SBA Lives but Must Refocus, Its Chief Says

The Reagan Administration has been trying to hang a going-out-of-business sign on the Small Business Administration for the last two years, but now the 33-year-old agency has a new lease on life.

After spending most of this year and last trying to ax the agency for its ineffectiveness, the White House has abandoned its plan to close the SBA’s credit operation, sell its loan portfolio and give the rest of its programs to the Commerce Department.

“The SBA will continue as an independent agency” but must achieve a “revival and refocusing,” Charles Heatherly, acting administrator of the SBA, told a crowd of about 100 small-business people gathered Thursday at the Los Angeles Area Chamber of Commerce.

“I believe that the SBA stands at a crossroads and at a historic opportunity that may not come again in this century,” said the controversial administrator who was named in April to champion the breakup of the agency.

“We need a new SBA,” he said. “We . . . deserve an SBA that’s worthy of the dynamism and creativity and sheer courage and toughness of the small-business community.”

The Small Business Administration provides loan guarantees and direct loans to small firms, gives management assistance and access to government contracts and acts as an advocate for the nation’s more than 14 million small businesses.

The SBA is considering the possibility of raising some loan fees, instituting fees for some services and tightening loan eligibility requirements to reduce the cost of the agency’s programs, Heatherly said.

“We don’t want to impose any new user fees that will impair the program itself. I know there’s some skepticism about that,” he said. “We don’t intend to use user fees as a back-door way of undermining programs.”

The plan to dismember the SBA was dropped because “it was recognized that it was just not politically doable,” Heatherly said in an interview. The Administration lacked the necessary support in Congress to get its proposal enacted, and small business took on the agency as a “symbolic issue,” he said.

“It was seen by many people as an attack on small business itself, which was never the intent,” Heatherly said.

The first hint that the Administration had given up its SBA phase-out plan came in August when White House Chief of Staff Donald T. Regan told the 1,800 delegates gathered at the White House Conference on Small Business in Washington that a permanent SBA administrator would be named soon.

Heatherly said Thursday that he is not a candidate for the job, which he expects to be filled early next year.

“I think there was a conscious decision to wait until after the November elections (to pick a nominee) to see what the new crop of ex-congressmen might yield,” he quipped in his speech.

Heatherly has drawn fire in a position he described as “banner carrier” at the SBA for the Reagan Administration.

When the former SBA deputy administrator was named acting administrator seven months ago, he promptly fired six of the agency’s 10 regional administrators, including the administrator based in San Francisco. A new regional administrator for San Francisco, Thomas Topuzes, was sworn in Monday.

During his speech Thursday, Heatherly was questioned closely about the possible plans for new or higher fees and tougher loan eligibility requirements. At one point, he was grilled by a private SBA lender about the growing length of time it takes to process loan applications.

The SBA’s effectiveness “varies from program to program and region to region,” Heatherly said in the interview.

“We have our strong points and our weak points and our success stories and our warts here and there,” he said.