Governor Newsom State of the State: Opportunity to Address Continued Targeted Support for Small Businesses

“California is home to more than 4 million small businesses, employing more than 7 million workers. California small businesses are the drivers of economic growth–creating two-thirds of new jobs and employing nearly half of all private-sector employees. This is why we hoped to hear Governor Gavin Newsom outline solutions for some of the critical financing and resource issues facing small business owners during his state of the state address. 

Tuesday’s address highlighted some tremendous achievements by Newsom’s administration. Amid a pandemic that devastated the financial stability of small businesses in California and throughout the country, California led the way on the economy by creating 1 million new jobs in the past 12 months and building opportunities for more new startups than Texas and Florida combined. 

As Governor Newsom continues to build pathways to small businesses' successful and sustainable growth, we encourage him to enact bold policies that will empower the smallest businesses, especially those owned by people of color, women, and immigrants. The following are some proposed policies that will influence the greatest change for entrepreneurs and small employers:

• Strengthen healthcare markets. The American Rescue Plan subsidies are set to expire at the end of 2022, which will bring back the “cliff" that many middle and low-income small business owners are dreading. California should pursue greater healthcare affordability for small business coverage like extending premium assistance and containing costs. 

• Expand access to responsible capital. Entrepreneurs—particularly women and people of color—have faced significant hurdles accessing traditional capital, which the COVID-19 pandemic has only exacerbated. Increasing access to affordable capital for entrepreneurs in marginalized communities is key to driving inclusive economic growth. In addition to supporting innovative solutions like the California Rebuilding Fund, California’s investments of the federal State Small Business Credit Initiative (SSBCI) should be implemented effectively through the Treasurer's Office and the Governor’s Office of Business Development and Economic Development (GOBiz).

• Provide commercial rent relief for small business owners and small landlords. Small Business Majority’s research has found that most small businesses that rent or own their business space say they are struggling with their rent. Importantly, nearly half (46%) of businesses with under $100,000 in revenue are one or more months behind on rent.

• Expand California’s Paid Family Leave Program to include an increase in the wage replacement rate to 90%. Small employers are still struggling to attract and retain workers. As small businesses work to hire talent, offering a robust benefits package will help them compete with larger employers. 

We are excited to work with the Governor’s office to advance new policies and initiatives that will align with “The California Way.” We embrace measures that will both maintain COVID-19 safety and promote economic recovery, and we support giving small business owners opportunities to benefit from government programs like paid family leave that will allow them to compete on a level playing field with larger companies for talent. Despite facing unique challenges during the pandemic, there are opportunities available for California small businesses to rise above those barriers and thrive.”

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