Business

The latest news¹ of First Republic Bank being taken over by the Federal Deposit Insurance Corporation (FDIC) and then sold to JPMorgan Chase marks the third major bank failure this year and the largest lender to collapse since the 2008 financial crisis.1 It was then that the country faced such a dire situation the Federal government decided it had to bail out banks deemed “too big to fail”.²

This notion of a business so large that it should not be allowed to collapse, lest there be catastrophic effects on the global economy, got me wondering: What if that same logic was applied to small businesses?

Small businesses are the lifeblood of the U.S. economy. They create two-thirds of net new jobs, drive U.S. innovation and competitiveness and account for 44 percent of U.S. economic activity.³ Therefore, it would seem to make good economic sense to ensure that small businesses survive and thrive. That small businesses be deemed: “too small to fail.”

While this logic may seem unlikely, it has already been applied. It led to the strategy of fiscally supporting small businesses with federal dollars to help them recover from the economic impacts of the Covid-19 pandemic. The U.S. Small Business Administration (SBA) delivered a record 43 billion dollars in historic support to America’s small businesses.⁴

According to the U.S. Bureau of Labor Statistics (BLS), approximately 20% of new businesses fail during the first two years of being open, 45% during the first five years, and 65% during the first ten years.⁵

For the economy to work, we all have to do our part. Imagine if every Southbury resident had the attitude that no business in town was too small to fail. If each made a pledge to Shop Local, Eat Local, use Local Services. The results would be transformative. Our local businesses are not looking for a bail out, they’re looking for customers. This June take the pledge, and watch Southbury soar.

References

1. https://www.nbcnews.com/business/business-news/first-republic-bank-fdic-takeover-sold-jp-morgan-rcna81437
2. https://www.thebalancemoney.com/the-great-recession-of-2008-explanation-with-dates-4056832
3. https://advocacy.sba.gov/2018/12/19/advocacy-releases-small-business-gdp-1998-2014/
4. https://www.sba.gov/article/2022/dec/13/sba-announces-end-year-capital-benchmarks-showing-historic-support-small-businesses-under
5. https://www.bls.gov/bdm/entrepreneurship/entrepreneurship.htm

Kevin Bielmeier
Economic Development Director
Town of Southbury
EcoDevDirector@southbury-ct.gov
(203) 262-0683

[This article first appeared in Southbury Neighbors magazine.]