[House Hearing, 108 Congress]
[From the U.S. Government Publishing Office]




          WOMEN'S ENTREPRENEURSHIP: SUCCESSES AND CHALLENGES

=======================================================================

                                HEARING

                               before the

                      COMMITTEE ON SMALL BUSINESS
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED EIGHTH CONGRESS

                             SECOND SESSION

                               __________

                      WASHINGTON, DC, MAY 12, 2004

                               __________

                           Serial No. 108-64

                               __________

         Printed for the use of the Committee on Small Business


 Available via the World Wide Web: http://www.access.gpo.gov/congress/
                                 house


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                      COMMITTEE ON SMALL BUSINESS

                 DONALD A. MANZULLO, Illinois, Chairman

ROSCOE BARTLETT, Maryland, Vice      NYDIA VELAZQUEZ, New York
Chairman                             JUANITA MILLENDER-McDONALD,
SUE KELLY, New York                    California
STEVE CHABOT, Ohio                   TOM UDALL, New Mexico
PATRICK J. TOOMEY, Pennsylvania      FRANK BALLANCE, North Carolina
JIM DeMINT, South Carolina           ENI FALEOMAVAEGA, American Samoa
SAM GRAVES, Missouri                 DONNA CHRISTENSEN, Virgin Islands
EDWARD SCHROCK, Virginia             DANNY DAVIS, Illinois
TODD AKIN, Missouri                  GRACE NAPOLITANO, California
SHELLEY MOORE CAPITO, West Virginia  ANIBAL ACEVEDO-VILA, Puerto Rico
BILL SHUSTER, Pennsylvania           ED CASE, Hawaii
MARILYN MUSGRAVE, Colorado           MADELEINE BORDALLO, Guam
TRENT FRANKS, Arizona                DENISE MAJETTE, Georgia
JIM GERLACH, Pennsylvania            JIM MARSHALL, Georgia
JEB BRADLEY, New Hampshire           MICHAEL MICHAUD, Maine
BOB BEAUPREZ, Colorado               LINDA SANCHEZ, California
CHRIS CHOCOLA, Indiana               BRAD MILLER, North Carolina
STEVE KING, Iowa                     [VACANCY]
THADDEUS McCOTTER, Michigan

                  J. Matthew Szymanski, Chief of Staff

                     Phil Eskeland, Policy Director

                  Michael Day, Minority Staff Director

                                  (ii)


                            C O N T E N T S

                              ----------                              

                               Witnesses

                                                                   Page
Sabelhaus, Hon. Melanie, Deputy Administrator, U.S. Small 
  Business Administration........................................     3
Pike, Ms. Judy, President, Production Tool & Supply..............     6
Byron, Ms. Norma Powell, President, The Ashlawn Group, L.L.C.....     8
Welch, Ms. Maria, CEO, Respira Medical...........................    10
Mosier, Ms. Cheryl on behalf of Ann Belus, Cable Pipe and Leak 
  Detection......................................................    12
Hilliard, Ms. Isabelle, RN., NHA, Old Dominion Home Health 
  Services.......................................................    14
Williams, Ms. Terry, President, U.S. Women's Chamber of Commerce.    15

                                Appendix

Opening statements:
    Manzullo, Hon. Donald A......................................    28
    Velazquez, Hon. Nydia........................................    32
Prepared statements:
    Sabelhaus, Hon. Melanie, Deputy Administrator, U.S. Small 
      Business Administration....................................    34
    Pike, Ms. Judy, President, Production Tool & Supply..........    41
    Byron, Ms. Norma Powell, President, The Ashlawn Group, L.L.C.    46
    Welch, Ms. Maria, CEO, Respira Medical.......................    51
    Mosier, Ms. Cheryl on behalf of Ann Belus, Cable Pipe and 
      Leak Detection.............................................    56
    Hilliard, Ms. Isabelle, RN., NHA, Old Dominion Home Health 
      Services...................................................    62
    Williams, Ms. Terry, President, U.S. Women's Chamber of 
      Commerce...................................................    67

                                 (iii)

 
           WOMEN'S ENTREPRENEURSHIP: SUCCESSES AND CHALLENGES

                              ----------                              


                         THURSDAY, MAY 12, 2004

                  House of Representatives,
                                Committee on Small Business
                                                   Washington, D.C.
    The Committee met, pursuant to call, at 2:05 p.m., Room 
2360, Rayburn House Office Building, Hon. Donald A. Manzullo 
presiding.
    Present: Representatives Manzullo, Velazquez, Akin, 
Millender-McDonald, Napolitano.
    Chairman Manzullo. Good afternoon and welcome to this 
hearing of the Small Business Committee on Women's 
Entrepreneurship: Successes and Challenges. Women-owned 
businesses are a dynamic and thriving force in the U.S. 
economy. In fact, there has never been a better time for women 
to be in business. That is a nice line that you put in there, 
pretty good. Thank you.
    Women own 40 percent of all small businesses. Furthermore, 
women-owned businesses are growing at twice the rate of all 
other businesses. America's 9.1 million women-owned businesses 
employ 27.5 million people and contribute $3.6 trillion to the 
economy. Business ownership has been one of the most effective 
means of improving women's economic well being. Women's 
participation in business ownership at all levels is climbing, 
showing an increasing presence in the U.S. economy, yet women 
still face many obstacles and challenges. Access to credit, 
access to affordable quality health care for themselves and 
their employees, procurement opportunities, regulations and 
taxes.
    We look forward to the testimony of all the witnesses here 
this afternoon to learn more about their perspective. And I now 
turn to my colleague, the ranking member, Congresswoman 
Velazquez, for her opening statement.
    [Chairman Manzullo's statement may be found in the 
appendix.]
    Ms. Velazquez. Thank you, Mr. Chairman. Throughout the past 
decade, women-owned businesses have flourished in the United 
States. Since 1997, women-owned firms have grown at nearly 
twice the rate of all businesses and growth in employment by 
women-owned businesses has been even more dramatic, 24 percent 
versus 12 percent for all other firms. It is quite obvious that 
women entrepreneurs are an increasingly important sector of our 
economy and their contributions are priceless. Nearly half of 
all privately owned businesses today are owned 50 percent or 
more by women, totalling 10.6 million enterprises.
    As these women entrepreneurs experience overwhelming growth 
and expansion, it is unfortunate the Bush administration 
policies failed their firms. The failure of this administration 
to provide access to health care, capital and the federal 
marketplace strongly impact women-owned business, since their 
firms tend to be smaller. These are the same businesses capable 
of putting us out of the current economic downturn and, 
unfortunately, these administration policies are not creating 
conditions conducive to enabling these women-owned firms to do 
so.
    For example, the SBA has several programs geared toward 
assisting women entrepreneurs in starting and growing their 
businesses. The programs that target entrepreneurial 
development have been either flat funded or cut in President 
Bush's latest budget proposal.
    Another challenge facing women business owners is the lack 
of access to the federal marketplace. The Women's Procurement 
Program, which was actually signed into law in 2000 would have 
allowed federal agencies to lessen competition for contracts by 
restricting a portion for women-owned businesses. Sadly, it was 
never implemented by SBA.
    Therefore, in 2001, women-owned businesses lost more than 
$5.5 billion in federal contracting opportunities and an 
addition of $4.9 billion in 2002. These are opportunities that 
women-owned firms cannot afford to lose. Another major barrier 
for women entrepreneurs is a lack of access to capital. Access 
to affordable capital determines their chance of survival among 
their competitors and without it, women-owned firms can be 
devastated. That is why the SBA loan programs are a vital tool 
for women business owners, enabling them to gain access to 
capital.
    Last year, these loan programs provided $20 billion to our 
nation's entrepreneurs, accounting for 40 percent of all long-
term small business lending. Yet, the Bush administration 
proposed to eliminate funding for several of these initiatives 
including two distinct funding sources for women entrepreneurs, 
the 7(a) and Micro Loan programs. This is a huge loss of the 
funds provided by the Micro Loan programs that were targeted 
towards these women business owners. There is no getting around 
the harsh truth, that our country's women business owners are 
facing an uphill battle. Despite their tremendous economic 
growth and strength over the past ten years, this 
administration continues to fail them by passing policies that 
do little, if anything, to provide the relief they deserve.
    If we want women entrepreneurs to thrive and to create the 
jobs our economy needs right now, then we must ensure they can 
overcome these challenges. Our nation's women entrepreneurs are 
among the fastest growing economic sectors today and we must 
recognize how the Bush administration policies are negatively 
affecting their growth and ability.
    As we acknowledge the accomplishments and growth of women-
owned businesses, we must work to guarantee they are successful 
and strong. The vitality of our economy depends on it. Thank 
you, Mr. Chairman.
    [Ranking Member Velazquez's statement may be found in the 
appendix.]
    Chairman Manzullo. Thank you. The light here gives you five 
minutes to give your testimony. Deputy Administrator Sabelhaus, 
we'll give you seven minutes. I think you have a little bit 
longer there because of the details you have to go into. But 
Deputy Administrator Sabelhaus came out to our district about a 
year and a half ago and she made sure that she came into the 
district so she could be there on a Monday, because she wanted 
to stop at Manzullo's Famous Foods on a Sunday evening. I think 
about five of you came in and we had a pretty wild time there 
at the restaurant. That is the family restaurant.
    Ms. Sabelhaus. Fabulous food.
    Chairman Manzullo. They specialize in fish on Friday night, 
lasagna on Saturday night. And it was growing up in the 
restaurant business where I really learned who ran the Ma and 
Pa operation. My dad did the general repairs and Ma did the 
ordering, paid the bills, did the hiring, did the firing. She 
ran the restaurant and it was a very delightful opportunity in 
my life to grow up in that business and to see that take place. 
So Melanie, we really look forward to your testimony and the 
written testimonies that you have submitted will all be made 
part of the record. You are not bound to follow them. This is a 
very conversational type of atmosphere and let us have some fun 
this afternoon and discover the great things that are going on 
with women entrepreneurs in America.

      STATEMENT OF MELANIE SABELHAUS, U.S. SMALL BUSINESS 
                         ADMINISTRATION

    Ms. Sabelhaus. Thank you. Chairman Manzullo, Ranking Member 
Velazquez and Members of the Committee, I appreciate the 
opportunity to testify today before you and discuss both the 
successes and the challenges of being a women in small business 
in this marketplace.
    I want to thank my fellow panelists right from the very 
beginning on their incredible commitment to women in business 
and for being here today. I feel the energy, I feel the 
enthusiasm in this room and I know I am with very good friends 
here. I want to especially recognize from Maria Welch from 
WIPP. We are fellow members of WIPP and also the Women's 
Initiative. I want to congratulate her on her recent 
recognition as being one of Maryland's top 100 women. I am 
proud of you, Maria.
    Chairman Manzullo and Congressman Akin, by the time this 
panel is through with our testimony, you are going to all want 
to be women entrepreneurs, so just get ready.
    [Laughter.]
    Ms. Sabelhaus. I am very proud to serve as the Deputy 
Administrator of the U.S. Small Business Administration. it is 
a once in a lifetime opportunity to be a strong advocate for 
our nation's small businesses. I feel it is absolutely the best 
job in government. I am passionate about the success of 
entrepreneurs and especially women entrepreneurs, the economic 
powerhouse of the 21st Century.
    I know how important it can be for an entrepreneur to have 
just one person stand behind them, encourage them, support them 
and make sure that they back them up. I know this because after 
being turned down six times for a loan as an entrepreneur, I 
started my own business and I did take it public in 1997. I did 
not know about the SBA and I do not want that to happen to 
another small business in America. This kind of real world 
experience shared by President Bust and Administrator Barreto 
has shaped the economic philosophy of this administration. 
Those of us who know what it is like to meet a payroll, those 
of us who know what it is like to meet a health insurance 
premium bring a unique perspective to the federal government. 
We know how hard small business people work, the risk they take 
and how good it feels to be an entrepreneur and your own boss.
    I agree with the President when he says, when it comes to 
entrepreneurship and job creation, it is becoming a women's 
world. You bet it is. The numbers prove it. It is 10.6 million 
entrepreneur women, women again owning up to 40 percent of all 
U.S. businesses and generating up to $3.6 trillion in revenue. 
That is larger than the GDP of Germany. Almost 100,000 women-
owned businesses in America have $1 million more in revenue. 
Twenty-four million people walk in every morning and look at 
that smiling woman's face. Women are the purchasing officers of 
America. We are buying for ourselves, we are buying for our 
families and we are buying for our companies. We manage 83 
percent of the household income and, gentlemen, we are going to 
inherit 85 to 95 percent of the nation's wealth and I will tell 
you why. We live seven years longer than you do.
    [Laughter.]
    So there are five million more of us. With this comes a 
great deal of responsibility. We are responsible for purchasing 
81 percent of all goods and services in the United States and 
it cannot all be shoes, although the women here would probably 
debate that.
    The point is, we are impacting our country like never 
before. We are in an unprecedented position of power. The way 
we think, ladies, the way we behave affects the way America 
does business. What was once seen as a glass ceiling is now the 
executive board room of most of the most successful companies 
in the country. Carly Fiorna of HP, Meg Whitman of eBay are 
role models and they are also partners with the SBA. But the 
real economic powerhouse sits here today on this panel, is in 
this room. It is the 10.6 million women business owners of 
America.
    The President believes that small business is the engine 
that fuels the economy. I say that we are the heart and soul of 
America. This is why the President has a small business agenda 
at the centerpiece of his domestic policy. The President's jobs 
and growth package, which I know has the support of numerous 
members on this Committee, accomplished the most important 
thing government can do for small business and that is let 
these hard working Americans keep more of their own money so 
they can earn that money, pay their bills, invest in their 
business and hire people.
    To these men and women, income tax cuts means more money 
and that is what is important. It is all about jobs, jobs, 
jobs. Along with it, we quadrupled the deduction for business 
expenses to $100,000. This allows them to invest in their 
businesses, in their futures. In fact, 79 percent of the $12.4 
billion in tax relief will go to small business owners. This is 
real impact of tax relief. This is job creation and the 
investment in our economy.
    The latest job figures last Friday showed that these 
policies have created 280,000 new jobs. That is more than 1.1 
million jobs in the last eight months. However, this 
administration recognizes that there are other hurdles that we 
need to face, such as the high cost of health care, the high 
cost of health insurance, the common sense tort reform, the 
ability to compete in the expanding global market. This 
administration is taking a proactive approach to addressing 
these issues. We are all about delivering results. Small 
businesses are telling us we must eliminate burdensome 
regulations, cut the red tape and get government out of the 
way.
    Over the last three years, SBA's Office of Advocacy has 
saved small businesses over $31 billion in needless red tape. 
Now that is what I call results. Small business wants their 
fair share of that $250 billion government pie and the women at 
this table want the whole pie, the do not want a piece of it.
    Under Hector Barreto's leadership, the SBA has launched a 
very innovative program to insure that small businesses receive 
their fair share. It is called business matchmaking. It has 
given the small businesses in America a chance to meet with the 
federal, state, and local government officials, as well as the 
private sector. What this means is results. It means contracts, 
it means dollars, it means jobs. I am proud to say that the 
seven matchmaking events have had 4,000 small business people 
participating and nearly half of them were women. And what we 
did is we took this program outside the Beltway. We have been 
all over the United States and it translated into 16,000 one on 
one meetings between small businesses and potential buyers.
    One individual said to me, Melanie, on a scale of one to 
ten, business matchmaking is a 15. I was very proud to report 
that.
    Last year we celebrated our 50th anniversary. It is scary 
that I am older than the agency, but I do not look it, do I, 
Mr. Manzullo? Do I look older than the agency? I may at this 
point.
    Chairman Manzullo. I think you were born in 1972, or 
something like that.
    Ms. Sabelhaus. Thank you very much. But last year we 
celebrated our 50th celebration and it was a banner year. We 
were up 30 percent in our lending, 74,000 loans, over $14 
billion. But what does that mean? That means jobs. Over 500,000 
jobs were created or retained.
    Loans to every sector in the marketplace increased, double 
digits. African Americans, Hispanics, Asians, Native Americans 
and women. Our work is far from finished, believe me. There is 
still a lot of work to do and there are many entrepreneurs that 
want to start businesses. They need access to capital, they 
need technical training and we are here to help. That is where 
the SBA comes in.
    Women last year had increased by 37 percent for fiscal year 
2003. In fact, SBA guaranteed 14,378 loans----
    Chairman Manzullo. How are you doing on time, Melanie?
    Ms. Sabelhaus [continuing] I am almost ready to end.
    Chairman Manzullo. Good, otherwise I would end you.
    Ms. Sabelhaus. Okay, let me just end quickly by saying that 
on top of this, this is important and I would like to address 
it. In the last three years, the percentage of federal prime 
contract dollars awarded to women has risen. Last year we saw 
$9.7 billion. We are up one billion dollars. We know we have a 
lot of work ahead of us, but we are progressing.
    So I am proud to represent this administration. I also want 
you to know I am glad you gave me this opportunity to highlight 
this administration's successes and I want to thank you very 
much, all of you, for your dedication and determination. I 
certainly look forward to this panel's testimony and I am 
available for any questions.
    [Ms. Sabelhaus' statement may be found in the appendix.]
    Chairman Manzullo. Thank you very much for that excellent 
testimony. Our next witness is Judy Pike. Judy is from 
Rockford. Judy's husband and my brother were in the Reserve 
together and were cooks and somebody has got to do the cooking. 
My brother went in there right after high school and he has 
been involved in the restaurant business ever since. Judy, we 
look forward to your testimony. If you could pull the mike up 
to you closer.
    Ms. Pike. Sure.
    Chairman Manzullo. You do not all have to be as animated as 
Melanie. I just want you to be yourselves, okay?

STATEMENT OF JUDITH E. PIKE, PRODUCTION TOOL & SUPPLY, WOMEN OF 
                     TODAY'S MANUFACTURING

    Ms. Pike. Good afternoon, Mr. Chairman. My name is Judy 
Pike and I am from Rockford, Illinois. The name of my company 
is Production Tool & Supply.
    Chairman Manzullo. Judy, could you pull the mike a little 
bit closer there? Thank you.
    Ms. Pike. Sure. The name of my company is Production Tool & 
Supply and until December 31, 2003, I also had another company 
called Acme Grinding. Both of the companies are in the 
manufacturing related business. Acme Grinding is a small job 
shop which does secondary services for the fastener industry 
and Production Tool & Supply is an industrial distributor. They 
are a supplier of abrasives, fluids, cutting tools, carbide 
cutting tools to the metal working industry in our area.
    My late husband, John Pike, owned both of these companies. 
I had the honor of working with John for 29 years until his 
death in 1996. Since then, I have been the president and owner 
of both companies.
    Even though I had worked in the business for many years, 
upon John's death, there was a period of time when we, as a 
company, had to prove we were able to provide the services our 
customers expected. There was the occasional let me talk to 
someone who knows something and I would rather talk to one of 
the guys comments. But for the most part, everyone we dealt 
with was gracious and helpful. The employees at both Production 
Tool and Acme had always been our biggest asset. Together we 
weathered the storm and grew both companies until the economic 
downturn in 2001.
    With the multinationals leaving our country to manufacture 
outside, in the next three years the manufacturing climate in 
Rockford declined and many of the companies we did business 
with closed or left the state. We tried our best to keep the 
business operating. We worked two years and trimmed schedules 
of 32 hours a week. My family wanted me out while there was 
still something to salvage, but when you have worked with 
people for 34 years, you owe some loyalty to your employees.
    I could not see closing. What were these people going to 
do? There were no manufacturing jobs in Rockford. I had an 
employee willing to give up his medical insurance so if people 
left, we could keep the business open a little longer. Health 
care for small business is in major crisis. But in December, 
2003, after months of declining sales and cutting employees' 
hours and seeing no relief in the future, I decided to sell the 
manufacturing part of our businesses, which was Acme. If I had 
been 45, I would have gone to the bank and tried refinancing to 
keep the business going, but that was not an option. At 64, my 
financial future was at risk.
    As a woman business owner, I have not run into the 
obstacles that some women seem to have been running into. I 
believe my situation has been different. My business was in 
place and I didn't have to go to anyone for help, so I thought. 
Maybe I should have.
    In the latest figures I could find on women owned 
businesses, only two to three percent of them are in the 
manufacturing industry, but I believe these numbers are on the 
rise. I know in Rockford there are several companies that are 
owned and run by women. With a couple of women I have talked 
to, the most challenging part of their business was not so much 
being a woman, but being in the manufacturing industry. The 
banks are not real kind to the manufacturing world in Rockford, 
Illinois.
    After one of the women said that she had gone to an agency 
and asked just for a loan, but they never even returned her 
call, after the move was complete, she did it all on her own 
and she called the person at the agency and thanked them for 
nothing. And we wonder is it being a woman or in the 
manufacturing industry?
    In our area, we really are trying to mentor and assist 
other women who are interested in getting into the 
manufacturing world. We have taken up the challenge of getting 
women involved in our industry. In the last year and a half, 
Melba Bradberry from S&B Jig Grinding, Teresa Beach-Shelow with 
Superior Joining Technologies and myself have incorporated a 
not-for-profit organization called Women of Today's 
Manufacturing. It is an educational organization dedicated to 
serve the manufacturing in our area. We have now grown to 75 
members.
    Teresa had an idea of having a camp for kids to introduce 
them to manufacturing in Rockford. We held our first 
Manufacturing Camp last summer. We signed up ten boys and girls 
and took them through a week of introduction to our industry. 
They are boys and girls that are in the eighth, ninth and tenth 
grade. It was a hands on week of learning how to operate 
various machines and software programs. They generated prints 
on their computers and they actually made their own little 
hammer to take home at the end of the session.
    They toured local manufacturing plants and by the end of 
the week they were excited to see things that had been made in 
Rockford and to be aware of their surroundings around them. The 
group has established our scholarship program through the 
community foundation and we are giving out our first 
scholarships this month, $500 each, and both boys are going 
into the engineering industry.
    We have to mentor. With nothing but discouraging news in 
the media----
    Chairman Manzullo. How are you doing on time, there, Judy?
    Ms. Pike [continuing] Oh, geez, I am sorry.
    Chairman Manzullo. That is all right, just finish your 
thought. That is okay.
    Ms. Pike. Okay, what we have done in our area is Teresa 
Beach-Shelow has started another location called Manufacturers 
Alliance of Rock River Valley, just to deal with the federal 
government. You cannot, as a small business owner, deal with 
the federal government. So they have started this group to deal 
with the Lockheed Martin, the Defense Department and 
Caterpillar.
    In the business world of today, we have been asked to be 
more productive, more cost efficient and in most cases, to 
reinvent ourselves. Hopefully in Rockford, Illinois, we are 
giving it our best shot and our best effort. Thank you for your 
time today.
    [Ms. Pike's statement may be found in the appendix.]
    Chairman Manzullo. Thank you. Our next witness is speaking 
on behalf of Women Impacting Public Policy and Norma Powell 
Byron, we look forward to your testimony. Byron is the nearest, 
biggest town to where my farm is. I do not know if you are 
aware of that.

STATEMENT OF NORMA POWELL BYRON, THE ASHLAWN GROUP, LLC, WOMEN 
                    IMPACTING PUBLIC POLICY

    Ms. Byron. Where is your farm?
    Chairman Manzullo. It is near Egan, Lightsville and Myrtle.
    Ms. Byron. Oh, great.
    Chairman Manzullo. You do not know where that is either, do 
you?
    Ms. Byron. I have no idea where that is.
    Chairman Manzullo. Yes, we raise beef cattle about 25 miles 
south and west of where Judy lives.
    Ms. Byron. Oh, great. I have been to Rockford. I know where 
that is.
    Chairman Manzullo. Good. We look forward to your testimony. 
That will not count towards your time. Go ahead, please.
    Ms. Byron. Good afternoon. Mr. Chairman and Members of the 
Committee, I am Norma Byron, President of the Ashlawn Group, 
located in Alexandria, Virginia. I am appreciative you are 
holding this hearing and its focus on women's entrepreneurship. 
I am testifying on behalf of Women Impacting Public Policy and 
the National Association of Women Business Owners.
    My entrance into the world of entrepreneurship came about 
in a sudden and unconventional way. After spending over 20 
years in the munitions industry for small and large companies, 
I was thrust into running a munitions company when my boss died 
in a small plane crash in the Shenandoah Valley. He had no will 
and no succession plan, so it was up to me to keep the company 
running and fulfill its contractual obligations. Since his 
family did not have any interest in continuing the business in 
the long term, they suggested to me that I start my own company 
and take the existing customers with me and that is how Ashlawn 
Group was born.
    Mr. Chairman, the Ashlawn Group is really one of a kind. 
There are no other women-owned businesses in this country who 
design munitions for weapons systems. Thanks to the program 
managers and contracting officers at the Department of Army's 
Picatinny Army Arsenal facility, we are slowly but surely 
building this business to expand its customer base to other 
services and government agencies. If Picatinny had not been 
willing to work with us, my business surely would have failed.
    So while you hear horror stories of small businesses who 
contract with the DoD, you should also hear stories such as 
mine that are positive. Since my first contract with Picatinny, 
my company's annual contracts doubled after the first year and 
have continued to hold steady since then. Our newest initiative 
is our fuel cell for munitions programs. We are capable of 
reducing a fuel cell to a D size battery and even smaller for 
weapons usage. This is critical, because it has been shown that 
standard batteries for weapons are not holding up as needed in 
Iraq. We have asked Congress for funding in FY 2005. If we 
secure the necessary funds, we will be able to produce these 
cells within 24 months. In doing so, we will create much needed 
manufacturing jobs in this country and insuring our weapons 
work. They are the first manufacturing jobs in fuel cells in 
America.
    Now let me address the challenges we face going forward. 
First we have applied for and hope to be awarded 8(a) status. 
Mr. Chairman, this is absolutely critical to our success in the 
government contracting arena. Clearly, we are not capable of 
competing in an open competition with large munitions companies 
with enormous resources. Without 8(a) status, we lose the 
ability to grow at a rate necessary to compete effectively.
    Second, small businesses like mine are at the mercy of 
federal contracting policy decisions which can be disastrous 
for them. Contract bundling continues to create barriers for 
small business. Small business must win each order separately 
on a case by case basis, while their large counterparts can win 
large bundle contracts. This places small government 
contractors at an immediate disadvantage in seeking contracts 
with the government.
    I know this Committee has been vigilant in its review of 
federal contracting policy and fought for changes important to 
small business, such as contract bundling.
    Third, the enforcement of Federal Acquisition Regulations 
and increased scrutiny of subcontracting plans is a key 
component of whether businesses such as mine will be able to be 
successful. Unless the secretary of each agency places a high 
priority on enforcement and attainment of small business goals, 
nothing will change. By increasing small business 
participation, we are in many cases asking contracting officers 
to do things differently. If contracting officers and program 
managers are not held to their small business goals and if 
contracting is largely left in the hands of the primes without 
the proper oversight, small business might well continue to 
struggle to get its fair share of federal contracts.
    Another issue for small business is payment in a timely 
fashion. As you are aware, cash flow is at the heart of any 
business. My experience has been difficult working with the 
contracting officials to allow for critically needed advance 
payments or partial payments for work in progress. Of course, 
the difficulty of collecting payments for work completed 
becomes even more difficult in a subcontracting relationship.
    The other challenge for women in small business is access 
to capital. The perception that you can only get an SBA loan if 
you do not need one is still the perception among women 
business owners and that one needs to change. As women who own 
businesses mature and move to the next level of growth, access 
to capital is a critical component. Thankfully, we no longer 
have to take our husbands with us to get a loan, but from my 
personal experience, the amount of loan offered to a woman-
owned business in a financial institution can still differ 
significantly from one given to a male counterpart. I encourage 
your Committee to continue its good work in ensuring that the 
SBA loan programs remain intact and percentages loaned to 
women-owned businesses increase. Thank you for giving me the 
opportunity to testify and tell my story. I am happy to answer 
any questions.
    [Ms. Byron's statement may be found in the appendix.]
    Chairman Manzullo. Thank you. We might get a series of four 
votes that could take an hour somewhere between two and three 
o'clock so I want to get through the testimony in chief here, 
so if you could keep your remarks to the five minutes, that 
would help out.
    Our next witness is Maria Welch, CEO of Respira Medical, 
Inc. and we look forward to your testimony.

 STATEMENT OF MARIA WELCH, RESPIRA MEDICAL, BALTIMORE HISPANIC 
                      CHAMBER OF COMMERCE

    Ms. Welch. Thank you. Mr. Chairman and Members of the 
Committee, good afternoon. My name is Y. Maria Welch. I am 
appearing before you today as a national founding partner of 
Women Impacting Public Policy and a member of the Baltimore 
Hispanic Chamber of Commerce. I am the CEO of Respira Medical, 
a respiratory and home medical equipment company located in 
Baltimore, Maryland. Here is my story.
    Three years ago, I applied to Women Entrepreneurs of 
Baltimore, WEB, an SBA-funded women's business center, which is 
also funded by the SBA Prime Program. Prior to entering the WEB 
program, I experienced difficulties including domestic 
violence, resulting in my becoming homeless. Prior to becoming 
homeless, my father, Miguel Better, was dying of chronic 
obstructive pulmonary disease, COPD. He was a career iron 
worker and was exposed to environmental hazards, such as 
asbestos, causing his COPD. COPD is a horrible disease which 
prevents ones lungs from expanding and contracting and results 
in a long, slow and painful death. The toll of this disease on 
a patient and caregivers is enormous. As a result of assisting 
in the care for my father, I realized the difference in 
services patients received from caring, qualified respiratory 
therapists as opposed to home medical equipment companies who 
provide only mediocre services.
    Faced with the dual challenge of supporting my family and 
finding meaningful work, I decided to go into the home health 
respiratory business so I could help people like my father and 
caregivers like my mother enjoy a much higher quality of life 
during the precious time they had remaining with us.
    When I applied to the WEB program, I expected to learn how 
to write a business plan and open a business. At that time, I 
was dealing with a lot of issues which affected my self-
confidence and self-esteem. Not only did I learn how to write a 
great business plan and open my business, I also received 
immense support, encouragement, resources and tools to overcome 
my lack of self-confidence and to build my self-esteem.
    I am happy to report that in just three years, I employ 24 
individuals and have cared for over 4,500 patients throughout a 
broad geographical area. We have grossed over $1.4 million this 
past year and have been honored with numerous awards, including 
the Small Business Administration Outstanding Woman 
Entrepreneur.
    I can assure you that none of this would have been possible 
without the highly effective and comprehensive program of WEB. 
There are no other programs that provide the in-depth and 
comprehensive training that WEB provides. The Senate recently 
passed S.2267 and I urge the House to agree to its passage. It 
is vitally important to the existing women business centers to 
be able to continue their much needed services. Fifty-three 
centers are in jeopardy of losing their funding as of July 1, 
2004 if this legislation is not passed.
    Now that I have addressed my successes, let me address some 
of the challenges that lie ahead for Respira Medical. An 
element of the new Medicare law contains a component of the law 
that can close the doors of Respira forever. The new law 
requires national competitive bidding for durable medical 
equipment, which can include oxygen related equipment that 
Respira Medical provides to its patients. While well 
intentioned to promote competition among providers and thereby 
lower prices, I believe it will have unintentional consequences 
for patients and small businesses. The consequence to small 
businesses is that service to patients such as my small company 
can provide will be lost in the frenzy to provide the lowest 
cost equipment. Patients will not only lose services but will 
also lose consumer choice.
    Respira Medical serves many individuals in isolated 
locations. We do not pick and choose whom we serve based on the 
amount of reimbursement for services. We fear that national 
competitive bidding rules will be set up to favor large, well 
capitalized providers and jeopardize small companies like mine. 
We fear patient choice will be limited to a few large companies 
and, in the end, the patient will lose.
    As is the case in many industries, it is a mistake to 
assume that size and capitalization assure appropriate, timely 
or legitimate services. After overcoming so many obstacles to 
be successful, I fear that the government will undo these 
efforts by imposing an insurmountable obstacle, a federal 
regulation which is not within my power to change.
    Currently, the Centers for Medicare and Medicaid Services 
are in the process of putting together an advisory Committee to 
determine the direction of this new requirement. We urge this 
Committee to protect the interest of small business as the CMS 
begins this process and develops its advisory Committee. At 
Respira Medical, we consider it a privilege to care for a 
patient. They have chosen us to provide their care. The secret 
to our success is that we do the basics very well. I hope my 
competition hears that loud and clear.
    Mr. Chairman and Members of the Committee, thank you for 
giving me the opportunity to speak today and I am happy to 
answer any questions.
    [Ms. Welch's statement may be found in the appendix.]
    Chairman Manzullo. Thank you very much. Our next witness is 
Cheryl, is it Mosier?
    Ms. Mosier. Yes.
    Chairman Manzullo. Pinch-hitting for her mom, Ann Belus, 
who is ill, is that correct?
    Ms. Mosier. Yes, she is.
    Chairman Manzullo. Cheryl, thank you for coming out on such 
very short notice, speaking on behalf of the Plumbing, Heating, 
Cooling Contractors of America and we look forward to your 
testimony.

 STATEMENT OF CHERYL MOSIER, FOR ANN BELUS, PRESIDENT OF CABLE 
    PIPE AND LEAK DETECTION AND PLUMBING, HEATING, COOLING 
                     CONTRACTORS OF AMERICA

    Ms. Mosier. Okay, thank you, Chairman Manzullo, Ranking 
Member Velazquez, Members of the Small Business Committee 
Members and other distinguished guests. First, let me offer 
that it is a thrill for me to be considered as an entrepreneur 
and it is indeed a privilege to be serving on a panel with 
other women that, in your view, have tremendous entrepreneurial 
spirit. Mr. Chairman, I applaud your Committee's scheduling of 
a hearing on this topic. It is a most gratifying experience for 
me to be here representing my company, Cable Pipe and Leak 
Detection, in Spring Valley, California and for the association 
of which I am a member, the Plumbing, Heating, Cooling 
Contractors National Association.
    My entrepreneurial vision began in 1976 when my husband, 
John, was employed as a journeyman plumber for a major 
contractor. At the time, I was employed as an administrative 
assistant for a civil engineer. We had comfortable incomes but 
had higher aspirations, both of us keeping alert for new 
business opportunities. In John's line of work, he came across 
the need for a specific, specialized type of work related to 
plumbing. In Southern California, most of our homes are built 
on slabs, with the plumbing installed under the foundation. If 
a problem in the piping, such as leaks or stoppages develop, 
there was no alternative but to dig and keep digging until the 
problem was found. He thought there had to be an easier way.
    Since his job was more financially lucrative than mine and 
we had four children under 12 years old to support, we decided 
he would keep his job and I would do the footwork to see if a 
business of this type would work. I would like to add at this 
point that even though my mom was starting her business, she 
always had time for us. She never missed any of our sporting 
events and was always there whenever we needed her and she 
still is to this day.
    I spent days researching manufacturers' directories at the 
library to see if there were instruments being made that could 
be used to trace underground pipes. The vision for my company 
would be to specialize in tracing underground plumbing and 
pinpointing leaks in those lines. We leveraged ourselves to the 
maximum by taking out a second mortgage on our home and went 
out to purchase the equipment and a truck. We settled on taking 
small steps and went out and hired our first employee, a 
technician, and trained him on how to use the equipment. Our 
vision was forming--little did I know at the time that I was 
well on my way to becoming a successful entrepreneur.
    The first two years were extremely difficult to keep my 
company alive, but I would not give up. I operated in the red 
but never gave up as I literally pounded the pavement, went 
door to door visiting anyone that I thought could benefit from 
my services. I tried all types of advertising, newspaper ads, 
radio and flyers, but found that word of mouth from satisfied 
customers worked the best. I established a foundation of sound 
business practices and committed to my customers a quality 
product. Eventually my company started to grow.
    I never felt that being a woman in a predominantly male-
oriented line of work was any disadvantage. I studied hard and 
learned quickly all the aspects of the plumbing trade so that I 
could converse with any contractor on an equal basis. When I 
approached a potential customer, I knew my facts and promised 
great service.
    My small company continued to grow until it reached the 
point where my husband could quit his job and come work for me. 
I continued to run the business from all aspects while he 
worked as a technician. Perhaps the biggest issue affecting my 
company today is the high cost of health care. It has always 
been a priority for me to offer my employees the best in health 
care insurance. The exorbitant increases in my health care 
premiums are forcing me to consider whether can continue to 
provide this benefit to my employees.
    My company firmly supports Association Health Plans and I 
am pleased to learn that both Chairman Manzullo and Ranking 
Member Velazquez support this legislation with Representative 
Velazquez taking a leadership role in sponsoring this 
legislation.
    I understand that this week being labeled covering the 
insured, so it is a thrill for me to be here in town while such 
an important issue is generating headlines. One would think 
that with small business providing nearly 70 percent of the 
economic growth in the country, it seems only fair that we 
should be able to obtain affordable health care such as that 
offered by large companies.
    In many ways, health care is a job issue. I would like to 
employ more technicians to meet the growing needs of my 
company, but I am somewhat reluctant to do so until we can 
hopefully control these ever increasing health care costs.
    In summation, having my own business has indeed been 
extremely satisfying for me. There have been tough times, good 
years and bad, problems encountered along the way, but I feel 
that I have provided a valuable service to society and provided 
a good working environment for all my employees. I now look 
forward to my retirement and letting my children take over the 
business operations. Perhaps now would be a good time to put in 
my plea for Congress to do away with the death tax, once and 
for all. I am fortunate to be in this industry and I truly 
value the services I provide, including health, comfort and 
safety to citizens across the country. Thank you, Mr. Chairman, 
for the opportunity to allow me to share the story of my dream 
come true.
    [Ms. Belus's statement may be found in the appendix.]
    Chairman Manzullo. Well, thank you very much. Our next 
witness is Isabelle Hilliard, President and Chief Executive 
Officer of Old Dominion Home Health Services. We look forward 
to your testimony.

   STATEMENT OF ISABELLE HILLIARD, OLD DOMINION HOME HEALTH 
               SERVICES, U.S. CHAMBER OF COMMERCE

    Ms. Hilliard. Thank you, Chairman Manzullo, Ranking Member 
Velazquez and members of the Committee. I am Isabelle Hilliard, 
President and CEO of Old Dominion Home Health Services, a small 
business headquartered in Richmond, Virginia with another 
center located in Petersburg, Virginia. Our firm currently 
employs 125 individuals dedicated to providing highest quality 
home care services to clients in their homes.
    My businesses offer a myriad of health care services, 
including free home care evaluation, medical skill nursing, 
Medicaid home health, Medicaid personal care, technology 
assisted waivered, respite care, sitters, live in and companion 
services, as well as physical, occupational, speech and 
respiratory services. My business includes a durable medical 
supply and equipment company and an adult day care center.
    I also come to you as a member of the U.S. Chamber of 
Commerce's Small Business Council. I am deeply honored to speak 
to you today on issues that are very important to me. I cannot 
help but think of the millions of women-owned businesses that 
share similar concerns and challenges as I have in the years of 
my being in business.
    Succeeding as a women-owned business, small business, are 
not much different than the hurdles presented to all small 
businesses, though at times they are exaggerated by my gender. 
Access to capital or the lack of it, the deluge of government 
regulation and paperwork, navigating through a complicated 
regulatory process and the ability to attract and keep 
qualified personnel serve to headline my difficulties in 
business over the years.
    I would like to make the following recommendations to 
Congress that would not only help my industry but would also 
help other business owners like myself start, run and expand 
our businesses.
    First, this Committee and the House of Representatives 
should pass S.2267, the Business Centers Sustainability 
Recovery Act of 2004. This bill would enable the Small Business 
Administration to reprogram currently appropriated funds and 
tap into a pool of funding normally reserved for initial grants 
to newly-established Women Business Centers. WBCs have been 
successful in providing assistance to women in all walks of 
life, including women who once received public assistance and 
are now operating businesses and creating jobs. Congress must 
appropriate enough funds to provide a consistent and 
predictable SBA 7(a) loan program. The SBA 7(a) program and the 
504 guaranteed loan programs play a vital role in alternative 
sources for capital when funding through conventional methods 
is not available, especially for women business owners.
    Third, the Senate must follow the lead of the House and 
pass association health plan legislation. Access to affordable, 
high quality health care coverage for small business owners and 
their employees must be improved, without adding new mandates 
that require specific coverage.
    Chairman Manzullo. Isabelle, could I interrupt you there? 
If I could go on to Terry to get her testimony in before we 
have to run off for some bells, would you mind if I do that?
    Ms. Hilliard. I do not mind at all.
    Chairman Manzullo. Then we will come right back and to the 
question time, okay?
    Ms. Williams. Talk to me in the future------.
    Chairman Manzullo. Terry, go ahead. I am sorry about these 
bells, but we will make sure everybody gets enough time.

 STATEMENT OF TERRY WILLIAMS, U.S. WOMEN'S CHAMBER OF COMMERCE

    Ms. Williams. Chairman Manzullo, Ranking Member Velazquez, 
Members of the Committee, thank you for the opportunity to 
appear before you today. My name is Terry Williams and I am 
President of the U.S. Women's Chamber of Commerce, representing 
the over 10 million women business owners of America.
    We are pleased to know the Committee on Small Business is 
looking at the successes and challenges of women in business 
because, frankly, we need your assistance. The growth of women-
owned businesses in the U.S. over the last decade has become 
one of the great business headlines of our time. Driven by 
individuality and independence, necessity and practicality, 
women by the thousands have abandoned the safety net of 
employment for the new frontier of entrepreneurism. With this 
feminine entrepreneurial expedition came headline stories and 
the growth and successes of women in business.
    Corporations lined up to fund reports and send press 
releases to generate headlines about women in business and 
political leaders held women's summits and gatherings to 
celebrate the successes of women.
    Unfortunately, the financial realities for women business 
owners are not really so bright. Even though privately held 
majority, 51 percent or more women-owned businesses make up 
nearly 30 percent of all privately held firms in the U.S., 
between fiscal year 1998 and 2003, there was a 7.5 percent 
decrease in the average value of loans made to women-owned 
businesses. The share of dollars lent to women-owned businesses 
increased from an already low of 13.2 percent in 1998 to only 
14.3 percent in 2003, while the share of the number of loans 
and equity investments decreased from 23 percent to 20 percent 
over the same period.
    Women-owned businesses struggle continually to reach 
through the federal procurement market, reaching the artificial 
five percent nickel ceiling. The 2001 U.S. Small Business 
Administration Office of Advocacy Women in Business reports 
98,870 women-owned firms or 1.8 percent had receipts of more 
than $1 million, compared to five percent of the market whole. 
So women-owned businesses are much smaller than the market 
whole.
    The struggle women-owned businesses are facing as they 
strive to reach strong levels of revenues is hindered by their 
ability to compete for larger market share. The majority of 
women-owned firms in the U.S. generate $1.19 trillion in sales 
and employ 9.8 million people nationwide. This sounds 
wonderful, but when the receipts of women-owned businesses are 
compared to the market whole, we gain a clearer perspective of 
the constraints women face. A representative sampling of the 
top metropolitan areas reveals that while there are a 
significant number of women-owned businesses, their receipts 
remain small.
    For example, the D.C., Maryland, Virginia, West Virginia 
metro statistical area. In that area, women own 32.3 percent of 
all firms but their annual receipts are only 10 percent, so 
they are one third of the size of the market whole.
    In Detroit, you can see the numbers are about the same. 
Detroit, Atlanta, Georgia, they are all in the 30 percent 
range, while their businesses generate less than ten percent of 
the receipts.
    The question we ask today is, while celebrating the 
successes of women in business, why is not the President, 
Congress and the Small Business Administration addressing the 
clear, competitive issues that our new pioneering women 
business owners are facing? Women owned businesses receive 
fewer and smaller SBA loans. Women owned businesses receive far 
fewer and smaller government procurement contracts. In an 
unconscionable lack of support for women-owned businesses, the 
SBA has failed to implement the Women's Procurement Program 
that was established in 2000. And this Committee has not acted 
to intercede on our behalf.
    I have grown successful businesses and I can attest that 
without access to markets, capital and technical expertise, 
businesses flounder. Our dynamic, committed women business 
owners need you to support them. In this time of focus on job 
stability, job growth, stability and fostering in competitive 
America, it is incomprehensible that we are not doing 
everything within our power to foster and develop this new 
wealth of entrepreneurial talent.
    To date,much has been promised and very little delivered. 
Modest tax cuts really do very little to help very small 
businesses.
    Chairman Manzullo. I am going to have to stop you there. We 
are going to come back. It could be 45, 50 minutes. When we 
come back, Terry, I will let you finish and then Isabelle, I am 
going to go back to you, okay. I am not forgetting about you, I 
just wanted to get everybody in before we go down for what 
appears to be about four votes. So hopefully, about 45 minutes. 
Yes, and we will be back.
    Oh, no, you do not have to stay seated. If anybody has to 
catch a plane, feel free to go, okay. I mean, if you are not 
here, we will understand you are on an airplane. We will be 
back.
    Ms. Williams. Thank you.
    [Whereupon, a short recess was taken.]
    Chairman Manzullo. Call the hearing back to order. Sorry 
about that. We were in the midst of testimony with Terry 
Williams and then we want to finish with Isabelle Hilliard.
    Deputy Administrator Sabelhaus has to leave at 4:15, is 
that your calendar there?
    Ms. Sabelhaus. Sorry.
    Chairman Manzullo. Let me do this. Let me defer to you, Ms. 
Velazquez, for some questions, because I know you have some of 
Ms. Sabelhaus.
    Ms. Velazquez. I have a lot.
    Chairman Manzullo. Okay, we will give you ten minutes 
there, then at 4:15 I will excuse you. Then we will come back 
to you ladies and finish your testimony.
    Ms. Velazquez?
    Ms. Velazquez. Thank you. And thank you all for being here. 
It is great to have all these success stories and for my part 
and I know the Chairman, we are committed to make sure that SBA 
provides the tools that you need in order to grow and expand.
    Ms. Sabelhaus, you know, listening to your testimony and 
listening to the rest of the witnesses here, I feel like I am 
in two different hearings. On the one hand, they are talking to 
us about all the needs of women-owned businesses and the 
commitment that we need to have in providing the tools that 
they need for succeeding.
    In your testimony and, you know, you are sitting here, you 
are representing the administration. I know that you are a 
charming lady, but these are issues that are important to me 
and to women-owned businesses in this country. In your 
testimony, you gave the impression that the SBA is meeting 
capital needs of women entrepreneurs more than ever. However, 
the average size of the 7(a) loan program, loans to women 
businesses has declined from 185,000 to 133,000. This is 
largely due to SBA's single focus on increasing the number of 
loans that it is making, while not calling for a corresponding 
increase in funding.
    As a result, women entrepreneurs must look to other, more 
costly sources of capital to compensate for this shortfall. 
What is SBA doing to insure that it fully meets the needs of 
women entrepreneurs, rather than just talking about the number 
of loans that it is making?
    Ms. Sabelhaus. Thank you very much for your question and I 
will respond by saying, I listen, as I do every week, 
Congresswoman, as I go out into the field and talk to women 
about what is on their mind and what do they need.
    Ms. Velazquez. Can you answer the question?
    Ms. Sabelhaus. Yes, I will. I will answer the question, 
absolutely. I will just say this to you. This is my focus, 
Hector and myself, this is what we are driving, is that we can 
have more access to capital for women entrepreneurs. I will say 
that the numbers truly speak for themselves and I think that is 
important to note. Last year, our lending was up 30 percent to 
women.
    Now you mention the fact that loans are lower. The market 
drives. The women here in this room are driving what they need 
as far as access. What I am proud to say is what small business 
owners are saying, they do not need a $250,000 loan. When we 
came into office, both Hector and I, that was the average size 
of a 7(a) loan. We brought that loan size down to $190,000.
    Ms. Velazquez. Ms. Williams, how do you feel about that, in 
terms of evidence that you have in front of you and anecdotal 
experience? Is this is what we hear from women entrepreneurs, 
that they need less money, not a larger amount of money? That 
it is okay that we cut the 7(a) loan from 1.5 to 750 and 
reinstate it because of all the publicity that was generated?
    Ms. Williams. Thank you, Congresswoman, for the question. 
Actually, our statistics show that women-owned businesses 
continue to be about a third of the size of the market whole, 
which means they cannot compete. And to compete, you need 
money. You need the same sort of money that the whole market 
has and that means getting the same size loan. Thank you.
    Ms. Velazquez. Thank you.
    Ms. Sabelhaus. Can I respond to that?
    Ms. Velazquez. I have too many questions. Currently through 
the 7(a) program, SBA guarantees--I asked a question.
    Chairman Manzullo. No, I understand, but she wanted to make 
a response. We can give you a couple more minutes. Just let her 
respond to this.
    Ms. Sabelhaus. I was just going to say that women are 
starting businesses and they are smaller businesses, so they 
require less as far as a loan size is concerned. That is what I 
am hearing. I am hearing small businesses say that the lower 
loan size is what is very important. And that is why they want 
access to $35,000 or less loans and that is why the average 
size, which I think I am very happy to say, is about $190,000.
    Ms. Velazquez. That is exactly why you zero out the micro 
enterprise----
    Ms. Sabelhaus. No.
    Ms. Velazquez [continuing] What you are telling me right 
here, right now, less amount of money, not more. And so what is 
the micro loan program? What is it?
    Ms. Sabelhaus. Okay, the micro loan program----
    Ms. Velazquez [continuing] It is okay.
    Ms. Sabelhaus. Do you want me to answer that or not?
    Ms. Velazquez. No.
    Ms. Sabelhaus. Okay.
    Ms. Velazquez. Through the 7(a) program, SBA guarantees up 
to 85 percent of a loan. If the maximum guarantee is revised to 
be 50 percent as SBA proposes, what effect will this have on 
the availability of capital to women entrepreneurs?
    Ms. Sabelhaus. With the zero subsidy, which is very 
important, we are going to be able to offer $12.5 billion in 
our FY 2005 budget. What this means is there is no cap. We will 
never cap, we will not close it. We will not have to go for 
appropriations, we will not have to operate under a CR. We will 
have, at no cost to the taxpayer, $12.5 billion worth of 
lending, which means we can go up to 90,000 loans, which means 
women are included in that and that----
    Ms. Velazquez. Okay, I get it. Have you been listening to 
the banks? Did you hear what they are saying?
    Ms. Sabelhaus [continuing] Yes.
    Ms. Velazquez. What does it do in terms of not using 
taxpayers' money if the banks will not be willing to lend? You 
know and I know that the biggest problem that small businesses 
have is accessing capital through conventional loans with 
commercial banks. That unless we have a guarantee like the 
7(a), we are not going to have those loans.
    So do not tell me that if we reduce the guarantee from 85 
to 50, that small businesses will be able to access capital 
through the 7(a) loan program.
    Ms. Sabelhaus. What is interesting is that right now, we 
did come up with a compromise which, I thank you very much, we 
felt was a very good solution to this plan. And that was, of 
course, that we were able to offer $3 billion more in the loan 
appropriation so that we can have a $12.5 billion loan program.
    But the point I was----
    Ms. Velazquez. Are you willing to support extending that to 
them next year?
    Ms. Sabelhaus [continuing] Our most popular program--we 
want to go to zero subsidy and then we have the program. We 
have the $12.5 billion. That is what is key, that is what is 
important. We do not have to beg for appropriations. We have 
the money to lend to these women at this table and all the 
women entrepreneurs.
    Ms. Velazquez. You know that we reach a compromise because 
you knew that you would not be able to get the reauthorization 
passed under suspension, because I would have opposed it. We 
cannot come here with a great rhetoric while the numbers do not 
match it.
    Ms. Williams, as you know, the administration has proposed 
to eliminate funding for the micro loan program, with the 
understanding that such low income entrepreneurs can be readily 
served through other avenues. The micro loan program is the 
only SBA access to capital program where nearly 50 percent of 
its funds find their way to women entrepreneurs.
    Given this reality, how do you believe this cut will affect 
women entrepreneurs?
    Ms. Williams. We believe this cut, and our members believe 
this cut would be highly detrimental to the growth of women in 
business. We don't just need women entering businesses, we need 
women able to access the funds that they need to get to the 
next level.
    These small loans also come also with technical assistance 
and other things that are really an intricate part of the micro 
loan program and we need not to remove these from the 
opportunities for women.
    Ms. Velazquez. Melanie, most, if not all borrowers 
obtaining funds through the micro loan program have been turned 
down by conventional lenders, including those that make 7(a) 
loans. With this in mind, is it not a bit disingenuous to 
suggest that the typical micro loan borrower, with a credit 
score well below what banks will accept, can be served through 
the 7(a) program?
    Ms. Sabelhaus. I would like to say to you that when I look 
at our numbers last year, I think it is important to note that 
we did 23,000 7(a) loans that were under $35,000. We did 2,400 
loans, micro loans, that were under $35,000. So what you are 
looking at is a program which is 7(a), which is ten times, 
which means we are getting the program out to the women. We are 
reaching out to them and in addition to that, I think it is 
important to note that when we work for a flagship program, 
which is the 7(a) SBA express, it is a 50 percent guarantee and 
the banks are willing. It is the most popular program we have. 
Forty-seven percent of all the loans that we did with women 
were through the 7(a) SBA express.
    Ms. Velazquez. That is only five minutes----
    Chairman Manzullo. I gave you ten minutes. I want to 
conclude this hearing hopefully within a short period of time, 
but I want to go to Terry to have you finish your testimony and 
then to Isabelle to have you finish your testimony.
    Ms. Velazquez [continuing] Well, I will come back.
    Ms. Williams. Thank you, Chairman.
    Chairman Manzullo. Thank you. I am sorry for the disruption 
with the bells, but this is our constitutional obligation----
    Ms. Velazquez. Chairman, I have a question to you.
    Chairman Manzullo [continuing] Well, let them finish their 
testimony.
    Ms. Velazquez. Well, she is going to leave at 4:15.
    Chairman Manzullo. That is correct.
    Ms. Velazquez. Okay, so I want to ask a question, not a 
question to her. I have other questions and I will be 
submitting those questions to you, for you to send the 
responses in writing.
    Ms. Sabelhaus. And I will do that.
    Chairman Manzullo. How much time would you like to respond 
after you receive?
    Ms. Sabelhaus. What would be appropriate?
    Ms. Velazquez. Three days?
    Ms. Sabelhaus. Three days? That would be fine.
    Chairman Manzullo. Terry?
    Ms. Williams. Thank you, sir.
    Chairman Manzullo. Deputy Administrator, you have to leave 
at 4:15. You are excused.
    Ms. Sabelhaus. Thank you very much.
    Chairman Manzullo. Thank you for participating. If anybody 
else has to catch an airplane, please, you know, do not miss a 
plane because of us. Go ahead, Terry.
    Ms. Williams. Thank you very much. I was just----
    Chairman Manzullo. Where were we? Okay.
    Ms. Williams [continuing] I was just getting to delivering 
on the promise.
    [Discussion held off the record.]
    Chairman Manzullo. That would be fine, thank you.
    Ms. Williams. Thank you, sir. Today, much has been promised 
to women-owned businesses and very little delivered. A modest 
tax cut does little to promote the growth of a very small 
business. The attempt to eliminate micro lending and adding 
more purloin costs to other loan programs does not help women 
in business.
    Cutting back the budget of important Small Business 
Administration programs does not help. Eroding the number of 
procurement center representatives does not help. Cutting the 
funding for Women's Business Centers does not help. Not 
implementing the Women's Procurement Program does not help. 
Failure to provide affordable health care does not help.
    Congress has not adequately served women-owned businesses. 
We strongly need real assistance with access to quality 
affordable health care so women business owners can secure and 
retain quality workers and remain competitive. Tax relief that 
truly supports the small business marketplace, access to the 
government marketplace with more realistic goals that are on 
par with the number of women-owned businesses rather than a 
portion of a portion of an already too small pie. We need a 
truly competitive marketplace that fosters competitiveness at 
all levels of contracting.
    Access to capital that is representative of our numbers and 
growing influence in the marketplace, reductions in the 
regulatory compliance work to relieve small businesses of 
wasted time and money so they can focus on growing and 
sustaining their businesses.
    More than anything, this dynamic market needs you to step 
up to the plate and truly embrace women-owned businesses for 
all that they can mean to the financial prosperity of our 
country.
    Mr. Chairman, we greatly appreciate your desire to hear of 
the successes and challenges of women in business. We hope that 
you and the Members of this Committee will finally help us take 
these successes to the next level. We hope you will move beyond 
handshakes and headlines to concrete action that will fully 
maximize the growth opportunities of women-owned businesses 
throughout the U.S. Help us complete the great entrepreneurial 
expedition and bring women-owned businesses to maturity and 
full contributing partners to a robust and flourishing U.S. 
economy.
    On behalf of the over 10 million women business owners in 
the United States, thank you for considering our challenges 
along with our successes.
    [Ms. Williams' statement may be found in the appendix.]
    Chairman Manzullo. Thank you. That had to be the longest 
testimony, yours and Isabelle's stretched over a period of 
time.
    Isabelle, we look forward to your concluding your 
testimony. Do you know where you left off?
    Ms. Hilliard. Yes, sir, I do.
    Chairman Manzullo. Why do you not go ahead? Again, thank 
you for patience. Please go ahead.
    Ms. Hilliard. I was at number three. The Senate must follow 
the lead of the House and pass the association health plan 
legislation. Access to affordable, high quality health care 
coverage for small business owners and their employees must be 
improved without adding new mandates that require specific 
coverage.
    Four, Congress must pass medical malpractice reform. 
Excessive litigation and high medical malpractice rates have 
added to employers' health care costs, reduced access to 
quality medical care--especially in the rural areas--and 
prompted unnecessary tests by physicians that further drive up 
health care costs.
    Five, federal agencies must reduce excessive federal 
paperwork burdens. One complete example of an agency where 
regulation and paperwork has limited my ability to hire people 
and expand my business is the Centers for Medicare & Medicaid 
Services. I have found many of the forms by CMS to be 
duplicative, excessive and unnecessarily time consuming.
    Six, over the last three years, Congress has passed and the 
President has signed into law tax reforms that have reduced 
marginal income tax rates, eliminated the death tax and 
increased small business expensing. These reforms must be 
permanent, thus freeing women business owners like myself to 
make investment decisions based on tax laws that are consistent 
and predictable from year to year.
    Again, I want to thank the Chairman and Ranking Member for 
allowing me to testify at this hearing.
    [Ms. Hilliard's statement may be found in the appendix.]
    Chairman Manzullo. Well, thank you. I have some questions 
here. Let me start first of all with you, Isabelle. Has your 
company, and you have what, 125 employees?
    Ms. Hilliard. Yes.
    Chairman Manzullo. Are you the sole owner of it?
    Ms. Hilliard. Yes, sir.
    Chairman Manzullo. Have you had occasion to take advantage 
of any of the new tax breaks with regard to purchase of 
equipment or is yours more of a service?
    Ms. Hilliard. No, sir, I am a service company.
    Chairman Manzullo. Okay.
    Ms. Hilliard. I provide service to clients and I have a 
medical supply equipment company that also, we purchase 
wheelchairs, walkers, canes and those type of supplies, 
hospital beds and equipments, and those are services.
    Chairman Manzullo. Okay. In your testimony, you mentioned 
about, I think it was the last paragraph, that Congress had 
passed and the President signed tax reforms that reduced 
marginal income tax rates, limited the death tax and increased 
small business expensing. To anybody here, what is the 
significance of eliminating the death tax? What impact does it 
have on any of your businesses?
    Ms. Hilliard. Well, I think it will help the business grow 
and expand. I think it will continue to keep employees. And if 
any employees in our business, we should lose employees, we 
will be able to work with those employees and their family 
members. I think that is what is relating to us as far as the 
death tax.
    I think it helps my company, as well as everybody else's 
company, grow and expand itself.
    Chairman Manzullo. I would venture to state that everybody 
here is having a horrible experience of the increasing and 
escalating cost of health care. How do any of you feel about 
the relationship between the medical malpractice premiums for 
physicians and the high cost of insurance? Does anybody want to 
comment on that? Norma?
    Ms. Byron. Well, it is hard for us to say, I think. I mean, 
unless you are in the health care industry. Maybe they would 
know. It is sort of invisible to us. We do not know why they 
are going up, but those things, they are not within our control 
to change our behavior in any way to affect that. I am sure it 
has certainly an impact, but it is not something that we see.
    Chairman Manzullo. That is something that you cannot 
quantify because you cannot draw the distinction on it?
    Ms. Byron. That is right.
    Ms. Williams. And, Chairman, one of the large challenges is 
really just even the scale of small businesses and their access 
to health care. We really do not have the ability to have scale 
in terms of purchasing health care for our businesses.
    Chairman Manzullo. Well, that is what association health 
plans will do, right.
    Ms. Williams. It will really make a difference with that.
    Chairman Manzullo. And that has been bottled up in the 
Senate, by the Democrats.
    Ms. Williams. We hope that this will pass.
    Chairman Manzullo. Right, well, we appreciate that, even 
though Ms. Velazquez and I both are in favor of the association 
health plans, but it has been an issue that has really 
stagnated in the Senate and it has hurt us tremendously.
    Ms. Napolitano?
    Ms. Napolitano. Thank you, Mr. Chairman. I apologize, I had 
other commitments and somebody twisted my arm to make sure that 
I got here. Being a micro small business owner myself, I have 
had the opportunity to ask questions of some of my women-owned 
business in my area, and I have part of the Los Angeles area, 
which as you well know, is very diverse.
    What I am finding out is that women are having a hard time 
convincing banks and other lending institutions to loan money 
to them, because, number one, they are women. Number two, they 
are small. And number three, they do not want to handle a small 
loan that is going to cost them in time and money the same as 
it would a large loan.
    What say you to that? How do you feel that we need to put 
pressure on the banks, whether through the FDIC, which they 
have been here before us before, this Committee, where we have 
applied pressure to them and said, look, if you want the 
protection of the federal government, you need to work with 
small business.
    Now the other thing that I am finding out is that credit 
unions are beginning to get involved in small micro and small 
business loans, with the blessing of SBA to a certain point. 
That, to me, is going to be a boon for women, because those are 
local vendors, local owners, local business people that know 
the community.
    I would like to hear from you how we can expand this to 
include other women entrepreneurs that will help our economy 
rather than hinder that ability, not only to get started, but 
develop products that will be able to employ and provide the 
jobs that we so desperately need in this country. Any one of 
you?
    Ms. Williams. I can speak personally from the lending side 
for business that I had on my own. SBA was wonderful to work 
with. We were one of the businesses that qualified for the very 
high level of backing from SBA and the banks really did not 
care. And the SBA in our region had very little ability to 
really coax those folks to really support the program. What we 
were told was that these programs were costly to the bank, that 
our loans were very expensive for them and that it was really 
nothing of importance for them.
    I believe that there needs to be a stronger tie to the SBA 
and the ability to get those banks to loan. Also, I think any 
time that we can put in the hands of folks that are much closer 
to our community the ability to do that lending, that we are 
going to have a better response.
    So the ability to get into associations, those sort of 
things to do the lending and to some of the SBICs, these sorts 
of lending institutions that might be run by women, would be 
wonderful for the marketplace.
    Ms. Welch. If I may something on a personal note, I think 
unfortunately many of us women entrepreneurs, a lot of times we 
actually start our businesses out of need and such in my case. 
And I was in a divorce where my credit was affected negatively 
and that was a long time ago, over ten years ago, and to this 
day, I am still suffering from that. Although my credit history 
now is wonderful, but the banks look at me very badly. And if 
were not for my husband, who helps me with his credit, that is 
how we are able to do some of the funding. But on my own, I 
should be able to, and that is one of the issues I think many 
of us women face.
    Ms. Byron. I have a situation. I went to a seminar where 
one of the leading financial institutions in the metropolitan 
area mentioned that virtually any business could come up and 
get a $50,000 loan, but when I went to go apply for one, they 
would only give me $25,000. And they said they went to SBA and 
that somehow or another, I did not qualify.
    There is nothing wrong with my credit, but I just did not 
qualify. So I do not know what the problems are, but I know 
that there are some and I have them.
    [Laughter.]
    Ms. Pike. One of the things I found after my husband died, 
we went through some transition, but what I used was his 
financial officer and I have maintained him over the last eight 
years. And so I used him as a front man and, you know, he went 
to the bank and he did the stuff and did the preliminaries. 
Then when it came down to really talking to them, you know, 
then I sort of would come into the picture.
    But I used that as sort of like to keep myself involved.
    Ms. Napolitano. You were able to have somebody front for 
you. How about the dozens, thousands of women who cannot?
    Ms. Pike. Absolutely.
    Ms. Napolitano. And why are we not in SBA creating a 
program that is going to help these women who have the need? 
They have the ability, we have shown it over and over again, 
but yet we cannot get the funding to an agency. They were here 
saying, oh, no, we have enough money, remember that? Oh, yes, 
we have enough money for the programs. What happens? They start 
cutting the programs.
    Well, ladies, you need to stand up on your hind legs and 
start talking to these people and telling all the women 
business owners and your customers and your providers to put 
the pressure on Washington. Because without you, this economy 
is going to go down the tubes. Because women work harder and 
they maintain longer and they have the staying power that it 
takes to be successful.
    I am very upset because this continues to be a problem. 
What was it, last year, they came up and asked for $8 million 
for the women-owned SBDCs. Eight million for the whole United 
States, ladies. And I am saying, well, that should be ten times 
that. They were asking for three, three more, and that was not 
this budget year, I think it was the last budget.
    I mean, it is the way you are treated, the way women--they 
are not given the recognition of being the backbone of a lot of 
our economy. And you are the fastest growing segment. Why is it 
that we have to fight and plead and beg for every cent?
    So my response to you is, help. Thank you, Mr. Chair.
    Chairman Manzullo. Let me, if I could just take a minute or 
so here. I was raised in small business and my heart is in 
small business. And this Congress has done a remarkable job on 
helping out the small business people. We will go through just 
a very short list here. When the tax cuts went through, that 
increased the bonus depreciation from 30 percent to 50 percent. 
Increase small business expensing from $25,000 to $100,000. And 
I have talked to a lot of guys with machine shops in Rockford 
and because of this provision whereby they could get back their 
money within one year of buying new machinery, as opposed to 
over a period of years, this helped them acquire the machinery 
they needed in a very short period of time, without having to 
wait years and years to depreciate it. A lot of shops have 
struggled and some have not made it in Rockford, but many of 
the guys that did make it appreciate the fact that Congress 
stepped up and did that.
    This death tax is extremely important. There is a figure 
out there that says something like I think it is 40 percent of 
small machinery, small manufacturing facilities do not get 
passed down to the children. The figure is staggering because 
of the tremendous cost of capital that is involved. You know, a 
father who is a lawyer can pass down his practice as it were to 
his son who is a lawyer at a very little cost, if any at all, 
because those are paper transactions. And services have a very 
difficult time being evaluated for estate tax purposes.
    But when we decided to get rid of that death tax, because 
it was killing the restaurant industry, it was killing the 
people with machinery and it was also killing the farmers back 
home. I remember one time when I was practicing law, when I had 
to tell the family that they had to sell one of their farms 
just to pay the death taxes. We got rid of that or at least 
moved down the road towards doing that.
    We got involved with the health savings accounts. I mean, 
any number of things that we have done. There is a difference 
in philosophy. Programs are good. If you have a program, you 
should fund it, otherwise you should not have it at all. That 
is the angst that we see here and I join in that.
    Personally, I would rather see small business people have 
access to capital with the ability to make their own decisions 
on where they are going to go. I mean, you can only have so 
many programs after awhile. I think the SBA should concentrate 
on, for example, making the 7(a) the best program there is, 
make it open for everybody, keep it at 85 percent and not have 
to come back here year after year after year. If the flagship 
program, which is the 7(a) were made so that each year was not 
subject to an appropriation, then it would be more predictable, 
more open for people and Congresswoman Velazquez and I would 
not have to, as it happens every year, have to get into a tango 
with the Administration to get them to write the check in order 
to fund it.
    So not everything is perfect. And we just try our best, I 
guess, based upon our philosophies. But, Terry, I am not going 
to let you leave here until you tell these people what you did 
prior to becoming President of the Women's Chamber of Commerce.
    Ms. Williams. There is a big change.
    Chairman Manzullo. There is. I want you to tell them.
    Ms. Williams. Well, you are very kind, but then I am going 
to squeeze in a response to you.
    Chairman Manzullo. I am responding to you, Terry. All 
right, go ahead.
    Ms. Williams. I appreciate your opportunity to speak.
    Chairman Manzullo. Go ahead.
    Ms. Williams. I was a conductor. So I----
    Chairman Manzullo. Well, not a train conductor, but an----
--.
    Ms. Williams [continuing] Orchestra conductor. No, not a 
train conductor, an orchestra conductor, it is true. So I am 
used to like making things happen, so hopefully I can make some 
things happen today.
    One of the things I would really lies to articulate to you, 
sir, I understand your commitment to small business. You would 
not be the Chair of this Committee if you were not.
    Something to really understand about women in business, you 
talk about, for instance, equipment, size of equipment, 
manufacturing. There are about two percent of all women-owned 
businesses that are manufacturers, so we are talking about two 
percent. About 50 percent are service oriented businesses that 
do not have equipment. So it is really, really a challenge to 
us.
    And you talk about size and getting cuts and things. Now 
take the businesses you were talking about and make them a 
third of the size that you are used to seeing. That is a women-
owned business. You know if there are a third of the businesses 
in the marketplace only getting ten percent of the revenues, 
then they are a third of the size of the market.
    And when we talk about just sort of standardizing loan 
programs, one of the challenges that we have in the market 
right now is that there is micro, small, medium, large. There 
is a breadth of businesses in the marketplace and if we 
standardize a program, then we need to make sure we are 
servicing the whole breadth of the market with that one 
program. That is why we fight so hard to make sure that there 
are niches of programs that serve the marketplace and serve 
women. Thank you.
    Chairman Manzullo. Well, the micro loan program was 
abandoned because of the high rate of default on it. It became 
an issue of safety and solvency. It is not abolished yet, but 
that is one of the reasons why----
    Ms. Velazquez. Can I correct the record, Mr. Chairman? The 
micro loan program has a lower default record than the 7(a) 
loan program, so that is not the reason.
    Chairman Manzullo [continuing] Well, we would disagree on 
that point. But one thing we agree on is that you ladies have 
been tremendous witnesses. You have traveled from long 
distances. You know, the purposes of these hearings is many-
fold. We have to draft legislation that deals with lots and 
lots of issues and oftentimes when we are sitting there trying 
to figure out where to go in policy, we make our decisions 
based upon the testimony that we hear here in Washington, the 
things we see in our congressional districts. The beauty of a 
congressional hearing is the fact that we have an opportunity, 
normally within about an hour and a half, to hear testimonies 
from people all over the country. Different backgrounds, 
different situations, and that is what we heard today. I cannot 
tell you how much I appreciate your coming here this afternoon, 
traveling to Washington. What we are going to do, as I said 
before, the record will accept your complete statement and as 
soon as we get a bound volume--I do not know how long it will 
take--of the testimony, we will make sure that we send it to 
each of you. Again, thank you for coming and this hearing is 
adjourned.
    [Whereupon, at 4:38 p.m., the Committee was adjourned.]

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