On The Hot Seat

As lenders shy away, government steps in

(Wendy Maeda/Globe Staff)
By Robert Gavin
Globe Staff / October 11, 2009

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Karen G. Mills, a graduate of Harvard College and Harvard Business School, became the 23rd administrator of the US Small Business Administration in April. Mills, of Brunswick, Maine, spoke last week with Globe reporter Robert Gavin at the SBA’s Boston regional office.

Coming out of the worst recession in 70 years, what kind of shape is small business in?

The condition of small business is critical to the economy because 70 percent of jobs in the country are created by small businesses. When the [American Recovery and Reinvestment Act of 2009] was passed [in February], our SBA activity started to ramp back up. We are now back at the level of lending in 2008, and last month we exceeded our 2007 benchmark.

How’s the credit situation for small business these days?

Banks really have contracted their credit, and our programs are there to provide the extra level of credit support that make it possible for the banks, even in these tighter times, to get the money out. We have over $12 billion in new credit that we’ve been able to leverage.

Where does small business fit into the Obama administration’s economic policies?

The president is completely focused on the health of small business. He understands about innovative small businesses creating the foundations of good-paying jobs. There is not a day that goes by in the White House that there’s not a focus on small business.

Well, what specifically are we doing to encourage small business?

Main Street small businesses - restaurants, dry cleaners, and car repair operations - are critical for jobs and the fabric of our lives. At the SBA, we provide capital for them. The second kind of small business is your high-growth, high-impact business. Those kind of entrepreneurial businesses have always been an American strength. This is where we’re going to take some of the investment in research and development and innovation and turn it into jobs.

What’s your sense of private capital markets? Is there a need for government to step in?

Venture capital is down 60 percent. We know angel investors have lost some of their assets. We are working hard now to create and expand programs that fill that gap.

What’s the status of the Small Business Innovation Research grant program, which sets aside federal research and development money for small businesses?

SBIR is up for renewal, and we expect it will be reauthorized. It is a way that some of these technologies can get into the commercialization process.

In this recession, we saw big business get billions of dollars. Did we do enough for small businesses?

We were able to move $12 billion into the hands of small businesses, and that does not count what we’re doing in the government contracting field. We are responsible to make sure 23 percent of all government contracts go to small businesses, and we have so far been exceeding that goal.

There’s a lot of concern among small businesses about the cost of health care reform. How does small business fit into this?

The status quo for small businesses is untenable. Right now, small businesses are paying 18 percent more than big businesses for the same health care product, just because they’re small. That’s when they can get it. Half of the businesses with between three and nine employees don’t provide health insurance. It’s not that they don’t want to. They don’t have access, and there’s nothing affordable. Everyone in this congressional process has really focused on making sure that small businesses have access and opportunity .

You’re a New Englander. How does the small business landscape here compare to the rest of the country?

Massachusetts is having a record year in our 504 loan program, which is for expansion of existing businesses. Massachusetts loan numbers are up 70 percent from before the recovery act, higher than the national average. This has always been a hotbed of great entrepreneurs and great employees. This area is quite well position ed.

What advice would you give to someone who wants to start up a small business?

Come see us in our SCORE and Small Business Development Centers. Our counselors are in the business of helping people start their business, expand their business, find capital. And that assistance is free.

Chat transcript

Small Business Q&A

Accountant and small business expert Jamie Downey will take your questions about starting and growing a small business.