People usually complain, loud and long, when a popular
government agency is faced with dramatic budget cuts. So what
explains the deafening silence after the Bush administration's
initial budget slashed funding for the SBA by 40 percent, to $540
million? Small-business-minded senators rode to the rescue,
restoring $264 million to a budget resolution in hopes of
protecting the 7(a) Loan Guaranty Program and a venture capital
program for businesses in economically depressed areas.
Still, some of the dramatic changes survived: Small businesses
will pay twice as much-$2,800-in fees for their guaranteed loans,
and for the first time, Small Business Development Centers (SBDCs)
will start charging entrepreneurs for counseling.
Is much of this news to you? If so, that's because few
small-business advocacy groups have been raising much of a stink
about the SBA's precarious position. That Bush's budget
even targeted the SBA-which, after all, is supposed to represent
one of the sacred cows of the U.S. economy and the new American
dream-underscores the agency's weak political position.
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The new SBA administrator, Hector Barreto Jr., will probably
have to defend the agency's very existence. Barreto, a
financial planner and vice chairman of the U.S. Hispanic Chamber of
Commerce (of which his father was a founder), will be faced with a
double whammy: a presidential administration that considers the SBA
expendable and a small-business public that doesn't seem to
care whether the agency exists or not.
"That there's no outcry when there's talk about
cutting the funds is a clear signal to the administration and
Congress to change things. It may be time to fold [the SBA] into
something else," says William A. Ward, the Warehime Professor
of Business Administration at Susquehanna University in
Selinsgrove, Pennsylvania. "You could make a case that the SBA
has been a victim of its own success. It has been successful in
getting a lot of interest and activities started at local and state
levels, too." He believes that those activities would carry on
even if the SBA ceased to exist.
Public interest in small businesses saw a boom in the go-go
1990s, partly because of the seemingly endless opportunities the
Internet opened up and partly because small businesses began to
understand and use their clout. Scores of small-business advocacy
and membership groups sprang up to advance the interests of various
minority groups, regional groups,
small-business-within-major-industry groups and so on. Ward
contends most of these groups are more committed to promoting their
own members' interests than they are to presenting a united
front on issues that are pertinent to all small businesses.
That's why few of them protested the SBA budget cuts, he says.
As entrepreneurship grows, membership in most of these groups also
expands, which boosts their clout and undermining any loyalty they
have to the SBA.
Meanwhile, the SBA continues to add to its long buffet of
programs and services, fueling confusion about its core mission.
Ward and others charge the agency has reacted to current business
and societal trends by developing a wider spectrum of ever more
narrowly focused programs, instead of strategically concentrating
on efforts that could lead to long-term gain for small businesses
as a whole, such as providing IT assistance and training, and
creating new channels for small businesses to trade overseas.
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