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The State of the SBA SBA chief Karen Mills on how the agency evolved through the economic crisis.

By Diana Ransom

Opinions expressed by Entrepreneur contributors are their own.

When Karen G. Mills took the top job at the U.S. Small Business Administration two years ago, she knew her path would be rocky.

Helping small businesses and entrepreneurs gain access to funding, technical assistance, training and federal contracts, is never easy. But amid the worst recession since the Great Depression, fulfilling that already tall order has become an almost herculean task.

While not exactly muscle-bound, the former venture capitalist and Tootsie Roll heiress from Maine did manage to grow the size of the SBA's pool of authorized lenders. Mills also temporarily boosted the agency's loan guarantee on its flagship 7(a) loan program.

"In two years, the SBA has helped deliver $42 billion into the hands of small-business owners in credit guarantees during the worst small-business credit crisis in recent history," says Mills, who added that the cost of doing so was just $1.2 billion.

And while the economy seems to be on more stable footing these days, small businesses aren't out of the woods yet, she says. "But we're really geared up to help small businesses as they begin to recover."

Related: Take Another Look at the SBA 504 Loan spoke with Mills about new SBA programs to aid businesses and the overall state of small businesses today. Here are edited excerpts from that conversation.

Has the role of the SBA changed since the downturn?
This has always been a small agency with a big mission. But these days, especially, we have to stand up every day, deliver value into the hands of small-business owners and get taxpayers the biggest bang for their buck so that we can help these job creators do what they need to do.

During the downturn, the SBA boosted its guarantee on certain loans to 90 percent, up from 75 percent and 85 percent. What has the response been like since the guarantee slipped back down to pre-recession levels?
As those guarantees ended, we had the highest quarter of lending ever in SBA history. In the quarter ended Dec. 31, we helped facilitate $11 billion worth of loans. And after that, we were concerned that we would see a fall-off. But, in the past several weeks, we've continued to rebound. At the SBA, we are back at 2008 lending levels.

What do you attribute those results to?
We brought more than 1,200 lenders back to SBA lending over the last two years. That means we're getting more access and more opportunity for more small businesses in more communities.

We've also streamlined our paperwork and improved our processing times. We are not the same SBA that people were dealing with several years ago.

Related: SBA Loan Checklist

What are the key challenges still facing small businesses?
When we look at access to credit, our overall volumes are back at 2008 levels. But there are gaps: Two of the gaps are in smaller loan sizes and in loans going to underserved markets and communities, which were very hard hit in the recession.

How is the SBA addressing these issues?
We have announced two specific programs to help. One is called Small Loan Advantage, where we work with our existing banks to deliver a streamlined paperwork product. That way, banks will process more small loans because it will be more cost-effective.

We also announced the Community Advantage program, where we've reached out to mission-based lenders in underserved communities to allow selected community-development financial institutions and others access to our key 7(a) programs. Having more points of access in each of these communities will allow entrepreneurs and small-business owners to finally get access to capital for startups and growth.

Since the much-maligned 1099 provision in the health-care law was repealed last month, do you think business owners will consider the reforms more palatable?
As many as 6 million small businesses were eligible for a 35 percent credit on their health-insurance costs in 2010. They're also looking forward to the exchanges that will provide a marketplace for them to buy insurance in 2014. Now, small businesses are paying more for the same health-insurance policy than a big business just because they're small. But by pooling their risk in these exchanges, they're going to get a better deal, and insurance companies will start competing for their business.

Related: Congress Moves to Cut Controversial 1099 Provision

Small businesses have largely shied away from hiring even as the economy has recovered somewhat. What will it take to get them to add staff?
We have to keep the momentum going in the economy. And we have to make sure that we give small businesses as much cash and liquidity as possible so they have the confidence to hire that next worker. We're giving them access to capital. We're helping them with counseling and advice. We are also delivering over $100 billion of government-contract opportunities to small businesses.

Diana Ransom is the former deputy editor of

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