If the next White House is shaping up to be a circus full of loud men saying or doing things that can sometimes make you cringe, Linda McMahon, President-elect Donald Trump’s nominee to lead the Small Business Administration, may feel right at home.
McMahon is most famously associated with World Wrestling Entertainment (WWE), which she and husband Vince McMahon took over more than three decades ago. She served as CEO from 1997 to 2009, a period in which the couple “took so-called professional wrestling from a regional act to an entertainment empire,” according to one Hartford Courant editorial. WWE is now worth $1.5 billion, and McMahon still owns $84 million in WWE stock, according to Forbes. She left the CEO position in 2010 to run for a U.S. Senate seat from Connecticut.
She lost that race, and lost again trying for the state’s other Senate slot in 2012. As the Courant editorial noted, small business was a theme of McMahon’s two failed campaigns. That’s a contrast from Ben Carson, Trump’s nominee for HUD, who had shown little to no interest in the agency Trump has asked him to lead.
Regarding the SBA specifically, during her 2012 campaign, McMahon backed a proposal from the Obama administration to merge the agency into the Department of Commerce as a way to streamline federal bureaucracy. Small business lenders opposed the change, the Wall Street Journal reported. The proposal never moved forward.
Thanks to her two Senate campaigns, much of McMahon’s track record as a CEO has been well-documented. That includes treatment of professional wrestlers as independent contractors responsible for obtaining their own healthcare, which saddled her 2010 campaign with accusations of negligence. Opponents also criticized McMahon’s leadership at WWE for having accepted state subsidies for the entertainment industry. (The company was among many to have received them, such as Connecticut-based ESPN.) The AFL-CIO sent a statewide mailer against McMahon during the 2012 campaign, calling out WWE taking subsidies in 2009, a year when WWE allegedly cut 10 percent of its Connecticut workforce.
While some connect McMahon’s SBA nomination to her $7 million donation to a pro-Trump super PAC, given her experience running and growing a business, others believe she’s a fit for the job.
“Reading about her, a woman small business owner rising from bankruptcy to grow a worldwide, multimillion dollar organization, is entrepreneurial authenticity and inspiration,” says Grace Fricks, president and CEO of Access to Capital for Entrepreneurs (ACE), a small business lending and support center in Georgia.
Since leaving WWE, McMahon co-founded Women’s Leadership LIVE, which provides guidance and events to support women in business.
“Women tend to focus on details and bring a lot of heart to their businesses,” she wrote in an October 2016 op-ed for the Salt Lake Tribune. “But we find they sometimes need a little wind beneath their wings.”
If confirmed as SBA administrator, McMahon would inherit a $10.8 billion budget and a $124 billion loan portfolio that support the growth of small businesses at successive stages of development.
The process starts from before an idea is a business at all, with the Small Business Innovation Research Fund and Small Technology Transfer Fund, which together make around $2 billion in grants a year to engage small businesses in research and development directed by the federal government. Companies don’t even have to be fully formed yet in order to apply.
One step beyond that, there’s the SBA’s Growth Accelerator Fund program, which packs a big punch. The program provides small grants to business accelerators around the U.S. who provide rented or shared workspaces and structured business training to help new businesses get off the ground. In exchange for the small grants, accelerators report data back to SBA on sectors, diversity and follow-on capital raised. SBA also focuses the program on sectors and geographies that venture capital has historically ignored, like anywhere between the coasts or businesses owned by women, people of color, or immigrants, or in sectors like food. The program is just in its third cohort. In the previous two cohorts, SBA reports that the 138 accelerators involved in the program reported that businesses moving through accelerator programs have raised around $1.5 billion in follow-on capital and created 20,000 new jobs.
Next, there’s the SBA’s Microloan program, which provides loans up to $50,000 to help small businesses start up and expand. The average microloan is about $13,000. The SBA made $51 million in microloans in FY2015. To administer the program, the SBA partners with local lending organizations, such as ACE, to accept and approve applications.
For the next stage, there’s SBA’s 7(a) loan guarantee program, which supported $23.5 billion in small business loans in FY2015, at an average loan size of $371,628. The 7(a) program helps women-owned businesses like The Buttered Tin in St. Paul’s Lowertown neighborhood. The program provides a partial guarantee against the value of a small business loan, reducing the risk that a lender takes when making a small business loan to someone who might not otherwise qualify because of limited or poor credit history, lack of collateral or other reasons. Participating lenders are typically banks or nonprofits, such as ACE or Oakland-based Main Street Launch.
“Our partnership with the SBA has been important in supporting our work of providing loans and technical assistance to small businesses, especially in reaching women-owned, minority-owned, low-income-owned, veteran-owned and new businesses,” says Jen Leybovich, senior vice president for strategy and development at Main Street Launch, which is an SBA microlender and 7(a) lender.
Local SBA partners like ACE or Main Street Launch also host SBA-funded centers that provide advising, training and mentoring for small businesses, which usually focus on a specific underserved geography or type of small business owner, providing them specialized support. Main Street Launch operates the Alameda County Small Business Development Center, and ACE operates a Women’s Business Center, in partnership with SBA. These types of centers provided support to more than 1.2 million clients in FY2015.
The SBA has a tool to support small businesses that are growing into bigger ventures too: the Small Business Investment Company (SBIC) Licensing program. For the SBIC program, the agency partners with private investors who pool investor dollars into managed funds (known as “SBICs”) that finance small businesses. For every dollar that private investors raise, the SBA provides up to $2 in matching investment into the fund. SBIC-licensed funds provided $6 billion in financing to 1,200 small businesses in 2016. Some of the companies that have received an SBIC investment in their history are household names, like Apple, Costco, Staples and FedEx.
Under the Obama administration, the SBIC program expanded to include an impact investing SBIC license. To get this license, funds promise to invest at least 50 percent of their capital in ways that generate social impact, such as investing in businesses that serve underserved or rural areas. Impact can be defined by SBA or by the funds themselves. The SBA promises an expedited licensing process for funds seeking an SBIC impact investing license. The Obama administration committed $1 billion in capital to this program, which has licensed nine funds so far.
Will all of these programs continue — and without scandal that has plagued past SBA administrators? Some remain optimistic.
“I see vast opportunity for small business growth under her leadership,” says Fricks.
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Oscar is Next City's senior economics correspondent. He previously served as Next City’s editor from 2018-2019, and was a Next City Equitable Cities Fellow from 2015-2016. Since 2011, Oscar has covered community development finance, community banking, impact investing, economic development, housing and more for media outlets such as Shelterforce, B Magazine, Impact Alpha, and Fast Company.