Administrator outlines accomplishments of SBA

The following information is excerpted from the July 20 testimony of Aida Alvarez, Small Business Administration administrator, before the Senate Committee on Small Business.

According to research done by SBA's Office of Advocacy, small businesses:

Represent 99 percent of all employers and 52 percent of the private work force;

Employ 38 percent of the private workers in the high-technology field;

Provide virtually all the net new jobs;

Provide 51 percent of private sector output;

Provide 35 percent of all Federal contract dollars;

Represent 97 percent of all exporters, with the number of small-business exporters doubling during the five year period from 1992 to 1997;

And provide more than half of all innovations.

The SBA was created nearly 50 years ago to ensure a strong and vibrant small business sector. Many things have changed in the half-century, but our mission stays the same to help small businesses start, grow and succeed.

The New SBA

SBA's work force and the way we deliver programs have changed dramatically in the past decade. Since 1990, our loan portfolio has grown from $17.5 billion to about $50 billion. At the same time, the number of our employees has decreased 22 percent.

Working closely with Congress, SBA has recognized where the private sector could perform our tasks more efficiently, and has contracted out or delegated those activities. SBA is delegating greater authority than ever before to its lending partners.

This transition permits greater use of staff for community outreach and greater attention to more complicated loan matters.

Most importantly, according to our auditors, we are making the transition in a manner that is financially safe and sound.

We have laid out an aggressive agenda to improve our internal management in the president's FY 2001 budget.

We requested $13 million for systems modernization to improve our lender oversight, risk management and program evaluation activities; $7 million for information technology infrastructure support; and $4 million to train and transform our work force.

Accomplishments

Since 1992, the SBA has helped almost 375,000 small businesses get more than $80 billion in loans, more than in the entire history of the agency before 1993. No other lender in this country perhaps no other lender in the world has been responsible for as much small business financing as the SBA has during that time.

Since 1958, SBA's venture capital program has put almost $30 billion into the hands of small-business owners to finance their growth.

More than half of that amount has been invested since 1992 in more than 13,000 businesses.

Last year, the SBA approved $3.4 billion in loans to more than 12,000 minority-owned businesses, three times the amount approved in 1992. The $3.4 billion amounts to almost 28 percent of all SBA loan dollars last year, a record.

Since 1992, the SBA has approved more than $18 billion in loans to nearly 80,000 minority-owned businesses, more than double the amount recorded during the entire previous history of the agency.

We've reduced our staff level by 22 percent in the past decade, from just more than 4,100 employees in 1990 to around 3,100 in 1999. At the same time, we've dramatically increased the size of our loan portfolio. In fact, from 1953 to 1993, SBA's portfolio grew to $25 billion. From 1993 through 1999, the portfolio nearly doubled to about $50 billion.

Since 1994, more than 140 new Small Business Investment Companies have been licensed with initial private capital exceeding $2 billion, more than the total private capital raised in the prior 35-year history of the program. Those SBICs participated in an estimated 53 percent of all institutional venture capital financing deals in the United States in fiscal year 1999.

In addition to financial assistance, SBA offers business development services to between 900,000 and 1 million small businesses each year through the Small Business Development Centers, SCORE, Women's Business Centers and others.

At the beginning of the decade, the Internet as we know it did not exist. Today, SBA has an award-winning Web site that offers entrepreneurs free online business planning and other valuable assistance. SBA's Web site receives more than 9 million hits per week.

SBA made more than 7,300 disaster business loans for more than $402 million. These loans have enabled businesses to rebuild, saving almost 35,200 jobs. In addition, SBA has made almost 29,000 home disaster loans for $534 million.

SBA just conducted its first sale of business loans to the private sector, and realized an estimated $90 million premium in excess what SBA would have received had we held the loans to maturity.

Our ongoing systems modernization initiative will completely overhaul our programmatic, financial and management systems, resulting in better data collection and greater ability to measure the impact of SBA's programs.

SBA represents less than 5/100th of 1 percent of the federal budget and the yearly taxes paid by just one of our success stories, Intel, more than pays the costs of running the agency's annual budget.

Changes at SBA

Historically, SBA has provided four types of service to the small-business community: credit/capital assistance (including disaster lending), procurement and government contracting help, business development, and advocacy.

Today, these products and services continue, but, in addition, the agency functions as a voice for small business in the face of macro-economic changes and globalization of markets.