But Where is the Money? While small business gets talked up in the economic recovery plan, lending to small business is still down--by $40 billion--from what it was two years ago. Entrepreneurs are grumbling. And Karen G. Mills, head of the SBA, is taking questions.

For glass-half-full types, President Barack Obama's proclamation this spring that his administration "is committed to helping small businesses drive our economy toward recovery and long-term growth" was another indication that small business has a true ally in the White House.

For others, however, those words provided another stinging reminder of how policymakers in Washington have failed to back their statements with action. Despite repeated assurances from the administration, accompanied by a flurry of new pro-entrepreneur initiatives, small-business supporters such as Todd McCracken, president of the National Small Business Association, in Washington, D.C., are concerned that policymakers remain largely beholden to big business, just as they were when George W. Bush ran the White House.

Just consider Uncle Sam's recent spending habits: $358 billion spent by the feds on small-business initiatives, compared with $2.8 trillion for non-small-business initiatives such as the Wall Street bailout. Even with a vocal supporter in the White House, McCracken contends, Washington's small-business track record of late is full of "bills that just didn't go far enough, proposals that took a wrong turn altogether and initiatives that left us scratching our heads wondering 'What were they thinking?'"

On the other hand--the glass-half-full side--is Lesa Mitchell, vice president of Advancing Innovation of the Kauffman Foundation, an organization devoted to the development of entrepreneurship. "This is by far the greatest level of interest we have seen from any administration," Mitchell says. "And that is a bipartisan comment." Meantime, Ben S. Bernanke, Federal Reserve chairman under both Obama and Bush, is urging banks to lend more to small businesses, calling it crucial to the economic recovery. Bernanke pointed out that as of June, outstanding loans to small businesses declined to $660 billion in the first quarter, down $40 billion from two years earlier.

At the center of it all is Karen G. Mills, the president's choice to lead the U.S. Small Business Administration. Mills, a New Englander with a strong venture capital and private equity background, has the formidable task of making the role scripted for small business a reality in the economic recovery. As you'd suspect, the small-business community is also divided on her qualifications to fulfill that role, given her r?sum? heavy on big business.

We caught up with Mills, speaking from Washington, D.C., about her plans for leading the SBA to prominence, tackling troublesome issues such as access to capital and government contracting practices, and how she plans to help revive U.S. small business--and the economy.

What is the SBA doing to help entrepreneurs?
There are two kinds of small businesses. There are Main Street small businesses and there are high-growth entrepreneurs. For net new job creation, a smaller number of high-growth entrepreneurs create lots of those jobs. So we have focused on them, and they need different kinds of capital and different kinds of counseling, and we are working very hard to make sure the programs we have stimulate those entrepreneurs.

For instance, we run the Small Business Innovation Research program. There is extraordinary R&D happening in this country, but we want to make sure small businesses are taking those innovative ideas and pushing them to the next level, then eventually commercializing them.

And we've just announced the fast-track program for SBICs [the SBA's small business investment companies] and we are processing more applications, because there's a lot of demand now from companies whose funding sources in the marketplace have disappeared, and we now have investors who have turned to the SBA to help get their funding out in the hands of good, high-growth entrepreneurs.

What are the odds of actually securing an SBA loan?
I travel around the country and I talk to small-business owners all the time--it's actually one of my favorite things. What I tell them is they should get into our counseling network first. We have 1,100 Small Business Development Centers. We have 110 Women's Business Centers. We have a whole network of SCORE counselors you can even access online. As you work with them to develop your business plan and your loan package, you can make yourself much more clear in your presentation and, therefore, much more likely to be bankable.

Which funding sources are most accessible for small businesses?
We have microloans. We have 170 intermediaries making microloans. We have about 5,000 banks who have SBA loans, and there are a variety of SBA loans, depending on the purpose of the loan, whether it's to buy a building or whether it's to finance inventory. So the most important thing is coming into the situation with a clear idea of what it is you want to do to grow your business. Then the SBA will partner with you to try to get you the tools you need.

Despite all of that, the SBA has its critics--people who wonder if the agency has lost sight of its mission and its relevance for small businesses in America.
This is a fantastic agency and it is highly relevant to small businesses and to the economy. The first indication is that we were able to put $25 billion into the hands of small businesses over this recession and really fill part of this credit gap that existed because of the financial crisis. But, in addition, we have bone structure--a network all across this country that's extremely powerful.

In most communities, we are extremely relevant to both Main Street small businesses and to young entrepreneurs. The president has really made small business a priority, so that the SBA under President Obama has enormous support. He really understands that small business is part of the way to middle-class prosperity.

How has the climate in Washington changed for small business and entrepreneurs?
This president has been moving strongly to help small business from the start. When the president and Congress passed the Recovery Act, this was critical to allowing the SBA to increase our loan guarantees to 90 percent and reduce or eliminate the fees.

Now the president has asked Congress to do even more because there are still gaps in the recovery and not every small business has access to all the credit they need and all the other tools they need to grow. We have a proposal before Congress that has strong bipartisan support to have a small-business jobs bill. And that should be coming forward soon.

What would that bill do?
We have asked Congress to continue the successful Recovery Act 90 percent [loan] guarantees and fee elimination through the end of the year. We have also asked Congress to raise our loan limits to $5 million. Right now, they are at $2 million. There are a lot of companies--manufacturers, franchises--that need the larger loan size and the players in the market that used to provide that type of funding, some of them are still absent, so we need to fill that gap. Understanding that banks are going to need credit support, we've also asked for the ability to use our 504 program [which provides businesses financing to acquire fixed assets for expansion or modernization] to refinance owner-occupied real estate.

So the dentist that owns the dentist office or the manufacturer that owns the warehouse will be able to, using this proposed 504 product, get that mortgage renewed.

How can the SBAhave the strongest effect on small business in America?
At the SBA we're responsible for making sure that 23 percent of all [federal] government contracts go to small business and that's about $100 billion a year. So this has a very important effect on all small businesses, and we have special programs for veteran-owned small businesses, and socially and economically disadvantaged small businesses and women-owned small businesses, so we can give them what we call the oxygen--the revenue--they need to grow.

Is that 23 percent target being met?
Last year we really focused on the Recovery Act and making sure small businesses had their share of those Recovery Act contracts, and I'm happy to say we are actually well ahead of our goal on Recovery Act contracts. We're at 29 percent.

The SBA under previous administrations has been criticized for awarding contracts to larger entities that were masked as small businesses.
This is a program for small business. It's not a program for big business masquerading as small businesses, and we have gone very far to try to ensure the integrity of the program and make sure those who are eligible are those getting the contracts.

Are there new standards or new screening procedures?
Yes. In fact, we redid the regulations for our flagship [business development] program, 8(a), and strengthened them considerably. And those are helping us make sure it's small businesses that get the access to these contracts.

What is the most pressing issue facing small businesses in 2010?
Small businesses are coming off a difficult time, with the recession and the credit crunch. So the first thing we have been concerned about is making sure we get the Recovery Act dollars in the hands of small businesses and give them the credit they need to grow and move forward.

In addition to access to credit, small businesses care about a number of other things. We find that our counseling operations are equally important as our credit operations because small businesses really need help and advice, and when they get it, they tend to have more sales and more profits and more longevity, and they hire more people. So we have looked forward and said, "How do we get all the tools small businesses need into their hands?" Maybe they want to export. Maybe they want to know how to use broadband. Maybe they are veterans who are coming back and want to start a business or grow their business. Our job is to make sure all that information and opportunity is accessible for small businesses so they can do what they do, which is keep our economy strong.

What is your agenda for moving forward?
My goal is, internally, to invest in our agency and our bone structure. To make sure our people have the training and we have the information technology to make sure the SBA delivers a helping hand to small businesses in the ways they need to get capital, to get counseling, to get government contracts and, heaven forbid, in the event of a disaster, we are also helping small businesses right now in places like Nashville and the Gulf Coast survive difficult situations. We will be there for small businesses because we know they are the critical force that is going to create jobs in our economy, and we know they are the critical force that is going to innovate and keep us competitive all across the globe.