Good News for Small Business? More Like Mixed Signals from the White House

Photo courtesy of CNN.com

Last Friday President Obama announced a proposal to combine the Small Business Administration (SBA) with five other government offices.  If approved by Congress, the proposal will merge the SBA with the core business functions of the Department of Commerce, the Office of U.S. Trade Representative, the Export-Import Bank and the Overseas Private Investment Corporation and the U.S. Trade and Development Agency.  The proposal, aiming to streamline the agencies, is part of Obama’s broader executive branch reorganization.  

At the same time, President Obama leveraged his authority to elevate the SBA to a cabinet-level agency.  The elevated status gives the head of the SBA, Karen Mills, a seat at future Cabinet meetings.

However, Karen Mill’s seat might not be warm for long.  If President Obama’s reorganization is approved by Congress, the SBA will immediately lose its Cabinet position. 

How’s that for mixed-signals?

During the announcement, Obama promised that the SBA elevation will “make sure that small-business owners have their own seat at the table in our Cabinet meetings.”  It’s always nice to have friends in high places and since the SBA hasn’t been recognized at this level since the Clinton administration, it’s good news for small businesses.  This seat at the table, while politically convenient in timing for President Obama, is definitely a tribute to the great work Karen Mills has done since she was sworn in as SBA Administrator in 2009.  She could help keep the small business community front-of-mind during those Cabinet meetings.     

The impact of the reorganization on small business owners is still up for debate (besides removing the SBA from the Cabinet). Obama described the proposed merger as a “one-stop shop” for entrepreneurs, a streamlined department with “one website, one phone number, one mission: helping American businesses succeed."  It’s difficult to argue with an effort to cut the run-around that many small-business owners face when seeking government services.  Many small-business owners don’t know what services are available or even where they would go to find them. 

However, it’s not so clear that changing things around is going to reduce that confusion.  It seems that entrepreneurs are becoming increasingly familiar with the programs and services offered by the SBA.  Karen Mills reported that the SBA set a record with $30.5 billion in loan guarantees to over 60,000 businesses in the government’s 2011 fiscal year. 

In addition, with a “one-stop shop” there is a risk that small businesses could get lost in the shuffle.  Small businesses have unique needs that the SBA serves.  If small businesses are only one of the customers for this shop, their needs might be masked, especially when competing with Fortune 500 companies for attention.   

The reorganization seems well-intentioned, but the change could disrupt the momentum the SBA has built from its great work. 

Small businesses are the drivers of our economy—we know this. They represent 99.7% of all firms here in the U.S., they create more than half of the private non-farm GDP and they create 60-80% of all net new jobs. The needs of small businesses cannot be ignored, especially in a time when we’re all searching for new ways to get Americans back to work.

Small businesses--- let us here from you!  What do you think about the SBA’s Cabinet status?  What do you see for President Obama’s reorganization proposal?

BY Mary Duggan on January 19th, 2012

TAGS: small business | sba | politics | entrepreneur