Question: You grew up in what many would call the barrio in Boyle Heights and ended up going to Yale. How did that happen?
Answer: Very simply, Yale recruited me. Remember, this was the late 1960s. I had done well in school, was valedictorian in my high school class and Yale was looking for diversity.
Q: Were you the first in your family to go to college?
A: Yes. I was raised by my mother, who never went beyond the second grade. So when I got to the third grade, I could say I was the success of my family.
Q: So what motivated you to excel?
A: My mother and grandmother who raised me were really strong women. They had incredible drive in their limited world. They instilled a sense of hard work in me, which translated into the classroom. At first, I had a little trouble with the English language, so it took me a little while to grab hold of schooling. But I had great role models at school, including my high school English teacher, George Crook.
Q: Your mother must have been very proud.
A: That reminds me of a little story. When I was attending Yale, and some of my old friends would come around my mother's home in Boyle Heights, they would ask where I was. She would say, in her broken English, that I was "at jail." What she really meant to say was "at Yale." That of course caused some of my old friends to wonder where I really was.
Q: Was it a culture shock going to Yale?
A: In some ways. Back in high school, I was a big fish in a little pond. When I got to Yale, that was no longer the case. Shortly after I got there, I was invited to a dinner where 14 out of the 16 people were valedictorians of their high schools. That was quite a shock to be in such distinguished company. Going to Yale changed the course of my life and my family's life.
Q: Do you find yourself a role model for young people now growing up in East Los Angeles?
A: Yes, I do, and it's quite a challenge. I tell people, "Si, se puede!" or "Yes, it can be done." It doesn't mean that everyone has to go to school on the East Coast or be a doctor or a lawyer. But you should not foreclose on your dreams.
Q: What else do you tell people in these communities?
A: I tell them that being a small business owner is a way not just to make money, but to really become a force in your community, to be respected and influential. If you're a small business owner, you win the respect of the elected officials in your community and you win the respect of other movers and shakers. That in turn gives you the opportunity to do good, to give back to the community, which is really what it's all about.
Q: So how did you end up at the SBA after law school?
A: When I was at Stanford, I had several friends and we all dreamed of starting a law firm together after we graduated. But as often happens, we each went our separate ways. A few years after graduation, I found myself wanting to learn more about banking and finance law. That's when an opportunity came my way to be a staff attorney at the SBA. The job meant dealing with collections, bankruptcy and related litigation.
Q: What kept you at the SBA?
A: I found the job incredibly fulfilling. I wasn't just bringing home a paycheck. The SBA is all about increasing business opportunities for people, about making the economy grow. The work we do here is noble, and that's why I stayed. I know that now I could be making much more in the private sector, but it's not the same. I applied once in the 1980s to become district director here in Los Angeles, but the job went to someone else. When he retired in 1994, I tried again and succeeded.
Q: Wasn't it a bit daunting to take over the largest SBA office in the country just months after the devastating Northridge earthquake?
A: Yes it was. Dealing with that earthquake was truly a horrendous time. But it never has really let up since then. The needs of the small business community just continue to grow exponentially. We've financed about 7,000 businesses for about $2.4 billion in the last three years alone. Many, if not most, of these businesses might never have found financing had it not been for the SBA.
Q: What do you regard as the biggest change you've been able to make during your tenure as district director?
A: We're not just up here in our ivory tower in Glendale waiting for businesses and banks to come to us for financing. We've taken the SBA out into the community, partnering with local chambers of commerce, industry groups, city economic development officials and many, many others.
Q: How would you say L.A.'s small business scene has changed in the two decades you've been at the local SBA office?
A: L.A.'s small business community is forever growing and expanding. I'm not just talking about the raw numbers here, or the types of businesses. Those come and go for a time it's retail, then it's technology, then it's manufacturing. The biggest change I've seen is how small businesspeople have become more politically active and more involved in their local communities. There's been a real pickup in the lobbying by small businesses here.
Q: It seems that the SBA's most well-known program, the loan guarantee, often runs out of money because reauthorization is held up in Congress. Isn't this frustrating for you when small businesses clamor for these loans?
A: First off, let me say that the loan guarantee program is fully funded this year. Now to your question. Yes, it was frustrating to constantly be concerned about running out of funds for the loan guarantee program. That's why the SBA recently restructured this program. The guarantee portion what we call the subsidy is now funded through fees. So there should be no more danger of running out of money.
Q: Is it true that a major portion of SBA loans are for purchases of real estate, and is that appropriate when it seems the market has peaked?
A: Yes, we often do make loans to businesses that want to buy their own buildings or acquire land to expand on. Before the participating bank makes the loan, though, they walk through all the options with the business. In certain cases, it may be better now to wait rather than buy. But I do want to clarify here: We do not make loans for businesses to go out and invest in property. So if you come to the SBA and say, "Hey, there's this duplex down the street that we can really make a killing on," we will tell you that if you want to buy that duplex, you're on your own.
Q: Many business people who apply for an SBA loan ultimately get directed to buying into a franchise operation. Is this an intentional policy of the SBA and if so, why?
A: No, neither the SBA nor the participating lenders are in the business of pitching one type of business structure over another. That being said, when someone comes to us, we will lay out all the options. At times, franchising may be an attractive alternative. At other times, it may not work out.
Q: What are the most common mistakes you see from businesses applying for SBA loans?
A: The most common is not being able to identify an adequate cash flow to repay the loans. Also, there are issues of eligibility: Many businesses that come to us are actually too large to meet our eligibility requirements. They don't realize that the SBA also looks at affiliates when sizing up a business.
Q: Anything else?
A: Well, yes. There are times when someone will come in and ask what type of business they should start to get an SBA loan. I tell them they are not going to get an SBA loan and that they probably shouldn't even start a business. This must come from within; you should be able to see the passion in the person. If that passion is not there, you're probably not going to succeed.
* Alberto Alvarado
Title: District Director
Organization: U.S. Small Business Administration
Born: May 1952, Boyle Heights
Education: B.A. in Political Science from Yale University; J.D. from Stanford University School of Law
Career Turning Point: Joining SBA as a staff attorney
Most Admired People His wife, Linda; Los Angeles Mayor Antonio Villaraigosa
Hobbies: Playing sports, especially basketball; family time
Personal: Lives in South Pasadena with his wife and 14-year-old son Albert Jr.
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