Creating Jobs and Winning the Future

Speech Date: 
Wednesday, May 4, 2011
Speech Location: 
Miami Chamber of Commerce, Miami, Florida
As Prepared For: 
Karen Mills, SBA Administrator

Thank you, Chairman Alonso. Congratulations to your award winners who are doing such great work here in Miami.

President Obama was here a few days ago at the Miami-Dade College graduation. He talked about equipping graduates with tools to compete and win in the 21st century. How many of you graduated from local colleges here in Miami?

So, you know that’s exactly what we have to do: Out-educate. Out-build. Out-compete. Out-innovate the rest of the world. That’s how we’re going to create jobs and win the future.

But it’s not government that is going to create those jobs. It’s businesses like yours. Where are our small business owners here today?

Your President (Barry Johnson) said in an email to me that small business is the “bread and butter” of Miami-Dade County. That’s true for our country as a whole.

Small businesses create 2 of every 3 new jobs. More than half of Americans who work, own or work for a small business. And right now, small businesses are driving our recovery, as they’ve done time and again throughout U.S. history.

Our job in Washington is simple: Put the wind at your backs. Today, I want to mention 4 ways we’re doing that. We step in when the unexpected happens. We step in when the market isn’t working. We provide more opportunities in the global market. And we work to maintain a foundation of stability.

First, the unexpected. The tornadoes in the South.

As you might know, the SBA provides disaster loans to businesses, homeowners and renters after disasters strike.

Sunday, I went to Alabama and Mississippi and saw communities that were devastated by one of the worst storms in U.S. history. It was heart-wrenching.

I spoke with a woman who’d lost her home and found nothing but a picture and a shoe several yards away. I talked to a mayor whose town was devastated and is concerned that his biggest employer might relocate. I know that we can’t fill the sense of loss they have right now, but we are doing everything we can to help them get back on their feet quickly.

Already, we’ve activated 75 SBA staff and we’ve helped create 10 Disaster Recovery Centers across Alabama, Mississippi, and Georgia, with 15 more centers to come.

And I’m confident we’ll get the job done right, because our disaster operation is working better than ever… When Katrina hit in 2005, it took us 70 days to turnaround disaster loan applications. Since then, we completely reengineered the process. Today, it’s taking just 10 days.

We’re going to be there for those communities. And we’re going to stay as long as necessary.

And if a hurricane or disaster hits this community, you can bet that we’ll be here for you, too.

But – beyond disasters – we have an important day-to-day role in supporting small business. That means we need to step in when the market isn’t working like it should.

We think of this as “filling the gaps” – providing access to things like capital, federal contracts, and business counseling. (We call those our “3 Cs” of the SBA.)

In particular, maintaining flow of capital to the hands of small business has been a top concern for the past 2 years.

Through SBA loans, we share risk with private lenders so they can go ahead and make that loan to a good borrower who might not quite fit their profile.

SBA loans are about 3 to 5 times more likely to go to women and minorities than conventional loans. So SBA loans are critical in diverse communities like this.

But in 2008, credit markets froze. Banks stopped making their own loans as well as SBA loans, despite our government guarantee of 75%.

That’s why the Recovery Act was so important. We increased the SBA loan guarantee to 90% and we waived our loan fees.

That formula worked.

We brought over 1,000 lenders back to SBA lending at a time when credit was extremely tight. Altogether, in 2009 and 2010, we took just $1.2 billion in taxpayer money and turned it into $42 billion in private sector lending. That’s what we call a big bang for the taxpayer buck.

What did that mean for South Florida?

In this area alone, we provided 2,500 loans totaling $1.3 billion in lending support. And I should mention that 500 of those loans went to folks who identified themselves as Hispanic.
Today, we’re seeing signs that conventional lending is ticking up. I’m sure you’ve seen the ads from banks that are geared to small businesses.

That’s good news, but we still have work to do. I’ll just mention one other gap that we’re working to fill.

Studies show that small dollar loans are critical for business formation and growth in underserved communities. But we also know that these communities were hit hardest by the credit crunch.

We took action earlier this year. We streamlined the paperwork on loans up to $250,000 for some of our high-volume lenders. Also, we’re allowing mission-focused lenders to start making these streamlined loans for the first time.

It’s called Advantage, and these loans are heading out the door. In fact, our first Advantage loan went to an African-American, woman-owned pharmacy outside of Atlanta.

We want more stories like that, and we’re working with lenders throughout the U.S. to make them happen.

And we’re also working with lenders to finance more small exporters.

I know that exporting is a huge issue for the business community here in Miami.

Miami is a beacon for U.S. trade. There’s a big sign planted at the end of Florida that says, “Made in America.” “Shop here.”

One story: National Small Business Week is less than 2 weeks away. Every state has one winner who goes to DC. From Florida this year is Jose Lopez who makes environmentally-friendly pesticides in Port Charlotte. Like some of you, he exports products through Miami to South and Central America.

In May 2009, things didn’t look so good for Jose. His bank was about to pull his line of credit despite the fact that he was doing well and making his payments. The bank was concerned about the risk of his foreign receivables.

So Jose called Mary Hernandez at our SBA office here in Miami. She set him up with a new lender who gave him an SBA Export Working Capital loan.

Last year, his sales went up 35%, he has hired 3 more people. I was actually going to invite him to be here today, but it turns out he’s in Guatemala. Most importantly, though, Jose said that without that loan, he probably would have had to close up shop.

That’s a perfect example of why we do what we do.

Here in South Florida, we’ve seen an increase in SBA export loans – like Jose’s – over the past 4 years.

We’re building on that momentum through things like the Small Business Jobs Act. Through that law: we’re training counselors to be certified in export counseling… we’re granting $30 million a year to state-based export assistance programs… and we’re making permanent a pilot that offers quick turnarounds on export loans.

On a broader scale, we’re also working on free trade agreements with Korea, Panama, and Colombia.

Already, the Korea and Panama deals are ready to go. And I know that many of you here in Miami are watching Colombia’s trade deal, which could be ready soon.

We’re making good progress on that deal. Once it is enacted, we expect to expand U.S. exported goods by more than a billion dollars – which translates to thousands of good, well-paying U.S. jobs.

The specific benefits are similar to the Korea deal.

We’ll get more access to Colombia’s 134-billion-dollar services market…

We’ll get greater IP protections for our firms…

And more than 80% of tariffs will go from 7 to 14%… to zero. This includes consumer goods, agricultural equipment, construction equipment, aircraft and auto parts, fertilizers, IT equipment, medical and scientific equipment, paper products, and more.

Jose Lopez, who I mentioned earlier, is ready for these barriers to come down. And I know this Chamber is, too.

Our commitment is that we’re going to work with Congress to move these agreements forward as quickly as possible… so that you can unleash even more American innovation into the global market.

Finally, we must maintain a foundation of stability in order to build on our momentum in the economy.

I came to Washington 2 years ago as someone who owned and invested in small businesses. I wasn’t a Beltway Insider.

I try to hold onto that perspective. I strongly believe that one of the most fundamental purposes of government is to maintain an environment where business can get done.

So, with the deficit, we should and will work to reduce it in a balanced way that won’t hurt small business. We are already finding ways to tighten our belts without hurting recovery.

Raising the debt limit is a separate issue, and we can’t play politics with it.

Tomorrow, the Vice President will sit down with members of Congress to help them reach a consensus. We’re confident that Congress will do the right thing.

If they don’t, the impact on small business would be catastrophic. For example, the government might have to stop payments to small businesses contractors. That means if you won a Defense contract and you bought expensive equipment and staffed up, you’re now stuck with a mountain of debt and no pay.

Or let’s say you’re a rural doctor who owns a small clinic with a lot of Medicare patients. You might not get paid for taking care of them.

This would be an unacceptable situation for small businesses, for workers, and for people who need them, including our military and our seniors.

In addition, if a default actually occurred, all small businesses would see interest rates skyrocket overnight. The lending markets – their lifeblood for growth and hiring – could once again freeze.

So let’s be clear: Increasing the debt limit is not up for debate.

It needs to happen, and it needs to happen soon so that the entire world knows that American businesses – both large and small – are moving forward with 100% confidence and certainty.

And we know that you are – indeed – ready to move forward. So I’ll close with a quote.

A couple of months ago, we rolled out an effort called Startup America at the White House.

It involves a number of initiatives (such as $2 billion for investment in underserved, emerging, and early-stage firms… a new Mentor Corps to help high-growth entrepreneurs… and an effort to reduce regulatory barriers to entrepreneurship).

What I remember most from that day was when a young entrepreneur named Jennifer (Zeszut) approached the microphone. She said something that resonated with me – and I’m sure it resonates with you:

“We entrepreneurs are a strange breed. We work around the clock and then sleep on the floor if need be. And when we do sleep, we dream about our startups. Clearly, we do not do this for the money – too often most of us work for little or no pay. Why do we do it? Think of us as sled dogs – born to run with new ideas. We don’t wait around for someone to create a job for us. We are job creators. It is passionate work. […] It is productive work. […] And it is deeply connected work. This is the kind of work this country needs. We are entrepreneurs. We are sled dogs. Support us. Connect us. Finance us. Make it easier for us to do what we do. Let us run. I promise, we will pull America forward.” Unquote.

Today, the SBA and this entire Administration is working harder than ever to support you, to connect you, and to make sure you have the tools you need.

You’re the sled dogs that are pulling us all forward.

Thank you for working with us to do what you do best: create jobs and win the future.