A Brief History of America’s Small Business Development Center Network
America’s Small Business Development Center Network in fiscal year 2011 provided assistance to an estimated 1.25 million clients. Of this number, approximately 710,000 counseling and training clients received a minimum of one hour of individual counseling or two hours of group training. The network’s clients include small business owners and aspiring entrepreneurs.
Stressing client education, the SBDC program is the federal government’s largest and most successful management and technical assistance program for small businesses. The program is a partnership program with the U.S. Small Business Administration. America’s Small Business Development Center Network, with roughly 1,000 full time service centers, operated with an overall budget of roughly $230,000,000 in 2011. Of that sum, $107.5 million was from the federal government and the remainder was matching dollars, both cash and in kind, from the program’s many funding partners, including state and local governments, institutions of higher learning, private enterprise and local nonprofit economic development organizations. The Network provides services to more clients annually than all other SBA programs combined.
The story of how America’s Small Business Development Center Network grew, from a small pilot program to a nationwide educational infrastructure of approximately 1,000 service centers and over 5,000 employees providing management and technical assistance to over a million Americans annually, is a unique one. It chronicles the commitment of key federal lawmakers, training professionals, college and university officials, state and local policy makers, private and public sector partners, dedicated SBDC personnel, an active trade association and, most of all, the millions of small business men and women of every race, creed and color who have come to America’s small business development centers seeking to improve their lives through America’s free enterprise system.
The exact genesis of the Small Business Development Center Program concept is difficult to pinpoint. As early as the 1940’s legislation was introduced in the Congress to establish University-based business extension services. By 1953, the Small Business Administration had been created by an act of Congress. This action reflected awareness at the federal level of the importance of small business to the nation’s economy and the need for federal government involvement in fostering a climate in which small businesses could flourish.
Educators, government officials and small business owners, at varying points in time, no doubt ruminated on the concept of combining the resources of institutions of higher learning and government to assist small businesses. One obvious model for such cooperation was the Cooperative Extension Service at the nation’s land grant institutions. As appreciation for the important role small business played in the nation’s economy increased, several initiatives were launched to assist small business owners with management problems. These initiatives included the establishment in 1964 of the Service Corps of Retire Executives (SCORE), and the formation in 1969 of the Active Corps of Retired Executives (ACE). In 1971 the Small Business Institute (SBI) was founded.
In 1975, William C. Flewellen, Jr., Dean of the College of Business Administration at the University of Georgia and incoming President of the American Assembly of Collegiate Schools of Business, was appointed to the SBA’s National Advisory Board. Reed Powell, of the California State Polytechnic University at Pomona, chaired the SBA National Advisory Board at that time. Subsequent conversations between Flewellen and Powell, according to Dean Flewellen, “convinced the two men that every state – and, in turn, the nation as a whole – would benefit from a small business program that offered the resources of higher education, small business and government.”
Flewellen and Powell approached SBA officials with their idea. SBA Administrator Thomas Kleppe, SBA Deputy Administrator for Management Assistance Henry Warren and Kleppe’s successor, Mitchell Kobelinski, embraced their concept. In May of 1976, during Small Business Week, Administrator Kobelinski formally announced plans for a University Business Development Center (UBDC) program, calling it a “bold new proposal.” The structure and goals of the program were detailed in an SBA press release issued at the time:
“Much along the line of what land grant colleges have been able to do to help agriculture, the plan envisions that universities establishing these Centers would make available to small business, not only the services of the School of Business, but the full capabilities of the universities. Combined with SBA’s growing Service Corps of Retired Executives, Active Corps of Executives, and Small Business Institute programs, the new UBDC concept could increase substantially the leverage SBA can provide in counseling and advising small business concerns.”
The SBA implemented the UBDC program by funding a pilot initiative at California State Polytechnic University at Pomona, in December of 1976. Seven more universities in seven states were funded in the first half of 1977, including California State University at Chico, The University of Georgia, The University of Missouri at St. Louis, The University of Nebraska at Omaha, Rutgers University, The University of Southern Maine and the University of West Florida. According to Dean Flewellen, SBA Deputy Administrator Henry Warren selected schools that already were providing business services to their communities.
The UBDC program received $350,000 from the SBA in FY 1977. Each pilot school received $40,000 with the exception of Rutgers University, which received $70,000. In FY 1978, SBA funding support for the UBDC program increased to $900,000, and in 1979 funding of $2.4 million was provided to 16 Small Business Development Centers, with the addition of Arkansas, the District of Columbia, Minnesota, Pennsylvania, South Carolina, Utah and Washington to the SBDC program as it was now called. Assistance to any one state was capped at $300,000.
In August of 1979, an evaluation of the SBDC program by an outside SBA contractor, Bentley-Clark, indicated that the program had considerable potential as a means of providing assistance to small business. The study pointed out that there was insufficient faculty participation in the program and an over-reliance on students. The Bentley-Clark study also contended that there was insufficient outreach to minorities and women. However, SBA officials in the fall of 1980 noted that there was a higher level of participation by minorities and women in the program than there were women and minorities in the actual business population. The study concluded that three fourths of SBDC clients surveyed ranked the program “good” or higher, with over one half of respondents rating the program “very good” or “excellent.” A contemporaneous GAO study found that small business persons served by SBDCs favored expanding the program, even at the cost of increasing taxes.
As the SBDC pilot program grew, support was growing on Capitol Hill for a Congressionally authorized program. Senator Gaylord Nelson, Chairman of the Senate Small Business Committee, introduced the Small Business Development Center Act of 1977 on March 22, 1977. Original cosponsors were Senator William Hathaway of Maine and Senator Sam Nunn of Georgia. Twenty-nine senators ultimately cosponsored the bill. Chairman Nelson’s bill was intended:
“To make grants to support the development and operation of small business development centers in order to provide small business with management development, technical information, product planning and development, and domestic and international market development, and for other purposes.”
The legislation moved through the Senate relatively intact, receiving formal Senate approval on August 5, 1977. Several House members introduced similar bills. The proposal was incorporated in an omnibus House bill, HR 11445, authored by Congressman Neil Smith of Iowa. The omnibus bill passed both chambers but was ultimately vetoed by President Carter in October of 1978, for reasons unrelated to the SBDC program.
Chairman Nelson reintroduced his legislation early in 1979 as S. 918, and the Senate adopted the measure in April of that year. Congressman Neal Smith introduced a companion measure, HR 7250, in the House with 24 cosponsors. Ultimately, S. 918, as amended, was adopted by the House and then incorporated as Title II of S. 2698. President Carter signed this bill into law (P.L. 96-302) on July 2, 1980. Title II, The Small Business Development Act of 1980, authorized the SBDC program at an initial annual funding level of $20 million for FY 1981. The new law specifically provided for federal funding to be matched one-for-one with non-federal funds, and it also required an evaluation of the program to be submitted to Congress by January 31, 1983.
During FY 1979, the 11 operating pilot SBDCs provided counseling to more than 7,000 businesses and trained 16,000 clients, utilizing 700 training programs. In 1979, the Association of Small Business Development Centers was formed (now known as America’s SBDC). Larry Bramlett, Director of the Georgia SBDC, was the Association’s first president. In 1980, the states of Massachusetts and Alabama were added to the SBDC program.
Congress appropriated $11.5 million for FY 1982, signaling bipartisan congressional support for continuation of the program. Representative Neal Smith, Chairman of the House Small Business Committee and Chair of the Appropriations Committee’s Commerce Justice State subcommittee, was in the forefront of Congressional supporters. During FY 1981 and 1982, the states of Connecticut, Mississippi Kentucky, Iowa, Vermont, West Virginia and Delaware were approved for funding and joined the program. In 1982, in accordance with the authorizing legislation, the SBA SBDC National Advisory Board was established.
In April of 1983, a Deputy Associate Administrator for Management Assistance was appointed. That position later became Associate Administrator for SBDCs. Ms. Johnnie Albertson, with only periodic interruptions, managed the national program for the greater part of 20 years. She was a tireless advocate for the program and its clients and an innovative program administrator. In the summer of 2003, Ms Bridget Bean was named Acting Associate Administrator. The sole responsibility of the new position when it was created in 1983 was to administer the SBDC program. SBA oversight of the SBDC program was “decentralized” in 1983 to SBA field offices.
In another major step for the program, on site “Peer Reviews” were initiated in 1984. These “Peer Reviews” became the forerunner of the modern day SBDC certification/accreditation program which is provided for by statute.
Thirteen more programs were added to the rapidly growing network during FY 1983 and 1984. These included Rhode Island, Michigan, Louisiana, Kansas Illinois, Tennessee, Texas-Arlington, Oregon, New Hampshire, New York (SUNY), Oklahoma, Texas-Houston and North Carolina. Congressional funding in FY 1984 rose to $22 million.
In June of 1983, Senate Small Business Committee Chairman Lowell Weicker of Connecticut introduced S. 1429, the Small Business Development Center Improvement Act. Cosponsors of the measure included Senators Rudy Boschwitz (MN), Sam Nunn (GA), Slade Gorton (WA), Walter Huddleston (KY), James Sasser (TN), Paul Tsongas (MA), Alan Dixon (IL) and Dale Bumpers (AR). President Reagan signed the legislation into law on July 21, 1984 as Public Law 98-395. The Weicker bill authorized appropriations for FY 1985, 1986 and years thereafter. It also extended the Small Business Development Center program through October 1, 1990.
The measure required that as a condition to the award of any grant to assist in the establishment of a Small Business Development Center, a matching amount equal to the grant amount be provided by non-Federal sources and be comprised of not less than 50 percent cash and not more than 50 percent of indirect costs and in-kind contributions. The measure also required that the facilities and staff of Small Business Development Centers be located in such places as to provide maximum accessibility and benefits to small businesses. It further required centers to have full-time directors who shall have the authority to make expenditures under the center’s budget.
Additional provisions required the SBA, within six months of the date of enactment of S. 1429, to develop and implement a program for onsite evaluation of each Small Business Development Center. The new law required such evaluation to be conducted at least once every two years (previously, evaluations were conducted annually).
The SBA in a 1985 report noted that “Several SBDC’s have established separate International Trade Centers (ITC) as part of their state-wide operations. These international trade centers are currently located in Alabama, Georgia, Mississippi, Arkansas, Louisiana and Pennsylvania.” The report also noted that “The North Carolina SBDC successfully persuaded the State Legislature to provide, through the State Economic Council, 50 million dollars in venture capital for the small businesses of the state.” The report went on to note that with an appropriation of $28,500,000 for FY 1985, the SBDC program leveraged an additional $40,645,000 to serve the small business community. The overall creativity of the SBDC program was acknowledged in an August 1986 SBA report. That report noted that SBDCs were operating Inventors Programs, offering counseling and training to assist their clients in obtaining SBIR research and development competitive funding agreements from various federal agencies, linking their small business assistance services with business incubators, and implementing statewide procurement assistance systems.
In 1985, Congress increased funding for the program, providing an appropriation of $33.5 million for 1986 and $35 million for 1987.
Fourteen SBDCs were added to the nearly nationwide network during fiscal years 1985, 1986 and 1987, including Indiana, Nevada, NY (Downstate) North Dakota, Puerto Rico, South Dakota, the Virgin Islands, Wyoming, Texas-Dallas, Texas-Lubbock, Texas-San Antonio, Ohio, Idaho and Alaska.
On August 23, 1988, President Reagan signed into law an omnibus trade bill, HR 4848, entitled “A bill to Enhance the Competitiveness of American industry and for other purposes,” as Public Law 100-418. Included in the bill was language authorizing appropriations for FY 1988 and FY 1989 for the Small Business Development Center program.
Public Law 100-418 also required the Small Business Development Center program to work with the Administration’s regional and local offices, the Department of Commerce, appropriate Federal, State, and local agencies and the small business community, to disseminate service delivery mechanisms for existing trade promotion, trade finance, trade adjustment, trade remedy, and trade data collection programs of particular utility for small businesses.
In April of 1989, the SBDC Research Network was formally initiated. An information clearinghouse had originally been mandated by the original authorizing legislation, Public Law 96-302.
During fiscal years 1988, 1989, and 1990, seven more states were added to the network including Arizona, Colorado, Maryland, Montana, New Mexico, Hawaii and Virginia. In 1990, Congress increased funding for the program to $50 million, a figure that would be reduced to $49.3 million by the Gramm-Rudman-Hollings Act.
Congressman John LaFalce of New York, in May of 1990, introduced H.R.4793, the Small Business Reauthorization and Amendments Act of 1990. The measure would become Public Law 101-574 in November of that year when signed into law by President George Bush. The new law extended the list of services to be provided by a small business development center to include rural small business export promotion, marketing, technical and managerial assistance, and tourist trade development.
In 1991, the SBDC program returned to California after an absence of several years, establishing for the first time an SBDC program in every state in the nation. In January of 1992, Congressman LaFalce introduced HR 4111, The Small Business Credit and Business Opportunity Enhancement Act of 1992. President George Bush signed the measure into law on September 4, 1992, as Public Law 102-366. Included among the new law’s provisions was language authorizing small business development centers to form an association to pursue matters of common concern. The law also required the SBA Administrator to consult with the association and develop documents concerning the operation of the center program if more than a majority of such centers were members of such an association.
The legislation also addressed a longstanding and contentious issue in the program between the association and the SBA regarding whether SBA could promulgate regulations for the SBDC program. The new law specifically provided that, “Not later than 180 days after the date of enactment of this Act [Sept. 4, 1992], the Administrator of the Small Business Administration shall submit to the Committees on Small Business and the Committees on Appropriations of the Senate and the House of Representatives, proposed regulations for the Small Business Development Center Program authorized by section 21 of the Small Business Act.” The measure also prohibited SBA from publishing proposed regulations in the Federal Register, a prohibition that was subsequently lifted. The issue of program regulations came to an end when proposed regulations were published in the Federal Register in December of 1994 and formally adopted in June of 1995. In August of 1995, SBA published a Project Officers Handbook laying out the responsibilities of the SBDC Project Officers. In 1993, Congress increased the program’s annual appropriation to $67 million dollars.
In 1993, Dr. James Chrisman, of the New Venture Development Faculty of Management at the University of Calgary, published “The Economic Impact of Small Business Development Center Consulting Activities in the United States 1991-1993.” The Chrisman study showed that 83% of clients surveyed considered the services provided by the SBDC program during 1982 to be beneficial. The Chrisman study documented that 65% of pre-venture clients surveyed started new businesses creating 3 new jobs per client. The Chrisman study documented that the cost benefit ratio of the Federal contribution to the entire SBDC program, based on tax revenues generated from counseling alone, was more than $4 for each federal dollar invested in 1992. Other statistics released in 1983 documented that 38 percent of SBDC clients in 1992 were women and that 17 percent were minorities. Dr. Chrisman has continued to conduct and publish similar studies for the ASBDC on a now annual basis. The latest was in 2002.
Senator Dale Bumpers, in May of 1994, introduced S. 2060, the Small Business Reauthorization and Amendment Act of 1994. President Clinton signed S. 2060 into law on October 22, 1994 as Public Law 103-403. The new law increased the authorized funding level of the SBDC program to $70 million through FY 1996, to $77.5 million for FY 1997, and to $85 million for FY 1998. The new law also required the SBA to develop and implement a biennial programmatic and financial examination of each SBDC.
In 1995, an SBDC was established in Guam.
Late in 1997, the SBDC program was reauthorized for three more years, FY 1998, 1999 and 2000, when Congress approved S.1139. Senator Christopher Bond of Missouri, Chairman of the Senate Small Business Committee, authored the measure. A companion measure, HR 2261, authored by House Small Business Committee Chairman Jim Talent of Missouri, had been introduced in the House of Representatives. President Clinton signed S. 1139 into law (Public Law 105-135) on December 2, 1997. The statute increased the SBDC program’s authorized funding level to $85 million for FY 1998, $90 million for FY 1999 and $95 million for FY 2000. For FY 1998, Congress appropriated $75.8 million for the program, and in FY 2000 $83.8 was appropriated.
In May of 2000, the 58th SBDC program was established when the SBA funded an SBDC program for American Samoa. America’s Small Business Development Center Network celebrated its 20th Anniversary in October of 2000. The Network’s historical total of counseling clients surpassed 3 million and its combined historical total of counseling clients and training attendees surpassed 8 million.
In December of 2000, Congress enacted HR 5667, increasing the program’s annual authorization to $125 million for FY 2001, 2002 and 2003. This legislation also amended the program’s funding formula.
In February of 2003, the Congress and the President approved an FY 2003 appropriation of $88,421,500.
In June of 2003, when the California Department of Trade and Commerce withdrew from the SBDC program for budgetary reasons, the SBA issued an RFP establishing six regional SBDC programs in the state of California.
In September 2003, the SBA celebrated its 50th Anniversary. In 2005, America’s Small Business Development Center Program celebrated its 25th Anniversary. By the end of 2005, the program had served roughly 12 million counseling and training clients. America’s SBDC provides the nation’s small business community with high quality and innovative management and technical assistance programs. Program offerings are constantly evolving to meet the changing needs of a dynamic small business economy. Through directed learning and one-on-one counseling, the Network is able to also address unique needs of individual businesses. The Network, with the support of its partners, remains the nation’s premier program providing management assistance and education to America’s entrepreneurs.
In 2013, the Association of Small Business Development Centers (ASBDC) rebranded itself and the national SBDC network as “America’s SBDC.”