SBA to the Rescue

At the SBA, Latinos are leading the pack

By Ana Radelat

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For Bibi Hidalgo, helping small businesses emerge from the COVID- 19 economic crisis is not just a job. It’s personal, because like with many Americans, the virus hit home.


The pandemic upended Hidalgo’s life, just as it has many small businesses that had to shut down or lay off staff and struggle in other ways to stave off bankruptcy. Now it’s up to Hidalgo and the other new Latino officials at the Small Business Administration (SBA) to try and boost the fortunes of Latino and minority-owned entrepreneurs, something President Biden has said is a priority.


The health of the Latino business community is inexorably linked to the economic well-being and success of our country. While non-Latino small businesses have grown by about 1% percent over the past 10 years, Latino-owned small businesses have grown 34% and contributed $500 billion to the U.S. economy. And there are no signs that this activity is slowing down.


A Cuban American, Hidalgo was appointed to boost the number of contracts to small and disadvantaged businesses under the leadership of Small Business Administrator Isabella Casillas Guzman, a member of President Biden’s Cabinet.  As the SBA’s Associate Administrator for Government Contracting & Business Development, she oversees and reviews procurement-related policies for small business contractors hoping to work with the Federal Government, including Woman-owned, Veteran-owned, Socially Disadvantaged, HUBZone, and 8(a) Minority Business Development Program small businesses.  


“To say the United States government is your client is a gamechanger,” she said.
Hidalgo had worked at the SBA during the Obama Administration and on Biden’s transition team. When first offered the appointment at the SBA, Hidalgo was mourning the death of her brother Patrick, who died at age 41 in March 2020. He suffered from undetected heart disease, but his family believes the cause of death was complications from one of the nation’s earliest cases of COVID.


Patrick Hidalgo was Obama's Hispanic vote director in Florida during the 2008 presidential election, and served as director of business engagement at the Obama White House. When he died, he and his sister were running a firm that sought to partner Fortune 500 companies with women and minority owned businesses. She still can’t speak about his death without succumbing to emotion.


Hidalgo said small Latino businesses were disproportionally hurt by the pandemic and that motivates her. The economic struggle of her parents is also an incentive. Her father, Manuel was a purchaser of medical supplies for hospitals. Hidalgo was born in Chicago and her family, which included five children, moved several times before settling down in Miami. 


“A lot of this goes back to what we experienced growing up,” she said. “My dad was usually looking for a job and we had a hard time getting a footing. My brother started work at 13. I started work at 14. We all l would bind together to make it. It made us aware of the struggles that immigrants and children of immigrants face.” 


According to Hidalgo, entrepreneurship is attractive to Latinos because they often hit “glass ceilings” working for the private sector: “They think, ’if I can’t be the head of this company, I’ll be the head of my own company.’” 


Mark Madrid, the former CEO of the Latino Business Action Network and the Stanford Latino Entrepreneurship Initiative, joined Hidalgo as SBA Associate Administrator.  Hidalgo and Madrid lead two of the largest units in the Agency. As the SBA’s Associate Administrator for the Office of Entrepreneurial Development, Madrid is in charge of the new $100 million Community Navigator Pilot Program, which issued grants to 51 organizations that will work with hundreds of local community navigators to connect America’s entrepreneurs to SBA and other federal, state and local resources.


Like the Department of Housing and Urban Development, SBA is an agency often used by the White House to fulfill promises of diversity in the Cabinet. Latinas and women have often headed the SBA in recent years, including Trump’s SBA administrators, Linda McMahon and Jovita Carranza.


Ramiro Cavazos, president and CEO of the U.S. Hispanic Chamber of Commerce, said that SBA and HUD often were headed by Latinos and blacks because much of their focus is on minority populations.


But he said the Biden administration is different. Besides having three top Latino officials (Guzman, Madrid and Hidalgo) at SBA, it also has many other Latinos at the executive level.


Cavazos is part of Proyecto 20%, an effort by a coalition of Latino groups headed by UnidosUS President Janet Murguía to urge that at least 20 percent of the 4,000 positions filled by the Biden administration are held by Latinos. “We need to demand it we need to expect it and we need to own it,” Cavazos said of Latino representation in the Biden administration, noting that SBA is probably the agency that’s closest to that 20 percent mark. 


According to him, Guzman is “a champion of diversity.” The Senate in March overwhelmingly voted to confirm her 81-18. She called for a level playing field for minority owned businesses during her confirmation hearing. “There are many communities that face barriers to capital or have experienced historic racism or barriers that have prevented them from building the wealth that’s needed for accessing capital,” said Guzman, who like Madrid is Mexican American.


Like Hidalgo, Guzman served in the Obama administration, as Deputy Chief of Staff at the SBA. Previously, she served as Director of California’s Office of the Small Business Advocate. But she also has small business credentials. Her father was a veterinarian who ran his own business. And she founded a consulting firm that helped small businesses compete for federal contracts.

Established by President Dwight Eisenhower in 1953, SBA was created to help small businesses receive credit, at affordable interest rates, and protect banks and other lenders from losses form failed enterprises that could not pay back their loans. Although SBA has had some grant programs, most of its focus was in guaranteeing loans for small businesses that qualified. It also swoops into sites of natural disasters to help stricken businesses with low-interest loans.


Although it was elevated to Cabinet status by President Clinton, and then again by President Obama, SBA has traditionally been a low-profile agency with a limited budget. That changed during the pandemic, when it became the conduit of billions of dollars in relief to small businesses. Unlike other SBA funding, “Paycheck Protection Program” funds would not necessarily have to be paid back. That loan would be “forgiven” if at business met certain conditions, including keeping most staff on the payroll.


“In the first days of the PPP program, the SBA did the equivalent of 14 years of loans,” said Michael Faulkender, the Assistant Secretary of the Treasury for Economic Policy during the Trump administration.


The rush to provide small businesses some help aimed at stopping the swelling of the unemployment rolls resulted in lots of glitches. Some SBA-approved banks had trouble uploading applications into the system, small businesses that did not have a relationship with banks---often owned by blacks and Latinos---were disadvantaged and many minority entrepreneurs didn’t know about the existence of PPP.


Now an associate dean at the University of Maryland’s business school, Faulkender said the bumpy rollout was inevitable. “The idea what we would wait until it was perfect was not going to happen,” he said. “We didn’t have time to waste.”


The government moved to address some of the glitches in the second and third rounds of the $350 billion loan program. The government also implemented other SBA programs aimed at helping small businesses, including low-interest Economic Injury Disaster Loans and grants to restaurants to help them cover losses related to the pandemic through the SBA’s Restaurant Revitalization Fund.


But many small business owners, especially minority business owners, still don’t know about the help the SBA can provide, or don’t have the resources to cut through red tape. The new navigator program hopes to fix that.


“Small businesses are still reeling from the pandemic, especially the smallest of the small and those that have historically been left behind,” Madrid said. “We will address and close these gaps, and is so doing, will advance equity, which is priority pillar under the results-driven leadership of Administrator Guzman.”


In late October, the SBA announced the 51 entities that would receive between $1 million and $5 million in grant funding under the new pilot program. Two of the $5 million grantees are the U.S. Hispanic Chamber of Commerce and the National Urban League, while the Florida Small Business Development Center at Florida International University and the Idaho Hispanic Foundation, will each receive up to $2.5 million.


The grantees will serve as central “hubs” that will leverage collaborations with community-based organizations to help small businesses navigate government programs and tap into critical resources. The goal is to break down barriers for small businesses---with priority focus on small businesses owned by veterans, women and socially and economically disadvantaged individuals.


Madrid said he hopes that this program grows exponentially: “The bottom line is this Community Navigator Pilot Program will connect more small businesses with resources, which will help them build back better, innovate, digitize, create new jobs, and build up our communities.  These small businesses with the support of this pilot will serve as key catalyzers to our U.S. economic recovery.

 

Additionally, we will work diligently to integrate action and impact from the pilot with that of our Resource Partners, which include our Small Business Development Centers, Women’s Business Centers, SCORE and Veteran Business Outreach Centers. It will be truly transformative!”
 

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