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Speeches & Op-Eds

National Minority Supplier Development Council

Speech Date: 
Monday, October 31, 2011
As Prepared For: 
Marie Johns

Good morning.  Thank you for having me.

Thank you, Joset, for that introduction.  I’m very pleased to be here. 

The SBA is lucky to have NMSDC as a partner.  You play a crucial role in supporting America’s small businesses. 

As we look at new ways of growing our economy, the SBA is committed to supporting small and minority suppliers.

For many small businesses, becoming suppliers to large companies is a key strategy for growth.  Supply chains are a stable and predictable source of revenue.  They are a fundamental way for small businesses to grow and thrive.

According to the Center for an Urban Future, small business suppliers reported revenue growth of 250% in their first few years of working with a large corporation.  At the same those businesses saw employment increase by 150%.[1]

It’s clear that more small businesses would benefit from entering supply chains.  Our economy would benefit, too.  After all, small businesses employ half of American workers and create 2 out of 3 new jobs.

But small businesses face numerous challenges and barriers to entry.
 

The difficulties are two-fold:

First, there’s an information gap.  Many small businesses don’t know where to begin.  Large corporations have complicated supply chains with no clear means of entry.  And as you know, small business owners have enough to do without spending time marketing to large companies.

Second, financing is difficult.  Small business suppliers struggle with access to working capital and lines of credit.  Credit needs are never more profound than when bridging the gap between payables and receivables.

The President understands this.  The SBA understands it.  And, in fact, so do many of the agency leaders across the Administration.

To eliminate the information gap, the SBA works with organizations like NMSDC to make sure small businesses have the information they need.

And through the President’s Council on Jobs and Competitiveness, we’re working to raise awareness of the benefits of entering supply chains.

The SBA also helps small businesses become federal contractors and sub-contractors. This is important because, after all, the federal government has the world’s largest supply chain—and small businesses benefit to the tune of $100 billion a year. 

Small businesses looking to get into government contracting can find support through our 8(a) program and our network of counselors.

The Small Business Jobs Act contained a number of provisions to further support small business contractors.  For example, the law holds large prime contractors more accountable to their subcontracting goals.  And it created a pilot program to help more small businesses enter into teaming arrangements to bid on large contracts.

On the capital side, the SBA has financing tools, like 7(a) loans.

Here in Atlanta, APA Color Graphics used a 7(a) working capital loan to expand in the face of recession.  The firm designs and produces signage and branding for large corporations like Delta, Baskin Robbins, Popeye’s, and Dunkin Donuts.  Now, thanks to their 7(a) loan, they had the capacity to bid on and win a contract providing signage for Pratt Whitney at 21 locations worldwide.

But we can do more.  That’s why I’m pleased to talk about our newly restructured CAPLines program that went live on October 1.

CAPLines helps small businesses meet their short-term and cyclical working capital needs.  

We recently made changes to the program, to make it easier for lenders and small businesses alike. 

These new guidelines were based on conversations with small businesses and community lenders in all 50 states.  The SBA conducted the outreach and released the guidelines all within three months, because the President knows, Karen Mills knows, and I know that we can’t wait to take action that helps grow business and create jobs.

First, small businesses can now borrow against purchase orders.  If you are fulfilling a purchase order request, you can use that order as collateral to obtain an SBA-guaranteed line of credit to pay for labor, materials, and overhead.

Second, CAPLines borrowers don’t need to pledge all available assets.  That means small business owners without buildings or equipment don’t have to use their personal assets to secure working capital.  CAPLines lets them pledge accounts receivable, inventory, contracts, and purchase orders.

Finally, for the first time, small businesses subcontractors can obtain an SBA-guaranteed line of credit to finance their work on a federal or private contract.  And small businesses working on a contract that requires surety bonding can obtain an SBA-guaranteed line of credit as well.

These new guidelines will go a long way towards helping small suppliers grow and create jobs.  For the small business contractors and suppliers in the audience, there are lenders in your state that are ready to make CAPLines loans today.

Of course, there is still more work to do.  The SBA is committed to helping more small businesses grow by becoming suppliers.

We’re looking at private sector examples that we can build on and amplify.  For instance, IBM created Supplier Connection, a web portal that connects small businesses with opportunities to become suppliers to Fortune 100 companies.  We want to build on that.

We can also support small businesses by passing the American Jobs Act.

The President has repeatedly called on Congress to pass his plan for putting Americans back to work. 

Payroll tax cuts in the American Jobs Act will help small business grow and hire more workers.  And the Act contains billions of dollars in infrastructure investments which means more contracts for small firms.

At the same time, we know we can’t wait for Congress to do its job, so the President is acting act where they won't.

The administration is speeding up payments to small business contractors.  

Federal agencies are taking steps to speed up the transfer of federal research and development from the laboratory to the marketplace. 

And the White House is launching BusinessUSA, an online platform where small businesses that want to begin or increase exporting can find out about federal programs.

While we will work with Congress to bring up the American Jobs Act piece by piece, the President will continue to take action because the American people simply can’t wait.

Our problems are too serious.  The stakes are too high.  That’s why we will keep fighting for small business owners like you.

Small businesses are leading the way to a full economic recovery.  And we know that building a network of strong, diverse suppliers is a key part of that growth.  That’s why all of us at the SBA and in the Obama administration are so pleased to have an ally in NMSDC.

Whether you’re a small manufacturer who wants to become suppliers to large corporations... or an established company looking to grow through federal contracting... the SBA is standing by with the tools you need. 

And my commitment today is we will keep working with you, and fighting for you, every step of the way.



[1] According to a study by the Center for an Urban Future, small businesses who were suppliers to large corporations reported revenue growth of more than 250 percent, on average, between one year before and two years after their first sale to a large corporation. For these same small businesses employment increased by more than 150 percent on average.