Who remembers what it was like to stream music before the iTunes Store? Want to find information on the Internet without Wikipedia? Or, for that matter, doing web searches when Google was an upstart that accounted for only one-tenth of online searches?
All of this was true the last time the Small Business Administration (SBA) was formally reauthorized by Congress. Since then, some things have changed. In fact, 68 percent of small businesses operating today did not exist when the SBA was last reauthorized. That’s December 12th, to be exact. On January 21, 2000, President Bill Clinton signed the year’s joint appropriations bill.
Since then, Congress hasn’t ignored the SBA and America’s small businesses. Important programs – such as the Small Business Innovation Research Program – have been regularly reauthorized, and new ones have been created, such as the Community Navigator. During COVID-19, Congress created the Paycheck Protection Program (PPP) and a new class of Economic Injury Disaster Loans (EIDL) for the SBA to help small businesses stay afloat.
Congressional reauthorization of the SBA is important. It provides an opportunity for lawmakers and the agency to step back and examine the mission and structure. It provides an opportunity to double down on the SBA’s strengths. It ensures that SBA can adapt and continue to serve thousands of small businesses.
It’s time to bring the SBA fully into the 21st century and modernize it with reauthorization.
Small business is an apple pie problem: policymakers claim to love and support business owners and entrepreneurs. With a divided government in the next Congress, Republicans and Democrats have a lot in common on small business issues. This is a strong starting point. Here are three guidelines for them to consider if they get down to the details.
First, keep in mind the feasibility of the SBA’s sphere of influence. There are 5 million small employer businesses and more than 20 million small non-employer businesses in the United States. In theory, all of this falls within the remit of the SBA. Even with a tenfold increase in the agency’s budget and staff, it’s a stretch to imagine the SBA serving so many small businesses.
Reauthorization presents an opportunity to ask questions, such as, what technology upgrades could the SBA employ to expand the online offering and thus reach? Many of its resource partners in its Entrepreneurship Development Program have made strides in bringing business education courses online, but there is still much room for improvement. For a small business that serves customers through a mobile app, having to find a fax machine to file with the SBA (true story from one small business owner) says it all.
2. Form should follow function. Small businesses are constantly reviewing their business models and whether their internal structures are fit for purpose. Reauthorization is an opportunity to do the same with the SBA and ensure it adequately serves small businesses. “If you look at the organizational chart,” one former official told us, “there is no overlap or intersection at all.” Others point to a lack of coordination, for example, between the capital acquisition office and the government contracts office.
Congress did not help solve the problem. The nominally independent advocacy office, housed within the SBA, has been without a Senate-confirmed head for nearly seven years. The office is designed to represent small businesses across the federal government. While the acting general counsel has been properly filled, the lack of action to permanently fill the position sends the wrong message to small business owners.
Third, leverage and prioritize data. No agency can expect to fulfill its mandate without high-quality and timely information. Small business data has been plagued by measurement challenges, lags and gaps, and a lack of comparability. For example, there is no comprehensive dataset on financing. Last year, the Consumer Financial Protection Bureau (CFPB) concluded that “current data cannot confidently answer basic questions about the state of small business lending.”
SBA cannot solve this challenge alone. The agency itself collects only a small amount of data, mostly related to its own lending programs. The rest are scattered among other institutions. Congress should empower the SBA to lead an overhaul of data collection and integration, tearing down bureaucratic walls.
The benefits of removing some of the guardrails that prevent data sharing far outweigh the costs incurred through proxy agreements and new data collection efforts initiated as a result of these barriers. Customer service for small businesses is sure to improve through better data and shared permissions among federal agencies.
In December 2000, the No. 1 Billboard hit was Destiny’s Child’s “Independent Women, Part 1.” In it, Beyoncé sings, “I work hard and sacrifice to get what I get.” It’s an apt mantra for small business owners. By reauthorizing the SBA, Congress can ensure that America’s business owners and entrepreneurs have a partner fully capable of supporting their financial independence.
Dane Stangler is director of strategic initiatives at the Bipartisan Policy Center and Joe Wall is managing director of government affairs at Goldman Sachs and works closely with their 10k Small Business Voices program.