[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

                              ----------                              

                           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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