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Changing SBA Accents New Market, Innovation

Federal agency in midst of modernization is channeling more resources to women, minorities, small and new enterprises.


For those who think that SBA stands for Stodgy, Bureaucratic and Almost no help, it's time to take another look at the federal agency. The Small Business Administration has launched several innovative programs in the past year, and more are on the way.

Under Small Business Administrator Aida Alvarez, who has headed trade delegations to Ireland and Mexico, the agency expects to nearly double the number of business centers serving women. A pilot micro-loan program is now a permanent financing alternative, and a federal contracting program focusing on urban and rural businesses was launched last month.

Innovation has percolated down to the local level, with the Los Angeles district office planning a conference for later this year that will bring lenders together with business owners. Even the annual SBA awards luncheon June 4 will spice up its offerings with a business trainer who will offer success techniques.

"I know we're doing some ground-breaking work, and it's the right direction to be heading in the 21st century," said Alvarez. "We charted a course a couple of years ago and we've stayed on track."

That track, Alvarez said, includes modernizing the SBA, expanding the geographic reach of small businesses and targeting women, minorities, new businesses and smaller businesses--collectively dubbed the "new market" by President Clinton.

Alvarez has tried to push the agency into becoming more responsive to its small-business customers and less program-oriented, a change also underway at other federal institutions such as the Internal Revenue Service and the Department of Housing and Urban Development.

For the SBA, that means that instead of loan officers focusing narrowly on how many loans they've given out and SBA-backed venture capital companies focusing on certain industries, all must now evaluate their programs broadly to see how the new market and other businesses are best served.

The new orientation has resulted in new and proposed programs that include:

* MicroLoan Program: Since starting in 1992 as a pilot program with 35 nonprofit community lending agencies nationwide, the program has expanded to more than 100 agencies. The SBA lends the agencies money and they, in turn, provide business training along with short-term loans of up to $25,000 for working capital, equipment, inventory or supplies. In Los Angeles, the Valley Economic Development Center and FAME Renaissance Resource Center are the micro-loan lenders.

* SBICs: The agency's 332 Small Business Investment Companies, licensed investment firms that use private capital along with SBA-backed debentures to help finance small businesses, are being encouraged to focus on new market groups. As a result, Capital International, a Miami SBIC, opened in February to focus on funding Latino-owned companies in the southeast United States and Puerto Rico. Meanwhile, SBICs that focus on women-owned businesses have opened in Nashville and Washington.

* New Market Venture Capital: A proposed program would help create up to 20 venture capital firms focusing on low- and moderate-income areas. SBA grants would provide technical assistance to funded companies.

* New Market Lenders: The proposed program would involve about 10 non-depository lenders, companies like the Money Store or other non-bank institutions, that would target the new market in return for SBA loan guarantees.

* New Market Tax Credit: Clinton has proposed that investors who fund new market businesses receive a tax credit equal to 25% of their investment.

* Women's Business Center Program: Begun in 1988 with $2 million, the program has grown to $8 million with 34 centers around the country providing training and technical assistance, primarily for low-income and minority women engaged in micro-enterprises. Another 25 centers are expected to open soon. Its Web site,, draws more than 1 million viewers monthly and has 75 pages in Spanish.

* International Trade: Alvarez and about 20 small-business owners visited Ireland in December, another 20 visited Mexico in March and more than 150 women-owned businesses will participate in a Canadian-U.S. trade summit in Toronto next week.

* Y2K Help: SBA-backed loans of up to $750,000 are available for small businesses to become Y2K-compliant, plus Matchmaker Fairs will be held throughout the country to bring small businesses together with companies able to help them with year 2000 problems. A fair will be held in Los Angeles the week of June 21.

Even with these programs, some fault the SBA for neglecting its core responsibilities to small business.

Sen. Christopher S. Bond (R-Mo.), chairman of the Small Business Committee, last month gave the agency a Plumber's Best Friend award for failing to comply with federal paperwork reduction regulations, which he said caused the agency to be an obstacle to the small businesses it seeks to help. Bond also questions the usefulness of the new international trade missions.

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