[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]


 
                 FULL COMMITTEE LEGISLATIVE HEARING ON 
                   ENERGY, VETERANS ENTREPRENEURSHIP, 
                     AND THE SBA'S ENTREPRENEURIAL 
                          DEVELOPMENT PROGRAMS 

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

                      COMMITTEE ON SMALL BUSINESS
                 UNITED STATES HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                               __________

                              MAY 16, 2007

                               __________

                          Serial Number 110-22

                               __________

         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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                   HOUSE COMMITTEE ON SMALL BUSINESS

                NYDIA M. VELAZQUEZ, New York, Chairwoman


WILLIAM JEFFERSON, Louisiana         STEVE CHABOT, Ohio, Ranking Member
HEATH SHULER, North Carolina         ROSCOE BARTLETT, Maryland
CHARLIE GONZALEZ, Texas              SAM GRAVES, Missouri
RICK LARSEN, Washington              TODD AKIN, Missouri
RAUL GRIJALVA, Arizona               BILL SHUSTER, Pennsylvania
MICHAEL MICHAUD, Maine               MARILYN MUSGRAVE, Colorado
MELISSA BEAN, Illinois               STEVE KING, Iowa
HENRY CUELLAR, Texas                 JEFF FORTENBERRY, Nebraska
DAN LIPINSKI, Illinois               LYNN WESTMORELAND, Georgia
GWEN MOORE, Wisconsin                LOUIE GOHMERT, Texas
JASON ALTMIRE, Pennsylvania          DEAN HELLER, Nevada
BRUCE BRALEY, Iowa                   DAVID DAVIS, Tennessee
YVETTE CLARKE, New York              MARY FALLIN, Oklahoma
BRAD ELLSWORTH, Indiana              VERN BUCHANAN, Florida
HANK JOHNSON, Georgia                JIM JORDAN, Ohio
JOE SESTAK, Pennsylvania

                  Michael Day, Majority Staff Director

                 Adam Minehardt, Deputy Staff Director

                      Tim Slattery, Chief Counsel

               Kevin Fitzpatrick, Minority Staff Director

                                 ______

                         STANDING SUBCOMMITTEES

                    Subcommittee on Finance and Tax

                   MELISSA BEAN, Illinois, Chairwoman


RAUL GRIJALVA, Arizona               DEAN HELLER, Nevada, Ranking
MICHAEL MICHAUD, Maine               BILL SHUSTER, Pennsylvania
BRAD ELLSWORTH, Indiana              STEVE KING, Iowa
HANK JOHNSON, Georgia                VERN BUCHANAN, Florida
JOE SESTAK, Pennsylvania             JIM JORDAN, Ohio

                                 ______

               Subcommittee on Contracting and Technology

                      BRUCE BRALEY, IOWA, Chairman


WILLIAM JEFFERSON, Louisiana         DAVID DAVIS, Tennessee, Ranking
HENRY CUELLAR, Texas                 ROSCOE BARTLETT, Maryland
GWEN MOORE, Wisconsin                SAM GRAVES, Missouri
YVETTE CLARKE, New York              TODD AKIN, Missouri
JOE SESTAK, Pennsylvania             MARY FALLIN, Oklahoma

        .........................................................

                                  (ii)

  


           Subcommittee on Regulations, Health Care and Trade

                   CHARLES GONZALEZ, Texas, Chairman


WILLIAM JEFFERSON, Louisiana         LYNN WESTMORELAND, Georgia, 
RICK LARSEN, Washington              Ranking
DAN LIPINSKI, Illinois               BILL SHUSTER, Pennsylvania
MELISSA BEAN, Illinois               STEVE KING, Iowa
GWEN MOORE, Wisconsin                MARILYN MUSGRAVE, Colorado
JASON ALTMIRE, Pennsylvania          MARY FALLIN, Oklahoma
JOE SESTAK, Pennsylvania             VERN BUCHANAN, Florida
                                     JIM JORDAN, Ohio

                                 ______

            Subcommittee on Urban and Rural Entrepreneurship

                 HEATH SHULER, North Carolina, Chairman


RICK LARSEN, Washington              JEFF FORTENBERRY, Nebraska, 
MICHAEL MICHAUD, Maine               Ranking
GWEN MOORE, Wisconsin                ROSCOE BARTLETT, Maryland
YVETTE CLARKE, New York              MARILYN MUSGRAVE, Colorado
BRAD ELLSWORTH, Indiana              DEAN HELLER, Nevada
HANK JOHNSON, Georgia                DAVID DAVIS, Tennessee

                                 ______

              Subcommittee on Investigations and Oversight

                 JASON ALTMIRE, PENNSYLVANIA, Chairman


CHARLIE GONZALEZ, Texas              LOUIE GOHMERT, Texas, Ranking
RAUL GRIJALVA, Arizona               LYNN WESTMORELAND, Georgia

                                 (iii)

  
























                            C O N T E N T S

                              ----------                              

                           OPENING STATEMENTS

                                                                   Page

Velazquez, Hon. Nydia M..........................................     1
Chabot, Hon. Steve...............................................     2
Sestak, Hon. Joe.................................................     4

                               WITNESSES


PANEL
Goldstein, Wilma, Acting Assistant Administrator for the Office 
  of Entrepreneurial Development, United States Small Business 
  Administration.................................................     5
Rowe, C.E. Tee, Associate Administrator of Congressional 
  Legislative Affairs, United States Small Business 
  Administration.................................................     8
Higgins, Gregory L. Jr., Pennsylvania Small Business Development 
  Centers........................................................     9
John, David L., New Mexico SBDC Statewide Advisory Council.......    12
Wrigley, Barbara, Women's Business Center of Northern Virginia...    14
Sklar, Scott, Committee of the Sustainable Energy Coalition......    16

                                APPENDIX


Prepared Statements:
Velazquez, Hon. Nydia M..........................................    31
Chabot, Hon. Steve...............................................    33
Sestak, Hon. Joe.................................................    35
Altmire, Hon. Jason..............................................    37
Goldstein, Wilma, United States Small Business Administration....    38
Higgins, Gregory L. Jr., Pennsylvania Small Business Development 
  Centers........................................................    45
John, David L., New Mexico SBDC Statewide Advisory Council.......    50
Wrigley, Barbara, Women's Business Center of Northern Virginia...    52
Sklar, Scott, Committee of the Sustainable Energy Coalition......    55

                                  (v)

  


                   FULL COMMITTEE LEGISLATIVE HEARING 
                   ON ENERGY, VETERANS ENTREPRENEURSHIP, 
                       AND THE SBA'S ENTREPRENEURIAL
                           DEVELOPMENT PROGRAMS

                              ----------                              


                        WEDNESDAY, MAY 16, 2007

                     U.S. House of Representatives,
                               Committee on Small Business,
                                                    Washington, DC.
    The Committee met, pursuant to call, at 10:00 a.m., in Room 
2360 Rayburn House Office Building, Hon. Nydia Velazquez 
[Chairwoman of the Committee] presiding.
    Present: Representatives Velazquez, Jefferson, Shuler, 
Cuellar, Ellsworth, Johnson, Sestak, Chabot, Heller, and 
Jordan.

           OPENING STATEMENT OF CHAIRWOMAN VELAZQUEZ

    ChairwomanVelazquez. Good morning. I am very pleased to 
call this morning's hearing on proposals to reauthorize the 
SBA's entrepreneurial development programs to order.
    Over 400,000 new businesses are created each month during 
an outage year. As Americans pursue self-employment, most find 
it both a challenge as well as a rewarding adventure. Time and 
time again, entrepreneurs have found that strong sustainable 
enterprises result from steady commitment to developing a well-
formulated business plan. The plans that are most likely to 
succeed are those that detail long-term strategies to obtain 
affordable capital, manage operational processes, and address 
human resources issues.
    As part of its mandate to ensure small business owners can 
be competitive in the marketplace, the Small Business 
Administration administers a portfolio of entrepreneurial 
development programs. These include small business development 
centers, women business centers, SCORE, Native American, and 
veterans' business average programs.
    All of these initiatives support business development by 
providing counseling, technical assistance, research, and 
mentorship to entrepreneurs throughout the country.
    This program has a proven record of success. In fact, the 
businesses that utilize these initiatives are twice as likely 
to succeed. Over the past few years, as more and more Americans 
have decided to make their dreams of business ownership a 
reality, we have seen an increased demand for these services. 
Yet, despite the increasing need for entrepreneurial 
development initiatives, this program has not been modernized 
in the past six years.
    Today's hearing will provide us with an opportunity to 
examine five proposals that aim to enhance these programs. The 
modifications will establish new initiatives and improved 
program operations to effectively fulfill the needs of small 
businesses. Most importantly, the proposals enable SBA programs 
to assist the next generation of entrepreneurs. By tailoring 
proposals to the current economic demand facing small 
businesses and the emerging sector of entrepreneurs, this 
initiative will promote business development in communities 
nationwide.
    The face of small business is changing today. Over the past 
two decades, women-owned businesses have increased at twice the 
rate of all firms. We are also seeing more minority 
entrepreneurs. In 2002, they owned 18 percent of all small 
firms. Veterans represent 14 percent of small business owners. 
And that number only continues to grow as more return from Iraq 
and Afghanistan.
    A key component to ensuring SBA's entrepreneurial 
development programs are effectively assisting entrepreneurs is 
not only making sure the needs of these growing sectors are 
being met but also that changing economic conditions are being 
accounted for.
    Today entrepreneurs are being hit with a whole new set of 
challenges different from the ones many struggle with, even if 
they get a goal. To address these challenges, the proposal 
before us creates a new subprogram within the SBDC program to 
help entrepreneurs deal with health care, energy, tax, and 
regulatory costs.
    We are also expanding the number of veterans' business 
centers and restructuring the women's business centers to open 
additional spaces. Part of the proposal also includes launching 
a new initiative to help senior citizens who are interested in 
becoming a small business owner to get those ventures off the 
ground.
    The proposal before us today provides SBA entrepreneurial 
development programs with a capacity to develop training, 
technology, and informational resources to ensure small 
businesses can address their specific challenges.
    This process to modernize SBA's entrepreneurial development 
programs has evolved from lessons learned. They will be 
revisited as we continue to look for ways to strengthen the 
entrepreneurial sector.
    To support business ownership in the Twenty-First Century, 
it is critical that we build upon an already strong foundation. 
Making this change is a first step toward ensuring our small 
business owners have what they need to keep this economy strong 
for generations to come.
    I now recognize Ranking Member Chabot for his opening 
statement.

                OPENING STATEMENT OF MR. CHABOT

    Mr.Chabot. Thank you, Madam Chair. And I want to thank you 
for holding this hearing to review the entrepreneurial 
development programs administered by the Small Business 
Administration, the SBA.
    I also want to thank our witnesses for their testimony that 
we will be hearing here shortly. I know we look forward to 
hearing their views on the legislation that the Committee will 
be considering in next week's markup also.
    The SBA's entrepreneurial development programs can play an 
important role in helping small business owners succeed. These 
programs range from narrowly targeted programs to very broad 
programs that take advantage of the resources of America's 
higher education system and retired business executives.
    The programs that we'll be considering today, SCORE, the 
small business development centers, and women's business 
centers, haven't been reviewed, it's our understanding, by this 
Committee since 2003. So it's certainly timely that we do this, 
and I want to commend you for doing this.
    It's important to ensure that these programs are doing what 
they're intended to do, which is help small business men and 
business women. We will also be looking at proposals to 
increase veterans' entrepreneurial opportunities, ways to 
improve the SBA's Native American outreach, and potential 
changes to the Small Business Investment Act that would 
increase investment in renewable energy technology development 
by small businesses.
    As anyone who has bought gas in the last few weeks knows, 
prices at the pump are over three dollars a gallon. And that's 
just unacceptable. In my view, the most effective solution to 
this problem is to increase domestic oil production in the 
outer continental shelf, for example, and in ANWAR and to 
improve this nation's ability to refine crude oil into gasoline 
while we work on developing promising new technologies that 
will serve us in the future.
    Regardless of where one stands on the energy debate, I 
think we can all agree that it's critical that we become much 
more energy-independent as quickly as possible.
    I want to again thank Chairwoman Velazquez for this 
opportunity to thoroughly review the SBA's entrepreneurial 
development programs and look forward to working with her in 
strengthening them.
    And I yield back.
    ChairwomanVelazquez. Thank you, Mr. Chabot. And I also 
would like at this point to recognize any member who has been 
working on this proposal from both sides of the aisle. If you 
wish to be recognized, I will do so now.
    Mr. Shuler?
    Mr.Shuler. Madam Chair, Ranking Member Chabot, thank you 
for holding this hearing today. I am particularly pleased that 
we are considering Small Energy Efficiency Business Act. Small 
businesses are the first to be affected by the rising energy 
prices. And small business will be the first to find the 
solution.
    This bill will give them the tools that they need to lead 
our nation in energy efficiency and independence. And I want to 
commend the two of you again for your hard work and your 
dedication in truly making this Committee what it should be and 
continue to be a very active part of our small business 
environment and throughout our whole society commend both of 
you for your hard work and dedication.
    ChairwomanVelazquez. any other member who wishes to be 
recognized at this point? Mr. Sestak?

                OPENING STATEMENT OF MR. SESTAK

    Mr.Sestak. Thank you, Madam Chair and Ranking Member 
Chabot.
    I would like to take a few moments and follow up. Let me 
speak on a piece of legislation that I will be introducing 
later this week. And it's to enhance two important Small 
Business Administration programs: the SBDCs and the Service 
Corps for Retired Executives, SCORE.
    I serve as a representative in a district that is 
economically driven by a very vibrant local small business 
economy. And so I am very appreciative of the entrepreneurial 
assistance that SBA provides.
    We know that the entrepreneurial development assistance 
programs do work, as Madam Chair had mentioned. And, as she had 
said, this entrepreneurial assistance, businesses that gain 
this type of assistance are twice as likely to succeed. In 
addition, for every federal dollar that is spent on 
entrepreneurial development, it generates seven dollars in 
increased tax revenue.
    However,in the past three years, my district has actually 
lost 607 small businesses. And, in fact, one out of five 
manufacturing establishments have disappeared.
    The trend I am committed to reversing and fostering 
entrepreneurial development and creating the right conditions 
to help businesses flourish, stay, and be attracted to the 
district.
    I know that in 1980, Congress actually took the step 
forward and established the SBDC program to do exactly what is 
needed, to foster economic development by providing the 
managerial, technical, and research assistance to both current 
and prospective small businesses.
    As you know, SBDCs do provide services which include, but 
aren't limited to, assisting small business financial 
marketing, organization engineering, technical problems, and 
other types of feasibility studies.
    The SBDC program also represents an efficient and effective 
use of allocated monies from the federal government to both I 
think particularly important public and private ventures in 
collaboration. To that end, SBDCs are funded by matching monies 
by state legislatures, local Chambers of Commerce, and 
technical schools and other institutions. In fact, it seems to 
go so well that we find that we are exceeding the minimum 50 
percent matching share now.
    I am very fortunate that both Widner, University of Penn, 
Mr. Higgins, as you well know. We have near my district. With 
all of that in mind, I see that while there are SBDCs, programs 
that are extremely effective, I do think there are certain 
operational improvements that could be implemented that help 
increase the flexibility of SBDCs to better support small 
businesses and entrepreneurs.
    And to that end, the changes that I will be proposing in 
legislation to help ensure the quality of grants will be those 
that do the following: ensure the quality of grant recipients 
to host SBDCs, to help SBDCs maintain their autonomy from undue 
SBA interference, to protect the confidentiality of SBDC 
clients, and ensure that taxpayers' dollars are being spent as 
efficiently as possible by not using SBDC funds except for the 
sole purpose of business development.
    And by allowing exemptions to deter and cap on non-matching 
portability grants in the bed of federally designated natural 
human-caused disasters, I also think it's important to 
strengthen SBDC core program by establishing specific grant 
programs that will allow SBDCs to tailor their services to meet 
the particular needs of their business constituencies; for 
example, the capital access initiative, which will establish 
grants to assist entrepreneurs in processing loan applications 
and attaining private equity.
    An innovation and competitiveness initiative, which will 
establish grants to allow SBDCs become technology centers to 
help market technologies and advanced products to 
manufacturers; and a disaster recovery program to establish 
grants to allow SBDCs to assist and coordinate the federal 
response for small disaster victims.
    There are others, which I won't bother to go into now, such 
as the older entrepreneur assistance sustainability initiative 
and the national regulatory assistance initiative.
    The second program, which I won't go into except to 
mention, SCORE, which, as you know, provides entrepreneurs free 
counseling assistance by former executives, is very important. 
And I believe it provides a valuable service to small 
businesses and can be even stronger with the provision to 
actively recruit volunteer mentors, who will then greater 
reflect the social and economic diversity of those who utilize 
SBA services.
    So, with that, I very much appreciate it, Madam Chair, to 
give me the opportunity to talk on this that we will introduce 
later this week. And I look forward to today's hearings.
    ChairwomanVelazquez. Thank you. And I want to express my 
appreciation for members from both sides who have been working 
on these proposals.
    With that, we are going to start our hearing. I just want 
to express my appreciation to all of the witnesses, especially 
those who come up from across the country to be here today and 
share with us your insights on the differing issues that we are 
going to be dealing with.
    Our first witness is Ms. Wilma Goldstein. She is the Small 
Business Administration's Acting Assistant Administrator for 
the Office of Entrepreneurial Development.
    Ms. Goldstein, you have five minutes to make your 
presentation. And you can enter your entire testimony into the 
record without objection.

 STATEMENT OF WILMA GOLDSTEIN, ACTING ASSISTANT ADMINISTRATOR 
 FOR THE OFFICE OF ENTREPRENEURIAL DEVELOPMENT, UNITED STATES 
                 SMALL BUSINESS ADMINISTRATION

    Ms.Goldstein. Thank you. Thank you, Chairwoman Velazquez, 
Ranking Member Chabot, distinguished members of the Committee, 
for your invitation and the opportunity to share with this 
Committee the work of the Small Business Administration's 
Office of Entrepreneurial Development and what we are doing to 
help serve America's entrepreneurs in small business.
    I am Wilma Goldstein, as Chairwoman Velazquez said. And on 
behalf of Administrator Preston, I am pleased to be here to 
share with you the operations and successes of SBA's programs 
and to briefly discuss with you some of our plans for the 
future.
    The Office of Entrepreneurial Development manages a strong 
distribution channel of service centers that provide business 
and management assistance to people who need guidance on how to 
start, grow, or better manage their small businesses. We do 
that through our three resource partners, who have been 
mentioned while we have been here this morning: small business 
development centers, women's business centers, and SCORE.
    In F.Y. 2006, our resource partners trained and counseled 
over 1.2 million clients. In addition, 315,154 to be exact 
clients registered for one of our 23 courses offered online 
through our small business training network, SBTN. And over 12 
million new visitors accessed the SBA Web site.
     SBA and, in particular, ED, has long recognized the value 
in being able to measure and validate the work that we do. One 
important way we can now measure our programs is through the 
data collected in the entrepreneurial development management 
information system known as EDMIS. We collect that data 
quarterly from each of our resource partners telling us how 
many they have trained and counseled.
    F.Y. 2006 marked the completion of the first full year of 
EDMIS implementation with all of our programs. If you will 
allow me a slight digression, I just want to add that I am 
extremely proud to be associated with the group that got EDMIS 
up and running.
     In the first half of its second year, I can report that it 
is running smoothly. We still monitor it regularly with 
conference calls between headquarters and our resource partners 
about once a month. And we are in the process of looking at 
upgrades so that we can do more with it than gather 
information.
    A further commitment on our part to assessing our 
performance is the impact survey. Interviewing is now beginning 
on the fourth year of this longitudinal study. And we continue 
to find that businesses that receive management assistance from 
SBA's resource partners give it high ratings to the usefulness 
of that assistance.
    Let me also touch briefly on our small business training 
network, which is our online training vehicle. It is having a 
banner year. And I thin you will be pleased to hear the 
following. We now have more than 25 free online business 
courses.
    We introduced this year the small business primer, which is 
an interactive assessment tool to help people determine their 
readiness for starting a business and guide them to the 
training they may need to be better prepared.
    We have partnered with Capital Access and government 
contracting to other parts of the SBA to create similar online 
assessment tools for community express loans and the 8(a) 
program.
    Then much has been said already about modernization. And I 
want to tell you about one way that we are trying to help our 
resource partners keep up with changing technologies.
    This coming week all three of our resource partners and 
SBTN are holding a technology summit here in D.C. Knowing that 
some of our centers with smaller budgets have difficulty 
keeping up with advances in technology, we sponsored a 
competition for new ideas in technology. We would be featuring 
the winners. And each will be questioned by a panel of experts. 
We hope this will become an ongoing event and the result would 
be that we will find ways to help our centers make better and 
more affordable technology decisions.
    We had a good year in ED, in which all the programs 
produced better that expected counseling and training numbers, 
which we provide to the Congress each year. So let me just 
mention a few things that go beyond those numbers.
    SBDC is proud of its many changes and improvements. I would 
like to mention two in particular. In anticipation of the need 
for all of us to expand our reach to veterans, the New York 
Veterans Outreach Program was implemented and during the past 
five years has counseled and trained over 8,000 veterans, many 
of them Service-disabled.
    The New York SBDC also recently developed EntreSkills for 
Veterans, a comprehensive interactive educational tool 
developed by veterans for veterans and members of the Reserve 
and National Guard.
    Before I conclude my testimony, I just want to very briefly 
communicate for the Committee's consideration some of our 
legislative proposals that we believe will bring greater 
efficiencies to the operation of our programs as well as 
enhance and expand our client services and base.
    In our F.Y. 2008 legislative package, SBA requests that the 
Committee provide SBA with authorization to have full access to 
client information obtained by the SBDCs as part of their SBDC 
program administration that allows us to continue doing the 
impact survey. Such access will allow SBDA to more effectively 
manage the program and to measure the program impact through 
client surveys, and their privacy will be guarded.
    We would also like an expansion of eligible applicants for 
SBDC lead centers. This provision opens up eligible entities to 
include public or private nonprofit organizations.
    SBA also requests the authority to determine the number of 
SBDC lead centers that are funded in each state on the 
individual circumstances in the state. We believe that this 
authority will provide SBA with the necessary flexibility to 
ensure that specific small business community needs are best 
served in various circumstances.
    Chairwoman Velazquez, that concludes my testimony. I look 
forward to answering any questions.
    [The prepared statement of Wilma Goldstein may be found in 
the Appendix on page 38.]

    ChairwomanVelazquez. Thank you, Ms. Goldstein.
    Our next witness is Mr. Tee Rowe. He is the Associate 
Administrator of Congressional and Legislative Affairs for the 
Small Business Administration. He also worked in this 
Committee, the Small Business Committee, under the leadership 
of Chairman Talent as the senior counsel for the Committee. 
Tee, you are most welcome.
    Mr.Rowe. Thank you very much, Chairwoman Velazquez. It is a 
little different being on this side of the microphone.

  STATEMENT OF C. E. ``TEE'' ROWE, ASSOCIATE ADMINISTRATOR OF 
CONGRESSIONAL LEGISLATIVE AFFAIRS, UNITED SATES SMALL BUSINESS 
                         ADMINISTRATION

    Mr.Rowe. Chairwoman Velazquez, Ranking Member Chabot, 
members of the Committee, my name is Tee Rowe. And I am the 
Associate Administrator of Congressional and Legislative 
Affairs at SBA.
    I want to thank you all very much for inviting me to 
testify on the provisions of the draft legislation before the 
Committee. I appreciate your desire to seek the 
administration's input, and I will do my best to respond to 
your questions as fully as possible.
    Unfortunately, I only received the Committee's invitation 
yesterday. And I haven't had time to prepare full written 
remarks, though I would very much appreciate the opportunity to 
get some remarks to you all prior to the markup.
    We also only received some of the final legislative 
language and summaries yesterday. However, based on a brief 
review of the drafts, allow me to make some of the following 
comments.
    As Wilma pointed out, SBA would like increased competition 
and access in the SBDC program. And to that extent, the 
administration would object to restricting SBDC grants solely 
to institutions of higher education.
    We believe the competition for these grants would foster 
expansion and innovation in the program. For instance, we 
support providing SBDC assistance to Native American 
communities. And the administration has to wonder if an open 
and competitive process would not have already resulted in that 
assistance, rather than raising the need for an adjunct program 
to provide that assistance now.
    With regards to the draft legislation concerning outreach 
to veterans, the administration supports this effort and the 
support that it offers to our veterans of both current and past 
conflicts.
    As Wilma has already talked about the women's business 
center program pretty fully, I will leave that to her, but 
speaking briefly as a former staffer to the Committee, I 
appreciate the Committee's recognition of the fact that the 
intent of the women's business program has already been to 
create self-sustaining women's business centers. The question 
before the Committee really is how long is that process going 
to take and how much accounting do we need to make for the 
different capabilities of the participants in the program?
    Lastly, let me just address the provisions of the draft 
energy bill. In general, the administration supports fostering 
energy conservation and innovation in energy technology. That 
has long been a component of the Small Business Act. Support 
for energy measures through the 7(a) program has been a part of 
section 3 of the act since 1981.
    SBA believes that educating small businesses on energy 
conservation is an appropriate function of the SBDC program. 
However, we would like to point out that regarding the 
provision on having SBA establish an energy education program, 
that language is a little bit redundant of authority and 
responsibilities we already have under the Energy Policy Act of 
2005. We are carrying that program out right now in conjunction 
with our colleagues from the Department of Energy and the EPA.
    Finally, just regarding the SBIC provisions of the bill, 
these raise some interesting possibilities. We haven't had time 
to fully assess the costs of the proposals or their 
marketability, but we would appreciate an opportunity to work 
with the Committee more fully to develop some of these 
proposals.
    Again, thank you very much for inviting me to testify. And 
I apologize for not being able to offer more complete remarks 
to you all. However, I hope I can assist the Committee with its 
questions. Thank you.

    ChairwomanVelazquez. Thank you.
    Our next witness is Mr. Gregory Higgins. Mr. Higgins is the 
State Director of the Pennsylvania Small Business Development 
Center, which assists more than 150,000 clients each year. Mr. 
Higgins has previously served two terms as President of the 
Association of Small Business Development Centers.
    Welcome, sir.

     STATEMENT OF GREGORY L. HIGGINS, JR., STATE DIRECTOR, 
 PENNSYLVANIA SMALL BUSINESS DEVELOPMENT CENTERS, THE WHARTON 
            SCHOOL OF THE UNIVERSITY OF PENNSYLVANIA

    Mr.Higgins. Good morning, Chairwoman Velazquez, Ranking 
Member Chabot, members of the Committee, I surely appreciate 
this opportunity to provide some comments on the 
entrepreneurial development program's reauthorization draft.
    I would begin by indicating that with these initiatives, I 
believe the Committee has identified several of the most 
critical issues that are confronting the small business 
community today. Since the draft addresses both procedural 
changes and initiatives, let me spend just a couple of seconds 
on the procedural changes before I move to the programmatic 
initiatives.
    There's a requirement that SBDCs operate out of accredited 
institutions of higher education. I think it makes perfect 
sense. We have an accreditation program with the Congress 
mandated for SBDCs.
    One of our strengths is being able to utilize the resources 
of institutions of higher education. And a requirement for 
accreditation of those institutions makes certain that those 
resources are available to the small business community.
    SBA involvement in hiring. We are all grownups operating in 
pretty complex organizations that have pretty well-defined 
processes for recruitment and hiring. And we do not think that 
it's appropriate to have SBA involved in that process.
    Privacy of consulting. For us to be affected, we have to be 
able to ensure that our clients are--all the information they 
provide is maintained in complete competence. And the language 
in the draft certainly strengthens that. And we surely support 
it.
    Prohibition of use of SBA funds on the examination. With as 
limited as SBDC funds are, I don't think it makes any sense to 
allocate SBDC funds to the examination process. In fact, I 
wonder since we're all subject to federal law that's under A-
133 and we also all undergo state audits, whether the 
examination process really adds any value to the SBDC program.
    On the elimination of the cap on non-matching portability, 
this makes great good sense. All you have to know is that in 
the aftermath of Hurricanes Rita and Katrina, not only did it 
take six months to process the portability grant applications, 
but the Louisiana SBDC was required to submit six separate 
applications, the six separate scopes of work. Now, in a time 
like that to spend time putting together proposals simply 
doesn't make an awful lot of sense.
    Now I would like to comment on the initiatives. And since 
time is really limited, I feel like saying they're all good, 
but let me give you a little more than that. And maybe the best 
thing I can do in this is to tell you why I think all of these 
make tremendous sense for this system.
    Over the years, the Congress has invested public funds to 
build an information and services distribution system, the 
SBDCs, that now reaches every part of the country through more 
than 1,000 offices. You built the infrastructure.
    In addition to the national coverage, there are several 
other aspects of the SBDC's program that make it especially 
effective in delivery. First, it's founded in local 
institutions with close ties to the business and civic 
communities.
    It has a proven record of success. Several folks here have 
mentioned, including Congressman Sestak, the return on 
investment. So it's not just a program that reaches a lot of 
folks. It makes a difference when it does.
    The SBDCs have knowledge in networking with all of the 
other state, local, and federal programs that also have to be 
engaged in providing business assistance. The SBDCs have access 
to the resources of a very powerful set of institutions of 
higher education. And the SBDCs have the flexibility to 
identify local and regional business issues and to develop 
programs as envisioned in this legislation to address those 
issues.
    And, finally, the SBDCs have an accreditation process 
mandated by Congress that ensures that anybody walking into an 
SBDC anywhere in the United States is assured of high-quality 
service.
    So, in summary, you know, over the past 27 years now, you 
have appropriated funds to build a system, delivery system, for 
small business that is second to none. And I think that each of 
these initiatives takes advantage of the value of that system.
    Rather than comment on all of the initiatives, let me just 
hit a couple of them. One is disaster recovery. In Florida, 
North Carolina, Louisiana, Mississippi, the SBDCs have 
demonstrated again and again their capacity to help businesses 
recover from the devastation of hurricanes.
    In many other states, including my own, we have been called 
in after disasters, which are clearly much less serious than 
the ones mentioned previously, but for the business owner 
affected, they are deadly serious. And the SBDCs have been able 
to assist in that.
    In New York and in the adjacent states, all of the SBDCs 
were effectively engaged in helping businesses recover from the 
terrorist attacks of 9/11. And this initiative in this 
legislation recognizes and takes advantage of the experience 
that SBDCs have gained in responding to disasters.
    Innovation and competitiveness is another initiative. 
Innovation is the heart of America's competitive advantage. 
Sixty-seven percent of all innovation and 95 percent of all 
radical innovation occurs in small businesses. If we are going 
to help the United States remain competitive, particularly the 
manufacturers, we have got to have the capacity to help 
businesses identify and introduce innovation that is going to 
increase their competitive position and allow them to bring 
their ideas to market. So I think the competitiveness 
initiative is a very good one.
    Mature entrepreneurs. Throughout the United States and 
particularly in a lot of rural areas, there is a generation, my 
own, I expect, that is getting ready to retire and who have 
been operating successful businesses. The danger is that as 
these folks retire, absent an exit strategy, a transition plan, 
not only are you going to lose the entrepreneur. You are quite 
likely to lose those businesses as well. There is no plan for 
how these things are going to be maintained.
    We think the SBDCs are in a terrific position to identify 
those types of businesses to hep them develop exit strategies, 
transition plans, to help identify folks who might be the next 
generation of entrepreneurs and hep them develop the skills to 
come into those businesses and to maintain them in those areas.
    Finally, the last one I would comment on is energy 
conservation. We have some experience in Pennsylvania with 
that. We have found in our energy conservation program that we 
can reduce energy consumption in small business, easily reduce 
energy consumption in the small businesses we work with, 
between 20 and 30 percent.
    If you look at what that could mean on a national level, 
that would mean that we could if this initiative is fully 
implemented help small businesses reduce carbon dioxide 
emissions by up to 140 million tons a year while saving 
businesses an estimated 18.75 billion.
    Now, that's complete. But, you know, obviously the more you 
put into it, the more impact we are going to have. I think it's 
a terrific idea. And it's one we support, as we do all of the 
initiatives outlined here.
    Thank you, Madam Chair.
    [The prepared statement of Gregory Higgins may be found in 
the Appendix on page 45.]

    ChairwomanVelazquez. Thank you, Mr. Higgins.
    Our next witness is Mr. David John. Mr. John is a member of 
the New Mexico SBDC Statewide Advisory Council. He is a small 
business owner and a member of the Navajo nation.
    Welcome, sir.
    Mr.John. Thank you.
    ChairwomanVelazquez. You will have five minutes.
    Mr.John. Thank you, Honorable Nydia M. Velazquez and 
Ranking Member Mr. Chabot and staff and ladies and gentlemen in 
the audience.

STATEMENT OF DAVID L. JOHN, FORMER NAVAJO NATION TRIBAL COUNCIL 
REPRESENTATIVE, FORMER SBDC CLIENT OF THE SAN JUAN COLLEGE SBDC 
 IN FARMINGTON ON BEHALF OF NEW MEXICO SBDC STATEWIDE ADVISORY 
                            COUNCIL

    Mr.John. My name is David L. John. Thank you for inviting 
me to testify before you today. I am very honored.
    I am a member of the Navajo nation. And I am also a Navajo 
businessman for the past 35 years in the Four Corners region. I 
am here before you today on behalf of New Mexico Small Business 
Development Center Statewide Advisory Council.
    I am self-employed. Professionally I am by profession a 
hair stylist and a barber and owner of other several businesses 
in the Four Corners region. I am the President of Northern 
Navajo Medical Center Health Board. I was a member, past 
member, of the Navajo Nation Council for three terms. I was a 
Chairman of the Economic Development Committee while I was on 
the council the whole time.
    As a member of the Navajo Nation Council and being the 
Chairman of the Economic Development Committee, we have 
experienced on Indian land how it is to start a business on 
Indian land. It is very obstacle. And people call it red tape 
to start a business on the reservation.
    We start with a land lease called business site lease. The 
procedure consists of sometimes 60 steps to go through to start 
a business on Indian land; whereas, compared to off the 
reservation, private land, you can start business within the 
week. And you're in business. And sometimes it takes two to 
three years to go through this process on this private property 
you go through within a week.
    I think one of the first steps that I would like to share 
with you is get a consent from the home site lease and business 
site lease that goes through the permit, grazing permit holder 
and where the potential site for business is going to go.
    That goes through the Navajo Nation called Regional 
Business Development Office of each agency. The application 
usually requires a business plan, what kind of financial 
package, including banking institution and projection for the 
few years that you are going to be in business.
    The lease lasts for about 25 years or sometime more 
depending what kind of business, the term of the lease 
agreement based on the profit and loss gross receipts, tax 
structure, statement on land use approved and appraised by the 
BIA, which stands for Bureau of Indian Affairs.
    It is very hard to get a loan for a business on Indian land 
because of lack of collateral since the business site is on 
federal property. All the reservations are usually known as 
federal property. You can't own land on these properties. You 
only can lease on tribal land, where off the reservation you 
can own land where you can get a loan against it.
    Because Indian land is federal property, BIA has the final 
authority. No matter what, they still have to sign off. And so 
there is a duplication of service right there going through the 
tribe and then the BIA again.
    Economic Development Committee gives approval. And then it 
goes to the BIA. By this time, you know, sometimes some of 
these steps that I'm talking about are not complete or 
sometimes they expire within all these times. And then you have 
to go back and start all over again. That's when some of these 
business people get frustrated, and they just quit.
    And so just imagine starting a business on federal property 
like Bureau of Land Management, for example, what kind of 
headache you are going to go through. And that's the same 
scenario in this issue here.
    Now I have told you about all the problems of starting a 
business on Indian land. The passage of this bill will help the 
Navajo and Native American small business people improve their 
lives, stimulate economic development on Indian land, and 
assisting creating new small business owned by the Indian 
tribal members. It will also help advise the local tribal 
council and tribal government where small business assistance 
is in dire need. Also, this will provide greater access to 
existing business council and technical assistance available 
though the small business development center program.
    I have been a member of a local small business development 
council for Farmington, New Mexico through San Juan College. 
I've recently joined New Mexico Statewide Small Business 
Advisory Council to provide input on Native American business 
issue providing some assistance to small businesses with 
initiative access funding amending some of these they are 
already doing but limited for funding and so forth. This 
amendment in the act is very important to Indian tribal 
economic development on Indian land because it ensures more 
convenient access to tribal services provided.
    Lastly, I would like to thank you for allowing me to 
testify today. And thank you for supporting small business and 
also Native American small business.
    I would also like to special thank Mr. Tom Udall, members 
of the Congress District 3 from the great State of New Mexico 
for sponsoring some of this amendment. Thank you very much.
    [The prepared statement of David John may be found in the 
Appendix on page 50.]

    ChairwomanVelazquez. Thank you.
    Our next witness is Ms. Barbara Wrigley. She is the 
Executive Director of the Women's Business Center of Northern 
Virginia. She is speaking on behalf of the Association of 
Women's Business Centers, which represents women business 
owners through a network of women business centers that serve 
nearly 150,000 entrepreneurs across the country.
    Welcome. And you have five minutes to make your 
presentation.
    Ms.Wrigley. Thank you. Madam Chair and Ranking Member 
Chabot, thank you so much, distinguished members of the 
Committee. I really appreciate the opportunity to be here.
    ChairwomanVelazquez. Without objection

   STATEMENT OF BARBARA WRIGLEY, EXECUTIVE DIRECTOR, WOMEN'S 
     BUSINESS CENTER OF NORTHERN VIRGINIA ON BEHALF OF THE 
            ASSOCIATION OF WOMEN'S BUSINESS CENTERS

    Ms.Wrigley. My name is Barbara Wrigley. And I am delighted 
to serve as chair-elect for the Board of Directors of the 
Association of Women's Business Centers. In addition, as the 
Chair mentioned, I am the Executive Director of the Women's 
Business Center of Northern Virginia and had the privilege of 
starting that center in 2001.
    I am honored today to speak on behalf of the Association of 
Women's Business Centers in support of the SBA Women's Business 
Programs Act of 2007. The association has submitted formal 
testimony. And I ask that those written remarks be entered into 
the record.
    ChairwomanVelazquez. Without objection.
    Ms.Wrigley. Thank you.
    Specifically, the AWBC's testimony speaks to three points. 
Point one, women's business centers are past the point of 
demonstration and should be evaluated and funded on an ongoing 
basis on par with other SBA business assistance programs.
    Despite a remarkable record of achievement over the past 18 
years as the program has come into its own, its growth has 
recently stalled due to funding decisions. We know that when 
our program performance is measured against any other 
enterprise program, we will meet or exceed performance 
benchmarks.
    Point two, funding allocations between new and existing 
centers should recognize the value of the longitudinal approach 
that WBCs take to client service and should not vary from year 
to year.
    The SBA Women's Business Programs Act of 2007 will remove 
the funding uncertainty that WBCs have had to endure by 
establishing three tiers of funding and setting funding levels 
and budget allocations for each. We believe that the 40-20-40 
allocation is eminently fair and recognizes the economic 
contributions made by WBCs that have an established track 
record of service.
    Point three, program grant disbursements should be made in 
a timely manner to ensure that client services are not 
interrupted. We are in solid agreement that awards should be 
made public and should be paid in a timely manner.
    The new SBA Women's Programs Act of 2007 would go a long 
way to addressing our concerns. And we applaud Congresswoman 
Velazquez for her leadership in introducing this bill. This 
bill will help solidify the standing of the women's business 
center program, both in terms of ongoing funding and with 
respect to how program funds are allocated among the centers.
    Women's business centers have struggled in recent years 
with a great deal of uncertainty, not only regarding whether or 
not they will receive funding but how much funding they will be 
given. It's a huge worry for all of us because our communities 
rely on us.
    Since we are forbidden to raise funds while being paid by 
the SBA, many of us put in long hours of our own time to build 
the relationships necessary to ensure federal and ongoing 
matching funds.
    I applaud the Committee for recognizing that the WBC 
program has proven its impact and deserves to be treated as 
such. Your support will not only be felt on the national level. 
It will be strikingly apparent at the center level as well.
    Allow me to tell you about the Women's Business Center of 
Northern Virginia. At the WBC in northern Virginia, we are 
proud of the fact that since opening our doors on January 3rd, 
2001, we have run over 530 classes attended by over 10,000 
women, and have provided over 1,600 hours of free one-on-one 
technical assistance counseling, all with a full-time staff of 
2. Fully two-thirds of our clients are women of color and new 
Americans. And, in fact, within five miles of our center in 
Springfield, women speak over 150 different languages.
    With the SBA's total investment to us in northern Virginia 
of approximately $900,000 over the past 6 years, we have only 
spent around 125 federal dollars per woman assisted. We also 
know that based on a survey of responses from about one-fifth 
of our clients, that we have had at a minimum a $44 million 
economic impact on northern Virginia and its surrounding areas. 
When you consider that the median gross receipts of the 
businesses we assist were only $25,000, we have helped a lot of 
small businesses.
    Despite flat and reduced funding, the SBA insists that all 
of our major milestones increase annually by ten percent. In 
the past two years, while the WBC NOVA has suffered a 32 
percent budget cut, the number of individuals we have assisted 
has grown 60 percent. I am projecting that this year we will 
help 2,500 women on an annual cash budget of $225,000.
    Let me tell you about one particularly interesting client. 
And then I will conclude. Pauline Lewis was born in Malaysia 
and came to the United States when she was 18 to attend a small 
college in New York. Three years ago she showed up at our WBC 
as a low-income new American with a Bachelor's degree in 
international relations, a desire to start her own importing 
business, and a keen commitment to helping women.
    Pauline traveled alone to Ho Chi Minh City in Vietnam and 
discovered a woman-owned factory there where 100 women were 
making beautiful handbags. The piece parts for those bags had 
come from 500 women doing hand embroidery work in co-ops 
outside of Hanoi.
    Pauline struck a deal with the factory owner to export her 
handbags and to support her women employees. She named her 
company Oovoo, the root of the word from Latin for female egg.
    Less than three years later, Oovoo Design Handbags are now 
sold in 600 retail stores in the United States, Canada, and 
Europe. The factory in Vietnam has hired 20 more women to keep 
up with demand. All of the women are being paid 15 percent 
above market rate as well as being taken annually by the 
company on a fully paid weekend vacation.
    Pauline's business, Oovoo Deign, made almost $500,000 last 
year and was featured in a Time Magazine article about women 
helping women through trade. And last month, Pauline was 
honored to receive Count Me In's prestigious Make Mine a 
Million award. Her goal is to have a million dollars in 
revenues by the end of the year. She is still a home-based 
business, and we are so proud of her. She says she could not 
have done it without us.
    We thank the members of the House Committee on Small 
Business for your longstanding support of the women's business 
center program and for other efforts to support women's 
enterprise development in general, such as your support for the 
National Women's Business Council and for increasing access to 
federal procurement opportunities to women-owned firms.
    In closing, I would like to reiterate on behalf of the AWBC 
our strong support for the SBA Women's Business Programs Act of 
2007. We look forward to continuing to work with you to 
increase the economic and social contributions of this nation's 
estimated 10.4 million women-owned enterprises and to the 
countless others whose ideas are on the drawing board awaiting 
support and assistance from our nation's women's business 
centers.
    Thank you, Madam Chair.
    [The prepared statement of Barbara Wrigley may be found in 
the Appendix on page 52.]

    ChairwomanVelazquez. Thank you, Ms. Wrigley, especially for 
that great story.
    Our next witness is Mr. Scott Sklar. Mr. Sklar is the 
President of The Stella Group, a strategic marketing and policy 
firm for clean distributed energy users and companies. He also 
serves as Steering Committee Chair of the Sustainable Energy 
Coalition, composed of the renewable energy and energy 
efficiency trade associations and analytical groups. Thank you.
    Mr.Sklar. Thank you, Madam Chairman. I wish to thank the 
House Committee on Small Business for holding this hearing and 
focusing on energy as critical to small business and how small 
business can provide critical answers to our country's energy, 
environmental, and security challenges.

  STATEMENT OF SCOTT SKLAR, CHAIR, STEERING COMMITTEE OF THE 
 SUSTAINABLE ENERGY COALITION AND PRESIDENT, THE STELLA GROUP, 
                              LTD.

    Mr.Sklar. I would like to point out that I am a small 
business. And my testimony I submitted was featured this past 
month in Fortune Small Business on how my own company has used 
these technologies. My company focuses on other companies and 
how to make them more efficient.
    Energy prices are going up. And I included in my testimony 
that I have submitted an April 11th submission in the 
Washington Post, an article where the local Virginia utility is 
asking a price increase of 90 percent for natural gas, 143 
percent for its crude oil for its peak power plants, 25 percent 
increase for coal, and 8 percent for nuclear fuel. And that is 
happening all over the country. We are having rate increases. 
That is going to continue.
    We have also experienced, as you know, longer-term energy 
outages from everything from a tree branch in Ohio that shut 
down electric power in 11 states for 3 weeks in many cases to 
Katrina. And I am consulting with the State of Mississippi and 
also, through the Clinton Foundation, the City of New Orleans 
on how they rebuild their energy infrastructure. The impact on 
business in both cases an accident and an act of God have been 
profound. It has pushed many businesses from being in the black 
into the red.
    I want to remind the Committee that most of our retail 
industry in this country makes its profit in the last few weeks 
of the year. So if you have an outage due to a mistake, an act 
of God, or a tree branch or a squirrel, it puts you in the red. 
It is not acceptable.
    The good news is--and I included that in my testimony that 
I hope will be included in the record--that we have $17 billion 
coming from institutional investors and the joint venture 
community into these businesses to create new kinds of 
technology. And that's the whole portfolio of energy efficiency 
renewable technology.
    That is the good news. And it is going into intellectual 
property. And these companies have been growing 30 percent a 
year for the last 7 years. The bad news is this kind of money 
does not go to the kinds of companies that take this new 
technology and bring it into the marketplace. So there has 
been, in fact, a bottleneck that we can manufacture and we can 
start automating. And we can't get it to the public.
    And, unfortunately, I have to disagree with our SBA 
representative here that DOE and EPA are really not set up to 
do this kind of job. And the fact of the matter is that the 
proposals in the draft bill of the Committee are very good.
    The sustainability initiative and the way to open up 
certain programs at SBA are able to bring professionals geared 
to help small businesses that need the capital to orchestrate 
that capital and for those who want to use these technologies 
to figure out ways to access private capital and in some cases 
public capital to be able to do that so that they can expand 
and be more cost-effective.
    I have been appointed this past month by the administrator 
of EPA on the NACEPT advisory committee, the over-arching 
committee for EPA. And I work closely with DOE. DOE is great on 
technology assistance. And EPA is a great regulatory agency and 
to give people some ideas. But they are not SBA.
    SBA the President has said all agencies through executive 
order are to work in making this country more energy efficient 
and to reduce energy imports, all agencies. The Committee's 
bill I believe, the proposed bill, is to really start getting 
into the meat of that and creating some tools to do that. So I 
urge you to raise the bar and create the capacity within SBA.
    I am getting called by lots of small businesses. And when I 
refer them to the SBA, they go, ``There is no one there that 
knows these energy issues.'' And so they just refer them to the 
banks. And the banks have no idea what to do. And it rolls off 
the back. So we need to be a little more focused on how we do 
this.
    There is no question that we have more cities out of Clean 
Air Act containment than ever before. Obviously you are reading 
the news articles about emissions causing change in our global 
climate. We are fighting a few wars in the Middle East now, 
where we are importing a good portion of our energy. But, 
frankly, we are importing our energy from other countries 
around the world that are as shaky or are not democracies.
    We have some problems in this country that small business 
can help tackle. We have the private investment coming in. We 
need the public tools to help to facilitate that investment.
    Thank you very much.
    [The prepared statement of Scott Sklar may be found in the 
Appendix on page 55.]

    ChairwomanVelazquez. Thank you, Mr. Sklar.
    Mr. Rowe, the Energy Policy Act of 2005 required the 
administrator to take an active role in getting small 
businesses to be more energy-efficient. And he was supposed to 
establish a strategy and plan for its implementation. He was 
supposed to meet with EPA and Department of Energy and 
coordinate an effort to gather information on energy 
efficiency, information that is useful to small businesses.
    We have looked over your congressional submissions, your 
GPRA reports, and your Web site. And I don't see any of that. I 
just would like to know what is it that SBA is doing to carry 
out the goals established by the Energy Policy Act of 2005?
     Mr.Rowe. Yes, ma'am. The Office of Policy and Planning at 
SBA is working with EPA and the Department of Energy to collect 
the information and establish links through our Web site to 
information from EPA and the Department of Energy.
    ChairwomanVelazquez. How long do you think it will take?
    Mr.Rowe. I can't give you an exact time, but it's my 
understanding from our Director of Policy and Planning that the 
implementation of the links should be established within the 
time frame of this summer.
    ChairwomanVelazquez. Since the SBIC program was 
implemented, basically it tended to focus more on financing 
small businesses in the manufacturing industry. In the past 
year, only four SBIC financings went to small businesses 
involved in energy and utilities. This represents less than 
one-quarter of one percent of the total finance in the SBIC 
program.
    Has the SBA done anything to increase the number of small 
businesses receiving SBIC investment in the area of alternative 
energy?
    Mr.Rowe. Ma'am, I spoke with your staff. And you are 
correct. We did four financings to utilities. I think we may 
have done about 30 financings in--
    ChairwomanVelazquez. Okay. Alternative energy, not 
petroleum.
    Mr.Rowe. Right. And the problem is, as you point out, most 
of those investments are probably extraction and services-
based. We don't have any information as to whether they are 
efficiency or conservation-based.
    ChairwomanVelazquez. So does the SBA support efforts to 
adapt the SBIC program to encourage investment in the area of 
energy independence if it could be done with zero additional 
cost to the government?
    Mr.Rowe. Yes, ma'am. I was discussing this with some other 
folks in the administration, ma'am. And I believe we would be 
very interested in the fact that if it can be done through a 
zero subsidy debenture, that might actually be more efficacious 
than some of these subsidized and supported provisions that 
exist at other agencies. Unfortunately, we just haven't had 
time to go through all of the other options that are out there, 
the other agencies.
    ChairwomanVelazquez. Thank you.
    Ms. Goldstein, one of your legislative proposals that you 
sent to us, you are requesting from Congress to give to the SBA 
one percent of the SBDC appropriation for administrative costs. 
If we look at the last seven years' budget submission from SBA, 
basically it has been flat funded, has been flat. You haven't 
requested any additional money.
    On top of that, you are also proposing to eliminate the 
microloan technical assistance program and have the SBDCs fill 
this gap. With an overstretched and flat funding SBDC program, 
explain to me how can the agency now take already scarce 
program funds from the SBDC and use it to pay for 
administrative costs?
    Ms.Goldstein. Well, we have made a great effort with 
Administrator Preston in finding ways to not get involved in 
too many platitudes but in doing more with less. And we have 
had a concerted effort on that.
    You always wish you were in the position to be able to meet 
all the requests and all the goals. We continue to do that and 
look at ways that we can stretch the dollars as far as we can. 
And we will have continued to do the same. Some of it is 
starting to take effect. We're devoting a lot of energy into 
how we manage and how we use our time and how we use our money.
    ChairwomanVelazquez. But do you think it is responsible on 
behalf of small businesses in this country for the 
administrator to submit a budget without asking for an increase 
for those programs and then robbing Peter to pay Paul while we 
know that in the last six years, the budget has been cut by 40 
percent?
    I will ask Mr. Higgins. What is your position regarding SBA 
taking one percent of the SBDCs to pay for the administrative 
costs?
    Mr.Higgins. Well, if the assumption is that the funds are 
being appropriated to serve small businesses, I don't think 
they would be served by moving those funds into the 
administrative costs of the agency.
    ChairwomanVelazquez. Let me go to Mr. Chabot because I know 
that there is going to be a series of votes. But I have more 
questions. And then on my second round, I will come back to 
them.

    Mr.Chabot. Thank you, Madam Chair. I would just like to 
compliment the panel on their testimony this morning. I thought 
it was very good and very interesting.
    Ms. Wrigley, if I could start with you first? Just a 
comment that your story was very interesting about the 
Malaysian lady who started the purse thing. And I have to say 
last weekend was Mother's Day, as we all know. And I was trying 
to figure out what to get my wife and was very creative and got 
her I think candy and flowers.
    She always compliments me on my creativity. But if I had 
known that, that sounds like that Oovoo purse would have been a 
very interesting --
    Ms.Wrigley. oovoodesign.com.
    Mr.Chabot. You said there are 600 outlets around the 
country that now carry that sort of thing?
    Ms.Wrigley. There are 600 retail stores that carry her 
purses, yes. And you can also find them online at 
oovoodesign.com.
    Mr.Chabot. Staff should take that down.
    [Laughter.]
    Ms.Wrigley. There you go.
    Mr.Chabot. Next Mother's Day. Thank you. Don't tell my 
wife, though, beforehand.
    Ms.Wrigley. Okay.
    Mr.Chabot. Let it be a surprise.
    Could you tell me what the rationale for having separate 
outreach programs is, just in general, you know, for specific 
groups?
    Ms.Wrigley. Sure.
    Mr.Chabot. And are the rationales as valid today as they 
were when Congress created them quite a few years ago?
    Ms.Wrigley. I think that there is tremendous rationale for 
having different programs, sir. The women's business center 
programs really target a very different kind of population than 
the SBDCs.
    And I speak from a great deal of experience because we 
happen to have both under one roof at our location in 
Springfield. The women's business center office is literally 
three feet away from the SBDC office.
    We serve very different clientele because we do so in a 
very different way. Women learn differently from men. And I 
know that when I had my own business in Virginia a number of 
years ago, it was very intimidating to me to consider the idea 
of going to a university to, frankly, sit down next to a bunch 
of white guys with M.B.A.'s and a lot of daddy's money in their 
pocket. I felt like, you know, I would be really intimidated to 
ask my questions.
    We create a very different culture at the women's business 
center. We really have made it a welcoming place where new 
Americans, where women of color are supported, and they feel 
comfortable.
    We explain all of our terms. We don't presume a level of 
knowledge that perhaps is presumed by the SBDC. Let me give you 
a real specific example. At the center where I work, the 
women's business center takes an entire day to teach how to 
write a business plan. We explain every term.
    As I mentioned, we spend some time with networking. We 
really don't want to use terms even like cash flow without 
really going into depth as to what that means.
    At the SBDC, you can get the exact same information in a 
two-hour class versus an eight-hour class. So there is a huge 
difference in how we do what we do. And it's very important to 
me that the woman have a place where they feel comfortable, 
where no question is considered stupid, and where they see 
other women like themselves who are aspiring to reach their 
dreams.
    Mr.Chabot. Thank you.
    Ms. Goldstein, if I could go to you next? You mentioned 
that, I believe, online the SBA has 23, I think you said, 
training programs that one can go on to get assistance at. How 
does the SBA get the word out there that those are available to 
make the public and maybe people that are thinking about 
getting into starting a small business or expanding? How do 
they find out about it to begin with?
    Ms.Goldstein. Well, we don't have a separate marketing 
program for it, but we let our resource partners know. And we 
get about 12 million people annually looking at our Web site. 
And they find it there. It's been fairly well-promoted on the 
Web site. That's how they learn.
    Mr.Chabot. Thank you.
    Ms.Goldstein. And, of course, we talk about it wherever we 
go.
    Mr.Chabot. Mr. Sklar, if I could move to you next? Could 
you talk again briefly--and you went into this in your 
testimony again--how small businesses, in particular, are 
affected by the energy prices that have been going up so 
dramatically in recent years?
    Mr.Sklar. You know, there are easy things that small 
businesses can do that we all do, even in our homes, you know, 
from compact fluorescence and energy thermostats and things 
like that which are common knowledge and you can do. But once 
you get to a certain level--and a lot of these small businesses 
are really constrained by the energy costs.
    I have a client company that is going to close down one of 
their plants just because their energy costs are too high, but 
they're committed not to go overseas and outsource. But, 
instead, they're just shutting down plants.
    And, frankly, that was the company I said, ``Well, go to 
the Small Business Administration.''
    And they said, ``We got no answers.''
    And then I called SBA and said, ``Who do you know on 
energy?''
    ``We have nobody on energy.'' And so they're getting 
squeezed. And the problem is if you want to keep business in 
the United States,--and I think we all want to do as much as 
rationally possible--one of the places we have to deal with is 
how to confront these rising energy costs.
    And, you know, you have in some cases no options if you 
don't do it. Refrigeration costs are high if you are in food 
processing. Running motors is high and so on. Obviously natural 
gas for heating is getting higher. And these businesses are 
also getting higher costs in basic commodities, a lot of it 
attributable to growth in China and India driving those 
commodities up worldwide, understandably.
    Well, if your energy prices are going up and your commodity 
prices are going up, I think you are really starting to get 
crunched. And that is what I hear all over the country. And I 
am working with these companies all over the country.
    Mr.Chabot. Thank you.
    Mr. Rowe, on behalf of the SBA, how do you respond to that, 
the comment that the SBA doesn't know energy or we don't have 
anybody there that knows this area and maybe concentrating on 
the future as much as in the past, really?
    Mr.Rowe. Yes, sir. Well, as I told the Chairwoman, we are 
working to implement the provisions of the Energy Policy Act, 
which should be able to provide some assistance to small 
businesses looking for that kind of information.
    I will be frank. I am not certain what information exists 
in the world, whether it's EPA or the Department of Energy, to 
help small businesses with these energy efficiency issues
    Mr.Chabot. Thank you.
    Do I still have any time, Madam Chair? Mr. Higgins, and 
then I will go very quickly. Mr. Higgins, you were fairly 
complimentary of the initiatives and the direction that the 
Committee is going on the proposed legislation. Are there any 
things when you reviewed this that seemed to be either missing 
or that you think we should add to make it even better, 
anything that comes to mind? And if there's not--
    Mr.Higgins. Well, with respect to the mature businesses, 
the legislation focused exclusively on what I mentioned, which 
is those businesses, those people that are likely to retire, 
leave the business, and may not succeed.
    Another point that was made here earlier is there is a huge 
slug of folks reaching retirement age or who are going to be 
looking at either part or full-time business ownership as a way 
to either stay business or to supplement their retirement.
    I think it's important to look to the future three or four 
years and figure out how we're going to handle that group of 
folks. Many of them are going to retire with significant assets 
that may be put at risk if they don't understand the mechanics 
of appropriately starting and managing businesses. I mean, the 
sharks will be out there to take their monies to sell them 
franchises or whatever. So I think that it would be well for us 
to get ahead of that curve.
    Mr.Chabot. Thank you.
    Mr. John, unfortunately, I have run out of time. We are 
going to maybe go to a second round. So maybe we'll get you 
next time. We are going to have a vote at 11:30. I think the 
Chairwoman wants to give the other members who are here a 
chance.
    ChairwomanVelazquez. And I will come back to you.
    Mr. Sestak?
    Mr.Sestak. Thanks, Madam Chair.
    See, I am kind of struck. From the background I come from 
in the military, I have watched. When people tend to lose 
funding or things start to decline, there is always this 
greater effort to fight for control over a smaller piece of 
pie. And to some degree, I have watched the SBA budget decline 
40 percent and saw what you have done zeroing out the 
microloans and zero subsidies for 7(a) and significant cuts 
that had been mentioned in the WBCs' percent of program 
budgets. And there's prime and all that.
    So I am intrigued at the same time why there seems to be 
this movement by SBA when it's got less to do, so to speak, or 
less funding to give, why there's this movement by you for 
greater control. It just seems like an organizational thing 
I've watched in the military. As the Services lost their power 
and their funding, went to Joint Staff, they seemed to fight 
more for it.
    So with that as background and as I watch as you want to 
know more about the clients that are coming to the SBDCs and 
their information, how money is used from the SBA for the SBDCs 
to do the examination process but, in particular, how you all 
want to now have a veto authority, so to speak, on the 
grantees' selection of the SBDC state director. Why is that so 
important?
    Ms.Goldstein. So that they can participate in the selection 
of the people that will be running the program. I mean, I don't 
think I find that a terribly unusual practice.
    And you are talking about some prohibitions that we have, 
but in the meantime, the programs are flourishing. We are 
training and counseling more people. We want to participate in 
the interaction in the States and with our programs and have 
that option to--
    Mr.Sestak. But is it true that the hours that are 
actually--the number of people is going up. Aren't the hours of 
client services going down? Mr. Higgins, is that so?
    Mr.Higgins. Necessarily when SBA was pressing for more 
touches of people, many states saw the number of hours per 
consulting case drop to less than two.
    Mr.Sestak. So the number of hours that we're able to do 
things is dropping. Would it be beneficial to have a position 
of state director, help to have a chop on it, so to speak, by 
the SBA?
    Mr.Higgins. Well, you know, there are two SBDCs here. One 
is from New Mexico. Both of us have partners that put far more 
money into the activity than does the SBA. I said there are two 
SBDCs represented here. And both of us have funding partners 
that put far more money into the SBDC than does the SBA. I 
don't know why the SBA is the only partner that insists upon a 
veto on the selection of the--
    Mr.Sestak. Again, as you mentioned, the number of people 
has gone up, but, actually, the number of hours are going down. 
And, yet, this is more assertion for control.
    A question I have is health care. I am most intrigued by 
it. There has been an increase according to the last 6 years of 
78 percent in the health premiums across the nation for small 
businesses. I mean, there is really a challenge for small 
businesses in addition to the energy. It's got to be health 
care. I mean, its time has come.
    My take on it is, does granting additional resources--
because a lot of this is just about sometimes information, 
knowing where to go to find something. Would that be of help in 
this health care area if we were able to provide additional 
resources?
    Mr.Higgins. Absolutely. And you're right. It's a matter of 
understanding where the information is and being able to 
analyze alternatives in many cases, which with everything else 
the small business owner has to do, that's often very 
difficult.
    Mr.Sestak. One other thing. I really like that we're 
reauthorizing this bill and all because, as everyone has 
mentioned, times are changing. You know, we see more groups, 
women, et cetera, coming. To some degree, I am also struck by 
formulas that are older and potentially need to be changed.
    This one may come across a bit parochial. I don't mean it 
that way, but I watched populations, like in Pennsylvania or 
New York City, where they are actually declining. We have a 
formula that is based upon population or distribution.
    You know, I find places like Pennsylvania or my own 
district that one out of five manufacturing establishments has 
disappeared in the last three years. And a real challenge is 
here.
    But is the formula we are using the correct one as we go 
into the future?
    Mr.Higgins. I think the formula establishes a base. And I 
think that's important to establish a base. But then I think 
that the separately funded initiatives allow individual SBDCs 
to identify opportunities or issues within their own area and 
then additional funds that would be more flexible, not 
allocated by formula, would allow SBDCs to address what they 
perceive as the special needs in their area.
    Mr.Sestak. Thank you, Madam Chair.
    ChairwomanVelazquez. Mr. Shuler?

    Mr.Shuler. Madam Chair, thank you.
    I continue here. We have heard about the SBA not being a 
part of the future, it seems like. I mean, we continue to talk 
about sustainable renewable energies, the ways that we can 
benefit. I mean, this hasn't happened overnight. It's not 
something that this Congress, this Committee decided to do 
yesterday. This has been going on for quite some time.
    So give me your plans. I mean, this is very discouraging to 
me that there has been no plan. It should have already been 
implemented. I mean, we have other businesses and organizations 
throughout our communities and our district and our state that 
have already gone forth and put the effort as working with the 
different organizations to ensure that we have better energy 
efficiency. We know it's a problem. We can't ignore it. And our 
small businesses continue to hurt every single day because of 
that.
    Give me your plan. I mean, we talk about implementing a Web 
site to be able to direct the information. But what are we 
doing actually on the ground with the people? What education 
are you giving to the employees that will actually benefit our 
small businesses?
    Mr.Rowe. Well, as far as an employee-based outreach 
program, Mr. Shuler, we don't have one in place at this time. 
I'm certainly willing to bring that back to the administrator. 
I know that's one of the things he would be happy to take up. 
He's very interested in getting our district offices more 
involved in outreach. And obviously this is an area of interest 
to the Congress but to the nation as a whole.
    ChairwomanVelazquez. Would the gentleman yield?
    Mr.Shuler. Yes.
    ChairwomanVelazquez. Mr. Rowe, I think that basically our 
frustration is because this Energy Policy Act of 2005 required 
for the administrator to establish a strategy and a plan. So I 
will request, formally request, from this Committee that you 
send to us information as to when the strategy and plan will be 
ready.
    Mr.Rowe. Yes, ma'am. I will be glad to do that.
    Mr.Shuler. Thank you, Madam Chair.
    Mr. Higgins, can you tell me some of the things that you 
are doing, certainly in Pennsylvania, to be able to get the 
message out. I mean, maybe this is some of the things that we 
can give SBA that how you have indicated in being able to 
educate the small business community.
    Mr.Higgins. Right. Well, we have in Pennsylvania an 
environmental management assistance program that includes also 
our energy conservation program. It's not funded with SBA 
funds. We funded it elsewhere.
    What we do is when we begin a consulting engagement with a 
company, we try to make them aware that it is quite likely that 
there are opportunities for energy conservation in those 
companies. We can follow that up with an on-site assessment 
where we make specific recommendations as to what you can do. I 
mean, it may be as simple as lighting, heating, and air 
conditioning and may be fairly complex depending on the size of 
the company, business they are in.
    But, as I said, we have found that with those on-site 
visits, those companies can realize savings of between 20 and 
30 percent in energy bills. This becomes critical in 
Pennsylvania because we're one of those states where the caps 
are coming off, electrical costs, and the bills are likely to 
rise anywhere from 50 to 70 percent. So these small businesses 
have got to confront this.
    You know, we market that. We have 18 centers in 
Pennsylvania. That assistance is available through all of them. 
But you know what? Again, it is one of the many things, like 
health care, that a small business owner has got to confront. 
So our job we feel when we get hold of them is to say, ``Okay. 
Have you thought about this? Do you want us to help you do 
this?''
    When we first started, about 30 percent of the businesses 
took us up on it. Now we are up to 60 percent of them want us 
to help with the energy conservation. It is huge for them.
    Mr.Shuler. Real quickly, Mr. Sklar, I appreciate your 
testimony today. And I commend you for your work and what you 
have been able to do and accomplish.
    Talk to me briefly what we can do in association with the 
banking industry, particularly maybe our more community, 
smaller community banks that we can actually educate them and 
allow them to get the background necessary for them to make a 
loan.
    For an example, our small businesses may have more up-front 
costs, but the energy impact, it may be a great investment, a 
larger investment, up front but over the life of a particular 
business to be able to benefit from better energy-efficient 
products.
    Mr.Sklar. I think that is an absolutely important question. 
We are finding that credit unions and more community-based 
banks are very concerned about the economic stability of the 
small business community.
    And the issue that you just addressed that yes, the up-
front cost is higher, I use the example that solar water heater 
costs four times what a regular water costs, but if you 
incorporate in a longer-term financing package, the monthly 
loan is less than the utility bill that you would be saving. So 
you would pay for itself the day you financed the system. And 
that is true in lots of different technologies in energy 
efficiency and renewables.
    Frankly, what I was hoping for SBA, what my aspiration is 
was really to do just that, is to provide some guidance to 
lenders that work with small businesses on these kinds of 
issues and yes, of course, bring in DOE or EPA on technology or 
regulatory issues and then work with the states.
    Pennsylvania has a fabulous program for environmental 
businesses and clean energy, but they don't have the expertise 
in the government to deal with this, the lending side of it. 
And that is, frankly, what we need. We need it to be done on a 
regional basis because most lenders are sort of regional. And 
they will learn from each other.
    And we are finding, by the way, in some states that have 
these programs once the lenders have a couple of years' 
experience, you know, it is sustainable. It goes on its own. So 
it is a very important issue.
    Mr.Shuler. Thank you, Madam Chair.
    ChairwomanVelazquez. Mr. Jefferson?
    Mr.Jefferson. Thank you, Madam Chair.
    Not to stay on the same subject for the entire hearing, but 
I suppose the area of energy efficiency is very intriguing for 
all of us. I think we all agree that the expertise does reside 
in the SBA now based on all of the discussions to provide real 
assistance in this area.
    My question is, is it important? Is it important for us to 
work on developing that sort of expertise or we look at this 
being provided in some other way? Is it realistic to propose 
this sort of expertise there or should we have partnership 
arrangements that provide it in some other way? Mr. Sklar, I 
might ask that.
    Mr.Sklar. You know, that is a good question. And I 
obviously believe--I am not thinking that the Committee ought 
to say, ``We ought to bring ten people into the SBA and create 
a new program,'' but I do believe the administrator ought to 
anoint someone to say, ``You look at energy and environmental 
lending.'' And then you start developing teams with the other 
agencies but really have it more edgy so that you can do 
something. It's building up knowledge.
    Again, the President has said to do this. EPACT has said to 
do this. The other agencies are willing to cooperate, but there 
needs to be a vision thing at SBA to do it. And then it needs 
to dialogue with these other programs that are also providing 
personalized assistance so they become more educated and 
implement. That is all I am asking, but you still have to have 
somebody who is responsible at the top of the agency for this 
kind of program area.
    I do agree with the congressman that it doesn't make sense 
to build a whole department around it.
    Mr.Jefferson. That is very helpful. With respect to 
disaster recovery, the approach that is taken in the bill is I 
think to provide some way to deal with the caps and to permit 
these to get up and running in a hurry.
    I don't know if even that is fast enough. Might it be that 
we might just insist on some automatic waivers in case of 
certain disasters when they are bad enough or extend long 
enough?
    Somehow or the other, there just needs to be a quicker way 
to get at it. Have you given any thought to how we might even 
do this more quickly than the bill provides us an opportunity 
to do it?
    Mr.Rowe. Mr. Jefferson, in the SBA's legislative package, 
one of the items that we addressed specifically regarding this 
was expanding the utility of the portability grants for that 
purpose. One of the other things we would support is some 
legislative changes so that we don't have the restriction, 
unfortunately, we ran into in Katrina regarding operations of 
SBDCs beyond, I guess, what you would call their borders so 
that an SBDC in New York could assist in Texas and vice versa 
without worrying about any restraints from the agency.
    And the portability grants go along with helping the SBDCs 
defray those costs because obviously if you're sending folks 
across the country to assist in counseling, you've got to pay 
their travel and other expenses.
    Mr.Jefferson. Mr. Higgins?
    Mr.Higgins. I am all for as much flexibility as you can get 
in a disaster situation. And I think the less paper and process 
involved, the better off you are. I think that one of the real 
advantages of this legislation is that it allows us to build 
some capability to get it in place.
    Now, the reality is that SBDCs or people from SBDCs in 
other states did go to the Gulf Coast. We sent folks out of 
Pennsylvania because they had training. But, you know, it was 
tied up in some complex negotiations, and there were silly 
limitations on it.
    You know, I think if this legislation passes, you know, you 
could put in place a framework that takes care of all of that 
bureaucratic nonsense on the front end so that when it is time 
to go, your people just go.
    ChairwomanVelazquez. The Committee will stand in recess. 
And we will resume after these two votes that will take around 
20 minutes.
    [Brief recess.]
    ChairwomanVelazquez. The Committee is called to order. As 
you can imagine, we're going to have a series of votes in the 
next maybe 15 more minutes or 20 minutes. So we're going to try 
to wrap this up as soon as we can.
    I would like to make some questions. Mr. Chabot is right 
here and having a meeting. And as soon as he finishes, he will 
join us.
    My question is addressed to Mr. Higgins. The proposed 
legislation, the draft legislation, that we're considering 
takes the SBDC program in a new direction by creating 
initiatives tailored to specific entrepreneurial needs. This 
differs from the baseline program, which provides a funding 
base on a population-based formula.
    Conceptually do you believe that this is the right 
direction to take the SBDC program in?
    Mr.Higgins. Let me begin by saying I think it is absolutely 
critical that the funding for the basic SBDC activities, those 
things that we do, all do, every day over and over again in 
working with the small business community be maintained and be 
protected. And I would not want to see anything happen to 
reduce the base funding for the SBDC.
    But moving to the next step, we all go through in each SBDC 
a strategic planning process on a regular basis, where we are 
looking at the needs of the small business community and trying 
to develop strategies and programs to meet those needs.
    And I think that this set of initiatives if funded in 
addition to the base funding would provide us the wherewithal 
to really move the SBDCs to the next level, where you not only 
were providing the basic meat and potatoes of small business 
development center assistance but were able to tailor your 
program to meet critical issues and meet some critical needs of 
small businesses in each of the states of the SBDC.
    ChairwomanVelazquez. Thank you, Mr. Higgins.
    Mr. John, the need for entrepreneurial development 
assistance in Native American communities is critical given the 
large number of individuals who are interested in starting 
their businesses and also given the fact of the high 
unemployment rate that you have in those communities. How will 
the Native American Business Development Act of 2007 introduced 
by Representative Udall support job growth in these 
communities?
    Mr.John. Thank you for that question, Madam Chair.
    I think right now, as we speak, we don't have a small 
business development center on the Navajo reservation right 
now. We do have it in border towns, like Farmington, Gallup 
areas, just adjacent to the reservation. And with this bill, we 
would like to expand onto the reservation to help assist some 
of these Native American entrepreneurs. And I think that is a 
need.
    And, of course, the tribal government is doing what they 
can to cut down some of these lengthy processes to make it 
easier to start a business on the Navajo reservation because 
some of these laws have already been mandated by Congress under 
the Code of Federal Regulations that we have to abide by 
through the Bureau of Indian Affairs.
    ChairwomanVelazquez. Thank you.
    Ms. Goldstein, the SBA's mismanagement of the disaster loan 
program has created unnecessary difficulties for small business 
owners in disaster-affected areas. The counselors at SBDC have 
experience with SBA loans and know what is required to help 
these business owners to complete their disaster loan 
applications. Would the SBA support giving these counselors a 
greater role as first responders to a disaster like this?
    Ms.Goldstein. Well, I think you know, Madam Chair, that we 
are in the process of producing a handbook for how to handle 
future disasters. It's due here in Congress June 1st, I believe 
it is. And we have gone to great attempts, and we have carried 
the message. And the SBDC has been part of the planning of that 
process. And they expressed that they certainly are capable of 
coming on the scene of a disaster sooner than they were 
previously.
    So I think when you see that document, which is being 
finished as we speak, and it comes up here, you will see a much 
different approach. You know, we learned a lesson, obviously.
    ChairwomanVelazquez. Well, we are discussing today 
legislation regarding the SBDC and the structure of problems 
that we saw regarding the disaster or lack of response, 
appropriate response, effective response, to the Katrina 
victims. And one of the issues that we saw was the fact that 
you didn't have on the ground the amount of people that were 
needed based on the magnitude of the disaster.
    Since I don't have that package in front of me that 
disaster plan that the administration has been working on and 
that was supposed to have even before Katrina hit the Gulf 
Coast, my question to you is, do you support the counselors 
from the SBDC to be part of the first responders?
    Ms.Goldstein. I don't know that I can answer the question 
not having seen the final product.
    ChairwomanVelazquez. Okay.
    Ms.Goldstein. I was definitely part of letting the deputy 
who is responsible for writing it--we met with the SBDC, with 
SCORE, women's business centers and talked about how their role 
could be enhanced in the future. And that's the best I know 
today.
    ChairwomanVelazquez. Who met with them, the SBDC?
    Ms.Goldstein. We did a conference call. Some people came to 
us.
    ChairwomanVelazquez. You were a part of that call?
    Ms.Goldstein. Yes, that call, one of many calls and 
meetings that took place as she was writing the handbook. There 
is a total team of people.
    ChairwomanVelazquez. But you don't recall what specific 
role a person from SBDC will play?
    Ms.Goldstein. It was certainly told to her that they would 
like an earlier role. She heard that. What the final product 
looks like I don't know.
    ChairwomanVelazquez. Okay. I want to note for the record 
that I will be submitting written questions to SBA. In 
particular, I will be submitting a question on the SBDC 
proposal and how SBA will administer it. Given our interest in 
this issue, I would like an answer by the end of the week.
    Ms.Goldstein. Okay. I will take that back.
    ChairwomanVelazquez. As part of the legislative package 
that SBA submitted to Congress, you proposed that Congress give 
SBA full access to SBDC client information. However, I just 
want to make it clear that current law already allows SBA to 
access SBDC client information for the purpose of conducting 
client surveys.
    So how can we be sure this information will be kept 
confidential? And, for example, what protects a client seeking 
assistance on tax questions from having the information 
conveyed to the IRS, Ms. Goldstein?
    Ms.Goldstein. Well, the information I know most about is 
that which goes for the impact survey. It goes directly to a 
company. And mostly we use it by numbers and addresses to send 
mail.
    They keep the records. They are not made public. They are 
just used by the vendor that we choose to conduct the survey. 
And none of the results are stated by name.
    We don't use personal information for that. It's aggregated 
data. And so I think, you know, we make every move to conduct 
privacy. I spent 12 years of my life in survey research. And 
that's part of it, the privacy thing. And we would not. We 
would not do it. You can ask for their permission if they want 
to be quoted on it, but we wouldn't do that.
    ChairwomanVelazquez. Mr. Higgins, what do you see as the 
benefit of client confidentiality protections? And do you 
believe they should be weakened or strengthened?
     Mr.Higgins. Well, I think the basic benefit is if we can't 
offer confidentiality, absolute confidentiality, to the 
clients, many are not going to come to us for assistance at 
all.
    And many who do are not going to be willing to share things 
like financial statements and sensitive business information. 
And that would make us fairly ineffective as business 
consultants if we don't have access to all of the information 
we need. I mean, it won't work. They won't come. And it won't 
work if they come and don't share.
    I think anything you can do to strengthen the 
confidentiality provision is something that you certainly 
should do.
    ChairwomanVelazquez. Thank you.
    Mr.Higgins. Thank you.
    ChairwomanVelazquez. Mr. Chabot?
    Mr.Chabot. Thank you, Madam Chair. I will be very brief 
because we have, again, votes on the floor.
    Mr. John, I hadn't gotten around to you. And I understand 
the Chair already asked you a question about it, but if I could 
just very briefly? You had mentioned in your testimony the 
challenges, the difficulty it is to start a business on Indian 
land, and the 60 steps that you have to go through and 
sometimes taken up to 2 to 3 years to go through the process.
    I just wanted to make sure that you are satisfied that the 
legislation that we are considering here will at least help to 
improve that situation. Is that correct?
    Mr.John. Yes, that is correct because a lot of these steps 
that I mentioned in my testimony are where the businessmen need 
technical assistance and also putting their business package 
together and financial and whatever that they need for the 
banking institution and then also help them.
    Counseling is a big issue after they get frustrated for 
being in the system for so long. Then they just quit. And then 
I think this legislation will be part of the area that will at 
least motivate them that the SBDC is also doing something on 
the Navajo reservation, which we don't right now.
    And, however, we do have 21 SBD offices statewide in New 
Mexico. So a lot of the Native Americans are already coming to 
SBDC for assistance. And we're helping them as much as we can. 
And I think that this legislation will be one of the red tape 
that will be cut a little bit at a time. Hopefully in the 
future we won't have to go through 60 steps or sometimes more.
    Mr.Chabot. Okay. Well, thank you very much.
    Mr.John. At one time it was 121 steps, just for your 
knowledge.
    [Laughter.]
    Mr.Chabot. Thank you. So we are at least heading in the 
right direction. All right. Well, thank you very much, Mr. 
John.
    ChairwomanVelazquez. Okay. Well, with this, it concludes 
this hearing. I want to thank all of the witnesses. And I ask 
unanimous consent that the members will be given five 
legislative days to enter into the record any statement or 
extraneous material that they might consider important.
    This Committee adjourns. The hearing adjourns.
    [Whereupon, at 12:19 p.m., the foregoing matter was 
concluded.]

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