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In The Hot Seat

Meet the new SBA Administrator.

Steve Preston, 46, is the 22nd Administrator of the SBA, a job which has come under much scrutiny lately. We asked Preston about his plans. Here's our complete interview with him:

Entrepreneur:What is your experience with small businesses?

Administrator Steven Preston: I've been in and around small business my whole life. When I was an investment banker, I worked with small companies to get access to capital. Later in my career, I served on the advisory boards for some private equity firms that invest in small business. I advised them on things like growth plans and marketing and financial issues. Then later, as a senior executive at a company that had about 4,500 franchisees, one of our most important functions was assisting those small franchisees in getting their business started, in putting growth plans in place. I also have a number of close friends and family members who have started small businesses. Many times, I've been at their side, working through the detailed issues with them, helping them put their plans together, helping them figure out their financial issues. So I've had a wonderful opportunity to see and become involved in small business from a number of angles.

Entrepreneur: Is it this experience with small business that makes you qualified for your new position?

Preston: People have to look at the SBA a little differently than that. The SBA is a very large organization that requires very sophisticated management. We have thousands of employees, we serve millions of people, and we manage a portfolio of almost $80 billion, in capital. We need to have an organization that's run with sophisticated financial management and that's very focused on the customer, because we have millions of customers. And we have to have an operating structure that works very, very well. So what I told the Senate when I was going through my hearings was, "We need leadership that has a mind for big business but a heart for small business."

Entrepreneur: What do you hope to accomplish your first year?

Steve Preston: First of all, we've got to absolutely ensure that we have a customer-focused culture here. We have to make sure that when people come to us for loans, we are responsive and can handle their needs quickly and effectively. We absolutely need an organization where employees are excited about what they're doing. That's very, very important in a customer service culture. Our people here are really devoted. They really care about the people they serve, and we need to make sure they have the tools, the training and the support to be able to serve people. Also, because we have such a large portfolio, we need to make sure we run this organization in a way that is very accountable, financially sophisticated and responsible, because there's a lot at stake if we don't do a good job there.

With the programs, job number one for us is making sure our disaster lending program is operating well. We were a little overwhelmed with the volume following Katrina. We have to make sure this program can serve Americans in any disaster. We've already dispatched teams to begin driving improvements. These are detailed, hands-on projects, and you need people to dig deep and understand how to fix the processes to make them operate more efficiently. I've spent time [in Louisiana] working through these issues. We have to be doggedly focused every day to move the ball forward.

Entrepreneur: There have been reports that SBA employee morale hit an all-time low. How's morale now?

Preston: It's getting better. It involves being more visible and listening harder to people so they know I care. Some of it is implementing specific solutions so they can do their jobs better; some of it's giving them tools like computer assistance, new programs or training. The employee feedback, so far, has been very positive.

Entrepreneur: How will you ensure the federal contracting oversight where loans for small businesses are granted to big businesses, doesn't happen again?

Preston: First, we need to be transparent and show people the data and help them understand it. Second, I firmly believe there has been a lot of misinformation in news reports-sometimes small businesses grow into bigger businesses during the life of a contract, but for that contract, they're still considered small businesses. Sometimes small businesses are bought by big businesses, and they don't get recoded until after the contract is over. We're working to simplify those rules, and we'll be working with other federal government agencies to ensure data submitted is accurate.

Entrepreneur: How do you feel about programs for women and minority business owners?

Preston: Both are critical constituencies for us. One of our missions at the SBA is to serve people who've been historically underserved. We have programs specifically designed for what we call "socially and economically disadvantaged businesses". I am working right now with lenders that administer our loan programs to understand if we're reaching people the right way, if we're lending to the right people, if we're active enough in the right neighborhoods and if we're targeting the right industries or groups to ensure that our programs are as effective as possible. And I've already had conversations with lenders about these issues. I'm challenging our people in our procurement programs to understand if there's more we can be doing to help businesses in these categories.

For the past several years, both minority- and women-owned businesses have consistently been getting more loan dollars through SBA programs and more procurement dollars from the federal government, so all those numbers are moving in the right direction, and we've already [provided] more minority loans in the first eight months of this year than we did in all of 2003. It's all moving in the right direction, but I'm not sure if that means we're doing enough. And that's one of the things we're digging very deep on and I'm challenging people in all parts of the organization to look at those issues.

Entrepreneur: How do you feel about your new position?

Preston: This organization touches the lives of millions of people. If we do a good job, we can help small businesses create jobs and move our economy forward. When I think about serving for the next few years, I'm very excited about it. I'm very excited about the opportunities we have to take this agency to a higher plateau by bringing good business solutions to how we perform our services.

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This article was originally published in the October 2006 print edition of Entrepreneur with the headline: In The Hot Seat.

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