Image: Amy Nichols, Dogtopia CEO
"Being open for eight years I should be able to get a bank loan with relative ease and that's just not the case," says Dogtopia CEO Amy Nichols.
updated 2/18/2010 4:48:15 PM ET 2010-02-18T21:48:15

Amy Nichols, a small business owner, is tired of the healthcare debate and is relieved President Obama has turned his attention toward her biggest concern: access to credit.

Nichols, who in 2002 launched Dogtopia — a daycare service for dogs — and grew it into a successful franchise that includes 20 locations, is now hamstrung by tight credit. Several of her newly-minted franchisees are in a holding pattern trying to get loans and Nichols has found it equally challenging in her own bid to secure credit.

"Being open for eight years I should be able to get a bank loan with relative ease and that's just not the case," said Nichols, who admitted she was unhappy with what she perceived as the Obama administration force-feeding a healthcare reform bill that she believes, could drive rising insurance costs even higher, especially for small companies. Nichols favors a less prescriptive plan that would give her the freedom to opt out and create her own franchise-wide program.

"Twisting my arm and making me pay into something I don't believe in is not the way to do it," said Nichols, noting that monthly healthcare expenses of $4,000 for her seven full-time employees remain a burden. "People are really afraid of that policy and how it's going to impact us as business owners."

Healthcare weariness is widespread among small business owners. Across the country, entrepreneurs appear dissatisfied with a debate they said tuned out the needs of small businesses, which have significantly higher healthcare costs than those of larger corporations.

"The top business priority is getting the economy functioning properly so that people are creating jobs and there's growth," said Chris Mittelstaedt, founder and CEO of The FruitGuys, a South San Francisco, California company that delivers fresh fruit from local farms to thousands of businesses.

Mittelstaedt said his company, which had flat sales of less than $10 million in 2009 from the prior year, is experiencing inflationary pressures that have driven up transportation and packaging costs in the past year.

"Those kinds of things are really big numbers," said Mittelstaedt, who provides the option of $200 each to some 20 full-time employees for monthly health coverage. He would like to see a government health reform package that offers tax incentives and other breaks to companies that foster wellness programs and other preventive health measures for workers.

"The cost of healthcare is really big in this economy, but the economy is bigger than the cost of healthcare," he said.

Findings from a year-end poll by the National Small Business Association, a Washington-based trade group, reflected the concerns of business owners like Mittelstaedt and Nichols. Healthcare, while still important, slipped back behind worries about economic uncertainty and federal taxes, according to the majority of small business owners surveyed. The January report revealed only 61 percent of small businesses polled were able to find adequate financing, down from 78 percent in August 2008.

"When you talk to small business people about what their struggles are, obviously the economy and getting credit are really high on the list," said Todd McCracken, NSBA president. "As the (healthcare) debate went on, they saw that less and less of what was happening was going to drive down healthcare costs, which was their overriding concern."

There is no easy healthcare solution for small businesses, which span a diverse range of industries and sizes. But those who study the issue say the answer may lie in some form of pooling that allows these companies to share resources and gain economies of scale.

Alain Enthoven, professor emeritus of public and private management at Stanford's Graduate School of Business, supports an exchange-based system, which fosters a competition between private and government-backed healthcare providers that helps drive down costs for businesses. He said a national solution must achieve more efficiencies and increased competition from health providers, noting that the Congressional Budget Office determined the recent House and Senate bills would not moderate the growth of healthcare costs.

"Most small employers are locked into a single fee-for-service plan and that's inflationary," said +efficiency."

The Healthy Americans Act, a Senate bill reintroduced a year ago by Senator Ron Wyden, an Oregon Democrat, and Senator Robert Bennett, a Utah Republican, is one measure that draws on the ideas of universal health insurance and market principles, according to Enthoven.

The healthcare debate, of course, remains a priority for President Obama, who has called for a bi-partisan meeting of Congressional leaders on the issue in the coming weeks. The Small Business Majority, a nonprofit group focused on healthcare reform to help small companies, is trying to keep the healthcare needs of small companies at the forefront. But these days, the president's attention appears to be shifting to more immediate small business concerns.

Following a promise in his State of the Union address, the president last week called on Congress to divert $30 billion from the TARP bank bailout program for a small business lending fund to try to spur job growth. The initiative targets small community banks with assets of less than $10 billion. That move followed a bid for legislation that would provide $5,000 tax breaks to small businesses that hire additional workers in 2010, among other tax incentives.

Those are steps in the right direction, said the NSBA's McCracken, whose group is pushing for more details on the new loan program.

"Those are really our highest priorities right now."

Copyright 2012 Thomson Reuters. Click for restrictions.


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