By Mike Mrkvicka

Washington lawmakers are restoring many of President Bush's proposed cuts to the budget of the Small Business Administration, making it less likely that local businessmen will have to pay either new fees for SBA loans or for counseling services from the Small Business Development Center.

Last March, Bush proposed slashing the SBA budget by 40 percent, from $899.5 million this current fiscal year, which ends Sept. 31, to $539 million in fiscal year 2002.

The president suggested the cuts be offset by increasing fees to small businesses when they acquire SBA-guaranteed loans through the 7(a) General Business Loan program. These loans are typically offered to companies that lack the equity to secure conventional loans. Bush's goal is to make the program pay for itself.

"The 7(a) program is the most popular for business loans over $150,000," said El Paso commercial lender Bill La Rue, vice president of First Federal Bank.

"An increase in fees would not be an attractive thing for making SBA loans," he said.

The Bush proposal met the same kind of bipartisan criticism on Capitol Hill.

"Making it more difficult for small businesses to get the credit and services they need is flat wrong," said Sen. John Kerry, D-Mass., the ranking Democrat on the Senate Small Business Committee.

On the other side of the aisle, Sen. Christopher Bond, R-Mo., chairman of the Senate Small Business Committee, expressed concern about the increased fees for 7(a) loans.

As a result, versions of the SBA budget in the House and Senate significantly increase the president's initial proposal.

A budget bill passed by the House allocates $727.9 million for the SBA, $188.9 more than the Bush proposal; a version approved by the Senate Appropriations Committee budgets $773.5 million for the SBA, $234.5 million more than the Bush proposal, said Mike Stamler, a public-affairs specialist with the SBA in Washington, D.C.

Both bills still reduce the SBA's current funding level. The House version represents a 19 percent reduction, the Senate version a 14 percent reduction. But both bills add enough money "to make the fees for 7(a) loans unnecessary," Stamler said.

The bills also provide enough money to alleviate the need for the SBDCs to charge for their business advisory services.

Unlike the president's proposal, they also continue financing for BusinessLINC, a mentoring program for small business in low-income areas to which the Greater El Paso Chamber of Commerce has applied for a $200,000 grant.

The Bush budget proposal cut $12 million from this year's $87.8 million budgets for the nation's 1,000 Small Business Development Centers, said Don Wilson, president and CEO of the Association of Small Business Development Centers in Washington, D.C.

The centers help owners prepare business plans and make presentations to bank officers when requesting a loan.

To make up for the $12 million shortfall, the Bush administration wanted SBDCs to begin charging fees for consultation services. In El Paso, this met mixed reactions.

Roque Segura, director of the SBDC in the One-Stop Capital Shop, 1359 Lomaland, worried that fees would drive many struggling businesses away.

"If we charged fees, 50 percent of our clients would not be able to take advantage of our service," he said.

On the other hand, Bob Martinez, a former SBDC employee who is now a financial analyst with the city's Department of Economic Development, said that clients might better appreciate the SBDC's services if they were required to pay modest fees.

Nonetheless, the two versions of the SBA budget both add money to make SBDC fees unnecessary.

"We're grateful they recognize the burden fees would be on small businesses that take advantage of our services, Wilson said.

The budgets in Congress also rescue the BusinessLINC program.

The Greater El Paso Chamber of Commerce expects to receive a $200,000 grant from BusinessLINC to finance the initial phases of a "real-time, online sourcing program," said John Fields, the chamber's vice president of the Business Resource Division.

The online site, to be known as Source Paso del Norte, will have short profiles of 18,000 small businesses in El Paso. A purchasing agent can go to the site, fill out a form outlining what kinds of goods or services he or she intends to purchase, then, using the site's search engine, find El Paso businesses that offer the product or service, Fields said.

"The grant will finance the technical development of it." Fields said.

The presidential SBA budget proposal, which eliminated BusinessLINC, never really threatened the first installment of the grant, Fields said. That is expected to arrive in El Paso within this fiscal year, he said.

If the BusinessLINC program is eliminated next fiscal year, however, the chamber may experience difficulty in financing the operation of Source Paso del Norte during coming years, Fields said.

Mamie Salazar-Harper, an El Paso businesswoman who owns Fiesta Rent-to-Own and is a partner in Payless Rent-to-Own, said she believes Bush's proposed cuts to the SBA are "detrimental to the economy" and will "exacerbate the economic downturn."

Recently, she got an unusual opportunity to express those views in Washington. Salazar-Harper and six other business leaders were invited to participate in a White House Business Leaders Survey Group July 18 with Bush's economic advisor, Lawrence Lindsey.

"I very pointedly made the statement that small businesses employed more people than all the big corporations nationwide. Small business is the true backbone of the economy. Because of that, the SBA budget is something with which they just can't tamper," Salazar-Harper said.

Mike Mrkvicka may be reached at mmrkvicka@elpasotimes.comPhoto Caption:Bill La Rue, vice president of First Federal Bank, is shown in the lobby of the bank at 2290 Trawood. President Bush has proposed cutting the Small Business Administration budget and offsetting those cuts by boosting the fees businesses pay for SBA loans. "An increase in fees would not be attractive for making SBA loans," La Rue says.