For $30B you can get a Chevy but no Pontiac?

G.M. and Chrysler came door-knocking again last week looking for $14B on top of the $16B or so they have already been given. In return, they promise to cut at least 47,000 more jobs and close plants across the country. To further their request they stated that giving the them $30B now would be much cheaper than if they went bankrupt. How could the government possibly refuse such a tempting request!
I know this is a complicated issue so I'm not going to argue the merits of giving these giant dinosaurs of commerce more money. Rather, I mention this to juxtapose the plight of G.M. and Chrysler to that of small business and question how best to use stimulus resources.
A recent report from the SBA's Office of Advocacy showed that in the last decade, small businesses (less than 500 employees) accounted for up to 80% of all job creation and now employ over half of all private sector employees. In 2005, small business created over 979,000 jobs compared to just 262,000 from large companies. Small businesses also generate the majority of innovation coming out of U.S. based companies. Quick, what was the last innovation you can recall coming out of G.M.? OK there was the EV1, which they quickly canned. And then there was the Pontiac Aztec which was voted the ugliest car in the history of the universe. Now they want to shut Pontiac down. Apparently the price for what serves as innovation at G.M. is termination.
Before I get too side-tracked in bashing G.M. (it's kind of fun and easy) let me get back to the important issue I want to raise, where is the stimulus support for small businesses? There are a few provisions in the stimulus bill that will benefit some small businesses such as capital investment deductions. However, the small business owners I know, and I know a few, mostly need access to cheap capital, either to keep them afloat during this trying time, or to support their growth. I have talked to more than a few small business owners who have had to let people go as sales have stalled or growth has slowed. None of them, that I'm aware of, have gone to D.C. asking for a billion or two, and it wasn't because their Learjet was in for repair.

Small business owners are not looking for government handouts. Even if they were that line is already too long. As Terry Berry (founder of several software companies) pointed out in a recent post, small businesses really need a healthy economy and access to financing. I believe that access to financing is needed regardless of the state of the economy.
If we truly want to foster job creation and innovation, the last decade has shown us that the place to look is small business. The days of Fortune 500 companies being the catalyst for economic growth are endangered, if not extinct. What would happen if, instead of giving G.M. $30B, we put that money into job training and financing for displaced workers to start their own businesses? One of them might even come up with a car that people want to buy. It's time for small business owners to get the respect due them and the same level of support we are ready to hand out to those large corporations that eliminate jobs and discourage innovation.
Full disclosure - I am a small business owner and researcher so my views are clearly biased in this matter.