The United States of America (USA) is home to a large number of micro, small and medium-sized enterprises (MSMEs). These enterprises play a significant role in the country’s economy, contributing to job creation, innovation, and economic growth. The US government has implemented various policies and reforms to support the growth and development of MSMEs. This article will decode the MSME policies and reforms of the USA.
Definition of MSMEs in the USA
The US government defines MSMEs based on their number of employees and annual revenue. The definition of MSMEs in the USA is as follows:
- Micro-enterprise: A business with fewer than 10 employees and annual revenues of less than $1 million
- Small enterprise: A business with fewer than 500 employees and annual revenues of less than $100 million
- Medium-sized enterprise: A business with fewer than 1,500 employees and annual revenues of less than $750 million
MSME Policies and Reforms in the USA
a. Access to Finance
Access to finance is a major challenge faced by MSMEs in the USA. To address this challenge, the US government has implemented various policies and initiatives to support MSMEs’ access to finance.
The Small Business Administration (SBA) is a government agency that provides loans, loan guarantees, and other forms of financial assistance to small businesses, including MSMEs. The SBA’s programs include the 7(a) Loan Program, which provides loans of up to $5 million to small businesses, the 504 Loan Program, which provides loans of up to $5.5 million for the purchase of fixed assets, and the Microloan Program, which provides loans of up to $50,000 to micro-enterprises.
In addition to the SBA, the US government has established various other initiatives to support MSMEs’ access to finance. For instance, the Jumpstart Our Business Startups (JOBS) Act, which was signed into law in 2012, allows MSMEs to raise capital through crowdfunding and other alternative financing methods. The Act also allows MSMEs to go public through the use of Regulation A+, which provides for a streamlined process for small offerings of up to $50 million.
b. Technology and Innovation
Technology and innovation are critical for the growth and competitiveness of MSMEs in the USA. The US government has implemented various policies and initiatives to support MSMEs’ adoption of new technologies and innovations.
The Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs provide funding and support to MSMEs for research and development of new technologies and innovations. The programs are administered by the SBA and provide grants of up to $150,000 to small businesses.
In addition to the SBIR and STTR programs, the US government has established various other initiatives to support MSMEs’ adoption of new technologies and innovations. For instance, the National Institute of Standards and Technology (NIST) provides technical assistance and support to MSMEs for the adoption of new technologies and innovations.
c. Internationalization
Internationalization is an important strategy for MSMEs in the USA to access new markets and grow their businesses. The US government has implemented various policies and initiatives to support MSMEs in accessing new markets.
The US Department of Commerce’s International Trade Administration (ITA) provides support to MSMEs for export promotion and market access. The ITA provides various services, such as market research, trade counseling, and trade events, to help MSMEs enter and succeed in international markets.
In addition to the ITA, the US government has established various other initiatives to support MSMEs in accessing new markets. For instance, the Export-Import Bank of the United States (Ex-Im Bank) provides financing and insurance to MSMEs for exports. The bank provides various services, such as working capital guarantees, export credit insurance, and direct loans, to help MSMEs access new markets.
d. Regulatory Reforms
Regulatory compliance is a significant challenge for MSMEs in the USA. The US government has implemented various policies and initiatives to reduce the regulatory burden on MSMEs.
The Small Business Regulatory Enforcement Fairness Act (SBREFA) requires federal agencies to consider the impact of proposed regulations on small businesses, including MSMEs. The Act also requires federal agencies to establish a small business advocacy review panel to provide input on proposed regulations.
In addition to SBREFA, the US government has established various other initiatives to reduce the regulatory burden on MSMEs. For instance, the Office of Advocacy within the SBA provides support to MSMEs for regulatory compliance. The office advocates for MSMEs in the regulatory process and provides assistance with regulatory compliance.
e. Tax Reforms
Taxation is a significant issue for MSMEs in the USA. The US government has implemented various policies and reforms to support MSMEs’ tax compliance and reduce their tax burden.
The Tax Cuts and Jobs Act (TCJA) of 2017 provides tax relief to MSMEs. The Act reduces the corporate tax rate from 35% to 21% and provides a new 20% deduction for pass-through businesses, such as partnerships and sole proprietorships. The Act also provides for full and immediate expensing of certain capital investments.
In addition to the TCJA, the US government has established various other initiatives to support MSMEs’ tax compliance and reduce their tax burden. For instance, the IRS provides various tax education and assistance programs to MSMEs, such as the Small Business Taxpayer Education Program and the Small Business and Self-Employed Tax Center.
MSMEs play a significant role in the US economy, contributing to job creation, innovation, and economic growth. The US government has implemented various policies and reforms to support the growth and development of MSMEs. These policies and reforms include access to finance, technology and innovation, internationalization, regulatory reforms, and tax reforms. MSMEs in the USA can take advantage of these policies and reforms to grow their businesses and succeed in the global economy.
References:
- Small Business Administration (SBA). (2021). About SBA. https://www.sba.gov/about-sba
- Jumpstart Our Business Startups (JOBS) Act, Pub. L. No. 112-106 (2012).
- Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) Programs. (2021). https://www.sbir.gov/about/about-sbir-sttr
- National Institute of Standards and Technology (NIST). (2021). NIST Small Business Innovation Research (SBIR) Program. https://www.nist.gov/tpo/small-business-innovation-research-sbir-program
- US Department of Commerce, International Trade Administration (ITA). (2021). About ITA. https://www.trade.gov/about-ita
- Export-Import Bank of the United States (Ex-Im Bank). (2021). About Us. https://www.exim.gov/about-us
- Small Business Regulatory Enforcement Fairness Act (SBREFA), Pub. L. No. 104-121 (1996).
- Small Business Administration (SBA). (2021). Office of Advocacy. https://www.sba.gov/advocacy
- Tax Cuts and Jobs Act (TCJA), Pub. L. No. 115-97
