Closed for Business: How Local Governments are Strangling Businesses and Entrepreneurs in Red Tape

This paper highlights the regulatory hurdles placed in the way of entrepreneurs by local governments, and why they present a challenge for those supporting economic opportunity and a ladder out of poverty. It recommends that microlenders should be aware of these challenges and factor them in their finance strategies and lending practices. The paper also discusses practical policies that could increase opportunity and decrease costs to would-be entrepreneurs.

The paper explores how local regulatory regimes either over-regulate or actively suppress competition, focusing on the case of Milwaukee, Wisconsin, a major U.S. city. The various regulatory hurdles that entrepreneurs in the city face include zoning and occupancy permits, business licenses, and industry-specific regulations. The paper suggests practical reforms that could help to create significant economic opportunity in America's cities. Recommendations include:

• Local governments need to evaluate whether the costs of licensing businesses outweighs public benefit gained through what is essentially a registration requirement;
• Another way to promote economic opportunity in a knowledge-based, highly connected, and digital economy is through the promotion of home-based businesses.