1. The SBA: Big Brother or Nurturing Mother? A Tale of Two Policy Narratives
Like manypolicies,the Small BusinessActof 1953 didnot happenovernight. Itisthe productof
manyforcesboth external andinternal to federal government. These forcescome inthe formof lobby
groups, media, agendasof electedofficials,changesinthe philosophyof the PresidentialAdministration,
budgetsandtriggerevents toname a few. Whenthinkingaboutthe manyfactorssurrounding policy
formation, ProfessorJohn Kingdon'spolicymodelcomestomind. The model statesthatthree separate
streams(problems,proposals, politics) mustconvergeinawindow of opportunityto setanagendaand
shape future policy development(Anderson,2011). In simple termsthe model indicatesthatagenda
settingisa combinationof the above mentionedforcesinanopportunistictime frame thatwill securea
majorityinterestonanissue. Thispaperwill focuson the waysinwhich the problemdefinition shapes
the Small BusinessAdministration,the policywindow forthe Small BusinessAct, andthe prevailing
policynarrativessurroundingthe agency.
Introduction and History
Althoughthingshave changedintechnology,business,andthe policyarena,the Small Business
Act isstill goingstrongover60 yearsafterits inception. The Small Business Administrationdotsthe
landscape of citiesandtownsacrossthe nation. It reachesthe population viaanetworkof affiliates
includingSmall BusinessandTechnologyDevelopmentCenters(SBTDC),SmallBusinessDevelopment
Centers(SBDC),SCOREvolunteers,SBA districtoffices,ExportCenters,Women'sandVeteran'sCenters
and Technical Assistance Centerstoname afew. Thisnetworkof thousands of offices andemployees
can trace itsroots to the Small BusinessAct. This"Small"Actsprangforth inthe tumultuoustime of

2. war. It struggled,flopped,andfloundereditswaythroughthe policycycle toemerge asthe Small
BusinessActof 1953.
Some argue that small businessasapublicpolicy interestbeganbackinthe timesof the
ShermanAntitrust andClayton legislation inthe early1900's. However,itappearsthatsmall business
as a vital elementto economicdevelopment isstrongly correlatedwith the periodthatbeganin1929
withthe ReconstructionFinance Corporation. The RFC, whichwascreatedbyPresidentHerbertHoover,
was designed tohelpbusinessesobtainloanmoneytoworkonfederal contracts(Bail,2009). In
additiontothe RFC, several otherpiecesof legislationwere introducedpriortoSmall BusinessActof
1953. For instance,in1942 Congresscreatedthe SmallerWarPlantsCorporation,SWPC, inresponse to
small businessownerscomplaintsthat they were unable tocompete withlarge business indefense
productioncontracting. Afterthe SecondWorldWar the SWPC wasdisbandedandthe lendingand
contract powerswere transferredtothe RFC(Bail,2009). In1944 PresidentRooseveltissuedan
"EconomicBill of Rights"that wasdesignedto bolstereconomicdevelopmentthroughthe "right"of
every individual toapayingjobina secure economy. ThisActhowever, hadnoprovisionforsmall
businessandhasbeencriticizedaslargely symbolicinnature (ClarkandSaade,2010).
Aroundthe time of the KoreanWar anotheragencysimilartoSWPCwas createdto certifysmall
businesseswhentheymeteligibility requirements forgovernmentcontracts. Inaddition, the
Departmentof Commerce'sOffice of Small Businessbegantakingovereducationresponsibilitiesinthe
formof managementcounseling. Thiswasdue to the belief thatsmall businessfailure was largely a
resultof lack of expertise andinformation. By1952, the RFC whichhad takenoverthe SWPC,was
abolished. Insensingthe importance of the agencywork aimedatsmall business,PresidentDwight D.
Eisenhowerhelpedtocreate Small BusinessAdministration withthe signingof the 1953 Small Business
Act (Bail,2009).

3. ProblemDefinition
Problemdefinitionisone of the mostimportantandmostdifficultprocessesinthe policycycle.
Thisis because problemdefinitioncanvarywidelyfromone individual tothe nextandsocial problems
are notnecessarily tangible.Typically social problems are sociallyconstructedandbased onlessthan
rational views. Thisisnodifferentforthe Small BusinessAct. The 1953 legislationwasborn duringa
twentyyearperiod of wartime turbulence. Thisperiodmarksatime whenthe countrywas
experiencinggrowingpains inthe formof changingattitudesandchangingworkenvironments.
On the economicside of thingsthere wasa drasticdecline inthe traditionallyactive sectorof
farming,especiallyinthe south. Thiswasdue notonly to wartime lossof life forsoldiers, butmanythat
returnedhome didnotwantto returnto a life of farming(ClarkandSaade,2010). Atthe same time,
complaintsof small businessdisadvantage inthe governmentdefenseproductionmarketplacewere
pouringintoCongress. Thatpressure gave rise tofearson a possible weakeningof homelanddefense
and the slogan"If Americawill save the small businessmen,thensmall businessmenwill save America"
(Clarkand Saade,2010, p.4).
In addition,chainstoreswere springingup rapidly, whichwhippedsmallbusinessadvocates
and independentmerchantsintoafrenzytopass tax legislation(Bean,1995).Andfinally,inthe article
Beyondthe BrokerState:A Historyof the Federal Government'sPoliciesTowardSmall Business,1936-
1961, an argumentispresentedthatglobal politicscontributedtoAmericanfears. The authorpoints
out that manyAmericansfelt thatrise of fascisminEurope waspartiallydue tothe decline of small
business. Thiscreatedthe fearinsome thatthe governmentwouldhave toexpanditsregulatory
powersif bigbusinesscontrolledthe economy. People saw thisasa possible threattodemocracy that
couldbe mitigated only throughthe protectionof small business. (Bean,1995)

4. Throughthis backwards viewof the policycycle the problemdefinition (thatledtoagenda
settingforthe 1953 Act) appearstobe fear. There wasfear that returningsoldierscouldnotfindwork,
and fearthat the economycouldnotrecoverif there were still depressedsectorsinthe nation. There
was fearthat withoutthe supportof the small businessmen indefense production there wouldbe a
weakeninginthe homelandsecurityposition. Fearwas definedintermsof athreat to "the little guy"as
chainstoressprang up. This fearwas compoundedbywhatsome feltwasthe contributionof big
businesstofascismandtotalitarianisminEurope.
A problemdefinitionthatiseasytodefine even inthe face of manycontributingsourcescan
catch on like wildfire. Inthisinstance fear,surroundedbytimesof Depressionandwar,ignitedablaze
of unityforsmall business advocacy underthe guise of the underdogmascot. Whendefiningpolicy
problemsintermsof fear,especiallyduringatriggerperiodof warthere isheavyreliance onmythsand
symbols. Thiscan take the formof the "little guy","usversusthem"andthe all too popularstoryof the
underdog. MostAmericanslove the storyof the underdog. Many can conjure upstoriesof heroesand
legendstheyknow;andmanyfeel thatourcountrywas builtinthe likenessof the underdog. Fear
coupledwiththe symbol of the "little guy"isaclear,concise andunifyingforce thatcan give wayto
agendasettingforsmall businesspolicy.Itisclearthatproblemdefinitionisnotnecessarilybasedon
facts. Politicianscanuse factsto craft argumentsto swaycitizensinemotionallychargedperspectivesof
problems. These themes willbe discussedfurtherinthe policynarrative section.
PolicyWindow
Criticsargue that effortsaroundsmall business agenciesduringthe periodleadinguptothe
1953 legislation were largelydesignedinhelpingwith national defense. Duringtimesof peace,the
agenciesappeartobe little more thanfigureheads. The agencieswere fraughtwithchange astheywere

5. oftendisbandedandreformulatedtomeetthe needsorwhimsof the changingAdministration. In
addition,itwasa periodof worldwideeconomicdepressionwhen the New Deal andFairDeal programs
were attemptingtobreathe life intothe comatose economy. Itisimportantto note the underpinnings
of the Eisenhoweradministrationasone of heavyinterestin"technical assistance andloansto
depressedareas"(ClarkandSaade,2010, p. 5). Thiswas the perfectbackdropto incubate The Small
BusinessActof 1953 which inturn ledCongresstocreate the Small BusinessAdministration.
To referback to the Kingdonmodel,the policywindow wasopenandthe three streams of
problems,proposalsandpolitics convergedatthe righttime inthe Eisenhoweradministration. The
problemswere basedonDepression,unemploymentandneedfordefense contracting. The proposals
tookvariousshapesas agenciesdesignedtohelpsmall businessgainfederal contracts. Proposalsalso
tookthe formof NewDeal andFairDeal programmingdesignedtobolsterdepressedsectorsof the
economy. The politicsswelledinvariousformsaroundsecuring"the little guy"for defense production
so that he wouldhelpprotect the homelandduringtimesof war. The politicsof fear were alsousedto
cementbonds throughnarrativesthatpushedlegislationtocure the "evils"of bigbusiness.
PolicyNarratives
The final sectionof thispaperwill coverthe twocompetingpolicynarrativessurroundingthe
SBA. The firstof these narrative isthe SBA as the nurturingmother. Inthispolicynarrative, supporters
of small businesscontendthatwithoutgovernmentinterventionsmall businesswouldbe snuffedoutby
bigbusiness. Inessence, SBA policywasdesignedtohelp disadvantagedbusinesscompeteinthe free
market.
Accordingto the 1953 Act Section 2. (a) from the SBA website (sba.gov)

6. The essence of the American economic system of private enterprise is free competition.
Only through full and free competition can free markets, free entry into business,and
opportunities for the expression and growth of personal initiative and individual judgment
be assured. The preservation and expansion of such competition is basic not only to the
economic well-beingbut to the security of this Nation. Such security and well-beingcannot
be realized unlessthe actual and potential capacity of small business is encouraged and
developed.It is the declared policy of the Congress that the Government should aid,
counsel, assist, and protect, insofar as is possible,the interests of small-businessconcerns in
order to preserve free competitive enterprise, to insure that a fair proportion of the total
purchases and contracts or subcontracts for property and services for the Government
(including but not limitedto contracts or subcontracts for maintenance, repair, and
construction) be placed with small businessenterprises, to insure that a fair proportion of
the total sales of Government property be made to such enterprises, and to maintain and
strengthen the overall economy of the Nation.
This passage from the Act is litteredwith what Deborah Stone refers to as the "strategically
crafted argument" (Clemons & McBeth, 2009 p. 79). Words such as "security", "encouraged",
"protect" and the phrasing of the policy is crafted in a way that portrays small business as the
nations savior.
According to many supporters the only way to promote small businessdevelopment is
through set asides and special loans. In the article, Should the Small Business Administration Be
Abolished?, a debate rages on both sides of the issue. Supporters of the SBA contend that billions
of dollars go towards business counselors, information, and loans that are crucial to those who have
been "failedby conventional lenders" (deRugy, 2012). Supporters also lay claim to small business as
the major creator of jobs for women, veterans, minorities, and the country as a whole. In the
aforementioned article, SBA proponent Barbara Kasoff, explainsthat the SBA is not singularly based
on the loans it grants to disadvantaged business. The work of the SBA reaches through the network
of affiliatesthat deliverone-on-one training and counseling sessions(deRugy, 2012). The affiliate
centers are designedto be a hub of knowledge and expertise that is available mostly free of charge
to small business owners.

7. Through the affiliate network, the SBA is still keepingupwiththe longtraditionof technical
assistance asespousedthroughthe EisenhowerAdministration. Forinstance,the Small Businessand
TechnologyDevelopmentCentersare anSBA affiliate with900centersnationwide. Manyof these types
of SBA affiliatesare locatedinandaroundcollege campuses. AccordingtoRichardProffer, aBusiness
DevelopmentSpecialist inCape Girardeau County,the moneyforthe SBTDCs'comesthougha contract
withMissouri UniversityinColumbia. The UniversityprovidesSBA initiatives throughSBTDCs'state
wide,viafundsfromthe SBA. The networkof Missouri SBTDCs' claimto be meetingtheireconomic
developmentgoals. Accordingtotheirwebsitethey"exceededannual capital infusionby150%,
pumpingmore than$670 millionintoMissouri'seconomyoverfiscal years2010-2013"
(missouribusiness.net).
A myriadof storiescan be foundaboutsmall businessownersreceivinghelpintechnical
assistance andloansthroughthe SBA affiliates. The volume of storiesfoundonthe SBA districtwebsites
and the SBTDC website istoolarge tocover inthispaper. Many of the storiesdiscusscommonthemes
such as how the businessownercouldnothave securedfundingwithoutthe helpof the SBA,orhow
SBA classeshelpedbusinessownersbecomemore knowledgeable. One suchexampleisinthe article,
Doesthe SBA Still Matter. The article discussesthe role of SBDCsmall business counselorsinhelping
small businessownersdevelopbusinessplansandothertechnical knowhowthatwill getthembefore
bankers. The small businessowners featuredinthe article discuss how beforethe helpof the small
businesscounselortheyfeltlike theywere "18againand tryingto borrow moneyfora car"
(Mandelbaum,2007, p. 101). The businessowners,like manyinthe SBA successstories, attribute their
successinthe marketplace directlytotheirworkwiththe SBA affiliate. The mantraof small businessas
the backbone of the economyiscontinuouslysupportedandreinforcedthroughthese typesof
narratives.

8. As previouslymentioned,the SBA policynarrativeasone of a nurturinginstitutionisrepeated
overand overagainthroughsmall businessownersuccessstories. These narrativesspeakdirectlyto
the original missionof the Small BusinessActof 1953, as it wasdesignedtohelpthe "littleguy"compete
withbigbusinessinthe free marketplace. PhillipBail pointstoaquote onthe SBA website thatsays,
"small firmsproduce the itemsthatline the shelvesof America'smuseums,shopsandhomes. They
keepintactthe heritage of ingenuityandenterprise andtheyhelpkeepthe American Dream withinthe
reach of millionsof Americans". He goesonto say thatattacking those wordsisakinto attackingthe
AmericanDream(Bail,2009 p. 28).
There are prevailingquestionsastowhether the SBA has steppedawayfromitsprimarygoals.
Amidmuchvalue conflict,the SBA still operatesandpushesinitiatesandmoneytowardsdeveloping
newand existingbusiness. Manyentitiesdisagree withgovernmentinvolvementinprivate industry;
while otherscontendthatsmall businessisvital tothe economyandthereforeitisourduty to support
it. Accordingtosome of the themesinthe literature,the agencygoalshave morphedfrom helpinset
asidesfordefense production contractingtoaidingall typesof endeavors forall typesof
"disadvantaged"businesses. The questionbecomeswhetherthe policyhaschangedduringevaluation
cycle or is there competinginterpretationsonthe implementationside? Some criticsof the agencycite
inconsistencyinprogram administration while otherscite changingtimes. These questionsleadusto
the nextpolicynarrative of the SBA as Big Brother.
It isinterestingtonote the opposingpolicynarrative surroundingEisenhower'sdecisiontosign
the 1953 legislation. Accordingto the article, Terminatingthe Small BusinessAdministration, the other
spinon whythe act was pennedwaspurelypolitical innature. The authorcontendsthatthe RFC was
abolishedbecauseof illegal influencepeddling. The article goesonto explainthatalthoughEisenhower
was againstthe Small BusinessActhe signedthe legislationtodisarmcriticsthat claimedthat

9. Republicanswere "beholdentobigbusiness"(deRugy&DeHaven,2011). In addition,the authors point
out that thisactionwasdirectlyagainstthe wishesof interestgroups. Groupssuchas bankersand the
Chamberof Commerce didnotfeel thatgovernmentshouldbe involvedinlending. These groupsalong
withthe National Associationof Manufactureswouldbenefitfromsuchlegislationbutinsteadwanted
no part of "big brother"interference. The authorsstate thatthe creationof the SBA legislation,"was
confinedprimarilytopoliticiansof bothpartieswhosaw anopportunitytoseduce the unorganized
small businesscommunityintoactive political support"(deRugy&DeHaven,2011). Thisagain,speaks
directly tothe storiesof heroesandlegendsandhow easily peoplecan be swayedby a clearlydefined
narrative. Especiallyone asseductive asthe underdog. Itisclearthat politiciansusedthisstrong
symbol togarner support. Inaddition,anypolitical figure thatchose notto act appearedt be infavor of
bigbusiness,whichwasclearlycastasthe villainousun-Americancharacterinthisnarrative.
Currently, there issome debate about whetherthe SBA istrulysupportingitsownmission.In
the article, Doesthe SBA Still Matter?,criticscite turmoil inthe agencydue to inaccurate fundingof
projects. Anexaminationof several large contractsthatshowedthat more than half of the highdollar
contracts infact wentto large business. The authorclaimsthat Washington appearstohave a fluid
definitionof the Small BusinessAct whenitcomestopromoting the goalsof small business. Behind
closeddoors there isa constant streamof effortstochange the definitionof small businesstoinclude
more constituentsandallow largerbusinesstotake advantage of 7(a) SBA backedloans(Mandelbaum,
2007 p.107). The 7(a) loan was designedto extendcredittothose small businessownerswho
otherwise mightbe ineligible. Thisspeaksdirectlytothe portionof legislationthat wascreatedtohelp
fundloansto enable disadvantagedbusinessestocompete inthe free market. By thisdefinition
disadvantagedmeanssmall. Inanotherloanprogram, the 8(a),disadvantage meansminority. Criticsof
the 8(a) program cite an unsuccessful,underfundedattemptateasing impoverishedareas inresponse
to the race riotsof 1967 (Mandelbaum,2007). The 8(a) isa programthat allowsfirmstogetfederal

10. contracts free frombidding. If a company growslargerthan the program allowance,itcansplitoff and
forma newone. Thisagainpointsto the wink-winkbehindcloseddoors intermsof allowinglarger
firmsto getSBA backedinitiatives.
A waste of tax dollars,moneylenttobusinesseswhohave beenrejectedfornotmeeting
benchmarksforsuccess,highriskborrowswhoas determinedbythe marketare not needed... these
are a fewof the policynarrativessurroundingVeronique deRugy'sview of the SBA as "BigBrother". In
the article, Shouldthe Small BusinessAdministrationBe Abolished, deRugyclaimsthatSBA loansare
harmful tothe economy,totax payers,and to the free market. She alsoclaimsthat governmentshould
not be involved inthe othertechnical assistance productsthatthe SBA offers. She saysthese are
unnecessaryand can be handledbyprivate firms(deRugy,2012).
Conclusion
Policyformationraisesmanyquestionsabout whothe interestgroupsare, whothe
stakeholdersare andwhois creatingthe problemdefinition . Inweedingoutthislistitisimportantto
note that individualsingroupsare notmutuallyexclusive. Itisalso interestingtonote thatthe problem
definition,policywindow andpolicynarrativesare deeplyintertwinedinacacophonyof white noise
frommyths,legendsandsymbols. Whateveranindividual'sparticularswaytowardsthe SBA,itisclear
that ithas a strongfootholdinAmericangovernment. Inthe wordsof critic Veronique deRugy,"The
SBA...aprogramto helpsmall business - awidelyheldbelief that'salmostassacrosanct as baseball,
motherhoodandapple pie. Inreality,the SBA isa formof corporate welfare..."(deRugy,2012). A
perfectpointtoillustrate animperfectsystem. A systemthatreliesonthe rallying troopsthrough battle
criesinthe formof policynarratives.

11. References

12. Anderson,JamesE.2011. Public Policymaking. 7th
ed. Boston,MA: WadsworthCengage Learning.
Bail,PhilipG.(2009). Federal Small BusinessProgramsandthe Small BusinessActof 1953. Contract
Management,24-40.
Bean,JonathanJ. (1995). Beyondthe BrokerState:A Historyof the Federal Government'sPolicies
Toward Small Business,1936-1961. Businessand EconomicHistory, 24 (1),9-12.
Clark,Major. L and RadwanN. Saade. SBA.gov website.The Role of Small BusinessinEconomic
Developmentof the UnitedStates:Fromthe Endof the KoreanWar (1953) to the Present.2010
Clemons,RandyS.andMcBeth, Mark K.2009. Public Policy Praxis. PearsonEducation,Inc.
deRugy,Veronique. WallStreet JournalOnlinewww.onlinewsj.com. Shouldthe Small Business
AdministrationBe Abolished?2012
deRuby,Veronique andTadDeHaven. Downsizinggovernment.org/sba. Terminatingthe Small Business
Administration.2011
Mandelbaum,Robb.2007. Doesthe SBA Still Matter. New York, NY: MansuetoVentures,LLC.
Missouribusiness.net. MOSBTDC infused$670 millionintoMissouri'seconomyover4years.2014.
Proffer,Richard.Personal interview.20Nov.2014.
SBA.gov website.Small BusinessAct1953. n.d.