As we look to increase the number of businesses that call Northeast Ohio home, the call has gone out to bring entrepreneurs into the area to increase local revenue and jobs. There are 25 million small businesses in the U.S. Studies show that two-thirds of all new jobs are created by these businesses.
Entrepreneurial endeavors usually start out small and need all the help they can get. Hector V. Barreto wants to give them that help.
“You ask a small business person what they want and they say they want the same thing as the big business wants,” says Barreto, the 21st Administrator of the U.S. Small Business Administration. “You ask what is that, they say more business.”
SBN sat down with Barreto and asked what the Bush Administration plans to do to help small businesses survive and thrive.
What have been your goals and what have you done in this your first year of serving as Administrator of the SBA?
A lot of the issues were illustrated in the President’s small business initiative. There is a lot of benefit for small businesses to increase the expensing they can do with equipment purchases, with regards to regulations and streamlining regulations. Small businesses often times pay as much as $7,000 per employee to comply with all the federal regulations.
As these regulations are being written, we are doing an analysis of what the implications on small business is and making sure that small businesses have access to affordable health care. The President believes very strongly in association health plans and also the expansion of medical savings accounts.
What is the SBA? What services does it offer?
The government spends about $200 billion a year in goods and services. The President wants to make sure that we are providing opportunities for as many small businesses as possible and we are going to do that in a variety of ways. We are going to work together with all the federal agencies and make sure they have plans in place to open up contracts and to create more access. We are also looking at ways that we can unbundle large government contracts.
The SBA has a 50-year history of providing hundreds of billions of dollar of capital access and educating millions of small businesses through technical assistance programs and facilitating significant amounts of government contracting for small businesses. We are continuing with all of that a making sure that we are positioning the agency for the next 50 years, and the next 50 years are going to be different.
What I see a lot of our ‘growth’ organizations leaning to is facilitating entrepreneurship, talking about start-ups and new technology — do you see the SBA heading in that direction?
We want to support those kinds of efforts and I think that is an example of how businesses are modernizing. Incubators are a good example, a great model of what can happen. A lot of those entrepreneurs were with large corporations at one time and now they are venturing on their own. Many of them have great prospects for success and eventually they will leave that incubator and create a lot of jobs.
That’s why small business is so important, and when we are talking about jobs you know that small business has created two thirds of all new jobs in the country right now. Most of the new jobs aren’t going to come from big factories anymore. They have been coming from small businesses. We need to foster an environment where people can go into a small business and have all the tools that they need to succeed.
Let’s talk about streamlining getting rid of regulations and an opening up access. How is the SBA going to tackle that?
One of the things that we did is look at all of the requirements for all of our programs. We found out there are a lot of redundancies. There are forms that we can simplify, there are requirements that we can eliminate and get that information from other sources. It should not be as cumbersome, expensive and take as long as it takes to access one of SBA’s programs.
The things is that we have been doing that for some time now, and we have loans like SBA express that already simplify the process quite a bit, but we can even do better with our working capital loans and some of our other certification programs. We can streamline it even more. All of the heads of our departments are looking at those initiatives right now.
For example, in the contracting program we hear concern about the volume of documents that are required. Now the SBA is creating an Internet document application so that you won’t have to send us any paper documents. A business can register online and it is a simplified process.
You talked about unbundling, what do you see the future of government contracting going?
The federal government’s mandate is that 23 percent of all government contracts will go to small businesses. So we need to make sure that we are maintaining that level and the last few years we have done that. But the thing that we are certain about is that it is not getting to enough business. There are some small businesses that are doing very well at it and we are happy about they got some of these large contracts. But that statistic isn’t as reflective as we think that it should be. In other words, just because the government is doing 23 percent doesn’t mean that it is filtering down to everybody. Especially the fastest growing segment of small businesses – women-owned small business and minority-owned small business.
Why is that?
First of all, if you have a $100 million contract and a small business doesn’t have the capacity to compete for that you are out of the game before the start. The thing is that a lot of small businesses are new. They didn’t exist five years ago. They don’t understand how to navigate the process, and if it becomes too complicated or too costly they just give up and say, ‘I don’t really want to do business with the government.’ It shouldn’t be that way. We should have a process where any small business that is capable of providing service and is competitive in price should have an opportunity.
What is the SBA doing to reach out to minority-owned businesses and female-owned businesses?
We are doing outreach and we are working together with our partners and we have relationships with every business organization in the country. We are working with our banks and other resource partners to make sure they understand that this is a very important opportunity.
It is a combination of things it is outreach, it is commitment. We don’t need to develop a brand new program, the programs we have already are excellent. We need to make sure that those communities are aware of them and can access those programs.
If you were looking at the issue like a business would, you would say look, the neighborhood is changing and we need to make sure we are responding to those changes. Reaching out to these types of small businesses is the right thing and the smart thing to do. There is a huge market out there. The minority business community represents 15 percent of businesses and is a $1.3 trillion market. And that market is going to double in the next 5 years. It is really an explosion that is going around the country.
How to reach: U.S. Small Business Administration, Cleveland District office, (216) 522-4180 or www.sba.gov
