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Guest Blogger, Gerry Purdy, Ph.D – Proposes Stimulus Plan For Startups, Early Stage, Small Business With Less than 100 Employees

By Gerry Purdy, Ph.D

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Dear Santa –

There’s only one thing I want for Christmas: For President Obama, Secretary of the Treasury Tim Geithner, Federal Reserve Chairman Ben Bernanke, Small Business Administration (SBA) Head Karen Mills — as well as both Senate Majority Leader Harry Reid & upcoming House Republican Majority Leader John Boehner — to kick off 2011 and create a stimulus plan for small businesses – startups, early stage, and small businesses with fewer than 100 employees. This is something that both parties should support.

Such a plan would do more to help the creation of jobs in the U.S. than any of the past stimulus plans, bailout programs, TARP programs, or even the most recent $800 billion dollar stimulus program announced by Mr. Bernanke on November 25, 2008 that will buy up debt and mortgage backed securities. 

Perhaps all of these big financial institution programs were necessary on a macro-economic scale, but very little of it has helped create new jobs in the small business sector.

Here’s what we need to do:  The Federal government should allocate a reasonable amount like $200 to $300 billion to fund grants that would be issued by the SBA and that would focus 100% on one thing: create new jobs. 

Each company could apply for a grant of up to $250,000.  Each grant would be used to:

1) hire new part-time and full-time employees

2) cover associated withholding (FICA, etc.) and health insurance

3) cover the costs of a notebook computer & SmartPhone for each new employee to support their employment.

The grant applicant would only need to demonstrate how the new employee would help the company grow revenues and profits over the coming years, verify that the company has fewer than 100 employees, and commit that they funds would be used for creating new jobs.

Thus, the cost to the small business applicants for hiring new people would be very low.  But, these new jobs would help generate additional new revenue in the economy and, as a result, millions of other new jobs would be created in the workforce.  This would act like venture capital but would be structured as one time-grant.

The SBA would provide funding for the grants but, perhaps, use private banks to administer the grant application & grant making process. The grants would then be deposited in the bank which took the application and sent it on to the SBA. The only qualification would be that the officers sign a commitment that the funds will only be used to hire new employees and cover their withholding & health insurance costs & the costs for one notebook computer & SmartPhone.  The cost to the government would be the one time allocation of $200 to $300 billion. 

Just look at the benefits.  The program would create approximately 2.5-4.0 million new jobs (based on an average of $80,000 per year ‘fully burdened’ costs including salary, withholding & health insurance).  That, in turn, would generate over $750 billion in new revenue which, in turn, would greatly increase spending in the economy.  Additional taxes would come in to the Treasury (which would eventually cover the program cost) and millions of additional new jobs in large & small businesses would be created.  Most of these new jobs would be permanent since the companies that created the new jobs would generate more than enough new revenue to keep the new person working long term.

These grants alone will bring down unemployment by 3% – enough to put the economy back to a normal unemployment rate of 5-6%.

I’m involved with two small ventures that would benefit from the $250,000 grants and create 3-4 new jobs immediately.  These new employees would help grow the business, generate new revenue, and allow the business to keep the employee.   

This isn’t another new government bailout.  This is a jobs creation plan to help build the economy from the ground up – allowing each small business to get access to new employees that, in turn, will help grow the economy — including mobile and wireless as well as many other industries.

C’mon Santa, work with Obama, Geithner, Bernanke, Mills, Reid & Boehner.  Make this the best Christmas ever.

Cc: President Barak Obama (The White House), Tim Geithner (Secretary, the Department of Treasury), Ben Bernanke (Chairman, The Federal Reserve), Karen Mills (Administrator, the Small Business Administration), Harry Reid (Majority Leader, the US Senate) & John Boehner (Upcoming Majority Leader, House of Representatives)

Inside Mobile is written by J. Gerry Purdy, Ph.D., Principal Analyst with MobileTrax and is published each Wednesday.  

 

 

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