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.
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