Harvard's Karen Mills: Small Businesses Feeling Cautious(Audio)

seventeen thousand, eight hundred sixty five. A dropped there of seven tens of one percent, and as a stack down sixty four, a drop of one point three percent. Gold up four sixty the ounce to twelve seventy seven. Again, there are four tenths of one percent, the tenure up thirteen thirty seconds, the yield one point six four percent. I'm Charlie Pellett, and that's a Bloomberg Business Flash. You're listening to Taking Stock with Kathleen Haymox on Bloomberg Radio.

You know, the big themes in global markets right now is concerned about the health of the global economy. Stocks, lower bonds rallying around the world. In the United States, of course, we're worried about jobs, and one of the big jobs creator is the host of small businesses across this country. We're very happy to welcome back now someone who can take the temperature of the small business economy for us. Karen Mills, Senior Fellow at the Harvard Business School.

She's also importantly former Small Business Administrator. Welcome back. Thank you. I'm so glad to be bad. It's great to have you back. It's always so interesting to know what you're doing at Harvard. But let's just start with all your contacts in the small business community, all the work you do. What is your feeling. I know it's a lot. It's it's so diverse, right, it's it's a mosaic. But if you had to say, you know, the temperature of the barometer,

how does it look right now? The temperature small business is actually not great. And if you go back to last week and the jobs number, this is a pretty good indication. The road out of the recession was so umpy for small business owners, and just when we thought they were getting their feedback under them, they we keep getting these bumps in the economy. So what they tell me is, you know, I'm just anxious about sales. I'm just not sure I want to buy that next piece

of equipment. It's unclear what's going to happen in the country, in the marketplace. So I'm not sure small business is really ready for an optimistic view. I think they're anxious.

Let's make these anxious. Well, you know, the economy has changed, and it's really been changing for I don't know twenty thirty years, depending on which economists you asked, but productivity has slowed, the average wages haven't increased, the consumers don't have the money, and small businesses really didn't feel the brunt of this because we had these bubbles, we had

consumer debt, we had mortgage debt. All of a sudden, they get hit and incredibly hard in the recession, and in fact, small business suffered more than any other segment because they're so credit dependent. In the bank shut down and then coming out of the recovery, big banks recovered well, big companies recovered well, Wall Street recovered well. In small business really took a very, very long time to get

back on their feet. So now they're feeling cautious and also nobody really knows where the jobs are going to come from in the future, so they recognize that. And I think that's part of this underlying anxiety that we continue to see in um, in the whole US economy. Nobody knows when it is realistic to be really optimistic. Well, and I think it's sometimes seat feeds on itself. Uh, maybe you hire somebody, but then somebody else doesn't. You see other people aren't, so you get concerned if this

is going to affect you. The Federal Reserve, you know, a couple of three months ago, he might have pot, well there, how's it? Why about you asking you? Oh, they're going to raise rates next week here, and what's that going to do to small businesses? Now it looks like June's not gonna happen. July may not happen in September, maybe even the first time they even think about raising rates. Is that good for small businesses? Jenny Allen came to Harvard right at the end of May and she's she

was just terrific. She won the Radcliffe Medal and um, you know, it's kind of felt at that moment as everybody thought, well, we're on track to raise the rates now, clearly not so much, And I think that's the right answer, because we've got so much uncertainty, uh, in the European market. We don't have anything strong from the small business owner's perspective except for gas prices. Gas prices and oil being down.

Maybe a negative to the stock market, but it's a positive to consumers and put some more money in their pocket. So what what What are you focused on in your in your programs, in your work with small business as right now at Harvard? What have you been doing and where do you want to go next with it? What needs to be done? Well, We're doing two things um right now in my work at Harvard. The first is that I've been focused on access to capital for a

long time. I ran the SBA loan program and that was really important to bring us out of this credit crisis. Then it turns out that small dollar loans were still a problem, and so we we took a look at these new online lenders. Small doll loans just want to stop. In other words, if I don't, if I don't need enough money for the bank to want to bother with me or even a small bank, I fall through the cracks.

Fifty dollars is the amount that about of the small businesses want to borrow, and it's an amount that a bank really can't make any money lending. So enter the new online lenders who don't have bricks and mortar, and they have done some real innovation. You've got to give people a lot of credit. There's a customer service aspect to this that a small business owner really appreciates. You can get your loan right away, you can get an answer in days or minutes or hours, and you can

get your money quickly. The issue is how much you're going to pay for it and is it the right loan for you. So we're doing a lot of work um with the market players, with existing banks seeing if they can innovate and catch up, and with regulators to make sure that bad actors don't take over and wreck this pretty good innovation that's come to the market. Whoever gets in the White House in a few months or what is the number one thing they should or could

do for small businesses? Karen Well, small business is clearly a key to the economy. And I was talking this morning at an entrepreneurial company in Brooklyn about how when I came in the White House, it was really actually hard to convince people that small businesses should even be at the table in the economic discussions. Now people have figured this out. But there are two kinds of small businesses,

and you've got to pay attention to both. You've got to help the entrepreneurs who are going to innovate and drive our productivity and drive our sort of future growth and create the next Amazons and Googles, and separately, you've gotta pay attention to small business owners. So this just has to be one of the first things you think about in economic strategy rather than what's going to go on for big business. Well, thank you so very much.

It's great to have you back here. In Mills, Senior fellow at the Harvard Business School, former head of the Small Business Administration the s b A. Thanks for joining me today. I'm taking stock pim Fox leave back with me on Monday. Thanks to Reggie Brazil, our technical director, Sam Linga, our producer. I'm Kathleen Hayes. This is Bloomberg Radio coming up Bloomberg Law brought to you you by Deutch

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