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STRATEGY

New Bills Propose Expansion of SBDCs
 

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July 27, 2005--Small Business Development Centers may have a chance to expand counseling and client services thanks to four bills recently passed by the House Committee on Small Business.

The SBDC, established nearly 25 years ago, receives funding from the U.S. Small Business Administration and offers counseling and training to start-up and existing businesses. There are more than 1,000 centers in all 50 states, plus locations in Washington, D.C., Guam, Puerto Rico, Samoa, and the U.S. Virgin Islands.

"We believe the SBDC network could be engaging in more initiatives on behalf of small business beyond their core mandate to provide basic assistance," said Rep. Donald Manzullo (R-Ill.), Chairman of the House committee. In step with this belief, the committee approved four initiatives that extend the SBDC's reach into more communities. The bills would create four new programs, covering regulatory assistance for clients, entrepreneurial training in vocational and technical schools, new centers on Native American reservations, and peer counseling for high-growth companies. All four bills will face the house floor in September.

The initiative for regulatory assistance received the most support from legislators, said Don Wilson, president of the Association of Small Business Development Centers. The bill would allow select SBDCs to provide compliance counseling to small businesses in an effort to help them better understand and meet the growing number of federal business regulations, said Wilson. It would also include a website that would explain compliance regulations in an accessible and easy-to-read format.

"Federal regulations are one of the biggest problems for small businesses, and they don't know where to turn for help," he said. "They can't afford to have a full-time lawyer on staff to sort through it. There's a keen awareness in Congress that small business is crying out for regulation compliance assistance."

A bill supporting SBDC-backed entrepreneurial curriculum in vocational schools would provide grants for schools without the usual condition that recipients must match the federal funds dollar for dollar with private fundraising, said Rep. Melissa Bean (D-Ill.), member of the House Committee on Small Business. Bean introduced an amendment to the bill that required schools to match only half of the federal funding in private dollars.

"[The bill] could produce a situation where a community college would apply for a grant, have a meritorious application and get it approved, only to find out that they have fundraising difficulties and are unable to draw the money down," Bean said. This will make sure this doesn't happen by allowing community colleges easier access to these funds."

The last two bills would extend the SBDC's reach to both the economically disadvantaged and the financially secure. The initiative to create SBDC locations on Native American Reservations is overdue and would create a significant impact, said Wilson. In the past, Native Americans who have used SBDC services have been very successful. Many of them have gone on to own two or three additional companies, he added.

"Having SBDCs right on reservations will make a difference in the economic development of the [tribe and native lands]," he said.

The last of the four bills would reach out to high-growth business owners who want to take their companies to the next level. It is based on a regional program in Wisconsin that connects small businesses with mentors from larger, more established companies.

In total, the four programs would cost an estimated $63 million over the next several years, according to the Congressional Budget Office. Bean believes that's "money well spent."

The trick will be to convince the Senate that the bills are a good investment, said both Manzullo and Bean. All of the bills, except for the Native American Small Business Development Act, have been passed by the House in previous sessions and died on the Senate floor.

But the outlook might be better this time around. According to the Senate's Small Business Committee website, the Senate has already introduced companion bills to both the National Small Business Regulatory Assistance Act and the Vocational and Technical Entrepreneurial Development Act.

Even if both chambers pass the legislation, appropriation cuts and the SBA's tight budget will make it difficult to receive the funding for the programs, said Wilson. The funding crunch might make legislators hesitant to approve the bills, but Wilson argues that lawmakers need to look at the SBDC's high return on investment to see the legislation's value. Businesses counseled by SBDCs provide more than twice the return to the National Treasury when compared to other companies, Wilson said.

"There have been concerns in the past with the budget and how we can afford to launch new programs," he said. "But I ask them, 'how can we afford not to?"

Last updated: Jul 27, 2005




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