[Senate Hearing 111-1175]
[From the U.S. Government Publishing Office]


                                                       S. Hrg. 111-1175
 
  INVESTING IN SMALL BUSINESS: JUMPSTARTING THE ENGINES OF OUR ECONOMY 

=======================================================================

                               ROUNDTABLE

                               BEFORE THE

            COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP
                          UNITED STATES SENATE

                     ONE HUNDRED ELEVENTH CONGRESS

                             FIRST SESSION

                               __________

                            JANUARY 29, 2009

                               __________

    Printed for the Committee on Small Business and Entrepreneurship

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            COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP

                     ONE HUNDRED ELEVENTH CONGRESS

                              ----------                              
                   MARY L. LANDRIEU, Louisiana, Chair
                 OLYMPIA J. SNOWE, Maine Ranking Member
JOHN F.KERRY, Massachusetts          CHRISTOPHER S. BOND, Missouri
CARL LEVIN, Michigan                 DAVID VITTER, Louisiana
TOM HARKIN, Iowa                     JOHN THUNE, South Dakota
JOSEPH I. LIEBERMAN, Connecticut     MICHAEL B. ENZI, Wyoming
MARIA CANTWELL, Washington           JOHNNY ISAKSON, Georgia
EVAN BAYH, Indiana                   ROGER F. WICKER, Mississippi
MARK L. PRYOR, Arkansas
BENJAMIN L. CARDIN, Maryland
JEANNE SHAHEEN, New Hampshire
KAY R. HAGAN, North Carolina
             Donald Cravins, Jr., Democratic Staff Director
                Wallace Hsueh, Republican Staff Director



                            C O N T E N T S

                              ----------                              

                           Opening Statements

                                                                   Page

Landrieu, Hon. Mary L., Chair, and a U.S. Senator from Louisiana.     1
Cardin, Hon. Benjamin L., a U.S. Senator from Maryland...........     2
Shaheen, Hon. Jeanne, a U.S. Senator from New Hampshire..........     4
Isakson, Hon. Johnny, a U.S. Senator from Georgia................     4
Bayh, Hon. Evan, a U.S. Senator from Indiana.....................    11

                           Witness Testimony

Adams,Timothy, President and CEO, Systems Applications & 
  Technologies...................................................     5
Alford, Harry, President and CEO, National Black Chamber of 
  Commerce, Washington, DC.......................................     5
Coratolo, Giovanni, Executive Director, Small and Mid-market 
  Business Councils, U.S. Chamber of Commerce....................     5
Eckerly, Susan, National Federation of Independent Business......     5
Ferreira, David, United States Hispanic Chamber of Commerce......     5
Hernandez, D'Juan, President and Chief Executive Officer, Sun 
  Energy.........................................................     5
Littlejohn, Virginia, Chief Executive Officer and Founder, 
  Quantum Leaps..................................................     5
McCracken, Todd, President, National Small Business Association..     6
Sharpe, Joe, Deputy Director of Economics, American Legion.......     6
Sullivan, Ann, Women Impacting Public Policy.....................     6
Swift, George, President and CEO, Chamber Southwest and the 
  Southwest Louisiana Economic Development Alliance, Lake 
  Charles, LA....................................................     6

          Alphabetical Listing and Appendix Material Submitted

Adams,Timothy
    Testimony....................................................     5
Alford, Harry
    Testimony....................................................     5
    Prepared statement...........................................    52
Bayh, Hon. Evan
    Opening statement............................................    11
Cardin, Hon. Benjamin L.
    Opening statement............................................     2
Coratolo, Giovanni
    Testimony....................................................     5
    Prepared statement...........................................    35
Eckerly, Susan
    Testimony....................................................     5
Federal Highway Administraton
    Prepared statement...........................................    56
Ferreira, David
    Testimony....................................................     5
Hernandez, D'Juan
    Testimony....................................................     5
Isakson, Hon. Johnny
    Opening statement............................................     4
Landrieu, Hon. Mary L.
    Opening statement............................................     1
Littlejohn, Virginia
    Testimony....................................................     5
McCracken, Todd
    Testimony....................................................     6
NFIB: The Voice of Small Business
    Report titled ``411 Small Business Facts''...................    32
Shaheen, Hon. Jeanne
    Opening statement............................................     4
Sharpe, Joe
    Testimony....................................................     6
Sullivan, Ann
    Testimony....................................................     6
Swift, George
    Testimony....................................................     6


                      INVESTING IN SMALL BUSINESS:
                JUMPSTARTING THE ENGINES OF OUR ECONOMY

                              ----------                              


                       THURSDAY, JANUARY 29, 2009

                      United States Senate,
                        Committee on Small Business
                                      and Entrepreneurship,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 9:09 a.m., in 
Room 428-A, Russell Senate Office Building, Hon. Mary L. 
Landrieu (chair of the committee) presiding.
    Present: Senators Landrieu, Bayh, Cardin, Shaheen, and 
Isakson.

 OPENING STATEMENT OF HON. MARY L. LANDRIEU, CHAIR, AND A U.S. 
                     SENATOR FROM LOUISIANA

    Chair Landrieu. Good morning, everyone. Welcome to the 
first hearing of the Senate Small Business Committee in this 
Congress. Let me first welcome all of the members of the Small 
Business Committee who will be joining us throughout this two-
hour roundtable.
    I also would like to thank particularly our panelists who 
have joined us. We are anxious to hear your comments, your 
suggestions and your concerns about some of the issues before 
the Congress.
    Before I introduce our panelists, let me just make a few 
brief opening remarks and then turn to my colleagues and ask 
them for a brief opening statement, and then we will try to get 
right into the questions this morning.
    The title of our panel, Investing in Small Business: 
Jumpstarting the Engines of Our Economy, I think is very 
appropriate for the situation that we find ourselves in. Our 
economy is struggling to get traction to create jobs and to 
sustain the jobs that we have. As you know, the focus of this 
Committee is going to be, has been and will continue to be, how 
the Federal Government can be a better, stronger, more reliable 
partner for the entrepreneurs and small businesses that make up 
a significant section of this economy.
    I would like to mention that my ranking member, Senator 
Snowe, was planning to be here this morning, but she had the 
happy occasion to be called by President Obama to join him in a 
signing of the Ledbetter legislation. So that is where she is. 
Hopefully she will be joining us later today.
    We want to hear from our panelists today, again from 
business owners and advocates and from organizations 
representing a variety of small businesses. We want to hear how 
this Committee, this Congress and the Federal Government can be 
stronger, more reliable partners for creating the kind of 
environment that entrepreneurs need to succeed.
    I am particularly proud to welcome the Louisiana panelists 
who are here, George Swift and D'Juan Hernandez. They have done 
a wonderful job, specifically in Louisiana, representing areas 
of the state that were very hard hit in the last several years 
by natural disasters. So, I welcome them particularly.
    Let me mention quickly that under Senator Kerry and Senator 
Snowe's leadership, this Committee held several hearings and 
roundtables last year focused on the credit crunch, and on how 
we could do a better job in terms of tax policy or investment 
policy to ease that crunch. That crunch has now turned into a 
crisis in many ways for small businesses across our country, 
and we are anxious to hear about that from your perspective.
    Unfortunately, just this week, on Tuesday the Labor 
Department released new unemployment numbers. Two million 
Americans have lost their jobs in the last four months, and the 
nation's average unemployment rate stands at 7.2 percent. In 
some of the areas, geographic areas that are represented here, 
those numbers are higher. Thankfully, in some places, Louisiana 
being one of them, those numbers are lower for a variety of 
different reasons, but we do recognize that it is a very 
difficult situation.
    Today as we begin--and I turn to my colleagues for their 
opening remarks--please do not feel constrained to limit your 
comments to just the workings of the SBA. Although this 
Committee has jurisdiction over the Small Business 
Administration, I want and I think the leadership of Senator 
Snowe as Chair and also of Senator Kerry as Chair, broadened 
the reach of this Committee to really be an advocate for small 
business, to give you a platform, to give you a voice, so that 
we can hear as members of Congress some of your immediate 
concerns and hopefully, with you, fashion some real solutions.
    So with that, let me turn it over, in order of attendance, 
first to my good friend Senator Cardin from Maryland, who has 
been a senior, almost a senior member now of this Committee. We 
have several new members, and I will introduce them in a 
minute. Ben, we are happy to have you here this morning.

 OPENING STATEMENT OF HON. BENJAMIN L. CARDIN, A U.S. SENATOR 
                         FROM MARYLAND

    Senator Cardin. Well first let me say what a pleasure it is 
to have Senator Landrieu as the Chair of this Committee. I 
really look forward to working on this Committee and helping 
small business and helping our country by the work of this very 
important Committee. So it is a real honor to be here on the 
Committee under your leadership.
    It is wonderful to have Senator Shaheen with us on the 
Committee, and we welcome her to the Small Business Committee.
    Madam Chair, let me thank you for convening this as our 
first meeting of the Committee and bringing together 
individuals who can really help us understand what is happening 
out in the community as far as small businesses are concerned, 
minority businesses, woman-owned businesses.
    I just tell you, my constituents are angry by the manner in 
which the Government has so far responded to the economic 
crisis. The TARP program is not very popular, and I think for 
good reason it is not popular. A lot of money has been put out 
and Americans say that unless you are a big company, your 
chances of getting help is not very great.
    And they look at the fairness of what our country has done. 
In this morning's paper I read where major banks that have been 
coming in or financial institutions that have been coming in 
asking for assistance from the Federal Government just issued 
significant bonuses to their employees.
    This angers my constituents, and it angers me. So as we 
look at the use of the second half of the TARP money and as we 
are now considering an economic stabilization bill of $825 
billion on the floor of the United States Senate, I want to 
make sure that small businesses, minority-owned businesses, 
women-owned businesses will get the type of help that is needed 
for our economy to grow.
    I want to make sure that we have a fair program and provide 
fair assistance. President Obama said that we need to have a 
Federal involvement that will create jobs. I agree with that. 
We need a Federal involvement that will invest in America's 
future so that when we come out of this recession, we have the 
tools in place for America to grow.
    If we do not have small businesses and minority businesses 
and women-owned, we know we will not have the job growth that 
we need in this country, because that is where the jobs are 
created in America. So we want to make sure that at the end of 
the day we have in place the companies that will permit this 
nation to once again exercise its economic strength and its 
growth.
    I really do look forward to the presentations from the 
panel today. I know we need to do a better job with the tools 
that are available under the SBA. The cost of loans are 
prohibitive for many companies. I know we have to take a look 
at our tax code and we know that the Senate Finance Committee 
and the Appropriations Committee have made certain 
recommendations and we will be considering them next week on 
the floor. We welcome your thoughts as to how effective those 
provisions would be in making sure that small businesses can 
continue to exist and thrive in our economy.
    Madam Chair, I do want to recognize Tim Adams, who is here 
from the State of Maryland. Tim has been a personal friend and 
advisor to me on small business issues and has a leadership 
position in Prince George's County, Maryland with the business 
community. Tim, it is nice to have you here and I thank you for 
joining us.
    I notice there are other members of the panel that are 
listed from Washington, D.C., but I am concerned that they may 
very well be Marylanders, so let me welcome everybody here.
    [Laughter.]
    Harry Alford. I have to specifically mention Harry because 
his two sons are here, who are also residents of Maryland. So I 
welcome all the Marylanders who happen to be here today.
    Chair Landrieu. As a good politician, he has covered all of 
his bases this morning.
    [Laughter.]
    Chair Landrieu. Governor Shaheen, let me welcome you not 
only to the Senate, but to this Committee in particular. I 
think your expertise as a former governor and leader from your 
state will bring immeasurable benefit to us.

 OPENING STATEMENT OF HON. JEANNE SHAHEEN, A U.S. SENATOR FROM 
                         NEW HAMPSHIRE

    Senator Shaheen. Thank you very much, Chair Landrieu. I am 
delighted to be appointed to this Committee because, like you 
and like Senator Cardin, I appreciate the importance of small 
businesses to the country and to job creation.
    It is a particular interest for me as someone representing 
New Hampshire because most of New Hampshire's employees are in 
businesses that have 10 or fewer employees. Just to put it in a 
little better context, 94 percent of New Hampshire companies 
have fewer than 100 employees. They employ close to half of the 
state's labor force and approximately 85 percent of all New 
Hampshire companies employ 19 or fewer employees.
    I know I take my life in my hands when I use a Red Sox 
metaphor, but to put it in perspective, New Hampshire has 
enough small business employees to fill up Fenway Park about 
six times. So small business is clearly the engine that drives 
New Hampshire's economy. As we all know, it is one of the 
engines that drives the U.S. economy.
    I appreciate that it is business, especially small 
business, that creates jobs, it is not the government. I also 
know that the government has a role to play and particularly in 
these tough economic times, we want to make sure that we are 
doing everything possible, whether it is through the economic 
stimulus package or other policy proposals, that can benefit 
and help small businesses grow.
    I am delighted to be here on this Committee to try and work 
in a way that is going to promote small business throughout the 
country and throughout New Hampshire.
    Chair Landrieu. Thank you, Governor. We have also been 
joined by Johnny Isakson, our great Senator from Georgia. We 
are happy to have you Senator, and we are just offering opening 
remarks.

 OPENING STATEMENT OF HON. JOHNNY ISAKSON, A U.S. SENATOR FROM 
                            GEORGIA

    Senator Isakson. I am going to be very brief. I was a small 
business person. It is the heart and soul of the American 
economy. It employs most of the American people and right now 
we are in a very serious, difficult time in the credit markets, 
which is impacting small business.
    So I am looking forward to hearing from the panelists today 
on what they see going on, what they think we can do in 
government to be a catalyst in any way to help energize small 
business, because if we energize small business and we solve 
our current credit crisis, business will take us out of the 
recession that we are in. But all the money in the world is not 
going to take us out if it is not empowering business to do 
business.
    I am delighted to be here, Madam Chair, and I appreciate 
the opportunity to participate.
    Chair Landrieu. Thank you. Well, let's begin, because this 
is what we are here for--to hear from you all. I would like our 
participants, if you do not mind, starting with you, Mr. Adams, 
to go around very briefly, to introduce yourselves and either 
your business or your association and then I will open it up 
with the first question to the entire panel. But just a brief 
introduction.
    Mr. Adams. Good morning, Senator. I would like to take a 
moment----
    Chair Landrieu. If you would turn your mike on and state 
just your name and your organization.
    Mr. Adams. Okay. Good morning. My name is Timothy Adams. I 
am the President and CEO of Systems Applications & 
Technologies. We are a defense and homeland security firm 
located corporately out of Maryland.
    Chair Landrieu. Okay.
    Mr. Alford.
    Mr. Alford. Madam Chair. I am really glad to see you here 
and to kick this off. I am Harry Alford, President and CEO of 
the National Black Chamber of Commerce, located here in 
Washington, D.C. We have 151 chapters within the United States, 
40 chapters abroad.
    Mr. Adams is on our board and Mr. Hernandez is on the board 
of our Greater New Orleans chapter, and we are very happy to be 
here.
    Chair Landrieu. Thank you.
    Mr. Coratolo. Giovanni Coratolo. I am the Executive 
Director of the Small and Mid-market Business Councils for the 
U.S. Chamber of Commerce. Mr. Adams is also part of our 
councils and part of the chamber. Mr. Swift is also very 
closely aligned with the U.S. Chamber of Commerce. I am very 
happy to be here and congratulations on the chairmanship.
    Chair Landrieu. Thank you. We welcome the Chamber.
    Ms. Eckerly. Susan Eckerly from the National Federation of 
Independent Business. We are located here in Washington, as 
well as in every state capital. Thank you.
    Mr. Ferreira. David Ferreira, United States Hispanic 
Chamber of Commerce. We represent the interests of three 
million Hispanic-owned businesses throughout the country, 
especially 200 chambers throughout the country and 20 Hispanic 
industry associations.
    Chair Landrieu. Wonderful.
    Mr. Hernandez. D'Juan Hernandez. I am President and Chief 
Executive Officer of Sun Energy, which is a renewable energy 
company headquartered in the City of New Orleans, and we are 
one of those small businesses that are driving the economy 
today.
    Also, as Mr. Alford mentioned, I am a member of the Board 
of Directors of the New Orleans chapter of the Black Chamber, 
and we are certainly happy to be here. Thank you for inviting 
us.
    Ms. Littlejohn. Virginia Littlejohn. I am Chief Executive 
Officer and Founder of Quantum Leaps, which is a global 
accelerator for [inaudible] native New Orleanean, former 
resident of Maryland. My husband----
    [Laughter.]
    Senator Cardin. Then you went and moved to New Hampshire?
    [Laughter.]
    Chair Landrieu. And may I observe that her attire is quite 
appropriate for today in that it is the first day of Louisiana 
Mardi Gras. So thank you. A true New Orleanean.
    Todd.
    Mr. McCracken. Good morning. I am Todd McCracken. I am the 
President of the National Small Business Association. In 
addition to representing small businesses all over the country, 
we are also a Federal umbrella group for state, local and 
regional small business organizations across the country.
    Chair Landrieu. Pull the mike as close to you as you can. I 
am sorry we do not have one for everyone.
    Mr. Sharpe. My name is Joe Sharpe. I am Deputy Director of 
Economics for the American Legion, which is a veterans service 
organization.
    Ms. Sullivan. I am Ann Sullivan. I am representing Women 
Impacting Public Policy that has 500,000 women business owners 
across the country and 46 organizations belong to our 
coalition.
    Mr. Swift. I am George Swift, President and CEO of the 
Chamber Southwest and the Southwest Louisiana Economic 
Development Alliance in Lake Charles, Louisiana. We represent 
over 1,000 small businesses in the Chamber Southwest and we 
have our Chairman of the Board, Ken Broussard, with us today 
also.
    Chair Landrieu. Well, let me welcome you all. I would like 
to suggest how we would like to move forward. I am going to 
pose a few questions. If you want to respond, place your card 
in an upright position. We ask you to respond briefly. So you 
may want to pull your card to you, and when you want to be 
recognized, push your card out.
    We are going to try to make this a very informal and lively 
discussion. We really encourage our members of the Committee to 
jump in. Let's begin by just throwing out the question to any 
of you. What are the main challenges that either you as a 
business owner or your organizations are facing?
    If you could limit it to one or two minutes, and tell us 
what you would like to communicate to those listening and 
observing this roundtable about the urgency or not of your 
particular situation.
    Mr. Hernandez.
    Mr. Hernandez. Senator, I would like to certainly emphasize 
that the issue for small businesses today is about liquidity. 
It is about capital access. There certainly are programs 
available through the Federal Government, through the state 
government, certainly through local government, but those 
programs have certainly tightened up in recent years and recent 
months in particular.
    We all know the state of the credit markets today and 
lenders just are not providing access to capital in the way 
that small businesses need it today to be able to take 
advantage of the opportunities that the Federal Government may 
create by stimulation.
    Chair Landrieu. Mr. Coratolo.
    Mr. Coratolo. I want to re-emphasize that access to capital 
is the number one----
    Chair Landrieu. Can you speak into the microphone, and I am 
so sorry we do not have one for everyone.
    Mr. Coratolo. I want to re-emphasize that access to capital 
is the number one issue for small business. We put out a survey 
to thousands of people nationally and it was through our 
friends at the Chamber. The two things, the two items that they 
would most want to see in a stimulus package is tax cuts or 
incentives to grow their business, but also access to capital 
comes a very close second as to the main priority within the 
stimulus and that is through cutting the fees for SBA loans.
    This is unprecedented. If you talk to small businesses in 
the past, normally SBA issues tend to fall to the bottom. In 
this case, they really rose to the top, even above 
infrastructure payments.
    Quite frankly, this makes this Committee a very pivotal and 
important Committee to small businesses and as you know, 60 to 
80 percent of the jobs are created through small business.
    Chair Landrieu. I am glad you raised that. I think, Jeanne, 
you wanted to comment. Senator Shaheen.
    Senator Shaheen. Well, I wanted to ask a follow-up to both 
of you, and that was to ask about SBA and whether you are 
feeling like--you mentioned the fees, Mr. Coratolo. Is it just 
the fees or are you finding that there are not enough people at 
SBA who can provide the help that businesses need as they are 
trying to figure out how to get access, or is it that the 
underlying funding isn't there for SBA?
    Can you be a little more specific about what particular 
challenges are relative to SBA?
    Mr. Coratolo. Oh, absolutely. I think SBA has some 
fantastic programs, but we find ourselves in an economic 
crisis. The few bucks that we give from the Federal Government 
to SCORE and some of the other programs, SBDC, Veterans 
business programs, are critical right now. We have to make sure 
that they are well funded in this type of environment.
    Obviously access to capital raises to the top, but we also 
have to make sure that we have these other programs in place in 
order to--and well funded--in order to make sure that we have 
the infrastructure in place to handle the future of small 
businesses.
    Chair Landrieu. Senator Cardin.
    Senator Cardin. Just to follow-up on Senator Shaheen's 
point. The Committees are recommending waiving the fees under 
the 7(a) Program and I think also under the 504 Program. 
Waiving the fees obviously make it more advantageous from a 
cost point of view.
    The cost of the SBA loans can become prohibitive, so I 
understand the waiving of the fees being extremely important. 
But I think Senator Shaheen was trying to get out if we waive 
the fees, will the banks make the loans, or do we need to do 
more in order to make sure the credit will be available, not 
just the cost of credit, but that there is credit?
    Mr. Coratolo. Oh, absolutely. More needs to be done, 
because part of that, an important element of that is the 
secondary markets. Banks have a very--infrastructure currently 
that makes the loan, sells the guaranteed portion into the 
secondary market.
    Now currently that secondary market is frozen. We have to 
make sure that we have adequate assets, whether it is through 
TARP or TALF, to make sure that there is liquidity into that 
second market so that banks could recapitalize funding for 
loans to small business.
    Now remember one thing, we are giving money or incentives 
to banks to make these loans. They do not get one penny of this 
unless they make the loan. So that is the important factor in 
this. They are incentivized to make loans and reducing those 
fees.
    Do not create a new program. Let's fix the one that is 
currently on the books that has worked well for years.
    Chair Landrieu. I want to recognize Senator Isakson and 
then I would like to go to Mr. McCracken and then come back to 
Mr. Alford.
    Senator Isakson. Mr. Coratolo has hit on--we can stay here 
all day and talk, but he has hit on the key point that is the 
problem in the United States. There is no liquidity in the debt 
markets for anything. Nothing is flowing. Small businesses are 
suffering, as are big businesses.
    Waiving fees on something that is not going to close does 
not do you any good. What we have got to do is focus a little 
bit on the banking industry and the finance industry, because 
to me, they are doing what I am doing. I am holding on to all 
the cash I have got right now because things are tough. And my 
kids are doing the same thing. And I think the banks are doing 
it because they are not sure where the bottom is in terms of 
this economy.
    What we have got to do in the United States Congress are 
those things that will stimulate people to do business and 
begin to bring the markets back. That is the key to it. It is 
not going to be waiving fees and it is not going to be passing 
a lot of regulations.
    When I say stimulation, with all due respect to the House 
bill, I am talking about the type of tax stimulation and credit 
depreciation, bonus depreciation, things of that nature, 
allowing to depreciate capital purchases up to a certain amount 
and incentivize business to do business and then the banking 
industry will come back over time and bring the liquidity you 
are talking about to the secondary market as well.
    Chair Landrieu. Mr. McCracken.
    Mr. McCracken. Yeah, I just wanted to respond specifically 
to Senator Shaheen's question and that is, the Fed reiterated 
this week that they are prepared to purchase these secondary 
small business loans, the loans in the secondary market. The 
degree to which that has happened is not clear because that 
market continues to be not where it needs to be.
    So we think the primary thing that needs to happen, in 
addition to eliminating the fees and increasing the guarantee 
rate, which I think are crucial to making this happen, is there 
has to be market fees alone, which does not exist today. The 
only available place we have right now is the Fed. They have 
begun buying home mortgages, but these small business loans in 
the secondary market, temporarily that is something they have 
got to do or else this is not going to happen.
    Chair Landrieu. Does anybody have a number or an estimate 
of what it would cost the Federal Government to actually secure 
that secondary market; has anybody or any of your organizations 
crunched those numbers or prepared any testimony?
    Mr. Alford, do you want to jump in?
    Mr. Alford. Let me go back to the SBA, Senator Shaheen. The 
SBA is dormant. There was a time in the early nineties, mid-
nineties, where I knew the name of every district director of 
the SBA in the country, knew his deputy director, knew the 
PCRs, knew the business opportunity specialists, and you could 
go to Los Angeles, to Chicago, to Kansas City and get 
businesses to sit down and they would get technical assistance 
and they knew that the SBA was their best resource. It is gone. 
It has been emaciated from a funding in '93 of 960 million to 
about 420 million today, maybe at 30 percent strength.
    There is no SBA. In terms of TARP, TARP was not meant for 
small business, particularly minority business, as not one 
minority business in this nation has been included in TARP 
contracting wise or lending wise, and contracting is our focus 
more than capital systems.
    We think you get the contract then you get the capital, you 
get the bonding. We have got a good bonding program that has 
been tested in Mississippi. Governor Barber has embraced it. We 
are ready to roll it out nationally. We would like to see the 
SBA to come by and just take a look at it.
    Chair Landrieu. Thank you.
    Ms. Sullivan.
    Ms. Sullivan. Well maybe I am jumping ahead a little, but 
you raised the question about what could we do to stimulate the 
market for small business, the credit market? So we came up 
with what we consider a big idea, but one that we hope you 
would consider putting into place.
    We believe that an equity-funded SBA is necessary for 
stable businesses that want to merge or acquire other 
businesses with additional capabilities to their own or their 
weaker competitors frankly that will otherwise go out of 
business. It would not only save jobs, but it would also create 
jobs.
    Let me just tell you how we arrived at this. We made a 
bunch of calls to our members and said, will tax breaks make 
you hire somebody? What will make you grow in this economy? And 
the answer came back--and we asked people in like Ohio, 
Indiana, you know, depressed places, and people that are 
suppliers to auto industry or retail or housing--and they said 
well demand is not going to go up, so the only way that we can 
possibly grow is by merging with other small businesses that 
either bring us additional capabilities or frankly this is the 
time where you buy up your competitor and spread your cost.
    So our idea is that SBA already has an SBIC program and 
while that may not be a very robust program at this time, we 
feel that you could use that model too. If you appropriated 
funds to an equity fund and you allowed the investment 
companies to take part of accessing that capital, we feel that 
that would free up something that right now we can not get 
through the banks or any other place.
    So that is our idea. It was run by a lot of people for the 
stimulus package and we have kind of been told that the 
stimulus package did not want new program starts. But we would 
argue this is not an entirely new program start because you 
have already got a model in place that if expanded and perhaps 
simplified and made attractive to investment companies, we 
would have some money for mergers and acquisitions for stable 
businesses, not startup businesses, but people that are in a 
position to grow and have cash right now.
    Chair Landrieu. Well this is a new and refreshing idea. 
Does anyone want to comment on it?
    Mr. Hernandez.
    Mr. Hernandez. Absolutely, Senator. We have an organization 
in New Orleans that is basically called Start Up New Orleans. 
It is really a combination of many small business owners who 
have started businesses in New Orleans post-Katrina, and we 
have real discussions about what the issues are, at least that 
we are experiencing as businesses.
    The thing that is always at the top of the list, I do not 
care when we meet and when we talk, is capitalization and 
access to capital is our issue. We have talked about why 
doesn't the government take funds that have been directed for 
economic development, use some portion of those funds for 
equity use? Why can't the government stimulate equity 
investment, particularly in this time in our economy where 
equity holders have lost a lot of their valuation in the 
market?
    They are pulling back on their investments in the market 
now. They are changing their risk profiles and looking at how 
am I going to make money in the future.
    Well when that happens, I think government's got to step in 
and say okay, we will shore up those equity bases for you. If 
you have got an economic development fund in the city of New 
Orleans, for instance, that is a $5 million fund. Why can't you 
take that $5 million fund, get some form of shore-up from the 
SBA of a $5 million match, and then maybe get the business 
community to step in and match that $10 million?
    Now you have got an equity fund that you can start to lure 
entrepreneurs to your community with. But in New Orleans, and I 
say New Orleans because that is where I am and that is where my 
relevant experience is today, in New Orleans we as 
entrepreneurs cannot raise money. We spend time in New York. We 
spend time in California. We spend time in Boston looking for 
equity sources to fund our businesses.
    And for a guy like me that is in the renewable energy 
business, listen, I am on the front end of the most significant 
economic trend to hit our country probably in the last 20 
years. We are building power generation facilities using 
renewable resources. Everyone we talk to says that is a 
fantastic idea, best thing I have heard in my lifetime.
    Great. Can we have some money? Well, that is another 
discussion. That is the issue that we are all facing as 
entrepreneurs and I would just like to encourage this Committee 
to look at creative out-of-the-box mechanisms to spur 
investment in companies.
    Chair Landrieu. Mr. Adams.
    Mr. Adams. Yes. Following along the line that I think 
[inaudible] discuss as well as we talk about small business is 
also understanding what I like to refer to in my organization 
as being and that is a tweener, those businesses that are 
emerging from the small business arena, some considered too 
large to be small and too small to be large, which we refer to 
more formally as the mid-tier businesses.
    I think the mid-tier businesses at this time are really 
poised to create jobs and to move forward. Historically they 
have been incentivized to grow, but at the current time, it is 
a concern as to whether or not to grow at this point. To grow 
out of the small business at this point would mean a much 
greater competition between the much larger businesses.
    As an example, if we average 30 million a year, one year we 
are a small business, the next year I am now immediately 
competing against, for example, Lockheed Martin, who has 40 
billion in revenues. They refer to it as being a level playing 
field.
    It is obvious that this is not a level playing field. I 
think one of the things that is very important at this point as 
we talk about creating equity and being able to do these things 
is that the SBA--and we strongly look at creating a mid-tier or 
a mid-size business program.
    I think other countries around the world have mid-sized 
enterprises, but we only have large and small. I think it is 
very important that we move forward, looking at a mid-size 
business program.
    Chair Landrieu. I would like to second that. I have long 
been an advocate, even well before I got on this Committee, of 
really being puzzled by the definitions that we use in this 
country of small business. I think it takes our focus away from 
the real start up entrepreneurs of four, five, six employees, 
and what special help they need as they begin to get started 
and then as they grow to that 50 or 75 or 100 level, and then 
they take the next leap to a much higher level.
    I do not think our SBA, with just the small and large 
definitions, which seems to get very confusing as far as this 
Chair is concerned, is sufficient. So, I want to second that 
and hopefully this Committee can review that designation 
through the year.
    We are joined by Senator Bayh, a senior member of this 
Committee. Senator, we are happy to have you here. We gave 
opening remarks briefly. Is there anything you would like to 
say or add to this discussion?

   OPENING STATEMENT OF HON. EVAN BAYH, A U.S. SENATOR FROM 
                            INDIANA

    Senator Bayh. Just to congratulate you on your 
chairmanship, Senator Landrieu, and to say this hearing could 
not be more timely. Small businesses generate the vast majority 
of new jobs in our economy and so at a time like this when we 
are all focused on creating new jobs, there is no better place 
to focus.
    And finally, at the time we are providing hundreds of 
billions of dollars for some of the largest companies and 
financial institutions, so why not focus upon the most dynamic 
part of our economy and that is small business.
    So I congratulate you on your leadership and thank you for 
having the hearing. I am just looking for good ideas that will 
help our people. I know you are too.
    Chair Landrieu. Thank you, Senator. We have had several 
this morning. I am going to turn to Ms. Littlejohn and then I 
am going to go to the next question.
    Ms. Littlejohn. I just wanted to say, I think the equity 
fund idea that Ann Sullivan mentioned is very interesting and 
builds on the SBIC model, so I think that can really make 
sense.
    To your point, Madam Chair, the rest of the world--and I 
have been living overseas most of the last five years--but the 
rest of the world does not call it small business. The rest of 
the world has a micro enterprise category and then they have 
small and medium enterprises. I think one of the big mistakes 
that we have made as a country is that we have not really 
looked at that growth continuum by the word ``small'' and I 
think looking at small and medium and different kinds of 
policies and financial mixes, access to markets, et cetera, to 
really grow businesses along the continuum is important.
    As we look at trying to overhaul the SBA so that it is more 
appropriate to the needs of the business community, I think we 
might look at the small and medium as well as the 
entrepreneurship piece because we are just kind of locked in in 
subsets.
    Chair Landrieu. Thank you.
    Mr. Swift.
    Mr. Swift. I just want to echo what has been said about the 
access to capital as being the biggest issue. We do find, as 
Ms. Littlejohn said, the micro enterprise businesses and we 
categorize those five and under. Employees have tremendous 
potential to grow and grow our economy and those are the 
businesses that have a tough time going to the bank. They have 
a tough time sometimes being taken seriously, but I think that 
is potential growth.
    As an area that has had significant disasters, we have had 
four hurricanes in the last three years with the major one, 
Hurricane Rita, in 2005. After that, we had over 3,000 
applications for SBA emergency grants. It took months and 
months and months for most people to find out that they were 
not going to get the loan or that it was so complicated they 
did not want to go with it.
    In Hurricane Ike, which happened September of this past 
year, September 13, that was a Saturday. Hurricane Ike hit 
Southwest Louisiana and Galveston, Texas area Saturday morning. 
Saturday afternoon we talked to the Louisiana Economic 
Development Department. They set up a conference call with SBA.
    We had SBA counselors arrive in Lake Charles Sunday night. 
We opened the business counseling center at 8:30 a.m. Monday 
morning. There was a world of difference in the response and 
the--but what we found, we had over 300 businesses come in for 
assistance, but I think a lot of people and a lot of businesses 
had a feeling that it is no use to go through the SBA 
procedure. They had done that before and so I think we need to 
let them know that procedures have been changed and that there 
is some possibilities for assistance.
    I think a lot of them are burned out on the system, so that 
would be an area that we could emphasize. The small businesses, 
micro enterprises need some access to capital. On the disaster 
side, let them know that procedures have been improved vastly. 
I do not think you could get any faster response than the storm 
hit Saturday and the business assistance center opened Monday 
morning. I want to congratulate the SBA for moving that fast.
    Chair Landrieu. Thank you. This Committee had a great deal 
to do with the reforms after Katrina and Rita, because it was 
such a pitiful and inadequate response initially. So this 
Committee did a tremendous amount of work and actually passed a 
reform disaster response bill.
    But as has been noted, and as one of the key authors of 
that, let me be quick to say, that is not enough. We must do 
more because we need a streamlined approach after catastrophic 
disasters so that businesses can get back up quickly. This may 
actually have some bearing on the situation we are in, which is 
not a natural disaster, but you could say a man-made disaster, 
a financial collapse disaster, that we are all experiencing now 
of similar proportion to what we went through with the winds 
and the waters of these storms. Senator Cardin?
    Senator Cardin. I just wanted to make a brief point in 
regards to size, because I think this is an issue that this 
Committee really needs to take a look at. There's so many 
different definitions for eligibility for government 
partnerships.
    We have been working with the chair on the surety bond 
issues with small construction companies. When you take a look 
at the limits that they place on the amount of the surety bond 
or the revenues that a company has, it really does not work 
today. So I think it is more than just the number of employees 
and the eligibility for the major programs within SBA. There is 
also a lot of other definitional issues that I think are 
preventing the full potential of economic growth for small 
companies.
    So I think we really do need to take a look at this and I 
think this point has been well made.
    Chair Landrieu. Okay, let me throw out another question. 
Following up on this credit crunch issue and the lack of a 
secondary market, what about the lack of willingness, which may 
be quite rational, although it is not helpful, on the part of 
banks to lend? As Senator Isakson pointed out, where is the 
bottom? People get very nervous when they can't feel it.
    If you have ever swam in a lake or a pool, you always want 
to know where that bottom is and that is symbolic of what is 
happening in the economy. People can not feel it, the bottom, 
and it is very disconcerting.
    But given that, would anyone like to comment on the use of 
credit cards and the rates being charged to the small business, 
the cost of capital now? As businesses struggle to stay afloat, 
what are you hearing from your members about the rates? I guess 
they are paying using credit cards primarily as access to 
credit? Let me start with you, sir.
    Mr. Sharpe. I really can not answer that question directly.
    Chair Landrieu. Can you speak into the mic?
    Mr. Sharpe. But from the veterans' perspective, I am an 
Iraqi veteran. I was in Baghdad with the Civil Affairs Unit. 
Our mission was to redo the Iraqi economy. That was one of our 
primary focuses.
    We had a microloan program. We trained Iraqi's how to start 
their own businesses. We helped them find a business, and we 
also helped current Iraqi businesses partner with the large 
western companies that were coming into the country.
    And the fact that the military recognized how important 
that was to bring stability in that country, a lot of veterans 
that are here now feel the same thing should happen in this 
country. SBA should have a direct loan program. In Iraq, the 
banks were not loaning to the Iraqi companies, so the military 
did it until we were able to restructure the banking system.
    Chair Landrieu. You know, Joe, I am so glad you brought 
that up. Joe, Mr. Sharpe, is mentioning something. I just had 
the opportunity to actually welcome home the Fourth Mountain 
Brigade that came back to Fort Polk, which is where they will 
come back to before they move to the rest of the country.
    Interestingly enough, many of the officers spent a good 
part of that day sharing with me how proud they were of this 
micro-lending program because it felt like to them that that 
was the most concrete way that they were able to help. When the 
Fourth Mountain Brigade got to the east part of Baghdad, which 
was a very difficult area, and secured it, one of the tools 
that they felt worked the best was giving small loans; I think 
it was five--I am not sure of the amount, so I do not want to 
quote the amounts. They said when they arrived, there there was 
virtually no market. When they left, there were thousands of 
stalls and markets reestablished, so I do not want to 
underestimate the value of this method.
    Mr. McCracken, what about credit cards and credit?
    Mr. McCracken. Regarding credit cards, there has been an 
extraordinary trend for quite awhile of small businesses using 
credit cards as an important source of credit and capital. We 
started doing surveys as a small business community almost 20 
years ago and found that at that time one in seven companies 
saw credit cards as an important source of credit and capital 
for them.
    Today it is very nearly half of small companies that use 
credit cards as an important source of credit and capital and 
so it is hugely important. We have--but today, we have a system 
where the credit cards that they use, the terms of those cards 
can change really at any moment. We have seen people who have 
seen the terms on their cards go up dramatically. We have seen 
people who have lost what they thought was a substantial line 
of credit entirely that they are depending upon.
    I mean, credit cards have largely replaced the traditional 
line of credit that many businesses had over the years as we 
have seen the consolidation of banks in this country over the 
last 20 years or so.
    Chair Landrieu. I am going to call on Ms. Eckerly in a 
minute, but, would you repeat that statistic--that one out of 
every seven was normal and now it is one out of every?
    Mr. McCracken. Now it is half.
    Chair Landrieu. Half. And those rates can fluctuate over 
night? Lines of credit can be canceled over night?
    Mr. McCracken. And small businesses are in a curious 
position now because some of the credit cards they use are 
personal credit cards. Some of the credit cards they use are 
business credit cards. They do not always themselves know which 
is which because they are not really sold to them very 
differently by the credit card companies.
    We have a new rule from the Fed that is going to sort of, 
in a couple of years at least, put a lid on some of these 
practices, but it only applies to the personal cards. And so 
small businesses still are not going to really know which cards 
some of these packages will apply to and which they won't.
    Chair Landrieu. Ms. Eckerly.
    Ms. Eckerly. Yes. We actually just did an access to credit 
poll recently.
    Chair Landrieu. Please remember to press your buttons.
    Mr. Eckerly. We recently did an access to credit poll and 
we actually asked some of these questions, what is the biggest 
change you had? Was it line of credit? Was it reduction in your 
line of credit? Was it change in your interest rates?
    What we had was the most frequent change, 41 percent. This 
is a survey of 800 small businesses, less than 250 employees, 
not just our members. The most frequent change was a lower 
credit limit, 41 percent. Another 35 percent had their interest 
rate raised and 6 percent had their card canceled. I will be 
happy to give you this survey.
    Chair Landrieu. We would like to submit that for the 
record. Anyone else on this credit card or crunch issue? Go 
ahead, Mr. Ferreira.
    Mr. Ferreira. Thank you, Chairwoman, for the invitation. 
Regarding the credit card use, surveys of our members show that 
only 28 percent of them report that they have no credit card or 
installment debt. That is generally reflective of lack of 
access to capital that many of the minority-owned and Hispanic-
owned companies generally have.
    But those that do report having credit card debt may use a 
lot of creative language in reporting the relationships that 
they have with their credit card company and issuing banks. 
Generally the punitive fees, the administration of them, they 
consider to be almost borderline predatory.
    We would like to very much echo also Mr. Sharpe's comment 
about the need for direct lending programs given that many of 
the smallest entrepreneurs are having a very strong problem 
being able to reach sources of capital right now and when 
everybody else is leveraging down, the only institution right 
now, as we can see from the TARP, that can leverage up is the 
Federal Government.
    Obviously we would echo the comments of Mr. Sharpe that a 
direct lending program would be extremely beneficial. As far as 
the TARP is concerned, we are not entirely sure what TARP 
stands for because troubled assets never got purchased and that 
goes straight to the point of balanced books and Wall Street 
got balanced. But generally speaking, liquidity down Main 
Street, especially down Main Street in minority communities 
throughout the country, has not been addressed.
    With that, we would like to also strongly advocate for the 
need of community investment, a community investment, the use 
of CDFIs and other institutions by which we try to make direct 
investment into the communities. We know that small businesses 
are the ones that generate 60 to 80 percent of the new jobs and 
those underserved communities are left out very frequently for 
many of--participation in many of these programs.
    Chair Landrieu. I am going to call on Ms. Eckerly to add 
something representing the National Federation of Independent 
Businesses on this subject, and then I would like to move to 
the issue of tax cuts or tax relief, if we could.
    Ms. Eckerly. One of the other things our access to credit 
poll found was how heavily--and it is not surprising--small 
business owners are using their--the reduction of real estate 
values has really killed them because they are so heavily 
mortgaged, their first, second or third mortgage. So one of the 
reasons lines of credit are getting cut is because their real 
estate valuations have declined. I just wanted to add that.
    Chair Landrieu. So you can really see the circle of this 
effect very clearly with businesses or entrepreneurs sometimes 
using equity in their home to finance the startup of their 
business, or using a combination of home equity and credit card 
lines to get started, hoping that sometime soon a bank might 
step in.
    When you have values decreasing so rapidly in your home, 
credit card companies raising your interest rate, and banks 
even more reluctant to step in and help you, you understand why 
we really are in an extremely, extremely tough situation and 
unprecedented.
    On that note, I would want to make a point that I hope will 
get picked up in our response. I do not know where it is coming 
from when I hear either from the Administration or sometimes 
from Congress that we do not want to think about new programs 
and new starts. This is me speaking, not this Committee.
    I do not think we are going to get out of where we are 
unless we think about new approaches, new ideas and new 
programs, because I am not sure that we have the patterns on 
the books to merely rely on the old programs that already 
exist. I think we must be much more open to some new thinking, 
and that is hopefully what this roundtable will help spur.
    Can I throw out, unless my other members have anything, a 
question on tax policy? We are not a tax writing Committee, but 
under my chairmanship, we want to be a tax cut or tax policy 
advising Committee to the Finance Committee that has ultimate 
jurisdiction in the Senate.
    This Committee has in the past, and I am going to continue 
that tradition, been a strong advocate of small business tax 
issues, from reform of healthcare, which is a very difficult 
issue for small business, to general tax policy that needs to 
be changed or modified.
    In the Senate markup on finance--several of our members 
serve on the Finance Committee--the loss carry-back provision 
has been included. The small expensing provision has been 
included, bonus depreciation, small business capital gains, 
expansion of the work opportunity tax credit, and new market 
tax credits. Would any of you like to comment on any of these, 
or additional tax provisions, that you either find helpful or 
things that you would like to suggest that are not in here that 
perhaps should be as we consider this tax portion on the floor 
of the Senate?
    I will start with you Mr. McCracken and then go to Susan 
and then Ms. Sullivan.
    Mr. McCracken. Thank you very much. We are pretty 
supportive of the things that are in the package but think 
there are some things that would be even more helpful if they 
were included in the package.
    I would like to preface just briefly with, one of the 
things we have to remember when we are thinking about jobs and 
the creation of jobs through small companies is not just the 
existing businesses being able to expand, although that is 
extremely important. We also have to remember the dynamism that 
is the small business community where businesses are constantly 
starting and dying and merging and there is this constant 
motion in the small business community and a lot of the job 
growth comes from new business startups.
    We all have to be thinking about how we are creating an 
environment where new businesses want to start. And usually 
when we come out of a recession like this, small businesses are 
the ones that lead us out. A lot of people who got laid off 
from big companies see this as well, I am going to take these 
lemons and make lemonade and go out and start that business I 
have been thinking about for years.
    They do that by getting a second mortgage on their house, 
by taking some money out of their 401k plan, by relying on 
credit cards. For the reasons we all know and discussed today, 
those three options are extremely limited to people right now 
and they may be non-existent.
    The other consideration that people have when they are 
thinking about starting a business is where am I going to get 
my health insurance? I just want to raise specifically to that 
point, the self-employment tax on health insurance. We have had 
occasion in the last month to learn a lot about the self-
employment tax nationally recently and many folks do not 
realize that small business owners, self-employed people, are 
the only workers in the economy that do not get to deduct the 
cost of their health insurance against their self-employment 
tax, that is, their FICA tax, and they pay both halves of the 
FICA tax, 15 percent.
    If they work for somebody else or they are the CEO of a C 
Corporation, every last dime of the health insurance, whether 
they paid it or the company paid it, is exempt from FICA tax on 
both halves. But that is not true for the self-employed.
    It strikes us that you could help access to health care, 
help encourage people to be able to afford to start a business 
by being able to afford healthcare. Make the tax system more 
equitable and put money in the pocket of the self-employed by 
the simple thing that everybody else already has.
    Chair Landrieu. Do we have a score for that? Has that been 
considered before?
    Mr. McCracken. About $20 billion for 10 years.
    Chair Landrieu. Twenty billion over 10 years?
    Mr. McCracken. Well that score is a little bit old, but 
that is what it was.
    Chair Landrieu. Okay, Ms. Sullivan and then Ms. Eckerly.
    Ms. Sullivan. We appreciate all the tax breaks that are 
included in the stimulus package. The feedback we get is 
helpful, but we are going to hang onto the money. It is not 
really going to stimulate anything really. But there is one 
thing that I think we may have overlooked that might help 
stimulate some additional investment in small business and that 
is giving the angel investors an incentive to invest in small 
businesses.
    If we could give them a tax break, I think that might be 
another source where they are going to free up a little more 
capital. Some experts say that companies seeking angel 
investment typically need between $25,000 and $500,000 and 
approximately 15.1 percent of new business founders surveyed in 
an entrepreneurial assessment say they need between 25,000 and 
500,000 from an external source.
    So we would encourage you to think about giving angel 
investors, who are an important piece of this, additional tax 
incentives.
    Chair Landrieu. Mr. Alford. Well, Ms. Eckerly and then Mr. 
Alford.
    Ms. Eckerly. I totally agree with what Todd said about the 
self-employed tax deduction. But even more, what he brought up 
with the score of $20 billion over 10 years underscores to me 
how--granted, that $20 billion is not a small amount of money. 
When you look at the size of the overall stimulus package and 
how much is geared to small business, that is to me chump 
change.
    That is why we argued for a payroll tax holiday, because 
there is no money coming into small business right now. Either 
the employees do not have money, or neither does the employer, 
and a payroll tax holiday only on the FICA would give 
substantial relief to both.
    Beyond that, Todd brought up startups. How about increasing 
the startup deduction? It is currently $5,000 if you start a 
business. Increase it to 20. That is another idea that would 
help. Beyond that, we agree with the expensing, but it is only 
one year expensing in the Senate package. How about making it 
two years? The net operating loss is only one year. How about 
making it five years?
    Chair Landrieu. Mr. Alford.
    Mr. Alford. Madam Chair, taking off from what Mr. Hernandez 
says about creative ways in New Orleans. One creative way in 
New Orleans in terms of surety bonds, Senator Cardin, we 
brought agents from Boston and New Jersey to write bonds for 
businesses in New Orleans. The waste removal contract in the 
French Quarter was bonded by a Boston agent. That woke up the 
local bonding community in New Orleans and they are on board 
now.
    In terms of financing, we got Alaska native corporations, 
who are cash rich, billion dollar companies, but still are in 
the 8(a) program, to joint venture on Corps of Engineer 
projects. They brought the money. We found the contracts, 
worked with the Corps. They brought the money. So there are 
some creative ways.
    New market tax credits are good as long as they are not 
used to gentrify urban communities, such as the south side of 
Chicago or East Cleveland. It is good for the community if the 
residents are not transplaced. Here in Washington, D.C., in the 
Shaw District, when I came to D.C., D.C. was 80 percent black. 
Today it is 55 percent black. What happened to those people? 
They are in Prince George's County.
    Mr. Adams' property values are getting hurt by that. They 
are being pushed out. So I do not think new market tax credits, 
the intent was to transplant people of ill means and replace 
them with people of good means.
    Chair Landrieu. Who else? Go ahead. I am sorry.
    Mr. Coratolo. Tax cuts go hand in hand with access to 
capital as far as stimulating the economy and invigorating the 
small business community and certainly we commend you or 
commend the Senate on their approach over the House's approach.
    Tax cuts have to be robust, timely, temporary and properly 
targeted in order to have immediate effect and immediate 
stimulus. I certainly agree with my colleagues on different 
approaches and other things that can be added. One thing that I 
will point out is cancellation of indebtedness. I commend the 
Senate for having that in the Senate package. It certainly 
could go further.
    Another thing is the 3 percent repeal on Government 
contracting withholding. The House version has a complete 
repeal. The Senate has a one-year delay. This is very onerous 
to small businesses. It should be repealed completely based on 
the fact that we are going to have millions of--or billions of 
dollars going into rebuilding America.
    The amount of money that is put into infrastructure which 
the Chamber endorses is important. We cannot have the 
Government withholding 3 percent of that money or that 
operating cash going from small businesses. It puts them in a 
very uncompetitive position. So I would encourage you to have a 
full repeal of the 3 percent withholding on Government 
contracts.
    Chair Landrieu. Would anybody else like to comment on this 
withholding provision?
    Mr. Ferreira.
    Mr. Ferreira. Unfortunately I am going to have to excuse 
myself very shortly, so I just want to leave the Senators and 
you Chair Landrieu a couple of minor comments.
    Chair Landrieu. Is your mic on? Can you pull it a little 
closer to you? Just pull it. It will move.
    Mr. Ferreira. Yes, Chairwoman. Can you hear me now?
    Chair Landrieu. Yes.
    Mr. Ferreira. There we go. Good. A few final comments 
before I unfortunately have to excuse myself, which is that 
very much to echo Mr. Hernandez's comments earlier about the 
black hole that exists for mid-size companies and the larger of 
the smalls in this country and the means by which to be able to 
invest in them.
    You go to B of A, they tell you to go to SBA and then SBA 
sends you right back. Diversity in contracting, another very 
important issue for us. The 107(a) provision and the Emergency 
Economic Stabilization Act, the bailout essentially gave first 
time a big waiver from any diversity in contracting for women-
owned businesses and minority-owned businesses, and yet a 
single minority business is yet to get a single contract for 
administration of TARP activities.
    We would very much be hesitant to support any types of 
investments in economic recovery that take any similar 
approaches. And if anything, we would like to urge the opposite 
to make sure that we invest in minority communities and 
underserved communities and women-owned businesses by having 
strong diversity language in the bill.
    And the last is, I want to also stress that neither the 
House or the Senate bills should contain any E-verify 
requirements which are very much unfortunately onerous and 
incredibly--Senator Grassley we understand has filed an 
amendment for the Senate bill which would require the use of E-
verify for any public or private entity that receives monies 
from the economic stimulus or even that receives a tax benefit, 
uses a tax benefit.
    That is essentially a nationwide implementation of an 
experimental database program that does not work and will put 1 
percent of all workers that go through it in the unemployment 
line. So we should not be actually using the economic stimulus 
bill as a means to put people out of work.
    And with that, thank you very much.
    Chair Landrieu. Okay, Mr. Hernandez and then Mr. Alford. If 
any of you want to speak, please just turn your card 
vertically.
    Mr. Hernandez. It took me a minute to figure that out. You 
know, at the end of the day as a small business owner, the 
reality is, that which puts cash in the bank for us stimulates 
us. Tax cuts are great and we certainly appreciate those. They 
do not cause us to go out and hire more people however.
    I think at the end of the day, this is about putting people 
to work and supporting communities and helping communities to 
sustain quality of life. To do that, you need cash money to 
drive that process.
    Certainly depreciation mechanisms that are in place are 
helpful to us because they are good financing tools for us. So 
those things will work.
    New market tax credit program. I think the underlying 
principle of the program is a phenomenal principle. But in 
practicality, it is not as easy to navigate as we may have 
intended. As a business owner that uses new market tax credits, 
I can tell you that they can be very expensive to close in a 
financing package. They can be very complicated to close in a 
financing package.
    It takes more lawyers to close a new market tax credit deal 
than I think I have ever seen before. And then lastly, what we 
have found in the new market tax credit realm is that those who 
are getting the allocations are not necessarily using them as a 
real financing tool for small businesses. They are really using 
them kind of as loan dollars and they are following typical 
bank loan procedures in order to get those monies out into the 
community.
    A lot of small businesses struggle with trying to close new 
market tax credit deals. So I would ask the Committee to take a 
look at streamlining the new market tax credit closing process, 
the cost of using the tax credits, and then put in place a true 
accountability system to measure where those monies are going 
and whether they are actually having the impact that the 
program actually intended.
    Chair Landrieu. Thank you. Going back to what Mr. Sharpe 
said, let me mention one part of the stimulus that this 
Committee can take some credit for. At our request, the package 
includes $51 million for micro loans, a substantial increase if 
the package goes through as the Senate version, and we can fine 
tune it.
    I would like you all to review that particular provision 
and make comments either verbally or in writing to this 
Committee, and we are proud to have advocated for that.
    I think I know the answer to this question, but I am going 
to ask it anyway because I think it is important to get some 
strong, clear comments on the record. The first round of TARP 
was $350 billion. There has been a lot of criticism. As you 
know, Senator Cardin started his remarks saying how unhappy his 
constituents are. I hear that, of course, from my constituents 
as well.
    So we know what is wrong and what did not work. What we 
would like to hear from you more specifically is what do you 
think might work in the next round as President Obama leads 
this next round? Do you have any specific recommendations to 
the Administration or to Congress about what provisions could 
be included in the finance provision that might help your small 
businesses and actually reach Main Street?
    We will start with you, Mr. Alford.
    Mr. Alford. Madam Chair, let's reinstate the FAR, the 
Federal Acquisitions Regulations, which has small business, 
minority business provisions. When that was waived, I smelled a 
rat and I knew what was going to go down. We did not support 
the bailout, the TARP.
    We do support the stimulus plan totally and in writing, but 
I believe the U.S. Chamber, and the Hispanic Chamber would join 
with my Chamber, to ask your Committee to get a report from 
Treasury on small business utilization stipulating minority 
women-owned businesses as well.
    I believe it is going to be a zero, but if you can get that 
report, we would really love to have it.
    Chair Landrieu. Yes, Senator Cardin.
    Senator Cardin. I agree with your point completely. Look, 
we need to pass an economic stabilization plan and I am hopeful 
that we will get it done within the next two weeks. I intend 
and hope I will be strongly supporting that.
    But I do have concern with the same point you raised on the 
TARP money, whether the procurement dollars that are being made 
available will be utilized in a way that is in the best 
interest of our company in a fair way. We have set aside 
programs for minority businesses and for small businesses and 
we have known of the abuses in these programs with bundling and 
with prime contractor abuses.
    This Committee has had hearings on it and it is well 
documented. The concerns that are always expressed is that when 
you have a stable pie on procurement it is difficult to break 
into the arrangements between the agencies and the prime 
contractors.
    Well now we have a larger pie, so this should be an 
opportunity to really reach out and to make sure that the 
Federal procurement's done in a fair way, in a way that is 
going to help this nation grow.
    I think your point about making sure we have accounting as 
to how these funds are used and reports as to how well we are 
complying with these programs is very well placed. I do have 
concern as to whether the dollars will get fairly down on 
procurement to small, minority businesses, women-owned 
businesses in a manner consistent with the intent of Federal 
law.
    Chair Landrieu. Go ahead, Mr. Alford.
    Mr. Alford. If I may say too, some of my accounting firms, 
members of the Chamber, came with a complaint that they could 
not get into their door. And we tracked Bank of New York 
Mellon, where did their accounting contracts go to? They 
outsourced them. They went to India. They went to India, sir, 
and the Secretary of Treasury gave them a waiver, a written 
waiver to do that.
    Senator Cardin. We are going to be watching that very 
closely and there is language in this bill that has gotten some 
concern internationally to make sure--we are about creating 
jobs here in America. That is what this economic stabilization 
plan is about. So we are going to follow up on that to make 
sure that these contracts are left here in the United States.
    Chair Landrieu. Mr. Coratolo.
    Mr. Coratolo. You had mentioned the TARP. A few weeks ago, 
I guess, the Treasury----
    Chair Landrieu. Speak into the mic if you could, please.
    Mr. Coratolo. I am sorry. You had mentioned the TARP. A few 
weeks ago the Treasury had initiated a new program called the 
TALF, which supposedly stands for the Term Asset-Backed 
Securities Loan Facility, where they were going to set up a 
loan facility which would buy some of the SBA and student loans 
and actually credit card assets that were out there that were 
clogging up the secondary markets.
    I think this is important. I think it is important to 
follow through to make sure they do not take a U-turn on this. 
You asked before how much we are clogging up the secondary 
markets. I know there is $4 billion clogging up the 7(a) 
secondary markets that really need to be liquefied in order for 
banks to have any shot at creating a steady flow of access to 
capital.
    So I think whether it is that particular program or another 
secondary market program, we really have to be judicious in 
looking at how this works for creating a good flow for small 
business.
    Chair Landrieu. Good point.
    Ms. Sullivan.
    Ms. Sullivan. There are really two parts of TARP. One is, 
as Senator Cardin mentioned, the procurement part of it, which 
is using small businesses to process loans and all the--there 
are a lot of small businesses in that arena.
    So when it first was passed, we eagerly called Treasury and 
said women businesses are here to help and they said, we have 
made a decision really not to work with outside groups. You 
will need to go talk to the prime. So that was that.
    There is section 107 in the original law that said they 
should work with minority and women-owned and small businesses, 
so I guess we would advocate for Congress to ask a lot of 
Congress about how that is being implemented.
    The second part is just how--the question that the Chair 
asked about the TARP program itself and how to trickle that 
down to Main Street. There is a Congressional oversight panel 
that is churning out reports kind of like baking cakes and the 
second one said that there really needs to be metrics put in 
place to be able to measure this, something that has not been 
done. We just want to echo that in order for that to come to 
Main Street, there have got to be some metrics put into place.
    Chair Landrieu. Mr. Sharpe.
    Mr. Sharpe. The second largest complaint that we receive on 
a daily basis, of course, is the procurement situation. You 
know, we talk about new programs, but we already have laws on 
the books that have not been enforced. One is 106-50, the 3 
percent procurement goal.
    It appears from our constituents that there is an inherent 
bias of working with not only small companies, but with 
veteran-owned companies. It appears that they would rather 
prefer to work with the larger companies. There seems to be 
some sort of connection already there that is cutting the 
veteran businesses out.
    You mentioned about India. We have some veteran-owned 
company owners right now working in Afghanistan and, of course, 
Iraq who are tired of trying to find contracts with American 
companies because they see a lot of these contracts going to 
foreign companies. So they are learning to work with foreign 
companies to get some piece of the pie there because they can 
not seem to do it here.
    So with the stimulus package, we understand that there is a 
part of it that is going to be massive funding for a lot of VA 
medical centers and a lot of military bases. Veterans of 
course, want to make sure that they are part of that.
    Again, we already have laws on the books. We just need SBA 
to really monitor and enforce what is--which is already there.
    As far as the direct loan program, it is my understanding 
that SBA already has that ability, that there is some 
regulation that allows them to do that. All they have to do is 
actually follow through on it.
    Chair Landrieu. Well it reminds me, as Mr. Sharpe 
mentioned, about the difficulty of veterans who are on the 
front lines. We say we honor them and take a lot of pictures, 
but when it comes to budgets, and making sure they are at the 
front of the line for benefits, sometimes they are not there.
    It reminds me. Right after one of our hurricanes, George--
we have had so many, I am not able to keep up with them. But, 
after one, we had a terrible disaster around the St. Bernard 
area, and the lower ninth ward in New Orleans and our military 
base were devastated.
    The small businesses in that community had an impossible--
it was impossible for them to get the contracts to help rebuild 
that base. People from the outside came in while the businesses 
that were directly impacted--hardware stores, supply stores, 
paint stores, electricians in the neighborhood--could not 
access the contract jobs.
    So we have had first-hand experience with contracting 
dilemmas, and this Committee would like to focus on that.
    Mr. McCracken.
    Mr. McCracken. One of the recent, I guess, bright spots in 
TARP is when it was initially enacted, there was no so-called 
term sheet for S Corporations that happen to be banks to 
participate and that is something like a third, I think, of 
banks in the country, and they tend to be the smaller community 
banks that do a great deal of small business lending.
    So they were not even eligible to participate in the TARP. 
That has just recently been changed, so going forward, they 
should be able to participate in the TARP. We are somewhat 
cautiously hopeful that will begin to help.
    Chair Landrieu. Thank you for mentioning that. This 
Committee has been really reaching out to our community banks 
nationally. We want to hear from them. We have been reaching 
out, not just to the Louisiana banks and Maryland banks, but to 
banks in all of the states through their national and regional 
organizations. We want them to be a big part of the solution 
because they have been a big basis of support for capital in 
the country. Please continue.
    Mr. McCracken. But then going forward, we also think there 
should be some target for banks that receive TARP monies for 
their small business lending. Obviously it will probably need 
to be a little bit different by bank because different banks 
have different specialties in the way they lend. There is a 
great diversity of banks.
    But we nevertheless think there should be a target for a 
bank that is receiving TARP monies and a clear mechanism for 
follow-up to subtract the loans that they have been making and 
were making following the TARP. So they know someone's watching 
them. I think accountability and oversight at least should be 
part of that.
    Chair Landrieu. I have got one more general question as we 
begin to wrap up the roundtable, and then I am going to ask for 
final comments from you all if you feel like we have not 
covered an area.
    We have talked about the tax provisions. We have talked 
about the SBA programs. We have talked about contracting, 
micro-lending, the definitions of businesses that may need to 
be reviewed.
    My last question has to do with the actual stimulative part 
of the bill relative to construction and infrastructure, which 
is widely supported among Democrats and Republicans. There is, 
of course, some disagreement as to the level of that investment 
and the targets.
    I think most Americans understand that one good way to put 
people to work is for the government to invest in building 
highways, rail, transportation, and broadband. I think 
President Obama's call to make these investments sturdy, bold 
and real, and also transformative, is also catching the 
imagination of Americans who would like to see us spending that 
money wisely, laying a foundation for a brighter future--
whether it is in Mr. Hernandez's energy efficiency, or new 
technologies for communication that will make America more 
competitive.
    So my final question to the panel is: How are your small 
businesses focused on this particular infrastructure portion? 
We talked a little bit about the set asides. We have talked 
some about the surety bonds. But on the construction side 
itself, how do we make sure that small businesses, minority-
owned, small, women-owned businesses, and the general small 
business community, can help build these roads, build these 
levies, restore our parks, lay this fiber, and create the green 
jobs of the future?
    Why don't we start with you, Mr. Adams?
    Mr. Adams. I believe it goes back to something we talked 
about a little earlier and I think Senator Cardin talked on 
that a little bit. But first, I think we have to have a strong 
SBA. We talked about the size of SBA. To service all of these 
small businesses that look to participate in this 
infrastructure development, we have to have the manpower and 
the personnel at SBA to facilitate that.
    So a part of that is we have to strengthen SBA. I think for 
those to participate, we also have to go back to I think what 
Senator Cardin and others have talked about, actually increase 
the level of the surety bonding. We talk about numbers in 
general, but we need to go for maybe 2 to 10 million.
    We keep hearing we have to develop capacity, you have to 
develop capacity. Well to do that, one has to have the 
opportunity to perform on larger and larger jobs. Increasing 
the surety bond levels will afford that opportunity.
    Along that same line, the SBA loans need to be increased. I 
think currently the level is $2.5 million. That needs to go to 
$5 or $10 million, as these businesses participate in some of 
the costs from a construction standpoint, to be able to do that 
as well.
    I still have to go back and talk a little about the mid-
tier businesses along these lines as well. We still need to 
cultivate and do everything we can for the smaller businesses, 
increasing the loans, the surety, but we also have to make sure 
we understand that there is an economic crunch when we talk 
about access to capital for the mid-tiers.
    We were at a recent conference at the U.S. Chamber of 
Commerce where one of the staffers from the Hill even commented 
that those going into mid-tier businesses, they referred to it 
as going into the Valley of Death, and that is a quote from 
that day. So I think we need to understand that there has to be 
something to assist him to be able to participate even as we 
grow with the SBA.
    One recommendation I would like to suggest is possibly, we 
always go back and forth about the NAICS, the size standards, 
the whole bit, the codes. I think one thing that could help a 
lot of businesses also to participate in the construction and 
the infrastructure development is to freeze businesses and 
allow them to maintain their NAICS code size standards from 
2008 for the next three years as we implement the economic 
recovery bill.
    Chair Landrieu. Ms. Eckerly and then Mr. Alford.
    Ms. Eckerly. I think one of the frustrations we hear from 
our members, we heard it about TARP and then we are hearing it 
about this stimulus package, is where all this money is going. 
Particularly with I think what we hear on the construction and 
the infrastructure portion is to make sure--I hate to use the--
it is a cliche now--but that they do not go to bridges to 
nowhere, that the money is used in a constructive fashion. So 
to the extent that during consideration of the stimulus this is 
paid attention to, that would be a good thing.
    The other thing is when you think of a lot of small 
businesses, if they are going to get some of this money, 
frankly and particularly in your part of the country, are not 
unionized. It is unrealistic to ask, for example, that Davis-
Bacon requirements get lifted. But this makes it tougher for 
small businesses to compete for these contracts if the red tape 
associated with them excludes a construction firm with less 
than 10 employees, for instance.
    So I think that is something else that our members would 
say needs to be paid attention to.
    Chair Landrieu. Let me get Ms. Littlejohn and then you, Mr. 
Alford, because she has not spoken as much as the others.
    Ms. Littlejohn. I wanted to speak to your issues about jobs 
of the future being created. I think that instead of just 
normal highways, the concept of smart highways and some of the 
things that can utilize technology, the broadband piece, I 
think, is absolutely critical.
    I mentioned I have been living overseas most of the last 
five years. You go to South Korea and their broadband is--I 
mean, it makes everything we have in this country look like we 
are in the horse and buggy era. I think that is going to be a 
huge aspect of how businesses and jobs are created in the 
future.
    I think that absolutely has to be a very, very high 
priority. The broadband piece as well as rural access, I know 
there are budgetary issues, but that is critical. And then 
energy efficiency, I personally feel that with how we squander 
resources with poor heating and houses with everything going 
through the roofs in the cold climates, our use of air 
conditioning, we need to look at renewable energy. I think that 
is just critical.
    We need to look at retrofitting housing. I think many 
people in construction can move into some of those kinds of 
jobs. But we really have to look at it in a transformational 
way, I think.
    Chair Landrieu. Well, there is a provision in part of the 
bill for weatherization programs that could have an immediate 
opportunity for businesses in that sector to step up the kind 
of weatherization for homes and businesses. In the long-term, 
those homeowners and businesses will reap the rewards of lower 
electricity.
    I am not sure that we sized it properly. It probably needs 
some work, but that is a part of the stimulus as it came out of 
the appropriations Committee.
    Mr. Alford.
    Mr. Alford. Yes, Madam Chair. The President has commitments 
to unions, but in construction, if we have project labor 
agreements on some of these projects, it is going to decrease 
minority contracting 60 percent. It will decrease minority 
worker participation by 75 percent.
    Unions do not hire minorities and minority companies do not 
belong to unions. So it is rather unrealistic if we try to 
blanket this with a project labor agreement. We will have to go 
to court because it is wholesale discrimination.
    Also, if we get direction from the top, that makes a lot of 
difference. We were getting wiped out, blocked out from the 
Gulf rebuilding and at a White House meeting, I asked the 
President to tell Riley Bechtel, who was there, and the CEO of 
Shaw, who was there, to open their doors to our members. And he 
said they will do it and they nodded. And that was all it took.
    Now we are participating in New Orleans. It is a model 
program for the nation because it was a word spoken from the 
top.
    Chair Landrieu. Mr. Coratolo.
    Mr. Coratolo. Madam Chair, certainly the Chamber endorses 
infrastructure spending. It is going to be key to putting 
people back to work.
    A couple of related thoughts on that is, when small 
businesses participate, their being paid on a timely basis is 
always an issue. I do not know that we can do anything other 
than maybe change some of the laws or maybe even from the 
pulpit of where you sit, encourage that payment. Because access 
to capital, that is another form of access to capital, is 
getting paid properly.
    Right now after 12 months, the government does not pay 
interest on any outstanding debts. Maybe we could extend that. 
Maybe we can encourage the government to pay more quickly 
rather than the 30 days.
    Another related issue, I know when we talk about 
infrastructure, we are talking about our energy infrastructure, 
our technologies, our energy security, so it goes beyond just 
roads and bridges. Part of the purview of this Committee here 
is SBIR and STTR. I think it is an imperative that we have a 
reauthorization and one, based on the compromise that you, in 
fact, you were part of last year. I think it is really needed 
to put forth a new foot forward to have small businesses 
participate in the R&D that will be the basis for our future.
    So even though that may not be stimulative, it is not a 
cost factor. It is something that we have to get in place so 
that we know that those R&D dollars are coming to small 
businesses such they can patent ideas that will be part of this 
new economy and this new energy economy.
    Chair Landrieu. Mr. Sharpe and Mr. Hernandez, you all will 
have the last word, and then I will do a closing statement.
    Mr. Sharpe. I would like to end with saying that everyone 
in this room, we are all concerned with the state of small 
businesses. We feel that the small business is what is going to 
keep the economy growing, but for the veteran living outside 
the Beltway, they do not believe at this point in time that the 
Federal Government or the Administration really believes the 
importance of small businesses.
    Some sort of strong signal has to be sent that we are 
serious about helping the small business community. One way you 
can do that is to--I really believe that you should have 
someone in the cabinet, you know, SBA should be on a cabinet-
level position.
    Chair Landrieu. Well I know you all are going to think I 
planted that question, that comment, but I did not. My staff 
just reminded me to announce that just today Senator Snowe and 
I sent a letter to the President asking him to do exactly that, 
to send a positive signal to the country that the small 
business Administrator would be elevate the SBA Administrator 
to a cabinet level.
    I think given the challenges before the nation and the fact 
that small business will be in large measure the engine that 
drives us out of this ditch and forward, that it would be very 
positive and powerful, not just symbolically, but 
substantively, to have the agenda of small business, whether it 
is in the tax provisions or the stimulus provisions or the 
investment provisions or in the regulatory provisions or the 
financial, to have that voice right there at the table.
    So we will see. I think the Administration is contemplating 
its action. Mr. Hernandez, you actually get the last word here.
    Mr. Hernandez. I wish I could get that same privilege at 
home.
    [Laughter.]
    You know, I just want to jump on the bandwagon. I actually 
had written down in my notes to emphasize that. I thought that 
there needed to be a cabinet-level position so that someone 
could focus on making sure that small businesses are 
participating in the flow of the stimulus monies.
    One of the issues that we have in New Orleans outside of 
the TARP package is that there are lots of Federal dollars that 
are focused on New Orleans infrastructure redevelopment. A lot 
has been said about those dollars flowing and a lot has been 
done about getting small businesses included, but the dollars 
have not flowed yet.
    One of the things that this Committee can truly help us do 
is make sure those monies begin the flow so that ultimately the 
small businesses can begin to participate. If someone at a 
cabinet-level position can have the responsibility of forcing 
those people who are handling the dollars to account for where 
those dollars go specifically, show us at the end of the day 
how small businesses have benefitted in any way, then we can 
start to appreciate where the small business are actually 
getting a piece of the pie.
    So we think accountability and having someone monitor that 
is going to be kind of the most important component of making 
sure small businesses get to play.
    Chair Landrieu. I am pleased to say in conclusion that I 
was able to put a provision in the appropriations mark just the 
other day to hopefully expedite about $1.5 billion of projects 
that are stymied. There is nothing right now in the law 
provision to settle disputes between local communities and 
FEMA--cities like Lake Charles, for instance, or Calcasieu, or 
Cameron Parish where Mr. Swift is from, or the New Orleans 
area, or St. Bernard.
    It is just an ongoing disagreement as to how much the fire 
station costs to rebuild. The fire chief says it costs $100. 
FEMA says it costs $50, and that continues for four and half 
years after the storm. So the provision that I put in the 
appropriations mark says that within 90 days, there has got to 
be almost like binding arbitration, or some final decision, 
that says this fire station costs $75, that is it, let's build 
it.
    Because we need to start building in some of these 
devastated areas. I know this is not true of the whole country, 
but we have devastation in California right now, and we in Iowa 
from the floods, not just the Gulf Coast, though there is the 
storm that hit the Texas border.
    I want to end by saying to Senator Cardin, I will most 
certainly take your concerns about the surety bond piece. We 
will raise that issue to the Senate leadership. I thank all of 
you for your participation. I think we had some excellent ideas 
and suggestions and comments.
    Again, this Committee, under my chairmanship and with the 
good work of my colleague Senator Snowe, will continue to be a 
strong voice for the needs and the potential of small business 
in this country.
    God bless you all. Thank you so much for participating.
    [Applause.]
    [Whereupon, at 10:41 a.m., the Committee was adjourned.]



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