Bridging the gap Featured

9:41am EDT July 22, 2002

If the U.S. Small Business Administration has its way, small businesses will benefit from more loans, venture capital and technical assistance in fiscal year 2001.

The SBA’s budget request is making its way through Congress. After committee hearings, its broad outlines should be more defined by August.

Aida Alvarez, administrator of the U.S. SBA, has lauded the President’s New Opportunity Agenda.

“It’s a terrific budget for small business,” she said in a press conference announcing the budget earlier this year, noting it must be seen in context with the overall economy.

“We’re operating in a time of record-setting economic expansion — for 107 consecutive months,” she said, noting the 30-year low unemployment rate and dramatic increases in innovation.

“This is truly a great economy, and it’s truly a small business economy,” she said.

The SBA will continue its focus on newer and smaller-sized businesses.

“The goal has always been to bridge the gap so these smaller businesses can be productive in a smaller time frame,” Alvarez said. “For years, we’ve encouraged America’s businesses to invest overseas, which is something we should continue, but we should also look within to our own communities and give businesses something to invest in here.”

Another gap to close: technology advancement.

“The president has talked repeatedly about the digital divide and the need for education, which includes involving people in this Internet technology world. Our budget includes $5 million to make sure small businesses are able to participate in the opportunities created by e-commerce,” Alvarez said.

She noted that last year highlighted a record number of small business start-ups.

“One-third of loans last year went to start-ups, 14 percent ahead of the previous year,” she said.

Among the highlights of the SBA’s fiscal year 2001 request:

  • $150 million in SBA-backed funds for new market venture capital companies, up from $40 million in 2000.

  • An increase in the funds for loans under the SBA’s Section 7(a) General Business Loan Guaranty program, as well as an increase to 90 percent for the guaranty on loans of $150,000 and less.

  • $15 million in technical assistance to entrepreneurs in distressed areas, rural and inner city communities, and microloan capacity building under the Program for Investment in Micro-Entrepreneurs.

  • $6.6 million to support a mentor-protg program, BusinessLINC, to connect the business expertise of successful large businesses with emerging small businesses. In fiscal year 2000, $1.5 million was appropriated for the program.

  • $60 million in loans to small businesses under the Microloan program, compared to $30 million in fiscal year 2000.

  • $2.5 billion, compared to $2.2 billion the previous year, in small business venture capital funding for SBA-backed Small business Investment Companies. Those companies combine the funds with their own private capital to finance equity investments in small businesses.

  • Increases in business development assistance programs, such as the Small Business Development Centers, One-Stop Capital shops and Service Corps of Retired Executives program.

  • Funding for programs to assist women- and Native American-owned businesses.

The SBA will be looking especially at approving smaller loans, such as $150,000 and less, for start-ups or companies in business fewer than two years.

“SBA is the gap lender. There is a gap out there that would not be met, that would not be filled without the characteristics of our programs,” Alvarez said. “These smaller loans are just harder to get without the help of our involvement.” Joan Slattery Wall (jwall@sbnnet.com) is associate editor of SBN Columbus.

How to reach: For details on the proposed SBA budget, visit www.sba.gov/aboutsba/2001budget/