Bush may trim SBA budget.

Less loan money at higher interest rates is planned for small businesses

When it comes to business, does President George W. Bush talk the talk and then walk in the opposite direction? There's no question that he's pro big business. The stands he has taken on such issues as energy and the environment--or a simple trip to the gas pump--make that clear. But those who need his support most--the fledgling entrepreneur who has a hot, new idea, or minorities and women who need a helping hand to improve or expand their businesses--they're on their own, it seems.

When Bush sent his budget for fiscal year 2002 to Congress this spring, it called for a 40% slash in the Small Business Administration's budget and the elimination of such programs as the New Market Venture Capital Program. "He has started on a slippery slope when it comes to small business," laments Rep. Juanita Millender-McDonald, D-Calif. "This budget is a clear indication that he is not compassionate, but he is a conservative."

To make up for the loss in funding, Bush has proposed an increase in fees for both borrowers and lenders who participate in the SBA's guaranteed loan program. He also proposes that the agency begin charging fees to entrepreneurs who use its small business development centers for much needed technical assistance and financial counseling.

"The administration's fiscal year 2002 budget request amounts to a retreat from the good work delivered by many of the core programs within the SBA," says Sen. Kit Bond, R-Mo., the former chair of the Senate Committee on Small Business. "We are beginning to see a trend in this request--replacing appropriations with more fees for services. Unfortunately, those fees would fall on the shoulders of those that are least able to support them."

So far, Republicans and Democrats in both the House and the Senate have been united in their opposition to these changes. "It is a formula for disaster," said Rep. Nydia M. Velazquez, D-N.Y., at a House Small Business Committee hearing in May. "Is that what we should be doing in an economy that has more questions than answers?"

Apparently not, say both houses of Congress. Sen. John Kerry, D-Mass., who now chairs the Senate Committee on Small Business, has put plans to restore the cuts at the top of his to-do list. He has already secured bipartisan support for an amendment to do so. "With this changing of the guard, we will look to the Senate to stop all of this renegade legislation," says a hopeful Millender-McDonald.

The Senate will also be taking a look at Hector Barreto Jr., Bush's nominee to head the SBA. He is founder of the Los Angeles-based Barreto Insurance and Financial Services Inc., and has held leadership positions in the U.S. Hispanic Chamber of Commerce and other professional organizations. He was also co-chairman of Bush's California campaign.

Barreto will most likely pass muster but will also face some difficult challenges in Washington, political sources predict. He will have to answer to a Congress that expects him to act one way while the White House pressures him to make cuts and stick with the party line. "It's really a balancing act," says Millender-McDonald, pointing to the heads of the Environmental Protection Agency and Health and Human Services, who are in similar positions. "Those who have more moderate stances on issues are having to back up and do an about-face because of, the administration. The verdict is still out on how sensitive he will be to the cries of the communities of color."