NEW YORK — Health care
Health care has been another source of uncertainty for small business owners. The new year will bring some, but probably not all, of the answers to questions about how the new health care law will affect them. Many will have to devote some time to understanding the law — or hire someone to help them do it.
“They’ll have to get their arms around the law, look at their options, learn more about the exchanges,” said John Arensmeyer, CEO of Small Business Majority, a lobbying group.
Under the law, companies with 50 or more employees will be required to provide affordable health care insurance for their employees starting Jan. 1, 2014. During 2013, federal and state health insurance exchanges will be set up, and owners will be able to see how much it will cost them to buy insurance. However, as the year begins, many small business owners don’t know whether their states will be creating exchanges, or whether they’ll have to go into the national system — and they don’t know what that will mean for their costs.
For some owners, that information will help them decide whether they will buy insurance, or whether they’ll decide it’s cheaper to not provide coverage and just pay the government a $2,000-per-employee fine. For those who have close to 50 workers, they may decide to not hire more workers in order to remain outside the law’s jurisdiction.
Don’t look for the small business lending climate to get easier in 2013. Owners who are uneasy about the economy, taxes and health care aren’t expected to significantly increase their borrowing, especially as many have been paying down debt since the recession. But even those who are ready to borrow are expected to find it’s still hard to get a loan. Bankers are unlikely to be more liberal in their lending policies.
Depressed lending levels may be with us well beyond 2013, said James Schrager, a professor of entrepreneurship at the University of Chicago Booth School of Business.
The problem isn’t just that banks are cautious about small business loans. Schrager notes home equity loans, a traditional source of money for people starting or expanding a business, remain difficult to get, the result of the collapse in the mortgage market in 2008.
Small Business Majority’s Arensmeyer is hopeful a bill introduced in Congress this year to allow credit unions to make more loans to small businesses will get more traction when the new Congress convenes. That bill would more than double the amount of total assets that credit unions can use to lend to small businesses to 27.5 percent.
But he’s also not expecting major changes in lending next year.
“Sadly, I don’t think we’re going to increase our access to capital overnight,” he said.