A Sharper Focus on Small Business

President-elect Obama plans to bolster the federal agency that gives support to small firms.

By Jonathan N. Crawford, Researcher-Reporter, the Kiplinger letters

January 13, 2009

The Small Business Administration (SBA) will get a beefier post in the Obama regime. Under President Bush, the agency saw its funding fall, was plagued by a host of controversies and lost the prestigious Cabinet level status conferred on it by President Clinton. But Barack Obama is signaling greater respect for the agency.

"There are signs that the SBA will play a more prominent role. The transition team has reached out to a number of small business organizations, and Obama has a very open ear [to small business needs]," says Molly Brogan, a spokeswoman for the National Small Business Association.

Given the precarious state of the economy, increased interest in Washington in small business isn't a surprise. More than half of gross domestic product comes from businesses with fewer than 500 employees.

Obama's pick to head the SBA, Karen Gordon Mills, comes with a wealth of experience investing in small businesses, gold-plated academic credentials -- a Harvard MBA -- and a track record of working with government to foster entrepreneurship.

Obama took care to fill the slot fast. Mills is the first SBA chief-in-waiting in decades to be named before inauguration. "That was a signal she's going to play a fairly significant role around the policymaking table," says Karen Kerrigan, president and CEO of the Small Business & Entrepreneurship Council.

"Clearly the challenge lies in what [Mills] can do for the SBA, in terms of rebranding and improving the image of the agency, and working to rebuild those programs," such as the flagship 7(a) loan program, which has seen the number of loans plummet, says Kerrigan.

Key lawmakers also want the SBA back in the Cabinet, not to mention more funds. The heads of the House and Senate small business committees plus the top GOPer on the Senate committee are urging Obama to elevate the agency's status once again.

Cabinet level clout could allow the SBA to play an even larger role on tax policy, health care reform, international trade and economic development.

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