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National Small Business Week Kicks Off Amid Rancor and Criticism

National Small Business Week unfolds against the backdrop of a suddenly unfriendly Washington, D.C.
Among other lawmakers, Nydia Velázquez, (D., N.Y.) has criticized the SBA's introduction of programs that weren't authorized by Congress.
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Small businesses are critical to the U.S. economy, creating half of all private sector jobs and half of our gross domestic product.

In celebration of their significance, the agency charged with encouraging the growth of U.S. small businesses is kicking off National Small Business Week on Monday. But the festivities come amid a vocal bipartisan pushback against the Small Business Administration and its programs; both sides of the aisle have voiced concern about allegedly unauthorized spending in recent years, particularly on fast-growth companies that appear to need no assistance.

The fear that the agency is not fulfilling its pledge to assist truly small businesses in the federal contracting process has also been raised, and Congress has threatened to trim $50 million from SBA's already curtailed budget of $710 million for the current fiscal year.

“Similar to previous years, the SBA continues to support initiatives that lack a specific statutory authorization,” ranking member Nydia Velázquez, Democrat from New York, told the House Small Business Committee in March. Velazquez more recently lambasted the SBA for offering mini-M.B.A. programs online to companies with $400,000 in annual revenue, noting that these are not exactly struggling enterprises. 

Small Business Week festivities are mainly taking place in four cities: Boston, Kansas City, San Francisco, and Washington, D.C., with an eye toward elevating the role of small businesses within each city. For example, Twitter will host an opening ceremony on Monday at its headquarters in San Francisco. In Boston, one of the prime venture capital corridors in the U.S., small businesses can attend seminars on funding and online marketing tools. And in D.C., the regulatory capital, entrepreneurs can learn about the Affordable Care Act and the convergence of physical and digital security in businesses.

There will also be numerous online training and informational webinars, and the entire affair will no doubt have both Washington critics and supporters wondering afresh whether the SBA is profligate or prodigious.

A Look Back

Since the recession began in earnest in 2009, the SBA has reinvented itself as an economic lever, enacting changes that were driven in large part by then-administrator Karen Mills and the financial crisis she faced.

At the height of the downturn, the SBA actively tried to increase financing for small businesses. Banks had essentially stopped lending altogether, and volumes for the agency's flagship loans, such as the 7(a) and the 504, had nosedived by more than 50 percent.

As part of President Obama's American Recovery and Reinvestment Act, Mills helped change the fee structure for these loans, increasing the government guarantee and decreasing fees entrepreneurs would have to pay for the loans. She also actively solicited banks, including hundreds of small community banks, to urge them to lend again. And she got the agency to shepherd emergency bridge loans to desperate small-business owners, attempting to strip down approval times for financing.

In the following years, as loan volumes rebounded to record levels, the SBA began pushing into territory that was not standard for the 60-year-old agency. For example, through its Small Business Investment Company program, it expanded its role as a backstop for private equity firms seeking increased capital to fund more mature businesses. Early last year, it expanded that program to include startups in need of venture capital.

(And in a sign of the agency's newfound importance, President Obama elevated the administrator job to a cabinet-level position in 2012. That position is now filled by Maria Contreras-Sweet.)

Mills, a protégé of management guru and Harvard professor Michael Porter, was no neophyte when she assumed the administrator office. Harvard-educated herself, with an economics degree and an M.B.A., Mills also founded two investment firms: MMP Group, a private equity firm in Brunswick, Maine, and Solera Capital, a venture capital firm in New York City.

Though Mills brought with her a deep understanding of fast-growth companies, and how they can be transformative job creators, she also understood that mom-and-pop shop owners across the country are critical to the economy.

The Way Forward

"It is very important we have a more granular understanding at the federal policy level about the voice of small business, that it is not a one-size-fits-all category. There are differences in small businesses," Mills told this reporter in an interview in 2008, immediately prior to assuming her role as administrator. "The SBA needs to evolve and recognize that a lot of [economic growth] will come from fast-growing small businesses."

National Small Business Week is likely to be a testament to how far both the economy--bursting with a fresh crop of startups--and the SBA--supporting loans at record levels and teaching businesses new ways to grow--have come since the Great Recession.

IMAGE: Getty Images
Last updated: May 12, 2014

JEREMY QUITTNER | Staff Writer | Staff Writer, Inc. and Inc.com

Jeremy Quittner is a staff writer for Inc. magazine and Inc.com. He previously covered technology for American Banker and entrepreneurship for BusinessWeek.




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