Selection of New SBA Leader Pleases Most, But Not All
By Rob Kuznia
April 6, 2009
Unlike many of President Barack Obama's controversial cabinet picks, the new leader of the U.S. Small Business Administration last week enjoyed unanimous Senate approval, with nary a peep of protest from a single legislator.
Karen Mills -- 55, a venture capitalist, Tootsie Roll heiress and registered Democrat -- has been welcomed by legislators on both sides of the aisle. Also pleased is the National Small Business Association, the oldest small-business advocacy organization in the United States.
But not everyone is cheering.
Perhaps chief among the chagrined is Lloyd Chapman, president of a watchdog group called the American Small Business League, which was an indefatigable critic of the federal agency during the George W. Bush years. Most notably, the league has assailed the SBA for allowing contracts meant for small businesses to be awarded to Fortune 500 companies. League associates say they have successfully sued the SBA three times under the Freedom of Information Act since 2003.
Chapman, who campaigned vigorously for President Obama, told HispanicBusiness.com that he is deeply disappointed in his pick for the SBA's top post.
"I know all you need to know about her," said Chapman, a featured blogger for the Huffington Post. "She sits on the board of directors of a handful of Fortune 1,000 companies. She is about the furthest thing from a small-business person you're going to be able to find."
What's more, he added, Mill's parents -- Melvin and Ellen Gordon, who have run Tootsie Roll Industries since the 1960s -- stated publicly in 2005 that they intend to keep the business in the family.
"Sometime any minute now, she's going to inherit a multi-billion dollar international candy company," he said.
A spokesman for the SBA declined to comment on the speculation that she may eventually take the reins at Tootsie. But the spokesman, Jonathan Swain, said Mills -- who was officially sworn in Monday as the department's administrator -- has plenty of experience working with small businesses.
As an example, Swain cited how Mills once helped secure a $15 million grant from the Department of Labor to provide workforce training and development for the boat-building industry in Maine, where she lives.
"Over the last several weeks, I've gotten to know her," he said. "She's talked very compellingly about being a kid sitting at the dining-room table, hearing her grandfather talk about his own small manufacturing company in New England."
In her professional life, he added, she has worked as an investor and operational manager of small businesses all over the country.
For her part, Mills, speaking at last week's confirmation hearing, said her top priority will be to "unstick" the frozen credit markets.
"The SBA must continue executing the plans in the Recovery Act and get capital flowing again through the core SBA loan programs," she said. She also said many struggling small businesses will soon receive a $35,000 "lifeline" loan with a 100 percent guarantee to banks lending the cash.
On Monday, a spokeswoman from the National Small Business Association rejected the criticism that Mills is a big-business player in a small-business arena.
"It's nice to have someone who really knows what it means to run a small business, but running the Small Business Administration isn't running a small business -- there are thousands of employees," said Molly Brogan, the NSBA's VP of public affairs. "That's not to say a small business owner isn't capable of doing it."
Brogan added that Mills does have experience working with small businesses.
Mills, a resident of Maine, founded MMP Group, a venture capital firm, in 1993, before co-founding Solera Capital, a woman-owned investment company, in 1999.
Her husband, Barry Mills, is president of Bowdoin College.
Mills will take the helm of a compromised SBA department that was hobbled by deep budget cuts under the Bush administration. Meanwhile, recent Congressional investigations by the have shown that the department has failed to detect fraud and abuse.
"The sum of my experience is this: I am a believer in American small business," she said in a statement Friday. "I am a believer in America's ability to manufacture goods and services that are world class, and I am a believer in America's spirit of entrepreneurship. This spirit is one of our country's greatest assets and we need to cultivate it today, more than ever."
Mills received a warm reception from both sides of the aisle, but the most effusive praise came from U.S. Sen. Olympia Snowe, R-Maine, the top Republican on the Senate Small Business Committee, who recommended Mills.
"She is truly ready to assume the reins of the agency responsible for small businesses, America's preeminent job generators that will lead us out of our economic morass," Snowe said in a statement.
Also supportive was committee chairwoman Mary Landrieu, D-La.
"Ms. Mills' background as an entrepreneur and community leader coupled with her vast experience and education put her in the right position to assume the reigns of the SBA," she said in a statement.
However, the welcome from U.S. Rep. Nydia Velazquez, D-NY, came with a hint of frost.
"After seeing SBA underfunded and mismanaged for the last eight years, it is fair to say she will certainly have her work cut out for her," she said in a short statement. "Small businesses need an effective SBA now more than ever, and that starts with new leadership. It is my hope that Ms. Mills will bring the necessary fresh thinking and vigor to renew and strengthen this agency, so that it better serves entrepreneurs' needs."
During the years of the Bush administration, the budget of the SBA was slashed in half, from about $1 billion to $500 million, Chapman said. Since then, President Obama has increased the budget to about $700 million, he said.
Most troubling to Chapman is how, during the confirmation hearing, Mills stated that she favors legislation that would allow some small business contracts to be awarded to small businesses owned by venture capitalists.
"Right now, if you look at the Small Business Act, it says small businesses must be independently owned," he said. "If some multi-millionaire venture capitalist owns a large portion of a small business, it's not independently owned anymore."