As small firms feel economic crunch, SBA bids to broaden loan base
By Sherri C. Ranta
A former Small Business Administration executive says the economy needs a good stimulus package to get moving and help grow small enterprises.
Miamian Fred Hochberg, former deputy and acting administrator at SBA in the Clinton Administration, says small businesses are operating in "the toughest US economy in 20 to 30 years."
"Small business needs a more positive economic environment. They need customers that will stop and shop," he said.
The SBA supports the growth of small business through its many programs including low-interest loans. Funding for the SBA, Mr. Hochberg said, is less than in the late 1990s.
"That concerns me. The SBA provided early and crucial support for companies like Intel, Compaq, Apple and Nike. If you cut support from SBA, where are we going to grow these bright stars?"
About 80% of the 22 million jobs created in the last eight years of the 1990s were created by small business, Mr. Hochberg said.
"If you don't fund SBA fully, you damage that part of the economy that has been such an engine for growth."
Nationwide, small businesses are getting hit on a number of fronts, he said. Advancing technological changes are pressuring businesses to upgrade technology and change the way they do business.
"It puts a lot of stress on a business," he said.
It's one thing to have a technological change with good sales, Mr. Hochberg said, because increased sales can cover a mistake or two. But this economic environment, he said, is very unforgiving.
Mike Stamler, a spokesman with the SBA in Washington, says the agency is emphasizing smaller loan amounts - $500,000 or less - in an effort to lend to more small businesses.
The agency recently found, he said, that 87% of its loans are made for $500,000 or less, but the majority of its loan authority - 51% of the total - went to just 13% of its clients.
"The President has a small business agenda," Mr. Stamler said. "He understands that small business is the engine of job creation."