5 Things Small-Business Owners Want from the New SBA Administrator

Business owners expect whoever is named as the new chief of the Small Business Administration to tackle some major challenges.
February 13, 2013

The news that Karen Mills is resigning as administrator of the Small Business Administration is probably good for business owners.

It’s not that Mills’ four years on the job were a disaster for small business. She made big strides in improving access to capital, which was one of the biggest problems facing small business when she arrived. In two of her years at the SBA’s helm, the agency backed more than $30 billion in loans, the largest dollar volumes in its history and more than three times the level in 2009.

5 Mills also presided over streamlining paperwork requirements in the loan guarantee program. She helped speed up government contracting payments to small-business owners. Back in 2010, she helped lobby for the Small Business Jobs Act.

But Mills is leaving a job very different from the one she started at. The SBA was in crisis when she arrived. Its problems weren’t so much internal, however, as external. The previous administration had cut its funding by more than a quarter and its staff had shrunk by nearly as much during former President George W. Bush’s term in office.

The Obama administration saw the SBA differently. Mills’ office was restored to Cabinet level. And, with White House backing, the agency expanded its employees from 2,000 to 3,000 during her time in office. Mills did fine growing the SBA, but her successor will need different skills.

Different Challenges

With Obama returning for a second term, there won’t be any similar shift in White House support for the SBA. It seems safe to say that the agency isn’t going to triple its loan volume again. It’s only slightly less likely that it will expand its head count by another 50 percent, as it did under Mills.

While capital access remains a concern of small businesses, according to surveys, today the issues that small-business owners are most worried about weren’t in the radar when Mills came to Washington. Those are the issues the next SBA will have to worry about.

Healthcare. Perhaps chief among them is healthcare. As the provisions of the Affordable Care Act are phased in over the next couple of years, small-business owners are going to have to be coached and comforted about the potential impact. A December survey by the National Small Business Association, a Washington-based small-business lobbying group, showed 83 percent of business owners have little or no understanding of how the healthcare law will affect them, according to Molly Brogan, vice president of public affairs. 

“That’s definitely an area where there’s widespread confusion on the part of small business,” Brogan says. “And inundating people with websites and links and guidance documents isn’t necessarily good.” Brogan says compressing and simplifying the information about the health act should be on the new SBA head’s task list.

Regulation. Regulatory reform has become a more significant concern for business owners after Obama’s first term, according to surveys. The next SBA owners will need to look at how new rules are affecting small businesses and, where possible, intercede with federal regulators to ease the burden.

Banking offers one possibility of regulatory interference-running. Brogan suggests a campaign to educate bankers about small-business lending. “That’s something we’d like to see an SBA administrator champion, really trying to reevaluate how banks in this country look at small business and lend to small business,” Brogan says.

Taxes. Taxes, after falling during Bush’s tenure and most of Obama’s first term, have recently become a bigger issue thanks to rising federal taxes and the prospect of more increases. Some advocates call for tax simplification in addition to lower rates, and that will be something the SBA administrator may be called upon to help with.

Simplifying the loan application process. Mills got credit for simplifying the application paperwork for the SBA’s loan program. But some say that the agency is still behind the curve technologically and needs to make it easier to apply online and electronically for loans and other programs. Upgrading the information infrastructure is sure to be on the new SBA administrator’s plate.

Survival of the SBA. Finally, the survival of the SBA itself may again be something to deal with. Obama at one point proposed to merge the SBA with the Department of Commerce. If that comes up again, small businesses may need to rely on the new SBA administrator to win whatever battles take place to keep the SBA as an influential if not separate voice. 

An Outside Perspective

Susan Eckerly, vice president for public policy at the National Federation of Independent Business, isn’t opposed to the SBA becoming part of the Department of Commerce. She generally sees much duplication of small-business programs at the federal level. “When we’re trying to tighten the budget, it doesn’t make sense to have duplicative programs,” she says.

Eckerly would also like to see the next SBA chief focus on some internal issues regarding its loan programs. The 8(a) minority loan program, for example, has recently been in arrears because borrowers weren’t repaying loans, she says.

As an example of the type of candidate she’d like, Eckerly recalls Steven Preston, who headed the SBA under Bush from 2006 to 2008, when he was appointed Secretary of Housing and Urban Development. It’s not likely Obama will look for a Republican associated with his predecessor for the job, Eckerly notes. But she hopes for "someone with more of a green eyeshade, because I think some of their loan programs still have problems,” she says. “You need someone to scrub them.”

SBA Limits

Many critical issues facing businesses today are outside the SBA administrator’s job description. According to the NSBA, economic uncertainty is the biggest challenge small-business owners report. And the main request business owners have from Congress is reducing the national deficit. Neither of those seems to fit the SBA’s mandate.

One possibility of the SBA’s future direction has been ruled out. Mills’ top assistant, Deputy Administrator Marie Johns, has also said she’ll be leaving the agency in May. Mills will be around until a successor is named.

Mills' background in venture capital seemed well-suited to the challenges of the day, particularly the capital crunch, when she started. Given the challenges today, which center on regulation and taxes, the next SBA administrator is likely to be more of a political animal and communicator, with perhaps a significant background in technology.

Most surveys report small-business optimism having significantly improved since Mills arrived. If the next SBA administrator, whoever it may be, does no worse a job than she has, business owners may say that’s good enough.

What do you think—will this change significantly impact your small business? Let us know in the comments.  

Photo: Getty Images