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Hector Barreto: "We Open Doors"

One part celebration, one part networking event, the SBA's National Small Business Week Conference casts a spotlight on a sector often touted as a vital engine of the economy, but not always given top billing in Washington. More than 1,000 entrepreneurs and other attendees gathered in the capital for the event, which featured speeches by prominent small-business leaders and lawmakers, including President Bush, who delivered a major policy speech on energy (see BW Online, 4/28/05, "Bush Is Blowing Smoke on Energy").

Hector Barreto, the SBA's charismatic administrator and a former entrepreneur himself, served as master of ceremonies. BusinessWeek Online SmallBiz Editor Rod Kurtz sat down with him between events to discuss some of the issues behind the pomp and circumstance and how the SBA is working to address new challenges facing small-business owners today. Edited excerpts of their conversation follow:

Q: What was your reaction to President Bush's speech?

A: I think he broke some very important ground about the importance of starting to do something with nuclear energy and talking about the fact that we need to start refining our own oil, and how those two opportunities really haven't been taken care of since the 1970s. Engaging small businesses in the legislation that's being dealt with at this moment on Capitol Hill is important.

Q: Energy is obviously relevant to small-business owners, but the President's speech wasn't directly targeted at them. Given this venue and the audience he was addressing, do you wish he had referenced small business more?

A: One of the things that the small businesses were just amazed by was the fact that he wanted to meet our top three small-business winners of the year. Obviously, we have 50 winners up there, and this event doesn't allow him to meet all of them. But he asked that the three top winners meet him backstage.

And then he asked that the small-business person of the year introduce him. And I will tell you, if you talk to her, this was the highlight of her life, especially her business life. When he was done with the speech, we actually went back with him and had some more time with him, and she said "I just can't believe how warm and engaging he is."

So I think the fact that he made time to be at Small Business Week, to speak directly with the small businesses, to meet those small-business owners -- I bet if you did a poll of the small businesses in that audience, [it would show] they felt very respected and acknowledged by the President of the United States.

Q: Overall, how has this year's conference shaped up?

A: What I'm always amazed by is the level of support we get for this event. You have people representing every state in the U.S. We have people from Hawaii here, people visiting us from Guam.

And it has also become international. We had the ambassador to Mexico and a delegation from Mexico here. We had the ambassador from Nicaragua earlier this week. We had a number of Latin American government officials here for an international trade symposium. I think it's phenomenal the SBA brings together so many different types of small-business people and entrepreneurs.

The President says the role of government is to create an environment in which entrepreneurs are willing to take risks -- and an environment that really heralds and celebrates their contributions. And I think this expo, this Small Business Week, has done that. Not because we had an event, but because we've brought so many opportunities to small business that they wouldn't have gotten any other way.

Q: In a speech earlier in the week, Senator John Kerry emphasized the need to move beyond rhetoric when it comes to small business. What do you think statistics and those things people frequently point out to convey the significance of small business really mean in practice?

A: I think he raises a great point. If you just talk about what small business represents in the U.S., and you don't do anything to help those small businesses, then it's empty rhetoric. But he actually referenced this -- and I was happy that he referenced it -- that over the last couple of years, the number of loans the SBA does has doubled. He referenced the fact that last year was historic in that we made fully a third of our loans to minority-owned businesses. He referenced the fact that, this year, we're doing 50% more loans to women-owned businesses.

He's aware that this conference is drawing thousands of people -- he's aware, because he's one of the honorary hosts of this conference -- and that we're training people here, that we're introducing them to buyers that they'd never be able to meet any other way, that we're bringing some of the best minds and the best speakers and some of the most influential leaders here to interface with the small-business community.

The key is that you can't do that for just one day, you can't do that for just one week, you can't even do it for just one year. That has to be something you have to be building all the time, all year long.

However, having said that, I don't think it's a bad thing -- because I do it all the time -- to constantly remind people that small business isn't small. I constantly remind people that our economy cannot continue without small business, that our future is not bright if we do not have small businesses that are winning. That's an important message.

Q: Some attendees have told me that they're pleasantly surprised by minority representation at the conference, and I know this has been a priority for the SBA. How do you keep minority entrepreneurship growing, and how do you serve the needs of those swelling ranks?

A: That's a good question, because it's great that we're focusing on the fastest-growing segments of small business, and I always tell people we don't do it just because it's the right thing to do. We do it because it's a smart business thing to do. If you were in a neighborhood and all of your clients were changing, and you didn't address those clients, you wouldn't be in business anymore.

Much the same way, we have to confront reality. And the reality is that the fastest-growing segment of small business is minority small business. Forty percent of businesses are owned by women. That wasn't the case when the SBA started in 1953.

But here's the real challenge and objective. A lot of these businesses are new. Fifty percent of businesses don't make it past five years. And the reason is they don't have capital, they don't have technical assistance, and they don't have people to do business with. And that's what SBA can help them to do.

So for us, the next step is helping them get started, but staying with them, so that once they get past that five years, they're still in business. And remember, it's after those five years that they really start to grow -- that's when they really start contributing to the tax base, creating innovation, and creating the jobs.

Q: Some small business owners say the best thing the government can do is leave them alone. If I'm a business owner skeptical about the government in general and the SBA specifically, what can you offer me?

A: For a lot of folks, SBA is really the last resort. They may go to a bank, and because they don't have a long track record, the bank says, "I like you. I like your business plan, but I just don't know you. You haven't been around that long. Come back in five years, and we'll talk then." And the small business says, "I won't be here in five years unless I get a loan."

So last year, we guaranteed $17 billion worth of capital for small businesses. This year, we'll probably do $21 billion. Last year, we did about 80,000 of our working capital loans. We'll do over 100,000 this year. So for those businesses that need that, we can help them.

The place we touch the most small businesses is really technical assistance -- teaching them what they don't know, teaching them to fish so that they can feed themselves for the rest of their lives. The things that we do are open doors that they can't open by themselves.

But if they're not interested in any of those things, the key thing that we can do is advocate for them, be a seat at the table for them, a voice for them, so that we can educate people on why small businesses need association health plans, why we need to make the tax cuts permanent, why we need to keep reducing the regulatory barrier for small businesses, why we need an energy bill, why we've got to fix Social Security -- because that's a small-business issue.

So those are important reasons for SBA to continue. And that way, when we do that, then we really do have an impact on all 25 million of them.

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