President Obama’s new Small Business Administration chief is mapping a more aggressive role for the agency, including finding more ways to aid fast growing, innovative companies. Administrator Karen G. Mills wants to give small businesses more of the tools they need to compete effectively in the national and global marketplaces. In an interview, she said that she wants to break from the past, when the SBA had a “one size fits all” approach.

One change would help firms even if they’re backed by venture capital. Under current SBA rules, majority owned VC companies aren’t eligible for grants that help small businesses bring technology innovations to the marketplace. Mills says a better balance is needed so that the government can play a significant role in developing the country’s next Apple or FedEx.

“We don’t want to somehow, because of arbitrary decisions, restrict ourselves from these small businesses. They should be included,” she says.

Another initiative would foster business clusters -- groups of smalls that can work together to be more competitive. Mills played that role in Maine as chair of the state’s Council on Competitiveness and the Economy, helping to bring engineers, suppliers and carpenters together in boatbuilding and to secure $15 million from the U.S. Department of Labor. The administration’s 2010 budget includes $50 million for a regional cluster program in the Department of Commerce. And $5 million is included in the SBA’s budget that Mills says will go toward supporting small businesses that participate in regional economic clusters.

Mills is also mulling ways to increase firms’ access to capital outside the SBA’s flagship 7(a) loan guaranty program, especially investment capital sought by start-up and early stage firms. The SBA has allocated $3 million in the budget to explore other ways of delivering equity capital to more effectively support innovative small businesses and spur job creation.

Some business advocates are opposed to Mills’ shifting of focus. Critics worry that the change in VC policy could hurt Main Street firms that don’t get venture capital. But Mills says her goal is to expand the SBA’s focus, not shortchange anyone. “We can continue to lay a stronger foundation both for Main Street businesses and for tomorrow’s high growth, high impact companies,” she says.

But some feel that the shift inevitably will have that effect. “We have some concerns that Mills’ position will give VC interests the leverage they need to make changes to small business programs that aren’t beneficial to the interests of small business,” says Chris Gunn, communications director for the American Small Business League.

Gunn says that allowing majority owned, venture capital backed firms to compete in these programs “sets a dangerous precedent” for other small business programs.

Ultimately, a bill granting concessions to venture capitalists is likely. Mills will get fixes that expand eligibility to majority owned, venture capital backed firms, allowing them to compete for awards in the Small Business Innovation Research Program. The program, which is run in 11 federal agencies, awards about $2 billion in project funding per year to small businesses.

Mills has a long history of supporting high growth potential companies. She founded and was president of the private equity firm MMP Group, investing in firms in the consumer products, food, distribution, textile and industrial components sectors. She also cofounded Solera Capital, a venture capital firm.

“We will [support] the high growth, high impact, as of course this is an area I know a lot about, and this is an area that we care a lot about because now is the time that everyone is realizing that those guys are going to drive the economy and future jobs. They are going to grow to be the big ones,” she says.

Richard Bendis, entrepreneur and president and CEO of Innovation America, a not-for-profit organization for entrepreneurial growth, is encouraged by Mills’ plans.

“We would like to see a greater commitment to innovative entrepreneurial small business funding programs. This has not been a priority for the SBA in the past,” he says.

source:  http://www.kiplinger.com/businessresource/forecast/archive/sba_chiefs_priority_helping_high_growth_firms_090618.html