Last week, President Barack Obama took the initial step in reorganizing a considerable portion of the federal government. It will involve the merging of several agencies into the Department of Commerce and the elevation of the Small Business Administration to a cabinet-level authority.
Exercised through executive powers, the president stated Friday that the new structure will introduce SBA administrator Karen Mills to the president's circle of close advisers.
"Karen Mills, who's been doing an outstanding job leading that agency, is going to make sure that small business owners have their own seat at the table in our Cabinet meetings," he said.
Many small business advocates have been pushing the president to elevate the status of the SBA for more than three years. Supporters tout the importance of small businesses in driving job creation and innovation. In fact, the SBA has reported that more than two-thirds of all jobs created within the past 15 years were at small firms.
The president's plan for a reorganized federal government will be pitched to Congress in coming months. The Los Angeles Times reported that the first step in the plan is to combine the SBA and much of the Commerce Department, along with the U.S. trade representative's office, the Overseas Private Investment Corporation, the Export-Import Bank, and the U.S. Trade and Development Agency.
"In this case, six is not better than one ... because it produces redundancy and inefficiency," Obama said last week, adding that consolidating the agencies into one department with "one website, one phone number, one mission [will help] American businesses succeed."
The new system may also benefit small business lending, as the SBA is often leveraged by entrepreneurs for guaranteed payments on private loans.
"Because banks tend to be reluctant to extend credit to risky small businesses, the SBA operates a program that makes such loans more enticing to lenders by guaranteeing a portion of each loan against default," writes Emily Maltby for The Wall Street Journal.
In the years since the recession began, SBA-backed loans have grown in response to banks tightening their lending policies. According to the WSJ, a record $30.5 billion in these loans were extended to more than 60,000 businesses during the 2011 fiscal year ending September 30.
Accordingly, entrepreneurs looking to incorporate in California, New York or elsewhere may want to consider acquiring SBA backing on bank loan applications in 2012.
Tags : California, New York, Taxes, Financing
Posted: 01/16/2012