After 5 Years, the Local SBA Financial Service Center Is Still a Start-Up

Although dozens of cities nationwide boast One-Stop Capital Shops--small-business financial service centers conceived by the federal Small Business Administration--Los Angeles is still struggling to get one going.

After nearly five years, three proposed locations and three co-sponsors, the center here exists only as a skeletal operation. And word is out that the mayor’s office, whose Minority Business Opportunity Committee came on board in March as the latest co-sponsor, is fast losing patience with the bureaucratic crawl.

Bureaucracies are inherently slow, but the One-Stop shop in Los Angeles stands in marked contrast to Oakland’s operation. Work on that center began four years ago. By 1997 financing workshops were being held, and the next year loans were being made.

Today, the Oakland One-Stop has made 17 loans to inner-city small businesses, using $4 million in One-Stop direct loans to secure another $9 million from bank lenders for a total of $13 million.

“Some are a little surprised at the success we’re having,” said Gregg Garrett, manager of the Oakland One-Stop.

SBA officials here say that although it’s been a long road to get the Los Angeles One-Stop up and running, the SBA has not been failing small business. About $88 million in SBA-backed loans went to small businesses in Southern California’s empowerment zones last year, said Alberto Alvarado, district director of the Los Angeles office. The One-Stop shop, he added, is closer than it’s ever been to adding to that loan record.

“We may not be happy it’s taken longer than we wanted, but we’re happy with the partnerships and the relationships we’ve built,” Alvarado said.

But the One-Stop dilemma only emphasizes the contrast between slow-moving bureaucracies and the fast-moving small-business world they seek to help. No estimate exists of the number of small companies that, for lack of timely financial help or counseling from the proposed SBA One-Stop, may have gone under in the last five years. But delays and snags are common in such public-private partnerships.

For example, it took nearly a year to resolve a dispute over who should run a statewide health insurance pool for small businesses. And it took nearly two years to find an operator to replace Accelerate Technology, the former high-tech small-business development center in Orange County, after UC Irvine pulled the plug in 1997.

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Today new operators are on board for both.

The Pacific Business Group on Health now runs the state small-business insurance pool, formerly known as HIPC, the Health Insurance Plan of California. PBGH wants to give the little-known pool a higher profile and has changed its name to Pacific Health Advantage, or PacAdvantage.

The pool lets small firms with two to 50 employees select from 15 health plans and seven dental plans. Domestic-partner benefits have been added, as have two vision plans and a Web site, https:///www.pacadvantage.org.

“We’re holding seminars for [insurance] brokers, developing employee newsletters and enhancing our benefits to make it more of a complete package for small business,” said Emma Hoo, PacAdvantage services manager.

Meanwhile, the Orange County Business Council finally secured state approval to run what it will call Venture Point-Tech SBDC (Small Business Development Center). Jointly funded by the state Trade and Commerce Agency and the federal government, the $325,000 annual contract requires the business council to pitch in about a quarter of the money needed to run the center, which will focus on assistance to fast-growing, early-stage companies.

The council considers the SBDC part of its expanding operations, which include economic development, international marketing, promotion of tourism and a public affairs component focusing on the Legislature and business issues.

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Yet, while these small-business efforts have finally moved forward, One-Stop seems almost back where it started five years ago. Then, the SBA’s Alvarado was working with Forescee Hogan-Rowles, executive director of the Community Financial Resource Center, which provides financial services and counseling to small businesses in Los Angeles.

Computer equipment had already been moved into the CFRC location on South Figueroa Street and the One-Stop was about to take off, but last-minute disputes over marketing and office access killed the deal and the equipment was pulled.

Alvarado then searched for a home with the USC Business Expansion Network as a co-sponsor, but the SBA got caught up in political wrangling over a proposed site at 81st Street and Vermont Avenue, and Alvarado pulled the plug. Now the SBA is working with the city.

But while Oakland eagerly embraced the One-Stop concept by making the operation a city department and providing $1.4 million and nine full-time employees, the city of Los Angeles came on board with some trepidation because of the One-Stop history here.

In March, city officials approved spending $75,000 for the operation, mostly in free rent at the Watts Civic Center on Compton Avenue. Implementation of the program has been up to the SBA, which so far has sent to the office a couple of SBA employees who answer the phone, make referrals and buy furniture. The SBA is still struggling to form a separate nonprofit corporation to run the One-Stop operation. Alvarado said a 17-member board is on the verge of being named. Once the board is in place, staffing can go forward and partnerships with banks can be created.

And therein lies part of the problem. Already, nearly a dozen similar small-business financing operations exist in Southern California, such as the CFRC, the Valley Economic Development Center, Operation Hope’s banking center, TELACU, Charo, FAME Renaissance and the Vermont Slauson Development Corp. Some of these providers fear that the SBA’s late entry will end up duplicating services and creating even more competition for bank dollars and support.

“It’s almost as if there’s an egotistical feeling that ‘we are the U.S. government and we will make it different and better,’ ” said one observer. “But they’ve still got to raise money from the same group of bankers.”

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Alvarado said the SBA enjoys good working relationships with all the service providers and that small-business owners will be helped by the addition of another lending agency.

“It’s not as if we did 10 deals and that’s the sum and total of the deals out there,” Alvarado said. “There are good deals to find and fund in these communities. We don’t need one Operation Hope Banking Center, we need 20, and we need 20 One-Stop Capital Shops.”

To the struggling small-business owners who need help writing a decent financial plan or getting expansion loans, the details of the rivalries and the ins and outs of the dispute are of little interest. Another financial player on the horizon is good news to them. Such entrepreneurs only look forward to the day when the red tape and delays are finally overcome and a new service provider opens its doors.

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Times staff writer Vicki Torres can be reached at (213) 237-6553 or at vicki.torres@latimes.com.