This article is reprinted by permission from NextAvenue.org.
There’s nothing small about the U.S. Small Business Administration. Isabella Casillas Guzman, who was sworn in March 17 as its 27th administrator and the first Latina in that role, gets it.
“I want all small businesses to feel like the giants that they are in our economy,” Guzman told me when I interviewed her last week. “In order to do that, we need to be as entrepreneurial as the small businesses we serve.”
There are more than 30 million of them. Small businesses account for 44% of U.S. gross domestic product, create two-thirds of net new jobs and employ nearly half of America’s workers.
The big focuses for SBA administrator Guzman
After speaking to Guzman about her plans for older entrepreneurs and minority entrepreneurs, I was guardedly optimistic.
Mostly, that’s because she stressed the importance of making it easier for people to navigate the often Byzantine resources provided by the SBA and conceded that was a troubling issue. Importantly, Guzman focused on the critical need to make it easier for small businesses to tap into capital to launch.
That said, I was only allotted a slim 15 minutes to speak to her via a Microsoft Teams meeting, so there was understandably a dearth of specifics and a heavy dose of political rhetoric.
Before I tell you about our conversation, a little context.
Guzman, who was the SBA’s deputy chief of staff under President Barack Obama, is the chief advocate and voice for America’s small-business owners and prospective entrepreneurs in Washington, D.C. She leads a staff of over 9,000 and oversees the SBA’s portfolio of loans, disaster assistance, contracting and counseling.
That’s the basic job description. But you need to ramp it up more than a few notches for Guzman’s tenure.
The agency is in the midst of executing aspects of President Joe Biden’s $1.9 trillion American Rescue Plan assisting the droves of small businesses pummeled by the pandemic.
As of April 2020, nearly one-third of small and medium-size businesses have stopped operating, according to the State of Small Business Report by Facebook and the Small Business Roundtable. More than half of the nation’s smallest businesses are no longer operating. That’s especially bad for women, who run most of these businesses.
See: A record number of small businesses can’t find enough workers to hire, NFIB finds
And a 2021 Federal Reserve Bank survey found that 30% of U.S. small businesses (9 million) don’t expect to survive 2021 without additional government assistance.
Guzman told me her aim is “to deliver critical relief swiftly and efficiently to our hardest-hit small businesses and also focusing on recovery and how we can better serve our small businesses as they look to grow and expand our economy into the future.”
Some cleanup work to do
But it’s early innings, so details are scarce.
Guzman and the SBA have some cleanup work to do.
Much of the money in the Trump administration’s federal Paycheck Protection Program for small businesses failed to actually reach them. More than half of the roughly $525 billion in loans doled out through November 2020 went to just 5% of the recipients, the Washington Post revealed. About 600 mostly larger companies, including dozens of national chains, received the maximum amount allowed under the program.
Similarly, more than half the money from the Treasury Department’s coronavirus emergency fund for small businesses went to just 5% of recipients.
Check out: How 3 nurses opened a restaurant between shifts during COVID
Guzman’s also aware of the SBA’s past customer service and tangled technology shortcomings. “We need to be more customer-first and leverage technology to be forward thinking on how we streamline our processes,” she said. “Navigating the government is a challenge.”
And from where I sit, her changes are still in the “let’s look at” category, particularly for older small-business owners who could use some help. As I wrote on Next Avenue in April, many entrepreneurs over 50 were slammed by the pandemic, which took a serious toll on their personal finances.
Guzman said she has asked her staff “to be very introspective on how we can look at every service, every program and every offering and ask ‘Is this accessible to everyone?’ to make sure that we have accommodations in every regard to support our small businesses. And many of our second-act entrepreneurs are the strength of our entrepreneurial base.”
Older entrepreneurs in the pandemic
Some older entrepreneurs I’ve spoken with recently, who lost their jobs during the pandemic, are pursuing new ventures. For instance, Dave Summers, of Knoxville, Tenn., 61, was laid off as director of digital media productions at the American Management Association and has launched his own business as a digital media producer, coach and animator creating podcasts, webcasts and video blogs.
Guzman’s advice for those looking to start businesses or keep their businesses afloat: “We have a great network of small business development centers, SCORE chapters and women’s business centers to help businesses think strategically about what they need to do.”
The SBA’s regional Small Business Development Centers and Women’s Business Development Centers offer entrepreneurship courses. And SCORE, a nonprofit affiliated with the SBA, provides mentoring and educational workshops nationwide.
Guzman is especially interested in serving women and minority business owners and prospective ones. That could help narrow racial wealth gaps. In 2019, the gap in business ownership between Black and Latino households, relative to white households, accounted for 25% of the overall racial wealth gap between these groups.
“The Biden-Harris administration is really committed to equity and I’m totally supportive of that, as I recognize that there’s a huge opportunity gap,” she said. “We know that women and people of color are starting businesses at higher rates than the population, yet oftentimes face barriers that they’re not able to grow successfully.”
Helping small-business owners with capital
Guzman was frank that the biggest stumbling block for new business owners is money.
“I think access to capital is really key,” Guzman said. “It’s such a brave act to jump into small business ownership and start something of your own, to create a new technology or a new innovation. Having support ecosystems will help support entrepreneurship and especially capital.”
Also see: Sweet return: A post-COVID recovery is baking on Duane Street
And, she added, “we really need to focus on our startups and what we can do to help facilitate more runway and access to capital to support them. We know how critical that is for job creation.”
One of the first things Guzman did when taking over at the SBA was to increase the agency’s economic injury disaster loan (EIDL) program, increasing the amount of capital owners in disaster areas who’ve suffered substantial economic injury could borrow from $150,000 to $500,000. Interest rates for these fixed-rate, 30-year loans are 3.75% for businesses and 2.75% for nonprofits.
This change has proven so popular, Guzman said, “that we provided additional funding for Targeted Economic Injury Disaster Loan advances for low-income communities in order to help support them during this time.”
Funds of up to $10,000 are available to applicants in low-income communities who previously received an EIDL loan for less than $10,000 or those who applied but received no funds due to lack of available program funding.
Her advice: look for federal contracting opportunities
Guzman recommended that older entrepreneurs and women and minority entrepreneurs look into federal government contracting opportunities “especially as we make some key investments, hopefully with the American Jobs Plan, into our infrastructure and innovation systems, supply chains and manufacturing.”
According to the Biden administration, only about 10% of federal agencies’ eligible contracting dollars typically go to small disadvantaged businesses, a category where Black-owned, Latino-owned, and other minority-owned businesses are presumed to qualify.
The SBA’s Women-Owned Small Businesses Federal Contracting program helps ventures compete for federal contracts and the SBA works with federal agencies to achieve the government’s 5% contracting goal for women-owned small businesses.
Guzman knows the inside scoop on federal contracts for small businesses. She co-founded GovContractPros, a firm that helps government contractors access and navigate the $500 billion federal marketplace.
Related: Adapt and reinvent: How tough times can be your chance to start a business
Earlier in June, the Biden-Harris administration announced it would use the federal government’s purchasing power to grow federal contracting with small, disadvantaged businesses by 50%, translating to an additional $100 billion over five years.
Moreover, it plans to invest $31 billion in small business programs that will increase access to capital and provide mentoring, networking and other forms of technical assistance to socially and economically disadvantaged businesses.
These initiatives will establish a new loan program for the smallest businesses; develop new loan products to support small manufacturers and businesses that invest in clean energy and launch a new Small Business Investment Corporation to make early-stage equity investments in small businesses, with priority for those owned by socially and economically disadvantaged individuals.
The American Jobs Plan will also invest billions in SBA technical assistance programs incubating and offering mentoring and technical assistance to 8(a) firms for small, disadvantaged businesses; encourage Fortune 500 firms to diversify their procurements and bring more socially and economically disadvantaged businesses into federal research and development programs.
Related: Small businesses still need support—5 ways you can help them recover
Older entrepreneurs must be prepared on many levels since they “wear multiple hats,” Guzman said. “If somebody is considering starting at this stage, I think it’s really important to arm yourself with the financial acumen, the marketing acumen and the technological acumen in order to really compete successfully.”
Where to get training and mentoring
I’m a big fan of getting education and adding skills before you launch. You might also seek out a small business support group, as I wrote about for Next Avenue.
There are a variety of virtual programs aimed at older prospective entrepreneurs. These include:
GetSetUp, which offers classes on launching a home-based business and the ins and outs of e-commerce
The free webinars and workshops from AARP Foundation’s Work for Yourself @50+ initiative
And online entrepreneurship courses on platforms like Coursera and edX; LinkedIn Learning has an assortment, too
As our speed date conversation neared the end, I asked Guzman for any final thoughts.
“One of the most important things for small businesses, and to open up opportunities for growth, is to help fight and combat COVID-19 with vaccinations,” she said. “This is really critical for our small businesses, because our main streets or marketplaces or supply chains are not going to normalize until we declare our independence from COVID-19. ”
The COVID-19 vaccine and business owners
Guzman said she’s trying to get the word out that there’s a tax credit for small businesses to give their employees paid time off to go get vaccinated, as well as time to recover.
The Paid Leave Credit for Vaccines, part of the American Rescue Plan, is offered to employers with under 500 employees through Sept. 30.
Now that’s worth clanging some pots and pans over.
Kerry Hannon is the author of “Great Pajama Jobs: Your Complete Guide to Working From Home.” She has covered personal finance, retirement and careers for the New York Times, Forbes, Money, U.S. News & World Report and USA Today, among others. She is the author of more than a dozen books including “Never Too Old to Get Rich: The Entrepreneur’s Guide to Starting a Business Mid-Life.” Her website is kerryhannon.com. Follow her on Twitter @kerryhannon.
This article is part of America’s Entrepreneurs, a Next Avenue initiative made possible by the Richard M. Schulze Foundation and EIX, the Entrepreneur Innovation Exchange.
This article is reprinted by permission from NextAvenue.org, © 2021 Twin Cities Public Television, Inc. All rights reserved.
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