SBA is not normally associated directly with local economic development — although it is an important component — because SBA programs are not geographically based. But, as a recent story in Business Week points out, the new head of SBA, Karen Mills, is very familiar with economic development:
Research Mills conducted for the Brookings Institution on economic business clusters in Maine, along with her personal lobbying efforts, helped convince the Maine legislature to pass a $50 million research and development bond to spur innovation by small businesses. “I have watched [Karen] operate in farms and factories and sawmills, with boat-builders and everywhere else with comfort and ease,” says [Maine Governor John] Baldacci. “I have not seen her be anything but comfortable navigating the halls of Maine legislature.” Mills was also chair of Baldacci’s Council on Competitiveness & the Economy.
It will be interesting to see if she brings any new ideas on how to spur innovation to the SBA. One idea she could adopt almost immediately concerns SBA and intangibles. Our earlier report, Intangible Asset Monetization: The Promise and the Reality and paper, “Building a capital market for intangibles,” we point out that SBA rules for using intangibles as collateral in the loan process are unclear. Therefore, Ms. Mills should require that SBA:
• review laws and regulations to ensure that SBA loans can be used for the acquisition of intangible assets, and that intangible assets can be used as collateral for such loans.
• work with its commercial lenders to develop standards for use of intangible assets as collateral, similar to existing SBA underwriting standards.
These two actions could potentially open up millions of dollars to intellectual-capital rich firms that could be used for further innovative activities. That would be a huge step forward in out innovation policy.