SMALL BUSINESS

Small Business Administration Criticized For Backing Big, Corporate Interests

03/15/2013 01:59 pm ET

A watchdog group charged this week that the federal Small Business Administration lobbied on behalf of large corporations, adding to criticism that the agency has been letting its definition of small get very big.

This week, the Center for Progressive Reform, a left-leaning nonprofit research and advocacy group, said the SBA has been using money earmarked for mom-and-pop business owners to lobby for corporate entities instead, the Washington Post reported.

On Thursday, Rena Steinzor, CPR's president, said during a congressional hearing that the SBA's lobbying arm had “consciously diverted its limited, taxpayer-funded resources away from helping truly small businesses.”

Steinzor also called for the government's oversight arm, the Government Accountability Office, to launch an investigation into whether SBA officials had been breaking the law by lobbying against new regulations, like rules about emissions, on behalf of big businesses, including large oil refineries and chemical plants. In one example cited in her testimony, Steinzor said the SBA lobbied to reduce air pollution regulations that were beneficial to the country's fourth-largest utility, the Southern Company.

Steinzor's testimony follows on a scathing report published by her organization in January that attacked the SBA's Office of Advocacy, charging it had "extraordinary authority" over business regulations, especially ones having to do with environmental impacts such as air pollution and contamination.

Another report also released in January from the Center for Effective Government said the SBA frequently heard from representatives of trade groups and lobbyists who represented the interests of big and small businesses alike, The Hill reported.

In an email to the Washington Post Thursday, the director of the SBA's Office of Advocacy said his office had not broken any laws.

But the latest round of criticism adds to a debate over how useful the SBA is for the majority of small businesses. The federal office has been criticized in the past for only offering or guaranteeing loans to a small percentage of businesses.

The agency defines small business in several different ways; for service and retail businesses, receipts cannot exceed more than $21 million per year. For manufacturing companies, the maximum number of employees can range from 500 to 1,500, depending on the type of product, according to the agency.

In her testimony, Steinzor said the SBA's definition of small business allows it "to push for preferential regulatory treatment for relatively large firms that do not conform to any common-sense understanding of what a 'small business' is."

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