Where Do You Stand?

It's Just Business

Another focal point of late is SBA-sponsored Small Business Development Centers, where new entrepreneurs can obtain individualized counseling and training. The counseling services are currently free, but if the Bush fiscal year 2002 budget for the program is funded at the $88 million level requested-$12 million short of the amount thought needed to fully fund the program's operations-entrepreneurs may have to begin paying hourly counseling fees.

Ellen Thrasher, deputy associate administrator for the SBDC program, doesn't see the proposed fees as problematic: "We estimate the typical entrepreneur will pay less than $40 a year," she says, basing her estimate on the average 5.3 hours of counseling an entrepreneur receives in one year.

But while financially needy entrepreneurs may be able to access scholarships to help pay counseling fees, Donald Wilson, president and CEO of the Association of Small Business Development Centers, believes imposition of any fee, no matter how nominal, will be detrimental: "We think a fee will deter a number of pre-venture clients and even some existing clients from using the SBDCs. I think many will view it as a tax on small business."

"We think a fee will deter a number of pre-venture clients and even some existing clients from using the SBDCs. I think many will view it as a tax on small business."

There's also the matter of matching funds. According to Thrasher, centers must secure one-to-one matching funding for the centers; at least 50 percent of that has to be cash. She says most centers get their additional funding from state government coffers and universities.

Wilson points out that a fee may also impact centers' ability to raise the required matching funds: "What happens is that when matching partners see that the federal government isn't willing to ante up, they say, 'Why should we?'"-and that, in turn, could force 24 of the 58 state programs to make drastic service reductions.

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This article was originally published in the July 2001 print edition of Entrepreneur with the headline: Where Do You Stand?.

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