Business is booming at the Los Angeles office of the Small Business Administration, which operates loan guarantee, contracting support and small-business skill-building programs for the 12 million residents of Los Angeles, Santa Barbara and Ventura counties.
SBA-guaranteed loans made by 150 lenders in the district broke the 6,000 mark for the first time in the fiscal year ended Sept. 30. The record total of 6,194 amounts to a 21% annual jump. The value of the loans guaranteed also climbed, up 13% to $1.3 billion.
That increase came despite a 25% decrease in staff over the last 2 1/2 years at the SBA regional headquarters in Glendale.
"We believe we have the best lending program in the country," said Alberto Alvarado, longtime head of the regional office.
The district's SBA-certified lenders also made more loans to women and minorities than any other district office in the country, he said.
Almost 2,400 women-owned businesses received SBA-guaranteed loans in the last fiscal year, a jump of 85% over the previous year. The number of minority-owned firms that received loans jumped 25% to 3,827 in the same period. The loans are made by private lenders but backed by the SBA.
Nationally, the SBA has been criticized by politicians and others for a lack of lending to women-owned firms and the effectiveness of its minority-lending program, among other things. But under Alvarado's leadership, the Los Angeles office seems to be bucking that trend.
Alvarado talked recently about his work at the agency.
How did you wind up as a self-described bureaucrat?
I'm from East Los Angeles, proudly so, a Yale undergrad, Stanford law school. And my dream at that point of time, along with some friends who were also fellows from the community who had gone back East, was to start our own law firm where we could practice the kind of law we wanted to do. So each of us decided to go and learn a trade, so to speak, for a year or so. The plan was to get back together. That never happened. I came here. I enjoyed the work; I've always been service-oriented.
In 1981, I became the district counsel, then round about '94 I lost my mind and wanted to become the district director. And somebody who hated me granted me my wish. I think . . . I was lucky enough to be offered the position.
Do people understand what it is you are trying to do at the SBA?
We like to say we are often the best-kept secret. So we really endeavor -- and it's not stretching to say -- on a daily basis to market all the very, very valuable services that we have. Especially to what you might call underserved communities. Our motto is, "It can be done."
Has your role changed?
It has in two important respects. Since the day that I became district director, I've always been focused on a very kind of activist approach. So getting out, marketing, making ourselves available, bringing together organizations and individuals -- it's a monumental task, what with 12 million residents in our service territory.
Secondly, changes in the agency, in the way we do business, taking us out of the day-to-day processing. Now, we basically allow banks to certify to us the validity of the documentation. We've seen that kind of thing occur in our other programs.
What's your biggest challenge at this point?
It's easy enough, I believe -- I'm not a banker -- to loan to the African American lawyer in Beverly Hills or the Latina dress designer in the Marina. Where I see a challenge, a challenge for our lenders, a challenge for ourselves, is to loan to the start-ups, the businesses, the entrepreneurs in East L.A. Those are difficult for our lenders. In one sense, they are invisible; in another sense, they've been a challenge for our banks to see as profitable.
What do you say to critics who say there's no proof the SBA is effective and should be dissolved?
You're leading me into a conversation that's above my pay grade. I am trying to run programs that we're trying to run here. Whether every business at end of the day goes from small to large, that's their dream and that's our dream. That's what keeps me inspired after so many years.
Not every big multibillion-dollar deal that somebody finances is a raging success. The percentage of failures is probably equally distributed among the big and the small, the woman- and non-woman-owned, the minority- and non-minority-owned. We are trying to run some programs here that have been known to have an effect. There are still a lot of challenges out there, and we are trying to deal with them one day at a time.
Why did the loan totals drop for the L.A. office in the previous two fiscal years?
Sometimes some of that up and down has to do with certain banks ending up being more involved than other times. The Bank of America probably did more during one of those high periods, probably as many as 2,000. Last year it did about 1,000.
Why so much effort and resources to help small businesses?