partner channel: Smaller VARs Get a Leg Up

Posted: 3/2004

Smaller VARs Get a Leg Up
By Tara

The U.S. Small Business Administration (SBA) has established a new industry category to allow VARs with 150
employees or less to qualify for federal loans for business development purposes
and bid on government equipment and services contracts.

The SBA estimates 1,737 small businesses could receive
assistance because of the new rule; and approximately $10 million to $25 million
in additional federal contracts could be awarded annually to smaller

The Computing Technology Industry Association (CompTIA) says the
move will level the playing field for small resellers, which will be able to
pursue federal contracts without the fear of larger firms with substantially
more resources unfairly competing for business.

Originally, the SBA proposed the program be available to VARs
with 500 employees or less, but CompTIA successfully lobbied to reduce that

In essence, it brought the qualification curve closer to the
small-business people, says Ed Migut, director of CompTIAs convergence
section, A lot of the smaller resellers that were out there had a very
difficult time competing with some of the larger ones with close to 500
employees, who have a strategic advantage over the smaller players.

The government can now send out bid requests that are available
only to the new category. Its also special projects that are regionalized,
says Migut.

A lot of these programs are regional in nature, so now the
focus will reside more on the small and evolving resellers that specialize in
areas across the continental U.S. They never had a footing before and couldnt

The initiative will affect a wide swath of the partner
community. The SBA says the average size of an IT VAR is about 15
employees, and 88 percent have 100 or fewer. The convergence technology VARs,
the folks that bring the migration of voice and data onto one communication
platform for their customers, a lot of these folks are smaller organizations,
anywhere from 10 to 15, some significantly less, in the area of a million to a
few million in sales, up to about $20 million, says Migut.

By redirecting programs and funding into the growing VAR sector,
the SBA put them on a competitive level relative to peers that had larger volume
of scale. Migut says the move will reinvigorate the industry.

It helps the small to medium business evolve and grow their
business now they have something they never had before and its pretty
exciting, he says. When the opportunity starts trickling down and people start
seeing the effect down the road, maybe later in the year, theres going to be a
large infusion of capital for these areas. This industry is taking off this

U.S. Small Business Administration
Computing Technology Industry Association

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