Stimulating Entrepreneurs

By Trishan Arul    March 11, 2009

Given the companies and people whom I work with, it should be no surprise that I strongly support entrepreneurship. The sad thing about the current economic problems is that small businesses have been hit harder than big corporate giants yet NOT A SINGLE POLITICIAN has bothered to help in any meaningful way. Yes, the economic stimulus package allows for bonus depreciation but that is useless if your business doesn’t have money to buy new equipment and, despite Republicans’ fanatical belief in tax cuts, its a very poor incentive to induce spending.  A number of columnists and writers such as Thomas Friedman have advocated common sense changes to foster innovation.

Some things that will help are:

• making it easier via tax incentives for people to invest in early stage companies
• providing operating companies with loans to weather through the downturn

On the first point, Sramana Mitra (whom I have plugged before) wrote a good article on Forbes.com advocating for President Obama to add entrepreneurs to his circle of advisors. Among the changes she advocates and I support is policy that would allow:

An aspiring entrepreneur ought to be allowed to create a tax-free pool of income for use as personal venture capital. Such a pool of capital would go a long way to help kick-start new ventures.

This is just the first step in many policy changes that the government can make to help foster new businesses.

On the second point, an innovative idea related to providing financing to existing businesses was written about by Andrew Field, an entrepreneur himself, in a comment article. He advocates small business loans for every employee hired by a company. The alternative for most is to cut payroll, something that will just make the recession worse since small businesses employ most of the people in this country.

Let’s hope someone in Washington DC is listening. Or better yet, write your congressional representative and US senators and tell them how they should be allocating the trillions of our tax dollars being spent on fixing the economy! I already have.