Sunday, 22 July 2018

Information and commentary for the small business banking industry

US Small Business Administration failing to help small business?

18 Jun

In the US, the major government support for small business is the Small Business Administration (SBA), best known for the loans it makes to small businesses. They are guaranteed 90% to be paid back by the government to lower the risk for the banks doing the lending. It is around $90 billion at present….

The SBA also runs counseling and mentoring services through a network of 800 Small Business Development Centers (SBDCs).

I don’t think the SBA is failing (I would get lynched) but I do think there is loads they should change to make their support much more effective. Their website or ‘window’ to the world is not the best.

I suggest axing the guaranteed loans. If someone can’t convince a bank to lend them the money in the first place, why should the government? It seems crazy to me; surely this is only encouraging US banks to lend to less-than-viable businesses. I say let the banks do their job. A shortage of capital is not the greatest challenge faced by small businesses; it is the application of that capital and creating a sustainable business. But I’m guessing because this is the core deliverable, the suggestion to axe these loans would fall on deaf ears.

Considering this, here is what I believe the SBA should change.

  • The SBDCs are often run out of Universities, or are part of a University outreach program. This is the wrong place for the SBDCs. SMEs don’t always want to visit a University for information or help. I would relocate these into less imposing organizations such as Chambers of Commerce.
  • The 800 SBDCs all look different and have different resources, structures, websites and services. They need a coordinated look and feel and some consistency of service.
  • Develop a content curriculum. The content on the SBA site has no sense of order, priority or investment – it seems they only list what has been given to them for free. They should first consider what small business owners need to know and then develop content – not provide content that has been sourced at no cost.
  • Get mobile. Develop applications for Apple and Android devices.
  • Develop self-help diagnostics. Not everyone wants a mentor or to talk to someone about their business issues. I agree that one-to-one mentoring or coaching is the most effective learning/assistance, but let’s be honest and admit that the majority of business owners in the US either don’t want to listen to someone else’s opinion on what they should do, or can’t travel or don’t want to travel. Having self-help diagnostics available online 24/7 would allow the SBA to be available to every business owner, not just those wanting a chat.
  • Have content listed under topics, not lifecycles. Users don’t want to search under ‘Managing a business’, they prefer topics like building a marketing campaign, driving traffic online, or developing a business plan.
  • Delete the registration process for accessing the online training. It isn’t even working properly – you can hit ‘submit’ without entering any data and still get in! If it is this easy to break, the data will be meaningless. Better to have the training freely available and then track user behavior.
  • Why send users away from the SBA website when recommending online training? Instead, they should be embedding the training like we do in this New Zealand portal:
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