When SBA Administrator Steven Preston took over as head of the agency in July 2006, there was a huge backlog in processing applications for SBA disaster recovery loans and the reputation of the SBA had taken a beating. Preston immediately showed a hands-on problem-solving approach extremely rare in the Washington bureaucracy.
Send an e-mail to Preston about a problem, and you could have a personal call or e-mail from him in hours.
“I learn more by direct e-mails from employees throughout our organization, and direct e-mails from our customers, than any other single source,” Preston says recently in a telephone interview with the Mississippi Business Journal while touring the Mississippi Gulf Coast in late August. “Unless I hear the voice of the customer, and hear the voice of the employer, I don’t think I can be an effective leader of this agency. There can’t be too many layers between me and the front lines. I need to hear it first hand.”
“I try to get to everybody, and I’d say I follow up on every single e-mail at least internally. Some people I don’t get back to directly because it is a complicated situation that requires follow up. But over 90% I get back to directly.”
In addition to phone calls and e-mails, Preston has held open forums where people can come and voice concerns. These sessions are not always easy. But it makes it crystal clear that the SBA is about people’s lives and not just forms and numbers.
“People in these sessions can get emotional and upset, and this really moves my heart,” Preston says. “It can be difficult, but unless I can see the energy that they bring and what they are feeling, I can’t see what is really happening. When I see that, it translates into action for the agency.
“It is important for any leader to avoid getting too detached from the front lines or you won’t know how to lead. Those e-mails, those sessions, those phone calls are absolutely gold to me in understanding what we have to do here.”
Commenting on his 11th visit to the Gulf Coast recently, Preston says he was inspired by the spirit of the people. Preston met with a number of small business leaders just before the second anniversary of Katrina.
“Every one of these small business owners had a story to tell that just showed an incredible amount of tenancy, hard work and ingenuity,” Preston says. “I have to tell you it was so encouraging just to see the attitude of the people down here both immediately after the storm and looking to the future.
“It was also encouraging to see that through a lot of the programs we have been instrumental in people getting capital, government contracts and technical assistance. It is not only disaster loans, but a lot of people we talked to have really benefited from federal contract dollars going to Gulf recovery. They got technical assistance that was very valuable, and guaranteed bank loans not just for recovery, but expansion and growth.”
The SBA chief admits that the agency was so overwhelmed with the disaster loan program the first year after storm that it took quite a long time for people to get their money.
“We have worked very hard over the past year to totally re-engineer the program, to turn around loan requests faster, to get money disbursed faster, and to help people by giving them case managers throughout the process so they have a consistent point of contact and accountability from the SBA to help them through the process,” Preston says.
He said progress has also been made in the small business set aside programs. Small businesses have complained that a lot of government contracts that were supposed to go to small businesses instead went to large businesses.
Preston says efforts are being made to remedy the problem. The SBA has requested all federal agencies that do small business contracts clean up data so small businesses are coded properly. He said a lot of progress has been made there, and there has also been a renewed effort to be more effective getting small businesses connected with the federal contracting agencies that can use their services.
The purpose of Preston’s recent visit was to spend more time talking to small businesses. He was pleased with what he saw and heard.
“There continues to be strong business formation here,” Preston says. “There is solid small business activity. A lot of these businesses have seen significant increases in sales. Small business owner are nimble, creative and innovative. They understand they have to adapt their business and go where the business is. A lot of these small businesses have been very creative in trying to respond to a different environment, and many have actually been seeing higher sales.
“It is very heartening for me to see the way people have rallied both to respond to the disaster and to respond to the longer term recovery. From someone who is not from down here, it is great example for all of us. It has meant a lot to me coming down here.”
A big issue he heard about during the recent trip was employee turnover. It is very difficult for businesses to keep their employees, and balance the cost of turnover with the cost of retaining employees through higher wages and benefits.
“That is a challenge almost all of these small business owners have been experiencing,” he said. “Affordable housing issues in this area can have impact on affordable labor, as well.”
The other big issue he continues to hear about is challenges with insurance cost and availability. One of the businesses on Preston’s recent tour was the Holiday Inn, U.S. 90, Biloxi. Owner Rick Ly says his insurance rates have gone up by two and a half times since before the storm, from $100,000 per year to $250,000.
“We have about the same amount of business, but higher expenses,” says Ly, who is also still battling to get Katrina claims resolved. “That means less profit for us.
Ly was appreciative of Preston’s visit.
“It was great of him to come down and see what is going on,” Ly said. “It is great to see someone out there doing a hands on, coming down to check and see what is going on instead of just by ear only.”
Another stop on Preston’s tour was the Business Technology Center in Biloxi. One tenant there, Daphne Davis, who co-owns Ace Construction Co. with her husband Kevin, says she was glad to see Preston.
“We have met with the regional director before, but not the SBA administrator from Washington,” Davis says. “We were able to sit down and talk with him about some of our concerns and our successes working with the SBA programs.”
Contact MBJ contributing writer Becky Gillette at email@example.com.
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