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The Small Business Technology Coalition is more than just a nonpartisan, nonprofit advocacy group. It’s tied into the government, yet has the interests of small businesses in mind first and foremost.

As an arm of the National Small Business Association, the Small Business Technology Coalition is more than just a nonpartisan, nonprofit advocacy group. It’s tied in to government without being a government organization, which means it has the interests of small business in mind first and foremost. SBTC Executive Director Jere W. Glover recently took time to take the current temperature of the small-business tech sector.

Who does the Small Business Technology Coalition serve?

SBTC serves all small technology-based companies, particularly those accessing federal technology programs and government procurement.

What are its membership figures?

SBTC serves several hundred members directly. The association is also the Technology Council of National Small Business Association, the nation’s oldest non-profit small-business advocacy organization, serving more than 150,000 small businesses.

From a tech standpoint, what are some of the biggest challenges facing small businesses these days?

Access to capital is, of course, paramount. With the venture capital industry recovering only slowly from the “bubble years,” capital for new and early-stage technology businesses remains scarce.

For this reason, it is also vital that smaller companies not be forced to expense their stock options. Doing so would further hurt small business’ ability to attract talent and investors and obtain bank loans.

Tech companies that are trying to sell to the federal government–and there are quite a few of them, when you consider the combined needs of the Defense Department, homeland security, health care, transportation, and so on–face real problems with the government’s increasing tendency to bundle contracts together. Bundling means making contracts so big and diverse that only large companies can hope to bid on them. [The federal government recently integrated the Pro-Net and Central Contractor Registration databases in a move meant to make it easier for small businesses to bid on federal contracts-eds.] Patent protection and intellectual property issues continue to be important, too.

In a general sense, tech companies face the ongoing challenge of developing business models and business plans that can adapt to a changing environment of capital access, strategic partnerships, outsourcing, and competitive pressures.

The SBTC also recently helped extend the Small Business Technology Transfer Program. Can you explain what this is?

STTR is similar to SBIR, except that it promotes cooperation between small businesses and universities in meeting the federal government’s technology needs.

You have a hand in supporting the Small Business Innovation Research Program. What does this program do?

The SBIR program is probably the federal government’s most cost-effective and successful initiative to encourage the formation and development of small technology companies.

It works like this: Every federal agency that has an extramural R&D budget of over $100 million sets aside 2.5 percent of those funds to meet their agency needs using small businesses. The agencies publish sets of general research topics that they are interested in. Small companies–generally speaking, those with fewer than 500 employees–submit research proposals addressing the agencies’ topics. The research proposals are assessed by agency R&D personnel and often by outside experts as well.

Grants are then given to successful applicants in three phases. Phase I is for “white paper” concept development. Phase II leads to a working prototype or advanced engineering development. Phase III supports commercialization of an invention either in the sense of its use by the federal government (such as defense innovations), or in the sense of getting an innovation on the market (such as in transportation innovations).

Since it was created 20 years ago, the SBIR program has directed more than $10 billion to small tech companies, resulting in hundreds of important innovations. The program has been highly praised by objective evaluators like the General Accounting Office and the National Academy of Sciences.

What is the current climate for small business in Congress and in the Bush administration?

Small business has its ups and downs in any administration or Congress. The Bush administration has made some very constructive moves to unbundle federal contracts, and they and Congress have made several improvements in the tax code, like increasing the direct expensing of equipment and reducing the estate tax.

Also, the Small Business Administration’s Office of Advocacy, under Tom Sullivan, does great work in helping the federal government understand the impact of its regulations on small business and cutting the regulations back whenever possible.

The problem, though, is that a number of federal agencies have not been fully responsive to the president’s strong statements on small business and Tom’s best efforts. For example, the small business share of federal contracting has continued to shrink.

What are some tech-related legislative issues that small-business owners should be aware of?

Apart from the federal procurement and intellectual property issues already mentioned, small tech companies also should be watching how the Internet tax moratorium plays out and how tax issues like expensing, capital gains, and the treatment of stock options are handled.

A big sore spot among American tech workers is offshore outsourcing. What is the SBTC’s position on that issue?

We believe that a forward-looking and aggressive policy of promoting smaller technology companies would yield an improved job market for skilled tech workers in this country. The SBIR program, for example, is limited to domestic companies.

Aside from your efforts in Washington, what are some more direct benefits that the SBTC offers its members?

SBTC’s members have extensive experience in starting and operating tech companies, in utilizing federal programs like SBIR, and in selling to the federal government. We offer this “intellectual capital” to our members through programs, mentoring and counseling.

From where you sit, what can American small-business owners look forward to in the coming year?

We expect to see accelerated growth in the technology sector, with increasing opportunities for small companies that are smart and agile.

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