It’s National Small Business Week. Since 1963, National Small Business Week has recognized the contributions of entrepreneurs and small business owners in the United States. In fact, according to the Small Business Administration (SBA), more than half of Americans either own or work for a small business. They also create about two out of every three new jobs in the U.S. each year.
This year, TNJ.com got an exclusive interview with business expert Rick C. Wade, a former senior adviser and deputy chief of staff at the U.S. Department of Commerce. The founder of the Wade Group, Wade was an advocate for small businesses and represented the Department of Commerce in various international forums, such as the U.S.-China Joint Commission on Commerce and Trade, Asian-Pacific Economic Cooperation, African Growth and Opportunity Act Forum and the Conference on the Caribbean and Central America. Wade will also be answering questions from small business owners via Twitter (@rickcwade ) throughout National Small Business week.
TNJ.com: Why is Small Business Week important?
Rick C. Wade: National Small Businesses Week is all about celebrating small businesses and opening more doors for entrepreneurs in more communities across the country. It’s about ensuring that small companies have the resources needed to start and grow their businesses. This year, the SBA is taking the show on the road offering educational panels and workshops on topics like how to start business, social media 101, how to protect your business against cyber security threats, and how to start exporting.
TNJ.com: What is the current state of small business?
RW: Small businesses have a significant impact on the United States economy. They represent 99.7 percent of all employers, and employ 60 million Americans or 49.1 percent of the private-labor force. Small businesses are crucial to the nation’s fiscal condition and numbered 27.8 million in 2010.
Most of the country’s small businesses are very small as 79.4 percent of all businesses have no employees, and most employers have fewer than 20 employees.
TNJ.com: How can small businesses compete on the global stage?
RW: Since 95 percent of the world’s population lives outside the U.S.; the global stage is wide open for small businesses to compete by exporting their goods and services. The SBA has several loan programs to finance exports and export-related business activities.
This past year, SBA supported $923 million in loans to small business exporters, which supported $1.7 billion in export sales. A major factor in this strong loan performance was an increase in the use of the International Trade Loan (ITL), which allows small manufacturers and businesses to expand their facilities or purchase equipment to manufacture goods that will be sold in the international market. The ITL grew by 106 percent in number of loans and 207 percent in dollar value from FY2011 to FY 2012. In fact, a small business doesn’t even have to be an exporter to benefit from the ITL. If the company sells to an Export Trading Company or an Export Management Company that exports, the small business may qualify. So, Indirect Exporting is a great way for small businesses to get their foot in the exporting door.
In addition, SBA regularly hosts trade seminars and export matchmaking events to help small business exporters, and those interested in exporting, get acquainted with everything SBA has to offer in terms of export assistance. SBA’s Office of International Trade website offers a great deal of information online on how to begin exporting, how to finance exports and foreign investment projects and much more.
Other great resources for export training and guidance are the US Export Assistance Centers, located in major metropolitan areas throughout the United States.
TNJ.com: What help is there now for minority businesses looking to expand?
RW: The Minority Business Development Agency (MBDA), an agency in the US Department of Commerce, helps create and maintain U.S. jobs by promoting the growth and global competitiveness of large, medium and small businesses owned and operated by members of the minority and Diaspora communities.
Through a national network of more than 40 business centers and a wide range of domestic and international strategic partners, MBDA provides Agency clients with the technical assistance and access to capital, contract opportunities and new markets that they need to create new jobs.
MBDA supports expanded trade through minority-owned and operated businesses as minority-owned firms have the most favorable export attributes of any sector of the U.S. economy and represent the future of export growth.
MBDA’s business advisers offer extensive experience in commercial lending and banking, financial, credit and risk analysis and general finance counseling. MBDA business development specialists provide procurement assistance to help minority-owned firms do business with the federal, state, and local governments as well as private corporations. The specialists provide identification of procurement opportunities, solicitation analysis, bid and proposal preparation, research contract award histories, post-award contract administration and certifications assistance.
TNJ.com: Are there new government contracting opportunities for small businesses?
RW: The U.S. government is the largest single purchaser of goods and services in the world, awarding approximately $500 billion in contracts every year. Last year, these programs reached more than 1 million small business owners. And more than 2.5 million entrepreneurs have accessed free online training since 2009 through SBA’s expanded online resources.
The SBA’s Office of Government Contracting & Business Development works with federal agencies to award at least 23 percent of all prime government contract dollars to small businesses and help federal agencies meet specific statutory goals for small disadvantaged businesses, women-owned small businesses (WOSB), service-disabled veteran-owned small businesses (SDVOSB), and small businesses that are located in historically underutilized business zones (HUBZone).
In addition, SBA’s 8(a) Business Development Program assists eligible socially and economically disadvantaged individuals in developing and growing their businesses through one-on-one counseling, training workshops, matchmaking opportunities with federal buyers, and other management and technical guidance.
TNJ.com: So many startups, especially minority startups, have trouble getting initial financing. What are some unique avenues for them to look into?
RW: Access to capital is critical to starting a business, purchasing inventory, expanding a business, and strengthening the financials of a firm. While the SBA does not make direct loans to small businesses, it sets the guidelines for loans, which are then made by its partners (lenders, community development organizations, and micro-lending institutions). The SBA guarantees that these loans will be repaid, thus eliminating some of the risk to the lending partners.
Last year was a record year for the SBA as it supported more than $30 billion in lending to over 60,000 small businesses across the country. SBA reengineered its CAPLines program to make sure that small businesses that win big orders have the cash-on-hand they need to service these orders.
In addition to its core loan programs, SBA also had a record year of $2.6 billion in growth capital delivered to businesses through its Small Business Investment Companies. Its new Impact Investment Fund—is focused on economically distressed regions—and an Early Stage Fund, is focused on filling gaps in angel stage investing.
SBA’s Surety Bond Guarantee (SBG) Program helps small business contractors who cannot obtain surety bonds through regular commercial channels…Through the SBG Program, the SBA makes an agreement with a surety guaranteeing that SBA will assume a percentage of loss in the event the contractor should breach the terms of the contract. The SBA’s guarantee gives sureties an incentive to provide bonding for eligible contractors, thereby strengthening a contractor’s ability to obtain bonding and greater access to contracting opportunities for small businesses. SBA can guarantee bonds for contracts up to $5 million, covering bid, performance and payment bonds, and in some cases up to $10 million for certain contracts.
SBA’s Small Business Investment Company (SBIC) Program is a public-private investment partnership created to help fill the gap between the availability of growth capital and the needs of small businesses. The SBA does not invest directly in small businesses, relying instead on the expertise of qualified private investment funds…SBICs are similar to other investment funds in terms of how they operate and their pursuit of high returns. However, unlike other funds, SBICs limit their investments to qualified small business concerns as defined by SBA regulations.
Small businesses engaged in scientific research and development (R&D) may qualify for federal grants under the Small Business Innovation Research (SBIR) and the Small Business Technology Transfer (STTR) programs. These programs encourage small businesses to undertake R&D projects that meet federal R&D objectives and have high potential for commercialization.
TNJ.com: Your thoughts on the relationship between the Obama Administration and the small business community?
RW: The Obama Administration and the small business community are working together towards a common goal— creating an economy that’s not built on the next bubble—but on small business growth, on investments in entrepreneurship, on advanced manufacturing and on increased exporting.
The economy that the Obama Administration inherited was particularly hard for America’s small businesses. Commercial credit markets were frozen and stable and well-run businesses were struggling to get the access to capital they needed to run their operations. The Obama Administration made helping these businesses a top priority. In the last 26 months, America’s economy has created more than 4.2 million private sector jobs – many of them at small businesses, largely dues to the policies implemented across the Administration over the last few years.
The President cut taxes 18 times for small businesses…The Obama Administration also passed the Recovery Act and the Small Business Jobs Act. This legislation gave the Small Business Administration more flexibility to get capital flowing again to small businesses.
The Administration has worked closely with the private sector to develop innovative solutions to America’s economic challenges. A great example of a new public-private partnership is Supplier Connection, a portal IBM Foundation built to make it easier for small businesses to tap into the supply chain of major U.S. companies. Today, there are 16 corporations signed up, including Citi, Facebook and major manufacturers like John Deere and Caterpillar. The participating companies have a supply chain of more than $300 billion – and they are looking to work with more small businesses.