In a relatively unhampered market, a declining population is not necessarily an economic problem. But in a system where retirees can loot younger workers through government pension systems, there is a real problem, indeed.
Small businesses are essential in providing employment for workers who might otherwise be locked out of the mainstream economy. Small firms also drive large firms to compete for workers, thus driving up wages.
Reparations to heirs of slaves make sense so long as the actually guilty parties are the ones paying. Short of that, the policy being discussed has nothing to do with reparations. It's just a wealth redistribution scheme.