[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]



                                                   S. Hrg. 102-000 
 
                      VETERANS ACCESS TO CAPITAL

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

                                HEARING

                               before the

            SUBCOMMITTEE ON REGULATORY REFORM AND OVERSIGHT

                                 of the

                      COMMITTEE ON SMALL BUSINESS
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED NINTH CONGRESS

                             FIRST SESSION

                               __________

                     WASHINGTON, DC, JUNE 21, 2005

                               __________

                           Serial No. 109-22

                               __________

         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
SAM GRAVES, Missouri                 DANIEL LIPINSKI, Illinois
TODD AKIN, Missouri                  ENI FALEOMAVAEGA, American Samoa
BILL SHUSTER, Pennsylvania           DONNA CHRISTENSEN, Virgin Islands
MARILYN MUSGRAVE, Colorado           DANNY DAVIS, Illinois
JEB BRADLEY, New Hampshire           ED CASE, Hawaii
STEVE KING, Iowa                     MADELEINE BORDALLO, Guam
THADDEUS McCOTTER, Michigan          RAUL GRIJALVA, Arizona
RIC KELLER, Florida                  MICHAEL MICHAUD, Maine
TED POE, Texas                       LINDA SANCHEZ, California
MICHAEL SODREL, Indiana              JOHN BARROW, Georgia
JEFF FORTENBERRY, Nebraska           MELISSA BEAN, Illinois
MICHAEL FITZPATRICK, Pennsylvania    GWEN MOORE, Wisconsin
LYNN WESTMORELAND, Georgia
LOUIE GOHMERT, Texas

                  J. Matthew Szymanski, Chief of Staff

          Phil Eskeland, Deputy Chief of Staff/Policy Director

                  Michael Day, Minority Staff Director

            SUBCOMMITTEE ON REGULATORY REFORM AND OVERSIGHT

W. TODD AKIN, Missouri Chairman      MADELEINE BORDALLO, Guam
MICHAEL SODREL, Indiana              ENI F. H. FALEOMAVAEGA, American 
LYNN WESTMORELAND, Georgia           Samoa
LOUIE GOHMERT, Texas                 DONNA CHRISTENSEN, Virgin Islands
SUE KELLY, New York                  ED CASE, Hawaii
STEVE KING, Iowa                     LINDA SANCHEZ, California
TED POE, Texas                       GWEN MOORE, Wisconsin

                     Tom Bezas, Professional Staff

                                  (ii)


                            C O N T E N T S

                              ----------                              

                               Witnesses

                                                                   Page
Elmore, Mr. Bill, Office of Veterans Business Development, US 
  Small Business Administration..................................     3
Wilson, Mr. Don, President & CEO, Association of Small Business 
  Development Centers............................................     5
Kerr, Ms. Patricia, Missouri Veterans Ombudsman, State of 
  Missouri.......................................................     6
Alford, Mr. Harry, President/CEO, National Black Chamber of 
  Commerce.......................................................     9

                                Appendix

Opening statements:
    Akin, Hon. W. Todd...........................................    22
Prepared statements:
    Elmore, Mr. Bill, Office of Veterans Business Development, US 
      Small Business Administration..............................    25
    Wilson, Mr. Don, President & CEO, Association of Small 
      Business Development Centers...............................    36
    Kerr, Ms. Patricia, Missouri Veterans Ombudsman, State of 
      Missouri...................................................    54
    Alford, Mr. Harry, President/CEO, National Black Chamber of 
      Commerce...................................................    59

                                 (iii)
      



                       VETERANS ACCESS TO CAPITAL

                              ----------                              


                         TUESDAY, JUNE 21, 2005

                   House of Representatives
    Subcommittee on Regulatory Reform and Oversight
                                Committee on Small Business
                                                     Washington, DC
    The Subcommittee met, pursuant to call, at 2:05 p.m., in 
Room 311, Cannon House Office Building, Hon. Todd Akin 
[Chairman of the Subcommittee] Presiding.
    Present: Representatives Akin, Kelly, Poe, and Bordallo.
    Chairman Akin. I have got a little bit of bad news relative 
to our time schedule. Supposedly, a vote is going to be called 
in a minute and a half to 2 minutes. So I think what we are 
going to procedurally do is I am going to go ahead and read the 
opening statements, and then we will adjourn temporarily for a 
recess, that is the word I was looking for, a recess for 
probably--it is a 15-minute vote, and then a 5-minute vote 
after that, so I would think, perhaps, in total, it will take 
about 20 minutes for the recess. That is the actual vote right 
now. So we will do that, and then come back and pick up. I am 
sorry, I don't schedule the votes, I just have to vote when 
they call.
    Good afternoon. I would like to extend a warm welcome to 
those of you who have taken time out of your busy schedules to 
testify before the committee this day. We are here to discuss 
the current obstacles that prevent veterans access to capital, 
and more specifically, the barriers that self-employed 
Reservists and Guardsmen face in maintaining financially 
solvent businesses during deployment.
    As we all know, small businesses play a critical role in 
our economy. Small businesses pay a major portion of our 
Nation's taxes and employ a majority of our workforce. In fact, 
small businesses employ approximately 18 percent of all 
Reservists who hold civilian jobs. Moreover, the Congressional 
Budget Office estimates that of the 860,000 Reservists in the 
Selected Reserves, approximately 9 percent are self-employed. 
And many self-employed Reservists experience economic hardship, 
both during deployment and after their tour of duty.
    According to one Department of Defense survey, 22 percent 
of the Reservists who had recently been activated said that the 
damage done to their business was a serious or very serious 
problem.
    To date, there are several Federal programs that have been 
set up to assist these small businesses. Bill Elmore, from the 
Small Business Administrations Office of Veteran Business 
Development is here to discuss some of the programs, and how 
our soldiers may take advantage of them. Welcome, Bill again.
    And then Don Wilson, president of the Small Business 
Association Centers, SBDCs, will provide us an insight into the 
role SBDCs play in providing assistance to self-employed 
Reservists and veteran small business owners.
    Ms. Patricia Kerr, Veteran Ombudsman for the State of 
Missouri, is here to explain to us the challenges faced by the 
soldiers, their families left behind, and the States 
responsibilities during their deployment.
    And lastly, we will hear from Mr. Harry Alford. Mr. Alford 
is here in his role as the president and CEO of the National 
Black Chamber of Commerce. He will explain the impact on his 
members' business, while many of the owners and proprietors 
have been sent overseas in our recent conflicts.
    Witnesses, I thank you for coming. And before we get 
started, I would like to greet my distinguished colleague from 
Guam, ranking member, who has now gone over in the finest of 
style to vote when she is supposed to, Congresswoman Bordallo, 
and invite her so say a few words. If she is here when I 
return, we will go ahead and let her have opening statement, 
and then after that we will just go to each of you.
    I am going to ask each of you to do a 5-minute opening 
statement, and you know the little light in the thing there 
gets red when you run over your five minutes, and then after 
that we will do questions and answers.
    If there are not too many people here, I like to run these 
things a little bit more as a discussion than having an 
excessive amount of formality. But we will need a little 
recess. I think there are probably some staff people to help 
you find the nearest Starbucks or ice cream place if you need 
it for 15 or 20 minutes until we are ready to go. Thank you 
all. The committee is in recess. Thank you.
    [recess.]
    [Chairman Akin's opening statement may be found in the 
appendix.]
    Chairman Akin. The committee will come to order. And we 
will now hear an opening statement from Ms. Bordallo, and our 
Minority Ranking Member and good friend of the committee, and a 
good friend of small business, proceed.
    Ms. Bordallo. Thank you, Mr. Chairman. And I apologize for 
being a bit late, but as you know, I represent the territory of 
Guam, so we do not vote on the floor. So that is why you saw me 
standing here during the voting process, I just want to 
explain.
    Today, more than ever, our Nation's veterans are facing a 
myriad of challenges in starting and running their own 
businesses. From rising healthcare, regulatory and energy 
costs, veteran business owners are experiencing many obstacles 
to creating and growing their businesses, and I have seen this 
right at home.
    In addition, many veteran business owners are either being 
deployed themselves or their employees are be sent overseas, 
making their job of running a business even more challenging, 
yet many small business owners have difficulty qualifying for 
traditional bank loans, and are all too often forced to use 
various methods of financing, such as credit cards and personal 
loans to finance their business ventures. So that is why 
programs such as SBA's 7(a) loan program and the 7(m) micro 
loan progam are so important to veteran entrepreneurs. These 
programs are meant to provide entrepreneurs with an affordable 
and a sensible source Of capital. The 7(a) loan program 
provides 30 percent of all long-term loans. And in fiscal year 
2004 alone, veteran business owners received nearly 8,000 7(a) 
loans for over $1.3 billion.
    The micro loan program has a specific mandate, to target 
veteran entrepreneurs for assistance, and in 2003 provided 
nearly 200 loans, totaling 2 million, to these enterprises. So 
clearly, these programs have been heavily used and effective in 
giving veterans the affordable capital they need.
    As the bill is marked up this week in the Senate, it will 
be up to the Senate to take the necessary action to ensure that 
capital is affordable and available to our Nation's veterans 
through the SBA's 7(a) loan program. And this is the first big 
step in lowering the increased fees that are currently facing 
our Nation's veterans small business owners.
    Once this funding is restored, it will be important for 
this committee to focus on H.R. 1868, the Access to Capital 
Act, which would ultimately lower the fees on both small 
businesses and lenders. By doing so, Congress will ensure that 
this large source of capital is both available and affordable 
to the thousands of veteran small business owners that rely on 
it.
    And that is my opening statement, Mr. Chairman.
    Chairman Akin. Thank you. Well, we will now proceed with 
the opening statements of the witnesses. And I believe I was 
corrected, they are to be 5 minutes long, and then we will just 
go into some questions afterwards.
    And our first witness will be Mr. Bill Elmore, Office of 
Veteran Business Development, Small Business Administration, 
hailing from Washington, D.C. Bill, welcome, thank you.


     STATEMENT OF BILL ELMORE, OFFICE OF VETERANS BUSINESS 
         DEVELOPMENT, US SMALL BUSINESS ADMINISTRATION

    Mr. Elmore. Thank you, sir.
    Chairman Akin, Ranking Member Bordallo, thank you for your 
invitation to testify today.
    The committee is interested in barriers that confront self-
employed Reserve and Guard members who, while activated, must 
maintain their viable small businesses back home.
    The administration is fully committed to supporting 
Reservists who maintain or establish successful small 
businesses. We believe it is vitally important; we offer all of 
our assistance to every Reservist to minimize damage that may 
occur.
    Reservists are unique in their dual mission of defending 
America, while maintaining their business. Their skills are 
vital to our defense and to their success in small business. 
This dual mission is a serious challenge, and simple solutions 
will not mitigate all the potential circumstances activated 
business owners face.
    Thus far, through Administrator Hector Barreto's 
leadership, SBA has lead Federal government's efforts. Since 
2001, our Military Reservist Economic Injury Disaster Loan has 
been provided to 228 small businesses for an average of $88,863 
each. SBA initiatives include, special district office 
outreach, production of Reservist outreach and program tools, 
directing our four veterans business outreach centers to 
enhance assistance for Reservists, highlighting our Reservists 
programs in our Vet Gazette newsletter, and establishing a 
Special Reservist Web page on the SBA Web page, with reciprocal 
links.
    We initiated collaborative outreach with DoD, providing SBA 
Reserve and Guard fact sheets, and program tools to 
mobilization and demobilization sites and to DoD personnel. We 
have produced thousands of post-mobilization business planning 
guides, and an interactive CD being distributed to 17,000 
Reserve and Guard units, and to thousands of individuals, SBA 
programs, offices and partners.
    I have presented at more than one hundred events and 
testified and briefed Congress about this. We provided guidance 
to our participating lenders and our certified development 
companies. And our disaster program, which manages the MREIDL 
program, provides priority processing to MREIDL loan 
applications and recipients.
    We provided specific instructions to our 1,100 small 
business development centers, and SCORE has created a special 
initiative targeted to self-employed Reservists.
    Two recent reports provide a basis for policy deliberations 
for self-employed Reservists. The first paper, prepared for the 
Assistant Secretary of Defense for Reserve Affairs, titled, 
"Analysis of Employer Costs From Reserve Component 
Mobilization" was released December 2004 by the Institute for 
Defense Analysis. I have a copy, sir, if you would like that.
    The second paper was published by the Congressional Budget 
Office in May 2005 titled, "The Effects of Reserve Call-ups on 
Civilian Employers."
    These papers provide a formative basis for substantive 
deliberations for Congress, for SBA, and for DoD. Both reports 
suggest cost consequences are greater for small business than 
large ones, especially for small businesses owned by 
Reservists. These papers raise fundamental questions of 
fairness and small business viability. They examine approaches 
that may mitigate problems, but make no definitive 
recommendations.
    Clearly, we understand the issues faced by self-employed 
Reservists do not present a simple one-size-fits-all program 
answer. That concludes my verbal testimony, sir, and I welcome 
any questions you may have--and ma'am, excuse me.
    Chairman Akin. Thank you. You ended up redeeming 38 seconds 
of your time, Bill. You are doing very well here this morning.
    [Mr. Elmore's statement may be found in the appendix.]
    Chairman Akin. Our next witness will be Mr. Don Wilson, who 
is President and CEO of the Association of Small Business 
Development Centers from Burke, Virginia.
    Don, proceed.


    STATEMENT OF DON WILSON, ASSOCIATION OF SMALL BUSINESS 
                      DEVELOPMENT CENTERS

    Mr. Wilson. Mr. Chairman, thank you very much, Ranking 
Member Bordallo; we appreciate the opportunity that both of you 
have afforded ASBDC to testify here today.
    As you know, the Association of Small Business Development 
Centers represents the Nation's 63 small business development 
center programs in all 50 States, D.C., Puerto Rico, Guam, 
American Samoa and the Virgin Islands. That program every year 
serves about 750,000 small business and aspiring small business 
owners face to face in one-on-one counseling or in training 
sessions.
    Roughly 8 percent of those are self-declared veterans. Last 
year we served approximately 60,000 veteran business owners, 
which exceeds the numbers of all other Federal management of 
technical assistance programs combined. We actually think, Mr. 
Chairman, that the numbers are larger than that because we are 
only speaking of self-declared veterans, and as Mr. Elmore 
knows, oftentimes veterans do not self-declare. So we 
anticipate that actually the number of our clients who are 
veterans may range as high as 12, perhaps even as high as 15 
percent.
    In February, when I testified before the full committee on 
the SBA budget, I brought to the attention of the committee 
that we were beginning to get very serious anecdotal evidence 
from our counselors in the thousand centers nationwide that 
Reserve call-ups were having a real impact on businesses all 
over the country. In May, Ms. Snow had the CBO study, and you 
have seen the articles in the Post and so forth, and it is very 
clear that problem is growing.
    When a veteran is called up--I mean, when a Reservist is 
called up and is gone for a year or 2 years, it is absolutely, 
often catastrophic for the business. And capital alone is not 
the answer. It can be very, very important, and certainly the 
Economic Injury Disaster Loans that the SBA provides and that 
Congress has provided for are very important, and our 
counselors are some of the leading sources of helping 
Reservists and Guardsmen fill out their applications for 
Economic Injury Disaster loans. But the biggest issue is 
planning. One of the things we are most concerned about is 
obviously if you are a Reservist, you can be called up on 24 
hours notice. And if you have not planned before then, the 
likelihood of a disastrous impact on your business is very 
real.
    The publication that Mr. Elmore produces and that we think 
very highly of in our SBDCs, we distribute to clients, we keep 
them in our centers, and I commend SBA and Mr. Elmore for that 
publication, it is outstanding. One of the things it stresses 
is planning, planning before you are actually activated. And 
there is where SBDCs can come in and make such a real 
difference in working with the Reservist who has not yet been 
called up. I know one of the things that we are talking about 
with DoL and DoD and VA is including additional information 
about SBDCs and the TAP program for the people who are actually 
leaving the military. But what needs desperately to be done is 
for Reserve units to make anyone who is a small business in 
their Reserve unit, before they are called up, aware, you know, 
just tell them, look, the Federal Government has a resource for 
you. SCORE and women centers and SBDCs can help you avoid many 
of the trouble spots if you will go work with them now before 
you are called up.
    So the numbers are very real. I know when you talk about 
850,000 Reservists and probably 400,000 are called up, or more, 
480, I look at the numbers in the CBO study and I can assure 
you that the numbers that they estimate of small businesses 
impacted, I believe, are truly low. And you will see in my 
complete testimony, Mr. Chairman, that they could be, the 
complete testimony in the record, as one of those reasons.
    So one of the things we want to do, we want them planning 
with there local SBAs, their SCORE chapter, their womens 
business centers to prepare for the contingency of leaving.
    Now one of the things that we do so very well is that once 
they are gone, is that we work with their families, we work 
with the employees that are left. But it is not just when a 
Reservist is called up, it is when an employee who is a 
Reservist is called up. I mean, people talk about an essential 
employee, and if you are in a small business of 5 or 10, 
probably almost every one of your employees is essential. I 
mean, if you lose 2 people out of a 10-man firm, that is like a 
500-man firm losing a hundred people. Imagine what that would 
be like. So that planning is absolutely essential for the 
people left behind, the training and the counseling that we can 
provide them while the Reservists or the Reserve employee is 
broad is very, very critical, and we are trying to expand that.
    I have proposed to my board, Mr. Chairman, only yesterday 
that the SBAs across the Nation--I am waiting, they will have 
to approve that--that the SBAs across the Nation provide free 
training to every small business that indicates that they are a 
small business that has been impacted, either by the loss of 
the owner or a key employee going abroad.
    So the program is there. It has got an amazing footprint 
with a thousand centers. We are prepared to assist--we raised 
this issue back in February, we are delighted to see the CBO 
and others paying attention to in this hearing, accentuating 
it, but it needs planning and it needs expansion of capacity 
for SBDC to be able to tend to the number that is coming to our 
doors.
    Thank you, Mr. Chairman.
    [Mr. Wilson's statement may be found in the appendix.]
    Chairman Akin. Thank you very much for your comments.
    Our third witness is Ms. Patricia Kerr. And you are the 
Missouri Veterans Ombudsman for the State of Missouri.
    Ms. Kerr. Thank you, sir.

STATEMENT OF PATRICIA KERR, MISSOURI VETERANS OMBUDSMAN, STATE 
                          OF MISSOURI

    Ms. Kerr. Well, if I may, thank you for inviting me to be 
here. I have been the former president and CEO of the largest 
court reporting firm in central Missouri, as well as having two 
other successful businesses. I am intimately familiar with the 
requirements of a small business person.
    Additionally, I am proud to say that I am the mother of a 
returned servicewoman, Captain Katherine Numerick, who is with 
me here today, and she deployed during rotation round of OIF. 
And also with me are two fine folks that are with Operation 
First Response, Peggy and Steve Baker. And they work with the 
very injured out of Walter Reed.
    We, in the State of Missouri, are very proud of the forward 
thinking of our governor, Matt Blunt, a veteran himself, and 
our legislative body, as we have successfully steered several 
bills through the 93rd Missouri General Assembly, including a 
Family Military Relief Bill, which we are excited to sign on 
Monday.
    As a State Veterans Ombudsman, I work to bring the numerous 
government, private and nonprofit services together to assist 
our wounded and those military returning to their communities. 
In the last 7 months I have had the opportunity to coordinate 
private contributions for our wounded and financially strapped 
Global War veterans totaling close to 140,000, and have 
negotiated and kept several homes out of foreclosure.
    Today, I received a call from Wisconsin of a Marine amputee 
who is about to lose his home. I have formed a national 
coalition with organizations like the VFW's Unmet Needs 
program, the Stan the Man Foundation located in Missouri and 
the Carolinas, USA Cares in Kentucky, Operation First Response 
out of Walter Reed, and the Coalition to Salute American Heroes 
in Virginia in an effort to maximize services and 
accessibility.
    Several hundred of Missouri's injured military have worked 
with me to sort through problems they and their families faced. 
Having shared that background with you, I thank you for being 
interested and being on this team because it is you who drives 
the boat. And we believe there are four actions Congress can 
take to improve Global War veteran entrepreneurship.
    First, assist with Federal funds for veterans ombudsman in 
each State's Veterans Commission, with sufficient support staff 
to provide a single point of contact. In-state personnel 
incorporate State and local specific resources and have the 
networks in place within the communities to quickly access 
referrals for immediate response to the needs of our return 
veterans.
    Second, eliminate Federal business taxes for Global War 
veteran entrepreneurs during their mobilization and deployment.
    Third, Federally support community-based organizations, 
underlining community-based organizations, such as the St. 
Louis Veterans Business Resource Center which has immediate 
access to financial and professional support resources that can 
quickly assist these Guard and Reservists.
    Fourth--and this is a little bit of a--this one is tough--
keep deployments in the Army at a shorter duration. For my 
doctors, shorter duration. For folks like my daughter, make it 
longer, get her home. You can't win for losing here.
    Why would these four actions make a difference to our 
Global War veteran entrepreneurs? Nationwide, as you said, you 
said 18 percent of our military personnel are business 
entrepreneurs or desire to open a business. In Missouri, there 
are more than 25 percent of our total population are veterans. 
Folks, that is an election. Failure to support our Global War 
small businessmen and women will result in decreased benefit to 
local, State, and thus Federal economies, and continued peril 
in recruitment and retention for our Armed Forces.
    How do I know this? Having worked with hundreds of military 
across the United States, I have also worked with mobilized 
Reserve physicians in our State who made 5 percent of their 
annual income based on their military salaries. The annual 
overall loss of business for these folks during the 4- to 6-
month deployment cycle created a 60 percent net loss. While 
their acts of having other health care professionals cover 
their practice saved the practice, the impact of that amount of 
deployment and care under another practitioner may cripple the 
business in the short term.
    Physicians are not the only service members impacted. 
Global War veteran businessmen and women own Postal Express 
stores, landscaping businesses. And one of our Marine 
Reservists has reopened his construction business for the third 
time.
    Currently, there are Military Disaster Loans available 
through the SBA. I encourage our folks to use them. They have 
used them; they have benefited from them. Unfortunately, these 
are often too little too late. They need the dollars much, much 
quicker. Bill and I have talked about this. Even in the best 
circumstances, a service member must return home, reacquire the 
clients, do the work, bill, and wait to get paid; easily a 90-
day cycle. If you add that to 120 days to get your loan 
through, they are without dollars for close to 6 months. Add to 
these the factors of personal, psychological and sometimes 
physical healing that must occur when our veterans return home.
    For our wounded or injured veterans, their return to the 
United States does not provide access to their businesses. 
CONUS medical hold facilities are often far from home, and thus 
prohibitive for travel. Even at a radius of 50 miles one way 
with the new CBOCs can be cost prohibitive when you are working 
from behind.
    Tax relief during mobilization and deployment will enable 
more Global War veteran entrepreneurs to maintain their 
businesses while serving overseas. Veterans Ombudsmans placed 
at the State level are capable of knowing national and State 
resources for veteran entrepreneurs, as well as developing and 
maintaining knowledge and relationships at the local level. No 
matter how willing staff at the VA, the SBA or one source 
entities may be at the Federal level, the volume of personnel, 
as Don said, and the diversity of available resources and 
resulting needs are simply insurmountable.
    I want to stop a minute and tell you that I have been asked 
what makes this veteran business person of the Global War on 
terrorism any different than a previous veteran, or for that 
matter, any different than any other businessman or woman. I 
submit to you, and you know, September 11th. This is the first 
time since the Korean War that there has been a call-out to our 
military to this magnitude. The use of the States National 
Guard and Reservists put the military member back into civilian 
life after deployment without a strong military network, such 
as the one in place for active duty.
    Federal participation with State programs is paramount to 
continued success for these brave Guard and Reserve personnel 
and their families.
    Subject to your questions, I thank you for the opportunity 
to address this committee.
    Chairman Akin. Thank you so much for coming up here, 
Patricia, to testify, and for your valuable insight.
    [Ms. Kerr's statement may be found in the appendix.]
    Chairman Akin. Our last witness is Mr. Harry Alford, and he 
is president and CEO of the National Black Chamber of Commerce 
in Washington, D.C. So you are nearby then. Thank you very much 
for coming over today.


 STATEMENT OF HARRY ALFORD, NATIONAL BLACK CHAMBER OF COMMERCE

    Mr. Alford. Thank you, Mr. Chairman, Ranking Member 
Bordallo, and distinguished members of the Small Business 
Regulatory and Reform Oversight Subcommittee.
    I am honored to be given a chance to testify today about 
the challenges faced today by our most prized citizens, the 
U.S. Military.
    The challenges are new and in sharp contrast to the 
environment faced by soldiers of the past. This Nation has 
always, in some form or another, recognized its veterans. Land 
grants, special bonuses and eventually the G.I. Bill of Rights 
have been used to honor the sacrifice of those who defended 
this Nation. The G.I. Bill of Rights, subsequent to World War 
II, is the firm reason for the development for the American 
middle class via opportunities in home ownership and education.
    I was drafted into the U.S. Army in 1971. As a college grad 
with a prize job at Proctor & Gamble, a wife and a second child 
on the way, this was going to be a great financial challenge. 
In retrospect, I had two things in my favor, a strong faith in 
God, and an unconditional love for this Nation. In eight 
months, I was commissioned a 2nd Lieutenant and served 2 years 
of permanent duty at Dugway Proving Grounds, Utah. We made it 
through it all, and upon discharge I returned to Proctor & 
Gamble. It was assumed and realistic during those times that 
your civilian job would be waiting for you upon your return.
    I had also had valuable benefits in terms of free education 
and homeownership. It made one so proud to love this country 
and have his country love him back. I am proud today, as ever, 
about serving my country.
    Today's military is quite different. Many of those serving 
in combat zones do not exactly know the length of their tour of 
duty. Those in the National Guard and Reserve units can be 
called up suddenly and endure much financial pain and upheaval. 
To the business owner, this could be potentially fatal to his 
enterprise.
    Today's economy is not big business or job-oriented as 
before. Small business is a growing and large entity in the 
United States economy. It provides 70 percent of all new job 
growth in this Nation. The percentage of business owners 
serving in the Nation's military is exponentially greater than 
during the conflicts of the past.
    Upon returning from combat, an entrepreneur can find 
financial chaos, tragic things such as bankruptcy, credit 
damage and all the ills that come with that, such as domestic 
stress and emotional disrepair. The veteran benefits for 
today's soldier are lacking and don't address modern day 
society as they should. Let us focus in on the veteran who is a 
business owner or is becoming a business owner. There should be 
some kind of benefits that apply to the modern economy.
    Let me first say, before I make recommendations, it saddens 
me to hear people say that government guaranteed loans are 
needless entitlements, handouts or taxpayer giveaways. Members 
of this committee, these are not handouts or giveaways, the 
American veteran has a right to programs to offset the 
sacrifice made for this Nation. It is a debt owed to each and 
every veteran who has put his or her life on the line.
    Many of these combat veterans will not be in that delivery 
room when a child is born; they won't be there to witness the 
first little league home run by their son; they won't be there 
at their daughter's baptism. No. They will be far away in a 
strange land catching hell. Far too many will not come back 
home, and far too many will not come back alive. These men and 
women lay it all out for the safety of each and every one of 
us. This Nation is too great and too proud to let its heroes go 
unrecognized. It is time to make the modern G.I. Bill of Rights 
applicable to the soldiers' needs of today.
    The current 7(a) loan program SBA guarantee has been quite 
successful in developing new business and creating new jobs. It 
provides 30 percent of all long-term loans and is a proven job 
creator. Last year alone, the 7(a) program generated half a 
million jobs across America .That is one job for every $33,000 
loan.
    As these veterans return from combat, the demand on 7(a) 
loans is going to rise. We need to increase the amount of 
funding for the 7(a) loan program, at least reserve a 
significant pool for modern day veterans who can resurrect 
their business standing after their absence.
    In addition to those veterans already in business, veterans 
who may consider entrepreneurship should also be encouraged to 
take advantage of the 7(a) loan program. Veteran incentives, 
such as lower fees and lower interest rates can be established. 
This is the least we can could do for our new heroes.
    Finally, while a business owner serves his or her Nation 
for indefinite tours, his business suffers from its absence. 
This absence may extend to the point of damaging the growth of 
his business, or maybe even lead to the demise of the 
enterprise. As the veteran puts his life on the line to protect 
this country, we should provide him or her with some form of 
insurance that could provide some type of protection during his 
absence.
    Key Man insurance, with affordable rates for the veterans 
business should be provided during combat tours. As the veteran 
protects us, we can protect his business with some form of 
alternative to financial collapse. Key Man insurance is not 
costly, and I believe a study should be done to determine the 
feasibility of the such a plan for the veteran business owner.
    Key Man insurance, greater availability to the 7(a) program 
with special rates and fees should be considered for the modern 
day veteran who is an entrepreneur. A Nation that honors and 
respects its veterans is a Nation that can endure.
    Again, thank you for this opportunity.
    [Mr. Alford's statement may be found in the appendix.]
    Chairman Akin. Thank you, also again, Harry. On time, and 
gives us a little bit of time to have a discussion. We will 
start off a little bit formally with a few questions, but I 
hope people feel free to go back and forth--
    Mrs. Kelly. Mr. Chairman, could I have a point of 
clarification, please?
    Chairman Akin. Yes.
    Mrs. Kelly. It seems to me that this witness was testifying 
that the 7(a) loan program will help veterans. 7(a), as I 
understand it, is set at for minorities which will help women 
veterans only, and minorities, but it is not a program that is 
set aside that would help any--so you have a cohort of male 
veterans that would not be helped by 7(a). The 8(a) program, I 
believe, is the one that would avail the veterans more, and I 
would like a clarification of the way that law works.
    Chairman Akin. Actually, the 7(a) is open to everybody. 
Okay.
    Mrs. Kelly. That is not the way I recognize the law in the 
past. Has that changed?
    Thank you. I just got this clarification here. It 
apparently has, and 8(a) is the set aside.
    Chairman Akin. Right. That is right.
    Mr. Alford. Mr. Chairman, if I may add, the 8(a) is not a 
lending program. It is a procurement program.
    Mrs. Kelly. No. It is a procurement program.
    Mr. Alford. It is apples to oranges. It is not a lending 
program at all, the 8(a) program.
    Mrs. Kelly. No, I understand that it, it is procurement. 
And that is part of what we are trying to do. The fight we have 
with our veterans is to even try to get the DoD to raise up its 
procurement to the 3 percent that we have actually asked the 
veterans to be able to have. They haven't yet accomplished 
that.
    I am sorry, Mr. Chairman, I didn't mean to get interrupted 
here.
    Chairman Akin. That is all right. You will have just a 
minute and be able to jump right in here.
    I was going to step back just a little bit. You know, with 
somebody that has had some small business experience 
personally, I just can't imagine being called up and all of a 
sudden in a couple of days just dropping because small 
businesses are not loaded with extra resources, they are always 
lean at best, and then to all of a sudden have one or two key 
people taken out, it is a complicated mix, indeed.
    I guess the question I had was, it would seem a little bit 
odd for somebody who was in that position in the small business 
to be on the Guard or Reserve in the first place, though, 
because you are opening yourself up to that possibility. It 
would seem like, to a certain degree, our first line of defense 
would be one of maybe preemptively to take a look at, you know, 
how do we warn people, maybe make sure that some people that 
really shouldn't be on the Guard or Reserve, that don't sign up 
for it. Maybe they are in a position where they just can't be 
spared by that business or their wife can't take over some part 
of something, and maybe they have made a mistake even to be 
part of that. So if you would respond to it. First the front 
end, the preventative side of it. And you can go in whichever 
order you would like. We will start with you, Harry, and just 
go across and let each one of you make a comment if you would 
like.
    Mr. Alford. Yes, Mr. Chairman. It makes a lot of sense what 
you are saying eventually, but I believe--let's start with the 
first Persian Gulf incident.
    Traditionally, when I was growing up being in the Reserves 
and National Guard was a good way to participate serving your 
country without going to active duty or maybe even getting into 
a combat zone. But quickly and suddenly, being that there was 
no draft, and being that there was a need for military, up 
popped Reservists and National Guard being called in 1990, 
1991. Now, there are some who may have had 10, 12 years 
invested into the Reserves and National Guard, and they want to 
make a career out of it, they have got this much time, so now 
they are still there at the time of Iraq.
    So, I think that the military is showing that their 
recruiting is lacking today because there are a lot of people 
making that decision; I can't afford to be called up all of a 
sudden. Eventually we are probably going to have to face the 
music and go back to the draft, which I wouldn't object to at 
all, being a draftee.
    Chairman Akin. I was a draftee, too, and I would argue 
about that, but this isn't the right hearing to argue on that 
subject. But go ahead, Patricia.
    Ms. Kerr. Well, and if I may, in Missouri, of course, a lot 
of the communities are very rural and a lot of families rely on 
that extra income for the Guard and Reserve. In this particular 
instance, with OIF and OEF, folks found themselves with 3 days 
notice. And I will tell you, at our house, our daughter called 
as she drove off to drill and she said, mom, will you put dad 
on the phone, I have got to tell you something, that was 
leaving her 13-month old. There was no opportunity to make a 
plan.
    Did we know that war was a possibility? Absolutely. But at 
that point you couldn't make a plan, and you certainly couldn't 
do planning for your business, and you couldn't get out of the 
Guard or Reserves because stop loss was immediately in effect. 
And what tour Guard and Reserve officers are finding, unless 
they are eligible for retirement, and they submit catworks of 
VF1, they submit their officer's resignation, it is coming back 
as denied. So while we don't have an in-your-face stop loss, it 
is actually in place.
    So I think we are well past that. We have been at this, we 
are in our third year now, and these folks have to have a fix 
that they can recoup their losses that they have already 
incurred. The majority of them, the greatest percentage have 
gone and are now going again. And it is a matter of either 
their spouses didn't have the wherewithal to run the business, 
they had employees they could not depend upon. The doctors, Dr. 
Young told me as I was writing my testimony, that Pat, I paid 
six doctors to cover my business, I kept my employees on line, 
and I came back and I was nearly bankrupt. And he is a 
nephrologist and looks at deploying again. We have an ER doc 
that is leaving for his third time--in fact, I think he left 
this week.
    But you put all those pieces there, and then you put our 
guys and gals back with an injury, and the injuries, as all of 
you know, are very significant, and they can't do it. They are 
sunk. So I don't think that we can go backwards for what we 
should have done, I think that we have to fix the losses that 
they have incurred in some manner, and then find a way to--they 
don't have time to make a million phone calls, you know, one 
phone call they have got to be able to get the answer because 
they come back so quickly and they have got to hit the roads 
running so fast. And then they have got their families wanting 
their attention, they have got their employees wanting to know 
what they can do differently, and frankly it is too much. And 
when you partner that with 1 in 3 or 1 in 5 with--have some 
element of post-traumatic stress, it is way too much.
    Chairman Akin. Couple of quick comments and then my time 
runs out, too.
    Mr. Wilson. We have 25 million soldiers in the country, 
self-employed. I am not sure it is practical to say to those, 
okay, the risk is too great to you to be in the Guard and 
Reserve. I don't know if our national security can let 25 
million self-employed people say, okay, we are not going to go 
into the Guard and Reserve because the risk to our business is 
too great.
    Doctors, for example, we have got to have medical people in 
the Guard and Reserve for when an action like Iraqi Freedom or 
whatever occurs. So I am not sure you can exempt them. And many 
of them want to serve, they want to serve their country, but 
they would like to have some assistance when they are suddenly 
picked up and moved to a foreign land, some type of assistance 
for their government to help them keep their business afloat.
    Chairman Akin. Maybe you are answering my question a little 
bit too narrowly. When I said preventive, I didn't mean to say 
they can't, I am just simply saying that in some cases it may 
be that they can structure their business in a way that if 
something happens, they can handle it. Other cases it may be 
that no matter how they structure their business, it can't 
handle it. And maybe those are the ones we ought to look at 
them and say, boy, we would love to have you sign up, but the 
cost may be more than you can afford.
    And then the other piece of it is, and I think that, 
Patricia, you were implying this, and that is, if you really 
want people to be in the Guard and Reserve and they have small 
businesses and the small businesses can't afford to let them 
go, then is it the policy of the Federal Government to pay them 
for their losses. Those are all questions. But they are all 
what I sort of think of in the preventative side of things in a 
way.
    Well, Bill, probably that question will come up again. And 
we have got people on short schedules. I know certainly that 
Ms. Kelly wants to speak, but first of all we have got to go to 
our majority leader--minority leader.
    Ms. Bordallo. Ranking. Whatever you want to call me, Mr. 
Chairman.
    Thank you, thank you very much. I have a question for you, 
Secretary Elmore. SBA has approved about 228 loans from the 
military Reservists, Economic Injury Disaster Loan Program over 
the last 4 years; is that a correct statement?
    Mr. Elmore. That is correct, ma'am.
    Ms. Bordallo. In that same period of time, almost 1 million 
men and women have cycled through Iraqi and Afghanistan, and 
about 250,000 of them Reserve and Guard. Now you estimate that 
30,000 are small business owners, yet we have only provided the 
equivalent of one loan per State per year to these returns 
veterans. Is it possible that despite your efforts, our troops 
are unaware of this program?
    Mr. Elmore. I think it is clear that--and we have done a 
lot of outreach, and I tried to focus on that in our testimony, 
but there certainly are lots of soldiers who still don't know 
explicitly about these programs. And I think part of it is 
attributable to the timing questions. If you are activated and 
you have 3 days or 3 weeks notice, you have a full range of 
things. If you just go to the National Guard Family Support Web 
site, they have about 12 documents posted there that if you 
download it, it totals somewhere in the range of 2,000 to 3,000 
pages. So there is an enormous amount of things that these 
soldiers and their families have to go through, sometimes on 
very, very short notice.
    So we have tried to focus on getting the information into 
their hands as they go in and when they come out, and through 
our outreach with DoD and through our reciprocity with the Web 
pages, trying to get that information out there. But clearly, 
the numbers of people that have been activated, and I think 
based on conservative estimates, the numbers of business owners 
that have been activated, we are--I don't want to say 
surprised, because I am not sure that a loan program like Mr. 
Wilson said is always the answer, but we are surprised by the 
lack of use of the MREIDL program itself.
    Ms. Bordallo. Yes. I certainly agree. And I think, Mr. 
Chairman, this is something that the agency should look into. 
Somewhere there has got to be better communication, better ways 
of allowing these veterans to know what is available to them. 
And this is just unacceptable to me.
    Mr. Elmore. One of the points that I made in the testimony 
is the interactive CD that we produced has the MREIDL program 
on it and all of the application forms themselves, and we are 
mailing those out to all 17,000 Reserve and Guard units, 
addresses that DoD provided us. So we are hoping through that 
to get this information into their hands. Now obviously if you 
send it to a unit and the unit has been deployed, there may not 
be someone there to receive it. So no matter how we approach 
this, there is always going to be gaps in this.
    I think some of the things that Don mentioned, perhaps what 
the State of Missouri has done, for example, with the State 
ombudsman, because I have gotten to know Pat Kerr now over the 
last 6 months or a year that I discovered there was a person in 
Missouri who was paying attention to this from a State 
perspective, and I found it very important and valuable to be 
able to talk with her, and to send her these same materials so 
as she engages with these families, she can help them know what 
is available from us.
    Ms. Bordallo. So you are working through the State and 
territorial SBA offices?
    Mr. Elmore. We are working through every SBA district 
office. We are working through the regional offices. We have 
provided information now to every State Office of the National 
Committee For Employer Support of the Guard and Reserve, we 
have gone out to the small business development chapters, we 
have gone to the development centers, we have gone to the SCORE 
chapters, we have gone to the veteran service organizations. 
Every place we can think of where these men and women may come 
in touch, we are trying to get our information out to them to 
try to mitigate--
    Ms. Bordallo. Well, I might just say you are working on it, 
but I still feel that maybe we should continue, because these 
numbers here just, you know, are not acceptable to me.
    I have a couple follow-up questions, Mr. Chairman.
    You have heard other testimony that it is too little, too 
late, and it takes 120 days for a returning veteran to get his 
money. Now, would you say it is being used by business owner 
troops effectively?
    Mr. Elmore. Back to me, ma'am?
    Ms. Bordallo. Yes.
    Mr. Elmore. I think it is effective, but what you need to 
understand, this is a disaster loan and it is in our disaster 
loan portfolio, that is where Congress chose to put this loan. 
So by its nature, it is restrictive, and it requires certain 
paperwork processing. We have to have certain affidavits 
provided to us, for example, before we can begin to disperse 
those funds, because we have to be able to demonstrate in the 
files an ability for the loan to be paid back, which goes back 
to the point Don said, access to capital or access to loans--
and I think I said this in my written testimony--additional 
debt for some businesses that are being damaged by an 
activation may not be the best solution.
    So we don't believe--and I am going to reiterate again what 
Don said, we think this business planning, we think the 
suggestion that you made, Mr. Chairman, if you look at the CBO 
report, which I tried to reference because there is a lot of 
detail in there, one of the options that they touched on was 
whether or not DoD should take a different approach to 
activating Reserve and Guard. I am not suggesting that is the 
solution, but certainly that is one of the issues at play here, 
business owners that are in the Reserve and Guard, and the 
level and the pace of activations and the kinds of resources 
that are available to them before they are called. DoD used to, 
before September 11, 2001, used to provide exemptions to some 
people from activation, they still do that; but the pace of 
those exemptions, given the war demand, have gone down 
significantly. So I am not trying to cast any--anything 
negative towards DoD, they have really been a good partner for 
us, but this is a really broad question that I think the 
circumstances of individual business owners enter into this as 
much as the circumstances as being activated itself.
    Ms. Bordallo. Does anybody else on the panel wish to answer 
that or comment on it?
    Mr. Wilson. Well, I think one of the issues, Ms. Bordallo, 
is obviously folks have got to often have collateral, and some 
of them are unwilling to put up their homes; they simply don't 
want to take that risk. And that is--and there is no question 
there are many who do not know about them. Some of them, you 
know, I don't say that the paperwork is overwhelming, some of 
them don't know, and that is, to some degree, our fault, the 
resources in terms of marketing what we do, SCORE and so forth. 
But filling out those applications and having, I believe it is 
bill 3 years of financials and that sort of thing, the person 
has been gone away 2 years and he comes back, trying to put all 
that together to get those applications filed and get them 
reviewed and so forth.
    So I think--I mean, I am somewhat surprised, as you are, by 
the numbers, but the loans are available, and there are a 
number of folks out there who can help walk them through it. It 
may be a choice that they don't want to go into debt like this.
    Ms. Bordallo. One final question. The two of you, I guess, 
if you would like to answer it. Should we then concentrate on 
making the 7(a) loan program more attractive to them, since the 
program made about 7,000 loans to veterans in 2004 alone. Would 
you support lowering the fees for such loans to veterans?
    Mr. Elmore. I think if the agency received that question 
from Congress, obviously we would have to take that into 
consideration in our legislative approach in what we are 
preparing to come back to you now with. I can't give you that 
sort of an answer here in this forum, ma'am. I can tell you 
that the 8,000 or so loans that we made in our 7(a) 504 loans 
in 2004 was a significant increase over the previous year.
    Ms. Bordallo. So it is 8,000 instead of 7.
    Mr. Elmore. It was a little over 8,000 loans in 7(a) 504 
and micro loan--I don't have the exact number in front of me. 
But compared to 2000, for example, I think we were in the 4,000 
loan range. So we have had a real significant growth in the 
number of loans we make to veterans, including Reserve and 
Guard.
    But again, access to capital, while it is critical for many 
small businesses, for a business that is at risk for damage may 
not be the final solution for many of them.
    Mr. Wilson. And ASBDC is always concerned about the cost of 
access to capital. And years ago, when there were various 
coalitions, the Chamber and Nagel and others who were concerned 
about the stability of the 7(a) program, we were very concerned 
that there wasn't adequate dollars for subsidy. Congress, in 
its judgment, has decided that the best way to stabilize that 
program, certainly a year or so ago, was to do away with the 
subsidy and increase fees.
    There are various people that take different--the number 
counts and so forth, what is happening with the number of 7(a) 
loans, whether or not those increased fees have reduced the 
loans or reduced the size of loans, or whatever. But I can 
assure you that our counselors are always concerned about what 
it cost a small business person to get access to the 7(a) 
program.
    Chairman Akin. I need to jump in here because we are 
supposed to run about 5 minutes. And Mrs. Kelly has been very 
patient and has some questions I am sure. Why don't you jump in 
here now.
    Mrs. Kelly. Thank you very much, Mr. Chairman.
    There are a couple of things that go through my mind right 
now. First of all, the SBA has had an excellent program called 
SCORE. It happens that in my area, SCORE is extremely 
effective, they do a great deal of outreach, if my area were to 
service to serve as a model for the rest of the Nation, it 
wouldn't be impossible, once a Reservist is called, to 
immediately put a SCORE person into that business the next day 
and quickly divine a business plan that would keep that 
business operational.
    That would be, if you had something like a retail business 
where you could rely on other people who new the business. 
Where you have a doctor with a unique set of skills, and that 
business will definitely fail, I am wondering about whether or 
not the SBA would ever consider something like a set figure 
revolving fund that could be drawn upon to rescue, if you will, 
at least at a certain level that small business until the 
doctor got back to the community, or the individual with the 
unique set of skills got back to the community.
    If you owned a garage, you are a mechanic and you are the 
mechanic for your village and you get called up, has anybody 
ever talked about the possibility of some sort of way to at 
least pay off--continue to pay the mortgage on that garage and 
the tools, or whatever, so that there is some kind of a way, 
even if it is a 1 percent interest on a revolving back? We do 
state revolving funds on various things, we do other revolving 
funds. There is a model there. Have you ever thought about 
that?
    Mr. Elmore. If I might, ma'am, let me try to answer both 
questions. SCORE actually has been very good on this, and they 
have created a special counseling initiative and it is 
specifically targeted to Reserve and Guard. As you know, 50 
percent or more of SCORE's counselors are veterans themselves.
    Mr. Elmore. And Ken Yancy has been really very good and 
very active and supportive on this. And I try to help, through 
my presentations, actually to recruit additional volunteers for 
him.
    On the idea of a revolving fund, or whatever it might be, I 
think what I might do is suggest you look at the Congressional 
Budget Office report that just came out this last month, in 
May, and look at that, that Institute for Defense analysis. 
They both give you a range of potential approaches to try to 
mitigate the problems that we believe these business owners 
face. And some of those suggestions, that they at least talk 
about, do include special access to capital and talk about 
revolving funds and grants and a range of things like that.
    So I think instead of asking me to sort of make policy on 
the run, you have got a couple of entities that have already 
given you some policy suggestions for your consideration;and I 
would urge that you look at those.
    Mrs. Kelly. You have read those reports, I haven't.
    Mr. Elmore. Yes, ma'am.
    Mrs. Kelly. Is a revolving fund one of those suggestions?
    Mr. Elmore. I don't think they mention revolving funds per 
se, but they do talk about special access to capital. They also 
talk about grants, they also talk about tax abatement, they 
talk about special technical assistance, they talk about the 
effect of the kinds of Reservists that are activated and 
called. So there is a full range of things that both of those 
things touch on, especially the Congressional Budget Office 
paper which has been only out a month.
    Mrs. Kelly. Having done a lot of disaster work on SBA, on 
straight disasters in my area, I am very careful to always 
specify, when I talk to Chambers of Commerce and any other 
small business group, the fact that if your business is 
failing, it is still going to be failing even if they give you 
the money to make yourself whole, in all probability, so you 
need to take a look. That is why I'm concerned about business 
plans.
    Absent a good business plan, a way to rescue a business, I 
agree with what you have all stated, essentially you can't go 
in and give money to a failing business if the business is 
already failing. However, there may be a way to get into those 
businesses prior to that. And I applaud the SBA for the 
outreach that they do and for SCORE, because in my area, SCORE 
is just the best resource for a lot of our small businesses 
involving veterans. It has been for some time.
    Thank you.
    Chairman Akin. Thank you very much. You have a little more 
time if you have any follow-up.
    Mrs. Kelly. I only have one comment.
    I want to say that, Mr. Elmore, I think the questions that 
you have posed here again are really good questions for this 
committee and for the Small Business Committee in general to 
take a look at.
    The small business--I am a small business woman. Small 
business is unique. We are such a--it is an interesting group 
of minds that drive the economy of the United States of 
America. We don't need one size fits all. And I think your 
questions are very well taken. Thank you for putting them 
there.
    Mr. Elmore. Thank you.
    Chairman Akin. That comes back to me; I get the next 
question here.
    I am going to start with, I think, three questions for you, 
Bill, and then you choose which ones you want to answer. First 
of all, can you elaborate on the outreach SBA does to veteran 
business owners?
    The second one, how much do you think that your office 
spends per vet in the outreach--per person, that is--and how 
many of these veteran businesses outreach centers are you able 
to fund?
    Mr. Elmore. Thank you, sir.
    Outreach, well, my office has three primary 
responsibilities, and the first in that is outreach, 
comprehensive outreach, on behalf of the agency. So the 
approach that we have taken is to go out initially to what I 
call the veteran-serving community, which I believe is about 
10,000 places where a veteran may walk in and go, "I am a 
veteran." that includes SBDCs, it includes the VA Hospitals and 
everything in between.
    So we focus on trying to reach out to them and provide them 
detailed information about the full range of programs. And we 
have done that specifically since September 2001 for Reserve 
and Guard, and we continue to do that. We do it, again, through 
SBDCs. We do it through the Department of Labor. We do it 
through the Department of Defense. We do it with State 
Department, Veterans Affairs, and anybody else in between we 
can find.
    Second, the cost per vet--let me talk about, and I will 
start with your third question. Presently, we fund four 
veterans business outreach centers. They tend to be regional. 
One is in Florida, one is in Texas, one is in New York, one is 
in California. Those are four of the five largest States for 
veteran populations, as well as four of the five largest States 
for Reserve and Guard populations. So part of where we locate 
them strategically and part of the evaluation was that 
geographic location.
    The resources that we have put into those over the last 5 
years, it has been about $2.5 million. And over those 5 years, 
we have touched somewhere in the range of 144,000 veterans and 
Reserve and Guard. So if you do the math on that, that equates 
out to about $17.35 per veteran that we have been able to touch 
base with.
    I am very proud of that. I don't know that you can find 
anyplace anywhere in government that works at that level of 
efficiency. But it is not just our efficiency. It is the 
efficiency of the veterans community itself and how they engage 
and how responsive they are to reach out and help each other. 
And that is an important part of what we do.
    The other thing I will touch on is that we also--and I am 
proud of this--we started 4 years ago with what I called 
district office outreach. And I think we were the first office 
in SBA to do this. And we have funded now 56 district offices, 
the last 4 years, a total of about $130,000. So we are working 
very efficiently and very economically. We have brought an 
additional 11,264 veterans into the agency to ask and seek and 
receive our services based on that $130,000 outlay.
    So I think in the economy of how we do things, we have 
really been very effective. And I have to thank my 
administrator, Hector Barreto, for allowing me the flexibility 
to take what were some relatively unusual sorts of outside-the-
government approaches by stepping into a district office, but 
also saying, I am not going to give you the money unless you 
bring the State department of veterans affairs, unless you 
bring the small business development center, unless you bring 
the American Legion and the VFW, also unless you bring Reserve 
and Guard units into your outreach efforts.
    And that is what we have done. Through our basic guidance 
and our funding, we have directed them to reach into this 
community and bring those communities together. And we think it 
works.
    Now, obviously, I think, in deference to the ranking woman, 
it hasn't perhaps worked well enough. And we continue to strive 
to make it better. I can tell you, for example--
    Chairman Akin. It sounds like you are going down the track, 
though, of what was being suggested. You are pretty aggressive 
in trying to pursue any possible lead where you can get that 
information.
    Mr. Elmore. Exactly. What I know is--and this goes to my 
core philosophy, and this is not now SBA; this is Bill Elmore 
speaking--government is not always the answer to all of these 
things. The answer lies in the hearts and heads and hands of 
these men and women who are business owners themselves. They 
have to take steps. We have to take all the appropriate steps 
to make sure that our resources are available to them in a way 
that is accessible and understandable, and encourage them to 
use them.
    But they have to take those steps, as well, so part of this 
is to engage with them and help them understand what is 
available; and if they don't get the assistance they need, to 
let me know. Because another responsibility I have is to act as 
an ombudsman.
    So if I get an MREIDL loan applicant who thinks that they 
haven't been treated fairly, or there is a problem in the 
process, if they find me and we tell them about this in our 
fact sheet, I will go to our disaster office and ask them to 
look at it; and if there is an issue that we can resolve 
favorably, we will.
    And we have done that.
    Chairman Akin. Thank you. My time has expired and we will 
go into second round of questions.
    Ms. Bordallo. Thank you, Mr. Chairman.
    My first question, I think Mr. Alford had his hand up, and 
if you would like to continue to answer that question, I think 
it is still on the table.
    Mr. Alford. Yes, ma'am, and I think there is some substance 
in your concern that something is missing with the lack of 
loans out of this special program. And it is an education for 
me today.
    I am the President/CEO of the National Black Chamber of 
Commerce. We have 130 chapters located in 40 States in this 
country. We have a written MOU with the SBA. We do a lot with 
the SBA district officers, and last week I was on the road with 
Administrator Hector Barreto.
    But this veterans program is new to me, and I am a little 
embarrassed personally. I should be on top of this. So I think 
that me and Mr. Elmore need to talk more and get better 
engaged. Thirty percent of our membership are veterans. Fifty 
percent of my board of directors are veterans; some are very 
good business owners.
    But there is something missing that needs to be in--and 
your concern, I think, is justified.
    Ms. Bordallo. Thank you. Thank you, Mr. Alford.
    I am just curious, Mr. Elmore--you might check into it; I 
just checked with my staff, and he is not aware of it. I am 
just wondering, we have a lot of veterans returning in Guam, 
many professionals. I think you mentioned doctors that are 
going out there for 3-month stints.
    Now, do you recall ever making a loan to Guam? I know that 
is kind of a loaded question, and you can check on it and let 
me know later.
    Mr. Elmore. We can simply follow up with you on that, 
ma'am.
    Let me help you understand the disaster assistance program 
is not a program my office runs. So I am not involved 
specifically, day-to-day, in where those loans go and how they 
are approved and so on. That is the disaster office that does 
that. But I provide a lot of support and assistance to them.
    So I will get that answer for you.
    Ms. Bordallo. Good.
    Mr. Elmore. And find out what loans, if any, have been made 
in Guam.
    Ms. Bordallo. I just want to point out, Mr. Chairman, per 
capita, Guam has lost more of its men and women in all the wars 
beginning with Vietnam than any other State in our Nation.
    We are very, very loyal Americans way out there, but 
because we are so far away, sometimes we are forgotten. So it--
to kind of round up my round of questioning right now, since 
you have posed a number of questions to us, and you are in a 
policy position--
    Mr. Elmore. Yes, ma'am.
    Ms. Bordallo. You are the Associate Administrator at the 
agency; you are an expert. So is there anything that--ideas 
that you have that you would like to share with the committee 
that you are thinking about--
    Mr. Elmore. Well, I think--
    Ms. Bordallo. --to make this program more effective?
    Mr. Elmore. Obviously, we need to continue to do the 
outreach.
    I think the missing element here--and again, it is not 
intended to say anything negative, because they have been very 
helpful--is DOD. At its core this is ultimately a DOD issue and 
a DOD responsibility.
    This is at its core, as well, about the all-volunteer force 
and the whole recruitment and retention side of that. And I 
think--and I am not saying they should be more involved, but I 
think they have a primary responsibility here for their 
soldiers. And we have done, I think, a reasonably good job 
trying to offer and extend our services and resources through 
that system. But perhaps a stronger joint effort with us, with 
them, and with the ASBDC and others, and SCORE, would be in 
order.
    Ms. Bordallo. Mr. Chairman, I want to thank you for holding 
this public hearing here today. I am on the Armed Services 
Committee. And there is so many stories I hear about our 
veterans that are now returning from Iraq and Afghanistan and 
other places, that are falling through the cracks. So it is not 
just business people, but it is people with disabilities.
    And I know the programs are there. Perhaps the information 
just isn't there to get to them.
    Yes?
    Ms. Kerr. If I could address that and--address those, 
outreach is great, Bill. I see his folks at our supermarket of 
veterans benefits, which we have in our state, but honestly, 
please don't have anyone send any more paper--paper to our 
veterans. They have piles of stuff to read. They can't read any 
more.
    I think the best way to reach them is through your 
television media, through your radios, through your billboards. 
They are all driving down the road; they are all catching the 
radio at some point. But to sit down and try to read another 
piece of paper, they are so strapped for time. If they saw a 
clip on TV that said, Have you checked out the SBA? It is a new 
way. It is a new SBA today. You know, wow, they are going to 
stop and look if they are a veteran businessman.
    Not any more paper.
    Ms. Bordallo. That is a good point.
    Thank you, Mr. Chairman.
    Chairman Akin. Thank you. I think that we should do a 
couple of rounds of questions, but we don't have too many 
Congressmen here. And so with that, the meeting is adjourned. 
But I will be sticking around for just a moment afterwards if 
there are questions or answers.
    [Whereupon, at 3:30 p.m., the subcommittee was adjourned.]

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