Today, President Obama announced the creation of SupplierPay, a new partnership with the private sector that will strengthen America's small businesses by increasing their working capital. He's also renewing the QuickPay initiative for federal small business subcontractors, which the President launched in 2011.
If you're scratching your head and asking yourself, "What does that mean, exactly?" — don't worry. We'll do our best to break it down for you.
Why do we need to strengthen small businesses?
Small businesses are vital to our nation's economy. Not only do they employ half of America's workers, but they create almost two out of every three new American jobs, and they're often the source of great innovation.
The Great Recession disproportionately affected small businesses, as they lost 40 percent more jobs than the rest of the private sector combined. Although they're still creating most of our new jobs, 66 percent of small businesses say that they find it "difficult to raise new business financing," according to a recent Pepperdine and D&B study.
What's more, it often takes too long for small businesses to get paid for their products and services. Estimates show that the average small business invoice goes unpaid for almost two months, and "past due" payments are increasing. This causes small businesses to spend unnecessary funds in order to cover the cash flow issues caused by late payments — funds that could be spent on growing their businesses and creating new jobs instead.
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