Steven C. Preston took the reins of the Small Business Administration in July with a promise to overhaul the agency's operations.
The former ServiceMaster Co. executive last week unveiled his first budget proposal, which includes a revamp of the disaster-loan process and some tinkering with the agency's popular small-business loan programs. Preston also plans more focus on ensuring that federal contracts get to small businesses, and he wants to automate the loan process for more of the SBA's lending partners.
Preston is asking Congress for $464 million for the 2008 fiscal year that begins Oct. 1. That's 5% higher than the approved budget for fiscal 2006 but about 30% lower than the 2001 budget.
"This budget gives us very important funding we need to provide the right kind of oversight for our lending program, to reach out to help small businesses get more government contract work and to do some other things that are important to us," he said.
Borrowers' upfront fees on the popular 504 real estate lending program, for example, are set to be eliminated as of Oct. 1. That would save $2,910 on an average loan, the SBA said.
But critics charge that the agency isn't doing enough to lower borrower costs, expand services and ensure fairness for small businesses working with the federal government.
In an interview last week, Preston defended the changing SBA. Excerpts are below.
What are the key operational reforms you are working on?
First of all, we are well into a massive operation reform, which is our disaster business.
We approved 150,000 loans to victims of [hurricanes] Katrina, Rita and Wilma in 2005 and, frankly, like many other federal and state organizations, the workload was overwhelming. So we have spent a lot of time in recent months fully revamping that entire program. Importantly, we are also taking the redesign we've done there and institutionalizing those reforms to make us much better prepared for disasters in the future.
How have disaster operations changed?
It's simple in concept but extremely complex to implement. That is, we fully redesigned our work flow and how we handle the work. In a nutshell, we moved from a production line, where loans went through different processes along the line, to teams of 15 to 18 people that work every aspect of the loan. On every team we have case managers. Every borrower has a case manager who helps see it through. There are fewer errors, much less rework. We can get the right loan package early on.
