The SSBCI is a program designed to encourage and achieve funding for small businesses. Through a variety of outlets, funding for small business start-ups and expansions will be easier to receive. The outlets are the Collateral Support Program, the Nevada Microenterprise Initiative, and Nevada Venture Capital.

The Collateral Support Program is designed to enable borrowers to acquire financing through banks that might not be available due to a lack of collateral on the borrower’s part. This lack of collateral could be due to reduced value of business or personal property or reduced value of other assets that might have otherwise been used as collateral in a better economy. Once the program starts in a few months, qualified business owners and potential business owners will be able to receive lending from a financial institution without having to provide the full collateral for the loan.

To be eligible to benefit from this program the borrower must be placed in a qualified industry such as mining, manufacturing, research and development, wholesale and trade, film and digital media productions, office operations or a business existing in technology. Other parameters of the program include maximum collateral deposits of $500,000, with exceptions for businesses that might provide significant job creation or economic impact, and collateral support for up to 35 per cent of the loan amount. The Collateral Support Program allows lenders to approve loans to qualified borrowers with diminished loan collateral which helps grow Nevada’s business infrastructure.

The Nevada Microenterprise Initiative (NMI) is an organization that aids small businesses through a lending program and classes. The SSBCI sets aside funds to support NMI’s lending program. Most of NMI’s clients are small enterprises with five or fewer employees and require less than $35,000 for start-up. With the money from SSBCI, NMI can help small businesses get off the ground and contribute to the overall success of Nevada’s economy.

As set up by the SSBCI, the Venture Capital Fund program sets aside money to contribute to an overall fund as established by the new cabinet-level agency – The Office of Economic Development. These funds will be used to provide money to private sector businesses to encourage start-ups, growth, or new business locations in Nevada. The new Office is in the process of being established, but applications for funding are expected to be accepted soon.

The State Small Business Credit Initiative and the establishment of the Catalyst Fund show movement in a positive direction for Nevada. Each of these programs will support the creation and growth of small businesses thereby making Nevada’s economy stronger by creating job opportunities and forming a sustainable economic business structure.

Keep an eye on the NSBDC website (www.nsbdc.org), the Nevada Commission on Economic Development website (www.diversifynevada.com) or the NMI website (www.4microbiz.org) for future details on these and other business support programs.

This past year brought new, sobering data that defied conventional wisdom that all businesses contribute to job growth at least to some degree. “The Importance of Startups in Job Creation and Job Destruction” by economist Tim Kane documented that net job growth occurs in the U.S. economy only through startup firms. While older companies lose 1 million jobs annually, new firms add an average of 3 million jobs in their first year. Moreover, during recessionary years, job creation at startups remains stable, while net job losses at existing firms are highly sensitive to the business cycle. Simply put, entrepreneurs are the primary engines of job creation in the country. If you zoom in further, you will see new firms that scale—those that grow in revenues and jobs—are especially important. More precisely, the top 1 percent of all companies generates 40 percent of new jobs, and the vast majority of these firms are no more than five years old. If we look even closer at the most rapidly growing young firms (those between ages 3-5 years), they represent less than 1 percent of all companies in the economy, but account for 10 percent of new jobs created each year (see High-Growth Firms and the Future of the American Economy)….

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Since Nevada has a very small government and was the fastest-growing state for decades, did the former cause the latter?

It’s not likely.

Examine the statistics comparing the real growth of a state’s GDP (gross domestic product) to the share of GDP provided by state and local governments for all states during the past 45 years, and you will find no correlation. States with relatively smaller governments have not tended to grow any faster than other states.

There is, however, a strong statistical relationship between a state’s real GDP growth rate and the lagged growth rate of its state and local government. A fall in state and local government spending in one year tends to be followed by lower economic growth in the next year.

Why is this? One way to look at it is that state and local governments provide essential public goods that cannot be adequately provided by the private sector, such as roads and education. While higher taxes might create some disincentives for private investment and growth, many of these public goods are necessary investments for the private sector to function.

For example, interstate and state highways increase productivity by making it possible for retailers such as Walmart to incorporate just-in-time inventory management. Otherwise, stores would have to hold large inventories, decreasing profits while increasing consumer prices. Similarly, without good public education, the private sector lacks the educated work force it needs.

You can also consider what economists call spending multipliers, which are particularly important in a recession. If the state spends less to fix a bridge, this means less revenue for a construction company, fewer jobs and fewer purchases of material from other companies and subcontractors, so they also have fewer jobs. Firing a school teacher means less money is spent by that teacher on rent, food and other goods.

In Nevada, good estimates are that a $100 reduction in state and local spending reduces Nevada’s GDP by $162, and reduces household income by $136. Firing 100 state or local employees reduces Nevada’s total employment by 153 workers.

Meanwhile, an increase in taxes to fix that bridge or keep that teacher reduces the money firms can pay to their workers or to their stockholders, and taxpayers have less to spend on purchases in restaurants, furniture stores and the like. Increasing state and local taxes by $100, however, reduces Nevada’s GDP by much less than $100, though it depends on the type of tax.

In short, the multipliers for state and local government spending cuts are larger than the multipliers for tax increases.

Economists teach this to every first-year student in macroeconomics, and estimates from real data consistently find it to be true.

Tom Harris is professor of resource economics and director of the University Center for Economic Development. Elliott Parker is professor and chairman of economics at the University of Nevada, Reno. College of Business.

This article was originally published by the Reno Gazette Journal on 01/12/2011.

The program is archived on KUNR’s website.

The Nevada State Demographer’s Office, located on the University of Nevada, Reno campus, has released its population projections for 2008 through 2028. The projections are for the state and the counties. Overall, Nevada is projected to grow by more than 1.3 million or 49 percent over the next 20 years.

“Nevada will likely continue to outpace the national growth rate. The Census Bureau’s National Projections show the United States growing by 22 percent between 2007 and 2028 and Nevada’s growth rate is projected at 49 percent for the same period,” said Jeff Hardcastle, the State Demographer. “Even though Nevada is expected to grow over the next 20 years, there is uncertainty about near-term changes in our population.”

According to Hardcastle, of particular concern is the impact of new hotel projects opening on the Las Vegas Strip between now and 2012. There are approximately 32,000 hotel rooms in some stage of development to be added to the hotel inventory on the Las Vegas Strip. One possible scenario from modeling the Southern Nevada economy is that the net effect of these rooms may be more like adding approximately 7,000 rooms.

“This scenario may be reflecting a number of factors that include the decrease in real wages over the past seven years and accompanying decrease in discretionary spending, the increase of transportation costs, and increasing competition locally, nationally, and internationally in the gaming industry,” Hardcastle said.

Overall, Hardcastle noted change will be uneven around Nevada. Northwestern Nevada (Carson City, Churchill, Douglas, Lyon, Storey, and Washoe Counties) is projected to grow by more than 226,000 people.  Rural Nevada (Elko, Esmeralda, Eureka, Humboldt, Lander, Lincoln, Mineral, Pershing, and White Pine Counties) is currently experiencing mining growth and that may last through the next 20 years. There are some other projects in the beginning stages that might help some of these counties weather any mining downturn. Southern Nevada (Clark and Nye Counties) is projected to grow by more than 1.1 million people.

The projections are used in preparing the state’s budget and for other planning purposes. They were prepared using the Regional Economic Models Inc. (REMI) model which relates a county’s population and economy to other counties in the model and the nation as a whole. A draft of the projections has been provided to local governments and other interested parties.

The complete report is available by downloading the pdf.

The State Demographer’s Office is part of the Nevada Small Business Development Center at the University’s College of Business Administration, and is funded by the Nevada Department of Taxation.