[House Hearing, 107 Congress]
[From the U.S. Government Printing Office]




                               Before the

                      COMMITTEE ON SMALL BUSINESS
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED SEVENTH CONGRESS

                             SECOND SESSION

                             WASHINGTON, DC

                             APRIL 2, 2002

                           Serial No. 107-50

         Printed for the use of the Committee on Small Business

                     U.S. GOVERNMENT PRINTING OFFICE
79-720                       WASHINGTON : 2002
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                      COMMITTEE ON SMALL BUSINESS

                  DONALD MANZULLO, Illinois, Chairman
LARRY COMBEST, Texas                 NYDIA M. VELAZQUEZ, New York
ROSCOE G. BARTLETT, Maryland             California
FRANK A. LoBIONDO, New Jersey        DANNY K. DAVIS, Illinois
SUE W. KELLY, New York               BILL PASCRELL, Jr., New Jersey
STEVE CHABOT, Ohio                   DONNA M. CHRISTENSEN, Virgin 
PATRICK J. TOOMEY, Pennsylvania          Islands
JIM DeMINT, South Carolina           ROBERT A. BRADY, Pennsylvania
JOHN R. THUNE, South Dakota          TOM UDALL, New Mexico
MIKE FERGUSON, New Jersey            CHARLES A. GONZALEZ, Texas
DARRELL E. ISSA, California          DAVID D. PHELPS, Illinois
SAM GRAVES, Missouri                 GRACE F. NAPOLITANO, California
EDWARD L. SCHROCK, Virginia          BRIAN BAIRD, Washington
FELIX J. GRUCCI, Jr., New York       MARK UDALL, Colorado
TODD W. AKIN, Missouri               JAMES R. LANGEVIN, Rhode Island
BILL SHUSTER, Pennsylvania           BRAD CARSON, Oklahoma
                                     ANIBAL ACEVEDO-VILA, Puerto Rico
                      Doug Thomas, Staff Director
                  Phil Eskeland, Deputy Staff Director
                  Michael Day, Minority Staff Director

                            C O N T E N T S

Hearing held on April 2, 2002....................................     1


Alvarado, Alberto, District Director, U.S. Small Business 
  Administration.................................................     5
Anderson, Colleen, Area Vice President, Wells Fargo Bank.........     7
Peterson, Regina Grant, Long Beach Area Certified Development 
  Corporation....................................................    10
Tambakis, Paul, Southern California Hub Director, U.S. Commercial 
  Service........................................................    12
Duran, Isabel, Director, Capital Partners Program Management.....    15
Venable, Phyllis Moore, Business Development Officer, City of 
  Long Beach Representing the City and Small Business Council, 
  Chamber of Commerce............................................    27
Unangst, Pat, Workforce Investment Network.......................    29
Borden, Phil, Women's Enterprise Development Corporation.........    32
Brown, Rolina, Regional Director, Small Business Development 
  Center.........................................................    34


Opening statements:
    Issa, Hon. Darrell...........................................    40
    Millender-McDonald, Hon. Juanita.............................    42
Prepared statements:
    Alvarado, Alberto............................................    52
    Anderson, Colleen............................................    61
    Peterson, Regina Grant.......................................    67
    Tambakis, Paul...............................................    70
    Duran, Isabel................................................    78
    Venable, Phyllis Moore.......................................    81
    Unangst, Pat.................................................    83
    Borden, Phil.................................................    89
    Brown, Rolina................................................    98



                         TUESDAY, APRIL 2, 2002

                          House of Representatives,
                               Committee on Small Business,
                                                    Washington, DC.
    The Committee met, pursuant to call, at 10:00 a.m., in the 
Carson Community Center, Hall B, 3 Civic Drive, Carson, 
California, Hon. Darrell E. Issa [chairman designate of the 
committee] presiding.
    Mr. Issa. Okay. If I could ask everyone to please take 
their seats.
    I want to thank everyone for coming here today. And 
although this is an official hearing, because we are not in 
Washington and in the interest of trying to have the freest 
flow of communications, we will be a little less formal than we 
would be in Washington.
    We will ask that the opening statements for all of us be 
limited to 5 minutes if at all possible. If you run a little 
over, we are understanding.
    And one formality we have to observe is, that without 
objections, all testimony will be placed into the record. All 
written testimony will be placed in the record. So if you do 
not either exactly follow your written testimony or if you are 
cut short, you will still have your entire statement as 
submitted. And you have 5 business days after this hearing if 
you would like to revise, extend. Perhaps questions that come 
out during the hearing you may want to add to. So you can 
supplement thoroughly in writing. So you do not have to feel 
like you have to get everything in now, because many staff 
members will pour over for weeks ahead anything that you supply 
in writing.
    I think it is worth noting that small business represents 
the backbone of our economy, that over 99 percent of all 
business is small business, and that small business employs 
more than 52 percent of the workforce.
    This Committee has held during this year hearings in 
Pennsylvania, New York, New Mexico, New Jersey, South Carolina 
and now here in the Los Angeles area.
    It is our intention here today to concentrate on the impact 
of small business on our economy, but more importantly, focus 
on areas such as women-owned businesses, minority opportunities 
and some of the areas in which the Small Business 
Administration can positively impact that.
    We have representatives here today from the field offices, 
and I will not recognize all of them, but suffice is to say 
that there is a great deal of interest by the Administration 
and by the Small Business Administration in this hearing and 
what you will all have to say here today.
    I want to thank you again for taking your time out of your 
day, both the witnesses and a sell-out crowd in the audience. 
Thank you for being here today.
    I would like to talk in a positive way also about 
Representative Millender-McDonald. We never call each other by 
our last names except in these kinds of events. Because her 
staff really did the hard work to get this together to convince 
the Chairman to allow for this hearing today and to prepare and 
meet with the witnesses.
    So with that, I would like to yield to the Ranking Member 
for her opening statement.
    [Mr. Issa's statement may be found in appendix.]
    Ms. Millender-McDonald. Thank you so much. And I would like 
to thank you and welcome you to the 37th Congressional 
District, Congressman Issa. And I will call you Darrell in just 
a short time.
    He and I are very dear friends, and I can say one thing 
about this gentleman to my right--to my right, yes.
    Mr. Issa. We can switch places if you want.
    Ms. Millender-McDonald. I had an amendment on a bill that I 
wanted to get out to raise the appropriation for women business 
centers. And, of course, the Chairman was a little tough on our 
putting any amendments on a bill. It was Darrell who spoke so 
firmly that we needed that to the degree that it did pass out 
of Committee without any resentment or anything else after the 
Chairman saw that Darrell, who is Republican, said we need 
this. And so this type of gentleman just represent one of many 
on the Small Business Committee.
    So we welcome you, Darrell.
    I would like to also welcome the staff from Washington, the 
counsel and others, the Democratic staff Michael Day and the 
subscriber who, as the Congressman has told you, this is an 
official hearing and now we are in Los Angeles whereas we have 
gone over many states.
    I would like to thank my staff coming in from Washington, 
my legislative director, as well as many other staff members 
who are outside who came in to make sure that this would 
    And thanks to all of you for being here today as well.
    I would like to make note of one elected official in the 
city of Carson who has come in for a short time, and that's our 
City Clerk Helen Helanoe. Is Helen still here? There she is in 
the back. The best City Clerk in the nation, Helen Helanoe.
    And I would like to thank the Chairman of our full 
Committee, Representative Don Manzullo and the ranking member 
representative Nydia Velazquez for their support of my request 
for their field hearing.
    I welcome all of the witnesses today and, of course you in 
the audience for this field hearing and hope that the 
information sharing will lead to a greater opportunity for 
success in your future endeavors.
    In the aftermath of the terrorist attacks of September the 
11th there is an ever greater need for the services provided by 
federal agencies and lenders for small businesses. 
Traditionally, small businesses have been the engine that 
drives our economy, but they have been devastated by the 
economic fallout from the combination of the attacks of 
September the 11th and the resulting downturn in the economy.
    In response to the current economic realities, the Small 
Business Committee offered legislation HR 3230 that will 
provide support to small businesses. This bill authorizes the 
SBA to make disaster loans to small businesses that have 
experienced economic injury from September the 11th. HR 3230 
also provides grants to small businesses to enable them to 
bounce back.
    It also provides a provision I authored that I spoke to you 
about that this gentleman was just so generous and sensitive to 
my requests for 2.5 million in the appropriation for women's 
business centers. Now this bill, hopefully, should be coming to 
the Floor soon.
    Today's hearing is an excellent opportunity to hear 
testimony from small business experts and to have them share 
some of their experiences and some of their challenges. We will 
gain perspective from the SBA and the Department of Commerce as 
to what they are doing to support small business, many of which 
are female and minority owned.
    In addition, we are fortunate to have lenders who can speak 
on what is necessary to secure funding for your businesses and 
other pertinent information.
    Our second panel will feature individuals who can provide 
unique perspectives about the types of technical assistance 
provided to businesses.
    I have heard countless testimony about how critical it is 
for small businesses to be able to acquire the necessary 
technical support and management assistance that will assist 
them in the overcoming of hurdles for developing business 
plans, performing inventory analysis, projecting growth or even 
conceptualizing starting a business.
    As we address today's theme I wish to highlight some of the 
Small Business Committee successes which members of the 
Committee fought to improve in the 2003 budget.
    We were able to secure $253 million increase in the budget 
proposal which will support loans, entrepreneurial development 
and technical assistance. We were also successful in cutting 
the cost of the 7(a) loan programs so that it is more 
affordable. However, there are still battles that need to be 
resolved. Minority and low income communities continue to 
suffer from the priorities outlined in the budget.
    Although this budget represents movement forward, there is 
much room for improvement. Two glaring problems remain. First, 
this budget fails to provide any solution to the growing 
problem of a subsidiary rate while also falling short in 
funding the SBA's flagship 7(a) general business loan program.
    Second, low income communities and minorities have been 
disadvantaged relative to critical programs that have been 
drastically under funded or simply eliminated.
    The programs for investment in micro-entrepreneurs, which 
is an important technical assistance program that helps small 
businesses before they receive an SBA loan, once again, has not 
been funded.
    Business Link, which creates cooperative agreements between 
small and large business were zeroed out.
    Minority entrepreneurs have been cut out from assessing 
larger market places for their products. New markets which 
would provide millions in venture capital to growing businesses 
in low income communities has not received funding for the FY 
2003, as of yet.
    The One Stop Capital Shop initiative which began in 1994 to 
support the President's Economic Empowerment Zone and 
Enterprise Community initiative, a central initiative in the 
effort to revitalize targeted under served communities, has not 
received any funding.
    Clearly there are many hurdles that make it difficult for 
small businesses to prosper; however the hallmark of any good 
business person is being tenacious and resourceful. Today's 
hearing is intended to provide small businesses and aspiring 
business owners with a sense of what types of programs and 
resources are available to them so that they can grow their 
businesses and fuel America's economy.
    I wish to thank this distinguished panel and look forward 
to the other panel and your testimony.
    And, Mr. Chairman, thank you so much for this statement.
    [Ms. Millender-McDonald's statement may be found in 
    Mr. Issa. Thank you, Juanita.
    I am going to break the rule I made, because the advantage 
of being sort-of the acting chair here, and introduce an old 
friend, a colleague of Juanita's and my former assemblyman, 
Bruce Thompson. If you would stand up for a moment.
    If I am correct, Bruce is also our first panelist's boss, 
and is the President's designee and appointee here in 
California. So, it just sort of shows the level to which the 
Administration considers these hearings. And to be honest, a 
lot of what we hope to discover here today of importance.
    And with that, I would like to introduce--and I will 
introduce you all very quickly and then we will go through with 
each of your statements and then we will go through with 
questions, if that is all right with everyone. Sort of minimize 
the back and forth where everyone says ``When am I going to get 
my turn.''
    But Albert Alvarado is the District Director for the Small 
Business Administration. And again if you can indulge, normally 
in Washington we would tell you a great deal about his many 
years, the many times he was the acting head between political 
appointees and so on. We will dispense with all that here today 
so we can get right to testify.
    Then Ms. Colleen Anderson, who's the Area Vice President of 
Wells Fargo Bank, my bank for my entire business career here in 
California. Full disclosure is always required.
    Ms. Regina Grant-Peterson is a Long Beach Area Certified 
Development Corporation representative.
    Mr. Paul Tambakis, that is a great Greek name. I will work 
on it. Southern California--let me put my glasses on and I will 
be a little bit less----
    Ms. Millender-McDonald. That is right.
    Mr. Issa [continuing]. Hub Director, the U.S. Commercial 
    And last on the first panel, Ms. Isabel Duran, Director 
Capital Partners Program Management. And I do not know more 
about that, but I will look forward to learning more.
    And with that, Mr. Alvarado, if you would begin.


    Mr. Alvarado. Mr. Congressman, just as an aside, let me say 
that not only is Mr. Thompson my boss, but he is the best boss 
I have ever had. He said to me, ``Alberto, I have heard you say 
that before.'' I said, ``But I really mean it this time.''
    Mr. Issa. Thank you. Especially today.
    Ms. Millender-McDonald. If I might just interject 
something. He and I served in the state assembly together. And 
while he has a big R behind his name, he is one of the finest 
that I served with. So it is great to see Bruce back here and 
in that capacity.
    Mr. Issa. Absolutely.
    Ms. Millender-McDonald. Now, I will bug him to death.
    Mr. Alvarado. Thank you very much Chairman Issa and 
Congresswoman Millender-McDonald.
    I am Alberto Alvarado, District Director of SBA's Los 
Angeles office. It is a pleasure for a kid from the barrio of 
East LA to have the honor to testify before you.
    I am proud to report that SBA staff has been recognized on 
many occasions for thinking outside the box, either as the 
``Outstanding Capital Access Division,'' or just last week, for 
example, as the recipient of the President's award from the 
Greater Los Angeles African-American Chamber of Commerce. We 
have even been honored with a White House Presidential Rank 
    While my comments today reflect considerable activity in 
the areas of access to capital technical assistance and 
procurement, Administrator Barreto and I understand much 
remains to be done in reaching out to our emerging markets, 
engaging our banks to increase lending, utilizing new 
technologies and in refining our products.
    Our LA office is SBA's number one lending office. During 
the past four years we have provided $2.8 billion, that is 
billion with a B, to 9600 businesses. We also led the country 
in lending to both minority entrepreneurs with 1.4 billion to 
5100 businesses, 569 million to 2200 women entrepreneurs.
    In a similar four year period, Congresswoman, we provided 
170 million to 479 businesses in your district. This has been 
accomplished through a proactive community lending and outreach 
campaign where we take bankers on bus tours to see the money 
making opportunities that await them and where we meet with 
Asian-American bank presidents to reiterate the importance of 
lending to all communities.
    In Watts, for example, we held a ``Hit-the-Streets'' event 
where we mobilized 50 financial service professionals going 
door-to-door to visit businesses. These ``Hit-the-Streets'' 
events are aimed at changing the federal government's image to 
one where residents come to believe that government can make a 
    Among our area capital access success stories are Carson's 
Southland Bagel Company, a past Small Business Person of the 
Year; Angela Walton owner of Melador Technologies, who just 
received a multi-million dollar contract from Northrup; and 
Spectrum Plating, a Torrance start-up, which now has 18 
employees and a 20,000 square foot shop.
    Our vast technical assistance network involves multiple 
partnerships with local organizations and chambers of commerce, 
such as Torrance, Lynwood and Long Beach. Our Women's Business 
Center also in Long Beach provides business counseling in 
multiple languages.
    One of our technical assistance clients, Victoria Lowe, has 
become the largest women owned business in Los Angeles County, 
a sterling accomplishment for this community-minded African-
American woman.
    Our high tech business information center at MidWilshire 
has been SBA's number one ranked center serving 5500 largely 
minority clients per year. Our small business development 
center program assists entrepreneurs in preparing themselves to 
approach lending institutions. Our pre-qualification loan 
program has become an agency model in packaging 399 loans for 
$42.4 million. We have assisted 7 local organizations including 
Vermont Slauson Economic Development Corporation in helping 
micro enterprises in low income communities.
    In the area of procurement whether it is through our 13 
HUBZone workshops attended by 1,000 area entrepreneurs, or 
through our ``Small Business Showcases'' before major prime 
contractors such as Boeing, TRW, Raytheon and Northrup Grumman, 
we inform our businesses on how to access federal buyers and in 
turn those buyers about the expertise of our small businesses.
    Our High-Tech Procurement Conference co-sponsored with 
NASA's Jet Propulsion Lab featured a remarkable 708 firms and 
261 procuring activities. During the past year our district's 
8(a) firms received 459 million in contract awards. Several 
area firms: Gene Hale's G&C Equipment in Gardena, Willie 
Thomas' Thomas Land Clearing in Long Beach and Mary Ann 
Mitchell's CCOPS have been among our most successful.
    We are proud that in the 37th Congressional District 
federal government contracts worth 30.4 million, 282 contracts, 
were awarded.
    Looking back at LA a decade after the 1992 civil unrest 
SBA's Los Angeles District Office is proud that we have 
provided 1.4 billion in financing to 3000 businesses in the 
Enterprise Zone and Enterprise communities.
    Through our media campaign success stories many involving 
minority and women entrepreneurs have been featured in the L.A. 
Sentinel, La Opinion and the Korea Times, as well as on NBC 
Nightly News, CNN and CBS Radio.
    Congressman Issa, I do not want you to think that we have 
not been busy in your district, which is served by our Santa 
Ana district office. Quite to the contrary, last year we 
provided 173 of your constituent businesses with 54.3 million 
in financing.
    Mr. Chairman, in closing I affirm to you our commitment and 
that of Administrator Barreto to build an SBA that helps 
businesses prosper and ultimately contribute to healthy 
    I know, Congresswoman, that you know that I and our staff 
are dedicated to these tasks. We will work closely with your 
local staff to ensure that we continue to address the concerns 
of your business constituency.
    Finally, we know that many outside this beautiful hall have 
not been able to enjoy such wonderful surroundings and to 
benefit fully from the opportunities available in our great 
country. So it is on their behalf that we dedicate and continue 
our noble work.
    Thank you for your attention this morning.
    [Mr. Alvarado's statement may be found in appendix.]
    Mr. Issa. Thank you.
    Ms. Anderson.
    I apologize. We will have to do a little mike passing here.

                        WELLS FARGO BANK

    Ms. Anderson. Good morning, Chairman Issa and Congresswoman 
Millender-McDonald. I am delighted to have this opportunity to 
present to you today the powerful partnership between Wells 
Fargo and small business owners.
    My name is Colleen Anderson, and I am an Executive Vice 
President of Wells Fargo Bank responsible for the company's 
small business lending group in California and the highest 
ranking executive in business banking in Southern California.
    I am here today as the official spokesperson for Wells 
Fargo Small Business Lending programs.
    After 26 years of serving the financial needs of Wells 
Fargo customers, I fully appreciate the business opportunity 
and economic potential represented by the small business owner. 
As the chairperson of Mayor Hann's LA Minority Business 
Opportunity Committee, the past vice chair of the Community 
Financial Resource Center in South Central LA, and an active 
participant in Latin Business Association, among many others, I 
represent a collective force dedicated to serving the needs of 
small business regardless of ethnic gender or demographic 
    Wells Fargo's a $308 billion diversified financial services 
company headquarters in San Francisco providing banking, 
insurance, investment, mortgage and consumer finance for more 
5,400 stores, the Internet and other distribution channels 
across North America.
    With more than 1.5 million small business customers, Wells 
Fargo is a leading financial service provider to small business 
owners. In fact, as of 2000 Wells Fargo was the country's 
largest small business lender among banks for loans under 
$100,000, and we lent the most dollars to small businesses 
located in low to moderate income census tracks according to 
PCI Services, Inc. in Boston.
    Today Wells Fargo has over $26 billion in small business 
loan commitments. Wells Fargo made the most loans in California 
to small businesses in 2000, Wells Fargo made more than 62,000 
loans totaling more than $2.4 billion in California in 2000 and 
lent more than 692 million to 15,000 California businesses in 
low and moderate income census tracks.
    In the Los Angeles metro area Wells Fargo is the second 
largest financial institution in the whole consumer and 
business market and the number one provider for all financial 
services to small businesses. We also provide significantly to 
the California and Los Angeles areas by being number one lender 
in home equity and home mortgage.
    Today by some counts there are approximately 30 million 
small businesses in the U.S. These businesses create more than 
half of the private workforce and half of the GDP. These 
businesses are responsible for about 75 percent of new jobs. 
Small business represents the backbone of our country's current 
and future economy.
    In 1989 Wells Fargo became one of the first major banks to 
form a banking division dedicated exclusively to the financial 
needs of small business. Studies found that the bulk of small 
businesses with less than $1 million in revenues and annual 
credit needs of $100,000 or less were grossly under served.
    Small businesses have found our programs extremely 
attractive. Since 1993 many competitors have followed suit with 
direct lending programs of their own. Loans obtained through 
direct lending are used to find working capital, payroll, tax 
payments, cash flow and short term financing requirements of 
small businesses.
    To date Wells Fargo has made an unprecedented commitment to 
supporting the development and success of small businesses.
    Wells Fargo has become integrated in the small business 
communities and in particular into the emerging market segments 
through various outreach initiatives. The Wells Fargo Los 
Angeles metro president has established a community board 
comprised of community leaders that meet monthly to focus 
exclusively on the under served markets. The forum has created 
partnerships between Wells Fargo and FAME Renaissance, the 
Valley Economic Development Center, Operation Hope, LA Mayor's 
Minority Business Opportunity Committee among many others in an 
effort to provide access to capital and aid for financial 
literacy to small business owners and consumers in low to 
moderate income communities.
    Wells Fargo has also maintained relationships with the 
Latin Business Association, the United States Hispanic Chamber 
of Commerce, CHARRO, the National Council of Asian American 
Business Associations, 100 Black Men, local Asian business 
associations, NAWBO and other organizations as a means to 
continue to connect directly with their constituencies.
    Our involvement with these organizations include the 
sponsoring of events, presenting financial workshops, 
partnering on research and supporting the development of their 
    Wells Fargo partners with some of the organizations such as 
the U.S. HCC and NAWBO to extend the efforts of the four small 
business services programs that provide the emerging markets 
including women, Latino, African-American and Asian American 
small business segments information on the availability of 
financial services from Wells Fargo
    As another demonstration of Wells Fargo commitment to the 
small business markets emerging segments, we have publicly 
stated our goal to lend $16 billion to these four market 
segments 1995 through 2012.
    Our connection with small business owners is also extended 
through our branch network. In Southern California we have a 
total of 418 store locations. We reach our customers via 247 
traditional stores, 153 locations in supermarkets and 18 
business centers. We have adopted a format in favor of fully 
staffed outlets in order to provide complete and one-to-one 
service in our various types of store configurations.
    In line with our philosophy to out local of the nationals, 
we have balanced our national outreach to emerging markets 
specific initiatives. We have tailored the approach to 
accommodate new entrants into the U.S. Our staff is completely 
bilingual in our branches in the cross border locations of San 
Ysidro and Calexico. We are now accepting the Matricula card as 
a form of identification to open consumer and business accounts 
in our stores nationwide.
    Wells Fargo has worked hard to provide financial services 
to a broad range of customers including small business owners. 
The Internet has been an effective vehicle to get busy small 
business customers information and the ability to transact and 
apply for products that make them successful without having to 
visit a branch.
    The Resource Center for Small Business Owners on the 
wellsfargo.com site provides solutions with products and 
services as well as helpful information and a dedicated section 
called ``Business Tips.''
    Wells Fargo has been especially involved in providing 
alternative forms of credit products to small businesses. 
Beginning in 1994 Wells Fargo bank has been the primary driver 
of the California Capital Access Program or CALCAP, and we even 
received recognition from the California State Treasurer's 
Office for our leading role.
    CALCAP provides loan insurance in the form of loan loss 
reserve co-funded by the borrower, the bank and the state. The 
loss reserve encourages the lender to extend credit to small 
businesses that otherwise would not qualify under standard loan 
underwriting. As of the end of 2001 Wells Fargo has made 1,845 
loans totaling $301 million in California, 763 loans totaling 
$138 million in Los Angeles to small business owners through 
the CALCAP program.
    Wells Fargo is similarly committed to working with the SBA 
to provide financing to companies that do not meet standard 
bank loan underwriting criteria. Unlike most SBA lenders who 
only offer variable rate loans, Wells Fargo's SBA's programs 
provide adjustable or fixed rate interest rate financing which 
many small business owners prefer.
    As a preferred lender in 2 of the 23 states where we have 
banking operations, Wells is the leading SBA 7(a) and SBA 504 
lender in many of the markets we serve. Our SBA loans have 
enabled thousands of small and women-owned businesses to expand 
with an average loan size of $231,500. In 2001 Wells Fargo has 
funded 4,128 7(a) loans totaling $87 million in California, of 
which 165 were to women and minority-owned businesses. 
Likewise, Wells Fargo funded 250 7(a) loans totaling $49.5 
million in Southern California with 84 loans to emerging 
markets totaling $23.5 million.
    Wells Fargo strives to provide access to capital and 
financial solutions to small business owners through a variety 
of approaches. SBA lending is one approach among others that we 
have used to address the needs of small business owners. A 
reduction of the funding appropriation for 7(a) loans will 
limit one of these options, particularly in Southern California 
which currently represents over 10 percent of the $9.9 billion 
in SBA 7(a) loans made in the fiscal year ending September 30, 
2001. If funding is reduced by 50 percent, the impact in 
Southern California will probably reduce SBA 7(a) lending by up 
to $500 million in this area.
    Small business is big business to our economy and to Wells 
Fargo. We would like to support an annual review of lending to 
small business in this type of forum. SBA lending is a critical 
component of the access to capital that we provide to small 
business owners. We at Wells Fargo would like to participate 
with the SBA in making this a less time consuming, more 
affordable process for lenders and the small business owners so 
that we can ensure that small business continues to be the 
engine that drives our economy. And that is not just good 
banking, that is good business.
    [Ms. Anderson's statement may be found in appendix.]
    Mr. Issa. Thank you.
    Ms. Peterson.


    Ms. Peterson. Chairman Issa, Congresswoman Millender-
McDonald, my name is Regina Grant-Peterson. I serve as 
Executive Director for the Long Beach Area Certified 
Development Corporation, which is----
    Ms. Millender-McDonald. Excuse me a minute, Regina. Can you 
push that closer to you.
    Can you hear her in the back? No, they cannot. So push it 
closer to you.
    Mr. Issa. If anytime you cannot hear any of the testimony 
or anything that is being said, just sort of wave a hand and we 
will probably catch on pretty quickly. Thank you.
    Please continue.
    Ms. Peterson. I will begin again.
    Mr. Issa. Yes.
    Ms. Peterson. Chairman Issa, Congresswoman Millender-
McDonald, my name is Regina Grant-Peterson. I serve as 
Executive Director for the Long Beach Area Certified 
Development Corporation, which uses the acronym CDC.
    The CDC is licensed and certified by the United States 
Small Business Administration as a 504 loan program. The CDC is 
a direct lender under this program and a loan packager, 
placement service under all other SBA programs. We also have 
the designation of intermediary for SBA's prequalification loan 
program in the Los Angeles and the Santa Ana district offices.
    SBA basically has three programs. The 7(a) for regular 
business loan loans, the 504 which is a fix asset financing 
program for expanding small businesses which is also SBA's only 
economic development program and then the 8(a) program for 
contracting opportunities.
    There is room to grow in all these programs in Los Angeles 
County, even though the Los Angeles District office is the top 
performer in 7(a) in the nation. There is room to grow in the 
504 loan program and in providing greater access by minorities, 
women and veteran owned businesses in all three programs.
    In our efforts with small businesses, which are minority, 
non-minority, women and veteran owned, there is a variety of 
funding sources today which did not exist 15 to 20 years ago. 
However, the greatest amount of financing is still being 
provided by the Small Business Administration.
    In addition, we have more technical assistance being made 
available to area businesses than ever before. But more is 
needed as long as we do not cross that sometimes fine line and 
start to run their businesses.
    In the quest to follow that dream of owning and operating 
your own business, there is also the reality of becoming a 
success, a failure or operating a business which is just 
limping along. In some cases we must say no to certain requests 
and refer them to other resources for education, more in depth 
technical assistance and other types of financing.
    Our biggest challenge is preparing minority women and 
veteran owned business persons with the financing opportunities 
which are available. Many persons are not aware of the types of 
financing available and the requirements. Some persons need to 
understand how owning collateral can be beneficial when 
applying for a business loan. Some persons need credit repair 
and other enhancements to make their loans requests more viable 
to the many lenders who desire to provide more financing to 
qualified businesses.
    As businesses grow and need different types of financing, 
they need to work with a business like ours which can continue 
to grow with them. Many of our borrowers have already received 
their second and third loans. However, very few persons know 
that they can qualify for more than one SBA loan.
    Another challenge which we have is to make our services 
known to interested business persons and to walk them through 
the processes.
    In addition, we are also seeking an expansion of our SBA 
territory so that we can provide services to businesses on the 
same level playing field as our other partners who have county 
wide territory. The Long Beach area CDC is probably the only 
partial county CDC in the state of California. We only have a 
third of the county for 504 loans, but no area restriction on 
all other SBA programs. Yet we have not been permitted to 
expand county wide because of a perception in Washington, D.C. 
that Los Angeles county is well served.
    When we no longer have a territory restriction of assisting 
a qualified Los Angeles county business, we will be able to 
assist more area businesses and assist SBA in increasing its 
504 and 7(a) loan volumes.
    If you can help us to ensure certain required funding 
levels for both the 504 and the 7(a) loan programs, and assist 
us in our expansion requests, we should all see greater 
assistance and increased loan volume for small, minority and 
women owned businesses in the Los Angeles County area.
    I thank you for the opportunity of presenting my views 
    [Ms. Peterson's statement may be found in appendix.]
    Mr. Issa. Thank you. And thank you for being the person 
closest to exactly 5 minutes. Very well done.
    Please, Paul.


    Mr. Tambakis. You mean you are timing us? Okay.
    Mr. Issa. I am timing you. You are not absolutely held to 
it. If we could be close, it will leave time for follow-up 
    Mr. Tambakis. I will try to talk fast and hopefully 
everybody will be able to understand me.
    Mr. Issa. And the balance of anything you leave off will be 
entered into the record.
    Mr. Tambakis. Okay.
    Ms. Millender-McDonald. And a hand is up back there 
indicating that they cannot hear you, so----
    Mr. Issa. Paul, if you will pull it just as close as can 
    Mr. Tambakis. My name is Paul Tambakis. I am the Hub 
Director for 8 offices of the U.S. and Foreign Commercial 
Service here in Southern California. And my territory stretches 
from as far north as Ventura County to Bakersfield and all the 
way down to the Mexican border and as far east as Indio.
    I wanted to thank both of you for the opportunity to give 
me this opportunity to showcase the important work that the 
U.S. Commercial Service does for small business of the United 
States. This is especially important in light of recent events 
that are having a profoundly negative impact in our economy and 
are causing great hardships to America's small businesses.
    WESSCO International is a real live example of difficulties 
experienced by small business in today's economy. WESSCO is an 
LA based supplier of amenities and other on-board/in-room 
service items sold to airlines, hotels and cruise lines. In the 
wake of the September 11th attacks, WESSCO encountered numerous 
problems in its business operations including canceled orders, 
stopped shipments, frozen inventory and delayed payments.
    WESSCO recently turned to the Commercial Service for 
assistance in helping them resolve a financial situation 
involving a large airline customer in Latin America. This real 
live example emphasizes the importance of the mission of the 
U.S. Commercial Service, and I hope that my testimony today 
will show what the U.S. Government, namely the U.S. Commercial 
Service can do to strengthen and protect our small businesses 
and in turn the very jobs that our economy depends on.
    In my testimony to you I hope to accomplish three goals. 
The first is to emphasize the importance of small businesses in 
the United States and the amazing benefits to our economy that 
can be realized by supporting small business exports.
    Secondly, I want to reintroduce the U.S. Commercial Service 
to the Committee members and members of the media, and public 
that have joined us today and give you some insight into 
exactly what we do to help the small businesses of America.
    Third, I wanted to focus on what the U.S. Commercial 
Service is doing for minority owned businesses in America 
highlighting some of our work in California.
    The facts speak for themselves about the importance of 
small businesses in our economy.
    For instance, 97 percent of U.S. businesses that export are 
small and medium-sized enterprises. Exports have accounted for 
30 percent of U.S. economic growth since 1989. Exports account 
for 21 percent of U.S. GDP growth in 2000. Export related jobs 
pay wages that are 13 to 16 percent higher than other jobs.
    The U.S. Commercial Service is part of the Department of 
Commerce that is solely focused on export promotion. Our 
mission is to assist U.S. businesses in the exporting process 
and to protect the interests of American businesses abroad. 
This includes a special emphasis on minority owned companies, 
women owned firms and companies in rural communities.
    Incidentally, we recently in the last year opened up two 
one person offices in rent-free space in rural communities 
including Bakersfield and also co-located on a native American 
Indian reservation in Indio, California.
    We have a worldwide network of offices and trade 
specialists that help small and medium sized U.S. firms realize 
their export potential. Commercial Service officers are posted 
in over 150 locations abroad at our embassies and at over 100 
U.S. Export Assistance Centers throughout the United States to 
provide one-on-one counseling for firms.
    We offer export counseling, market research, matchmaking 
services, advocacy towards foreign governments on behalf of 
U.S. business in numerous business creation opportunities with 
trade missions and trade events both in the United States and 
    Just a few of the important programs we offer. There is a 
wide range of services, everything from the Gold Key program 
where we setup appointments for companies overseas, which you 
are familiar with, Congressman, to a fairly new program called 
BuyUSA, which is a new e-commerce service provided for American 
businesses by the Commercial Service in conjunction with the 
    This is an international electronic marketplace, a ``one-
stop'' export assistance web site that brings U.S. and 
international companies together to export U.S. products and 
services. There is really no web site like it in existence.
    BuyUSA integrates the one-on-one export counseling of the 
U.S. Commercial Service with the latest in business-to-business 
technology critical for competing in today's global e-economy. 
The site offers a small business the ability to find 
international partners, identify sales leads and make an actual 
international transaction. And this is really critical for 
small businesses that have good products and services that can 
not afford the time or money it takes to travel abroad.
    We also have very strong partnerships with the Small 
Business Administration and the Export Import Bank. And this 
allows the Commercial Service to assist small businesses in 
finding the working capital and finance programs they need to 
begin exporting for the first time or to expand their overseas 
    Our work with Visual Matrix of Burbank, California is a 
perfect example of this collaboration between agencies. And 
this is a success story that recently crossed my desk late on 
Friday, so it is not in your written testimony and I will add 
it as soon as possible.
    Visual Matrix is a developer and manufacturer of 
professional video products that can be found in television 
broadcast facilities, video production and post production in 
studios worldwide. Mora Kim in our West Los Angeles office was 
first introduced to the client by a referral from our Ex-Im 
Bank local representative.
    Mora invited the client to a seminar on the Small Business 
Administration's export express loan program. As a result of 
following up with contacts made at the seminar, the client 
received a significant SBA export express loan close to the 
maximum allowable amount under the program. The loan proceeds 
have been utilized for, among other things, export promotion, 
advertisements in trade journals and exhibiting at overseas 
trade shows as the National Association of Broadcasters Show in 
Sidney, Australia.
    By working with SBA the company also received the combined 
line of credit covering both preshipment and post-shipment 
    Our client has also worked with Ex-Im Bank and received an 
Ex-Im export credit insurance policy which allows them to sell 
on an open account basis to overseas customers.
    As a result of participation at all these trade promotion, 
coordinating counsel agency programs, Visual Matrix in the past 
months reports significant sales to Australia, China, Germany, 
France and the Netherlands.
    I next wanted to briefly touch on the program that we have 
in place focusing on minority small businesses. It is called 
our Global Diversity and Women's Initiative. Additionally we 
have the Rural Export Initiative that focuses on rural 
community small businesses throughout the United States.
    The Global Diversity and Women's Initiative is designed to 
greatly increase the probability of minority and women owned 
companies achieving export success. Maria Cino, our Assistant 
Secretary and Director General of the U.S. Commercial Service, 
continues to lead overseas trade missions abroad for minority 
and women small businesses with one coming up to Southern 
Europe in July, and which a strong focus will be placed on 
recruiting companies from Southern California.
    Also in my written testimony I have provided at least ten 
examples of minority business enterprises we have assisted in 
the last year to export successfully.
    Also, to increase our outreach efforts to minority 
enterprises, the U.S. Commercial Service is in the process of 
developing promotional marketing material on our services that 
will be translated into Spanish and will add other foreign 
languages by next fiscal year.
    In conclusion, we have made some huge inroads into 
assisting the minority business community find overseas 
business opportunities all across America. The key is for all 
of us to continue to work together to educate companies about 
the support and assistance available to small and medium size 
    We continue to work hard to make the Commercial Service 
part of our elected officials resource network so that when 
international trade questions arise, you will refer your 
constituents to us. A good example of some of the most recent 
work we have done with minority businesses was the program that 
we put on yesterday in Los Angeles on the African Development 
Bank. Over 100 companies attended, 90 percent of those were 
minority businesses from the Los Angeles area with our keynote 
speaker being Congressman Ed Royce.
    The recently instituted Export Achievement Certificate will 
help to recognize first time minority exporters and encourage 
other companies to pursue international business opportunities.
    We are all working hard to spread the word about the great 
work that all of us in the local trade community do day in and 
day out. Together as partners we will reach out to more 
American businesses and increase the number of minority 
businesses exporting profitably.
    Thank you.
    [Mr. Tambakis' statement may be found in appendix.]
    Mr. Issa. Thank you.
    Ms. Duran. Oh, and if you can share the mike.

                   STATEMENT OF ISABEL DURAN

    Ms. Duran. Good morning.
    Can you hear me?
    Mr. Issa. Yes, we hear you fine.
    Ms. Duran. Okay.
    Mr. Issa. Everyone in the back hear okay?
    Ms. Duran. Thank you, Chairman Issa and Congresswoman 
Millender-McDonald. Thank you for the opportunity to hear my 
humble testimony.
    I am Isabel Duran, and I am the manager of the Capital 
Partners Loan Program for Community Financial Resource Center.
    Community Financial Resource Center was incorporated in 
1992 by the Los Angeles Community Reinvestment Committee. This 
is Los Angeles' first public and private partnership between 
the city, financial institutions and the community.
    Established as a 501c-3 nonprofit corporation, CFRC opened 
its doors in March of 1993 with the express purpose of 
providing financial services and counseling for residents and 
businesses located in South Central Los Angeles and later 
expansion to distressed communities throughout Los Angeles 
    CFRC is a one stop of service providers. Individuals may 
choose from the following types of services: Business lending 
programs; business plan guidance; technical assistance services 
in English and in Spanish languages; consumer and business 
development workshops; home ownership preparation and 
counseling; business automation technology development, 
computer training; and money management counseling.
    Our loan programs are in three categories. We have the 
business expansion loan program from 25,000 to 250,000. It is a 
flexible lending program for businesses that have sustained 
operations for a minimum of three full years and are unable to 
obtain adequate financing from the convention private sector.
    We have the micro-loan program from 5,000 to 25,000 which 
provides micro-loans to newly operated businesses with a 
minimum of 2 years seeking small amounts of capital for 
leasehold improvements, working capital and fixed assets.
    Capital Partners loan program, 500 to 5,000. A 
comprehensive program that offers loads, business training and 
education, group support and networking opportunities to self 
employed business owners and entrepreneurs with limited access 
to working capital. Loans are offered in graduated amounts from 
500 to 5,000.
    Our track record is as follows: Since 1993 we have served 
over 49,000 residents in the Los Angeles County area; CFRC has 
invested $3.1 million in businesses located in South Los 
Angeles; we have leveraged over $4 million from area banks for 
co-lending loans; the average loan amount is $85,000.
    CFRC and its banking partners combined have invested more 
than $6 million in South Los Angeles businesses. Since 1993 
CFRC has assisted in creating or expanding approximately 200 
small businesses. Over 442 jobs have been created and/or saved 
through our programs. We are certified California finance 
lender, certified by the United States Treasury Department as a 
Community Development Financial Institution, and certified 
California Community Development Financial Institution.
    Thank you.
    [Ms. Duran's statement may be found in appendix.]
    Mr. Issa. Thank you.
    Was not ready for that brevity.
    One announcement I would like to make is we have had some 
requests for questions from the audience. If you have questions 
that have come up as a result of testimony or maybe you came 
with questions, if you would write them down and then would--
hold up your hand again. He has had to miss in the crowd. And 
Andy whose a little less tall will come by and pick them up and 
bring them up so that your questions will not fail to be 
incorporated into any questions we ask.
    The procedures require that this is not a public gathering 
in the sense that questions from the audience be asked, but we 
will incorporate them into our questions if you have any.
    And while someone may be thinking of some, I just have one 
quick comment and then I am going to yield to Juanita and let 
her do most of the heavy lifting on the questions. And that 
really is for comment from Mr. Tambakis.
    I am sorry to mess up a wonderful name.
    I did not receive in my own company an SBA loan, never 
applied for one. But I did receive consulting from the SBA and 
I did receive some low cost advertising and opportunities to 
work on some of the overseas pavilions that 20 years ago were 
being provided, I think still are, where you set up at some of 
the trade shows. And in my case that allowed our company to go 
from $7,000 in start up capital to, with me gone last year, 
doing about $1.3 million, and at one time more than 50 percent 
of my sales were export as a result of the U.S. Government's 
making those opportunities available for me to be known in 
Australia and other areas that would not otherwise, never have 
done it.
    So, I want to thank you for being here today, Paul. And I 
think that is part of the reason that I sought to be on the 
Committee on Small Business. And I think it is also one of the 
reasons that, as Juanita said, it is a very bipartisan 
committee. It is one of the few committees in the Congress 
where it is us on the Committee against the ill-informed the 
rest of the Congress sometimes.
    So, again, I want to thank the panel for being here and 
helping us at least produce some additional information for the 
body of Congress as a whole.
    And with that, I would yield to the ranking member----
    Mr. Tambakis. May I make a quick comment on that?
    Mr. Issa. Please.
    Mr. Tambakis. Yes, we still are in the business of helping 
companies to participate in overseas trade shows and other 
overseas missions, but we are also seeing recently an influx of 
businesses coming from overseas to our shows here in the United 
States and delegations coming from many different countries. 
Last week, in fact, we hosted a delegation from Vietnam and 
China in Orange County.
    So what we are doing, and particular as an assistance to 
the small businesses, is being able to offer them briefings and 
appointment setting at local events right here in the United 
    Mr. Issa. Excellent. Thank you.
    Ms. Millender-McDonald. Thank you so much, Mr. Chairman.
    As you know, in the House when there are congressional 
hearings like this, the majority has to be in the forefront. 
And I think Darrell for allowing me to kind of be in the 
forefront here in my own district and raising questions on 
issues that are critical to us.
    Before I say this, there is a critical issue. The restrooms 
are outside; women to the right, men to the left right outside 
in the corridor.
    And I have asked for coffee and tea to be brought in 
because it is rather cool here, and you might want to do that 
in between panels.
    You have also packets that were given to you that would 
contain mostly all of the testimony which is really the case of 
our having the field hearings and other pertinent information 
in those packets. So if you have not gotten your red folder, 
there is one outside for you.
    Paul, you have raised a question that is so important to my 
constituents. Because as e-commerce comes into further 
awareness, small businesses are very nervous about this 
concept. Because a lot of them really do not understand the 
concept. Secondarily, they do not feel that they are equipped 
to do e-commerce or even exports. With that said, how much of 
an outreach, and I will be asking all of you this because I 
have taken notes and I need to ask, with all of this money that 
is flowing here this panel is the one for access to capital; we 
need to know how we can reach you? What is your outreach 
efforts? Where are you? We do not want you just in Orange 
County, want you just in Ventura County, we want you in LA 
County and we want you in the South Bay.
    South Bay is going to be the engine that drives, sorry to 
say this, sir, but will be the engine that drives the economy 
in California and bring it up.
    Mr. Issa. We will follow along.
    Ms. Millender-McDonald. With the ports after the dredging 
and all of that.
    So, Paul, if you can just tell the constituents and the 
fine business people who have come here, how does one access 
this information? And what degree should business deem itself 
viable to go into exporting?
    And your whole notion on the minority concentration, the 
Global Diversity and Women's Initiatives, we need to know about 
that. Where are you? Where can we access you? Where can we find 
you and how can you come here in this region to give us the 
information that is critically needed as you recruit Southern 
California small businesses for international business?
    Mr. Tambakis. Okay. I think I got most of that.
    First of all, for clarification, in the two years that I 
have been in this position before being the Director for Orange 
County, I have really focused on under served communities. And, 
hence, the opening of the two additional offices out in the 
rural community, but as well we have an office in downtown Los 
Angeles and we also have another office in West Los Angeles.
    Ms. Millender-McDonald. Could we get an address for the one 
in downtown Los Angeles?
    Mr. Tambakis. Yes. It is on Olympic, but I can provide that 
for you. And also you can go to our basic web site. It is 
buyUSA.gov. And you can click on offices and get access to all 
the Southern California offices. It has a map and you can click 
on the office that you want and it will lead you there. It will 
lead you to trade specialists who will talk with you one-on-one 
whether or not the companies comes in the office or we are 
frequently going out 90 percent of the time meeting at the 
company's location.
    Ms. Millender-McDonald. Now, Paul, if a small business does 
not have, regretfully to say, computer hookups or that type of 
thing, they are really just starting out but they do find that 
international trade is something that they want to do, what can 
they do? Because what you are saying might be a little more 
advanced in some of the smaller businesses and maybe we need to 
define what businesses are you looking for in terms of the 
global trade?
    Mr. Tambakis. We are as far as the Global Diversity 
Initiative, we targeted about 135 minority businesses this year 
to work with under this program. And the basic criteria is a 
company that has been in business for one year; that has a 
marketing plan; that whose products are at least 51 percent 
U.S. manufactured. We also work with service companies as well 
including the travel and tourism industry to help bring in 
inbound visitors into the United States.
    And also the program is ideal for the small minority 
business because education is a big component of it where we 
are setting up teleconferences, we are doing a lot of hand 
holding, we are taking the companies to local domestic trade 
shows; doing everything to get them to a level of export 
readiness with our goal of getting them into their first 
overseas market within 12 months.
    Ms. Millender-McDonald. Could the teleconferencing be at 
places like on campus at colleges if, in fact, small businesses 
do not have the wherewithal for teleconferencing? Because I 
have done teleconferencing at Cal State Dominguez Hills on 
other issues. A lot of this, and I am not downplaying any of 
the small business, but a lot of this stuff is Greek to some 
people in terms of how do they access the teleconferencing, how 
do they contact you or you contact them, or just what can be 
done. Because we recognize that this region will be kicked in 
with international trade big time and small businesses must 
play a part in that, but how can they do that?
    Mr. Tambakis. I think Maria Cino is correct when she says 
that the Commercial Service is the best kept secret in 
government, and we are trying to change that. We are trying to 
work with you to help get the word out.
    We are asking you to communicate to your constituents 
through newsletters, through any sort of regular communication 
that you have with them to tell them about the services that we 
have to offer. And then any referrals that come from your 
office, we will definitely follow up with the companies.
    Also, I just wanted to mention that we have webcasts 
available by going on to the commercial service web site.
    And also usatrade.gov is another source for information on 
trade resources of the U.S. Government.
    And these are great programs. They work. If companies come 
to us, we are going to spend time with them, we are going to 
access their level of export readiness, see if they are viable 
for the Global Diversity Initiative, and also there is other 
partner organizations that we work with in the community such 
as the Center for International Trade Development and the Small 
Business Development Centers that are very useful in providing 
education to these companies. And the SCORE Executives, retired 
    Ms. Millender-McDonald. So, Paul, I am going to try to get 
to all of them. Can you tell me, send information to me so that 
I can get it out to the people here in the audience and others 
where and what can, and how can and when can you and I get 
together so you may know small business folks in trying to 
reach the level of Global Diversity Initiative that you are 
talking about?
    Mr. Tambakis. We would love to sit down with you and 
workout a strategy for----
    Ms. Millender-McDonald. Bring the people together again.
    Mr. Tambakis. Exactly.
    Ms. Millender-McDonald. This is just one of many.
    Mr. Tambakis. Whether it is a program we want to do 
together; it is very common that we do that with our 
congressional representatives.
    Ms. Millender-McDonald. Okay. Fine. Thank you.
    Isabel, if I can just quickly ask you, you have given about 
$1 million in loans and leveraged about 4 million. And you have 
reached about 49,000 residents. However, in talking with some 
of my small businesses they think $5,000 and $25,000 is just 
nothing in terms of expanding their businesses or even try to 
survive. What can you tell them in your micro-loan, although 
you are a micro-loan program so I guess this is more geared for 
persons who have home business or what? You know, $5,000 and 
$25,000 just does not cut the mustard.
    Ms. Duran. That is a really good question and I am always 
asked that when I do the orientations about our $500 loan; what 
can you do? And we try to give them a little bit of hope that 
you can use $500 to do research on the business you are going 
to start, you can start creating your marketing materials and 
look for clients. And as you pay back the $500, you can 
graduate up to $1,000 and $2,000.
    Most of them are home based businesses or they partner with 
other business owners in a coop type of a shop. But as they 
graduate up to $5,000, we are requiring more documentation, 
more information, more financial information that they have 
already been trained when they were at 500, 1,000, 2,000.
    Ms. Millender-McDonald. You know, I am thinking about Lulu 
Desserts, because Lulu started in her home.
    Ms. Duran. Right.
    Ms. Millender-McDonald. And that is now a million dollar 
business. We can not shy away from the small numbers that we 
are talking about, but the whole notion of just looking at 
5,000 or 25,000 it has to be kind of geared for then the home 
based business, more or less?
    Ms. Duran. Well you could look at the small shoe repair 
business. You know, they can buy a tiny little office or a 
little space for $500 a month or $1,000 a month, or they share 
that space with a beauty salon.
    Ms. Millender-McDonald. Now anyone who wants to contact you 
for this type of loan, where can we find you? I know where to 
find you, but there are a lot of folks who need to know where 
to find you.
    Ms. Duran. Right. Right. Our web site is www.cfrc.net, but 
our telephone number is 323-233-1900. And we have a toll free 
number. I think it is 866-222-CFRC or 2372.
    Ms. Millender-McDonald. And you are geared, more or less, 
for the home based businesses or those who need to have some 
few improvements?
    Ms. Duran. I specialize in people who are starting small 
business or who are wanting to start a small business. Our loan 
program incorporates a lot of training. So we tell people if 
you stay with our program for at least a year and a half, you 
can become bankable.
    Ms. Millender-McDonald. Okay. For Regina, you spoke about 
the 7(a), 8(a), 504. I am sure most of the people here 
understand the differences between those programs. Is there 
anyone who needs further explanation of those programs out 
there? I do not think so, because you are small business 
    But you spoke about you are unable to expand due to 
perceptions in Washington. What are those perceptions
    Ms. Peterson. First of all, we have always had support from 
our friends at the local SBA office in Glendale. But the 
problem has always been at the central office level.
    The bar is constantly being raised or the last standard 
that was imposed is that as long as the area is making one loan 
per 100,000 population that the area is well served. But if you 
take the same standard and look at what is being accomplished 
up and down the state of California in the northern area and 
then just south of us in the Santa Ana district office as well 
as the San Diego district offices, those offices have a much 
higher 504 loan volume than Los Angeles County does when Los 
Angeles County's population greatly exceeds all of those areas.
    Ms. Millender-McDonald. So what can we do then to alleviate 
this problem that you have?
    Ms. Peterson. I need to have the persons making the 
decision at the national level to take another look at Los 
Angeles County. In my view, Los Angeles County is probably one 
of the last or greatest under served areas in the nation.
    The reasons that we had problems in '65 and '92, some of 
those same problems still exist today. If we were to have 
another problem, we would undergo the same types of problems 
that we had before.
    Ms. Millender-McDonald. So can you then send me a letter 
outlining all of those concerns so that I can pass them on to 
Alberto and pass them on to Bruce, and pass them on to folks 
back in Washington and see what we can do?
    Ms. Peterson. I would be happy to.
    Ms. Millender-McDonald. Yes?
    Mr. Issa. If I could just ask if it also includes, if one 
per 100,000 is a very low bar, give us your suggestions of 
where you think the goal should be? Should it be one in 50,000, 
one in 20,000, one in 10,000? Because I think that also would 
help us in understanding just how far we are away from where 
supporting entrepreneurism we should be.
    Ms. Peterson. Okay. Thank you.
    Ms. Millender-McDonald. Lastly, few people know you said 
that they can qualify for such loans. What is your outreach on 
this? How can you make them further aware of the loans?
    Now, most people can not do loans because they do not have 
the money and the wherewithal to pay it back. What they want 
are grants. And so while you specialize in just loans, no 
    Ms. Peterson. Yes. SBA specializes in loans, and that is 
our focus is to be a partner with the SBA.
    Ms. Millender-McDonald. Well, you know, we have been trying 
to beat up on the Small Business Chairman and all to make more 
grants and less loans. And so we need to beat up on them back 
there, too.
    Mr. Issa. We will surround him when we get back.
    Ms. Millender-McDonald. I know that is right. We will now 
that they know Bruce is here at the helm.
    Colleen, you mentioned----
    Ms. Peterson. Congresswoman, before you go to the next 
person, may I please interrupt?
    Ms. Millender-McDonald. Yes.
    Ms. Peterson. May I have an opportunity to let your 
constituents know how they may contact us?
    Ms. Millender-McDonald. Oh, please. Please. I did not ask 
for that. Yes.
    Ms. Peterson. We are located in downtown Long Beach at 11 
Golden Shore, Suite 630, and that is just a half block south of 
Ocean Boulevard.
    They can also phone us at area code 562-983-7450. Our web 
site address is www.longbeachareacdc.com. Our email address is 
[email protected]
    For business persons, they are welcome to walk in to visit 
us anytime between 8:00 and 5:00 Monday through Friday.
    Ms. Millender-McDonald. Okay.
    Ms. Peterson. If it is more convenient for them to continue 
operating their businesses, then we will be happy to come and 
visit them.
    Ms. Millender-McDonald. Okay. Thank you so much.
    Colleen, you said something that is very critical and you 
said it critical ``Less time, more affordable funding for 
    Ms. Anderson. The process, yes.
    Ms. Millender-McDonald. We need to know what you mean by 
that and what is done to give us less time, more affordable 
answers or the wherewithal.
    And secondly, less paperwork. I think people do not want to 
get bogged down in a lot of application and paperwork.
    And we also want to know about your committee that meets 
monthly to look at how under served communities can be served. 
Who is on that committee from this area? You spoke about all of 
those great folks we know in the Los Angeles area. We need to 
have someone down here looking into our interests.
    And you have loans of $26 billion in small businesses 
commitments in what? FY 2002? FY 2003?
    Ms. Anderson. That is what on the books today.
    Ms. Millender-McDonald. That is what is on the books today?
    Ms. Anderson. Be total commitments.
    Ms. Millender-McDonald. And you have a $16 billion 
commitment. To whom are you going to commit that, be committed 
to, whereabouts?
    Again, your outreach. We do not know about that down here. 
For some reason we get missed down here. Folks think that we 
are wealthy do not need it, but we need it down here like every 
other small business. Help us out.
    Ms. Anderson. Okay. Hold on then, I am trying to write all 
this down. Okay.
    First, the comment on the time and cost of the SBA 7(a). 
Currently, and this is not to be critical this is just, you 
know, we are a 150 year old institution so we have learned from 
our experience. And today when you talk about 7(a) program 
applying for a loan, it is in their own documentation states 
that the average time to complete the paperwork is 12 hours, 
and it is about a 30 page process.
    Is it not, Alberto?
    Mr. Alvarado. It is what?
    Ms. Anderson. Thirty pages?
    Mr. Alvarado. No, I do not think it is quite that long.
    Ms. Anderson. I think it is close. And the point is that 
when you are targeting the really small companies, and a lot of 
the 7(a) customers or borrowers are start ups or companies 
that, you know, small companies that do not qualify for other 
conventional lending, often times these are one or two people 
shops. And, you know, you are HR, you are marketing, you are 
sales, you are bookkeeping, you are accounting, you are ops, 
you are everything. And to be able to invest that much time in 
the process probably causes a lot of companies or business 
owners not to apply.
    I also think some of the guarantee fees for the smaller 
companies may cause some companies not to be able to apply. And 
I think the example is a $250,000 loan request, I think the 
guarantee fees are like $3,750. And our point is not to be 
critical, because we are very good partners with the SBA----
    Ms. Millender-McDonald. Now wait a minute. You say for 
$250,000 loan you have to a $3,000 assessment fee?
    Ms. Anderson. I think the guarantee fee is $3,750. Yes.
    Ms. Millender-McDonald. Heavens to Mergatrode.
    Ms. Anderson. And, again, I don't want to be critical. 
These are our partners. But my point is is that we have learned 
a lot in starting out and doing very conventional underwriting 
and then streamlining our processes where, for example, under 
$100,000 ours, I believe, it is still one page document that 
you can do through the mail, you know, fax, over the Internet 
and in person.
    So the comment was to say we would very much like to take 
our 150 years of experience and partner with the SBA and other 
lenders to see if we can not, not at any incremental risk to 
the program, but streamline the process so that the SBA, the 
private sector lenders and the borrowers and potential 
borrowers would be more likely to apply and be able to afford.
    Ms. Millender-McDonald. Do you ever have just an access to 
capital workshop?
    Ms. Anderson. Sure.
    Ms. Millender-McDonald. When can you do one of those in 
this region? Whenever we ask.
    Ms. Anderson. Anytime you want me to.
    Ms. Millender-McDonald. Okay. Fine. So tomorrow--no.
    Ms. Anderson. We might probably shock you, but we would be 
    Mr. Issa. I think the question is, do you have the room all 
    Ms. Anderson. That is right, it will take all day to do 
    Mr. Issa. No, no. I just thought that immediately following 
the panel at noon, we would just go right into one of your 
opportunities right here. We already have everything set up.
    Ms. Anderson. We would be delighted to do it.
    Ms. Millender-McDonald. Well, we certainly do need to know, 
though, rather swiftly and do want to encourage all of you to 
have conferences right here in this great conference centers 
and conference centers in Long Beach and other parts of the 
37th. People need to see you and people need to see you up 
close. They see you too far away and you do not seem to be a 
tangible item. So we have got to make sure that happens.
    Quickly to Alberto. Alberto, now you know you and I have 
been friends through the last Administration and even before. 
Again, your outreach, you have this money flowing in both the 
Congressman's district and my district, a combination of about 
$39.5 million. Who knows about it? What kind of out reach have 
you given here so that my people will know about it, the people 
of the 37th?
    Mr. Alvarado. First, let me introduce to you my staff----
    Ms. Millender-McDonald. Got to get the mike.
    Mr. Alvarado. Sorry. Our management team and staff, stand 
up for a second.
    Ms. Millender-McDonald. My God.
    Mr. Alvarado. Now, all of these fine men and women have 
money with them. Do not take no for an answer. Close the doors, 
do not let them leave. So they are here, as they often are, 
available today.
    Our web site, sba.gov, is really an award winning web site 
where people can access some very, very good information.
    We have two handouts today. One is a magazine format, all 
of you need to pick one of these up. It has phone numbers, 
information on local centers that have SBA information.
    We also have this handout here. ``You Could Be Next,'' the 
number of businesses that have received assistance in your 
district, Congresswoman with the phone numbers to our staff and 
marketing specialists.
    Let me give you my phone number: 818-552-3201. We have 
money available.
    So, we are working continuously with the organizations, 
with your staff to bring our staff to the community to work 
with the local organizations. Our marketing is clearly very, 
very important.
    Ms. Millender-McDonald. And I think that is the operative 
word, ``our bringing you'' or the statement ``our bringing you 
to them'' on a more frequent basis. We need to just have these 
things through the Federal Register, and all of those other 
things. You just tend to think small businesses are going to 
access that Federal Register when really we need to bring you 
out here so that they can touch you, feel you and talk with 
you. And that is what we are going to do.
    I have three questions quickly, Mr. Chairman.
    One is I am thankful for the government's involvement with 
business development. I believe if government can do it, than 
businesses can do it better. Question: Have you given thought 
to the value of public/private partnerships as a mean of 
developing the California small business community?
    Example, a mentorship program where major corporations 
would lend assistance to small business on all levels from 
start up to sustained growth.
    Any of you, well those of you who can.
    Mr. Alvarado. Well, let me say, Congresswoman, that is a 
tremendous idea. We surely employ that concept. In reaching out 
to communities, for example, we will often ask Wells Fargo and 
other institutions to come and sponsor events in the community. 
We also work with our organizations and successful businesses 
whether they are from our contracts program or loan recipients 
to mentor other firms. So we utilize that synergy of the 
public/private partnerships quite a bit. And that really is a 
way of maximizing some of the limitations in our budgets so 
that we can reach out.
    Ms. Millender-McDonald. So we do have that type of public/
private partnership that we need to bring in here. This is 
another workshop that we need to do and bring in here along 
with Paul, so that together we can have that type of synergy 
    And so the next question is a question by Alfonso C. Webb. 
Now, Alfonso did not have any problems letting you know what 
his question is. Global Internet trade course teacher at King 
Drew Magna School in my district of Watts.
    The World Business Exchange Network and the International 
Trade Association has developed a global Internet trade course 
for students that have been implemented in several high schools 
and elementary schools throughout California. What can 
organizations such as these do to increase the cooperation 
between local manufacturers, politicians and educational 
institutions for the purpose of preparing our youth to make a 
smooth school to career transition? Do any of you have any of 
those programs for this type of need?
    Mr. Tambakis. I think that we should give him an 
opportunity to be involved in our seminar that we are planning 
    Ms. Millender-McDonald. Okay. So----
    Mr. Tambakis. And that sounds like a gentleman Reggie 
Robbie that I have before here in the Los Angeles area who also 
has similar programs. I think it is excellent to get the youth 
involved in understanding international trade and, you know, 
transitioning them up the career ladder.
    And I do want to mention that for those students that do 
make it to the university level, we have some great entrantship 
programs available at the Commercial Service office's locally 
where the students come in and work basically on a volunteer 
basis, but they earn college credit. And it is an excellent 
vehicle to----
    Ms. Millender-McDonald. I need to get that information 
right away, because we have really the CAMS program on the 
campus of Dominguez Hills, these students, 98 percent of them 
go to the ivy league schools. Also the Charles Drew Magnet 
School for math and science; these kids are our brightest and 
best. I want to get that internship information.
    The last question: Will any money or is there any money 
currently to assist business owners in continuing their 
education at universities, junior colleges or trade schools? 
Are there any loans or grants for this specific reason?
    I believe that we would agree that growing as a business 
person is just as important as expanding the business itself. 
Thank you. And this is Danny Bayone. Promote this.
    Mr. Alvarado. We have an Executive Education Program, for 
our 8(a) firms, our procurement firms. It's in my written 
testimony, Pacific Harness in Lynwood, one of your firms, was 
selected last year for example for the Executive Education 
Program at Clark Atlanta University. And that is a program that 
we make available, continuing education. We find that, 
obviously, management is a very, very significant issue for a 
lot of our small businesses who maybe very good technicians but 
often lack in management type skills.
    Ms. Millender-McDonald. But you know what, Alberto? And 
that is great, because you talked about one of the HBCUs, and 
that is critically needed. But we need to have something that's 
closer here that we can utilize.
    And once you do one business, it appears to me, and I guess 
it gets back to what Regina was saying, you think that is the 
top of it all when we need several of these programs and 
several businesses coming into play so that we can then expand 
this whole notion of entrepreneurialship, creating wealth, if 
you will, to the extent of wealth. But you must put this 
information in the hands of more people in California, in this 
    South Bay has been neglected. I can see that with an 
assessment that I have done. Because people just think that we 
have made it. No, we have not. We need the same type of 
programs that you have, the same type of support that we do 
right here in this region as in all other regions.
    Mr. Alvarado. Let me just state, and I think that is very 
valid, and we are going to pursue that. Through our SBDC 
program we also provide a lot of direct technical assistance. 
Many of those programs done in conjunction with local 
universities, Southwest Community College, for example. And we 
find that that's another very, very vital source of direct 
training to our businesses.
    Ms. Millender-McDonald. And Southwest Community College is 
a great college. I know its President. But we also have great 
colleges such as Compton College, Harbor College, Long Beach 
City College. We have got to come further into this region and 
promote it. Because you know what? This is the engine that is 
going to kick it up for California.
    Thank you so much, Mr. Chairman.
    Mr. Issa. Juanita, I know you could see me posed at the 
    Ms. Millender-McDonald. I know.
    Mr. Issa. I want to thank the panel for this in depth 
discussion. I think you have enlightened us a great deal. And, 
hopefully, as you are thinking back on what you have said here 
today, more things will come to mind. Please feel free to 
include them in correspondence.
    I am going to ask in closing both panels, but this panel 
right now, I have one pet project. And I do not think that a 
Chairman should use pet projects at a time like this to ask in 
depth questions, but I have had a couple of companies within my 
own Congressional District who have bid for what I call 
``beltway bandit jobs,'' jobs which, they are small businesses, 
they bid for them and they somehow come up just a little short 
even though they are priced the same amount because either they 
(a) do not have the experience, which is a way of saying you 
are not the existing inside the beltway known entity. 
Especially a lot of these are consulting, although some are 
product. Or (2) it would be more expensive to go all the way 
out here versus a closer to the source type contract.
    As each of you deal with companies, at anytime now or in 
the future, I would appreciate it if you run into similar 
situations in which, when dealing with the government, somehow 
a company is disadvantaged because they are small and they can 
not get unbundled, the contract, or because they're determined 
not to have the experience even though their product or service 
may be equal, and lastly any kind of a hint of a geographic 
skew toward the sourcing agency's point. Because in this day 
and age I am a believer that at least within the continent of 
the United States we should not assume that geographic distance 
should make any difference at all, other than shipping cost, in 
our ability to look for sources. And as a Californian, I am 
acutely aware, as is Juanita, of how far we are from 
Washington, D.C.
    So as those occur now or in the future, I would appreciate 
it if you would just drop my office a line and we will follow 
up wherever the person is, even if they are not a constituent. 
Because this is I think on an ongoing basis this Committee 
needs to dedicate itself to making sure it no longer happens in 
government procurement.
    And with that, I want to thank you all for your 
    Ms. Millender-McDonald. Thank you so much.
    Mr. Issa. And as Congresswoman Millender-McDonald has said, 
the coffee has arrived. We are going to take the fastest break 
you can imagine to get the next panel up, but if you want to 
get your coffee while we are getting them up, we would 
appreciate it.
    Mr. Issa. If we can get started now.
    And since you all sat patiently through the earlier 
session, you kind of know we are going to do this informally. 
We are going to be a little quicker in the second session, but 
I want to make sure we get all your testimony in and then an 
opportunity for a little bit of questioning, which means we 
will run late, but we will be as quick as we can. And I would 
only ask that you understand that our lateness is causing you 
to rush you a little bit, but trust me, we will make sure that 
no one fails to get their word out.
    I'll try to introduce because there has been a lot of 
changes here. But Rolina Brown is the Regional Director of the 
Small Business Development Center.
    Mr. Phil Borden is the Women's Enterprise Development 
Corporation. You are the Executive Director.
    And then flipping this around, Pat Unangst is Workforce 
Investment Network, and you are the ED there. Executive 
    And last, and not least, is Phyllis Venable. And Phyllis is 
not titled. What do you do there? I am sorry. You are a 
wonderful substitution. We are glad to have you. What do you 
do? You are the--pull the mike closer. Here is a chance to toot 
your own horn.


    Ms. Venable. Okay. I'm the Business Development Officer for 
the City of Long Beach, and I am representing the city and the 
Small Business Council, Chamber, today.
    Mr. Issa. Excellent. So there is an outreach from public/
private right now just as we asked for in the last session.
    And since we are doing the panel in reverse, back and forth 
order, Phyllis why don't we start with you and we will go this 
    It is for a little bit.
    Ms. Venable. My name is Phyllis Moore Venable and I am the 
Business Development Officer for the City of Long Beach. I am 
representing the city today and the Chamber of Commerce.
    And recognizing that this is a technical assistance panel, 
I do want to start out by saying in my experience the most 
pressing problem facing small businesses today, whether they be 
minority businesses or disadvantaged businesses or women owned 
businesses is the access to capital. And I have to say that a 
business can be technically tight in every single way, but if 
they cannot get the money to do the things that they need to 
do, then they still have not arrived.
    So I would like to address in my testimony some of the ways 
that I feel that government can impact on this problem in a 
positive way, this access to capital problem.
    You know, small businesses had a tremendous impact on life 
in Southern California in a most profound way. Sixty percent of 
all businesses in Los Angeles County are classified small 
businesses, but what they deliver in terms of economic impact 
is no small business. They are vital to our economy. Small 
businesses often provide people with their first jobs. They 
lead the way in on-the-job training opportunities for workforce 
development. They generate big taxes. And making small business 
healthy should be at the top of our economic development list.
    Of course, now, we have a lot of businesses that are in 
trouble. We had severe economic downturns in 1990s and now we 
are faced with the recent economic issues related to the 
terrorism of September 11, 2001.
    On top of this the recent trend in bank mergers has created 
a very conservative lending market almost exclusively for 
businesses with strong equity contributions and long histories 
of positive cash flow. These conditions definitely do not favor 
small businesses, many of which are credit worthy but cannot 
meet the strict lending criteria of commercial banks, 
notwithstanding the fact, mind you, that such businesses on the 
average last longer, collectively employ more people and repay 
bank loans faster.
    And women owned businesses are especially hard hit. Women 
entrepreneurs earn about three-quarters as much as male 
entrepreneurs and their businesses tend to be smaller. They 
lack then in the accumulation of assets and have special 
difficulty in getting equity financing.
    What can we do about this? I have put together a seven 
point plan which I feel are things that government can do to 
begin the journey towards recognizing this severely undervalued 
resource, small businesses.
    Number one, we need to improve and coordinate alternate 
financing resources for small businesses. We need to 
aggressively seek and procure funding of public and nonprofit 
lenders who can create favorable lending environments for small 
    Two, we need to toughen CRA and fair lending and other 
lending requirements. We need to put more pressure on merging 
banks to force them to commit to lending programs for credit-
worthy small businesses.
    Three, we need to raise the profile of smaller community 
lenders. These banks are more likely to respond to local market 
conditions to cultivate closer relationship with customers. 
They utilize credit scoring less and personal banking more. And 
they need help in accessing their local markets and improving 
marketing and outreach.
    Four, we need to strengthen private micro-enterprise 
programs. And as much as I loved my private enterprise program 
that we operate in the city of Long Beach, it takes too long to 
get money out the door and we encumbered by a lot of 
regulations and red tape. We need to put this more in the 
private market.
    One, two, three, four, five. We need to increase support 
for training and technical assistance. Small business persons 
are most likely to use these resources. The training and the 
counseling will help to bridge the gap between where they are 
now and where they need to become, which is ultimately more 
    We need modal youth entrepreneurial training programs. We 
need to concentrate these programs less on creating businesses 
and more on teaching life skills, instilling confidence and 
esteem in our youth so that when they become adults, they will 
perhaps become entrepreneurs as well.
    And lastly, we need encourage more small business 
gatekeepers in our financial institutions. We need more people, 
more women, more minorities who understand the plight of small 
businesses and can help bring about the changes necessary to 
create a sensitive lending environment.
    Let me just end by saying that the growth in small business 
activity has to be accompanied by a growth in sophistication, 
in management ability, in training and in access. We need to 
positively demonstrate how big impacts can follow from taking 
significant small little steps that give them the opportunity 
for many small entities.
    Thank you for the opportunity to testify.
    [Ms. Venable's statement may be found in appendix.]
    Mr. Issa. Thank you.
    Our next panelist is Patricia Unangst.

                       INVESTMENT NETWORK

    Ms. Unangst. Thank you for inviting me today. My name is 
Patricia Unangst, I'm the Executive Director of the Carson/
    Ms. Millender-Mcdonald. Excuse me. Can you hear in back? 
Can you bring it closer.
    Ms. Operator in the booth, can you raise it a little bit, 
the volume.
    Ms. Unangst. I am the Executive Director of the Carson/
Lomita/Torrance Workforce Investment Network Board, formerly 
known as the Private Industry Council. We operate programs as a 
public/private partnership with business and local elected 
    In fact, Congresswoman McDonald served as a City of Carson 
City Council policy board member in our initial public/private 
partnership back in the early '80s, and in fact appointed our 
incoming chair, Richard Cook, who is here in the audience 
today. And we are very grateful for that appointment.
    He, by the way, is a small business person. Our current 
chair is a small business person. So we have strong emphasis on 
getting small business together with the training 
opportunities. And I am glad Phyllis talked about training, 
because that is of course the core competency of what we do.
    I wanted to mention, and I had this on the back table, but 
one of the other speakers today is the Small Business 
Development Center Regional folks, and we opened in the city of 
Carson right next door to this facility a Small Business 
Resource Center so that small businesses can have access five 
days a week including Thursday nights to a series of resources, 
as well as online resources necessary to make their businesses 
    We operate three WorkSource Centers. WorkSource is a new 
name. You will be seeing this in and around the LA area. I do 
not know if it will make it down to Orange County unless the 
buses run through there. But WorkSource Centers are the new 
name for the one-stop career centers, and it is in partnership 
with the city and county of LA.
    One of the issues facing small businesses, of course, is 
the definition. When you go on the SBA web site there is about 
77 definitions of small business. And in looking at that 
virtually everybody can qualify. But locally we had some 
statistics from the state employment service and it indicated 
that 92.9 percent of the businesses in our service area employ 
less than 50 people. 69.4 percent have less than ten. 
Furthermore, the U.S. Census says that countywide in Los 
Angeles four out of ten of LA county small companies are 
minority owned.
    So the impacts are great. They drive our local economy and 
create the majority of jobs, as Phyllis just said.
    The Workforce Investment Boards are your vehicle, Congress' 
vehicle to put the public/private partnership together; 
education, business, labor, so on, to strength the role of 
business and guiding our local job training programs. The Board 
has a business majority. We have 34 members, 20 of which are 
business. So it's greater than 50 percent, half of those are 
small business.
    We are working on the branding concept so that people can 
find us. One of the things you know in government programs is 
we often speak governmentese, and in doing so we often do not 
communicate with the customers we are very much trying to 
    Recently the eight Los Angeles area Workforce Boards along 
with the County Department of Social Services and the state Job 
Service joined together to create this branding of the 
WorkSource Center in a marketing campaign. It will be going on 
between now and the end of May.
    We need to speak the language the business. We need to 
create one-stop-shopping. Small business in particular cannot 
afford to go from place to place to look for resources. They 
need a place they can go.
    We established a job developers network in the South Bay 
which actually includes parts of Long Beach and up through the 
LA airport area that has over 20 agencies that meet on a 
regular basis so that only one time a business members needs to 
have a call. And only one time they have to build a 
relationship, but then they have access to the services of 20 
agencies, 20 plus.
    The key to success of this network is building the 
relationships amongst the individuals and building that trust. 
If they do not trust, they do not share information and things 
do not happen.
    We also conduct a lot of business roundtables and industry 
cluster sessions. Just recently last week we had two small 
aerospace suppliers in our offices talking to a variety of 
these folks that are job developers about the needs of the 
aerospace industry. We are also going to do communications and 
transportation industry. We are hoping to add petrochemical 
because it is so large in our jurisdiction.
    Our Board remains active in various business organizations. 
We are a partner in the South Bay Economic Development 
Partnership. We are on several Chamber boards. And we play a 
lead role in the Regional Business Assistance Network which is 
part of the Los Angeles Economic Development Corporation. We're 
members of PHRA, the Human Resource Association, etcetera.
    Probably one of the biggest needs of small business is that 
of recruiting and retaining qualified workers. This is where we 
can play the most pivotal role. Those workers are important to 
the success of the business.
    Small businesses do not have human resource departments. 
They need assistance with dealing with hiring needs, labor laws 
and training. A single bad hiring decision has a proportionally 
greater impact on a small business than a large business.
    We can assist with screening applicants, providing the 
resources, providing the place to do the interviews. What do 
not seem widely known is that that resource is available to 
small and large business. The large businesses seem to be able 
to find us, but we can provide that service.
    It was spoken about earlier, and Phyllis reiterated it, 
access to capital the number one issue followed by the 
qualified workers. As you have heard, it is increasingly more 
difficult to access.
    One of the suggestions we wanted to make is particularly in 
the area of cultural awareness many of the entrepreneurs in the 
South Bay area are not native born. They need materials and 
folks in the institutions that speak their native languages. 
They need to be able to communicate with them, not just in the 
language of business, but in their own tongue. Banks needs to 
look at materials that outreach that audience in the light of 
the ever changing marketplace.
    We have had good relationships recently, Community 
Financial Resource Center. They conduct regular business 
workshops since January of 2001 at our Harbor WorkSource Center 
every third Thursday of the month. They are designed to help 
businesses run more smoothly. They also run computer workshops. 
I will talk about that in a few minutes.
    WiN Business Services also works with Wells Fargo Bank. We 
have put on a workshop with a local employment lawyer on 
growing your own business along with the bank, and we are going 
to add an insurance company for the next session on taking your 
business to the next level.
    We create a lot of our outreach efforts through business 
    Mr. Issa. I am going to have to ask you to sort of wrap up 
and then we will get to Q&A.
    Ms. Venable. Okay.
    Mr. Issa. And as I said to the first panel, your entire 
written statements plus anything you choose to summarize or to 
supplement for the next five days will be incorporated into the 
official report. Thank you.
    Ms. Venable. Okay. I just want to say something on access 
to technology. This is an area that small businesses often are 
most disadvantageous in. They do not have in-house technical 
advisors, they do not have IT departments. One of the things 
that both CFRC and ourselves do is we offer free classes in 
computer and in more advanced classes, as well as access to the 
regular classes at colleges and so on.
    We want to provide small business with advice. They are the 
backbone of our economy, but the challenges they face are 
daunting. Working together as partners, local organizations and 
federal agencies can help provide businesses with information 
and resources to succeed.
    Thank you for this opportunity.
    [Ms. Unangst's statement may be found in appendix.]
    Mr. Issa. Thank you.
    Please, Phil.


    Mr. Borden. It was initially not my intention to talk about 
my organization, but let me give the one minute speech about 
    Since 1991 Women's Enterprise Development Corporation has 
been a feature of the Southern California landscape. We have 
touched the lives of 18,000 clients. We have helped start 1700 
businesses, generating an enormous impact on the tax base and 
on the employment of Southern California. If we set aside the 
large businesses that we have started and focus on our bread 
and butter, which is very small businesses, they contribute 
about $10 million a year to the tax base each year, and we grow 
that by about a million dollars a year.
    Eighty-two percent of our clients are people of color and 
ethnicity, 75 percent are women. We teach in five languages. So 
we address some of the problems that Pat has talked about. We 
teach in English, Spanish, Khmer, Chinese and Korean, and we 
are in the process of adding Vietnamese and Armenian. That 
question of addressing minorities in their language and recent 
immigrants in their own language is very critical to us.
    Sixty-five percent of our money comes from federal 
contracts of one sort or another, and we have four SBA 
contracts. I will not bore you with them, but I was 
particularly alarmed when Congressman Millender-McDonald talked 
about the cancellation of the BusinessLinc program. That is a 
mentoring program. We have 2200 people signed up and we are 
teaching them technology and them how to deal directly with 
large companies through supply chain management software and 
software that has been developed under this program. To have 
that canceled before a year is out is a tragedy because there 
will be no chance to access the virtues and vices of the 
    Now to my testimony. My written testimony is a detailed 
argument for addressing the following policy issues: The need 
for improved methods of communication between potential users 
and suppliers of technical assistance and the need for 
streamlining the funding and bettering the reporting processes 
for government technical assistance projects.
    I have heard a lot about access to capital. Phyllis and I 
certainly have been on the same page, and I thank her for 
giving the statistics. Although getting money is never easy, 
the problem for small business often is where to find it, how 
to get it and most important, how to use it well. Knowledge and 
experience together with money are what capitalize a business.
    With a loan in hand but no technical assistance when they 
need it, small and minority owned businesses simply spend 
themselves into penury at a faster clip.
    In the written statement I surveyed the massive complexity 
of types and delivery methods of technical assistance and 
furnished a list of technical service providers in the LA area, 
more or less off the top of my head. After excluding all by the 
most narrowly defined types using government dollars, I reached 
60 and simply stopped. Technical assistance is a big industry.
    This morning I would like to focus on two key problems that 
plague the technical service industry and the clients it seeks 
to serve.
    Number one, the welter of government sponsored programs is 
wildly confusing from WMBEs in need. And number two, the 
funding priorities and reporting requirements of government 
agencies cripple providers who are seeking to help the WMBEs.
    In making my list I began with the Women's Business Center 
Program sponsored by SBA, WEDC runs two in the area. Depending 
on how you define Southern California, the state and SBA also 
fund 14 SBDCs, the Department of Commerce adds five, MBDCs the 
city of Los Angeles four major programs on at least 20 sites. 
Two county programs add six sites, two programs network other 
business technical service providers on at least 7 sites, and 
on and on. I have not counted workforce, or housing, or faith 
based technical assistance programs, or those sponsored by BIDs 
or the area's 91 chambers or the Economic Development 
Departments at 83 cities in the county. They would add another 
300 or so entries. And if we include Internet based services, 
it increases ten fold again.
    Each of these has a geographic base, though most can 
operate outside of it. No two government agencies use the same 
geographic definitions, no two government agencies use the same 
definitions of small business. How can a client seeking help 
find the right technical assistance for her or his business 
    The answer is that often they can't. The system of 
competing jurisdictions and programs, and shrinking and 
uncertain funding like BusinessLinc create information 
overload, competition among entities that should be 
collaborating; and confusion, distraction and inaccessibility 
for those who need the services.
    The other part of the difficulty is that small businesses 
lack the time and personnel to attend multiple meetings, 
workshops, seminars and so forth of uncertain business value.
    In the written statement I propose more local and direct 
delivery of service referrals routed through local elected 
officials' offices. This approach addresses some of the 
outreach issues. I suggest a model for doing so and the 
training needed plus the benefits for the sponsoring office.
    Local business people think locally, because that is how 
and where they do business and because local thinking and 
action fits their sense of time. They call their elected 
representatives at every level for help. If city council, 
supervisorial, and/or state and federal legislative offices 
were to take on a leadership role in attracting such calls, 
then directing the callers to the right place, a great deal of 
confusion could be eliminated. And I'd be glad to talk about 
that in detail.
    [Mr. Borden's statement may be found in appendix.]
    Mr. Issa. Thank you.
    And we appreciate that the remainder of your testimony be 
placed in the record, and we hope that we can follow up in 
detail during the Q&A.
    Ms. Brown, please?

                       DEVELOPMENT CENTER

    Ms. Brown. Good afternoon. First of all, welcome back, 
welcome home.
    I am Rolina Brown, and I am the Assistant State Director 
for the California Small Business Development Center Program 
also known as the SBDC Program. And I am honored to represented 
the Small Business Development Center Program Network. We 
believe that we are the nation's largest consulting and 
training group.
    I am pleased to have opportunity to appear to discuss 
problems facing Southern California small business owners and 
their needs in the current economy. I was especially pleased 
that your invitation seeks to understand the challenges of 
minority owned firms, especially in light of the recent 
economic downturn. As you are already aware, minority owned 
firms are the fastest growing segment of business owners in the 
nation. Minority owned firms are surpassing the growth rates of 
U.S. businesses growing at a rate sometimes six times the 
growth rate of all other firms.
    The SBDC Network is broad band service delivery network 
designed to make a significant strategic investment in building 
and enhancing local communities. I am pleased to say that we 
are partners with each of the representatives here.
    The California SBDC's mission to provide quality management 
and technical assistance to existing and potential small 
businesses resulting in the success of the entrepreneur, 
sustainable economic growth and prosperity for all 
    We accomplish our missions by providing direct customer 
focused services. We maintain a highly dedicated flexible, 
diverse and enthusiastic professional and experienced staff. 
And we act as a catalyst for a sustainable economic development 
by responding to local needs.
    I am the representative for Santa Ana and the Los Angeles 
SBA districts. We build collaborative partnerships and we and 
we leverage resources through fundings through our match 
    By virtue of the size, obviously the significant part of 
the California SBDC program delivery system is here in Southern 
California. Of course, naturally it is my opinion that the SBDC 
Network leads the nation in finance innovation and there is no 
doubt, as Mr. Alvarado has testified, that the SBDC Network in 
Los Angeles leads the nation in access to capital.
    After having said that, I am also keenly aware of the 
challenges that small business owners face in accessing capital 
and the challenge that they face in who to approach and where 
to go for necessary capital to just get their business started.
    In our findings and our evaluation and research I find that 
the barriers to the growth of California small businesses, and 
in particular minority owned businesses, is access to capital, 
business assistance and support such as strategic planning and 
marketing, effective utilization of technology, access to 
markets outside of their traditional areas and participation in 
social and business networks. Given that small businesses 
heavily rely on credit to facilitate the growth, the California 
SBDC Network has taken a leading role to create a bridge 
between the small owners and access to capital. Here in Los 
Angeles in particular we have a wonderful track record of 
helping small businesses. We've created an innovative program 
called the Rover Program which is widely respected around the 
nation. This program is dedicated to sending experienced 
business developers to address the needs of small businesses to 
their place of business.
    Access to capital remains, however, the number one problem 
in the region for most minorities, and in particular African-
American businesses especially when it's related to race and 
other ethnic groups. The Rover program has increased capital to 
all minority owned businesses and African-Americans. However, 
in a partnership with the University of Southern California, 
the Southern California region partnered with the Harvard 
Business School and the Competitive Inner City initiative to 
take a closer look at minority owned businesses and to develop 
an action plan to deal with the issues of limited equity 
capital, asset pledges, uncertain earning streams and other 
barriers to minority credit accessibility.
    The initiative will also deliver specialized assistance to 
help smaller businesses gain the capital that they need to 
establish and grow their business, and to overcome the 
challenges that face minorities and women owned businesses in 
the inner city. The project will host a capital access team. 
This team will not only provide technical assistance to small 
businesses, but they will also educate banks and communities to 
help them understand the credit needs of an availability of 
capital to small businesses.
    The Southern California SBDC program will employ a new 
finance technology system which is designed to speed the 
process for loan applications by tracking the loan flow of 
documentation, business assistance and loan review. This data 
should help us understand the system better, and to understand 
the credit activities and the impacts on small businesses.
    We believe that the outcome of this initiative will help us 
frame the debate on how we can all provide new age solutions to 
small business and, in particular, minority owned businesses. 
We also believe that the combination of these programs can help 
Southern California small businesses access capital and secure 
the resources that they need.
    We're very proud of our relationship with the SBA, and in 
particular with our SBA district office in Los Angeles who is 
the holder of two prestigious awards and the nation's leader in 
    We are also particularly proud that the Santa Ana SBA 
district hosts the nation's only venture capital technical 
assistance center. The Tech Coast SBDC is located in Irvine and 
provides resources to support early stage and start up 
businesses. The Tech Coast SBDC produces an annual funding 
directory and resource guide that is considered a source for 
emerging growth companies and advisers.
    We also have a Diamond Venture Forum, and we have multiple 
access to capital venues in Santa Ana, and weekly access to 
capital activities in Los Angeles County.
    We understand the challenges that we have heard today about 
access and outreach, and we have come up with a strategy to 
create community based relationships by establishing branch 
offices. And I noticed Cook Snew happens to be here from API 
and is also one of our branch office locations.
    We also have a relationship with Women's Inc. We are 
establishing a new cultural arts and entertainment SBDC program 
which will focus on an industry that is often overlooked.
    This has just brought a few of the activities that the 
California SBDC program, and in particular the Southern 
California SBDC program are doing to deal with the issues of 
small business development, technical assistance and access.
    I want to call to your attention as I conclude, the vast 
size of the counties that we serve in Southern California. And 
if you take Los Angeles County and you take Orange County, you 
will be looking at the largest concentration of minority owned 
businesses, yet we have eight SBDC centers hosted to provide 
the services. And while our partnerships are leverage and we 
have community based relationships, we have to become more 
innovative in the ways that we approach these businesses. It is 
for that reason that we have established a toll free line, 1-
866-You Ask SBDC as a central point of contact for small 
business owners seeking not only the assistance of the SBDC 
program, but technical assistance in Southern California.
    And during Small Business Week we will launch a new portal 
askSBDC.com. AskSBDC.com will not only provide technical 
assistance and online training, but chat rooms and forums for 
small business. We are particularly happy that the askSBDC.com 
will have a digital commerce solution which will allow small 
business owners to create webpages, have e-mails, shopping 
charts online at reduced or virtually no cost. Most minority 
small businesses have Internet access, however few have active 
sites that allow them to transact businesses on line.
    In closing, I would like to give you an idea of the impact 
that the Southern California SBDC program had on its districts 
in the last year. Eight of the SBDCs contributed to the 
creation of 676 jobs. $31,367 in sales. $24,414 in financing of 
which $20 million was SBA financing.
    The California SBDC program is a whole, we operate as a 
network, created 3,778 jobs, retained 5,295 and increased sales 
by $115 million.
    Mr. Issa. Ms. Brown.
    Ms. Brown. Yes.
    Mr. Issa. I am afraid I am going to have to ask you to put 
the remainder into your written statement. It will be retained 
for the record.
    Ms. Brown. Thank you.
    [Ms. Brown's statement may be found in appendix.]
    Mr. Issa. Thank you.
    Well, first of all, I want to thank you again for all 
coming. And as I did with the first panel, I want to limit my 
comments since the Congresswoman's district is here and I am a 
visitor, and I appreciate the opportunity to be in this 
district, but I think a lot of the issues are very much germane 
to this area and I want to concentrate the time on her 
    The two things I want to do before yielding, first of all, 
is to ask all of you as I asked the first panel, if you come in 
contact with access to government contracts being denied either 
because of bundling, prohibitively large for your companies 
even though they have the ability to perform some significant 
portion of the contract, or what I earlier described as the 
beltway mentality of ``Gee, we have a company that has already 
done it and they are much closer to Washington, DC.'' For all 
of us as Californians I think we need to point up those 
examples as they occur. Some people in the audience had already 
brought me some of those during the break, so hopefully we will 
continue to accumulate that and that will be the subject of 
another hearing and, hopefully, some efforts in Washington.
    And the lastly, Mr. Borden, I wanted to thank you. Your 
testimony went out of its way to describe something that I 
think is very important, and that is the inability to manage 
limited capital that most start up companies have. Having been 
a micro-business, if $7,000 is micro and 20 years ago I guess 
it was bigger than it is today, but it is still small. I 
recognized that in those days one mistake could kill my 
business. Well, a little bit of luck and sound capital 
management was the difference between success and failure. And 
so I appreciate not only your statements, but also the fact 
that you participate in trying to train start up companies to 
understand that access to capital is important, but then it 
takes a lot more capital if you misuse it. And there is not 
enough capital for any company. To use a current example, Enron 
had an incredible amount of capital but if one misuses capital, 
there is not enough money in the whole world and in the piggy 
bank in Washington to support mismanagement at any level. So, I 
want to thank you for pointing that out.
    And with that, I will yield to the gentlelady from the 37th 
Congressional District.
    Ms. Millender-McDonald. Both of us from California. I tell 
you, it has been a remarkable day with you being here with us 
in the 37th. Thank you so much. You are welcome at anytime. Not 
too often, though.
    Mr. Issa. No.
    Ms. Millender-McDonald. Just kidding. Just kidding. He's my 
    Mr. Issa. You can come to Camp Pendleton.
    Ms. Millender-McDonald. Oh, that's right. Absolutely.
    Let me acknowledge some representatives here representing 
some of our colleagues.
    Bobbie Blanks is the field director for Congresswoman 
Maxine Waters, who is here. Thank you so much for being here.
    Mr. Issa. Just stand up.
    Ms. Millender-McDonald. And thank the Congresswoman for 
allowing you to come here today.
    Lanny Saunders, the administrative assistant to 
Congresswoman Diane Watson. Please stand, Lanny, so that we can 
see you. Tell the Congresswoman as well thank you.
    We have mayor pro tem of the city of Gardenia, Steve 
Bradford who was here, perhaps stepped out for a--oh, there he 
is. Very good. Thank you, Steve, for being here.
    Mr. Basil Kimbre, the Vice President of Compton Unified 
School District perhaps may be out there in the foyer.
    And Eric Lee who is the chief executive officer to Lynwood 
Chamber of Commerce. If he is not here, they are all outside.
    I see my dear friend sweet Alice who has come in from the 
Watts area, Parents of Watts. It is good to see you here.
    I think you have all touched on it; knowledge, experience, 
capital all elements of a thriving small business. I cannot say 
enough for Pat Unangst when she said there are 77 definitions 
of small business. We are also grappling with that in 
Washington and we need to revisit that issue.
    One-stop-shopping or development centers are critical to 
small businesses. They cannot hop around and try to find the 
resources and knowledge and all of that that we have.
    I am happy to say that Bruce Thompson is still the head of 
our SBA is still in the audience with us, as well as Alberto 
Alvarado who is our Executive Director or Director. I might be 
giving some titles, but that is okay. I will talk with the 
President and make sure all of this happens. But, anyway----
    Mr. Issa. Between the two of you you certainly are the 
``go-to's'' for the state, and we appreciate you being here 
    Ms. Millender-McDonald. And I think with Rolina Brown, all 
of you are still here. You have heard the expert witnesses talk 
about the need and the needs of small businesses, so we won't 
belabor that any longer. I would just like to chitchat with all 
of you so that we can make things happen for small businesses.
    Rolina, you are talking about all the time teams, and LA 
teams and LA County. You did not say anything about Long Beach, 
Carson, other places. We have got to talk to you about that.
    Ms. Brown. Well, no, no, no.
    Ms. Millender-McDonald. Got to come to South Bay.
    Ms. Brown. You are heavily represented in South Bay.
    Ms. Millender-McDonald. Then you must tell me where you 
    Ms. Brown. Actually Jim Treat is here and I will allow Jim 
to respond.
    Ms. Millender-McDonald. Okay. Jim, we are going to have to 
talk with you. We are actually in Carson and Long Beach?
    Ms. Brown. Right.
    Ms. Millender-McDonald. Well, okay, fine. Pat is one of 
    Ms. Brown. Right.
    Ms. Millender-McDonald. Okay. Fine. Well, Pat changed names 
and so she changed a lot of other things going on, but to the 
betterment, I might add.
    Let me just say thank you.
    The time was to be from 10:00 to 12:00. This great man has 
overstayed the time because he has other things in his district 
that he must attend to. We are here only for a week, a week and 
a half and we are trying to cover the waterfront.
    And so I just wanted to say thank you to all of you. I will 
be in touch with you getting to know you better as we continue 
to move workshops in this area and in the district to enhance 
small businesses.
    Again, thank you to the staff from Washington who has come 
in. Now you know the tremendous task we have of flying in every 
weekend. You should appreciate us more.
    Thank you to my district office staff. They were tremendous 
in getting such a great crowd out today.
    And with that, I will yield back to the chairman to close 
it out.
    Mr. Issa. Thank you.
    And one last request. If the members from the government 
side of SBA would please stand for a moment if you are still 
here. We still have them.
    For all of you in the business community, we have this hall 
for another hour. If you want to get them before they go out 
the door, I would ask that you give them your card or get their 
card. Because this is also a networking opportunity.
    And with that, this hearing is adjourned. Thank you.
    [Whereupon, at 12:25 p.m., the subcommittee adjourned 
subject to the call of the Chair.]