WASHINGTON — As an appointee of President Clinton, Fred P. Hochberg, deputy administrator of the Small Business Administration, must hand in his resignation before President-elect George W. Bush takes office Jan. 20.

But before he leaves, Mr. Hochberg is issuing this challenge to the Bush administration: Increase lending to the smallest businesses, especially those owned by women and members of minority groups.

Under President Clinton, the agency has made huge strides in minority lending. Thirty percent of all loans in fiscal year 2000 were made to women and minorities, compared with 16% in 1992. Moreover, SBA loan volume has nearly doubled in that period, meaning loans to women and minorities have almost quadrupled since President Clinton took office.

“President Clinton and Vice President Gore had a genuine commitment to new markets and a genuine commitment to diversity,” said Mr. Hochberg. “It wasn’t just lip service.”

Now, he said, it is up to Bush appointees to “keep the momentum going.” Just this week, the agency announced that it has increased loan guarantees and simplified its fee structure, all in an attempt to encourage banks and other lenders to make more small-business loans “at the lower end of the scale.”

A business owner who has to borrow $100,000 “is probably having a tougher time with income and cash flow than the someone who has to borrow $700,000,” he said. “We wanted to find ways to give those more vulnerable customers as many opportunities as possible.”

When he joined the SBA as deputy to Administrator Aida M. Alvarez in 1998, Mr. Hochberg’s goal was to improve customer service and efficiency at the often-maligned agency. He said that no job could have better prepared him for that task than his presidency of Lillian Vernon Corp., the catalog retailer founded by his mom, Lillian.

“Customer service is the key in the catalog business,” he said. “When you’re selling through the mail, where there is a big trust factor, you’ve got to provide legendary, not just average, customer service.”

Among Mr. Hochberg’s key initiatives was overseeing the agency’s asset sale program. Congress has mandated that the SBA and other federal agencies sell certain assets to the private sector to improve efficiency, and it was Mr. Hochberg who championed the effort at the agency.

The agency mainly guarantees loans, but because of borrower defaults it has taken back about 14% of its popular 7(a) loans since 1985. It also makes direct loans to disaster victims. As a result, it has billions of dollars of loans on its books — loans for which its staff is responsible for servicing.

But since August 1999 the SBA has sold $1.4 billion of those loans to private debt collectors in three separate sales. By the end of 2003 it plans to sell its entire $10 billion portfolio and all but exit the servicing business.

“Isn’t it better to let the private sector, which does a lot more servicing than we do, be responsible for collection, and use our people to help others start businesses and grow businesses?” he asked. “Isn’t that a better use of federal resources?”

The loan sale program has helped the agency reduce expenses by eliminating 50 loan-servicing jobs. It is also one reason — besides a decline in defaults during good economic times — why the agency has cut its average cost of guaranteeing a loan by 76.8% since 1995, to $1.16 per $100, Mr. Hochberg said.

“This is an important program in the reinvention of the agency,” he said. “Important in terms of getting back to our customers, and important in terms of the whole fiscal discipline message this administration has been trying to send.”

Restructuring fees was also a key component of the customer-service initiative. Until a few weeks ago borrowers were paying two or three different fees — essentially the points borrowers pay to the SBA — on single loans. After meeting with hundreds of lenders who had complained that fees were too complicated, Mr. Hochberg asked Congress to simplify the guarantee fee structure.

Under a law signed by President Clinton last month, borrowers pay a 2% fee on loans of up to $150,000, 3% on loans of $150,000 to $700,000, and 3.5% on loans above $700,000. In addition, the law lets the agency share a small portion of guarantee fees with lenders.

That same law also boosted the agency’s guarantee to 85% from 80%, another move advocated by Mr. Hochberg.

All of the above are incentives for lenders to make smaller loans, he said.

“If I’m a banker, it takes me as much time to do a $100,000 loan as it does to do a $500,000 loan,” he said. “If we simplify the fees and offer rebates and increase the guarantees, we will get more banks competing for customers’ business.”

Mr. Hochberg, 48, has not decided what he will do next, though he said he will not return to Lillian Vernon. Of his two-and-a-half years at the agency, he said he is most proud of the efforts to reach out to underserved communities.

And in his last week on the job, he said he will focus on supplying his successors with “the tools that they need” to carry on that commitment.

Is he confident that the new administration will do so?

“Ask me in six months,” he said.

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