Vice President Kamala Harris swears by Isabel Guzman as Administrator of Small Business Administration while husband Javier Guzman stands by her side at the White House in Washington on March 22, 2021.
Kevin Lemarque | Reuters
Isabella Casillas Guzman, the new administrator of the US Small Business Administration, began her tenure under President Joe Biden in March with responsibility for managing the government’s efforts to support the US’s more than 30 million small businesses. She took over an agency that was experiencing a scaling experiment because of Covid that would attract the attention of even the fastest growing startups.
“We scaled from a $ 40 billion portfolio to over $ 1 trillion in relief during Covid,” Guzman said at CNBC’s Small Business Playbook event on Wednesday.
Guzman is familiar with managing large sums of money on behalf of the government and entrepreneurs. She worked for the SBA under President Barack Obama and as director of the California office of the Small Business Advocate oversaw billions in aid to the largest state economy during Covid. But a trillion dollar grant machine is on a different mission, and Guzman tells CNBC there are still opportunities for companies to find the support they need to get back from Covid fully and get through this new period of uncertainty of the Delta variant .
“You still need our support now. You need continued relief efforts and access to capital and markets to sustain this recovery,” said Guzman.
While describing broad optimism among small business owners, even when faced with numerous challenges, she said the Delta variant creates concerns and “uncertainties on the horizon that may limit their recovery” – a view shared with the recently released CNBC | . matches Momentive Q3 2021 Small Business Survey.
Because of that, the SBA focused on “continuing to unburden our small businesses with billions of dollars,” Guzman said.
Here are some of the programs the new SBA administrator mentioned that are still available to small businesses.
Opportunities for financial relief for the SBA
While some of Covid’s financial relief plans are exhausted, Guzman noted that the American Rescue Plan is still running the Shuttered Venues Operator Grant program to support live venues such as stages, museums, and theaters.
This program has been criticized for providing financial relief and how fraud controls actually refused to help companies in need, but Guzman said the SBA was able to reverse the program. “We have over 10,000 approved applications and distributed over $ 8.5 billion as a result of just strong management within anti-fraud,” said Guzman. “Therefore, we firmly believe that we can reconcile the two and still put these funds in the hands of these intended companies.”
Additionally, the Covid Economic Injury Disaster Loan program remains available, which she described as both a loan program and an expanded grant program for the hardest-hit low-income businesses with fixed, long-term, soft debt.
This allows companies to position themselves with capital to take advantage of growth opportunities or simply position their companies to rebound from Covid, Guzman said. She added that the SBA is trying to make sure it is streamlined and accessible to more businesses during this period.
Support start-ups in the age of pandemics
One of the surprises of the pandemic is that many Americans took this as an opportunity to start a new business, whether it was elderly Americans pushed out of corporate careers or just entering the world of work during a crisis.
Guzman said one of the lesser-known roles the SBA plays are Small Business Investment Companies (SBICs), private companies licensed and regulated by the SBA that make debt and equity investments in small businesses. The SBA provides SBICs across industries and industries with their guaranteed financing, which then invest in companies.
She said the SBA work with SBICs is an area where she wants to do more. “We are reviewing the President’s Build Back Better agenda to create new SBIC programs, as we call them for Venture and Micro, to drive this next recovery and business opportunity,” said Guzman.
Additionally, grants through the Small Business Innovation Research Program and SBA are also an option that startups should know about, according to Guzman. These grants are designed to bring together startups working on ideas that could be funded by the federal government for core R&D before they are in the commercialization phase of a company.
“Small Business Administration is here with a variety of services for startups, cutting edge technology, science-based startups and small businesses from Main Street to Manufacturing, with core capital market access programs and networking to build your team,” she said .
PPP problems, lending in 10 minutes
While the paycheck protection program has been a lifeline for many companies that closed during Covid, it has also been criticized for an unfair approach to lending.
Guzman, the daughter of a small business owner and entrepreneur, said she grew up in a small business family that understanding your customers’ needs is a dominant issue to business survival, and the SBA must think so too.
“For the SBA, our customers, we need to make sure we are customer-centric and serve our businesses. That means entrepreneurship is changing with women and people of color who also start businesses at such high rates.” as a necessity for all of us to better serve these companies and connect them with resources, “she said.
The SBA recently launched their direct forgiveness portal, which focuses on small businesses that have PPP loans of $ 150,000 and less. Guzman said the SBA partnered with over 1,000 lenders on this platform so that companies could complete the process of getting their loans down in 10 minutes.
“Over 94% of the unspent loans are with these small businesses, and we want to make sure we can help them and our large network of lenders run these forgeable PPP loans,” she said.
Gender, Race, and Business Recreation
Start-ups that, according to Guzman, could be particularly in need of help are those that are run by founders of minorities.
“What we found particularly during Covid is that women and people of color are often faced with greater challenges and are trying to access those resources to either position or start their businesses for recovery,” Guzman said. “We need to make sure we are picking companies up where they are, considering the challenges they have faced over the past year and a half, and being ready with programs that can help them today.”
She said creating a network of community navigators funded by the American Rescue Plan will help connect local businesses to SBA programs. Adopting new technology to address the agency’s massive resizing from $ 40 billion to $ 1 trillion will also go a long way in making the SBA more effective, she said.
The labor shortage, Covid and small business
Financial relief from the SBA and help with access to capital has helped small businesses facing a tough job market as they try to get back on track, but Guzman said many of the conversations she has with small business owners showed that Covid concerns continue to be a large part of the labor shortage, not just competition for wages and benefits.
“They let me know that there are still concerns about Covid. And especially with the Delta variant,” she said.
The National Federation of Independent Businesses sees labor shortages translating into lost sales at its member companies, said Holly Wade, executive director of research at NFIB, citing data from its latest Covid survey. Also on the CNBC Small Business Playbook, she said the combination of continued competition from larger companies in the hiring market and the rise of the Delta variant will continue to challenge small businesses to maintain sales. “We may see the lost sales you saw again,” said Wade.
The American Rescue Plan allows companies to give their employees time to get vaccinated and recover, and access a tax credit that is built specifically into the federal Covid relief plan for them. “That’s what it’s all about. They want their main streets and business centers to return to normal. And that means we have to fight the pandemic,” Guzman said.
The CNBC | Momentive Q3 2021 Small Business Survey found that hiring difficulties are among the top challenges small business owners face as wages and benefits rise to keep employees and recruit new employees.
Uncertain prospects for restaurant relief
Restaurants in particular have faced both labor shortages and concerns about the Delta variant.
Guzman said the federal restaurant revitalization fund created by the American Rescue Plan had provided $ 28.6 billion to over 100,000 companies, but she added that demand was 2.5 times that amount.
“There are still restaurants, food and beverage companies that need support. We know they have been hardest hit and will often be the last to reopen in churches, but they define so many of our main roads, “she said.
Laws have been passed on Capitol Hill three times since the original permit ran out in July to add new funding for restaurants, including a recent effort by Senators last weekend, but no legislative effort has yet been successful.
Guzman said she couldn’t comment on any action Congress might take to further support the food industry.
NFIB’s Wade said the trading group is currently seeking new funding for restaurants, but stressed that small businesses should take advantage of today’s world. She referred to the employee withholding tax credit that many small business owners are unaware of. It offers a tax credit based on wages paid to employees of up to $ 33,000 per employee. “It is a bit technical to find your way around, but for many you will qualify. Small business owners should definitely check this out, ”she said.
Paychex CEO Marty Mucci recently told Jim Cramer on CNBC’s Mad Money that it processed over $ 3 billion in tax credits “what’s in your pocket to help you now.”
The $ 1 trillion Senate infrastructure package would end the employee retention tax credit three months early, October 1 instead of January 1, 2022.