SBA leader: Loans in 2005 likely to set a record for Nevada, U.S.

Michelle Swafford

Friday, July 15, 2005 | 11:08 a.m.

The Small Business Administration's top official was in Las Vegas on Thursday to discuss entrepreneurial challenges and opportunities with local small-business owners.

SBA Administrator Hector Barreto met with small-business owners and advocates at the Latin Chamber of Commerce to hear their concerns and ideas, while touting President Bush's accomplishments that benefit small-business owners. He also used the forum to urge small-business owners to speak out on pending bills that he said would affect them -- such as privatized Social Security plans and a free-trade agreement with Central America and the Dominican Republic.

Small businesses contribute 52 percent to the U.S. economy and create 75 percent of the nation's new jobs, which is why the SBA wants to be a strong community partner because "they are the engine that fuels our economy," Barreto said.

Common small-business concerns included financing, business counseling and educational resources and contract opportunities, which are all areas the SBA touts as priorities through its various programs.

The number of SBA loans -- which are funded through banks but guaranteed by the SBA -- approved during fiscal year 2005 are likely to set a record for Nevada and the nation, Barreto said.

"SBA is having a phenomenal year," he said.

The SBA is expected to guarantee about 100,000 loans, totaling more than $20 billion, during fiscal year 2005, Barreto said.

In Nevada, small-business lenders have approved 648 loans totaling more than $172.4 million, through July 12, which is a record for the state. About 7 percent of Nevada's SBA loans are 60 days or more past due.

"This office is one of my best performing offices," Barreto said of the Nevada district office. "It's normally in the top 10 in all categories."

While the SBA is proud of its increase in the number and dollar amount of its loans, its greater accomplishment is that many of the loans were approved for women and minorities.

"That's been very important to me," Barreto said. "When I came on board we weren't doing enough in those areas."

Last year, the number of loans approved for Asians and Hispanics increased 16 percent for each group and 50 percent for both women and blacks.

"We don't do it because it's the right thing to do -- it's the right thing to do -- but it's the smart thing to do," Barreto said. "These are the fastest-growing business segments."

The SBA also is lending an increasing number of loans valued at less than $35,000 through its flagship loan program -- the 7(a) program -- and that was a small-business frustration four years ago when loans started at $250,000, Barreto said.

The change could mean less funding for microlenders such as the Nevada Microenterprise Initiative, which provides loans of up to $35,000 to small-business owners who have been denied bank funding, said Anna Siefert, NMI operations manager.

"It costs $1 for every $1 we loan out, Barreto said, adding that 2,500 SBA microloans were issued last year and 10 times that many were issued through the 7(a) program. "It's an expensive program for the SBA. We're doing loans of every size and every type in our regular flagship loan program."

While the SBA did not request funding for microloan centers, -- which borrow money from the SBA and lend it to small-business owners once they complete business technical assistance classes -- Congress has appropriated money for the centers.

Other changes that occurred during Bush's term that Barreto says have helped small businesses include tax cuts to encourage capital investments and health savings accounts to ease escalating health care costs. Congress is also considering legislation that would enable small-businesses to pool together to purchase health care at lower rates through association health plans.

"Small-business people and people who work for small businesses are the only ones who don't have a good deal on health care," Barreto said, adding that the House has already approved association health plans.

While Barreto collected ideas from local small-business owners, he also presented them with a few proposals that he says would aid them.

For example, if Congress approves a free-trade agreement with Central America and the Dominican Republic, it would save American businesses about $1 billion in tariffs, Barreto said. It would also increase manufacturing and agricultural spending by $1 billion and $1.5 billion respectively, he said, adding that it also makes those countries' governments more secure.

His other point was that Social Security needs to be reformed through voluntary private retirement accounts.

"Most small businesses don't have pension plans and can't afford to contribute to an IRA," he said. " The president says let's fix this problem now. It's already broken. You can never raise taxes fast enough and high enough to fix the hole in Social Security."