Loans are the primary reason small businesses seek help from the Small Business Administration, but the new head of the agency says that more capital may not be what owners always need.
Maria Contreras-Sweet has been a small-business owner herself, most recently as co-founder of Promerica Bank, a Los Angeles-based lender focused on small companies. That experience not only helped her win the SBA post, it gives her insight into what could aid small companies the most.
COUNSELING IS IMPORTANT
"I think the counseling is almost more important than the lending. The lending is vital; we need access to capital for sure. But sometimes as I sat at the bank, business owners would ask me for a loan, and I'd say, 'You're just not managing your cash well. Let's talk about your cash flow, let's talk about the business plan. Can I help you enough so you don't need that extra line of credit?' " she said in an interview last week.
"And so many times, we'd give them a line of credit, and then it wasn't deployed accurately or effectively or efficiently."
Even though she thinks more counseling could be the key to helping owners be more successful, faster loan processing is also a priority. Last week she announced the SBA is giving banks what's called a predictive business credit scoring model, a tool to help them forecast whether a borrower is likely to repay a loan. It's designed to speed loan approvals.
STILL EVALUATING AGENCY
Two months into her tenure, Contreras-Sweet said she's still getting a handle on what's working at the SBA and what needs to be changed. One area of focus is the way the agency communicates with small businesses; she's recently launched a Twitter account to better connect with the public.
"At every key intersection of a business person's cycle, the SBA has a response to their needs," she said. "I'm not certain that has been made abundantly clear to entrepreneurs. So I think first and foremost that's something we want to focus on, how we communicate about the products, the services, the programs, that already exist."
She said the SBA needs to broaden its methods of communication. For example, she pointed to the fact that many younger people are getting their news from shows like Jon Stewart's "The Daily Show," rather than traditional news programs. "We need to understand where people are, how they're getting information," Contreras-Sweet said.
CHECKING THE GAPS
The agency is conducting an analysis of gaps in its programs to serve different segments of the population, she said.
The SBA's Office of Advocacy has issued a report about the government's inability to reach its goal of giving contracts to small businesses; in response, she said the agency is making a bigger effort to communicate the opportunities that are available. "Our website, BusinessUSA is important," she said. There, business owners can "learn about what's going on in the Agriculture Department, the Defense Department or the Department of Transportation."