THE BUSINESS JOURNALS -- SBA administrator faces a tough crowd at House Small Business Committee By Kent Hoover September 10, 2014 SBA Administrator Maria Contreras-Sweet got a taste Wednesday of what awaits her from the House Small Business Committee, which doesn’t want the Small Business Administration to do anything that it hasn’t authorized. Contreras-Sweet got off relatively easy since it was her first appearance before the committee. Chairman Sam Graves, who will step down as head of the committee at the end of this year, scolded the SBA for making policy changes, such as a new credit scoring model for loans of under $350,000, without going through the normal rulemaking process. This means the agency ignored “valuable input of those most affected,” the Missouri Republican said. “Additionally, the agency has a history of pursuing initiatives it creates on its own, while ignoring congressionally mandated activities,” Graves complained. The SBA has failed to fully implement reforms to government contracting programs that were enacted two years ago, “while resources instead have been devoted to potentially duplicative, unauthorized entrepreneurial development programs dreamed up by the agency with little public input,” he said. Looking over the SBA’s shoulder is the committee’s main responsibility, and the House committee in recent years has been tougher on the agency than its Senate counterpart. For the most part, small businesses benefit from this oversight — the SBA is a small agency with limited resources, so it’s important that it gets the biggest bang for the buck. Wednesday’s hearing shows the SBA still has work to do in a number of areas, including getting more loans and federal contracts into the hands of women-owned businesses. Rep. Nydia Velazquez, D-N.Y., challenged Contreras-Sweet on this point. Since 2010, when Congress increased the maximum size of loans available through the SBA’s flagship 7(a) loan program, the share of loan dollars going to women-owned businesses has declined, Velazquez noted. That’s because male-owned businesses are disproportionately benefiting from the larger loans, she said. So the congresswoman, who has been the top Democrat on the committee for more than a decade, pressed Contreras-Sweet about what the SBA administrator was going to do to reverse this slide in lending to women-owned businesses. Contreras-Sweet said there’s “no one silver bullet” to serving any particular market, but she said the SBA’s emphasis on increasing the number of small loans it backs should help more women-owned businesses get financing. That wasn’t good enough for Velazquez, who told Contreras-Sweet to review the data and come back with “specific steps” to increase lending to women-owned businesses. Velazquez also had concerns about government contracting. The SBA is in charge of working with federal agencies to meet Congress’ goal of awarding at least 23 percent of their contracting dollars to small businesses. This year, the SBA finally was able to announce that the goal had been met, but this achievement came with some asterisks. For example, many types of contracts are excluded from consideration when agencies calculate how much of their money went to small businesses. Plus, agencies keep counting some contracts being performed by big businesses as small business contracts, Velazquez said. Contreras-Sweet told Velazquez that she has taken a “deep dive” into this question. The reason big businesses show up on the list of small business contracts is that they’ve acquired small businesses that were awarded multiyear contracts, she said. The SB is “amping up” its policing efforts to make sure big businesses aren’t getting contracts meant for small businesses, she said. It better, Velazquez said, because “small business contractors who are playing by the rules are the ones missing out” every time a big business gets a contract that was supposed to go to a small firm. Other committee members, meanwhile, seemed more interested in micromanaging the SBA than in addressing big issues. Rep. Blaine Luetkemeyer, R-Mo., challenged Contreras-Sweet to back up her statement that the SBA’s plan to create a new interactive platform for automating loan documents and form generation “will save banks hours of processing time and money” on each 7(a) loan. Did you do a study that proves this, asked Luetkemeyer, a former banker. No, Contreras-Sweet replied. That displeased Luetkemeyer, who contended these changes might end up cost banks more. Contreras-Sweet relied on her own background as a banker to answer Luetkemeyer’s concerns. “Mr. Congressman, I have not seen a program where you take out steps and steps, and take out lots of paperwork, that it ends up costing more,” she said. “As an experienced banker, I can assure you it’s going to be more efficient,” she said.
Posted on: Thu, 11 Sep 2014 13:23:23 +0000
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