[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]







    FIELD HEARING IN CALIFORNIA: LAND OF OPPORTUNITY--PURSUING THE 
                     ENTREPRENEURIAL AMERICAN DREAM

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

                                HEARING

                               before the

               SUBCOMMITTEE ON CONTRACTING AND WORKFORCE

                                 of the

                      COMMITTEE ON SMALL BUSINESS
                             UNITED STATES
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               __________

                              HEARING HELD
                            OCTOBER 17, 2011

                               __________






            Small Business Committee Document Number 112-040
           Available via the GPO Website: www.fdsys.gov/house

                                _____

                  U.S. GOVERNMENT PRINTING OFFICE
71-787                    WASHINGTON : 2011
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                   HOUSE COMMITTEE ON SMALL BUSINESS

                     SAM GRAVES, Missouri, Chairman
                       ROSCOE BARTLETT, Maryland
                           STEVE CHABOT, Ohio
                            STEVE KING, Iowa
                         MIKE COFFMAN, Colorado
                     MICK MULVANEY, South Carolina
                         SCOTT TIPTON, Colorado
                         JEFF LANDRY, Louisiana
                   JAIME HERRERA BEUTLER, Washington
                          ALLEN WEST, Florida
                     RENEE ELLMERS, North Carolina
                          JOE WALSH, Illinois
                       LOU BARLETTA, Pennsylvania
                        RICHARD HANNA, New York
                       ROBERT SCHILLING, Illinois

               NYDIA VELAZQUEZ, New York, Ranking Member
                         KURT SCHRADER, Oregon
                        MARK CRITZ, Pennsylvania
                      JASON ALTMIRE, Pennsylvania
                        YVETTE CLARKE, New York
                          JUDY CHU, California
                     DAVID CICILLINE, Rhode Island
                       CEDRIC RICHMOND, Louisiana
                        JANICE HAHN, California
                         GARY PETERS, Michigan
                          BILL OWENS, New York
                      BILL KEATING, Massachusetts

                      Lori Salley, Staff Director
                    Paul Sass, Deputy Staff Director
                      Barry Pineles, Chief Counsel
                  Michael Day, Minority Staff Director
                                 ------                                












                            C O N T E N T S

                              ----------                              
                                                                   Page

                           Opening Statements

Mulvaney, Hon. Mick..............................................     1
Chu, Hon. Judy...................................................     3

                               Witnesses

Mr. Manuel Martinez, President Elect, Score LA, Los Angeles, CA..     7
Ms. America Tang, CEO, Ace Fence Company, La Puente, CA..........     8
Mr. Jesse Torres, President, Pan American Bank, Los Angeles, CA..    11
Ms. Yusa Chang, Vice President and Chief Operating Officer, 
  Pacific Asian Consortium in Employment (PACE), Los Angeles, CA.    13

                                Appendix

Prepared Statements:
    Mr. Manuel Martinez, President Elect, Score LA, Los Angeles, 
      CA.........................................................    33
    Ms. America Tang, CEO, Ace Fence Company, La Puente, CA......    35
    Mr Jesse Torres, President, Pan American Bank, Los Angeles, 
      CA.........................................................    38
    Ms. Yusa Chang, Vice President and Chief Operating Officer, 
      Pacific Asian Consortium in Employment (PACE), Los Angeles, 
      CA.........................................................    41
Questions for the Record: None
Answers for the Record: None
Additional Materials for the Record:
    Statement of Craig Furniss...................................    45
    APAC CHSRP Civil Rights Position Paper.......................    46
    Lawyers' Committee for Civil Rights Letter...................    59
    California High Speed Rail Speaking Points...................   103
    U.S. Department of Transportation, Federal Railroad 
      Administration Letter to California High Speed Rail 
      Authority..................................................   108
    Asian Pacific Islander Small Business Program Letter.........   120

 
    LAND OF OPPORTUNITY: PURSUING THE ENTREPRENEURIAL AMERICAN DREAM

                              ----------                             

                        MONDAY, OCTOBER 17, 2011

                  House of Representatives,
         Subcommittee on Contracting and Workforce,
                               Committee on Small Business,
                                                    Washington, DC.
    The Subcommittee met, pursuant to call, at 2:41 p.m., in 
Richard H. Chambers Courthouse, 125 South Grand Avenue, Hon. 
Mick Mulvaney (chairman of the Subcommittee) presiding.
    Present: Representatives Mulvaney and Chu.
    Also Present: Representative Napolitano.
    Chairman Mulvaney. I'm going to call this meeting of the 
Small Business Committee Contracting and Workforce Subcommittee 
to order. And before we begin today, we have been gracious 
enough to be joined by Mayor Bill Bogaard from Pasadena, who is 
going to welcome everybody to the meeting.
    Mayor.
    Mayor Bogaard. Mr. Chairman, Congress member Chu, on behalf 
of the great city and community of Pasadena, I want to extend a 
cordial welcome to you.
    Pasadena is a city that recognizes important business. We 
are anxious to cooperate with the workings of government at the 
state level and the Federal level at all times, and so it is a 
special privilege to have this opportunity to come to this 
hearing. We don't have hearings conducted by Congressional 
members in Pasadena every day, so we are proud of that and I am 
happy to be here and welcome you both and wish you the very, 
very best.
    I am here today in the--I am with Dr. Sandra Thomas, who is 
the chair of the Altadina Town Council, and from our Pasadena 
City staff a deputy and director of business development, Ruth 
Martinez is here. She is here to observe and, of course, if 
questions came up about the specifics of City Hall in this 
regard and in regard to business development, she would be 
available while she is here to answer questions.
    Chairman Mulvaney. Mayor, thank you very much. As a member 
of Congress from a very, very rural, small area in South 
Carolina who has only, I think, been to California twice in my 
life for a combined 15 hours, this has been a really neat 
experience to be here in this wonderful town that I have seen 
for so long on television and to drive by all the things today 
that I grew up with watching on TV, to actually be here, and 
especially in this fabulous building. What a wonderful facility 
this is. It is really an honor, really and truly an honor to be 
here, and I cannot thank Ranking Member Chu enough for 
suggesting that we do this, because it was her suggestion that 
we come here.
    I am looking forward to a wonderful hearing today. Thank 
you both for being gracious hosts on your own part, but also on 
the part of your entire city. Thank you for being here.
    Mayor Bogaard. Thank you, sir. Good luck today.
    Chairman Mulvaney. All right. We can go ahead and begin the 
hearing. As Chairman of this Subcommittee, one of our key 
responsibilities is to look at the current state of small 
business ownership in the United States of America. Ms. Chu and 
I have been conducting a series of hearings on this 
Subcommittee in Washington during the course of the year, 
focusing almost entirely on trying to figure out ways to allow 
the government in general, and specifically the Small Business 
Administration, to help encourage small business growth.
    I am pleased to be here for this opportunity to learn about 
the challenges that small businesses in this community face. 
While I represent the Fifth District of South Carolina, which 
is some 2,400 miles away and, if you leave it to United 
Airlines, about six different flights and four rental cars, 
there are certainly common themes that I think unite us.
    One of the founding principles that allows our country to 
be successful is the spirit of entrepreneurship. Each year, 
thousands of people come to the United States seeking a better 
life for themselves and their families. The reason they do that 
is because of the economic opportunity provided here and the 
knowledge that no matter what your background, you can start a 
business. I started four myself. My father started several. I 
come from a family of small business people.
    While the path to success is not always easy, it remains 
achievable to all who are willing to put in the hard work to 
build a business. We are all familiar with the many anecdotes 
of people pulling themselves up literally by their bootstraps 
and turning a simple idea into a successful business. In fact, 
these stories are the very fabric of our nation.
    Just a few weeks ago we were reminded of this possibility 
of success when we mourned the passing of Steve Jobs at Apple, 
an entrepreneur who took an idea that started literally in a 
garage and turned it into one of the most well-known businesses 
and brands the world has ever known. This story reinforces the 
true greatness of this country, that no matter what your 
background or hurdles are, if you have an idea and a drive for 
success, you have the opportunity to succeed.
    While it takes a lot of hard work and, I can assure you, 
often some luck on the part of business owners for a business 
to be successful, as policymakers we need to make sure that the 
path for success is not more difficult than it needs to be. A 
vital part of this success is working to remove obstacles that 
stand in the way of business ownership. In my view, prospective 
business owners should be encouraged to start a business and 
should not be scared away by the vast sea of regulations that 
do nothing but add more costs and burdens to business owners. 
Rather, we need a system that encourages entrepreneurs to take 
risks, to encourage individuals to do what the Lord made them 
do or put them on this earth for, which is to be productive.
    I am pleased that we are joined here by witnesses who are 
working every day to provide their communities with a leg-up 
when it comes to starting a business and turning a dream into 
reality. Many of the folks here are going beyond merely running 
their own business, because they want to make sure their 
communities thrive.
    With that, I will thank our witnesses in advance for being 
here and I will turn now to Ranking Member Judy Chu for her 
opening comments.
    Ms. Chu. Thank you so much, Chairman Mulvaney.
    I would like to welcome everyone here, and also I hope that 
you can join us later where we are going to have a little 
reception with coffee and cookies.
    And I really want to thank Chairman Mulvaney for flying all 
the way here from South Carolina. He has moved mountains to be 
here. Yes, he had an airplane flight. That was cancelled, and 
they forced him to drive four hours to the next available 
airport in order to be here on time. He got here, and then they 
lost his luggage. So I really have to thank Chairman Mulvaney 
for----
    Chairman Mulvaney. I apologize for not having time. 
[Laughter.]
    Ms. Chu. He has tolerated a lot, and yet he is still in 
such a good mood. So it is really amazing.
    Well, I am so glad to have this hearing here today because 
our area certainly is a unique area, and it is one that has 
been shaped by immigrants. Since our nation's founding, 
generation after generation of immigrants have arrived on our 
shores. They have built our nation, created economic 
opportunities and enriched our communities.
    Over the course of our history, entrepreneurship and 
immigration have been inextricably linked with newly-arrived 
immigrants launching small enterprises that form the backbone 
of our economy.
    In recent years the trend has grown more pronounced, not 
less. During the last 14 years, the percentage of immigrant-
owned businesses has doubled and now makes up about 29 percent 
of all U.S. firms. Immigrants as a whole are 30 percent more 
likely to go into business for themselves than non-immigrants. 
Here in California, one-quarter of all business income is 
generated by immigrant businesses.
    It is clear from these facts that even in the current 
economic climate, America remains the land for those hoping to 
pursue a better life through entrepreneurship. Starting a new 
business is not a get-rich-quick scheme for many. In fact, it 
means no vacations, long work days, and some lean years in the 
beginning. Our nation's entrepreneurs and small business owners 
are some of the hardest working people in America.
    I know this firsthand because my grandfather came to this 
country with nothing, but he decided to make something of his 
life anyway. He opened up a small Chinese restaurant in Watts 
and worked day and night and night and day, and he used that 
very expensive labor, his sons, and finally he was able to make 
ends meet. And now, two generations later, his granddaughter 
can become a member of Congress.
    I am so proud to represent a district that has many 
immigrant entrepreneurs who are pursuing the American dream, 
just like my grandfather. We visited two of them today before 
this hearing, Glomar Professional Baseball Bats, and Huy Fong 
Foods. Glomar is an Hispanic business cornering the market with 
the professional grade bats that are sold locally to the L.A. 
Dodgers. Huy Fong Foods is an Asian business spicing up 
everyday foods with their Asian chili sauce across the country. 
In fact, it is in the cafeteria of the House of 
Representatives.
    In order to continually foster entrepreneurship and build 
upon the economic benefits of new businesses, several 
initiatives were established as Small Business Administration 
offices. The Office of Entrepreneurial Development Overseas is 
aimed at meeting the needs of our country's entrepreneurs, and 
there are three main programs within it: first, the Small 
Business Development Centers; secondly, the Women Business 
Centers; and third, the Entrepreneurship Education.
    SBDCs are one of the main sources for small business 
entrepreneurs. They provide individual assistance to small 
businesses based on their needs. Women Business Centers do 
similar work but cater to the unique needs of women business 
owners. Finally, we also have Entrepreneurship Education, whose 
leading resource is the SCORE Program that matches seasoned 
business owners with new business owners for counseling and 
advice.
    While these programs are very successful at helping small 
business owners, there are many small business owners from my 
district that tell me they don't know about these great 
resources. But even if they do know what SBA can offer, there 
may be cultural barriers preventing them from seeking help. In 
many Asian Pacific American cultures, for example, seeking 
assistance from the government can carry a stigma that may be 
hard to overcome. On top of that, some business owners might 
have limited English proficiency and may not understand all the 
forms they are being asked to fill out.
    Entrepreneurship steadily rose from 2006 through 2009, but 
flattened dramatically during the recession. This poses a 
problem for the long-term health of our economy, and that is 
why we should be doing all that we can to leverage the new 
ideas and drive of the immigrant community to improve the 
economy. In fact, according to the Coffin Index of 
Entrepreneurial Activity, Latinos and Asians have the two 
highest rates of entrepreneurship from 1996 to 2010. Businesses 
started by immigrants are also a growing segment of our small 
businesses, growing from 14 percent in 1996 to 29 percent in 
2010.
    We need the spirit of entrepreneurship and self-reliance 
now more than ever. If our economy is to grow again, we will 
need small businesses and their job-creating power to be 
operating at maximum capacity. Immigrant-owned start-ups can be 
particularly beneficial. These entrepreneurs bring their 
operations to more economically distressed areas where real 
estate can be more affordable.
    Bringing new businesses, be they storefronts or small 
manufacturers, to traditionally disadvantaged neighborhoods not 
only creates local jobs but also generates additional commerce 
and economic activity.
    While immigrant entrepreneurs play an enormous role in our 
communities and economy, they also face unique hurdles to 
entrepreneurship. A recently arrived immigrant in the United 
States is less likely to have the credit history or collateral 
necessary for obtaining financing from a bank. Similarly, they 
may not have the networks in place to quickly raise equity or 
venture capital.
    Often, immigrants looking to launch their own enterprise 
may be less experienced than a serial entrepreneur who has 
operated businesses in the past. Their lack of management 
experience, in addition to potential language barriers, can 
present difficulties. Any previous business experience can be 
negated by cultural differences in the regulatory processes, 
both local and Federal, which may differ substantially from 
those in the immigrant's home country.
    And so that is why I have convened this field hearing with 
the help of Chairman Mulvaney, to hear from experts in the area 
and to get their feedback on these programs. We need to know 
what works, what doesn't work, and what needs to be changed. 
With a sluggish economy, it is absolutely critical that 
programs like these succeed and are successful in meeting the 
needs of all of our country's entrepreneurs.
    Thank you, and I yield back.
    Chairman Mulvaney. Thank you, Ms. Chu.
    We are going to go ahead and set the first panel now, 
please. If Mr. Martinez, Ms. Tang, Mr. Torres, and Ms. Chang 
would come to the front table?
    Folks, just a couple of housekeeping matters before I 
introduce you and take your testimony. Traditionally, how we 
will do this is that each of you will give your testimony at 
one time, and then we will save questions to the end. So it 
will not be Mr. Martinez and then question/answer, Ms. Tang, 
question/answer. All four of you speak and then we will run 
through our questions together at the end. Oftentimes, the 
testimony of one witness will lead to good questions from the 
testimony of another. So it does help.
    So Mr. Martinez is our first witness here today. He is a 
small business owner and a SCORE counselor working here in the 
Los Angeles area. Mr. Martinez became a SCORE counselor two 
years ago and has counseled hundreds of business owners and 
prospective business owners on how to start a small business. 
Most importantly, working with the SCORE Program, Mr. Martinez 
has done so on a volunteer basis, meaning he has taken time out 
of his schedule not only today but every day to help other 
folks experience what it is like to run a small business.
    Mr. Martinez, thank you for being here today.
    I will yield now to Ms. Chu to introduce our other three 
witnesses.
    Ms. Chu. Thank you, Mr. Chairman.
    I would like to start by introducing Ms. America Tang. She 
is the CEO of Ace Fence Company and has owned and managed Ace 
Fence Company, which is a small specialty construction company, 
for the past 23 years. She has actively participated in the 
running of this firm on a daily basis. Ace Fence currently has 
60 employees and is active in the building and design of chain 
link fence, ornamental iron fence, metal beam guard rails and 
handrails for public works projects in the Southern California 
area. Gross sales for Ace range from $10 million to $13 million 
per year.
    America Tang has also founded the Lending Hope Foundation, 
a California non-profit organization that aims to reduce 
poverty worldwide through education and capital. Free business 
workshops are provided in small cities, currently in Peru, with 
the assistance of the mayors of each city, and upon successful 
graduation from the program candidates are given a microloan to 
start their businesses.
    Our next witness is Jesse Torres, the President of Pan 
American Bank. Headquartered in East Los Angeles, California, 
Pan American Bank is California's oldest Latino-owned bank. Pan 
American Bank's mission is to transform and empower Latino 
communities through banking relationships built on trust, 
service, respect, communication, and guidance. Pan American 
Bank was founded in 1964 by former U.S. Treasurer Romana Acosta 
Banuelos.
    Next is Yusa Chang, who is the Vice President and Chief 
Operating Officer at PACE, the Pacific Asian Consortium in 
Employment. Ms. Chang's background spans more than two decades 
of diversified and practical experience in developing and 
administrating projects in community-based and non-profit 
settings. She has played a lead role in PACE's growth into 
making it one of the largest local non-profits benefiting all 
the diverse communities of Los Angeles. PACE is one of the 
leading community development corporations in the L.A. area. 
They provide job training and employment services. They operate 
a Head Start center. They assist people with financial 
literacy. They have weatherization and energy conservation 
programs.
    With all of this, PACE still manages to operate a woman's 
business center, and they are an SBA certified micro lender.
    Thank you all for being here today, and I look forward to 
hearing your testimony.
    Chairman Mulvaney. Thank you.
    Before we begin, just a few rules as I discussed 
beforehand. Technically there is a five-minute rule. You see 
the timer in front of you. It will be green for the first four 
minutes, yellow for the last minute, and then it will become 
this annoying red after the five minutes runs. But I am from 
South Carolina, and we have been accused from time to time of 
talking slower than the rest of the country, although I think 
it is all relative, that they talk a lot faster than we do. So 
saying anything in five minutes is difficult. Please, do take 
your time. Do not feel the need to rush. Until you hear me 
lightly tapping the gavel, please feel free to continue. As 
long as you don't go more than 10 minutes, we are not going to 
throw you out of the room.
    So, Mr. Martinez, please begin.

 STATEMENTS OF MANUEL MARTINEZ, PRESIDENT ELECT, SCORE LA, LOS 
 ANGELES, CALIFORNIA; AMERICA TANG, CEO, ACE FENCE COMPANY, LA 
PUENTE, CALIFORNIA; JESSE TORRES, PRESIDENT, PAN AMERICAN BANK, 
  LOS ANGELES, CALIFORNIA; AND YUSA CHANG, VICE PRESIDENT AND 
CHIEF OPERATING OFFICER, PACIFIC ASIAN CONSORTIUM IN EMPLOYMENT 
                (PACE), LOS ANGELES, CALIFORNIA

                  STATEMENT OF MANUEL MARTINEZ

    Mr. Martinez. Thank you. Good morning, Small Business 
Committee members. My name is Manuel Martinez. I am a lifelong 
entrepreneur and a small business mentor. I am also the 
President of the Greater Los Angeles SCORE chapter. SCORE is an 
SBA-sponsored organization, and it offers business workshops as 
well as face-to-face, over the phone, and online mentoring 
sessions to striving entrepreneurs and current small business 
owners. Just in the past 12 months, we have mentored 6,288 
small business owners and held 187 workshops with 4,677 
attendees. According to the latest Census data, there is over a 
million small businesses here in the L.A. County or the County 
of Los Angeles. As you can see with the minimal amount of 
resources available to our organization, we were only able to 
reach about 1.09 percent of all small business operating in the 
Greater L.A. area.
    I am here today to ask you to continue to support the 
efforts of the Small Business Administration, SCORE, and all 
other technical resources available to small business owners 
today.
    Special attention should be given to the following 
programs, I believe. Number one is high school students 
graduating and not graduating from high school that need or 
have that spirit of wanting to become entrepreneurs. The second 
is I believe that we need to have entrepreneurship programs for 
people that are just getting laid off from work. As you know, 
there are hundreds, millions out there right now. And lastly, 
we need to support, take those assistance programs that are 
already available for struggling small business owners.
    Speaking as an advocate for all striving entrepreneurs who 
will be detrimentally affected by not having your support in 
Congress, I also have personal experience being an 
entrepreneur. You see, I am one of the most fortunate 
individuals in America because I made my business work and 
became very successful at it. However, it was not easy. I made 
a lot of mistakes along the way in my life as a business owner.
    As I remember the event that changed my future, I was 16 
years old and I experienced my father being laid off from his 
job, over 20-year-old job and how it affected our whole family 
for about two years. I remember when he was unemployed, he used 
to take me and my little brother over to pick up cardboard and 
recyclables just to put food on the table on a daily basis. 
That was the moment I promised to myself, that was a promise 
that I made to myself, that I would never, never, never, never, 
never let anyone or any company lay me off work. So if I had 
not experienced when that event happened to me back then, I 
probably would have quit being an entrepreneur and I would have 
settled for a job.
    As of today I have started many, many businesses, created, 
built and sold a number of them too, and a lot of them failed 
too, not every one was successful, and I'm currently working on 
three new small projects.
    I'm telling this story not to say that anybody can be an 
entrepreneur, but rather to gain your support for all striving 
entrepreneurs in America today. Thank you.
    [The prepared statement of Mr. Martinez follows:]
    Chairman Mulvaney. Ms. Tang.

                   STATEMENT OF AMERICA TANG

    Ms. Tang. Chairman Mulvaney and Congresswoman Chu, thank 
you for inviting me today to participate in this great program 
that I believe is very much needed in the crisis times like 
right now.
    My name is America Tang. I am the CEO of a construction 
company called Ace Fence Company. We're located right here in 
La Puente, California, and we've been around for 23 years. Our 
company does about 90 percent of public works construction. 
Throughout the years, we have had the honor and the privilege 
to participate in the construction of landmarks such as the 34 
miles of median fencing alongside the 105 Freeway back in 1993, 
construction of the Metro Blue Line fencing in 2001, and many 
other prominent public projects in the Southern California 
area.
    I am of Chinese descent but born in Lima, Peru. Therefore, 
I can speak three languages--English, Spanish, Chinese/
Cantonese. My family immigrated to Los Angeles in 1974, a move 
that turned out to be a blessing for myself and my entire 
family because the multicultural environment of this great City 
of Los Angeles allowed us the full usage of all of our diverse 
cultural backgrounds and enabled us to pursue the American 
dream.
    When I purchased the Ace Fence Company from the retiring 
owner back in 1988, one of the first moves I made was to start 
participating in the bidding on public works construction. I 
found out that the California Department of Transportation, Cal 
Trans, offered the certification program for minority- and 
women-owned companies. I applied, in fact, in 1989, and it did 
take a good nine months before obtaining approval, but this 
certification opened the doors for my company in areas that 
were completely shut down to us and pretty much forbidden 
before.
    In 1990 we were the low bidders of the yard fencing for the 
Metro Red Line in downtown Los Angeles. It would have been 
impossible for us to obtain the bond necessary to back up the 
project if not for the Transit Bond Guarantee Program, which I 
think was established at that time by the Metropolitan 
Transportation Authority, and it was opened to all the 
companies that were certified as a woman-owned company, SBE, 
MBE, and DBE.
    Ace Fence used this bonding program to help us bond four of 
our largest projects during the years of 1990 and '93, bonds 
ranging from a quarter-million to $2.5 million. The last $2.5 
million is the construction of the fencing that I mentioned 
above, the one for the 105 Century Freeway.
    The Century Freeway project was a challenge as it 
represented a very large contract amount, and therefore Ace 
Fence not only needed to find a surety bond to issue the 
payment and performance bonds, but we also needed financing to 
help us cash flow the project. Ace Fence obtained a half a 
million dollar loan from the Department of Transportation 
Office of Small and Disadvantaged Business Utilization. This 
project was the successful one that propelled our company to 
its next level, and since then we have participated in 
innumerable high-profile projects from Cal Trans, the MTA, L.A. 
Unified, Department of Airports, City of L.A., and many other 
cities in the Los Angeles and surrounding areas.
    There is no question that the SBA and its program designed 
to help small businesses, women and minorities, works. Ace 
Fence is an example of it. But the economic turnaround in the 
past few years has had its impact also on us. In 2009, we had 
85 employees who worked an average of 2,000 man hours per week. 
This past week, just last week, October 14 of 2011, we are down 
to an average of 60 employees and clocking in about 1,200 man 
hours per week.
    The U.S. Government supposedly have poured in money into 
new projects in the construction industry to invigorate the 
infrastructure of our country, to provide new jobs, to help our 
depleted economy. But somehow we felt that the process for some 
reason is just too slow, and in practice the intended effect 
still has not trickled down to the small companies like myself. 
So we are expecting an increase in our sales but instead, while 
already keeping the same staff as far as the fixed overhead, we 
have the same amount of salespeople, we're deriving only about 
20 percent less from our gross sales right now.
    So for the first time in 20 years in my industry, we 
declared a net loss last year, and our year-to-date figures are 
still negative, and we're already talking about October of this 
year.
    In my personal experience I believe that the SBA has 
created some real good programs to effectively help the small 
business community, who, after all, is the backbone of our 
country's economy. But there is a failure to communicate to the 
general public existence of these programs. And I personally 
found out about the programs when I was already in the 
business, and when I started bidding on the public projects I 
found out about the certification as a minority, about a 
bonding program and the loan availability for the small 
companies like myself.
    In 2009, the Surety Bond Guarantee Program was raised from 
$2 million to $5 million. I'm talking about a program from the 
SBA. But for some reason, even me that I'm already actively 
involved in the industry, I did not know about this increase in 
the bonding until about maybe just a few months before. For 
example, if we would have heard about this back then in 2009, 
I'm sure that my company would have bid on a lot more projects, 
and those projects, we would have been executing them and 
building them as of right now, and that would have avoided 
having to lay off between 20 to 25 people in the last six 
months.
    So in a certain way, you know, I think there is still this 
gap where information is not coming down to the right people.
    In our current economic situation, timing is the essence. 
We do not have the luxury to sit back and let things move and 
take their time as if we're in a regular business, because 
these are not times for regular business. The government must 
act quickly, and by quickly it means to start dropping the 
bureaucracy, excess paperwork, and streamline the process for 
our program to actually work and to reach its intended 
population, and not just the few who has the time to do the 
research and find the bits and pieces of information, which 
most people probably won't know how to or won't have the time 
to.
    Companies are registered, so it's easy for the SBA to 
actually find all these--you know, the emails of these firms, 
and maybe just doing some massive emails from time to time, it 
would provide a lot and help and become a more effective 
program.
    I know you will say that we can access Internet and find 
all this information, but I think if the SBA, you want to have 
a real impact, create new jobs quickly, what better way than 
making sure that every dollar allocated for the program is used 
immediately? I do not have the latest records, but I was 
reading that back in 2009 the SBA total lending was down by 41 
percent, that by July of 2009 there were only 3,900 loans 
versus 6,700 loans the year before in the same period of time. 
Now, these statistics are speaking for itself.
    The program, which is a life saver for thousands of 
businesses, is failing to successfully reach its intended 
public, probably due to excessive requirements and, again, 
bureaucracy.
    One of the weak points for any small business, and right 
now I'm sure even the large business, has always been cash 
flow. In my industry specifically, as a subcontractor, we have 
always been the underdog, the one who forks out the funds 
immediately but get paid at the end. The biggest problem is 
that the system is flawed in the sense that even though we are 
supposed to get paid by law within 10 days of the general 
contractors getting paid, this seldom happens. Especially in 
hard times like now, general contractors are still, they're 
using their funds and they will hold it for themselves as long 
as possible.
    So the subcontractors don't get paid until maybe 60 days to 
180 days, 180 days, and I repeat that, and many of the cases 
are even longer than that. And they will use all kinds of 
excuses for us not to get paid. Among all the institutions, Cal 
Trans is one of the few that has an open website for the public 
where people like me, subcontractors, can log in and find out 
what items has been already paid to the general. For all the 
other entities, no information is available from the owners to 
the subcontractors since their contract is only with the 
general contractor.
    The SBA should protect its members, most of all, vulnerable 
members like ourselves, which in many aspects have major 
problems with the cash flow, by mandating that the companies 
that do business with the SBA firms will allow them full access 
to vital and pertinent information such as payment records from 
the owners to them, to any company that has delivered material 
or done work for the project.
    The SBA is definitely a powerful engine for opportunities. 
It has already come a long way from the 1980s, when the system 
was in its infancy. The programs offered by the SBA has 
personally helped my company grow, and without these programs 
I'm sure that Ace Fence would still be only doing commercial 
and residential fencing.
    The spirit of entrepreneurship is very much alive, and more 
so now when scores of unemployed individuals will be seeking to 
start their own businesses as the only alternative to finding a 
job again. I commend the efforts of this committee for 
understanding the urgency and the demands of our current 
predicament, and I'm very optimistic that together we will find 
the solution to keep this beautiful country as the land of 
opportunities. Thank you.
    [The prepared statement of Ms. Tang follows:]
    Chairman Mulvaney. Thank you, Ms. Tang.
    Mr. Torres.

                   STATEMENT OF JESSE TORRES

    Mr. Torres. Good afternoon, Mr. Chairman and members of the 
Committee. As the President and Chief Executive Officer of Pan 
American Bank in East Los Angeles, I am pleased to be here to 
testify before the Subcommittee on Contracting and the 
Workforce.
    Pan American Bank is an example of the American Dream. 
While the fact that Pan American Bank is California's oldest 
Latino-owned bank and the second oldest Latino-owned bank in 
the United States is an impressive feat, particularly in 
today's banking environment, it is the story of its founder 
that is most impressive and reflective of the values of our 
great nation.
    Pan American Bank was founded by and is majority-owned by 
Romana Acosta Banuelos. Mrs. Banuelos, born in the small and 
poor mining town of Miami, Arizona in 1925, is the daughter of 
Mexican immigrants. In 1933, as part of a repatriation 
initiative, Mrs. Banuelos and her family were relocated to 
Mexico. While Mrs. Banuelos did not at the time understand the 
reasons for her relocation, she knew she would one day return 
to the United States. Mrs. Banuelos returned to the United 
States as a young woman in the early 1940s.
    Mrs. Banuelos was born a United States citizen. However, 
her upbringing was consistent with that of an immigrant. When 
Mrs. Banuelos relocated to Los Angeles, she quickly found 
employment as a dishwasher during the day and as a tortilla 
maker from midnight to 6:00 a.m. After several years, Mrs. 
Banuelos saved $500, enough seed capital to start her own 
tortilla company. Mrs. Banuelos purchased a tortilla machine, a 
fan and a corn grinder. With the assistance of her aunt, Mrs. 
Banuelos made $36 on the first day of business in 1949. After 
many long days and many long years, Mrs. Banuelos' immigrant 
work ethic evolved the two-person business into Ramona's 
Mexican Food Products, a company that for decades has employed 
hundreds of Angelinos.
    In 1963, with significant business and financial success, 
Mrs. Banuelos joined an effort to establish Pan American Bank 
in order to help struggling Latino consumers and small business 
owners in her neighborhood. Pan American Bank opened its doors 
in 1964. Mrs. Banuelos' success in the food and banking 
industries resulted in her successful appointment as the first 
Latina United States Treasurer, serving from 1971 to 1974.
    While some in the past have criticized Mrs. Banuelos' 
decision to locate and headquarter Pan American Bank in 
economically-challenged East Los Angeles, others call her a 
true visionary who for 47 years has provided culturally 
relevant financial services, supported local ``mom and pop'' 
immigrant-owned businesses, provided ``living wage'' jobs for 
East Los Angeles residents, and has provided immigrants and 
their children with an example of what is possible in the 
United States. Today, Mrs. Banuelos is a vibrant 86 years old.
    In June 2009, Mrs. Banuelos brought me to Pan American Bank 
to assume her decades-old role as Chief Executive. Upon my 
arrival at Pan American Bank, Mrs. Banuelos stressed the 
importance of staying true to the mission of Pan American Bank, 
to play a vital role in the transformation and empowerment of 
the underserved immigrant communities served by the Bank. Of 
particular concern was the ongoing support of the family-owned 
businesses that dominate these communities but that have been 
largely ignored by mainstream financial institutions.
    Serving the small businesses that populate immigrant 
communities such as East Los Angeles is not an easy feat. While 
every small business at some point can benefit from financial, 
technical, or other assistance, significant challenges exist. 
Such challenges include but are not limited to a distrust of 
financial institutions, a lack of understanding regarding 
licensing requirements, a lack of knowledge regarding the 
availability of technical and other assistance, and a lack of 
time needed to obtain the necessary knowledge.
    All of these challenges are further complicated by the 
language barrier that exists within the predominantly Spanish-
speaking community of East Los Angeles.
    An additional barrier from a banker's point of view is the 
regulatory challenges. As many of these small businesses 
possess non-traditional credit profiles, regulators at the 
field office level struggle many times to understand these 
businesses, which results in regulatory challenges for the 
financial institutions.
    In an effort to serve the needs of Pan American Bank's 
small business community, the Bank has recently implemented 
several programs apart from its traditional products and 
services. First, in 2010, Pan American Bank partnered with non-
profit EastLA Works. Under the partnership, the Bank provides 
free office space to EastLA Works. EastLA Works visits with 
family-owned businesses in East Los Angeles for the purpose of 
providing free Business Improvement Plans. The Business 
Improvement Plans are roadmaps to improved operations and 
profitability.
    The key to EastLA Works' program is its focus on visiting 
the small business owners at their place of business rather 
than requiring them to make office visits. This is a crucial 
element as most of these family-owned business owners cannot 
leave their place of business without having to temporarily 
close the business. In addition to the Business Improvement 
Plans, EastLA Works also provides on-site training related to 
Quick Books and other small business applications, as well as 
training related to social network marketing, direct mail 
marketing, and licensing requirements.
    Due to the socioeconomic challenges of Pan American Bank's 
service area, the Bank also employs graduate students from the 
Community Organization Planning and Administration Program at 
the USC Graduate School of Social Work. These individuals 
include among their responsibilities the performance of surveys 
and needs assessments with consumers, small businesses and 
other community stakeholders. Among other things, the social 
workers assist the Bank in bridging the divide that stands 
between the Bank and the small business community.
    In October 2011, Pan American Bank entered into a 
Memorandum of Understanding with the Small Business Development 
Center. The Small Business Development Center will maintain a 
presence at Pan American Bank. Similar to the Bank's 
arrangement with EastLA Works, the Small Business Development 
Center will receive free office space in order to permit the 
Small Business Development Center to establish a presence in 
East Los Angeles and surrounding communities. The Small 
Business Development Center will develop and deliver culturally 
relevant technical and other assistance to East Los Angeles 
small business owners.
    Mr. Chairman, Pan American Bank is very proud of its 
history in serving the largely immigrant small business 
community of East Los Angeles. Our work over the years has 
enabled immigrant entrepreneurs to experience firsthand the 
same American Dream experienced by Mrs. Banuelos. Apart from 
supporting their immediate families, immigrant entrepreneurs 
also provide living wage jobs for other members of the 
community. In Mrs. Banuelos' case and other similarly situated 
small businesses, the businesses provide financial support for 
hundreds of families.
    Just as Pan American Bank has sought creative and 
innovative solutions to meeting the needs of its local small 
business community, so too must this Committee continue to 
support traditional and non-traditional efforts that encourage 
the work of organizations such as EastLA Works and the Small 
Business Development Center. In communities such as East Los 
Angeles, it is the small businesses that are owned and operated 
by immigrants that will act as the engine that keeps America 
working. Pan American Bank will continue to do its part to 
serve the largely immigrant small business community of East 
Los Angeles. However, as one of Los Angeles County's smallest 
banks, our efforts reflect a drop in a large bucket that must 
be filled through continued Committee support and outreach.
    Mr. Chairman, this concludes my remarks. I would be happy 
to answer any questions at this time.
    [The prepared statement of Mr. Torres follows:]
    Chairman Mulvaney. Thank you, Mr. Torres. We will hold the 
questions until the very end.
    Ms. Chang. Would you please make sure the microphone is on.

                    STATEMENT OF YUSA CHANG

    Ms. Chang. Yes. Hello? Okay, thanks.
    Chairman Mulvaney and Ranking Member Chu, thank you so much 
for this opportunity to testify. My name is Yusa Chang. I 
represent a non-profit community development corporation called 
PACE, an acronym for Pacific Asian Consortium in Employment. 
PACE was established 35 years ago to improve the economic 
conditions of the emerging Asian and other immigrant 
communities.
    PACE receives both Federal and private grants and operates 
six major lines of services. But today I would like to talk 
PACE's Business Development Center. This center was established 
18 years ago, right after the 1992 Los Angeles riots, with the 
goal of assisting small businesses with recovering. We have 
since then assisted close to 24,000 entrepreneurs and small 
businesses. We receive public and private financial support, 
including the Small Business Administration. Our current SBA 
grants support the operation of a Women's Business Center and a 
PRIME-funded project in the San Gabriel Valley. Last year, we 
became an SBA microlender. We are also in the process of being 
certified as a CDFI entity so that we can bring even more 
capital to our community.
    In the Center's 18-year history, we helped to create and 
sustain over 10,000 businesses and 14,000 jobs. We have also 
helped these businesses in accessing $43 million in capital. I 
can tell you from experience that these programs are a very 
good investment for our community.
    I just want to share with you a few success stories of 
entrepreneurs that we assisted. One, a political asylee from 
China operating a Dollar Store created several jobs after 
receiving a $10,000 loan from PACE. Two, the daughter of a 
Vietnamese refugee started a food truck business selling 
Vietnamese eggrolls and noodles. Three, a son of an immigrant 
from China created his own line of high fashion for men. And 
four, an immigrant from Mexico opened her second hair salon 
after borrowing $5,000 from PACE and put a few of her family 
members to work. Similar stories of these can be repeated 
hundreds of times.
    But with every success story, there are many others that 
are still struggling. I will just tell you one story in the 
interest of time. Mr. Chung, we call him a ``mad scientist.'' 
He is an inventor in the clean energy field. He has many 
patents under his belt. He recently developed a prototype 
machine that can convert solid waste into fertilizer in one 
hour instead of over several months. This small prototype can 
reduce eight tons of solid waste a day. He has received a 
tremendous amount of interest from companies across the nation, 
as well as overseas. But he lost the equity of his home and 
faced bad credit. He was in no position to finance the 
production of this machine. He can potentially create jobs, but 
he needs help.
    There are thousands of people like Mr. Chung out there in 
the same predicament. So here are my two recommendations.
    Number one, not only to keep the current SBA programs alive 
but further invest in them. Small business start-ups and small 
business expansion is the job creation engine, particularly in 
this economic climate where millions of Americans are out of 
work. Our government and large corporations cannot create 
enough jobs at the rate that we need them. But there are 
thousands of aspiring entrepreneurs who have the will and can 
create jobs, so let's help them.
    We ask that you strongly support and augment these 
following SBA programs: SBA Women's Business Center, SBA 
Microloan Program, and make permanent the Community Advantage 
initiative, and initiate a credit building/credit counseling 
program for small businesses. We also strongly support the 
expansion of the Small Business Investment companies, or SBIC 
program, that makes financial assistance available to the 
ethnic minority communities.
    And number two, we need to be flexible in collateral 
requirement in small business lending for those business owners 
who lost their home equity but are still reliable and still 
have very good business models. So I recommend that we expand 
SBA loan guarantee programs to keep the credit flowing.
    We are in an unusual time. We need a game changer. We need 
our elected officials to stand up for small businesses. We need 
you to increase the size and flexibility of these programs in 
order to ensure that all Americans with the hardworking 
entrepreneurial spirit have access to the American Dream. Thank 
you very much.
    [The prepared statement of Ms. Chang follows:]
    Chairman Mulvaney. Thank you, Ms. Chang.
    As is my practice, I will yield to my Ranking Member for 
her questions first.
    Ms. Chu. Well, let's start with Ms. Chang. As a business 
development and technical assistance provider for businesses in 
the L.A. area, can you tell me more about the businesses that 
come to PACE for assistance and the barriers that they face?
    Ms. Chang. Most of the businesses that we work with are 
start-ups or what we call micro enterprises, and they are 
usually about 1 to 5 employees, with annual sales of under 
half-a-million dollars. They are usually sole proprietors and 
owner operators, and most of our clients are from the immigrant 
communities.
    The barriers with them we see is mostly, of course, 
language and culture barriers. For simple things like how to 
get a permit, the zoning process, or even where to file a 
business license, and a lot of times because they are limited 
in their language proficiency, they tend to stay within their 
own or the ethnic enclave.
    So let's say for a restaurant, they just tend to market to 
only their own ethnic communities, but potentially they could 
market to other communities. They could expand their business a 
lot more. So those are the barriers that we see for the clients 
that we work with.
    Ms. Chu. And your staff speak many languages, right? And 
they are able to help them through these kinds of issues?
    Ms. Chang. Yes. Every one of our business counselors are 
multilingual in English and another language, English to 
Mandarin, Cantonese, Vietnamese, Cambodian, even French.
    Ms. Chu. And you provide a microloan program.
    Ms. Chang. Yes.
    Ms. Chu. In the past SBA said that their standard 7A loan 
programs are cheaper and more effective than the microloan 
program in helping low-income and small-dollar borrowers. Ms. 
Chang, do you agree with that assessment, or does this program, 
the microloan program, continue to fill an important void in 
the credit markets?
    Ms. Chang. 7A or other larger loan programs are probably 
cheaper to operate, but there is huge segment of market that 
those programs are not touching, particularly the kind of 
clients that we work with. The way I understand those loans, 
they are really larger than over half-a-million or three-
quarters of a million dollars, or even multi-million dollars. 
But the kind of loan programs that we work with are the 
microloans, and those are the huge gap and void that these 
loans are not meeting the demands.
    So we see a great need for microloans. There is definitely 
a huge market for it, and we definitely need a continuation of 
that.
    Ms. Chu. Can you give an example of a microloan that 
helped, and how small are the loans that you provide?
    Ms. Chang. Our microloans are typically from $5,000 up to 
about $40,000, so it is relatively small. Of course, it is very 
labor intensive. We spend the same amount of time packaging 
these loans compared to a multi-million-dollar loan, and then 
we have to provide a lot of technical assistance. So it is 
definitely a lot more labor intensive, but that is the hole or 
that is the only avenues for a lot of clients that we work 
with.
    Ms. Chu. And are there other SBA loan programs that meet 
the needs of San Gabriel entrepreneurs?
    Ms. Chang. There's another program the SBA I think just 
unveiled in the last year or so. It's called Community 
Advantage. That's kind of replacing the formal Community 
Express programs, and these programs are made to be available 
to non-profit community corporations like ours, and that's for 
loans up to $250,000, with a guarantee I think--don't quote me 
exactly--up to about 75 percent. Again, we see--so this is 
different products. Our current products is microloans, about 
$5,000 to $40,000. We see another level of loans that is not 
quite available in the market. It is up to $250,000. So that is 
the product that will develop the capacity to address.
    Ms. Chu. Excellent.
    Mr. Torres, let me ask, I understand that your bank does 
not offer SBA-guaranteed loans, but does operate a small 
business lending program. What are the differences between your 
small business loan program and SBA's?
    Mr. Torres. Yes, that is accurate. The main difference is 
just the flexibility in the process. Many of our clients in 
East Los Angeles lack a certain amount of sophistication 
relative to the application for a small business loan. Items 
such as cash flow projections and other similar documentation 
is something that escapes many of them. And as a result, in 
order for us to adequately meet the needs of that community, we 
need to be able to work within the scope of where they are.
    What this means is we get to know these clients in 
different ways. In our community, we have served customers for 
more than 40 years, and so we know their businesses pretty 
well. If they are restaurants, we have eaten there for decades. 
If they are retailers, we have purchased there for decades and 
we know their business cycle. We know their strengths. We know 
their weaknesses. We break bread with them on a very regular 
basis.
    And so we rely on the more traditional metrics for credit 
than the SBA process requires, and that flexibility, quite 
honestly, is what ensures that a lot of these folks do get 
funded. In an ideal world, having an SBA product in every 
business would be great. But these folks, because they are 
largely immigrant, at least in the first generation here, lack 
a lot of the expertise that is needed to get them past the 
process.
    So we do originate, as a result, loans. We will go as high 
as $150,000, $200,000. The nice thing about our community is 
that they don't need a lot of funding. Their needs are fairly 
modest. Anywhere from $50,000 to $100,000 is more than 
sufficient working capital for the majority of these small 
businesses.
    Ms. Chu. Have you thought about being an SBA lender, or is 
the----
    Mr. Torres. We have, we have. You know, we are a very small 
organization, and the problem in a sense with SBA is that it 
has become sort of a micro-industry. There is a certain amount 
of expertise that is required to make these loans, and what you 
see around town is you see banks buying teams of SBA 
underwriters and funders, and as a result these teams are paid 
a premium.
    For a bank of our size, it really makes it difficult for us 
to make up those costs that are associated with these premiums. 
We would really have to make a whole lot of loans, many more 
loans than our capital would permit us to do. So it really 
becomes a difficult situation for us. As a result, we go the 
non-traditional route of a non-SBA portfolio.
    Ms. Chu. Well, I was interested in hearing that you are 
sharing space with a local SBDC, and I am really interested in 
this because the San Gabriel Valley lost its SBD center and now 
we have to send people to Long Beach, and there is a huge void 
there in my opinion.
    Did you have an SBDC center that was nearby, or what 
brought you to this generous offer to share space?
    Mr. Torres. Right. No. Well, in fact, you are absolutely 
right that the nearest was Long Beach, and as I said in my 
remarks, it is very difficult for these small business owners 
to get out of their shop and come and seek the technical 
assistance. It is tough enough for them to go to the next town 
over, much less 10 miles up the road. So we are--our mission--
we live our mission, and our mission is to empower and 
transform this community. So we are constantly looking for new 
approaches to serve these customers.
    So we reached out to the SBDC, asking them if they would 
consider something similar to what we had with EastLA Works, 
and I think we caught them at exactly the right time, and they 
came on-site. They took a look around and they said we would 
love to partner with you. This will open up a tremendous 
opportunity for our local small business, not only those in 
East L.A. but those in the San Gabriel Valley in general by way 
of their technical assistance. We have space that they will be 
able to use for classes for a number of services.
    So I am extremely excited about the opportunity that this 
is going to bring. They have committed to providing these 
services in a culturally relevant meeting in Spanish, coming 
from the immigrant point of view. So this is something that we 
currently don't have that can really be a game changer for the 
small business community in East L.A. It will, in a sense, give 
them the tools to enable them to compete for the same bank 
loans on the same terms as what I would consider the more 
sophisticated small business owners.
    Ms. Chu. How long did it take to get this process going? 
Because some are saying that it could take as long as three 
years to get an SBDC running.
    Mr. Torres. You know, we are very entrepreneurial as a 
bank, and as most entrepreneurs know, time is money. And so 
basically what we said is if we are going to make this happen, 
this needs to happen tomorrow. So the process took probably 
three months from the point we originated conversations to the 
point we signed an MOU. So like I said, I think we hit them at 
exactly the right time, and we brought them--we forced them to 
show up. We showed them the space, and within two weeks of them 
visiting our location we had a draft MOU in hand, and it 
probably took another three or four weeks to get them to sign 
off on it. So we were able to move rather quickly.
    But again, we are East L.A., and despite what others may 
believe, in my opinion East L.A. is the center of the universe. 
And so we have a tremendous amount of opportunity. We have a 
tremendous buying and purchasing power. We have tremendous 
opportunity for investment. And so I wasn't surprised that they 
snapped up the opportunity to come into East L.A.
    Ms. Chu. And they usually require a match. Was your office 
space the match, or are there funds from elsewhere?
    Mr. Torres. For the space? So they--that detail is being 
worked out specifically. We have the MOU in hand, and it is 
signed. So I believe that they are figuring out--they are 
finalizing their matching piece. But they wanted to get their 
fee, their boots on the ground as quickly as possible to start 
working this.
    I have to give credit to the local director, a fellow by 
the name of--in Spanish we call him a toquio--Jesse Torres, who 
is a regional, the local executive director of the SBDC in Long 
Beach. His name is also Jesse Torres. So my toquio there, he 
really wanted to get something moving, and he has been with the 
agency for maybe two months. And so he has been very aggressive 
in making sure that we put something in place because he wants 
to make sure that we start putting the SBDC resources to bear 
in the eastern part of the county as soon as possible. So it is 
very, very exciting for us.
    Ms. Chu. Very, very wonderful that you have been able to do 
this.
    Chairman Mulvaney. We have a special guest here is what we 
are talking about. I am sorry to interrupt the questions, but 
Ms. Chu would like to introduce her colleague and good friend, 
also here from the San Gabriel Valley.
    Ms. Chu. Yes. We are joined by Congress member Grace 
Napolitano. I am so happy to see that she is here. I know that 
she has had a lot of interest in small business and that she 
will add a great deal to this very important conversation. So 
welcome, Congress member Napolitano.
    Ms. Napolitano. Thank you so very much. I am sorry I am 
late. I was on the phone with Lieutenant Governor Gavin Newsom 
on international trade. So this is right down the alley of 
being able to expand the manufacturing export, not necessarily 
import, export. And unfortunately, state, county, cities and 
state don't talk to each other, and that is what he is 
attempting to do. So later on if you want to, I took some 
notes.
    But thank you very much for allowing me to be here. This is 
of great interest. We need to find markets. We don't need to 
import any more. We need to find markets so that we can expand 
our manufacturing base. With that, I look forward to the 
witnesses' testimony. Thank you.
    Ms. Chu. Well, they did testify. Now I am in the middle of 
asking questions, and then feel free to make comments and ask 
questions.
    But I would like to turn to Ms. America Tang now. Let me 
ask this. You have had quite a success story. Do you think 
businesses in the San Gabriel Valley know about the resources 
SBA has to offer, and why or why not?
    Ms. Tang. In my experience, I haven't heard too much about 
these SBA programs, so I really believe that there is not 
enough information passed on--I don't know why--in the form of 
maybe pamphlets or--I know that we got representatives, they 
are at both sides of me right now who are actually doing that, 
and it is their job for the past many years. But for some 
reason, you know, I come from a family of business people. It 
is not only I, but my brother is the owner of Hanfore Realty. 
My sister and her husband owns Battery Technology, which is 
another $30 million company, which is fairly large. We would 
have taken advantage of programs like this, but we didn't 
because we really didn't know about them.
    So for some reason or the other, our businesses were 
started just like Mr. Jobs in the garage of our houses and 
using our own resources, using credit cards, and that is how we 
started our business 20 to 30 years ago.
    You know, I know that maybe precisely that is the reason we 
are having this subcommittee, to try to see the ways that we 
can get this information, which is really great programs that 
should be more available to the majority of the public that 
needs it. But for some reason it is not getting down to where 
it is really needed. Maybe the resources are limited. That is 
very possible. But to me, we have the email right now. I think 
it would be such a powerful thing to just compile the 
information of all of these companies like myself who have 
already been in business and just keep us informed of new 
projects or new programs that are coming from the SBA.
    Ace Fence, despite the fact that we have been in the 
industry, 23 years, I am still an SBA company. We haven't been 
able to grow beyond it. We still are very limited in many of 
the resources, if we are going to compare them with the large 
firms. So there are things that programs like SCORE I'm sure we 
could take advantage of, and programs from Mrs. Chang where it 
is set to help the Pacific community. I will acknowledge that 
there are many areas that I would be very happy to participate 
in. I am already receiving, of course, the benefits of the SBA. 
But what I am saying is that when I started a business, I 
really didn't know about them and I started just finding out 
about the SBA as I grew my business.
    And it is thanks to programs like the SBA that I am where I 
am, because I took advantage of these loans, the loan that 
helped me build the fence at the Century Freeway, and right now 
the certification of being a woman-owned company, a minority-
owned company, a SBE company, and a small business; all those 
certifications are definitely a plus to help me continue 
getting the jobs, because our businesses do nothing but public 
works mostly. They are based on bidding, and the invitations to 
bid have continually come to our office thanks to the fact that 
we are certified as a minority.
    So definitely this is a program that more people should be 
aware of and more participant on. But yet, in actuality, being 
in the industry already all these years, I haven't seen that 
many other Asian firms, a few of them maybe, but not too many 
that are in the public works. And for them to participate, they 
need to know about the availability of all these resources, 
know that they are there. But somehow, I don't know why they 
are not being used, possibly because of cultural issues like 
you have mentioned before, that they are not used to going to 
the government for help because the Asian communities I think 
were more self-sufficient individuals, and in China I don't 
think they have that many business loans for small businesses. 
So maybe out of tradition, out of cultural habits, they have 
not really resorted to using programs like the SBA.
    But yet they are there, and I do believe that a lot has to 
do with having the chance to reach out and tell the whole 
public; to say ``Here we are, how can we help?''
    Ms. Chu. And how could the SBA improve its outreach to 
businesses like yours?
    Ms. Tang. In the way to help directly to me, I was thinking 
just the fact that I am already in the industry for so long, 
you know, you should still maintain a forum of these programs. 
A good example that I talked about earlier is that the bonding 
program issue. The bonding capacity by the SBA increased the 
back-up from $2 million all the way to $5 million. But I did 
not know about this increase for some reason, even though I am 
in the industry. If I would have known about this back in 2009 
when the change happened, I would be the first to jump in and 
start bidding on larger projects and participate on them in 
such a way that today, in 2011, I would already maybe have 
enough jobs to maintain my regular crew.
    So instead I went from 85 employees down to 60 maybe 
because of miscommunication and the fact that I did not get 
that information passed down to me.
    You know, and the funny thing is I even asked my insurance 
agents, the ones that sell me the bonds, and they work with 
thousands of contractors, so they are specialized in 
construction, and somehow they also didn't know about this 
until I told them. I said could you look into this for me? I 
heard that the bonding capacity has gone from $2 to $5 million, 
but we didn't know about this. That is when he started reading 
on it and started telling me, oh, you are absolutely right, we 
can put you in that program. I should have been in that program 
two years ago and avoid having to let go 25 employees of mine 
that I have had for 20 years, and now they are unemployed 
because I don't have enough jobs to support them.
    So I definitely want to stress the point for the SBA to 
compile a big information database of emails, and hire a couple 
of students, interns, and put them to send emails out, massive 
emails. It doesn't have to be sent only once. Send them two, 
three times, whatever it takes for the general public to get to 
know about your programs.
    Ms. Chu. Okay. Well, thank you.
    Mr. Martinez, SCORE is dedicated to educating 
entrepreneurs, and you have counseling and then train small 
business owners. So you must know from personal experience, 
since you are president of SCORE, and I guess you do SCORE 
counseling yourself?
    Mr. Martinez. Correct.
    Ms. Chu. Could you tell us from your experience with these 
business owners, what are the typical challenges they face, and 
how do you help them?
    Mr. Martinez. Well, the typical challenge that our clients 
face is basically just how to get started. A large percentage 
of the kinds that we get in our office is people who have an 
idea to open a business, and where do they go from there. I 
think the best way I can kind of summarize it to you is with a 
quick story.
    I had a gentleman come in about three weeks ago who wanted 
to open a restaurant, and my first question that I asked him 
was have you been in the restaurant business before, and he 
said yeah, and I say what capacity, and he said, well, I have 
been a waiter and kind of in the kitchen. So I said, well, you 
know, what you need to do is what I do when I want to open a 
business, is you need to go back to the restaurant and get to a 
management level, or become the best employee that the 
restaurant has, because when you do that, the owner of that 
restaurant will give you all the information that you need. And 
therefore, you need to spend enough time doing that so when you 
do open a business, guess what, you are 100 percent ready, you 
know exactly what to do.
    So the challenges that I see, a lot of people when they 
come into our office, is just the challenge of how to get 
started, not much of where do I get the money. Yes, a lot of 
them do come with that, but a lot of them come with the need 
for marketing and experience, sales experience. We get a lot of 
practitioners who come into our office wanting to open a 
business, but they have never been business owners in the past. 
So therefore, they have a hard time understanding what it takes 
to open a business.
    Like, for example, we do a financial literacy class or how 
to audit your financials, and we go from--we create a 
fictitious business from beginning to end, and we let the 
attendees know that at the end, when we complete the financial 
plan, they are $250,000 in the hole just to open the business 
itself. So the challenges that we see, that I see personally, 
it is a lot of folks that want to start their own business or 
they already started, they just need the marketing sales 
experience, or they need that information to get going.
    Ms. Chu. And how long do you work with them?
    Mr. Martinez. We work for as long as they want. We don't 
have a time limit. We have had individuals who we have taken 
from beginning to end. We have individuals who come just for a 
one-time session, and I think that is what our expertise is. We 
have experts not just here in L.A. but throughout the country 
where somebody comes to us and they have a specific issue, like 
I was talking to Mrs. Rays before, and she says she might have 
an issue, just a small one that she needs help with, and I 
mentioned to her we don't have someone in our office that can 
help you, just give you the wisdom, the knowledge, information 
that you need. We have somebody across the nation because we 
have 13,000 volunteers that can answer that question for you.
    We have been in the hole. We know how to get out of it. So 
we can definitely give you a hand up, help get you out of it.
    Ms. Chu. Well, that sounds really great. I understand that 
SCORE has mentored 6,220 small business owners and held 187 
workshops, but that it is still 1 percent of all businesses 
that are small businesses operating in the greater Los Angeles 
area.
    Mr. Martinez. That is right.
    Ms. Chu. What do you need to be able to have an even 
greater reach?
    Mr. Martinez. Honestly, we need to get more people in our 
community involved, especially in the minority communities. One 
of the biggest challenges that I have had, and I have only been 
a president for the last two weeks or so, but one of the 
biggest challenges that I have is finding individuals that want 
to give back. And I was having a conversation with another 
gentleman at one of our lunches that we had, and I basically 
told him the reality is that within the minority communities, 
we are probably 15 or 20 years away still from seeing actually 
individuals that have been successful in business raise their 
hands and say, yes, I want to help.
    So my recommendation to him was let's just go out there and 
see what we can find and get the one or two that want to give 
their time and efforts and experience and knowledge and wisdom, 
and let's team up with them, let's see what we can do.
    Ms. Chu. Okay, thank you.
    Chairman Mulvaney. Thank you, Ms. Chu.
    Ms. Napolitano, it is our custom on this subcommittee, 
since I am a tried and true southerner, to let the ladies go 
first. So if you have some questions or some comments, you are 
welcome to go.
    Ms. Napolitano. How sweet of you.
    I don't know if I am on. Can everybody hear me?
    Chairman Mulvaney. Yes.
    Ms. Napolitano. I am not sure what--well, you can hear me. 
Okay. Logistics.
    Lots of questions, and I just barely have started going 
through some of the testimony, and I already have about 10 
questions, but I will limit myself to Mr. Martinez because I 
sat on a subcommittee now for six years on small business, so I 
went through a lot of this with them. And then at the state 
level I also did a lot on international trade and small 
business. In fact, I am still a micro-business owner.
    But I did go to SBA, and they assigned a SCORE person to me 
before we had a restaurant, and let me tell you, I am glad that 
you are talking the way you are talking, because at that time 
they said what is your business plan? I don't know. So you have 
got to understand from people that have no experience and, like 
you say, coming in brand new, off the street with the ideas and 
the passion that will make things work, but how do we get them 
from point A to B?
    Have you considered going to the community colleges and 
asking them to set up classes to help entrepreneurs that you 
are dealing with go in and begin to talk to actual businesses 
that can give firsthand information and begin to make sense of 
what they are going to need? Because one person tells you, but 
you are missing out on some of the things that somebody else 
can tell you. That is one thing.
    And then you must be dealing a lot with individual 
companies that might have product for export, and have you been 
able to communicate those to, say, Commerce or State 
Department, the State of California, to be able to find 
assistance for them to be able to get certified? Let me tell 
you, when I did small business, certification was a process 
that took many people 15 years, and even then they could not 
get the 8A certification. I mean, they got it maybe, but they 
weren't getting any ability to get projects like you have. You 
have been lucky. But at the Federal level, it is a whole 
different ballgame.
    So how do we bring all those resources? And sure, while you 
are at it, and to any of you, how do you get the cities to do 
the permitting at a one-stop shop, the state to work with the 
cities to be able to allow waivers or not exemptions 
necessarily to bring more business to California instead of 
having the states come into California and taking our 
businesses because they are either right-to-work states or they 
have incentives that they provide for the businesses? Have you 
maybe gone to the county to find out how everybody can sit at 
the table and be able to format what are the regs that are out 
there that are prohibiting--that are not prohibiting--that are, 
unfortunately, roadblocks for business? Because it takes the 
same amount of time to go after one permit if you had a one-
stop shop and you would be able to have the city, the county, 
the state at one point, be able then to facilitate the ones 
that are duplicative, not only in money but in time, and time 
is money for business.
    Mr. Martinez. That is correct. And to try to answer all 
those questions----
    Ms. Napolitano. Like I said, I have a million of them.
    Mr. Martinez. There are about 10 of them there, but I will 
try to do my best that I can. First of all, with the 
communities, as a matter of fact, one of the directives this 
year with our original director which is here, Blake Welch, one 
of his directives for this year is to actually go out there and 
get involved with the community colleges, and also the 
universities to see how we can spur that entrepreneurship 
spirit. And if the communities or the community colleges don't 
have that program, to get involved with them and actually 
create an entrepreneurship program.
    One of my goals in life which I think is a lifetime goal 
that I really have talked about over the last few years, it is 
about a program that I started about a year-and-a-half ago. It 
is called the Academy of Entrepreneurship Leadership, and I was 
talking to Jesse about it before we got started. But basically 
what I am doing with that, I am taking high school students 
like myself, because I saw myself in that, and that is where I 
came from, I am taking high school students that otherwise have 
graduated from college or really not college but high school, 
are now going to graduate, but they really have that 
entrepreneurship spirit, they want to do something with their 
lives.
    So basically what I have done is I have brought them on 
board to my academy and asked them to give me a three-year 
commitment, and what I do with them is that I find out where 
they are at as far as personality and what would be best for 
them----
    Ms. Napolitano. Can I stop you? Because I don't want to run 
into a lot of time.
    Mr. Martinez. Yes, sure.
    Ms. Napolitano. One of the community colleges is Reondo, 
and in conjunction with the COGs, the Councils of Government, 
they identified what the business community needed in terms of 
training of personnel, and then they set up a class. So then 
they had a market of people to go and do it. That is something 
that we have not really looked at.
    Mr. Martinez. No.
    Ms. Napolitano. And that is something that needs to happen 
because the community can tell you what they need, versus us 
going out there and setting classes up and saying, okay, come 
and get it, and then where are they going to be employed?
    Mr. Martinez. Right. No, my program runs a little bit 
different where I see what the need of the individual is, and 
then I go and I team them up with that industry. We find them a 
job in that industry for three years, working in that industry, 
find out exactly what it is to be successful in industry, and 
during those three years we take them through a whole mentoring 
program where we teach them management skills, sell skills, 
marketing skills, everything.
    Ms. Napolitano. That's very laudable, but we need this for 
business. And while those youngsters may be coming up in the 
business world, right now California and the rest of the nation 
is suffering from budget woes.
    Mr. Martinez. That is correct, and I agree fully with you, 
Ms. Napolitano. Like I said, we have a directive this year to 
get involved with the community colleges, get involved with the 
universities and see how we can spur that entrepreneurial 
spirit and help any ways we can.
    As far as exports, when we have individuals who come to our 
office to get help for import/exports, we have actually experts 
on our staff here in California, here in L.A., that as soon as 
somebody comes in and they talk about import/export, we direct 
them to them, and that individual walks them through the whole 
process of what they need to do. And we also have a workshop 
that teaches import/export to individuals that want to get 
involved with that.
    So the resources are there, definitely, yes.
    Ms. Napolitano. Again, to the point of Ms. Tang is we 
cannot, do not, and have not been able to get the information 
to the people that need the information. We don't use 
everything that is available to us to communicate, whether it 
is the new technology, whether it is the Net, or whether it is 
videoconference, or whether it is the cable, which you have the 
free access cable in every city.
    Mr. Martinez. Right.
    Ms. Napolitano. All those things, we have not put them 
together.
    Mr. Martinez. You know, one of the things, Ms. Napolitano, 
that I learned when I was in business is that I needed to go 
and do it myself. If I didn't have the resources, I would get 
in my car and go find the resources. If I need to find out 
about bonding or whatever the issue might be, I would go out 
and find it myself. It is true, yeah, we need to communicate 
better, and to be honest with you and completely frank with 
you, the only thing that can improve that is the resources that 
we have available. And unfortunately, the resources that we 
have available will only get us to that 1.09 percent of being 
able to reach the small business community.
    Ms. Napolitano. As you understand, I'm sure, Chairman 
Mulvaney and my colleague understand that when Washington 
resources are being cut more and more.
    Mr. Martinez. That is correct.
    Ms. Napolitano. And the state, of course, is in financial 
woe, so no help. So what do we do to be able to get out of the 
box and be able to get these things done? Now, if I may, if you 
will indulge me for just a second, I was in a conversation with 
Lieutenant Governor Gavin Newsom a little while ago in regard 
to trade, as I mentioned, and he is looking at the permitting 
process. How do we cut down the red tape?
    Second, streamlining with the counties and the cities. In 
other words, have the counties, cities and county government 
also involved in this. They are doing six pilots, one of them 
starting in Riverside, international trade. They are going to 
open a new office in China, the first state office since the 
Davis Administration, and they are looking at the manufacturing 
component. Those are just a few of the highlights that I 
garnered from the conversation.
    So there is great need, and I think hopefully we will be 
able to partner with the state, Madam Chair, to be able to get 
a lot of these things passed on to not just the new 
entrepreneurs but also the ones that have business and who want 
to expand and go into other countries with a product that they 
make.
    And thank you so very much for being so indulgent.
    Chairman Mulvaney. Happy to do it. Thank you, Ms. 
Napolitano, for joining us. It is a pleasure to meet you. There 
are 435 of us in Congress, so it takes a while to meet 
everybody.
    Let me go about it a little bit differently. Instead of 
going one by one, I want to deal with topics and have each of 
you check in on just a couple of global topics I have heard 
discussed here today. One of them, the first one is access. Ms. 
Napolitano was mentioning it. Ms. Tang, you talked about it a 
couple of times, access to the information.
    Does anybody here use the SBA website? Mr. Martinez, good. 
You have to. Ms. Chang, you have. But Mr. Torres, Ms. Tang, you 
have not had a chance to use it? It is a tremendous, a 
tremendous asset that we have available to us. But again, 
everywhere I go and I have these meetings, I ask that question 
and half is above average for folks who have actually been 
aware of it.
    Ms. Tang, I did a series of small business workshops in my 
district, put together a tremendous body of information. The 
SBA came up from the state capitol. We had four or five people 
on this panel. I had 40 people at most at a meeting where I 
thought I would have 500. It is just very difficult to get that 
word out there that this particular service is available.
    So often it seems with the Federal Government, the 
difficulty we have is this overlap of services. We have all of 
these entities doing the same thing. I think we are up to 47 
different job training programs now. But in this particular 
circumstance with small business, there is this giant gap that 
nobody even knows that we do this. So it is up to us, I think, 
to do a little bit about that.
    Sharing something else with you folks, I didn't hear the 8A 
program mentioned at all. I don't know if you are familiar with 
it. Mr. Martinez is. But I know, Ms. Tang, your business would 
qualify for it. Ms. Chang, yours may well. There is a series of 
programs available to especially women-owned businesses where 
you can compete on a non-competitive bid basis. There are 
certain restrictions on that, but you don't have to bid. You 
have to have a track record. You have to be established as a 
certified 8A provider, but there is a wealth of programs out 
there that folks are simply not taking advantage of. The last 
one would be the mentorship program that I think one of you--I 
read the testimony before, and one of you has participated in 
that before. Was it you, Mr. Martinez?
    Mr. Martinez. Which mentorship program?
    Chairman Mulvaney. The SBA mentorship program.
    Mr. Martinez. Oh, no.
    Chairman Mulvaney. So you have done your own. The SBA has 
its own mentorship protege program where large businesses will 
come down and teach small businesses how to do government 
contracting. In fact, there are incentives in place for large 
businesses to do exactly that. So I encourage you to put that 
in front of your customers, your clients, your colleagues, your 
neighbors as well. But we are learning firsthand in South 
Carolina. Boeing has already signed up a tremendous number of 
very, very small businesses doing very small levels of work 
that they are ready to do, subassembly a lot of time, but it is 
a great way not only to expand that small business but also to 
train those small businesses in the intricacies of complex 
contracting. Contracting with Boeing is probably more complex 
than contracting with the Federal Government, believe it or 
not.
    Let me ask this, then, and move on to the questions I have 
on a different topic, which is micro-credit. Mr. Torres, you 
said that you don't do SBA loans but you said you do your own. 
You effectively are doing what we try to get folks to do. Why 
don't you do SBA loans, and what would it take in your 
experience, what could we change--and really, at the end of the 
day, that is why we are here. What could we change to make it 
better so that you could provide it?
    Mr. Torres. Sure, and as I had said earlier, the biggest 
issue for us is just our size. So for us to bring on a capable 
SBA team, the expense related to, in a sense, buying that team, 
and banks compete for teams of individuals to----
    Chairman Mulvaney. Why does it take a team to do it?
    Mr. Torres. Because it is a highly technical area of 
lending. I mean, there are a lot of specific rules and 
regulations that if you do not dot the proper I or cross the 
proper T, the guarantee is not there. And so it takes a very 
specific expertise and someone that is very experienced, and 
this knowledge base is not very widespread in our community. 
And where it is widespread, it lies resident within a larger 
organization. So it becomes very expensive for banks of our 
size to obtain that expertise.
    Now, we can develop it. We can home-grow it. We can take 
existing resources or bring in new resources and educate them 
in that process, and that is something that we have talked 
about for in the coming years, taking our existing credit folks 
and putting them through a rigorous training program, but that 
is a process that also takes a significant amount of time 
because they need to go through the entire program.
    So getting to your question, what can the SBA do, I would 
say if the SBA can develop a program where they can take either 
junior credit administrators or some folks that have been in 
the credit industry for a while and put them through a 
comprehensive certification program where they can become 
competent, that would probably go a long way in doing this.
    Our biggest fear as an industry relative to, let's say, 
SBA, is the loss of that guarantee, obviously. If we do 
something along the way and there's a default and someone says, 
ah, I see in the file when we do a post-mortem review, you did 
not dot this I, cross that T, sorry, and we have pulled it from 
you, now we are stuck with a much bigger loss than anticipated.
    So as a small bank, that tends to be the hurdle for us. 
Certainly I think the education piece, the outreach piece, 
putting the money out there to take these smaller banks that 
can afford to buy these teams and just getting their folks and 
educating them, and perhaps even--and this is a perfect tie-in 
to the community college piece--why not take these kids that 
are in community college that normally get these AA degrees or 
certificate programs, and make them SBA qualified or SBA 
credentialed so that they can go straight into those same 
communities that they are living in and start working in that 
business? That is a lifetime opportunity for them, it is not 
overly expensive for the institution, and it takes the 
resources of the SBA and puts them to good use.
    Chairman Mulvaney. Ms. Chang's testimony rung particularly 
true with me. I had a Small Business loan one time. I was a 
young lawyer, I had just started practicing, and I had a flood 
in my office, and I ended up with a small business disaster 
loan. It was outrageously easy. Your point is an excellent one, 
which is that it is almost as difficult to make a microloan as 
it is to make a massive loan, and maybe that is one of the 
places we can look at as well, not only figuring out a way to 
do a training program to certify your bankers and so forth and 
train them so that you don't have to go off and add this team 
just to do it, but also to change the process so that micro-
lending is easier, or at least it is proportional to the value. 
There is no reason to spend 100 pages of documents on a 
$100,000 loan when you can spend 100 pages of documents and do 
a $100 million loan. So that is something that I will take away 
from here.
    Mr. Martinez, give me a feel, of these folks that you have 
talked to, if we want to go back, if micro-lending is one of 
the things we take back to Washington, is that the kind of 
thing that you see on a day-to-day basis that really would have 
an impact? Do you get a feel for the percentage, the volume of 
traffic that you see that could benefit from those loans, say, 
under $100,000 or under $50,000?
    Mr. Martinez. I would say yes, definitely. We do get a 
large percentage of clients that come in and are business 
ready, ready to receive that microloan. Because they don't have 
the experience, maybe they don't have the business plan put 
together or something is missing where they are not able to 
apply for that loan. I know there are many organizations here 
in the L.A. County, San Bernardino County, and the Empire 
County, there is a tremendous amount of resources. Again, they 
are out there. The only problem that we have is that for some 
reason they haven't heard about it yet. But, yes, there is a 
large percentage that would benefit tremendously from that, 
micro-lending.
    Chairman Mulvaney. I get that impression as well, because 
most small businesses are not looking for a million or $2 
million. They are looking for $50,000----
    Mr. Martinez. No. I mean, the individuals that come in, 
they are asking for $20,000, $25,000. And by asking questions, 
looking at their background, see where they are with their 
business plan, I usually refer--I say to them do what I did, 
which is what? Use my credit cards, use my savings, ask 
friends, ask family, and get the business going. Get it going 
for two years. Once it is running, we will help you throughout 
the whole two years. Once you have been in business for two 
years, you will be ready for an SBA loan.
    And the only reason why you need an SBA loan, not to 
survive, but you need an SBA loan to expand, which a lot of 
people look at it differently.
    Chairman Mulvaney. That's an excellent point. That's an 
excellent point. That is a message that needs to get out there 
to the small business communities, and that is that this is 
maybe not designed to help you start from scratch. In fact, 
maybe it makes it too easy for you to try and start from 
scratch.
    Mr. Martinez. That is right.
    Chairman Mulvaney. You don't learn the value of the money 
unless it is your money and your mother's money and your 
neighbor's money, but it can help you to expand.
    Mr. Martinez. Most definitely, most definitely.
    Chairman Mulvaney. So maybe we will take a look at, then, 
possibly changing some of the qualifiers, some of the 
categories in terms of treating loans to existing companies 
differently than treating loans to brand new start-up 
companies.
    Mr. Martinez. That would help, yes.
    Chairman Mulvaney. That might be something worth it to look 
at.
    Exports is something else that everybody here has mentioned 
off and on. Ms. Napolitano I think specifically mentioned it. I 
will tell you, I will tell my colleagues, the Small Business 
Administration is available to you to help promote this 
specifically. There are specific areas within the SBA that are 
set up to help small businesses export. Mrs. Chu and I have 
been heavily involved in the committee in Washington on trying 
to drive small businesses to export. Less than 1 percent of the 
small businesses nationwide export at all, and 95 percent of 
the ones that do export to only one country. There is a 
tremendous untapped market for us in small business, but it is 
so often the case, as with other things we have heard here 
today, that it just doesn't occur to people to seek those 
markets. They are looking here in East Los Angeles, they are 
looking in South Carolina, they are looking where they live, as 
opposed to thinking globally in terms of where their markets 
are.
    By the way, and I share this with my colleagues as well, 
there are a couple of different organizations that will come to 
your district and put on symposia on how to export into 
specific regions. We just had a series of meetings in my 
district led by the U.S. Chamber specifically encouraging 
people to export into the Middle East, tremendous growth 
opportunities there as well. So those things do exist, and 
again, targeted specifically at small businesses.
    Mrs. Tang, you mentioned something that is near and dear to 
my heart. I have had many careers. I get bored very, very 
easily, and in addition to running a law firm and running a 
restaurant, I also ran a construction and a real estate 
business. And you mentioned the criticalness of getting paid 
quicker.
    Ms. Tang. Yes.
    Chairman Mulvaney. We are looking at that. One of the 
things--and you don't often hear this from conservative right-
wing extremists from South Carolina like myself, but I give the 
President tremendous credit for specifically mentioning those 
things in his jobs bill, the idea of paying small business, 
paying contractors in 15 days instead of 30 days. This makes a 
big difference where we come from.
    Ms. Tang. Oh, yes.
    Chairman Mulvaney. What we need to make sure of, however, 
and you sort of hit on it, is we need to make sure that while 
that changes at the owner-contractor level, it also needs to 
change at the contractor to subcontractor and second-tier 
subcontractor level.
    Ms. Tang. Exactly.
    Chairman Mulvaney. Otherwise all it does is we are 
providing the float to the big business but not the small 
business that come down.
    Ms. Tang. Exactly.
    Chairman Mulvaney. So you were spot-on on that. And I know 
that I haven't raised a lot of questions here because really, 
for me, and I will say this by way of closing today, the value 
here, we love the opportunity to sit and ask you questions. It 
is extraordinarily helpful. But what we are trying to get, and 
the reason that we are here, and the reason this is important, 
is we need those stories. We need the story of the Chinese 
asylum seeker who took $10,000, now hires a bunch of people. We 
need the stories about the food truck with the immigrant who 
grew it into a business.
    We have to go back and raise the level of dialogue on this 
particular issue, and having the stories from you and from your 
colleagues and from your neighbors are what allow us to do it. 
I can go back now, Mr. Torres, and tell these folks, look, I 
was talking to a banker in California, and he said if you can 
make it easier to do microloans and we can get this down to 
three or four pages, he could open the floodgates on this thing 
and it could really, really help.
    So often we get stuck in the policy and we don't have those 
firsthand stories to tell. Ms. Tang, I will always tell the 
story from now on about driving in. It is my first experience 
in driving in Southern California. I came when I was 9, 
thankfully, and someone else drove, and then I came a couple of 
months ago and they provided a driver for me. But I did it by 
myself today, which is a real interesting experience. But it is 
nice to know that it is your fences on 105. [Laughter.]
    Chairman Mulvaney. And Mr. Martinez, I will tell you that 
the story that you tell makes me pause because my father and I 
went through the exact same situation in 1975 when he lost his 
job and decided that that was the last time that anybody was 
going to lay him off, that if he was going to lose his job, he 
was going to lose it because he wasn't any good at it, not 
because somebody else made that decision for him, and he has 
been a small business person ever since.
    You talk a lot about high school dropouts and trying to 
teach them, and I wonder if we had, how many of those folks who 
dropped out of high school had fathers and mothers telling them 
the same stories. My fear is it is probably not enough, and if 
they had their parents telling them that story, they would stay 
in school a lot longer. I know that I did.
    We try and raise the level of dialogue. This is a very 
small group. You may be sitting in the back of this room, you 
may be sitting up front going was this worthwhile or was this a 
complete waste of time? Let me tell you how it works. This is a 
tremendously valuable tool.
    What will happen inevitably from here today is that the 
media is here. There are folks taking pictures. There are folks 
who write articles in journals that you have never heard of 
before. I don't know if PACE has a magazine or not, but my 
guess is there may be a Hispanic Banker Magazine that only you 
truly appreciate the value of, Mr. Torres. This story will be 
written in those magazines, and they will be talked about on 
blogs, and someone at some conference someplace in Nebraska 
will say, you know, I read about this hearing in California 
about what we can do to help micro-credit, or what we can do to 
help pay people faster, and it will become a dialogue, and then 
people will start talking to their Congressman, and then we 
will have another hearing on it, and then finally we will have 
a chance to actually do something about it.
    I can say this with experience because I have only been 
here nine months, but we have already started to see it with 
the 3 percent withholding rule, something that I knew nothing 
about eight months ago, and at the risk of being presumptuous, 
my guess is you knew nothing about it eight months ago, but 
maybe you did.
    It is something that is arcane and it means something only 
to small business owners who do large government contracts. But 
because of the hearings that Mrs. Chu and I have been able to 
have this year, because of that process of percolating up 
information, a bill is getting ready to be passed by the U.S. 
House of Representatives--in fact, I think it passed out of 
Ways and Means the day before we left--to change the way that 
the government pays small business people on their government 
contracts. This is a dramatic change for the better. It would 
not have happened in a top-down type of process. It happened 
because people took the time to do what you folks are doing 
today.
    And hopefully, if you start to see progress in the next 
couple of months on things like micro-credit, exports, paying 
small business faster, reaching out to specialized programs 
perhaps for folks who haven't graduated high school who have a 
whole other level of issues, not only do they not understand 
business, they don't understand the basics that go into 
business. You have to teach them math first before you can 
teach them how to do accounting for their products. But I can 
assure you this, and I will say this to wrap things up----
    Ms. Chu. Will the gentleman yield before----
    Chairman Mulvaney. Yes, ma'am. Absolutely. Always to my 
senior.
    Ms. Napolitano. Just as you are talking, it brings back my 
six years that I sat on Small Business when I first got to 
Congress. And at that time, SBA brought in the banks who 
purportedly were helping small business, and let me tell you, 
the story was dismal about the amount of small business loans 
they were giving out. Now, I am talking about six years ago.
    Now, whether this changed or not, that is something that we 
need to ensure will happen because we were told that a business 
bank would rather do a large loan than a small one because it 
takes the same amount of time, the same amount of money to do 
it, and of course you have the team of experts that need to be 
able to push it through.
    Well, years ago the Arrowhead Credit Union was able to 
begin putting such a team together and be able to get 
permission from SBA to do small business loans at the local 
level because they know their businesses, and that was very, 
very successful. Maybe we need to look at helping SBA be more 
in contact with the credit unions because they can do the 
microloans that the banks cannot take the time, nor do they 
have the ability to do all of the things that they need to do. 
But they had an expert team developed where the credit unions 
sent in their customers to the Arrowhead Credit Union.
    The other issue, Mr. Chairman, immigration, because as you 
can see, you have minorities from other countries that run into 
issues with immigration being able to get--whether it is the 
owners being able to get legalized--now, these are people who 
are bringing businesses in. And you talk about a story, I have 
had in my district some people who own used car lots netting--
grossing, I am sorry, $400,000 a month, netting. And because 
their attorney who was incorporating didn't do the work with 
immigration, they became undocumented. Do you think we were 
able to help them for years?
    So we need to be able to find a way to be able to help the 
businesses who are bringing, and not the ones who are going 
through the paper mill, to be able to come here to the United 
States and try to become businesses supposedly, but are not 
necessarily the true type of business we would like to have.
    There are pitfalls, and we need to be sure that the 
businesses that come in understand what the letters of credit--
if you send merchandise abroad, how are you going to collect 
your money if that country does not recognize our justice 
system or rule of law? In other words, you owe us, you pay us.
    So those are all things that I am certain people want to 
learn about, new entrepreneurships. These ladies and gentlemen 
already know because they had the businesses. But if you are 
talking entrepreneurship, these are pitfalls that we need to 
ensure that come to the front, that they acknowledge and get 
information so they avoid them, or at least know what they are 
getting into. I am glad to learn about the U.S. Chamber doing 
an export seminar next month, so look forward to talking to 
you.
    And thank you again for allowing me. Thank you for the 
invitation.
    Chairman Mulvaney. You are welcome, Ms. Napolitano.
    Ms. Chu, would you like to say anything before we close?
    Ms. Chu. Well, I want to thank you for having this hearing 
here. This hearing meant a lot to me. You know, I have been an 
elected official here in the San Gabriel Valley for 26 years, 
and I know that small business is the engine of the San Gabriel 
Valley. And if we can make it successful, the San Gabriel 
Valley will be successful.
    So I was really anxious to have a hearing here that 
reflected the issues that we are dealing with in Washington, 
D.C., but it was even more valuable to hear from your very own 
words what you are facing and how the programs of Washington, 
D.C. are or are not helping you. So I appreciate it. We will 
take these suggestions, these experiences that you have had 
back to Washington, D.C., and we will try to make things 
better.
    I want to thank Congress member Grace Napolitano for being 
here. She has been such an advocate here in the San Gabriel 
Valley and in Los Angeles County.
    And I especially want to thank our chairman, Congress 
member Mulvaney, for making this monumental effort. He has been 
so gracious in having this SBA hearing, but then to overcome 
these incredible obstacles he had just in getting here, I thank 
you so much.
    Chairman Mulvaney. I will see how I feel tomorrow, that's 
for sure.
    Listen, thank you, ladies, for doing this. Thank you for 
participating. Thank you folks especially for doing this. I can 
assure you one thing, that this was worthwhile for me. I have 
three 11-year-old children that I haven't seen in the last 
couple of days, but this is what we do, and this was worth 
coming across the country to get this information and to get 
these stories because it is what we need to try and change 
things.
    Ms. Chu and I have one of the luxuries in Congress. We 
actually function when we participate in a committee that gets 
along. This is a bipartisan effort. We are not here with 
Republican and Democrat. We are here as the protectors and the 
voice of small business. I think we have sent out more 
bipartisan bills out of our committee this year than perhaps 
all the rest of them put together. We are making strides for 
small business, and I appreciate you all participating in that 
process.
    With that, I will ask that there be five days for members 
to revise and extend their remarks. There are no objections to 
that, so we will do that. And with that--yes, ma'am?
    Ms. Chu. Just to invite everybody to a little reception of 
cookies and coffee afterwards.
    Chairman Mulvaney. Cookies and coffee it is. Coffee would 
be really good right now. [Laughter.]
    We stand adjourned. Thank you, folks.
    [Whereupon, at 4:23 p.m., the Subcommittee was adjourned.]







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