As 2011 comes to a close, I am struck by one number: 9.9 percent, Georgia’s unemployment rate. We all know families need jobs and that more jobs come from small businesses than anywhere else. Georgia must create an economic environment that encourages small businesses to survive and grow. One tool we can deploy quickly is the Georgia Small Business Investment Company Act.
Among many things, small businesses need access to capital to thrive. The GSBIC places $125 million of private sector money into deserving firms promptly and efficiently, enabling the creation and retention of good-paying jobs. Many promising businesses outgrow the financial resources of their founders, as well as the limited funds of the founders’ friends and families. While these businesses may contain tremendous potential, they neither qualify for commercial bank lending nor interest institutional investors. This in-between stage is where good companies often die.
GSBIC offers a bridge for Georgia businesses across the abyss of growth capital. Businesses in need of $500,000 up to several million dollars will obtain vital capital to pay salaries, buy equipment or invest in any of the numerous needs small businesses face.
GSBIC brings together a truly beneficial public-private partnership. The cash to invest comes from the private sector. Professional fund managers in Georgia screen qualified businesses for investment according to private industry best practices. Investment decisions are based on economic reality, without political influence. No Solyndras are foisted onto the Georgia taxpayers.
Georgia contributes tax credits in the future. The three-year delay in the state’s contribution allows the private investment to create not only jobs, but also state and local tax revenue offsetting the cost.
Annual performance reports will be provided to the governor and Legislature. No new bureaucracy or political boards are created.
My goal is to add to Georgia’s toolbox for creating and supporting a job-growing economy. No one program answers all needs and many work together well. Georgia is blessed with a strong local entrepreneurial community.
Some see the need to disparage GSBIC with misinformation. Economic development and job growth is not a zero-sum game, however, and the more capital that flows into small businesses, the better.
Some questions apply for all small business finance programs: What is the cost to Georgia? How much capital gets invested in Georgia businesses? Will the new investment create more new state tax revenue than the cost?
A 9.9 percent unemployment rate represents failure. The GSBIC Act offers an opportunity for success.
Ben Harbin is a Republican state representative from Evans.
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