News Column

SBA ombudsman hears El Paso business gripes about fed contracts, loans

July 24, 2014

By Vic Kolenc, El Paso Times, Texas



July 24--Carlos Diaz Jr., the owner of an El Paso janitorial service, said the Border Patrol owes his company almost $300,000 in back payments for cleaning his company does under a federal contract.

"It's sucked my cash flow, and messed up my credit," the owner of Bellamie Inc., told Brian Castro, Small Business Administration national ombudsman, during a regulatory fairness forum Castro conducted in El Paso Wednesday. Diaz's company has not been paid by the Border Patrol for four months, and had to wait 12 months for payments last year, he reported.

Juan Carlos Diaz, a commercial loan officer at United Bank of El Paso Del Norte, said increased SBA regulations and centralized loan reviews have forced his small bank to substantially reduce its use of SBA-backed loans.

"We used to be the top SBA lender" in El Paso, Juan Diaz said. Now, "we (sometimes) feel we are wasting our time" doing SBA-backed loans.

Those were two of the gripes aired at the forum at the El Paso Hispanic Chamber of Commerce offices.

The ombudsman holds forums and hearings around the country to give small business operators the chance to complain about problems with federal agencies and federal contracts. The ombudsman takes those complaints back to the affected agencies for resolutions or to help improve SBA services and improve small business dealings with federal agencies.

It's been seven years since an SBA ombudsman forum has been held in El Paso.

"I never heard about the ombudsman before," Bellamie's Carlos Diaz said. "As a small business operator, I don't have the chance to read all the rules and regulations."

Castro encouraged the janitorial service owner to file a formal complaint with the ombudsman office. He said his office recently helped a business in another part of the country, with the same predicament, get its tardy federal contract payments.

Late federal contract payments are not a wide problem since President Obama in 2011 issued an executive order requiring federal agencies to pay contractors within 15 days of getting a valid invoice, instead of the previous 30 days, Castro said after the forum.

However, construction contractor Oscar Venegas said an ongoing problem is that payments to subcontractors not paid directly by a federal prime contractor, but supplying labor for the prime contract, are having to wait as much as 60 days to get contract payments. Venegas is president, founder and owner of Venegas Engineering Management and Construction, or VEMAC, in El Paso.

Banker Juan Diaz said his small bank doesn't have the staff to keep abreast of all the SBA's loan regulations. So, when United Bank recently tried to collect the SBA's guarantee on a defaulted loan, it ran into a road block because SBA officials said the bank never verified that all the borrower's employees had required immigration documents or were U.S. citizens.

Banks were not given adequate notification of this new rule, he said.

The SBA's increased loan-supervision requirements aren't the only problem, the banker said. SBA loan reviews for several years have been centralized in call-center like places, and that's removed the local flavor needed in loan determinations, he said after the forum. The centralized review last year led to the bank's first loan rejection by the SBA, he said.

Getting SBA-backed loans is more difficult now than seven years ago, Juan Diaz said. United Bank is using the SBA-backed loan program less, and that is hurting some small businesses, he said.

Phillip Silva, SBA district director in El Paso, said the number of SBA-backed loans decreased 38 percent last year in this area. Part of the decrease may be due to small banks having problems with increased regulations, he said. However, the bulk of the decrease is tied to national lenders no longer providing loans for start-ups in El Paso, he said.

The SBA also now has a fairly new, computer-tied system for scoring loans up to $350,000 that actually is making it easier for loans to be approved by the SBA, he said.

Castro said the common theme he heard at the El Paso forum was that there is perceived, and actual barriers for some small businesses to participate in SBA programs.

About 20 business operators and representatives of business-assistance agencies attended the forum. The turnout was partially hurt by some business operators fearing government agencies will retaliate against them if they complain, reported Cindy Ramos-Davidson, Hispanic Chamber chief executive officer.

Castro and other officials assured those at the forum that agencies don't retaliate. A business person's complaint filed with the ombudsman remains confidential, Castro said.

More information: sba.gov/ombudsman.

Vic Kolenc may be reached at 915-546-6421.

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(c)2014 the El Paso Times (El Paso, Texas)

Visit the El Paso Times (El Paso, Texas) at www.elpasotimes.com

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Source: El Paso Times (TX)


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