While you were busy running your company this week, the nation's small business lobbying groups were in Washington, D.C., representing–they say–your interests on Capitol Hill. But what are they saying? Are the issues that they champion really those that are essential to your success? And do they truly represent you on hot-button topics, like affordable healthcare plans and tax relief?

The most high-profile of these groups is the National Federation of Independent Businesses (NFIB), which bills itself as the nation's largest small business advocacy group,with 600,000 members. NFIB surveys its members every year to see where their concerns lie (access to health care coverage has topped the list for years) and has been a leading advocate of association health plans, which would allow groups–including the NFIB–to gather members into buying pools, in theory to create buying clout and reduce premiums.

Its other hot button has been tax reduction. While NFIB says it is nonpartisan, it has been closely associated with the Bush Administration agenda, pushing for permanent adoption of the 2001 tax cuts and championing estate-tax repeal. BusinessWeek called the NFIB a Republican group in an article on small business lobbying (BusinessWeek SmallBiz, Fall 2004 issue) and early this year the NFIB issued a blanket endorsement of President Bush's State of the Union agenda.

In lobbying for estate tax repeal, the NFIB adopted the "death tax" label that was cooked up by a Republican lobbyist working for a group supported by billionaire heirs, including members of the Mars and Walton families. It has spent the past few years trying to draft its members for a "grass roots" movement for repeal, even though the measure would have little effect on most of them; 72 percent of NFIB members are businesses with fewer than 10 employees, almost none of whose owners will be subject to estate taxes. (A 2005 report by the credit-scoring company Experian found that the average income among small business owners it surveyed was $71,690.) According to the non-partisan, Center on Budget and Policy Priorities, at the current exemption level ($2 million for an individual and $4 million for a couple), only about 1% of estates in the U.S. are taxable. In 2000, when the exemption was just $675,000 per individual, the Congressional Budget Office found that 135 family-owned businesses in the country would have owed estate tax.

After pushing for full repeal–and lambasting the Senate for stopping the measure–this week the NFIB endorsed a new House bill that exempts the first $5 million of an individual's estate from taxes beginning in 2010, when the current temporary law expires.

The NFIB's other hot button is the Bush Administration-supported version of association health plan legislation, which would allow small businesses to band together and buy healthcare insurance across state lines.

The proposed bill has not gotten out of committee, because it includes language that would supercede longstanding state rules preventing discrimination and establishing minimum levels of coverage by insurers. Under the proposed bill, insurance companies would be able to exclude from coverage sick workers, or workers with certain diseases like diabetes and hypertension, which strike disproportionately in minority populations. A broad coalition of healthcare, politicians, woman's and labor groups have allied against the so-called Enzi bill, which it says actually result in less coverage (for details, see previous story in Small Business Review).The NFIB did recently score a victory for small businesses with a provision under HR 4297, the Tax Increase Prevention and Reconciliation Act of 2005 Conference Report. This provision, signed into law in May, was part of a bill to make the 2001 tax cuts permanent and extended a 2003 measure allowing businesses to expense capital investments. It also increased limits, up to $400,000 per year. The break is extended to 2009.

The National Small Business Association (NSBA) is the oldest small-business lobbying group. Established in 1937, it has 150,000 members and, like the NFIB, has been a staunch supporter of estate-tax repeal. On the other hand, NSBA has opposed the Enzi bill, because of the pre-emption of state laws. The organization opposed an earlier NFIB-supported Association Health Plan bill that would have permitted outfits like NFIB to self- insure–to get into the healthcare insurance business directly. The NSBA applauded the recent Massachusetts healthcare legislation which, like its own reform proposal, relies on getting maximum participation among employers and employees to obtain lower rates.

The US Chambers of Commerce (Chambers) make up the largest all-around business advocacy group in the world, with 3 million members. What are they doing for small business? Although they lean to the right, this association has been vocal in its opposition to certain Bush Administration moves, such as cutting funds for 7(a) loans through the Small Business Administration (SBA), and has rallied against the Administration's drive to cut the program entirely. Like NFIB, the Chambers support Small-Business Health Plans and wants to abolish the estate tax.

A new organization that would seem the polar opposite of NFIB and the US Chambers is Small Business Majority (SBM), formerly Small Business for America, established in 2004. SBM rejects Association Health Plans and Small-Business Health Plans as piecemeal, temporary solutions that only complicate the patchwork system of small-business healthcare insurance now in place. SBM advocates comprehensive national healthcare reform, endorsing the Massachusetts system of ensuring that almost all of its citizens have access to affordable healthcare coverage as a model to emulate countrywide. Massachusetts recently mandated that all residents must have healthcare insurance by July 1, 2007. The legislature passed a provision that requires business owners with more than 10 employees to either provide healthcare insurance or kick in a "Fair Share" of up to $295 per employee per year.

"The main reason we like the Massachusetts plan is that it is comprehensive–it asks everybody to come to the table," says John Arensmeyer, founder and CEO of Small Business Majority. "It requires everyone to participate, and doesn't place the burden on any individual, or on any business, or on government alone."

SBM promotes the Small Employers Health Benefits Program Act of 2005, a Democratic bill that it says would preserve state insurance regulations and reduce administrative paperwork by using a system based on one now used by federal employees. The association also supports healthcare tax equality for businesses, regardless of size, which would allow small business owners to afford healthcare insurance in part through the use of tax credits.

As for the estate tax, "We're not in favor of eliminating it entirely," Arensmeyer says, due to budget deficit concerns. The organization does support increased exemptions and wants to preserve the "stepped up basis" rules in effect until 2010. Those rules allow exemptions of all capital gains on assets up to the time of death.

Alone among small business lobbying groups, the efforts of the American Small Business League (ASBL) are aimed solely at the practices of the SBA. This organization represents "the 98% of U.S. companies with less than 100 employees" according to its Web site. The ASBL acts as a scourge to keep the SBA in line with its own policies.

President Bush's pick to lead the Small Business Administration received generally positive reviews.

Steven Preston, a largely unknown former executive at lawn-care giant ServiceMaster, went before the Senate Committee on Small Business and Entrepreneurship this week to persuade lawmakers that he's the right man to lead the embattled Small Business Administration. We asked three Washington watchers for their thoughts on Preston's performance:

1) Do you think the hearing helped or hurt Preston's chances of being confirmed?

Karen Kerrigan, President of the Small Business and Entrepreneurship Council, a Washington-based lobby:

"My original analysis was that he would certainly present very well, and he did. Barring any holds on the nomination that may not have anything to do with him personally -- that is, the hold is being used to get something else politically -- yes, he will be confirmed."

Andrew Sherman, partner in Dickstein Shapiro Morin & Oshinsky, a Washington-based law firm, and co-founder of Grow Fast Grow Right, an entrepreneurship training firm:

"It helped his chances. There does not seem to be anyone in the wings as a back up."

Lloyd Chapman, president of the American Small Business League, a Petaluma, Calif.-based policy watchdog group:

"He'll absolutely be confirmed, because it's a Republican-led process."

2) Preston identified overhauling the SBA's disaster loan program as "job number one." What is your assessment of his list of priorities for the agency?

Kerrigan: "That is not a surprise given that the agency is overwhelmed in this arena, and we have just entered a new hurricane season. It is a big task, which will require focus."

Sherman: "I am hoping that he doesn't spend too much time on disaster relief. It is critical, but there are many other issues and problems that are equally important."

Chapman: "Preston's going to give lip-service to the disaster loan program so he doesn't make the president look bad. But his number one priority is really to close the SBA."

3) Did the hearing improve or worsen your impression of Preston?

Kerrigan: "I had no impression of Mr. Preston other than his career successes. I did not know him. I thought his background would suit the priorities of the agency -- that is, systems and management, along with some knowledge of small business operations. My impression of him is a good one at this point."

Sherman: "Neutral to better. I was pretty bullish at the outset, so the needle did not move all that much one way or the other."

Chapman: "He still looks like a hard-nosed Fortune 500 executive to me."

4) What is your assessment of the committee's line of questioning?

Kerrigan: "There were no surprises."

Sherman: "Pretty typical. There are some high visibility issues that naturally lead to some showboating, but I don't think anyone on the Hill has a better idea or better solution to the problems and challenges that he or anyone else running the SBA will face."

The new bankruptcy law that takes effect this October will hit small-business owners much harder than previously thought. That's the conclusion of a new study, which appears in the most recent issue of the California Law Review, by Robert Lawless, a law professor at the University of Nevada–Las Vegas, and Elizabeth Warren, a Harvard Law School professor. The law makes it more difficult to wipe away debt by mandating that bankruptcy filers pass a means test. For example, a petitioner with a family income greater than the state's median may have to enter a repayment plan.

The study found that the Administrative Office of the U.S. Courts, which tracks bankruptcies, failed to count as business related approximately 220,000 to 280,000 filings by entrepreneurs, self-employed individuals, and independent contractors who needed bankruptcy relief in 2003 to recover from unsuccessful business ventures. The AO data show that only 2.3 percent of 2003 bankruptcy filings were business related, while Lawless and Warren say the number is as high as 17.4 percent. The AO disagrees, saying the study incorrectly focuses on the type of debtor as opposed to the type of debt.

Why the discrepancy? The study authors blame software that attorneys routinely use to generate bankruptcy filings, which incorrectly, the authors say, counts many businesses as consumers. "This suggests that there are more small businesses filing bankruptcy than we thought, so it's inevitable that the small-business sector may not be as healthy as we thought," says Lawless. "The type of bankruptcy system a small-business owner needs is quite different from the type a consumer needs."