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The SBA's Ardent, Anxious Advocate

The first Puerto Rican woman elected to the House of Representatives, Nydia Vel??uez spent time while growing up in and around her father's small factory -- an experience that helped inspire her involvement in small-business issues on Capitol Hill. Today, the New York Democrat serves as the ranking member on the House Small Business Committee.

A vocal opponent of the Bush Administration, Vel??uez concedes that 2004 was a difficult and often unproductive time for the minority party, but has hopes that the upcoming session will yield results on issues she continues to champion: boosting funding for the Small Business Administration, making health care more affordable, and assisting the growing ranks of women and minority entrepreneurs. BusinessWeek Online SmallBiz editor Rod Kurtz recently spoke with Vel??uez about the state of small business today, and the year ahead in Congress. Edited excerpts of their conversation follow.

Q: As we look to the year ahead in Congress, what are your plans on the Small Business Committee?

A: We didn't accomplish much for small business in the last session, so there are a lot of issues that we need to revisit -- particularly the Small Business Administration budget and its 7(a) loan program. This is the most important loan program, but now, the 7(a) is nothing more than a small-dollar loan program. And if the budget continues in this downward trend, I guess that the Bush Administration may ultimately eliminate the SBA completely. (For a Q&A with Republican Don Manzullo, the committee's chairman, see BW Online, 1/20/05, "Getting to Gut Issues' in D.C.")

Q: Do you actually think that is a realistic possibility?

A: It's been tried before [in the 1980s]. It certainly wouldn't surprise me. If this Administration really, truly wanted to help small business, they would start making the SBA budget full. There is a lack of commitment to small business in this country, when the economy is still struggling. If you go back and look at the numbers in 2001, the SBA budget was over $1 billion. If you look at the budget [now $580 million] and compare, you will draw your own conclusions.

Q: What type of innovative program would you be able to implement when the budget has been cut in this manner?

A: I don't think that they will do it. It's not politically wise to do that. It's one thing to try to do it, it's another thing for members of Congress to support it.

Q: So you believe that the strategy to starve the SBA gradually, by cutting its budget?

A: Correct.

Q: What are some other issues you'd like to address in this session?

A: I would like to put more attention and focus on the self-employed. It's a growing sector of our economy, and in a time when they can't find jobs, more and more people are deciding to open businesses in their own homes. That is an area I would like to discuss. I would like to do a survey to determine access to capital. I don't know what would work for them -- microloans [and/or] the 7(a)? If any of these loan programs would be the best response to the capital needs to the self-employed, I would like to explore that.

Another issue that continues to be very important is the cost of running a business, so health care. That is an issue that, after so much noise coming from the Administration and some of the Republicans in Congress, we didn't do anything.

Q: Some small-business owners say the federal government is the last place they would turn to for help, that Washington does not -- or at least should not -- play a role. How do you counter that?

A: We know that small businesses in this country are the drivers of this economy. Seventy-five percent of new jobs are created by small businesses. There are some who believe the government shouldn't play any role.

But there is an environment where small businesses can grow and succeed. And that climate can be shaped by the federal government. For example, when we talk about health-care costs, there is a role for the federal government. In terms of oil prices, we don't have an energy policy in this country, basically. So the cost of energy is another issue that could jeopardize the environment for small businesses....

Anytime there is any regulation that does not take into account economic impact -- without doing an economic analysis of the impact it might have on small businesses -- it represents a burden for small businesses. If you look at the number of regulations that have been issued by this Administration -- and they campaigned saying they were going to be business-friendly -- the costs for small businesses to comply represent a real obstacle.

Q: But many, if not most, small-business owners vote Republican.

A: When I approach the issues that affect small business, I don't think there should be a Republican or Democratic approach. In the past, we have reached compromise and common ground. But I have to say, more and more, yes it is true that a lot of small businesses are either Bush supporters or Republicans, but they are getting the message that whenever there is an opportunity for the Bush Administration to side with small business, they go the other way. They need to look and we need to do a lot of education.

I spend a lot of time going across the country -- to say "Wait a minute, look at the tax-cut packages that we passed. And you tell me whether it was really one that benefited small businesses, or did it help Corporate America?" The Bush Administration, I have to give it to them, they are good at the rhetoric. But their rhetoric does not match their actions.

Q: You talk about the "changing face of small business" -- notably, more women and minorities. How are you addressing that?

A: When you have so many people losing their jobs, they look at the possibilities of opening their own businesses. History has shown that in every economic downturn, there is always an increase in the numbers of small-business startups.

I would [also] like to see that the federal government provide a level playing field in terms of the federal marketplace, so more small businesses do business with the federal government. When the private sector and big corporations turn to small businesses, why can't the federal government do the same? The federal government is the largest purchaser of goods and services in the world!

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