The Small Business Administration Model

MANILA, Philippines - We are always on the lookout for the best approach towards building the infrastructure, processes and systems that will support the developmental growth of Philippine small and medium enterprises.

While copying a system that works elsewhere should never be done blindly, it is worthwhile to see what does the job well and adopt it to our circumstance. One such model that has been around for over 60 years is the Small Business Administration or SBA of the Unites States.

In 1953, the SBA was created through the enactment of the Small Business Act in the US, as amended, to promote free competition among enterprises. This was done in recognition of the critical role that small businesses play in building and strengthening the US economy in order to compete in the global market. Various services are offered to help the Americans start, build, and grow their business.

With strong regular government funding (almost $1 billion in 2012, for example), SBA has been able to reach out to a huge number of small businesses since its inception, providing loans and loan guarantees, contracts, counselling sessions, and many other forms of assistance to small businesses. SBA's goal of successfully supporting small business owners are captured in its statement of strategic goals: 1) growing business and creating jobs; 2) building an SBA that meets the needs of today's and tomorrow's small businesses; and 3) serving as the voice for small businesses.

Consistent with these objectives, the agency performs four major functions: Access to Capital, Entrepreneurial Development, Government Contracting, and Advocacy.

Access to capital is carried out through an array of financing schemes. Among the loan programs are the micro-loan program which provides small, short-term loans to small business concerns made available through specially designated intermediary lenders. The mainstream loan program help start-up and existing small businesses obtain financing where the SBA guarantees a portion of loans made and administered by commercial lending institutions. There is also a disaster assistance loan program and a venture capital and equity investment program.

Entrepreneurial development involves giving access to education, information, technical assistance, and training that will aid in growing their business. There are special programs for native Americans and women's business ownership, small business development centres and counsellors to small businesses.

The third function relates to the mandate of Small Business Act requiring SBA's Office of Government Contracting to set goals with other federal offices to achieve 23% in prime contract dollars to small businesses. Further, small businesses are provided with subcontracting procurement opportunities to help create more income opportunities for them.

Finally, the SBA provides advocacy support to strengthen policies for small businesses. Over the years, SBA has been the voice for small enterprises in the legislative process. SBA undertakes research studies on small businesses and the environment with which they operate to gather relevant and meaningful inputs in enhancing the existing policies or creating new ones. In relation to this function, the SBA makes an assessment of impact of the regulatory burden on behalf of small businesses.

If one will review the Philippine system, there are apparent parallels. The Small Business Act in the US is similar to our Magna Carta for Micro, Small and Medium Enterprises. We also have a guarantee program which, unfortunately, is structured very differently through a corporate setup that is subject to a profit objective and government dividends, and a regulatory structure that compromises its developmental mandate. We also have a procurement policy for small businesses that has not received any regulatory monitoring reports. The US has a Community Reinvestment Act and we have our mandatory lending (but with a meagre penalty structure). Finally, our system does not provide the magnitude of budgetary infusion even on a scaled down relative basis.

Of course, our government cannot be totally faulted given the various demands on our limited resources. But as the economy continues to accelerate and given the reported under-spending of our budget, isn't it about time we take full stock and allocate funds for this purpose? Small businesses cannot be supported by mere exhortation, and by laws that remain unfunded. There's no such thing, as they say in finance, as a free lunch.

***

(Mr. Benel P. Lagua is the President/COO of the Small Business Corporation. He is likewise an active member of FINEX. Feedback and comments are welcome at benellagua@alumni.ksg.harvard.edu ).

Loading...

Editor’s note:Yahoo Philippines encourages responsible comments that add dimension to the discussion. No bashing or hate speech, please. You can express your opinion without slamming others or making derogatory remarks.

  • Muslim group calls for universal peace
    Muslim group calls for universal peace

    As predominantly Catholic Philippines and the rest of the Christian world observe the Holy Week, peace advocates like the Young Muslim Professionals Network (YMPN) are appealing to Filipinos of various creeds and persuasion to embrace the universal message of kindness, love and peace. The group issued the call as peace negotiations between the government and the Moro Islamic Liberation Front teeter due to the Mamasapano incident where members of the rebel group killed 44 police commandos on a …

  • Ex-WB exec pushes BBL passage
    Ex-WB exec pushes BBL passage

    A former World Bank official has warned of dire consequences for the Philippines if the proposed Bangsamoro Basic Law (BBL) is not passed into law. Nigel Roberts, former director on conflict, security and development, said that more conflict could occur without the BBL. “It takes about 15 years to get back to pre-conflict GDP growth rates, and 20 years for trade to recover,” Roberts said in his blog at the World Bank website. The World Bank estimated that economic losses amounted to $10 …

  • Despite typhoon, summer is here
    Despite typhoon, summer is here

    Super Typhoon Chedeng roared toward Luzon as the weather bureau announced the official start of summer in the country yesterday. The Philippine Atmospheric, Geophysical and Astronomical Services Administration (PAGASA) announced yesterday the official start of the dry or summer season in the country due to the termination of the cold northeast monsoon. “The general public is advised to take precautionary measures to minimize heat stress and take note of the need in optimizing the daily use of …

  • Noy told: Just answer the questions
    Noy told: Just answer the questions

    Just answer the 20 questions. The Makabayan bloc of seven party-list representatives made this appeal to President Aquino yesterday after his spokesman claimed the Chief Executive has already answered most of the questions posed by the militant lawmakers regarding the Mamasapano incident. For instance, he said the President has not yet explained why he allowed then suspended Philippine National Police chief Director General Alan Purisima to take the lead in Oplan Exodus or the mission to …

  • DFA: Malaysia paying rent for Sabah
    DFA: Malaysia paying rent for Sabah

    Malaysia does not acknowledge the Philippine claim over Sabah but the Department of Foreign Affairs (DFA) maintained yesterday that the Malaysian government is paying rent for Sabah, indicating it rightfully belongs to the Philippines. The Malay Mail Online reported that Malaysian Foreign Minister Datuk Seri Anifah Aman said Malaysia has not and does not acknowledge the Philippine claim over Sabah when asked by media about the reported offer of the Philippine government to downgrade its Sabah …

  • 63 OFWs returning from Yemen
    63 OFWs returning from Yemen

    Sixty-three overseas Filipino workers (OFWs) are set to return home from war-torn Yemen, Labor Secretary Rosalinda Baldoz said yesterday. Baldoz said the licensed recruiters of the OFWs have assured the government of their immediate repatriation. Administrator Hans Cacdac of the Philippine Overseas Employment Administration has ordered the recruitment agencies to fulfill their obligation to bring home the OFWs. Baldoz called on Filipinos still in Yemen to avail themselves of the government’s …

  • Jinggoy gets furlough for shoulder checkup
    Jinggoy gets furlough for shoulder checkup

    Despite opposition from ombudsman lawyers, the Sandiganbayan yesterday granted detained Sen. Jinggoy Estrada’s request to undergo a medical checkup at the Cardinal Santos Memorial Hospital. Estrada was allowed to undergo a medical examination for pain in his left shoulder from 3 p.m. to 6 p.m. The senator was ordered to shoulder the expenses incurred by the Philippine National Police in  escorting him. In a pleading filed Monday with the anti-graft court’s Fifth Division, Estrada’s lawyers …

  • Tekken’s Josie Rizal gets flak
    Tekken’s Josie Rizal gets flak

    A professor of the University of the Philippines yesterday hit the portrayal of a Filipino character, whose name was based on Jose Rizal, in a Japanese-produced video game. “(It’s) offensive and unsuited for a big company like Bandai because they have the money to do research,” Gonzalo Campoamor II, professor of Life and Works of Rizal in UP Diliman, told The STAR. Japanese giant Namco Bandai recently introduced Josie Rizal, the first Filipino character in the popular fighting game franchise …

POLL

Should Aquino be held accountable over the Mamasapano operations?

Loading...
Poll Choice Options