Across the state, the past several years have been filled with stories of job loss, downsizing, layoffs — and most recently, the fiscal cliff. But is business in Kentucky really in trouble?
In reality, small business in Kentucky appears to be alive and well. In fiscal year 2011, the Small Business Administration (SBA) doled out $200 million in loans in Kentucky. In fiscal year 2012, the SBA achieved a record-breaking 504 loans in Kentucky, with 60 of those loans worth more than $46 million. In the first two months of fiscal year 2013, there was already a 30 percent increase in loans over last year.
Cassius Butts, SBA regional administrator, identified a few reasons for the dramatic increase. “A lot of people were laid off, or their jobs were moved. When the 9-to-5 job isn’t available, starting a small business becomes an option. You rely on your own talent. You rely on something you’ve wanted to do for years but kept putting off. This entrepreneurial mindset has been flourishing across the country and across Kentucky,” Butts said.
The SBA loan figures should be a positive sign for the Kentucky economy, considering that 99.4 percent of businesses in the United States are classified as small businesses. You may think a small business only refers to that independent dress shop down the street or your neighborhood dentist office. The Small Business Administration defines a small business as one that is independently owned and operated, is organized for profit and is not dominant in its field. Depending on the industry, eligibility is based on the average number of employees or sales volume, and generally that means 500 employees or less, with sales volume not exceeding $2.5 million.
Brad Thomas, branch manager of the Small Business Services Division in the Kentucky Cabinet for Economic Development, said small business in Kentucky is indeed looking up.
“We are seeing a big uptick now, based on some of the programs that help put dollars in these small businesses through either loans or credit. Small business is what really drives our economy. It’s opportunities through SBA-funded programs and the Kentucky Small Business Credit Initiative that are helping make a difference,” Thomas said.
According to the Kentucky Cabinet for Economic Development, Kentucky’s net job growth from September 2011 to September 2012 was 2.6 percent, the second best in the nation, behind only North Dakota’s 5.6 percent growth. Kentucky’s job growth was more than double the Kentucky competitor state average of 1.1 percent. Kentucky’s competitor states, listed in order of ranking, include Indiana, Ohio, South Carolina, Georgia, Virginia, Illinois, North Carolina, Tennessee, Alabama, Missouri, Mississippi and West Virginia.
Thomas said one aspect of that growth can be attributed to a rise in Kentucky exports. The Kentucky Cabinet for Economic Development is making export opportunities one of its chief initiatives.