Elisabeth Meinecke

At a recent stop by the Small Business Administration's Jobs Act tour in Washington, D.C., small business owners seemed divided about the effects federal policy is having on their companies.

"Government is getting too big," said attendee Pennie Drinkard, president of Advanced Visions Systems Inc., an engineering and technical services company. "Giving more jobs to the government, government employees, instead of contracting things out, makes it very difficult for small businesses, because the government continues to expand. We lose people because they go to work for the government because it's secure. …That's hurtful when the government continues to hire people and expand. That's hurtful for small business."

Drinkard said she's sat on a line of credit that's 100 percent guaranteed by the government for some time but has not used it because she feels it's too risky. One key component of the SBA program is helping facilitate loans by lenders to small businesses and providing a government guarantee on those loans. However, with the U.S. government getting dangerously close to defaulting on its own debt ceiling limit, the question remains whether that would create uncertainty with government-guaranteed loans. A spokesman for PNC Bank said that the bank does foresee a strong partnership with small businesses regardless of the U.S. decision on the debt limit, although that is no indication on whether the partnership will or will not happen through government-backed loans.

SBA administrator Karen Mills, has said, however, that small business owners have not been expressing that concern to her over the agency's thirteen-city tour (D.C. is the ninth stop).

"I'm not hearing that – I am hearing from small business owners that they want government to be paying attention to the economy and those things that create jobs, and they want to make sure that we keep our fiscal house in order, that we tighten our belts…and then at the same time, we remember how to support them in cost-effective ways," Mills said. "Small business owners right now are experiencing a good amount of momentum from recovery. Two years ago, they were worried. They need[ed] a loan to stay in business. But right now, they are saying, "I need a loan, I need a government contract – I need something to help me because I'm going to take this next order and hire some new people.'"

Mills said that's why last year's Jobs Act is so important. It provided increased lending support and included 17 tax cuts for small businesses, although it also contained a $30 billion small business lending fund "bailout" that gave money to banks with incentives to increase small business lending.

Elisabeth Meinecke

Elisabeth Meinecke is TOWNHALL MAGAZINE Managing Editor. Follow her on Twitter @lismeinecke.