Michael Ricks and Small Business Administration
Michael: “Yes. I started off in the Army. I joined from college and I was on scholarship at the University of Houston where I studied Electrical Technology. Graduated, served 11 years in the Army. While I was in the Army, I got a Master’s Degree and an MBA from the university, as well as a graduate of a Master’s Degree in Engineering Systems from Naval Postgraduate School. Most of my background is in Economics and Engineering but I did take an MBA course and that got me in business… (continues)
Small Business Administration came as an inter-agency transfer from the United States Marine Corps, Marine Corps Systems Command, worked in Marine Corps acquisition with the advanced and heavy to soft vehicles in Woodbridge, Virginia. After that, I transferred to the SBA and worked in Birmingham where I was stationed for four years and then transferred here to New Orleans. I have been here for six… (continues)
The Small Business Administration is three parts. I like to use a three-legged stool. If you don’t have one of these three things, then the stool falls over and doesn’t work. We focus on growing opportunity, providing resources and also, the training and development assistance. The opportunity comes from our government contracting certified programs: our 8(a) program, our HUBZone program, our Economically Disadvantaged Women-Owned program. These are all federal contracting programs that provide opportunities for small businesses.
Also, our procurement technical assistance representatives provide technical assistance on procurement. Contracting representatives, they are embedded in every district and their job is to work, liaison, with federal agencies, to ensure that a significant percentage of their contracts are set aside for small businesses.
In that regard, we hold up the opportunity like being able to find resources available for your business. Maybe you have heard the term, “Money fixes a lot of problems”? Money fixes a lot of resource problems. It doesn’t fix all your problems, but if you need something and you have the money to buy it, you can get it.
That’s like employees, that’s raw materials, that’s [clears throat] equipment, training, whatever you need, you can buy. To help you with that, we have a guaranteed loan program which is a way for small business owners, if they go to a bank and your business has some risk factors that a bank can’t mitigate them within their own underwriting criteria, they can come to the SBA and get a guarantee against that loan. We don’t make the loan, the bank does. SBA underwrite the loans, God forbid, the loan goes on default, we will buy that loan back from the bank.
What that does, is it makes the lender a lot more interested in making that if they have a guarantee behind it. The other thing that it allows the banks to do is to mitigate collateral shortfalls, which is really the main purpose of SBA. If you’re a business owner and you walk in the door, most banks today, you really have to have some collateral, if not 100% collateral, to get a loan. The more conservative banks are going to say, “Well, you need to be able to secure that loan 100% with real property or fixed capital assets, you have to show three years of profitability increasing over time and you have to have a pro forma that makes sense and you have financials to back it up and then, we’ll make it.”
What if you’re a new business? What if you haven’t sufficient collateral? One of the ways you can mitigate a collateral shortfall is with an SBA guarantee. An SBA guarantee effectively collateralizes that loan and also mitigates some risk factors that a lender might see when it comes to making a loan to start a business. Having said that, the SBA loan program is not for people without credit. It’s for business owners that have good business plans, that have some risk factors that a lender just cannot overcome with their underwriting criteria so then, they can’t risk.
That’s it. The last thing we do, of course, is training and education of our own entrepreneurs. That’s through our counseling resource partners of Small Business Development Centers, our SCORE chapters, our Women’s Business Centers, our Veterans Business Opportunity Centers. These are all counseling resources that are available to small businesses. You go to any one, like the Women’s Business Center is a misnomer. Anybody can go to a Women’s Business Center and get assistance. It’s focused on outreach to women, but they counsel men, so does the SBDC, so does the VBOCs, they all support any small business owner that wants to come in. That’s the training and education. If you got an opportunity and you got the resources and you got the know-how, you are going to be successful.”
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Thank you to Economic Group Pension Services for providing a location to film our New Orleans interview series.