News Column

New Face at the SBA

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Declining budget or no, Hector Barreto hopes to make the agency more responsive to the small-business community it serves.

Hector V. Barreto's confirmation as administrator of the U.S. Small Business Administration (SBA) earlier this year was a mixed blessing of sorts. On one hand, the Senate's vote of confidence meant that Mr. Barreto, a Southern California businessman, would become the nation's most influential advocate for small business. Under President Bush's proposed budget, however, annual SBA funding would be slashed from $860 million to $540 million – a decrease of 37 percent.

"We were very excited he was nominated for the position, but we also were concerned that he would be coming into a situation that would restrict his ability to do the best job he could," says Elizabeth Lisboa-Farrow, chairwoman of the U.S. Hispanic Chamber of Commerce (USHCC).

Ms. Lisboa-Farrow and others worried that Mr. Barreto, a former USHCC vice-chairman, would shoulder blame for the inevitable cutbacks. And some feared Mr. Barreto, despite having learned the political ropes from his father, USHCC cofounder Hector Barreto Sr., would be unable to deflect the criticism.

The president's proposal to cut the SBA's budget and impose $141 million in higher loan fees elicited protests from small businesses, minority groups, and members of Congress.

Rep. Nydia M. Velázquez (NY), ranking Democrat on the House Small Business Committee, questioned the president's commitment to small business in an opinion piece published in HISPANIC BUSINESS ("Pro-Business or Big Business," Second Opinion, June 2001).

"I can tell you that this is the worst budget that I have seen in my nine years as a congresswoman and my four years as ranking member on the Small Business Committee," she said in a subsequent telephone interview. "I guess Mr. Barreto's first order of business will be to restore some of these cuts and work hard with the administration to make sure next year's budget doesn't look as bad, because then it will be on his shoulders."

Congress, however, wasn't willing to wait that long. At press time, budget bills in both the House and the Senate sought to restore much of the SBA's funding. The House bill proposes $728 million in SBA funding, while the Senate bill would provide $778 million, according to Mike Stamler, an SBA spokesman.

Click here to view the SBA budget breakdown.

Neither bill contains the new fees proposed by the president, and only the House bill lacks funding for the newly created BusinessLINC Program, which would be eliminated under the president's budget.

In a telephone interview with HISPANIC BUSINESS, Mr. Barreto warned against reading too much into the president's initial SBA budget. "The president has told me on more than one occasion that this agency is a vital part of his administration and that he wants to see small businesses prosper and grow," said Mr. Barreto, who co-chaired the Bush/Cheney 2000 campaign in California and was a delegate and featured speaker at last year's Republican National Convention in Philadelphia.

He says the SBA, with 2,800 employees and a loan portfolio in excess of $10 billion, will work with whatever budget it receives without eliminating offices, cutting programs, or diminishing its ability to serve the small-business community. "We're talking about doing a lot more outreach and leveraging our resources in a better way than has been done in the past," he said. "We need to look at the agency from top to bottom, making sure it operates as efficiently and effectively as possible."

Mr. Barreto says he hopes to improve the SBA's reputation among small-business owners. "A lot of folks just don't know what the SBA does," observes the 40-year-old Kansas City native, who moved to Southern California in 1986 to start Barreto Insurance and Financial Services. "A lot of times, business owners are only familiar with the loan program. Sometimes their perspective is, 'I don't even want to try,' because they had a friend who had a bad experience. … We want to change that perspective. We want to make sure our programs and our entry points are as efficient and effective as possible."

Following his confirmation, Mr. Barreto pledged that the SBA would:

* Listen to small businesses and reduce outdated and overly cumbersome regulations;

* Provide technical assistance and guidance through its entrepreneurial development partners 24 hours a day;

* Work with its financial partners to improve access to capital through the SBA's loan and venture capital programs; and

* Establish and strengthen public and private partnerships to encourage greater contracting and business opportunities for small businesses.

He says the agency will make a point of meeting with the more than 100 organizations the SBA partners with, and venturing beyond Washington, D.C., to other places where the membership and business markets are found.

"I learned a long time ago that your clients will tell you everything you need to know about how to help them," Mr. Barreto says. "I really want to make sure we are staying relevant, modifying the way we do business and being reflective of the marketplace and the economy."

Mr. Barreto says those who supply capital to small-business owners through the SBA want to increase their business with the small-business community. The SBA's job will be to find more opportunities to make that happen. "We want to strengthen those partnerships and try to provide more of this important resource to our constituents," he says.

Improving business partnerships is something with which Mr. Barreto is familiar. He is generally credited with bringing a national presence to the Latin Business Association, a Los Angeles–based trade group for which he served as chairman of the board from 1997 to 1999, says Ruth Lopez Williams, the LBA's current chairman.

In 1999, Mr. Barreto brought presidential candidate George W. Bush to the Latin Business Association Expo, where Mr. Bush made his first campaign speech, generating national exposure for the LBA.

Under Mr. Barreto's leadership, the LBA's annual expo experienced significant growth, according to Ms. Lopez Williams, increasing from $30 million in new contracts his first year to $50 million in new contracts in the second year. The event is now one of the largest of its kind in the nation.

Mr. Barreto says the LBA used the expo as a platform to link Hispanic small-business owners with public and private partners – a model he hopes to bring to the SBA.

Hispanic small-business advocates say Mr. Barreto has the personality to accomplish his goals. They describe him as energetic, inspirational, and politically savvy, and they place great significance on the fact that he has operated a small business himself.

"It's like one of our own has finally taken the helm of the agency for small-business assistance in this country," says Roberto Barragan, president of the nonprofit Valley Economic Development Center in Los Angeles.

Mr. Barragan, who operates the largest business-development organization in Southern California and has been involved with economic development organizations for years, describes Mr. Barreto as an affable person without vainglorious tendencies.

"I have seen a number of people with huge egos run organizations for their own benefit or for their own promotion," Mr. Barragan says. "I've never seen Hector do that. I think he can bring a voice to the administration and make them understand that the SBA is a profitable entity."

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