SBA’s cash crunch hits women

Special to The Times

To serve the fast-growing ranks of female business owners like Kathy Macias, who runs a Riverside auto repair shop, the Small Business Administration has added more than two dozen assistance centers in the last two years.

Now, that pace has ground to a halt.

No new federal women’s business centers will open in the 2009 fiscal year, which starts Oct. 1, because of funding constraints, according to the Small Business Administration official who oversees the grant program.

The $13-million program also has capped the size of the grants it will award to the oldest centers for fiscal 2009.


“Unfortunately, the appropriations from Congress were only enough to fund the existing centers and returning centers,” said Anoop Prakash, associate administrator for the agency’s Office of Entrepreneurial Development, which oversees the women’s program.

The halt in funding comes after the office made grants for 25 new centers in fiscal 2007 and 2008, bringing the total to 116. Last month, the Senate passed a budget bill that would boost fiscal 2009 funds to $17 million, but Prakash couldn’t say whether that would mean more centers.

Such operations are important to budding entrepreneurs, including Macias, who credits the CHARO-SBA Women’s Business Center in Riverside and its director, Lizette Escobedo, with much of the success of her year-old venture, Fernando’s Auto Care.

A homemaker with seven children, Macias wanted to open an auto repair shop last year with an inheritance she had received. A friend encouraged her to go to a local new-business networking event, but she was nervous in the room full of professionals in business suits.

“I was really self-conscious,” Macias recalled. “I didn’t know how to talk to them.”

Escobedo, who was at the event, found Macias, introduced her around and signed her up for a free business training class at the center.

“That little class opened so many windows for me,” said Macias, who now employs four people, including her husband.

Macias is one of the 150,000 people nationwide who used women’s business center services last year, the SBA said. They came for training, mentoring, business development help and financing advice.


Typically, a client of such a center wants to open a small business or is in the start-up phase with median revenue of about $50,000 and two or fewer employees, SBA data show. About half are minorities or in underserved communities.

Female-owned businesses are the fastest-growing segment of the economy and account for about one-third of private businesses, compared with 5% in 1972, according to the Center for Women’s Business Research.

But they remain small -- 86% are sole proprietorships, compared with 73% of firms owned by men. And female-owned businesses in the main have lower incomes than those owned by men.

Michelle Butler wants to improve those statistics.


Until she learned last week that no new centers would be funded to open in 2009, she had been expecting a call any day from the SBA with news that her fledgling San Diego nonprofit had won a grant to become the state’s newest women’s business center.

She already had plans for how the Women’s Business Center of California would add bilingual consulting and business training classes. She intended to publish training materials in Spanish as well as English and to boost the bilingual interactive offerings on the center’s website.

“With the grant we will be able to plan our mandate, properly organize and have a very clear path,” Butler said. Without it, her 18-month-old organization will struggle along with smaller local grants, she said.

Butler’s projects are just what Congress had in mind in 1988 when it created the Women’s Business Center program. Congress uses taxpayer dollars to encourage female-owned small businesses as fuel for economic growth.


The program now includes 18 centers in California. Southern California, with 10 centers, accounts for about 9% of the national total.

Funding levels for the national program have remained a challenge, with the budget holding steady for the last few years at about $13 million.

The relatively flat funding, coupled with a change in the law last year that allows centers to apply for three-year grants indefinitely instead of having to graduate after two five-year grants, pressures the agency’s ability to fund new centers. By law, no center can receive more than $150,000, a level the SBA has tried to reserve for new centers.

The agency issued its program announcements for new centers before it knew what the fiscal 2008 appropriation would be, Prakash said. That’s how it ended up with 24 applicants for 2009 centers that it will not fund.


In recent months, the agency has taken steps to improve its grant process for women’s centers, he said, responding to complaints about slowness and inefficiency.

As for Macias, her new networking skills have landed her the fleet-care business for several local outfits, including a Marriott hotel. Talking about her business has helped her hone a “female-friendly auto shop” marketing message that illustrates her passion for helping women, based on the hard times she faced as a former single mom on welfare trying to get her car fixed.

Now she prowls the once-dreaded networking events, looking for women who have the scared look she once wore.

“I cannot stop talking about the women’s business center,” she said. “I would give them 75% of the credit for my growth.”