[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]
SUBCOMMITTEE HEARING ON PROGRAM
HARMONIZATION IN RURAL AMERICA -
HOW THE SBA AND USDA CAN WORK
TOGETHER TO BETTER SERVE SMALL
BUSINESSES
=======================================================================
SUBCOMMITTEE ON URBAN & RURAL ENTREPRENEURSHIP
COMMITTEE ON SMALL BUSINESS
UNITED STATES HOUSE OF REPRESENTATIVES
ONE HUNDRED TENTH CONGRESS
FIRST SESSION
__________
November 14, 2007
__________
Serial Number 110-60
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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
BRIAN HIGGINS, New York
MAZIE HIRONO, Hawaii
Michael Day, Majority Staff Director
Adam Minehardt, Deputy Staff Director
Tim Slattery, Chief Counsel
Kevin Fitzpatrick, Minority Staff Director
______
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SUBCOMMITTEE ON URBAN & 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
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(ii)
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C O N T E N T S
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OPENING STATEMENTS
Page
Shuler, Hon. Heath............................................... 1
Fortenberry, Hon. Jeff........................................... 2
WITNESSES
Shear, William, Government Accountability Office................. 3
Carroll, Dale, Advantage West Economic Development Group......... 5
Ziegler, Katy, National Farmers Union............................ 6
Myhre, Michael, The Association of Small Business Development
Centers........................................................ 8
Milobar, Leon, U.S. Small Business Administration................ 10
APPENDIX
Prepared Statements:
Shuler, Hon. Heath............................................... 23
Fortenberry, Hon. Jeff........................................... 24
Shear, William, Government Accountability Office................. 26
Carroll, Dale, Advantage West Economic Development Group......... 41
Ziegler, Katy, National Farmers Union............................ 45
Myhre, Michael, The Association of Small Business Development
Centers........................................................ 49
Milobar, Leon, U.S. Small Business Administration................ 64
(iii)
SUBCOMMITTEE HEARING ON PROGRAM
HARMONIZATION IN RURAL AMERICA -
HOW THE SMALL BUSINESS
ADMINISTRATION (SBA) AND U.S.
DEPARTMENT OF AGRICULTURE (USDA)
CAN WORK TOGETHER TO BETTER
SERVE SMALL BUSINESSES
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Wednesday, November 14, 2007
U.S. House of Representatives,
Committee on Small Business,
Subcommittee on Urban & Rural Entrepreneurship
Washington, DC.
The Subcommittee met, pursuant to call, at 10:00 a.m., in
Room 2360 Rayburn House Office Building, Hon. Heath Shuler
[chairman of the Subcommittee] presiding.
Present: Representatives Shuler, Gonzalez, Ellsworth,
Fortenberry and Davis.
OPENING STATEMENT OF MR. SHULER
ChairmanShuler. I now call this hearing to order.
Today we'll examine some of the SBA and USDA programs and
whether there are ways to improve their services to small
businesses in rural America.
This Subcommittee wants to ensure that the programs of
these agencies can be maximized to benefit the nation's nearly
2 million farm owners and their communities. Small businesses
are the backbone of rural America. And if we are spending
Federal dollars to assist them, we need to get the most out of
the taxpayer's dollar.
With cooperation efforts both from the SBA and the USDA can
promote greater economic development.
As part of this effort, Mr. Fortenberry and I have led a
bipartisan effort to ask the GAO to look at this issue. In
June, Mr. Fortenberry, Mr. Chabot and I requested that the GAO
review and report on a collaboration and cooperation between
the SBA and USDA. These agencies have had success in helping
rural economy. However, the Federal Government has not looked
close enough to see if there are ways to improve these efforts.
Given their similar economic development goals of these
agencies it only makes sense to look at ways of coordination
and efforts to help local businesses.
The agencies have had a role in providing family farmers
with new business alternatives. These programs at the USDA have
mostly focused on serving our rural economics and agricultural
industries. The SBA has also had a role in ensuring that
businesses in the rural communities have accessed to capital as
well as technical assistance.
Small business development centers and women's business
centers have played a critical role in providing advice and
expertise to assist these business growth. With access to
capital to these areas there are significant SBA lending that
goes to our rural communities.
In recent history, however, we have seen how gaps have
existed between these agencies. One of the most discussed has
been the access of disaster assistance program. Farmers are
often unable to use SBA disaster loans and instead must way for
the Federal Disaster Assistance to be declared.
There have been also questions whether the SBA lending and
the farm credit services are covering the complete needs of the
rural small businesses.
Today's hearing will allow us to examine the SBA and the
USDA programs have worked and gain a better understanding of
how they can better work together.
Considering that small business dominates rural economies,
it only makes sense. The Federal Government support through the
SBA and the USDA to rural Americans assures opportunities and
stability often spurring the entrepreneurial spirit.
Today we will have the opportunity to hear from the GAO on
the status of their report as well as hear from the
stakeholders on the issues that the GAO should be examining.
I appreciate all the witnesses being here today.
And at this time I would like to recognize the Ranking
Member Mr. Fortenberry for his opening statement.
OPENING STATEMENT OF MR. FORTENBERRY
Mr.Fortenberry. Thank you, Mr. Chairman. And thank you all
for coming today and, Mr. Chairman, for your agreement to hold
this hearing.
We are here to talk about the harmonization of programmatic
elements in rural America. Our Government employs a wide
variety of tools in its efforts to improve the abilities of
families and community to better themselves through economic
growth and entrepreneurship. Some of these programs are
targeted and well coordinated, but we believe that progress can
be made in shaping the resources of the U.S. Department of
Agriculture and the Small Business Administration to ensure
that they work effectively well together.
We all understand the necessity of drawing efficiency from
each tax dollar. Part of this efficiency is ensuring that
different Government agencies work well in tandem with each
other. This challenge was identified in a GAO report alluded to
by our Chairman two years, which recommended that agencies
define and articulate common outcomes, agree upon agency roles
and responsibilities, operate across agency boundaries as well
as reduce cost by pooling resources.
The USDA through its Rural Development Office and the Small
Business Administration share the common goal of improving the
economic opportunity for all of America. And particularly
economic development in rural areas has been the focus of the
USDA, and Administrator Preston to his credit has made it a
goal of the SBA to focus on addressing the needs of underserved
communities as well.
Rural American certainly fits that definition. The SBA
through its loan programs, technical assistance, Federal
contracting serves thousands of small businesses and creates
jobs. Rural Development, while organized differently, has a
broad network of offices in almost every rural county in our
country and operates a variety of grant and loan programs
targeted at rural communities.
While Rural Development has a wide footprint in rural
America, the SBA maintains a limited number of offices, mostly
in larger cities in partnerships with colleges and universities
as well. While its effectiveness is not questioned, the SBA is
less accessible to rural communities, particularly in large
states such as my own, Nebraska.
For an entrepreneur in rural Nebraska a small business
development center or Rural Development office may be the point
of first contact to see what resources are available for
beginning a new venture. New businesses in rural economies
stimulate job growth and provide needed diversification to
communities that have been in the past reliant, perhaps, on a
few large employers many of whom downsize or close plants.
These entrepreneurs need to be able to utilize all the
appropriate assistance as they begin their business. And
officials in these officials need to be flexible in directing
their constituents to the most productive program.
The issue we are discussing today holds a great deal of
promise, I believe, for entrepreneurs and rural communities.
The ability to coordinate the programmatic elements of these
agencies is vital to the empowerment of small businesses. And I
also believe this effort could very well serve as a model to
stimulate cooperation among agencies in the Federal Government
with other similar missions.
Thank you again, Mr. Shuler, for your leadership on this
important issue. And I look forward to our witness' testimony
today. And thank you all for coming.
ChairmanShuler. Thank you, Mr. Fortenberry.
We'll now move to testimony from the witnesses. Witnesses
will have five minutes to deliver their statement. The yellow
light that comes on means that you have one minute remaining
and red means wrap it up. We're not too technical, as you can
see.
But our first witness is Bill Shear, Director of Financial
Markets and Community Investments at the GAO Office. Mr. Shear
oversees the GAO report on Collaboration and Cooperation of the
USDA and the SBA Programs.
Mr. Shear, welcome. And thank you for your testimony.
STATEMENT OF WILLIAM SHEAR, DIRECTOR OF FINANCIAL MARKETS AND
COMMUNITY INVESTMENTS
Mr.Shear. Thank you very much.
Mr. Chairman, Mr. Fortenberry and Members of the
Subcommittee, I am pleased to be here today to discuss our
preliminary views on the potential for increased collaboration
between SBA and USDA Rural Development offices.
I will provide preliminary views on:
First, mechanisms that SBA and USDA have used to facilitate
collaboration with other Federal agencies and with each other.
Second, the organization of SBA and Rural Development
offices across the country, and;
Third, the planned approach for our recently initiated
evaluation on collaboration between SBA and Rural Development.
In summary, first, while SBA and Rural Development are not
currently involved at the agency-wide level in a collaborative
working relationship, SBA and Rural Development have used a
number of different mechanisms both formal and informal to
collaborate with other agencies and with each other.
For example, both agencies have used the Economy Act, a
general statutory provision that permits Federal agencies under
certain circumstances to enter into mutual agreements with
other Federal agencies to purchase goods or services and take
advantages of specialized experience or expertise.
SBA and USDA use the Act to enter into an interagency
agreement to create rural business investment companies to
provide equity investments to rural small businesses. In this
case the legislation creating this rural investment program
recommended that Rural Development manage the program with the
assistance of the SBA because of SBA's investment expertise and
experience, and because the program was modeled after SBA's
SBIC program.
Second, both SBA and Rural Development have undergone
restructuring that has resulted in the downsizing and greater
centralization of each agency's field operations. Currently
SBA's 68 field offices are still undergoing a transformation to
more centralized structure. Rural Development has largely
completed its transformation, but continues to have a large
presence in rural areas through a network of hundreds of field
offices. Rural Development's recognized presence in rural areas
and expertise in the issues and challenges facing rural lenders
and small businesses may make these offices appropriate
partners to help SBA deliver services.
Third, at your request we have recently begun a review of
the potential for increased collaboration between SBA and Rural
Development. In general, the major objections are to examine
the differences and similarities between SBA and Rural
Development programs. Any cooperation that is already taking
place between SBA and Rural Development, and any opportunities
for or barriers to collaboration involving the two agencies.
And then, obviously, looking for solutions on how to address
those potential barriers.
It is a pleasure to be here today. I'd be happy to answer
any questions you may have.
[The prepared statement of Mr. Shear may be found in the
Appendix on page 26.]
ChairmanShuler.
Thank you, Mr. Shear.
Our next witness is Mr. Dale Carroll, President and CEO of
Advantage West Economic Development Group from my District in
Fletcher, North Carolina. Advantage West is nonprofit, public/
private partnership to focus on marketing west North Carolina
for business and corporation development.
Bill, thank you for being here today. I look forward to
your testimony.
STATEMENT OF DALE CARROLL, PRESIDENT AND CEO, ADVANTAGE WEST
ECONOMIC DEVELOPMENT GROUP
Mr.Carroll. Good morning. And thank you, Congressman Shuler
and Ranking Member Fortenberry. We appreciate this opportunity
very much.
As the Congressman just mentioned, Advantage West is a
regional economic development organization. We serve 23
counties in western North Carolina, the mountains of North
Carolina. We have been involved in economic development for 15
years now. We have diversified our program of work over the
years. Organizations like the Southern Economic Development
Council, publications like Economic Development America have
noted that we probably have the most diversified economic
development program of any regional EDC in the country.
Several months ago we implemented through our Blue Ridge
Entrepreneurial Council Division a program called Certified
Entrepreneurial Community. This program is patterned after a
certified industrial site program that we implemented in the
mid 1990s. It's a checklist, if you will. Certified
Entrepreneurial Community is a designation that we currently
have 12 counties in our region pursuing as well as the eastern
band of the Cherokee Indian.
The goal of the Certified Entrepreneurial Community Program
is to make a local community entrepreneurial ready. It takes
entrepreneurship and pushes it down to the grassroots level.
Entrepreneurship is so important in our mountain economy.
We've seen the closure of branch plants in the manufacturing
sector. We've seen the shifts of the manufacturing base that is
so reflective of other parts of the country in rural America.
In our particular case we have made entrepreneurship a
major strategy at Advantage West for the future of our region.
We are here today to recommend to you that as you look at
coordinating and collaborating for higher levels of
effectiveness the programs of the SBA and the USDA, that you
consider piloting your work with Advantage West in our 23
county area. I'll give a quick example.
Two of the most popular programs in economic development,
and I would add they have been very effective in North
Carolina, are the SBA 504 Loan Program and the USDA Business
Industry Loan Guarantee Program. Think of it like this: With
the new Certified Entrepreneurial Community program we have a
mechanism in place at the local level where we are encouraging
the communities to become more effective in working with small
businesses and entrepreneurs. There literally is a checklist
that they have to go through. They have to document that they
have improved the permitting process at the community level.
They have to list all of the capital providers that they have
in their local area. What organizations can provide technical
assistance as well as financial programs for startup companies.
But the real bonus that comes out of this is that improving the
business climate in this manner to make a community
entrepreneur ready also makes it better for existing business
as well.
So what we are saying is how about the SBA 504 Loan
Program, the USDA Business Industry Loan Guarantee Program,
think of those being documented in a handbook and on a web site
used by a community that achieves the designation as a
Certified Entrepreneurial Community. And then we believe there
will be better access to these programs at the grassroots
level.
Let me close by saying that USDA and SBA have an excellent
reputation in western North Carolina. I have many years of
experience as an economic developer in North Carolina. And we
applaud you for what you are doing today. When you try to
improve the effectiveness of two crucial Federal agencies like
this, you're just striving for excellence. And that's what this
Certified Entrepreneurial Community program is all about. So we
applaud you for the spirit of this hearing and what you're
trying to do.
Thank you very much.
[The prepared of Mr. Carroll may be found in the Appendix
on page 41.]
ChairmanShuler. Thank you, Mr. Carroll.
Our next witness is Ms. Katy Ziegler, Vice President of
Government Relations for the National Farmers Unions. Prior to
joining the National Farmers Union in 2003, Ms. Ziegler worked
on agricultural policy for Senator Tim Johnson of South Dakota.
You'll be recognized for five minutes, and welcome.
STATEMENT OF KATY ZIEGLER, VICE PRESIDENT GOVERNMENT RELATIONS
FOR THE NATIONAL FARMERS UNION
Ms.Ziegler. Thank you, Chairman Shuler, Ranking Member
Fortenberry for the opportunity to be here today.
National Farmers Union is a nationwide organization that
represents family farmers, ranchers, fishermen and rural
residents. We are proud of our policymaking process which
begins at the local level where those who are most impacted by
Federal decisions make our policy.
Our members believe that the family farmer and rancher
owned and operated food, fiber and fuel production system is
the most economically, socially and environmentally responsible
and beneficial way to meet the needs of the nation. While the
economy of rural America faces many challenges there are also a
number of opportunities for growth and revitalization. Because
main street businesses are an important segment of the rural
community and generate many jobs, we recommend that Federal
policy foster and encourage those businesses providing
protection from encroachment from big business monopolies.
The SBA provides an invaluable service and our members
supports support its continuation. Unfortunately, many in rural
America are unaware of the programs available at SBA due to a
lack of communication and outreach to rural residents. Ample
small business loan resources should be made available through
the SBA to credit worthy applications, including those from
farmers as ranchers.
As producers diversify their income, historic and
traditional lines of credit options are not always available or
affordable.
Last year NFU held numerous listening sessions throughout
the country to hear directly from producers what they are
looking for in Federal farm policy. The number one issue of
concern was the lack of a permanent disaster program. Farmers
and ranchers have no control over the weather and can face
devastating losses when a disaster strikes. Without addressing
this hole in the safety net, producers who suffer from those
losses will lose profits and all too often their operations.
According to CRS 34 ad hoc disaster packages have been
approved since FY 1989 totaling nearly $60 billion. Each
measure approved requires the U.S. Department of Agriculture to
recreate the program, the implementation plan and often results
in new guidelines and delayed sign up requirements for
producers.
One of our highest priorities is to make ad hoc disaster
assistance a practice of the past and put in place a standing
disaster program that provides producers with an assured safety
net in the event of a natural disaster and provides USDA
certainty, making the program more consistent, reliable and
timely for producers.
The advances of renewable energy in fuels from the farm are
one of the most exciting economic opportunities across rural
America. As this industry grows, it is vital to ensure that the
ownership remain in those communities and in the hands of the
local farmers. When money is generated from an ethanol or a
biodiesel plant it makes a real difference in the lives of
those rural citizens. All too often large corporations invest
in rural areas, but they take the profits with them instead of
reinvesting in the local economy.
I would encourage this Subcommittee to work with your
colleagues in the agricultural sector to ensure that all
Federal incentive programs used for renewable energy
development give a competitive advantage to farmer owned and
locally owned projects.
Because of the advancement of renewable energy projects and
production we have witnessed the plywood boards coming off of
those main street businesses instead of going on. The annual
local economic impact of a 40 million gallon ethanol plant in
significant. The highlights include an expanded economic base
by $110 million, household income increasing by nearly $20
million, about 700 permanent new jobs and an additional $1.2
million created in new tax revenues.
One other exciting economic opportunity for producers is
the consumer demand for fresh source verified direct from the
farm food. It is the fastest growing segment of the food
business. A producer's price is based upon quality and
freshness and, in turn, consumers receive a high quality and
fresh product that they can trust. That is why there have an
explosion of urban farmers markets and direct selling by
farmers to consumers, retailers and restaurants throughout the
country. It is why restaurants like Agraria here in town, in
Georgetown waterfront, which is owned by Farmers Union members
is very successful.
This is an opportunity for USDA and the Small Business
Administration to evaluate how each could work more closely
together to foster the development of this movement.
Mr. Chairman, I thank you for this opportunity and look
forward to answering any questions.
[The prepared statement of Ms. Ziegler may be found in the
Appendix on page 45.]
ChairmanShuler. Ms. Ziegler, thank you for your testimony.
Next our witness will be Mike Myhre, the State Director of
Minnesota Small Business Development Center. Mr. Myhre is
testifying on behalf of the Association of Small Business
Development Center.
Mr. Myhre, you have five minutes for your testimony.
STATEMENT OF MIKE MYHRE, THE STATE DIRECTOR OF MINNESOTA SMALL
BUSINESS DEVELOPMENT CENTER ON BEHALF OF THE ASSOCIATION OF
SMALL BUSINESS DEVELOPMENT CENTER
Mr.Myhre. Thank you. Chairman Shuler, Ranking Member
Fortenberry, on behalf of the SBDC and the roughly 5,000
dedicated men and women who are part of the America's SBDC
network and hundreds of thousands of entrepreneurs and small
business owners they serve each year, I would like to thank you
and the members of this Subcommittee for inviting me here
today.
Mr. Chairman, in my testimony today I will seek to focus my
remarks on how SBDCs can build upon its current capabilities
and expertise of its national delivery network. I will seek to
point out where SBDCs can be leverage by USDA loan and
technical assistant programs. I will cite some specific
instances where SBDCs have been successful in comparable work.
The intent of my effort will be to demonstrate how Congress and
Federal agencies, including USDA and others, can reduce the
proliferation of duplicative programs and better utilize SBDC
partnership program by providing direct support to enhance its
capacity to serve rural areas.
First, one of the most serious and historical facing rural
entrepreneurs and small business owners is equitable access to
adequate capital for business establishment or expansion of an
existing business. To help fill this gap both USDA and SBA
provide for national assistance through loan and loan guarantee
programs. USDA facilities its Business and Industry Guaranteed
Loan Program and SBA has its 7[a] loan guarantee and 504 loan
program.
SBDCs provide rural small business entrepreneurs with
access to these and other capital resources by building and
maintaining relationships with various lending resources
allowing rural small business entrepreneurs the ability to
access and leverage multiple resources to finance a single
business venture.
In Minnesota an average SBDC loan deal consists of three
and sometimes up to six or seven different sources of capital
to complete a successful deal. The fact is that USDA loans have
among the highest default rates of any Government loan program.
I believe the historical high default rates are a attribute to
the lack of loan recipients not receiving critical financial
and cash flow management education and consulting. In Minnesota
lenders consistently say and indicate that clients who have a
loan deal prepared by their local SBDC professional and
continue to work with that professional are significantly less
likely to default on their business loan and more likely to pay
off their loan before maturity. This is an area where ASBDC
believes America's SBDC network could collaborate with USDA by
being its technical and educational resource partner.
We believe USDA, SBA, ASBDC should work together to develop
a memorandum of understanding or other workable funding
arrangement whereby SBDCs would be formally recognized by USDA
as a financial training provider for those USDA loan
recipients.
Furthermore, ASBDC believes that if USDA collaborates and
supports SBDC financial and management training and
professional business consulting, USDA loan delinquencies and
default rates can be substantially reduced by that segment
served.
We also have no doubt that SBDC financial and management
training and ongoing long term business consulting can greatly
enhance the likelihood of long term sustainable and financial
success.
SBDC networks from coast to coast have considerable
experience and have been recognized for their contributions
working with small businesses including rural and agra
businesses impacted by disaster. In light of recent fires,
hurricanes, floods, drought and disasters like the 35W Bridge
collapse in Minnesota, Congress and the public are justifiably
interested in the effectiveness of Federal disaster assistance
programs, particularly Federal disaster loan programs. In many
disasters cooperation and collaboration between the USDA, SBA,
SBDCs can be extremely important to the going concern of
businesses in the survival of small towns following a disaster.
The fact is in a disaster Federal response agencies lack the
necessary manpower, and more importantly, the expertise to
assist hundreds if not thousands and in some instances tens of
thousands of small business owners in need of assistance.
One of the most effective ways that SBDCs can assist small
business owners after a disaster is help them successfully
complete applications for disaster loans, a process which can
add additional frustration and anger to an already tragic
circumstance. If leveraged with appropriate USDA resources for
enhanced capacity, ASBDC believes that America's SBDC network
effectively use its existing national wide structure and
expertise to help farmers, ranchers and small businesses in
rural communities apply for USDA disaster assistance.
We believe that with ASBDC assistance we can significantly
improve the ability of producers, small businesses in rural
communities to survive, recover and flourish following a
disaster.
In conclusion, one quarter of Americans live in rural
areas. Subsequently 20 percent of all businesses are located in
rural America. Conversely, individual state SBDC network
appropriate anywhere to 50 to 90 percent of their resources to
serving rural communities. In Minnesota we appropriate 80
percent of our total resources to produce 70 percent of our
deliverables in federally defined rural communities. This
demonstrates a clear commitment by SBDCs to serve rural
communities and that SBDCs have an existing and established
infrastructure to serve rural America.
USDA Rural Development's mission is to increase economic
opportunity and improve quality of life for rural residents. If
USDA wants to effectively enhance jobs, economic growth in the
quality of life in rural America, we should be looking to build
funding opportunities for partnerships and collaboration
between USDA and America's SBDC network.
I thank the Subcommittee for this opportunity. And we'd be
happy to take any questions.
[The prepared statement of Mr. Myhre may be found in the
Appendix on page 49.]
ChairmanShuler. Thank you.
I'd like to recognize Ranking Member Mr. Fortenberry for
introduction of our last witness.
Mr.Fortenberry. Thank you, Mr. Chairman.
It's my privilege to introduce Mr. Leon Milobar. He is a
Nebraska native and he currently serves as the Small Business
Administration's District Director back home. Welcome, sir.
Previously he served as the Small Business Administration's
District Director in Portland, Oregon, and was also an
Associate State Director for the Nebraska Business Development
Center.
Mr. Milobar, welcome and we look forward to your testimony.
STATEMENT OF LEON MILOBAR, NEBRASKA DISTRICT OFFICE, U.S. SMALL
BUSINESS ADMINISTRATION
Mr.Milobar. Thank you.
Good morning, Chairman Shuler, Ranking Member Fortenberry
and members of the Committee. Thank you for the opportunity to
speak with you today regarding United States Small Business
Administration programs that support rural small business
owners and entrepreneurs.
Small businesses account for two-thirds of our rural jobs
and comprise more than 90 percent of all rural establishments.
Under Administrator Preston's leadership the agency has a
renewed focus on ensuring that its products and services and
accessible to entrepreneurs in the nation's most underserved
markets, including the rural small businesses.
I'm Leon Milobar, and I am the District Director of United
States Small Business Administration, Nebraska. Prior to
serving as District Director in Nebraska I served as the
District Director in Portland, Oregon. And prior to that, I
served as Associate State Director for the Nebraska Business
Development Center.
As an Associate State Director for Nebraska Business
Development Center I was responsible for the management and
technical assistance that small businesses received throughout
Nebraska. This included SBA Small Business Developments Centers
and the manufacturing subcontract extension program through the
Nebraska Department of Economic Development, and U.S. Commerce
Department and the Procurement Technical Assistance Center.
In 2005 while serving as District Director in Oregon the
local SBA office met with U.S. Department of Agriculture Rural
Development and the Oregon Economic and Community Development
Department in a collaborative effort to provide lender training
on various Federal and state government loan guarantee
programs.
From 2005 to 2006 approximately 12 training sessions were
held throughout Oregon and the sessions were attended by over
400 bankers. This collaborative effort resulted in additional
loan activity and exposure for the agencies involved with the
rural community. The Portland District Office realized a 30
percent increase in loan volume over the past fiscal year, an
increase we believe our collaboration with USDA contributed to.
During my brief time in Nebraska District Office we have
implemented the same basic initiative. I personally visited
with the state Economic Development Department and the USDA
Rural Development shortly after my arrival in Nebraska. In
meeting with USDA Rural Development I produced the materials
and an initiative design that was used in Oregon to spur
interest in a USDA/SBA collaboration in Nebraska. The interest
level from USDA was considerable, and we began working on the
program roll out that very day.
Currently the initiative is only a test phase in Nebraska,
but we've had very good attendance by bank loan officers in the
state. There have been two programs which have been held, one
in Omaha and the other in Kearny, Nebraska. The attendance from
these two events was impressive. Approximately 90 bankers and
economic development professionals attended.
This joint training program serves as an important tool
because it is used to educate and reacquaint loan officers with
government guaranteed loan programs. There is a significant
amount of loan officer turnover and many of the loan programs
change. So this lender training is crucial for all parties
involved.
At the end of the event we discuss the technical resources
that are available throughout the state for the benefit of
small businesses. These include all the business assistance
programs that SBA provides, as well as additional resources
that loan officers can use in putting a loan package together.
In Nebraska, this includes 7 SCORE chapters, 7 Small
Business Development subcenters and a women's business center
with 7 regional locations which are supported by funding
through SBA.
SBA has a good reach in terms of technical assistance with
the Small Business Development Centers, SCORE and women's
business centers throughout the state. In Nebraska, SBA has a
fairly large footprint in terms of lenders. We have agreements
with approximately 350 banks throughout the state.
SBA's fully committed to serving our nation's underserved
markets, including our rural community. In September of this
year SBA announced a new loan processing initiative designed to
spur economic growth in rural communities by encouraging rural
lenders, including community banks and credit unions, to
finance small businesses and entrepreneurs with SBA resources.
Rural Lender Advantage is part of a broader SBA goal to
increase access to capital in regions that face unique
challenges due to factors including population loss and high
unemployment rates. This streamlined process is part of SBA's
7[a] loan program and encourages small rural lenders to partner
with SBA by requiring less paper and offering services on line.
This process is intended to increase SBA's market
penetration in rural areas. It is being tested in Colorado,
Montana, South Dakota, North Dakota, Utah and Wyoming. The
agency expects there will be 3,000 to 4,000 loans made in the
first year of implementation. We are excited about the
introduction of this new service and anticipate great results.
American's rural communities is essential to the nation's
economy, and SBA is committed to encourage entrepreneurs and
furthering job growth in rural regions.
This concludes my testimony. And I look forward to
answering any questions you may have. Thank you very much.
[The prepared Statement of Mr. Milobar may be found in the
Appendix on page 64.]
ChairmanShuler. Thank you, Mr. Milobar.
I appreciate all of your testimony.
Mr. Shear, I understand that the Office of the Rural
Business Investment Program obviously is no longer in
existence. But were you able to create any cooperation between
the two agencies through this particular program? Was there any
relationship between the USDA and Small Business
Administration?
Mr.Shear. Based on the work that we've begun, it seems like
our relationship had been developing, as was called for by the
legislation creating the program. There were some difficulties
identifying investment companies, there was a settling at one
investment company and there was the rescission of the funding.
But it appears to us, we were told basically by SBA and USDA
that a collaborative relationship was at least developing.
We know that there was a fairly extensive process for
creating regulations and rules that would help to govern the
program. So there seemed to be some collaboration there, and
we'll be following up on that.
ChairmanShuler. When the SBA and the USDA went through
their reorganization or reforming--you know, obviously we've
gone through the SBA quite extensively in this Committee. When
they went that through reprogramming was there any
collaboration between the two agencies based on because they're
in some instances starting over in a lot of areas, was there
any collaboration talked about? Here's what we'd like to do and
here's what we're going to do? But any information that you
have so far on your research?
Mr.Shear. At the agency wide level in that so far our
interactions have been with SBA headquarters. I was very glad
to hear of some of the efforts going on, let's say, in Nebraska
and what had occurred in Oregon. But at the agency level where
we have really begun this work, there isn't evidence that there
were collaborative working relationships. In fact, it seemed
like these MOUs that went back a great number of years that no
longer are being used and there hasn't been the creation, at
least at the agency wide level, of anything since. So that's
kind of like preliminary of what it looks like to us at this
time.
ChairmanShuler. And I realize, you know, it's only been a
very short time period you've been able to do the research. And
I thank you for the report, the preliminary report that we
have. And we look forward to, hopefully, hearing the testimony
after the report is completed and final.
Mr. Carroll, you know do you find that certain businesses
would be better off utilizing both the USDA and the SBA
technical assistance and lending program as opposed to being
just pushed to one or the other?
Mr.Carroll. I think there could be an up side from the
collaboration that you're exploring in this hearing today. And,
again, if I go back to my earlier remarks, what we're trying to
do through the Certified Entrepreneurial Community program is
to make the resources more readily available at the grassroots
level. And so it is in fact not just the loan programs, the
portfolio programs, but it is the technical assistance and the
coaching that's so important. And we think that as a community
meets the rigorous standards and guidelines to accomplish the
CEC designation, that it is going to be incumbent on them at
the local level to have USDA staff, SBA staff, their technical
assistance and their programs more readily available to the
entrepreneurs in those given communities as well as the
existing enterprises.
So, yes, we're encouraging that collaboration and we think
we have a platform. Maybe there could be a little test
marketing could be done through the 12 counties and the Eastern
band of the Cherokee Indian that we are currently working with.
ChairmanShuler. In the follow up, when a business comes in
to you and your staff and you're helping direct loan programs,
specifically the SBA or the USDA, how do you help direct them?
From your experience how do you feel that a particular business
is better off with SBA or the USDA?
Mr.Carroll. Well, the best thing we know to do in a
situation is to work with a group called the Technology
Commercialization Center. I'll summarize it very quickly by
saying it's a program that grew out of an effort at Oak Ridge
National Labs and in the Knoxville area. We have now brought
that to western North Carolina. Bob Wilson and Todd Fisher are
two very experienced business people that are excellent in
evaluating business plans. They help startup companies develop
execution plans. And it's through that high level of technical
assistance and their experience, and the fact that the TCC, the
Technology Commercialization Center is an extension of our
Advantage West staff, that we are confident we can get people
to the right place.
What we're advocating here today is that we have to
multiple our efforts. And where TCC is currently based in the
central part of the region in Asheville where the Advantage
West offices are close by, through the CEC program, the
Certified Entrepreneurial Community program we could push it
out across all 23 counties, starting with the 12 counties that
are currently involved in the CEC program.
ChairmanShuler. Mr. Ziegler, can you explain to the
Subcommittee why the permanent disaster program may be
necessary for agricultural producers?
Ms.Ziegler. Absolutely. I would remind the Committee
earlier this year Congress passed an ad hoc disaster package,
and that included losses that happened in 2005, 2006 and 2007.
And that required a significant amount of political will in
order to get that package approved. And it puts producers in an
unfortunate position of hoping that if they are a stuck by a
disaster, that their neighbor is struck by a disaster so that
political will builds to pass that disaster package.
So for three years of disaster USDA just recently announced
sign up for that program so producers can go into their local
USDA offices and prove their losses and receive some assistance
through that package.
So if you had a loss in 2005, today is nearly the end of
2007. That's a long period of time to wait for assistance if
you sustain some significant losses. Having a standing and a
permanent disaster program would eliminate the political will
or the political requirement to pass a disaster package, and
that's the number one reason that we have pushed so hard is to
have that certainly there for producers when a disaster would
hit.
ChairmanShuler. Why do you think there's been so much
resistance of the program?
Ms.Ziegler. Well, disaster happen locally. And
unfortunately given the budget situation here in Congress,
there is not a lot of money flowing freely. And when a disaster
happens locally some folks who aren't impacted by those
disasters aren't as willing to be as helpful as we would like
them to be.
ChairmanShuler. Thank you.
Mr. Myhre, from your vantage point can you tell us what
lending instrument that farmers are asking for when they come
into your center. What's the one that's most asked for?
Mr.Myhre. When farmers come into? Probably more than
anything, probably the SBA 7[a] loan program. It's been my
experience and my knowledge for the business side of that
producer.
My experiences as it relates to USDA loan programs in the
state of Minnesota has not been very extensive.
ChairmanShuler. What discrepancies are you seeing between
the two? Why is it more readily available for USDA type loans
as opposed to SBA?
Mr.Myhre. Well, in all honesty I think it was communicated
earlier by Ms. Ziegler, is its knowledge or recognition of
producers or farmers of the SBDC being a resource for them to
assist them with their business and t help them in their loan
packaging deals. So in all honesty, they don't make up a very
large segment or sector of business client for the SBDC
network.
ChairmanShuler. Mr. Milobar, have you received requests and
inquiries from farmers who wish to start an agricultural
related business, and how does the USDA benefit? How does it
fit into this equation?
Mr.Milobar. Each agency has their own financing programs.
One of the nice things that I enjoy a very good relationship
with the business and industry people at the USDA. And in the
event that I do not think that it fits us, our program, our
agency, I will call or have the Director of the USDA Rural
Development, I will have them call.
I've had previous instances when I was in Oregon an
individual in a rural part of the state asked me, it was a
referral from Senator Smith. And we basically, all the agencies
stepped forward, SBA, USDA and the Oregon Community and
Economic Development Department because there's a variety of
things that we could each provide, but they were looking for
the best possible deal in terms of how fast they could get the
money, the cost of money and overall terms.
So when we get requests, we realize that sometimes we just
have to go ahead and make that phone call so that the
individual, it fits the client.
ChairmanShuler. Besides a senator asking for the request,
how often does it happen just from your own judgment standpoint
in conducting day-to-day business?
Mr.Milobar. I have not tracked. I could not tell you. We
get quite a few calls from the financial institutions who are
calling us. We probably get maybe one or two calls a week and
there are certain types of ag related businesses that we do and
can finance.
ChairmanShuler. How do you feel like the coordinated effort
is between the SBA and the USDA?
Mr.Milobar. As I described in my testimony, I've walked
across the street. I know some of these individuals personally.
That's how we typically have done business in Nebraska. So I
had a relationship when I was with the SBDC program with the
USDA Rural Development in a number of other programs. And also
with the Department of Economic Development. This was one of
those things for me to be able to do my job properly, you know,
it's necessary for me to go ahead and reach out to other
organizations and agencies to go ahead and get it done
properly.
ChairmanShuler. Do you feel that Nebraska is just an
exception to the rule or do you feel that there's a
corroborated effort throughout all of the states?
Mr.Milobar. First of all, it depends on leadership and what
is happening. You know I can address what I see in Nebraska and
some of my some close colleagues that I've worked with in the
region. And we've done a very good job of trying corroborate
and try to go ahead and deliver services since we are, you know
in my particular region, we're all rural so to speak.
ChairmanShuler. I'd like to recognize Ranking Member Mr.
Fortenberry for his questions.
Mr.Fortenberry. Thank you, Mr. Chairman.
I'm just going to walk down the panel right quick and make
some comments and ask some questions and you all can come back
to them because I have some comments and questions.
Mr. Chair, I hope this has been helpful to you today in
hearing about some of the innovation that's taking place on the
ground without the formalization or codification into law or
regulation. And perhaps that can become an important part of
the GAO study and report, unpacking some of the initiatives
that are occurring here to enhance in a more refined or
formalized way the collaboration which we're looking for. So I
hope this has been helpful to you as well.
Mr.Shear. Did you want me to respond now or go--
Mr.Fortenberry. Go ahead, Mr. Shear.
Mr.Shear. Okay. It is very useful for us. In fact, it
starts with some information that we have asked for and it is
kind of trickling in from the agencies Washington of trying to
see what is going on out in the field. And I will just mention
one report that we are actually issuing and publicly releasing
on Friday that looks at women's business centers and
coordination with small business development centers and the
SCORE chapter.
And here what we are looking for is we know that there are
certain things that these resource partners do. We know that
there is certain things that go on in maybe a less formal
basis, kind of out across the country. And what we are looking
for in that case, which I think is relevant here, is to what
degree can SBA and Rural Development as agencies use to try to
kind of bring those practices that are efficient, that can
improve services and how to create a structure where they can
be rolled out more across the country.
Mr.Fortenberry. Thank you.
Mr. Carroll, I am very impressed with your testimony and
appreciate your initiatives on behalf of the people of western
North Carolina. Who funds Advantage West? And how many counties
are involved when you get the Certified Entrepreneurial
Community designation, is that a city, is that a county? And
then if you could just briefly walk through the checklist again
of key criteria in which a community meets that certification?
Mr.Carroll. Advantage West is a public/private partnership.
We receive a state grant in aid. We also receive support
through charitable foundations that are focused on economic
development and improving the economic well being of our
communities. Private contributions are made to Advantage West
and we've also managed a number of Federal grant projects for
our 23 county area.
The Certified Entrepreneurial Community program checklist,
the key criteria involved in it is better access to capital for
entrepreneurs and startup enterprises. Again, improving the
business climate at the same time for existing companies.
There is a component focused on community engagement.
Community engagement is not only to reach the general public at
the adult level, but it's also to drive down entrepreneurial
training and concepts in the school systems with the
communities that are involved.
There is a telecom broadband component for the Certified
Entrepreneurial Community program. We've made great strides in
our region with middle mile telecom broadband infrastructure.
CEC communities following the checklist are required to develop
a plan and pursue funding for last mile deployment. Keep in
mind most of our region is very rural.
And then the other thing that I mentioned earlier in my
testimony is that we are sincere and earnest about trying to
improve the permitting process for small business people at the
local level. There has to be a one stop shop of some form or
shape documented and implemented for a community to receive the
CEC designation.
Mr.Fortenberry. When you refer to community, you refer to
small town, city or county or all the above?
Mr.Carroll. Yes, sir. And in response to your other
question, the CEC designation could be a municipality. For
example, we're in discussions right now with the town of Black
Mountain, which is a small town outside of Asheville. It also
can be at the country level. And, again, we have 12 counties
region wide that are participating in the program.
As I mentioned earlier, it also can be a hybrid. In our
case, the eastern band of the Cherokee Indian, their Qualla
boundary, as Congressman Shuler knows, touches into several
countries. It crosses some county boundaries.
Mr.Fortenberry. So your criteria is basically four fold:
It's access to capital; education, technical assistance
particularly as it takes the form of broadband access, and;
reducing governmental regulatory barriers?
Mr.Carroll. And the only thing I would add to that is the
citizen engagement plan, including reaching young people in the
school systems.
Mr.Fortenberry. That's what I meant by education, but yes.
Thank you very much.
Ms. Ziegler, thank you for your testimony as well. By the
way, I'm on the House Agriculture Committee and I offered an
amendment that I think would be pleasing to you as establishing
a preference in USDA value added grant program for small and
medium sized farmers to address the very issue you talked about
in terms of ownership at the lowest possible economic level to
ensure there's vibrancy in rural communities and not too much
of a concentration of the land and wealth and productive means,
inputs in the hands of a few which are then exported out of the
community generally. So I appreciate that.
The other comment I wanted to make regarding local foods, I
think you're exactly right. In terms of rural entrepreneurship
this is an undertaking that can provide tremendous benefits
both in terms of added value to farmers as well as the social
impacts of the reconnection of the farm to the family, and then
improve nutritional outcomes. So I think you are dead on there.
And we actually hosted a conference with the University of
Nebraska this past August to bring together all of the
participants in this seminal growing, I won't call it industry,
but movement if you will. And I think you are right on there to
begin to expose, unpack, teach, educate our country about the
potential opportunities there. So thank you.
Mr. Myhre, you had mentioned regarding the association, are
you finding some resistance to being called upon more
aggressively by either USDA or SBA in terms of providing that
technical level of assistance or is it simply just a process by
which we continue to develop the good relationships that we are
hearing across the panel here?
Mr.Myhre. On the macro level, yes. On the micro level
within individual centers with local USDA staff personnel, you
do find some really good and outstanding relationships. But
creating those relationships on the state level or even the
national level I think, you know, we have encountered certain
barriers.
Mr.Fortenberry. What would be the reasons for that, or is
the association not yet positioned to coordinate aggressively
with SBA/USDA? Is it simply the development of this has not yet
just come to pass? I mean, is it just presenting opportunities
here or are there legal, regulatory impediments to better
coordinated resources?
Mr.Myhre. Well, the association and its board members
actually just convened and put together its strategic plan for
the next five years. And as part of that plan, it is in working
with other federal agencies who do compliment what it is that
the SBDC national network does. So we'll be looking at other
opportunities and how we can further collaborate with the USDA
and working with Congressman Peterson's office to assure that
SBDCs are then recognized within the next Farm Bill
reauthorization.
So we do have certain strategies to certainly do that.
And we've also through the leadership of SBA and its
economic development office and leadership of the association
have sat down with OMB, who has basically encouraged or
strongly encouraged SBA to support SBDCs working with other
Federal agencies.
Mr.Fortenberry. Thank you.
Mr. Milobar, welcome again. And appreciate your testimony.
I was very encouraged by the initiative you have
undertaken, but very saddened by the fact that they are not in
the First District of Nebraska. So I invite you to do what
you've done in Omaha and Kearny and Lincoln, South Sioux City,
Auburn or anywhere else we can duplicate this. I am very
impressed by the outcome of what you talked about. And I think
you hit on the right point as well as you, Mr. Myhre, about
leadership being a key in how we duplicate what is happening on
a micro level perhaps to a macros level, whether that takes the
formalization of a codification in law or some new spirit of
collaboration is less formal; I don't know. But I think your
initiative in Nebraska, particularly, is one that could or
should be duplicated nationwide or can serve as a model or
prototype, particularly given the outcome that you suggested of
30 percent advancement in the number of applications in a very
short period of time. And that is what we would really like to
see. So thank you for doing that.
Is there any opportunity that you can to formalize what
you've done on an informal basis so that it can be shared with
the rest of the nation in terms of other SBA Administrators and
USDA Rural Development personnel?
Mr.Milobar. First of all, we are coming to Lincoln.
Probably be sometime early this winter. As you know, winter is
coming to Nebraska very shortly and we have to pick and choose
where we are going to go ahead and deliver programs so we do
not get snowed in.
But regarding the program, we do share best practices. I
know in Region 10, which is Alaska, Oregon, Washington and
Idaho, they have looked at these practices that we have had.
And as a matter of fact, with the congressional--I should say
with the boundaries for the Portland District office, we have
already gone into the state of Washington to deliver this
exactly same program.
To date in the last two years, they have had 760 lenders
that they have touched. USDA asked very shortly after I had
left Portland to go ahead and go into another state.
So the word is spreading. It is a best practice. It is one
of those things in rural areas that we see that it does work
and increases our numbers.
This co-marketing is very, very important. There are
advantages to both of our programs. And the lenders are a very
important contact when that entrepreneur, that business owner
comes in looking for financing.
Mr.Fortenberry. Do you think it would be necessary for
Congress again to codify that best practice in some way,
encourage it in another way that we may not have thought of
yet?
Mr.Milobar. It was one of the things, as I said, this
initiative I have tried--I may tell you something tomorrow or
next month and we find another initiative that is that much
better, and it is an evolving process.
I will tell you, the first year in Oregon we had 400
lenders, the second year we had only 350 attend.
One of the other things that I see with the age of the
commercial loan officers, that they are half my age and I am
somewhat concerned. I am constantly retraining these lenders.
So what I do today, you know, may be quite different tomorrow.
Mr.Fortenberry. Well, I think you have struck on a key
idea, just in terms of sharing information about best
practices. And, Mr. Shear, I know you are listening intently.
And I think that would be a good one to potentially unpack as
we look at new initiatives to more formalize this collaboration
that is currently at a macro level.
So thank you, Mr. Chairman.
ChairmanShuler. I would like to follow up with the other
question. We had the Administrator in some months ago. And we
had talked about sustainable renewable energies when it comes
to with the SBA and how they have been able to put a program.
And that, some due to reorganization, they had really not
gotten to the point where they are talking about the ethanol
plants or the biodiesel plants, how that is impacted in SBA.
Has anyone from the USDA had a relationship with, whether it be
a biodiesel, ethanol plant for sustainable renewable energies
and having to be able to get those types of loans? Has anyone
had any relationship with any business that had a difficulty
because of the SBA not truly having that organization quite
complete yet?
Ms.Ziegler. I believe that some of our members take
advantage of the value added grant program which is
administered by USDA and the section 9006, which is included in
the Farm Bill. Those are two programs geared towards renewable
energy that are administered by the Department of Agriculture.
And I do not know that is because of an absence of SBA being--
or having a role in that industry or that area, but they are
two programs that I know producers do use and take advantage of
for renewable energy projects.
ChairmanShuler. It only seems that if we look at some of
our smaller businesses, smaller producer that the ethanol, the
biodiesel producing as alternative energies certainly in my
area, I mean sometimes in our mountains we have what we call
vertical water culture. It is hard to plant things up on the
side of the mountains, but we have been producing Blue Ridge
biodiesels as a perfect example. They have been able to produce
working with our local farmers, be able to produce the
vegetables that they are utilizing in their biodiesel plant.
You know, Mr. Shear, I think maybe that is a look at an
ongoing business that seems to me there is a substantial area
of growth that we can start this collaboration between the USDA
and our SBA to be able to work together. We can have the
funding and, you know, truly change the dynamics of our energy
policy. Because it is going to start with our small businesses.
I mean, we can wait on the large corporations as long as we
want to, but it really starts with the small businesses and the
entrepreneurship and the spirit which they have and willing to
make a difference and make it a change. So that may be one area
that we can actually truly plug in to say that here is an area
that we have not thought about. SBA is just now putting
together some of their programs that they had the testimony
some months ago. Maybe it will put that collaborative
coordination together.
Mr. Shear?
Mr.Shear. And I thank you for the suggestion. Because we
are looking for certain opportunities that would kind of let us
look at what are the possibilities that might be out there
where collaboration could lead to a better outcome. And I think
it might be consistent with some of the SBA's initiatives in
reaching out to underserved markets.
ChairmanShuler. Ms. Ziegler, the farm credit limits typical
is limited to on the farm lending. Should the SBA be prepared
to assist farmers who wish to engage off the farm business
interests?
Ms.Ziegler. I think absolutely. As I mentioned earlier,
producers are diversifying their income sources and we have
producers that are wanting to start a grass feed business, who
want to sell soy wax candles or who have a tractor repair
company that they start to supplement their income. And some of
those types of projects are not always traditional or have
traditional or historic types of lending. And I think that it
is important to have as many options as possible for investment
and potential credit sources throughout rural America.
ChairmanShuler. Mr. Milobar, obviously we talked about
sustainable renewable energies. Would it be appropriate through
the SBA program to promote different renewable energy types, I
mean once that's in place and have you had any conversation
with the Administration about renewable energies?
Mr.Milobar. No, I haven't. That has not come up on the
District level, and that I would have to go ahead and get back
to you on.
ChairmanShuler. Well, no one has come in the office and
talked about renewable energies outside of in the farming area?
Mr.Milobar. Not that I can recall. Not in the last six
months that I can recall.
Mr.Myhre. I can comment on that, Mr. Chair.
In Minnesota we have had both producers who have come to
the SBDC seeking to have a small business to help supplement
their family income, and we have worked with many of those
types of businesses very successfully.
As it relates to SBA funding and their 504 loan program, we
have certainly had a lot of alternative bioenergy biodiesel
plants come to the SBDC seeking both USDA grants and helping
them research and begin those facilities, and then utilizing
504 for the actual facility purchases themselves.
ChairmanShuler. Terrific.
Yes, sir?
Mr.Fortenberry. Let me follow up on that line as well.
One of the largest wholesale structural changes that is
happening in rural communities is the advent of agricultural
energy production, the wedding of agriculture and energy policy
is potentially very beneficial in meeting multiple objectives.
First of all, diversifying our energy portfolio clearly in
our country.
Secondly, with clean renewable resources meeting
environmental stewardship goals, and;
Third is increasing income for farmers.
So as this continues to unfold, as this trend becomes more
aggressively emerging, particularly given the market
opportunities that are there but also some of the underwriting
that should we have a Farm Bill shortly is going to occur with
new initiatives in this area as we develop even newer means of
means of biomass and cellulosic materials, it is going to
create the potential for a lot of different spin-off activities
as it related to that.
This is a market change in rural America. And so I think
the line of questioning actually suggests something to you all
to be into as you do your normalize outreach in terms of market
stimulation or thinking through market opportunities where you
could potentially better serve. That one is tremendous.
I can give you a very small example. I have a chiropractor
entrepreneur who wants to begin to build his back support
mechanism through a corn based--it is not plastics, but corn
based material versus having it shipped overseas to
manufacturers using traditional hydrocarbon. And so the
opportunity there, again as we look at the diversification of
uses of traditional grain stocks, is going to be extraordinary
for our rural communities.
And I could tell you story after story about what we are
doing. Mr. Milobar, I am sure you know in Nebraska in terms of
trying to position the state to lead this renaissance of
rural--the beginning of the renewal resource, renewable energy
market that leads the way in our country.
But it is one of those wholesale structural changes coming
that is in rural America currently. It is also going to have a
lot of spin off effects that will be potentially--that your
programs will be potentially called upon to help and fund.
ChairmanShuler. Any more questions?
I think today we have really made a really good stop for
the GAO to finish their report, to continue. You know, it is
one thing to look at it on the Washington level of how the two
industries, agencies can work together. But it is even more
important to recognize how on the ground level, how, what the
impact the USDA and the SBA have been able to work together in
some ways and in ways that there is void, and that we need to
fill that gap to make sure that rural America has the
resources, has the capital.
And I want to commend all of you for your comments today,
your testimony. And certainly Mr. Fortenberry for his true
leadership to bringing this to the Committee's attention and
truly putting forth the effort of getting this hearing being
heard today. His leadership has been very strong.
And as you can probably tell, that this is a very
bipartisan Committee, both our Subcommittee, obviously, and the
Committee as a whole. Very bipartisan and we truly want to
provide for economic development in the rural communities to
ensure that the small business have the advantages. Because
that is the backbone behind our economy in America. And we
truly create and covet that spirit of entrepreneurship.
So I want to commend all of you.
I look forward to seeing the report. And I hope that the
GAO will take the testimony today and continue to look on the
ground level where the impact is truly needed most in so many
different ways.
I ask unanimous consent that the members have five days to
submit statements and supporting materials to this record.
Without objection, so ordered.
This hearing is now adjourned. Thank you all.
[Whereupon, at 11:10 a.m. the Subcommittee was adjourned.]
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