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The question of where the government would, or should, allocate the final $100 million left in its budget might seem hypothetical but is, in fact, the type of situation facing governments across this country at the federal, state, and local levels. With governments at all levels facing budget shortfalls or tight budgetary conditions, it is extremely crucial to identify and implement creative and cost-effective solutions to our country’s current and future problems. Various government agencies and programs have disparate levels of success when it comes to output versus input—that is, how much benefit is generated for society versus how much money is put in. One of the most effective and important government agencies in this regard is the United States Small Business Administration (SBA).
Today’s economic climate puts a strain on many small businesses in this country. Yet, economists say that it is small businesses that drive innovation and entrepreneurship. From the lightbulb to the Apple computer to Facebook, much of what has shaped our modern society has been developed by entrepreneurs. The SBA assists these entrepreneurs by providing grants, matching funds, and counseling and training. Current economic conditions have made it difficult for small businesses and entrepreneurs to secure capital, loans, and investment, and have subsequently reduced their confidence in the future.
Although success in capitalism has generally required taking risks, the government can spur investment by reducing risk and increasing security through the various types of assistance provided by the SBA. Whereas $100 million might buy only one-tenth of a bridge, it can buy thousands of ideas. Oftentimes, it is unclear where research will lead and whether it will be profitable. This makes potentially innovative research a risky venture. The SBA can lower that risk by providing grants to small businesses and entrepreneurs who are doing research in areas of renewable energy and climate change, two of the biggest issues facing America and the world on both a socio-geographic level and an economic level. The Small Business Innovation Program (SBIR) specifically targets businesses that conduct research with commercial potential. The SBIR program, an SBA subsidiary, is essential for delivering federal funds to chosen recipients. Small $50,000 grants, given to businesses around the country, can help encourage risk taking and innovation. Larger grants, given to more developed projects, can help see a project through to completion. Well-developed and profitable ideas often have no trouble finding investors; however, getting to the latter stage of an idea is often the hardest part of the process. By both spreading investment around and targeting potential growth industries, the SBA can grease the wheels of innovation and move capital investment toward America’s next lightbulb.
Without the money for direct and large-scale spending, the government must rely on creative solutions to deal with current and future problems. By strengthening America’s small businesses and entrepreneurs, the Small Business Administration can do its best to insure that this country remains a world leader in innovation and economic creativity. Doing this will brighten our future.
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