[Senate Hearing 111-1092]
[From the U.S. Government Publishing Office]

                                                       S. Hrg. 111-1092

                              OUR ECONOMY



                               BEFORE THE

                          UNITED STATES SENATE


                             FIRST SESSION


                             JUNE 11, 2009


    Printed for the Committee on Small Business and Entrepreneurship

 Available via the World Wide Web: http://www.access.gpo.gov/congress/

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                   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 WICKER, Mississippi
MARK L. PRYOR, Arkansas              JAMES E. RISCH, Idaho
KAY HAGAN, North Carolina
           Donald R. Cravins, Jr., Democratic Staff Director
              Wallace K. Hsueh, Republican Staff Director

                            C O N T E N T S


                           Opening Statements


Landrieu, Hon. Mary L., Chairman, a United States Senator from 
  Louisiana......................................................     1


Boyce, Kate, Partner, law firm Patton Boggs......................     4
Celli, Louis, Chief Executive Officer for the Northeast Veterans 
  Business Resource Center.......................................     4
Conrad, Deborah, Vice President and Business Development Manager 
  for BB&T, Structured Trade Finance Group.......................     4
Jones, Jenice, Congressional Liaison, Association for Enterprise 
  Opportunity....................................................     4
Keenan, Jody, State Director, Virginia Small Business Development 
  Center Network.................................................     4
O'Donoghue, Sharon, Executive Director, Central Indiana Women's 
  Business Center and Board Chair,National Association of Women's 
  Business Centers...............................................     4
Porges, Shelly, Board Chair, Count Me In for Women's Economic 
  Independence...................................................     4
Reilly, Liz, Director, Trade Roots Program, U.S. Chamber of 
  Commerce.......................................................     4
Schick, Holly, Deputy Associate Administrator, Office of 
  Entrepreneurial Development, Small Business Administration.....     4
Sharpe, Joe, Director of Economics, American Legion..............     4
Wilson, Donald, President and CEO, Association of Small Business 
  Development Centers............................................     4
Yancey, Ken, CEO, SCORE..........................................     4
Triolo, Jacob, Staffer, Office of Senator Olympia J. Snowe.......     4
West, Meredith, Staffer, Office of Senator Olympia J. Snowe......     4
Walker, Matt, Deputy Staff Director and Counsel, Office of 
  Senator Olympia J. Snowe.......................................     4
Cravins, Donald, Staff Director, Senator Mary L. Landrieu........     4
Sanchez, Ami, Staffer, Office of Senator Mary L. Landrieu........     5
Morrison, Dr. James, President, Small Business Exporters 
  Association....................................................    21

                              OUR ECONOMY


                        THURSDAY, JUNE 11, 2009

                      United States Senate,
                        Committee on Small Business
                                      and Entrepreneurship,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 10:05 a.m., in 
Room 428-A, Russell Senate Office Building, Hon. Mary L. 
Landrieu (chairman of the committee) presiding.
    Present: Senator Landrieu.


    Chairman Landrieu. Good morning, everyone. Thank you all 
very much for joining us this morning for this important 
roundtable. As we prepare to reauthorize the programs for the 
Small Business Administration, we are going through a series of 
these roundtables and we really so appreciate you all taking 
your time to join us and your testimony has been very helpful.
    So let me get right into my opening statement and we will, 
of course, have a round of questioning that we are looking 
forward to.
    The entrepreneurial development components of the SBA 
reauthorization are among the top priorities of our committee. 
We are pleased to have this reauthorization roundtable on these 
programs this morning following up on our roundtables of the 
SBIR and STTR reauthorizations last week.
    Yesterday, Senator Snowe and I introduced S. 1229, the 
Entrepreneurial Development Act of 2009. This legislation will 
reauthorize our four current programs and will outline our 
support for the three new proposed programs in this category. 
The bill will boost our Small Business Development Centers, our 
Women's Business Centers, and SCORE, and other existing 
entrepreneurial development programs while creating new 
initiatives in support of veterans and Native American 
    The bill reauthorizes several programs through 2012 and 
sets forth requirements for communication and consultation 
between agencies. It also sets requirements for training, 
counseling, and improvements within these programs. The bill 
establishes a grant program to provide objective information 
and educational materials regarding health insurance options 
for small businesses throughout our country, which continue to 
be greatly challenged in this area.
    On Monday, I also introduced a bill, S. 1196, the Small 
Business International Trade Enhancement Act. This legislation 
makes several important changes to the SBA's International 
Trade Programs, opening up a wide range of new opportunities 
for small businesses looking to export. It is my understanding 
that Senator Snowe also filed a bill to improve the SBA's 
International Trade Programs, and I have heard from several 
other committee members interested in this issue, as well. So I 
look forward in the coming weeks to try to build a bipartisan 
compromise on this effort and move forward as the schedule will 
    To help this effort, I will be holding a field hearing in 
New Orleans on June 30 to discuss Federal Export Promotion 
Programs and other related issues.
    Let me take a moment to explain for this roundtable. We use 
a very simple system. When you want to be recognized, you just 
stand your card up like this. You will be recognized. We ask 
you to be as specific as possible to the questions that are 
asked. I am going to stay for the first segment and then turn 
it over to the trusted staff here, Democrat and Republican 
staff, to help lead this effort.
    Let me just make a few more key points. We have a good 
foundation for this year's bill based on the work this 
committee did in the last two Congresses. If anyone has changes 
to recommend, today is the day to make the case, and I know you 
all have come prepared with documentation and supportive 
arguments to your positions. Given the breadth of areas of 
entrepreneurial development, I would like to stay focused on 
constructive ways to improve this particular legislation, which 
I am sure you all have reviewed the document and the 
legislation and we are asking you to comment in terms of 
improvements of that draft.
    We have many policy goals and interests to balance. First, 
I want to be clear that, as Chair, my goal--one of my goals, 
and I would say it is really my top goal--is to make the 
programs of the SBA the very best and most effective and cost 
effective that they can be. I believe the Federal Government 
should play a role in the development and support of 
entrepreneurs throughout America. But that role is limited by 
the nature of what this is. It is limited by budget. It is 
limited by its nature. But the part that we do play, I want it 
to be as effective as possible and leverage other resources to 
accomplish that goal.
    I don't agree with the philosophy that some have, not 
necessarily on this committee, that the government should stay 
out of this completely, that it should be up to business to 
develop business. I think it is in the United States 
Government's strong interest to have a strong, robust 
entrepreneurial system in this country and the government can 
do a part and a piece. The piece we do, I want to be effective.
    The other goal that I have is to make sure that the 
government's plans are reaching geographic diversity, racial 
diversity, and reaching out broadly to elicit and encourage 
entrepreneurs in America to grow, of course, very small and 
then larger and larger businesses which we believe is really 
the underpinning of our great system that we have here in 
    As all of you know, the Entrepreneurial Development 
Programs have been generally very successful over the years. 
Small Business Development Centers offer one-stop assistance to 
individuals and small businesses by providing a wide variety of 
information and guidance in central and easily accessible 
branch locations across the U.S. The program is a cooperative 
effort of the private sector, the educational community, 
Federal, State, and local governments, which is a strong 
partnership when you can build it, and it is an integral 
component of the entrepreneurial development network of 
training and counseling services. There are 11 SBDC locations 
in Louisiana. I am proud of that, and we hope to expand around 
the country and throughout our State, as well.
    SCORE is a very important organization. It has been around 
for quite some time. I am personally very familiar with it and 
think it is a great resource. It started as retired executives 
reaching out to entrepreneurs to help them grow their 
businesses. Now they have dropped the letter for ``retired'' 
and it is any business executives joining SCORE and I think 
that model is quite exciting. We want to support their 
locations and their development.
    Women's Business Centers provide support and services to a 
range of women business owners and entrepreneurs. Founded in 
1998, this association supports development among women, which 
is one of the fastest-growing segments of entrepreneurship in 
America today.
    Senator Kerry and Senator Snowe headed a very strong effort 
on Veterans Business Outreach Centers with so many of our men 
and women returning from Afghanistan and Iraq. We would like to 
provide not just work opportunities for them, but 
entrepreneurial opportunities for them as they come back from 
the front line.
    The Office of Native American Affairs is also an important 
initiative, and the Program for Investments and Micro 
Entrepreneurship, or PRIME, provides intensive one-on-one 
business counseling for disadvantaged entrepreneurs or very 
challenged entrepreneurs. Through the program training and 
technical assistance, PRIME helps bridge the gap for low-income 
entrepreneurs who may possess business experience but have some 
difficulties in terms of credit issues and others that with the 
right help and counseling could be overcome.
    So we are excited about the current programs in the SBA and 
making them even more effective. We are optimistic about the 
new initiatives that we hope to create.
    The question that I am going to pose to the roundtable this 
morning is the--and I don't think there are any other members 
here--I am going to pose in just a moment, but I would like 
each of the participants this morning to introduce themselves, 
give their name and the organization they represent, and then I 
am also going to ask the staff to introduce themselves as we 
get off this morning.
    So why don't, Katharine, we start with you. You need to use 
the mike, and these mikes are very tricky. You have to pull 
them very close to you and speak almost right into them, like 
this. I didn't even do a very good job myself, but you have to 
speak right into it.
    Ms. Boyce. Hi. I am Kate Boyce, partner of the law firm 
Patton Boggs. I am here on behalf of my client, the National 
Center for American Indian Enterprise Development, for whom I 
serve as Washington counsel.
    Mr. Celli. Good morning. My name is Louis Celli. I am the 
Chief Executive Officer for the Northeast Veterans Business 
Resource Center. We help veterans start and grow businesses and 
we are now an SBA resource center and part of the Small 
Business Administration.
    Ms. Conrad. Good morning. I am Deborah Conrad. I am the 
Vice President and Business Development Manager for BB&T in 
their Structured Trade Finance Group.
    Ms. Jones. Hello. My name is Jenice Jones. I am the 
Congressional liaison at Association for Enterprise 
    Ms. Keenan. Good morning. I am Jody Keenan. I am the State 
Director of the Virginia Small Business Development Center 
    Ms. O'Donoghue. Good morning. I am Sharon O'Donoghue. I am 
the Executive Director of the Central Indiana Women's Business 
Center and I serve as the Board Chair of the National 
Association of Women's Business Centers.
    Ms. Porges. Good morning. My name is Shelly Porges. I am 
the Board Chair for Count Me In for Women's Economic 
Independence. We are based in New York but serve women all over 
the country in every State and in most communities.
    Ms. Reilly. Good morning. I am Liz Reilly, the Director of 
the Trade Roots Program through the U.S. Chamber of Commerce, 
and Trade Roots is a trade education program for small- and 
medium-sized companies.
    Ms. Schick. Good morning. I am Holly Schick. I am the 
Deputy Associate Administrator, Office of Entrepreneurial 
Development in the Small Business Administration.
    Mr. Sharpe. My name is Joe Sharpe and I am Director of 
Economics for the American Legion.
    Mr. Wilson. Good morning. I am Donald Wilson. I am 
President and CEO of the Association of Small Business 
Development Centers.
    Mr. Yancey. And I am Ken Yancey and I am CEO of SCORE.
    Mr. Triolo. I am Jacob Triolo and I work for Senator Snowe 
on entrepreneurial development issues.
    Ms. West. I am Meredith West with Senator Snowe's staff and 
I handle women's business issues and export assistance and 
promotion issues.
    Mr. Walker. I am Matt Walker. I am Senator Snowe's Deputy 
Staff Director and Counsel. I want to briefly commend the Chair 
of the committee as well as her staff for carrying on the 
tradition of this committee in working so closely with us in 
developing this bill on a bipartisan basis. Thank you.
    Chairman Landrieu. Thank you.
    Mr. Cravins. Good morning. I am Donald Cravins. I worked 
for Senator Landrieu. I am the Staff Director. And again, thank 
you all for being here.
    Ms. Sanchez. I am Ami Sanchez. I work for Chair Landrieu on 
the Senate Small Business Committee and I handle the 
entrepreneurial development issues for the committee.
    Chairman Landrieu. Okay. Let me begin with the first 
question. The Entrepreneurial Development Act of 2009 requires 
certain information to be tracked and reported, particularly 
trying to reach outcome-based measures for grant recipients. As 
I said, it is a real focus of mine and I believe that Senator 
Snowe shares my intentions and my goals of making sure that the 
programs that we support with taxpayer dollars have great 
return for the taxpayer and are positioned and fashioned in 
such a way that small businesses can really access and use 
these services.
    So I believe that whenever we as lawmakers make a financial 
investment in public programs, we make sure that those that are 
receiving the funds are able to accurately account for their 
expenditures and are able to report to stakeholders the level 
of return on that investment.
    However, given the demands on small businesses and on your 
organizations, which are not that large anyway, we don't want 
to overburden you with inappropriate or unnecessary reporting. 
So my question is, how would you suggest that we track the work 
that you are doing and what would be some ways to elicit the 
information that we need? How do we basically achieve those 
goals in terms of reporting requirements and reporting the 
outcome-based measures to see if they are sufficient in the 
bill that we have outlined?
    I don't know who wants to start, but if anybody wants to 
make any general comments or suggestions about that--Louis.
    Mr. Celli. Thank you, Chairwoman Landrieu, and thank you 
for having me here. As you will soon see, I am no wallflower 
and I don't mind going first.
    Chairman Landrieu. Good.
    Mr. Celli. I have reviewed some of the reporting 
requirements and we have had lengthy discussions with your 
staff and with Senator Snowe's staff, and when we started the 
discussions, one of the things we found was a little bit of 
apprehension on the part of the government to ask questions 
with regard to our clients. We run our business center as if it 
were a business, and without sounding callous, we see our 
grantors, in this case, the Federal Government, as our clients 
and our veterans, the folks we serve, as our product, and that 
is just to put it in a simple dynamic.
    The client--or, I am sorry, the grantor is going to want to 
see certain outcomes, just as you expressed. With that in mind, 
we are eager, and our small businesses are also eager to get 
the word out about their business. They want to be reported 
about because they want that type of exposure.
    The only thing that--you know, as we talked about it, I am 
looking through--I see on page 79, line six, it talks about 
gross receipts. Quite frankly, we don't ask for gross receipts 
because if that is not the reason that they are seeking 
assistance, we don't want that information. It is too time 
consuming to go through it and figure out what is going on. In 
many cases, there aren't gross receipts and that does start to 
get a little bit invasive with regard to what the small 
business is comfortable sharing.
    Percentages, I think percentages speak volumes. We can talk 
about percentages with regard to what did your business do last 
year? What was the percentage of growth? After meeting us, what 
was your percentage of growth and what is your projected 
percentage of growth based on the assistance that you were able 
to receive from these programs?
    So I think that reporting is important. I think that the 
clients that we help have really no expectation of privacy. 
These aren't private issues. These are business issues. And 
while we are not giving out Social Security numbers, we are not 
reporting to you EINs, we are not crossing any lines with 
regard to health status or medical conditions, we are talking 
about a business.
    So with that regard, I think that the only way that we can 
continue to grow this program is to be able to provide you with 
the proof that we are working for a living and that our clients 
are receiving a benefit from our existence.
    Chairman Landrieu. Okay. And I do want to really 
encourage--I mean, this is what the roundtable is, a lot of 
back and forth--if anyone has anything to add to that or 
suggest. Shelly, and then I will get you, Donald.
    Ms. Porges. Thank you. Thank you so much, and thanks for 
including us, Senator, on such short notice. We crossed paths 
on Monday and here we are----
    Chairman Landrieu. I was very impressed with what you had 
suggested, so go ahead.
    Ms. Porges. We really appreciate being included. Count Me 
In for Women's Economic Independence began as a microlender 
about ten years ago. Over the years, we discovered that one of 
the key reasons that women-owned businesses get stuck in what 
we call the missing middle, that $250,000 to $750,000 range, 
and there are about two million, or 1.8 million of those, one 
of the reasons that they get stuck is not just access to 
capital, although that can be an issue. It is more about the 
knowledge and training.
    Our whole focus is getting those businesses to grow, and 
with our program, Make Mine a Million Dollar Business, that we 
launched about three years ago, we have had huge success. 
Overall in the country, only 2.8 percent of women-owned 
businesses get to a million dollars in revenue. Now, we are not 
even talking profit. We are just talking revenue.
    Through our program, when they have come through our 
program, so far in the three years, over 30 percent have 
already gotten to the million dollar mark. Now, granted, some 
of that is self-selection, very growth-minded, very aggressive 
businesses, but many of them--most of them were stuck in this 
missing middle. They were stuck in this range.
    A good example is Garnett Newcombe from Southern 
California. She has got a great business. Is it called Human 
Potential, Inc. She puts veterans to work. She helps coach 
veterans in getting jobs. She helps other folks, whether they 
are coming out of prisons or with handicaps, get jobs. That was 
her business. But she was stuck with ten employees and about 
$350,000 in revenue for six years. She did our program three 
years ago. Today--last year, she did $5.2 million. Next year--I 
mean, this coming year, she is on track to do about $14.1 
million through the coaching, resources, peer mentoring, and 
other access.
    Our whole reason for being is to grow these businesses, 
which wouldn't make any sense, therefore, if we didn't collect 
the information, and we do. We require it. And I am not saying 
it is easy. We are looking at a number of different models to 
overcome some of these issues, whether it is a model like 
mint.com, that goes and scoops up all your information, or 
whether--there are a range of possibilities here. So these are 
challenging issues.
    But if these businesses don't grow and if they are not 
creating jobs--and that is part two of what I wanted to comment 
on--our businesses have grown their revenues by over 40 
percent. They have grown jobs by over 40 percent, on average. 
That is four to five jobs apiece.
    Chairman Landrieu. And Shelly, what kind of information do 
you require, just briefly, because we want to have other people 
    Ms. Porges. Right. We require what you could call a top-
line P&L, an absolutely cashless statement, because these are 
the key things that they get coached on. And if we find that 
they are unable to find it, we delve further to understand. Our 
coaches delve further to understand, what is it? And more often 
than not, we have issues of financial illiteracy going on.
    So when you say they are reluctant, sometimes they have 
reasons for being reluctant and they are totally legitimate. 
But often in our case we find that there is training and 
coaching that needs to go on in order to empower and enable 
these women to grow their businesses.
    So for us, we are thrilled that you are asking for it. We 
consider ourselves an evidence-based program. We track it and--
    Chairman Landrieu. And are you a for-profit organization or 
    Ms. Porges. We are a not-for-profit organization. We have--
    Chairman Landrieu. And you have been in business how long?
    Ms. Porges. The organization has been in business for over 
ten years.
    Chairman Landrieu. You have been operating----
    Ms. Porges. I am sorry. Not in business. We have been 
operating for over ten years, exactly. And as I said, we have 
evolved in terms of our focus from a microlending organization. 
We still do some microlending, but we predominately focus on 
the coaching, the training, the peer mentoring, which women has 
told us that has been their breakthrough. And then we partner 
with companies, great companies like American Express Open and 
others to fund the loans when the women need them. So----
    Chairman Landrieu. Fabulous. Thank you so much.
    Ms. O'Donoghue. Good morning. On behalf of Ann Marie 
Almeida, I would like to thank both staffs here, and she is 
sorry she is not able to attend. I am glad to be here on behalf 
of the National Association of Women's Business Centers. I also 
wear the hat, as a grantee at the SBA Director of Women's 
Business Center program for the past five years and I came into 
that position because I was a woman business owner. I ran a 
terrazzo restoration business and we restore the floors in 
courthouses, airports throughout Indiana, Michigan, Kentucky, 
and Ohio, and in four years, we went from $200,000 to $1.4 
million, you know, and government helping in a previous life. 
But it was not an easy trade to put on cement boots and that is 
what we are here to ask.
    On the reporting, and specifically to answer the questions, 
the feedback we receive from our members who are the Women's 
Business Centers is it is vital and critical not only for the 
SBA and the government's investment in the Women's Business 
Centers, but to all of the other funders. As you know, Women's 
Business Centers are not-for-profit organizations and we raise 
often more than 70 percent of the rest of our budget--the SBA 
just being one grantor--from foundations like Lilly Endowment 
and Kauffman and others, and they, too, have the same reporting 
    It is important as a not-for-profit to have client metrics. 
The client metrics, however, that we see with sole proprietors 
or microentrepreneurs are a little bit different than what we 
might use for what we would call middle or mature businesses. 
One of the issues that we ourselves have as centers in 
measuring the traction, how far the Dow goes to the right, with 
our clients is sole proprietors often take a little bit longer 
to get traction.
    We applaud and support and thank the SBA for, as painful as 
it has been, the EDMIS system, which has allowed us over the 
past three years to better track our client outcomes. It has 
been a tool that we have used. But what we notice is that in a 
system that reports quarterly, your records often walk over the 
previous data so you don't have that historical look. So if 
somebody is giving me gross receipts, all I have is the current 
snapshot when I look at a client database. I don't see what 
they have reported every time they came in for a visit.
    The second issue with some of the tracking or just 
capturing metrics in whole is clients come in when their tails 
are on fire. They don't often come and share you the good news. 
So the snapshot we have in time is when they need the help and 
when the tail is on fire. That often is not the best news. We 
do not have resources as Small Women's Business Centers to dial 
for dollars to call our clients and to say, so, what is the 
report this month and how are you doing? Or, we haven't seen 
you for six months and it is because now all of the sudden 
everything is fine, and we could get an update that now they 
are at a negative net profit, not the negative loss that we 
have on our records from the last time they saw us. So there 
are obviously systems issues as well as measurement issues.
    Last but not least, one of the most important things that 
we believe we are tracking in the communities, especially in 
this high unemployment, is in those households where self-
employment or business ownership is seen as a supplement to 
household income, not a replacement. A lot of business 
ownership and microenterprise tracking is set up looking at the 
measurement of the business as being the sole source of income 
for a household or for that individual when, in fact, that 
might just be one of two or three employment opportunities that 
individual is using.
    We don't then clearly understand for the government's 
investment in us or for any foundation's private investment--
and we are wrestling with this in Indiana--we aren't better 
able to grab the metrics of what other Federal programs these 
individuals have been able to come off of because the business 
ownership or the microenterprise is supplementing income, 
because it is all rolled up into household income and somebody 
doesn't think of grooming dogs or auto detailing cars as a 
separate way to keep track of their money, but it now allows 
them not to have to receive assistance from other Federal 
    So here are some of the tracking that our centers said that 
they are doing that the government is not asking us for which 
we think are important. One, we track how many people are 
working paid or not paid. When a business often starts, family 
members are unpaid.
    Second, we track is it part-time or is it full-time? If it 
is part-time, how many hours are expended by the individual?
    We also track total growth income on a monthly basis. That 
allows us not to get locked in with somebody reporting a gross 
annual receipt but basically give us an average of what the 
doggie grooming or the catering is throwing off on a monthly 
    Last but not least, we try to get people to articulate and 
we have what might be called the social services checklist of 
where else in their life now are they achieving sustainability. 
Are they no longer getting child care vouchers? Are they no 
longer getting a housing voucher? So we get folks to list all 
of the other government assistance they are receiving. Those 
are some of the suggestions we have to help make the metrics.
    Chairman Landrieu. Thank you, Shelly and Sharon. Those were 
excellent, excellent.
    And Donald.
    Mr. Wilson. Yes. Thank you, Madam Chair. ASBDC, as you 
know, has long advocated measuring results. We have worked very 
cooperatively, may I say, with ED at SBA in trying to 
strengthen, improve, and provide better reports through the 
EDMIS system. There have been ups and downs, as Sharon 
mentioned. But there is no question it is improving and we are 
bringing to the agency a number of recommendations the next few 
weeks that our EDMIS subcommittee has developed over the last 
year. I think the taxpayers, I think the Congress who invest in 
these programs have every right to know what the results are 
from the dollars spent.
    As your staff and I think you also know, we do the ASBDC 
economic impact study every year. We measure sales. We measure 
new business starts. We measure jobs created. We measure jobs 
saved, et cetera. I think there is room for improvement at 
EDMIS. I think there has to be an awareness of the 
confidentiality issues for clients. I think there is a real 
reluctance on clients to see a list of names, a list of names 
and addresses and so forth in computer databases. We have seen 
those get released and so forth.
    A very real life situation. Take, for example, someone who 
comes to an SBDC to get an evaluation of the value of the 
business if they want to sell. A lot of the public perceives 
that when someone comes to an SBDC or to a SCORE counselor or 
even the WBC, they are coming because they are in trouble. The 
house is on fire, as Sharon so articulately said.
    But that is not the only reason they come. It may be an 
extraordinarily successful business coming to get an 
evaluation. They have never sold their business before. They 
have been in business for 30 years. I need to know how to value 
it for sale. If their name is on a list that they are coming 
down to SBDC and somebody sees that, it is like, oh, their 
business must be in trouble. I was thinking of offering $5 
million for the business, $20 million for the business, but I 
am not going to offer that.
    You see people come for training about starting up a 
business. Their employer finds out, they may say, oh, you are 
thinking about leaving me. Well, you are going to leave me. You 
are fired. That has happened. So there has got to be a balance 
between getting the data that the government needs and deserves 
and the taxpayer and folks can see whether these programs are 
working but without being invasive in the privacy of the 
    Chairman Landrieu. Well, let me just say, and I would like 
anybody else that wants to comment--Holly, I will get you in a 
minute--not only do I want us to have the adequate data that we 
need, not any more, not any less, I also want it to be 
streamlined and uniform so that small business owners aren't 
filling out one set of documents for the IRS, another set of 
documents for the SBA, another set of documents for this and 
this and that. So I need everybody to really focus on what are 
the core essential--what is the core essential data that we 
    And keep in mind the new opportunities for this to be 
online and through really very convenient tools. We want to 
keep this as convenient and as easy, informative, because 
taxpayers do have a right to know of every dollar we are 
investing in these programs, what is the return, and if we 
can't justify it, we are going to end the program. It is about 
as simple as that.
    We don't know how to judge, and it is going to be very 
interesting to me as I sort of sort and figure this out, are 
the SBA programs more effective than the Commerce Department 
programs? Are the Commerce Department programs running better 
programs than the Defense Department Entrepreneurship Programs? 
I want our programs to be the very, very best and I want to be 
able to challenge the Congress, because we do have the lead, 
basically, in entrepreneurship for the country and we want ours 
to be a model for other departments that this is not their 
central business necessarily, except maybe for Commerce. You 
could say business is their central business. Defense, their 
central business is defending the country, not developing 
businesses. But our central business or focus of the SBA and 
this committee is entrepreneurial development, so we need to be 
the very best.
    Let me get Holly. Go ahead, Holly.
    Ms. Schick. Madam Chair, first, thank you so much for the 
invitation and the opportunity for us to be involved in the 
roundtable today. I want to make a comment briefly about what 
other folks have referred to as EDMIS. It is the platform on 
which entrepreneurial development programs collect the data and 
it is very important to us that we have common sets of 
definitions and a common platform so that we can measure apples 
to apples where that is important. So we are working very hard 
moving into the future to have continuous improvement for this 
EDMIS system and we look forward to making it more flexible and 
more nimble to try to collect other things that come up that 
are important.
    When we establish metrics for each program, it is important 
that we look at the goals of those programs and identify what 
are drivers for those programs, but also what are the 
appropriate outcome measures so that we will know, have we 
really hit our mark. And for each one of our programs, we not 
only identify output measures, but outcome measures, as well, 
which in terms of the business, what did all of this mean to 
them in terms of jobs created, sales increase. Our EDMIS system 
has the capability to collect baseline data for the company and 
then to measure at subsequent points after that.
    We also do an OED, an impact study, which is a longitudinal 
study on a selected sample from all of our programs where we 
collect data directly from the companies on the impact and we 
report that formally every year.
    Chairman Landrieu. Kate, and then I am going to have to 
slip out and I really apologize. I have got another hearing. 
But I really encourage the staff to press these issues, and for 
those of you that disagree with things that are being said, 
please speak up, or if you are not familiar with some of the 
issues that are being discussed, please feel free to ask 
    So Kate, I am going to ask you to be recognized now and 
then I will slip out and thank you all very much.
    Ms. Boyce. Thank you, Madam Chair. The National Center for 
American Indian Enterprise Development runs several Native 
American Business Enterprise Centers funded by MBDA and 
American Indian Procurement Technical Assistance Centers funded 
by the Defense Logistics Agency. They are the longest serving--
40 years anniversary this year--business assistance center 
organization in the United States.
    Because they work with different programs, they have been 
subject to different reporting requirements. Some of them 
measure--and they measure different things. MBDA used to 
measure number of visits, for example, and now they don't 
require that. They look for other metrics.
    So we think that it is important for these metrics to be 
collected and we have a good track record of, in the last four 
years alone, having helped clients capture $2.5 billion in 
contract awards and financings. That is a pretty good return on 
a very modest investment.
    And one of the things I am--just listening to people around 
the table, it is pretty clear that you have to have sufficient 
revenues in your organization in order to afford the staff and 
the software and everything to track these kinds of metrics.
    So for the Native American program that is proposed--first 
of all, we are delighted that you have included this and that 
you are authorizing the program--we have a number of 
recommendations we have made in a written statement. But I 
think you have to realize that there are a lot of organizations 
in Indian Country that have developed some form of business 
assistance, but they are at various levels. They are culturally 
tailored to their clientele, but they are not revved up to 
provide the type of metric and reporting that is required in 
this bill.
    So I agree with Holly Schick that it is--at least she was 
inferring or implying that there are different goals--there 
should be different goals for different programs. And so I 
would recommend a little bit of flexibility in the Native 
American context in order to provide the additional assistance 
that the various providers in Indian Country already--so that 
they can do a better job in delivering the services that they 
    Chairman Landrieu. Well, and I appreciate that and we will 
consider that. I want to think through that a little bit more 
and we want to be very, very sensitive to different 
populations. But what I really want our group to really focus 
on is a very streamlined system, either online or available, 
accessible, where people can give the kind of reporting that is 
necessary for us to judge, whether they are in the Northeast, 
the South, or the West, or whether they are a one-person shop 
or a three-person shop or a ten-person shop, what kind of 
business opportunity they are providing.
    And I would like to ask the staff before I leave to also 
make sure to follow up on what Sharon said, because I want to 
be more familiar with this myself. We contribute, let us say, 
whatever it is, 15 cents on the dollar of their operations, or 
20 cents. I would really like to have, and maybe you all have 
this data, the foundations that are--the total amount of 
foundation support that some of you all are receiving because 
that is really the Federal Government leveraging other 
resources in the nation and I want us to count that because 
that is something that we can count. And I am not sure we have 
that. So it is not just the outcomes of the businesses, the 
jobs they are creating, the taxes that they are, but leveraging 
the other help to small business from other nongovernment 
sources of funding. I want to make sure we capture it.
    Okay. Thank you all so much.
    Mr. Cravins. All right. Thank you again, ladies and 
gentlemen, for being here. I am going to start off. We are 
going to start with you, Don, pick on you first with the SBDCs 
and just ask you a couple of questions about the SBDCs. First 
of all, if you could just give us just a background, just 
typically what types of businesses are you seeing at the SBDCs, 
what are the sizes, just maybe a description of who do you 
cater to.
    Mr. Wilson. They range all the way from start-ups to 500 
employees, as you know. Obviously, primarily retail and 
service, increasing numbers of manufacturing clients. The SBA's 
economic impact study indicates that I think we are probably in 
the ten-employee range, five to ten, if my memory serves me. 
SCORE, a little bit smaller than that. Women's Business 
Centers, a little bit smaller than that, which points out to 
the fact that I know Congress on both sides of the Hill have 
been concerned with whether or not these programs are 
duplicative, but it is very clear from the five-year study that 
has been going on that these programs are serving niches, and I 
think Sharon and Ken and others would agree with that, Jody. So 
I think that is very important to realize that one of the 
issues that has always been a concern is about duplication and 
that does not appear to be occurring. I hope that is responsive 
to your question.
    Mr. Cravins. It is, and Don, if you could, give us just--
briefly explain the impact that the SBDCs have had on the 
economy and with regards to our investment, the return on the 
investment of Federal dollars.
    Mr. Wilson. Absolutely. As you know, we have done for a 
number of years an annual study. Holly, correct me. I think 
your study samples about 300 SBDC clients, if I recall 
correctly, in the impact study that you folks do. I think it is 
about 300 that you survey, if I remember George's numbers.
    Ms. Schick. We sample across all resource partners 
approximately 12,000----
    Mr. Wilson. Okay.
    Ms. Schick [continuing]. With the larger portion----
    Mr. Wilson. I was thinking that the returns that George had 
were about 300 last time, when we were there two weeks ago. I 
could be wrong.
    We sample 55,000 of our clients. We sample every client 
that has over five hours of counseling within the year and we 
get about a 20 percent return, so you can see the rather 
significant return that we get.
    SBDC in-depth clients, and that is the ones with five 
hours, generate about $250 in new Federal tax revenue--excuse 
me, $2.50 for every dollar that we expend, and I think it is 
critically important to realize that one of the things that we 
have always measured is the return on investment. But one of 
the things that I think has been missed in recent years, and I 
count myself remiss in that, is getting really good data on 
savings to the government in other areas.
    Last year, the Cristman study that was released in late 
September--we have another study out but Dr. Cristman--our 
clients, those 55,000 clients, reported that as a direct result 
of SBDC consulting, they saved 93,000 jobs. Now, if you take 
93,000 jobs, as some of you have heard me say, and multiply it 
by $300 a week, which is the national average for unemployment 
benefits, and multiply it by 18 weeks, which is the average 
amount of time folks are unemployed, you come up with almost a 
half-a-billion dollars in savings to State and Federal 
    I think that is a better than five-to-one return. But once 
again, when you do static accounting at OMB, they don't count 
savings, okay. They simply count outlays. And so when you do it 
that way, you don't account for the true value of a program 
like this, but it is there, and we are not even talking about 
things like Food Stamps and all the other things that could be 
affected, as well. It is just immediately.
    Now, I noticed the administration released earlier this 
week that over the last three months since the stimulus package 
went into effect that $135 billion--$135 billion--has been 
spent and it has saved or created 150,000 jobs. Just among our 
long-term clients in 2007, the Congress spent $720 million and 
saved or created 165,000 jobs. So if there is any question 
whether government is getting bang for the buck--and I suspect 
you will see similar numbers with Ken and the Women's Centers--
if you want to talk about bang for the buck, I simply don't 
know of any other programs.
    The Agriculture Department reports that its economic 
development programs created jobs for about $42,000 a job. Look 
at the SBDC and Women's Centers numbers and you will see 
something dramatically less than that.
    Mr. Cravins. Thank you, Don.
    Mr. Wilson. We are also spending--I don't mean to take too 
much time----
    Mr. Cravins. Sure.
    Mr. Wilson [continuing]. We are also spending--and I don't 
criticize it at all, please understand--we are spending endless 
billions at Labor in job training. Look at the total amount of 
money that we are spending on economic development programs, 
and if we get people trained and they are not being hired, then 
you may not have got what you wanted. And when small business 
is creating 67 to 80 percent of the net new jobs in the 
country, they are going to be hiring the people that Labor is 
training. So we might want to allocate resources a little bit 
differently if we want those people that we are training for 
new jobs, green or otherwise, to be hired, because they are 
going to be hired by small businesses.
    Mr. Cravins. Thank you, Don.
    Do you support the authorization levels that are 
contemplated in Senator Landrieu and Senator Snowe's bill, and 
why is it important to maintain a strong core funding for the 
    Mr. Wilson. Don, I thank you for that. We are very, very 
grateful for the work that Senator Landrieu and Senator Snowe 
and Senator Cardin have done, both in the budget process and in 
what they are proposing in terms of the authorization level. I 
could always say that in a type of economic downturn like this 
with, you know, the worst economic conditions in over 70 years 
that we could probably utilize more. But obviously, you don't 
want to allocate so much that you can't grow into it in the 
time. There is no sense in allocating dollars that are not 
going to be timely used. But I think the dollars that are in 
the program are accurate.
    I know that there is discussion of creating a number of 
other grant programs and so forth. Once again, we have seen SBA 
have difficulty simply from manpower issues of getting some of 
those new grants into the field in a timely manner. The 
affordability grants were one of the issues. It became that 
many of the affordability grants didn't actually get out until 
a fiscal year later.
    SBA had to work very, very hard to get out the veterans and 
the--I mean, the energy efficiency grant. That puts a 
tremendous burden on them, and one of the things--I was just at 
the New England Professional Development Conference. I had the 
privilege of driving through Maine and to be in New Hampshire, 
Senator Shaheen's State, and I was with about 150 counselors. 
They were telling me--for example, I spoke with a center 
director in Massachusetts--by June, she will have trained as 
many people as she did the entirety of last year, and she is on 
a calendar year basis grant. So the core funding is absolutely 
    You do the boutique grants for manufacturing or whatever 
and you may be, because of the pie that the appropriators have, 
you may be cutting that pie in many more slices and diminishing 
that core from a program that has had really rather astonishing 
returns over the years. So I think preserving core funding is 
absolutely essential.
    Mr. Cravins. Thank you, Don, and I am going to be very 
brief. One last question and then I will get to my colleagues.
    I want to ask you, I was in New Orleans last week and met 
with the Hispanic Chamber of Commerce there. One of the 
concerns that they had about the SBDC program was sometimes not 
having a bilingual person at the SBDC served as a barrier. 
There are other groups in Louisiana that I have met with that 
have just expressed a concern of the lack of diversity with the 
SBDC programs. Can you comment about that and what steps we can 
take to alleviate some of those concerns?
    Mr. Wilson. I don't know what they mean by lack of 
diversity. If you look at the minority clients we serve, it is 
in the upper 30, I would say, 36 percent, 33, 36 percent, which 
is significantly higher than the minority population in the 
general business population. So I am astounded that anybody 
would make that claim because the data over the years simply 
defies that.
    I will be very candid with you. SBDCs have been frustrated 
over the ability to have bilingual counselors. As you know, we 
primarily have folks with finance degrees, MBAs who have been 
serial entrepreneurs as our counselors because we want not only 
the academic experience, but the real world experience. We have 
a very difficult time competing with big business for Hispanic-
speaking or other foreign language-speaking MBAs because, quite 
frankly, large business simply buys them away from us.
    I know in Michigan, one of the most outstanding counselors 
we had was Spanish-speaking and was also a minority counselor. 
Chrysler hired him away at about three times what he was 
earning. I am glad to report that after three years, he 
returned. He found our work far more satisfying.
    Mr. Cravins. Thank you, Don.
    Senator Snowe's staff, do you have any questions for Don?
    Mr. Triolo. I have a couple of questions on the actual 
bill. The first question is for Ms. Keenan. It has always been 
a priority of Senator Snowe, and Senator Landrieu, as well now, 
that we do more to ensure that the resource partners are 
helping entrepreneurs on procuring health care, and one thing 
that we have in this bill is a grant program that would go 
through the Office of Entrepreneurial Development to help 
provide assistance to the SBA resource partners to create a 
national program for all of your centers to provide that type 
of assistance.
    I know you have read that provision. I am curious as to 
your thoughts, also maybe the SBA's thoughts on how that 
program is created and whether or not you think the SBDCs have 
the capacity to build something that could be used on a 
national basis.
    Mr. Wilson. I yield to Jody, but let me just simply say 
that we have discussed with the Hill for a number of years the 
importance of access to health care information. Ken and I have 
discussed the whole issue that almost every year you poll small 
business people and concern about health care costs and their 
ability to afford and provide health care costs to their 
employees is critical as they try to compete with large 
business on hiring.
    We get inquiries and, for example, Jody, you might want to 
mention the work that your Alexandria Center did with some of 
your major national health care coalitions in providing 
information to clients.
    Ms. Keenan. We partnered a few years ago with the Health 
Care Leadership Council. They had some funding from the Robert 
Wood Johnson Foundation to really--and they focused on Virginia 
as a pilot--to survey the insurance programs and options 
available by region around the State and they published a guide 
that they distributed through the State Department of Health 
and the Small Business Development Center Network.
    So it was a useful resource for us, really to just kind of 
educate business owners about what options they may have 
available if they needed to provide or wanted to provide health 
insurance for their employees. I mean, most of them do want to 
provide health insurance for their employees. It is a business 
attraction tool. But it can certainly be cost prohibitive. 
There are a range of options, though, for them to phase in 
products and tools.
    So that was a useful resource for us that we shared around 
the State, but it is pretty time-sensitive. So every couple of 
years at least, and certainly probably every few months, those 
price points change and can change pretty dramatically. So it 
is a time-sensitive document, but it was useful and helpful, 
and I actually made a note when you talked about it that 
reconnecting with the Health Care Leadership Council on a 
project like that would make sense.
    Mr. Triolo. Now, I know that you--the Virginia SBDC has 
worked on a program that could potentially go national. We were 
speaking about it when our staff came in and visited you a few 
weeks ago. With additional funds, would you, the Virginia 
Center, have the capability to utilize those funds to not only 
build a pamphlet, but also an online resource center, 
nationally training courses, etc.? Could you possibly do all 
    Ms. Keenan. I think so, yes. I mean, the example you are 
talking about is we have a grant from SBA for Veterans Business 
Assistance and we are developing--we are one of five States 
that won the grant--we are developing an online portal for 
veteran entrepreneurs that will have a video component and 
documentation, all this stuff. But our philosophy when we got 
the grant was this was a one-time project. We need to build 
something that will benefit our veteran entrepreneurs in 
Virginia. But most of the issues are common to any veteran 
entrepreneur and so we wanted to build a tool that we could put 
up that the SBA can use, that the Veterans Business Centers can 
use, that any other SBDC program can use.
    So I think the idea to have a deliverable that is not just 
State-centric but that has--maybe it is regional in the health 
care area, I mean, I am not as familiar with what those 
particulars would be, but yes, I think that is something that 
either one or a group of States could work to develop a tool 
that would benefit the greater network.
    Ms. Porges. I would just like to add to that. When we 
entered this process--obviously, I guess I would say I am the 
newcomer around the table, we don't do this coming to the Hill 
on a professional basis or on a regular basis but we do 
appreciate the opportunity here--one of the things that we were 
counseled on was because we have an online offering and we 
invest a huge amount of resources also with grants that we 
ourselves generate, or were able to generate from corporations 
and their foundations, to create this online resource because 
most of our delivery had also been one-on-one and we recognized 
quickly that we could never scale to fulfill our goal, which is 
a million women-owned businesses at a million dollars in 
revenue without that. There is just no way to cost effectively 
reach the audience without having that kind of resource.
    So we invested, frankly, over $1 million in resources over 
the last two years, and right now, we are partnering with the 
likes of the National Association of Women Business Owners, the 
Women's Business Enterprise National Council, and other large 
women's business organizations to then wholesale to them our 
offering, because they have already recognized us as being the 
lead in this online training universe--in the overall training 
universe because of the results we have already achieved and 
the investment we have made online.
    We encourage you tremendously to go in that direction. We 
try to bring ourselves forth and position ourselves as the 
Virtual Women's Business Center supporting the regional centers 
that are already in place that do very important interpersonal, 
you know, sort of as they being the retail arm and we being the 
online arm. We understand that in this bill, there is no 
funding for such an initiative, or at least it is difficult to 
see how that could fit. But we certainly want to encourage you 
as you look forward--clearly, the job is not done yet, this is 
one bill, but there will be others--to really look at these 
important things for so very many reasons.
    One, the Senator mentioned reach and diversity. We have a 
tremendous diversity in our population, both in terms of 
geography, in terms of ethnicity, in terms of industries and so 
forth, and in terms of performance, frankly. But that is what 
we are working on. And being online allows us to do that. For 
the first time, we are not bound by having an initiative in one 
State or another but really can serve the whole country.
    Ms. Keenan. Yes. I think the online, if I can just add, 
really complements, as you were saying, the retail outlet or 
the faces in the local communities. It is a nice complement. I 
don't think there is a replacement, but it works very well, 
hand in glove.
    Mr. Triolo. And then my final question, and again to Mr. 
Wilson, included in this bill are some provisions regarding 
SBDCs and more flexibility with portability grants as well as 
the ability to use your staff in other States in the event of a 
natural disaster; I know that this has been a provision that 
the ASBDC supported following Hurricane Katrina and Rita and 
some problems you had in moving around monies and staff and I 
just want to ensure that that is still something that you 
    Mr. Wilson. Absolutely, and I thank those who put the bill 
together on a bipartisan basis to recognize a need when there 
are major national disasters, such as we saw with Katrina along 
the Gulf Coast. It may very well come one day--hopefully not--
California, whatever. But that was one of the issues we had, 
was the issue of moving people around. We had a lot of people 
who simply--SBDC counselors who were so concerned about what 
was going on on the Gulf Coast that they took their own 
vacation time, they took their own rec vehicles and so forth, 
all at cost to themselves, to go there and work weeks at a 
    And there were some States that wanted to go and under the 
old statute and the decisions of the Administrator, who tried 
to have as great of flexibility, may I say, as he possibly 
could under the statute, but on the advice of legal counsel, 
there were a number of States that had very experienced 
disaster counselors who were not able to send them because of 
the distance. So I think being able to mobilize the entire 
network when there is something of the magnitude of the Gulf 
Coast is a dramatic improvement and I commend all of those who 
have worked on that and we thank you for it.
    Mr. Cravins. We are going to move on. Jody, I know you 
drove some way to be here this morning, too, and we picked on 
Don a lot, but was there anything else you wanted to add about 
SBDCs before we moved on to SCORE?
    Ms. Keenan. No. I think you have hit all the points. Thank 
    Mr. Cravins. Okay. Thank you.
    Ms. Sanchez. Great. For Ken, can you just kind of briefly 
describe the size and type of small business concerns that 
SCORE serves and get to the complementary versus duplicative 
nature of the services? Just elaborate on what Don said.
    Mr. Yancey. Sure, Ami. Thank you very much for allowing us 
to be part of this roundtable. I think my colleague, Don 
Wilson, did a really nice job of describing the relationship 
between SBDCs, SCORE, and Women's Business Centers in terms of 
client size. SCORE today serves about 370,000 different 
businesses and individuals each year. Those businesses are 
typically five employees and typically less than $300,000 a 
year in total revenue. So it is a smaller client. The SBDC is 
serving a little bit larger and Women's Business Centers 
serving a little bit smaller, each a recognized niche and 
demonstrates that there is not a duplication of service that is 
    The other thing that we provide and I think that Jody and 
Sharon and Don will show, we also find that as organizations in 
specific markets, we often do our best work when we collaborate 
with a client. SCORE volunteers bring real world experience. 
That experience typically dates back to some period of time, 
because most of our volunteers today are still retired. 
Bringing that to bear with the cutting edge information that 
can be provided by the SBDCs, the unique information that can 
be provided by Women's Business Centers makes a really unique 
and valuable service to small business owners and those who 
would want to start in the various markets.
    So we believe and we find more and more that we work more 
closely, those stovepipes and silos that had existed in the 
past and the unwillingness to share clients across programs is 
far less today than it has been in the past. So clearly, 
different services, clearly, different programs, clearly, 
different markets.
    Ms. Sanchez. Great. And just kind of follow up on the 
services. I know there were online mechanisms mentioned. Can 
you speak to what technology, if any, that you are using in 
kind of maximizing the services you are providing?
    Mr. Yancey. Sure. As most of you know, we were in the 
online space counseling very early on. Our online counseling 
dates back to 1997. Odd that a very small nonprofit made up 
primarily of retired executives would be one of the early 
online advice sites.
    We continue to offer that service today. It represents 
about 33 percent of our total business. We have over 1,500 
counselors that are available. It is a keyword search 
capability, so a small business owner can come on, ask a 
question, and we will align them with an appropriate counselor, 
allow them to choose that counselor based on a skill set as 
well as a review of a brief bio. The e-mail goes directly to 
our system. The counselor is notified that they have a 
question. They come to the server, answer the question, and it 
goes back out.
    Today, it is working very well. We have done--our 
foundation has funded an economic--or an impact survey similar 
to what the SBA does for our face-to-face clients. We are 
finding the results to be very similar. We are getting 
excellent feedback in terms of quality. We measure quality in 
that service as well as in our face-to-face service using net 
promoter scores. We send that survey to 100 percent of our 
clients. We have over a 30 percent return. And we are finding 
year on year that our net promoter scores are improving in 
terms of client satisfaction and feedback.
    We have also recently launched an online community, so not 
only can--within this community can small business owners seek 
advice and ask questions of SCORE volunteers, but they can also 
communicate with one another peer-to-peer. They can find 
services. They can advertise for any type of service or promote 
their own services within that. We are very fortunate to have 
partnered with Deluxe Corporation, one of their subsidiaries, 
Partner Up, to provide that. There are over 100,000 
entrepreneurs in that community today.
    Our online workshops have also been quite popular. Over 
7,000 people per month are taking workshops online. Obviously, 
if we are successful in achieving the funding that you have so 
graciously provided, we will use a lot of that to continue to 
build out the services that we can offer online.
    You know, our site has become less of an information 
provider and more of a service provider and our vision is that 
it becomes actually an entry portal for the client. So while 
today the chapter is the primary hub that does client intake, 
in the future, the primary hub for client intake for SCORE will 
be that website and we believe that we can offer the same type 
of choices for face-to-face counseling that we do for the 
online and we believe that we can have a central registration 
system for all of our workshops, promote those nationally, and 
then begin to offer counseling not just face-to-face and via e-
mail, but also instant message and over Skype or some similar 
free service. So we have plans to build that out and appreciate 
your willingness to support that through the authorization. 
Thank you.
    Ms. Sanchez. Shelly, did you have something to comment on?
    Ms. Porges. No.
    Ms. Sanchez. Okay.
    Mr. Triolo. Just to kind of touch on what you just said 
about the authorization levels, I am wondering if you can go 
into whether or not the authorization levels are adequate 
enough to meet some of the more ambitious goals that I know 
that SCORE has for the future? Also, please go into what you 
hope to do with potentially additional funding? Thank you.
    Mr. Yancey. Thank you, Jacob. You know, like my colleague, 
Don Wilson, in a difficult economic environment, we have the 
ability to scale the business well beyond the dollars that are 
provided and the limiting factor that we have today that 
determines our ability to grow from a rate standpoint is 
dollars. It is investment, and particularly investment in 
    We appreciate the authorization. Our challenge seems to be 
in this process not in the authorization arena but in the 
appropriations arena. I have had the pleasure of having this 
seat for 16 years, and in 16 years, we have never been funded 
at the authorized level. So I hope that both Senator Snowe and 
Senator Landrieu would write specifically to Senator Durbin and 
the appropriators requesting that SCORE and all the programs be 
fully funded at the authorized level. The only way that--this 
is a great step and nothing happens without this step, as we 
all know. But we have got to take it one step beyond this and 
any aggressive, active support that you can provide would be 
very, very much appreciated.
    In terms of what we would do with the additional funds, 
clearly, we would use those funds to create greater outreach to 
the client base most of that through technology, because it is 
the most efficient method for us to reach. We can use that 
method and drive that traffic back to our retail locations, our 
370 chapters across the country. We are using the web now as 
lead generation for those. When someone registers for a 
workshop, their information is provided back to the chapter 
that is nearest them. We have been very fortunate that Constant 
Contact has helped us with e-mail newsletters for all of our 
chapters. So we begin to have regular contact, the permission 
marketing-type opportunity, with all of those folks.
    We are using, again, planning to use the web to drive 
traffic to those face-to-face workshops. We are planning to use 
the web to lessen the administrative burden on our chapters and 
lessen their cost. Our next phase in the web is to actually 
hose and provide a content management system for all chapter 
websites so that not only will they be able to customize their 
site, but we will be able to keep it refreshed with regular 
information, taking some of that burden off.
    Our desire from a technological standpoint is to use the 
web to make it easier to do business with SCORE, and as you 
know, we really have two clients. We have those small business 
owners and those that would like to start, but we also have 
11,200 volunteers that are also our clients and we want it to 
be easier for them to do their job. And their desire is not to 
be engaged in administrivia. Their desire is to help people. 
And we believe that we can use these dollars to provide 
technological solutions that allow them to spend more time with 
the client and less time on the administration.
    So in addition to that, our desire is to create a 
consistent counseling methodology that we will apply across all 
11,200 volunteers and 370 chapters and create a certification 
program around that so we can ensure that we have consistent 
service delivery across all of our locations.
    Mr. Triolo. I think it is important just to note that this 
committee has always been supportive of ensuring that SCORE 
does receive additional funds, and we did, as you remember, 
Senator Landrieu and Snowe introduced an amendment to the 
stimulus asking for emergency funds for the SCORE program. We 
also have asked for $10 million from the Senate Appropriations 
Committee through this fiscal year. So we will continue to work 
bipartisanly to try and accomplish that goal.
    Mr. Yancey. And we have appreciated that support and know 
that it will continue and thank you very much for that.
    Mr. Cravins. Thank you, Ken. Thank you, Jacob.
    I see that we have been joined by Dr. Morrison. Dr. 
Morrison, welcome to the roundtable.
    Mr. Morrison. Thank you.
    Mr. Cravins. And we are going to get to you. He is with the 
Small Business Exporters Association, so we will get on some of 
those issues shortly.
    Now I would like to move to the Women's Business Centers, 
and Sharon and those of you who may have some testimony about 
that to help in our discussion. If you could, Sharon, could you 
just describe the types of small businesses that our Women's 
Business Centers are seeing?
    Ms. O'Donoghue. I would be happy to. And again, thank you 
very much----
    Mr. Cravins. Thank you.
    Ms. O'Donoghue [continuing]. To both Senators' committees 
for the invitation. It was a pleasure to race in front of the 
thunderstorms this morning to get here from the Midwest.
    Mr. Cravins. If you stay here long enough, you will get 
some this afternoon here.
    Ms. O'Donoghue. I brought it with me and I take full 
    My appreciation and gratitude also, obviously, to my 
colleagues with the SBDC and with SCORE and certainly with the 
full support of our investor SBA office and OED.
    Don and Ken said it well. We are unduplicated. We do know 
that the Women's Business Centers, though they serve women and 
men, overall, we tend to serve anywhere between 65 to 69 
percent women, the remainder being men. It seems to focus on a 
different level of entrepreneur and that seems to be what we 
might want to call, regardless of legal business entity across 
the States, the sole proprietor, the onesie, twosies. It is not 
that these businesses do not grow into picking up employees, 
but as opposed to other small businesses that might launch or 
start with an employee pool, most microenterprises start 
singularly with the owner-founder being the everything, the 
worker bee and the owner. So that is one of the distinctions.
    The type of businesses are more predominately services than 
being in product or traditional storefronts or manufacturing. 
What we are seeing over the last couple of years, especially 
with the upturn in unemployment, or downturn in employment, is 
the functional areas of what we would call middle managers 
coming out of--excuse me, functional areas from corporations--
accounting backgrounds, HR backgrounds, IT backgrounds, 
marketing backgrounds. So these are individuals.
    You know, in the old days, to hang your shingle, you often 
were licensed as an attorney or an insurance agent or an 
accountant. Now many people can hang their shingle as 
professions of what we would call traditional corporate 
functions. So somebody can launch a business as a marketing 
expert and they can manage many other small business companies 
that might very well be served by SBDC or SCORE and manage 
their trade shows for them. So that is the distinction.
    Obviously, with the women-owned businesses, the distinction 
that we see and that has been captured is that women tend to be 
a little bit more, the terminology is integrated or holistic in 
need as opposed to transactional. I don't mean to make a 
profile or a stereotype statement here, but just to mention the 
Babson College study in 2005 noted that women business owners 
tend to ride with their Women's Business Center for up to 1.7 
years and they come for the whole kit and caboodle. They want 
to be connected. They need the asset building. Social, human, 
and financial assets need to be built and they are looking for, 
for lack of a better terminology, one-stop shopping for that.
    So Women's Business Centers above and below 100, as SBA 
funds them, are across the country serving over 155,000 clients 
on an annual basis.
    The other interesting part, if I might just make, about the 
centers is--and I don't have the exact ratios, but we come from 
our own business entity organizations which seem to be stand-
alones, not-for-profits, or were a program within a host 
organization and that often throughout the country and through 
our membership as well as the SBA-funded centers seems to be 
either with academics, universities, or with Chambers of 
    I mention that because that is also a reason why the client 
may often come to the Women's Business Centers, because of the 
affiliation of other resources that that Women's Business 
Center has to offer, depending on the host organization, or if 
they are a stand-alone, not-for-profit, they tend to be a very 
good air traffic controller within their community of 
connecting women business clients, period, with the other 
resources within that community.
    Mr. Cravins. Does the bill in its present form, does it 
provide enough flexibility to ensure that States that don't 
have the Women's Business Centers can get assistance, as well? 
I know that is a big concern. I mean, the Women's Business 
Centers are great resources, but some States don't have them.
    Ms. O'Donoghue. And within States, you have geographic 
areas not covered that do have them. Indiana has two, yet we 
have more than 70 percent of the State not covered, and 
predominately in the area with highest unemployment where Karen 
Mills and Senator Bayh just announced the auto floor financing 
in Kokomo.
    No, respectfully, obviously. Respectfully, not enough 
appropriations, authorization to this extent, if I may cover 
the points that were raised by the members. First, there is in 
the language of the reauthorization, and excuse my terminology, 
a cap of this $150,000 award. Now, this is how and why most of 
the Women's Business Centers have gone from an SBA award being 
80-some percent of the budget, and not that that was ever a 
perceived goal, to less than 30 percent, and in some cases less 
than ten percent of that center's budget.
    So you have Women's Business Centers--when you think about 
this as an investor, the government being an investor, you have 
Women's Business Centers who actually might be beholden to 
larger investors than the government, especially the SBA. In 
four short years, the Central Indiana Women's Business Center, 
the SBA is actually my fourth. I have three other powers-to-be 
that I report to that have greater skin in the game than the 
SBA does, and I am only in year four, finished year four, now 
in year five. I am--Central Indiana is what you would call a 
new center, yet we have popped, because of the need, to where 
not only are we not appropriated at what was authorized, but we 
have had to go out and beat cheeks and raise much more money to 
meet the need.
    Second with the authorization is--and to speak directly to 
the point of coverage--we have recognized and Senator Landrieu 
opened by noting that women business owners are opening at the 
largest segment of business owners starting businesses and 
growing, and yet with 370 SCORE chapters and SBDCs 
geographically covering the corners of the States, we have, 
give or take, only 100 funded Women's Business Centers in the 
country. I don't know how we think we have the resource stacked 
to respond to those that are starting businesses if we are less 
than 100 Women's Business Centers as well as some States not 
even being covered.
    So we have an authorization issue with the number of 
Women's Business Centers, with the coverage not in existing 
States, with the States that aren't covered, and then the 
funding level at which we are capped, $150,000 in our little 
center in Central Indiana in just five years to offer over 
18,000 hours of training, 2,200 clients, 543 businesses 
starting up. I have had to grow that budget to $600,000 and I 
got appropriated $118,000 this year out of my $150,000 that I 
was supposed to get.
    So, quite frankly, I have to look at the SBA grant and the 
Women's Business Centers--excuse me, the authorization, this is 
a cost of doing business. So you are also, as much as we are 
measuring the outcome for the appropriations, I would like--and 
I heard Senator Landrieu say, let us look at the efficiency of 
the appropriations and what it is--how it is measuring across 
the board. The cost of every dollar granted with what we spend 
to track as well as to do it pulls it a little bit off center.
    Ms. Sanchez. Great. Thank you, Sharon.
    I know Meredith has a few questions.
    Ms. West. Yes. I wanted to touch on some important points 
you made there, particularly on the funding for WBCs, and to 
point out that actually the bipartisan bill that Chair Landrieu 
and Senator Snowe introduced yesterday changes the 
authorization of the grant amounts from a maximum of $150,000 
to a minimum of $150,000. I have been listening to you and the 
association on this very important point, so I wanted to touch 
on that and ask you if a minimum grant amount of $150,000 
instead of a max would better enable--the centers to serve the 
important populations you guys are working with.
    Ms. O'Donoghue. That would certainly--and coupling on Ken's 
statement, the authorization would certainly allow us to go in, 
better match--a lot of women--it is the appropriation, you 
know. It is the appropriation needs to match up to the 
    Just a comment, though, about how and why that helps us. 
For $150,000 minimum, if you have a third of the funded centers 
as stand-alone 501(c)(3)s with less than four staff members 
that need to operate budgets at $300,000 to $500,000, that 
helps not having to spend manhour time trying to do other 
fundraising and being able to expend the dollars directly to 
the client services, as well, as we already do by the SBA 
requirements. But when we talk about all hands on deck, I think 
the critical part of a minimum of $150,000, if it is 
appropriated, is that is more money that can be turned into 
physical counseling hours and training workshops and loan 
    Ms. West. All right. Previously, even with additional 
appropriations, the agency couldn't give a grantee more than 
$150,000, so we think this is an important change.
    Holly, I wanted to ask you about the balance between 
opening new centers and supporting the centers that are in 
existence and serving women's businesses. Does the bill provide 
flexibility to serve the States that currently don't have 
centers while maintaining renewal funds----
    Ms. Schick. Yes.
    Ms. West [continuing]. For existing centers?
    Ms. Schick. Yes, it does.
    Ms. West. All right. Thank you.
    Ms. Sanchez. Great. I think we have some questions for 
Shelly, too.
    Ms. West. Yes. You touched on this a bit earlier, on the 
challenges in the missing middle and women-owned businesses 
struggling to grow the revenue base of their businesses. What 
factors have you found in your research and in your work with 
these populations contribute to this phenomenon, and what are 
you doing and what does the Women's Business Center program 
need to do to better support growth in these businesses?
    Ms. Porges. Thank you very much for the opportunity to 
address that. First of all, the women have told us who have 
gone through our program, the women who have success, we 
obviously monitor them all along, not only their actual 
financial performance and job performance, but also what is 
working for them, what isn't. We do ongoing modification of the 
    The key things they have told us work for them to break 
through, the women who have gotten to the million-dollar mark 
and beyond, number one, it is setting the goal. So many women 
get into it either as a sideline, or even if they thought of it 
as a business, the notion of, oh, I never thought of that. I 
could grow my business to a million dollars. It is almost like 
you have to give them permission. So setting the goal.
    And with that a certain level of confidence that will come 
with the rest of the program, which is the next thing they tell 
us. The coaching is essential. We are partnered with an 
organization, the Coach Connection, that already does what Ken 
is talking about, which is it has got a very formatted approach 
to coaching these small businesses. I don't know if they call 
their--they call it certification, but effectively, they 
certify their coaches. Their coaches have to have not only a 
fairly extensive--I think it is ten years-plus--of business 
experience, but also have to have had at least two years of 
coaching experience and then go through a certain oversight. So 
the connection with their coaches.
    And interestingly, they tell us two things about the 
coaches. One, it is, of course, the input they get from the 
coach, and they get to pick their coaches as they do in your 
program, but it is the accountability to the coach that is very 
important to them, because otherwise, they are on their own. So 
if they have decided to tap into five new customers but no one 
is there to tell them, and now months from now they haven't 
done it, if they have a coach who once a month checks in with 
them and is talking with them and is guiding them further or 
giving them input, they have someone to account to who is going 
to ask them, so, did you call those five new customers? On 
their own, there isn't that kind of accountability.
    And the last and most important thing, I think, is the peer 
mentoring. We found that going on. I mean, you talked about 
integrated. Women approach these things on an integrated basis. 
We do think that there are differences in the way men and women 
approach building their small businesses, and what we have 
found is that the women just really benefit from the community. 
They benefit from the fact of seeing other women in similar 
situations, understanding it is not a unique challenge that 
they may be facing, getting input from somebody who has already 
overcome or met the challenge and so forth.
    So again, the goal setting, the coaching, the peer 
mentoring are the three things they tell us are the most 
important things for them.
    Ms. West. All right. Thank you.
    Ms. Sanchez. Great. Wonderful. Actually, now we are going 
to, I think, move on to our Veterans Business Centers, and Lou, 
I actually want to start with you. Can you briefly describe 
kind of the nature of the center that you run, the services you 
are providing and kind of the gambit of the folks that you are 
actually serving?
    Mr. Celli. That you, Ami. That is a great question and it 
is really a great way to start off the veterans' portion of 
this discussion. Our center is--I heard Don mention boutique 
services. I have heard some other people mention some specific 
services. We are a full-service resource center that provides a 
variety of different services, not only counseling and 
mentoring, but we also provide education. We provide nine-week 
courses, 11-week courses, three-day courses. We provide 
seminars, not only locally, but we have also been asked to 
provide these seminars nationally. We provide online 
counseling. We provide in-person counseling.
    We provide a variety of services that have really stretched 
our resources to capacity, and I have always understood that we 
were the orphans of the program, you know, that we were the 
little guys on the block. We are the youngest entrepreneurial 
development program in the repertoire of the SBA of 
entrepreneurial programs, only having been around now ten 
    I hear Sharon's concern that 100 Women's Business Centers 
is a very difficult number of outreach efforts in order to 
service the United States of America and I just want the 
committee to be aware that the Veterans Business Resource 
Centers number in total of eight. We have eight across the 
country. So we are now hyper-focused on this piece of 
legislation to try to grow this program to the degree that it 
was intended to be grown through Public Law 106-50.
    The entrepreneurial effort that was passed in the 110th 
Congress, Public Law 110-186, sought to try to grow this 
program at least a little bit by funding the Office of Veterans 
Business Development out of the Small Business Administration 
from what historically had been a flat-funded program of 
$750,000 a year to $2 million a year and that authorization was 
summarily ignored as they remained flat-funded at $750,000 
through the term of that authorization, from 2009 and 2010.
    So I sit here and am jealous of all of you, trust me. You 
know, you have resources and outreach and capabilities that we 
only dream about, yet we have still been able to support our 
veterans in this effort. I will leave some of the statistics 
that I have to Director Sharpe as we talk about returning 
    Ms. Sanchez. Joe, do you want to add?
    Mr. Sharpe. Well, first, I want to thank you for having 
this hearing and the American Legion really appreciates the 
support that we have received from Senator Snowe and Senator 
Kerry and now Senator Landrieu. But I need to make a few things 
perfectly clear.
    The situation with veteran entrepreneurship is becoming 
intolerable. Many of the veterans are so angry and so 
frustrated with the lack of support that they are receiving 
from the Hill and from SBA that there is a real movement to 
move the entire program from SBA, move it to the VA. Veterans 
feel that they really don't have a seat at the table. The 
centers are underfunded. There is an expectation that the eight 
centers cover the entire country, that they provide special 
services that no one else can, and it has gotten to the point 
where the American Legion is looking at investing a sizeable 
amount of money to do the things that we feel the Federal 
Government should be doing. There are also three other Veterans 
Service Organizations, not-for-profit, that are raising money 
to do the same thing.
    It is imperative with the number of veterans returning and 
wanting to start businesses that they receive the support that 
they need. A hundred-and-fifty-thousand to $200,000 for one 
center that is expected to cover six or seven States is just 
not feasible. If an organization in California--and this has 
happened--wants to do a program, then they expect Louis Celli 
or someone from Flint to fly out there and put that on for them 
because they feel like they are not getting that support from 
anywhere else. When we do our conferences during our national 
conventions, we have veterans flying in from both coasts for a 
two-day program, something that we feel that they should be 
able to get in their own States. And this is a serious 
    There is going to be a veteran business seminar that will 
take place in July in Las Vegas. We expect over 2,000 veterans 
to fly to that event, and the Secretary of VA is speaking, not 
SBA. SBA has played a very minimal role in anything the 
veterans have done. As Louis had stated before, that veteran 
office in the SBA has been flat-lined with a budget of $750,000 
for years and they have somehow been able to use that money to 
keep five centers going, and now they have eight. We don't feel 
like we are getting support that is required.
    Mr. Walker. Could I respond to that? I would just like to 
respond. I think that you are preaching to the choir here in 
terms of veteran support, particularly from our bosses. That is 
why we fought so hard to get the bill passed last year. That is 
why we fought to secure in the Senate the funding to keep the 
three Veterans Business Resource Centers open, including 
Louis'. We included provisions to do so in the Senate 
appropriations bill, and we were fortunately successful in 
doing so.
    I also do not want to in any way downplay the role that we 
are playing in terms of veterans in this bill. This bill 
proposes a significant increase to veterans services. By order 
of magnitude, what we are proposing in this bill is an over 
1,225 percent increase in funding, from the historical level, 
for this upcoming year. And that is in response to fiscal year 
2009. So a 1,225 percent increase should certainly show a level 
of support from people that understand that this program 
deserves increased funding. I think that that is one of the 
largest proportional increases in fundings that I have ever 
heard proposed on Capitol Hill.
    Similarly, for the Office of Veterans Business Development, 
we are proposing raising its funding to $2 million. That is a 
massive increase, as well.
    And in regard to one center serving, for instance, six or 
seven States, if you do the math with $8 million, which is the 
lowest amount that we would have in every year, that would be 
approximately 40 centers at $200,000 apiece. So if you did 40 
centers across the nation, it would not be one center for every 
couple of States.
    Additionally, we are trying to bolster what the SBA offices 
are doing for veterans. That is why this bill has the 
requirement that the SBA designate a Veteran Business Center 
representative for every State, and that way, there would be an 
additional 50 people out there that would be focused on 
veterans' needs, as well as a new computer network and other 
measures that we are working on.
    So again, I do understand the frustration. I do understand 
the concerns. But I definitely, in defense of this bill, want 
to express the fact that a 1,225 percent increase is 
substantial, and that is the lowest level, it increases in the 
following years.
    Mr. Celli. Thank you, Matt. I just want to respond to that 
by saying that while we certainly appreciate the increased 
emphasis this year, that 1,200 percent really represents a ten-
year increase which never happened. So we are just now trying 
to get caught up with where we should have been starting ten 
years ago, and while it may seem like a lot of money dumped 
into one pot overnight, it is really money that we never got 
over the past ten years. I mean, eight centers--and really, it 
has been five centers over the past ten years that were 
generated out of Public Law 106-50, which started in 1999. So I 
don't think that it paints an accurate picture to say that it 
is a 1,000 percent increase overnight. It is really--it is an 
outgrowth where we should have been anyway.
    Mr. Walker. I agree that it is regrettable that there are 
not more centers, and that is not to say that more isn't needed 
in the future, but also, in terms of incremental growth, it is 
a substantial amount to do in the very beginning with the 
knowledge that more may need to be done, but we should do so 
incrementally in a way that can be done responsibly. I think it 
is a very large increase in support of the Veterans Centers, is 
what I am trying to say----
    Mr. Celli. I agree.
    Mr. Walker. And I think that in order to grow something 
incrementally, that is a pretty big step to take in years one 
through three.
    Mr. Celli. Right.
    Mr. Sharpe. But Matt, I need to also state that that is a 
good start, but you and I both know that a lot of statutes, a 
lot of laws that have been enacted for the past ten years have 
not been carried out from the various agencies that were 
supposed to do them.
    Mr. Walker. I agree.
    Mr. Sharpe. SBA, again, you fought hard for an increase in 
the budget. The Administrator of SBA never gave that department 
the money that they were allocated for. A lot of the laws that 
were passed last year have not been carried out. Most of the 
Federal agencies have not reached their three percent goals. VA 
is the only agency that has that. And when you start talking 
about having a seat at the table, that has not happened for 
veterans. We are still ignored. SBA has not participated in 
many of our programs and the perception is, even though you may 
pass a bill, that doesn't necessarily mean it is going to be 
enacted, the agencies are going to follow suit, and any type of 
recourse will be done to them if they don't fulfill their 
    Mr. Walker. And I couldn't agree more, and going back to 
that bill, I have got to thank you for all of the hard work the 
American Legion and you personally did, and Louis, as well, in 
passing that bill. A perfect example of that is the Veterans 
Task Force. The Veterans Interagency Task Force was required to 
be stood up specifically for this reason, so that we could 
coordinate and leverage what it was that the Federal agencies 
were doing. It has been over a year and that hasn't taken 
place. So we have called on the SBA to do that, to get it up 
and running, and we are going to continue to push for that, 
particularly trying to get that up, because we really believe 
that it is an opportunity, and anything that anyone in this 
room can do to help to push that, we strongly encourage it, 
because it is something that our bosses believe in.
    Mr. Cravins. And Joe, I want to thank you and Lou for being 
here, and I am new to the Hill but I am not new to government 
and the politics. One thing that I would advise you on, though, 
is realize that we have a new administration, as well, and I 
think before you write off the Small Business Administration--
and I don't need to speak for Holly or for the Administrator--I 
think it is worth reaching out to the new Administrator and 
reconsidering inviting her and her staff to different events 
that the VA may be having because I think you need to 
reconsider that. I think it is good to--I understand past and 
you base people's--you base results on past experiences, but I 
think you will be--I can't speak for her, but I think if you 
reach out to the Administrator, you invite her to some of those 
events, I think you will be very pleasantly surprised or happy 
with the results you get. I think she is on the same page with 
our bosses on the VA issue.
    Mr. Sharpe. I don't think it is a question of whether the 
American Legion personally reaches out. What I am conveying to 
this committee today are perceptions from veterans across the 
country. We have a Small Business Task Force. We are inundated 
every day with inquiries, that there is a lot of frustration 
around the country.
    Mr. Cravins. Absolutely.
    Mr. Sharpe. There is still a feeling that SBA is more 
concerned with the Women's Centers and 8(a) and HUB Zones than 
they are for veterans, and this comes out on a daily basis. And 
I am telling you that the hostility toward these various 
interest groups is getting to the point where there is a call 
to move the program to an agency that understands veterans and 
their issues.
    Mr. Cravins. And we want to help with alleviating some of 
those concerns and some of that hostility, and I know that the 
Administrator and the administration would love to be part of 
that, too. So anything that we can do to do that, we definitely 
want to be a part. But thank you very much.
    Let us move on to our Native American entrepreneurial 
development opportunities. Katharine, you are going to be 
talking to us about those issues today. Are there any specific 
issues to our Native Americans that would make targeted 
assistance necessary?
    Ms. Boyce. Yes, Don. Thank you very much for the 
opportunity to be here today. I represent the National Center, 
but I will try to do my best to describe or at least speak on 
behalf of other providers of business assistance in Indian 
    First of all, I want to echo what you just said about the 
new SBA. I have been really pleased in my brief conversations 
with the new Administrator, Karen Mills, with Holly Schick, 
with the new National Director of the Office of Native American 
Affairs, Clara Pratte. They have all been tremendously 
outreaching and understanding of the real challenges of 
delivering business and entrepreneurial development assistance 
in Indian Country.
    You know, in the last umpteen years, there has not been a 
lot of focus on Native American entrepreneurial development by 
SBA, particularly in the last eight years, or on small business 
development assistance from any other centers than the Native-
focused centers. For example, during the Clinton 
administration, SBA provided about $5 million for a Native 
American outreach and had funded some Tribal Business 
Information Centers, and in the beginning of the next 
administration, that whole program was defunded. The funding 
for MBDAs, Minority Centers, and they run eight Native centers, 
has also been flat-lined about at $1.5 million. So there hasn't 
been a lot of money in this area at all.
    There is a real--it is a unique set of problems in Indian 
Country. You have got, in most cases, first generation 
entrepreneurs. You have tremendous hurdles with financial 
literacy. I have to take my hat off to the Native CDFI, the 
Community Development and Financial Institutions system, that 
has developed in Indian Country because that is providing 
microlending and so increasing the amount of entrepreneurial 
development assistance. That is really important.
    There is very limited access to capital in Indian Country 
or even traditional financing mechanisms. For example, an 
entrepreneur cannot use his home or her home or land as 
collateral to start a business because the land is not--the 
Tribal lands are not alienable, which is a major problem. For a 
tribe to start a business, particularly, for example, in 
government contracting, you have to waive sovereign immunity in 
order to qualify and that is a real challenge for Tribal 
councils to agree to waive sovereign immunity.
    So all of these business challenges require more time by 
business counselors in these centers and that is one of the 
reasons why a lot of the other centers that are not Native-
focused have not really spent the time that it takes to work 
with Native entrepreneurs.
    So SBA funding, though, is really essential because SBA 
focuses on the start-ups. The Minority Business Development 
Agency funding more and more are focused on strategic growth 
companies. So they want more bang for the Federal dollar. They 
are looking for big contract awards and big financings in order 
to prove that their program is providing that return on 
investment, and it makes it more difficult for the Native 
Centers, because they need to meet their goals that MBDA 
imposes on them for those big numbers, but they still have 
their mission to service any Native American company that comes 
in the door, or entrepreneur.
    So one of the things that I wanted to say, to echo the 
comment that Mr. Yancey made, this is a big problem, that you 
always have unfunded authorizations up here. I notice that the 
SBA budget request for fiscal year 2010, and I was delighted to 
see it, has $29 million for entrepreneurial development. There 
is no mention within that figure for Native American 
entrepreneurial development. So I am very anxious to help the 
committee move this bill along as quickly as possible so there 
is an authorization figure, at least a target. We have talked 
to the Appropriations Committees on both sides and it is hard 
to make a case if there is only $1 million right now in the 
budget for Native American outreach at SBA. To get higher, it 
is difficult without an authorization that is actually enacted. 
    Ms. Sanchez. Sorry. I know--just really quickly about the 
programs that are created by the grant work in conjunction with 
the preexisting technical assistance programs, and you spoke a 
little bit about the kind of unique nature of Indian Country 
and how these programs work. Who do you anticipate--or do you 
anticipate those programs being interested in applying for the 
assistance under the Act and kind of who would represent these 
service providers?
    Ms. Boyce. Okay. I think that there is a lot of interest in 
this legislation in Indian Country to the extent that it is 
known out there because every center that tries to provide 
development assistance to Indian people is short-funded. They 
don't have the capacity to develop big grant proposals to 
foundations. The ones who are more schooled in that kind of 
activity do better, obviously.
    I think you will find that the existing centers run by the 
National Center, we have been working for quite a while with 
the Senate committee to make sure that this entrepreneurial 
development assistance legislation is available to centers like 
the ones the National Center runs. I think the Native American 
DCFI will apply for this kind of funding. There are American 
Indian Procurement Technical Assistance Centers. They might 
apply. Tribes will apply for this funding. Alaska Native 
Corporations, likely.
    I think the bill should include Native Hawaiian 
organizations and service Native Hawaiians, and every bill that 
has been introduced on this subject in the House and Senate 
prior to this bill has covered them, so I think you need to 
talk to more organizations that have a broad Native American 
representation in order to decide whether you want to pursue 
that narrow focus of this Native American bill.
    I know that you all wanted me to focus on the match 
requirement. The National Centers, with the programs they run 
now, their cooperative agreements with other Federal agencies 
have to meet a match requirement, so I think we would be able 
to meet some sort of match requirement. But not everybody who 
would like to either start a center or augment what they are 
doing now would have the capability to meet this match.
    So what we would recommend is that you lower that--either 
remove the match or lower it to 25 percent for the first two 
years and 33 percent for the last three years of the project, 
and for renewals, make that more flexible than requiring a flat 
50 percent.
    Mr. Triolo. Just a quick question. Can you briefly address 
or go through your relationship with the SBA and what else they 
could do or you would like to work with them in doing, to 
ensure that Native Americans are receiving proper technical 
    Ms. Boyce. Yes. Actually, we have had a lot of meetings 
recently on this. The grant funding would be helpful. Access to 
more of the online capabilities and probably some of the 
tracking mechanisms for tracking return on investment and 
metrics for business success and so forth would be helpful. We 
have some of that. The National Center has some of that 
operationally already, but oftentimes we have to apply for 
other grants in order to fund that kind of activity.
    We would like to explore the possibility of some sort of 
veterans capability. There are a lot of Native American 
veterans in the country. Native Americans have a higher 
percentage of serving in the military than just about any other 
ethnicity in the United States. They are very loyal and they 
have needs. So that is one area where I think that--I am glad 
that SBA is moving into this and we would like to work with 
them on that.
    Microlending is really important in Indian Country, as I 
mentioned, and to date, SBA loan programs and their loan 
guarantee programs have not been as accessible to Native 
entrepreneurs and Indian-owned businesses, particularly Tribal-
owned businesses, as they could be. So I think this is an 
area--I have already talked with the SBA--that there should be 
more focus and set up working groups and so forth.
    Mr. Triolo. Can you also describe a bit as to your 
relationship with--your understanding of some of the current 
Technical Assistance Centers that are out there that do 
specific Native American issues and how they are able to work 
with other SBA resource partners, because my thought would be 
that even with a full-funded grant the SBA may not necessarily 
be able to put a center in every area that has a large 
population of Native Americans. So I think it is important that 
they also work to leverage other resources. I am just wondering 
what you have seen, your experience in the past with that.
    Ms. Boyce. Well, I think there is some collaboration. There 
could be more, and we have talked about this before. My 
concern, even with the Senate bill's provisions, which we tend 
to prefer over what the House has passed in this particular 
area, is that what little funding is made available for Native 
American outreach, entrepreneurial development outreach, really 
ought to be focused on the native centers that are already 
providing this work, because they have a proven track record. 
They have already developed their culturally-appropriate 
business assistance. That is not to say that they couldn't do 
better, no question about it.
    And so collaboration is helpful. But I would really not 
like to see--or I think it would be better if the primary focus 
of this funding be to assist the Native Centers and encourage 
collaboration, but not make the requirement so stringent that 
the only people who can require and meet the match and fulfill 
all the reporting requirements are SBDC-funded organizations.
    And if that is the case, if there has to be that kind of 
mandatory collaboration because of financial constraints, then 
the Native Centers should have more access to the SBDC funding, 
because SBDCs are funded at a pretty substantial rate, far more 
than what Native Development Assistance has been provided. 
Granted, it is a smaller community, but still, there is a huge 
need in Indian Country for this assistance.
    Ms. Sanchez. Great. Thank you.
    Now, I would like to move into PRIME. If you could speak to 
PRIME, give us kind of what is the clientele again, what is the 
clientele that the PRIME program is meant to serve, and how 
does PRIME differ from SBA's Microloan Technical Assistance 
    Ms. Jones. Sure. First of all, I want to say thank you for 
the opportunity to speak today and thank the committee for all 
of their leadership and commitment to small businesses and 
entrepreneurial development. PRIME is a program for investment 
for microentrepreneurs and it provides assistance to the low 
and very low-income microentrepreneurs and it is a program 
that, again, provides training and technical assistance. It 
doesn't provide any lending.
    Ms. Sanchez. Why is PRIME so important to entrepreneurs, 
women-owned businesses? What factors account for this 
phenomenon? Can you just kind of give a little bit more into 
the services? I mean, one of the changes that we are making is 
moving it into the Office of Entrepreneurial Development, and 
kind of give that kind of background on what effect that would 
    Ms. Jones. Sure. PRIME is the only program--well, first of 
all, entrepreneurs lack the access to capital, only one of the 
barriers to starting, growing a successful small business in 
today's complex economy for microentrepreneurs. They frequently 
require business training in order to achieve business success. 
By investing in business training for disadvantaged 
entrepreneurs, PRIME has been successful in creating jobs and 
generating income in communities that need it most.
    PRIME is the only Federal microenterprise program that 
provides intensive business training to low-income and very 
low-income entrepreneurs. It is different from SBA because it 
is--again, it provides one-on-one training to the very low-
income entrepreneurs and they are not--they are not looking for 
capital. They need training for, for example, developing 
business plans, mentorship, coaching, walking through what 
entrepreneurship may be, and how to develop their business.
    Ms. Sanchez. Great. Thank you. Do you have any kind of 
comments as to what can be done to help women business owners 
accelerate their revenue growth given kind of the current state 
of the economy and what kind of assistance that could mean for 
women business owners and kind of the socially and economically 
disadvantaged group, folks that are being served by this?
    Ms. Jones. Sure. The current economic climate has really 
affected, you know, the economy throughout, but microenterprise 
has actually grown and Women's Business Centers have done 
better in the economy and microenterprise has done better, but 
funding is definitely needed. Funding for the private sector 
foundations of personal giving have been severely curtailed due 
to the current economic climate, especially unfortunate because 
these funding sources dwindle. The demand for self-employment 
training has gone up considerably. Job losses have contributed 
greatly to the number of individuals who seek to start the 
businesses using the vocational and technical skills they may 
have honed in their careers.
    We have requested $15 million for PRIME and we haven't 
received that funding since 2001. So that is something that we 
really need, because with the current state of the economy, 
PRIME has not--the current state of the economy, there are more 
people who have moved into self-employment and microenterprise 
is a much greater need at this point and the funding is not 
there. We see a lot of our members want--need to provide more 
technical assistance and training and they just don't have the 
funds to do that.
    Ms. Sanchez. Just to get in, I mean, one of the changes in 
this piece of legislation that really affects PRIME is the move 
into entrepreneurial development, and it is our understanding 
that 90 percent of these microentrepreneurs are not seeking 
financing. So would it be correct to say that, well, SBA 
microloan programs, technical assistance pieces for borrowers, 
PRIME serves actually those not necessarily seeking capital, do 
I have that right?
    Ms. Jones. No. They are not seeking capital. They are not 
seeking capital. They are seeking training and technical 
assistance. A lot of it is one-on-one training. For example, 
for Women's Business Centers, for Small Business Development 
Center programs, they define a client as someone who has 
received two hours of training. Under PRIME, a client is 
defined as receiving ten or more hours of service. So it is 
specifically focused on providing training and technical 
assistance. It is not microloans. It is not microlending. And 
it is the only Federal program that focuses on training and 
technical assistance for this population.
    Ms. Sanchez. Thank you. Do you all have anything?
    Ms. West. Yes. Thank you, Ami.
    As you know, the PRIME program has typically been 
considered when we have reauthorized the SBA's loan programs. I 
would just like for you to speak to why it is so important for 
us to reauthorize PRIME now in this entrepreneurial development 
reauthorization legislation.
    Ms. Jones. Well, again, in this economy, there is a growing 
need for microenterprise. There are a lot more people who have 
moved to self-employment. It has grown substantially, according 
to our members. AEO serves over 400 microenterprise 
organizations and we have served over two million entrepreneurs 
and we have heard from them that, you know, they are just 
screaming that they need assistance with training and technical 
assistance and they have seen an increase since the recession.
    Ms. West. Right. So it is a matter of timing?
    Ms. Jones. It is a matter of timing and the funding has not 
been there. The previous administration has, you know, since 
the inception of PRIME, which was 1999, has continually tried 
to eliminate funding for PRIME and Congress has seen the 
importance of PRIME. So it has been funded, but substantially 
less than what was authorized, which was the $15 million.
    Ms. West. In this committee, Chair Landrieu and Ranking 
Member Snowe worked to include additional funds for PRIME in 
the stimulus bill earlier this year, and in our appropriations 
letter requested the $15 million in funding. So this committee 
has been supportive of that.
    Ms. Jones. And we very much appreciate that.
    Ms. West. Before we move off this topic, I wanted to ask 
SBA, back to the conversation we were having earlier about 
metrics outcomes of these programs, do you think that the EDMIS 
system can be used to evaluate the PRIME program and utilized 
in evaluating outcomes, or would you have to develop a separate 
tracking mechanism for that program?
    Ms. Jones. First of all, I would comment that 
entrepreneurial development is the agency's hub for management 
and technical assistance and the expertise resides there in 
terms of how to do it, how to do it efficiently, and how to 
measure it. EDMIS has the capability to track the basics of 
what management and technical assistance means to 
entrepreneurs, which is what services they get, who provides 
it, how long do we spend with the customer, and what is the 
outcome. And so I believe that EDMIS would absolutely support 
the PRIME clients in that regard with very few, if any, 
    Ms. Sanchez. Great. Thank you, Holly.
    Now I am going to actually turn it over to my colleague, 
John High, who handles trade for the committee. John.
    Mr. High. All right. Thank you, Ami.
    Good afternoon, everyone. I just want to start off by 
thanking Dr. Morrison, Ms. Reilly, and Ms. Conrad for being 
here today to speak with the committee staff about small 
business trade issues. I know we are a little bit short on 
time, so we will try and just jump right into it and move 
quickly through it.
    I just want to start off by saying that, as many of you 
know, the government offers a wide variety of assistance and 
counseling programs to small exporters. Chief among them is the 
SBA and the services offered through the Office of 
International Trade over there. I think we all know that they 
have some good programs that reach a significant number of 
small exporters.
    Unfortunately, under the previous administration, this 
office was neglected a little bit, and I think when you look at 
the loan volume of the programs offered through their office, 
you will see a significant drop over the last five years, and I 
think that indicates to us that we need to make some changes.
    Both Senator Landrieu and I believe Senator Snowe have 
recently introduced trade legislation, and one of the things 
that they have in common in their bills is moving the SBA 
Office of International Trade out of the Office of Capital 
Access at the SBA, in which it is currently housed, and 
creating a new office that is directly accountable to the 
    So I would like to start with Dr. Morrison. Do you support 
this idea of moving the Office of International Trade from 
within Capital Access and creating a new office within the 
    Mr. Morrison. Yes, we do support that. We think that is a 
very good idea. It has been a problem for several years that 
the Office of International Trade has sort of descended within 
the SBA organization. Back in the 1980s when it was created, it 
did answer directly to the Administrator, and over time, as the 
agency has assumed other priorities and maintained more of a 
domestic focus, this has, I think, been to some degree 
neglected. Its track record, however, is terrific with the 
resources it has been given and there is every indication that 
with more emphasis, it could do more.
    Mr. High. Thank you, Dr. Morrison.
    Ms. Conrad or Ms. Reilly, if you would like to make any 
comments on that. No? Okay.
    Dr. Morrison, if I could just follow up real quick, do you 
have any other suggested changes that we can make to the office 
without unduly burdening the agency and impacting field 
operations in the agency? Do you have any other suggestions 
that come to mind as a way to improve the office?
    Mr. Morrison. Well, over time, I think that the--all IT 
people need to be in more of the U.S. Export Assistance 
Centers. We have 18 of them now, and in the last fiscal year, 
those 18 people underwrote over $2 billion worth of small 
business exports. It is quite an amazing record. If you do the 
math, for every dollar that we put into this program, we get 
over $500 in export sales, and those dollars create really good 
jobs in this country.
    So I think that the program is well proven, but it is only 
in--we have 104 U.S. Export Assistance Centers in the United 
States and SBA is only in 18 of them. In fact, it is in fewer 
than that, because in a couple of cases, they have got one or 
two people in the same office. You look at a State like 
California with 50,000 small business exporters and probably 
two or three times that many that could become exporters and 
you have got SBA, they have got two people, 25,000 exporters 
per person.
    I think that the committee and the agency really should 
look at it as an expansion of the program and to more of the 
U.S. Export Assistance Centers as a top priority.
    Mr. High. Sure. Ms. Reilly.
    Ms. Reilly. Yes, thank you. Just on behalf of the Chamber, 
I want to thank Senator Landrieu and Senator Snowe for these 
important bills. I think all of us understand that small 
business is the backbone of our economy and that is why we 
fully support increasing the SCORE funding by $10 million, as 
well as the SBTC funding. But trade and export promotion is 
really an important piece of this, and just what I just do a 
little bit within the U.S. Chamber is I am the Director of our 
Trade Roots Program. So what I do specifically is trade and 
education on exporting for small- and medium-sized companies. 
So I am in the real world most of my time. I am actually only 
in town four days this month and was in Wisconsin this morning.
    I partner a lot with local Chambers of Commerce as well as 
universities and world trade centers to talk about what are the 
resources that are available for business. So part of our 
programs always include SBA, but they also always include the 
Export Assistance Centers as well as EX-IM Bank and whoever 
might be relevant locally. And another key of that is that we 
highlight the small and medium-sized companies that are 
exporting as our faces of trade.
    What I can say is that there is really a lack of awareness 
of these agencies here in the real world. I think that, sadly, 
I spend a lot of time explaining just what SBA is and what they 
do and why they are there to help. So I think kind of on a more 
basic level, there is some work that needs to be done on the 
marketing side of SBA as well as the promotion side of it.
    As far as international goes, really, it is pretty basic 
science. It is opportunity for small business. Ninety-six 
percent of the world's consumers are outside of the U.S. Jobs 
that relate to international trade pay 13 to 18 percent more. 
Small businesses that are exporting are less than one percent 
right now. So there is amazing opportunity for business and 
that is why it is crucially important to help these companies 
figure out how to get their exports and how to get their 
products abroad.
    The World Bank came out with a recent study that said for 
every dollar spent on export promotion is a 40-to-one return on 
investment, and some States have taken this into account. 
Pennsylvania, for example, has developed what is called the 
Market Access Grant, which is a $5,000 grant for small- and 
medium-sized companies if they basically want to become 
international in any way. So they can go to trade shows, they 
can do trade missions, they can translate their website, and it 
has been a really--not a lot of red tape and a really good 
program for a lot of these companies in Pennsylvania. So we 
would recommend that turning into a Federal program.
    Regarding the funding of the SBA, I just have to echo Mr. 
Morrison, as well, as far as the offices and the shortages of 
personnel out there. Often, there is one person in charge of 
five States and so they can't be everywhere and it is very 
difficult for them even to put a face on the SBA in the rest of 
the States, as well as collaborating and coordinating efforts 
with the Department of Commerce and with the Export Assistance 
Centers. They are a wonderful resource. They do a great job. 
But they are underfunded, as well, so I think that that is 
going to be something to look at, as well, is the Department of 
Commerce funding. We are recommending to double the Federal 
expenditure on that.
    Mr. High. Thank you for your comments.
    I just want to go back real quick to the staffing levels of 
the U.S. Export Assistance Centers. I know that that is an 
issue that is very, very important to Chair Landrieu. The 
center down in New Orleans has been vacant since 2003, I 
believe. Since then, I believe the number of financial 
specialists funded by the agency has gone from 22 down to, I 
believe, as low as 14 or 15. And as Dr. Morrison pointed out, 
now it is back up around 17 or 18. Unfortunately, the New 
Orleans position is still vacant, but I know the SBA is working 
on that and will hopefully have somebody soon.
    But in Senator Landrieu's bill, this is something she 
addresses and I think that once we get this program back fully 
staffed to where it needs to be, I think we would be interested 
in looking at maybe expanding the program a little bit, and I 
know we have heard from various stakeholder groups that some of 
the areas of greatest need might be some of the fastest-growing 
export regions, such as New York, California, Texas, and 
Florida. And it sounds like, Dr. Morrison and Ms. Reilly, that 
you would be supportive of this idea and I just want to confirm 
    Mr. Morrison. Absolutely. You have got one person in the 
entire State of Florida, and it is arguably the best State in 
the United States for small business exporting.
    Mr. High. Sure.
    Ms. Reilly. We would support that, as well.
    Mr. High. Thank you.
    Ms. West. Yes. I want to just jump in here and say that 
Senator Snowe has been working with Senator Landrieu in 
supporting an increase in the SBA staff that are sent to the 
USIACs, that it is a really critical position in connecting 
these small exporters to financing and the technical assistance 
they need to deal with some unique challenges.
    We very much agree on the need to fill those positions and 
really increase the positions that have been vacant and really 
to increase the presence of SBA staff in the USIACs nationwide 
and would suggest that a study is necessary to understand where 
there are opportunities for growth in small business exports, 
and Senator Snowe's bill really focuses on that and we are 
working with Senator Landrieu. Any comments you have related to 
really the level of coverage in these USIACs would be 
appropriate, I think.
    Mr. Morrison. Do you want one now or later?
    Ms. West. I would love it now. How many do we need and----
    Mr. Morrison. I think that if you are doing this good by 
scratching the surface with 18 people, you really should have 
in place a plan to grow this program to at some point 40 or 50 
people. In some States, you are going to need several people. I 
mentioned California, Florida. It is a matter of scaling up 
existing operations. But in other cases, like in the Midwest 
where you have, as Liz pointed out, people covering four or 
five States, you have just got to do better than that. And I 
might note that SBA is forever cutting the travel budgets for 
these people so they get stuck in the USIACs and they can't go 
out and visit businesses or visit other bankers in other parts 
of their region.
    Mr. High. Thank you. And Dr. Morrison, just to follow up 
real quickly, I think one thing that is really important--would 
you agree that it is important to, before we start to look at 
expanding the program, at least get it back up to where it was 
in 2002 and 2003?
    Mr. Morrison. Yes. I mean, it has been as high as 20 or 22 
people at the beginning of this decade, so yes, absolutely, get 
it back to the starting point.
    Mr. High. Thank you. And before I just move on to one final 
question, Ms. Reilly, I just wanted to follow up with you. You 
had spoken a little bit about this idea of a State grant 
program to small businesses looking to export to provide them 
financial assistance to allow them to go to trade shows and et 
cetera, et cetera. I just wanted to kind of flesh this idea out 
a little bit more. We really like the idea behind it. I mean, I 
think everybody in this room agrees that it is very important 
to get more capital in the hands of all small businesses and 
especially small exporters with the opportunity that is 
available right now.
    I would just like to ask you if you could give some more 
detail on this program, and Ms. Conrad and Dr. Morrison, if you 
would like to comment, as well. I think a good programmatic 
model that comes to mind that the SBA has already done in the 
past is the Fast Program, that used to be part of the SBIR/STTR 
program. I would just like to kind of get your thoughts, if you 
think that would be a good model for accomplishing this goal.
    Ms. Reilly. Yes. Just a little bit more on the Market 
Access Grants and as they stand. Like I mentioned, they are a 
pretty simple system, which is good, I think, for a small, 
medium-sized business. They have so many other things to worry 
about, let alone how to find a new international market and 
what that takes. But it has to be a company that has been in 
good standing for over a year, that shows good financials.
    Currently, the way the Pennsylvania system works is that 
the company puts the money up front and then they are 
reimbursed after they get back and they just have to prove that 
they, again, have been at a trade show or on a trade mission. I 
would be happy to send you more information from companies that 
have actually utilized those that have told me about them and 
how successful they have been.
    Mr. High. Sure. Thank you. And can I just ask real quickly, 
it sounds like it is a fairly new program, but have there been 
any significant issues with companies not adequately providing 
proof that they have attended these missions and stuff, because 
I think one issue that we would be concerned with is kind of 
oversight of this sort of program.
    Ms. Reilly. Right. Absolutely. I haven't been aware of any 
issues because often, the companies that I have dealt with have 
actually worked through their USIACs to help them even find 
these markets and to begin to even go down that road with trade 
shows, so they have been all legitimized from the start.
    Mr. High. Thank you.
    Dr. Morrison.
    Mr. Morrison. On that, I might mention that Los Angeles 
County runs its own trade missions, particularly to the Asia 
Pacific countries, and they have a contest for who can get the 
award to come on the trip and they scale and rank the 
businesses and the ones that seem to be the most export-ready 
for the markets that they are going to visit receive, in 
effect, a scholarship, a significant amount of assistance. It 
is not hard to notice whether somebody is actually on the trip 
or not. I mean, they are all together at one place at one time. 
So I think there are plenty of ways to evolve checks against 
    Mr. High. Okay. Thank you very much.
    And just real quickly, before I turn it over to my 
colleague, Meredith West, one of the other big issues that I 
know this committee has been working on, and Senator Landrieu 
has put this in her trade bill and I know that Senator Snowe 
has been a big advocate for this, is creating a role for 
somebody in the government at a very high level to advocate for 
small exporters.
    Back in March, Senator Landrieu, Senator Snowe, and Senator 
Schumer sent a letter to U.S. Trade Representative Ron Kirk 
asking him to create a Trade Representative for Small Business. 
The idea behind this is that we need somebody at a very high 
level advocating for small businesses, not only in trade 
negotiations to ensure that they get a fair deal and that they 
are not an afterthought, but also to just kind of help raise 
the profile of small businesses and maybe even contribute a 
little bit to better coordinating some of the trade and export 
promotion efforts across the government as a whole.
    So I would like to see, Dr. Morrison and Ms. Reilly and Ms. 
Conrad, if you would like to comment on this at all and are you 
supportive of this idea.
    Mr. Morrison. I think it is a terrific idea. We have worked 
closely with USTR for a number of years and USTR does care 
about small business, but they care about small business 
intermittently and after the fact, in my experience. You need 
somebody at the agency that is strategic and proactive about 
this issue and can bring it to the attention of the people who 
are doing the trade negotiations and also can listen, can go 
around the country and listen to what small businesses feel 
they need from trade agreements and then tell them what they 
really are getting from the trade agreements.
    Unfortunately, we sometimes get into a situation where the 
trade agreement is completed and then the first that the small 
business community hears about it is a plea to support the 
trade agreement without having had much input. I think an 
Assistant USTR for Small Business could solve a lot of those 
    Mr. High. Thanks.
    Ms. Reilly.
    Ms. Reilly. I think from our position that that would be 
something worth exploring a little bit more. I think that we 
see on the Commerce side the Trade Promotion Coordination 
Committee that has been put in place with, I think there are 22 
agencies at that and everybody has a voice. I am not quite sure 
how often they meet or how effective they are, but I think that 
it would be something worth looking into, because if you are 
talking about raising the profile of small business at these 
negotiations, I think that there could possibly be other assets 
to do that already. There is a compliance issue to it. There is 
an intellectual property protection issue. And those people 
really should be representing small business as part of the 
bigger issues.
    Another possible way might be to look at the District 
Export Councils and putting one of those members on the 
President's Export Council or something to that capacity. But I 
think it would be something we would want to look at a little 
bit more.
    Mr. High. Thank you.
    Ms. Conrad, do you have any comments?
    Ms. Conrad. No.
    Mr. High. Okay. Meredith.
    Ms. West. Okay. Thank you, John.
    On the Market Access Grant Program, which Senator Snowe has 
included in her export opportunities bill, S. 1208, it allows 
for that grant to pay for a subscription to the Department of 
Commerce Gold Key Services, which now small businesses have to 
pay in many cases thousands of dollars to access Department of 
Commerce services in embassies around the world when they are 
trying to connect with foreign buyers, when they are trying to 
connect with export trading companies and actually the 
logistics of getting these deals done.
    Have you seen the cost of some of those Department of 
Commerce services as a barrier to small businesses in pursuing 
some of these deals, and as you said, the 96 percent of the 
world's customers who live outside of the U.S.?
    Ms. Reilly. Yes. I first have to say that the Gold Key 
Service is an amazing service. It is really well done. If it 
maintains its funding as it says with all of our foreign 
offices everywhere, I think that it can continue to be a great 
thing. But I do think that it has been cost prohibitive for a 
lot of, in particular, very small companies that are new to 
export. So I think often it is much easier if there is a 
company that has already found a couple of countries to export 
to and it is a little bit easier and then the costs are 
different that way. But I have talked to a handful of 
companies, very small ones, that have said that they would be 
interested in this service, but they just don't have the money 
up front to go down that road.
    Ms. West. Okay. Thank you. The core part of SBA's current 
export assistance is their export finance programs, because 
small businesses, small exporters face particular challenges in 
financing the working capital that is needed to fill these 
export orders and providing sufficient liquidity and if they 
want to offer open account terms to their foreign buyers. So 
the SBA has a number of export finance programs--the Export 
Working Capital Program, the International Trade Loan, a pilot 
Export Express Loan.
    Dr. Morrison or Ms. Conrad, could you comment on those 
programs and what needs to be done to expand access to them? As 
John mentioned, the numbers of loans in these programs have 
been very low--very low--and we want to make sure that small 
businesses are getting access to the working capital they need 
to participate in the global marketplace. So we want to 
consider the improvements to those loans that need to be made 
and this committee is going to be focusing on this in the 
months to come.
    Ms. Conrad. Thank you. Now I know why we invited the 
    Basically, you have two programs that lenders tend to use, 
and that is the--for exports--I shouldn't say two, three. You 
have got Ex-Im Bank, and for SBA you have got the Export 
Working Capital Guarantee and the Export Express Program. We 
appreciate being able to use the EWCP as it offers us the 
opportunity to do lines of credit for small business exporters 
that cannot avail themselves of the Ex-Im Bank's rules under 
the programs.
    The problems that we run into is that as contracts have 
grown, the SBA's limit is $1.6 million and with a 90 percent 
guarantee. Recently, I had a client who had a $3 million deal. 
It could not fit under Ex-Im Bank and we had to stand on our 
head to try to figure out how we could do it. So we certainly 
would like to see the amount of the loan increased, or the 
amount of the guarantee increased so that it would fit more in 
with what is going on on the ground.
    The Export Express Program itself is a good program. It has 
been a pilot program, which means you never know when it is 
going to get funded again. It falls into place because a lot of 
times in banking, lines--you don't look at lines that are 
smaller than a certain amount because they are too cost 
prohibitive to the exporter, because there is--I am sorry. You 
have to monitor them. There are certain fees that are handled 
on that. So you would like to send them to the Export Express 
    The problem with the Export Express Program is it, once 
again, stops at $250,000. So you have got a gap between where 
you have got most regional lenders that are going to do a line 
of credit and where SBA stops. So we would certainly suggest 
that that also not only be increased, but also--I was at an SBA 
lenders' roundtable around the Ex-Im Bank conference, and the 
amount $500,000, $600,000 was thrown around because you can do 
that locally, monitor it, and it costs less for the small 
business. So we would look to see that.
    And then also, we would like to know that at least the 
program is going to be in place for a while. I was able to 
introduce the Export Express Program into BB&T as well as the 
Export Working Capital, but they love the Express Program. They 
love the Export Express Program. So that would be great.
    The third thing I probably would bring up is the use of 
delegated authority. Ex-Im Bank calls it delegated authority. 
SBA--every agency has to have its own nomenclature--they call 
it PLP. So we will speak of it as delegated authority to make 
it easier for everybody to understand.
    When Ex-Im Bank approached its lenders years ago with their 
own delegated authority program, they were doing about $500 
million worth of loans. In three years, they did over $1 
billion worth of loans. The reason it took three years is 
because you just don't have banks come in and start lending. 
What you are doing is you are allowing a bank to commit your 
guarantee, the Federal Government guarantee, so they have to be 
    I know that SBA has been aggressive, has started to be very 
aggressive about getting out their delegated authority program. 
BB&T is one of them that is under their delegated authority 
program. But it would be great to be able to avail themselves--
if they could find a way to move into and be able to avail 
themselves of the delegated authority.
    And for those of you that don't know much about that, that 
just, as I said, simply means that normally when you are doing 
a loan and you have it approved internally, then you have to 
send it to SBA in order for it to be approved. And while they 
turn it as quickly as they can, sometimes it takes two weeks to 
get all the documents back. If you are doing the delegated 
authority under the Working Capital Program, you then are able 
to commit the line, sign the loan, get the documents, and close 
the loan, and that is going to be able to help the small 
business exporters.
    Mr. High. Thanks. All set?
    Ms. West. I just have one last question here for Dr. 
Morrison. Right now, less than one percent of U.S. small 
businesses export, participate in the global marketplace. We 
have spent a lot of time in hearings here on the Hill talking 
about how small businesses are going to lead us to economic 
recovery. That is going to involve making sure small businesses 
are participating in the global economy. With less than one 
percent exporting right now, what needs to be done from your 
perspective as the representative of small business exporters 
to really move the needle there and make small businesses 
bigger players in the global marketplace? And what is a 
reasonable goal we can consider and expect for small business 
participation in this?
    Mr. Morrison. Well, to answer the latter part of the 
question first, you have countries around the world that are 
getting six or eight or ten percent of their SMEs to export and 
we are below one percent. I don't think it is unrealistic to 
shoot for five percent. I think we could do that. But that 
would be more than five times as many as we have got right now.
    Conceptually, the problems in this country, or the problems 
for small business exporting anywhere are opportunity costs, 
transaction costs, fear factors, learning curves. All those 
things can be addressed through training, through helping 
smaller companies find customers, through teaching them the 
ropes of exporting. SBDCs over there have some international 
centers that do that. Through financing, both through Ex-Im and 
SBA, as we have talked about. It also helps if at the upper 
reaches of trade policy, some of these concerns are addressed 
on a continuing and strategic basis, which is one of the 
reasons I am happy about your initiative with USTR.
    I just think that you have got to decide you want to do it 
and then you have got to press out in four or five different 
directions at once. It is obviously not impossible. You have 
got 240,000 SME exporters now in this country and you have got 
other countries that are doing better.
    Another thing you can do, and you mentioned the States, is 
just look around at some of the States. I mean, most States 
consider it an important priority to encourage their companies 
to export and they have gotten very creative. There are a lot 
of very interesting things going on in the different States. 
Just find the stuff that is working and bring it here.
    Mr. High. Thank you, Meredith, and thank you, Dr. Morrison.
    Just real quickly, I think we are just about out of time, 
but I just want to let everybody know that I am sure we are 
going to be doing a lot more on this issue. Senator Landrieu 
recently announced that on June 30, we are going to be holding 
a field hearing on trade issues down in New Orleans and we are 
very, very excited about this field hearing. We are going to 
get a lot of feedback both from the Federal level and some 
local businesses who are involved in exporting, so thank you 
all for your feedback on that.
    Mr. Cravins. I want to thank all of you on behalf of 
Senator Landrieu for being here this morning, and we have tried 
to get you out before the hail begins, Sharon's weather she 
    On behalf of my staff, thank you so much. I want to thank 
the staffs for working hard--very hard. As you saw today, this 
is what bipartisanship looks like, when you can't really 
determine which staff works for whom because we have worked so 
hard on these issues together.
    Again, thank you all. Holly, I want to thank you for being 
here, and I am hoping that this roundtable was more than just 
discussion of a bill. It was also an opportunity for you, and I 
know you guys work hard on meeting with these respective 
groups, and I am hoping that it will lead to meetings and talks 
and sit-downs, particularly with my friend Joe and his group, 
because that is what this was supposed to be about, too, was 
just talking and getting to deal with folks' concerns.
    Matt, I know you had some closing remarks.
    Mr. Walker. Yes. I just wanted to echo what Don said about 
the bipartisan nature of the Chair and the Ranking Member as 
well as the staff and how much of a privilege it is to be able 
to have that relationship.
    And in the spirit of bipartisanship and cooperation, I 
similarly want to impress on people before they leave one extra 
thought, and that is that all too often, we hear concerns about 
the government being fragmented and duplicative and too big. We 
heard a lot today about different people, different 
constituencies and different specialties and the varying 
concerns of different businesses and it evidences why there is 
a special purpose for the different entrepreneurship 
development programs.
    But I want everyone to leave today with an additional 
thought, to continue to focus on ways that you can coordinate 
what you are doing for one another and to help one another. I 
was very encouraged to hear today Jody Keenan mention about the 
veterans computer program that you are working on and how you 
want to expand that beyond Virginia and into other SBDC 
networks. It would be great to share that with other 
entrepreneurship program networks, as well.
    And similarly--I know that this is being done, so I don't 
want to try to infer that it is not, but there is a tremendous 
amount of power in this room and knowledge in this room and the 
ability for people to cross-refer people to one another and to 
work with one another and to share counseling advice and 
services and information and computer programs. It is 
absolutely essential that you do so because it is going to help 
everyone in the long run and it is going to show that there 
isn't duplication and that what you are doing is truly 
leveraging one another in what you do.
    Thank you.
    Mr. Cravins. Thank you all.
    [Whereupon, at 12:33 p.m., the committee was adjourned.]