Hispanic Heritage

Aida Alvarez

Cabinet official

"It is critical to the economy of our nation that the small business community continues to flourish."

Aida Alvarez is the first Hispanic woman to head the U.S. Small Business Administration (SBA) and the first person of Puerto Rican descent to hold a Cabinet-level post in the U.S. government. As such, she is part of the economic policy-making team in the Clinton White House, responsible for ensuring that small businesses in the United States receive the federal support needed to be successful. She has helped minorities and women break into the business world by making it easier for them to qualify for loans.

Born in Aguadilla, a seaport in northwestern Puerto Rico, Alvarez grew up in New York City. She graduated cum laude from Harvard and holds honorary law degrees from Iona College in New York, Bethany College in Kansas, and Inter-American University in Puerto Rico.

Starting Out in Journalism and Public service

Alvarez brings a rich and varied career background to her position as administrator of SBA. Before becoming involved in banking and business, she spent eleven years as a newspaper and television journalist in New York City. She won a Front Page Award and an Associated Press Award for her reporting at the New York Post. As a reporter for Metromedia Television (Channel 5), she received an Associated Press Award for Excellence, and as a reporter/anchor for the Ten O'Clock News, Alvarez won an Emmy nomination for her work.

Her tenure in New York City was not devoted entirely to journalism. She found time for public service as well, serving as vice president of public affairs and special projects for the New York City Health and Hospitals Corporation. For that work, she was cited for distinguished service to the people of New York by the New York State Hispanic Chamber of Commerce. She was a member of both the governor's State Judicial Screening Committee and the mayor's Committee on Appointments. In addition, she was a commissioner on the New York City Charter Revision Commission, which restructured the city government.

Leaving the journalism field, Alvarez entered the world of investment banking. She worked in public finance for seven years, first in New York City and then in San Francisco, for Bear Stearns and First Boston Corporation, where she led teams of bankers in marketing tax-exempt bond issues. While in California, she was a member of the United Way's San Francisco County Leadership Board, the Rebuild L.A. Finance Task Force, and the California Council for Environmental and Economic Balance.

Enters Government Finance

In March 1993, President Bill Clinton chose Alvarez to become the first director of the Office of Federal Housing Enterprise Oversight (OFHEO). This appointment meant a move to Washington, DC, for Alvarez, her husband, Dr. Raymond J. Baxter, and daughter, Aurora Alvarez-Baxter. OFHEO, pronounced "o-free-o" in government lingo, was set up to oversee the soundness and safety of the Federal National Mortgage Association (Fannie Mae). As director of this small but powerful government regulatory agency, Alvarez established the structure for oversight of Fannie Mae and Freddie Mac, the nation's two largest housing finance companies. They constitute the basis of the trillion-dollar secondary mortgage market. After accepting the job at OFHEO, Alvarez remarked to American Banker, "I remember all the warnings that I had gotten when I first came on board—about how the job was too big, too difficult, undoable, whatever. I didn't really believe it then, and I know I was right..."

New to Washington D.C., Alvarez witnessed the irony of being empowered with building up a new agency in a city where the focus in the late twentieth century is consolidating or scaling down. Although she initially went to a local office supply store for basic office items — and paid for them out of her own pocket — she quickly learned the ways of Washington D.C. By the time she left OFHEO, the staff had climbed to 45 people, and Congress had appropriated a budget of several million dollars.

At OFHEO, Alvarez established herself as a hands-on manager, conceding in an interview with Savings & Community Banker that this was not a nine-to-five job with "people in defined boxes." However, she tried to set an example by "coming in first and leaving last." In fact, the quality of her staff was given the most credit for the success of the office during her tenure at OFHEO. "I think that the people you hire make a significant difference," Alvarez said. "Everybody was really enthusiastic about the challenge."

A Greater Challenge

A new and even greater challenge was in store for Aida Alvarez in 1997 when, on March 7, she was sworn in as the twentieth administrator of the U.S. Small Business Administration. This position elevated her to Cabinet-level rank in the Clinton Administration, the first Puerto Rican and the first Hispanic woman to be so honored. The SBA, founded in 1953, delivers comprehensive financial and business development programs for entrepreneurs. It is the nation's largest single financial backer of small business, with direct and guaranteed business and disaster loans worth more than $45 billion. The agency's primary functions are to guarantee small business loans made by banks, to advocate the awarding of federal government contracts to small firms owned by "socially and economically disadvantaged" persons, and to make long and short-term loans to businesses that experience loss or damage, due to natural disasters.

Although Alvarez went to the SBA without a background in small business, her investment banking and finance company experience served her well as head of an administration that was on somewhat shaky ground. In an era of budget cuts and increasing need for access to capital by small business entrepreneurs, the resources of the SBA were strained. Some minority business leaders criticized the agency for lack of responsiveness to their concerns.

Addresses SBA Budgetary Crisis

Almost immediately, Alvarez was faced with a crisis. Funding was stretched to the limit, making the shutdown of the SBA's largest loan program that is depended upon by some 8,000 lenders, a real possibility. Some tight recalculating of the agency's costs saved the program at the last minute. But the SBA still faces trials. As reported by American Banker, Paul Leliakov, president of commercial lending for the MoneyStore acknowledged that Alvarez has "inherited a fairly difficult set of circumstances." Anthony J. Feraro was quoted in the same source as saying, "...[H]er number one job is to figure out the problem with the continued shortfall (in SBA lending authority) and how to fix it long-term."

Once on the job, Alvarez quickly aligned herself with minority businesses. In a speech shortly after she was sworn in by Vice President Al Gore, she said, "[b]ecause of the dynamic growth in the number of women and minority-owned businesses, the SBA needs to find ways to help create access to credit and capital, to procurement opportunities, and to information, counseling, and business development training." Because she believes that the demographics of the United States are changing, Alvarez wants to strongly focus the SBA on lending billions of dollars to those small businesses owned by women, African Americans, native Alaskans, and Native Americans. In late 1997, she told the Chicago Tribune that the SBA must "increase the number of loan guarantees to these groups, just as the agency has toward Hispanic-owned businesses." It is her intention that by the year 2000, Hispanic-owned businesses will have received a total of $2.5 billion in guaranteed loans.

Creates More Hispanic Business Opportunities

In January 1998 the SBA and the Texas Association of Mexican American Chambers of Commerce (TAMACC) signed the Memorandum of Understanding agreement designed to create additional business opportunities for Hispanic American entrepreneurs in Texas. According to Alvarez, "This historic partnership means that many more Hispanic-owned businesses will be able to learn about and take advantage of SBA's programs, services, and financial assistance." Additionally, the SBA and TAMACC will jointly conduct workshops for Hispanic American women entrepreneurs to provide training on access to capital entrepreneurial skills and the basics of forming a business. It is hoped that the agreement will serve as a model for agreements in the future and will build more effective working relationships between the SBA and business organizations throughout the United States.

Strengthens Loan Program for Women, Minorities

The new director's answer to lack of access to capital by small business owners is to strengthen her agency's prequalification loan program. Minority and women business owners have historically had trouble qualifying for business loans. Alvarez has started to change that situation. According to the current program, companies owned by women and minorities can prequalify through the SBA for loans of $250,000 or less. Those businesses can qualify for up to $25,000 in short-term, smaller loans provided by nonprofit groups, which are approved by the SBA. Alvarez believes in her work. "It is critical," she told Hispanic, "to the economy of our nation that the small business community continues to flourish. Together with our private sector partners, our mission at the SBA is to provide entrepreneurs with access to capital and credit, business education and training opportunities, and to serve as an advocate for small business. We acknowledge with pride and gratitude the contributions made by the small business community to the nation's economic growth and quality of life."

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