[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]







   FIELD HEARING IN QUEENS, NEW YORK: UNDERSERVED SMALL BUSINESSES: 
                               PROVIDING 
                       ACCESS TO FEDERAL PROGRAMS

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

                                HEARING

                               before the

               SUBCOMMITTEE ON CONTRACTING AND WORKFORCE

                                 OF THE

                      COMMITTEE ON SMALL BUSINESS
                             UNITED STATES
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED THIRTEENTH CONGRESS

                             SECOND SESSION

                               __________

                              HEARING HELD
                             MARCH 11, 2014

                               __________



[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


            Small Business Committee Document Number 113-058
              Available via the GPO Website: www.fdsys.gov

                                _____

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                   HOUSE COMMITTEE ON SMALL BUSINESS

                     SAM GRAVES, Missouri, Chairman
                           STEVE CHABOT, Ohio
                            STEVE KING, Iowa
                         MIKE COFFMAN, Colorado
                       BLAINE LUETKEMER, Missouri
                     MICK MULVANEY, South Carolina
                         SCOTT TIPTON, Colorado
                   JAIME HERRERA BEUTLER, Washington
                        RICHARD HANNA, New York
                         TIM HUELSKAMP, Kansas
                       DAVID SCHWEIKERT, Arizona
                       KERRY BENTIVOLIO, Michigan
                        CHRIS COLLINS, New York
                        TOM RICE, South Carolina
               NYDIA VELAZQUEZ, New York, Ranking Member
                         KURT SCHRADER, Oregon
                        YVETTE CLARKE, New York
                          JUDY CHU, California
                        JANICE HAHN, California
                     DONALD PAYNE, JR., New Jersey
                          GRACE MENG, New York
                        BRAD SCHNEIDER, Illinois
                          RON BARBER, Arizona
                    ANN McLANE KUSTER, New Hampshire
                        PATRICK MURPHY, Florida

                      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

                           OPENING STATEMENTS

                                                                   Page
Hon. Richard Hanna...............................................     1
Hon. Grace Meng..................................................     2

                               WITNESSES

Mr. Bill Imada, Chairman and CEO, IW Group, West Hollywood, CA, 
  testifying on behalf of Asian/Pacific Islander American Chamber 
  of Commerce & Entrepreneurship (ACE)...........................     4
Ms. Joyce Moy, Executive Director, Asian American/Asian Research 
  Institute at Queens College, New York, NY......................     8
Mr. William Wilkins, Director of Development, Local Development 
  Corporation for East New york, Brooklyn, NY....................    10
Ms. Michele Chang, Acting Chief of Staff, United States Small 
  Business Administration, Washington, DC........................    12

                                APPENDIX

Prepared Statements:
    Mr. Bill Imada, Chairman and CEO, IW Group, West Hollywood, 
      CA, testifying on behalf of Asian/Pacific Islander American 
      Chamber of Commerce & Entrepreneurship (ACE)...............    31
    Ms. Joyce Moy, Executive Director, Asian American/Asian 
      Research Institute at Queens College, New York, NY.........    38
    Mr. William Wilkins, Director of Development, Local 
      Development Corporation for East New York, Brooklyn, NY....    41
    Ms. Michele Chang, Acting Chief of Staff, United States Small 
      Business Administration, Washington, DC....................    42
Questions for the Record:
    None.
Answers for the Record:
    None.
Additional Material for the Record:
    Statement of Kenneth H. Ryesky, Esq..........................    45

 
   UNDERSERVED SMALL BUSINESSES: PROVIDING ACCESS TO FEDERAL PROGRAMS

                              ----------                              


                        TUESDAY, MARCH 11, 2014

                  House of Representatives,
               Committee on Small Business,
         Subcommittee on Contracting and Workforce,
                                                    Washington, DC.
    The Subcommittee met, pursuant to call, at 10:05 a.m., at 
Queens College, Rosenthal Library, Room 230, 65-30 Kissena 
Boulevard, Queens, New York, Hon. Richard Hanna [chairman of 
the Subcommittee] presiding.
    Present: Representatives Hanna, Meng, Velazquez, and 
Clarke.
    Chairman Hanna. I call this hearing to order. I am going to 
start by thanking Ranking Member Velazquez, the Ranking Member 
of the entire Committee, for being here today, and Ms. Meng, 
who is a great and thoughtful partner, always deliberate and 
always prepared. So it is a pleasure to work with Grace.
    Thank you all for being with us today. I would like to 
thank each of our witnesses for taking time to provide 
testimony on ways we can all work together to increase access 
to Federal programs for underserved small businesses.
    Small business growth is essential as the United States 
still struggles with high unemployment. We know that small 
businesses are the catalyst for job creation, creating more 
than half the net new jobs between 1993 and 2011. The Small 
Business Administration, or SBA, is tasked with aiding small 
businesses to promote full and free competition. This aid comes 
in a variety of forms, such as increasing access to capital; 
providing technical assistance, such as counseling; and 
promoting small firms' ability to promote compete for Federal 
contracts.
    Today, we look forward to hearing from the SBA about how 
they are making sure these resources are accessible in 
underserved communities. As chairman of the Subcommittee on 
Contracting and Workforce, I understand the importance of 
ensuring that small firms do not face undue barriers in 
utilizing the SBA's programs.
    Recently, our Committee approved legislation to ensure 
greater opportunities for small businesses in the Federal 
procurement marketplace. Notably, one of these bills, H.R. 776, 
which Ranking Member Meng was kind enough to cosponsor, 
increases the guarantee rate for the SBA Surety Bond Guarantee 
Program, which strengthens small businesses ability to compete 
for Federal contracts.
    At the legislative level, Congress can effectively improve 
programs and give SBA better tools to assist small businesses. 
But there is a disconnect when the SBA implements these tools 
and they do not reach the maximum possible number of small 
businesses.
    If barriers exist to accessing these programs for firms in 
traditionally underserved areas, even the best designed 
programs are ineffective.
    Currently, the SBA does not have an official definition of 
underserved communities, but I understand underserved 
communities come in a variety of shapes and sizes, whether it 
is in my district in upstate New York where rural firms face 
countless challenges, or here in Queens and urban areas, where 
small businesses face the same barriers to accessing the SBA's 
programs.
    In light of that, today's hearing will look at what can be 
done to ensure small firms in underserved communities can 
access Federal programs meant to promote economic growth and 
foster job creation.
    Again, I want to thank the witnesses for being here today. 
As you know, you have 5 minutes, but we will be lenient. We 
want to hear what you have to say.
    And with that, I invite Ranking Member Meng to give her 
opening statement.
    Ms. Meng. Thank you, Mr. Chairman, for your tremendous 
leadership and your willingness to hold this important hearing 
right here in Queens, New York City.
    I also want to thank the ranking member of our entire Small 
Business Committee, and my good friend, Nydia Velazquez, and 
Congresswoman Yvette Clarke, who is on the way.
    I also would like to extend a big thank you to Queens 
College and our new interim president, President Gizis, for 
hosting us today and for allowing us to hold this hearing here.
    And thank you to each and every one of our witnesses for 
being here today.
    There are a number of programs at the Small Business 
Administration and Department of Commerce that are able to help 
small businesses achieve success and grow. I have heard from 
business owners in Queens and business organizations that there 
is insufficient outreach from the Federal Government. These 
programs, including loans, government contracts, the Export-
Import Bank, and guidance through Small Business Development 
Centers, and mentor protege programs, prove to be successful 
once they are accessed.
    Today, I hope to learn more about how we can ensure better 
access to these programs, which will help our local economies 
grow and provide jobs to our communities.
    Small-business ownership and entrepreneurship have a long 
track record of helping Americans achieve self-sufficiency. 
Entrepreneurs launch new ventures for a range of reasons--a 
change in career, to bring a new idea to market, to support 
their families, supplement their income, or simply to pursue a 
lifelong dream.
    Here in New York, we have a particularly vibrant culture of 
entrepreneurship. This commitment to small business formation 
and growth makes our city great and diverse, with new ideas 
constantly being brought to fruition, whether it is a new food 
truck or a 3-D printing factory.
    Entrepreneurship in New York is largely characterized by 
diversity. Here in New York, there are 607,000 businesses owned 
by minorities. Women own 595,000 enterprises throughout the 
State. More than 69,000, almost half, of New York City 
businesses are owned by immigrants.
    Throughout the country, like in New York, women-, minority-
, and immigrant-owned businesses are thriving. Yet even as 
these important populations become more involved in 
entrepreneurship, challenges remain.
    Our Committee has done significant work looking at the 
challenges faced by these underserved entrepreneurs. While 
access to affordable capital is a perennial challenge for all 
small businesses, for underserved communities, this obstacle 
can be particularly daunting.
    The Committee held four hearings in the last 2 years 
looking at capital access challenges and new opportunities for 
financing. This is an area where we know underserved firms face 
unique challenges.
    Although women own 38 percent of businesses, just 2 percent 
of venture capital goes to female-owned firms. For ethnic 
minorities, securing capital is also a challenge.
    Minority firms with assets of less than $500,000 are three 
times more likely to be denied a loan than nonminority firms.
    The Committee has also done significant work examining how 
businesses from these demographics interact with the 
procurement process. Our contracting Subcommittee held four 
hearings looking at how we might improve government procurement 
programs so that small businesses and women- and minority-owned 
firms can secure their fair share of Federal projects.
    In particular, we heard from representatives from the 
women's business community, who discussed how challenging it 
can be to break into the Federal marketplace. These hearings 
led to a raft of legislation aimed at improving the situation, 
which the Committee finally approved just last week.
    It is my hope that today's hearing will shed additional 
light on how we can help these types of firms win the Federal 
Government as a client.
    Additional opportunities exist for these firms by breaking 
into new markets, both here and abroad. Our Committee has 
looked closely at how trade policy affects small businesses. 
And we have seen that, in many cases, underserved businesses 
could benefit greatly, if they had the tools, by marketing 
their products abroad.
    In all of these areas, the Small Business Administration's 
programs can play a vital role in giving these firms a hand up. 
The agency's Capital Access Programs are critical to helping 
small businesses secure loans and equity investment. It has a 
series of contracting initiatives that can help these firms 
navigate the Byzantine Federal procurement process and land 
Federal projects.
    The 8(a) program provided valuable mentoring services for 
disadvantaged companies, including assistance landing 
contracting work. The agency's Entrepreneurial Development 
Programs offer vital guidance and technical assistance for 
prospective entrepreneurs looking to start a new venture.
    The same centers can be a useful resource for growing 
businesses looking to expand into new markets, both 
domestically and internationally.
    It is important that these programs are providing maximum 
value and proactively reaching out to traditionally underserved 
demographics, like women and minorities.
    A series of hearings in the Committee have examined 
duplication among entrepreneurial development services. It is 
important that different Federal agencies are coordinating 
their efforts effectively to underserved small businesses and 
entrepreneurs can maximize use of these programs.
    Likewise, we previously examined how private sector 
entrepreneurial education services can complement the SBA's 
work. We have a number of such programs here in New York and I 
hope to hear more about them today.
    While the SBA does many things well, there have been 
concerns about how well its programs are tailored to 
underserved communities. With the face of small business 
changing, it is vital that the agency keep pace, conducting 
meaningful outreach to those entrepreneurs who could most 
benefit from this type of assistance.
    It is very fitting that we are holding this hearing here in 
New York City and Queens. As one of the most diverse areas in 
the Nation, we have small businesses that represent every 
strand of America's national tapestry. It is my hope that 
today's discussion will educate our Committee about how these 
programs can be improved while helping educate local 
entrepreneurs about the various services available to them.
    I yield back.
    Chairman Hanna. Do you want to introduce the witness?
    Ms. Meng. It is my pleasure to introduce one of our 
witnesses, Mr. Bill Imada, the chairman and CEO of the IW 
Group, testifying on behalf of Asian/Pacific Islander American 
Chamber of Commerce & Entrepreneurship.
    Mr. Imada has previously served as a human resources 
manager for a major national subleasing company and worked as 
an employment recruiter for a small startup placement agency. 
He has more than 20 years of experience in marketing and public 
relations and has represented some of the top global and 
domestic brands in the world and the United States.
    Welcome, Mr. Imada.

  STATEMENTS OF BILL IMADA, CHAIRMAN AND CEO, IW GROUP, WEST 
  HOLLYWOOD, CALIFORNIA; JOYCE MOY, EXECUTIVE DIRECTOR, ASIAN 
  AMERICAN AND ASIAN RESEARCH INSTITUTE, QUEENS COLLEGE, NEW 
 YORK, NEW YORK; WILLIAM S. WILKINS, DIRECTOR OF DEVELOPMENT, 
LOCAL DEVELOPMENT CORPORATION FOR EAST NEW YORK, BROOKLYN, NEW 
 YORK; AND MICHELE CHANG, ACTING CHIEF OF STAFF, UNITED STATES 
        SMALL BUSINESS ADMINISTRATION, WASHINGTON, D.C.

                    STATEMENT OF BILL IMADA

    Mr. Imada. Thank you, and thank you, Mr. Chairman, and 
ranking members of Congress, Congresswoman Meng and 
Congresswoman Velazquez. I appreciate you inviting me today for 
this meeting.
    For the record, I am the chairman and founder of the IW 
Group. We have offices all over the country, including New 
York, and we have been in business for 23 years.
    I am also the chairman of the Asian/Pacific Islander 
American Chamber of Commerce & Entrepreneurship, which is a 
mouthful, so I apologize. We call ourselves ACE, and ACE is the 
primary voice for the Asian-American and Pacific Islander 
communities focusing on business-related issues, and we are 
based in Washington, D.C.
    ACE was established to be a visible and credible voice in 
the halls of government. Last October, we convened several 
Chambers from 16 different States and the District of Columbia 
to talk about some of the issues that impact our community.
    The key areas that we focused on were access to capital, 
Federal contracting, and small businesses development 
assistance. We also agreed, all these different Chambers from 
around the country, after meeting with both Republican and 
Democratic leaders, that we need to develop a system for 
collecting, monitoring, and verifying data on federally 
supported programs addressing the needs of AAPI businesses.
    We also want to reduce the language barriers and the 
cultural barriers that impede small businesses from seeking 
help from organizations like the SBA and the Minority Business 
Development Agency.
    We also want to make sure that SBA and MBDA add business 
development centers specifically in places where there are 
large immigrant and minority communities, and one of those 
areas is specifically here in Queens.
    And we want to also hold Federal agencies and prime 
contractors that work with these Federal contracts accountable 
for meeting all minority business development goals.
    So I am going to start by addressing some of these areas 
separately.
    Access to capital: Although the SBA encourages more AAPI 
business owners to apply for Government-guaranteed loans 
through their preferred lenders, we believe a large percentage 
of businesses do not. A full 33 percent of small businesses do 
not apply because they fear rejection from the organizations 
that are lending to them.
    We believe other factors may also include the following: 
One, there is a distrust of what a preferred Government lender 
will do with their personal and financial information, which is 
what we discovered with the U.S. Census; a pervasive belief 
that SBA officials may not have the ability to assist them in 
languages other than English; three, an overwhelming fear that 
rejection will lead to a loss of face and the potential for the 
loss of good credit; four, a strong and pervasive feeling that 
lending institutions do not have the means or the resources to 
explain why a loan was not given, and actually counseling them 
so they can get a loan in the future; and a lack of 
understanding and knowledge that even a Government-backed loan 
still requires some personal guarantees in the form of 
collateral that may be difficult for a small business to 
obtain; six, a lack of SBA and Minority Business Development 
Centers in communities where small business enterprises are 
being established, and that specifically means places like 
Queens here in New York, as well as the San Gabriel Valley in 
California; and more must be done with ACE and regional Asian 
Chambers and business organizations to alleviate these 
sometimes opaque cultural barriers to capital.
    I will move on to Federal contracting. There needs to be 
stronger and more visible oversight on Federal contracting 
processes. While Executive Order 11625 requires Federal 
agencies to report their minority business development 
activities, a more comprehensive data collection process must 
be employed to ensure that more AAPI small businesses have 
opportunities to participate in the Federal contracting 
process.
    Over the past year, several AAPI business owners have 
recounted how they have been invited to serve as subcontractors 
on Federal contracting opportunities and through the 
procurement process. The prime contractors, often nonminority-
owned firms, have a long history of Federal contracting deals, 
and they enlist diverse businesses to bolster their team's 
credentials.
    However, a number of business owners, including my own 
firm, have served on winning teams only to be told that there 
isn't enough funding in the budget to utilize all the diverse 
team members. In other words, the prime contractors were 
ultimately unwilling to allocate even a penny of funding from 
their budget to utilize diverse talent suppliers on their team.
    It is essential that once a Government contract is awarded, 
budget allocations are reviewed and monitored to ensure that 
contracting opportunities are available to all willing and 
able.
    Also, in order to increase the success rate of AAPI-owned 
small businesses in the Federal contracting process, and for 
other minority businesses, it is critically important to 
identify members for the 8(a) and other business development 
programs early and to work with the regional Asian Chambers to 
match them with qualified AAPI suppliers.
    Small business development assistance: In the past few 
months, ACE has worked with the SBA and the MBDA and made great 
strides with both of them. In high-level meetings that were 
held in Washington and later on in San Francisco, ACE signed a 
memorandum of understanding with the SBA and continues to have 
ongoing dialogue with their representatives. Our MOU 
established a framework for ACE to partner with SBA on 
monitoring programs, services, and initiatives designed to 
address the needs of AAPI and other minority-owned businesses.
    Furthermore, after several conversations with the Minority 
Business Development Agency, two of their representatives were 
actually designated to work closely with ACE and the regional 
Chambers to advance AAPI businesses nominated by the leaders of 
several Chambers around the country.
    We also hold regular conversations with MBDA and SBA 
leaders to advance and promote business centers to address 
cultural needs as well as cultural barriers.
    To build on these successes, we continue to advocate for 
more small business development centers. We also encourage SBA 
and the MBDA to recruit, hire, and advance more AAPIs and other 
minorities with specific language and cultural skills, so that 
they could address the needs that are often important to the 
small business community.
    Since the majority of AAPI business owners are recent 
immigrants to this country, language and cross-cultural skills 
are needed to instill trust to provide culturally relevant 
consultations with AAPI business owners and other minorities.
    In some cities where there are MBDA and SBA offices, there 
are few if any officials or specialists of AAPI heritage. It's 
often case, there is only one.
    In conclusion, in order to ensure that AAPI small 
businesses continue to have access to capital, Federal 
contracting opportunities, and small business development 
assistance, we must verify data that serves as a benchmark for 
their progress and the progress of the Federal Government--more 
outreach specialists with language and cross-cultural 
experience, more SBA and MBDA business development centers in 
growing immigrant communities, and greater accountability for 
meeting and achieving stated goals for minority business 
development.
    I also wanted to introduce some people in the audience, our 
new president, Sach Takayasu, is with us as well as a brand-new 
Asian Chamber here in New York that is being started by June 
Jee, Kevin Zhang, and Patricia Shibata, so they will be able to 
help support that.
    I also want to mention, since I have a few more minutes, 
that when there is in-language assistance at the SBA and MBDA 
centers, San Francisco implemented a program with Chinese 
language brochures and flyers to talk to Chinese business 
owners about the needs that they might have, and it was 
standing room only.
    And earlier in a conversation with one of the SBA offices, 
they said that the reason why they didn't have Korean, Chinese, 
and Spanish speaking people at some of their offices is because 
there wasn't a demand. So I just think it is very important to 
point out that even if it doesn't appear that there is a 
demand, if you provide in-language support or in-culture 
support, you are going to get people to participate, because in 
San Francisco, it was standing room only, and they had to turn 
people away just by doing things in the Chinese language.
    I also wanted to accent again that there has to be very 
strong oversight, because if there isn't strong oversight by 
the Federal Government when people get these contracts, they 
are not always given those awards.
    So thank you very much for your time.
    Ms. Meng. Thank you, Mr. Imada.
    It is my pleasure to introduce Ms. Joyce Moy, the executive 
director of the Asian American and Asian Research Institute and 
professor of small business management and entrepreneurship at 
the City University of New York.
    Ms. Moy was the first Asian-American director of the New 
York State Small Business Development Center at LaGuardia 
Community College, where she helped to secure $25 million in 
funding for small businesses. She is an expert on the local 
economy and the challenges facing our small businesses.
    Welcome, Ms. Moy.

                     STATEMENT OF JOYCE MOY

    Ms. Moy. Thank you, Chairman Hanna, Ranking Members Ms. 
Velazquez, Ms. Meng, and Representative Clarke. Thank you for 
the opportunity to testify before you today regarding 
opportunities, needs, the outreach efforts, and technical 
assistance to small business communities.
    I am executive director of the Asian and Asian American 
Research Institute at the City University of New York. I am 
speaking today in my personal and individual capacity.
    As was stated, I was the first Asian-American director of 
the New York State Small Business Development Center, and when 
I founded the center right after 9/11 at LaGuardia Community 
College, I immediately saw the lack of resources for the 
underserved communities.
    I created a team that spoke English, Spanish, Korean, and 
three dialects of Chinese, in order to address the issues of 
these particular communities.
    Later, when I became director of economic development at 
LaGuardia, I also oversaw the Procurement Technical Assistance 
Center, which provides help to small businesses to secure 
contracts with the Federal, State, and city governments.
    I would like to focus on three issues: number one, outreach 
to underserved communities, particularly immigrant communities; 
number two, what it really means to provide meaningful and 
effective technical assistance to these communities; and then 
to make some recommendations about how we can ensure that we 
build the capacity for this meaningful and effective business 
assistance to these small communities.
    First in New York City, as was said earlier, we have a 
tremendously diverse business base. Asian businesses in New 
York City number in the 150,000s. In Queens alone, over 68,000 
of the businesses are Asian businesses.
    In the black community, over 154,000 businesses are owned 
by black business owners. And in Brooklyn, there are over 
52,000 of them.
    In the Hispanic community, the numbers are over 140,000 in 
New York City with Bronx having over 37 percent of its 
businesses owned by Hispanics.
    But when we look at the national picture with respect to 
immigrant businesses, we find that immigrant businesses make up 
17 percent of the small businesses in the United States. They 
account for $776 billion in revenue. They employ over 4.5 
million people in the workforce.
    In New York City, as was said earlier, nearly 50 percent of 
small-business owners are immigrants. In the decade between 
2000 and 2011, the neighborhoods with highest concentrations of 
immigrants saw the largest growth in business, 23 percent 
compared to the rest of New York City at 7 percent.
    In addition, the growth of employment in these areas was 11 
percent versus 4 percent for the rest of New York City. And the 
payrolls increased by 56 percent compared to 40 percent of the 
rest of the city, showing you just how critical these 
communities are.
    And in New York City, as many of you know, the population 
is 37 percent foreign-born. But if you look at the underserved 
communities, 73 percent of the Asian-American community is 
foreign-born. Over 31 percent of the black community is 
foreign-born. And over 41 percent of the Hispanic community is 
foreign-born.
    Looking at these statistics show you just how imperative it 
is to provide services in-language and with cultural 
understanding. But it is not enough to do outreach in these 
various languages.
    When these folks show up at the door of technical 
assistance providers, there must be culturally competent 
advisers available. Otherwise, it is nothing more than a false 
promise.
    In addition to this, because I am running out of time, I 
would like to also mention that the SBA has done a great job, 
along with other agencies, in reaching out to community 
partners to try to add these cultural and linguistic 
competencies. However, that alone is not sufficient.
    We need to make sure that these community-based 
organizations get the financial and other resources necessary 
to support the work that they do. Without technical education 
of the staff of these organizations, et cetera, again, it is 
nothing more than a false promise.
    Let me give you an example of what happens when these 
community centers are asked to partner with SBA, but are not 
given proper training or proper support. Right after 9/11, I 
read a story in a Chinese newspaper about a restaurant owner in 
Chinatown. There were 11 employees in that restaurant.
    One of the owners of the restaurant, Mr. Ho, had gone down 
to a Chinatown site for help from the SBA. He went numerous 
times in the rain and in the snow, stood out in the cold, and 
he was turned away so many times that when the reporter spoke 
to him, he said that he had nothing but dry tears to cry. He 
was so upset and frustrated. He was about to lose his ability 
to support his entire family.
    When we looked into it, because we contacted him through 
the reporter, we found out that the problem was that the 
community translators, who had no business training, told him 
that they could not help him unless a majority shareholder 
signed the documents. This business had seven shareholders. 
There was no majority shareholder.
    The translation should have been ``a majority of the 
shareholders.'' But because the translator translated 
literally, and did not understand the significance of what SBA 
required, this man was turned away for weeks.
    And had we not see that article, we would not have been 
able to help him. And we helped him to secure $75,000 in 
assistance. So those are the kinds of things we are talking 
about.
    We have not just a duty to do things well, but I believe it 
is an ethical duty. I think it is important to provide 
standardized and professional training to all of our technical 
assistance providers. I think there need to be national 
standards set for technical assistance providers. If they are 
to get the dollars of the SBA, if they are to get the dollars 
of the Department of Commerce, let's make sure that we know 
that all of our technical assistance providers reach a basic 
benchmark of knowledge and then proceed from there.
    Without competence in culture and language and technical 
assistance, all of this outreach, again, is nothing but a false 
promise. Thank you.
    Ms. Meng. I yield to Ms. Clarke to introduce her witness.
    Ms. Clarke. Thank you very much, Ranking Member Meng, Mr. 
Chairman, and Ranking Member Velazquez.
    I would like to, Mr. Chairman, ask that my opening 
statement, as unanimous consent----
    Chairman Hanna. Without objection, so ordered.
    [The statement of Ms. Clarke follows:]
    Ms. Clarke. Thank you so much, Mr. Chairman.
    Mr. Chairman, it is my pleasure to introduce Bill Wilkins. 
Bill Wilkins is the director of economic development for the 
Local Development Corporation of East New York in Brooklyn. His 
responsibilities include but are not limited to managing 
several city and State economic development districts that are 
set aside specifically to bring investment, tax incentives, and 
employment opportunities to East Brooklyn.
    He is an active member of the board of directors of the 
Trey Whitfield School, former board member of the Minority 
Education Sports and Arts Organization, and a member of Berean 
Missionary Baptist Church, as well as Kappa Alpha Psi.
    A graduate of Syracuse University, he also has 
certifications from Harvard University, the American Banking 
Institute, and the New York City Department of Consumer 
Affairs.
    Without further ado, I would like to thank Mr. Wilkins for 
appearing today. We look forward to your testimony.

                STATEMENT OF WILLIAM S. WILKINS

    Mr. Wilkins. Thank you very much. Thank you to all of the 
members, and I am very pleased and honored to be here.
    As stated, I am the director of economic development for 
the Local Development Corporation of East New York. Since 1979, 
our principal mission has been to foster economic and business 
development in East Brooklyn and surrounding communities.
    Economic development is achieved when you have capital 
investment mixed with job creation or job retention. As a 
byproduct of capital investment and job growth in distressed 
areas, tax incentives and other programs like the SBA 504 and 
7(a) are incorporated into the equation to induce or incent the 
required result.
    Being in harmony and in accord with our business 
development team, the LDC engages in the seamless integration 
of a myriad of activities and programs that foster both short- 
and long-term economic business development benefits to 
Brownsville and surrounding communities.
    We are funded by the SBA administration through the Women's 
Business Center, and I give credit to Congressman Velazquez for 
having the insight and belief in our ability to administer 
programs that actually are helpful to communities in the 
forefront of creation of Women's Business Centers. We are one 
of the first designated in New York City.
    The SBA and the Women's Business Center actually provide us 
with the economic development tools in our toolbox to assist 
entrepreneurs and businesses.
    We promote and use both loan types in instances when 
clients are short on equity or undercapitalized. Both loan 
products are necessary and needed in the marketplace by virtue 
of creating additional flexibility to underwriting 
requirements. In other words, many deals that are essential to 
the marketplace would not get done unless both programs were in 
existence.
    Post-Superstorm Sandy, the turnaround time in processing 
loan applications has been taking longer than normal. But 
recently, we are starting to see an improvement.
    Secondly, I encourage the SBA to continue to explore ways 
to streamline their loan application and support documentation 
requirements.
    Thirdly, the SBA should continue to work with community-
based organizations that have boots on the ground to assist the 
marketing of SBA loan products.
    I would just like to speak to a couple of I think key 
factors that would have significant benefits to organizations 
that are actually working with, as Professor Moy stated, we 
have over a half billion minority entities that are functioning 
businesses. One thing that is paramount is to really provide 
capacity strengthening for community-based organizations. 
Organizations that have the required skill set and the 
benchmark, if we had a pool of money, whether it be $50,000 or 
$100,000, we could execute some of the deliverables that our 
city, State, and Federal contracts have and really start to 
assist and see some exponential benefits to those 
entrepreneurs.
    We need capacity-strengthening money. That is what we need. 
We know what we are doing. We have the capacity. We have the 
ability. But if we had more flexibility, I think that we would 
start to see immeasurable results.
    Secondly, I think that it is incumbent upon us to really 
take a step back and understand the entities and businesses 
that we are helping. Most businesses are family businesses, 
whether they are Fortune 100 or 500. You have the Heinzes, you 
have the DuPonts, you have the Rockefellers. It is the same 
thing.
    Our businesses, the money that is created in inception, is 
from friends, family, and acquaintances. That is the seed 
money, coupled with credit, that creates your seed money to 
engage in business.
    We on our side of the table provide the technical 
assistance to help these businesses to succeed. What we need to 
do, what we need to think about, is that we have a significant 
amount of home-based businesses that have reached the capacity 
of production in their homes. They don't have the capital to 
move into brick-and-mortar or to a commercial storefront. What 
we need to do is start to look at public land to create 
incubators for these individuals. The public land is sitting 
there. It is not generating any revenue.
    Right now, we are working on a project to create a retail 
incubator using cargo containers. Cargo containers are in 
Williamsburg, they are in Dumbo, they are in Manhattan in our 
more tony neighborhoods. We can also use this same concept in 
our at-risk communities because you are not going to have the 
startup costs.
    A cargo container is $2,500. You can retrofit it for 
another $2,500 or $5,000. If it is food related, then it is 
about maybe $15,000. So you can actually have a business start 
operating with the startup capital of only $15,000 or $20,000.
    And it starts to create economic synergy within the 
community, because then you have businesses who employ locally 
and people start shopping locally. That creates a microeconomic 
stimulus plan, because now the money is circulating within our 
distressed communities. That doesn't take hundreds of millions 
of dollars.
    We are starting this project actually with about $500,000 
from EDC and some foundation money, and we are going to have 
eight to 12 entrepreneurs and also about eight artisans and 
create studio gallery space where people start to take more 
pride in their community.
    This is happening in our more tony neighborhoods. It can 
also happen in our more distressed neighborhoods.
    In addition to that, I think that there is a need for more 
money for marketing, for our Women's Business Centers, and 
SBDCs.
    As Professor Moy said, we have over a half billion 
entities. A lot of individuals don't know we exist. We need 
money to really get the word out from a grassroots level that 
we are there, that we are competent, and there should be 
standards. There should be benchmark standards for the delivery 
of service, because we need some sort of accreditation.
    In addition to that, right now, we are working and using a 
model from the hub zone to have a designation ``Made in 
Brooklyn.'' Brooklyn is hot. We are experiencing a 
Manhattanization of Brooklyn, and we are also at looking at 
some of the standards from the hub zone as it relates to the 
address of the business, and also the address of the employees, 
to use that as part of one of the requirements to have this 
distinction as ``Made in Brooklyn.''
    Lastly, I would just like to end with procurement, because 
in coming to meetings that are held, and there are always, on 
the city, State, and Federal level, you need to do business. It 
is extremely daunting to do business with government. We rolled 
up our sleeves and we tried.
    As a matter of fact, it was at my encouragement that I had 
a business actually secure a very small contract with the 
Federal Government. We made the widget. We are fine with it. To 
send our finished product to the Government, the book is about 
3 inches thick as to how this Federal agency would accept this 
end product. We then had to use a subcontractor to even ship 
our finished product. And we said, you know what? It really 
just isn't worth it.
    Thank you very much.
    Ms. Meng. It is my pleasure to introduce Ms. Michele Chang, 
the acting chief of staff at the U.S. Small Business 
Administration. Ms. Chang works alongside the SBA administrator 
and deputy administrator. She oversees the day-to-day 
operations, personnel, and decision-making processes at the 
agency.
    Previously, Ms. Chang was an engagement manager with 
McKinsey & Company, a global management consulting firm. I had 
the pleasure of hosting her at the Business and Leadership 
Summit in D.C. where 60 constituents and small-business owners 
listened to her valuable advice.
    Thank you and welcome, Ms. Chang.

                   STATEMENT OF MICHELE CHANG

    Ms. Chang. Thank you, Chairman Hanna, Ranking Member 
Velazquez, Ranking Member Meng, and Congresswoman Clarke. Thank 
you for inviting me to testify today.
    It is an honor to be here in New York to discuss SBA's 
ongoing efforts to increase access to capital, counseling, and 
contracting opportunities in underserved communities.
    We commend the Subcommittee for highlighting this important 
topic and are grateful for your continued leadership and 
support.
    America's 28 million small businesses are the engine of our 
economy and one of our country's greatest assets. They employ 
half of the private sector workforce and create two out of 
every three net new private sector jobs.
    At the SBA, we are committed to ensuring that all 
entrepreneurs, including those in underserved communities, such 
as minorities, women, veterans, people with disabilities, and 
those in urban and rural areas, have the tools they need to 
grow their companies and create jobs.
    According to the Urban Institute, SBA-guaranteed loans are 
3 to 5 times more likely than conventional loans to go to 
minority- and women-owned businesses. We are working to fill 
existing market gaps for underserved communities across the 
board, with both microloans and smaller dollar loans.
    While we have already expanded and simplified our Community 
Advantage program and streamlined our signature Small Loan 
Advantage program, we are constantly looking for more ways to 
make it easier and cheaper for entrepreneurs to reinvest in 
their businesses. That is why this past October, we reduced 
fees to zero for borrowers and lenders for all 7(a) loans $150 
and less.
    Due to these efforts, SBA has supported over $126 billion 
in lending to more than 260,000 small businesses and 
entrepreneurs since 2009.
    However, a loan can only take an entrepreneur so far. Our 
data shows that small-business owners who have long-term 
counselors are more likely to hire, grow, and increase revenue.
    To help make that happen, we have an extensive nationwide 
network of 900 Small Business Development Centers, over 100 
Women's Business Centers, and 12,000 SCORE volunteers. Last 
year alone, these resource partners counseled and trained more 
than 1 million small-business owners across the country.
    Building on our current efforts, President Obama's fiscal 
year 2015 budget invests $7 million to support our successful 
Boots to Business initiative, which offers transitioning 
servicemembers intensive entrepreneur training through the TAP 
program. Boots to Business is expected to reach an estimated 
25,000 veterans across all military branches.
    In addition to our capital and counseling programs, SBA 
works to level the playing field for small businesses to access 
Federal contracting opportunities. Each year, the U.S. 
Government spends about $400 billion in contracts. And it is 
SBA's job to ensure that 23 percent of those dollars go to 
small businesses.
    We are continually working to make sure that our minority, 
women, and veteran contracting programs are effective. In fact, 
we launched a pre-8(a) business development training series to 
help potential 8(a) firms prepare for success in the program. 
And we established the government contracting classroom, which 
is an online tool geared toward underserved communities.
    As a result of these efforts, during the first term of the 
Obama administration, small businesses accessed more than $376 
billion in Federal contracts. That is $48 billion more than the 
previous 4 years combined, even as overall contracting spending 
decreased during those years.
    These programs and initiatives enable us to continue 
supporting underserved entrepreneurs like Tony Baird, the 
recipient of SBA's 2013 Veteran-Owned Business Achievement 
Award.
    With the help of our local resource partners in Syracuse 
and an SBA-guaranteed loan, Tony was able to leverage his 
experience in the U.S. Army to launch a successful electronics 
startup. Tony Baird Electronics has since been able to pursue 
higher value contracts with the Federal Government.
    This is a perfect example of how SBA's capital, counseling, 
and contracting programs enable underserved entrepreneurs to 
pursue their dreams of small business ownership.
    Under this administration, SBA has become more accessible 
and created more opportunities for underserved entrepreneurs 
than ever before. We have been able to achieve this by 
connecting need with opportunity, forging new relationships 
with lenders and community organizations that can help us 
better serve the small businesses.
    We have formed partnerships with organizations such as ACE, 
which is represented today by Bill Imada, as well as the U.S. 
Black Chamber, the U.S. Hispanic Chamber, Women Impacting 
Public Policy, the National Minority Supplier Development 
Council, and the National 8(a) Association.
    These strategic alliances enable us to leverage our 
partners' nationwide networks and connect us directly with the 
communities they support.
    While we are proud of all that SBA has accomplished 
alongside this Committee, we must continue to be diligent in 
our work to support underserved entrepreneurs. We know that 
with the right tools, small businesses in these communities can 
have significant impact in driving economic growth and creating 
jobs where they are needed most.
    Thank you again for having me today, and I am happy to 
answer your questions.
    Chairman Hanna. Thank you all. Thank you very much. You are 
great advocates.
    I am going to turn over the first questions to Ranking 
Member Meng.
    Ms. Meng. Again, thank you to all of our witnesses for your 
important testimonies.
    My question is for Ms. Chang. What is SBA doing to make 
sure its programs and services are cost-effective? And, 
alternatively, if our other three witnesses could talk about 
what you think the SBA could do to make sure its programs and 
services are more cost-effective?
    Ms. Chang. Thank you. Every day, we are trying to figure 
out how we can make sure we are using taxpayer money most 
effectively.
    The primary focus over the last 4 years is to make sure we 
are streamlining our programs and our processes as much as 
possible.
    For example, one of our main focuses over the last 4 years 
was looking at our loan programs. In the past, our 7(a) and 504 
applications were quite extensive, quite long, and it was quite 
burdensome, not only for small businesses, but also for banks. 
Over the last few years, we have taken a very fine toothcomb, 
going through all the different paperwork and really making 
sure we are really distilling it just down to the paperwork 
that really needs to be done.
    So we have taken a number of efforts to streamline various 
numbers and processes not only in our capital programs, but 
also in our SBIC, our SBI programs, and also our Federal 
contracting side.
    We are always working with community leaders, also, to 
understand what more we can do. So we are excited and we went 
to learn more about what people are hearing on the ground and 
what more we can do to help.
    Ms. Meng. Anyone can start or chime in.
    Ms. Moy. In looking at finances, I would advocate for 
greater investment. It is important to make things more 
efficient. It is important to look at metrics and so on. But 
without the all important initial investment, we, in fact, wind 
up losing.
    For example, if we are not paying our small business 
development counselors sufficient salaries, so that they are 
able to be retained over time, we lose them. And I think many 
of us have seen the statistics. It costs almost 60 percent of a 
person's salary to replace them when you look at starting from 
scratch with benefits and contributions and things like 
unemployment insurance, when you look at the ramp-up time, et 
cetera, and the loss of time, in terms of counseling clients.
    So I think we have to look at how we are funding these 
centers and making sure that the investment is adequate. And 
then I think you will see a return on investment.
    And then, with regard to metrics, the way that we measure 
things is somewhat interesting. It is important to count the 
number of clients that come in the door. It is also important 
to count the number of clients who have left and not come back. 
Retention is extremely important.
    Again, the investment makes the difference in whether we 
retain and ultimately graduate, if you want to use that term, 
successful entrepreneurs.
    Mr. Imada. I would have to agree with Ms. Moy that you get 
what you pay for. So it is very important that when you are 
hiring professionals at the SBA, that you hire professionals 
that are going to stay. So I do think retention is an issue, 
because when the community gets used to one or two people, and 
those people leave, then the SBA has to start all over again 
from scratch.
    I also recommend very strongly, and we have been partnering 
with the SBA, who has been very open about this, is to work 
with some of the alumni and get the mentors, for instance, from 
the 8(a) program early, and get them to help counsel some of 
the new businesses that are coming in. And I think that that 
should be a little bit of a requirement of anybody that 
qualifies for some of these loans or gets in the 8(a) program, 
that they are mentoring the next generation of small 
businesses. And that would help immensely, because I think most 
people would trust another small business person that has gone 
through this process.
    But I do have to applaud the SBA for the 7(a) program, 
because that is one area that we think is critically important, 
to provide lending at microloans as opposed to some of these 
bigger loans, which are a lot more attractive to the SBA 
lenders, but to give more of these microloans to these 
startups, because this is, typically, what they want.
    Ms. Meng. Mr. Imada talked about the need for more SBDCs 
throughout the country in certain communities, and many of you 
talked about the importance of culturally competent staff at 
the centers.
    In Queens, we have two SBDCs. Do you believe that they are 
currently sufficiently equipped? And how could they be 
improved?
    Ms. Moy. I do know the SBDC system in Queens quite well. 
There is one at LaGuardia Community College, and then there is 
one in York College in the southern part of Queens. Both of the 
centers, I believe, are heavily utilized.
    But I also believe that both centers could use augmentation 
in terms of their budget and staffing. It may not be 
necessarily a path to set up a brand-new SBDC, but, certainly, 
there should be extensions of the current SBDCs, again with 
additional staffing and additional funding, that could service 
communities.
    When you have heavy concentrations of small business 
owners, such as you do here in the Flushing area, for example, 
and a particularly close with community, it may warrant a 
specific SBDC with language capacity or a specific satellite of 
an SBDC with language and cultural capacity.
    Mr. Imada. I would say it is important to have a new 
center, provided that the hours are different. Part of the 
complaint the small business community has is that these 
centers run regular hours. But when you are a business, a 
Dominican business or a Korean business or a Chinese business 
or a Haitian business or a Russian business, you work 80 hours 
a week. And so coming to the center at 10 o'clock or 1 o'clock 
isn't always possible.
    So it would be great, if we open another center in the 
Queens area or in Bronx or in Brooklyn, that it has staggered 
hours, because some of the business owners would like to arrive 
and get the counseling later in the evening, as opposed to 
during regular business hours.
    So I would encourage that, if you do that, to not only put 
some resources behind it, but to look at staggering the hours 
so that more people could take advantage of these development 
centers.
    Ms. Chang. Just one point of clarification, the Small 
Business Development Centers are SBA resource partners, so 
technically, their employers are not SBA staff.
    However, we work very closely with them to make sure that 
they are representing the communities that they serve.
    One point I would like to also address, Mr. Imada's point 
about making sure we are being responsive to small business 
owners. We understand, a small business owner, it is a hard 
job. You work all hours of the day. It is your lifeblood. Any 
hour is fair game.
    So one of the things that we are doing at the SBA to try to 
be more cost-effective is to provide more training and webinars 
online that are accessible at any hour of the day. We 
understand that it is not the same as an in-person touch, but 
it is something that we have been trying to do to make it a 
free, easy way for folks to get access to free counseling.
    We have what we call the Online Learning Center, which has 
a number of different webinars and training tools that help 
small businesses learn about not only the services SBA 
provides, but also basic questions about how do I build a 
business plan, how do I find financing. So we encourage folks 
to check that out at SBA.gov
    Ms. Meng. Thank you.
    Before I yield to Congresswoman Velazquez, I would just 
like to echo the sentiments of Mr. Imada and would welcome, I 
believe, with many of our constituents and small businesses, a 
center within the Sixth Congressional District.
    Thank you. I yield back.
    Ms. Velazquez. Thank you, Mr. Chairman Hanna, and 
Congresswoman Grace Meng, for the incredible job that you are 
doing as ranking on this important Subcommittee, and 
Congresswoman Clarke, a very active member of our Committee.
    This Small Business Committee is one of the few that really 
work in a bipartisan way. Just last week, we reported out seven 
bipartisan bills, and I am proud of the work that we do, 
because we really understand that there is no Republican or 
Democratic approach to deal with issues that are important to 
small businesses.
    And the work that small businesses do is very important for 
our economy, particularly at a time when our economy continues 
to struggle. We know that small businesses are the job 
creators. So if we want the economy to grow, we have to create 
jobs. But in order for small businesses to create jobs, there 
has to be a climate that is conducive for businesses to do what 
you do best.
    The face of small businesses in America is changing. There 
are more women. There are more brown faces. There are more 
Asians. There are more immigrants.
    And so we need to bring the Small Business Administration 
to its core mission, and that is to help small businesses 
either access credit or capital, at a time when financial 
lending since 2007 has been ineffectively providing capital to 
small businesses, because credit standards are being tightened. 
And yet even those who partner with SBA, because SBA doesn't 
make loans, SBA partners with those financial institution.
    One thing that SBA needs to get into its mentality is ... 
what are the types of capital that we need to focus on? Are 
those the big loans, the $5 million loans, the $7 million 
loans? Or microlending?
    For immigrants and for those startups, the portfolios show 
that it is between $50,000 to $250,000. When we do not demand 
that banks make those smaller loans because they are not 
profitable, that is a disservice. And so we expect for SBA and 
the new administrator to focus more on those types of loans.
    In terms of procurement and accessing the federal 
marketplace, for years, as ranking member of the Small Business 
Committee, and as chair of the Small Business Committee, I took 
it upon myself to put together a scorecard grading all the 
federal agencies on whether or not they fulfill the contracting 
goals set up by Congress.
    When some in the administration said that yes, they 
achieved the 23 percent, we discovered through investigations 
conducted by GAO that those contracts they said were given to 
small businesses were miscoded and given to big businesses.
    I am really excited about the fact that under President 
Barack Obama and the previous administrator, she instituted, 
she adopted my scorecard. And for the first time this year, we 
are seeing that it might achieve the contracting goal of 23 
percent for small businesses.
    Look, it is the largest purchaser of goods and services in 
the world, the federal government. So it is a market for small 
businesses, and we have to make sure that there is a level 
playing field and that the federal government's message to 
small businesses is that we are open for business, and we want 
small businesses to participate in the federal marketplace. 
Because when you do, we all win.
    Competition is good, even for the government and for 
taxpayers, because no one produces and provides better services 
than small businesses. Even the private sector, corporate 
America, turns to small businesses to be able to provide the 
work that they need.
    So I am happy and expect the new SBA administrator to 
continue to focus on making sure that all the federal agencies, 
starting with SBA, because it will be quite embarrassing if we 
produce a report that shows that even the SBA--that used to 
happen before--didn't comply with the statutory goal of 23 
percent.
    In terms of SBDC, I agree with you.
    Ms. Moy, you have experience. You know what works, what 
doesn't work, with the Small Business Development Center. I 
believe that is one of the most important investments that we 
make in the federal government.
    For every dollar that we spend in services that we provide 
through SBDCs, the government gets $2.62 in tax revenues. So it 
is a great investment.
    You are right, we need to have more staff. We need to pay 
better. Otherwise, we are going to train them and they are 
going to leave. What we need to do is not cut like we did, that 
the administration proposed cutting--I don't even remember the 
amounts--but proposed cutting the funding for SBDC. My reaction 
to the administration is don't cut the funding to those 
institutions and those partners that have a proven record, that 
have been tested, just because we want to create pilot programs 
that have not been authorized by us, that are untested, and 
that do not have a track record.
    Just last week we passed legislation, my legislation, that 
will prohibit the creation of any pilot project that has not 
been authorized by Congress. And use that money to fund SBDCs 
that have a proven record in their communities.
    So my question, based on my comments, to Ms. Moy and Mr. 
Imada, do you believe that, in terms of the needs for 
businesses, immigrant businesses, is it the big loans or the 
smaller loans that SBA needs to focus on?
    Ms. Moy. I would agree with you, Congresswoman Velazquez, 
that it is the smaller loans between $50,000 and $250,000 that 
will really seed the capital that is needed by these smaller 
businesses and will allow them to grow to the next level.
    There are a lot of services for the startups, not enough 
service and concentration on these growing businesses for whom 
the $50,000 and $250,000 would be particularly important.
    I also want to take the opportunity to just clarify 
something about my comments. I do agree that a Small Business 
Development Center right here in a location such as Flushing is 
extremely important. But my comments about the possibility of a 
satellite office was based partly on my fear that funding would 
be taken away somehow from the two existing centers, which are 
extremely needed.
    But a third center in Queens, particularly with Asian and 
Hispanic language capacity, is urgently needed as well.
    Mr. Imada. I would have to say that we need to have both 
loans, and I will tell you why we also have to have the larger 
loans. It is that it is very important for us to create jobs. 
And so some of the successful businesses, they are making $10 
million, $20 million, $30 million per year, but then they hit a 
wall.
    So a lot of these women-owned businesses, in particular, 
they are very successful, they have done extremely well over 
the years, but they ultimately get to this place where they 
don't know how to scale up their business, and that is where 
they need a loan. So I do think that once those minority 
businesses do well, particularly women minority businesses, 
then we need to have some system in place where they can get 
those loans.
    But I am also concerned about the smaller organizations, 
because we have a lot of organizations that come here, a lot of 
minorities coming from all over the world, and they just need a 
break. And most of the lending institutions, even if they are 
preferred lenders and are supported by the SBA, they still have 
to come up with a certain level of personal collateral. And 
many of these small businesses don't know how to do that.
    And as Ms. Moy said, when they are going to these centers, 
if there is no one who can speak Espanola, or Korean, or 
Chinese, or even some of the language out of the Caribbean and 
Eastern Europe, then they can't get access to that information, 
because most of these lending institutions do not provide that 
support.
    And even worse, when they are turned down for loans, there 
is no one there to explain why they didn't get the loan and 
what they need to do in order to get it. So I think it is both.
    Ms. Velazquez. Thank you.
    I yield back.
    Chairman Hanna. Thank you.
    Ms. Clarke?
    Ms. Clarke. Thank you very much, Mr. Chairman. Let me add 
my voice in thanking you and Ranking Member Meng, as well as 
the ranking member for the full Committee, Ms. Velazquez, for 
holding this field hearing in here in New York City.
    We have a very unique business climate here in New York 
City, and I think it can serve as a model for other regions 
that have the diversity that we have here in the city of New 
York, in terms of our entrepreneurs.
    One of the things that I would like to raise with you, Ms. 
Chang, and just get feedback from our panelists about, is the 
whole idea of cultural competencies. I think that it is a 
scenario where we are actually losing money, losing 
opportunity, because we are not able to create the nuances 
within programs, agency policies and procedures, that capture 
the full breadth and depth of entrepreneurial spirit that 
exists within our communities.
    And I was taken by Ms. Moy's testimony about cultural 
competencies in the agency itself among its executives and its 
professionals, and how we address that in a way in which it 
doesn't take us beyond the mission of the agency, but enhances 
the mission of the agency in the regions in which SBA operates.
    I think if we break it down to sort of the microlevel and 
look at how our partnerships with our community-based 
organizations, and our collaborations, are just that, 
collaborations. It is one thing to offer the Local Development 
Corporation of East New York a contract to do some services, 
but as Bill has stated, it is another thing to truly partner 
and look at the resource allocation and how those connections 
are made to be effective on the ground in the communities that 
we operate in.
    So I would like to ask the panelists, in your experience, 
without any major law or regulation having to be changed, what 
are some of the nuts and bolts, or nuanced ways in which you 
would like to work with the SBA?
    Bill, do you want to start?
    Mr. Wilkins. Yes, I can weigh in on that. I think it 
touches on a previous question that the member raised as far as 
cost-effectiveness. One of the difficulties that we encounter 
is the human hours spent with reporting with the documentation. 
We just went through, actually, an audit and there is a 
constant interaction with our office, with SBA, and it is 
positive. But on the reporting side, because, as you know, the 
director of the Women's Business Centers, they have to be 
vetted. Our director spends a considerable amount of time on 
the reporting of interface with SBA. This is a very bright 
woman, an MBA who is extremely proficient as far as her 
technical assistance and being a counselor. We find it 
extremely effective when she can teach.
    When she is able to teach and we are not doing the one-offs 
anymore, we do trainings for a multiple of people, whether it 
be QuickBooks, whether it be marketing, whether it be using 
social media. So now an hour or two that she spends on 
reporting, that hour or two can actually help 20 or 30 
individuals in the classroom.
    So to come back to the point of cost-effectiveness, I think 
that is very important.
    To Congresswoman Velazquez, we have to have SBA play in the 
micromarket. As you know, banks, it is just not profitable. We 
have to figure out ways in which we can go back to something of 
the '60s or '70s and go to character lending. Direct lending, 
character lending with the support, and I am trained by 
Professor Moy as far as credit, and we know the ins and outs. 
Actually going through one of her trainings, we were taken 
aback by the skill set, inherently the skill sets of the people 
who were taking her curriculum, and sending these people out 
into the marketplace as professionals. They really didn't have 
that type of background. The curriculum was great. It was a 
great manuscript. But they didn't really have the skill set to 
really advise someone on something as important as credit.
    I mean, credit is essential for all of us. It is a 
beginning framework to really manipulate yourself through the 
marketplace so you not paying more than what you have.
    What I find is that our ethnic communities have come up 
with their own solutions. Whether it be a Caribbean with the 
susu, whether peer lending. Also hard-money lending, I recently 
had one of our businesses on Jamaica Avenue, an apparel 
manufacturer, borrowed about $18,000 from a hard-money lender. 
He was paying about $250 interest a month. So I was thinking, 
well, you borrowed $18,000; you're paying back $22,000, we then 
invoked City National Bank into the equation, which actually 
gave him a line credit and also a credit card. And now he is 
able to sustain himself during his down period.
    So I think that we have to look at the nuances. We have to 
look from not the top down but from entrepreneur, and also from 
the vantage point--it was stated that an entrepreneur spends 
about 80 hours a week in their business. It is very difficult 
to pull these people into our centers for training. It is an 
interesting dichotomy, because you have ownership and you have 
rank-and-file. There is no middle management.
    When you leave the shop, you are not talking to your 
vendors, you are not talking to your suppliers, you are not 
producing for your customers. Their time is invaluable. So we 
have to make sure that our approach is insightful, and it is 
extremely valuable that we are able to penetrate.
    What we do is a before-business breakfast so that way 
everybody can be at their desk by 9 o'clock, or open the store 
at 9, so we look at that 7 to 9 o'clock in the morning to 
really provide the training that the business community needs.
    Ms. Clarke. So the question is, is this a 21st century 
model? We are sort of hardwired on the 9 to 5 as employees, 
oftentimes, but the entrepreneur is the element that we are 
trying to focus on. So how does our agency respond to the world 
of the entrepreneur that doesn't transpose an employee's 
template on top of them. Because if our workforce is working 9 
to 5 and the assistance that is needed is needed either before 
9 or after 5, then it almost becomes a daunting task for those 
individuals. And those individuals that don't get help when 
they need it, it is too late after the fact. They are out of 
business.
    Would you say, Ms. Chang, that there is a desire within the 
agency to embrace some nuances, and to work with community 
based, with our organizations that are focused on business, to 
create the space for these nuances?
    Ms. Chang. I would say absolutely. This is something that 
we strive and work to do every day.
    And I think what you all are highlighting is the same thing 
we are struggling with every day. How do we, as a Federal 
agency, continue to stay nimble and innovative, and keep up 
with the changing population that we are serving, which are 
small businesses?
    And as you rightly highlighted, they are an evolving 
population, which is often changing. So we are always trying to 
make sure that we are keeping a pulse of what is on their 
minds, how do we make sure that we are serving them 
appropriately.
    So conversations like this are extremely helpful. What has 
also been helpful for us is that some of our partnerships that 
we have done with very community-based focus groups. I 
mentioned the Chambers that we have partnered with, and through 
those partnerships, we have partnered with their local chapters 
within all the different communities. And we really do rely on 
those partnerships to help us make sure that we are not losing 
sight of what people are really experiencing on the ground. I 
think it is very easy for folks to think in D.C. that you are 
not thinking what is happening on the ground. But that is what 
why it is so important for us to utilize our field network, our 
resource partners, as well as these partnerships, so we can 
continually make sure that our services are providing the need 
that people need.
    Ms. Clarke. And is there a place in the agency where you 
can actually do an analysis of practices, and whether, in fact, 
these practices have yielded far more in terms of business 
assistance than perhaps a previous practice has?
    Ms. Chang. That is a great question. And we are very fact-
based, data-driven agency. We try to make sure that, whenever 
possible, we are making policy and programmatic decisions based 
on facts.
    There actually is the SBA's Office of Advocacy, which is an 
independent office of the SBA, which is mandated with doing 
research and analysis of what are the changing trends within 
the small business community. So that seems like a natural fit 
for that office.
    And I am happy to bring this back to those folks and say 
this is a pressing issue.
    Ms. Clarke. We actually have a representative sitting here 
with us. Ms. Teri Coaxum is here from the Office of Advocacy.
    And it is great that that independent office exists. What 
becomes even greater is if their findings find their way into 
policy.
    Ms. Chang. Absolutely.
    Ms. Clarke. Because at the end of the day, we should not 
come here again next year for a field hearing after receiving 
this information without there being some steps taken to verify 
the facts that have been presented here today, and then make 
the necessary adjustments to address these very concerns. 
Because if they are concerns here, they are concerns in other 
parts of the country as well. And perhaps there are 
environments similar to ours, in terms of entrepreneurship, the 
markets, that can benefit from what we have learned here today.
    So I wanted to share that with you.
    And just one final question, Mr. Chairman, if you will just 
indulge me, because I want to talk about the credit markets. 
That has been something that has just been so devastating for 
so many entrepreneurs, so many families, because, quite 
frankly, we are all counting on the market and entrepreneur to 
be the breadwinners for our families.
    As the credit market begins to loosen, are you noticing any 
difference in those who come to you seeking assistance, or have 
you begun to see a return to normal credit markets? I am just 
going to put that out to the entire panel.
    And I yield back after their answers, Mr. Chairman.
    Ms. Moy. First, I want to commend the SBA for its 
partnership outreach in working with the Hispanic Chamber and 
the other ethnic Chambers, for example. But that is not a 
substitute for providing substantive day-to-day technical 
assistance, because, again, many of these Chambers do wonderful 
work. They are great in terms of convening conferences and 
seminars, and so on. But they are not in a position to 
handhold.
    Many of these Chambers are made up of volunteers, or they 
are made up of very small staff. So that again is not a 
substitute for funding and total and complete support for 
organizations like the LDC of East New York who do the day-to-
day hard, grappling work.
    And then secondly, in terms of the credit markets, I think 
that over the past several years, entrepreneurs have taken a 
tremendous beating. They have, more than ever, relied on credit 
cards and other things to fund their businesses, to keep the 
cash flow going, to try to hold on until the economy turns.
    And so the course that Mr. Wilkins mentioned is a class 
that I have done for over 300 counselors who are embedded with 
community-based organizations throughout New York City. And the 
kind of credit reports that we are seeing show people whose 
credit has been battered.
    And I am wondering whether or not there is a way to help 
underwriters begin to look at shorter credit histories, going 
back 3 years instead of 7. That could actually help to turn the 
tide, because I think if you look at a business, and you see a 
positive trajectory, a constant increase in credit--in other 
words, their credit scores are getting better over a 3-year 
period of time--that might in fact enable these people to 
access credit where they can't, because the credit reporting 
agencies bury these people in 7 years of bad history.
    Mr. Imada. I would have to agree 1,000 percent with Ms. 
Moy, because when I started my own company, it took me 7 years 
to convince a lender that I was worthy. And most businesses do 
fail, a lot of businesses do fail within the first 2 to 3 
years. But once you pass that 3-year threshold and you have a 
positive cash flow, even if you have a little bit of a negative 
credit rating, there should be a little bit more access to 
credit from the banks, particularly from the preferred lenders 
that support the SBA program.
    One thing I wanted to mention about what Bill had to say, 
and what Ms. Chang had to say, is that it would be great if we 
could get more people in the SCORE program. The SCORE program 
is excellent, but we need to get more people that graduate from 
the 8(a) program, more corporate executives who are people of 
color.
    And one area where that might happen is a lot of these 
lenders actually have employee resource groups. And to get 
those employee resource groups, the African-American, the 
Latino, the Asian, the disabled, the veteran resource groups, 
to serve as mentors for these small businesses, I think that is 
a really good place to get the corporations involved, get 
businesses involved, to help support these businesses in the 
community.
    Mr. Wilkins. Just to weigh in, I think, as far as your 
question as it relates to the credit markets, it is an 
interesting dynamic, because I think our first-tier lending 
institutions have sort of ignored the market unless you are 
really a middle-market client. We have the secondary lenders, 
whether it be Project Enterprise, Accion, and other community-
based credit unions, they sort of fill the void and also the 
SBA.
    But the paradigm is that businesses fail because they are 
undercapitalized. They don't have enough money. And the first 
thing that suffers is your credit.
    And then you go to lending institutions that are looking at 
your credit. And they are going to feel that they can't help 
you.
    Prior to that, the businesses, the principals had a 700 
credit score, and they were flush with cash. The issue is that 
that money was not married with institutional money being bank 
money. That is the problem, because there are always mitigants 
to getting started.
    And you think that your cash register will start to jingle 
after 3 months, and it takes you then 7 months to get your 
permits from the Department of Buildings. You don't have enough 
of a buffer to sustain that extra 4 months of paying a lease 
and paying employees and utilities because you don't have the 
cash flow.
    And because now you don't have the cash flow, you don't 
have the ability to market and be successful.
    So I think what is needed is that, institutionally, we have 
to start looking at more creative credit opportunities, because 
if you have an individual working 80 hours a week doing 
something, I think they are going to be successful. We need to 
have money to support these individuals and look at it 
differently, especially when we are working in distressed 
communities.
    Chairman Hanna. Thank you.
    Ms. Meng, do you have a question?
    Ms. Meng. Just a final question for all of our panelists. 
If you could come up with a wish list for SBA, what are some of 
your biggest challenges, and how could Congress be helpful in 
the imminent future?
    And to our other panelists, what are some ways that Federal 
agencies can immediately advertise or better market their 
services, in your opinion? How can they do even better?
    Ms. Chang. We probably want a lot of things on a wish list, 
but I think some of the things that you highlighted today are 
really what we are trying to figure out. How do we make sure 
that we are continuing to evolve and be able to stay up with 
the changing needs of small businesses?
    So some of the different things that we at the SBA have 
looked at are different ways to make sure that we are 
tailoring, particularly our entrepreneurship training program, 
to different segments of the group.
    So as you will see in President Obama's fiscal year 2015 
budget, in there are a number of requests for very specialized 
entrepreneurship training. I mention the Boots to Business 
program that we have highlighted. We also have training around 
entrepreneurship education, which traditionally has been known 
as our emerging leaders program, which is an intensive mini-MBA 
type course for existing small businesses.
    We would love to make sure that we are able to continue to 
provide these services to small businesses across the Nation, 
and we have always enjoyed the support of this Committee and 
look forward to that going forward.
    Ms. Moy. Since access to capital is so critical for small 
businesses, I would like to look at whether or not a fund could 
be created specifically in the $50,000 to $250,000 range, where 
the underwriting criteria could be loosened a bit, providing 
that people in this program are paired with technical 
assistance. So that when they apply for the money, they work 
through very carefully as to how that money will be applied, 
because a lot of the problems, for example, that Mr. Wilkins 
cited were really cash flow problems. They didn't have 
sufficient reserves in the beginning, and so forth. And we have 
seen programs where people working with technical assistance 
providers learn to apply the funds in the right way, so that 
they don't blow through it, putting it all into marketing when 
there are other things to balance in the business as well.
    So again, a small fund that could provide these amounts, 
helping them to build credit. There are things in New York 
City, for example, called credit builder loans where somebody 
could borrow--well, actually, the amounts are quite small, 
$300. The amount of money is actually put into a bank account 
and each and every month, the payment is drawn from that, so 
that these folks have a track record of perfect payments for a 
period of time, like 1 year, and it helps to rebuild their 
credit.
    So something of that nature that can help a business owner 
quickly ratchet up and better his credit will then allow him to 
go and connect back into the traditional banking world.
    Ms. Velazquez. Will the gentlelady please yield?
    Ms. Meng. Yes.
    Ms. Velazquez. Ms. Moy, why is it that you don't believe 
that the microlending program fits the bill? It is a 
combination of capacity building, plus money from $500 to 
$50,000, and in some instances to $100,000.
    And it is a very effective program. In fact, it has the 
lowest default rate of only 2 percent, and 62 percent of those 
microborrowers are women, where we fill an incredible vacuum, 
because when you talk about access to capital, women are really 
shut out of the financial institutions.
    Ms. Moy. So I do believe that the microfunding programs 
have been very effective. And programs like Accion that look at 
nontraditional criteria for making loans, such as paying rent 
on time and so forth, the kinds of things that the traditional 
banks may not look at, have been extremely effective.
    But I think that the rapport and the technical assistance 
have to be paired, and that this relationship is an ongoing 
relationship, so it is not the kind of relationship where you 
go to the technical assistance provider to get through the 
crisis, and then you don't come back.
    The point is to have the relationship established at that 
point, and then for it to continue, so that we can make sure 
that these businesses get to the next level, because to fund 
them, and allow them to stabilize and then to watch them fail a 
year or two later, is not what we are looking for. We are 
looking for that sustained growth.
    Ms. Velazquez. But in the order for them to go to the next 
level and get a larger amount, they have to continue to go 
through technical assistance.
    Ms. Moy. I think that would be key to success, because, 
again, they have to be able to develop the skills necessary to 
move on to the next level. These classes like the mini-MBA 
training is exactly the kind of thing they need, but we have to 
stabilize the business to the point where they can step away 
from the business in order to acquire those skills.
    Mr. Imada. My wish list is very simple. I think that what 
would be great is to have more of the successful businesses 
come back and mentor the community. I do think that the access 
to the microlending is critically important.
    But I also think that some of these Dominicans and 
Nicaraguans and all these people that are starting businesses, 
Koreans and Chinese and Russians, they don't necessarily want 
the Government to help them, but they want to know that the 
Government is behind them if they need support.
    So the microlending is important. Give them the tools and 
the apparatus to be able to manage that. Give them the tools 
and apparatus that is within those communities where they can 
have mentors. And the SBA should be looked at as a convener, a 
convener of talent, a convener of information, a convener of 
access to different types of lending programs and technical 
assistance, if they want. And that requires a lot of patience, 
some partnerships, and some people who are culturally 
interested in these communities and are aware of what their 
needs are.
    Mr. Wilkins. As far as my wish list, I will just highlight 
the fact of the capacity-strengthening grants maybe can be 
proportionate to what the Women's Business Centers or SBDCs 
receive. I think that we would start to actually experience a 
significant growth in being able to help entrepreneurs.
    Secondly, as we look to streamline applications for the 504 
or the 7(a), also to streamline the reporting requirements for 
these centers. It really takes a considerable amount of human 
hours to be able to address some of the deliverables that we 
have, which are important. But we need to be able to streamline 
it.
    Thirdly, the underwriting criteria and personal guarantees 
for SBA have to be looked at. We recently went through an 
experience with a very successful business in Coney Island, 
actually. I am not going to say their name. But basically, they 
had the capacity to do all of the rehabilitation for their 
business post-Superstorm Sandy, about $2 million. On the back 
end then, they were trying to receive a loan from SBA.
    There were seven equity owners. Four of them, their assets 
were about $17 million. SBA was dogged for the fact that they 
wanted all seven to sign. The three minority equity holders 
really were not involved in the business, and they didn't want 
to pledge personal guarantees.
    That particular loan was overcollateralized. They only 
needed $2 million. The four people with assets were about $17 
million. It took us about 2 to 3 months to go through this. And 
this is after you have a victim of Sandy.
    So we need to look at some of the underwriting criteria, 
because it creates a disdain for the SBA that is not deserved.
    Ms. Meng. Thank you. I yield back.
    Chairman Hanna. Thank you.
    Mr. Wilkins, Mr. Imada, you mentioned the lack of personal 
collateral is a problem to start up a business.
    Mr. Wilkins, you spoke of character loans. You also talked 
about additional flexibility.
    Ms. Chang has a responsibility to see to it that this money 
is paid back, that the Government's risk is at a minimum. So 
knowing that there is a large default rate with small 
businesses, startup businesses, and Ranking Member Velazquez 
mentioned the 2 percent loss rate for the microloans, how do 
you reconcile Ms. Chang's responsibility to see to it that she 
does her job and the public trust is respected, and Mr. 
Wilkins' notion, and I am not faulting it, that somehow we have 
character loans?
    And we have people with no equity, and yet we all want to 
grow businesses, that all sounds wonderful, right? But how do 
we do that in a world that protects Ms. Chang from not writing 
a bunch of bad loans, and Mr. Wilkins who would like to see 
people with very little equity, but good character, hardworking 
people, get a business, and you who have people with no equity?
    I was in business for 30 years. That is a tough recipe for 
Ms. Chang. So what do we do? Do we increase the loss ratio to 5 
and accept it?
    I am just interested, especially from Mr. Wilkins, because 
I sympathize with you. However, I don't see how we can just 
hand money out to people based on character. Character is 
important, but character is also a function of paying your 
bills over time, and accepting responsibility and proving that 
you have a product that people want, and you know how to manage 
things.
    So I am just curious, how do we accomplish what we all want 
to do here and grow small businesses, particularly with 
minorities? That is what we are talking about today. How do we 
get there from here?
    Mr. Wilkins. I think you just have to take common sense to 
a high place as it relates to character lending. It could be as 
simple as you have SBDCs and WBCs, allow them the flexibility 
within their client base to choose two or four entities to 
engage in these character loans, because the centers have 
worked with individuals.
    Someone that is coming into my center every week to receive 
counseling, those are the people that repay loans. The 
individuals, when you say, ``Well, you know what? I need to see 
2 years of your personal tax returns and 2 years of your 
business tax returns and your certificate of incorporation.'' 
The individuals that give you that information back timely, 
those are the people who repay loans.
    I am a prior loan officer for a community development 
credit union, and I had a portfolio of over $1.5 million. When 
you have individuals who are experienced in lending, there are 
certain steps and mandates that you can create in the lending 
process where you have a higher rate of success.
    On the backside, it is a very difficult space, as far as 
lending to individuals on a character basis. But then, on the 
other side, we will have $100 million loans to very successful 
entities also fail.
    So there also has to be a tolerance. And if we look at that 
every dollar that we lend, the Federal Government is getting 
$2.62 back, then I think we have a little flexibility to 
underwrite some bad loans.
    Mr. Imada. Well-said. That is all I have to say.
    Ranking Member Velazquez gave a very important statistic, 
and it is 2 percent. We are talking 2 percent of that large 
group of people who are getting these microloans who are not 
paying them back. This is actually a very small amount of 
lending.
    If we look at some of the bigger loans that are going out 
and those failed, we are talking about significant amounts of 
money. This is a very small and insignificant amount of money.
    But one thing that I think it is important to know about 
immigrant businesspeople, and I work with day in and day out, 
regardless of where they are from, is that they do not want to 
lose face in the community. Not repaying even the smallest loan 
loses face in the community.
    And I think that that is something that is not necessarily 
discussed in halls like this, but these small businesses take 
their businesses very seriously. That is why we have such a low 
rate of default, because they want to make sure that if they 
are borrowing from institutions that are backed by the 
Government, that they are going to return every single dime of 
that money, because the Government has provided them an 
opportunity to live in this country and thrive.
    So I think we do need to give a little bit of leeway to 
those immigrants.
    But I also agree with Bill, because you empowered some of 
these organization and entrusted these organizations to work 
with women- and minority-owned businesses. Give them a little 
bit more leeway to make those decisions, because they work with 
these people day in and day out. They know their record of 
returning calls, paying bills, meeting their deadlines.
    So, I would say, if you are going to entrust them with 
support, with Federal dollars, then entrust them with the 
support in being able to pick and choose some of the people who 
need those funds.
    Chairman Hanna. Thank you.
    So just to paraphrase what you have both said, because to 
me, it is very interesting, you are asking to give the SBA 
latitude to make loans that don't fit the traditional notion of 
those things required to make a loan. So Ms. Chang would say I 
have an allowance, a portion, if you will, as an opportunity, 
without retribution from her bosses, to make loans to people 
who don't fit the bill.
    Is that what you are saying, too, Mr. Wilkins?
    Ms. Velazquez. Mr. Chairman, I just would like to call 
attention to the fact that SBA doesn't make loans. SBA 
guarantees loans.
    Chairman Hanna. Correct.
    Ms. Velazquez. So it is the bank, ultimately, that will 
make that final decision whether or not they have the 
requirements----
    Chairman Hanna. But the bank's loan is based on the 
guarantee, so it is all interconnected. And, certainly, the 
backup for the bank being the SBA matters a lot.
    I find it interesting, and I don't disagree with you. If 
you look at projects around the world, and things like that, 
places around the world that don't have the kind of protection 
of property rights that this country has, they managed to go 
through those in different ways.
    Mr. Imada. Chairman Hanna, I do have to say I agree with 
Representative Clarke. We have to look at different ways to 
look at lending. We can't do the same thing that we have been 
doing day in and day out. We have to look at small business as 
an opportunity for growth, as you have all stated, as everybody 
here has stated on this panel.
    Small-business people take risks each and every single day. 
Many of these small businesses, frankly, would be dependent on 
the Government if they didn't have an opportunity to start a 
small business. And most of them do not want to. They want to 
make a living for their friends and their family. They want to 
contribute to their communities. They want to do things that 
are going to benefit society as a whole.
    So I believe that we have to look at how we lend 
differently with keeping in mind how the demographics have 
changed in this country.
    Chairman Hanna. Thank you.
    Ms. Moy. Pardon me, Chairman Hanna, if I may, character 
loans have been in existence in these communities for 
generations. The susu that was mentioned by Mr. Wilkins, in my 
own community, family associations, people from the same 
village, have pooled money together, and members who have the 
same surname draw a lottery and they are allowed to borrow from 
this fund to start their businesses. That is how my family 
started its businesses three or four generations ago.
    And those are character loans, because if you don't pay 
them back, everybody, not only here in the United States in 
your community hears about it, but your great-grandmother in 
the village hears about it. So you pay it back.
    Organizations like Project Enterprise, for example, you are 
put forth as a candidate to borrow money based on the group 
that you formed and the community support that you have from 
other business owners. This model works.
    And whether it is face or business reputation, et cetera, 
there are things that we can adopt from this. Indications of 
character do come from things like paying your rent on time, 
paying your phone bill on time. These are not traditional 
measures that have been captured by the credit bureaus. Accion 
USA has used this very successfully.
    Chairman Hanna. That is Mr. Wilkins point, that they need 
to be, correct?
    Mr. Wilkins. Yes.
    Ms. Moy. Thank you, Mr. Chairman.
    Chairman Hanna. Thank you.
    If there are no further questions, I want to thank Queens 
College for hosting us, and thank you all for participating 
today. I appreciate your insights into the challenges facing 
the underserved small businesses and in ways to reduce barriers 
to accessing Federal programs.
    I ask unanimous consent that members have 5 legislative 
days to submit statements and supporting material for the 
record. Without objection, so ordered.
    Chairman Hanna. This hearing is now adjourned. Thank you 
very much.
    [Whereupon, at 12:39 p.m., the Subcommittee was adjourned.]




































                            A P P E N D I X





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    Distinguished Members of the U.S. House of Representatives 
Committee on Small Business and Subcommittee on Contracting and 
Workforce:

    Thank you for extending me the opportunity to offer my 
testimony today. It is truly a great honor and privilege to be 
with you today.

    For the record, my name is Bill Imada and I am one of the 
co-founders of the Asian/Pacific Islander American Chamber of 
Commerce & Entrepreneurship, which is also known by its 
acronym, ``ACE.'' ACE was established in January 2013 and is 
based in Washington, D.C. Our mission is to address the needs, 
interests and aspirations of business owners, entrepreneurs and 
corporate leaders of Asian American, Native Hawaiian and 
Pacific Islander American heritage. I am also the founder, 
chairman and chief collaboration officer of a certified 
minority-owned and operated small business that focuses on 
marketing and communications to the greater Asian-American and 
Pacific-Islander (AAPI) communities.

    ACE was established as a business advancement organization 
and strives to be a visible and credible voice for the AAPI 
business sector in the halls of government in our nation's 
capital. For the past year, our 22-member board of directors 
met with and listened to the leaders of dozens of AAPI business 
organizations from more than 25 states to learn from their 
experiences as small-business advocates. What we heard 
reinforced our resolve to be a representative voice for AAPI 
small-business owners and entrepreneurs with elected and 
officials and federal agencies such as the U.S. Department of 
Commerce, U.S. Department of Labor, U.S. Department of 
Education, U.S. Small Business Administration and others.

    The AAPI community represents some of the most recent 
immigrants in the United States all the way to some of the 
oldest communities that were instrumental in the development of 
this country. As entrepreneurs, AAPI-owned businesses represent 
the gamut of large companies that manufacture products and 
distribute across the nation or around the globe, to the 
smallest businesses around the block from your own 
neighborhood. Yet too often, it seems as though many AAPI 
entrepreneurs must start from square one and are often 
overlooked as key stakeholders in the business community and 
are rarely acknowledged by policy makers as contributing more 
than $500 billion in annual economic output and nearly three 
million jobs.

    It is critical to state that we can only be successful in 
advancing economic development, business growth and new job 
creation if the federal government and federal agencies work in 
tandem with community-based AAPI chambers, business 
organizations and professional associations. Last October, ACE 
convened a meeting with more than 200 AAPI chamber leaders, 
business owners, entrepreneurs and corporate officials 
representing 16 different states and the District of Columbia. 
This was the first time these business leaders had ever met in 
person to address the needs of the AAPI-business community. 
During this and subsequent meetings, we were able to review and 
discuss several topics of mutual interest and concern. As a 
direct result of these meetings, we identified three specific 
areas to address:

          1. Access to Capital

          2. Federal Contracting

          3. Small Business Development Assistance

    We also agree that we can only make progress in these areas 
by:

          1. Developing a system for collecting, monitoring and 
        verifying data on federally supported programs 
        addressing the needs of AAPI and other minority small 
        businesses;

          2. Reducing language and cultural barriers for small 
        businesses and entrepreneurs that impede them from 
        seeking assistance;

          3. Adding SBA and MBDA business development centers 
        in growing immigrant and minority communities; and by

          4. Holding federal agencies and prime contractors 
        accountable for meeting all minority business 
        development goals.

    I would like to start by addressing each area separately.

    Access to Capital

    According to the U.S. Census, more than two-thirds of the 
AAPI populations immigrated to this country and now consider 
America their home. Due to language and cultural issues--which 
set many of these immigrants and their families apart from the 
American mainstream--starting a business is often viewed as the 
best (and only) way to earn an income and to make ends meet. 
Today there are over 1.54 million AAPI-owned businesses in the 
country, with m ore than 80 percent of them small, family-run 
operations with no paid employees. These businesses, according 
to U.S. Census Bureau's 2007 Survey of Business Owners (SBO) 
conducted as part of the 2007 Economic Census, generated $514.1 
billion in annual economic output and support more than 2.84 
million jobs. Seven years later, we can only assume these 
figures are higher today.

    However, as a result of the chaos and confusion caused by 
subprime mortgage lending to individuals and families who could 
not qualify for prime-rate loans, and the ultimate crash of the 
real estate and mortgage markets, the banking industry began 
lending money only to individuals who posed the least financial 
risk, leaving many small-business owners and entrepreneurs 
without the capital needed to expand their operations, hire new 
talent, open new offices, advance sales and marketing, or 
invest in new equipment that would allow them to compete 
successfully in an increasingly competitive marketplace. This 
lack of capital has also constrained the ability of small 
businesses to increase production, introduce new products or 
develop new services that would allow them to accommodate 
larger corporations or compete for federal contracts.

    There are signs of progress. The U.S. Small Business 
Administration (SBA) has made historic gains with AAPI-owned 
and operated small businesses, as well as with other minority 
groups and women. From January 2009 to March 2013, more than 
$19 billion or 27,485 SBA loans were granted and distributed to 
AAPI small businesses. The San Francisco SBA District Office 
held seminars in Chinese, attracting a capacity crowd of 
Chinese-American business owners eager to learn more about 
fiscal management, loans, mentorship programs, and business 
development training. We believe these gains can be improved 
significantly in the months and years ahead through stronger, 
more-targeted outreach and through education and partnerships 
with AAPI chambers and business organizations.

    Although the SBA encourages more AAPI-owned small 
businesses and entrepreneurs to apply for government-guaranteed 
loans through their preferred lenders, we believe that a large 
percentage of businesses do not. A full 33 percent of small 
businesses do not apply because they fear rejection by the same 
lending institutions that are there to assist them. But ACE and 
many of the regional AAPI chambers believe there are other 
critical factors that may dissuade an AAPI small-business owner 
from applying for an SBA loan. These factors include:

           A distrust of what a preferred government 
        lender will do with their personal and financial 
        information;

           A pervasive belief that SBA officials may 
        not have the ability to assist them in languages and 
        dialects other than English;

           An overwhelming fear that rejection will 
        lead to ``loss of face'' in the community or adversely 
        impact their credit scores;

           A strong and pervasive feeling that lending 
        institutions do not have the means or the resources to 
        explain why a loan was denied;

           A lack of understanding and knowledge that 
        even a government-backed loan still requires some 
        personal guarantees in the form of collateral that may 
        be difficult for many smaller businesses to provide; 
        and,

           A lack of SBA and MBDA development centers 
        in communities where many of these small business 
        enterprises are established--especially in areas such 
        as Queens, New York.

    A large number of AAPI businesses encounter these issues 
and more must be done with ACE and regional AAPI chambers and 
business associations to alleviate these sometimes opaque 
cultural barriers to capital.

    Federal Contracting

    Although tools (such as websites and webinars) are 
available to help AAPI small business owners secure information 
about federal contracting opportunities, there continues to be 
a lack of knowledge and awareness about them and about how to 
utilize these options. Nearly all of the AAPI chamber and 
business association leaders who met with us in Washington said 
they were unaware of these tools that were available to them, 
which meant that many of their members lacked the knowledge and 
understanding of federal contracting opportunities. 
Unfortunately, many ACE and AAPI-chamber leaders only learned 
about federal contracting opportunities after they were 
officially awarded.

    One program that could be helpful to many AAPI small 
businesses interested in pursuing federal contracts is the 8a 
program. I can speak from personal experience that the 8a 
program has the ability to advance AAPI businesses in the 
federal contracting arena. After applying for 8a status at a 
local SBA office, my own firm achieved this designation several 
years ago. But once my firm became a bona fide 8a company, my 
partners and I did not know what to do next. Fortunately, I 
recognized quickly that we needed to actively and assertively 
market ourselves and our company to be viewed as a credible 
supplier to the federal agencies. This was no easy task when 
the field of potential suppliers (large and small) is filled 
with legacy firms with decades of relevant experience pursuing 
and securing federal contracts, and a wide cadre of 8a firms 
competing to attract attention to their products and services. 
Within a very short period of time, my firm was able to secure 
a major federal contract and quickly found ourselves among the 
ranks of 8a graduates. While I was successful, I believe I was 
the exception, not the rule.

    There needs to be stronger and more visible oversight on 
the federal contracting process. While Executive Order 11625 
requires federal agencies to report their minority business 
development activities, a more comprehensive data collection 
process must be employed to ensure that more AAPI small 
businesses have opportunities to participate in federal 
contracting opportunities. Over the past year, several AAPI 
business owners have recounted how they have been invited to 
serve as subcontractors in the federal contracting and 
procurement process. The prime contractors--often non-minority-
owned firms with a long history of federal contracting deals--
enlist diverse businesses to bolster their teams' capabilities 
and to demonstrate their commitment to supplier diversity. 
However, a number of business owners, including my own firm, 
have served on winning teams only to be told that there is not 
enough funding in the budget to utilize all of the diverse team 
members. In other words, the prime contractors were ultimately 
unwilling to allocate any funding from the budget to utilize 
the talent diverse suppliers bring to the team.

    Small, diverse businesses that are not given any paid 
contractual work often do not lodge a protest because they run 
the risk of being ostracized by the prime contractors and other 
team members that win many of the large federal contracts. 
Congressional representatives and federal agencies could 
mitigate this challenge by simply asking prime contractors to 
report their budget allocations before a contract is awarded, 
during the contract period, and once a contract is completed 
and fully executed. It is essential that once a federal 
contract is awarded, that includes AAPI subcontractors and 
other diverse suppliers, budget allocations are reviewed and 
monitored to ensure that contracting opportunities are 
available to all willing and able.

    Current U.S. government procurement policy needs to 
reinforce what is known as ``maximum practicable'' contracting 
and subcontracting opportunities for small businesses. This 
reinforcement and strong encouragement is critical since 
federal agencies missed two percent of their contracting goals 
(23 percent), resulting in a loss of $10 billion for small 
businesses.

    Mentorships and training also increase the chances that 
AAPI small businesses can secure more federal contracting 
opportunities. While the SBA does have a mentorship program in 
place for 8a firms and other diverse suppliers, very little is 
known about this program or its success rate. In order to 
increase the success rate of AAPI-owned small businesses in the 
federal contracting process, it is critically important to 
identify mentors early and to work with the regional AAPI 
chambers and business organizations to match them with 
qualified AAPI suppliers.

    Small Business Development Assistance

    The U.S. Department of Commerce, through the SBA and the 
Minority Business Development Agency (MBDA), offer assistance 
to small businesses and entrepreneurs who have specific 
financing and business development needs. While many of their 
programs benefit AAPI businesses, it is clear from ACE's 
discussion with the regional AAPI chambers and business 
organizations that many more AAPI small businesses could 
benefit from the business loans, 8a program, technical 
assistance, business counseling and business development 
programs that are offered by SBA and MBDA.

    In the past few months, ACE has made great strides with the 
SBA and the MBDA. In high level meetings that were held in 
Washington, D.C. and later in San Francisco, ACE signed a 
Memorandum of Understanding (MOU) with the SBA and continues to 
have ongoing dialogue with their representatives. Our MOU 
established a framework for ACE to partner with the SBA on 
promoting programs, services and initiatives designed to 
address the needs of AAPI-owned small businesses throughout the 
country.

    ACE also received an invitations to meet with former SBA 
Acting Administrator Jeanne Hulit and also met with other 
business associations to discuss how the SBA could enhance 
their outreach to diverse small businesses nationwide. As a 
result of our meetings with the SBA, we have received a myriad 
of information about programs and services that will benefit 
regional and local AAPI chambers and business association.

    After several conversations with the MBDA, two of their 
representatives have been designated to work closely with ACE 
to advance 15 AAPI firms nominated by the leaders of several 
regional AAPI chambers of commerce. We also hold regular 
conversations with MBDA leaders to advance and promote more 
MBDA Business Centers to address the cross-cultural needs of 
AAPIs, and were delighted to learn that five of these centers 
are located in communities with large and growing AAPI 
populations. To build on these successes, we continue to 
advocate more of these small business development centers, 
especially in areas such as the Queens borough of New York and 
the San Gabriel Valley in the Greater Los Angeles area. We also 
encourage the SBA and MBDA to recruit, hire and advance more 
AAPIs with language and cross-cultural skills to navigate the 
cultural barriers that arise with diverse AAPI-owned businesses 
and business organizations. Since a majority of AAPI-business 
owners are recent immigrants to this country, language and 
cross-cultural skills are needed to instill trust and to 
provide culturally relevant consultations with AAPI business 
owners. In some cities where there are MBDA offices, there are 
few, if any, officials or specialists of AAPI heritage.

    In conclusion, in order to ensure that AAPI small 
businesses continue to have access to capital, federal 
contracting opportunities and small business development 
assistance, we must verify data that serves as a benchmark for 
their progress and the progress of the federal government; more 
outreach specialists with language and cross-cultural 
experience; more SBA and MBDA centers in growing immigrant and 
minority communities; and, greater accountability in meeting 
and achieving stated goals for minority business development.

    ACE and the regional AAPI chambers and business 
organizations recognize that the federal government cannot be 
held fully responsible for the success of AAPI small businesses 
in the country. The AAPI small business community, in 
partnership with government and corporations, must work more 
collaboratively together to ensure that all AAPI and other 
minority companies have their opportunity to grow, develop and 
thrive. We also recognize that ACE and the AAPI business 
community must act assertively, but responsibly to ensure that 
information about government programs and services are made 
available to the greater Asian American, Native Hawaiian and 
Pacific Islander business communities.

    Once again, we can only be successful in advancing economic 
development, business growth and new job creation if the 
federal government and federal agencies develop a system for 
collecting, monitoring and verifying data on mentor-mentee 
programs, reducing language and cultural barriers for small 
businesses and entrepreneurs that impede them from seeking 
assistance, adding SBA and MBDA business development centers in 
growing immigrant and minority communities, and by holding 
federal agencies and prime contractors accountable for meeting 
all minority business development goals.

    Thank you for advancing the interests of AAPI-owned 
businesses and entrepreneurs. We look forward to our continued 
partnership with each of you and with the federal agencies 
dedicated to addressing the needs, interests and aspirations of 
all people living and working in our country.
                     Written Testimony of Joyce Moy


                           Executive Director


              Asian and Asian American Research Institute


                      City University of New York


                             March 11, 2014


    Thank you to Chairman Graves, Ranking Member Nydia 
Velazquez, Congresswoman Meng and Members of the Subcommittee 
for the opportunity to provide testimony on the needs, outreach 
and technical assistance to underserved small business 
communities.

    I am Joyce Moy, Executive Director of the Asian and Asian 
American Research Institute at the City University of New York. 
I am speaking in my individual capacity, and the views that are 
expressed are my own. My area of focus is entrepreneurship and 
economic development. I have started and run businesses, and 
have been and continue to be a practitioner in entrepreneurship 
technical assistance and training, in addition to my teaching 
in the academy. I was the first and to date I believe am the 
only Asian American appointed as Director in the New York State 
Small Business Development Center (SBDC) system which is funded 
by the United State Small Business Administration and New York 
State. This was located at LaGuardia Community College, City 
University of New York. Later, in my capacity as the Director 
of Economic Development at the College, I oversaw not only the 
SBDC, but the federally funded Procurement Technical Assistance 
Center which works to help businesses secure federal, state and 
local contracts as well as corporate supplier diversity 
opportunities.

    I will focus on several issues: 1) outreach to under-served 
business communities, in particular immigrant communities; 2) 
providing meaningful and effective technical assistance to 
these communities and 3) recommendations to ensure that we 
build capacity and meaningful and effective assistance to help 
these business communities thrive and grow.

    Nationally, immigrant businesses make up 17% of small 
businesses, account for $776 billion in revenues, and employ 
over 4.5 million workers or 14% of all small business 
employees.\1\
---------------------------------------------------------------------------
    \1\ Fiscal Policy Institute, Immigrant Small Business Owners: A 
Significant and Growing Part of the Economy, June 2012.

    In New York City, 48% of all small business owners are 
immigrants.\2\ In the period 2000 to 2011, the neighborhoods 
with the highest concentrations of immigrants, according to the 
Census, showed growth of nearly 23% compared with the rest of 
New York City. In addition, the growth of employment of these 
small businesses increased by 11% vs. 4% for the rest of New 
York City, and payrolls increased by 56% vs. 40%.\3\
---------------------------------------------------------------------------
    \2\ Fiscal Policy Institute, FPI's Immigration Research Initiative, 
October 2010.
    \3\ Ofice of the New York State Comptroller, The Role of Immigrants 
in the New York City Economy, November 2013.

    As is reflected in the businesses in New York City, 37% of 
New York City's population is foreign born, and in counties 
such as Queens, it is nearly half. Over 73% of the Asian 
population is foreign born, and 31% of New York City's Black 
population is foreign born, while 41.2% of the Hispanic 
population is foreign born. This highlights the need for 
culturally, linguistically and technically competent services 
---------------------------------------------------------------------------
to these businesses if they are to grow.

    Increasingly, there has been outreach to the immigrant 
communities in various languages. Many agencies provide 
workshops on the services they provide in language. However, if 
there is not a culturally and linguistically appropriate 
service provider when the business owner arrives at a technical 
assistance center or other organization for assistance, all the 
outreach would be for naught.

    To be fair, SBA and other federal agencies have tried to 
partner with community based organizations that may have the 
cultural and linguistic capacity they see as needed. However, 
these organizations are often not given adequate support, 
financial and otherwise, so they lack resources and the 
training needed to assist the immigrant business owner in a 
meaningful and effective way. Many rely on volunteers who do 
not have adequate training. This may not only lead to 
assistance which is not sufficiently effective, but can in fact 
be detrimental.

    Let me cite one of many examples. When the SBDC at 
LaGuardia Community College was founded in response to 9/11 so 
as to get more resources in New York City, I immediately 
discovered that immigrant business owners were facing 
difficulties and not able to get the assistance they needed. I 
built a team that not only had the business skills and training 
needed, but spoke, English, Spanish, Korean and three dialects 
of Chinese.

    In reading the Chinese newspaper, I learned of a restaurant 
that employed 11 people, in Chinatown. One of the owners had 
gone for assistance at a SBA site established in Chinatown to 
assist business owners, partnering with a community 
organization. He waited in the rain, snow and cold numerous 
times, and was so frustrated after being turned away over and 
over again for improper documents that he said he cried so much 
that he only had dry tears to cry. When we located him with the 
assistance of the reporter we learned that he was turned away 
because he was told by volunteer English/Chinese translator at 
the SBA site that he had to have ``a majority owner'' rather 
``the majority of owners'' sign the documents. The owner and 
the translators did not understand the difference between ``a 
majority owner,'' meaning an owner with more than 50% 
ownership, as opposed to ``the majority owner.'' This company 
had 7 equal owners, so they needed the signatures and 
information of 4 owners out of the 7. Without an understanding 
of the business context, the volunteers could not possibly have 
understood this, and it is clear they did not have the 
training, although they did have the cultural and language 
skills. Fortunately with our intervention, he was able to 
obtain $75,000 in assistance.

    In my capacity as Director of the LaGuardia SBDC, I 
conducted a series of workshops on starting a business, legal 
structures and taxation, marketing and financing for business. 
When I presented this at an Asian American women's business 
organization, I found in the audience the entire staff of a 
community based organization that had just partnered with SBA 
in Chinatown. The staff was there so that they could get 
uniform training on the issues that were presented. Because we 
presented real nuts and bolts, this training was needed to get 
everyone on the same page. Today, it is still clear the 
community partners coming on line, do not have much needed and 
standardized training available to them. Quality control is 
imperative. Many of the SBA and other agencies have partners 
who have varying degrees of knowledge, training and capacity. 
Again, the cultural and linguistic competence alone is not 
sufficient without the business knowledge. If these services 
are to be offered, they should come with a degree of quality 
control, and the government agencies can not only play a role 
in ensuring this, but I believe it is ethically bound to do so.

    So in conclusion: The outreach and services to the under-
served immigrant business population must be both meaningful 
and effective.

    1. Culturally and linguistically appropriate outreach alone 
is not sufficient. There must be culturally and linguistically 
appropriate service providers.

    2. Community partners need better support and resources.

    3. Uniform and standardized training is needed across the 
range of technical assistance providers. We must build the 
capacity of our partners, and ensure quality across the board 
for the organizations and their volunteers.

    Thank you to the Subcommittee for this opportunity to 
present this testimony. I would be happy to take questions.
                    Testimony of William S. Wilkins


                    Director of Economic Development


           The Local Development Corporation of East New York


    My Name is William Scott Wilkins, and I am the Director of 
Economic Development for the Local Development Corporation of 
East New York (LDCENY). Since 1979 the LDCENY's principal 
mission is to foster economic and business development in East 
Brooklyn and surrounding communities. Economic development is 
achieved when capital investment is coupled with job creation 
or job retention. As a by product of capital investment and job 
growth in distressed areas, tax incentives and or programs like 
the SBA 504 or 7A are incorporated into the equation to induce 
or incent the required result.

    Being in harmony and accord with our business development 
team the LDCENY engages in the seamless integration of a myriad 
of activities and programs that foster both short and long term 
economic and business development benefits to the Brownsville 
and surrounding East New York (ENY) community. We are funded by 
the Small Business Administration (SBA) through the Woman's 
Business Center and rely upon SBA programs like the 504 and 7A 
to add to our economic development tool box.

    We promote and use both loan types in instances when 
clients are short on equity or are undercapitalized. Both loan 
products are necessary and needed in the market place by virtue 
of creating additional flexibility to traditional underwriting 
requirements. In other words, many deals that are essential to 
the market place would not get done unless both programs were 
not in existence.

    Post Super Storm Sandy, the turnaround time in processing 
loan applications have been taking longer than normal but 
recently we are starting to see an improvement. Secondly, I 
encourage the SBA to continue to explore ways to stream line 
their loan application and support documentation requirements. 
Thirdly, SBA should continue to work with community based 
organizations (CBO's) who have ``boots on the ground'' to 
assist in the marketing of SBA loan products.

    Lastly, I encourage SBA to introduce technical assistance 
providers to work with applicants and borrowers thus creating 
mentorship opportunities and increase the probability of 
repayment.



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    Chairman Hanna and Ranking Member Meng, thank you for 
inviting me to testify today. It is an honor to be in New York 
to discuss SBA's ongoing efforts to increase access to capital, 
counseling, and contracting opportunities in underserved 
communities. We commend the Subcommittee for highlighting this 
important topic and are grateful for your continued leadership 
and support.

    America's 28 million small businesses are the engine of our 
economy and one of our country's greatest assets. They employ 
half of the private sector workforce and create two out of 
every three net new private sector jobs. And at SBA, we are 
committed to ensuring that all entrepreneurs, including those 
in underserved communities--such as minorities, women, 
veterans, people with disabilities, and those in urban and 
rural areas--have the tools they need to start and grow 
companies and create jobs.

    According to the Urban Institute, SBA-guaranteed loans are 
three to five times more likely than conventional loans to go 
to minority- and women-owned businesses. And we are working to 
fill existing market gaps for underserved communities across 
the board, with both microloans and smaller dollar loans. While 
we have already expanded and simplified our Community Advantage 
program and streamlined our signature Small Loan Advantage 
program, we are constantly looking for more ways to make it 
easier and cheaper for entrepreneurs to reinvest in their 
business. That is why, this past October, we reduced fees to 
zero for borrowers and lenders for all 7(a) loans $150,000 and 
less. Due to these efforts, SBA has supported over $126 billion 
in lending to more than 260,000 small businesses and 
entrepreneurs since 2009.

    However, a loan can only take an entrepreneur so far. Our 
data shows that small business owners who have long-term 
counselors are more likely to hire, grow, and increase revenue. 
To help make that happen, we have an extensive nationwide 
network of 900 Small Business Development Centers, over 100 
Women's Business Centers, and 12,000 volunteer SCORE 
counselors. Last year alone, these resource partners counseled 
and trained more than 1 million small business owners across 
the country.

    Building on our current efforts, President Obama's Fiscal 
Year 2015 budget invests $7 million to support our successful 
Boots to Business initiative, which offers transitioning 
service members intensive entrepreneurial training through the 
Transition Assistance Program (TAP). Boots to Business is 
expected to reach an estimated 25,000 veterans across all 
military branches.

    In addition to our capital and counseling programs, SBA 
works to level the playing field for small businesses to access 
federal contracting opportunities. Each year, the U.S. 
government spends about $400 billion in contracts, and it is 
SBA's job to ensure that 23 percent of those dollars go to 
small businesses. We continually work to make our minority, 
women, and veterans contracting programs more effective. In 
fact, we launched a Pre-8(a) Business Development Training 
Series to help potential 8(a) firms prepare for success in the 
program and established an online tool, the Government 
Contracting Classroom, which is geared toward underserved 
communities.

    As a result of these efforts, during the first term of the 
Obama Administration, small businesses accessed more than $376 
billion in federal contracts. That is $48 billion more than the 
previous four years, even as overall contract spending 
decreased during those years.

    These programs and initiatives enable us to continue 
supporting underserved entrepreneurs like Tony Baird, the 
recipient of SBA's 2013 Veteran-Owned Business Achievement 
Award. With the help of our local resource partners in Syracuse 
and an SBA guaranteed loan, Tony was able to leverage his 
experience in the U.S. Army to launch a successful electronics 
startup. Tony Baird Electronics, Inc. has since been able to 
pursue higher value contracts with the federal government. This 
is a perfect example of how SBA's capital, counseling, and 
contracting programs enable underserved entrepreneurs to pursue 
their dreams of small business ownership.

    Under this Administration, SBA has become more accessible 
and created more opportunities for underserved entrepreneurs 
than ever before. We have been able to achieve this is by 
connecting need with opportunity--forging new relationships 
with lenders and community organizations that can help us 
better serve these small businesses. We have formed 
partnerships with organizations such as ACE, which is 
represented today by Bill Imada, as well as the US Black 
Chamber, US Hispanic Chamber, Women Impacting Public Policy 
(WIPP), the National Minority Supplier Development Council 
(NMSDC), and the National 8(a) Association. These strategic 
alliances enable us to leverage our partners' nationwide 
networks and connect directly with the communities they 
support.

    While we are proud of all that SBA has accomplished 
alongside this Committee, we must continue to be diligent in 
our work to support underserved entrepreneurs. We know that 
with the right tools, small businesses in these communities can 
have a significant impact in driving economic growth and 
creating jobs where they are needed most.

    Thank you again for having me here today, and I look 
forward to answering your questions.



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