Lending a Hand: Interview With Steve Preston

SBA, AICPA partner to help small businesses

When Steve Preston stepped into the role of SBA administrator in July 2006, he left a seemingly comfortable career in the private sector, most recently with the ServiceMaster Company, for a less certain future in the public arena. Charged with the task of overhauling the SBA’s Disaster Assistance Program in the wake of its heavily criticized delayed response efforts to Hurricane Katrina victims, Preston embraced the challenge as an opportunity to serve others.

In his relatively short tenure at the SBA, he has implemented strategies designed to
improve both the overall operational efficiency and effectiveness of the SBA while
furthering the products and services that the agency offers to small businesses.

Another initiative that he hopes will expand SBA services is a Strategic Alliance partnership with the AICPA. This agreement, signed late last year, was created to help the organizations join resources to better serve the small business community. In a recent interview with the JofA, Preston described his goals for the partnership and spoke about his work with the SBA.

JofA: Describe the SBA’s partnership with the AICPA and the successes you hope to achieve through this alliance.

Preston: Partnering with the AICPA is a great opportunity for us to work with individual accounting firms to handle any number of challenges a small business might face. My vision is to become well known in the accounting community for the services and assistance we can provide to small businesses throughout their development. For example, we help businesses get capital that they wouldn’t get through the conventional market and provide training to help them develop at various points through their life cycle. We assist small businesses in selling products and services to the federal government by showing them the process for registering their business and finding available contracts to bid on. We also work with federal agencies to find the right small business as well.

JofA: How can CPAs help their clients in their dealings with the SBA?

Preston: CPAs can provide high-quality referrals to SBA services. As a former CFO, I’m very familiar with the accounting profession and the way CPAs understand their clients’ businesses. Through auditing and other work, CPAs get a deep understanding of what that firm does: their issues, strengths and weaknesses. And through this relationship, the CPA becomes a trusted adviser for the company.

JofA: What’s the most effective way for busy CPAs and their small business clients to become aware of services the SBA has to offer?

Preston: There’s a lot CPAs can learn through our Web site, www.sba.gov, which is quite robust and continually improving. We offer online courses, tips and referrals to service providers in any number of areas where help is needed. But I encourage local CPA organizations or firms to reach out to our district offices and coordinate with them to have our personnel come out and present our programs.

JofA: Do you find that small business owners are hesitant to ask for help? Is it hard getting the word out about SBA programs, in general?

Preston: Getting the word out is a challenge. Last year we counseled almost 1.5 million businesses through our training network, so we do touch a lot of small businesses; but I think the average small business does not know about SBA services. That’s why a partnership with an organization like the AICPA is so important. Most of what we do is free, including counseling sessions and contracting support. We charge a fee for bank guarantees to cover delinquencies in the program, but much of what we do is funded by the taxpayer.

JofA: How is the SBA helping expand the ranks of minority and women business owners?

Preston: An important and successful part of our mission includes specific outreach
to minorities and women. Compared to loans made through the conventional  private sector, a dramatically higher percentage of SBA loan dollars go to minority and women owned businesses, as well as businesses in areas with higher poverty and unemployment rates. We also lend more dollars to startups and do more early-stage lending as a percentage of our loans than a typical lender. The federal government has specific goals for procuring goods and services from firms that are owned by women, minorities, service–disabled veterans and firms located in areas of our country with high poverty and high unemployment rates. We work with businesses that meet those qualifications and federal agencies trying to achieve their procurement goals to put them together and help people in those small business categories maximize their potential in the federal contracting arena.

JofA: As baby boomers get closer to retirement, succession planning has become a leadership and continuity challenge for all business. How can the SBA help small businesses, who may not have the same resources as larger businesses, with these challenges?

Preston: It’s not unusual for a small family-owned business facing a decision about succession to decide to either groom other family members to run it or to actually use it as an opportunity to sell a business and move on. To the extent that there’s a transaction, the SBA can provide counseling. We also potentially guarantee loans that would fund an acquirer of those small businesses if the acquirer, in fact, is a small business.

JofA: Is there anything that the SBA could do to help small businesses weather a potential recession?

Preston: Our services are well–tailored for businesses going through the types of issues they would face in a recession. If they’re having a hard time getting capital, they need to look for lenders that offer SBA loans because we will help lenders  make loans that they wouldn’t otherwise. If a business finds that their costs are going up and/or revenues are going down, they need to talk to an SBA counselor to help keep their business on a profitability track, look at new markets, or market their products more effectively. The existing products we have become all the more critical to a small business during times of difficulty. People need to find us and seek us out.

JofA: How do you see the generational differences in work ethics and work/life  balance  affecting the future of small businesses?

Preston: Some of the most famous small businesses that have become large  businesses in the last number of years have been started by very young people who’ve put a lot of energy and vision into it. The younger generation continues to be innovative and thoughtful; and the great thing about a small business is, even though it takes a tremendous amount of work and commitment, it’s part of fulfilling a dream and doing what you want in life, being your own boss. I think those are very compelling factors that people in the younger generation think about.

JofA: What opportunities or advice do you have for small businesses looking to do business outside the U.S.?

Preston: I wish more small businesses would think about export, because it’s a great opportunity for our small businesses to grow and benefit from markets that are much larger outside of our borders than inside of our borders. Almost 30% of our exports are from small businesses. Because of a number of trade agreements that have opened up recently, more countries are open to small businesses. It is very important that small businesses who think they have a product to export investigate because it can be a huge opportunity for growth. The Department of Commerce has a network called U.S. Export Assistance Centers (USEACs) where we are co-located [with other agencies] so that we have small business export experts on site to help.

The SBA and [the Export-Import] Bank have a suite of export finance products to help small businesses who want to export their products and need financing. Some of those products will finance working capital or other investments needed to handle higher export volume. Others of those lending products are actually specific export finance products with the capability to finance the actual trade. Some of our resource partners also have export assistance.

JofA: What are the most important developments on the horizon for your agency in the future and the small businesses it serves?

Preston: We are working very hard to provide excellent customer service and to expand our relevance and impact through operational excellence. There is a connection between great customer service and being able to expand services. I strongly believe that by being more effective and efficient, people will use SBA services more. To the extent that we are more efficient and easier to work with, providing good customer support, the third parties we work through will be more likely to partner with the SBA to use our services and ultimately reach the small businesses we’re trying to reach. We continuously strive to better serve our underserved markets through the introduction of new products.

JofA: What are some examples of these new products?

Preston: We just launched a pilot in eight states called Rural Lender Advantage, which is a new process for lending. For community lenders that don’t make a lot of SBA loans, our policies and required documentation can be time-consuming to learn. We’ve simplified the application, provided dedicated helpdesk support and are making quick turnarounds for approving or not approving those loans. By making it simpler, easier and more supported, we’re hoping to help rural lenders reach some of the difficult rural areas of our country that are more likely to use our programs. We are also developing the SBA Emerging 200 program for potential high-growth businesses in 10 inner city areas. Once identified, they will undergo extensive training including mentorship and networking programs, and will get help with the capital they need for business development. By identifying inner city gazelles [fast-growing companies] with the potential to create a lot of jobs, we hope this will create a positive investment in our inner cities and generate ancillary economic activity. Although we’re still designing the program, the plan is to have another class of companies entering the program next year.

JofA: How will the lessons learned from the SBA’s experiences following Hurricane Katrina affect the agency and small businesses in the future?

Preston: Dramatically. When I came into this job about 11 months after Hurricane Katrina, there were over 100,000 people in our process who had not received full disbursements on their loans, many of whom hadn’t gotten any disbursements. In many cases, these people had lost everything and had never experienced the destruction loan process. Based on what we saw and heard from people in the Gulf, we entirely reengineered our program. We provided a more supportive and empathetic management process for the borrower. We moved from a production line format, where loans went from one group to the next, to competent case teams where lawyers, financial people, case managers and clerical people were given the authority to make approvals and work seamlessly on assigned loans. Every borrower was given a case manager to walk them through the process and who was accountable for bringing their loan to completion. Prior to this, there was no one individual who understood each case history and was responsible for getting the borrower through our organizational process.

We also upgraded our IT capabilities. Then, we took a step back and asked  ourselves, “How do we make sure this  never happens again?” We developed a  comprehensive disaster recovery plan,  which we submitted to Congress on June 1 [, 2007], which outlines: how we will  ramp our capability in a future disaster with respect to people, facilities, and systems capacity; how we will coordinate with other agencies—state, local and federal; how we will engage the rest of the  agency because, historically, SBA’s disaster operation and the rest of its field network were two entities and now they cooperate hand in glove. The status of every single customer in the database is now tracked monthly to see how many customers are waiting for information from us. That’s never happened before at the agency.

JofA: Going into this position, you had to be  aware of the challenges you faced. What made you take on this position?

Preston: Admittedly, when the opportunity came my way, I had to ask myself  whether I was willing to jump into a highly public position in an agency that was under attack and that had some very significant hurdles. The agency was listed dead last in employee morale in semiannual government surveys. I decided to enter into government service to make a contribution, something different from what I was able to contribute in the private sector. I knew that coming in here as the leader couldn’t be about me. It had to be about the people we serve. The more I thought about the people in the  Gulf who needed funding, the thousands of people at the agency that needed a better environment with the tools to do their jobs, and the opportunity to serve this country’s entrepreneurs, which are the absolute backbone of our economy, there appeared to be no better opportunity to make a contribution. I started this position very excited to be part of this team and to help impact the lives of many, many Americans.

JofA: Do you have any advice for small businesses that want to compete for government contracts or any other advice in general?

Preston: Come and see us! Contact your  local SBA office or Department of Defense PTAC centers—Procurement Technical Assistance Centers, which are great resources for small businesses who want to sell to the federal government. Or you can go into a small business development center. Get advice from people who can help you understand whether the products or services you have are the kinds of things the government buys, what you have to do to market your services effectively and to comply with government regulations. There are plenty of resources out there to help you.  




©2008 AICPA


Get your clients ready for tax season

Upon its enactment in March, the American Rescue Plan Act (ARPA) introduced many new tax changes, some of which retroactively affected 2020 returns. Making the right moves now can help you mitigate any surprises heading into 2022.


Black CPA Centennial, 1921–2021

With 2021 marking the 100th anniversary of the first Black licensed CPA in the United States, a yearlong campaign kicked off to recognize the nation’s Black CPAs and encourage greater progress in diversity, inclusion, and equity in the CPA profession.