SBA’s Future in Limbo: What It Means for Your Business

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Karen Mills, who’s led the Small Business Administration since early 2009, has announced her resignation. No successor to this Cabinet-level position has been named or suggested, perhaps because there’s a possibility that the SBA will be combined with other agencies and that the new Cabinet position will be an overseer of these multiple agencies. Adding to the potential of harm to entrepreneurship is the recently announced sequestration of government funding for thousands of businesses that rely on federal funding.

Since its founding in 1953 as an independent agency to the federal government, the SBA has been a source of economic and moral support to new businesses, helping companies by facilitating loans, finding venture capital and guaranteeing surety bonds. Mills defined the SBA role in a speech during the May 2012 National Small Business Week conference, by saying, “We’re the agency that works with the businesses that create two out of every three net new jobs in the U.S.”

 President Obama elevated the SBA to a Cabinet level agency, describing it as an “under-appreciated agency.” He has, however, also proposed merging the SBA with several commerce-related federal agencies, in a bid to make government more efficient. The head of the new agency, which will serve businesses of all sizes, would be part of the President’s Cabinet. Congress has not granted him the authority to do so, and it’s unclear if the proposal will be raised again during this term.

It’s possible that consolidating government programs for business in one agency could make it easier for small businesses to find the information and resources they need, but merging the SBA with other agencies could dilute its direct effectiveness.

The programs discussed as part of the merger with the SBA include the business and trade programs at the Department of Commerce, the Office of the U.S. Trade Representative, the Export-Import Bank, the Overseas Private Investment Corporation, and the U.S. Trade and Development Agency.

According to Jeffrey Zients, the federal chief performance officer and deputy director for management at the Office of Management and Budget, the reorganization would help businesses find the help they need more quickly, and would save taxpayers around $3 billion over 10 years. It would eliminate between 1,000 and 2,000 administrative support positions.

Arguments against the merger include the dilution of direct support specifically for small businesses, which could lead to a greater imbalance of the interests of big business over entrepreneurs. Pros include consolidation of resources, and would be especially helpful for small companies looking to enter the export market.

If the across the board cuts are fully implemented as anticipated, nearly 1 million jobs in the small business arena could be lost. These are businesses that subcontract and supply to larger businesses that are prime federal contractors. Government research will also be cut, which could affect a large number of small businesses owners who rely on medical research funding.

The irony is that sequestration was never intended to go into effect. But it has, and the consequences will play out, one way or the other. Some say the media and politicos are playing Chicken Little – “the sky is falling,” but others say this is the only way to get the budget balanced again.

Point of Sale News will keep you updated on the effects of the government cutbacks on small business throughout the coming months. Meanwhile, we encourage small business owners to continue to keep abreast of the latest in POS and bar code technologies to maximize customer care and business efficiency, and if concerned about the future of their businesses, to contact their representatives in the House and Senate. 

 


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PointOfSale.com is a leading industry news site for the point of sale and payments industry.We are also the go-to resource for small business owners that want expert tips and inspiration on how to run a successful business. Collectively, our team of experts has decades of POS, payments, and small business experience.