Three Plans to Help Small Business

Uncle Sam will provide more assistance for small businesses in three key areas:

Federal contracting. To meet President Obama’s goal of having nearly 25% of all U.S. contracting dollars go to smalls, the administration will push for expansion of teaming arrangements -- the pairing of small companies with big firms to pursue contracts.

Such partnerships allow small businesses to benefit from the larger contractor’s expertise. For example, Azimuth Inc., a W.Va.-based software and electronic engineering company, grew from two workers to 84, partly because it participated in a mentorship program with Electronic Warfare Associates of Va. It also saw a huge jump in annual sales.

Exporting. Under a new initiative coming in September from the U.S. Small Business Administration (SBA), small firms can boost export sales by partnering with distributors or wholesalers that already do business in markets they want to reach. Doing so reduces risk, too.

State programs operating along these lines on a smaller scale have proved successful. In Massachusetts, for example, about 80% of small businesses that reach out for assistance become exporters.

“We create a detailed profile of potential clients, meet with management, conduct research, come up with marketing strategies and really work one on one with the small businesses,” explains Julia Dvorko, program director at the Massachusetts Export Center, a part of the state’s Small Business Development Center Network.

“The follow-up is up to them, though. That is one of the tests to see if they are really ready to expand their business,” Dvorko says.

Also, the U.S. Department of Commerce is working with global shipping giants FedEx and UPS on projects aimed at helping small exporters reach a larger customer base.

Still, less than 1% of small businesses nationwide export their goods or services.

Commercialization. Another SBA program, also coming this fall, will provide a capital infusion for moneymaking smalls in the renewable energy and energy efficiency fields.

The goal is to help high-quality entrepreneurs get capital, mobilize private investors and put their capital to work, according to Sean Greene, associate administrator for investment and special adviser for innovation at the SBA.

Under the program, privately owned and managed investment firms will use their own capital plus funds borrowed at favorable rates through the SBA to provide venture capital to small, independent businesses.

Using guidelines provided by the U.S. Department of Energy to determine in which companies to invest, the SBA will help match funds at a 2:1 ratio or higher, up to $300 million. The program will enable investment to go toward early-stage technology in the areas of renewable energy and energy efficiency.

There will be no cost to taxpayers, since investment fund managers must pay back the loans with interest.