When Karen Gordon Mills, the 23rd Administrator of the Small Business Administration announced her resignation this week, it raised plenty of questions about the future of the agency, as well as the impact Mills has had on it and the lives of small business owners during the Great Recession.

Mills did not say why she was leaving or what she will do next, but her departure marks the fourth high-ranking woman in the Obama Administration to leave during the President's second term. Mills was one of only a handful of women to head up the SBA in its 60 year history*.

For all the political talk that small businesses are the engine that drive the economy, it's the SBA administrator's job to make it happen.

After inheriting an agency that was largely neglected by George W. Bush, most observers agree that she updated it into something more vital and more open. The agency Mills inherited four years ago had seen its budget slashed nearly 30 percent since 2001, and its staffing diminished almost 20 percent. In contrast, Mills' SBA assisted small businesses at record levels. And, the Administrator now holds a cabinet seat, for the first time since President Bill Clinton's tenure.

"I am confident that the SBA will be a driving force in [small businesses'] success for decades to come." Mills wrote in her resignation letter to staffers.

Not everyone agrees, of course. Not surprisingly, Mills is especially controversial to conservative business groups, which say the Administrator did not do enough to help small businesses, particularly when it came to increasing contracting opportunities.

"The economy is just not rebounding, and in terms of [Karen Mills'] legacy, I'm not blaming her, but I think the Administration did not do enough to help small businesses recover," says Susan Eckerly, senior vice president for public policy for the National Federation of Independent Business, a right-leaning lobby.

As the severity of the financial crisis became apparent and credit markets froze, Mills made it her task, upon being unanimously confirmed by the Senate in April 2009, to try to get funding to businesses as quickly as possible.  

"[Karen Mills] came in at a really difficult time when small businesses could not access lending, and the economy was in the tank, and I think she worked trying to address those issues," Molly Brogan, spokeswoman for the National Small Business Association says.

An Uphill Battle

As her first order of business, Mills shepherded through a number of measures to staunch the bleeding, initiating bridge loans that had a 100 percent guarantee for hard-hit, credit-challenged businesses.

SBA lending had fallen off a cliff. Issuance of the agency's flagship 7(a) loans declined more than 50 percent in 2009. And so Mills went to work, with the help of three quarters of a billion dollars of American Recovery and Reinvestment Act money, to try to speed up processing times for the loans.  In addition to increasing the government guarantee to 90 percent, and increasing the loan amount to $5 million from $2 million, Mills also got more than 1,000 community banks to start participating again in the SBA program, which had been dominated by a handful of large banks.

One of Mills' most important achievements was her input on the Small Business Jobs Act from 2010. The act strengthened small business lending, increased loan amounts for key lending programs, and increased financing to growing sectors, such as for small business exporters, and to key industries, such as small auto dealers, in the form of floor financing plans.

In the past four years, SBA lending has recovered and includes two record years of more than $30 billion in 2011 and 2012. (Of course, an improving overall economy deserves some of the credit.) In total, Mills' SBA helped 200,000 small businesses with financing worth more than $100 billion, according to the SBA.

But not everyone's getting the funding they want.

Maria E Martinez, president and chief executive officer of Naturally Green Products, a manufacturer of eco-friendly cleaning products in Orlando, Florida, says she had a terrific relationship with the SBA in the 1990s with her first company, a janitorial services provider. That company easily received three loans from the SBA, to fund such things as a partner buy-out and the purchase of a building. Though Martinez paid back all of her loans, she was unable to obtain financing for her second, current business from the SBA starting in 2008, despite that business' profitability and stellar client list.

"Right now I am working with a broker who works with minority businesses to find them funding outside of the box," Martinez says, adding that banks in her area are still not lending, even with the government guarantee. Martinez is looking for a $12 million loan to purchase her own factory building. Private equity firms are interested, but she doesn't want to sell more than 25 percent of her company, she says.

Other critics say Mills could have done a better job, especially for women-owned businesses, and contracting in general.

Nothing Ventured, Nothing Gained?

Mills's background indicated she might try to take the SBA in a new direction. The daughter of Tootsie Roll president and chief executive Melvin Gordon, Mills holds an A.B in economics and an MBA from Harvard. Her background took her from the private sector to a state-level economic development role in the public sector, in Maine, where she encouraged the development of business clusters--a philosophy she brought to the SBA.

Mills's turn in private equity--she was a partner at Solera Capital and a founder of an early-stage investment group in Maine called MMP Group--colored her perspective. She favored, for example, broadening the scope of small business to include venture-backed companies. Supporters say Mills understood that in a shifting economy, small businesses could not be painted with one broad stroke: Some would remain on Main Street, small and important to the local economy. Others would leap past those boundaries and become the next Google or Apple or Amazon. (In fact, Nike, Staples, Apple, Federal Express, Ben & Jerry’s, Outback Steakhouse, and Hewlett-Packard all received SBA loans as startups.)

But the emphasis on venture capital alienated some traditionalists.

Even the generally-friendly National Small Business Association says that the influence of the venture community has at times been perhaps too strong, particularly with the Small Business Innovation and Research program, which funds small, majority-owned companies in research areas. New rules recently opened up participation in the program to venture capital firms.

Mills also expanded the Small Business Investment Company structure to include venture firms that want to invest in start-up companies.

"The SBA needs to evolve and recognize that a lot of [economic growth] will come from fast-growing small businesses," Mills told this reporter in 2008, when she was still president of MMP Group. "It is very important we have a more granular understanding at the federal policy level about the voice of small business, because it is not a one-size-fits-all category."


*This article was updated February 19, 2013 to include the following correction: Administrator Mills is the fourth woman administrator, not the second. The other three were Susan Engeleiter, Pat Saiki and Aida Alvarez.