The Small Business Administration (SBA) should be the driving force behind small business growth in the USA. Instead over regulation and favoritism has create an environment in which small firms are struggling to take the next step in company growth. As Linda McMahon prepares to assume the mantel of leadership, there are a few SBA gaps that need to be addressed.
In reading The Hill’s article on the subject, while I do agree with most of the points, there are a few things I would like to add. To begin, communication needs to improve between the SBA and the regular American citizen. The SBA is different than other government agencies due to the fact that they must interact with smaller organizations that in most cases are not prepared to compete with established entities. Because of this, its structure can’t be so ….well …. structured. When dealing with entrepreneurs, flexibility is key in connecting with them and the excess of rules, regulation, and documentation is not a good method to reach the people who need the organization’s help. When these issues persist, you get the bastardization of the SBA loan process that we’ve seen in the past. Simplifying rules will grant opportunities for community banks, who control “43 percent of all small business loans” and make up 92% of all banks in the US. Currently these banks only control 13% of available lending capital, which with SBA partnerships could increase, giving local businesses more support. In addition, connecting with alternative lenders and even private VC firms would go a long way in increasing opportunities for small firms.
According to the SBA micro businesses, which include companies with 5 employees or less “created 5.5 million net U.S. jobs, an astounding 90 percent of total U.S. jobs, between 2004 and 2010.” Improving the SBA’s Program for Investment in Microentrepreneurs (PRIME) is vital to improving small business. This coincides with supporting diverse businesses. As I’ve written before, black and Asian women have the highest rate of starting a business than any other female ethnicity. In addition, since 1996, the percent of Hispanic businesses in the US has doubled. "In 2016, only 26 percent of all SBA loans made under the SBA 7(a) loan program went to minority-owned businesses and only 18 percent went to woman-owned businesses.“
This must improve as we head into the future.
Lastly small businesses are owed a greater opportunity in federal contracting. Currently numbers are continually debated as to how much the government is rewarding to smaller firms, but everyone agrees the number needs to increase. Connecting the SBA and it’s programs with federal incentives is a necessity moving forward. Small businesses will continue to operate as the backbone of America. With more people going into business for themselves, the need for the SBA and its services will only continue to grow.