how big is small? Ninety-five percent of all businesses in the United States are classified as "small" by SBA standards. Numerically, that is about 51/5 million businesses out of a total 51/2 million. To the U.S. economy these small businesses mean some 37 percent of the gross national product and 43 percent of the gross business product. Small business employs about 40 percent of the civilian labor force. Basically, eligibility as a small business depends on a company's annual sales or receipts and the number of employees, varying with the type of business. Sixty-six percent of all businesses have annual gross receipts of less than $100,000. Seventy-one percent of all businesses employ fewer than 10 people. The definitions of small business undergo constant review by SBA because the characteristics of industry change and the structure of the U.S. economy never sleeps. In 1970, new size standards for financial assistance were adopted for coal mines and mining services. Standards were increased for retail farm equipment dealers and retail motor vehicle dealers, and for food services for the purpose of Government procurement. An amendment to the regulations established a new method of determining the size of a loan applicant having diverse affiliates. The agency amended its definition of a petroleum refiner for the purpose of Government procurements, disposals, and loans with respect to the barrels-per-day capacity criterion. An amendment to the size regulations was drafted, setting forth for the first time the rules of conduct of "Size Appeals Board Proceedings". The definition of "annual sales and receipts" was revised to eliminate doubt as to the proper method of computation. 1970 reflected sustained and substantial increases in private sector participation in SBA local development company loans. The cumulative record since the inception of the program in 1959 disclosed that the agency has participated in 2,836 development company projects representing total financing of $593 million. The SBA direct share of these projects amounted to approximately $324 million, and the agency's contingent liability under SBA guarantees were $37 million. Under this program, SBA has assisted in creating 1,285 new businesses and has contributed to the expansion of 1,551 existing businesses. In addition, these loans have created 99,773 new job opportunities and have helped preserve 42,431 existing jobs. Private sector participation was obtained from banks, savings and loan institutions, insurance companies, State retirement pension funds, and a labor union retirement pension fund. Many projects also included participation by State authorities, privately owned State development companies and the Indian Business Development Fund administered by the Bureau of Indian Affairs. Every project included participation by the local development company borrower. The key to the continued success of the 502 program lies in greater community involvement in each project and increased participation from the private sector. In order to accomplish these objectives, a Community Liaison Division was established in 1970. It conducts economic development workshops and provides related services to those communities seeking advice and assistance in furthering balanced economic development. A kitchen stove and overturned car form the backdrop as SBA officials assist a farmer with a loan application at the site of his former home, destroyed by a tornado. Minority Enterprise SBA continued its emphasis on enabling minority group members to become a part of the Nation's economic life. Among business-type loans, a total of 6,741 were made to minorities, totaling $176 million, compared to 5,385 totaling $131 million the previous year, with a broad geographical distribution in the inner cities, in rural areas, and on Indian reservations. While the majority of loans were made under the economic opportunity loan program with its lower ceiling of $25,000, some 1,830 loans totaling $108 million were approved under the regular business, displaced business, and development company loan programs. Disaster Loans The year brought 50 natural disasters in 32 States that were considered to be sufficiently serious to be declared disaster areas by either the President and/or the SBA, thereby allowing affected homeowners and businessmen to receive low-interest loan aid. The record number of catastrophies, coupled with loans that continued to victims of 1969 disasters, resulted in 31,754 such loans in 1970, totaling $220 million, far exceeding the 9,288 loans and $99 million the previous year. Through the end of the year, 15,553 loans for more than $153 million had been made in the wake of Hurricane Camille, which struck the Gulf Coast area in August 1969. This is an SBA record for any single disaster. Texas was the hardest hit in 1970. Hurricane Celia devasted large sections, and the State also had three major tornadoes and a flood. Southern California experienced the worst brush and forest fires in its history. : small business investment companies The Small Business Administration has a possible solution for almost every small business situation. Often the potentially successful entrepteneur has little more than a good idea. He is without equity capital, the seed money necessary to take the first step. Filling this venture capital "gap" is the principal objective of the Office of Investment and its program for Small Business Investment Companies (SBIC's) and the companion Minority Enterprise Companies (MESBIC's), both of which are privately owned and operated corporations licensed, regulated and partially financed by SBA. The MESBIC program, launched in November 1969, enjoyed a high-priority status among the investment activities of SBA during 1970. A MESBIC is a specialized SBIC dedicated to providing long-term financing and management consulting services to disadvantaged small business concerns, those which are at least 50 percent owned and managed by individuals from minorities or groups that are underrepresented in the free enterprise system. Spurred by the national attention this program recieved, many corporations and community groups submitted proposals for the establishment of MESBIC's. However, a number of the potential MESBIC sponsors were unable to obtain the required funding, and others encountered orgainizational and other difficulties. Nevertheless, SBA licensed 19 MESBIC's during the first full year of the program's operation, for a total of 22 licensees. |