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SBA Reaching Out to Entrepreneurs

July 26, 2004 – The Small Business Administration wants to get the word out about the services they offer to entrepreneurs and SBA's top gun is taking the news on the road to communities across the country.
Hector V. Barreto, national SBA administrator, has visited 55 of the 77 Small Business Development Center facilities in the United States and its territories as part of his commitment to the entrepreneurs he serves.
"I can't ever recall an administrator coming to the V.I. in an official capacity," Carl C. Christensen, local SBA officer in charge, said Monday as he introduced Barreto to a group of local bankers and SBA and SBDC officials.
Barreto's message was clear: small businesses drive the economy. The 25 million small businesses in the United States, he said, employ 50 percent of the workforce.
"They are the engine that fuels the economy," and the SBA provides much of the capital – $220 billion since its inception in the 1950s – that Barreto called "the oxygen that small businesses breathe."
But, Barreto said, money, in the form of loan guarantees, is not the only thing SBA offers to small businesses. Information, technical training and free advice can and should, he said, be acquired even before an entrepreneur goes after capital. That's where the local SBDCs come in.
In the Virgin Islands, as elsewhere, the Small Business Development Center provides the technical assistance to put together loan packages so entrepreneurs can go to one of four institutions providing loans in the territory. But sometimes, according to Barreto, the SBDC will advise it's not time for an individual to start a business. "It may not be a matter of whether you get into business," Barreto said, "just a matter of when."
He said, "If you are really serious about getting into business, we'll help you."
Why is the SBA so committed? Because, Barreto said, "Small businesses are creating most of the new jobs."
The SBA provides guarantees to banks, as opposed to being a direct lender. In the U.S V.I. the lenders are FirstBank Virgin Islands, Banco Popular, V.I. Community Bank and the Government Development Bank.
Larger loans specifically earmarked for real estate or large equipment are also provided through the 504 loan program by what Barreto called "certified development companies." He said , "I have $5 billion I can put in the hands of small businesses for buildings and large equipment."
He said last year he only used $3 billion, leaving "$2 billion on the table."
Along with money and training, SBDCs and the SBA also work hard to put small business owners in touch with larger business or government agencies seeking their products and services. SBA does this face to face, but also in a virtual setting on-line through www.businessmatchmaking.com. Barreto said 20,000 appointments between small businesses and procurers have been made through the site.
Because many small business as well as banking institutions shy away from SBA guaranteed loan program because of the perception that they'll be buried in paperwork, the administration has also addressed that electronically, Barreto said, with a program called E-trans.
Barreto said 600,000 new businesses start up every year. "You don't see them right away," because they are started part time or in people's homes. Of that number 50 percent will fail sometime before they hit their fifth year in business. But SBA lending institutions don't lose much more than is lost on commercial loans – which have about a 6 percent failure rate, Barreto said.
He said entrepreneurs can find almost everything they need to know by going to the administration's website at www.sba.gov , which Barreto said gets a million page requests a week.
Unfortunately, according to Phyllis Bryan, SBDC business counselor on St. Croix, the center doesn't see clients sometimes until they, "have already spent all their money and then they come back and say, 'Now what do I do.'"
That was one of the messages repeated at Monday's roundtable discussion, held at the SBDC offices in Nisky Center: Come to SBDC before starting your business – they can help.

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