The SBDC Story
The Small Business Development Center program is a National Network of state university-based small business assistance centers that has grown over the last two decades to become the preeminent small business assistance program in the nation.
The story of how America’s Small Business Development Center network grew in 27 years - 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 U.S. Congress to establish university-based business extension services. By 1953, the Small Business Administration had been created by an executive order signed by then-President Eisenhower. This action reflected awareness at the federal level of the importance of small businesses to the nation’s economy and the need for federal government involvement in fostering a climate in which small businesses could flourish.
As appreciation for the important of role small businesses 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 U.S. Small Business Association's (SBA) 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 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.
The SBA implemented the UBDC program by funding a pilot initiative at California State Polytechnic University at Pomona in December 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 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 fall 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 also required an evaluation of the program to be submitted to Congress by January 31, 1983.