58% Want to End Small Business Administration Loan Guarantees

Small businesses are seen by many as the heart of the U.S. economy, and most voters think the best way the government can help them is by staying out of the way.

Fifty-eight percent (58%) of Likely U.S. Voters don’t believe the federal government should provide loan guarantees to banks, so they will lend money to someone looking to start their own small business who otherwise couldn’t get bank financing. A new Rasmussen Reports national telephone survey finds that only 23% say the government should provide such loan guarantees. Nineteen percent (19%) are not sure. (To see survey question wording, click here.) 

The opposition to loan guarantees exists even though voters overestimate the importance of loans in starting a small business. Most businesses get started out of personal savings. Many also start with personal loans such as home equity loans or credit card advances, while only a few actually receive bank financing. But 47% of voters believe that most small businesses get started with bank loans. Twenty-four percent (24%) think most get started with personal savings, while only nine percent (9%) believe their seed funding comes from outside investors. Twenty percent (20%) aren’t sure.

Fifty-nine percent (59%) of voters believe reducing government regulations and taxes will do more to help small business than for the government to provide loans to small businessmen who cannot get financing on their own. Just 22% feel it’s better for the government to offer loans to those businessmen who can’t get outside financing. Eighteen percent (18%) are not sure which course is better.

Entrepreneurs believe even more strongly than others that reducing government regulations and taxes will do more for small businesses, with 76% who feel that way. Sixty-one percent (61%) of entrepreneurs oppose government loans to small businessmen who can’t get outside financing, as does a plurality (47%) of those who work for private companies.

As is often the case, the Political Class and Mainstream voters distinctly disagree. Sixty-seven percent (67%) of Mainstream voters, for example, think small businesses will benefit more from reduced regulations and taxes, but 57% of the Political Class think the better course is government loans for small businessmen who cannot get financing on their own.

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The national survey of 1,000 Likely Voters was conducted on August 13-14, 2011 by Rasmussen Reports. The margin of sampling error is +/- 3 percentage points with a 95% level of confidence. Field work for all Rasmussen Reports surveys is conducted by Pulse Opinion Research, LLC. See methodology.