News Column

Agency With a Small Focus

September 2003, HISPANIC BUSINESS Magazine

Patricia Guadalupe

How would the world today be different without the Small Business Administration? "We might not have America Online, Staples, Hewlett-Packard, Nike, Gymboree, or Intel," says SBA Administrator Hector Barreto. "Companies like that and so many others started out as small businesses and grew with help from the SBA."

Mr. Barreto's comments helped kick off activities to mark the agency's 50th anniversary. The commemoration started in Abilene, Kansas - the hometown of President Dwight Eisenhower, who signed the Small Business Act in 1953 - and finished in New York at the opening of Nasdaq.

During its history, the SBA has helped more than 20 million people start or expand their businesses. It has channeled more than $170 billion in direct or guaranteed loans to entrepreneurs. Its current portfolio of about 219,000 loans worth more than $45 billion makes it the largest single financier for business in the nation. But in this anniversary year, CEOs, political leaders, and lawmakers agree that the agency must evolve to keep pace with the business community it serves.

"The 50th anniversary gives us a perfect opportunity to reflect upon our history and to plan innovative methods to better serve America's entrepreneurs. It's not just a celebration," says Mr. Barreto.

Today's SBA encompasses several divisions targeted to minority and Hispanic entrepreneurs, including the 8(a) Business Development program, HUB (historically underutilized business) Zones, and the Small Disadvantaged Business certification program. In addition, many Hispanic firms participate in the 7(a) loan program, Small Business Development Centers (SBDCs), technology transfer programs, and business counseling provided by SCORE (Service Corps of Retired Executives) and other SBA technical services.

Also, as the small-business sector has assumed a central role in U.S. economic development, the SBA has embarked on an extensive research program to quantify small-business needs and impacts. Examples include data on self-employment, business financing, bankruptcies, and economic growth (see accompanying story, "Research from the SBA Vault").

Despite the impressive numbers the SBA has assembled on its operations and constituency, the agency has attracted critics over the years from both political parties. Some Republicans have advocated dismantling the agency's loan programs, against the protests of heavyweights such as Senate Small Business Chairman Christopher Bond. From the Democratic side, Congresswoman Nydia Velázquez of New York, the highest-ranking Democrat on the House Small Business Committee, feels the agency has fallen short of its mandate to maintain a competitive free enterprise system and ensure that a "fair proportion" of government contracts and subcontracts be placed with small businesses.

In particular, Ms. Velázquez believes the government isn't doing enough to help minority-owned companies. "The programs that impact minority-owned businesses have been either eliminated or severely underfunded, and federal contracts have dropped substantially," she says. Adds House Minority Leader Nancy Pelosi of California: "The SBA should be doing more to reach Hispanics, including specifically marketing its loan programs to Hispanics and streamlining and reducing their paperwork requirements so that more Hispanic businesses can take advantage of them."

In terms of minority programs, the SBA fiscal year 2004 budget requests $2 million for HUB Zones (compared to $5 million in FY 2001, the final year of the Clinton administration), $88 million for SBDCs ($85 million in FY 2001), and $3.6 million for technical assistance to 8(a) firms (compared to $5 million in FY 2001). Overall, the SBA's FY 2004 budget request is $503.7 million, compared to $1 billion in FY 2001.

Congressman Donald Manzullo, a Republican from Illinois and chairman of the House Small Business Committee, maintains that a lot has been done to help small companies. "One of the greatest things this president did for small businesses was to sign the bill that repealed the oppressive ergonomics regulations. That was a horrible unfounded mandate that hurt small businesses," he says. "He then did tax relief that allows small businesses the ability to expense more along with a bonused appreciation, and the overall tax cuts helped out a lot of small-business people. Also, tax relief in terms of the repeal of the death tax [estate tax] for small business allows the business to be passed on to succeeding generations without an unfair tax burden. On the committee, we have worked with the SBA administrator on a number of issues, including lowering the cost of 7(a) loans. Can more be done? Of course. Has a lot been done so far? Absolutely."

With the U.S. economy still in slow motion, Mr. Barreto prefers to focus on immediate steps to foster small-business prosperity. Last year, he says, his agency made loans totaling nearly $1 billion to Hispanic firms, and this year the number of loans to Hispanics will rise 45 percent. "The president's small-business agenda is designed to create an environment where entrepreneurship can flourish by providing small businesses with the information needed to succeed, saving taxpayer dollars by ensuring open competition to government contracts, and tearing down regulatory barriers," he explains.

As administrator, Mr. Barreto hopes to use technology to create a "new SBA" for the 21st century. Currently, the Web site gets more than 1.5 million visitors every week, and the Spanish-language version ( now has an average of 50,000 visitors per week. Mr. Barreto plans to put the application for the 8(a) program online and hopes to have it operational within a year.

Internationally, the SBA recently signed a memorandum of understanding with two economic agencies in Mexico - the Secretaría de Economía (Economy Secretariat) and the Agencia Nacional Financiera (National Financing Agency) - to promote business between U.S. small businesses and their counterparts in Mexico. Under the agreement, businesses would share information to facilitate joint ventures, licensing, subcontracting, and product distribution. "By helping small businesses across the border to increase their productivity and competitiveness, as well as promoting more bilateral trade, this agreement will encourage a climate of economic development and job creation in both countries," says Mr. Barreto, a Mexican American.

One of the SBA's most successful projects this year is a series of matchmaking events patterned after the Latino Business Expo in Los Angeles, which Mr. Barreto started during his tenure as chairman of the Latin Business Association. After a rollout at the Florida State Hispanic Chamber of Commerce Conference in January (see "Sunshine State Summit," March issue), the event went on the road to pair up major corporations and government agencies with small suppliers. The culmination will be the National Entrepreneurial Conference and Expo, part of the 50th anniversary celebration in Washington, D.C., on September 17-19.

Then, beginning in October, the SBA will sponsor a series of public forums at which entrepreneurs will have an opportunity to talk to SBA officials about how the agency can best serve their needs. "When I was a small businessman, I knew about the SBA but I didn't realize how many things it does and how much it could help," says Mr. Barreto. "Now that I'm here and familiar with the agency, I'm here to reach out, be a partner to small businesses, and be very customer-centric."

Even through a recession, a slow recovery, the September 11 terrorist attacks, and wars in Afghanistan and Iraq, the SBA has made progress in helping small companies in general and Hispanic ones in particular, according to Mr. Barreto. "Small business isn't small when you consider what [these companies] contribute to the economy, and we want to do as much as possible to help," he says. "I am very confident about what we are doing now and where we are going."


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