Independence, dependability, self-reliance - these ideals of the American character are rooted in rural America. The Office of Advocacy recognizes that viable small businesses are the core of sustainable rural communities. And today, rural small businesses face special challenges - limited access to capital and technological infrastructure, an eroding employment base, and the need for agriculture to compete globally - to name a few.
In recent years, the office has devoted greater resources to studying and identifying rural issues and making information available to help address them. For instance, the office's studies on lending let rural business owners know which banks have a track record of lending to small rural businesses and small farms. The studies may also prod banks into improving their lending practices. Advocacy started ACE-Net (the Access to Capital Electronic Network) to expand access to early-stage equity capital for all small businesses. ACE-Net is a tool that is especially relevant to rural small businesses. Rural small businesses' access to capital has historically been limited and may be constrained further as bank mergers replace community banks with larger entities that are less interested in non-credit card small-sized loans. And Advocacy's regulatory review has helped assuage some of the burdens that new federal regulations would have imposed on rural small businesses.
The Office of Advocacy has also teamed with the National Rural Development Partnership (NRDP), an initiative of the U.S. Department of Agriculture, to raise institutional awareness of rural issues. Advocacy hosted one of the NRDP's Harry S. Truman Fellows for 2000-2001, Shawn Vogt Sween, who is the author of this report. In this report, Sween catalogues Advocacy's recent efforts to address issues that affect rural small businesses and, with the input of NRDP members, identifies areas of much needed future research.
Visit the Office of Advocacy's Web site at www.sba.gov/advo for additional information about small businesses.
Introduction
One-quarter of all Americans live in rural areas and particularly benefit from the resources that the Office of Advocacy offers to small business. For many reasons, local firms serving rural communities often have more difficulty accessing needed technology, transportation, and services. That difficulty in accessing resources results in high fixed costs for rural small businesses. Those costs effectively create barriers of entry for rural small businesses making it more difficult for rural small businesses to compete with urban small and large businesses.
The Office of Advocacy's mission, simply stated, is to encourage policies that support the development and growth of American small business in all areas of the country. The Office of Advocacy works to ensure that government policies not increase the barriers to entry for new small firms and to reduce the burdens that federal policies impose on small firms, without compromising the intent of policies or regulations. Most "one-size-fits-all" regulations and the required paperwork have a high component of fixed costs and result in a higher cost per unit of output for small firms relative to large firms. For rural small firms, the fixed costs are likely to be even higher.
Given these challenges, the Office of Advocacy has taken a leadership position in recognizing the unique needs of rural small businesses. This study outlines the work that the Office has already completed that affects rural small businesses. There is, however, additional work to be done - work that is consistently constrained by staff and budget limitations. Because Advocacy has played a leading role in calling attention to the unique needs of rural and urban small businesses, this study suggests possible directions for future work that would positively impact influence rural small businesses.
Conclusion
Through its research and data development, review of federal regulations, partnerships with state and regional agencies, and other initiatives, the Office of Advocacy has positively impacted influenced rural small businesses. This work has made Advocacy a leader in advocating for the needs of rural businesses. It is also apparent, however, that additional work remains to be done for rural small businesses. This future work will depend upon time, budgets, and staffing levels of the office.
Information courtesy of the Small Business Administration.
