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Is the Small Business Administration in the Cross Hairs of Small Business and Our Economy?

Is the Small Business Administration in the Cross Hairs of Small Business and Our Economy?

To suggest that US small business, entrepreneurial growth as well creation of quality long term employment opportunities have been exceedingly dismal over the last 8-10 years would be a vast understatement – all facets have been unacceptable by every reasonable gauge and standard.

It should be beyond conjecture that small business and a thriving entrepreneurial climate are the prime driving engines for the entire US economy. Both are essential cogs for the creation of long term quality employment opportunities nationwide. By definition where there exists economic prosperity with quality employment there follows diminished social ills and problems.

The new Administration has made it exceedingly clear that the indicated past deficiencies are to be entirely reversed. There will now be a whole new focus for turnarounds within all categories for sustainable economic growth along with quality jobs expansions – by definition that means major positive changes must follow for small business and entrepreneurial successes.

President’s Executive Order in March, 2017 is clear in its aims to streamline and demand more efficiency from within all government agencies. https://www.whitehouse.gov/the-press-office/2017/03/13/presidential-executive-order-comprehensive-plan-reorganizing-executive

Executive Order 13781 of March 13, 2017, (Comprehensive Plan for Reorganizing the Executive Branch, https://www.federalregister.gov/documents/2017/03/16/2017-05399/comprehensive-plan-for-reorganizing-the-executive-branch)

The President directs the Office of Management and Budget Director Mick Mulvaney to “propose a plan to reorganize governmental functions and eliminate unnecessary agencies … components of agencies and agency programs,” – to identify and cut what it calls burdensome regulations or spending in the federal government.

If those goals are truly to be effectuated (impacting all of small businesses and the entrepreneurial communities), then it would seem logical that the US Small Business Administration (SBA) should be designated as “ground zero” for all such efforts. SBA should be the primary focal point for all “change”.

Serious questions exist whether SBA has the abilities to provide the cost effective programs that would accomplish those objectives – even the will to do so?

What follows is an objective fact-based investigation to answer those questions.

SBA as the Focal Point for Small Business/National Economy

If true economic turnarounds are to be the goals (through re-energized small business and entrepreneurial efforts), – perhaps it’s long overdue to approach all the issues presented using different tools and investigative processes?

Insanity: doing the same thing over and over again and expecting different results.

Obviously what has been attempted in the past has not created the intended results.

Adapting Different More Effective Tools

For a suggested change this multi-part series offers whole new pathways based on sets of proven applications utilizing:

*informed business knowledge/expertise;
*honest objectively-based questions; and
*formulating options using ethically grounded reasoned thinking.

Simply put, instead of starting with a preconceived opinion or conclusion then seeking by all available means to offer up justifications or proofs to support (sadly a seemingly routine and ineffective process highly invested and in vogue within our government, why not instead try the following:

*objectively and honestly investigate,
*see where the facts lead,
* apply objective and ethically grounded reasoning, and thereafter
*determine how and what means to effect practical changes to achieve desired results

In a time of universal deceit and subjective ill informed opinions, seeking objective facts and applying ethically grounded reasoned thinking becomes a revolutionary act.

The Small Business Administration

The prime mission of the US Small Business Administration is to provide direct support and programs for small business, entrepreneurship, and capital availability. That should mean SBA properly sits within the “target cross hairs” to radically reverse course to produce the needed change in “real world” positive results for the US economy.

SBA Mission:
The U.S. Small Business Administration (SBA) was created in 1953 as an independent agency of the federal government to aid, counsel, assist and protect the interests of small business concerns, to preserve free competitive enterprise and to maintain and strengthen the overall economy of our nation . . . critical to our economic recovery and strength, to building America’s future. . . The SBA helps Americans start, build and grow businesses. https://www.sba.gov/about-sba/what-we-do/mission

The mission of the Small Business Administration is “to maintain and strengthen the nation’s economy by enabling the establishment and viability of small businesses and by assisting in the economic recovery of communities after disasters”. The agency’s activities are summarized as the “3 Cs” of capital, contracts and counseling. Former Administrator Marie Johns

To fulfill that mission, SBA implements through the following pertinent parts:
*Small Business Development Centers – an extensive network of 63 lead centers managing more than 900 service delivery points throughout the U.S. and the insular territories
*Women’s Business Centers – more than 100 non-profit educational centers
* Veterans Business Outreach Centers – 20 Veteran Business Outreach Centers providing counseling and training services to veteran-owned and service-disabled veteran-owned small businesses and entrepreneurs E.g., https://www.sba.gov/tools/local-assistance

Although not a direct lender, SBA also provides government financial guarantee programs in order to stimulate and provide capital to and for small business:
Management ‘s Discussion & Analysis, Agency Financial Report, FY 2016 – Primer of SBA’s Principal Programs – Capital www.sba.gov/financialassistance

* The SBA has a total business loan portfolio of $106.9 billion.7(a) Loan Guaranties The SBA offers government guaranties on loans (up to $5.0 million) made by commercial lenders to help expand access to capital for business owners who face challenges in getting approved for financing. The SBA guarantees a portion of 7(a) loans made and administered by commercial lending institutions. Loans can be guaranteed for a variety of general business purposes.
* 504 CDC Loan Guaranties – These long-term, fixed-rate loans (up to $5.5 million) support investment in major assets such as real estate and heavy equipment. Loans are delivered by certified development companies, which are private, non-profit corporations. CDCs work with the SBA and private lenders to provide the financing. The SBA guarantees the CDC’s portion of these loans.
* Microloans – SBA provides loans to non-profit intermediary lenders, which are community-based organizations with experience in lending and technical assistance, that in turn make these loans (up to $50,000) to small businesses needing small-scale financing and technical assistance for start-up or expansion.

The Obvious Starting Point – The Past

The objective and logical first question – what has SBA been doing for the last 8-10 years?

For FY 2016, SBA’s total budgetary resources used for staffing, operations, and subsidy costs were $1.7 billion, and SBA’s total non budgetary resources for loan financing used to purchase guaranteed loans in default and to make direct loans were $4.2 billion. AFR, page 7.

Just using rough math that’s an approximate public investment of at least $15-20 billion over the period with SBA loan guarantees around the same or greater dollars depending on the annual placements and vintage of those loans.

Part II in this series – What are the outcomes of these public investments?