A Q&A With SBA Administrator Karen Mills

Karen Mills, the head of the U.S. Small Business Administration [1], recently took time from her busy schedule to answer questions from BTW about some of the key steps SBA has taken to help small businesses over the last two years, the challenges facing Main Street businesses today, SBA’s new loan initiatives and online resources, and more.

Administrator Mills will be interviewed by PBS NewsHour’s Jim Lehrer at the opening event at this month’s Winter Institute. The conversation between Mills – the highest-ranking official in the Obama administration for small business issues – and Lehrer will focus on the challenges and opportunities facing small businesses today.

The event, part of a special Legislative Day, will be held from 9:00 a.m. – 10:15 a.m. in the Crystal Gateway Marriott’s Arlington Ballroom. All Wi6 participants are invited to attend. Legislative Day will also feature a full day of programming focusing on the special role of independent business and the political process, as well as visits by member booksellers with their elected officials. Legislative Day will end with a reception co-sponsored by the Center for the Book, at the Montpelier Room in the Library of Congress’ Madison Building.

Q: During your confirmation hearings you noted that “building and growing small business has been the defining tradition for America,” and that “to find our way out of the current economic crisis, we have to find ways to help small businesses stay in operation and even expand.” Almost two years later, what are some of the key steps that the Small Business Administration has taken to help ensure that small businesses continue as engines for job growth and the critical support for healthy communities?

It has been a tough couple of years for small business. At the SBA, we’ve been working very hard to make sure that Main Street small businesses such as booksellers have the capital they need not just to keep their doors open, but to grow and create jobs in these tough times.

The good news is that with the Recovery Act, we found a formula that worked. We raised the guarantee and reduced the fees in our top two programs, called 7(a) and 504. So, while traditional small-business lending was frozen, we engineered a major turnaround in SBA lending.  They were so successful that Congress extended these provisions several times, including with the Small Business Jobs Act last September. In just the past three months, SBA supported nearly $12 billion in Jobs Act lending, which comes in addition to the $30 billion we supported through Recovery loans.

At the same time, our counselors have helped record numbers of small business owners through free counseling and training. Our 68 field offices, 900 Small Business Development Centers, 110 Women’s Business Centers, and 350 chapters of SCORE have all been extremely busy. And that’s important, because our data show that small business owners who spend three or more hours with us have more revenues and more hires.

Q: What do you see as the most significant challenges facing Main Street businesses today? What do you think some of the keys to meeting these challenges are?

Getting financing and counseling, which I just mentioned, are crucial. The SBA can help with both of those and you can find your local resources at www.sba.gov [1].

On a broader level, I think Main Street businesses always have to be open to the idea of reinventing themselves. You have to be aware of how the market is changing around you – both locally and nationally – and ask yourself tough questions: What is the unique value proposition that I provide to my customers that differentiates me from the competition? How can I maximize my market strengths and minimize my weaknesses? Are there process or infrastructure improvements I need to make? How can I use broadband? How can I find new markets?  It doesn’t matter whether you’re selling books or high-tech manufacturing equipment, you still have to answer these tough questions in order to keep growing.

Q: In this difficult economic climate access to credit continues to be a major challenge for indie booksellers and other small businesspeople. Both the ARRA and the SBJA have helped SBA increase guarantees and reduce fees in its two largest loan programs. Have you been satisfied with the results of these initiatives so far? And given the very uncertain economic prospects, how is SBA planning to face this challenge in 2011?

As I mentioned before, the Recovery Act and the Jobs Act have been very successful in helping small businesses find credit. Right now, we’re transitioning back to our regular lending programs, which are still very effective and popular in the small business lending community.

Beyond that, the Small Business Jobs Act enacted a number of critical changes that are going to strengthen small business lending through SBA loans in 2011. For example, we increased the top size of SBA’s 7(a) and 504 loans from $2 million to $5 million. We also increased microloan limits from $35,000 to $50,000, which is crucial for entrepreneurs and start-ups. And, through September, we temporarily increased our quick-turnaround Express loans from $350,000 to $1 million.

In a few months, we’re also going to temporarily allow some small businesses to refinance their owner-occupied commercial real estate into our 504 loan program. There is a lot of interest in this.

In a couple of months, we’ll also roll out two new initiatives (Small Loan Advantage and Community Advantage) that will have streamlined paperwork for loans under $250,000. These smaller loans are crucial to helping underserved communities that have been hit disproportionately these past few years.

Q: SBA is planning to launch a new website. What are the goals of the new site, and what features of the new website do you think might be the most useful for Main Street retailers such as indie booksellers.

I’m pleased to announce that the new site is up and running! Go to www.sba.gov [1].

I’ve worked with a lot of small business owners over the years, and if there is one thing I know about them, it’s this: They never have enough time in the day to get everything done. That’s why we overhauled the site last year.

Our focus was to make sure that when anyone comes to our site, you find what you’re looking for as quickly as possible, whether that’s information about SBA loans, our free counselors in every state, or anything else. The result is a more streamlined, effective, customized, and dynamic website.  Take a tour of the site at our new blog: http://www.sba.gov/about-sba-info/take-a-tour [2]

One highlight for Main Street retailers is called SBA Direct. This tool allows you to personalize your browsing experience according to where you live, your business type, and what information you’re looking for. Check it out.

Q: In an interview with the Washington Post, you noted that some of your best ideas come to you when you are on the road, out talking with field staff and small business owners. You noted in that interview that you received feedback that some of SBA’s programs were too complicated. What are you doing to address that concern? Might there be any changes in regard to fostering communication between small businesses and SBA?

Traveling the country, I often hear great success stories from business owners about how the SBA has helped them grow their business. I also hear suggestions from these small business owners that we work hard to address. One comment I heard on the road was that our programs were still too complicated. In response, I created a task force comprised of both our staff in the field and our staff in headquarters. They’re focused on finding new ways – both large and small – to streamline and simplify our programs and processes. We’re doing that right now.

In regards to fostering communication, the new website is a great example. In addition, we’ve beefed up our social media presence and updates from our Facebook, Twitter, and Youtube sites… and we’ll soon be adding an online community to our blog. Two-way, interactive online communication with SBA simply didn’t exist before, so we’re glad to be taking that step.

Q: You yourself come from a family business. Has that life experience affected how you approach and do your job as SBA Administrator?

Definitely. I grew up with two family businesses in textiles and candy, so manufacturing was the discussion around the dinner table. We would go to the factory, talk about the factory, talk about the machines. My grandfather was probably my most important mentor in business. He bought a couple of machines and started making socks in the back of a shoe store where he worked. Eventually, he bought more machines, started his own business, and started building more factories. In fact, I worked at one of them during my college years.

I’ve been working with small businesses ever since, and – to this day – one of my favorite things to do is to walk a factory floor and to talk to small business owners across the country. The entrepreneurial spirit that Grandpa Jack had is alive and well, and I feel truly honored to be helping grow that spirit – in some small way – by serving in this role.