The Importance of the Small Business Administration
Despite being overworked and underfunded, the Small Business
Administration (SBA) is taking body shots from all sides. And it
just isn't fair. How many people can truthfully say to a small
business owner, "I am from the government and I'm here to help?"
Leading the way in disbursing federal subsidies and other help
is the SBA, whose mission statement says that its role is to
"maintain and strengthen the nation's economy by aiding,
counseling, assisting and protecting the interests of small
businesses."
In the wake of 9/11, the SBA issued $1.2 billion in disaster
loans. In just 90 days since the wrath of Hurricane Katrina, the
SBA has already dispersed $1.3 billion to thousands of small
business owners under the regulatory guidelines established via
federal legislation on Capitol Hill.
But USA Today recently reported that SBA workers are reporting
low morale, high stress. Swamped by disaster loan applications
from victims of the Gulf Coast hurricanes, the SBA ranked last
in a recent study of employee morale at 30 federal departments
and agencies. The agency's low job satisfaction score is a drop
from its 24th-place ranking in a similar survey of 28 agencies
and 150,000 federal workers two years earlier.
Meanwhile, the left is comparing SBA to FEMA.
Blackenterprise.com reported that SBA Administrator Hector
Barreto recently addressed Capitol Hill for yet another attempt
to "spin away the SBA's failure to help small businesses in the
Gulf Coast" devastated by Hurricane Katrina. Reminiscent of
former FEMA director Mike Brown's attacks, opined the magazine's
Web site, officials are publicly speaking out against Barreto.
Sen. John Kerry, top Democrat on the Senate Committee on Small
Business and Entrepreneurship, issued the following statement:
"This administration should be ashamed of the SBA's response to
Katrina. Hector Barreto is not doing a heck of a job. Out of
more than 300,000 applications, they've only approved 20,251.
Small business owners throughout the Gulf Coast are still
hurting months after Katrina, but the Small Business
Administration's leadership is offering them only hurricane
force spin."
While the Democrats attacked, the Libertarians followed suit.
According to one Libertarian scholar, there is no factual reason
to base policies on the idea that small businesses are more
deserving of government favor than big companies. Preferential
policies hurt, not help, economic growth.
"Wasteful spending is wasteful spending. The Republicans need to
return to their message that being compassionate is doing what
it takes to implement a system that works," said Veronique de
Rugy, economist for the conservative American Enterprise
Institute.
When du Rugy began looking at the long-held notion among
entrepreneurs and policymakers that small businesses were the
"fountainhead of job creation" and an important economic driver,
she came to a radically different conclusion.
"For nearly 20 years, political leaders of all stripes have
taken as gospel truth that small companies are the chief drivers
of economic growth and are responsible for about two-thirds of
all new jobs created in the United States," says du Rugy. "But
is this conventional wisdom true? Do the facts justify the many
government spending programs, tax incentives, and regulatory
policies that favor the small business sector?"
Ouch. Ouch. Ouch. Oversight is one thing, but it is no fun being
a political football.
As someone who for 23 years has helped owners of privately owned
businesses sell their companies, let me speak up in defense of
the SBA. Small business is the engine of the U.S. economy.
Without small businesses, where would today's big businesses
come from? Microsoft, Wal-Mart, Marriott and countless other
examples started out as a small business.
Although in its bureaucratic past this wasn't always the case,
today the SBA is a preferred lender when small privately owned
businesses decide to either sell their business or want to
borrow additional capital to expand their business. Business
expansion clearly creates additional capital spending and new
jobs. In addition, the transfer of ownership is both good for
the economy and also good for employees.
When a business is sold, the fact of the matter is that
virtually all employees fare better in the future because a high
percentage of new owners come in with additional capital and a
desire to grow their new business. This growth typically spells
opportunity for employees who want to grow their careers and who
welcome working with a new owner. Meanwhile, the former owner of
a business typically either buys and grows a new business or
invests for retirement and those invested funds and savings are
recycled into to new loans and additional capital expansion
through the banks, savings and loans and other investment
vehicles typically used by retirees.
There always are political opportunists who will take either
side of any argument. The fact of the matter is that the SBA
fulfills a vital function in the U.S. economy. Even with reduced
staff levels due to earlier budget cuts, the SBA gets assigned
the massive 9/11, Katrina and other tasks and is unreasonably
expected to perform those additional tasks perfectly.
SBA, thank you for being there.