Making Sure Small Businesses Get Paid – Not Stiffed
Paying Small Businesses Promptly and Completely, and Cracking Down on Big Businesses that Take Advantage of Them
“The same people he’s trying to get to vote for him now are people he’s been exploiting for years…Ordinary Americans and small businesses…did work for Trump and never got paid – painters, waiters, plumbers – people who needed the money, and didn’t get it – not because he couldn’t pay them, but because he could stiff them…And they all tell a similar story: I worked for him, I did my job, he wouldn’t pay me what he owed me.”
- Hillary Clinton on Donald Trump’s business practices, June 21
Hillary Clinton believes it is outrageous when big businesses like Donald Trump’s build their fortunes by repeatedly stiffing the small businesses that do work for them. As the daughter of a small business owner, she knows that getting paid, and getting paid on time, is essential to making payroll and keeping a business running. When small businesses do not get paid for honest work, it is not just wrong, it is bad for our economy, because small businesses that are getting stiffed cannot thrive, grow, and hire.
That is why today, Hillary is committing to crack down on unscrupulous big businesses that repeatedly stiff small businesses when the bill comes due, and to give small businesses recourse to fight back. And as President, she will work to speed the flow of billions of dollars in payments to small businesses, and expand access to working capital so small businesses have the resources to expand.
Beyond Donald Trump, small businesses too often are at risk of not being paid promptly by larger customers: According to a 2015 report, 64% of small businesses face payment delays, which can cause serious cash flow problems – and both the New York Times and Wall Street Journal report on larger companies not paying small businesses on time.
Hillary Clinton knows that small businesses are the engine of the American economy – creating nearly two-thirds of new American jobs, fueling U.S. innovation, and offering crucial ladders to prosperity for hardworking entrepreneurs and families. That is why supporting small businesses – including by offering them tax relief, cutting red tape, and expanding access to capital for entrepreneurs so they can hire and grow – is a key part of the jobs plan she will put forward to Congress in her first 100 days. Making the largest investment in good-paying jobs since World War II is just the first of her five ambitious goals to build an economy that works for everyone, not just those at the top. And in the coming weeks, she will have more to say about how she will help small businesses thrive beyond the principles she has laid out so far.
Today, Hillary is announcing that she will:
- Enhance legal protections for small businesses that are repeatedly stiffed by large firms and give them better tools to protect themselves against predatory behavior by large companies. Hillary will increase federal regulatory enforcement for unscrupulous big businesses that have a pattern or practice of using their market power to repeatedly exploit small businesses by not paying them, or otherwise defrauding or deceiving them. She will also make sure that small businesses have expanded means of recourse, such as through banding together to hold these practices accountable in court.
- Use the leverage of more than $400 billion in federal government contracting to encourage businesses to pay their suppliers in full and on time. Hillary will make sure the government does everything possible to accelerate payments to small businesses, and leverage hundreds of billions of dollars to ensure government contractors pay their suppliers promptly and on time. And she will work to increase the amount of Federal dollars that flow to small businesses.
- Expand working capital for small businesses so they can thrive and grow, and weather difficulties when larger customers stiff them or do not pay on time. Hillary will expand proven SBA loan guarantee programs that broaden access to working capital, so small businesses can weather periods where they are not paid on time – and thrive, grow, and expand.
1. Strengthen oversight and penalties when large companies repeatedly stiff smaller businesses and give small businesses better tools to protect themselves against predatory behavior.
Hillary will crack down on repeated commercial abuses of small businesses, and give these firms the ability to fight back. She will:
- Ensure federal regulatory oversight of proven bad actors: Hillary believes that when large firms use their market power to systematically breach their contracts with smaller contractors—either failing to pay in due course, or failing to pay in full for services rendered—this is a form of deceptive trade practice that should be recognized by federal law and penalized by federal authorities. Hillary will ensure that agencies like the Federal Trade Commission (FTC) and Department of Justice have sufficient statutory authority to investigate patterns or practices of such misconduct, and to bring enforcement actions where appropriate. She will also make sure that federal penalties are sufficient to deter egregious contract breaches and other harmful behavior by large firms. Hillary also believes that better reporting will mean better information about, and better identification of, repeat bad actors. She will work with governments at every level as well as with consumer watchdogs to enhance the abilities of small firms to report instances of abuse—unjustified breaches of contract, stiffing, fraud, or deception—so that large companies who engage in such systematic misconduct can be identified.
- Stop large companies from using expensive litigation hurdles to deny small businesses their right to a remedy – and give small businesses recourse to take on predatory behavior: Currently, big corporations can break their contracts with smaller firms—or even enter those contracts with the intention of not honoring them—because they know that small business owners often cannot afford the costs of mounting an expensive lawsuit to demand payment. Hillary believes that while strengthened regulatory oversight is important, we should also expand options for small businesses to pursue legal recourse against this kind of predatory behavior. She will ask her Attorney General to work with her SBA Administrator, and experts from the small business community, to recommend new measures that would enable small firms to seek relief—whether through a new private right of action under federal law, easier standards for class-action certification for aggrieved small suppliers, treble damages and attorney’s fees for egregious and intentional patterns of abuse, or other measures.
2. Use the leverage of more than $400 billion in federal government contracting to ensure big businesses pay their suppliers on time.
In addition to cracking down on abusive businesses that take advantage of their smaller contractors, Hillary will ensure thousands of small businesses get paid on time by leveraging the resources of the Federal government and holding it accountable for prompt payments.
- Push for prompt payment through the power of the federal purse. Hillary Clinton believes that contractors who don’t pay small businesses promptly should be disadvantaged in federal contracting decisions, which is why she will make these practices an important factor in procurement choices. She will also encourage best practices among existing contractors so they pay small businesses faster. She will convene large companies to encourage them to pledge to pay their small business suppliers promptly, building on an initiative begun by the Obama Administration.
- Expedite payments to federal contractors. Hillary Clinton believes that the federal government should pay its bills more promptly than the 30 days required by current law. She will help small business across the country by working to ensure that all federal contractors are paid within 15 days, and will explore ways to increase accountability and transparency to meet this standard, building on the Obama administration’s existing efforts. And she will work to ensure these measures help smaller, downstream contractors get paid promptly.
- Increase federal contracting with small businesses. Working with small businesses is essential for the government to be innovative and efficient – and is another way to help small businesses grow. The federal government just reached its 23 percent small business federal contracting goal for the third consecutive year. Hillary will challenge federal agencies to meet even more ambitious goals for ensuring small businesses benefit from federal contracting. She will expand access to contracts to a wider range of entrepreneurs and small business owners, and make it simpler and easier for small businesses to navigate Federal contracting. And throughout this encouragement of small business contracting, she will make sure Federal dollars continue to reward prompt payment.
3. Expand support for working capital so small businesses can grow and thrive
Hillary believes we should expand support for small businesses to have the working capital they need to grow and thrive. Working capital is the lifeblood of small businesses: if you are a small business and you provide a service on the first day of the month but do not get paid until the last day of the month, or not at all, you might have a serious cash flow problem. Providing additional working capital support will help give small businesses resources to sustain and protect themselves against predatory behavior by larger companies:
- Expand access to working capital. The SBA supports more than $20 billion annually in loans to small businesses through its flagship 7(a) loan guarantee program. As part of that program, it offers support for short-term and cyclical working capital through its package of CAPLines loans. Clinton will expand resources for these loan guarantee programs that support small business working capital – whether it is for acquiring new equipment, upgrading systems to get a new contract, or marketing goods around the world. This will give small businesses the support they need to grow, hire, and expand, creating good-paying jobs and driving American innovation. It will help encourage small business ownership in every community - in 2015 the Small Business Administration helped support more than $4.5 billion in 7(a) loans to minority-owned businesses and nearly $4.8 billion to female-owned businesses. And this financial support could help small businesses meet their obligations when large businesses are slow to pay, keeping them growing as they move from one contract to another.
- Lower working capital fees for small businesses in underserved communities. In recent years, the SBA has offered reduced or zero fees on small (<$150,000) loans to provide greater access to working capital; and offered a Community Advantage pilot program to streamline applications for 7(a) loans in underserved communities. Both of these initiatives have not been extended permanently. Hillary Clinton will extend and further expand upon the Small Business Administration’s Community Advantage Program, and relief from fees for small-dollar loans. This expansion of affordable access to working capital support will ensure that we break down barriers to small business growth in every community across the country.
These new measures to crack down on stiffing small business, make sure small businesses are paid on time, and expand access to working capital are consistent with Hillary’s vision for helping small businesses grow and thrive. She has already laid out her principles for small business, including 1) cutting red tape; 2) expanding access to capital; 3) simplifying and reducing taxes; and 4) expanding access to new markets across the U.S. and the world. And she will have more to say in the coming weeks on how helping small businesses expand, hire, and grow will be part of her plan to create good-paying jobs – and an economy that works for everyone, not just those at the top.