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Will Plans to Consolidate Federal Commerce, Business and Trade Agencies Help or Hurt Small Businesses?

The Small Business Administration would be rolled into a new business- and trade-related department made up of a portion of the current Department of Commerce and several other now-independent federal agencies, under a plan floated by the Obama administration a few weeks ago. A related move on January 13 re-elevated the head of the SBA to a cabinet-level position. Small business consultants differ as to what these changes mean, and many question whether the consolidation of agencies will actually ever happen.

Having the President’s cabinet include the SBA administrator, as it did during the Clinton administration, may turn out to be a symbolic move that won’t actually accomplish much for small business advocacy. The cabinet is not the exclusive club it once was, having doubled in size just since the 1970s. The SBA administrator would bring membership in the cabinet up to 24 officials, and it’s generally agreed that a body that large can’t do and doesn’t do much in the way of actual policymaking. Even so, the Financial Services Roundtable, an association of the 100 largest U.S. financial companies, praised the move and said “We look forward to working with the SBA … to continue providing benefits, education and lending opportunities to small business.”

But any influence the SBA administrator might gain from becoming part of the cabinet could be more than offset by a reduced emphasis on helping small business when and if the agency reorganization takes place. The president and CEO of the National Small Business Association, Todd McCracken, expressed just this concern in a response to the President’s proposals. The president of the American Small Business League, Lloyd Chapman, went even further, saying that the reorganization would “reduce the power of the only federal agency that helps small businesses” and would lead to the eventual elimination of the SBA.

The Department of Commerce is more than 100 years old, having been created in 1903 during the administration of Theodore Roosevelt. The SBA came along 50 years later under President Eisenhower. No name has been chosen for the new consolidated department that President Obama’s proposal would create, although the Department of Competitiveness is one of the leading contenders. A similar proposal for business-agency realignment put forth last year by an outside group suggested the name Department for Business, Trade and Technology. If the consolidation of federal business agencies does occur, it’s expected to create efficiencies that would save taxpayers $3 billion over 10 years.

A related idea announced by the President in the same speech in January is more likely to see implementation in the near-term. That’s the creation of a comprehensive business services website, Business USA, that would serve as “a one-stop-shop for small businesses and exporters” looking for information about government programs designed to encourage entrepreneurship, especially for companies that export to other countries or would like to do so. The current SBA website would presumably become a subdomain of this larger site.

PADGETT BUSINESS SERVICES® has been on the side of small business since 1966. We offer expert small business bookkeeping services including tax preparation and contract payroll services. We can foster your success by taking care of some of the details while you focus on building your company.