 Thanks for joining us again today for another Adventure in Small Business program that's put together with ThinkTech and the U.S. Small Business Administration, along with our other partners, the Veteran Business Opportunity Center, or excuse me, Outreach Center, the Small Business Development Center, and the Ming Center for Business and Leadership, our Women's Business Center here in Hawaii. Today, I am joined by a very special guest, and I think many people will recognize you, but he is a special title today. He is our designated provocateur. Welcome, Jay Fidel, to the program. It's great to be here with you, Jayne. Thank you. Thanks for joining me. I think it's a perfect setup because today, I wanted to talk a little bit about SBA's year in review, SBA reinventing itself, and some of the great things that have been accomplished in the last year, where we've been, where we're going. A lot of people may be aware that last week, the SBA administrator, Linda McMahon, visited Hawaii for the first time. She's been our administrator appointed by the president for just about, just under two years, and then in that two year, she took a tour of the entire United States, and she's the first administrator ever to accomplish this feat. She visited every one of the SBA offices, 68 across the country, and she went out to talk to small businesses, both about what SBA is doing, what SBA can do better, and learn about how we've helped small businesses grow. And she found out that a lot of people really don't understand what SBA does. So, why don't you take a moment and tell them? Okay. Well, it's, SBA has been around for about 65 years, and a lot of people don't realize that SBA is actually an independent federal agency. We're not under the Department of Commerce or Labor or anything like that. So, we're pretty small operation in the grand scheme of things, but we really accomplish quite a bit. We're the small business bank for the country. We, our mission in helping small businesses start grow and succeed really helps them by providing financial assistance, by contracting assistance, helping you build the capacity of your business, get federal contracts, and make sure that small businesses get a piece of those dollars that Uncle Sam is spending because the US government is one of the biggest customers, is the biggest customer in the world. So, it provides a lot of opportunities. And 23% of the contracts let by the government are supposed to go to small business. That's a congressional requirement. That's a good thing. Why is small businesses better, you know, why is the federal government in this policy favor small businesses? I think the thing that's important to realize is that small businesses, not just in Hawaii, where most of our businesses are considered small, but small businesses create most of the jobs. They create also most of the new innovations because they're smaller, they're more nimble. They can develop ideas or take a new idea and run with it. So, it really helps us stay on the cutting edge with newer technologies, newer procedures and processes. So, it really makes a difference in keeping our economy strong across the country. Now, I'm very impressed with what you were saying at the very beginning. I'd just like to comment on your office. You've done a great job and everybody knows that. Thank you. You're welcome. True. Is your in partnerships and affiliations with so many organizations? You've been reaching out and that's the only way to really do this in order to reach your market, your customer market, so to speak, client market. You have to reach out and you've done that and that's the way you can extend your operation, meet your mission to do that. It's really made a big difference through a lot of public and private partnerships. We partner with D-Bed. We partner with the University of Hawaii, with the University of Guam, with American Samoa Community Colleges, so educational institutions, other non-profit organizations. Our Women's Business Center is a partnership with Hawaii. The High Step Program, which we bring in anywhere from $450,000 to $750,000 to the state each year, helps small businesses expand into export markets. That also generates new money coming into our economy, not only in Hawaii, but across the country. That's a great program. You're stimulating me as the designated provider. Okay, here we go. When I practice law, no small business got started without help from the SBA. The SBA was part of the checklist. You want to get a bank loan, go to the SBA. SBA will guarantee the bank loan and therefore the bank will make the loan. If you don't have the SBA guarantee, chances are not nearly as good that the bank will make the loan. So it was a mom and pop kind of business and a small business where there wasn't a lot of external capital available right now. It was part of the routine, part of the checklist to get started. And the SBA was always there. Is that the same today? Well, I think it should be if it's not. And for example, I just had a call into my office yesterday, and I was really surprised at the gentleman I spoke to. He and his wife were going to start. They were looking at opening a new restaurant, and they were needing financing to do that. And he was ready to go sign a lease, but he hadn't secured his financing. He hadn't really, I said, do you have a business plan? And I said, I'm not talking, you know, big academic kind of thing, but I'm talking about a real plan and a timeline going forward so that you know where that rent money is going to come from. Because trust me, if you're signing a lease, they're going to want their money and that can make or break you. There are a lot of variables you need to look at. So along with the financing, we do recommend that you get in touch with one of the organizations that we work with to get some free confidential counseling so you can make sure that what you're thinking or what you're assuming actually has some basis in reality. And you know what you have to do to deliver it. Because oftentimes, you know, the best made plans don't work out. Your leasehold improvements don't come, you know, get delivered on time. As we talked earlier, unemployment is about two, two and a half percent. So where are those employees coming from? Maybe you're going to have to give them different compensation package than you originally estimated or what you got paid when you were a major D or a wait staff years back. You know, there are rules of the games can be a little bit different when you're an owner instead of an employee and you're responsible for the bottom line. I hope you're writing this down, you guys. Because no, you know, my statement before was kind of shallow. It's not just the loan guarantees. It's advice. It's mentoring. It's putting people in the right direction. It's connecting them with all these outreach organizations to give them a real start because most people who go into business, you know, it's like opening a restaurant. I like food, so I'll open a restaurant where you have to know a lot more than food. Yes. And so you're there to help them. It's not legal help. It's kind of practical business help. It's common sense kinds of things that somebody who's been around can help somebody who hasn't been around, you know. This is so valuable. Write it down. It's going to be the final exam. The final exam may be if you can meet payroll or pay the rent check. So study up a little bit. There are some good mentors available, whether you're looking at the SCORE chapter or the Hawaii Small Business Development Center Network, a great program, a partnership between SBA and University of Hawaii. We have offices and senior business consultants available to you on all the islands. And so you can find them on Kauai, on Maui, West Hawaii. The neighbor islands are so important, really. I mean, yes. There's so much, you know, opportunity and they really want to develop. So there are some great, great programs out there. We even work with other nonprofits that kind of diversify a little bit. We work with the USDA for rural development. And we partner by, they help with some of the other programs and some financial tools that give different advantages. And we, our consultants, will help them or help a small business qualify for that kind of financing as well. You would never know, you know, the entrepreneur would never know about some of these programs unless somebody tells them about it. You know, they can be very, very resourceful looking at our website. There are interactive trainings on the website. There has been a list of like 45 different classes that have been designed by different experts across the country, business colleges, and they're all up there for free. You do have to go in and sign in and register just www.sba.gov and search for training. Look for workshops. And there's so much information there that just, tools and templates that can help you set up your books because that's an important thing too, can give you financial management training. I don't forget when we started our law firm, this is back in 1974. I got a call from a friend of mine who had been with the Internal Revenue Service and he called me and he said, now is the time to be careful about your books. If you set them up right, you'll thank me for years to come. If you set them up wrong, you're going to pay a terrible price. So that was a friendly call from the IRS? It was. Well, he was not in the IRS at the time. But he, you know, he had a lot of experience on where it goes wrong. So I guess that's another part of this, to steer people away from where it goes wrong, keep them out of trouble. You know, even when I just started with the SBA, one of the SBDC consultants told me, my job is not just telling people what they should do, but it's sometimes telling them what they shouldn't do. And sometimes that was to start a business when they wanted to because they weren't ready. You know, or they really hadn't researched it enough. And I can say that to people quite easily because I started a business when I shouldn't have. What great experience to bring to the table, Jim. And that's how I found SBA because I went to SBA for help. And I didn't think they were right at that time offering enough to women who were starting businesses. And so we partnered that time, me as a wayward business owner and the SBA, so that I could learn. I'm so curious what kind of business was it. It was a small business that did daily money management and protective services for elderly and disabled individuals, so they could stay active in their homes and in the community longer. Very worthy. So it was a little bit before it's time. But it shows you something. I mean, I'm sorry it didn't work out. Well, it did. It did work out. Okay. You know, after I helped develop it, got it funded, wrote my first business plan, learned a lot, and hopefully helped a lot of other people get started correctly in business by doing a lot of workshops and producing and conducting a lot of workshops in affiliation with SBA. But I learned and saw a need. And also it really reinforced to me what a great opportunity, small business ownership and entrepreneurship can be for a person who wants to kind of set their own course or determine their, you know, become a little more financially independent, who may not be a good employee type. Looking at the policy side though, what I see is that, you know, that particular and so many areas like that, that area of helping the elderly, helping the seniors. So we have so many shows about that because it's so important, especially when the bell curve changes and there are more elderly among us and they're, you know, exposed to so many risks. And so that was very charitable. But it was a business. Yes. And you made a profit to stay in business. And you did things that charitable organizations might otherwise have had to do, that the government might otherwise have had to do, whether it did it well, who knows. But when you have a profit company, an ordinary corporation, an ordinary business that does things that fit with social policy in this country, you're really contributing to the country in so many ways. There's a humanness about that. And it's the best side of capitalism as far as I'm concerned. Yes, yes. And I mean, and it fulfills that kind of business contract as well, that people need this product or service and they are at some point willing to pay for that kind of product or service. They wanted to stay in their homes. We helped families stay together. So it was, I mean, I mean, it was incredible. Some of the difficult things that I learned about and was exposed to through that, because I didn't grow up around, you know, grandparents or elderly people. So it was it was lessons on so many levels for me that I took away from that experience. Yeah. Well, I say, you know, every business you're in, whether it works or not, is a preparation for the next one. And you get to be sophisticated. And maybe it's all preparation for being manager of the SBA here. I'm not sure. I was really that well prepared for that. But I've learned a lot. And from my colleagues and from other mentors, from my previous director. But we'll pick up that note in just a few more minutes. We're going to go to a quick break, but please stick with us. Hey, loha. My name is Andrew Lanning. I'm the host of Security Matters Hawaii airing every Wednesday here on Think Tech Hawaii live from the studios. I'll bring you guests. I'll bring you information about the things in security that matter to keeping you safe, your coworkers safe, your family safe, to keep our community safe. We want to teach you about those things in our industry that, you know, may be a little outside of your experience. So please join me because security matters. Aloha. All provokedly with the answers. Okay, here we are again. I am with the designated provocateur today. Thanks for joining us in adventures and small business with Jane and Jay. So Jane, I want to take you back to, I guess, almost 20 years ago, the Hawaii Venture Capital Association. We both went to the meetings. You spoke frequently on behalf of the SBA. You were very interested in what was going on. And what was going on is that we had a lot of entrepreneurial activity in those days. Really high flying companies. Some of them failed. A lot of them failed. Some of them succeeded. A lot of them were tech companies, innovation companies, one kind or another. They would have these pitchfests. They would approach the angels. They were always a stream of venture capital guys coming in from California. It was a celebration of entrepreneurial activity, especially tech activity. And my observation, I'd be interested in your observation, is that that doesn't happen so much anymore. It's different now. You get the Blue Planet Foundation doing this cohort arrangement and have the Elemental Accelerator doing the cohort arrangement. And those companies are not necessarily from Hawaii and they're not necessarily going to stay in Hawaii in those cohorts. So it's different. And I just wonder your thoughts about the comparison of then and now and the role of SBA and all of that. Well, I think it has always been a very, very interesting and exciting area to be in. And often it seems like some of those companies, even with the efforts to diversify our economy over the years and look at, okay, this should be a great place for tech companies to get started and grow because of the environment, because of so many of the different conditions. But we are not an easy place to do business. And our business models have remained somewhat traditional. So an SBA in using the debt financing model and the guaranteed loans from banks hasn't really brought as much to the innovation ecosystem as I would like to see. We've been doing a little bit more over the last, say, eight or 10 years, I would say, in terms of supporting some of those cohorts or the accelerators. Accelerate UH, the GBA's accelerator, the Maui Food Incubation Center, have all gotten some accelerator awards from the SBA. SBA has an Office of Innovation and Investment. And we also are the administrators of the Small Business Innovation Research Grants and Awards and the Technology Transfer Programs as well. So in that respect, we do help those organizations who are developing or researching different topics that, again, have that dual interest with the government to find funding and then move toward capital, getting capital so they can go to commercialization. But Hawaii has still not been as active. SBA has had the Small Business Investment Corporation, SBIC program, for years. And in some states, it's one of the, you know, nationally we are the biggest investment fund or provide money to investment funds in a bigger way. We haven't had anybody active here in Hawaii in a long time. And I'm hoping we're going to now turn some of our attention with our administrator to the innovation side so that we can support that and perhaps get an SBIC started here or servicing this area. So we would have more funding that would allow people to get started and potentially with those more resources be able to stay. We still will have those companies as they go to commercialization. If they're looking at real estate, if they're looking at employees and all of those things are still going to be challenging. So it can be very attractive for them to move to another location. Some place else, yeah. There may be more funding available. So we have to, you know, whether it is through the legislature, whether it is through our financial community, look at how we can better support those, that ecosystem here. Yeah. I remember one of those venture capital meetings, Ted Lu, who was then the D-bed director, he came in and he sort of crashed the meeting and took the mic. And he said, I have just come from a meeting of bankers down the street. And they tell me you guys are barking up a tree because they're not going to support technology entrepreneurs. They're going to support the hotels in Waikiki. They want to support big projects, big capital. That's who they want to make their loans to, because that's a guaranteed loan. I mean, it's not guaranteed, but, you know, it's not, it'll be a performing loan. Right. Right. They have deeper pockets. They have other backing. Right. Right. I said, oh, gee, that's really awful. Yeah. You've weathered that storm. I mean, you keep on trucking right on through. You keep on helping people who maybe the banks don't help or at least they don't help without your, without your guarantee. You know, it's been very, very interesting this year. And, you know, SBA lending does kind of track with the economy. And sometimes as the economy becomes better, banks and individual business owners don't necessarily need to turn to SBA for the guarantee quite as often. There's still our situations with newer businesses or, you know, smaller businesses. Sometimes those difficult industries like restaurants, you know, they're higher risk. So the banks like to have a guarantee and our loans can be guaranteed anywhere from 50 to 90% depending on the amount of the loan, the term of the loan, the use of the proceeds. And we can guarantee a loan with a bank for almost any business, any business purpose working capital, you know, for real estate for all different kinds of things. I've noticed that not only that, but you're flexible. You're not bureaucratic. You can, you help people and it's all in the same, the same, the same moment that you help them. You make a loan. You tailor it for them. This is, this is not necessarily what would, what would expect of a federal agency, but fact is you're very kind and flexible to your borrowers. Well, we, we try to be, we try to, the banks are the ones that actually make those credit decisions and we set kind of the framework, but we try to be as responsive as possible to them so they can kind of tailor the loan. They can look at the terms. They can decide, you know, cause we'll do lines of credit. We'll do, we do, we guarantee surety bonds even for the contractors. A lot of people aren't aware of that, but a lot of people still stick to the idea that we're old and bureaucratic and there's a lot of red tape. You have to have decent credit. You have to have a plan. You have to show repayment ability. You know, we don't, you don't take wooden nickels. We don't take wooden nickels. We don't, we don't spend taxpayer money, you know, and a lot of people think we're giving a loan. The only loans that we actually lend taxpayer money is disaster loans and we've done a lot of disaster loans in this territory over the last year. So that's another whole other side of the business and another big story because we've, we've had the Kilauea eruption. We've had the Kauai floods. We've had, we've had, we've had a lot of SBA people here working on all the neighbor islands, Hurricane Lane, the, the fires on Maui, you know, that came after the hurricanes and with the flooding there. So... We're going to have more of that, Jane. Yeah, it's going to continue. You're going to be able to handle it? I mean, where, where are your limits? You know, it's, you know, I'm lucky that we have a great Office of Disaster Assistance and some great people that they can call up when, when these conditions come up. So they're, they really kind of rock it and they're on the ground. They're calling me to say we've got team coming down to do a preliminary disaster review within hours of a storm touching down. That's great. So they really... That's so comforting to know you're there. Into CNMI and American Samoa as well. So, and that's, you know, an agency that really responds. Because we're going to need all the help we can get when El Nino is coming up and, you know, Hawaii could be in line for some extreme weather. Yes, we could be getting hit again. So get prepared, go to our website, sba.gov and look up disaster preparedness. There's some great kits there and it will make a big difference because so many businesses don't recover after a disaster. They don't get back to what, they have a whole new normal. So we encourage you to do that. On that note, I think we're supposed to wrap up now, Jay. So I think, thank you designated for Varkatur. And for both of us, we want to wish you very happy holidays and we'll be seeing you soon. Aloha. Aloha.