Ben S Bernanke: Welcoming remarks
Speech by Mr Ben S Bernanke, Chairman of the Board of Governors of the Federal Reserve
System, at the Conference on "Small Business and Entrepreneurship during an Economic
Recovery", Federal Reserve Board, Washington DC, 9 November 2011.
* * *
Good morning. Welcome to the Federal Reserve Board and today's conference, "Small
Business and Entrepreneurship during an Economic Recovery." Let me begin by thanking
the Federal Reserve Bank of Atlanta and the Ewing Marion Kauffman Foundation, both of
which have cooperated closely with the Board of Governors in organizing this event. This
meeting is indeed an eclectic one, bringing together small business owners, lenders,
technical assistance providers, government officials, and members of the academic
community to explore the challenges faced by today's entrepreneurs and to identify
promising approaches to addressing their needs. Events such as this one are particularly
valuable because they allow us to draw on a broad range of experiences and evidence. We
are keenly interested in hearing your insights and look forward to sharing results from the
Federal Reserve's continued small business outreach and research efforts.
Some of you may have attended a forum here last year that focused on credit access for
small businesses.1 We hope to advance that discussion today by exploring not only the
financing needs of creditworthy small businesses, but also the role these firms could play in
creating jobs during these difficult economic times. We will also discuss the unique
challenges faced by women- and minority-owned firms. We hope to be as concrete and
practical as possible; for example, several conference papers assess the extent to which
training, technical assistance, and other resources are available to support these and other
small firms. The ultimate goal of this meeting is to learn more about how best to support both
small businesses and their communities - to understand what works and what doesn't.
Importance of small businesses to the economy
It's no secret that the past few years have been very difficult for many small firms. They have
faced weak sales, diminished asset values, elevated uncertainty, and tight credit market
conditions. Many small business owners have had to lay off employees or defer hiring. And
many potential entrepreneurs with plans to start new businesses have put those plans on
hold.
The role of small businesses and entrepreneurship in job creation will be discussed in our
first panel today. As many of you are aware, small businesses have played an important role
in fueling past economic recoveries. We need to think carefully about how, in the current
economic environment, our nation can best provide small businesses and entrepreneurs with
the support they need to expand job opportunities.
Small businesses also help our country compete globally; they often offer a level of agility in
bringing innovative products to the global marketplace that larger firms cannot match. At
home, many entrepreneurs do more than provide important goods and services - they and
their businesses help sustain the vitality of the neighborhoods in which they live and work.
Frequently, small business owners demonstrate their commitment to their communities by
serving in leadership positions in local schools, volunteering for local nonprofit organizations,
and engaging in civic affairs.
For many people, starting a small business is an opportunity to follow one's particular dream.
We should recognize that it can also be an important option for people confronting economic
challenges in their lives, such as insufficient retirement savings. A study conducted by the
Kauffman Foundation suggests that both baby boomers and older generations are
increasingly turning to entrepreneurial activities.2 Tomorrow's discussion will pay special
attention to how these and other new entrepreneurs are adjusting to the changing landscape
of financial services.
Federal Reserve efforts to support small businesses
The Federal Reserve System is committed to supporting small business and
entrepreneurship. We do that, for example, through research that adds to our stock of
knowledge about the catalysts for and barriers to entrepreneurship, and through outreach
programs to help small business owners and other community stakeholders gain access to a
range of financing and technical assistance.
For instance, in a recent forum sponsored by the Federal Reserve System and held in
Jacksonville, Florida, both small business owners and their lenders stressed that it takes
more than an enterprising spirit to succeed; entrepreneurs also must seek appropriate
training and resources. Forum participants emphasized the need to support organizations
that offer valuable technical assistance and training programs, including state and regional
economic development offices, small business development centers, community colleges,
technical schools, and rural cooperative extension offices. Similar forums in Chicago, Atlanta,
and Denver - conducted by the Federal Reserve in cooperation with the Opportunity Finance
Network, a national trade association for community development financial institutions
(CDFIs) - highlighted examples of banks working closely with community development loan
funds and other CDFIs to streamline client referral processes to match small businesses with
appropriate lenders. Our regional meetings also focused on providing capital and support
services to minority-owned small businesses. Through research and analytical efforts, we are
working to deepen our understanding of credit market conditions facing small and new
businesses, particularly the frictions that impede the flow of credit to creditworthy borrowers.
In addition, some of our community development offices conduct regional surveys to obtain a
better understanding of the characteristics and financing needs of small business owners in
their areas. You will hear more about their findings during the second panel today.
The Federal Reserve also continues to encourage bank examiners to adopt a balanced
approach to reviewing banks' lending to small businesses. We hold training sessions for
examiners and extend outreach to lenders to promote awareness about both the credit
environment and available lending guidance and resources. We would like to foster an
environment in which lenders do all they can to meet the needs of creditworthy borrowers
while maintaining appropriately prudent underwriting standards.
Closing observations
The issues you will be discussing today and tomorrow are critical to everyone with an interest
in the success of our nation's small firms and entrepreneurs, and, by extension, of our
economy as a whole. Based on the wide variety of perspectives represented at today's
conference, I feel sure you won't agree on the answers to all the many questions that will be
raised. But the dialogue itself is of great value. We at the Federal Reserve have found that
conferences such as this one help us to more effectively conduct our outreach and analytical
work. We hope that each of you will find this experience worthwhile as well. Thank you in
advance for sharing your insights about the challenges for small businesses, and I look
forward to seeing the results of your work.