Velzquez blames rising costs for Small Business Index decline

Rep. Nydia Velzquez (D-N.Y.), ranking member of the House Small Business Committee, released the Small Business Index for the second quarter of fiscal 2006 today. The SBI reached its lowest point in nearly a decade at 69.20.

Velzquez said in a statement that there were several causes for the decline, including rising energy, health care and capital costs. As of the second quarter, energy prices remain relatively high despite recent decreases in gas prices. Additionally, health insurance premiums have risen 80 percent in the past six years, she said, while the prime interest rate has doubled.

“These increasing costs have placed a disproportionate burden on small firms, preventing them from gaining traction in today’s economy,” Velzquez said.

The most recent index points to troubling signs for small businesses, whose growth has been affected by worsening business conditions on several fronts, she said. “Most disconcerting is that the SBI has maintained this downward trend and has not rebounded as expected, leading to an overall sense of economic uncertainty and pessimism among this country’s entrepreneurs,” she added.

“Rising health care and energy costs coupled with a decline in access to affordable capital have hampered the ability of entrepreneurs across the country to establish and expand successful enterprises,” Velzquez said.

She said current economic conditions continue to threaten the prosperity of entrepreneurs nationwide. “As a result, small businesses have yet to experience the growth they deserve, which has in turn taken its toll on our country’s overall economic situation, leading to poor job growth and stifled innovation,” she said.

Citing the latest index figures, she said the deterioration of conditions vital to small businesses’ success has had a negative effect on the economy as a whole.

“Small businesses inherently face myriad challenges in pursuing successful ventures,” Velzquez said. “What the most recent SBI shows is that the already difficult job of entrepreneurship is getting even harder.”