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SBA Administrator brings personal perspective to challenges

Melinda Waldrop //May 5, 2022//

SBA Administrator brings personal perspective to challenges

Melinda Waldrop //May 5, 2022//

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Isabella Casillas Guzman learned firsthand what makes a successful small business growing up in California, where her father owned a chain of veterinary practices.

“What I admired most about my father was his relationship in the community. Everyone who walked in that door was so special to him and vice versa,” Guzman said. “The impact that he made in his neighborhood was truly remarkable.”

Guzman, sworn in as the 27th Administrator of the Small Business Administration on March 17, 2021, spoke with the Columbia Regional Business Report after a stop at Benedict College as part of a bus tour supporting National Small Business Week. Benedict became one of two historically Black colleges and universities to launch a Women’s Business Center in 2020.

“Focusing always — from having worked in his business — on that customer-first experience is what drives me,” said Guzman, who represents the country's 35.2 million-plus small business owners. “I look through the lens of a customer first at all times in our design and implementation. That informs everything else, because you look at who that client is — and it’s a changing face of entrepreneurship — you look at what their needs are and seek to transform the SBA to better serve them. … My dad was able to pursue his American dream, and my grandmother before him. I really appreciate the value of (entrepreneurship) and want to be able to bring it more communities with equity.”

Extending that equity has become especially important as the nation’s small business continue to recover from repercussions stemming from the COVID-19 pandemic. The National Federation of Independent Businesses’ Small Business Optimism Index decreased in January to 97.1, down 1.8 points from December, with 22% of business owners reporting inflation as their single most important problem. Supply-chain tie-ups and difficulty in hiring enough workers are two other concerns causing small business confidence to shrink.

A report by technology company Meta, cited in a March 2022 Business Insider article, found that businesses run by underrepresented founders were 14% more likely to report lower sales than other businesses. The report, which surveyed 5,324 U.S. small business leaders and more than 24,000 worldwide, found that 51% of Black-owned businesses were experiencing record-low sales compared to January 2021, versus 36% of all businesses in the U.S. 

Despite those numbers, Guzman said minority- and women-owned businesses, perhaps out of pandemic-generated necessity, are forming the backbone of the country’s economic recovery, noting that those businesses have created two-thirds of the 7.4 million jobs created since President Joe Biden took office.

“No different than any other time over the past 10 years, women and people of color are the ones starting businesses at high rates,” she said. “We saw 5.4 million people decide to start a business in 2021. That’s 20% higher than any year on record, and so this tour is to celebrate all those new entrepreneurs, those established businesses that have had to pivot and adapt during the pandemic, and make sure that we can get them the resources they need to survive. And that’s capital to fund businesses, that’s market access to grow businesses with revenue opportunities with the federal government or online through digital markets, and that’s networks and support.”

In 2021, the SBA administered nearly $416.3 billion in emergency relief to more than 6 million small business through initiatives including the Paycheck Protection Program, COVID-19 Economic Injury Disaster Loans and loans targeted at hard-hit industries such as retail and hospitality.

“As they reopen and recover their revenues, they’re still facing headwinds, and the president is committed to dealing with some of the challenges around inflationary pressures, the global supply chain disruptions, as well as workforce challenges,” Guzman said. “SBA has a role to play. Of course, our small businesses are a big part of expanding our productive capacity in the United States. That means making more here in America and strengthening our supply chain and strengthening our infrastructure.”

There are calls to expand that role from those who support the SBA becoming involved in direct loans to small business owners going forward, particularly smaller-dollar loans that bigger banks and even Community Development Financial Institutions find hard to make work with their balance sheets. Noting that loans through pandemic federal relief averaged just more than $40,000, Guzman said the SBA would welcome the chance to “help our lending network meet needs of borrowers and leverage the balance sheet of the federal government to underwrite these loans and have them on their books. That could help our lenders as well.

“We don’t want to replace or compete. We want to be that true lender of last resort and support the private financial markets. … It was part of our proposals within Build Back Better and the president’s agenda. While Congress did not move forward on that, we continue to study it and explore the possibility of SBA doing direct lending. We have the authority. We’ve been doing it since 1953 when we started doing disaster loans, and we’ve proven in 2021 with COVID EIDL that we’ve been effective at getting funds into the hands of businesses.”

Guzman is also focused on digital technology, an area of emphasis during her tenure as director of the California Office of the Small Business Advocate. In that role, she created Get Digital CA, an initiative aimed at increasing technology and e-commerce adoption.

“We know that micro-entrepreneurship flourishes where there’s high-speed internet,” she said, adding that the $1.2 trillion bipartisan Infrastructure and Investment Jobs Act signed into law Nov. 15 commits more than $60 billion to expanding rural broadband access.

Guzman said as the country continues to forge a post-pandemic path, the SBA is committed to expanding access to its services through broader distribution networks in multiple languages.

“I feel there’s so much opportunity that could be unlocked if we better supported all of our small businesses and innovative startups,” she said. “I think it’s a unique moment in time and history, especially because of the pandemic and attention on small businesses and the impact that they have.”