Helping a growing sector: SBA resources available for minority owned small businesses
Last month the Census Bureau reported the number of minority owned businesses in the United States increased 46 percent from 2002 to 2007. That’s good news. These new businesses create jobs and drive economic growth across the country.
However, this increase doesn’t mean our work at the U.S. Small Business Administration is done. This is no time to lessen our commitment or resources available to help minority small businesses grow and create jobs — especially because the new data doesn’t reflect the last three years, which have been some of the toughest for all American businesses and small businesses in particular.
At the SBA, we recognize that the tools we can provide are just as important now as they were a decade ago. That’s why we’re leveraging our three core mission areas — access to capital, opportunities for federal contracting and business counseling — to build on the growth we’ve seen in minority business ownership.
First, capital. Since October 2008, many small businesses have had trouble getting the credit they need to survive the recession, grow and create jobs. Historically, minority owned firms struggle with access to capital. When they do receive loans, they’re often too small or the interest rates too high. The SBA often steps in to help those who can’t find credit in the conventional market. That’s why SBA is three to five times more likely to make a loan to minority owned small business than a conventional bank, according to the Urban Institute.
At a time when conventional small business lending has declined significantly, enhancements to SBA loans made possible by the American Recovery and Reinvestment Act of 2009 have supported more than 14,000 recovery loans worth a total of $5 billion to minority owned small firms — nearly a fourth of loan volume. President Barack Obama has called on Congress to extend funding for these successful recovery loan programs — funding that ran out several weeks ago, resulting in a 60 percent drop in SBA lending.
Lenders and small business owners also have been clear: Now is not the time to pull back.
Second, the Recovery Act also has been a critical tool in helping minority owned small firms compete for and win federal contracts.
Already, billions of dollars in recovery contracts have been awarded to socially and economically disadvantaged firms that participate in the SBA 8 (a) program. In addition, the administration has called on Congress to restore equal consideration, or “parity,” among federal small business contracting programs, helping ensure businesses in the 8 (a) program have equal opportunities to win contracts.
Third, the SBA supports minority business ownership through its entrepreneurial development programs. A critical example of this is reflected in the president’s new budget, which calls for an emerging leaders program to be built on a successful pilot program that provided intensive training for entrepreneurs in inner cities and underserved areas. Nearly two-thirds of the graduates of the pilot program have been minorities, with many of them having already experienced increased revenues, secured more government contracts and — most importantly — created more jobs in their communities.
The theme for a Minority Enterprise Development Week conference set for Aug. 25 to 27 in Washington, D.C., is “Strategies for Growth and Competitiveness in the Global Economy.” That theme ties ties directly to President Obama’s national export initiative, which calls for the doubling of U.S. exports over the next five years. Exporting offers a critical strategy for small businesses to find new markets, increase sales, generate economies of scale and remain competitive. The SBA and its MED Week partners have the people and tools to help small businesses do just that.
As one of the fastest growing segments of the small business community, minority owned businesses remain crucial to the strength of our economy and global competitiveness. From loans, to contracting to counseling and business development, the SBA will continue to ensure that minority owned small businesses and entrepreneurs have the tools to grow, drive our economy and create jobs.
Daniel Hannaher, the U.S. Small Business Administration Region VIII administrator, works out of Denver. Reach him by e-mail at Daniel.Hannaher@sba.gov.