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


 
                        SUBCOMMITTEE HEARING ON 
                    OVERSIGHT OF THE ENTREPRENEURIAL 
                    DEVELOPMENT PROGRAMS IMPLEMENTED 
                  BY THE SMALL BUSINESS ADMINISTRATION 
                     AND NATIONAL VETERANS BUSINESS 
                        DEVELOPMENT CORPORATION 
=======================================================================

            SUBCOMMITTEE ON RURAL AND URBAN ENTREPRENEURSHIP
                      COMMITTEE ON SMALL BUSINESS
                 UNITED STATES HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             SECOND SESSION

                               __________

                             MARCH 12, 2008

                               __________

                          Serial Number 110-78

                               __________

         Printed for the use of the Committee on Small Business


 Available via the World Wide Web: http://www.access.gpo.gov/congress/
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                   HOUSE COMMITTEE ON SMALL BUSINESS

                NYDIA M. VELAZQUEZ, New York, Chairwoman


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

                                 ______

            Subcommittee on Rural and Urban 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              DAVID DAVIS, Tennessee
HANK JOHNSON, Georgia

                                  (ii)

  











































                            C O N T E N T S

                              ----------                              

                           OPENING STATEMENTS

                                                                   Page

Shuler, Hon. Heath...............................................     1
Fortenberry, Hon. Jeff...........................................     2

                               WITNESSES


PANEL I:
Prakash, Mr. Anoop, Associate Administrator, Office of 
  Entrepreneurial Development, U.S. Small Business Administration     3
Blackwell, Mr. Walter, President/CEO, National Veterans Business 
  Development Corporation........................................     6
Wilson, Mr. Donald Wilson, President, Association of Small 
  Business Development Centers...................................     8
Sanderson, Ms. Melinda, Executive Director, Canisius College 
  Women's Business Center........................................    10
Yancey, Mr. Ken, CEO, SCORE......................................    12
Carroll, Mr. Dale B., President & CEO, Western N.C. Regional 
  Economic Development Commission, AdvantageWest Economic 
  Development Group..............................................    14

                                APPENDIX


Prepared Statements:
Shuler, Hon. Heath...............................................    37
Fortenberry, Hon. Jeff...........................................    39
Altmire, Hon. Jason..............................................    40
Prakash, Mr. Anoop, Associate Administrator, Office of 
  Entrepreneurial Development, U.S. Small Business Administration    42
Blackwell, Mr. Walter, President/CEO, National Veterans Business 
  Development Corporation........................................    46
Wilson, Mr. Donald Wilson, President, Association of Small 
  Business Development Centers...................................    56
Sanderson, Ms. Melinda, Executive Director, Canisius College 
  Women's Business Center........................................    63
Yancey, Mr. Ken, CEO, SCORE......................................    67
Carroll, Mr. Dale B., President & CEO, Western N.C. Regional 
  Economic Development Commission, AdvantageWest Economic 
  Development Group..............................................    76
Letter from Rep. Dale E. Kildee..................................    80
National Veterans Business Development Corporation: Strategic 
  Plan FY 2008 - FY 2012.........................................    83
National Veterans Business Development Corporation: Annual Report 
  FY 2007........................................................   112

                                 (iii)

  


                   SUBCOMMITTEE HEARING ON OVERSIGHT
                   OF THE ENTREPRENEURIAL DEVELOPMENT
                   PROGRAMS IMPLEMENTED BY THE SMALL
                  BUSINESS ADMINISTRATION AND NATIONAL
               VETERANS BUSINESS DEVELOPMENT CORPORATION

                              ----------                              


                       Wednesday, March 12, 2008

                     U.S. House of Representatives,
                               Committee on Small Business,
                                                    Washington, DC.
    The Committee met, pursuant to call, at 10:00 a.m., in Room 
1539 Longworth House Office Building, Hon. Heath Shuler 
[chairman of the Subcommittee] presiding.
    Present: Representatives Shuler, Clarke, and Fortenberry.
    Also Present: Representative Velazquez.

              OPENING STATEMENT OF CHAIRMAN SHULER

    Chairman Shuler. I call this hearing to order.
    I'd like to, first of all, thank everybody for coming to 
our new place, our new home here. Ranking Member Fortenberry 
was saying that the folks here that have the column in the way, 
your tickets will be discounted and you will pick up that 
discount at the door as you leave.
    Today the committee will examine Small Business 
Administration/Veterans Corporation efforts to provide 
entrepreneurial development assistance. In times of economic 
instability, new business opportunities are critical sources of 
growth for our nation's productivity, employment, and 
innovation.
    However, with tightened credit conditions and the rising 
health care and energy prices, small businesses face an 
increasingly tough economic environment. For them to remain 
competitive, they need access to up to date information, 
business training and marketing advice.
    This hearing will evaluate SBA's and Veterans Corporation's 
initiatives and determine what needs to be done to make sure 
that they meet the needs of today's entrepreneurs. This program 
develops services across a wide range of economic sectors, 
providing significant returns on investment.
    A particularly remarkable example is the Women's Business 
Center Program, which has demonstrated a 15-to-one return on 
federal expenditures. This is occurring during a time when 
diminishing resources, capital, and poor agency management 
practices are holding these initiatives back. If we could 
overcome such problems, think of what that could mean for 
America's entrepreneurs.
    For many SBA programs providing the framework for success, 
demand for these services has risen while capacity has not kept 
pace. In fact, consulting hours are declining. It is important 
to find ways to reverse these trends and to provide tomorrow's 
business owners with the support that they need.
    The Committee will also look more broadly at what the SBA 
is doing to improve these initiatives. One of these proposals 
is the emerging 200 program which focuses on inner city 
businesses. An important point to examine is how the program's 
cost compares to existing SBA initiatives. We need to make sure 
that the taxpayers are getting the best bang for their buck and 
that these monies couldn't be better spent elsewhere.
    One of the most important up and coming entrepreneur 
sectors is veterans. For the 600,000 troops returning from Iraq 
and Afghanistan, business ownership is a viable option. To make 
this a reality, they need the tools to start up and grow. 
Unfortunately, one-third of the veterans have no knowledge of 
these programs targeting them to promote entrepreneurship.
    We have to find ways to increase outreach efforts to more 
returning service men and women so that they, too, can become 
entrepreneurs. The Entrepreneurship Program can provide new 
opportunities and vital training. With the economy facing 
substantial challenges, these initiatives should be a top 
priority for lawmakers, practitioners, and small business 
owners.
    This Committee has spent a great deal of its time to 
improve these programs and recently two bills became law. For 
400,000 Americans who each month take the brave step in 
starting a new business, we must be certain that they can 
succeed. Our nation and our local communities will successfully 
benefit from the growth and business creation.
    I want to thank the witnesses for the testimony today, and 
I now will recognize the Ranking Member, Mr. Fortenberry, for 
his opening statements.

              OPENING STATEMENT OF MR. FORTENBERRY

    Mr. Fortenberry. Thank you, Chairman Shuler, for holding 
this hearing on our entrepreneurial development programs and 
outreach as well, and welcome to our guests. I hope you are all 
friends, given the tight quarters here, or you will soon be, I 
guess.
    We are here, as the Chairman mentioned, to offer oversight 
of the SBA's Entrepreneurial Development Programs, and I am 
hopeful that this hearing demonstrates to entrepreneurs that 
Congress is very attentive to their needs as the nation's 
primary job creators.
    Today's hearing affords us a unique opportunity to examine 
some success stories, as well as potential areas of improvement 
of the federal government's efforts to assist entrepreneurs. 
The vast majority of potential entrepreneurs, as well as the 28 
million small business owners in the country, do not have the 
financial resources to hire management consultants or business 
advisors. Nevertheless, these people face numerous operational 
issues, such as finding financing, developing marketing plans, 
handling production and complying with the myriad of local, 
state, and federal regulations.
    Many of the programs we oversee in the Small Business 
Committee are designed to assist already established 
businesses. So I am pleased and excited to be a part of playing 
a role to assist small business entrepreneurs and start-ups.
    The spirit of entrepreneurship does need nurturing in our 
country, and to that end, Congress has authorized a wide 
variety of programs to assist small business owners and budding 
entrepreneurs. The SBA's Entrepreneur Development Programs 
operate in tandem with a number of other business outreach 
programs operated by other federal agencies, as we all know, 
such as the Department of Commerce and the Department of 
Agriculture. Some are designed to provide advice to small 
business, such as the Department of Commerce's Trade Assistance 
Program. Others offer assistance to specific groups, such as 
the Center for Veterans Enterprise at the Department of Veteran 
Affairs, as the Chairman alluded to.
    As with any government program, oversight is very critical 
for these program. Mr. Shuler's briefing memorandum for this 
hearing did a superb job of highlighting some of the specific 
issues to be addressed in each of these programs under review 
today. These programs must be closely coordinated to insure a 
maximum level of flexibility for our nation's entrepreneurs so 
that these small business owners do not encounter a patchwork 
that is confusing when they approach the government for 
assistance.
    The need for better coordination and efficiency led 
Chairman Shuler and I last year to direct the Government 
Accountability Office to examine how the SBA's programs can be 
better coordinated with those at the Department of Agriculture. 
The results of that review should help the SBA do a better job 
of coordinating its disparate outreach efforts so that 
entrepreneurs in rural America will have access to the best 
resources and expertise when they interact with the government.
    Again, thank you all, to our witnesses, for taking your 
time out today and providing valuable insights.
    Mr. Chairman.
    Chairman Shuler. Thank you, Mr. Fortenberry, for your 
testimony.
    I ask unanimous consent that the record be open for five 
days for members to submit their statements.
    Hearing no objection, so ordered.
     Our first witness today is Anoop Prakash, Associate 
Administrator for Entrepreneurial Development for the U.S. 
Small Business Administration. In his capacity, he manages the 
SBA's Technical Assistance Program, providing training and 
business consulting to small business clients.
    Mr. Prakash, thank you so much. You have five minutes for 
your testimony.

STATEMENT OF ANOOP PRAKASH, ASSOCIATE ADMINISTRATOR, OFFICE OF 
   ENTREPRENEURIAL DEVELOPMENT, SMALL BUSINESS ADMINISTRATION

    Mr. Prakash. Chairman Shuler, thank you for having me. 
Distinguished members of the Committee, we appreciate the 
invitation to share with you the important work for the Office 
of Entrepreneurial Development.
    I am Anoop Prakash, the Associate Administrator for the 
Office of Entrepreneurial Development.
    Our mission is to help entrepreneurs start, grow, and 
succeed by providing a nationwide network of resources both for 
training and counseling through a physical network of resource 
partners, as well as through our online training resources.
    In fiscal year 2007, our portfolio programs counseled and 
trained over 1.4 million entrepreneurs, and we serve our 
clients primarily through our three resource partners, the 
Small Business Development Centers, the Women's Business 
Centers, and the SCORE Network, who are all well represented 
with me here today on the panel.
    We also serve them through our Small Business Training 
Network, which is our online training platform.
    Today I would like to focus on the strategic direction our 
office has been taking over the past year and will continue to 
pursue through fiscal year 2008. We have been focused on three 
core areas to improve our program management and further impact 
economic development across the country.
    Our first area of focus is to accelerate delivery of SBA 
products and services into under-served markets. Agency 
activities in this area fall into three broad categories. First 
and foremost is improvement of entrepreneurial literacy and 
technical assistance in the inner cities.
    Our first pilot has been a collaboration between the New 
York SBA district office, the New York Small Business 
Development Center, and New York SCORE Chapters to deliver 
training and counseling to Operation Hope's center in Harlem, 
New York. At last report, we were on pace to double the number 
of entrepreneurs counseled and trained in that community and 
hope to see more collaborations in 2008.
    Our second area of focus for the undeserved is to improve 
access to capital in undeserved communities through improved 
lending processes and loan products. You have heard from my 
colleagues in the past about rural under advantage, and that is 
just one example of the programs we are putting into place.
    And lastly, we have created an inner city training program 
called the SBA Emerging 200. This program will provide 
intensive growth oriented training to in-business emerging 
inner city companies. The goal is sustained job creation by 
focusing on companies with the highest potential for growth in 
the most economically distressed communities.
    We currently have limited coverage in the inner city with 
our current partners and resources, and it is important that we 
work with the companies that are emerging in those areas.
    It is important to note that the Emerging 200 initiative is 
not duplicative of current ED programs because of the current 
coverage. Current programs serve entrepreneurs at every stage 
of business development. They also cover very large geographic 
areas statewide, and they reach out broadly to minority women 
and veteran entrepreneurs. The Emerging 200 initiative is 
targeted, 200 inner city companies with established revenue in 
business that have high potential to grow and create jobs in 
the communities that have lost the most jobs.
    Our second major area of improvement in ED is the quality 
of customer service for our grantees. We have completed two 
major projects in this area. First, we have reengineered the 
Small Business Development Center financial exam process, and 
we have also streamlined the Women's Business Center operations 
and the program announcement. In both cases we have received 
extremely positive feedback from the center directors and our 
clients and are committed to continuously improving in these 
areas.
    The goal across all these continuous improvement activities 
is to make sure our compliance and risk management 
responsibilities are met, that we are taking a practical and 
proportionate approach in terms of so that we allow our grant 
recipients to spend more time doing what they do best, which is 
to serve entrepreneurs.
    Our third area of focus is to increase investment in our 
online assessment and training tools. As you might imagine, the 
increase in demand for online training and assessment tools has 
spiked dramatically. We are currently seeing about one-fourth 
of all clients coming through to SBA and through to our 
training and counseling programs coming online, and we would 
probably expect to see about one-third by the end of 2008. By 
the end of 2008, we will probably see fully a third of our 
training and counseling numbers coming through our training 
network or those of our partners that are on line.
    The courses are available to anyone free of charge, and on 
average we are seeing 1,200 entrepreneurs a day coming to our 
site and the training, and we are continuing to invest there.
    One additional area I would like to touch upon is our 
focused outreach to veterans. As a former marine and veteran, I 
am passionate about serving both past and present members of 
our Armed Forces and their families. ED Resource Partners do a 
tremendous job of reaching veterans through their counseling 
and training programs. One contributing factor to our resource 
partners' success is that several of our Veterans Business 
Outreach Centers are collocated with some of the larger state 
veteran populations and with our SPDC programs. Those are in 
Texas, New York, and Florida.
    Last year ED and resource partners served over 64,000 
veterans, and 7,383 were service disabled.
    Chairman Shuler, it is a sincere privilege for me to be 
here and tell you about my important work and to work alongside 
such great professionals that I have here next to me who are 
working on behalf of America's entrepreneurs.
    Thank you, and I will be happy to answer any questions.
    [The prepared statement of Mr. Prakash may be found in the 
Appendix on page 42.]

    Chairman Shuler. Ladies and gentlemen, we will be back. We 
have a procedural vote, I think, on the House floor. So we will 
just recess for now, and we will be back in about 20 minutes. 
So we apologize for that, but we have to do our duties as well.
    [Recess.]
    Chairman Shuler. Thank you for your patience. Hopefully we 
will not have too many more interruptions before this ends.
    Our next witness is Walter Blackwell, the President and CEO 
of National Veterans Business Development Corporation. The 
Veterans Corporation was established in 1999 to provide 
entrepreneurial development services for our nation's veterans.
    Mr. Blackwell, you will be recognized for five minutes.

STATEMENT OF WALTER BLACKWELL, PRESIDENT/CEO, NATIONAL VETERANS 
                BUSINESS DEVELOPMENT CORPORATION

    Mr. Blackwell. Mr. Chairman and Ranking Members and members 
of the Subcommittee, I want to thank you for the opportunity to 
discuss Veterans Corporation, TVC more specifically, our 
outreach efforts and business development service delivery to 
veteran entrepreneurs across the country.
    The mission of TVC is to create more prosperous communities 
and a stronger national economy by fostering business 
opportunities for veterans, service disabled veterans. Our 
special status as a federally supported yet independent 
501(c)(3) organization creates a public-private partnership 
that maximizes the effectiveness and efficient use of public 
funds on behalf of veteran entrepreneurs.
    TVC continues to fulfill its mission in spite of 
increasingly limited funding from Congress, and the strict 
privacy laws that deny us access to contact information about 
current and former members of our Armed Forces, precisely the 
individuals who are TVC's target market for membership. TVC 
helps our veteran entrepreneurs maintain their competitive edge 
by providing direct program services to veterans, including 
business education and training, one-on-one counseling, 
participation in transition assistance program seminars at 
Walter Reed Army Medical Center, and around the clock worldwide 
access to a comprehensive suite of online business tools and 
resources.
    TVC acts as an entrepreneurial catalyst and facilitator for 
veterans, service disabled veterans, and members of the Armed 
Forces by creating a network of resources leveraging partners 
and building nationwide community based veteran entrepreneurial 
support, particularly in areas with the largest number of 
veterans.
    In implementing TVC's mission, our goal is always to reach 
the most veterans possible. To that end we must leverage every 
dollar we receive to a worldwide program that reaches out to 
veteran entrepreneurs in every state, on then front lines, and 
in all stages of business creation and growth.
    Under the auspices of our mandate to establish and maintain 
a network of centers nationwide, we operate a strong national 
hub headquartered in Washington, D.C. that provides direct 
business counseling and is responsible for implementing 
programs that can provide veterans across the country with the 
most critical business tools, resources and knowledge.
    TVC's competitive grants process allows TVC to identify, 
cultivate and support veteran entrepreneurial programs at 
business resource centers nationwide in order to bring one-on-
one information and resources to more local veteran 
communities. TVC has listened to its constituency and 
established significant, effective programs that are 
successfully helping veterans start and grow businesses. 
Responding to veteran entrepreneurs' pleas for access to 
capital, TVC created a program that is without a doubt the most 
successful program in the veteran owned business community.
    In Fiscal Year 2007 alone, almost 46,000 veterans seeking 
capital to starter grow businesses downloaded our Access to 
Capital Questionnaire. Two hundred and sixteen submitted 
answers; 209 received individual financial counseling by our 
national staff who worked with them to refine their business 
plans and prepare for loans. We referred 73 of those veterans 
to our partner, the National Economic Opportunity Fund, NEOF, 
which provided two or more financial strategy and advising 
sessions to each of those 73.
    Through TVC and NEOF's partnership, veterans are eligible 
to receive financing above and beyond those that are offered by 
the SBA on a fraction of SBA's budget and staff size. Two 
tremendous success stories clearly illustrate the positive 
effect TVC's Capital Access Program has on our veterans.
    One example is the Army National Guard Lieutenant Trinity 
Cazzola, who was used to being a man on a mission. In 2007, 
while he was still deployed in Iraq, he expanded his mission to 
include lending his entrepreneurial spirit to the rebirth of 
New Orleans.
    On November 26, 2007, Lieutenant Cazzola opened Mayas 
Restaurant on Magazine Street in New Orleans. Just four short 
months earlier he was on active duty in Iraq. It was from Iraq 
that he contacted TVC for help. Lieutenant Cazzola called our 
office in D.C. during his down time, 12:30 a.m. Baghdad time, 
and talked to our staff about the need for capital and the 
barriers he faced on active duty in Iraq.
    TVC provided Trinity with full service support from 
business plan to advice, worked with our local bankers and in 
fewer than 60 days, Lieutenant Cazzola found a loan to get his 
business started.
    In Fredericksburg, Virginia, TVC helped a soldier and his 
family create a triumph moment on November 22nd, 2007. Over the 
past four years the Santiago family had been coping with 
traumatic brain injury Joe Santiago suffered while he was on a 
mission in Kuwait. Unable to hold a traditional nine to five 
job, Joe and his wife decided to go into business and opened a 
franchise that they could own and manage as a family.
    When their loan fell through at the last minute, Joe and 
his wife contacted TVC. TVC's partner NEOF began negotiating 
with bank officers, and within a month the Santiagos had the 
loan and were preparing for their grand opening, a Nestle 
Tollhouse Cafe by Chip franchise. It is an accomplishment that 
once seemed impossible, but it was achieved through the help of 
our TVC partner.
    TVC's national hub has also implemented a nationwide surety 
bonding program. This program is crucial. For veteran 
contractors to secure some of the 550 billion nonresidential 
construction trade, they must be surety bonded. Through TVC and 
its partner, the Surety and Fidelity Association of America, 
celebrating its hundredth anniversary this year, veteran 
contractors have access to education and training that teaches 
them how to do business with the government and how to become 
bonded. SBA's program is capped at $2 million with an average 
SBA-backed bond at about $250,000. This is not enough for 
veterans and service disabled veterans to successfully compete 
for federal contracts.
    By comparison, TVC's program is in all 50 states. It has no 
caps, and last year, TVC helped qualify 6.7 million in new 
surety bond programs. These Affinity partnerships help TVC make 
the best use of its restricted staff and financial resource. 
Each partnership is carefully considered and the specific 
applicability and value of the veteran entrepreneurial 
community. Each Affinity agreement is vetted through our pro 
bono law firm to insure that TVC and veteran interests are 
being well maintained.
    In keeping with the rapid pace of change in our military 
and our economy, TVC's national staff members created and 
monitor an online veteran's business forum, connectvets.com, 
that facilitates veteran-to-veteran business support.
    One veteran wrote TVC on February 20th to thank him for 
this forum saying, ``The information you provided me will 
assist our attorneys in a more timely and accurate preparation 
of our new teaming agreement. Keep up the great work.''
    Additionally TVC staff members make presentations at 
conferences, seminars and events and implement nationwide 
programs that reach specific veteran communities, including 
service disabled veterans and members of the National Guard and 
reserve.
    Added to these programs, TVC is a component of the Army 
career and alumni program, ACAP, and is opening an office at 
Walter Reed Army Medical Center through which we are providing 
direct counseling, posting business classes, and serving as a 
critical transition step for our nation's men and women.
    TVC also--
    Chairman Shuler. Excuse, Mr. Blackwell. Are you getting 
close?
    Mr. Blackwell. I have more.
    Chairman Shuler. Obviously it has been submitted to the 
record. So if we can, let's move on. We typically only have 
five minutes, and we never know when the next procedural vote 
will come forward.
    Mr. Blackwell. All right.
    Chairman Shuler. So thank you for your testimony. I do 
apologize.
    Mr. Blackwell. Oh, that is fine. I just would like to ask 
that TVC's annual report, our audit report, our strategic plan, 
and letters from support be entered into the record as well, 
sir.
    Chairman Shuler. Yes.
    Mr. Blackwell. Thank you.
    [The prepared statement of Mr. Blackwell may be found in 
the Appendix on page 46.]

    Chairman Shuler. Our next witness is Don Wilson, President 
and CEO of the Association of Small Business Development 
Centers. The association has a partnership program uniting 
private enterprise, government, higher education, and local 
nonprofit development organizations.
    Mr. Wilson, you will be recognized for five minutes.

  STATEMENT OF DONALD WILSON, PRESIDENT, ASSOCIATION OF SMALL 
                  BUSINESS DEVELOPMENT CENTERS

    Mr. Wilson. Thank you, Chairman Shuler.
    It is an honor to appear before the Subcommittee and 
discuss the Small Business Development Center Program.
    A little over 30 years ago, the SBDC started as a pilot 
program in a handful of universities. Since that time, the 
program has grown to 63 programs in all 50 states, Puerto Rico, 
Guam, American Samoa, the District of Columbia, the Virgin 
Islands. We are now serving approximately 600,000 small 
businesses annually. Unfortunately those numbers are declining.
    For the last seven years, until the 2008 fiscal year, SBDC 
funding from 2001 until 2007 was going backwards. As a result, 
the infrastructure had been decaying, not unlike bridges, 
roads, et cetera.
    We are very fortunate and appreciate your leadership, the 
leadership of Ms. Velazquez and others on the committee who 
have advocated for increased funding for this program. We are 
not back to where we need to be in inflation terms. If you look 
at 2001, you have gone down about 24 percent until we got this 
new increase. If you will look at the testimony, page 2, I cite 
a number of examples of what is happening in individual state 
programs: the loss of counselors, the loss of centers.
    You know, speaking of veterans, we normally serve 50 to 
60,000 veterans annually. We are now below 50. We simply do not 
have the counselor capacity to serve them like we would like 
to. We hope that the additional dollars that we have received 
in 2008 will begin to reverse that.
    But incredibly and unfortunately, the administration's 
budget has proposed for 2009 a $10 million cut, which, quite 
frankly, would be catastrophic.
    Our biggest concern right now is to look at the economy in 
the state that it is in, the declining jobs, the severe credit 
crunch that small business is facing, rising energy costs and 
so forth and realize that for many small businesses, they have 
only been in business during the good years, say, the last five 
years when the economy was growing. They have never faced a 
declining economy. It is kind of like a stock broker never 
being in a bear market.
    These people, many of them without any management 
education, will be coming to us for assistance to keep their 
businesses afloat, and we are not going to have the counselor 
capacity to serve them.
    We work with all of our partners. We work with Women's 
Business Centers. We work with SCORE. We work with the Veterans 
Corp. We work with the PTACs. We tried to work with the TAP 
Program with the military so that we are reaching all of these 
individual constituencies.
    I think the numbers are very dramatic. Over 40 percent of 
SBDC clients are women. That is decidedly higher than the 
percentage of business owners who are women. Well over 30 
percent of our clients are minorities, once again, considerably 
higher than the percentage of minorities among small business 
owners.
    We have identified the at risk, the under-served. We are 
trying to reach out to them, but we cannot continue to do it. 
We cannot do more with less, as has been suggested to us for a 
number of years.
    I do want to acknowledge the tremendous cooperation that we 
have had from the Associate Administrator and his staff and his 
predecessor, Cheryl Mills. Many of the issues that we have had 
with the agency over the years have been, I think, alleviated.
    For many years, SBA basically goaled us on how many people 
we saw. Our funding partners goaled us on our economic impact. 
And so as a result of the work of Anoop and his predecessor, 
that has been changed, and I think that is very, very favorable 
to the outlook for this program.
    One of the things that concerns us, Mr. Chairman, is we are 
now beginning to see a number of new grant programs designed 
for SBDCs. There was some confusion as to whether that intended 
that those monies were to come out of core funding or new 
funding. That is an issue that we brought to the attention of 
all of the staff on both the House and the Senate side, both 
the authorizing committees and the appropriating committees, 
and we are very grateful for the response that we are getting 
to address that issue.
    We do not want to see a situation where we take monies away 
from, say, 42 or 45 states who are serving veterans to provide 
a veterans grant program for half a dozen states. That is a 
zero sum game, and that will not serve our veterans well.
    At this time I will be glad to answer any questions that 
you may have.
    [The prepared statement of Mr. Wilson may be found in the 
Appendix on page 56.]

    Chairman Shuler. Thank you, Mr. Wilson.
    Our next witness is Melinda Sanderson, a member of the 
Public Policy Council for the Association of Women's Business 
Centers, and she is speaking on behalf of the organization 
today.

 STATEMENT OF MELINDA SANDERSON, EXECUTIVE DIRECTOR, CANISIUS 
COLLEGE WOMEN'S BUSINESS CENTER ON BEHALF OF THE ASSOCIATION OF 
                    WOMEN'S BUSINESS CENTERS

    Ms. Sanderson. Chairman Shuler, thank you for the 
opportunity to be here today.
    My name is Melinda Rath Sanderson. I am the Executive 
Director of the Canisius College Women's Business Center 
located in Buffalo, New York. I am proud to serve as the 
national chair for the Women's Business Centers Association, as 
the public policy chair.
    The mission of the Association of Women's Business Centers, 
which was founded in 1998, is to support the entrepreneurial 
development programs for women across the country. There is 
currently 99 federally funded programs, and we see 
approximately 150,000 women-owned businesses on a an annual 
basis.
    I am in a unique position that I bring to you a perspective 
as someone in the field actually running a center. I am proud 
to tell you that at the Women's Business Center at Canisius 
College in Buffalo, New York, we serve just over 2,000 program 
participants on an annual basis. Since the program was 
established in 2003, we have had just over 8,000 total program 
participants.
    Our program is somewhat unique, as we are imbedded with an 
entrepreneurial program in the School of Business. We are a 
completely external business program, but it allows us to truly 
leverage the relationship and the partnership, which is a true 
public-private partnership.
    I also speak to you today having been a woman business 
owner for ten years, and I bring that perspective to my role as 
Executive Director of this particular Women's Business Center.
    I was asked to address three specific issues. The first one 
was to evaluate the portfolio and the capacity to meet the 
needs. In my testimony, you will see that I have indicated that 
I think that it has been difficult for this particular program, 
the Women's Business Center Program, to keep pace with the 
quantity of growth of women business owners in the United 
States.
    So I think that although we are having significant 
outcomes, it has been difficult to keep pace with the 
exponential growth of women business owners domestically.
    The second area I was asked to address is the SBA's 
oversight efforts and distribution of resources. Quite frankly, 
this is the best relationship we have ever had with the Women's 
Business Centers and the SBA, and I applaud the leadership of 
the Administrator for putting in some real solid business 
practices, setting benchmarks, best practices, and implementing 
some real process improvement plans that are going to make a 
real difference in the running of these programs.
    Specifically, I was asked to address the federal resource 
distribution issue. Recently there was put into place a process 
improvement which I believe will significantly improve the 
implementation of the payment. It was a model which was 
selected, a national model, a Health and Human Services model, 
and while it has not been implemented yet, it will allow 
Women's Business Centers to get advanced funding for their 
grants versus waiting for a request for reimbursement, which in 
the past has taken an incredible amount of time.
    So I applaud you for your leadership on that. It is going 
to make a big improvement for cash flow for these Women's 
Business Centers, many of whom do not have an institution of 
higher education like a Jesuit institution behind them to 
support them financially.
     The third area that I was asked to address was 
recommendations to improve the structure and delivery of the 
program. I think that it is critical that Women's Business 
Centers have a focus on financial sustainability and leveraging 
of resources.
    I also think that it is critical for every Women's Business 
Center to strategically align themselves and partner with the 
other resource partners, small business development centers, 
and SCORE. In western New York, we have worked very, very hard 
to develop wonderful relationships, and we actually do a 
significant amount of collaborative work together.
    In my opinion, SCORE and SBDC focus primarily on very early 
stage entrepreneurs. In the Women's Business Center in Buffalo, 
we focus on all stages, but in a very collaborative effort for 
those early stages. Quite honestly, I do not have the resources 
to be able to help people one on one write business plans. So 
what we do is take them after they have gotten their 7(a) or 
504 loan and really help them to sustain, pay back their money, 
and grow.
    As far as structure recommendations, I think the district 
offices should have a planned meeting between the resource 
partners in their area. I know it is happening in some parts of 
the country, but I do not think there is consistency, and I 
think that would really add to the communication.
    The depth of collaboration and the connection between the 
entrepreneurial development agencies I believe could be 
improved, specifically in the area of capital access and 
procurement. We have worked hard in our local market, but I do 
believe that there is a disconnect on the national level with 
helping those that have already received SBA funding to really 
help them pay back their loans and grow their businesses.
    The Women's Business Center Program should be recognized as 
an economic development agency versus a social service agency. 
I believe there is a little bit of confusion in the marketplace 
around the country, and I would like to thank you for this 
opportunity to present this testimony.
    [The prepared statement of Ms. Sanderson may be found in 
the Appendix on page 63.]

    Chairman Shuler. Thank you.
    As you have heard, we have another vote. So we will be in 
recess for about 15 minutes, and we will be right back.
    [Recess.]
    Chairman Shuler. This hearing is called back to order.
    We probably have 20 minutes. So I have spoken to Mr. Yancey 
and Mr. Carroll, and they are going to speed up the process, 
and thank you for that.
    Our next witness is Ken Yancey, Chief Executive Officer of 
SCORE, the Service Corps of Retired Executives. SCORE has 389 
chapters in locations throughout the United States and its 
territories, with over 10,000 volunteers nationwide.
    Mr. Yancey, you will be recognized for less than five 
minutes.

              STATEMENT OF KEN YANCEY, CEO, SCORE

    Mr. Yancey. Thank you, Mr. Chairman, Mr. Fortenberry.
    My name is Ken Yancey, and I am the CEO of SCORE. We 
appreciate this opportunity to testify.
    As you know, SCORE is a resource partner with the Small 
Business Administration. SCORE offers free business counseling 
and low cost workshops to small business owners and those who 
would like to start a business. Since its founding in 1964, 
SCORE has helped nearly eight million small businesses. Today 
SCORE offers its services through 389 local offices and over 
800 branches across the country.
    Last year SCORE volunteers provided mentoring to nearly 
340,000 entrepreneurs and provided workshops to almost 119 
people. Our volunteers donated more than 1.1 million hours in 
fiscal year 2007. SCORE's total cost to the federal government 
was reported by the SBA to be $9.8 million. That comes to $8.90 
per hour for expert business advice.
    By helping new and growing small businesses, SCORE supports 
job creation nationwide. In 2007, the SBA reported that SCORE 
volunteers helped to create more than 19,700 new businesses, 
and SCORE estimates 25,000 new jobs were created.
    SCORE was one of the first organizations on the WEB to 
offer E-mail advice. SCORE's 1,200 online counselors now 
provide advice in more than 600 business areas. Online 
counseling represents more than 38 percent of our total 
business.
    SCORE also offers free online information and workshops on 
how to start, manage, and grow a business. Last year more than 
2.6 million people visited score.org. SCORE offers online 
resources specifically for women, minorities, young 
entrepreneurs, Baby Boomers, manufacturers and veterans. More 
than half of SCORE's clients and 25 percent of our volunteers 
are women and minorities.
    Men and women serving in the Armed Forces can count on 
SCORE for business mentoring and advice. For veterans who owned 
a business before being called into service, SCORE can help 
with marketing, business recovery and other plans to 
reestablish and grow their business.
    SCORE counselors provide assistance for the new SBA Patriot 
Express pilot loan initiative, which offers loans to help start 
or grow a business. SCORE volunteers, many of whom served in 
the military themselves, are proud to support the success of 
these entrepreneurs.
    SCORE continues to work to increase outside funding. Last 
year SCORE raised more than $1 million in total contributions 
from corporate and foundation and volunteer sources. While 
major corporations are interested in reaching out to 
entrepreneurs through SCORE, they mainly provide funding for 
specific projects, not infrastructure, not general support, not 
organizational growth. These targeted donations rarely go into 
SCORE's general fund, and they cannot replace the dedicated 
appropriation we receive from Congress each year.
    SCORE will continue to rely on the federal grant for those 
operating funds. To meet rising costs, expand services, and 
modernize operations, we request that this Subcommittee 
consider urging the House Appropriations Subcommittee on 
Financial Services and General Government to fully fund SCORE 
at $7 million in fiscal year 2009. That additional funding 
would allow us to serve our clients better.
    Chairman Shuler, we are here to help entrepreneurs achieve 
their dreams of success and strengthen the U.S. economy, 
especially during a time of economic uncertainty. SCORE 
volunteers help to create one new job for every seven new 
counseling sessions and one new business for every ten new 
counseling sessions. That is a valuable economic impact for our 
nation at a very reasonable cost.
    We appreciate our partnership with the SBA and the others 
that are here. Thank you for this opportunity to testify.
    [The prepared statement of Mr. Yancey may be found in the 
Appendix on page 67.]

    Chairman Shuler. Mr. Yancey, an outstanding job on time.
    Our final testimony will be provided by a resident in my 
district who has served a very important role in promoting the 
region's growth. Dale Carroll is the President and CEO of 
AdvantageWest, Western North Carolina's Regional Economic 
Development Commission. Dale Carroll is the past President of 
North Carolina's Economic Developers Association, where he has 
helped lead statewide efforts in 2003 to promote passage of 
landmark legislation through the Economic Stimulus and Job 
Creation Act.
    Dale, you have five minutes.

 STATEMENT OF DALE B. CARROLL, PRESIDENT AND CEO, WESTERN N.C. 
    REGIONAL ECONOMIC DEVELOPMENT COMMISSION, AdvantageWEST 
                      ECONOMIC WEST GROUP

    Mr. Carroll. Thank you, Congressman Shuler, and it is good 
to see the Ranking Member, Congressman Fortenberry, again 
today.
    When I was with you in mid-November, I introduced the 
Certified Entrepreneurial Community Program to you at that 
time. You were having a hearing about collaboration between 
USDA and SBA and how that might be extended to the grassroots 
level and become even more effective in places like western 
North Carolina.
    I am glad to give you an update today on the Certified 
Entrepreneurial Program. We now have 14 communities that have 
completed the required leadership mean training in the 
Certified Entrepreneurial Community Program. They are moving 
through the checklist of requirements in order to become 
certified.
    This program is building momentum not just in western North 
Carolina. I am pleased to update you today and let you know 
that the Economic Development Organizations in seven different 
states have now contacted us with interest in our Certified 
Entrepreneurial Community Program.
    As related to today's topic where you look at SBA related 
programs, as I told you back in November, we have a good 
working relationship with USDA Rural Development, with SBA in 
western North Carolina, SBTDC which is the Small Business 
Development Center version of that program in North Carolina. 
It is called SBTDC.
    In the case of the Certified Entrepreneurial Community 
Program, one of the requirements on the checklist is that these 
leadership teams, including some of the most rural areas of 
North Carolina, develop better access to technical assistance 
and capital formation programs for the entrepreneurs in their 
given communities. As I introduced the subject back in 
November, I want to reinforce the point again today. We believe 
that the CEC Program with the requirement regarding better 
technical assistance and access to capital programs through 
organizations like SBA and SBTDC in North Carolina, CEC can be 
a platform for delivering those services.
    Let me summarize it this way. Just like it is not practical 
for AdvantageWest as a regional EDC based in Ashville to have a 
staff person in all 23 of the countries that we serve, we have 
to find ways to deliver our programs and services.
    I would submit to you that SBA and SBTDC that is funded in 
part by SBA could do the same thing like we are doing now 
through the CEC Program. The leadership team in each community 
is going to be required to not only catalogue and promote 
services like SBA and SBTDC through their brochures, their Web 
sites, the campaign that they do with the local business 
writers with the media, but they will also do something called 
the Blue Ridge Entrepreneurial Council Forum Series, where they 
will have ongoing workshops where SBA experts could come in and 
make presentations, where SBTDC staff could come in and meet 
entrepreneurs first hand on a regular scheduled basis. A real 
economy of scale could be picking up by doing things this way 
in western North Carolina.
    As I close, let me thank you again for including our 
program in your hearing as you look at these and other 
important subjects, and if I can answer any questions about how 
the Certified Entrepreneurial Community Program can be a 
platform for delivering SBA and SBTDC services at the local 
level, I will be glad to talk about that.
    Thank you.
    [The prepared statement of Mr. Carroll may be found in the 
Appendix on page 76.]

    Chairman Shuler. Thank you, Mr. Carroll.
    At this time I will open it up for questions. Mr. Prakash, 
is that the proper pronunciation?
    Mr. Prakash. Prakash.
    Chairman Shuler. Prakash, Mr. Prakash. I apologize.
    This year Congress gave $97 million to the SBDC Program for 
the modernization and expansion of its services. Six months 
into the fiscal year, state SBDCs have not received any of its 
resources or its funding.
    When will the agency allocate the $97 million?
    Mr. Prakash. Chairman, we have actually allocated those 
funds as of this week. Part of the hold-up was our 
consideration for some of the new legislation that had been 
passed, specifically the energy bill and the veterans bill, and 
making sure we had the right amount of money. We did not want 
to promise something that we could not deliver on, and so we 
did provide those accurate funding numbers actually as of 
Monday this week.
    Chairman Shuler. Was that noted to the folks that it was 
going to take that amount of time? I mean, six months is an 
awfully long time.
    Mr. Prakash. Sure. No, I think we all would have loved to 
have provided that early. It hurts our own planning, in fact, 
to not provide that sooner. We have been working closely with 
Mr. Wilson here and his board chair, Ms. Keenan, to make this 
happen as soon as we could, and a lot of that had to do with 
some of the questions that were left open in terms of the 
authorizing language and the appropriating language and 
bringing those together so that we were synched up.
    Chairman Shuler. Very good, and obviously as we well know, 
everything up here does move extremely slowly.
    Mr. Prakash. Absolutely.
    Chairman Shuler. What has the SBA done to insure that the 
programs are keeping pace with the changing demographics of our 
veteran population?
    Mr. Prakash. Well, I think I would love to also allow my 
peers to respond because they are the ones on the ground 
delivering those services every day. I can tell you that from 
our point of view, you know, we have a large emphasis on 
veterans service through all of our partners. Our online 
training speaks directly to veterans, particularly when it 
comes to our Patriot Express loan program. That has been a 
great success, and it is a core mission of our agency. It has 
been a core mission, and it is something that we think about 
very seriously every day.
    As far as the changing demographics of veterans, obviously 
there is a lot of return. Veterans are tapping into some of the 
transition assistance programs, particularly those resource 
partners who are located near places where there is transition 
happening, the larger military installations, and again, you 
know, I think the response has been tremendous. Particularly 
through the SBDCs and the Women's Business Centers and the 
SCORE program equally have served a disproportionately larger 
share of the veteran population.
    Chairman Shuler. Mr. Blackwell, in my opening statement we 
recognized that only one-third of our veterans are obviously 
aware of the program. Do you agree with that part? And it is 
okay to disagree.
    Mr. Blackwell. Absolutely. I mean, we are one of the best 
kept secrets in Washington, let alone in the other cities and 
rural communities.
    Chairman Shuler. We will help fix that.
    Mr. Blackwell. Yes. It is a serious issue. As I mentioned, 
one of the core problems really revolves around the fact that 
we do not know who those people are until they self-identify. I 
have often used the term there are three times that a person 
drowning uses. ``Hey, I am out here.'' The second time, ``I am 
in trouble.'' The third time it is, ``Goodbye.''
    We are getting our veterans somewhere between two and 
three. They have gone through the traditional sources, the VA, 
the SBA. They may be confused by the Web site. They may not be 
close to an SBDC. They are not close to a DOL one-stop, and 
they are really confused about how to get through the process.
    Sometimes we get them at the point where they have just 
abandoned all hope. So we absolutely agree there has to be a 
better way to get the message that there is an organization 
that works with all of my friends here at the table today, that 
is consolidating the salient points for them to start or be 
successful in a business that is already there.
    Chairman Shuler. And I will note that I met recently with 
our veterans, our VFW and our American Legion, and they are 
having the exact same problem reaching out to our veterans, and 
part of it just a mental state after coming back home. The 
mental stress that they are under at that particular time that 
when they are leaving, that is the last thing on their mind.
    Mr. Blackwell. I think it is two really flavors of ice 
cream here. The first is our guys are coming back much faster. 
So they are coming back from a theater of activity back into a 
civilian life without those transition times that are so 
crucial for them to readapt to a peacetime environment. At home 
it is very hard for them to do that quickly.
    The second piece is they are coming back as you say in a 
mode of ``I do not want to talk about it right now. I am going 
to go do something else for a while.'' So they put that time of 
transition into a longer period to where they are really ready 
to go look for and get advice.
    Chairman Shuler. Thank you.
    And I think we do have to continue to work with our 
veterans. They need the support whether it be health care and 
obviously in small business to give them an opportunity and 
have that outreach. That is something that I know Mr. 
Fortenberry and I will continue to talk about and stress, the 
importance of having the contacts and relationships that you 
can reach out to them.
    Mr. Blackwell. I would just close on that piece by saying 
that we need whole people to be whole businesses.
    Chairman Shuler. Absolutely.
    Mr. Blackwell. And we really have to address all of the 
issues that veterans face, whether that is health care or well 
care, whether that is family services. You cannot be in a 
business that demands so much of your time that small 
businesses do without having a whole person to start that 
process, go through the process and be successful.
    Chairman Shuler. Okay. It was not quite 20 minutes. I would 
like to ask one last question and then I would like to turn to 
my colleague.
    This will be for Mr. Wilson and Ms. Sanderson. You know, 
with the tremendous amount of our budgets continuing to be cut, 
tell us about your outreach with the private sector and 
different foundations, how you are actually being able to gain 
capital and capitalize even though the funding is not there 
from the federal government.
    I mean, you can look at the signs all over the halls. 
Democrats and Republicans talk about our debt. So if you do not 
mind, talk about your outreach to the community and how you 
have been able to gain so much economic structure for your 
organization.
    Ms. Sanderson. This is Melinda Sanderson.
    We have been able to leverage our resources and our 
relationships because we are an institution of higher 
education. We have significant representation on our public 
directors who are lenders. They are SBA lenders, and because we 
are not doing direct lending, some Women's Business Centers are 
micro lenders, but we are not. They see a direct benefit to the 
sponsoring of programs, and we have been very successful.
    The SBA percent of the budget currently is 37 percent, and 
we have been very successful in raising corporate and 
foundation dollars, as well as individual donors.
    So I think it is finding the right partner. I think if you 
have got the right partner that has got the respect, I think 
that makes a big difference. And then showing that there is 
really something in there for that, there is a benefit for 
these banks to run a sponsored program that has access to our 
clients.
    Chairman Shuler. Mr. Wilson.
    Mr. Wilson. Mr. Chairman, we have, of course, had a 
requirement from the outset to access the federal dollars, we 
have to raise non-federal dollars, and we have done that 
through state governments, local governments, foundations, 
corporations and so forth.
    One of the issues is the whole design of the program was 
that the federal dollar would leverage the non-federal dollar. 
And so when you get states that match and the federal dollar 
never goes up, the states are not likely to go up.
    And now with this current economic downturn, all you have 
to do is look at foundations and you see where their stock 
portfolios are going. You see banks which have often been very 
helpful for us because we bring them high quality loan 
candidates. Their dollars are declining. States that are facing 
severe budget deficits which by law by their state constitution 
they cannot have. They are cutting back.
    And so the issue now is not the same rosy outlook in terms 
of getting matched that it was, say, three or four years ago, 
and quite frankly, we encounter all the time if the federal 
government does not believe in this program, you know, we are 
not going to start pouring a lot of money into it.
    Fortunately, with 208, with the help of Ms. Velazquez and 
others, we have been able to change that, and I have had 
several people tell me that that has resulted in a new match 
for them. But we have had some states that are in such dire 
stress for their budget that they have had to cut back on some 
of our match.
    Chairman Shuler. At this time I would like to recognize 
Ranking Member Mr. Fortenberry for his questions.
    Mr. Fortenberry. Thank you, Mr. Chairman.
    First of all, let me thank you all for your patience 
through the disruptions today, and let me give a little speech, 
a little editorial comment, and then I will go to my questions 
as well.
    This is an oversight hearing. Obviously, as members of 
Congress who are charged with responsibility for this area of 
federal spending, it is our responsibility to make sure 
taxpayer monies are used prudently and wisely. But I think you 
will find in us some that some oversight hearings can be a bit 
raucous and contentious, and of course, if there is something 
wrong we need to find it and point it out, but I think the 
spirit in which we approach this through the leadership of the 
Chairman has been a working partnership.
    If you see things that are not right, if you see things 
that could be done better, if you can enliven your work with 
the spirit of entrepreneurship so that we could use our limited 
funds most efficiently, expand where appropriate, maybe pull 
back on things that are dated and no longer apply, that is very 
helpful to us in helping you do your jobs as well.
    And in that regard, let me ask you, Mr. Prakash. I 
appreciate your comments. The Emerging 200 targeted program for 
inner cities, do you have something under consideration for 
rural communities that would be concentrated like the Emerging 
200?
    Mr. Prakash. Thank you for your question, sir.
    Right now the Emerging 200 is standing alone as an inner 
city program. Certainly for rural entrepreneurship, we have had 
a number of interesting programs go through.
    First of all, Rural Lender Advantage, which I know, again, 
my colleague Mr. Zarnikow has briefed this Committee on or the 
broader Committee, and what we have found in the rural areas, 
the most important thing there is reaching rural communities 
because of the dispersion and the geographic dispersion; we 
have found that the best tools to reach rural communities are 
not only through our resource partners, but also our online 
training and online tools and working with local economic 
development organizations who can deliver those in their places 
of business much like the program Mr. Carroll described.
    You know, as far as doing a concentrated technical 
assistance program there, there is just not enough density to 
be able to deliver that to rural America, and that is why we 
have been working through the banking community with Rural 
Lender Advantage, because the banking community has that scale, 
has that leverage, and you know, they have a co-investment and 
alignment of interest to grow that community.
    Mr. Fortenberry. Yes, it is a very interesting concept and 
the reason I raise it. And if you look at the work Mr. Carroll 
has done in terms of coordination of all resources and 
elevating it to a new concept which gives, I think, real 
excitement that rallies even small communities around an idea 
of it being a certified entrepreneurial community, again, I put 
it on the table as perhaps an entrepreneurial governmental 
policy idea that lifting the best practices from what you are 
doing there and success stories and applying it in perhaps a 
more micro way, even though it might not be as concentrated of 
an area in terms of economic opportunity, need, or population; 
nonetheless, the severity in some areas of rural communities 
that are experiencing significant resource decline and 
dislocations which cause tremendous problems and stresses and 
duress for communities, again, may fit what I was talking about 
earlier in terms of entrepreneurial policy thinking.
    So I leave that to you all to ruminate on.
    Mr. Chairman, do we have a few more minutes? It is just 
about ten minutes of.
    Okay. Mr. Blackwell, you had pointed to an interesting 
story about a disabled veteran who has a wonderful success 
story. What types of entrepreneurial opportunities do you see 
emerging for disabled veterans, best fits for people who are 
suffering from significant consequences of their public service 
to this country and have, therefore, certain limitations on 
their ability to move and pursue the range of opportunities 
most of us take for granted?
    So what do you see as real potential there? Because, again, 
as I mentioned earlier, I think we do need to elevate your good 
work so that it is widespread and known, but there may be a 
subset of the niche you are talking about in terms of disabled 
veterans' opportunities.
    Mr. Blackwell. There are veterans who have very strong 
family ties, wives, children, who are able to enter into 
franchise businesses, not just the Santiagos were able to do. 
Joe's traumatic brain injury allows him to be at the building, 
but it is really his wife Stacy and their three daughters that 
are making this work and give financial stability to that 
family.
    So the franchise opportunity continues to grow. That is why 
we work with the International Franchise Association to make 
that happen.
    In terms of severely disabled vets who are able to 
participate either in homebound business activities or able to 
go into outbound, we are very actively involved in establishing 
call centers. Call centers in Chattanooga, Tennessee will come 
on line some time mid-next month. We are very excited because 
that is a 150 seats. They can do that from their home with 
special assisted equipment.
    We have made all of our Web site activities 8(a) compatible 
so that all of our activities are available regardless of your 
disability. We are working, as I mentioned earlier, with Walter 
Reed to see if an internship program will work with local kind 
of mini mentors in the area. The first of those folks will be 
coming into our offices directly to work on the phones and to 
get direct advice on businesses.
    So I do not think that there is a specific range of jobs 
that are available. What we are trying to do is see where the 
knowledge and assets that maybe the physical liabilities do not 
allow would allow them to go into either a coordinated activity 
for counseling other vets in jobs or sharing their information 
about their professions.
    Mr. Fortenberry. Great. Thank you. Thank you very much for 
that.
    I will continuing questions, Mr. Chairman, if that works. 
Are we ten minutes in? No, we are five minutes.
    Chairman Shuler. The next bell.
    Mr. Fortenberry. Thank you for your leadership, Mr. 
Chairman.
    [Laughter.]
    Chairman Shuler. We will be in recess and we will come back 
in ten or 15 minutes.
    [Recess.]
    Chairman Shuler. At this time I would like to recognize the 
gentlewomen from New York, Ms. Yvette Clarke, for her 
questions.
    Ms. Clarke.
    Ms. Clarke. Thank you very much, Mr. Chair and Ranking 
Member Fortenberry, for holding this very important hearing.
    Let me just start by stating that it is evident that there 
is a direct relationship between the technical assistance and 
positive success rate for small businesses. In fact, there is 
evidence that firms that receive technical assistance double 
their chances to succeed.
    Small businesses in many inner city communities, including 
my district, benefit from accessible, affordable technical 
assistance, and as more socially economically disadvantaged and 
women-owned businesses continue to grow rapidly, we must 
continue to find ways to provide resources they need to succeed 
since these businesses have historically faced so many 
obstacles in order to start and to improve their companies.
    I would like to start my questioning to Mr. Prakash. As you 
know, my colleague, Chairman Shuler, introduced H.R. 2389, 
which is the Small Energy Efficient Business Act, which was 
later incorporated into the House energy bill that passed last 
August. These provisions require the SBA to develop an Energy 
Star Program for small businesses and to provide grants through 
SBDCs to help small businesses become energy efficient.
    My question to you is: has your agency started developing 
the Energy Star Program? And do you intend to insure that small 
businesses who need financial assistance the most to become 
energy efficient will be able to get that funding?
    Mr. Prakash. Thank you for the question.
    We have, indeed. Obviously we are in receipt of the passing 
of the Energy Efficiency Act. We are looking forward to 
implementing the bill. Part of the delay, frankly, for us was 
making sure we understood what the funding was going to be in 
2008 for the agency, and at this point now that that is clear 
and we know that we are going to be providing to the SBDCs, we 
are looking forward to implementing a pilot set of grants for 
the energy efficiency audits that were required by the law.
    Ms. Clarke. And can you give us a sense of how the Energy 
Star Program will work for small businesses, what structure and 
infrastructure has been put in place to facilitate that?
    Mr. Prakash. I think I may be confused around the Energy 
Star Program. I am speaking to the Energy Efficiency Grant 
Program to the SBDCs. I am less familiar with the Energy Star 
requirement, but I am assuming you are speaking of the same 
thing.
    Ms. Clarke. Yes, basically.
    Mr. Prakash. Okay. What we are planning to do is as per the 
legislation, the legislation spoke to grant amounts between 
100,000 and 300,000 to get started. I think from our point of 
view there are certainly a couple of SBDCs that have already 
demonstrated some best practices in the energy audit area. We 
would like to take those best practices, learn what they have 
done that has been so successful, put those into our program 
announcement for the pilot program, and try to see five pilots 
within this fiscal year, which obviously we know time is 
running short.
    We want to get those five pilots up and running, get some 
metrics, get some response back, and then hopefully, depending 
on the funding levels next year, work on a much broader 
program.
    Ms. Clarke. So the program has yet to be implemented. Have 
you targeted specific regions to run these pilots in?
    Mr. Prakash. We have not targeted any regions. We are still 
working on collecting all of the pieces for the program 
announcement. I do not expect personally that we would move to 
a region-by-region requirement. Part of doing a competitive 
grant program is to allow it to be open for any SBDC to pursue 
it.
    Ms. Clarke. So you are going to do sort of an RFP for 
competitive bidding?
    Mr. Prakash. That is right. It will take the same grant RFP 
format as our Women's Business Center Program, which is also a 
competitive program.
    Ms. Velazquez. Will the gentle lady yield?
    Ms. Clarke. Certainly, Madam Chair.
    Ms. Velazquez. Sir, can you explain to us where you are 
getting the money for the program?
    Mr. Prakash. Absolutely, yes. For both the energy and the 
veterans program, we will be pulling that from the $97,120,000 
that were provided in the appropriations language for grant 
programs.
    Ms. Velazquez. I will come back to you when I am 
recognized. I yield back.
    Ms. Clarke. Mr. Prakash, the full Committee recently sent a 
letter to the Budget Committee recommending that new funding 
initiatives, but expressed the core SBDC Program to be fully 
funded before resources are directed to new services.
    Do you intend to not divert funds from the core SBDC 
program? And if so, then how do you plan to fund other 
initiatives?
    Mr. Prakash. Are you speaking to the veterans and energy 
specifically?
    Ms. Clarke. Yes, specifically.
    Mr. Prakash. Well, our plan today is to pull about a 
million dollars, exactly one million dollars from the 
97,120,000 that was provided in the appropriations language for 
grants. It was a general grants line, and given that this was 
law and we intend to implement that law and look forward to 
implementing those laws, that was basically the only pool that 
was appropriated for those programs.
    Ms. Clarke. Thank you very much.
    Mr. Chair, I yield back.
    Chairman Shuler. I would like to recognize again the 
Ranking Member, Mr. Fortenberry, for his follow-up questions.
    Mr. Fortenberry. Ms. Sanderson, I would like to continue 
with you as well. In your experience, what are you seeing as 
emerging trends among women entrepreneurs?
    Similar to the question I asked previously, where do you 
see the trajectory of certain types of opportunities and 
success stories emerging? Can they be quantified to a 
particular set of opportunities? Is it a continuum of things?
    And what are the resources that are giving rise to certain 
sets of entrepreneurial opportunities for women that you work 
with? What other barriers are out there that are prohibiting or 
limiting entrepreneurial opportunities for the sector which you 
work with?
    In other words, what are your success stories, if there is 
a general pattern of them, and do you see those being 
duplicated and continuing to grow versus other opportunities 
that might be on the continuum of things that are available?
    Ms. Sanderson. You know, the program is set up as a center. 
We are a center. So, you know, we are kind of like the 
switchboard operator where we can really direct people to other 
resources that might suit their needs better like the veterans 
program. We have a veterans representative, a permanent 
position on our board of directors, specifically for the 
purpose of being that switchboard operator to direct them to 
the other resource partners that might better serve their 
needs.
    So that is an important distinction, I believe, of the 
program, that we are a center and a resource for all women. I 
do think that women have some very specific and unique 
characteristics. They are risk adverse. So they are afraid to 
get a loan and afraid to sign the collateral because they know 
that they would have to sign the collateral for their house, 
and that is very scary for women. So that is a unique feature 
for women business owners.
    Also, the issue of isolation. Many women start home-based 
businesses and that is unique to women, and also support, the 
support piece. Our program focuses on critical skills, 
knowledge, tools and support, and what I find is that for the 
women that that support element to our program is really what 
they need. They need ongoing continual help in kind of a 
continuum of care so that wherever they come to us, whether it 
is early stage entrepreneur or middle stage, we are really 
looking, you know, to sustain and grow and get another loan and 
expand and take advantage of some of the capital 504 programs. 
It is really that continuum of ongoing care step by step that 
is really important to them.
    Mr. Fortenberry. It is interesting that you mention home-
based businesses, and I just want to bring this up in a larger 
context because the last hearing we held if I recall correctly, 
what we were trying to do is identify clear burdens or barriers 
to entry for entrepreneurs, and there are many of those outside 
the traditional bounds of what we think of. We tend to quantify 
them as capital.
    Mr. Carroll, you do a real good job of identifying the four 
key ones, I think. It is capital, technology, regulatory, and 
education, if I recall correctly.
    But there are other issues out there that could smooth the 
pathway, and let's just pick up with home-based businesses, for 
instance. Are there tax code changes that could be made to 
allow this to be a little bit easier for people to take 
advantage of the potential tax deductions that are available? 
That is one.
    Do we encourage or are we encouraging or are our 
deductibility on real estate laws such that we give a 
disincentive in a certain sense to wiring up through technology 
so that we can have extended workplace either hours or distant 
locations of work?
    I think these are the types of questions that we need to 
look at as drivers underneath or impediments underneath what 
could be much more flourishing opportunities and 
entrepreneurship given the constraints that exist in certain 
communities.
    We talk about disabled veterans. There might be certain 
constraints for women entrepreneurs, and you have identified 
some of them that other initiatives might help take care of. So 
I was trying to get at that point as well earlier, and that is 
why I wanted you to expand upon do you see a certain trajectory 
of opportunity that is fitting the niche that you are working 
with.
    Ms. Sanderson. I do, and for us and having been a woman 
business owner, we start with a business plan. Having been in 
business for ten years myself without a business plan, I think 
the fallacy of the plan is you only write it to get money, but 
the reality is I may still be in business had I had a plan with 
accurate financial projections.
    So you know, we work real hard on trying to set a 
distinction between a hobby and a business, and we serve a lot 
of hobbies. You know, Dolly's Doughnuts out of her kitchen is 
very different than someone who has capital and is renting 
space and has employees and is really trying to pay back their 
loan and trying to grow and get the core business skills 
necessary.
    Our program focuses on core business skills and what is 
really necessary, and then we focus on their area of 
deficiency. If they are weak in marketing, we get the marketing 
help, and if they are weak on finance, we match them up in a 
one-on-one program, a coaching program we have, with experts 
that focus on that deficiency, and to get them the knowledge 
that they need for tax purposes, we partner with our state and 
our local experts in that to bring that kind of educational 
entrepreneurial training to them.
    Mr. Fortenberry. Thank you.
    One other impediment that we have not discussed that is 
probably worthy of a hearing in and of itself is the issue, and 
we have had them in the larger Committee, but the issue of how 
health insurance, lack of availability or portability impedes 
entrepreneurial opportunity is a real productive drain on 
society because it basically chains the person to whatever 
institution they may be with that is providing them health 
insurance and does not allow a shift into what they would 
desire, what they would socially prefer in terms of risk 
taking.
    That is a topic for another day, but, Mr. Yancey, I want to 
say thank you for your work with SCORE. I think it is probably 
our nation's oldest effort in this regard and well established.
    I was in Norfolk, Nebraska recently to celebrate three 
entrepreneurs. One was a new barbecue business. One was a 
person who was doing marketing through her home on the 
Internet, and there was another business, but it was a 
celebration of the SCORE chapter's work in one of my primary 
rural communities.
    In that regard, I think it is important also to point out 
that sometimes the answer is no, and this is very important as 
well to properly allocate scarce resources in a society. 
Whether or not the capital is not adequately there, whether or 
not the technological barriers have been overcome, whether or 
not there is sufficient understanding of how to market an 
account or lay out a business plan leads sometimes to the 
answer being, no, this is not a good fit for you because being 
in business, particularly entrepreneurial business, is risky, 
is a heavy lift. It takes not only a deep passion and a long 
view, but a lot of things to line up accordingly.
    In that regard, Mr. Yancey, I want to go back to that same 
question. What do you see evolving as new trends for 
entrepreneurs that mitigate those risk elements that increase 
the probability of success and, again, can provide a broader 
template as we are discussing this for SCORE to work with so 
that we could precisely identify real opportunities that are 
emerging that have strong probability of success?
    Mr. Yancey. As we address the needs of our clients that 
come in, you are right. The need to say no is something that we 
do often and try to do that without in any way damaging 
anybody's dreams or making them feel like they do not have the 
possibility of being successful at a point in time.
    We do see opportunities, franchise type opportunities where 
there is a model and there are systems and processes in place 
that can be replicated successfully. We talk more about the 
franchise opportunity these days than we have in the past.
    We also find that clients that come to us today are better 
prepared than they have been in the past, and I think the 
reason for that is the proliferation of information on the 
Internet and one's ability to go and search Small Business 
Start and see 39 million different opportunities to get 
information.
    That is certainly valuable, but information only goes so 
far, and we believe that what we provide is an opportunity for 
a small business owner to take that information, bring it into 
one of our counselors and allow us to help them understand how 
that or if that applies in their particular business 
environment.
    So I think, again, the franchise opportunity seems to be 
one that we see more, and certainly that we recommend when 
someone does not have really strong business background.
    Mr. Fortenberry. Well, again, let me leave you with a 
parting challenge to say that we are here to help creatively 
think through new policy opportunities that will strengthen 
America's entrepreneurial vision. This is a great growing 
trend, particularly among younger workers who do not project 
and see themselves out as being someone for 30 years in 
retirement and all of those other niceties which we use to 
structure our labor force.
    I think it is a great trend. It is very meaningful to 
people to be able to take the gift of their own two hands and 
their intellect and create a product and take full 
responsibility for that and, in turn, create a product that is 
good for society and have the fullness of returns to them and 
in the process maybe help some other families along the way 
with employment opportunities.
    So even though I think the Small Business Committee and the 
small business policies, the SBA and U.S. affiliated 
organizations really should be deeply gratified by the 
opportunity you have been given to help people at the most 
fundamental level, to provide well for themselves in an area 
that is deeply gratifying.
    To that end though, what I like to avoid is a conversation 
about, hey, here is the pie. We need a bigger slice. We need a 
bigger slice.
    Let's expand the size of the pie. Things that are not 
working, that are dated, that are from a previous era let's let 
go of. Things that need to be modernized, expanded because they 
have real benefit-to-cost ratios and high levels of return is 
what I want to hear about, and I think the Chairman and I are 
greatly disposed or being open to receiving that type of input 
from you all.
    Thank you.
    Ms. Sanderson. I would like to follow up with a couple of 
my questions that I had from earlier.
    Mr. Carroll, obviously, you have been an outstanding 
champion in our community, and I would kind of like to brag on 
what AdvantageWest has done in our communities, and so I would 
like you to share some of the ideas that you have had in the 
form of a question, but tell us more specifically how you have 
been able to organize a community.
    Your organization has helped implement economic growth 
strategies for the rural areas. The western part of North 
Carolina is a very rural area. We have three counties that have 
less than 10,000 people in population. It seems that one of the 
principles for Advantage West is using resources and 
partnerships to the greatest extent possible.
     Can you outline to the Committee why it is particularly 
important in rural areas to have these outlining groups to come 
in and help you to organize and to bring entrepreneurship 
throughout the region?
    Mr. Carroll. Thank you.
    I will briefly summarize what I mentioned earlier. In a 23-
county area like the AdvantageWest region, it is roughly the 
size of the State of Maryland, but due to the presence, 
thankfully, of both national and state parks in that landscape, 
our geography is a beautiful geography, but our population is 
just not that dense. Very much when you get outside of Ashville 
and Hendersonville, we reflect a landscape that would be 
representative of rural America.
    And so the leadership teams that are required to go through 
prerequisite training through the Center for Rural 
Entrepreneurship, RUPRE as it is called, are crucial to these 
very rural and small communities as you describe, Chairman 
Shuler.
    And we are excited about the momentum of the program. The 
14 leadership teams include 12 county-wide programs, the 
Eastern Band of the Cherokee Indian has developed a leadership 
team, and the most recent team to complete training was the 
Town of Black Mountain, a very small, quaint, little 
municipality.
    Each of these leadership teams have in common that they 
represent a cross-section of people in their given community. 
There are elected officials. There are people from the 
financial community, local business owners. We have made it a 
requirement that entrepreneurs be seated as members of each 
leadership team as they go through the certified 
entrepreneurial community checklist and meet all of their 
requirements.
    And I tend to believe that when you make progress, whether 
it is rural or urban America, generally people follow 
leadership, and they follow a sound plan and strategy. And I 
know that sounds like I am oversimplifying something that can 
be very challenging, but in essence, that is what this 
Certified Entrepreneurial Community Program is all about. It is 
putting some structure in place at the grassroots level. It is 
getting the right leaders in behind that structure, and then 
requesting that resources like the group that I am here with on 
the panel today be a part of that Certified Entrepreneurial 
Community effort so that we can deliver those programs and 
services more efficiently in, again, very rural communities.
    Chairman Shuler. How has the program worked in working with 
our panel here today? Describe some of the relationships and 
how it has worked and some of the benefits that the 
entrepreneurs receive from that.
    Mr. Carroll. Well, we are off to a very good start in that 
in our 23-county area we have a regional presence of SBA in 
Ashville, our urban center, and then for the rest of the 
region, again, that is so rural, we have SBTDC offices, one 
based at West Carolina University, the Western Carolina 
University campus in southwestern North Carolina. We have an 
office of SBTDC at Appalachian State University in Boone. All 
of that football publicity, people know where Boone is now, 
Appalachian State University.
    And in Ashville, a relationship with one of our financial 
institutions. Bank of America has provided some of their space 
for an SBTDC office in Ashville.
    And then in the Hickory MSA between Ashville and Charlotte, 
that part of the foothill counties we have the fourth SBTDC 
office in the region.
    Those SBTDC offices are beginning to work with us. You have 
to keep in mind that the Certified Entrepreneurial Community 
Program was just designed and launched in 2007, and as the 
communities begin to go through the checklist, the SBTDC field 
personnel are working with those local leadership teams, again, 
because there is a requirement that the leadership teams reach 
out to them.
    We think that over time we will pick up some economies of 
scale this way, and it will get that technical assistance and 
access to capital to entrepreneurs, not to say that they could 
not have gotten it otherwise. I believe in many cases they 
could. This will be a more structured and a more efficient way 
to deliver it through the 14 different communities that are 
participating.
    Chairman Shuler. Thank you.
    It gives me great pleasure to introduce our Chair of the 
Small Business Committee, the Chairwoman of Small Business, Ms. 
Velazquez.
    Ms. Velazquez. Thank you, Mr. Chairman, and thank you for 
holding this very important hearing, and Ranking Member 
Fortenberry.
    Mr. Prakash, I would like to address my first question to 
you, and that is regarding your emergent cities proposal that 
will draw resources from the agency's already strapped budget 
for very limited results, helping 200 inner city businesses. 
This is in comparison to a program like the Women's Business 
Center where, for example, the Canisius College Women's 
Business Center in Buffalo, New York, whose Director is 
testifying here today, assists on average 2,000 women per year, 
including many inner city women.
    Yet, as you know, this is with a grant that is 
approximately half of what you are spending on your entire new 
initiative.
    Given the cost of this new program and the limited 
deliverables, how can this be a good use of this agency's 
funds?
    Mr. Prakash. Thank you for the question, Madam Chairwoman.
    The Emerging 200 Program is sufficiently focused on an area 
of coverage that we currently just do not have coverage in. 
Currently, our best estimate is about less than ten percent of 
any of our resource--
    Ms. Velazquez. I am sorry. What did you just say, that they 
do not have coverage? What?
    Mr. Prakash. I am saying that less than ten percent of our 
nationwide coverage with our resource partners is in the inner 
cities in the United States.
    Ms. Velazquez. I would like for Mr. Wilson and Ms. 
Sanderson to comment on that.
    Mr. Prakash. Sure.
    Mr. Wilson. Madam Chair, I do not have a breakdown, but I 
will try to get that for you. Obviously whether it is St. Louis 
or Philadelphia or New York or Atlanta or wherever, we have 
SBDCs right downtown, and they are serving the inner city 
community.
    Obviously, as you know, with 25 million small business 
people across the country, if you took all of these, we are 
only reaching a part of them.
    Ms. Velazquez. But does that ten percent come right to you?
    Mr. Wilson. Ten percent might very well be a reasonable 
number. I am thinking of places like Georgia and Pennsylvania 
and New York. I would think in New York probably we are better 
than that.
    Ms. Velazquez. Mr. Prakash, let me go to Ms. Sanderson. I 
am sorry.
    Ms. Sanderson. Thank you for the question.
    The program, the Women's Business Center Program 
specifically, has about 100 federally funded programs right now 
in the whole country. So you know, there are limited, you know, 
ways that we can focus specifically on inner cities.
    We had a conversation at the break that many of these areas 
that are being targeted are urban that do not have a focus or 
do not even have a focus of Women's Business Center or maybe an 
SBDC Program.
    Ms. Velazquez. But do you really think that only ten 
percent of your centers are serving ten percent of the women in 
urban areas?
    Ms. Sanderson. Our numbers are not tracked that way. The 
way we track it is socioeconomically disadvantaged. That is how 
we are required to track it, and the Women's Business Center 
sees between 46 and 52 percent on an annual basis. So whether 
those women come from the inner city or not is not a focus. It 
is tracked in different ways. So I cannot answer the question.
    Mr. Blackwell. When we look at our minority numbers of over 
30 percent, Madam Chair, I would correct myself.
    Ms. Velazquez. I am sorry?
    Mr. Blackwell. When we look at SBDC overall counseling 
clients and training, which are over 30 percent minority, I 
would probably raise my estimate of coverage.
    Ms. Velazquez. At a time when the budget is being cut and 
at a time when the entire budget for SBA has been cut and the 
money for Women's Business Center and Small Business 
Development Centers, you have to ask yourself if the type of 
money that you are taking from this program is worth taking to 
finance 200 businesses. The return that you are going to get 
compared to the work and the goals that are achieved through 
the network of Small Business Development Centers across the 
nation and Women's Business Centers.
    Mr. Prakash. May I comment?
    Ms. Velazquez. I know the answer, but I want to tell you 
that $250,000 out of the money of the corps to fund--
    Mr. Prakash. That money is not coming from the Core, Madam 
Chairwoman.
    Ms. Velazquez. It is coming from the agency's budget.
    Mr. Prakash. It is a request.
    Ms. Velazquez. It is coming from--the cuts that have been--
from the agency whose budget has been cut almost 50 percent in 
the last six years. So when you talk about consolidating 
programs, when you talk about making government smaller, here 
you come and take money and create a new program.
    Let's talk about the language on the energy bill that you 
made reference to and the language on the H.R. 4253 for the 
vets program. I am going to read the language to you.
    ``Subject to amounts approved in advance in appropriations 
acts,'' that is the language for H.R. 4253. On the energy bill 
the language reads, ``Specifically in advance,'' and the energy 
bill goes further and says it takes the extraordinary step to 
include separate.
    So my question to you today is: what does advance mean?
    Mr. Prakash. Madam Chairwoman, the authorizing bill may 
very well say advance. It is the appropriations language that 
has said the $97,120,000 for grants. It did not specify Section 
21(a) grants, and we are being told also by your colleague, Ms. 
Clarke, we want to implement this bill. We want to support 
energy and support veterans, which is core to our mission, and 
we intend to do it, and we have reached a very nice 
accommodation to be able to support that as a pilot and none of 
the money is going away from the SBDC Program. It is simply 
supporting energy and veterans within the SBDC Program.
    Ms. Velazquez. My question is why don't you then use the 
$250,000 to do that.
    Mr. Prakash. This is a fiscal year 2008 implementation. We 
do not have those $250,000 to do that.
    Ms. Velazquez. My question is the statute reads ``subject 
to amounts approved in advance in appropriations acts.'' Are 
you going to request appropriations separate for the vets 
program?
    Mr. Prakash. We are going to be using one million dollars 
from the 97 million that was appropriated for grants.
    Ms. Velazquez. Why are you doing that?
    Mr. Prakash. That is the only grant pool that has been 
appropriated.
    Ms. Velazquez. It does not say that you are going to take 
money from that. It says separate from that amount of money, 
from that program.
    Mr. Prakash. There is no other grant pool to take from.
    Ms. Velazquez. Yes, but you know, we here passed the law, 
and you implement it. So it does not say that you are going to 
fund the vets grant program through the Corps money.
    Mr. Prakash. I think I am confused. We are here to 
implement laws. We look forward to implementing these laws. We 
support them.
    Ms. Velazquez. What I am trying to say--
    Mr. Prakash. But I am not sure how you expect us to fund 
them if we do not fund them from a grant pool.
    Ms. Velazquez. --that you have to use--well, the statute is 
very clear. It says it is separate. It says in advance in 
appropriations act, and what I am saying to you today is that 
you have to use a separate appropriation, and do not come to us 
with something different because then we are going to hold a 
hearing, and I am going to bring the Administrator to explain 
to us why you are doing what you are not supposed to do. That 
is not what the statute said.
    Mr. Wilson, you testified that the SBA has defined 
congressional intent in its interpretation of how the grant 
programs are to be funded. So based on the fact that the 
statute is clear, what do you intend to do? Are you going to 
file a lawsuit because they are in violation of the statute?
    Mr. Wilson. Madam Chair, the association probably does not 
have standing to file that suit, you know, and when you are 
trying to work with a partner, litigation is not an avenue that 
you would readily jump into.
    We have talked with a number of people, as you know. 
Michael and Tim and others have been so helpful to us, and Mr. 
Serrano's staff and Chairman Kerry's staff and others. We are 
not experts in writing appropriations statutes or authorizing 
statutes. We had thought it was clear. Working with your staff 
and Senator Kerry's staff and Ms. Snowe's staff, we had thought 
it was clear, but we have had others, some of Senator Durbin's 
staff and legal counsel of SBA--
    Ms. Velazquez. But the Parliamentarian of the House made it 
clear to us that the language that was submitted was in 
violation of House rule. If it is in violation of House rule, 
we cannot include such language.
    Mr. Wilson. Right, and so we had hoped, I think, as you 
did, as your staff and everyone on the Committee that that 
language was clear enough. Apparently SBA legal counsel views 
it differently, and I do not know that we are in a position to 
address that through litigation.
    I would hope that if there are disagreements among the 
agency lawyers and congressional staff and the authorizers and 
appropriators that perhaps language can be found that everyone 
can agree on its meaning, but we had, like you, we had thought 
that what you had done was adequate.
    Ms. Velazquez. What you need to do, what the administration 
needs to do is to read the statute, and I am going to read it 
again to you. ``Subject to amounts approved in advance in 
appropriations act, the administration may make grants or 
enter,'' and it continues.
    So it is quite clear, but do you know what? We created the 
Women's Procurement Program. We signed that into law. The 
administration refused to implement it, and the Women's Chamber 
of Commerce, first they want to work with the administration, 
but when they are in violation of the law, you have a remedy, 
and that is to bring a lawsuit and they did, and the court 
ruled in their favor.
    So it seems like women in this country, when they feel 
violated and that their rights are being violated, they will 
use the legal recourse that they have in front of them.
    Mr. Blackwell, you claim that the process for awarding 
grants to average centers was altered to increase the program's 
comprisment. Yet some of this year's grant recipients have no 
history of serving veterans.
    At the same time you terminated funding for average centers 
like the Boston one that focuses only on training veterans. 
This center has served over 4,000 clients over the past four 
years.
    Given the Veterans Corporation's limited budget, why would 
you fund organizations without experience over those who have 
demonstrated success assisting veterans?
    Mr. Blackwell. Thank you, Madam Chairwoman.
    The board faced a very difficult decision two years ago in 
that funds are limited and in order to maintain the national 
mandate of 106-50 serving nationwide programs, we decided to 
follow the lead of Women's Business Centers in competitive 
grants. Those competitive grants would be based on 
opportunities that exist, for example, in 1999. When 106-50 was 
passed there were very few, quote, veteran assistance centers 
around the country.
    Today there are literally hundreds, and those hundreds have 
demonstrated the ability--
    Ms. Velazquez. But can you explain to me why you do not 
fund the Boston Center while you fund the Technological and 
Research Development Authority and the Jewish Vocational 
Service in Boston, the Seattle Business Assistance Center? They 
have no experience, none. In their mission statement, if you go 
to, they have no experience.
    Mr. Blackwell. I understand that.
    Ms. Velazquez. They provide no services. So why are you 
going to terminate centers that have the experience, the 
capability, and the history of providing services to veterans 
and instead give to these who have no experience?
    Mr. Blackwell. I go back to the fact that the board decided 
on a competitive grant system in Fiscal Year 2006, and that 
competitive grant system, again, modeled after the Women's 
Business Centers, gave three centers that we funded in Fiscal 
Year 2007, Boston, St. Louis, and Flint, Michigan, the 
opportunity for a non-competitive grant program for that entire 
year.
    At that time they were told that they would be part of a 
competitive grant system for Fiscal Year 2008. That Fiscal Year 
2008 system had over 32 grants from 22 states compete for those 
grants, and--
    Ms. Velazquez. What is the success of the three centers 
that have been operating?
    Mr. Blackwell. Those charts are in my written performance, 
and we evaluate those every quarter. Their success rates are 
good. The organizations--
    Ms. Velazquez. So why are you not providing the money for 
them if they are good?
    Mr. Blackwell. It is very simple. We could only fund the 
top eight according to our grants committee review. There are 
32 other grants that are there.
    Ms. Velazquez. Are you telling me that those who have no 
experience, no track record, no history, no capability, that 
they score better than those who have been on the ground 
providing the service?
    Mr. Blackwell. No, I am not telling you that. I am telling 
you that these centers are--
    Ms. Velazquez. Let's go to the next question.
    Mr. Blackwell. --qualified through the grants--
    Ms. Velazquez. Mr. Blackwell, the act creating the Veterans 
Corporation required that your organization develop and 
coordinate relationships with a number of federal agencies, 
such as DOL, DoD, and the Department of Commerce. Additionally, 
you were to work with SCORE and SBDCs.
    It seems that over the past to years or few years the 
corporation has ignored this mandate. In the last 12 months, 
what has been your interaction or partnership with any of these 
agencies or resource partners?
    Mr. Blackwell. I would be happy to answer that. In December 
of 2007, we co-sponsored the Department of Defense's Doing 
Business with DoD Show--
    Ms. Velazquez. But previous to that, since you have been 
operating. So talk to me about all of the coordination that you 
have been doing--
    Mr. Blackwell. Oh, I would be happy--
    Ms. Velazquez. --in accordance to the mandate.
    Mr. Blackwell. We work with almost every agency, except 
Agriculture, and they just have not had an opportunity to do 
that.
    Ken Yancey at SCORE and I have been working together for my 
entire three-year tenure. We send through our portal at TVC 
site three to 500 people a day to Ken's counseling center.
    Mr. Wilson and I have a memorandum of understanding since 
my tenure three years ago, and we worked literally last Friday. 
Mr. Wilson's organization and mine did a ribbon cutting in 
Scranton, Pennsylvania for a young vet who has started his own 
mining company.
    Ms. Velazquez. That was last Friday.
    Mr. Blackwell. That was last Friday.
    Ms. Velazquez. Previous to that, besides doing a workshop 
in December.
    Mr. Blackwell. I speak at Mr. Wilson's conferences. We work 
on programs together. We have an active memorandum of 
understanding.
    In terms of DOE, we work very closely with the Department 
of Energy.
    Ms. Velazquez. Okay. Specific initiative with the 
Department of Energy.
    Mr. Blackwell. We co-sponsor their annual event. We co-
sponsor the Eighth Annual Event for Small Business Conference 
in June of last year.
    Ms. Velazquez. You sponsor their annual event. Is that 
solely for veterans?
    Mr. Blackwell. No. Veterans comprise a large number of 
those things.
    Ms. Velazquez. Mr. Blackwell, TVC was basically a charter 
with three missions: to establish a professional certification 
advisory committee; to engage the major federal agencies and 
partner with them to assist vets; and finally, to establish and 
maintain a network of information and assistance centers.
    Given that the first two mandates have not been met, it 
seems the corporation will have more resources to insure a 
solid framework of centers to assist veterans. However, we 
understand that the three centers TVC was responsible for 
funding are all about to close.
    What efforts has the organization pursued to insure that 
the three centers in Boston, Missouri and Michigan will not 
close?
    Mr. Blackwell. Well, we are very concerned about their fate 
as well as we are our own.
    Ms. Velazquez. I know that you are very concerned. What are 
you going to do so that they do not close?
    Mr. Blackwell. We are very actively involved in trying to 
find private funding. A lot of my time is being put on finding 
that outside private sector funding.
    Ms. Velazquez. Okay. Let me make this clear to you. Then 
Chairman Talent and I worked very hard to create this 
legislation, to pass this legislation, and we spent a lot of 
time in putting this together, and I promise you that I intend 
to spend a lot of time to make sure that the Vets Corps gets 
back on track. And so you and I, we are going to be seeing each 
other a lot.
    Mr. Blackwell. Well, we will welcome this opportunity.
    Ms. Velazquez. And we will intend to hold oversight 
hearings to make sure that the Vets Corps accomplishes what it 
sets out to do, and that is not to close centers and open three 
million centers and dilute the resources that you do not have.
    So let's make sure that the mission of this corporation is 
achieved, and we are going to be seeing each other quite a bit.
    Mr. Blackwell. Thank you, Madam Chairman.
    Ms. Velazquez. Thank you, Mr. Chairman.
    Chairman Shuler. Thank you, Madam Chair.
    I guess I forgot to mention fasten your seatbelts.
    [Laughter.]
    Chairman Shuler. I would like to have follow-up questions. 
Ms. Clarke has a couple more questions. So Ms. Clarke from New 
York.
    Ms. Clarke. Thank you, Mr. Chairman.
    Just a follow-up to Mr. Blackwell, just one. I have a 
concern that I would like you to address on the record here 
today, and that is recently reading in the New York Times March 
5th that the Senate Small Business Committee launched an 
investigation into a shortfall at the National Veterans 
Business Development Corporation. Can you please tell us why 
your organization is being investigated, one?
    Two, why did your organization receive only 1.5 million in 
funding last year?
    And, three, how do you expect to run your program 
efficiently and effectively on only $1.5 million?
    Mr. Blackwell. Well, let me start with the latter. The 
simple facts are there are 4.2 million veteran companies in the 
United States. I cannot even send them a stamped envelope, let 
alone provide a service if I were just be chartered to support 
them.
    Secondarily, we are very concerned obviously because $1.5 
million does not go very far when you start talking about 
serving a nation.
    To your first question, the real issue is we are not 
terribly sure why they are doing that. We have provided and 
been in compliance with Senator Kerry and Senator Snowe and 
given them information on our 2007 activities in the annual 
report, our audit, and all the other materials they have asked 
for, including our strategic plan from 2008 to 2012.
    We are more than happy to work with them and to resolve 
this issue because our staff of three, which is literally 50 
percent of where we were six months ago, has a very deep 
commitment along with our board to supplying veterans services 
across the country. It is very, very, very difficult to do that 
when you are talking about over 600,000 young men and women who 
have served our country nobly who have come back recently from 
Iraq and Afghanistan.
    Ms. Clarke. Just as a follow-up, so why did your 
organization receive only 1.5 million in funding last year?
    Mr. Blackwell. Well, the Public Law 106-50 is out of 
authorization in 2004, and thanks to Congress, we have been 
able to apply for and receive appropriations in 2005, 2006, 
2007 and in 2008, and those numbers decrease. We are very 
grateful to Congress for keeping our veteran entrepreneurship 
hopes alive through this organization.
    We had approved in the house 2.5 million, as you may know. 
It went to the Senate, and out of conference it came back at 
1.41. So we were very disappointed.
    To the Chairwoman's comment, we would have been able to 
give a lot more grants this year had we been given the 2.5 out 
of the Senate. So it is very disconcerting to the board and to 
the professional leadership that dollars are decreasing at a 
time when demand is increasing.
    Ms. Clarke. My final question is to Ms. Sanderson. Ms. 
Sanderson, Women's Business Centers have faced reductions 
across the board due to inadequate budget resources. Can you 
tell this Committee in detail how this has impacted your 
center?
    You know, this is a major concern. I think the fastest 
growth in small business has taken place in women-owned 
businesses across the board, and the type of supports that we 
believe are required have not been stated explicitly here 
today.
    We also want to acknowledge the overlap that is taking 
place. In other words, women veterans, you know, what type of 
attention are they being given in the entrepreneurial sphere as 
well?
    So if you could just address that for us.
    Ms. Sanderson. Yes, thank you for the question.
    Specifically regarding women veterans, we had a focus group 
with all of our local veteran leaders. We have got a leader on 
our board of directors who is currently employed with the 
county in western New York, and so we do a lot of really 
thinking, strategic thinking, about how we reach out to these 
special groups.
    And last year the Women's Business Center received more 
funding than it had in the past. We were up to 13 from 12.8, 
and for my particular program and the program that I run, we 
have a sustainability plan, a sustainability plan and a 
strategic plan that really forces us to look strategically at 
our resources and to creatively come up with diversified 
streams of revenue. It is the only way that we are going to 
sustain the organization.
    And I think that that is really important for Women's 
Business Centers. I think it should be part of the RFP, that in 
year three of their five-year grant, they should put a 
sustainability plan together because that is what we did and it 
actually preceded our strategic plan, which called for us 
partnering with corporations and foundations and individuals, 
as well as defining the needs and designing programs that met 
the needs, did not duplicate, but collaborated with other 
resource partners and, you know, charged a fair price for the 
products and services that we are delivering.
    And specifically for the socioeconomically disadvantaged 
and the inner city clients that we serve, we scholarship them 
into our programs because we believe that that is core to our 
mission and is one of our core values.
    Thank you for the question.
    Ms. Clarke. Thank you very much, Mr. Chairman.
    I noticed Mr. Prakash taking some notes there. I think that 
that is an important component, the sustainability of these 
technical assistance and development centers within our 
communities. You know, economic times change, and certainly I 
think, Mr. Blackwell, you may be seeing some of that in terms 
of your expectations.
    It is really important that we, you know, think outside the 
box and look at how we can leverage what we are receiving. We 
expect that the dollars that we are able to appropriate to you, 
that they are maximized and they are not diluted, which is one 
of the issues and concerns that our Chairwoman has.
    At the same time we have got to think smart, and we have 
got to be able to leverage this for the future of our economy.
    Thank you very much, Mr. Chairman.
    Chairman Shuler. I would again like to recognize the 
Chairwoman, Ms. Velazquez.
    Ms. Velazquez. Thank you very much.
    I just a copy of a letter that I sent to Administrator 
Preston, that Mr. Edward Rose answered on his behalf to me, and 
I am going to read what he sent, what I asked him for him to 
respond and what was his response to the subject that I raised 
in my letter.
    ``Administrator Preston asked me to respond to your letter 
of May 16th, 2007, regarding the Small Business Development 
center Program. You inquired as to whether proposed legislative 
language will provide guidance that SBDC based on program 
funding is separate from the funding of other proposed SBDC 
related grant initiatives. The language in question reads,'' 
and this is right after Mr. Shuler's energy bill passed, 
``'Subject to amounts approved in advance in appropriations 
acts and separate from amounts approved to carry out Section 
21,''' and it goes on.
    This is his response. ``SBA assumes its placement will be 
in a separate paragraph of the Small Business Act in the 
absence of any other writing or conflicting statutory 
provisions in the authorizing or appropriations statute. This 
proposed language, maintain the main SBDC program baseline 
funding separate from that of any other enacted SBDC related 
grant initiative programs.''
    So, sir, why is it that administrative officials tell me 
and this Committee something and you come here and tell me 
something else?
    Mr. Prakash. Well, Madam Chairwoman, there was a key 
sentence in there, and that was in absence of any conflicting 
authorizing and appropriating language, and what we have heard, 
and I am not the General Counsel. This is my General Counsel 
advising me, and I think it is correct, is that the authorizing 
language and the appropriations language--
    Ms. Velazquez. Okay. Yes, I hear what you are saying.
    Mr. Prakash. --was conflicting. The appropriations language 
overrides that language.
    Ms. Velazquez. Sir.
    Mr. Prakash. And it was not referred to as 21(a) funding.
    Ms. Velazquez. Your legal counsel, you made reference to 
your legal counsel. Can you tell me right here right now when 
did your legal counsel approach the Committee staff regarding 
this language so that they concluded what they concluded?
    Mr. Prakash. There have been many conversations with 
Committee staff, both with counsel, with our Legislative 
Affairs group.
    Ms. Velazquez. No.
    Mr. Prakash. Both on the Senate and the House side.
    Ms. Velazquez. None.
    Mr. Prakash. I would be happy to provide that in writing 
when those meetings took place. I know there were several 
visits, and I am not sure who attended, but there were several 
conversations.
    Ms. Velazquez. I will maintain my previous statement, and 
that is you will request funding that is separate from the ABDC 
for the grant program, and if not, we will hold a hearing and 
the Administrator will come and will answer.
    Thank you, Mr. Chair.
    Chairman Shuler. Thank you.
    I would like to thank all of the witnesses for their 
testimony today. I look forward to working with my colleagues 
to address some of the issues that were raised today.
    This hearing is adjourned.
    [Whereupon, at 12:49 p.m., the Subcommittee meeting was 
adjourned.]

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