District director, Small Business Administration
The Small Business Administration’s office in Santa Ana helps Orange County small companies compete against large corporations. Last year, the office guaranteed $150 million in loans to companies here. The SBA also counsels entrepreneurs trying to start new businesses and links venture capital investors with small businesses. Steve Waddell, 49, has been the office’s district director since 1988. He recently spoke with Times staff writer Susan Christian about the role of the SBA, both on the national and local level.
* What effect will the changing of the guard at the White House have on the Small Business Administration?
It appears to me that this President has a lot of interest in small business. In fact, he has commented on small business as the engine of growth, and part of his economic plan focuses on small business.
The President has indicated a desire to encourage loan availability through the SBA program. Our guarantee authority budget for 1993 was originally $2.6 billion, but his economic plan calls for $6.2 billion.
In his State of the Union address, the President called for a reduction in capital gains taxes for investments; in his economic plan he calls for tax credits for the purchases of machines and equipment. Both things would affect a small business growing fast, needing to buy equipment and attract investment money.
President Clinton also has shown a lot of support for the SBA’s venture capital program. This is important because we’ve experienced a five-year decline in venture capital commitments with respect to small businesses--from $4.2 billion in 1987 to $1.1 billion in 1991. That’s a powerful statistic because venture capital is key to the growth of small businesses.
The SBA has the only government venture capital program that exists, where privately owned firms can use their own capital plus funds guaranteed by the SBA to finance investments in small businesses.
This Administration has made a commitment to the SBA. That hasn’t always been the case with other administrations.
Do you feel that the recent Republican administrations focused more on big business than on small business?
I prefer not to comment about former administrations. I’m just saying that what we have seen of the new Administration bodes well for an effective SBA.
You sound optimistic.
I’m very optimistic about this leadership.
What are some of the more unusual businesses you’ve dealt with during your five years as district director?
To name just a few: a business owned by a handicapped person that manufactures tools for the handicapped; a start-up brewery; a company that recycles old computer parts; another company that plugs abandoned oil wells.
The ideas people have for new businesses are unlimited. With many of the ideas you think, “Gee, I don’t know how they could ever make that go,” but sometimes they do.
Does an out-of-the-ordinary idea stand much chance of obtaining an SBA-backed loan?
Uniqueness can be a negative in that respect. A business that we have never seen before certainly is going to be considered more questionable. Risk analysis is key to loan approval. We need to feel comfortable that the business can repay the loan from its profits. That’s why the loan program is mainly for expansion purposes, not for new businesses. Our SCORE counselors are the ones who deal with start-up businesses.
What is the SCORE program?
Service Corps of Retired Executives--a volunteer group made up of experienced business men and women who are retired. They give free counsel to people who have a small business or who want to start a business. We have about 60 counselors, who talked with more than 4,000 people last year.
Some of the questions they answer are: What agencies do I have to apply with to start or expand a business? What are the pitfalls I should be looking out for? How should I organize my business--as a sole proprietorship or as a partnership?
Do the entrepreneurs you see in Orange County differ from those in other areas?
This office covers San Bernardino and Riverside counties, and I’ve worked in the Los Angeles office, so I have some perspective on this matter. I don’t want to insult our sister counties, but I would say that the people in Orange County are far more sophisticated--we tend to get very sharp people here. They’ve thought their business projections out, they have plans, they come in serious. You would expect that of this county, where people are wealthier and highly educated.
What is the SBA’s definition of a small business?
An independently owned and operated business that employs fewer than 500 people.
What are some local businesses that have become success stories with help from the SBA?
Back in 1981, we approved a loan through our minority business program for a small company named Infotec Development Inc. Now Infotec is one of the largest Latino-owned companies in the country. (The privately held software developer in Santa Ana reported 1992 revenue of $126 million.)
Original Parts Group Inc., which supplies parts for classic cars, got an SBA loan in 1990. The company used the money to buy a commercial building, which allowed it to increase its capacity of business. It has grown very fast, and today it is very successful. (Original Parts in Costa Mesa said its revenue grew 40%, to nearly $7 million, within two years of receiving its loan.)
I drive down the street and see all sorts of businesses that received loans through the SBA--restaurants, liquor stores, computer manufacturers, a lawn mower shop in Huntington Beach that does quite well. We’ve touched a lot of businesses.
On the new presidential Administration. . .
“We appreciate having someone on board who understands what small businesses need. And this is an Administration that appears to be comfortable using government programs.”
On his office’s focus on high-tech companies. . .
“High-tech companies tend to grow fast, and they need a lot of employees to satisfy that growth.”
On a new wave of entrepreneurs. . .
“We have a lot of people in Orange County coming out of the defense industry looking for opportunity to start a business.”
On the importance of SBA-backed loans. . .
“The SBA’s program allows financing over a long period (up to 25 years)--something that otherwise would not be available through most commercial banks. A lot of good companies could not have survived without SBA loans.”
