Who recalls what it was like to stream music before the iTunes Store? To look up information on the internet without Wikipedia? Or, for that matter, to do a web search when Google was an upstart that only accounted for one in 10 online searches?
All of this was true the last time the Small Business Administration (SBA) was formally reauthorized by Congress. A few things have changed since then. In fact, 68 percentof small businesses operating today didn’t exist when SBA was last reauthorized. Which was, to be precise, Dec. 21, 2000, when President Bill Clinton’s signed the year’s Consolidated Appropriations Act.
Congress has not ignored SBA and America’s small businesses since then. Important programs — such as the Small Business Innovation Research program — have been reauthorized periodically and new ones, like Community Navigator, created. During COVID-19, Congress created the Paycheck Protection Program (PPP) and a new class of Economic Injury Disaster Loans (EIDL) for SBA to disburse to help small businesses stay afloat.
Congressional reauthorization of SBA is important. It provides an opportunity for lawmakers and the agency to take a step back and examine mission and structure. It offers a chance to double down on SBA’s strengths. It ensures that SBA can adapt and continue serving thousands of small businesses.
The time has come to bring SBA fully into the 21st century, to reauthorize to modernize.
Small business is an apple-pie issue: Policymakers profess to love and support business owners and entrepreneurs. With a divided government in the next Congress, Republicans and Democrats share a lot of agreement when it comes to small businesses. That’s a strong starting point. As they dig into the particulars, here are three guidelines for their consideration.
First, keep in mind the feasibility of SBA’s reach. There are 5 million small employer firms in the United States and over 20 million more small nonemployers. All of them, in theory, fall within SBA’s remit. Even if the agency’s budget and staff increased tenfold, it would be a stretch to imagine that SBA could serve this many small businesses.
Reauthorization presents a chance to ask questions such as, what technological upgrades can SBA adopt to expand online offerings and therefore reach? Many of the resource partners in its entrepreneurial development programs have made great strides in putting business education curricula online but ample scope remains for improvement. For small businesses that serve customers through a mobile app, having to locate a fax machine to submit documentation to SBA (a true story told by a small business owner) speaks volumes.
Second, form should follow function. Small businesses ceaselessly review their business model and whether internal structure fits their purpose. Reauthorization is a chance to do the same with SBA and ensure it can adequately serve small businesses. “If you look at the org chart,” one former official told us, “nothing overlaps or intersects at all.” Others pointed to the lack of coordination between, for example, the Office of Capital Access and the Office of Government Contracting.
Congress hasn’t helped matters. The nominally independent Office of Advocacy, housed within SBA, has gone without a Senate-confirmed head for nearly seven years. The office is intended to represent small businesses across the federal government. While acting chief counsels have suitably filled in, lack of action to permanently fill the role sends the wrong message to small business owners.
Third, leverage and prioritize data. No agency can expect to fulfill its charge without high-quality and timely information. Small business data has always been plagued by measurement challenges, lags and gaps and a lack of comparability. There is no comprehensive dataset, for example, on financing. Last year, the Consumer Financial Protection Bureau (CFPB) concluded: “it is not possible with current data to confidently answer basic questions regarding the state of small business lending.”
SBA cannot resolve this challenge alone. The agency collects only a tiny amount of data itself, mostly pertaining to its own lending programs. The rest is scattered across other agencies. Congress should empower SBA to lead a thorough overhaul of data collection and integration, knocking down bureaucratic walls.
The benefits of removing some guardrails that prevent data sharing far outweigh the costs incurred through agency agreements and new data collection efforts that are started because of those barriers. Customer service for small businesses can be vastly improved with better data and sharing authorities among federal agencies.
In December 2000, the number one Billboard song was “Independent Women, Part 1,” by Destiny’s Child. In it, Beyoncé sang, “I worked hard and sacrificed to get what I get.” That’s an apt mantra for small business owners. By reauthorizing SBA, Congress can ensure America’s business owners and entrepreneurs have a partner fully equipped to support their economic independence.
Dane Stangler is the director of Strategic Initiatives at the Bipartisan Policy Center and Joe Wall is the managing director of Government Affairs at Goldman Sachs and works closely with their 10k Small Business Voices Program.