The Year Ahead
The year ahead will bring huge benefits to enterprises that are well managed, competitive, innovative and proactive enough to exploit public- and private-sector actions aimed at enhancing the nation’s small businesses. At the same time, advocates for minority businesses will be watching for fallout from a November 2008 federal court decision that declared “unconstitutional” a minority contracting program authorized under Section 1207 of the Department of Defense Authorization Act of 1987.
The challenge for small businesses and their advocates is to keep abreast of initiatives and legislation that impact their sector and provide input to ensure the best possible outcome. Actions worth following include:
In Rothe Development Corp. v. Department of Defense, the U.S. Court of Appeals for the Federal Circuit held that Congress must have “a strong basis in evidence upon which to conclude that the remedial action [is] necessary” before enacting or re-enacting a race-conscious minority contracting program. While the court strictly limited its decision to the DOD program, many fear that other agencies and private institutions might now have second thoughts about contracting with minorities.
“The need is to show that discrimination still exists in contract letting. We need that testimony from [Black businessowners] when there are hearings on this subject,” said a congressional aide who declined to be identified by name.
On Capitol Hill, House and Senate lawmakers tackled the U.S. Small Business Administration, giving its capital access programs their first overhaul in 10 years. If passed by the full Senate, S. 2869 would:
- Increase the loan limit on 7(a) loans from $2 million to $5 million; on 504 loans from $1.5 million to $5.5 million; on microloans from $35,000 to $50,000; and the amount an intermediary can borrow from the SBA from $3.5 million to $5 million;
- Allow the 504 loan program to refinance short-term commercial real estate debt into long-term, fixed-rate loans;
Extend the authorization to provide 90 percent guarantees on 7(a) loans and fee elimination for borrowers on 7(a) and 504 loans through Dec. 31, 2010;
Direct the SBA to create a Web site where small businesses can identify lenders in their communities and compare rates.
In October, the House passed and referred to the Senate its own bill (H.R. 3854) that incorporates a Small Business Credit Expansion and Loan Markets Stabilization Act, Job Creation and Economic Development Through CDC Modernization Act, Small Business Investment Company Modern-ization and Improvement Act, and the Enhanced New Markets and Expanded Investment in Renewable Energy for Small Manufacturers Act. The House also referred its Small Business Health Information Technology Financing Act, Small Business Microlending Expan-sion Act, Small Business Disaster Readiness and Reform Act and Small Business Early Stage Investment Act.
On its own, the SBA proposed changes to its 8(a) Business Development Program, which provides training, technical assistance, and contracting opportunities to qualified minority-owned small businesses. The proposed changes address size standards, ownership and control requirements and joint ventures, and more fully define “economic disadvantage.” The SBA is reviewing public comments on these changes.
For businesses venturing overseas, the Senate’s Small Business Export Enhancement and International Trade Act, S. 2862, would ensure access to resources and tools needed to explore new export opportunities in emerging markets or expand their current export business.
In 2009, the U.S. Department of Energy awarded $620 million from the American Recovery and Reinvestment Act (Stimulus Bill) for the development of a Smart Grid. The $620 million will go toward projects that include large-scale storage, smart meters, distribution, transmission system monitoring devices and other smart technologies. An additional $1 billion from the private sector will support Smart Grid projects nationally.
In the private sector, Goldman Sachs partnered with billionaire businessman and philanthropist Warren Buffett to support small businesses with an initiative called “10,000 Small Businesses.” The initiative dedicates $500 million to lending, technical assistance and education for small businesses. Community Development Financial Institutions (CDFIs) will have access to $300 million in grants or investments to increase small-business lending.