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The Small Business Administration (SBA) is the federal government's arm that is solely focused on small businesses. The SBA is probably most well-known for its SBA loans that are issued through partner banks, but it also provides a number of advisory services to help businesses with myriad problems. In addition, the SBA works with a number of other organizations that provide different helpful services to small businesses and startups.
We spoke with Bernard J. Paprocki, SBA Syracuse district director. While we had already spoken to Beth Goldberg, director of the New York district office, we wanted to get a peek inside the local operations and the climate at the Syracuse office, as each office operates relatively independently.
If you're a small-business owner who wants to grow their business or runs into recurring problems, we highly recommend you reach out to your local SBA office.
This interview has been condensed and edited for clarity. If you're a small-business owner interested in sharing your funding story, tweet us at @ValuePenguin.
Can you briefly describe your background and how you came to work at the SBA?
I have been working for the U.S. Small Business Administration since 1987. I was a special assistant to the deputy administrator in 1987, working in our Washington, D.C., headquarters. I did liaison work with the House and Senate small-business committees on everything from our programs to our budget and associated types of things, in terms of setting programs, changes to our programs, staffing. After 1991, I got the job here in Syracuse. I’ve been here since then as the district director. So I’ve got a pretty good sense of what’s been happening in Upstate New York. I was born an hour’s drive south of Buffalo, New York, so I’ve spent pretty much all my time in Upstate. The Syracuse district covers 34 counties of Upstate. We have district offices in Syracuse and Buffalo, and other smaller branch or alternate worksites in Rochester, Albany and more.
Can you briefly describe what the SBA does?
The SBA is a Cabinet-level agency that empowers entrepreneurs with the resources and support they need to start, grow, expand and recover. Working with the SBA, small business owners are able to access capital, valuable resources, business know-how, and the right expertise for every stage of the business lifecycle. Entrepreneurs can access expert counseling and training services from our four resource partners: SCORE, Small Business Development Centers (SBDC), Women’s Business Centers (WBC) and Veterans Business Outreach Centers (VBOC). Startups and growing businesses can access the capital they need from participating lenders with SBA-backed microloans, lines of credit, working capital loans, and much more. Our new online tool, Lender Match, enables entrepreneurs to connect with small business lenders in as few as 48 hours. SBA programs such as 8(a) and HUBZone help expand the opportunities for small businesses to compete in the federal contracting marketplace.
The agency does have a very major role during natural disasters. That’s not necessarily something that district offices like ours get involved in, other than if it does happen to be right here in our district, we do provide support as much as we can. But there’s a whole separate cadre of employees of our disaster office that come in after a disaster declaration has been made. We make direct loans to businesses of all sizes, renters, homeowners and nonprofits for uninsured portions of the damage. SBA disaster recovery centers are up and running in South Carolina, as you might imagine. In fact, we were part of a huge effort with the 9/11 incident in New York. I was actually down in the World Trade Center during that time. The whole agency gets behind major disasters like that.
Do you see any typical kinds of businesses that you tend to work with from the Syracuse area?
I was looking at our latest loan list—for last week, for example, we did 20 loans for $7.5 million. And that’s more than normal, but it was the last week of our fiscal year that ends Sept. 30. There was a lot of effort on the part of lenders to get loans in and done before books close for the year.
Who are those loans going to?
It runs the gamut: construction, veterinary clinics, restaurants, music studios and more. There’s a big uptick in the demand for loans, and we’ve seen boom in breweries, wineries and distilleries that have started in Upstate New York. Restaurants, construction and retail have been fairly standard year after year.
Interestingly, we do a lot of loans to doctors and veterinary businesses. The reason there being a lot of medical professionals realize that when they graduate, they have very limited business acumen. It might seem a no-brainer for a bank to want to finance a veterinary clinic, but in reality they have no idea how to run a business. We’ve been involved with quite a few for people that are just starting out in their own small businesses in those areas.
Outside of loans, you also offer advisory services. Is that right?
That’s right. In our district we have nine Small Business Development Centers (SBDCs) and subcenters. Our partner in these is the State University of New York. They’re located at SUNY colleges or community colleges throughout Upstate New York in over 34 counties. Most of the services are either free or low-cost services.
It’s really one of the best-kept secrets for people interested in exploring the idea of small business ownership. We work with all sorts of businesses and empower people to achieve the American Dream. Do I have what it takes to start a business? Does my plan seem viable? How do I market online? How do I access additional financing? It’s a really good resource to know about for entrepreneurs and business owners.
We also have our SCORE chapters that are staffed with volunteers. Those volunteers are usually accountants, attorneys, bankers or other small-business owners who just want to give back. So that is available as well, free of charge. They focus more on the startup part of small businesses: How do I start a business here Upstate? SBDCs, on the other hand, can be a little more involved, and their projects are often over a longer period of time. Our women’s centers function more closely to SBDCs and focus on women business owners.
Are there any unique challenges or advantages to a business in the Syracuse area?
The challenge in my district is reaching rural areas. For example, we cover the Adirondack Park and the southern tier of New York, which doesn’t have a lot of coverage in between. Businesses located in more urban areas like in Syracuse or Albany have more access to resources such as chambers of commerce and other economic development organizations. I think geography plays a big part in us being able to deliver our products and services.
Also, businesses are impacted heavily by the weather. Syracuse is the snowiest city in the United States, and we can get up to 200 inches of snow in a year. So getting around can get a little dicey, especially in the January-March time frame.
What are some creative ways business owners have used SBA loans in the past that people wouldn’t immediately think of?
I’m not sure if this necessarily qualifies as creative, but there is one success story that clearly stands out from my time here in Syracuse: A gentleman from Turkey, an immigrant, decided to buy an old cheese factory down in New Berlin, New York, with an SBA-backed loan. He noticed that Kraft was moving out of the area since they were struggling to sell their products. He saw an opportunity to buy this thing and to actually reinvigorate the whole industry of yogurt. You probably know it better as Chobani yogurt. They were the recipient of an SBA 504 loan to start their first warehouse.
They have driven the dairy industry in the entire country to new heights with the demand for milk. They’ve since opened up numerous plants to help meet demand; they compete with companies like Fage and Oikos, and they’ve even helped drive up the price of milk for dairy farmers. It’s just been a huge success. This all started with a gentleman from Turkey who just saw a niche. He recognized that people in the United States really didn’t know what good yogurt was. He saw that opportunity, and with hard work and determination made it what it is today. That, to me, was our biggest success story. It makes you feel good—right in our own district, and still going. And the number of jobs that it’s created and supported—incredible!
How has the general appetite for small-business loans in your covered areas changed over recent years?
We’ve noticed an influx of loans that are coming from out-of-state lenders. A lot of these lenders work with very specific businesses like specific hotel chains, franchises, etc. A lot of local banks have been focusing on mergers and acquisitions instead. Compound that with credit unions entering the small-business lending space, the number of local banks operating in the small-business space has decreased. It’s not a big trend, but it’s there.
Also, the agency itself increased our loan limit from $2 million to $5 million a few years ago. Dollars have increased, and the size of our loans have increased, but the number of loans has since fallen in Upstate. That is due to a variety of reasons, but the small-business lending space is very competitive. Most banks tend to compete on price, and if you compare SBA-backed loans to the most competitive bank loans, SBA-backed loans will probably look a little less attractive, since we have guaranty fees. We don’t get any money for our 7a loan program as part of the agency’s overall budget; it’s all generated by fees that are charged by the program nationwide.
There are a lot of organizations focused on helping small businesses, and it seems like the SBA falls in the middle of all of them. Is the SBA the best place to visit first and act as a directory?
The SBA is definitely a good place to go. One of our best resources is our national website. If you call our office at 315-471-9393, we’d be happy to direct you, or help you out the best way we can. We’re like the tip of the iceberg. We’re only nine employees, but underneath the tip of this iceberg is a vast array of resources that we work with, either directly or through partnerships. I’m big on partnerships, and I think that only benefits everyone.
Currently we are partnering with the Department of Agriculture, to reach farm- and agriculture-related businesses, and between the two of us, we can leverage our outreach to serve rural areas.