[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]



                       FULL COMMITTEE HEARING ON
                THE STATE OF THE SBA'S ENTREPRENEURIAL 
                DEVELOPMENT PROGRAMS AND THEIR ROLE
                   IN PROMOTING AN ECONOMIC RECOVERY
=======================================================================

                      COMMITTEE ON SMALL BUSINESS
                             UNITED STATES
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED ELEVENTH CONGRESS

                             FIRST SESSION

                               __________

                              HEARING HELD
                           FEBRUARY 11, 2009

                               __________

                  [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

            Small Business Committee Document Number 111-005
Available via the GPO Website: http://www.access.gpo.gov/congress/house
                                 ------

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                   HOUSE COMMITTEE ON SMALL BUSINESS

                NYDIA M. VELAZQUEZ, New York, Chairwoman
                          DENNIS MOORE, Kansas
                      HEATH SHULER, North Carolina
                     KATHY DAHLKEMPER, Pennsylvania
                         KURT SCHRADER, Oregon
                        ANN KIRKPATRICK, Arizona
                          GLENN NYE, Virginia
                         MICHAEL MICHAUD, Maine
                         MELISSA BEAN, Illinois
                         DAN LIPINSKI, Illinois
                      JASON ALTMIRE, Pennsylvania
                        YVETTE CLARKE, New York
                        BRAD ELLSWORTH, Indiana
                        JOE SESTAK, Pennsylvania
                         BOBBY BRIGHT, Alabama
                        PARKER GRIFFITH, Alabama
                      DEBORAH HALVORSON, Illinois
                  SAM GRAVES, Missouri, Ranking Member
                      ROSCOE G. BARTLETT, Maryland
                         W. TODD AKIN, Missouri
                            STEVE KING, Iowa
                     LYNN A. WESTMORELAND, Georgia
                          LOUIE GOHMERT, Texas
                         MARY FALLIN, Oklahoma
                         VERN BUCHANAN, Florida
                      BLAINE LUETKEMEYER, Missouri
                         AARON SCHOCK, Illinois
                      GLENN THOMPSON, Pennsylvania
                         MIKE COFFMAN, Colorado

                  Michael Day, Majority Staff Director
                 Adam Minehardt, Deputy Staff Director
                      Tim Slattery, Chief Counsel
                  Karen Haas, Minority Staff Director

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

                                  (ii)



                         STANDING SUBCOMMITTEES

                                 ______

               Subcommittee on Contracting and Technology

                     GLENN NYE, Virginia, Chairman


YVETTE CLARKE, New York              AARON SCHOCK, Illinois, Ranking
BRAD ELLSWORTH, Indiana              ROSCOE BARTLETT, Maryland
KURT SCHRADER, Oregon                TODD AKIN, Missouri
DEBORAH HALVORSON, Illinois          MARY FALLIN, Oklahoma
MELISSA BEAN, Illinois               GLENN THOMPSON, Pennsylvania
JOE SESTAK, Pennsylvania
PARKER GRIFFITH, Alabama

                                 ______

                    Subcommittee on Finance and Tax

                    KURT SCHRADER, Oregon, Chairman


DENNIS MOORE, Kansas                 VERN BUCHANAN, Florida, Ranking
ANN KIRKPATRICK, Arizona             STEVE KING, Iowa
MELISSA BEAN, Illinois               TODD AKIN, Missouri
JOE SESTAK, Pennsylvania             BLAINE LUETKEMEYER, Missouri
DEBORAH HALVORSON, Illinois          MIKE COFFMAN, Colorado
GLENN NYE, Virginia
MICHAEL MICHAUD, Maine

                                 ______

              Subcommittee on Investigations and Oversight

                 JASON ALTMIRE, Pennsylvania, Chairman


HEATH SHULER, North Carolina         MARY FALLIN, Oklahoma, Ranking
BRAD ELLSWORTH, Indiana              LOUIE GOHMERT, Texas
PARKER GRIFFITH, Alabama

                                 (iii)



               Subcommittee on Regulations and Healthcare

               KATHY DAHLKEMPER, Pennsylvania, Chairwoman


DAN LIPINSKI, Illinois               LYNN WESTMORELAND, Georgia, 
PARKER GRIFFITH, Alabama             Ranking
MELISSA BEAN, Illinois               STEVE KING, Iowa
JASON ALTMIRE, Pennsylvania          VERN BUCHANAN, Florida
JOE SESTAK, Pennsylvania             GLENN THOMPSON, Pennsylvania
BOBBY BRIGHT, Alabama                MIKE COFFMAN, Colorado

                                 ______

     Subcommittee on Rural Development, Entrepreneurship and Trade

                  HEATH SHULER, Pennsylvania, Chairman


MICHAEL MICHAUD, Maine               BLAINE LUETKEMEYER, Missouri, 
BOBBY BRIGHT, Alabama                Ranking
KATHY DAHLKEMPER, Pennsylvania       STEVE KING, Iowa
ANN KIRKPATRICK, Arizona             AARON SCHOCK, Illinois
YVETTE CLARKE, New York              GLENN THOMPSON, Pennsylvania

                                  (iv)






                            C O N T E N T S

                              ----------                              

                           OPENING STATEMENTS

                                                                   Page

Velazquez, Hon. Nydia M..........................................     1
Graves, Hon. Sam.................................................     2

                               WITNESSES

Dorfman, Ms. Margot, CEO, U.S. Women's Chamber Of Commerce.......     3
Wolfe, Mr. Chuck, President, Claggett Wolfe Associates, Auburn, 
  CA.............................................................     5
Cartwright, Mr. Jerry, State Director, Florida SBDC, University 
  Of West Florida, Pensacola, FL.................................     7
Gregg, Ms. Carol A., President & Owner, Flexible Staffing, 
  Chillicothe, MO................................................     9
Wrigley, Ms. Barbara, Executive Director, Association Of Women's 
  Business Centers, Springfield, VA..............................    11
Blackburn, Mr. Ron , President, Aspira...........................    13

                                APPENDIX


Prepared Statements:
Dorfman, Ms. Margot, CEO, U.S. Women's Chamber Of Commerce.......    24
Wolfe, Mr. Chuck, President, Claggett Wolfe Associates, Auburn, 
  CA.............................................................    29
Cartwright, Mr. Jerry, State Director, Florida SBDC, University 
  Of West Florida, Pensacola, FL.................................    34
Gregg, Ms. Carol A., President & Owner, Flexible Staffing, 
  Chillicothe, MO................................................    41
Wrigley, Ms. Barbara, Executive Director, Association Of Women's 
  Business Centers, Springfield, VA..............................    44
Blackburn, Mr. Ron , President, Aspira...........................    50

                                  (v)



 
                       FULL COMMITTEE HEARING ON:
                   THE STATE OF SBA'S ENTREPRENEURIAL
                          DEVELOPMENT PROGRAMS
                      AND THEIR ROLE IN PROMOTING
                          AN ECONOMIC RECOVERY


                              ----------                              


                      Wednesday, February 11, 2009

                     U.S. House of Representatives,
                               Committee on Small Business,
                                                    Washington, DC.
    The Committee met, pursuant to call, at 1:00 p.m., in Room 
2360, Rayburn House Office Building, Hon. Nydia Velazquez 
[chairman of the Committee] presiding.
    Present: Representatives Velazquez, Dahlkemper, Schrader, 
Ellsworth, Sestak, Bright, Halvorson, Graves, Buchanan, 
Luetkemeyer, and Coffman.
    Chairwoman Velazquez. I call this hearing of the House 
Small Business Committee to order.
    Even during times of prosperity, starting and running a 
small business is an enormous undertaking. From drafting their 
first business plan to learning how to navigate the Tax Code, 
entrepreneurs are on a perpetual learning curve. Historically, 
SBA has helped simplify the process through its entrepreneurial 
development programs, or ED. Today those initiatives have the 
potential to play an even more critical role by encouraging 
small business growth and creating new jobs for American 
workers.
    Much of the debate surrounding the new stimulus hinges on 
the importance of creating jobs. Once enacted, the bill will 
help entrepreneurs do exactly that. But even after restoring 
stability, challenges will remain. With a renewed emphasis on 
SBA's entrepreneurial development programs, small firms will be 
able to take full advantage of the Recovery Act.
    In today's hearing, we will explore the role that these 
programs play in advancing economic recovery. Entrepreneurial 
development is critical to small business success. In fact, 
firms that receive this kind of assistance are twice as likely 
to succeed as those that don't. From executive mentoring to 
veterans' business initiatives, they help new and experienced 
entrepreneurs gain access to the tools they need to flourish. 
But perhaps, most importantly, this program fosters job 
creation and economic growth. That is exactly what we need 
today--job creation--so that we can get this economy growing 
again.
    Following the recession of the mid-1990s, small firms 
created 3.8 million new jobs. Not surprisingly, that era was 
marked by an enormous uptake in entrepreneurship. In fact, 25 
percent of laid-off managers over the age of 40 went on to 
start their own small businesses. Fortunately, there is no 
shortage of that same entrepreneurial spirit today. Each month, 
400,000 new companies crop up across the country. That is 
400,000 entrepreneurs looking to create new industry here in 
the United States.
    Imagine if each and every one of those businesses had 
advisors to help them draft viable business plans. That is the 
kind of guidance that small firms could really use, and that is 
the kind of support that entrepreneurial development programs 
provide.
    The challenges facing small firms are different today than 
they were in the past. In order for entrepreneurs to have the 
same catalyzing effect they had in the 1990s, they will need 
all the tools available. This is particularly true for 
businesses in low income communities. Those are the areas that 
have been hardest hit by the recession and are most in need of 
economic development.
    ED programs provide small firms with the resources they 
need to expand. Just last year, entrepreneurial development 
helped generate 73,000 new jobs and drove $7.2 billion into the 
economy.
    Through programs like Mentorship and Distance Learning, SBA 
has helped countless small firms get off the ground. At the 
same time, it has counseled thousands of experienced 
entrepreneurs looking to expand. And at the end of the day, 
every one dollar spent on these programs puts another $2.87 
back into the economy. That is a 287 percent return on 
investment--doing much better than Wall Street, believe me.
    [Laughter]
    And just the kind of economic stimulus we need right now.
    It is no secret that times are tough. In January alone, 
600,000 Americans were laid off. That figure tops off the 3.6 
million positions shed since the recession began. The writing 
is on the wall. We need to stop the losses, and we need to 
replace the jobs that are already gone.
    While there is no silver bullet solution to our economic 
troubles, small businesses promise the surest path to recovery. 
Entrepreneurial development programs can help jumpstart that 
recovery.
    So let me take this opportunity to thank all of the 
witnesses for taking time, especially now when small businesses 
need you to be out there providing the technical assistance and 
the kind of business planning guidance that they need, to be 
with us to offer your insights as to how these programs are 
doing and what type--given the times that we are in, what type 
of changes or modifications we need to make to get these 
programs to be more effective, cost effective, and efficient.
    So I look forward to hearing from you today, and now I 
yield to the Ranking Member, Mr. Graves, for his opening 
statement.
    Mr. Graves. Thank you, Madam Chair, and thank you for 
holding this hearing examining the SBA's entrepreneurial 
development programs and the challenges that entrepreneurs face 
in this volatile economic climate. And I, too, would like to 
thank all the witnesses for being here. I know some of you 
traveled a long way. We do appreciate your input and appreciate 
your being here today.
    I think everyone can agree that a good business plan is the 
cornerstone of any successful small business. Creating and 
executing a business plan requires extensive business knowledge 
and ingenuity, including the ability to predict potential 
obstacles to success that may unfold at just about any time.
    The entrepreneurial development programs of the Small 
Business Administration provide new and existing entrepreneurs 
with solid business knowledge to provide continued guidance to 
aid their growth. Entrepreneurial development programs have 
become a critical tool for many small businesses across 
America. Whether it is helping a small business owner export a 
product, develop a marketing scheme, or obtain financing, that 
entrepreneur is almost always more successful after working 
with a small business development center, SCORE, or a women's 
business center.
    Today's current economic climate provides an even more 
difficult path to success than it has before. Small businesses 
are finding it increasingly difficult to meet their bottom 
line, much less become a thriving business. Creative methods 
are being employed by entrepreneurs throughout the country as 
they try to figure out for themselves how to survive in this 
new economic climate.
    As small businesses work to survive, the entrepreneurial 
development programs of the SBA need to be reassessed in order 
to ensure that they are providing the most effective assistance 
to small businesses. As we begin to look at the current state 
of the SBA's entrepreneurial development programs, I believe it 
is important to retool programs to meet the demands of today's 
environment. We also must examine the entrepreneurial programs 
outside the SBA and look for ways to consolidate efforts in 
order to provide the best service for all small business 
owners.
    Again, I want to thank the Chairwoman for having this 
hearing today, and look forward to hearing what our witnesses 
have to say.
    Chairwoman Velazquez. Thank you, Mr. Graves.
    And now it is my pleasure to welcome back Ms. Margot 
Dorfman. She is the CEO and founder of U.S. Women's Chamber of 
Commerce. Ms. Dorfman has championed opportunities to increase 
women's business growth, career, and leadership advancement. 
She is here to testify on behalf of the U.S. Women's Chamber of 
Commerce, which was founded in 2001 to increase economic growth 
opportunities for women.
    Welcome.

                  STATEMENT OF MARGOT DORFMAN

    Ms. Dorfman. Thank you. Chairwoman Velazquez, Ranking 
Member Graves, members of the Committee, I thank you once again 
for this opportunity.
    I am here today on behalf of the U.S. Women's Chamber of 
Commerce, representing over 500,000 members and the millions of 
small businesses who are in need of assistance as they seek to 
grow profitable businesses to provide income for themselves, 
their families, and their communities. America needs 
entrepreneurial development programs that match our challenging 
economic times. We cannot afford to simply rubber-stamp 
existing programs and add increases to an old budget.
    We are in a fragile economic crossroad that demands our 
government focus every taxpayer dollar towards productivity and 
assisting that entrepreneurs receive quality expedient 
education and financial assistance. Over the last 50 years, the 
SBA entrepreneurial development system has grown into a 
fragmented array of programs, which has resulted in a 
disorganized overlapping and efficient delivery of service 
through a system that is ill-prepared to effectively address 
the challenges of our economy.
    Looking to the past, the evidence of failure is profound. 
During the last decade, the most impressive new spirit of 
entrepreneurship came from our new minority and women 
entrepreneurs. But while the number of new minority and women-
owned firms grew dramatically, the average revenues generated 
by these firms actually declined.
    Even though the number of women-owned firms grew 42.3 
percent between 1997 and 2006, their combined annual sales grew 
only by 4.4 percent. The average annual sales for a women-owned 
firm dropped 36 percent.
    Minority business owners have seen the same lackluster 
results. Over the last decade, the number of minority-owned 
firms increased 35 percent, but their gross receipts only 
increased 13 percent. The average annual sales for a minority-
owned firm dropped 16 percent.
    Another disturbing statistic should be noted. While 
entrepreneurship has long been considered a pathway to 
increased wealth in America, the marked decline in the 
fulfillment of this promise has shown in the period of 1984 and 
2004. A 2007 SBA report finds that families owning businesses 
are significantly less likely to be high-income earners in 2004 
than in 1989.
    The collapse of the U.S. manufacturing base, Katrina, and 
9/11 have shown us that our entrepreneurial needs are 
experiencing regional shifts, and tragedy can strike at an 
instant, creating the need for urgent responses. For the first 
time, women now exceed men in the labor force, because many of 
the manufacturing and higher paying jobs have vanished. Many 
men may now turn to entrepreneurship to help feed their 
businesses and small families.
    If we are to serve the needs of American entrepreneurs, we 
must commit to a top to bottom restructuring of the delivery of 
the entrepreneurial services of the SBA. The myriad of 
entrepreneurial development programs should be unified into one 
centrally managed organization that has the flexibility to 
provide services when and where they are needed.
    With one unified system, the SBA can provide a much 
stronger, coordinated response than the current patchwork 
system. One example is the Women's Business Center Program. It 
is clear women business owners are among those emerging market 
businesses that have not been well served, and it is paramount 
that these firms work side by side with male business owners 
for a number of important reasons.
    Studies have shown that there are real differences in the 
backgrounds and resources available to male business owners. 
Male business owners have a greater history of entrepreneurial 
experience than women, better business networks, and greater 
access to capital. These are attributes to which women should 
be exposed instead of segregated.
    The SBDC network should be used as the foundation for a new 
unified delivery platform that includes women and minority 
entrepreneurs, along with broad community accountability for 
the effectiveness of their outreach and delivery of value. This 
network should be transformed into a broad-based system of 
flexible entrepreneurial centers, which include consistent 
quality education, counseling, incubators, and access to 
capital, and the implementation of a top-tier e-learning 
system.
    And Congress should define an external process to measure 
the results of SBA entrepreneurial programs, looking at both 
micro and macro views. It is vitally important for Congress to 
act now to unify, streamline, modernize, and right-size the SBA 
entrepreneurial development programs.
    Thank you.
    [The prepared statement of Ms. Dorfman is included in the 
appendix at page 24.]
    Chairwoman Velazquez. Thank you.
    Our next witness is Mr. Chuck Wolfe. Mr. Wolfe is the 
President of Claggett Wolfe Associates in Auburn, California. 
Mr. Wolfe founded two technology startups and has worked with 
numerous small businesses in planning, marketing, and capital 
acquisition. Claggett Wolfe Associates provides management and 
economic development consulting to small and medium-sized 
businesses, academic institutions, and domestic and foreign 
public officials.
    Welcome, and you will have five minutes.

                    STATEMENT OF CHUCK WOLFE

    Mr. Wolfe. Thank you, Madam Chairwoman, and honored members 
of the Small Business Committee. As you said, my name is Chuck 
Wolfe, and I am the President of Claggett Wolfe Associates, an 
economic development consulting firm specializing in working 
with public, private, and academic clients around the world to 
basically develop strategies and programs to support small and 
medium enterprise development. I am also a serial entrepreneur 
and have started and operated five businesses over the last 25 
years.
    To put things in context, my perspective comes from having 
worked with or evaluated 30 SBDCs and SCORE chapters in 14 
states over the last 18 years, also serving as a small business 
counselor and instructor, running a nonprofit business 
assistance organization, and co- authoring a book on best 
practices in business incubation.
    As to the state of SBA's entrepreneurial development 
programs, I see that the SBA has a wide range of existing 
programs and resources to assist small businesses. If someone 
from the outside were to review each program's mission, 
objectives, and offerings, they would conclude that this is an 
ideal setup for helping our entrepreneurs and small business 
owners.
    Unfortunately, only 20 to 25 percent of the programs I have 
encountered meet this standard. In addition, I have found 
valuable information and online courses on program-affiliated 
websites. However, most are inconsistent in their offering, 
general in their content, and difficult to navigate. In general 
terms, we have found that the SBA's entrepreneurial development 
programs have a top- down, one-size-fits-all approach that is 
reactive versus proactive.
    In addition, most programs are not fully integrated into 
the broader economic development efforts or customized to meet 
the needs of specific industry segments. There are many causes 
for these conditions, ranging from lack of funding, the methods 
used to allocate funding and track performance, the inefficient 
use of resources, and the organizational structure of SBA 
itself.
    But what I wanted to talk about was the role, as I see it, 
for the SBA entrepreneurial development programs in promoting 
an economic recovery. There are many areas that need 
improvement, but there are also many tools already in the 
toolbox. To maximize the impact of SBA's programs, I would 
recommend the following actions.
    First, align the programs more effectively with local, 
regional, and state economic development efforts in the 
industries they have targeted for economic stabilization and 
growth. Second, establish a more proactive program delivery 
structure involving client filtering, customization of service 
offerings and defined milestones, and active outreach by 
program staff who serve more as facilitators and coaches rather 
than as technical service providers.
    Third, build an extensive topic and industry-specific 
provider network that can be accessed by any SBA program 
provider to meet a business' needs regardless of their 
location. Fourth, develop and implement a system to train and/
or certify SBA program staff, volunteers, and outside service 
providers, by skill area, industry specialization, and 
experience in small business.
    Fifth was develop a more comprehensive and integrated web 
platform that supports all SBA programs. This would utilize 
technology such as video conferencing, e-mail, blogs, to link 
network providers to client businesses regardless of location. 
Another part would be to provide relevant web content 
aggravated by industry segment, stage of business development, 
and level of need. Another component would be to provide a more 
consistent home page format for the SBDC and WBC websites that 
allows for state and local content and imagery but conveys a 
consistent brand.
    Next would be to design all websites to promote solutions, 
such as marketing, finance, and human resources, not programs, 
in a familiar fashion, the way that the Kaufman Foundation has 
developed with its eVenturing website, and Inc Magazine has 
developed with its inc.com website.
    The sixth point was to develop and implement a centralized 
customer rating and usage system for all program resources and 
services similar to the star rating system used by YouTube and 
eBay. The system should have both public and private reporting 
areas designed to collect user input and improved program 
performance while protecting individual counselors, service 
providers, and program staff.
    We are living in the age of Google, Facebook, Wikipedia, 
and other web-based platforms that have changed the way people 
interact and do business. And we need to refresh SBA's 
programs, services, and delivery, in line with those changes.
    Our need is now, and it will be important to respond 
quickly to support the startups and existing small businesses 
that will play an important part in our economic recovery. 
Madam Chairwoman, I commend you and the members of the Small 
Business Committee on your efforts to support our economic 
recovery, and I thank you for the opportunity you have given me 
to present my testimony.
    [The prepared statement of Mr. Wolfe is included in the 
appendix at page 29.]
    Chairwoman Velazquez. Thank you, Mr. Wolfe.
    Our next witness is Mr. Jerry Cartwright. Mr. Cartwright is 
the State Director for the Florida Small Business Development 
Center Network in Pensacola, Florida. Mr. Cartwright has been 
with the SBDC program for 25 years and serves on the 
Association of SBDC's Board of Directors.
    The Florida network is the only statewide economic 
development technical assistance provider. The program focuses 
on enhancing trade opportunities for small- scale enterprises.
    Welcome, sir.

                 STATEMENT OF JERRY CARTWRIGHT

    Mr. Cartwright. Thank you, Madam Chair. I currently serve 
as the Chairman of the Board of the Association of Small 
Business Development Centers, and I am very honored to be here 
today to have you hear our views.
    Some 900 individual SBDC service centers and approximately 
5,000 professionals are in place providing expert counsel in 
management and technical areas critical to--
    Chairwoman Velazquez. Excuse me, sir. Do you have the mic 
on? Is it?
    Mr. Cartwright. Yes, I did. How is that? Small businesses 
are adjusting to survive in a historic decline in spending, 
which means potentially greater layoffs and closures. Madam 
Chair, your efforts to increase funding for the SBDCs has 
increased assistance to small businesses. However, state 
revenues have declined sharply, and SBDC budgets are being cut 
to help balance budgets.
    Compared to 2001, SBDC national counseling is down by some 
60,000 businesses, directly due to declining capacity. Training 
programs are down by 109,000, also due to a decline in capacity 
and a shift in priorities to long-term counseling. During this 
same period, many states have closed operations and/or 
eliminated business consultants.
    Some have seen host institutions leave the program at a 
time when small business assistance is critically needed, and 
SBDCs are being inundated with unemployed, and existing small 
businesses seeking greater assistance. Management and technical 
assistance can make the difference for potentially millions of 
small businesses.
    Key management and fundamental principles and practices can 
assist many businesses to survive what would otherwise be 
failure in difficult times. The critical issue is the 
management decisions these small business owners and aspiring 
entrepreneurs will make in an economic and business environment 
in which they are unfamiliar. Small business owners know their 
business. However, they have little training or experience in 
how to manage a business in times like these.
    Many are not prepared to take advantage of the significant 
opportunities of the stimulus package. Many of the small 
business owners who face the most difficult decisions in this 
economy are women and minority business owners. SBDCs across 
the country are successfully engaged in outreach to these 
segments of the community, with counseling exceeding the 
national percentage of business owners.
    More can be done, and with enhanced resources new and more 
innovative approaches will be developed to address these needs 
by the SBDC network. SBDCs have a proven track record of 
responding to crises--9/11, hurricanes in the Gulf Coast and 
south, floods in the Midwest, and fires in California. We view 
this economic crisis similarly.
    As policymakers, you decide the priority of small business 
management assistance. SBDCs facilitate the access to capital, 
securing government contracts, and services to the underserved 
or minority community, the three major priorities of the 
national SBDC program. We propose to allocate 75 to 80 percent 
of all incremental funding to these urgent needs of the small 
business community.
    Madam Chair, you are acutely aware of the impact of the 
national SBDC program. A return on investment of over $2.26 for 
every federal dollar invested, over 73,000 jobs created last 
year, and a local leverage of federal dollars of 2 to 3 to 1 
for every federal dollar.
    We appreciate the confidence that you gave--showed in the 
SBDC program by indicating that $140 million in funding was 
appropriate for FY09. The approved appropriations level of $110 
million, if Congress approves, will greatly aid in rebuilding 
our national capacity. A funding level corresponding to the 
current authorized level would allow SBDCs to increase the 
level and scope of assistance that we believe is required to 
meet the needs of small businesses during this critical 
economic crisis.
    This is an investment in the small businesses of the 
future. By expanding SBDC's network capacity, essential 
information, analysis, and decision making tools will be more 
readily available to small businesses to improve survivability, 
efficiency, and growth. We are poised, once again, to rapidly 
respond in the economic crisis.
    I want to thank you for the opportunity to share our views, 
and I would be happy to answer any questions.
    [The prepared statement of Mr. Cartwright is included in 
the appendix at page 34.]
    Chairwoman Velazquez. Thank you, Mr. Cartwright.
    And I now recognize the Ranking Member, Mr. Graves.
    Mr. Graves. Thank you, Madam Chair. I wanted to introduce 
our next witness. It is Carol Gregg from Chillicothe, Missouri. 
Ms. Gregg holds a Bachelor's Degree from Central Missouri State 
University and is the founder, owner, and president of Flexible 
Staffing, with locations in Chillicothe, Sedalia, and 
Warrensburg, Missouri.
    As a successful small business, Flexible Staffing has 
placed more than 800 Missourians in positions throughout the 
state. And like so many of our small businesses, she is the CEO 
and president and also sweeps at night.
    [Laughter.]
    So I want to thank her for being here, and appreciate her 
coming.

                  STATEMENT OF CAROL A. GREGG

    Ms. Gregg. Madam Chair, and members of the Committee, thank 
you for inviting me. I am president and owner of Flexible 
Staffing. I have offices in Chillicothe, Warrensburg, and 
Sedalia. I also have an onsite office in Kingsville, Missouri. 
I have been an SBTDC client since January 2000, and I have 
worked continuously with the Northwest Missouri State 
University and Chillicothe, Missouri office ever since.
    The SBTDC office provided me with the assistance to develop 
cash flow charts and create a business plan to start my 
business. I started Flexible Staffing in May 2003 and reached 
the tipping point of success in 2007. I set the goal of growing 
to $10 million in sales from my 2007 sales high of about $3 
million. In 2008, we had sales of almost $5 million. The focus 
of our growth objective has reinforced my positive outlook, 
caused me to be able to identify opportunities, even in 
difficult times, and highlighted the need for continuous 
improvement in procedures and personnel.
    Having a plan with growth focus has mentally prepared me to 
adjust to the changing circumstances while maintaining an 
opportunity-driven approach to running my business. Because we 
are located in the rural areas of Missouri, this approach plays 
out in adding experienced, capable professionals to my staff as 
they become available, and being able to replace the parting 
expertise with a minimum of disruption.
    Finding people with talents where I have weaknesses is the 
key to my success. This approach plays out in soaking up advice 
from expanding networks of expertise and experience. These 
networks come from state and national trade associations, local 
and state SHRM organizations, and two local entrepreneurial 
groups.
    In Chillicothe, we have 20 to 30 businesses that meet every 
six weeks to share ideas, discuss issues, and receive updates 
on what is affecting small businesses in our area. Both groups 
have bank support and support from the NWMSU SBTDC office. In 
addition, I have been able to rely on networking relationships 
within cooperating businesses within my industry.
    When I realized that I had reached the point where I could 
stop worrying about survival of my business, and focus on 
growth, I scheduled a meeting with Mr. Jim Houseworth, my 
mentor, banker, and entrepreneurial, and Mr. Steve Holt, the 
Director of the NWMSU SBTDC Chillicothe office. They helped me 
to review my 2007 financials, they recommended a new CPA that 
would better serve my needs, and listened to my growth plans 
identifying new action steps.
    Mr. Holt later ran and delivered market comparison reports 
and allowed me to better gauge the market opportunity for the 
new markets that I was considering. He also provided background 
information on the competition already serving those new 
markets and generated business-to-business new customer market 
contact lists.
    My plan for growth has changed slightly in the last six 
months due to the downturn in manufacturing and light 
industrial industries in Missouri. I have needed to think 
outside the box. I believe that going through diversifying my 
business is my best option, and to do it very quickly. In 
September 2008, I started a new division in my Sedalia office 
called Flexible Consulting, which contracts mechanical, 
electrical, and chemical and industrial engineers.
    We now have three recruiters in that office. In my 
Warrensburg office, I am hopeful to soon begin Flexible Medical 
Staffing. There is an opportunity that has been knocking on my 
door for the last two years to do medical staffing within the 
rural areas of Missouri. Again, due to the economy, my belief 
is growing through diversification. I am currently moving 
forward to take advantage of these opportunities at an 
accelerated pace.
    This past week I have moved to a new location, which gives 
me room to house five medical recruiters, and we will be 
serving hospitals and clinics throughout Missouri. With this 
being said, all three of my offices will still do light 
industrial and clerical staffing. I have used the SBDC for 
market research, and I have plans to work with them on updating 
financial analysis and market analysis within the new medical 
staffing facility.
    I view the medical industry as being somewhat recession-
proof with a constant skilled labor shortage. I need to hire an 
experienced medical professional to manage this new venture, 
and hopefully Flexible Medical Staffing will be up and running 
soon.
    The economic downturn has provided the motivation and the 
opportunity to address this new business opportunity. 
Anticipating an extended downturn will require new cash 
resources, and I have negotiated an expanded line of credit in 
advance to meet my potential needs. Expecting to emerge from 
the downturn stronger than the recession started, I am having 
my staff concentrating on getting our house in order by 
documenting our policies and procedures and providing extensive 
training to shorten our learning curve.
    I am also positioning myself to eliminate weaknesses in my 
management staff when opportunities arise. We have not laid off 
any staff yet, but we are retraining for these new 
opportunities.
    To provide my staff with the highest expertise and training 
in our industry, I have negotiated with our other businesses to 
share their talented employees in our company. For instance, I 
needed a trainer supervisor for the Flexible Consulting side of 
our business. By sharing in the expenses of that individual, 
this will enable both companies to have a quality, high-paid 
employee that can meet the needs at half the cost.
    Chairwoman Velazquez. Ms. Gregg, time has expired.
    Ms. Gregg. Sorry.
    Chairwoman Velazquez. But during the question and answer 
period you could expand on--
    Ms. Gregg. Okay.
    Chairwoman Velazquez. --because I am really interested in 
listening to your story, and I just must congratulate you for 
your expansion and the insight to go and get the support, the 
technical assistance, that led you to grow your business.
    Ms. Gregg. Thank you.
    [The prepared statement of Ms. Gregg is included in the 
appendix at page 41.]
    Chairwoman Velazquez. Our next witness is Barbara Wrigley. 
She is the Executive Director to the Association of Women's 
Business Centers in Northern Virginia. Ms. Wrigley has more 
than 20 years' experience as a manager and advisor to women 
entrepreneurs. The Women's Business Center of Northern Virginia 
was founded to provide training and support to women seeking to 
start or grow their own businesses.
    Welcome.

                  STATEMENT OF BARBARA WRIGLEY

    Ms. Wrigley. Thank you so much. Good afternoon, Chairwoman, 
Ranking Member Graves, members of the Committee. Thank you for 
the opportunity to speak with you today. I do have the 
privilege of serving as the Executive Director of the Women's 
Business Center of Northern Virginia, as well as Vice Chairman 
of the Board of Directors for the Association of Women's 
Business Centers.
    The AWBC is a not-for-profit organization representing 
women's business centers and those that we serve. It was 
founded 10 years ago to support entrepreneurial development 
among women as a means to achieve self-sufficiency and to 
create wealth through education, training, counseling, 
mentoring, technical assistance, and financing opportunities.
    My remarks today will summarize our more complete written 
testimony, which I understand will be entered into the official 
record, and I will focus on three main points. Point one, 
recognition of the significant improvement in the WBC program 
in the past 18 months.
    We are grateful for the wisdom and support of leaders in 
the House and the Senate for securing our permanent funding in 
2007. Now that WBC directors no longer have to worry about the 
very existence of their centers, they are concentrating on 
better serving their clients and growing their programs.
    WBCs have had a remarkable record of achievement over the 
past 20 years. Across the country, we annually provide 
entrepreneurial training, technical assistance, and counseling 
to over 150,000 clients, including a significant number that 
are minority and socially disadvantaged. For example, here in 
Northern Virginia, fully 25 percent of my client base is low-
income women.
    How have we done with the SBA's annual $13.5 million 
investment in the WBC program? Research from the National 
Women's Business Council found that there has been an 
extraordinary 14 to 1 return on investment. There has been 
significant improvement in our relationship with the SBA, in 
particular with the Office of Women's Business Ownership. We 
are now working on issues as partners and continue to address 
in a much more communicative and much less adversarial manner 
the ongoing management of the program.
    Point two, planning for the future and the need to improve 
current operational challenges. We look forward to establishing 
relationships with the newly-appointed SBA personnel to deal 
with some of our current operational challenges and to plan for 
future improvements. At present, we are having a difficult time 
fulfilling the growing demand for our services in the face of 
significant cuts in the per center program budget.
    Annual allocations have fallen from an average of $150,000 
per center per year to between $80,000 and $100,000. For 
example, my center has a total budget of less than $300,000. We 
are dealing with a 25 percent cut from the SBA this year, yet 
we have trained and counseled over a thousand clients in the 
last three months, a 14 percent increase from a year ago.
    We are concerned that there has not been consistency in the 
way funding allocations have been made to WBCs nationwide, nor 
has there been sufficient transparency. We believe that all 
awards should be made public, and we recommend that the funding 
level should consistently average $150,000 per center per year. 
We, therefore, request a full appropriation of $17,100,000 to 
fund our centers.
    Secondly, the AWBC feels that a comprehensive system to 
evaluate, improve, and actually certify women's business 
centers should be developed. This would include training for 
new and underperforming centers, benchmarking, and sharing best 
practices. We recommend an additional appropriation of a half a 
million dollars, so that such a certification model could be 
developed and tested.
    And, third, while there has been significant improvement in 
the speed with which grant monies are disbursed through 
automated drawdowns, the overall administrative burden remains 
high and continues to need further review.
    Point three, the current economic crisis and the vital role 
of WBCs in our nation's economic recovery. Women's business 
centers are on the frontline of the economic crisis. We are 
seeing more and more clients coming through our doors who have 
been downsized, pink-slipped, or who are underemployed and 
looking for ways to put their economic futures in their own 
hands.
    WBC directors are also reporting greater desperation among 
our clients. We are ready, willing, able, and are already 
serving as a source of information and inspiration to these 
clients. One of my award-winning clients reports to me, ``The 
current economic situation is having a significant negative 
impact on my business. From 2004 to '06, my company saw 125 
percent plus sales growth from year to year. In 2008, however, 
total sales revenue dropped 40 percent. The significant decline 
in sales puts a lot of pressure on my company to implement 
severe cost-cutting measures, delay introduction of new 
products, and resist the introduction of new technologies.''
    The director of the women's business center in Indiana 
wrote to me, ``Some folks seem simply desperate, and they just 
don't know what else to do, so they are looking at creating 
their own jobs.`` Several people expect to put a business plan 
together over the weekend. When I tell them to expect more like 
six months, they seem to get more depressed.
    And the director of the women's business center in San 
Francisco echoed many when she wrote to me, ``We are seeing 
more and more people who are already in business coming to us 
to help them find ways to survive.''
    Many women's business centers have responded with 
innovative strategies, such as providing incubator offices, 
day-to-day work spaces, low-cost meeting room and conference 
room rentals, and increasing access to our computer labs, 
responding to increased interest in peer support and networking 
gatherings, providing more skill-specific, just-in-time, and 
distance learning training, designing and offering new classes 
such as how to recession- proof your business, marketing on a 
shoestring budget, building alliances and partnerships to stay 
ahead in tough times.
    Another innovative example is the women's business center 
in West Virginia, which has been working with partners to hold 
events in shopping malls, where up to 30,000 visitors per 
weekend learn low-cost ways to make money through direct sales 
businesses.
    While we are being innovative and responsive, the key 
challenge at the present time is to increase the flow of 
capital to our clients, not just those seeking to start a 
business but especially to our clients who are already in 
business. Capital has dried up, and our clients are suffering.
    Within my own parent company, the Community Business 
Partnership, our business finance center has gotten only one 
SOHO loan approved since October 1st, whereas a year ago 16 
loans were approved in the same four- month cycle.
    Chairwoman Velazquez. Ms. Wrigley, time is up. But, again, 
during the period of question and answers--
    Ms. Wrigley. Thank you.
    Chairwoman Velazquez. --you can expand. Thank you.
    [The prepared statement of Ms. Wrigley is included in the 
appendix at page 44.]
    Chairwoman Velazquez. Our next witness is Mr. Ronald 
Blackburn. He is the President and CEO to ASPIRA Association, 
Inc. Under his leadership, ASPIRA has opened more than 20 
community technology centers across the country, providing 
internet access to thousands of Latinos in low-income areas. 
Also, he has helped shape federal education legislation, most 
recently the Higher Education Act.
    ASPIRA is a national nonprofit organization devoted solely 
to the education and leadership development of Latino youth.
    Welcome.

                   STATEMENT OF RON BLACKBURN

    Mr. Blackburn. Thank you so much, Madam Chair. I am 
President and CEO of ASPIRA, as you mentioned, the largest 
national Hispanic organization in the country, and the only one 
dedicated exclusively to education. And we are also well-known 
for the use of technology in education, which is what I am 
going to talk about.
    But, first, I have to say how proud I am as a Puerto Rican 
to have Congresswoman Velazquez not only to be chair of this 
Committee, but to be the newly-elected chair of a congressional 
Hispanic caucus. Congratulations.
    I want to thank the Committee for the opportunity to 
present some ideas regarding a topic that has become critical 
in these very uncertain times. How can we use technology, 
especially distance learning, to enhance the effectiveness of 
the SBA in providing training and support to entrepreneurs and 
small businesses around the country?
    We know the enormous potential of technology, and the 
Internet is a tool to deliver training and technical 
assistance. And I believe that a robust, well-designed, 
comprehensive, and nimble online distance learning program at 
the SBA has the potential to reach thousands of business owners 
and potential business owners and reduce the burden on the SBA 
assistance centers.
    It is important to note, however, that there is a major 
issue that potential entrepreneurs and small businesses face, 
and it is the cost of broadband, especially in low- income 
communities. Without assessing--because broadband hasn't been 
employed in their communities or because the cost of broadband 
is too high, online training programs have little value.
    To address this issue, I would like to propose and 
recommend to the Committee the creation of an eRate type 
program, specifically for small businesses to access and cover 
part of the cost of broadband. We already have this subsidy for 
schools and libraries, and the Telecommunications Industry 
Association advanced this notion before this Committee in 
January.
    There are two major issues in developing a distance 
learning program the SBA must address. One is the quality of 
the courses offered online, including the depth of each course 
and the teaching methods used to deliver the course. And, 
second, the number and relevance of the courses that are 
actually available.
    Now, effective online training programs have several key 
characteristics. One, the content of the courses is 
interesting, relevant to the learner's needs, is of sufficient 
depth of the learner to master the subject matter. I will just 
give you an example. You cannot learn how to develop a business 
plan or the intricacies of securing a business loan in 35 
minutes.
    They progress from the basics of the subject matter to more 
advanced topics in several well thought out steps or modules. 
They are interactive, where the learner becomes a participant 
in his own learning using tools that engage the learner in 
learning activities in practice. This requires a learning 
management system, which the SBA does not have.
    They use a variety of teaching methods, including a 
combination of video, webcast, webinars, audio, and text. They 
are asynchronous, which means that the learner can access the 
program at--the courses at any time from anywhere and complete 
it at their own pace.
    The learner is provided ongoing support through a learning 
process where the learners can ask questions as they go through 
the course, with access to a tutor as well as other learners, 
where learning is assessed, and usually feedback is provided to 
the learner throughout the learning process. Usually, the 
learner ends up with a product.
    Regarding the variety of courses, the SBA courses should be 
extensive, and the program should be capable of deploying 
coursework quickly to meet the emerging challenges to business. 
The distance learning program should also be able to move 
quickly with the times, creating and offering courses that 
direct emerging needs, such as the current economic downturn. 
Of course, given the demographics and the fact that the SBA 
serves Puerto Rico as well, the coursework should be available 
at least in Spanish, if not in other languages.
    Distance learning is very cost effective. Developing 
courses and having them online today is actually quite cheap, 
especially with all of the open source, free, and secure 
network platforms that are available.
    The second major issue is deployment. How do you reach 
potential entrepreneurs especially in lower income communities? 
A tried and true strategy for reaching local communities is 
through its community-based organizations. This is especially 
true in the Latino community. As you mentioned, Madam Chair, 
ASPIRA has 150 community technology centers across the country, 
with computer labs connected to high- speed Internet lines.
    These centers can serve as entry points for potential 
entrepreneurs in small business where they can learn to use a 
computer, the Internet, have access to the courses, have local 
coaches that can help them and refer them, all in an 
environment that is familiar, comfortable, and which they 
trust. Extensive national partnerships between the SBA and 
community organizations would go a long way in providing the 
SBA access to communities, and this would be mostly at little 
or no cost to the SBA.
    The SBA is going to be an effective promoter of new 
business and an effective partner in sustaining and growing 
existing small businesses. It is essential that it take 
advantage of the power of technology as a training and 
assistance tool, that it invest the resources it needs to 
create a robust, comprehensive, online education program, and 
that it partner with communities to reach thousands who have 
the potential to start or grow businesses, and, hence, create 
jobs.
    Thank you very much. I will be glad to answer any questions 
you have.
    [The prepared statement of Mr. Blackburn is included in the 
appendix at page 50.]
    Chairwoman Velazquez. Thank you, Mr. Blackburn.
    I would like to address my first question to Mr. 
Cartwright. As we all know, SBA lending has declined 
significantly in the past year. The credit crunch is posing 
tremendous challenges to small businesses in this nation. We 
read the papers, we listen to the news, and all we hear is the 
credit crunch that small businesses have. The secondary market 
is frozen.
    What role can SBDCs play in assisting businesses as they 
seek capital in this difficult economy?
    Mr. Cartwright. Madam Chairwoman, that is a very good 
question. You are absolutely correct that access to capital is 
at the worst level we have ever seen. I think the national 
figures are SBA loans are off by 57 percent. I would believe 
that in the two districts that we have in Florida--Jacksonville 
and Miami--they are at least at that level.
    SBDCs across the country rely on SBA tools, they rely on 
SBA loan programs, to present those to small businesses. I 
think the reality is that there are--what we see now is a lot 
of other non-bank lenders, credit unions, savings and loans, 
also getting into that market. And SBDCs, as I would guess all 
of the other SBA entrepreneurial development programs, try to 
do what is best for the small business owner or entrepreneur 
who is starting a business. They shop the best deal possible 
for businesses.
    I believe that with the--in terms of the SBDC's case, with 
the rebuilding of the capacity of SBDCs, you would see a higher 
level of marketing of SBA programs, as long as there is an 
increased funding of those critical SBA loan programs.
    Chairwoman Velazquez. Let me ask, Mr. Wolfe, how can 
entrepreneurial development services be designed to ensure that 
new firms can access capital at a time when credit is so tight?
    Mr. Wolfe. Madam Chairwoman, the credit issue right now is 
not a matter of people always being aware of the money. Many 
people are aware of SBA funding at this point. The challenge 
is, internally, they don't know how or what types of funding 
they need. They don't have properly-structured financials. They 
don't have insights in terms of, why are they declining in 
sales? How might they recover those declines? And, as a result, 
they present to a lender a very high-risk credit.
    And if you are looking at adapting, I think the focus is to 
reach out with the programs, actively go out to the businesses. 
They are not going to tell you that they are having trouble 
until you actually develop a level of trust with them. And 
then, work with them to look at what is happening within their 
operation, what types of capital or debt they currently have, 
is it appropriate for what they are using it for, which what we 
are finding is it is not. They are using lines of credit to 
make capital purchases, which is a very bad thing to be doing.
    And then, look at what other sources there are--community 
development block grant funds, EDA funds, SBA funds. Private 
lenders are looking for ways to mitigate risk, but they need 
someone who can validate the strength of a business, the 
strength of a business model, the strength of an adjustment to 
the economy, and then how are they going to move forward, since 
most of them now no longer have collateral.
    Chairwoman Velazquez. Mr. Blackburn, the needs of small 
businesses are constantly changing, and SBA programs must be 
flexible to adapt to those changes.
    Mr. Blackburn. Certainly.
    Chairwoman Velazquez. For example, last year energy costs 
were crippling small business owners, and today it is the lack 
of credit. So, in your opinion, does the small business 
training network have the ability to adapt and meet the new 
needs of small entrepreneurs?
    Mr. Blackburn. Well, basically, the platform that you have 
now is a very static platform. There are some courses that can 
easily be put up, but they are really not as intense as they 
should be. As I mentioned before, you can't really develop a 
business plan in a 35- minute course, a PowerPoint course. I 
mean, there are 22 courses in there, but they really don't have 
the depth to assist a small business owner or a potential 
entrepreneur to either develop a business plan or a marketing 
plan or how to survive in these times.
    I think that some of the investment that would be put into 
distance learning would be a tremendous savings in terms of not 
having to provide those same--that same guidance counseling to 
entrepreneurs in the centers. So, right now, it is not 
adaptable. It could be much more adaptable if it had a learning 
management--based on a learning management platform. And I 
think that the SBA should have the vision to be able to harness 
the technology.
    I mean, distance learning is a $31 billion business in this 
country. And every university, every college and university in 
the country, has a sound distance learning program. There is no 
reason why the SBA cannot have that.
    Chairwoman Velazquez. Thank you. Mr. Graves.
    Mr. Graves. Thank you, Madam Chair.
    My first question is for Ms. Wrigley. You said that you 
helped businesses recession- proof. How do you recession--I 
mean, I am just curious. That sounds like a great tool to be 
able to offer small businesses.
    Ms. Wrigley. Well, what I was talking about was that a 
number of women's business centers have developed classes to 
help their clients be recession-proof. So right now one of the 
main things that my clients have been asking for is 
information, for example, on social networking. They have been 
asking for more immediate, quick, real-time training in 
Quickbooks Pro and other things like that.
    I think, you know, as these clients come in, the most 
immediate way that we can be of assistance to them is just to 
know that we are there to talk to them, that we can help them 
with their cashflow, that we can help them in understanding 
some of the steps that they need to take to better market their 
services, to form some alliances for example.
    So it is really--you know, taking these existing clients, 
having them come in and say, ``Yes, we are really here for 
you.''
    Mr. Graves. Ms. Gregg, you are kind of in a unique 
situation I guess because not only are you a small business, 
but you also provide staffing to other businesses. And you said 
you are going to come through this downturn stronger than ever. 
And I would like to kind of have you explain that, because that 
is kind of exciting, given a lot of the, you know, horror 
stories that we have heard.
    And you might also expand on some of the businesses you 
work with providing staffing, how they are going to do as a--
you know, do you think they can come through this thing 
stronger than ever? Or are we going to lose a lot of businesses 
out there?
    Ms. Gregg. Well, Ranking Member Graves, you know, I am a 
pretty positive person, and I refuse to think negative. I am 
going forward as quickly as I can. Like I said, I am expanding 
on opportunities, so that I can survive. Right now, our focus, 
since we are in rural Missouri, has been light industrial and 
clerical. Light industrial is hurting tremendously out in the 
rural areas, as I know they are hurting everywhere.
    As far as if they are going to make it, I don't know. Most 
of my clients right now still are optimistic that they are 
going to start up. They might have started up hard and heavy 
after the first of the year. They are looking at March, second 
quarter, with startups, and we are all hopeful.
    I am just trying to expand my business as quickly as I can 
in order to survive, because I don't believe light industrial 
is going to feed us well anymore. And that is why we started 
the Engineering Department, and we are hoping to start Flexible 
Medical Staffing soon.
    So did that answer your question?
    Chairwoman Velazquez. Would you yield for a second?
    Mr. Graves. Yes, Madam Chair.
    Chairwoman Velazquez. When did you make the decision to get 
into medical services staffing? And did you do--did you do some 
research that led you to make that determination?
    Ms. Gregg. Yes.
    Chairwoman Velazquez. That that is an area where you can 
grow your business?
    Ms. Gregg. Yes. I have had opportunities that have come to 
me, because I am the local person who is doing staffing. I have 
had hospital CEOs come to me. I have been researching for two 
years. The SBDC has--small business development center has been 
helping me. They have been doing market analysis for me.
    They have also looked at the competitors within my field. 
In rural areas, there is not a lot of people doing staffing in 
the medical field, so that is an opportunity.
    Chairwoman Velazquez. Thank you.
    Thank you for yielding. Any other questions?
    Mr. Schrader.
    Mr. Schrader. Thank you, Madam Chair. Ms. Dorfman, you had 
talked about the somewhat fragmented nature potentially of some 
of the small business development services, and, you know, a 
lot of overlapping regulation and opportunities. It makes 
sense, certainly. You know, everyone wants to be efficient and 
pool resources where possible.
    How do you juxtapose that with a lot of communities, this 
body, and state legislators, wanting to focus on making sure 
women and minorities get special access, or at least are aware? 
Veterans? How do you--how do we juxtapose those two, the 
efficiency versus making sure different groups really get 
access?
    Ms. Dorfman. Well, again, I think it is in the best 
interest of a woman-owned firm to get the highest quality and 
consistency of the education and the resources that are out 
there. And to be able to provide that, you really do need to 
unify. The e- learning that has come up here, that is 
paramount.
    If we can streamline some of the more I would say 
fundamentals, that can be done from e-learning and then have 
very specific focuses on those areas where there are--it is a 
little bit more complex and there needs to be some specialized 
assistance. For instance, women-owned firms typically find it 
very difficult to get access to capital.
    Well, so that is one area we are going to have to have a 
specialist in there to walk them through that process to make 
sure that, first of all, there is funding available, but, 
second of all, making sure that their financials are prepared 
the proper way to get in there. And then, have somebody 
actually at the bank to hold the bank accountable for lending 
to women as well.
    And I really believe, again, that we need as a unified 
system to really look at the demographics within the community 
and see what the needs for the community are. Right now, we are 
hearing that some communities are faring better than others, 
because there is not that consistency. But if we can come from 
a macro level, and really provide good, consistent, quality 
interface for the business owners, I think you are going to 
really--the investment that we are making is going to just grow 
exponentially.
    Mr. Schrader. Along the same lines, both you and Mr. 
Cartwright, and it was referenced in the Speaker's memorandum 
about performance measures, you know, a lot of times we measure 
outputs as opposed to outcomes. And I was fairly involved in 
that in my home State of Oregon, trying to shift our budgeting 
to, you know, performance-based rather than just measuring 
widgets that were produced.
    So to that extent, one of the basic questions I would 
always ask, particularly the SBDCs, was, you know, how do we 
know you are doing a better job than a business that does not 
start up with SBDC assistance? And is there a way we can 
measure this, among many other measures that might be 
appropriate? Could you comment on where we are in that 
development, what role this body may have in assisting you in 
developing appropriate actual outcomes?
    Ms. Dorfman. Sure. One reference that was stated here was 
we saw a thousand clients in the last three months. We hear 
that from the SBDCs and our interface, that that is part of how 
they have to measure, how many bodies got through their doors. 
Well, we want to know what percentage was the growth of 
revenues for those companies, and how many new employees have 
been hired? That is going to really measure their growth.
    And, again, when you take a look from a macro level, you 
can really see the communities across the board, where there is 
success versus where there is challenges, and where we need to 
get in and maybe get more assistance to them.
    Mr. Schrader. Mr. Cartwright, could you comment on that and 
how, again, we might--is that rule-driven? Are we the culprits? 
Who is to be responsible perhaps for that interpretation?
    Mr. Cartwright. Actually, I don't know if there is a 
culprit or not, but I can tell you--you make a very good point, 
and I will tell you that the SBDCs actually do measure those 
kinds of things that are critically important. We conduct--each 
SBDC conducts their own state economic impact analysis, where 
we do get down to what was the revenue increase by business and 
number of jobs that they created, or the number of jobs that 
they retained due to assistance. That is reported by the small 
business owner.
    We also have a national impact study that is done by Dr. 
James Chrisman at the University of Mississippi that, as an 
association, we encourage every SBDC state and regional program 
to participate in. That study compares the Oregon SBDC and its 
outputs to the average Oregon business. Dr. Chrisman--
    Mr. Schrader. Is that outcomes or outputs, sir?
    Mr. Cartwright. Both.
    Mr. Schrader. Okay.
    Mr. Cartwright. Both. And that research is done by Dr. 
Chrisman, so it is not the SBDC that is taking a look at those 
figures. It is Dr. Chrisman. So we--that information is readily 
available.
    Mr. Schrader. We had trouble getting--just as a comment--I 
apologize for going slightly over--we had a little trouble 
getting that information in Oregon, so I would be interested in 
that data, if that is available.
    Mr. Cartwright. Okay.
    Mr. Schrader. Thank you, Madam Chair.
    Chairwoman Velazquez. Mr. Coffman.
    Mr. Coffman. Thank you, Madam Chairwoman. There was some 
discussion about e-learning, putting information out, and as a 
former small business owner, where time was a premium, and I 
didn't necessarily have time during the day to attend 
something, but maybe I could look at information online at 
nights, such as writing a business plan, which was my downfall, 
but I survived somehow. I wonder if some of the members could 
comment on that.
    Mr. Blackburn. Well, I can certainly comment on the 
importance of the program to be interesting, to be in depth, to 
be able to show you step by step how to develop a business 
plan. And it is something you can't do during the day, it can't 
be live. You have to be able to access it whenever you have the 
opportunity to access it.
    And it should be able to walk you through the steps of 
developing a good business plan, so that when they get to the 
center you already have a product that you can take to the 
center for review. And just--and mentioning how to be updated, 
how to change with the times, I can see, for instance, the SBA 
having webinars and webcasts on the impact of the stimulus 
package on small business.
    And this is something that is being discussed today, and 
that could be on tonight, for a small business person to know, 
if they approve X, Y, and Z, will I have more access to credit? 
Those are the important topics. And others as well. I mean, 
there are hundreds of potential courses that can be provided 
for business owners, for people who are thinking of starting a 
business, for people who are already there but haven't gotten 
the credit yet to start their own business.
    So I think it is a critical tool that almost everybody else 
is using, and it is very simple to use. Just ask our children. 
I mean, they are doing very, very well. And to exchange with 
other business people.
    You can mention chatrooms, you can mention groups, you can 
mention all sorts of means of communicating with other small 
business people in your same field, or in others. Those are 
important for learning.
    Mr. Coffman. Madam Chairwoman, if I could continue.
    Chairwoman Velazquez. Yes.
    Mr. Coffman. Ms. Gregg, you had talked about relocating 
your business from Missouri to Colorado.
    (Laughter.)
    Out of all of the services that were provided to you, if 
you had to identify one as being the most significant, what 
would that be?
    Ms. Gregg. I had started businesses in the past. However, I 
had never done cashflows before, and actually had something to 
take to the bank when I went to borrow money. And so I would 
say learning how to do cashflow charts was the top of my line. 
I have had--I have done lots of conferences on how to grow, but 
I think learning how to do cashflows would be the thing that I 
lacked and I needed help with.
    Mr. Coffman. Madam Chairwoman, one more question.
    What are you seeing out there, any of the panelists, in 
terms of the credit crisis right now? And from the grass roots 
of our financial system, are, in your view, small businesses 
locked out of it that wouldn't otherwise qualify for credit 
during normal economic times?
    Mr. Wolfe. I will touch that. Actually, right now, there 
are very viable businesses that are being locked out, because 
the local and regional banks have just basically tightened up. 
Even with SBA lending, I interviewed five lenders in the last 
two months, and they indicated that there has been some 
restrictions, and basically SBA has been looking at the 
documentation and not always honoring the guarantee.
    So the banks are running scared right now as to whether or 
not they can even utilize the guarantee. So they are tightening 
up their own credit, they are pulling lines of credit from 
existing businesses that are very solid, because they don't 
know what kind of reserves they need to have in place, because 
they are not sure how their portfolio is going to go, they 
don't know if their collateral is upside down.
    So there is a really--everyone is tightening up. Everyone 
is pulling back. And what has to happen is we have to rebuild 
confidence. And that is what I think the opportunity is, to go 
out and rebuild confidence in sound business, with information, 
with the whole concept--I mean, education is great, but someone 
has got to get out there and reach out to the businesses, not 
wait for them to walk in the door. They are not going to walk 
in the door.
    And when I teach lending, I tell them, the good deals are 
going to--you are not going to find the good deals unless you 
get out on the street and knock on doors, because those 
business people are too busy running their business.
    Chairwoman Velazquez. Well, Mr. Coffman, just for one 
second. If SBA is not honoring the guarantee, I want to know, 
because they cannot do that.
    Mr. Coffman. Yes. Okay.
    Chairwoman Velazquez. And time is up, since we have votes 
on the floor. Ms. Dahlkemper.
    Ms. Dahlkemper. Thank you, Madam Chair.
    I just have a quick question to any of you who would like 
to answer this. Is there any regional issues that we should be 
looking at as we look at this entire, you know, picture here? 
We certainly have different issues in the northeast versus the 
southwest and some of those areas. Are there any regional 
issues that we should be looking at as we look at these 
programs that we are not identifying at this point as we look 
at economic recovery?
    Mr. Blackburn. I can think of not regional issues, but 
community issues.
    Ms. Dahlkemper. Okay.
    Mr. Blackburn. In other words, where is the diversity of 
the country? And where are small businesses suffering the most? 
And if you look at the country that way, it is sort of 
different from looking at the geographical regions, the small 
businesses that are in inner cities versus those that are in 
rural areas or in suburbs, how can you better support 
businesses that I am sure are suffering in low income 
communities, whether they are urban, rural, or suburban?
    So I would try to look at it more in terms of the 
particular community that they are in rather than their region. 
There may be some regional issues, but I would look at those 
first.
    Ms. Dahlkemper. Would anyone else like to comment on that?
    Mr. Wolfe. I would like to say also I think, really, there 
needs to be a focus on industry, specific industry segments, 
because a lot of the retailers and the service businesses 
aren't going to survive if the people don't have money. So you 
have got to look at where people are targeting recovery, and 
that is a national issue.
    So if it is in clean technology, it could be in tourism, it 
could be in manufacturing, but it has to be tailored to those 
industries where there is the chance and opportunity for 
recovery, and that support them and can go across. And that is 
where all of the programs tie in. And it doesn't matter where 
they are located; it just matters on having resources for the 
industry.
    Ms. Dahlkemper. Thank you.
    Chairwoman Velazquez. I have another question, and I 
believe--well, probably we are going to pass the stimulus 
package by the end of this week, hopefully. And there is going 
to be a lot of money for IT-related initiatives, and a lot of 
money for infrastructure. And so small firms are expected to 
play a big role in all of these projects.
    And it is likely that many companies forego--these 
opportunities due to the complexity of the federal procurement 
process. And I hear back in my district, and every member here, 
they hear from small businesses who are having problems 
accessing the federal procurement marketplace.
    So my question to the SBDCs that are represented here: 
would you think that it would be useful to establish a 
specialized program so that SBDCs can hire experts in federal 
procurement and provide that type of assistance?
    Mr. Cartwright. Madam Chair, I totally agree with you. 
SBDCs are--under their scope of work currently provide 
procurement assistance, government contracting. That is not the 
primary focus, however, of our programs. And with that enhanced 
capacity, I would say, yes, you could see much more contracting 
take place throughout the country.
    Chairwoman Velazquez. Yes. And the women's business 
centers?
    Mr. Wolfe. Absolutely.
    Chairwoman Velazquez. Okay.
    Ms. Wrigley. I happen to be fortunate to be in a location 
where we have a small business development center adjacent to 
our women's business center, as well as a finance center and an 
incubator, all under one roof. And so we are sending more 
people--more of our women, once they grow up their businesses 
to be ready to do federal contracting, particularly here in the 
Washington area, to our SBDC and to the procurement technical 
assistance program.
    But I think you are exactly right. Women are confused about 
this, and it is a wonderful marketplace right now. Those that 
have gotten in are doing work.
    Chairwoman Velazquez. Last year, we spent $400 billion--
    Ms. Wrigley. That is right.
    Chairwoman Velazquez. --yet small firms lost out when they 
were not able to get the 23 percent contracting goal.
    Anyway, I want to thank all of you for your testimony and 
your presence here today.
    I ask unanimous consent that members will have five days to 
submit a statement and supporting materials for the record. 
Without objection, so ordered.
    And this hearing is now adjourned. Thank you. [Whereupon, 
at 2:19 p.m., the Committee was adjourned.]


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