Entrepreneurial Development Crucial to Economic Recovery - Center for Rural Affairs' Report Highlights Benefits of Microenterprise Development to Nebraska Economy

Release Date: 

03/04/2009

Contact(s): 

Jon Bailey, jonb@cfra.org, 402-687-2103 ext. 1013
Lyons, Nebraska - A Center for Rural Affairs report released today finds that investment in microenterprise and entrepreneurial development paid big dividends during the last recession, and continued investment in microenterprise development would help Nebraska weather the current economic recession. During the last recession (2000-2003), employment in Nebraska attributable to microenterprises (small businesses with 5 or fewer employees) actually grew by nearly five percent while all other private, non-farm employment fell by nearly one percent.
"We are again in a period of recession. It is a critical time to invest in job creation and economic recovery by supporting microenterprise development," said Jon Bailey, Rural Research and Analysis Director for the Center for Rural Affairs.

According to the Center's report, entitled Economic Outcomes of State Investment In the Nebraska Microenterprise Development Act, a $1.5 million annual appropriation to the Nebraska Microenterprise Development Act would potentially result in:

    * 184 to 198 microenterprise businesses created or expanded with assistance from the program,   

    * creation of 294 to 317 jobs across the state,   

    * creation of $5.6 million to $8.6 million in additional income in Nebraska households (business owners and employees),   

    * creation of over $ 1.1 million in household asset growth in its first year,   

    * economic outcomes in Nebraska of over $ 6 million to nearly $10.5 million in one year.


The report also finds that a $1.5 million one year investment in the Nebraska Microenterprise Development Act would result in potential economic outcomes in Nebraska of $25 million to $41 million after five years.
"Microenterprise development is especially critical in light of the deepening recession. Investing in initiatives such as the Nebraska Microenterprise Development Act has great potential to spur innovation and job creation in rural communities and urban neighborhoods alike," said Bailey.

In the 2007 session of the Nebraska Legislature, funding for the Nebraska Microenterprise Development Act was increased significantly to $1.5 million annually in the biennium budget for the 2007-2008 and 2008-2009 fiscal years. This funding contained an annual general fund appropriation of $500,000 and a newly created cash fund of $1 million per year. In the 2009 session, the Legislature is tasked with developing a new state budget for the next biennium. The Governor's budget recommendation released in January 2009 recommended maintaining the general fund appropriation, but recommended terminating the annual cash fund appropriation.

"The Governor's proposed disproportionate cuts to Nebraska Microenterprise Development Act funding are ill-advised.  Nebraska Legislators should not turn their backs on rural mainstreets, especially at the precise time we should be investing in entrepreneurial development and other proven strategies that can help revitalize rural communities and reinvigorate Nebraska's economy," added Bailey.

The report employed previously published research and data to examine the potential economic outcomes of maintaining the $1.5 million annual appropriation for the Nebraska Microenterprise Development Act, including the potential job creation and effects on income and assets for business owners for one year and five year periods.  For more information about the report or to obtain a full copy of the report go to http://www.cfra.org/node/1759 or call (402) 687-2100.

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