FACT SHEET: The White House and Small Business Administration Launch Startup in a Day Initiative and Prize Competition
11 Pioneering Cities Pledge to Reduce New Business Licensing and Permitting Process to Less Than One Day; August 4 Set as Date for First-Ever White House Demo Day Focused on Inclusive Entrepreneurship
Yesterday, the White House and U.S. Small Business Administration (SBA), in coordination with the National League of Cities, announced the launch of the Startup in a Day initiative, a partnership with U.S. cities to develop online tools that let entrepreneurs discover and apply—in less than a day—for local, state, and federal requirements needed to start a business.
“I’m calling on city halls across the country to join the initial eleven mayors in a simple but powerful pledge to entrepreneurs and small business owners: If you want to start a business, we’ll make it so easy to navigate the license and permitting system online, that you’ll be off and running within 24 hours,” said President Obama.
Also yesterday, the White House announced August 4 as the date for the first-ever White House Demo Day, which will bring together entrepreneurs from all walks of life, from all across the country, to “demo” individual success stories and build on efforts like Startup in a Day to empower diverse innovators from around the country to launch and scale companies.
The Startup in a Day Initiative
As any entrepreneur or small business owner knows, starting or expanding a business often entails dealing with considerable red tape, from setting up a legal business structure, to understanding zoning laws and licensing requirements, to acquiring various permits. Research suggests that small business owners are potentially more frustrated by mundane red tape than by other obstacles.
The good news is that fairly simple and affordable technological solutions exist to digitize, consolidate, and condense into a matter of hours the licensing and permitting requirements that can otherwise take days or weeks of an entrepreneur’s time—time more productively spent on developing goods and services, finding customers, and growing the business.
To encourage adoption of these technological solutions, the Administration yesterday announced a package of federal, local, and nonprofit commitments that ensure American small business owners spend less time navigating red tape—and more time creating jobs.
- Startup in a Day Pledge: The President launched a national call to action encouraging local leaders around the country to sign onto the Startup in a Day pledge, which has already been adopted by a eleven pioneering mayors.
- Executive Actions: The Small Business Administration will announce a $1.5 million competition for seed grants to cities committed to building Startup in a Day solutions. The SBA will also work with other agencies to develop improved online solutions addressing the relatively few federal requirements that small businesses typically need to navigate when starting up.
- New Federal-Municipal Partnership: The National League of Cities, which represents thousands of municipal leaders around the country, is establishing a Startup in a Day partnership with SBA to support and coordinate this effort.
A National Call to Action in Support of Startups and Small Businesses
The President issued a national call-to-action to America’s mayors to each develop a local online permitting and licensing tool, following the lead of pioneering cities including Boston, San Francisco, Salt Lake City, and Kansas City, among others that have taken meaningful steps in this direction.
These solutions typically take the form of a city-based website that asks entrepreneurs about their proposed business, generates a customized menu of regulatory requirements, and lets them apply for all permits and manage the application process from a single interface.
The Startup in a Day pledge:
Our cities and communities are committed to making it easier for every entrepreneur to start a business. We believe an entrepreneur’s time is best spent developing innovative products and services, creating jobs, and growing local economies—not navigating red tape. While fair zoning rules, licenses, and permits are important to ensuring public safety and fair competition, it shouldn’t take more than a day for entrepreneurs to identify and begin to apply, ideally through a single online tool, for the licenses and permits they need to responsibly launch a business. Accordingly, we resolve to:
- Create a “Startup in a Day” online tool within 12 months: We will develop within a year a website or application that lets most entrepreneurs identify and begin to apply within one day for all requirements to launch a business in our respective communities.
- Develop a streamlined, business-friendly, online permitting system: Our pledge is a first step in a larger effort to streamline, simplify, and bring online those regulatory requirements that have traditionally been fragmented across multiple agencies and handled through a paper-based process. Our ultimate goal is for small business owners to be able to manage and complete most of their regulatory obligations within a single easy-to-use online system.
- Share best practices: In an effort to encourage other municipalities to join us in this effort, we are joining a community of practice administered by the National League of Cities, and commit to sharing best practices, publicizing key learnings, highlighting tangible outcomes, supporting smart regulatory simplification, and providing visibility into our actions.
Cities Participating in the Announcement
The following cities committed to launching Startup in a Day solutions within 12 months.
- Boston, MA
- Chattanooga, TN
- Denver, CO
- Fresno, CA
- Kansas City, MO
- Nashville, TN
- San Francisco, CA
- St. Petersburg, FL
- Salt Lake City, UT
- Seattle, WA
- Washington, DC
Many of these cities have already made significant progress and investment in developing online tools that let entrepreneurs navigate and apply for startup permits and licenses in less than a day.
For example, new online permitting tools unveiled last year by Boston Mayor Marty Walsh have increased on-time permit issuance by 12 percent, shortened the time to review and issue long-form permit by 8 business days, and shrunk the backlog of building complaints from 3,500 to fewer than 300.
Small Business Administration Actions to Support the Startup in a Day Initiative
To support more mayors in this effort, SBA Administrator Maria Contreras-Sweet announced the launch of an SBA competition to fund, in more than two-dozen communities nationwide, the development of online tools that satisfy the Startup in a Day pledge. The SBA also announced its commitment to developing a federal companion tool to the digital solutions being developed by Startup in a Day cities. The federal tool will enable business owners to quickly identify and apply for the relatively few federal permits and requirements needed to start the typical small business, such as applying for an IRS Employer ID Number, conducting a trademark search, and understanding Occupational Safety and Health Administration (OSHA) standards.
Incentive fund. The SBA is launching a $1.5 million competition which will by summer’s end award $50,000 financial prizes to 25 communities around the country committed to adopting Startup in a Day goals and online tools. An additional $250,000 in prizes will go to consortia of local and state governments who team up to develop tools that cover multiple regions, or that can be easily repurposed by other localities. The President’s 2016 budget request doubles this incentive fund, so it can directly benefit dozens more communities.
Federal companion tool. The SBA will also develop a companion service to the city-level tools being developed as part of the Startup in a Day initiative. This companion service—delivered either as a website or application that can be integrated into city tools—will make it easy for entrepreneurs to identify and apply within hours for the few federal requirements (e.g. from the IRS, Department of Labor, the U.S. Patent and Trademark Office) often required of a small business at launch.
National League of Cities partnership
The National League of Cities (NLC) will provide implementation support to Startup in a Day cities, under a partnership with the Small Business Administration. NLC will create a platform for municipal leaders—including mayors, chief innovation officers, permitting staff, economic development and small business staff—to collaborate and share common challenges and proven strategies to meeting the Startup in a Day goals. Through its Center for City Solutions and Applied Research, NLC will leverage its capacity to deliver high quality, effective peer-to-peer learning, research, and best practices to help cities create a more business-friendly ecosystem. NLC is a member-driven resource and advocacy organization representing thousands of cities throughout the country.
Small businesses are the engines of job creation and the lifeblood of our nation’s economy. They create two of every three new jobs and employ just over half of the country’s private sector workforce. The Administration has made it a priority, therefore, to eliminate undue obstacles to small business creation. Among those obstacles is the time and energy entrepreneurs must spend understanding and applying for business licenses and permits. U.S. entrepreneurs spend nearly 6 days discovering, applying for, and managing licenses and permits before opening their doors, according to a 2015 study by the World Bank Group. User-friendly licensing and permitting are a more powerful predictor of a state’s perceived friendliness toward small business than its tax regime, according to a 2014 survey sponsored by the Kauffman Foundation.