Network that aids small businesses struggling with budget cuts

Glenn McAllister (left), director of the Small Business Development Center at Widener University, meets with Geoff Broome, who, with his wife, Amy, is considering buying a dance studio in Kennett Square.
Glenn McAllister (left), director of the Small Business Development Center at Widener University, meets with Geoff Broome, who, with his wife, Amy, is considering buying a dance studio in Kennett Square. (CHARLES FOX / Staff Photographer)
Posted: March 03, 2014

SBDC. In the resource-starved world of small-business owners, that acronym is tantamount to invaluable guidance, insightful research, and, for some, sheer survival.

Small Business Development Centers are a national network of roughly 1,000 offices providing free assistance to aspiring entrepreneurs - that adventurous breed that generally doesn't have two extra nickels.

But now, it's the SBDCs scrounging for funds. Without additional revenue, service cuts are likely, directors of the networks in Pennsylvania and New Jersey say. And that, they warn, could disrupt the economy's recovery - a turnaround the Obama administration has credited small businesses with leading.

"There will be less aspiring entrepreneurs served and, as a result, there will be less businesses created and less jobs created," said Christian Conroy, director of Pennsylvania SBDC, a network of 18 centers. In his 20 years there, they have helped start 33,939 businesses, creating 145,197 jobs and generating $1.2 billion in federal and state taxes.

It's time to put money behind all the talk about the importance of small-business development, said Brenda Hopper, CEO and state director of New Jersey's 12 SBDCs, which are operating with one-fourth the state funding they had in fiscal 2008.

"For the economy to be strong, you always hear we are the engine," Hopper said of small business. "You need to take care of the engine."

In the case of SBDCs, that care has primarily been the responsibility of federal and state governments. SBDC networks are supported by the U.S. Small Business Administration, state economic-development agencies, the colleges and universities that host the centers, and the private sector.

Since the 2008 economic collapse, simply maintaining the status quo has been a challenge, particularly at the state level, where pensions, health coverage, and education obligations have left coffers ill-equipped to meet much else.

Pennsylvania SBDC, established in 1980 and headquartered at the University of Pennsylvania, had its highest state allocation - $8 million - in fiscal year 2007. Last year, it was barely over $3 million.

What helped prevent complete disaster was the passage by Congress of the Small Business Jobs Act in 2010, which provided funding to all SBDCs to help spur the economy. Pennsylvania SBDC got about $1 million a year for two years, which it dedicated to helping start-ups, Conroy said.

With that funding now at an end, Pennsylvania SBDC is pushing for an additional $1 million from the state to simply maintain its current level of service to start-ups. Its overall budget is $7 million.

"It will enable us to dedicate the time and resources to aspiring entrepreneurs," Conroy said. "As a minimum, we'd be able to work with 700 clients across the state, with the goal of starting at least 100 new businesses a year."

In his fiscal 2015 budget, Gov. Corbett has proposed $12.4 million for the Partnerships for Regional Economic Performance, which includes Pennsylvania SBDC. That's $500,000 more than the current budget.

While appreciative of the increase, Pennsylvania SBDC is calling for still more - a PREP allocation of at least $15 million. The $1 million it hopes to devote to start-up assistance would come from there.

State Sen. John Blake (D., Scranton), whose district includes two SBDCs, said Thursday that "there are allies on both sides of the aisle in both chambers who understand . . . SBDCs have a long track record of demonstrating the value of our investment in them."

And while he plans to advocate for more SBDC funding, Blake noted: "The general fund is so constrained."

Conditions in New Jersey are no more flush. The state allocation to the SBDC network is $250,000, down from $1 million in fiscal 2008, and half what it was at least 20 years ago. Its total budget is $4.3 million.

Making matters worse, New Jersey SBDC, like all SBDC networks, lost federal funding in 2013 because of sequestration spending cuts. Its allocation, usually $2.9 million, was $190,000 lighter, resulting in about 10 layoffs from her staff of 45, Hopper said.

Pennsylvania was shorted $350,000 from its roughly $4 million allotment.

State funding cuts imperil federal allotments, too, because those federal dollars are available on a matching basis.

"Our state funding is critical and needed for services, as well as a leveraging mechanism for federal funding," Hopper said.

Gov. Christie unveiled a $34.4 billion budget Tuesday. What it proposes, if anything, for his state's SBDC network was not expected to be known until later this week.

Deborah Smarth, the SBDC's chief operating officer and associate state director, is hoping for at least $500,000:

"We're just trying to get back to where we started more than two decades ago," she said.


PA SBDC BY NUMBERS

654

businesses started in 2013.

9,971

businesses and entrepreneurs served in 2013.

98,665

counseling hours provided in 2013.

$390M

loans, equity, and procurement contracts facilitated in 2013.


NJ SBDC BY NUMBERS

644

Businesses created in 2013.

5,351

Businesses and entrepreneurs served

in 2013.

22,699

Counseling hours provided in 2013.

$75M

Loans, equity, and procurement contracts facilitated in 2013.


dmastrull@phillynews.com

215-854-2466 @dmastrull

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