The Answer for L.A. Is to Think Small : Economy: Small business will help revitalize our city, provided that loans are available and bureaucratic red tape is reduced.

In less than a month, either Richard Riordan or Michael Woo will become the next mayor of Los Angeles. I urge both candidates to focus, as neither is now doing, on the real issue--the economy. In particular, small business.

Job creation through expansion of small business is exactly what Los Angeles needs. More than 20 million small businesses in the United States account for more than half of the jobs in this country and provided almost two-thirds of all the job growth from 1976 through 1990. These statistics show that small businesses are the engine of economic prosperity.

Some critics say that small business does not create good, high-paying jobs. While it is true that many traditional “mom and pop” small businesses offer entry-level, minimum-wage jobs, those businesses buy equipment, supplies and furnishings not necessarily produced by minimum-wage jobs.

In addition, many small businesses offer high wages and high-skill jobs. For example, in the garment industry, entry-level jobs often lead to higher skilled jobs in sales, accounting, design and marketing--jobs with real growth opportunities. Los Angeles is blessed with tens of thousands of small businesses that produce goods that are shipped all over the world. These goods are transported by trucks through the Los Angeles harbor and airport, further generating thousands of jobs. We must not overlook, then, the economic multiplier effect of small business.

The next mayor must stop the city bureaucracy from discouraging small businesses from expanding, or even from opening in the first place. Lengthy delays keep jobs from being created and taxes from being paid. Small business cannot afford expensive lobbyists and lawyers that big business frequently uses to get through this difficult system.

Los Angeles is a unique city of ethnically diverse entrepreneurs willing to risk everything to start small businesses. While most small businesses startups are statistically destined to fail, every entrepreneur knows that beating the odds is what it is all about. About 90% of the businesses in Los Angeles employ fewer than 100 people but represent a large share of total employment. While the size of the small business is its greatest asset, because of its flexibility, at the same time it is also a major weakness when it comes to getting business loans and dealing with an entrenched bureaucracy.

The Small Business Administration announced recently that it has exhausted its funding until October. Los Angeles’ small businesses are SBA’s No. 1 borrower in the country. The need for business loans today is greater than it has ever been. Banks in the best of times are reluctant to lend to small businesses; in today’s economic climate, the odds on getting a loan are even more remote.

Regrettably, neither Riordan nor Woo is adequately discussing these economic issues, because these tough problems are not easily reduced to 30-second TV sound bites. Neither candidate has focused on realistic solutions to job creation.

The city should not waste its limited resources to help out big businesses that will not commit to staying in Los Angeles and investing in our communities. Nor should the city be antagonistic to big business and expect federal bailouts and entitlements. Both approaches do not take into account the new reality in Los Angeles and the need to take a new path of government-business cooperation to create the much needed jobs.

Here are a few concrete steps that the next mayor of Los Angeles can take to help small businesses:

* Leverage the city’s federal loan funding programs with local banks to provide greater access to capital. Loans should not be made by the city but by a nonprofit community development corporation.

* Promote our local businesses to the international trade delegations that come through the city every day.

* Establish a unit within the mayor’s office that oversees economic development functions of city departments, rather than trying to consolidate departments, which is likely to take years and cost too much.

* Give preference to businesses located in the city of Los Angeles when purchasing goods or contracting.

* Press for additional SBA funding from Congress--we cannot afford to wait until October for reinstatement of funding.

As a former candidate for mayor who espoused the importance of creating jobs through small business, I plan to put my money where my mouth is and go back into business and create some of those desperately needed jobs.