For an Administration that is working to relieve poverty, the White House seems strangely reluctant to get behind low-income entrepreneurship

October 24, 2005 — I can only imagine that the folks over at the Small Business Administration must be wishing that Senator John Kerry (D-MA) would take a long vacation to Baluchistan by now.

The Ranking Member of the Senate Committee on Small Business and Entrepreneurship has been an ongoing thorn in the SBA's side, having evidently decided that somebody needs to take oversight of the agency seriously. There's not much evidence that the Chairpersons of either the House or Senate Committees is doing much there, that's for sure.

Among other things, Senator Kerry has recently inquired into the status of the Women's Procurement Program, has tried to light a fire under the SBA to speed small business hurricane relief, and has made discontented noises about the SBA's oversight of small business federal contracting. He is now looking into the lack of implementation of the New Markets Venture Capital (NMVC) program.

The NMVC is another one of those Clinton-era small business initiatives that the current Administration has wanted to get rid of almost as soon as the SBA had an administrator. It was part of a broad set of initiatives contained in the Community Renewal Tax Relief Act and signed into law by President Clinton shortly before he left office.

The legislative package contained new programs like the NMVC, New Markets Tax Credits, and Community Renewal Zones, as well as additional Empowerment Zones (which President Bush has also tried to get rid of). According to a letter sent by Senator Kerry to SBA Administrator Hector Barreto last week, all those programs have been fully implemented except the NMVC program — because the SBA is dragging its feet.

Every year's proposed budget asks to zero out the program and every budget hearing finds lawmakers asking why they should get rid of it without finding out whether it does any good. But it seems that the brass at the SBA has perfected the art of simply ignoring those programs they don't wish to implement whenever Congress doesn't do what it's told.

There have only been six NMVC Companies approved by the SBA since the program was made law and, according to the information available at the SBA web site, they are not accepting new applications for additional ones. In fact, the SBA directs interested investment companies to apply for Small Business Investment Company status instead.

And that is undoubtedly the reason why the SBA is dragging their heels here. As far as they are concerned, the SBIC program does the same thing that the NMVC program is supposed to do, so the NMVC program is duplicative and unneeded. One has to assume that the concept of targeted small business assistance is not a part of the current Administrator's intellectual vocabulary.

What is particularly peculiar about all this is that the Congressional appropriation for the NMVC program is dedicated funding and can't be used for anything else. Right now, according to Senator Kerry's letter, there is more than half a million dollars in the SBA coffers for NMVC guaranteed debentures and another $1.35 million for operational assistance grants, and it has been there since July 2003. That's because there were seven conditionally approved NMVC Companies but only six of them won final approval.

Now, those six companies have asked the SBA if they could submit a joint proposal to access those leftover funds, but have received no response from the agency. Evidently, they have appealed Senator Kerry, whose letter states that they remain interested in the money and "are prepared to raise the private capital match necessary to do so."

At the same time, there's a staffing problem. Again according to Senator Kerry's letter, the position of Director of the NMVC office has been vacant for more than a year and there has been other senior staff shuffling, in spite of previous assurances that the NMVC office would not be dismantled.

It has been perfectly clear for a very long time that the current Administration does not accept the viability of small business development among low- to moderate-income entrepreneurs as a poverty alleviation strategy. That's curious course of action from an Administration that assured the world, only about a month or so ago, that it was ready to work hard to address the poverty that generated international shock, if not awe, in the wake of Hurricane Katrina.

And it illustrates the worth of what we were all taught in grade school: it's not what you say that matters, it's what you do.