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Mr. Small Biz Goes to Washington

Nominated to head the SBA, Steven Preston is facing his confirmation hearing. Here is what small-business leaders say about him

June 21, 2006

For some time now, the Small Business Administration has found itself under fire. Frequently referred to as the "embattled SBA, " the agency has received criticism and censures for its management of a raft of situations–in particular, its response to the Gulf Coast hurricanes last year and its handling of economic disaster-recovery loans to small businesses following the September 11 terrorist attacks (see BusinessWeek.com, 5/11/06, "The SBA's Iffy Future").

This represents a critical juncture for the SBA. In April, SBA administrator Hector Barreto announced he was stepping down after five years, to head up the Washington (D.C.)-based Hispanic business-advocacy group, the Latino Coalition. The White House's nominee to replace Barreto, Steven Preston, an executive vice-president for Downers Grove (Ill.)-based ServiceMaster (SVM), faces a host of challenges, should his confirmation go forward. Questions have arisen regarding the Bush Administration's commitment to the SBA, particularly in light of proposed budget cuts. While Democrats have called for a complete overhaul of the SBA, some critics have asked for its dissolution altogether.

As Preston, whose nomination has received a mixed reaction, prepares to go before the Senate this week, BusinessWeek.com spoke to industry watchers, policy makers, and entrepreneurs to hear their responses to the nomination of the man who would head up the SBA.

Spokeswoman for Nydia Velázquez (D-N.Y.), ranking Democrat on the Congressional Committee on Small Business
"There's been some concern about [Preston's] lack of experience in working with small businesses. However, he apparently has a lot of experience working in financial management operations, and this could be [an] asset in addressing the multitude of problems facing the agency, from contracting fraud to its inadequate response to Hurricane Katrina, and a lot of mismanagement issues that have prevented them from reaching its full potential in helping small businesses."

Harry Alford, president and CEO, National Black Chamber of Commerce
"I find nothing in this guy's background that says he's a small-business advocate…We need a strong SBA and a stronger focus on small business contracting. "

Representative Marilyn Musgrave (R-Colo.), member of the Congressional Small Business Committee
"I think very highly of chairman Manzullo, and he recommends our new guy, Steven Preston. He's from Illinois, and he has a good background in finance. From what I've heard, Mr. Preston specifically is going to focus on disaster assistance. After the scrutiny that Mr. Barreto got, Steven Preston will be very conscientious in that area. I'm not saying Barreto wasn't. I'm just saying that you get a lot of scrutiny when people are in desperate straits. I think Mr. Barreto has served us well, and I look forward to this administrator. "

Lloyd Chapman, president, American Small Business League
"In my way of thinking, Steven Preston couldn't be more unqualified to head the SBA. He's a Fortune 500 exec–that's the opposite of small business. Appointing a Fortune 500 executive to head the SBA is like appointing the head of Exxon (XOM) to head the Sierra Club. I think that Bush has selected Preston to continue to close the agency with the goal of ending all federal programs for small, women-owned, minority-owned, and disabled-veteran-owned firms. And if he does, he will find, just as Barreto did, that I will be one of his biggest opponents. "

Margot Dorfman, president, U.S. Women's Chamber of Commerce
"With regard to the nomination of Steven Preston, we have one primary question: Will his tenure at the SBA be marked by this same disregard for the will of Congress–and the same mistreatment of women business owners–we have seen over the last five years? Or will he step up to the challenge of true small-business leadership–and finally return the SBA to its intended role of support and advancement for America's small businesses? "

Mike Little, owner of the 90-employee B&W Solutions, a company that provides federal human resources management support
"Historically, the SBA has made a huge difference for small business, and that's what we would like it to continue to do, but funding and leadership are what make every organization go…I didn't know [Preston], and that gives me some concern, as small-business advocacy has been a major part of my adult life. A candidate's history and track record certainly say a lot about interest, commitment, and qualifications."

Véronique de Rugy, American Enterprise Institute Fellow
"The real test to me of his tenure is whether [the SBA] actually responds to my paper ["Why the Small Business Administration's Loan Programs Should be Abolished"] about how inefficient they are–and if he takes the time to engage in that debate. The SBA has been asked to respond. If [he doesn't] engage in debate about how taxpayer dollars [are spent in regard to loan guarantees at the SBA], he is no better than any of his predecessors."

Michael Barrera, president & CEO, U.S. Hispanic Chamber of Commerce
"I applauded the Administration when they got Hector, because he came from a small-business background. His father was an entrepreneur, he was an entrepreneur, and there is a certain sense you have to have lived it to know it. To a certain extent, that's what concerns me about Steven Preston, although I do applaud the fact that ServiceMaster does deal with a lot of small businesses.

All I would ask is that when dealing with these folks, he does reach out and listen to a lot of small-business organizations' [concerns]…I want to be clear that we look forward to working with Mr. Preston on this, because I think it's important that he know that. He's got a lot of people that are out there willing to help."



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