2/1 Michael Ashcraft - U.S. Small Business Administration (SBA)

2/1 Michael Ashcraft - U.S. Small Business Administration (SBA)

Episode Transcript

Speaker 1 (00:01):
Welcome to the Chamber Connection on Talk Radio ten eighty,
a program designed for small business owners, aspiring entrepreneurs, and
community members who are eager to learn more about the
intricacies of running a successful business, hosted by that dedicated
staff of the Chamber of Saint Matthews. Now here's your
host for this week, Amanda Harper, director of Member Services.

Speaker 2 (00:27):
Good morning everybody, and welcome to the Chamber Connection. As
the interests that I am Amanda Harper, and I will
be your host today. And in the studio we have
somebody very special, Mike Ashcraft with the Small Business Association
at the Administration. I don't know why I always do that,
Sorry about.

Speaker 3 (00:47):
That anyways, Hi, Mike him to the show. Great tickled
to be here.

Speaker 2 (00:53):
We're so happy to have you here. So let's go
ahead and we're going to get We're going to start
talking about some of the general stuff. So first off,
can you give me a brief overview of the Small
Business Administration and what you all do. And we're probably
going to refer to it as the SBA.

Speaker 3 (01:10):
SBA, Okay, that's how most people know it, right. The
SBA is a federal agency. It's been in existence since
nineteen fifty four and they were created by Congress. We're
the only federal agency that exists solely to help people start, grow, expand,
and recover their small businesses.

Speaker 2 (01:30):
Nice.

Speaker 3 (01:30):
So that is what we do. In all we do.
We're laser focused on small business issues.

Speaker 2 (01:34):
Okay, and so like when you say your laser focused
on some of the small business issues. So what are
kind of the things the SBA provides two small businesses?

Speaker 3 (01:45):
Well, there are really kind of I call it the
four buckets of what we do. What a lot of
people know us for and a lot of people don't
even know what SBA does. But since the pandemic, a
lot more unfortunately, because of those circumstances found out. But
the the thing, man, you know, is small business loans.
So if there's one thing that a lot of people

(02:06):
are aware of, it's the SBA and its various loan programs.
The second thing, probably a little less well known, but
probably the true gem of what's available is what we
call our resource partners, and those are folks that work
directly with small business owners and entrepreneurs, whether there's season
been in business twenty years or somebody that's got an

(02:27):
idea of written down on an apkin. They work with
anyone as long as they're going to be or are
in a for profit small business. The third category is
helping people in growing their business, and with small businesses
there's a huge opportunity with government contracting. Exporting is another
great way to grow business because five percent of the

(02:50):
world's population lives outside the US. And then the fourth category,
and probably the one I enjoy a whole lot, is
it's kind of a catch all called advocacy. Out of
that is what people know is things like Small Business
Saturday or a Small Business Week which is in May,
same as Derby every year. If you're in this area
of the country, you know that. And then we do

(03:12):
other things highlight success stories. That's part of that advocacy piece,
and a lot of other things related to that. We
also have a group of people in Washington that ensure
that when Congress passes laws or discusses new laws, or
even laws they have passed, that they don't adversely impact
those small businesses. So they advocate on behalf of the
small business communities. They actually go around the country listening

(03:35):
Before some of these become new laws, they'll take it
back to Congress and say, here's what we heard in
our road tour across the country from small businesses how
it would impact them, sometimes in a positive way, sometimes
in a negative way, and they take that into account
and try and eliminate or decrease those negative impacts.

Speaker 2 (03:54):
Wow, so you all are busy. I'm sure right, very
busy always. Oh if something go Yeah, i'd be.

Speaker 3 (04:00):
Bored if I'm not super busy. I bet yeah, we're
all like that.

Speaker 2 (04:04):
So I do want to know what does the SPA
define a small business as. So to be a small
business if I were to come in, how many employees.

Speaker 3 (04:13):
Like all of the jazz that That is the second
most asked question we have. And the quick answer, it's
not exactly accurate, is five hundred employees or less, which
is shocking to most people.

Speaker 2 (04:28):
I feel like that's a lot.

Speaker 3 (04:29):
To me, it is, but that's based on categories of
business in different industries. So if you're in manufacturing, that's
five hundred employees and in some cases fifteen hundred employees,
and certain types of manufacturing their class side is small.
But when you think about them versus somebody like ge
or Ford or somebody like that, then employees a lot more.
It seems relatively small. Yeah, but the average small business

(04:54):
is under ten employees in most areas of the country.

Speaker 2 (04:57):
All right, so what's what's the best way for a
small business owner to determine if they qualify for the
SBA assistance?

Speaker 3 (05:05):
Great question, and the answers are, it's very easy. You
have to be either starting or existing as a for
profit business. That is, if you don't make money, but
you want to make money, that's all right, we'll still
talk with it. We're happy to talk with it. A
lot of times that's an issue people have. We're not
making as much or any profit, or we're losing money.

(05:26):
But yeah, a for profit small business, there are very
few categories where they can't. They might be in an
industry like lending or something. It's not a bank, but
something like that. A couple of you know, having to
do with certain limited number of categories where we can't
work with them. But ninety nine point nine percent of

(05:46):
the time they're they're going to qualify as a small
business or somebody interested in starting a small business, which
is interesting because about ninety nine point nine percent of
all business in the country is classified as small.

Speaker 2 (05:59):
Really that I did not know that what was the percentage.

Speaker 3 (06:02):
Again, about ninety nine point nine percent. Yeah, I think
it's about ninety nine and zero point three percent in Kentucky.
But it's very typical. At least nine times out of
ten it'll be a small business. If you're talking to
anybody in business, huh, much higher in most categories.

Speaker 2 (06:19):
That is interesting. I would have never imagined that in
a millionaire.

Speaker 3 (06:22):
Yeah, in small businesses employee about forty to forty five
percent depending on which state you're in, of all employment
in every state, Okay, they're working for small business and
that's increasing again. So yeah, it's that's why small business
is considered so important and really the key to the
driving the economy.

Speaker 2 (06:43):
Well, yeah, absolutely, and I mean you hear that all
the time, like you said, like the Small Business Week,
the Small Business Saturday, stuff like that. But I just
didn't imagine that it would be that high a number.
But that is phenomenal. I love that. Yeah, So can
you kind of briefly overview what type of loan programs
does the SBA offer?

Speaker 3 (07:03):
Yeah, there are three plus a separate one, and I'll
go through those very quickly. The one most people know
it's those three buckets. Basically, I call it like goldilocks,
small medium or just right sort of thing. So at
the small end it's called micro loans. Those go up
to fifty thousand dollars. The most often used is the

(07:26):
one people will get through a bank or a credit
union that's authorized as an SBA lender. They have to
be authorized, which means they have to have some training
and experience and expertise. They can also go to SBA
with questions they have, but that's about eighty to ninety
percent of the loans that are done every year across
the country or through those programs. It's called seven A,

(07:47):
but it's just the one that most people are familiar
with with their bank or their credit union where they
do business. And then there's a specialized one kind of
towards the top end, the one that's typically the highest
dollar amount, but not too many any of them, and
that's called a five oh four, but that's very specialized.
Mostly people will use that when they're wanting to either

(08:08):
buy a building, renovate a building, build it from the
ground up. Land building and equipment that has the equipment
has to have a typically a useful, light, durable life
of at least ten years. Now it's great for lots
of types of businesses. For instance, if you're going to
buy franchise, and you've got a choice of going into
some building and renovating it and renting it out for

(08:29):
ten years or more, or you can buy a building,
own it and not have to pay rent on it,
and you get the tax benefits of from owning that building.
Then you would do something like that five zero four
loan because a lot of times these loans are anywhere
from two hundred and fifty thousand to up to five
million or more, so depending on what they're doing, if

(08:50):
they're building. You know, certain types of buildings that are
very specialized, like car washes, for instance. A lot of
those are franchised. They almost always have to build it
from the ground up. It's usually cheaper than to go
in and renovate. You're almost tearing it all down anyway.

Speaker 2 (09:05):
True, I guess I've never thought of that.

Speaker 3 (09:06):
Yeah, sure, so those are certain types. That's a specialized loan.
But what's interesting about that it has a long term
fixed rate with that part of the loan, so they
get twenty or twenty five years locked in at whatever
the current rate is. So and with the rates being
not historically high, but compared to what it was a

(09:28):
few years ago, relatively higher. If the rates drop down dramatically,
a lot of times they can go back and under
most circumstances can get that rate refinanced. But the key
is it's locked in for twenty to twenty or twenty
five years on the land and building, sort of like
a mortgage on a person's home. Oh wow, So that's
one that's used a lot less frequently, but it's a

(09:51):
very advantageous one because of the long term fixed rate
on that. And then one thing I do want to
stress on these is SBA, with one exception disaster loans,
and I'll circle back to that in a moment. Okay,
but that money is being lent by the bank, the
credit union, or certain types of SBA authorized nonprofits that

(10:15):
do the micro loans or the five L four loans.

Speaker 2 (10:18):
Okay.

Speaker 3 (10:19):
So the only exception is when SBA goes through a
program the federal government is lending for disaster loans directly.
Those are what's called direct loans.

Speaker 2 (10:28):
Okay.

Speaker 3 (10:28):
So the people that have remembered the pandemic or that
have gone through a natural disaster, that funding is coming
directly from the government.

Speaker 2 (10:36):
Okay, well that is awesome, so real quick before we
cut to break, I just have one more question about this.
The loans and grants. Well, actually that is not what
I was gonna I was going to I just peaked
out my question. Do you all offer any grants?

Speaker 3 (10:52):
Is that a thing that you all have or is
it just very very few? Yeah, ninety nine point nine
percent of what we do is grants. I'm sorry, loans,
not grants, the only grants. Yeah, you got me thinking
about it. There's something called a step grant that's for exporting.
It's an SBA program. State governments typically administer that to

(11:13):
help people with exporting. It's small grants like maybe up
to five to ten thousand dollars opuickly one time, maybe
two times for a company. And then that's really about it.
There are some other things it's called SBI are small
business Innovation research. Those are grants, but that's more to
organizations that do high level research, typically with the university

(11:35):
and working in conjunction with federal agencies like Department of
Defense or Health and Human Services, for things like cancer
research or developing something cutting edge.

Speaker 2 (11:45):
Okay, that makes sense, but it's.

Speaker 3 (11:47):
Not for the typical small business. There really aren't any
grants available at least through SBA.

Speaker 2 (11:53):
All right, well, we will go ahead and take a
quick break and then we will be back with Michael
Ashcraft from the Small Business Administration.

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Speaker 1 (12:38):
Com, Real News, Real Talk Talk Radio ten eighty.

Speaker 2 (12:47):
And we're back and we have Michael Ashcraft in here
from the SBA, and we're just gonna continue our conversation
a little bit. And I did have one thing that
I would like to start off with for the second section.
What are some common misconceptions about the s BAH.

Speaker 3 (13:07):
That's a really good question, Amanda. And one thing that
we just wrapped up on before the break was grants.
We don't have grants except for a very few specialized instances.

Speaker 2 (13:20):
Do you get that a lot like a whole Yeah?

Speaker 3 (13:23):
And that after that is how big can you be
or what does it take to become you know, a
small business client with THISBA. So that's that's usually it.
Another misconception is that we lend the money directly, which
we just talked about there. It's usually through banks, credit
unions and others that have those funds. So what we
do it's kind of like a guarantee, sort of like

(13:44):
equate it to an insurance policy. So if the lender
lends money to a borrow or a business owner and
they cannot pay, the business fails, whatever they are if
they can, and they go through a whole process, the
borrow or even if the business fales, is typically obligated
to pay that back, sort of like any any kind
of contract. So whether it's like buying a home or

(14:06):
age or anything else, and you have to pay your bill, right,
but they're not kicking people out on the street if
they can't pay it back, kicking Grandma or at home
taking her car. No, that that doesn't happen. They try
and work things out there very Yeah, we don't want
grandma being cold.

Speaker 2 (14:26):
Yes, all right, Well, so what earlier you had mentioned resources,
and before the show we were talking and I was
telling you how I am not familiar at all with
the s b A and then I did some intense
research on you guys in order to do this interview today.
So can you provide me with some of the resources

(14:48):
that the SBA offers for entrepreneurs?

Speaker 3 (14:51):
Yes, and that that dovetails so well with your last
question about what is things that people don't know or
don't understand. So the resource partners as mentioned earlier, true, gem,
because these are folks that work directly with the businesses SBA.
I used to do that years ago when I worked
for some an organization called the Small Business Development Center SBDC.

(15:13):
Those are folks that sit down and work with people
wherever they are and helping them get to whatever level
or whatever goal they're trying to achieve.

Speaker 2 (15:22):
I don't mean to interrupt, but are they like the
stay under the same umbrella the company or the.

Speaker 3 (15:28):
Separate SBA were federal and they're typically state level. Okay,
they get funding for the SBDCs, and there's another one
called the Women's Business Center, and then a third one
called the Veterans Business Center's Veterans Business Outreach Centers. They
all get funding, and then there's a fourth one called SCORE.
They are all volunteers, many but not all anymore are

(15:50):
retired and they have careers in all these industries and
usually highly successful, and they give back by helping small
businesses so they coach and mentor them. So all of
the four the SBDC, SCORE, Women's Business Center, and the
Veterans Business Outreach Center, so they all can work with
the business at whatever stage, whatever level they are, and

(16:11):
try and help them with whatever goals that business owner has.
It's all free, no charge ever for it, so.

Speaker 2 (16:17):
It's not like you have to get a membership or
anything like that. So me, Joe Schmo can come up
to the SBA. You all have offices downtown, right, Yes,
I can come up there and I can be like, hey,
I need a resource for this, and you all will
give it to me without like any prior.

Speaker 3 (16:33):
The only thing that's not free is the loan, so
they pay, you know, But everything else they have all
kinds of expertise these folks out there, and then SBA
fills in the gaps. But these are folks that do
most of the one on one coaching, counseling, mentoring with
these business owners or aspiring entrepreneurs. And you would be

(16:55):
shocked at all the businesses around the Louisville area, around
the country that worked with one of these folks way
back in the day, way back early on, and a
lot of them had aspirations to grow to big, some
of them huge corporations. Now, some of the names that
we have, I'm trying to think of one off top
of my head, but they somehow, yeah, they somehow. Well

(17:18):
one of them is, oh, twenty three and meters Oh
really Yeah, they got funding through SBA, through a resource there,
so they were able to launch that concept.

Speaker 2 (17:31):
That's cool.

Speaker 3 (17:31):
Yeah, So there are lots of ben and Jerry's ice
Cream is another one. Yeah, I mean we could go
on and on and on. Yeah. So there are literally hundreds,
maybe probably thousands of corporations now that many people know
that started out a small business. And almost every business
started out small at one point and they grew so
as long as they're classified as small and again ninety

(17:53):
nine plus percent of all businesses small they can work
with SBA.

Speaker 2 (17:57):
Very cool, very cool. So do you all have like
government contracting and certification programs? I saw that on the internet,
and I didn't want to assume, because you know, you
never know what you see. I could be on ruck fight.

Speaker 3 (18:11):
Well, no, that's that's one of those.

Speaker 2 (18:13):
Real important ones.

Speaker 3 (18:15):
Real important ones, because most businesses don't think they have
something that the government can buy or will buy from them.
And if you think about the federal government, it's think
about what we spend every year. It's hundreds of billions
of dollars. And in fact, I look last year, federal
agencies spent over one hundred and seventy three I believe

(18:36):
billion dollars with small just with small business. These are
government contracts. These are contracts that typically start out small,
maybe in the five thousand, ten thousand dollars range, but
they are have the ability to grow to multi tens,
sometimes hundreds of millions of dollars, and that can propel
that company from a small business to a nice sized corporation.

(18:59):
R some here around town that have anywhere from fifty
to one hundred million dollars in government contracts. They get
annually that have grown that quickly through some of those
programs that we're about to talk about, the ones where
you get certified.

Speaker 2 (19:12):
Right right, And actually that's a good segue. Just tell
me about it. Tell me about the whole government contracting
and certification programs. You all have something that's called Hubzone, yes, okay.

Speaker 3 (19:22):
Yeah, there are five or six of them. One is
called eight a business development program. So if they're designated
as a disadvantage business by the federal guidelines, then they
need to submit paperwork and they have a program where
they can get into this eight day certification for up
to nine years. And what they are is given the

(19:44):
opportunity to win these government contracts and they learn along
the way. They typically have a mentor working with them, okay,
and then later on as they graduate, many of them
turn around and mentor somebody else. So it's really cool
how they kind of pass the towards.

Speaker 2 (19:58):
Yeah, well you know, you want to kind of do that.
That's the community feels.

Speaker 3 (20:02):
Yes, but it's a very powerful program there where they
learn more and more skills and knowledge to help themselves
become more efficient, more profitable. Businesses started to say small businesses,
but many of them by the time they graduate from
the program ors truly bigger size at least a medium
sized company. So that's one you mentioned. Hub zones. It's

(20:24):
an acronym historically underutilized business zones, which basically means they're
areas of a community and it could be an entire
county where they don't have very much investment in that
new investment in that community, so they have a disadvantage
because of not having a lot of the local resources.
So they get advantages themselves and competing on some of

(20:46):
those government contracts. Another one is veteran owned. There's a
woman owned small business certification, so there are lots of categories.

Speaker 2 (20:53):
That's actually one of my questions. Can you tell me
a little bit about the how would a small business
because certified for the woman owned or veteran owned.

Speaker 3 (21:02):
Business, So they have to prove they are they say
they are, and it's an online certification process. Everything is
done online now. In fact, they just created a new
platform recently to make it more efficient and streamlined. And
part of that was because many of the businesses can
check more than one box. In fact, I've got one
that's a great success story we have. He checks a

(21:25):
bunch of boxes. He's Hispanic owned, he is rural, he
is veteran owned, service disabled, veteran owned small business. He
does exporting on top of that, government contracting on top
of that. But a lot of that has to do
with his original certifications he got when he was a
fairly young business. So yeah, they have to submit paperwork,

(21:45):
they have to provide things like tax returns to prove
they're small, to prove they are who they say they are,
because we don't want situations where and it's happened before
a large corporation uses a small businesses afront to get
a government contract and then that's not right.

Speaker 2 (22:00):
Oh that's really yeah, that's.

Speaker 3 (22:02):
Supposed to be the small business that gets the benefit
of that money. Like so that that's never good. It
doesn't make for bid headlines.

Speaker 2 (22:12):
No, no, Before we move on to my next set
of questions, do you have anything else that you want
to talk about with the government contracting, certification programs or
research sources.

Speaker 3 (22:24):
Yes, we've got it's not a direct SBA resource partner,
but they're sort of like a sister organization called APEX
APEX Accelerators. There's one in every state Kentucky. Apex Accelerator.
They work directly with the folks that are either thinking
about certification and government contracting or they are trying to

(22:46):
figure out does it make sense for me, or they're
struggling with it. So that's there there, that's their Bailey Wick.
They're they're real niche. Now, some of our other folks,
like the SBDC might have some people with experience in
government contracting too, and SBA always has at least one
or two people within their district offices. But the APEX
Accelerators across the country, that is what they do and

(23:07):
that's all that they do. So they're hyper excellent and
really focused on that with government contracting. So they just
went through rebranding about a year and a half ago
calling it the APEX succellers. A lot of people if
they've heard of they might think p tech Procurement Technical
Assistance Centers, so that's what it used to be called.
Same thing, but they if you're looking at government contracting

(23:28):
and you've been around at least typically two years or more,
you should talk to them because there are so many
government contracts available. The federal government's always looking for more
small businesses as part of their supply chain, and it's
not just products, services as well. And that's interesting because
sixty to seventy percent of all small business now is

(23:51):
service classified. So a lot of people think, well, I
don't sell a product, so I can't sell it to
the government. But they've bet all kinds of services, everything
from painting and you know, landscaping and lawn to I
don't know, catering, right, yeah.

Speaker 2 (24:06):
All of it.

Speaker 3 (24:07):
Yep.

Speaker 2 (24:07):
Well that's really cool, and I feel like I can
talk to you about this all day because, like I said,
I don't really have a lot of knowledge about it,
and I'm not sure how many of you out there
listening have a lot of knowledge about it. So can
you real quick before we have to wrap up the show,
can you give us a rundown on how to contact,
how to sign up all the good stuff, any socials, websites,
all the yep.

Speaker 3 (24:28):
So the easiest is sb A Small Business Administration SBA
dot gov, SBA dot gov. And from that you can
go to the landing page. There's a textbox where you
can type in your zip code and you can get
our district offices. You can reach each of our resource partners.
You can be as specific as you know five miles
twenty five miles away or whatever, and it has all

(24:50):
the information on the things we talked about, in addition
to the partners, the loan programs, the government contracting, all
the events going on. We've got a website nationally and
locally where you can find all kinds of webinars, seminars,
online content, and then there's a category where you can
just learn on your own, sort of like YouTube videos too.

Speaker 2 (25:09):
That's really cool. Yeah, well, Mike, I appreciate you being here.
Thank you so much for coming on the show and
all that you do with the SBA. And if anybody
wants to talk to him, he's here. You can reach
out to the chamber, you can go to the website,
all the good stuff, and we'll see you next week.

Speaker 3 (25:27):
Thanks Amanda, thank you very much. Bye,