By Robb Mandelbaum
The New York Times
October 29, 2009
Last week, President Obama announced new initiatives to spur lending to small businesses, including higher caps on loans guaranteed by the Small Business Administration. The Obama administration acted after enduring months of criticism from small-business advocates, some of whom say the measures are too little too late. In an interview, the S.B.A. administrator, Karen Mills, spoke about this and other efforts by the Obama administration — including her assertion that the agency is currently well ahead of its goal of making sure that at least 23 percent of government contracts go to small businesses. A condensed version of the conversation follows.
Q. In light of the way S.B.A. lending fell so dramatically last year, has the recession taught us anything about what the S.B.A. can do?
A. I think we’ve learned that the S.B.A. plays a critical role in providing access and opportunity when the market is not providing that access. We help banks get that money out into the hands of important and viable businesses, particularly those owned by minorities, women, immigrants and veterans.
Q. But when the market collapsed, so did S.B.A. lending. Is there a better way to do it?
A. This has been a pretty strong system, and strong success story, and partnering with 5,000 banks is, I think, a highly effective template. We should build on the strength of our partnerships because it gives more points of access.
Q. What reaction have you gotten to the president’s proposals to increase access to S.B.A. lending?
A. We’ve gotten tremendous support. Everybody now understands how critical it is to help small businesses get out of this recession and into recovery.
Q. There are a lot of small businesses that are in no position to take on more debt. What can the S.B.A. offer them?
A. Among our responsibilities is to make sure that 23 percent of all government contracts go to small businesses. That’s about $150 billion annually, from all the government agencies.
Q. Well, since you brought it up: the S.B.A. reported a couple of months back that in 2008, the government didn’t meet that 23 percent goal. Of course, that was before your time. But what are you going to do to push that number up?
A. I have to give the vice president credit. [Commerce Secretary] Gary Locke and I were tasked by the vice president with making sure that the Recovery Act dollars met the same small-business goals that we have for the regular money. It was actually not in the statute, but we took it on as if it were.
The first thing we did is with Commerce we held 200 matchmaking events, where we bring agencies in to meet suppliers. We did 200 of these in 90 days. We also put training guides up on the Web site. In the first weeks, 10,000 people have taken the course on how to get a government contract -- they haven’t just clicked on the page, they’ve taken the course. We’re trying to provide small businesses more seamless access to these business opportunities, and then walk them through it. And this is a big engine, because the president and the vice president and the other agencies have bought in that this is a win-win. Our goal is 23 percent and we’re at 26.5 percent. We’re double the goal on small disadvantaged businesses. We’re going to get there on those women-owned businesses, but we’re above on all the other goals.
Q. Let’s talk about health care. A lot of people who purport to speak for small businesses object strenuously to an employer mandate. Do you think an employer taking some, or even most, of the responsibility for providing health care for its employees is bad for small business?
A. When the [National Federation of Independent Business] surveys small businesses, affordable health care is the No. 1 concern — out of 77 issues. It has been since 1986. Why are they saying that? They’re saying that because small-business owners want to provide health care. It’s like a family.
I have been traveling the country pretty rigorously over the last four months, talking in every stop to small-business owners about health care. I have to tell you a story. Kathleen Sebelius and I are in New Jersey, doing a panel in a factory with women business owners. And one of them — and I’ll never forget this — says, “Look, I started this business, and we were three years before we could provide health care. The day we got that policy, I said, ‘My business is a success.’ ” That’s what’s going on.
Q. So if health care were more affordable, you wouldn’t need a mandate?
A. I think the No. 1 concern that these small businesses have is that we provide things like the exchange. That’s what they care about. They want the choice and competition. That’s the outcome.
Q. I noticed you didn’t mention the public option. The Congressional Budget Office has said that a government-run insurance plan competing with private coverage could reduce premium costs by up to 10 percent on top of the savings you’d get with an exchange. If cost is the problem, why isn’t the public option a rallying cry for small business? Why aren’t you out there pushing for it?
A. Well, once again, I think small businesses are focusing on the outcome that they want. There are many paths being discussed in the process, but those are the outcomes small business cares about.
Q. There seems to be a lot of pent-up frustration from small-business owners directed at government in general and the Obama administration in particular. In your travels, do you see that? Do you think there’s hope for turning that around?
A. We see tremendous excitement from small-business people about the administration and about the attention and commitment that the president has to do things that really make a difference. I think they recognize that health care is one of those. I think they recognize that what we’ve been doing in the Recovery Act with our loan programs has mattered.
Did you see the end of his speech [last week]? I’m standing behind him in the warehouse, with all the boxes. He finishes the prepared remarks, and he says something else, which I knew was not in the prepared remarks. I’ll read it to you. He says: “So to all the small-business owners out there, I just want to close by saying this. I know that times are tough, and I can only imagine what many of you are going through in terms of keeping things going in the midst of a very tough economic climate, but I guarantee you this: This administration is going to stand behind small businesses. You are our highest priority because we are confident that when you are succeeding, America succeeds.”
That was not in the script. That’s what he thinks. That’s what I think.
Q. And you think that message is being received?
A. I do.