Agency faces a devastating state budget cut

The New Hampshire Small Business Development Center helped Robert Barmore launch Therma-Hexx a decade ago, guiding his fledgling Portsmouth-based manufacturing business to a $120,000 grant.

“That gave us our start,” Barmore said. “We couldn’t have started this business without that grant.”

Elizabeth Curcio, director of sales and co-owner of catering business The White Apron, said the SBDC’s services helped contribute to tripling the Dover firm’s revenue and helped it through the pandemic.

“For us, it was kind of our lifeline to either continuing with the business and growing to be successful or just throwing in the towel,” she said.

For Steve Cunningham, SBDC helped National Flight Simulator in Manchester take off and recover from the pandemic, and now the 78-year-old owner is seeking its help to come up with a succession strategy.

For 36 years, the SBDC — a partnership between the state which funds it, the federal Small Business Administration which matches that funding, and the University of New Hampshire, which hosts it — has helped thousands of small businesses get started and get though troubled times.

But now, all of a sudden, the agency is in a fight for its life.

In a surprise move, Gov. Chris Sununu drastically cut the agency out of his proposed biennial budget, from $880,000 in support in the last biennium to $50,000 next fiscal year, and zero the following year.

“There is no way we can continue without state funding,” said Liz Gray, the SBDC’s executive director, who only learned of the cut shortly after the governor released the budget on Feb. 11. “I cannot make up the difference from other sources. Without state support, we cannot exist.”

Business and Economic Affairs Commissioner Taylor Caldwell, who oversees the SBDC budget, was unavailable for comment before NH Business Review’s deadline, but he did refer to a prepared statement by the governor.

“The state has subsidized this university grant for years. While the university can continue to provide matching funds for this program, the state is going to redirect its resources to focus on job-creating tax cuts for small businesses and increased investment in workforce development efforts.”

The governor was referring to a proposed cut in the business enterprise tax from a 6% rate to 5.5% as well as another proposal to forgive student loans of college students who remain in the state.

‘A tremendous resource’

The SBDC, headquartered at the UNH Peter T. Paul College of Business & Economics, provides a myriad of resources to small businesses and startups, conducts trainings — some 200 webinars last year — and recently conducted the largest small business survey in the state. But the agency is best known for the free one-on-one guidance and counseling it provides businesses.

This is not the first time the SBDC has come under attack.

Back in 2003, then-Gov. Craig Benson attempted to replace it with his own incubator program, but it had enough support in the Legislature to keep going, albeit at a lower funding level.

It’s not clear how much support the governor’s proposal will have this time around.

A call to Senate President Chuck Morse, R-Salem, was not returned by deadline, and House Speaker Sherman Packard, R- Londonderry, declined comment, saying he was not familiar with the program.

Morse — who has championed small business often in the Senate — will be hearing from Greater Salem Chamber of Commerce President Donna Morris.

“They are a tremendous resource,” she said. “It would be disheartening — a big loss for the small business community. I hope they get the funding they need in order to continue.”

If the SBDC is forced to close its doors, it will do so at a peak in demand for its programs and services.

Last year, the agency said it helped 7,000 New Hampshire businesses, assisting them in accessing $44 million in capital, preserving 1,300 jobs and resulting in an economic impact of $166 million. It also said it helped grow their clients’ revenue by about $10 million, which is saying a lot, pointed out Gray, considering their survey revealed that during the start of the pandemic, half of the businesses reported their revenue had declined 50%.

Wendy Hunt, president and CEO of the Greater Merrimack-Souhegan Valley Chamber of Commerce — a fan of the agency for decades — said the SBDC really stepped it up during the pandemic.

“Businesses were absolutely blindsided.

They couldn’t make payroll, couldn’t make rent. They couldn’t get through to their bank or the SBA, but when they contacted SBDC, they got through immediately,” Hunt said.

The agency did this on an annual budget of $1.5 million in 2020, not counting another $1.28 million of CARES Act funding that expires in September.

Nearly a third of its funding came from the state as well as in-kind contributions of $382,361 from UNH, which also pays the salaries of the 13 team members. (An additional six were hired with CARES Act funding.) UNH also contributed about $25,000 in cash, and several other organizations also chipped in similar small amounts.

UNH, or more specifically the university’s Peter T. Paul College of Business & Economics, hosts the program “because in New Hampshire we know 99% of the businesses are small business,” said Deborah Merrill-Sands, dean of the business school who recently became chair of the SBDC advisory board. “Part of our mission is to provide support to small businesses and economic development in the state. Our collaboration with SBDC is one of the major ways that we do that.”

The collaboration works in several ways.

Students from the business school help with consulting projects and invite businesses to symposiums on such topics as digital marketing and analytics.

While the governor asked all departments to cut their budgets by 20%, Merrill-Sands questioned why there was such a deep cut to a “really valuable partner” during the pandemic.

“You have to wonder, if the pandemic is not over and the repercussions of the pandemic are not over, why would the state not want to continue that kind of advisory support to help businesses recover?” she said.

“It seems like a very small amount of investment from the state to support a highly effective organization.”

When asked whether UNH might fill the gap, she said, “This is under discussion. There is a lot we have to figure out if the state withdraws from the partnership and says it is up to us.”

‘We wouldn’t be here’

The question of cash is crucial when it comes to the SBA’s $750,000 grant, which encompasses half of the SBA’s budget since only half of the support can be an inkind contribution.

“You can’t run anything without cash,” said Amy Bassett, district director of the SBA in New Hampshire. Bassett also didn’t see either the state or federal money as a grant to the university.

“It is a long-standing investment in this program and in small businesses,” Bassett said. “All these years of training and advising. It would be a shame if it was gone. So many of our clients will tell you they would not be here today if not for the SBDC.”

That’s almost identical to what Therma- Hexx owner Barmore told NH Business Review: “If it wasn’t for the SBDC, we wouldn’t be here.”

Barmore started Therma-Hexx in the midst of the last recession. The company manufactures heating and cooling systems that warm pavement to melt snow from city streets, high-rise terraces and pool patios.

Barmore started the company from scratch with the help of SBDC adviser Warren Daniel, but it didn’t just end there.

“Warren had always been there when we needed to raise capital,” he said. Daniel helped Barmore start exporting to Canada and other countries. He helped him get into an Emerging Leader Training Program, “which was almost like an MBA,” said Barmore. And when the pandemic hit — and his sales by 90% — Daniel helped him navigate various government programs, enabling him to get $116,000 through the Paycheck Protection Program; a $150,000 long-term, low-interest Emergency Injury and Disaster Loan; and more than $41,000 from the state’s Main Street Relief program. With this, Barmore said he was able to send his employees home with pay until he figured out how they could work safely.

He also used the time to build inventory, and he expects this year to be his best yet. He is ready to expand his staff of eight, and now “we plan to shoot to the moon. We couldn’t have done it without Warren Daniel and the SBDC.”

When the owners of The White Apron catering hooked up with Daniel in the Dover Washington Mill Building in Dover, the business “wasn’t doing as well as it could have been,” said co-owner Liz Curcio, but after catering an event for Daniel, he soon was advising the firm on everything from hiring to investment.

“Since we started using services, our business has grown, I think, roughly 300%, just based on our revenue,” she said.

Then came Covid-19. The entire 2020 calendar of 56 booked weddings was wiped out, forcing the company to lay off its five full-time employees. But the company was able to get through with $124,000 from the PPP, $150,000 in an EIDL loan and $100,000 of Main Street funding. It also ended up backfilling with small events and delaying the big ones.

“Warren was a godsend,” Curcio said.

“It’s been crucial in us pivoting to where we were then to where we are now. For us, it was kind of our lifeline to either continue with the business and grow to be successful or just throwing in the towel.”

Steve Cunningham has owned what was then Nashua Flight Simulator since 2006, but with the help of the SBDC’s Andrea O’Brien, he grew the company, which moved to Manchester-Boston Regional Airport and rebranded as National Flight Simulator. It now has 15 staff, five simulators, and offers testing and training for the general aviation market.

“I go to her for lots of things,” he said.

“How to structure an advisory board, evaluating financing to upgrade equipment.”

He had to shut down at first during the first months of Covid, surviving on $28,000 in PPP funds, a $144,000 EIDL loan and $13,000 of Main Street funding, but now there is a growth of interest in general aviation for business travel among those who can afford to avoid commercial airlines.

So he is expanding again. But, on the other hand, Cunningham, at 78, is starting to think about a succession plan and how to structure that kind of financing. Through all of this, he has turned to the SBDC: “I can’t speak highly enough of them.”

Bob Sanders can be reached at bsanders@nhbr.com.

---

If the SBDC is forced to close, it will do so at a peak in demand for its programs and services.