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Events

Familiarization tour of the Russian officials to the United States

The SBWG Action Plan implementation project targets at carrying out ad hoc requests from SBWG expert groups working to accomplish the Action Plan. The travel of Russian officials was one of these ad hoc requests. The delegation was headed by Ilya Yuzhanov. The Grantee organized this trip which in its turn was funded out of the USAID-AMM Cooperative Agreement.

For several years, the SBA has been a part of an inter-agency effort to support the U.S.-Russia Bi-National Commission. The SBA and the MAP are co-chairs of the BNC's Small Business Working Group, and SBA's Assistant Administrator James Wilfong has forged a close relationship with officials in key economic reform sections of the Russian government, the MAP and the FFSBS. This tour was proposed in response to requests by Russian officials for a thorough familiarization about the role of small business in a market-based economy and its potential application to Russia. In the past several months, the SBA has been a party to numerous protocols, action plans, proposals by Russian officials and meetings in the U.S., Russia, and at the Organization for Economic Cooperation and Development (OECD) ministerial small enterprise conference in Bologna, Italy.

Russia's extended economic and political transition is at a critical stage. U.S. policy is to encourage its movement toward a democratic political and market-based economic system. The Russian government's interest in small business and intent to develop this sector is seen as a means to encourage economic democracy and decentralization, personal liberty and empowerment, job and income generation, liberalization of the financial sector to enable small business development and economic growth, promotion of international trade opportunities and technological cooperation with the U.S.

As part of the on-going relationship between SBA and counterpart organizations in Russia, the purpose of the tour was to expose Russia's small business policymakers to the role of small business in a country's economic growth and development. This is primarily relevant to the USAID's strategic objective in economic growth (S.O. 1, Economic Restructuring, Accelerated Development and Growth of Private Enterprise and A More Competitive and Market-Responsive Private Financial Sector). Small business development also has implications for Russia's democratic transition (S.O. 2) in that it can help disperse economic power, encourage competing views of the country's political system and empower the individual.

The schedule of the tour was developed including several opportunities to meet with small businesses in a variety of industries including high tech, natural resources, agriculture, forestry. It was subject to the availability of participants and scheduling constraints.

The USAID covered all financial arrangements for the Russian officials, including for translator to accompany the group. Funding included all travel, Russia to the U.S. and within the U.S., per diems for the duration of the tour, and associated expenses.

The SBA made arrangements within the U.S. for the familiarization tour, which formally began on December 11, 2000 in Washington and finished on December 15 in New York. The SBA made the hotel bookings for Maine and also arrangement for rental of vehicles for transport within Maine. The Russian Embassy in Washington, the Russian Consulate General and the Permanent Representation of the Russian Federation to the United Nations Organization in New York made all necessary arrangements for hotel and local transportation in Washington and New York.

SBA officials included Assistant Administrator (international) James Wilfong, Deputy Assistant Administrator (international) Jean Smith, and Harvey Bronstein (senior international economist). Among the Russian officials were: Minister Ilya Yuzhanov, FFSBS Chairman Alexander Runov, President of the Russian Agency for Small and Medium Business Support (RA) Viktor Ermakov, AMM Vice-Rector and Director of the Institute for Entrepreneurship and Investments (IEI) Veniamin Kaganov, Deputy Head of the State Fund for Assistance to Small Innovative Enterprises (FASIE) Pyotr Begidjanov, Head of the MAP Informational Department Sergey Dudkin, Deputy Head of the MAP Department for State Support of Entrepreneurship Sergey Ilyushin, Deputy Head of the MAP Department for International Relations Lessia Davydova, Deputy Head of the FFSBS Department of Finance Alexander Volkov, Coordinator of Eurasia Foundation/Moscow Yelena Vasilyeva, International Advisor to AMM Vice-gector and IEI Director Ilgiz Yanbukhtin (also translator).

Day by day schedule Sunday

12/10/00
The delegation members had both the Capitol and the White House (left wing) Tours with James Wilfong as a tour guide.

Then an official working dinner for the Russian delegation was held at the Russian Embassy with the participation of Yury Ushakov, Ambassador Extraordinary and Plenipotentiary to the United States, Igor Neverov, Minister-Chancellor, Yury Akhremenko, Trade Representative, Alexander Surikov, Senior Economic Advisor, Alexander Konovalov, First Economic Secretary. The delegation members and diplomats discussed various aspects of U.S-Russia economic relations including specific measures to facilitate trade and investments.

Monday - 12/11/00
Signing Ceremony for Action Plan and Press Conference took place at the SBA's Conference Room. Key participants: Russia - Minister Ilya Yuzhanov, Ambassador Yuri Ushakov and Chairman of the FFSBS Alexander Runov; U.S. - SBA: Administrator Aida Alvarez and Assistant Administrator James Wilfong; State Department: Ambassador William Taylor; USAID: Deputy Administrator John Ingram.

There was also a small meeting between Minister Yuzhanov (MAP), Assistant Administrator Wilfong (SBA), Assistant Administrator Pressley(AID) and Ambassador Taylor (State Department).

Then SBA officials introduced to the Russian delegation programs and service offered by the SBA and their partners: 1) Overview of the SBA by George Solomon, Office of Entrepreneurial Development ; 2) Incubator Association Presentation (Technologies Advancement Program - TAP) by Ed Sybert, University of Maryland College Park; 3) Government Procurement by Linda Williams; 4) Business Advocacy by Russ Orban.

After the working lunch Minister Yuzhanov together with Mr. Dudkin departed SBA to the U.S. Commodities Futures Trading Commission (CFTC). Remainder of the delegation stayed at SBA for presentations.

SBA experts introduced Small Business Finance (Capital Access) Overview: 1) Basic 7(a) Loan Guaranty Program and 504 Certified Development Company Program by Sloan Coleman; 2) 7 (m) Microloan Program by Justine Alston; 3) Equity Investment - Small Business Investment Company (SBIC) Program by Saunders Miller. Presenter 7A and 504 Sloan Coleman: 205-7737

1) The SBA is Congressionally mandated to assist the nation's small businesses in meeting their financial needs. The 7(a) Loan Guaranty Program is the SBA's primary loan program. It is also the most flexible, since the agency can guaranty financing under the program for a variety of general business purposes. To qualify for an SBA guaranty, a small business must meet the 7(a) loan guaranty criteria, and the lender must certify that it cannot provide funding on reasonable terms except with an SBA guaranty. The SBA can then guarantee as much as 80 percent on loans up to $100,000 and 75 percent on loans greater than $100,000. In most cases, the maximum guaranty is $750,000 (75 percent of $1 million). 504 loan program has higher loan limits. In guaranteeing the loan, the SBA assures the lender that, in the event the borrower does not repay the loan, the government will reimburse the lender for its loss, up to the percentage of the SBA's guaranty. The borrower, however, still remains obligated for the full amount due. The SBA does not provide grants to start or expand a business.

A start-up or existing business may use the proceeds of a 7(a) guaranteed loan to: expand or renovate facilities; purchase machinery, equipment, fixtures and leasehold improvements; finance receivables and augment working capital; refinance existing debt (with compelling reason); finance seasonal lines of credit; construct commercial buildings; purchase land or buildings. To be eligible, a business must be operated for profit and not exceed the SBA's established size standards. Documentation requirements may vary. But what the SBA looks for are: management expertise and the commitment necessary for success; reasonable personal contribution and/or business equity, which along with the loan proceeds enable the borrower to operate the business on a sound financial basis; feasible business plan; adequate equity; sufficient collateral; ability to repay the loan on time from the projected operating cash flow. The general terms are: five to ten years for working capital; upto twenty five years for fixed assets such as the purchase or major renovation of real estate or the purchase of equipment.

Through certified development companies, the 504 Certified Development Company (CDC) Program provides growing businesses with long-term, fixed-rate financing for major fixed assets, such as land and buildings. 270 CDCs nationwide work with the SBA and private-sector lenders to provide financing to small businesses. CDCs are nonprofit corporations. CDC's portfolio must create or retain at least one job for every $35,000 of debenture proceeds provided by the SBA.

2) The SBA's 7(m) Microloan Program provides very small loans up to $25,000 to small businesses through a network of locally based intermediary lenders. In addition to making the loans, the intermediaries provide management and technical assistance to micriborrowers. Microloans may not be used to purchase real estate.

The maximum term for a Microloan is six years. Interest rates can be up to 8.5 percent over the intermediary's cost of borrowing from the SBA. Microloans are direct loans from the intermediaries and they are not guaranteed by the SBA.

3) The Small Business Investment Company (SBIC) Program fills the gap between the availability of venture capital and the needs of small start-up or growing businesses. Licensed and regulated by the SBA, SBICs are privately owned and managed for-profit investment companies that make capital available to small businesses through investments and loans. They use their own funds plus funds obtained at favorable rates with SBA guaranties.

The SBIC Program provides funding to all types of manufacturing and service industries.

Tuesday - 12/12/00
Early in the morning Minister Yuzhanov was at National Press Club for CFTC press conference.

Meeting at the Civilian Research & Development Foundation - CRDF (Nonprofit charitable organization that promotes scientific and technical collaboration between the United States and the countries of the Former Soviet Union (FSU). Created by the U.S. National Science Foundation to promote small business ventures, provide grants, and fund cooperative research projects between U.S. and FSU small businesses). The CRDF's officials included Tom Owens, Senior Vice President, Mark Taylor, Senior Advisor, Technology Development, Joanne Neuber, Senior Program Advisor, Next Steps to the Market Program, Camille de Walder, Program Manager, Travel Grant Program, Yulia Yausheva, Program Manager, Partner Search Program. They introduced industry-oriented programs. The CRDF works with the U.S. private industry to reduce the risks and costs of initiating industrial R&D collaborations with the countries of the FSU. The Next Steps to Market program supports precommercial cooperation in applied research and development projects designed to facilitate and expedite the commercial utilization of research results. The Travel Grants program provides short-term support to encourage new industrial R&D collaborations.

Travel to the Federal Trade Commission (FTC). Presentation on Competition, Antitrust and Antimonopoly Policy of the MAP together with the FTC and Antitrust Division, U.S. Department of Justice (USDOJ). Presenters: Robert Pitovsky, FTC Chairman, Douglas Melamed, Acting Assistant Attorney General for Antitrust, and Russell Pittman, Senior Economist (USDOJ).

Meeting at the Overseas Private Investment Corporation (OPIC). OPIC officials included George Munoz, President # Chief Executive Officer, Jean-Christopher Boa, Director of Intergovernment and Public Affairs, George Gale, Manager, Central and East Europe Department. They introduced to the Russian delegation OPIC's programs and shared their investment plans in Russia.

Travel to Export-Import Bank (EXIMBANK) to meet with Chairman Harmon. Negotiations on financing, small business trade and microlending.

Departure to Portland, Maine.

Wednesday - 12/13/00
Arrive at Lewiston, Business Information Center of Maine. Local Small Business Development Roundtable at Business Information Center of Maine. Patrick McGowan, Regional Administrator, SBA welcomed participants to the BIC. Bob Thompson, Executive Director, Androscoggin Valley Council of Governments (AVCOG) welcome to Androscoggin Valley region. Jim Wilfong allowed each panelist two minutes to discuss the role of their community organization in small business development. Jim Wilfong then led roundtable discussion.

Panelists: Bob Thompson, Executive Director, AVCOG, Ellen Golden, Senior Program Officer, Microenterprise and Women's Business Development, Coastal Enterprises Inc.(CEI), Ron McKinnon, Business Development Specialist, Department of Economic and Communities Developmemt (DECD), Valerie Lamont, Ph.D., Center for Entrepreneurship and Small Business, University of Southern Maine, Chip Morrison, Executive Director, Androscoggin County Chamber of Commerce, Jane Mickeriz, Small Business Development Centers (SBDC) Project Officer, AVCOG, John Belisle, Senior Vice President, Mechanic Savings Bank, Auburn, Maine, Bethany Douglas, Service Corps of Retired Executives (SCORE), Vaughn Rasar, Heart of Maine, United States Department of Agriculture (USDA), Johnnie Albertson, Associate Administrator, Office of Small Business Development, SBA, Helen Brimigion, Loan Officer, SBA.

Arrive at Statehouse, Augusta, Maine. Statewide Small Business Development Roundtable at Statehouse Banking and Insurance Committee room. Opening remarks by Patrick McGowan, Regional Administrator, SBA. Jim Wilfong then allowed participants 2 minutes each to discuss their role in statewide business development. Jim Wilfong led a discussion.

Panelists: Charles Spies, CEO, Finance Authority of Maine (FAME), Eloise Vitelli, Associate Director, Maine Centers for Women Work and Community, University of Maine, Augusta, Brian Dancause, Business Development Advocate, DECD, Mark Walker, Vice President, Maine Bankers Association, Helen Scalia, Program Manager, CEI Development Services, Michael Rollins, Business and Cooperatives Specialist, USDA, Johnnie Albertson, Associate Administrator, Office of Business Development, SBA, Patrick McGowan, Regional Administrator, SBA, Mary McAleney , District Director, SBA. Blaine House, official residence of the Governor of Maine, Angus S. King, Jr..

Blaine House Tea - refreshments served. Jim Wilfong introduced Governor Angus S. King, Jr. who then provided welcoming remarks. Jim Wilfong then asked Ilya Yuzhanov to speak. Mr. Yuzhanov had up to five minutes for his remarks. Following the remarks, Jim Wilfong, the Russians and Governor King had an opportunity for a side conference.

Thursday - 12/14/00
Arrive Maine Balsam Fir, West Paris, Maine. Tour of business, Q & A session together with Wendy and Jack Newmeyer.

Arrive at Valley View Orchard Pies, Hebron Maine. Tour of business, Q & A session together with Jim and Jean Kroitch.

Arrive MacFarland Steel, Fryeburg, Maine. Tour of Business, Q&A session together with Pat Mallett.

Arrive Wilfong Christmas Trees, Stow, Fryeburg, Maine. Light dinner served. Meeting with Valerie, Christian and Liza Wilfong.

Friday - 12/15/00
Arrive Fryeburg Academy and visit Classroom. Jim Wilfong led the class discussion together with 20 economics students - most of whom were international including Russia.

Visit Thomas Hammond & Son Lumber Company, Hiram, Maine. Upon arrival group traveled to a logging site to view logging operations. Tour of business and Q&A session together with Tom and Debbie Hammond.

Departure to New York. SBA Point of Contact, Harvey Bronstein accompanied Russian delegation and remained through Saturday.

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