The Small Business Administration would be put inside a new government department, but its current chief, venture capitalist Karen Mills, is getting a promotion under a proposal Friday from President Barack Obama.

The SBA, which has been a stand-alone agency since it was formed under President Dwight Eisenhower in 1953, would be combined into the new department along with the Commerce Department, the Office of the U.S. Trade Representative, the Export-Import Bank, the Overseas Private Investment Corporation, and the U.S. Trade and Development Agency.

Congress would have to authorize the changes.

Mr. Obama says the change would make it easier for businesses that have to deal with the federal government.

But the move is being criticized by a long-time critic of the SBA and of Mr. Obama’s efforts regarding small business, Lloyd Chapman, president of the American Small Business League, based in Petaluma.

“They’re not trying to save money; they’re trying to close the agency because large corporations want 100 percent of federal contracting dollars,” Mr. Chapman says. “If they can essentially close the SBA by combining it with the commerce department, zeroing out the budget and slowly eliminating the staff, they can essentially wind down small business programs, including the requirement that 23 percent of all federal contracts be awarded to small businesses. That money will be diverted to large corporations.”

But the opposite view comes from another small business advocate.

"We were pleased today to hear the president will be elevating the head of the Small Business Administration to a cabinet-level position, as it reflects the importance small businesses play in our nation’s economy,” says John Arensmeyer, founder and CEO of Small Business Majority, a national small business advocacy organization.

“As SBA administrator, Karen Mills has proven herself a champion of the small business community and an effective leader. We’re sure she’ll continue her good work as part of the president’s cabinet,” he says.

Taking a middle ground is the National Small Business Association.

“While NSBA is firmly committed to reducing the deficit, there simply aren’t enough details available yet to know if this will be a net win or loss for small business,” says NSBA President and CEO Todd McCracken.

“On the one hand, reorganizing federal agencies to create a ‘one-stop-shop’ for America’s small businesses could streamline processes and make accessing information and assistance much easier. On the other hand, such a reorganization could minimize the emphasis placed on small business by the federal government and lead to an even greater imbalance toward promoting the interests of large businesses over those of small business,” Mr. McCracken says.

The change effectively moves the SBA and its more than 2,000 employees from the influence sphere of Cabinet-level government agencies. But Ms. Mills, an Obama appointee, and former head of the venture capital company MMP Group Inc., will be elevated to a Cabinet level position. No details were offered as to what her new duties might be.

The White House says the combination would see 1,000 federal jobs eliminated and a savings of about $3 billion over ten years.