Terrorism, an economy in quicksand, a war in the Middle East--with the current events of late, today's business owners understandably have a lot on their minds. With the SBA, one of the most prominent government icons of small business, now in its 50th year, we spoke with SBA Administrator Hector Barreto to discuss some of the pressing issues on entrepreneurs' minds today--and how the SBA is addressing them.
In February, President Bush proposed $20.8 billion for small-business financing and $9.3 billion in guaranteed loans. Has this funding been affected by the war in Iraq?
Hector Barreto: It's really incredible--we're on track to have our most successful year ever. Our loans are running about 35 percent over a similar time last year--and we had a very good year last year.
You mention that the number of loans has increased, and the number of loans for minorities and women has increased a little over 35 percent overall. However, the dollar amount loaned out is down by 0.3 percent. Is this a strategy?
Barreto: Well, it's not necessarily a strategy. When we got here, the average size loan at the SBA was around $225,000. But a lot of small businesses don't need a million-dollar loan or even a quarter-million-dollar loan--they need $50,000; they need $100,000. In fact, our latest numbers show us at 43.1 percent on minority loans and 35.5 percent on women loans, so it's even a little bit better than what you just quoted.
On 504 loans, as opposed to the 7(a) loans just mentioned, the dollar amount loaned out has increased on average. What's the significance of that?
Barreto: That's very important to us--every year we're leaving a couple billion dollars on the table, and that's not our intention. We want to get as much of it out as we can. We feel very good about the budget that the president gave us, especially in this environment. We got about a 4 percent increase, a very good message to small business.
Has the war in Iraq affected any programs?
Barreto: I don't know that it's affected any of our programs. We are getting a lot of people calling us and coming to our Web site. Many of them are concerned about having key employees called up for active duty. Sometimes that key employee is the business owner. We've reached out to those businesses and let them know that we are here to provide them with counseling, business education and technical assistance. We can also provide them with disaster injury loans.
Part of President Bush's budget proposal was to make the SBA more customer-centric. What is your plan is for this?
Barreto: This year, we're launching a transformation effort at the SBA. One of the best things we can do is to take away a lot of the bureaucracy that [small businesses] get saddled with and wherever we can, bring that back to Washington, DC. Pilot [programs] have already begun, and it's our intention to spread that to the rest of the network as the year progresses--and definitely complete it next year.
Could you update us on the Business Matchmaking Program?
Barreto: The matchmaker is going great. We had a great kickoff event in Florida and scheduled close to 2,500 appointments. There is a lot of awareness and enthusiasm, and this is exactly what we were trying to do--take contracts out of Washington, DC, and take them where the small businesses are.
|Taking Advantage of an SBA Program|
|In early March, the SBA and
U.S. Chamber of Commerce, in partnership with Hewlett-Packard,
launched the Business
Matchmaking Program. Prior to the launch, however, Joseph
Lopez, founder and president of New Era Builders
Inc., attended the pilot event held in Cleveland and landed a
$300,000 contract with the U.S. Navy.
"We're extremely excited that we had the opportunity to present our firm to this closed audience of buyers," says Lopez. "And when it comes back into Cleveland, we're certainly going to attend it again."
SBA Administrator Hector Barreto says the government will spend in excess of $230 billion in goods and service this year, and by law, at least 23 percent of all federal procurement must go to small business, which equates to roughly $46 billion. Traditionally, 80 percent of federal government contracts have been awarded to businesses within 50 miles of the Washington Beltway. That's changing.
Though Lopez and his 14-year-old Cleveland-based company are no strangers to government contracts, having been awarded past contracts with the Coast Guard, General Services Administration and NASA, this was his company's first contract with the U.S. Navy.
"Some of these buyers are very difficult to get to," says Lopez, who advises small businesses to make appointments with companies that they would not normally have the opportunity to approach. With these exclusive opportunities, Lopez adds: "You have to be well-rehearsed, know what you want to say, know what they're looking for and be complimentary to what they're trying to buy. You can be the best service out there, but if they don't need your services, it's a waste of time."