By Charlotte Crane

Pensacola micro-lender Dan Horvath is counting on Congress to redo the math for small-business funding in President Bush's 2005 budget request.

Bottom line: The Bush budget draft cuts Small Business Administration funds by $119.5 million, eliminates 10 SBA programs and reduces funding for several others. Locally, the cuts would devastate microloan programs offered by Community Enterprise Investments Inc., the Pensacola-based agency Horvath leads, one of the top 10 SBA lenders in the country.

Under the proposed cutback, says Horvath, "we wouldn't have new money for microloans or any money to provide technical assistance to the microloans that are out there."

CEII has $1.28 million in microloans outstanding, among 212 totaling $3.7 million since 1992 and providing 568 jobs. Microloans, $35,000 and below, are small loans for the smallest of businesses and often for startups - loans because of their size and high risk that typically aren't made by banks. In addition, of CEII's total portfolio ($11 million over 22 years), 40 percent goes to minority-owned businesses and 40 percent are women-owned - borrowers traditionally underserved, says Horvath.

The proposed budget contains zero funding for microloans, this year funded at $25 million for loans to businesses and $15 million for training and technical assistance to borrowers, the latter making it more likely the businesses will succeed and repay the loans.

"By wiping out the training program, they are endangering their own investment," argues Horvath. In training dollars, CEII typically gets around $350,000 annually.

Micro-businesses - those with fewer than five employees - are especially vital to the Florida economy, accounting for 20 percent of jobs, says Horvath, whose agency serves 22 Florida counties plus 30 counties in South Alabama. "But most of our lending is in this area."

As chairman of the Association for Enterprise Opportunity - a national nonprofit trade association representing over 600 microloan programs throughout the nation - Horvath is taking a lead in rallying micro-lenders to lobby congressional representatives, asking that, at minimum, this year's funding levels be restored.

Proposed SBA decreases did not escape the eye of presidential candidate Sen. John Kerry, who's also ranking member of the Senate Committee on Small Business and Entrepreneurship. "Since (Bush) took office, the SBA budget has been cut more than any other major agency in the federal government," Kerry said in a press release. Administration budgets reduced SBA funding by 24.7 percent between 2001 and 2005, according to the White House budget summary. This year's request is 15 percent below last year's.

Says Horvath: "Kerry and his staff have been our strongest supporters in the Senate in getting approved as large a budget appropriation as possible," arranging, for example, for an AEO representative to testify earlier this month before a Senate subcommittee considering appropriation levels for the microloan program.

"This is not a social program," adds Horvath. "This is a business development program aimed at assisting the smallest of small-business owners."

A bit of bottom-line rethinking here would seem to be good economic strategy.