Troubled Waters It's been a year of scandal, criticism and change at the SBA.
Opinions expressed by Entrepreneur contributors are their own.
Recently, the SBA has come under a hailstorm of criticism foreverything from its response to the Katrina disaster to the way ithelped companies recover from 9/11: The Associated Press reportedthat some of the loans designated for companies impacted byterrorism went to a perfume firm in the Virgin Islands, a winery inOregon and other unaffected businesses. One prominent senator evenheld hearings on whether the SBA should be abolished.
With the SBA on everyone's mind, we put questions about theorganization to this month's "Point/Counterpoint"team, New Mexico Democrat Rep. Tom Udall and Arizona RepublicanRep. Rick Renzi.
Entrepreneur: Are there better ways for the federalgovernment to help entrepreneurs than the current structures andorganizations? If so, what are they?
Rep. Udall: I believe that if the federal governmentwould fully fund the Small Business Administration, it would go along way toward helping entrepreneurs start their businesses andsucceed. When run correctly with the necessary funding, the SBA andits programs can help entrepreneurs.
Rep. Renzi: There are better ways for the federalgovernment to help entrepreneurs, but it doesn't necessarilymean that more programs or more governmental structures have to becreated. In this current tight-budget climate, the federalgovernment has to work smarter and faster with limited resources.The best way to accomplish that task is for the federal governmentto partner with the private sector to leverage limitedresources.
Some congresspeople have been critical of the SBA. Do youthink criticism is warranted?
Udall: There are obviously problems within the SBA. Thisissue came to the forefront after Hurricanes Katrina and Rita hitthe Gulf Coast. Of the approximately 380,000 disaster loanapplications received in the five months after Katrina, the SBAapproved 59,398, and an additional 60,000 went unprocessed in thosefive months. The SBA has shown that it has an insufficientinstitutional infrastructure and work-force capacity. And it hasnot properly managed its financial and budgetary obligations. Ithad to come to Congress to appropriate additional funding numeroustimes.
Renzi: Obviously, every office can be run moreefficiently. Nevertheless, I believe SBA administrator HectorBarreto was a tremendous leader for the Small BusinessAdministration. Under Barreto's leadership, the SBA streamlinedmany functions and learned to do more with less while facingunparalleled challenges to the SBA's disaster loan program fromthe 9/11 terrorist attacks and from [the] hurricanes. He also ledthe charge to save taxpayers nearly $100 million annually byeliminating the federal subsidy that was wreaking havoc on theSBA's 7(a) guaranteed loan program. I think the criticisms ofhim were mostly political.
One of the invited panelists to a recent Senate hearing onthe SBA suggested that the agency should be shut down. Do youagree? Why or why not?
Renzi: I disagree that the SBA should be shut down. Thereare already very few resources in the federal government dedicatedto helping small business.
Udall: Despite its problems, the SBA is still needed. Butwe need to ensure that this vital agency has the resources itneeds, not continue the "doing more with less"falsehood.
