By Kent Hoover

Critics say the U.S. Small Business Administration's proposed $798 million budget for next year fails to invest enough money in growing entrepreneurship by not adequately funding training and counseling for small businesses.

The Bush administration wants to eliminate the Program for Investment in Microentrepreneurs, which provides technical assistance to low-income individuals who would like to start their own businesses, and end funding for the Business Learning, Innovation, Networking and Collaboration program, which encourages large companies to provide mentoring and business opportunities to small businesses.

The proposed SBA budget calls for no increases in federal support for the nation's 1,000 Small Business Development Centers and 92 Women's Business Centers, despite rising demand for their training and counseling services. Technical assistance for recipients of microloans also remains flat, despite this program's growth.

"Shortchanging and sometimes eliminating successful efforts to help business owners ... is a mistake," said Sen. John Kerry, D-Mass., chairman of the Senate Small Business and Entrepreneurship Committee. "We will not allow a mistake to become a law."

SBA Administrator Hector Barreto says the PRIME and BusinessLINC programs are unnecessary because other government programs provide the same services. Republicans on the House Small Business Committee agree that PRIME should be eliminated and say killing BusinessLINC might be acceptable "if the SBA made more of an effort to link up existing private-sector efforts with interested small businesses, particularly from low- and moderate-income areas," according to a letter to the House Budget Committee.

Washington's most powerful small-business lobbying group also is not upset by the proposed cuts to SBA programs.

"The vast majority" of small businesses are "flourishing without government assistance," said Mary Leon, a lobbyist with the 600,000-member National Federation of Independent Business.

"Most small-business owners want the federal government off their backs," Leon said. "They want freedom from overly burdensome regulation and too many taxes. They're not reliant on the federal government for their livelihood."

Supporters of business assistance programs, however, said they pay back much more than they cost.

The microloan program, for example, provides loans of $35,000 or less to owners of startups or early-stage businesses who need help with things like financial management, bookkeeping and marketing. Technical assistance not only helps these microentrepreneurs succeed, it also helps make sure they repay their loans, said Alan Corbet, executive director of Growth Opportunity Connection Inc., a Microloan intermediary lender in Kansas City, Mo.

Corbet says $35 million in technical assistance -- not the $17.5 million proposed by the SBA -- is needed in order to keep up with the growth in microloan volume. Last year's $2.5 million cut in technical assistance funding "severely curtailed" training for microloan recipients, he said.

Continuing this lower level of funding does not make sense to Kerry.

"The economic measurements we use today don't factor in the plus-side benefits of that person conceivably being off welfare rolls, that person having gainful employment and therefore providing a role model to family, perhaps being able to support kids in a way that empowers those kids to do something other than wind up in the court system or the streets or on drugs," Kerry says.

The technical assistance provided through the microloan program is available only to business owners who apply for a loan. Most microentrepreneurs, however, do not want to borrow money -- they want training, said Amanda C. Zinn, CEO of Women Entrepreneurs of Baltimore Inc., which helps low-income women become business owners. That is why PRIME is needed, Zinn said.

"The Small Business Development Centers do not provide the same kind of intensive services, such as the 108-hour training course that WEB provides, that are required to build businesses from the ground up," she said.

Meanwhile, development centers are concerned whether $88 million in federal support -- the same amount appropriated last year -- can meet the growing demand.

Nearly 610,000 business owners -- and prospective business owners -- received counseling and training from Small Business Development Centers in fiscal 2001, a 4.6 percent increase over the previous year. The Central Maryland Region Small Business Development Center also saw an increase in clients receiving counseling services, from 1,462 to 1,653.

"Many of our centers have a 45-day waiting list for counseling," said Donald Wilson, president of the Association of Small Business Development Centers. "That's intolerable if you're a small business on the verge of going under."

Rep. Donald Manzullo, R-Ill., chairman of the House Small Business Committee, said these centers are effective not only at growing entrepreneurship, but also at keeping people whose business ventures would fail from quitting their jobs and mortgaging their houses.

SBDCs "discourage as many people from going into business as they encourage," he said.