GOVERNOR PATERSON ACCEPTS FINAL REPORT FROM SMALL BUSINESS TASK FORCE

Report Contains Comprehensive Recommendations to Effectively Cut Red Tape, Create Jobs

Proposals Aim to Increase Access to Capital, Provide Regulatory Reform and Strengthen Entrepreneurs

New York State Launches Second Free Guide Aimed at Helping Small Businesses

Link to Governor Paterson's Press Release

Governor David A. Paterson today accepted the Final Report of the Small Business Task Force. The Final Report includes proposals to address increasing access to capital; reducing red tape and providing regulatory reform; strengthening and enhancing training and technical assistance for business owners, employees and aspiring entrepreneurs; and improving access to, and awareness of, available State resources. Each of these priorities includes a series of actionable initiatives that will spur economic growth and make doing business in the State easier.

“In this age of super-sized corporations, small businesses may not make the headlines, but they do drive job creation,” Governor Paterson said. “The road to prosperity runs through New York’s corner stores and technology start-ups, its mom-and-pop restaurants and roadside repair shops. That’s why I have worked for the past 20 months to expand opportunity for small businesses – to increase minority and women-owned business participation in government contracting four-fold and to double alternative lending resources for entrepreneurs.”

“But there’s more work to be done,” the Governor added, “and that’s why I look forward to reviewing these recommendations and working with the Task Force to implement a number of them as a means of creating jobs and improving the business climate in New York. I also want to thank Chairman Bill Grinker and the members of the Task Force for their diligent work over the past several months culminating in this thorough and forward-looking report.”

In addition to accepting the Final Report, Governor Paterson today announced the launch of the New York State Small Business Lending Guide (found here: http://www.nylovessmallbiz.com/lenders.htm), another free online manual aimed at connecting small business owners and entrepreneurs with alternative banks and credit unions who are lending right now. This is the second guide New York State has launched this year: in September, Governor Paterson announced the New York State Directory of Small Business Programs – an interactive online directory of State business resources.

Following the Governor’s response, accepted recommendations will be developed into actionable initiatives aimed at spurring economic growth and making doing business easier.

Small Business Task Force Chairman William J. Grinker said: “Just as Governor Paterson assembled a diverse and knowledgeable group of individuals to serve on his Small Business Task Force, we believe we have delivered a robust and comprehensive set of recommendations that will serve the small business community well. Our recommendations were guided by the Governor’s directives – to design strategies to aid the growth of small businesses, maximize job creation and reduce duplication and waste through more positive interactions with State government. Surely, New York State has the talent, the dedication and the entrepreneurial spirit needed to ensure growth for years to come, and I believe these recommendations, when acted upon, can leverage that talent into the jobs and industries that will drive the new economy. The Task Force members remain committed to working with the Governor to lead the State in its economic recovery and growth.”

The proposals in the Final Report of the Small Business Task Force include:

Increase Access to Capital
1. Create a New Small Business Revolving Loan Fund. Small businesses comprise 98 percent of all businesses in New York and employ 52 percent of the State’s private sector workforce. A new revolving loan fund dedicated to supporting small business owners who cannot access capital from traditional sources; data suggests that a $50 million State fund allocation would generate approximately a 10:1 leverage from the private sector, or close to $500 million, and would generate more than 14,000 jobs in New York State. 
2. Create a State-Supported Seed Capital Fund. A seed capital fund would leverage private venture capital (VC) and support the development of seed-stage and start-up companies. Matching funds could come from New York’s approximately 64 VC firms, the several Angel Networks located in New York State, or other outside sources. 
3. Expand Eligibility of Existing Loan Programs to Allow Debt Refinancing. Several of the State’s existing loan programs currently do not permit businesses to use funds to refinance existing debt. The Task Force recommends that the State eliminate this restriction where possible. Allowing small businesses to reduce their monthly interest payments could have significant, positive impacts on businesses’ cash flow.
4. Explore the Viability of an Interest Rate Subsidy Program. Empire State Development should explore the viability of an expanded Interest Rate Subsidy Program (IRSP) targeted to small business micro-loans that often have higher interest rates than other alternative financing. Reducing the interest rate on small business loans would provide immediate and tangible financial benefits to small businesses.

Reduce Red Tape and Provide Regulatory Reform
1. Create Interagency Working Groups, such as the Interagency Small Business Working Group and Ombudsman Working Group. These would coordinate small business programs and strategies, create uniform definitions and share information, helping businesses gain fast and easy access to appropriate State resources.
2. Improve the Efficiency of State Lending Programs. An estimated $1.25 million in additional loan capital for small businesses could be made available at no additional cost to the State by reducing paperwork, increasing the speed of payments and reallocating funds within existing small business lending programs from lower performing lending partners to higher performing ones.
3. Develop and Implement an Online Permitting and Licensing Process. New York State has already shown leadership through the Governor’s Office of Regulatory Reform and its interactive Online Permit Assistance and Licensing (OPAL) tools. But a single-access portal to all agencies and services, and to create a unified e-licensing system with a simple application for multiple licenses is needed.
4. Pilot and Expand a Voluntary Regulatory Compliance System. This would have two parts. The first would be designed to provide regulated businesses with the information and training they need in order to keep their businesses compliant with State rules, regulations and laws. The second part would involve using enforcement methods that are fair and designed to achieve compliance through education and dispute resolution. 
5. Develop Consistent and Uniform Definitions – Independent Contractor vs. Employee. The Task Force recommends expanding the authority and membership of the Department of Labor’s Joint Enforcement Task Force on Employee Misclassifications, so that it can develop clear criteria and guidelines for determining when employees should be classified as employees or independent contractors.
6. Reduce the Impact of Health Insurance Costs on Small Business. There are a number of ways in which to reduce the cost of health insurance for small businesses, from capping broker commissions to improving the family health plus buy-in program to standardizing administrative requirements that increase transparency.

Provide New Tools and Techniques for Business Growth
1. Enhance Staff Training to Provide Higher Quality Technical Assistance Services. More professional development and peer-to-peer training opportunities be developed between networks and that ESD should facilitate the sharing of training materials.
2. Provide Greater Access to State Purchasing Opportunities through Procurement Assistance. The Task Force recommends increased direct technical assistance to small businesses around bid development, bid matching and linking prime contractors with subcontractors and suppliers.
3. Support the Commercialization of Technology. The Task Force recommends the development or enhancement of seven to 10 technology incubators throughout the State around a model that includes connections to capital, management coaching and recruitment of talent and connections to technology and market planning assistance. Working in tandem with the additional seed capital resources, this effort would assist 250-300 entrepreneurs to develop viable technology companies and secure $200-$300 million in investment over the next three years.
4. Integrate Economic Development and Workforce Training Activities through a Sector-Based Strategy.This effort should build on the work of the National Governor’s Association Sector Academy, which is focusing on three industry clusters: green, advanced manufacturing and health care.
5. Create and Expand a Layoff Aversion Program. The State Department of Labor (DOL) is in the process of creating Emergency Response Teams that will assist small businesses in distress with consulting on business turnaround, layoff aversion and Employee Stock Ownership Programs. The Task Force supports the initiation of this pilot program encourages statewide expansion as soon as possible.
6. Increase On-the-Job Training Opportunities. The Task Force urges DOL to use its federal Workforce Investment Act funding to leverage greater local participation by providing matching support on a competitive basis for up to 50 On-the-Job Training (OJT) projects of between five and 10 workers each. The Task Force also supports DOL’s plan to enhance OJT by providing an additional incentive to businesses that hire the long-term unemployed.
7. Improve Opportunities for Youth in Small Business. A portion of the Workforce Investment Act resources should be set aside to leverage local funding of creative youth/small business projects. A fund of $750,000, matched at the local level by a 2-1 ratio, could support 10 competitively selected projects linking youth to small business opportunities.

Improve Access to, and Awareness of, Available State Resources
1. Develop a Directory of Small Business Programs. The development of a directory of State programs for small businesses was an immediate recommendation of the Task Force. The first online guide was launched in September and contains information on 140 State programs across 28 agencies. A Spanish language version is expected to be completed by year’s end.
2. Coordinate the Directory with Various Existing Websites. The Directory of Small Business Programs should be expanded to include information on third-party business support providers, as well as an online resource library of business tools, resources and information, integrated with existing resources on the ESD website.
3. Create “How To” Manuals. Listings of sector-specific resources, such as manuals on industry operations, should be included in the Directory and the online resource library.
4. Update and Enhance the Small Business Alternative Lending Directory. This is being launched today.

Governor Paterson convened the Task Force in July and charged it with examining strategies for expanding the role of small businesses in New York State and providing them with the support needed to expand and flourish. It is comprised of a combination of State government officials and non-governmental business experts appointed by the Governor. This past spring, at the Governor’s direction, State business leaders, who later would be reconstituted as the Task Force, held 11 focus groups during which local stakeholders helped formulate the recommendations. This fall, Task Force members led an additional 11 workshops – across New York City and in Buffalo, Rochester, Syracuse, Gloversville, Watervliet and Hauppauge – to discuss the variety of State resources that are currently available for small businesses or were about to come online, such as the Lending Guide and the sortable State Contract Reporter.

The full report is available online at: http://www.ny.gov/governor/press/pdf/Final_report.pdf. For more information about the Small Business Task Force, please visit http://www.nysmallbiztaskforce.org.

The following statements were provided in support of the final report of the Small Business Task Force:

ESD President and CEO Designate and Task Force member Dennis M. Mullen said: “As a part of the Governor’s Small Business Task Force ESD has been working to address the challenges small businesses face statewide. The unveiling of the New York State Directory of Small Business Programs and today’s New York State Small Business Lending Guide are the products of our concerted effort to provide much needed supports to small business owners and aspiring entrepreneurs. I commend the Governor and my fellow Task Force members for their unwavering commitment to creating practical solutions to the barriers small business owners face. Today’s announcement of recommendations provides the framework we need to develop meaningful strategies in order to continue to promote the growth of small businesses in New York.”

State Department of Labor Commissioner and Task Force member Patricia Smith said: “Small businesses are the lifeblood of our state’s economy, which is why we need to do all we can to help get them out of survival mode and back into job creation mode. The recommendations outlined in this report to Governor Paterson represent sound policy and will play a key role in our state’s economic turnaround.”

Secretary of State and Task Force member Lorraine Cortes-Vasquez said: “The recommendations of the Small Business Task Force will help strengthen and promote small businesses all across the state. Even during these very difficult economic times, we must continue to make progress each and every day in helping to create and support small businesses.”

Mike Elmendorf, State Director of National Federation of Independent Business (NFIB) and Task Force member, said: “I applaud Governor Paterson for recognizing the importance of small business to our economy by convening this Task Force, as well as the work of Chairman Grinker and my colleagues on the Task Force in putting this report together. The recommendations contained herein include some solid first steps toward improving New York’s business climate. Clearly, even more must be done to lower the Empire State’s high cost of doing business and crushing tax burden to enable small business owners – New York’s innovators and job creators – to create new opportunities and grow our economy. NFIB looks forward to working with Governor Paterson and the Legislature to move forward with and build on these recommendations to strengthen our business environment.”

Tasha Norman, President of the National Association of Women Business Owners New York City Chapter, said: “More than 90 percent of small businesses in New York employ fewer than 20 employees, with each employee expected to perform a number of roles within the business. That’s why the Task Force’s recommendations on workforce development are so important, as they highlight the need for broader on-the-job training that will ensure employees are better equipped to handle the challenges of running a small enterprise. I look forward to working with the Governor and the Task Force on implementing these and other programs that ensure a highly trained workforce.”

President and CEO of the Center for Economic Growth F. Michael Tucker said: “Governor Paterson’s Small Business Task Force Report clearly identifies both the contribution small businesses makes to a regional economy and the obstacles they face. With the combined knowledge and experience of its diverse membership, the Task Force took many ideas into consideration in laying out its recommendations. These recommendations, once implemented, will significantly help to alleviate major challenges faced by small businesses throughout New York helping to grow and expand jobs and economic vitality.”

Joyce Moy, Executive Director of Asian American / Asian Research Institute at CUNY and Task Force member, said: “I believe that the Governor’s Task Force on Small Business has addressed issues of critical importance to the creation, growth and sustainability of small businesses in New York. Having served nearly 2,000 businesses as a former director of a NYS Small Business Development Center at CUNY, and in my capacity as a Board member of the U.S. Pan-Asian American Chamber of Commerce, I can say that not only has the Task Force attempted to leverage and enhance already existing resources, but has also recommended innovative structures and approaches to help small businesses stay viable and grow in these hard economic times.”

Director of Public Policy at the NYS Farm Bureau and Task Force member Julie Suarez said: “These report recommendations should make it easier for families to navigate New York’s complex bureaucracy – but we can’t forget that even with the emphasis on creating needed green jobs and seed capital, the first order of business is to cut red tape, taxes and nuisance fees that add significantly to the costs of doing business in New York. I was honored to be a part of this committee, and I welcome and applaud Governor Paterson’s commitment to taking the steps necessary to get New York’s economy, and our farm families, growing again.”

Executive Director of the Capital District Community Loan Fund Bob Radliff said: “The Capital District Community Loan Fund, a nonprofit financial institution with a community development mission, wholeheartedly agrees with Governor Paterson that a renewed focus on small business development is a critical economic development priority. New York State needs strong small businesses in order to build strong locally based economies, and the Governor’s Small Business Task Force recommendations include many needed remedies. We applaud the Governor and the Task Force for recognizing that access to fair and affordable capital, coupled with appropriate technical assistance and other small business development support, can lead us to a more diverse, self-reliant and sustainable economy.”