Obama’s Pick for Administrator of the Small Business Administration

Posted on January 15, 2009

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My personal opinion on the economic crisis is that it is going to be the small business owners that pull us out.  That said, they have got a ways to go: the home equity lines, the car loans, and the credit cards are now a traditional source of financing.  The outlook looks dim, and it seems to be getting worse with more small businesses using credit cards.  (See Small Business Outlook Dims.)

Enter on the scene Obama’s SBA pick, Karen Gordon Mills, of whom little has been written in the main stream media. (See Obama Picks Venture Capitalist as New SBA Administrator.)

Perhaps the lack of fanfare is because the SBA does not touch many small businesses.  Its function is limited and while extremely useful to some, it is of no use to others.  It serves to support a niche of the population (the entrepreneur) that typically does not want or ask for advice and support (although they probably need it). Their financing reaches only a fraction of small businesses, and even that number is dwindling (see related post, Small Business Administration – Political Heads Up).

The choice of Ms. Mills is curious as well because she is a venture capitalist.  VCs have a goal to grow companies; in fact, they usually grow them to such scale and with such speed that the companies will no longer be small, and thus no longer within the purview of the SBA.  Consequently, the SBA has an awkward and reluctant relationship with the VC world.

I think Ms. Mills can do a lot of good, however, if she focuses on small business as a whole and realizes that most small business cannot and should not have as their capital model venture capitalism.  If Ms. Mills focuses on developing financing programs that work for all stakeholders (including business lenders and business borrowers), and if the SBA will foster the small business community as a whole,  then hopefully it will provide meaningful help to the entrepreneurial community.  We shall see.

Mike Goodrich, Goodrich Law Firm, LLC

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