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Making It Easier for Small Businesses to Make it in America
Karen Mills
Post date: 03/21/2012 - 16:18

Manufacturing is adding jobs for the first time since the 1990s, and our manufacturers are more productive today than ever. That’s good news for America’s producers, but it’s also good news up and down the supply chain.

Everybody benefits when manufacturing is going strong. In fact, studies show that each dollar invested in manufacturing creates $2.41 in total economic output. And, for every new job created in the manufacturing sector, another two jobs are created in the surrounding community.

Made in America is strong and getting stronger, and President Obama is doing everything he can to make sure that these three proud words are still number one.

Today, I am highlighting a new administration-wide effort to support American manufacturing, which we call the American Supplier Initiative. This initiative invests in America’s small suppliers—the legions of small businesses which make the parts and services that go into the final products you and I buy every day.

As part of this initiative, I showcased one of the major tools at an event with Dick Parsons, Chairman of Citi and a member of the President’s Council on Jobs and Competitiveness, and Stan Litow, President of the IBM Foundation, to announce a collaboration between the SBA and a private sector-led application called Supplier Connection.

Created by the IBM Foundation, Supplier Connection is a free online common application that allows small businesses to simultaneously send information about their products and services to private sector buyers. These buyers include fifteen household brands (AMD, AT &T, Bank of America, Caterpillar, Citi Group, Dell, Facebook, IBM, JP Morgan Chase, John Deere, Kellogg’s, Office Depot, Pfizer, UPS, and Wells Fargo), with a combined purchasing power of $300 billion each year. Over the coming months, we anticipate even more large companies will be added.

Supplier Connection removes barriers that small businesses face in trying to break into large company supply chains. It also gives large companies exposure to a more diverse array of suppliers, so they can get the best, most innovative suppliers America has to offer. This is especially important for America’s small businesses. Recent reports show that small suppliers can more than triple revenue growth and more than double job growth only a few years after becoming a large company supplier. I recently sent a letter to over 50,000 small businesses in SBA’s network to highlight the uses of tools like Supplier Connection.

These efforts build on the Obama administration’s existing actions to make it easier for small suppliers to make it in America. At the SBA, we maintain an online database that helps small suppliers search for the $70 billion in Federal sub-contracting opportunities posted by large prime contractors and other non-federal agencies, which we call SUB-Net. Earlier this year, we also announced significantly expanded outreach efforts to educate America’s small suppliers on SBA’s International Trade Loan program, which offers a 90% loan guarantee on loans up to $5 million, and can help small suppliers get the financing they need to bring jobs home.

Over the coming weeks, we will roll out a number of other tools that address big challenges small firms face in trying to sell goods and services to larger companies. These efforts will include ways to help small businesses gain greater access to capital, counseling and mentoring services, and workforce skills training, all of which small firms need to be reliable suppliers.

Today, American consumers are buying more of what we make here at home and our companies are selling more to competitors abroad. And, make no mistake -- it’s not just that we are making more goods here at home; we are making better goods here at home. I recently visited a small business in Minneapolis, Minnesota that makes precision machine parts for the aviation, aerospace, and defense industries, and serves as a leading supplier to Lockheed Martin. The custom parts manufactured in that factory will go into next-generation planes that are lighter, faster, and more fuel-efficient.

That’s the new face of American manufacturing - an industry that is entrepreneurial, high-tech, value-added and globally oriented - and, a sector of great opportunity, growth and promise for our nation.

President Obama understands that America’s success was built by the grit and resolve of our manufacturers. In the 20th century, American inventors, makers and doers helped create the largest middle class the world has ever known.

Today, the manufacturing sector is poised for a renaissance. That’s why the Obama administration is doing everything we can to seize this moment, to put more people back to work, and to show the world, yet again, what America can do.

Building Ecosystems of Manufacturing Innovation
Karen Mills
Post date: 03/19/2012 - 15:59

America is adding manufacturing jobs for the first time since the 1990s. We have created 440,000 good manufacturing jobs over the past two years, and we know that small businesses are leading the charge here. They create about two-thirds of net new jobs in the country, and more than a third of all manufacturing employees work for a small business.
Karen Mills visits a manufacturing facility

Made in America is strong and getting stronger. That’s why President Obama has proposed tax incentives to encourage manufacturers to invest in America, removal of tax breaks for manufacturing firms that ship jobs abroad, and enhanced workforce training. And that’s why the President announced plans a few weeks ago to create up to 15 manufacturing innovation institutes.

These institutes will bring together industry, universities and community colleges, federal agencies, and states to accelerate innovation by investing in manufacturing technologies. The institutes will bridge the gap between basic research and product development, provide shared assets to help companies, particularly small manufacturers, access cutting-edge capabilities and equipment, and create an environment to educate and train workers in advanced manufacturing skills. These institutes will also act as hubs for regional manufacturing activity, helping our large and small manufacturers become more competitive while creating an ecosystem that encourages investment on our shores.

Over the past three years, SBA has also taken steps to encourage the development of innovative ecosystems through other means. We have supported over thirty regional clusters nationwide through partnerships with other government agencies, several of which focus on manufacturing. Many of these robust clusters evolved out of innovation research institutes that are similar to what President Obama announced a few weeks ago. They enhance the local economy, serving as a convener of small and large firms, academia, and local governments to turn product ideas into market opportunities.

SBA offers capital, counseling and matchmaking opportunities, and we ensure small manufacturers have a lot to gain from access to these regional economies. Clusters connect innovative small suppliers with large companies, link research with the start-ups that can commercialize the ideas, and train workers with skills that firms need to capitalize on business opportunities. They ensure that all players in the innovation process are working together to foster an economy built to last.

I grew up in a manufacturing family, and over the past thirty years I have invested in and managed manufacturing businesses across the country. I know that the story of our nation’s greatness is written by our inventors, builders and doers. The small businesses I meet with every day as SBA Administrator bear witness to this strength.

Today, American manufacturing is poised for a renaissance, and the Obama administration is doing everything we can to make sure the world knows that made in America is still number one.

US-Korea Trade Agreement Opens Big Market for Small Businesses
Karen Mills
Post date: 03/15/2012 - 10:00

The US- Korea trade agreement, which takes effect today, is a major win for America’s small businesses.  A key part of President Obama’s National Export Initiative, this historic agreement provides businesses with greater access to a fast growing market and more opportunities to create jobs.   It is estimated that the tariff cuts in the agreement will support 70,000 American jobs.

The U.S. International Trade Commission estimates that the US-Korea agreement will increase annual exports to Korea by about $10 billion.  Here at SBA, we’re ready to help small businesses tap into this market. 

There are several provisions that benefit small businesses.  For example, the agreement expands U.S. firms’ access to the $100 billion Korean government procurement market, ensuring that U.S. firms will get to bid on contracts on a level playing field.  At the same time, the agreement preserves government procurement rules that benefit U.S. small businesses, for example in bidding on Department of Defense procurement, for which small businesses will continue to receive the same treatment they have in other agreements. 

Leveling the playing field on government procurement will help small businesses like Rachel Carson.  Rachel is president of Helicopter Tech, Inc. (HTI), a Pennsylvania company that provides thousands of aircraft parts to aviation companies.  HTI is already exporting and Rachel is excited about continuing to grow her company.  Having already attended business matchmaking events in Korea, this trade agreement will enable her to pursue viable exporting opportunities that were previously inaccessible.  

“Made in America” goods will gain easier entrance into the Korean market thanks to the US-Korea trade agreement terms.  The agreement will eliminate tariffs on over 95 percent of industrial and consumer goods within five years.  Additionally, the agreement’s provisions on cross-border services, telecommunications, and electronic commerce offer advantages to the information and communications technology service sector – an area where the United States excels – benefitting small- and medium-sized American companies without the resources to establish an office in every market they serve.

SBA has a variety of programs and initiatives in place that will help these ambitious small business owners take advantage of the new market, scale up and create jobs.  Many small businesses benefit from our International Trade Loans, or Export Express and Export Working Capital programs.  American small businesses that shipped to Korea were supported last year by almost $40 million in loan guarantees under these programs. 

Additionally, the State Trade Export Promotion (STEP) pilot program - a joint federal-state-and local program to help small businesses export – is enabling several states to conduct small business trade missions to Korea this summer focusing on industries such as food and agriculture, services and medical devices. 

At SBA we know that exporting is a key way to help small businesses create an economy built to last.  The US-Korea trade agreement comes at the perfect time to help the economic recovery continue to gain momentum and enable American small businesses to start or increase their level of exporting, grow and create jobs.

Business Lending Showing New Signs of Strength
Karen Mills
Post date: 03/05/2012 - 14:51

Over the past three years, the Obama administration has made it a top priority to increase access to capital for small business owners across America.  When I came to SBA in early 2009, small business owners would say to me, “I need a loan to survive.”  Since that time, SBA has worked hard to provide small businesses with access to capital – even during the depth of the recession.  Thanks to the Recovery Act and the Small Business Jobs Act, SBA had a record year in FY2011, supporting more than $30 billion in small business lending across the country. 

Now we’re getting encouraging news that business lending is showing new signs of strength.  You may have seen that the FDIC recently released data showing that banks had their biggest increase in business lending in four years.   And the Wall Street Journal recently wrote “At Last! Banks Are Making New Loans.” Lately, small business owners are no longer telling me they’re fighting for survival; they’re talking about needing a loan to take advantage of a new opportunity, hire another worker or buy more inventory. There are additional signs that more money is getting into the hands of business owners.  The Department of Treasury began receiving reports from the banks that participated in the Small Business Lending Fund (SBLF).  Already these financial institutions, mostly community banks, have increased their small business lending by $3.5 billion.  And, the 27 states participating in the State Small Business Credit Initiative are also putting the funds to use, supporting lending to small businesses and small manufacturers.

Of course, we all know that even though lending is on the rise, there’s still more to be done.  That’s why SBA is working hard to continue filling gaps in the market place.  For example, we’re working with some of the largest lenders around the country, who last year committed $20 billion for small business lending over the next three years.  We’re also working to streamline our processes and make it easier for small businesses to benefit from our programs.  We recently revamped the CAPLines program to provide a working line of capital to certain businesses, including manufacturers and government contractors.  We also created new programs, such as Small Loan Advantage and Community Advantage, which incentivizes lenders to make small-dollar loans and opens up SBA programs to new lenders, such as CDFIs.  

We’re confident that this is just the beginning of the momentum small businesses need to keep growing and creating jobs.  Everyone at SBA recognizes that this is a critical time for small businesses, and we’re committed to helping them get the financing they need so they can lay the foundation for an economy built to last.

 

Small Manufacturers Driving Job Creation, Economic Growth
Karen Mills
Post date: 03/02/2012 - 20:07

Made in America is hot.  More than 400,000 manufacturing jobs have been created since the start of 2010 and there are currently about 229,000 job openings in the manufacturing sector, according to data from the Labor Department.

America’s small manufacturers are a critical part of that.  According to BLS and Census data, 98 percent of America’s manufacturing firms are small.  More than one in three Americans who work in manufacturing, work at a small business.  

Everyone from the President on down has been working very hard to make sure these firms have the tools they need to grow and create jobs.

For example, in 2010, President Obama signed into law the Small Business Jobs Act.  One of the most important provisions was increasing the limit on SBA loans from $2 million to $5 million.  The higher loan limits directly helped nearly 2,500 small businesses – including nearly 450 small manufacturers – with access to over $10.2 billion to help buy new buildings, buy more equipment, and hire more workers. 

We’re building on that momentum by taking even more steps to help small manufacturers.

For example, a recent study shows that access to a supply chain can help employers increase revenues by more than 250 percent and create 150 percent more jobs. That’s why SBA is working with America’s biggest companies to develop easier access to those critical supply chains.

In addition, the federal government itself is working to make sure we meet the goal of 23 percent of federal contract dollars going to small businesses, including small manufacturers.  Already, we have had two consecutive years of increases, with nearly $100 billion going to small businesses last year.

Also, a recent report on the state of capital access from the Manufacturing Extension Partnership (MEP) – a program of the U.S. Department of Commerce’s National Institute of Standards and Technology - shows a lack of available capital to manufacturers has “restricted the ability of many small manufactures to grow and compete.”  We’ve heard this and have developed new tools to support access to capital including a redesigned Supply Chain loan program (CAPLines) that provides low-cost, short-term financing to help small contractors and sub-contractors get the working capital they need to fulfill the contract, including creating jobs in the short-term. 

And finally, for those manufacturing small businesses that are poised for significant expansion and growth, the Small Business Investment Company (SBIC) program has been a great source of long-term, patient capital.  It had a record year in 2011, and over the past several years, more SBIC dollars from the debenture program have gone to manufacturing than any other sector. 

Through our continued work with the White House Office of Manufacturing Policy, the MEP, and many other partners, we will continue to help manufacturers create good jobs here over the long term.