Editor's note: This is an updated version of the story.
President Barack Obama's pick to head the Small Business Administration, Karen Gordon Mills, was approved on Apr. 1 by the Senate Committee on Small Business & Entrepreneurship in a cordial hearing that emphasized the dire straits of the nation's small businesses and the need to work rapidly to help them. The full Senate unanimously confirmed her nomination April 2.
"Karen Mills is precisely the right person at this critical juncture for our economy to assume the reins of the agency responsible for small businesses, America's preeminent job generators that will lead us out of our economic morass," says Senator Olympia Snowe (R-Me.), ranking committee member, who recommended Mills for the post. "She promises to be a strong and vibrant advocate for our nation's 27 million small businesses, and I look forward to partnering with her on bold initiatives to tackle America's economic problems."
Mills, 55, brings experience from both private capital markets and the public policy arena. Small business advocates say she will enhance the agency's partnerships with elements in the public and private sectors, address shortcomings in SBA programs intended to help women and minority small business owners, and improve small business access to government contracts. They also hope Mills will push the agency to be more responsive to small businesses that seek credit: The SBA backed only 69,434 flagship 7(a) loans for the fiscal year 2008, down 30% from 2007.
A Harvard-Educated Venture Capitalist
"I think [Mills] can be highly successful in transforming the agency by simply focusing on collaborative partnerships with other agencies and departments, as well as business associations and private-sector partners," says Karen Kerrigan, president of the Small Business & Economic Council in Washington. Small business advocates and politicians have also been pushing to increase the SBA's stature by making the administrator a Cabinet Secretary.
Harvard-educated, with both an economics degree and an MBA from her alma mater, Mills founded two venture capital firms, MMP Group in Brunswick, Me., and Solera Capital in New York. More recently she chaired Maine Governor John Baldacci's Council on Competitiveness & the Economy, where she met regularly with the state's small business owners. Serving on the council also required her to seek bipartisan support for the passage in 2007 of a $50 million research and development bond issue to spur innovation among Maine's small businesses. "She led the effort to raise the funds for the research and development bond issue," Governor Baldacci said in an earlier interview with BusinessWeek SmallBiz. "And people were surprised she got that done without having any earmarks."
America's Recovery Capital Program
Mills nevertheless inherits an SBA that languished under the Bush Administration, which cut its funding by about 26% since 2001 and sliced staff by 18% since 2003. Lobbyist Todd McCracken, president of the National Small Business Assn., says he hopes Mills will deploy her nonpartisan credentials and experience to reach across the aisles in crafting policy. "There is often an antagonistic relationship between committees and the SBA," McCracken says, adding: "She has the strong support of Senator Snowe, which is important because the SBA, more than any other agency, operates on a nonpartisan basis—or needs to."
In the hearing, senators grilled Mills about how she would unfreeze the credit market for small businesses, ensure that more federal contracts go to small business owners, and help them cope with the astronomical cost of health insurance.
For her part, Mills said the SBA must start to distinguish between typical small businesses critical throughout the country's Main Streets and those whose innovative potential might help lift the U.S. economy out of its slump. "If the SBA can help these people, America will grow," Mills said. She also stressed the need to begin immediately approving bridge financing through the SBA's new America's Recovery Capital program, which will provide emergency short-term loans of up to $35,000 once operating details are hammered out.
Mills' confirmation follows President Obama's recent emphasis on small business in policy decisions related to the bailout. Specifically, he met with some 200 small business advocates and entrepreneurs on Mar. 16 to discuss using $15 billion from the Troubled Asset Relief Program to help unfreeze the secondary market for SBA-guaranteed loans, as well as increasing the guarantee on such loans to 90% from 75% while reducing fees for the 7(a) program. Some banks and brokerages that specialize in selling SBA loans to the secondary market have indicated that they may not participate, however, because they say TARP imposes too many restrictions in return for bailout money, including limits on executive compensation and a partial ownership stake for the government.
Nevertheless, with the stimulus putting more funds in small business hands, advocates also hope Mills will push for minority procurement, which the SBA oversees. "There is an expectation among the Beltway's small business crowd that President Obama will make sure that small business gets its fair share," says Kerrigan. Others, like the National Association of Women Business Owners, say they hope the new SBA chief will pay closer attention to female-owned small businesses that seek government contracts. "It is our hope and expectation that [Karen Mills] will aggressively move the procurement agenda forward for women," says NAWBO's president, Cynthia McClain-Hill, who adds: "Women business owners make up one of the fastest-growing segments of the small business market." In recent years, the SBA has set a goal of 5% of procurements for women-owned businesses, but probably half that amount has actually found its way to them.