Here’s a real basic concept for you: businesses need customers. When businesses have customers, then they have cash flow. Cash flow enables businesses to do several things:

1. They can self-finance a lot of what they need with internal capital.

2. They can afford to borrow money, if necessary, because they have sufficient cash flow to handle servicing a loan.

3. They can justify the loan because they have the demand (i.e., the customers) to warrant expansion.

4. They can possibly actually get the loan because they have cash flow (of course, they still need good credit and collateral).

It all starts with customers. This is Business Management 101. Cash flow is king.

Which is why it’s funny to listen to lawmakers talk about access to capital as if borrowing money will return small businesses, and therefore the U.S. economy, to prosperity.

Haven’t we heard that tune before? You’d think Americans would never again want to listen to anybody suggesting that debt is what they really need.

But, here we are, with coverage of two separate hearings on small business access to capital, one in the House and one in the Senate. And, just to round out the picture, we have another of our periodic peeks at the economy, which ain’t pretty.

For more information:

• Senate Committee on Small Business and Entrepreneurship
• National Association for the Self-Employed (NASE)
• House Committee on Small Business
• Econosystems.com
• The Conference Board
• National Federation of Independent Business (NFIB)

Naturally, since April 15th was last week, you knew there was going to be something about everybody’s least favorite civic chore in the week’s microbusiness news, didn’t you?

I didn’t have the space in the Microbusiness News Briefs to do last week’s House Small Business Committee hearing full justice, to own the truth. Everything from Vern Buchanan’s concern about those unfortunate souls earning in excess of $250,000 in annual adjusted income to Roscoe Bartlett’s rather bizarre theory that taxing business income hurts poor people was on display.

You really just can’t make this stuff up.

That’s one of my ongoing frustrations, the difficulty in covering an event that has all kinds of complex background information attached to it. Inevitably, you have to leave things out, whether you want to or not.

(That’s also what makes The MicroEnterprise Journal a much more valuable source of information when it comes to delivering the microbusiness news.)

All of that said, the health care haggling that took over last week’s hearing on small business and taxes before the House Small Business Committee was worth the attention it got. Clearly, Congressional Republicans are on the warpath, managing to mar even the legendary bipartisan harmony on this Committee.

Also this week, an interesting hearing on minority-owned firms and access to capital (or lack thereof) and, as always, this week’s Policy Matters column.

For more information:

• House Committee on Small Business
• Senate Committee on Small Business and Entrepreneurship

Raw Voice (owners of Blubrry.com, the podcast network to which the Microbusiness News Briefs belongs) and several other podcasting companies have joined with The Association for Downloadable Media (ADM) on the “Consumers Attitudes on Advertising & Sponsorship in Audio and Video Podcasts” research project.

The project is a survey that should take about 10 minutes to complete and does NOT ask for personal contact information. The survey will record audience reactions to topics such as ad style, delivery and placement. The research will help podcast producers best fulfill the expectations of their listeners and viewers.

If you are willing to take a few minutes to complete the survey (and I hope you will), please visit http://www.takethesurvey.com/rawvoice. And thank you for your help!

Health care reform is back and the number one topic of the week, with two of our three stories focusing on that very interesting topic. The Senate Small Business Committee leadership (Landrieu and Snowe) are concerned about some of the issues facing the self-employed that are not addressed in proposed reform legislation. The NASE is concerned about that, too.

I don’t know why but … you’d think that eventually people would get it that they don’t get it, wouldn’t you? Personal paradigms are powerful persuaders.

Rounding out the weeks news is a recent proposal that says to businesses, “We don’t need you to site your factory or call center in our community. We just need you to hire our rural and small town constituents to telework for you. Isn’t technology wonderful?” New wrinkle on an old economic development tactic.

For more information:

• Senate Committee on Small Business and Entrepreneurship
• National Association for the Self-Employed (NASE)
• (THOMAS) Rural and Small Town Telework Tax Credit Act of 2009 (H.R. 3627)

This Congressional session has been a peculiar one so far, simply because there has been the usual amount of hot air expended on Capitol Hill but it all seems to be expended in discussing only one or two topics.

One might argue about how well lawmakers walk and chew gum at the same time but, I’ll confess, now that everybody has turned themselves into Johnny-One-Note, covering Capitol Hill is not at its most interesting.

This week, we have small businesses and access to capital (Microloan with a twist), the tax gap, and small firms and health care reform. There will be more on that last subject next week; Senate Small Business Committee Chairwoman Mary Landrieu will convene a hearing on that subject later this week.

For more information:

• House Small Business Committee
• GAO Report: Limiting Sole Proprietor Loss Deductions Could Improve Compliance but Would Also Limit Some Legitimate Losses (PDF)
• Senate Committee on Small Business and Entrepreneurship

Considering the scope of that little project, it’ll be a bit of a miracle if they get it done in less than two months (on schedule). House Majority Leader Steny Hoyer has said that he expects the House to vote on that and an energy bill by that August recess deadline.

Personally, I think he’s nuts but I wouldn’t want to burst his bubble.

I found my conversation with Paul Glover to be a fascinating exercise into just what is possible when you think way, way, way outside the box.

Just think: if our current system of currency and exchange isn’t working for you, invent one of your own! Why not?

Now that’s what ya call testicular fortitude!

For more information:

• House Committee on Small Business
• Philadelphia Regional and Independent Stock Exchange (PRAISE)
• Paper: Entrepreneurial Attitudes and Action in New Venture Development

This weekly ritual small business groveling that emerges from Washington every year is always a time of profound irony for me. It’s tough to take policy makers seriously when they spout off about the manifold wonderfulnesses of small businesses, when the actual economic policies they craft say something very different.

Or, to put it another way, if I had a choice between $787 billion and a proclamation from President Obama about how wonderful I am, I’d take the money. In a heartbeat.

There is good news for microbusinesses coming out of the Senate Small Business Committee, in the form of the open-mindedness of Chairwoman Mary Landrieu. Every time I have an opportunity to watch her in that capacity, she sounds as if she is prepared to do things differently, to seek alternatives when programs and services are not reaching segments of their target populations, to listen to innovative ways to get things done.

All of which is very encouraging. Granted, it’s not the first time I’ve heard stuff that seemed encouraging coming from the lips of lawmakers and I am usually disappointed. So, the jury is still out on Landrieu but … it does look promising.

For more information

• Senate Committee on Small Business and Entrepreneurship
• National Small Business Association
• House Committee on Small Business
• National Association for the Self-Employed

Here’s something I’m wondering about.

If most small businesses are microbusinesses, and if microbusinesses generally don’t have access to capital under normal circumstances, then I’m wondering why anybody thinks that lack of access to capital now will cause their businesses to fail?

Or maybe the jumping up and down and yelling is not on behalf of microbusinesses but on behalf of all those small businesses that are used to having access to working and expansion capital?

For all the yelling, access to capital is not going to drive most of the nation’s small firms out of businesses. That’s like saying lack of water will kill a cactus during a drought when the cactus always lacks water so why should a drought make a difference?

Well, it made perfect sense to me!

For more information

Credit Cardholders Bill of Rights Act of 2009 (H.R. 627) (THOMAS)
The FY2010 Budget Request for the SBA (Hearing Archive, Senate Committee on Small Business and Entrepreneurship)
Expanding Equity Investment in Small Business (Hearing Archives, House Committee on Small Business)

Not even a quick jaunt down to Washington managed to save me from a certain, shall we say, ennui?

A lot of it has to do with the frustration that I’m feeling and that I know is shared by many other leaders in the small and microbusiness space. Nothing can happen until Karen Mills is confirmed and, given that we’ve known she was the nominee since last December, it seems to be taking forever to get her into place.

That matters because there is much cleaning up to do at the SBA. The sooner somebody gets started on that project, the better.

For further information:

Fiscal 2010 SBA Budget Fact Sheet (Office of Management and Budget)
SBA Office of Advocacy
National Association of Government Guaranteed Lenders

As much as small business owners complain about regulations, that’s a real shocker. And poor Tom (Sullivan, former Chief Counsel of Advocacy) was so excited about what did sound like a great program … !

This is what happens when the guy with the vision leaves the implementation to others. And it’s a good example of the role passion plays in moving people to get things done.

Speaking of getting things done, there has been lots of yelling about including small business and microbusiness in the economic recovery bill but, without an advocate inside the Obama Administration, don’t hold your breath.

And we’re still waiting for word that prospective SBA Administrator Karen Gordon Mills’ confirmation has been scheduled. Stay tuned.

For more information:

Small-Mart.org
SBA Office of Advocacy r3 Initiative

Access Your PC from Anywhere with GoToMyPC. Try it FREE for 30 days!
www.GoToMyPC.com/podcast

I have to confess, I had a lot of fun writing this week’s newsletters. That is largely thanks to the conversations I had with Margaret Henningsen of Legacy Bank in Milwaukee and Gina Harman of ACCION USA, who offered some terrific input and insights for my analysis of the largely unnoticed silver lining in the small business access to capital story.

It’s kind of funny, though, that the economy is on everybody’s mind right now but the real issue has to do with credit. That will certainly impact the overall economy but they are not quite the same thing.

Also this week — just in case you’re tired of the subject — we’ve got a policy paper in which the prolific Information Technology and Innovation Foundation makes tech policy recommendations to whichever of our beloved presidential candidates prevails next month. Is Election Day only a month away? What’s that? Less?

Yes, fans, there is light at the end of the tunnel.

For more information:

National Federation of Independent Business
National Association for the Self-Employed
Legacy Bank
ACCION USA
An Innovation Agenda for the Next Administration (PDF)