr. Obama’s tax plans. He has pledged to raise taxes on households earning more than $250,000. He has also pledged to create a $5 billion Small Business Rescue Plan, similar to the Treasury bailout, to be run through the Small Business Administration, as well as to scrap capital gains taxes on investments in small businesses and provide them with a small tax credit on their health care costs.
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