SBA Administrator Discusses Challenges & Opportunities Facing Small Businesses

Jim Lehrer and Karen Mills at Wi6

On Wednesday, January 19, hundreds of booksellers at Winter Institute 6 packed the Arlington Ballroom of the Crystal Gateway Marriott to hear PBS NewsHour’s Jim Lehrer interview Karen Mills, the head of the U.S. Small Business Administration [1], about the challenges and opportunities facing small businesses today.

The keynote, part of a special Legislative Day, was scheduled to be the opening event at ABA’s Winter Institute in Washington, D.C. However, because the House of Representatives was expected to hold a vote to repeal the Affordable Care Act (which occurred later that day), Mills was called into an important meeting that morning. As a result, the interview was moved back an hour.

In her opening remarks, Mills thanked ABA and the attending booksellers for accommodating the last-minute change “because I didn’t want to miss this.” She then stressed how important the health care law is to small businesses such as independent bookstores. “At the Small Business Administration, we are very, very much partnered with you as a small business,” she said, adding that SBA knows that access to affordable health care is a key priority for small businesses. The health care reform bill contains important small business tax credits [2] that will do just that, Mills said.

Small businesses can claim the tax credit for 2010 through 2013 and for any two years after that. For tax years 2010 to 2013, the maximum credit is 35 percent of premiums paid by eligible small businesses and 25 percent of premiums paid by eligible tax-exempt organizations. Beginning in 2014, the maximum tax credit will increase to 50 percent of premiums paid by eligible small business employers and 35 percent of premiums paid by eligible tax-exempt organizations.

Repealing the law would take away those key tax credits, Mills said. “That’s one of the things to think about … you get that right now.”

In discussing challenges for independent businesses, Lehrer noted that a huge issue is getting access to capital. He then asked Mills how SBA has helped, and is looking to help booksellers, in that regard.

“I believe that SBA has had a huge impact,” Mills asserted. “In 2008, the credit market froze, especially for small businesses. So we raised loan guarantees to 90 percent … and issued $41 billion in loan guarantees. We continue to guarantee loans.” She suggested that booksellers who have been denied a loan should inquire with their local bank to see about an SBA-guaranteed loan.

“One of the things that I was informed about is that SBA had a brand issue,” Mills said. “We heard there was too much paperwork, too much time involved…. We still have a job to do on our brand. On our loans, we will have a five- to eight-day turnaround in very short order. We have simplified and streamlined our paperwork.”

Noting that smaller loan amounts, the kind that an independent bookseller needs, are harder to get, Lehrer quipped, “A bookseller told me what we really need is a ‘Tiny’ Business Administration.”

“It’s really important you say that,” Mills said, pointing out that small businesses with 25 employees or fewer account for so many of the jobs in the country. “It’s why the health care bill is so important…. We’ve raised our loan limits from $2 million to $5 million,” which is money a bookseller could use to buy their building, for example. “We want to service you on that growth phase,” she said.

“Everyone [in Congress] says we have to support small business and then everyone cheers … but are they following up on that?” Lehrer asked.

“My boss is the President, and we’re lucky to have a leader who really cares about small business,” Mills said. “Now, I haven’t asked him, but I bet [he cares] especially about [independent bookstores]. He has given enormous support to small businesses.” She pointed to the Small Business Jobs Act and noted that “every single day in August he spoke about it. It passed in September in a bipartisan vote. We’ve put our markers down on this…. Small businesses are without a doubt a bipartisan issue. The discourse is extraordinarily positive and civil on this issue.”

“Do you feel you have the resources to do what you think needs to be done?” Lehrer asked.

“We are a small agency with a big mission,” Mills said. “We provide $41 billion in guarantees, but they only cost us $1.2 billion…. We have an extraordinary team, with 2,000 people, and 14,000 affiliated counselors…. We get things done because we’re in the community, and because we’re small, we’re nimble.”

In concluding, Lehrer asked, “Everyone here is in the book business, so can you tell us your reading habits?”

“I read a lot,” Mills said. Explaining that, because she travels so much for her job, she spends a great deal of time going through the books on the “airport shelves – mostly thrillers…. I enjoy books that have connections to where I am,” she said. Mills’ home is Brunswick, Maine, and among her favorite authors is David Baldacci, the second cousin of Maine Gov. John Baldacci.

In related Small Business Administration news, the SBA announced this week the first six of a series of grants to Small Business Development Centers (SBDCs) around the country to expand access to programs to help entrepreneurs start or grow their businesses and create jobs. These grants are part of $50 million in funding included in the Small Business Jobs Act of 2010 signed by President Obama last September.

A key provision of the Jobs Act provides separate, one-time funding to the SBDCs to support job creation and retention within the small business community, both through in-depth business counseling and by advising entrepreneurs and small business owners. SBDCs in Alaska, California (Northeastern SBDC program), Idaho, Iowa, Michigan, and South Carolina are the first to receive funding grants from the Jobs Act to expand training and business advisory services.

“The Small Business Jobs Act is the most consequential piece of legislation affecting small businesses enacted in more than a decade,” SBA Deputy Administrator Marie Johns said in a statement. “It provides an array of tools to help small businesses continue to drive economic growth and create jobs, including these grants to expand access to SBDCs around the country, which provide valuable business counseling and technical assistance.”

More information on the Small Business Development Centers is available on the SBA website [3].