[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]
FULL COMMITTEE HEARING ON
LEGISLATION TO REAUTHORIZE AND
MODERNIZE SBA'S ENTREPRENEURIAL
DEVELOPMENT PROGRAMS
=======================================================================
HEARING
before the
COMMITTEE ON SMALL BUSINESS
UNITED STATES
HOUSE OF REPRESENTATIVES
ONE HUNDRED ELEVENTH CONGRESS
FIRST SESSION
__________
HEARING HELD
MAY 6, 2009
__________
[GRAPHIC] [TIFF OMITTED] TONGRESS.#13
Small Business Committee Document Number 111-119
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
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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
Hauge, Mr. Scott, First Vice Chair, National Small Business
Association.................................................... 5
Evans, Ms. Connie, President and CEO, The Association For
Enterprise Opportunity......................................... 7
Brown, Mr. Justin, Legislative Associate, Veterans of Foreign
Wars........................................................... 9
Yancy, Mr. Ken, CEO, Score....................................... 10
APPENDIX
Prepared Statements:
Velazquez, Hon. Nydia M.......................................... 25
Graves, Hon. Sam................................................. 27
Dorfman, Ms. Margot, CEO, U.S. Women's Chamber Of Commerce....... 29
Hauge, Mr. Scott, First Vice Chair, National Small Business
Association.................................................... 35
Evans, Ms. Connie, President and CEO, The Association For
Enterprise Opportunity......................................... 41
Brown, Mr. Justin, Legislative Associate, Veterans of Foreign
Wars........................................................... 45
Yancy, Mr. Ken, CEO, Score....................................... 51
(v)
FULL COMMITTEE HEARING ON
LEGISLATION TO REAUTHORIZE
AND MODERNIZE SBA'S ENTREPRENEURIAL
DEVELOPMENT PROGRAMS
----------
Wednesday, May 6, 2009
U.S. House of Representatives,
Committee on Small Business,
Washington, DC.
The Committee met, pursuant to call, at 1:04 p.m., in Room
2360, Rayburn House Office Building, Hon. Nydia M. Velazquez
[Chair of the Committee] presiding.
Present: Representatives Velazquez, Moore, Dahlkemper,
Schrader, Bright, Graves, King, and Luetkemeyer.
Chairwoman Velazquez. Good afternoon. I call this hearing
of the House Small Business Committee to order. Just last
month, General Motors announced 8,000 new layoffs. Since then,
companies like Clear Channel Broadcasting and Johnson & Johnson
have followed suit. But while the corporate world may be
scaling back, the entrepreneurial spirit is still alive and
well. In fact, 400,000 small firms crop up every month. With
the right resources and a little hard work, those startups will
be the key to our economic recovery.
Starting and running a new enterprise is not a small
achievement, even during times of prosperity. As any small
business owner will tell you, the learning curve is steep. That
is where today's legislation comes in. The Job Creation Through
Entrepreneurship Act of 2009 will help small businesses access
the resources they need to succeed.
With lending down and credit tightening, small firms are
facing significant obstacles on all fronts, particularly when
it comes to accessing capital. The proposal under consideration
today will help them identify the best way to secure that
funding. It will do this by offering training sessions and
seminars on everything from repairing damaged credit to seeking
out equity investment.
While the rest of the economy is declining, the Federal
marketplace is booming. Last year it grew by 9 percent. The new
stimulus is only going to add to that increase, and small
businesses stand to gain a great deal. In terms of
infrastructure contracts alone, they are expected to win $29.9
billion. Still, many of these firms have never competed in the
Federal marketplace and need to learn its ins and outs. That
takes training, and this bill will provide it.
If entrepreneurs are to emerge stronger from the recession,
then they must be able to retool their ventures. Enhanced
technology resources will help them do that and help them
become more efficient. It will also rejuvenate underserved
communities. This is critical, especially in the rural regions
and inner cities that are suffering most. Through the use of
online, satellite, and video resources, small business owners
everywhere can access training on a variety of subjects, and,
in doing so, close the gap with their corporate and
international competitors.
We are constantly hearing about the need to put people back
to work. An important part of job creation is entrepreneurship.
Through this legislation, we give people who might not
otherwise pursue that line of work a chance to do so,
especially those from nontraditional communities.
We know that the face of American business is changing.
This bill recognizes that transformation with provisions for
women and Native American business owners. It also provides a
unique opportunity for veteran entrepreneurship. As our
servicemen and women return from war, it is critical that they
have a chance to start their own businesses. But in order for
ED to have its desired effect, it needs to be running at full
capacity. SBA also should be smarter about how it manages these
programs. The agency has suffered from chronic underfunding in
the past, and it is critical that it make the most of its
resources today.
That is why this legislation includes conditions for
program coordination. New requirements promote best practices
and ensure services are not duplicated. They also contain tough
new performance measurements for gauging program success. That
way, we will know which initiatives are working, which need to
be reevaluated, and which should be scrapped altogether.
The Job Creation Through Entrepreneurship Act of 2009 is a
bipartisan product. It is the work of seven different Committee
members, including five from the Minority. I would like to
thank Chairman Shuler and Ranking Member Luetkemeyer for his
leadership in these efforts, and everyone else who contributed
to this legislation. Strengthening ED programs will not only
bolster small businesses, but will help get our economy moving
again.
I look forward to hearing from today's witnesses, and I
thank them in advance for their testimony. With that, I yield
to Ranking Member Graves for his opening statement.
[The statement of Chairwoman Velazquez is included in the
appendix at page 25.]
Mr. Graves. Thank you, Madam Chair, and thank you for
holding this hearing today examining SBA's entrepreneurial
development programs and the challenges that they face in the
current economic climate. I would also like to thank all of our
witnesses for being here and taking time out of your schedule
to be with us today.
It is widely accepted that a good business plan is the
cornerstone of any successful 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 any time.
The entrepreneurial development programs of the Small
Business Administration provide both new and seasoned
entrepreneurs with solid business knowledge to help start and
grow their businesses. The entrepreneurial development programs
provided by the SBA 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 one of SBA's entrepreneurial
development programs.
Unfortunately, the current economic climate provides an
even more difficult path to success than 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 effectiveness of these programs has become even
more important than ever. We must reassess these programs and
fine-tune them to ensure that they are as efficient as
possible.
Today we are going to discuss six recently introduced bills
that aim to modernize and recondition the SBA's entrepreneurial
development programs to guarantee they are well suited to serve
the challenging needs of today's entrepreneur. As we examine
this legislation, we must make certain to eliminate duplication
and streamline the efforts of the Federal entrepreneurial
development programs.
And once again, Madam Chairwoman, thank you for holding
this hearing today, and I look forward to hearing the
testimony.
Chairwoman Velazquez. Thank you, Mr. Graves.
Chairwoman Velazquez. I welcome our first witness Ms.
Margot Dorfman. She is the CEO and founder of the 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.
SATEMENT OF MARGOT DORFMAN
Ms. Dorfman. Chairwoman Velazquez, Ranking Member Graves,
and members of the Committee, I am here today on behalf of the
millions of American small businesses who are in need of
assistance as they seek to grow strong businesses to provide
income for themselves, their families, and their communities.
Thank you for this opportunity to comment on the current
legislative proposal to strengthen the SBA's entrepreneurial
development programs. I had the opportunity to speak before
this Committee several weeks ago. I am pleased to see the
thoughtful steps you are taking to extend the reach and
effectiveness of these programs. The Committee has
appropriately focused on access to capital and contracts,
reaching to those in greatest need of assistance, including the
likely migration of dislocated workers to small business
startups, and prudently managing the amount and focus of funds
committed to each of the SBA entrepreneurial development
programs.
Previously I provided a number of recommendations,
including unifying the entrepreneurial education programs and
providing greater coordination between these programs,
establishing outreach specialists, positioning facilities in
areas with least mobility and/or greatest economic need,
providing one clear channel for assistance, assuring language
and cultural needs are addressed, outsourcing the creation of a
top-tier e-learning education system, establishing a method to
review the impact of SBA entrepreneurial programs on our
communities, looking at the macro view of impact to assure our
entrepreneurial development programs are the right size and
effectiveness to meet our current demands, addressing the
revenue disparities for minority, women, handicapped, and
veteran-owned firms, and finding ways to expose these emerging
small businesses to the mainstream marketplace.
In my written testimony I have detailed comments, and today
I will offer highlights. We continue to recommend that programs
like the Veterans Business Center program be housed within the
Small Business Development Centers so that the veterans can
have the best exposure to businesses with better experience,
networks, and access to capital. However, we understand that
our veterans have some very unique challenges as entrepreneurs,
and may require special counseling to achieve best results.
Additionally, there are clear regional needs that can best
be served through placing centers in high-density veteran
areas. We believe that the Procurement Assistance Grant program
duplicates the role of the Procurement Center Representatives
and the Procurement Technical Assistance Centers. There should
be more PCRs, and their roles should be better defined to
remove the obligation to counsel small firms, so that the PCR
may focus more internally to uncover and advocate for
opportunities for small businesses.
We commend this Committee in bringing the SBA into the 21st
century by establishing a high-quality multilingual distance
training and education program. The content should use
broadband so that the learning may be distributed through all
50 States, small businesses, and the SBA program offices.
We suggest that you consider increasing the budget for this
program twofold, as the development and delivery costs may
exceed the $2 million that you recommend. This program can
efficiently and effectively reach a broad group of individuals
in need of quality entrepreneurial training.
We applaud creation of the Office of Native American
Affairs within the SBA and the Tribal Business Information
Centers, as it will provide a great impact on our tribal
communities and provide a platform to extend the e-learning to
these communities. We support the continued efforts of this
Committee to assure the Women's Business Centers become self-
sustaining and serve socially and economically disadvantaged
women. We continue to believe that women business owners would
be best served through folding Women's Business Centers into
SBDCs, and simply establishing women's outreach and support
specialists.
We support your efforts in the Expanding Entrepreneurship
Act of 2009. The strong focus on jobs is the primary metric for
measuring success. It is absolutely appropriate. Job creation
must be the number one objective of the SBA. All resources and
programs must lead to this end. Even the new sole proprietor
can be measured as a new American job created and fulfilled.
And if for no other reason, the profound role the SBA can play
in job creation in America should compel President Obama to
place the SBA Administrator on his Cabinet.
In conclusion, America needs entrepreneurial development
programs that match our challenging economic times.
Coordinating and aligning the SBA programs is vitally
important. Limiting duplication will prevent waste to the
taxpayer money. And the economic challenges we face mandate
that our small business programs are working efficiently and
effectively. Coordination and cooperation between programs is
essential to achieve best outcomes. Thank you.
Chairwoman Velazquez. Thank you, Ms. Dorfman.
[The statement of Ms. Dorfman is included in the appendix
at page 29.]
Chairwoman Velazquez. And now I welcome Mr. Scott Hauge. He
is the First Vice Chair of the National Small Business
Association. He has been a leading advocate for small- and
medium-sized businesses. The National Small Business
Association is the oldest small business advocacy organization
in the United States, representing more than 150,000 small
business owners across the country. Welcome.
STATEMENT OF SCOTT HAUGE
Mr. Hauge. Chairwoman Velazquez, Ranking Member Graves, and
members of the Committee, thank you for inviting me here today
to be able to speak on the importance of the entrepreneurial
development programs of the U.S. Small Business Administration.
The Committee certainly is focusing on job creation through
entrepreneurship at an unfortunately opportune time. The U.S.
is the in the midst of the worst financial crisis since the
Great Depression. Historically, small businesses have led
America's resurgence out of periods of economic distress and
uncertainty. The Economist recently pointed out Microsoft,
Genentech, Gap, and The Limited, just to name a few, were all
founded during recessions.
Previous small business-led economic recoveries were based
less on the sudden expansion of existing small businesses than
they were on the creation of millions of new small firms.
Suddenly out-of-work employees, many of them laid off from big
businesses, identified a niche they could fill, a product they
could provide, or a service they could enhance, and decided to
start their own firms.
If today's aspiring entrepreneurs are to succeed, they are
going to need support and guidance on an array of issues, and
the Job Creation Through Entrepreneurship Act of 2009 seeks to
improve the counseling, technical assistance, education and
mentoring, outreach, and networking opportunities offered by
the Federal Government through the SBA.
The NSBA applauds these efforts. Starting a new business
has never been easy, but the task is even more formidable
today. This makes entrepreneurial development programs the Job
Creation Through Entrepreneurship Act would authorize and
modernize all the more important. With America's entrepreneurs,
existent and aspiring, suffering through a crippling credit
crunch, programs that provide information and technical
assistance on the acquisition of capital have never been more
important. Even in the best of times, accessing capital is one
of the most persistent obstacles facing small business owners.
In fact, the small business members of NSBA consistently have
identified access to capital as one of the top 10 issues
impacting their firms.
This perennial problem is worse now, given the economic
times. According to a nationwide survey of small- and medium-
sized business owners commissioned in 2008 by NSBA, 55 percent
of small- and mid-sized business owners had difficulty securing
credit in the previous 6 months. And this finding was
consistent across firm size.
In the past, small business owners chiefly would obtain
capital through three avenues, which at the moment are very
difficult: borrowing from themselves, borrowing from friends
and family, or borrowing from the bank. Home values are down,
stocks are down, very difficult to borrow from themselves.
Friends and families are struggling also. Same problem. Banks
are just not making loans. In addition to tightening their
credit standards, hundreds of banks have dropped out of the
lending programs offered by the SBA. There has been a very
dramatic drop over the last year, the last couple of years, in
the number of loans made through the 7(a) and the 504 program.
NSBA commends inclusion in the bill of many sections
focused on providing aspiring and existing small business
owners with information on how and where to seek capital,
improve their financial presentations for lenders, both
traditional and nontraditional. NSBA particularly supports the
provisions in the bill aimed at coordinating and aligning the
various entrepreneurial development programs within the SBA. It
is vital that the SBA programs aimed at discrete constituencies
complement each other and work in unison.
Establishing a portal through which small business owners
will be able to access on the main Web site comprehensive
information on all the SBA entrepreneurial development programs
is extremely welcome.
NSBA welcomes the legislation's provisions pertaining to
contracting. Small businesses need those Federal dollars to
work on, but we also bring something to the table in that we
bring new services, we bring entrepreneurism, and we bring
competitiveness to the country, and the best use of their
dollars.
Access to capital is always important, but right now is
very important. And we think it is clear that the Job Creation
Through Entrepreneurship Act is going to be of great benefit to
small businesses.
Finally, I would like to touch on a provision in the bill
that is close to my heart; specifically, the creation of a
green entrepreneurs program. Through this critical provision,
participating Small Business Development Centers will provide
education classes and one-on-one instruction in starting a
business in the fields of energy efficiency, green technology,
and clean technology. This is an overdue but extremely welcome
development.
NSBA thanks the Committee for its introduction of the Jobs
Creation Through Entrepreneurship Act of 2009 and its efforts
to help small business.
I would like to make just one comment that I think shows
the way small businesses approach things. Small Business
California recently did a survey and asked them would they be
in business in 3 years? Even in this very difficult time, 84
percent saw themselves in business in 3 years. I think that is
truly remarkable and shows the optimism and doggedness, if you
will, of small business. Thank you for the opportunity to
speak.
Chairwoman Velazquez. Thank you, Mr. Hauge.
[The statement of Mr. Hauge is included in the appendix at
page 35.]
Chairwoman Velazquez. And now I welcome Ms. Connie Evans.
She is the President and CEO of the Association for Enterprise
Opportunity. She is the founding President of the Women's Self-
Employment Project, and has a long history of leadership within
the microenterprise development field. Founded in 1991, The
Association for Enterprise Opportunity member organizations
bridges the gap between disadvantaged individuals and the tools
they need to start and grow successful businesses. Welcome.
STATEMENT OF CONNIE EVANS
Ms. Evans. Thank you. Chairwoman Velazquez, Mr. Graves,
members of the Committee, thank you for the opportunity to
testify here today for the SBA entrepreneurial development
programs and the role of Women's Business Centers in economic
recovery. I am grateful for your strong leadership and
commitment to small business and entrepreneurial development.
AEO represents nearly 400 microenterprise development
organizations around the country who have served over 2 million
microentrepreneurs. Chairwoman Velazquez, I have been involved
in enterprise development, as you mentioned, since the mid-
1980s, when I started one of the first microenterprise and
micro loan programs in the country, assisting urban women in
Chicago to become business owners. I am very proud to say that
we hosted the original architects of the legislation that was
used for a model for designing the SBA Microloan program. I
have personally seen how these programs unleashed new economic
activity and job creation in communities.
As the members of the Committee are well aware, there is a
constant tension within the SBA between the intent of its
financial assistance programs and the subsidy of the programs.
The argument is that microlending programs are too expensive
and the return limited.
However, the facts of the SBA microlending programs prove
this argument to be false. First, the International Labor
Organization estimates that the return on investment in
microenterprise development through programs such as PRIME and
the Women's Business Centers ranges from $2.06 to $2.72 for
every dollar invested. Second, the SBA microloan program, as
compared to other SBA lending programs, reaches women, African
American, Hispanic, and rural business owners in significantly
greater percentages. For example, 48 percent of women are
served by the SBA microloan program, as compared to 18 percent
by 7(a). Third, these programs, WBCs and microenterprise
development, serve low-income clients at least 67 percent of
the time.
These facts demonstrate that investment in microenterprise
is both cost-effective and market-effective, serving the
communities and entrepreneurs most in need. We contend that
these dollars are an investment, not a subsidy.
Further, AEO estimates that 2.3 jobs are created annually
per business served by our industry, at a cost of less than
$5,000 per job created or protected. Notwithstanding this
record, it remains difficult for our clients, these small
business owners, to receive the capital and technical
assistance they need to sustain or grow current employment
levels. The public investment in these businesses through the
entrepreneurial development services of the SBA, including the
Women's Business Centers, SCORE, and the SBDC offices, leads to
strong business growth, job creation, and vibrant local
communities. In our current economic crisis, we need these
programs to fulfill their intent to provide the assistance when
traditional private institutions cannot do so at an affordable
price, and to provide it to the communities and people that it
serves who are most in need.
The country's Women's Business Centers are hubs of activity
in urban and rural communities. The WBCs provide unique
services to women entrepreneurs with critical business
education and access to market and capital resources. These
inputs lead to business retention, while creating and retaining
thousands of jobs per year.
In these unprecedented times, the WBCs are an important
economic development tool for many communities. It is the
investment in Women's Business Centers and microenterprise
development that allow nonprofit organizations to weave
together an important base for business development and job
creation.
The Women's Economic Self-Sufficiency Team is one example
of a microenterprise development organization that is also a
Women's Business Center whose mission is to facilitate economic
self-sufficiency through sustained self-employment in the State
of New Mexico. They provide a comprehensive set of services,
including training, technical assistance, and access to capital
targeted to both startup and existing businesses.
In 2009, the organization opened the WESST Enterprise
Center, a 37,000 square foot LEED-certified small business
incubator in downtown Albuquerque. Once fully occupied, the WEC
will house 18 to 22 growth-oriented businesses, each with the
ability to create jobs for low- and moderate-income people. It
is at this moment that we must increase the investment in these
businesses by strengthening the vital programs that serve them,
ensuring that the agencies who are implementing these services
have the funds to keep their doors wide open. The
microenterprise development industry is uniquely qualified to
work with emerging business sectors and populations with
limited access.
Let me conclude by clearly stating the gratitude that we
all hold in our industry toward the Committee and the
tremendous leadership of the Honorable Chairwoman Velazquez,
who has from your very first days as a Member of the House
stood strong and clear in your advocacy for women's businesses.
AEO stands behind the services of the Women's Business
Centers, SCORE and Small Business Development Centers. We
applaud your support of H.R. 1838, along with your support of
fully funding PRIME. We thank you for acknowledging that the
SBA microloan program and TA services, along with Enterprise
Development Service Centers discussed here today are not a
subsidy, but an investment in the American dream on Main Street
and every street. Thank you.
Chairwoman Velazquez. Thank you, Ms. Evans.
[The statement of Ms. Evans is included in the appendix at
page 41.]
Chairwoman Velazquez. I welcome Mr. Justin Brown. He is the
legislative associate for Veterans of Foreign Wars. Mr. Brown
is a veteran of the United States Navy, having participated in
Operation Southern Watch and Operation Iraqi Freedom. The VFW
is the Nation's oldest major veterans group, with more than 1.7
million veterans who have served our Nation overseas. Welcome.
STATEMENT OF JUSTIN BROWN
Mr. Brown. Thank you, Madam Chairwoman. Madam Chairwoman,
Ranking Member Graves, members of this Committee, on behalf of
the 2.2 million members of the Veterans of Foreign Wars of the
United States and our auxiliaries, I would like to thank this
Committee for the opportunity to testify and for its rigor in
pursuing small business issues on behalf of veterans.
The issues under consideration today are of great
importance to veterans, to our members, and to the entire
veteran population. During this economic recession, the number
of unemployed veterans has increased to more than 1 million as
of March 2009. There are twice as many unemployed veterans as
there were 1 year ago, and there are more unemployed Iraq and
Afghanistan veterans than service members in Iraq and
Afghanistan combined. Make no mistake, our service members are
leaving Iraq and Afghanistan, coming home and fighting another
war against unemployment, homelessness, bankruptcy, and a host
of medical conditions.
In this tough economy, many veterans are considering self-
employment. Unfortunately, there are scarce resources for
transitioning veterans interested in small business. The VFW
believes the answer to veterans unemployment is multifold, and
that increased resources for veterans interested in
entrepreneurship is one of the answers to this national issue.
Veterans, if given the opportunity, will succeed in small
business because they understand the concept of hard work, can
adapt quickly to changing times, and are goal-oriented.
We believe that Title I of the Job Creation Through
Entrepreneurship Act of 2009 will have a large impact on
veterans, and the VFW is highly supportive of it.
Currently, veterans only have access to eight Veterans
Business Centers in the entire United States, and only five
that are receiving government funding. These centers have
proven successful to veterans interested in receiving
entrepreneurial education, information, and resources to assist
them in starting or maintaining a business.
This act would expand these services by providing $10
million for Veterans Business Centers in fiscal year 2010 and
12 million for fiscal year 2011. These funds will be issued to
centers that meet the criteria as established by the director
of SBA, and are required to seek matching funds for grants they
receive. The grants will be broken into two categories, initial
grants and growth funding grants. Priority for grant
applications will given to areas where the population of
veterans, or OEF/OIF veterans exceeds the national median of
such veterans.
While we are highly supportive of the intent of the
legislation, we do have some concerns. In the future, we do not
want to see veterans utilizing these Veterans Business Centers
only to find they are unable to secure a loan for their
business.
The business centers are half of the equation. Access to
capital is the other half. And we strongly urge this Committee
to further address it and consider creating a direct loan
program. For many veterans, credit was and is negatively
affected due to their military service. The VFW has found this
to be more common among veterans who participated in the
invasion force of Iraq, and Afghanistan veterans, due to a
general lack of access to communications and the Internet. In
this, many service members were unable to pay bills, receive
credit alerts, or learn of any other issues that might
negatively affect their credit until the damage was already
done.
Another issue for veterans in accessing capital is that
they lack equity, property, and lack the credit history
necessary for many small business loans. Again, the VFW
strongly supports Title I of this legislation. This is a hand-
up program in the right direction to correct a long overlooked
population in the realm of small business.
Veterans need a substantive veterans business program that
will provide the tools and resources necessary to create and
maintain business. As America's largest group representing
combat veterans, we thank you for allowing the Veterans of
Foreign Wars to present its opinion on these very important
issues. Veteran entrepreneurship, if expanded, is a win-win for
everyone, including the government and America's taxpayers.
Madam Chairwoman, this concludes my testimony, and I will
be pleased to respond to any questions you or the members of
this Committee may have.
Chairwoman Velazquez. Thank you, Mr. Brown.
[The statement of Mr. Brown is included in the appendix at
page 45.]
Chairwoman Velazquez. Our next witness is Mr. Ken Yancey.
He is the CEO of SCORE, counselors to America's small
businesses. In this position, Mr. Yancey coordinates all
program efforts, prepares the Association's development plan,
and manages strategic alliances and fundraising activities for
SCORE.
The SCORE Association was formed in 1964 as a nonprofit
association dedicated to entrepreneur education and the
formation, growth, and success of small businesses nationwide.
Welcome.
STATEMENT OF KEN YANCEY
Mr. Yancey. Thank you, Chairwoman Velazquez, Ranking Member
Graves, members of this Committee. I appreciate the opportunity
to testify.
As you know, SCORE offers free business mentoring and low-
cost workshops. Since its creation by Congress 45 years ago,
SCORE has helped more than 8.3 million people. Last year SCORE
volunteers helped more than 350,000 entrepreneurs and donated
more than 1.3 million hours of service.
According to an SBA report to Congress, SCORE helped to
create more than 19,700 businesses in 2007, at a cost of $29
per business. SCORE helps to create more than 25,000 new jobs
each year according to an SBA entrepreneurial development
impact study. Based upon SCORE's $5 million appropriation,
these jobs are created at a cost of $200 per job. Simply put,
there is no other program that comes close to delivering the
same number of new businesses and jobs at a better rate of
return on the taxpayers' investment.
SCORE has developed a rigorous measurement program to
ensure that we provide excellent client outreach data. Today
SCORE tracks all counseling cases, counseling hours, volunteer
hours, and quality in a customer relationship management
system.
While H.R. 1839 and H.R. 1842 call for consistent data
collection across all SBA partners, it is already in place
through the SBA's EDMIS system. The EDMIS system captures all
activities for each resource partner based upon consistent
definitions. SCORE has adapted from a traditional face-to-face
services model to a blended service model, leveraging new
Internet-based technologies. This includes the expansion of our
online presence, online workshops, and social media. Today we
are the national leader of online technical assistance among
SBA partners.
H.R. 1807, which calls for distance learning, supports the
direction SCORE is going with our efforts to use technologies
like Skype to deliver mentoring and training services. We would
like to request that SCORE be added to this bill.
Additionally, the SCORE Web site at SCORE.org provides a
wealth of knowledge by business stage and by special interest
area. We believe that H.R. 1842, which calls for the addition
of consumer content on the SBA Web site, duplicates that
resource that is available today at the SCORE Web site.
As part of our social media strategy, SCORE will launch its
online client community this month in partnership with
PartnerUp, a Deluxe Company. This new leading-edge community
will offer SCORE mentoring and peer-to-peer networking
opportunities within a growing community of 80,000
entrepreneurs. This supports the request in H.R. 1839 related
to small business networking.
SCORE supports the outreach to our country's veterans as
proposed in H.R. 1803. SCORE would be pleased to partner with
the new Veterans Business Centers, if appropriate, to leverage
our existing capabilities and to avoid duplication.
Today SCORE faces a serious challenge: our funding. SCORE
has been level-funded at roughly $5 million for almost 10
years. Simply put, SCORE needs your immediate support and
investment. SCORE is the only resource partner not to receive
an increase in funding in the last few years. We do deserve an
increase in our appropriation.
We appreciate the Committee's support for $7 million in
both 2010 and 2011, as requested in H.R. 1839. Unfortunately,
it is not enough. SCORE is beginning a large-scale
transformation process that will enable us to dramatically
increase the number of businesses started during the next 5
years. To meet this goal, SCORE is requesting a significant
increase in funding to implement new initiatives that will
improve client service, access and quality.
We request that the Committee consider authorizing SCORE at
$10 million in 2010 and 2011. These funds would be used to
develop new online mentoring services through online video and
online chat, redevelop and relaunch the new SCORE Web site
focused on enhancing interactive client services and content,
create a national online registration system for counseling and
workshops, create a national standardized counseling
methodology, create a certification program for all SCORE
volunteers, create a national call center that can assist
entrepreneurs 24 hours a day, 7 days a week, and dramatically
expand our volunteer recruit efforts to double the number of
volunteers to 22,000.
There is nothing more powerful than an army of passionate
volunteers dedicated to success of small businesses of America.
We currently have the passion, the volunteers, and the
leadership to take this organization to the next level
immediately. What SCORE has been missing and what continues to
be missing today is one important ingredient: It is a higher
level of funding.
Chairwoman Velazquez, SCORE has an incredible opportunity
to dramatically boost small business creation and survivability
rates, but we need your help now. We appreciate the support of
this Committee and your personal support of SCORE. Thank you
very much for having me today and I look forward to responding
to questions.
Chairwoman Velazquez. Thank you, Mr. Yancey.
[The statement of Mr. Yancey is included in the appendix at
page 51.]
Chairwoman Velazquez. Ms. Dorfman, I would like to address
my first question to you. As you know, some of these programs
of SBA have not been modernized for almost a decade. In order
to make the changes necessary, we need to do it based on well-
defined performance measures.
The SBA has typically relied on quantity-based indicators,
such as the number of clients served or counselor hours
provided. A better measure might be outcome-based, such as the
number of businesses started or jobs created. Do you believe
that such outcome-based indicators are more appropriate than
those that are quantity-based?
Ms. Dorfman. I would say absolutely, especially as a
business owner. I would like to see the numbers reflect how
many jobs were created from the small business, what was their
revenue increase? That is the true indicator of whether a
business is successful, and the number of small businesses
started and then how they have grown.
So absolutely that makes much more sense than the numbers
in and numbers out that we have seen in the past.
Chairwoman Velazquez. Aren't you concerned that these type
of outcomes will be more difficult to measure?
Ms. Dorfman. Well, it will be new and different, but I
think that this will help the SBA to be very focused in terms
of the programs that are there and the outcomes. And in the
long run I think it will be much more efficient and we will see
a much better return on the investment.
Chairwoman Velazquez. Mr. Brown, as you know, the SBA
operates a wide variety of training initiatives targeting
specific demographics. What is so unique about the veterans
population that they require their own program?
Mr. Brown. Thank you for the question, Madam Chairwoman.
I think there are a number of things. First and foremost,
especially amongst younger service members coming back, they
have very specific needs. And they are also going to have their
own credit issues in consideration of small business. I think
there are a number of fixes we can look at for that. One is
either directly assessing their credit issues as a result of
their service, or creating a loan program that makes it more
likely that they will be able to access capital.
But in regards to the Veterans Business Centers themselves,
you know, we obviously do have the set-asides, and I think that
veteran business owners, from what I have seen, tend to work
very well together. And if we can help facilitate this and find
a unique place to kind of get this started, I think it will
build upon itself. And I think we have seen that with the
Veterans Business Centers that already do exist.
Chairwoman Velazquez. Okay. There are two delivery points
for veterans to secure business counseling. First, there are
SBA's veterans ED programs, which are underfunded. And second,
there is the Veterans Corporation that is ineffective.
Mr. Brown. Right.
Chairwoman Velazquez. What aspects of the new Veterans
Business Center will make it superior to the existing programs
it would be replacing?
Mr. Brown. I think most importantly would be the quantity
and the geographic location. I mean I think if you look at the
western United States--in fact I have a map which I don't know
if you can see from there, but if you are anywhere in the
United States you are going to have a lot of trouble accessing
these centers. I think foremost that is the most important
issue, is that we have a higher number of them that are more
accessible.
Chairwoman Velazquez. Okay. Thank you.
Ms. Evans, many of the Nation's smallest businesses are
located in areas that lack the entrepreneurial development
infrastructure of more affluent communities. And this is why
the Women's Business Center is so important. How much of a
priority should it be to focus new centers in these low-income
communities?
Ms. Evans. Madam Chair, I think it is incredibly important.
As you probably already know, when women start businesses and
use their income to not only create jobs in the communities,
they also build assets. And when children are raised in asset-
positive homes, we see outcomes that go beyond just the job
creation and the community development, but also we see
increased educational, health and other positive outcomes.
Making sure that Women's Business Centers are in these low-
income neighborhoods and communities, where often there are
female single heads of households, we think it is very
important as we look at the many impacts that are happening in
the communities from these businesses being there.
Chairwoman Velazquez. And do you think that the agency's
approval of grants should take into account the centers'
ability to serve the low-income population?
Ms. Evans. Again, definitely. We have some of the most
entrenched poverty in these communities, and entrepreneurship
development must play a key role in providing the necessary
opportunities for asset building and wealth creation for these
individuals in order to rebuild their communities. And so we
must ensure that all the communities throughout the country
have access to entrepreneurial development services,
particularly those aimed at women.
Chairwoman Velazquez. Thank you.
Mr. Hauge, the proposed legislation takes several steps to
foster better coordination among the different SBA's
entrepreneurial development programs. And this includes the
development of a comprehensive strategy that draws upon all the
agencies' training and counseling initiatives. Why do you think
this is important?
Mr. Hauge. Well, I think there have been problems in the
past of coordination amongst agencies. And clearly if there is
a common goal amongst the agencies and there is a direction, it
clearly would be more effective. And this has been a problem in
the past of agencies going different directions, fighting with
each other.Turf battles is not the most effective for small
businesses.
Chairwoman Velazquez. Ms. Dorfman?
Ms. Dorfman. You took the words out of my mouth. There has
been a competitiveness, and we really need to see focus to move
forward and to bring together the consistency across the
various agencies. And having even one person kind of
coordinating that, bringing people in the door and then
identifying what is the best avenue for that individual or for
that small business, where they need to start, would be of
great assistance, I think, for a small business owner rather
than the fragmentation and hearing from different people and
not sharing the best way to start.
Chairwoman Velazquez. Thank you.
Mr. Hauge. Could I just ask a question? Are you talking--
because I think we have got problems in both areas--are you
talking specifically within the SBA programs or across agencies
in general?
Chairwoman Velazquez. No, SBA.
Mr. Hauge. Well, I agree with you. But I think there is
another problem, agencies in general. And it creates a real
problem that you cannot have--we have a situation right now
where under the energy bill that was passed in 2005 and 2007,
the SBA was to work inter-agencies to assist small business in
energy conservation and job creation, and that just has not
happened.
Chairwoman Velazquez. There are a lot of things that have
not happened. But this is the purpose of this Committee's
oversight role.
Mr. Graves.
Mr. Graves. Thank you, Madam Chair. If each of you could
just pick one thing when it comes to the entrepreneurial
development program, you know, and you can simplify it or
expand on it, but just give me the one quick thing that comes
to mind that would help. And this is coming from each of your
individual areas, obviously, of expertise or your focus. But
what would be the one thing that would make all the difference
in the world? Ms. Dorfman?
Ms. Dorfman. I think, again, the coordination between the
various programs, streamlining, preventing the duplication that
could occur, will make the programs more effective and
efficient.
Mr. Hauge. I don't mean to be repetitive, but I think that
is--
Mr. Graves. I figured both of you kind of answered it. Ms.
Evans?
Ms. Evans. I would expand the PRIME, SBA PRIME program,
doubling that program and expanding its reach to all 50 States.
Mr. Brown. Thank you for the question. In addition to the
legislation that is laid out, we would urge increased access to
capital through a direct loan program or something to that
means, additional financial tools for access to capital.
Mr. Yancey. From a SCORE standpoint, support totally the
need for additional information on outcomes as opposed to
outputs. All of our stakeholders, the SBA, the Congress,
everybody that we work with, is interested in that number. So
the more we do there the better off we are going to be as an
organization. And, of course, from a SCORE standpoint, funding
would be also very helpful.
Mr. Graves. But outcomes are the biggest--emphasis on
outcomes?
Mr. Yancey. Yes, sir. Jobs created, business starts. And I
would like to add to that survivability. You know, what we know
based on survey is that the toughest time for small businesses
are startup through the first six quarters. And we would like
to begin and will attempt to begin to track that as best we
can.
Mr. Graves. Okay. Thank you, Madam Chair.
Chairwoman Velazquez. Mr. Schrader.
Mr. Schrader. Okay. Thank you, Madam Chair.
Ms. Dorfman, given your testimony about unifying and
coordinating a lot of the disparate programs within the Small
Business Administration, what do you think about the fact that
we are actually creating more programs within SBA?
Ms. Dorfman. Well, I have always said I think that the
SBDCs can handle it with specialized people within those
agencies to address each of the socioeconomic areas. Given the
way we are--if you are developing these programs, I think that
is why I say that coordination is key so that there is not the
duplicity in that. And then the focus again on the economics of
survivability, and the small businesses growth, and just sort
of the economic outcome for them would be very important.
Mr. Schrader. It would seem that we would want to make sure
that we are not adding to the burden, we are actually making
sure--or cross-training. I mean the fact that we don't have a
lot of extra money to throw around, at least at this point,
perhaps cross-training of individuals so they could address the
women's issues, veterans issues, appropriately.
Let's see, Mr. Yancey, excuse me, I was heartened by your
response to the Chair's and Ranking Member Graves' questions
about outcomes, because it has been my experience in my home
State of Oregon that it was very difficult to get any outcome
data at all. There were a lot of input stuff. As a matter of
fact, it would be good in the legislation, I think, just to
line out exactly the outcomes that we are talking about.
Because I don't see that bureaucracies, with all due respect,
are able to formulate thoughtful ones on their own or actually
able to track them.
And we are the legislators, we are the policymakers, not
the bureaucracies. It would be nice if we could come up with
things that we think the taxpayers are interested in funding.
And I think you have hit upon several here, certainly the
actual outcomes as they go forward.
Mr. Yancey. Thank you.
Mr. Schrader. I guess a question for Mr. Hauge: How
effective do you think SBDCs are?
Mr. Hauge. Well, at one time--
Mr. Schrader. I can tell you how effective I think they
are.
Mr. Hauge. At one time I was the Chair of the National
Advisory Committee for the SBDC so I do have some history
there. I think the SBDCs can play a tremendous role in
assisting small businesses. And in a number of areas around the
country, they have done that.
I guess my only comment would be is I would like to see all
of the--not all, but more of the SBDCs to be more
entrepreneurial.
I sense in some of them that because they are housed in
universities, there is an academic, bureaucratic position. And
I think that where they function best is where you have
entrepreneurs that are running those centers and assisting
small businesses.
Mr. Schrader. Very good. Well, I would tend to agree. I
don't think many businesses know they exist, so part of the
education--like in the bill, we talk about the Web site, making
portals available, advertising the fact that they are there.
And again, frankly, I spent a year trying to get outcomes out
of the SBDC in the State of Oregon. And also, Madam Chair, I
think these things should be audited. I have a lot of people
that tend to say we created X number of jobs. You go back and
you audit you find out those jobs never existed, or the SBDC
had little or no effect on that, it was actually somebody else
that came in and made the major effect.
So I really applaud where this legislation is going in
trying to make sure that we are actually doing the best we can
with the little bit of money that we have. I might also
recommend that we continue to look at getting rid of a lot of
the output requirements or the input documentation that make it
difficult for small businesses or SCORE or the SBDCs to
actually do the job they need to do. They are so busy writing
the reports that they, frankly, can't do what they are trained
to do or want to do, I think, in their hearts of heart. And
with that I yield back my time.
Mr. Hauge. Could I just add to that if you don't mind? I
think the SBDCs have for years been pushing to increase their
budgets, and I think that is very good. However, I think there
should be a contingency or what else are they going to bring to
the table? What are they going to do?
There are tremendous opportunities with the SBDCs in the
energy arena. They can serve a tremendous role in helping small
businesses lower their energy costs, developing small
businesses that are green businesses. And I think those kind of
things should be encouraged and additional funding should be
provided where they are doing that.
Mr. Schrader. Thank you.
Chairwoman Velazquez. Now I would recognize the Ranking
Member of the Subcommittee on Rural Development,
Entrepreneurship and Trade, Mr. Luetkemeyer. He has worked very
hard on this bill and he is a sponsor of the bill.
Mr. Luetkemeyer. Thank you, Madam Chairwoman. I appreciate
those remarks and I want to thank you and Ranking Member Graves
for your hard work on this issue of trying to make the SBA more
responsive and improve its operations. I think it is extremely
important, and your leadership is very much appreciated on this
issue. And I think you have done a great job of putting this
together and I want to thank you for that.
I will keep my remarks very brief here. Just for Mr. Brown,
you made a comment about direct loan. Can you expand on that,
what you are looking for with your direct loan stuff?
Mr. Brown. Sure. Thank you for the question, Congressman.
One of the things that we are seeing right now is that with the
capital options that are available many, especially younger
veterans in consideration of transferability, are not getting
approved for these types of business loans, whether it be
because they lack credit history, whether it be because they
have poor credit scores--sometimes, as I stated in my opening
statement, due to their service.
What we are hoping to see is potentially a direct loan
program through something like SBA in which, if they did not
get approved for, say, the Patriot Loan Express or a loan
through a third party, that they would be able to look into
accessing capital through SBA and maybe have some additional
measures. Maybe they have to do additional small business
training and they have to actually sit down and really have
someone go over their business plan. And there would be
additional mechanisms to someone that was going through it,
that was going to get a loan directly through SBA.
We have had this before, I think it was 20, 25 years ago,
but that is kind of the idea we were getting at is that it
would give veterans that are not getting--that are unable to
get access to capital an option.
Mr. Luetkemeyer. I appreciate your comments.
I am willing to work with you on that issue. Having been in
the business for over 30 years, I know a little bit about the
direct lending. When the government gets involved, it doesn't
do a very good job, quite frankly. I think we are better off
from the standpoint of being able to monitor and being able to
do a better job of addressing the needs of an individual.
If you leave it in private hands and have SBA guarantee it,
I think probably if we could work on some sort of language that
would allow it to put some parameters in place--and, boy, I
would love to work with you on that and see if there is a way
we could--you have indicated a few things here like more
training or put some criteria together that if they fall
through the cracks of another program that there would be a way
you could qualify for a 95 or 100 percent guarantee or
something like that in an extreme instance where we have got
some credit difficulties. If it is a veteran, we would be able
to at least take a shot with those guys, to give them some
help.
I appreciate your comment about the direct loan, but having
been in the business for 30 years, the government doesn't do a
good job in direct loans. The experience has very poor. If you
look at what FHA did back in the 1970s, it took it all away
from them, because they did such a poor job, and it went back
to the lending institutions.
I think that we have seen that that has been very helpful
to the farming community over the years to get them back out
and get back into the guarantee portion versus direct lending.
I think you have a great idea from the standpoint of, if we
have some problems with the VA portion of this SBA program
here, we need to find out a way to come up with some new
criteria that will enable those folks to get the loans they
need to be able to participate in the programs. If they are
falling through the cracks, we can find a way.
Chairwoman Velazquez. Would the gentleman yield?
Mr. Luetkemeyer. Yes, Madam Chair.
Chairwoman Velazquez. Last year, we passed out such a bill,
not with direct lending, but it is loans specifically for
veterans returning from the war, 90 percent guaranteed, no
fees. All we need to do is to get SBA to implement the program.
Mr. Luetkemeyer. Appreciate those comments, Madam
Chairwoman. If you would like to include something like that in
this bill--
Chairwoman Velazquez. We don't have to. It is oversight. We
will bring SBA to inform us and to report where they are in
implementing the program.
Mr. Luetkemeyer. So we are already there. Fantastic.
With that, I yield back. I appreciate your time.
Chairwoman Velazquez. Mr. Moore.
Mr. Moore. Thank you, and I want to thank the witnesses for
being here to share your expertise and your perspective on
these things.
My first question is for anyone to answer. As you know, the
draft legislation that has been developed to reauthorize the
SBA's ED programs is designed to ensure that the programs can
effectively meet the demand for counseling, training, and
support services, to increase the accessibility of the programs
in underserved communities, to improve service delivery, and
close gaps in ED services.
In your opinion--whoever would like to answer this or
several of you--do you believe the draft legislation would be
effective in achieving these objectives? And are there
additional suggestions or specific reforms that you would
recommend be included in this legislation? Anybody care to
answer?
Not all at once. Any suggestions for improving the bill
here that would provide better services to people who are
trying to serve here?
Ms. Dorfman. I guess I would just kind of reiterate some of
the things that we talked about, the accountability and
transparency to make sure the outcomes are very focused on the
money that is coming in through revenues, the jobs created,
those sorts of things. I think those are the important aspects.
But I think you all have done a great job with what you have
done, and I appreciate that.
Mr. Moore. Anybody else?
Ms. Evans. I would just add, Congressman, that I think the
bill as written is a very good bill.
As it relates to accountability issues, I would urge you to
encourage the SBA to look at accountability mechanisms that are
already in the field. Our industry, the microenterprise
industry, working with the Aspen Institute and Ford Foundation
and several others have spent years identifying key indicators
and developing, monitoring and evaluation. So rather than kind
of come out of the blue with something that no one has had to
put systems together, we have actually had longitudinal data,
tremendous indicators, and data sets that I think would be very
useful in developing accountability and outcome measures. I
really encourage you to do what you can to use the existing
infrastructure for indicators, for business development
organizations, for accountability.
Mr. Moore. Thank you, Ms. Evans.
Mr. Brown.
Mr. Brown. Thank you for the question, Congressman.
One thing that isn't clearly written in the bill that we
have taken note is we think it should be expanded to include
not only veterans but members of the Guard and members of the
Reserve and surviving spouses.
Mr. Moore. Thank you.
Mr. Hauge.
Mr. Hauge. A specific area that I think needs to be beefed
up a little bit is the whole green aspect. Small business is
about 50 percent of the economy of this country; and when you
look at the resources that are available to small businesses,
not just in business startups and job creation but also in the
area of energy conservation, there are tremendous
opportunities. It has been shown that we waste about 30 percent
of the energy that we use; and with some very simple things,
which may just include maintenance--
We have got a program that we put together called On Bill
Financing, which is a program that takes a business, has an
audit, and the utility company then provides the money to do
the retrofit. And we have done very successful work with United
Illuminating back in Connecticut. Small Business California has
implemented a program in California.
That money is paid back at zero percent financing over a 2-
to 3-year period. It is a positive cash flow. And right now in
United Illuminating, they are doing it as a positive cash flow
to the business.
There are almost no defaults. Not only is that helping the
global warming situation, but it also is putting capital back
into the small business that they can use to hire people and
buy equipment.
Mr. Moore. Thank you.
My final question I would like to direct to Mr. Brown of
the VFW.
Mr. Brown, as a veteran myself, I am particularly
interested in the opportunities available to those who serve
our Nation in uniform. As you know, the structure of
entrepreneurial development assistance to veteran entrepreneurs
needs to be improved; and I think this legislation would expand
the veteran business center program.
I noticed in your testimony that you feel the legislation
does not go far enough in ensuring that the veteran small
business owners have access to capital, does not address a lack
of entrepreneurial education assistance, and doesn't address a
lack of compliance with Federal contracting requirements. Can
you go into a little more detail in how those can be addressed,
if you think they could?
Mr. Brown. Thank you for the question.
Much of what I would say is what I would reiterate of what
I have said earlier in regards to access to capital, that
really there are two ways, in my opinion, that we can look at
changing that. That is, either creating new financial tools,
whatever they may be, if it is a direct loan program, if it is
not a direct loan program. We are actually looking at service
members whose credit was affected by their service and looking
for some form of relief for those service members.
In regards to the set-asides themselves, I testified
recently before Congressman Nye's committee; and, really, we
just need the agencies on that side to step it up. Some are
doing excellent, DOD particularly is not, and others are
egregiously failing that mandate.
It has been 10 years since we passed Public Law 106-50, and
we are not even halfway there. We are not even at 1.5 percent.
We could really use any help from your side of the aisle and
really try to get these agencies to follow the laws that you
have created.
Mr. Moore. Thank you, Mr. Brown and the other witnesses. I
yield back.
Chairwoman Velazquez. Mr. King.
Mr. King. Thank you, Madam Chair.
I appreciate the testimony of the witnesses, and I hope you
appreciate the intensity of our schedule around this Hill.
I have a particular interest in distance learning; and it
is something that I have worked on for quite a number of years,
more than a decade. I just frame my belief in this, that
certainly education needs a mentor, someone with their hands on
the shoulder of the student; and that is an important component
of this. But, also, I have not watched technology develop in a
fashion in education and I think it has a potential.
When I look at distance learning in the area of military or
the private sector, I see that, at least by my judgment, they
are far ahead of especially our public education. We have some
universities and some schools of higher learning that have
taken some leads in distance learning. I have, of course,
communicated with them.
When I look at a whole combination of things with distance
learning--for example, there is a Virtual Reality Center at
Iowa State University. It has been there for some years. It is
a 12 by 12 by 12 cubicle, and you can go inside that and put on
a set of 3-D glasses and take a controller that gives you an
XYZ coordinate and you can go virtually visit the Taj Mahal or
the cathedral of Notre Dame and levitate up into the air, look
at it from a bird's eye view, go in the window up above the
gussets and the trusses, et cetera. It is a fascinating tool,
but it is only one of many different kinds of tools out there,
all the things that are available on the Internet.
The virtual reality component of this, text base, the text
that is a rolling quiz test system that would allow students to
grow their education at the pace of their ability. It seems to
me that distance learning has the potential not only to be a
useful tool for the entrepreneurs out there so they can
continue to get themselves up to speed at any hour of the day
or night, but it also is a tool that can take us to the point
to transform education and be able to have every student learn
at the pace of their ability rather than the pace of their
class.
So I would ask if there is anything in this bill we are
talking about or any ideas out here in the panel that would
care to expand upon that thought that I have offered to you. A
general question to whoever grabs the microphone.
Mr. Yancey. If I may, thank you for the question.
I will tell you from a SCORE standpoint we believe
technology is an enabler that will allow us to develop
relationships between counselors and clients in a variety of
different methods and manners, and we are beginning to do more
of that with communities and social media and so on.
It is not a desire that is limiting. It is the investment
ability. These things are not easily developed. You can do them
in partnership.
A good example is the new community that we will launch in
a couple of weeks in partnership with a company that provides
private label communities. They have donated that, so we are
very appreciative. But you can't always get these technology
donated. So what limits our ability to enhance our offer and
create more relationships using technology, distance learning,
whatever it might be is the investment.
I have got a plan. It is a $14 million plan, and we are
Implementing it little bit by little bit, because the funding
just doesn't exist.
Thank you for the question.
Mr. King. I thank Mr. Yancey.
And I would add to this question and offer back out, what
do you think of the idea of providing education as well as
technical assistance under a distance learning proposal? And
perhaps, Ms. Dorfman, you were leaning ahead more than anyone
else.
Ms. Dorfman. I am a great proponent of it. We have been
using at the Chamber various technologies to connect with
members or participants at our various educational seminars.
And I think that, yes, it can be accomplished; and for what we
have seen it is also for a business owner who is very busy and
doesn't have time to go to a meeting somewhere because of the
time it takes to drive them, to get there, attend the class,
drive back. Whereas if they can put it on mute and listen, and
if there is an emergency that comes in through the business,
they can take it and then get back to class. It really does
well for small businesses.
Well, there are some very expensive technologies out there.
There are also very affordable technologies out there as well.
We know where they are, and I would be glad to help with that
information.
Mr. King. I thank you. I thank all the witness, and I yield
back the balance of my time.
Ms. Evans. May I also answer, please? I think it is a very
good question. I would like to respond on a couple of issues.
One, because our members serve many communities, rural and
urban, that are low income. We still have the issue of
broadband coverage. So even though this technology would be
great in terms of reaching scale, we also must be aware that
not all of our communities have access to broadband coverage to
make that possible.
Secondly, I want to also reiterate the issue of investment.
AEO, my association, is moving to create a fund, raising social
capital that we can invest in these kinds of platforms that our
member organizations around the country can link into. I have
not seen anything in the present bills that actually will help
support our efforts in raising that capital. And so, looking at
the issue of broadband, looking at how do we get the investment
dollars to create platforms so--
For example, one of our members in Albuquerque, New Mexico,
has actually designed technology that is distance learning,
delivering technical assistance throughout the State. I
mentioned earlier Aspen Institute, one of our partners, has
already evaluated the use of the pilot. So they have done the
due diligence. We know it is an effective strategy for
delivering TA to the entrepreneurs. So we are now trying to
again put together a fund that can build a platform to expand
that to more members throughout the country in our association
to be able to use that. But broadband and investments
opportunities are clearly needed to make your ideas a reality.
Mr. King. I thank you very much for getting that in the
testimony.
Thank you, Madam Chair. I yield back.
Chairwoman Velazquez. Mrs. Dahlkemper.
Mrs. Dahlkemper. Thank you, Madam Chair.
Given my experience as a small business owner, I certainly
understand the daunting task of starting a new business and
making that business grow; and these entrepreneurial
development programs are critical in providing these businesses
assistance.
I do have a couple questions for a few of you.
Mr. Hague, what effect would the proposed legislation to
strengthen entrepreneurial development programs have on our
local economies? Do you have any sense of that in terms of do
these small businesses use other--use of other locales for
their workforce, for technologies, other needs?
Mr. Hauge. Clearly, if you strengthen the assistance to the
small businesses and provide them the tools to be able to
effectively develop their business and hire employees, that is
going to have a positive effect on the local economy.
The other thing that I would like to point out on that is
locally owned businesses have a disproportionate effect on the
economy, the local economy, as opposed to businesses that are
headquartered outside of the locality and taking capital away
from the economy in that specific area. There have been
numerous studies that shows that the return to the local--as a
result of the locally owned business versus the business that
is headquartered outside of that particular locality is much,
much greater and has a greater effect on that particular local
economy.
Mrs. Dahlkemper. Ms. Dorfman, do you want to comment on
that at all?
No, okay.
Mr. Brown, you showed your map; and I think there were five
locations for your veterans business outreach centers. One of
them is in my State of Pennsylvania, but it is still an hour
drive from my district. And, obviously, the whole western part
of the country, I think, from your viewing of your map, looked
pretty empty. So what do we need to do to make sure--
First of all, will this legislation make these centers more
accessible? And, if not, how do we need to change that? And,
also, what do you see are the needs going into the future here?
Mr. Brown. Thank you for the question, Congresswoman.
I think this legislation is an excellent start with a step
in the right direction, being that it would clearly create more
of the veteran business centers and it would concentrate them
where the veterans are by basing a priority of application for
the centers that have a higher than the median for the
respective veterans, veterans at large and then OEF and OIF
veterans especially.
Geographically, I think that is really one of the big
things hurting us. I have veterans calling me that are
interested in going into small business. They are looking for
resources, and I am over here praying that they are near one of
these eight veteran business centers. Because they have really
done a good job. I think what we are looking to do is duplicate
something that is working, which is, I think, a good way to
start. And does that answer your question?
Mrs. Dahlkemper. Yes, thank you.
Ms. Dorfman, in a 2004 survey, members of the National
Association of Women Business Owners cited as their top
concerns business marketing and business growth. How can the
legislation assist women-owned firms in expanding their market,
despite the current economic downturn?
Ms. Dorfman. I think the program focused--when you get into
the small business development centers and the other programs
out there, that the focus of making sure that their needs in
terms of business growth, whether it be marketing or, in our
case, when we did our survey door to door, it was really access
to Federal contracts and access to capital and access to
affordable health care that are key. And all these components I
think start that process.
I think what we want to make sure that has happened is make
sure there is quality to the programs, that it is consistent so
when you walk into one SBDC or women's business development
center or any centers that it will be the same across the
United States. There is not a disparate where one you might get
better quality service in one locale than another. So I think
those are some of the key things.
Mrs. Dahlkemper. Thank you. I yield back.
Chairwoman Velazquez. Mr. Graves?
Are there other questions by any other members?
Well, let me take this opportunity to thank all the
witnesses for your contribution and your insights on the
pending legislation before the committee. Hopefully, soon we
will be marking it up in the full committee and we will have
legislation ready to be sent to the floor.
Chairwoman Velazquez. I ask unanimous consent that members
will have 5 days to submit a statement and supporting materials
for the record.
Without objection, so ordered.
This hearing is now adjourned.
[Whereupon, at 2:21 p.m., the committee was adjourned.]
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