How firms can Cs the day: SBA resources focus on capital, contracts, counseling
Although I’m relatively new to the U.S. Small Business Administration, I’m not new to the issues facing small businesses. I operated a family owned office furniture store in Fargo, N.D., for more than 30 years. While the business survived the recession, it continues to face many challenges, including access to capital.
The recent economic downturn has dramatically disrupted the lives of many Americans. Unemployment numbers soared and consumer confidence took a nose dive. Solving these national issues might be beyond our individual control, but one thing each of us can do is to support the real job creators — our locally owned small businesses. The 450,000 small businesses in Colorado employ millions of people and account for most of the new jobs created today. By supporting locally owned small businesses, we help sustain the jobs they create and the families they help.
Small firms have rightfully gained the attention of President Barack Obama and his administration. This renewed attention has a primary goal of creating a more robust and diverse economy nationwide. The president has said that small businesses constitute the solution to our economic problems. They are the job creators and the force behind economic prosperity.
At the SBA, our mission is to help small businesses start, grow and succeed. We work in three main areas: access to capital, opportunities in federal contracting and developing entrepreneurs. More simply put, the SBA is involved in the three Cs: capital, contracts and counseling.
The first C is capital. Small businesses rely on access to bank credit much more than large businesses do. After the credit markets froze in 2008, President Obama signed the American Recovery and Reinvestment Act (ARRA), which got credit flowing again and made several dramatic changes to the top two SBA loan guarantee programs.
ARRA reduced or eliminated fees on our 7(a) and 504 loan guarantee programs. The act also increased the guarantee on 7(a) loans to 90 percent so banks will be more likely to lend to small businesses. With those changes, our average weekly loan volume increased more than 90 percent compared to the weeks before the Recovery Act was signed. The SBA leveraged about $700 million in recovery dollars into nearly $25 billion in lending to small businesses. That’s a pretty good return on investment.
Secondly, small businesses benefit from ARRA contracts — the second C. Our goal is to ensure that small firms get at least 23 percent of federal contracts. SBA Administrator Karen Mills accurately calls federal contracts the “oxygen” that small businesses need to drive revenues and improve profitability. At a time when revenues are tight, Recovery Act contracts are even more critical.
The third C is counseling. Many people don’t realize how extensive our counseling network is. It’s what Mills calls “the SBA bone structure.” The backbone includes our SBA employees on the ground at nearly 100 offices around the country, but also thousands of counselors at Small Business Development Centers, SCORE offices, U.S. Export Assistance Centers, Veterans Assistance Center and Women’s business Centers in Colorado and across the nation.
The president has made exporting another of his priorities for small business. Although small firms account for 97 percent of all exporters, they still represent only
30 percent of all export dollars, with more than half of small business exporters shipping to just one country. We’re helping lead an interagency group that wants to change that by increasing both the number of exporters and number of countries to which they ship.
Small businesses constitute the engine that drives the U.S. economy. With the right policies, I know our locally owned small firms will not only survive the economic downturn, but ultimately flourish.
Daniel Hannaher, the U.S. Small Business Administration Region VIII administrator, works out of Denver. Reach him at (303) 844-0505 or Daniel.Hannaher@sba.gov.