Senate Panel Hearing with President Obama SBA Nominee Maria Contreras-Sweet
A year after the search began, the Senate has taken the next step toward filling the opening at the top of the Small Business Administration (SBA) by holding its nomination hearing for Maria Contreras-Sweet.
During the hearing on Wednesday February 12, 2014 with member of the Senate Small Business and Entrepreneurship Committee, Contreras-Sweet, leaned heavily on her public and private sector experience as she vowed to use her post to help entrepreneurs achieve access to more capital, and secure more government contracts.
One area of concern for policymakers is whether small businesses have sufficient access to credit. Growing firms need capital, but smaller firms may have a harder time obtaining loans if they have less of a credit history. Lenders may also be reluctant to lend to small and relatively young firms based on the inability to accurately gauge the potential for the success. These factors are cited by policymakers to justify government intervention in credit markets that assist small businesses. Policymakers argue that market-driven lending denies credit to worthy small businesses, and so they have tasked the Small Business Administration with correcting this market failure.
Originally from Guadalajara, Mexico, Contreras-Sweet immigrated to the United States when she was 5 years old. She has made a point of working closely with Hispanic businesses and other minority groups that have been underserved by private investors and traditional bank lenders. She served as California’s Secretary of the states Business, Transportation and Housing Agency before founding ProAmerica Bank, a certified SBA lender specializing in commercial loans to small and mid-sized companies. By total assets, ProAmerica ranks 3,779th out of 6,900 American banks, according to data from the Federal Deposit Insurance Corporation, with real estate loans constituting about 81 percent of its portfolio. What the F.D.I.C. classifies as small-business loans those under $1 million make up 15 percent. But these figures are misleading because the bank often makes a business loan using real estate as collateral, which the government tallies as a real estate loan. By the banks own accounting, 30 percent of its loans are business loans, and they average about $500,000 with about 62 percent of the banks lending to minorities.
Ms. Contreras-Sweet is also familiar with the S.B.A.’s counseling programs. At her insistence, ProAmerica Bank has teamed up with the Small Business Development Center at Santa Monica College, which is partly financed by the S.B.A. A loan officer at the bank teaches both at the center’s workshops for entrepreneurs a few times a year, and the bank sponsored workshops for its own clients several times. In both 2011 and 2012 the bank contributed $5,000 to the Small Business Development Center’s budget.
Many in the banking industry said her experience at ProAmerica should not be discounted. It’s been frustrating that there hasn’t been an S.B.A. administrator with banking experience for a very long time that I can recall, Mr. Winick at Clark Street Capital said. Getting somebody who has real-world banking experience and real-world S.B.A. experience is a big change for the agency.