Barreto: SBA Leader Says Economy Has Turned Corner

As the administrator of the U.S. Small Business Administration, Hector
Barreto oversees financial and business development programs for the
nation’s entrepreneurs. The SBA has a portfolio of more than $45
billion of direct and guaranteed business loans and disaster loans. The
SBA is the nation’s largest financial backer of small businesses.

Barreto is an entrepreneur himself. He founded Barreto Insurance and
Financial Services in California and later started another business as
a securities broker/dealer specializing in retirement plans. Barreto,
who was appointed to the top job at the SBA by President George Bush in
2001, was in Milwaukee recently to deliver the keynote address at the
National Credit Union Administration’s economic empowerment summit.
During his visit, he spoke with Small
Business Times
managing editor Andrew Weiland. The following are
excerpts from that interview.

SBT: What is the state of the SBA?



Barreto: We’re on track to have
the best year in our 51-year history. We’ll do more loans this year
than ever before. We’ll reach more communities, especially the
fastest-growing segments of small business, which are women-owned and
minority-owned small business. We’ll do more veterans loans, we’ll do
more rural loans. We are also going to train more people. “This year,
we’re on track to train over 2.1 million small business persons. We’ll
facilitate more contract opportunities for small businesses as well.

We have a number of different initiatives that match up small business
with federal agencies and a lot of Fortune 500 companies.

We never used to do that before, and we set up about 20,000 of those
appointments over the last two years. The federal government just
reported our contracting numbers for the last year. We surpassed the
year before by over $13 billion. We did $65.5 billion – 24 percent of
all federal contracts went to small businesses.”

SBT: How would you describe the state
of the U.S. economy?




Barreto: Many small businesses
are feeling much better than they were a year ago. They’re starting to
hire people again. Also, they are purchasing more. A couple years ago
when we would visit those small businesses, they would say, ‘I think
the economy could turn around, but I’m not sure yet. I’m not going to
buy that piece of equipment, I’m not going to buy that technology I
need and I’m definitely not going to hire anybody.’

Well, over the last year, that’s changed. Now a lot of these small
businesses are saying, ‘You know, once that jobs and growth package got
passed in Congress and incentiveized us by lowering our top marginal
tax rate and by quadrupling the business deduction, that was kind of
the green light for us to go out and start doing those things that we
hadn’t been doing before. On top
of that, what we started noticing is our customers started coming back,
which made us even more bullish.’

Now, having said that, small businesses still have challenges. They’re
concerned those tax rates are going to go back up. They tell us that
the fastest-growing cost is health care and that they need some relief.
They’re seeing double-digit increases in their health insurance
premiums, whether they use the plan or not. So, we talk to them about
the things we’re doing at the federal level, for example health savings
accounts, which is a great tool for them to lower their premiums.

One of the other things small businesses are worried about is excessive
regulation. The SBA has been able to document that we’ve saved small
businesses over $6 billion in regulatory costs, and from the inception
of the administration, over $30 billion. We need to do more of that.
It’s not to say that all regulation is bad, but when there is
regulation that is redundant, excessive regulation that hasn’t really
been looked at for years, we can do a better job of at least
streamlining those processes and eliminating redundancies.

Another area they are concerned about is excessive lawsuits. Many small
businesses are worried they are one bad lawsuit away from going out of
business. They’re also interested in new opportunities, new markets. I
referenced federal procurement, but also they are interested in
international trade. And it’s not surprising when you consider the fact
that 97 percent of all companies in the United States that do exporting
and importing are small businesses – over 225,000 companies. The
challenge for those companies is they only represent 30 percent of all
the trade that’s going on, so there truly is an opportunity to grow
that pie for them.”