Local small business owners get a pipeline straight to the White House
Barriers, bureaucracies and banks.
Those summarize the areas Valencia County small business operators believe need some changes so they can survive and thrive.
And their suggestions for specific changes, expressed March 14 at a small business forum in Los Lunas, will go straight to the top — the White House — according to the forum's sponsor.
The forum was one of several in New Mexico under the auspices of Organizing for America, a project of the Democratic National Committee, designed to gain direct input from small businesses and bring it directly to the administration, according to Field Director Pamela Coleman, who moderated the event.
"Organizing for America is President Obama's field team," Coleman said in opening the forum. "We're piloting this program in this state because New Mexico is well-positioned to give feedback to Washington" because of the diversity and variety of its small businesses.
"Your comments," she said, "will go directly to Washington, to the Department of Commerce, to the Small Business Administration, and to the White House."
Coleman outlined steps she said the administration has taken to help small business, including tax cuts, a jobs act, and the Startup America initiative, which is designed "to get money into communities and small businesses quickly."
Coleman acknowledged that the principal organization devoted to helping small business, the Small Business Administration, has experienced staffing cutbacks in New Mexico, making it more difficult for people to get personal help.
At the same time, she said, the administration is attempting to streamline the agency and make it more efficient.
She said the administration and the SBA "are focused on finding more financing for small business."
Coleman said businesses should start with the SBA's website, which she said can answer most questions and provide businesses with most of the forms they need. She also encouraged businesses to take advantage of the New Mexico Small Business Development Center at UNM-VC and other locations around the state.
David Carlberg, business adviser at the local SBDC, said that will the agency is not affiliated with the SBA, it is supported by the SBA and the center can help business owners access the agency.
Coleman then opened the floor to comments from the approximately 25 business owners and public officials present, again assuring them the comments would go directly to Obama administration officials.
One target for criticism was the federal procurement process, which many of the business people who do or would like to do business with the government described as "a quagmire."
"Contracts are based on who you know," complained one woman, who with her husband operates a construction firm. "It seems they just give the contracts to the same people over and over rather than giving small businesses a chance."
Michael Loewenthal, an Albuquerque business coach, sympathized, saying, "The process is designed to exclude, not to include. Micro-businesses have little chance of getting contracts."
Asked by Coleman for a specific suggestion to address the issue, the woman said, "Bonding requirements are out of sight. They require such a huge bond for a job that most of us small contractors can't afford it. They need some sort of process to make it easier to qualify. The bonding field is not level."
Several business operators focused on the difficulty of getting through the bureaucracy to make contact with the actual decision-maker, once again complaining of being excluded by people who have nothing to do with the actual project.
"There are so many layers of people you have to go through," one business owner said. "You're never able to get to the people you'll actually be doing the work for."
That means a small business never gets to make its case to anyone with direct knowledge of the project. Instead, mid-level bureaucrats are making decisions based on factors no one quite understands.
From real estate agents on hand came the complaint that agencies are developing procedures and forms that even people in the agency don't understand.
One form singled out was a new one from Housing and Urban Development that agents, homebuyers, banks and even HUD employees can't figure out.
"People who write these regulations and forms don't know the industry," complained one real estate agency owner, who suggested, "They should include people who work in the industry in doing these things."
One of the results of this confusing form, she said, is that "the consumer doesn't know what closing costs will be up until the moment of closing."
When someone noted that many of the new rules are the result of the real estate collapse, the agency owner responded, "There are a lot of arbitrary rules coming out (because of the collapse), and while nothing's happened to the guys who actually perpetrated it, it's creating a lot of instability in real estate sales."
Banks came under heavy criticism from all directions, mainly for doing nothing — such as not making mortgage loans, not dealing in good faith on mortgage modifications, and not making business loans, even with SBA guarantees.
"Loan stipulations are so stringent most people can't qualify," said a real estate agency owner. "The housing market is depressed because nobody can get a loan."
Meanwhile, she said, banks are building an inventory of foreclosed properties on which agents receive only 1 percent commission, if they get the opportunity to sell it at all.
Another participant, who operates a number of rental properties, called new bank requirements of investment properties "ridiculous."
"The want 30 percent to 40 percent down," he said. "Nobody can come up with that."
Carlberg said that in many cases the limitations are not necessarily set by the banks, but by the institutions the banks sell their loans to, institutions that are under closer scrutiny than they were before the housing collapse.
And it's not just mortgages. One business owner said he's become discouraged about even seeking a business loan.
"It's harder to get a business loan that it is a mortgage," he said.
Loewenthal said the SBA can't get banks to lend because the banks say federal regulations have changed and the banks are worried about getting stuck with bad loans for failure to dot an "i" or cross a "t."
Another realty owner said part of the loan problem is that decisions aren't being made locally, that loans have to be approved by an out-of-state banker who has no knowledge of the area.
She also said banks "shouldn't be so dependent on credit scores."
She cited a recent example of a homebuyer with a credit score around 735, considered pretty good, who paid off some debt to make his application look better, only to find that his credit score went down because he now had too little outstanding credit.
Others told stories of clients who paid off all their debt and saw their credit scores fall to zero.
Despite complaints about the lack of business lending, Carlberg said working through the SBA "is still the way to gain entry into the (business credit) market."
And Loewenthal said the answer to many of the problems detailed during the forum is "more programs to get people back to work."
Contact Dana Bowley