[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]


                  FIELD HEARING IN JACKSONVILLE, FL: 
DISPARITIES IN ACCESS TO CAPITAL: WHAT THE FEDERAL GOVERNMENT IS DOING 
              TO INCREASE SUPPORT FOR MINORITY OWNED FIRMS

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

                                HEARING

                               BEFORE THE

                      COMMITTEE ON SMALL BUSINESS
                             UNITED STATES
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED FIFTEENTH CONGRESS

                             SECOND SESSION

                               __________

                              HEARING HELD
                             MARCH 12, 2018

                               __________

[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]                               
                               

            Small Business Committee Document Number 115-062
             Available via the GPO Website: www.govinfo.gov
             
             
                                __________
                               

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                   HOUSE COMMITTEE ON SMALL BUSINESS

                      STEVE CHABOT, Ohio, Chairman
                            STEVE KING, Iowa
                      BLAINE LUETKEMEYER, Missouri
                          DAVE BRAT, Virginia
             AUMUA AMATA COLEMAN RADEWAGEN, American Samoa
                        STEVE KNIGHT, California
                        TRENT KELLY, Mississippi
                             ROD BLUM, Iowa
                         JAMES COMER, Kentucky
                 JENNIFFER GONZALEZ-COLON, Puerto Rico
                           JOHN CURTIS, Utah
                    BRIAN FITZPATRICK, Pennsylvania
                         ROGER MARSHALL, Kansas
                      RALPH NORMAN, South Carolina
               NYDIA VELAZQUEZ, New York, Ranking Member
                       DWIGHT EVANS, Pennsylvania
                       STEPHANIE MURPHY, Florida
                        AL LAWSON, JR., Florida
                         YVETTE CLARK, New York
                          JUDY CHU, California
                       ALMA ADAMS, North Carolina
                      ADRIANO ESPAILLAT, New York
                        BRAD SCHNEIDER, Illinois
                                 VACANT

               Kevin Fitzpatrick, Majority Staff Director
      Jan Oliver, Majority Deputy Staff Director and Chief Counsel
                     Adam Minehardt, Staff Director
                           
                           
                           
                           C O N T E N T S

                           OPENING STATEMENTS

                                                                   Page
Hon. James Comer.................................................     1
Hon. Al Lawson...................................................     1

                               WITNESSES

Mr. Jimmy Van Horn, Lead Lender Relations Specialist, United 
  States Small Business Administration, Jacksonville, FL.........     4
Ms. Hillary Almond, Owner, Almond Engineering, Jacksonville, FL..     5
Ms. Roslyn Phillips, Vice President, The Hester Group, 
  Jacksonville, FL...............................................     7
Mr. Dane Grey, President, Elite Parking Services of America, 
  Jacksonville, FL...............................................     9

                                APPENDIX

Prepared Statements:
    Mr. Jimmy Van Horn, Lead Lender Relations Specialist, United 
      States Small Business Administration, Jacksonville, FL.....    27
    Ms. Hillary Almond, Owner, Almond Engineering, Jacksonville, 
      FL.........................................................    30
    Ms. Roslyn Phillips, Vice President, The Hester Group, 
      Jacksonville, FL...........................................    32
    Mr. Dane Grey, President, Elite Parking Services of America, 
      Jacksonville, FL...........................................    34
Questions for the Record:
    None.
Answers for the Record:
    None.
Additional Material for the Record:
    None.

 
DISPARITIES IN ACCESS TO CAPITAL: WHAT THE FEDERAL GOVERNMENT IS DOING 
              TO INCREASE SUPPORT FOR MINORITY OWNED FIRMS

                              ----------                              


                         MONDAY, MARCH 12, 2018

                  House of Representatives,
               Committee on Small Business,
                                                  Jacksonville, FL.
    The Committee met, pursuant to call, at 10:02 a.m., in the 
Hadlow Board Room, Jacksonville Chamber of Commerce, 3 
Independent Drive, Jacksonville, FL, Hon. James Comer 
presiding.
    Present: Representatives Comer and Lawson.
    Mr. COMER. Good morning. I call this hearing to order.
    Before we begin, I want to thank the ranking member, Mr. 
Lawson, for inviting me to be here with him in his district 
today. While we may be from different political parties, we are 
both fighting hard on behalf of America's small businesses here 
in Jacksonville and in my district in Kentucky, and all across 
the country.
    Access to capital has been a top priority for this 
Committee. It gives small businesses the resources they need to 
keep the doors open, the lights on, to purchase inventory, pay 
employees, and expand their businesses.
    However, since the financial crisis almost a decade ago, 
small business owners across a variety of industries and 
demographics report that it is still difficult to acquire 
capital. Since the crisis, the number of community banks in the 
United States has decreased, the amount of paperwork for banks 
and businesses has increased, and it has become more difficult 
for small businesses just to meet payroll.
    This morning we will hear from a distinguished panel on how 
the small business access to capital landscape has changed and 
how the Federal Government can help create an environment where 
all small businesses have access to the resources they need to 
succeed.
    Again, I appreciate the ranking member for his hospitality 
and the witnesses for taking time away from their businesses to 
be here today. I look forward to your testimony.
    I now yield to Mr. Lawson for his opening remarks.
    Mr. LAWSON. Thank you very much, Mr. Chair. I am delighted, 
and good morning to everyone.
    Our nation's economy is growing largely due to women- and 
minority-owned businesses. The economy relies on nearly 8 
million minority businesses and generates over $1 trillion in 
revenue and employs over 7 million workers. Despite these 
numbers, minority-owned business, small firms, including women, 
still face hurdles.
    We also hear that access to capital is the biggest 
challenge. This is problematic because capital is the lifeblood 
of any business. It helps companies buy inventory and 
equipment, pay their employees, and expand operations.
    Unfortunately, minority-owned firms, including women, are 
more likely than other businesses to be denied traditional 
financing compared to other businesses. In fact, the average 
African American owner raises about $500 in equity in the first 
year, compared to $18,000 for the average white business start-
up. And in D.C., which is a venture capital funding market, 
they are 18 percent less likely than white start-up owners to 
receive such investment.
    Much of this disparity can be laid to the lack of 
representation within the lending industry. This is very 
important because research has shown that investors are 
predisposed to exhibit a preference for people who are similar 
to them. So it really doesn't matter who is at the table when 
the minority business owner is asking for capital.
    In order for these firms to play their traditional job-
creating role, we must take steps to address these challenges. 
Within this context, it is important to remember that lending 
through the Small Business Administration is significant for 
women and minority business owners, yet improvements are needed 
to ensure SBA loans are reaching these entrepreneurs.
    Today's hearing will take the pulse of the small business 
lending environment for minority business owners, along with 
women entrepreneurs, and gain insight about how to expand their 
financial options. As we do this, it is important to remember 
that what makes sense for one entrepreneur might not for 
another, and that is a broad spectrum of the capital options 
for small firms. Some businesses' needs can be met with 
conventional loans. For others, a debt-based solution may not 
make sense at all. Equity in investment might be the best fit.
    The reality is we need to support the next generation of 
minority entrepreneurs to be empowered to take on the 
challenges of starting a business and becoming an economic 
powerhouse. On that note I would like to thank our witnesses 
for taking the time to be here.
    Thank you, and I yield back, Mr. Chairman.
    Mr. COMER. If any other Committee members have an opening 
statement prepared, I ask that they be submitted for the 
record.
    I would like to take a moment to explain the timing and the 
lights for you. You will each have 5 minutes to deliver your 
testimony. The light will start out as green. When you have 1 
minute remaining, the light will turn yellow. Finally, at the 
end of your 5 minutes, it will turn red. I ask that you try to 
adhere to that time limit, but if you need a few more seconds 
or minutes to wrap up, that is fine.
    I will yield back to Mr. Lawson to introduce the panel.
    Mr. LAWSON. Thank you, Mr. Chairman.
    First we have Mr. Jimmy Van Horn, who is the Lead Lender 
Relations Specialist for the Small Business Administration.
    Welcome, Mr. Van Horn.
    His experience includes economic policy with regard to 
financial markets and compliance with state and Federal 
securities laws and regulations. As a lending relations 
specialist with the SBA, he is responsible for working with 
small business and educating those firms about small business 
lending programs. Again, I would like to welcome Mr. Van Horn 
to this Committee.
    Next we have Ms. Hillary Almond. Ms. Almond is President of 
Almond Engineering. It is a civic engineering consulting firm 
in Florida and Georgia. She is a graduate of the University of 
Alabama and received her Master's degree at the University of 
Florida, where she studied environmental engineering.
    One thing, Ms. Almond, is that my wife graduated from the 
University of Alabama, and also from the University of Florida.
    I want to thank Ms. Almond. Thank you for being here and 
working with the panel.
    Next is Ms. Roslyn Phillips. Ms. Phillips is the Vice 
President of The Hester Group, an 8(a) woman-owned small 
business that provides professional services to Federal 
agencies. She currently manages The Hester Group 8(a) SBA 
status and their portfolio, which includes government agencies 
as well as private corporations.
    Ms. Phillips' career as an executive spans over 25 years, 
including consulting in the public and private sector. She 
previously served as Policy Advisor for the City of 
Jacksonville. She led the team administering for the Northwest 
Economic Development Fund, the Empire Zone and Empowerment 
Zone, and designed and implemented the SWJEDF, a better 
Jacksonville plan that had resulted in $134 million in private 
investment and over 2,500 jobs.
    Ms. Phillips, thank you very much for being here.
    Mr. Dane Grey is President of Elite Parking Services of 
America, a company that specializes in parking and 
transportation management services that employs nearly 400 
employees. As a small business owner, Mr. Grey has led Elite 
Parking Services to develop new services that have 
revolutionized parking services and management, including the 
development of the first human capital management system that 
used automated services to manage his operation.
    Mr. Grey has amassed numerous awards, including Business 
Journal's Top 40, Under 40, and was a nominee for the Ernst and 
Young Entrepreneur of the Year Award. He is a graduate of the 
JU University and received his MBA from Delta State University.
    Mr. Grey, welcome.
    I want to thank them and welcome them to the Committee.
    Mr. Chairman, I yield back.
    Mr. COMER. Thank you.
    We will begin with the testimony.

STATEMENTS OF JIMMY VAN HORN, LEAD LENDER RELATIONS SPECIALIST, 
UNITED STATES SMALL BUSINESS ADMINISTRATION, JACKSONVILLE, FL; 
 HILLARY ALMOND, OWNER, ALMOND ENGINEERING, JACKSONVILLE, FL; 
      ROSLYN PHILLIPS, VICE PRESIDENT, THE HESTER GROUP, 
JACKSONVILLE, FL; DANE GREY, PRESIDENT, ELITE PARKING SERVICES 
                  OF AMERICA, JACKSONVILLE, FL

                  STATEMENT OF JIMMY VAN HORN

    Mr. VAN HORN. Good morning. Mr. Chairman, thank you and the 
entire House Small Business Committee for inviting me to 
testify here before you for the Small Business Administration. 
My name is James Van Horn, as you said earlier. I am the Lead 
Lender Relations Specialist in North Florida here in the 
Jacksonville area. The North Florida District Office is 
responsible for the delivery of SBA's programs and services 
throughout our 43 counties here in North Florida. Today's 
hearing topic of access to capital supporting minority firms is 
one of the core missions of the SBA.
    SBA has a number of programs that provide access to 
capital. The most common and widely known is the 7(a) loan 
program. Our agency aims to help small businesses obtain credit 
which is otherwise unavailable through conventional terms. As 
many of you know, oftentimes entrepreneurs have the will and 
drive to succeed, but access to capital unfortunately proves to 
be an insurmountable hurdle. That is where the SBA comes in. 
Our programs have been helping small businesses get on their 
feet and grow for decades, particularly in the North Florida 
area.
    The 7(a) loan program is the Small Business 
Administration's primary lending program. It provides 
assistance to small businesses. This loan program offers 
guaranteed loans to small businesses up to $5 million, and can 
be used for small business purposes, including acquiring land, 
purchasing or constructing buildings, purchasing equipment, and 
working capital. The SBA works with lenders to provide loans to 
small businesses. The agency doesn't lend directly to the small 
businesses. They use lending institutions throughout the area 
to actually get our capital out to the businesses.
    The SBA has established credit terms and conditions for 
these loans. Community development organizations and micro-
lending institutions are all offering. The SBA reduces risk for 
these lenders by making it easier to get access to capital for 
these loans.
    Administrator McMahon and our Office of Capital Access in 
headquarters have been stressing to our lending partners that 
we want to see more small-dollar loans being made to minority 
entrepreneurs. Our focus is to help those who need capital 
most. This includes minority-owned businesses, women-owned 
businesses, our veterans, and our emerging markets.
    For those businesses who need longer-term loans for real 
estate, fixed assets, or large equipment, we have the 504 
Certified Development Company loans. The SBA 504 Loan Program 
is a powerful economic tool that offers smal1 businesses 
another avenue for business financing while promoting business 
growth and job creation. The 504 loan is made through our 
Certified Development Companies in North Florida, and SBA's 
community-based lenders can also provide the 504.
    The 504 loan also is typically structured through 40 
percent SBA funding of the total project costs. Participating 
lenders come in with 50 percent of the total project costs, and 
then borrowers are typically required to contribute anywhere 
from 10 to 20 percent to the project.
    For businesses that need smaller amounts of dollars, SBA 
has the direct micro-lending program, the SBA micro-lending 
program, providing entrepreneurs loans of up to $50,000, and 
the program has an average loan amount of about $13,800. Year-
over-year, the SBA has seen a 5 percent increase in these loans 
which have supported 17,500 American jobs. Another interesting 
fact is that over 8 percent of these micro-loan recipients have 
gone on to receive larger loans from the SBA to support their 
continued growth.
    All of SBA's loan programs have unique eligibility 
requirements. In general, eligibility is based on what a 
business does, how they receive their income, the character of 
the business, and where the business operates. Also, businesses 
must meet size requirements and be able to repay loans from 
within the cash flow of the business, and must have sound 
purposes.
    In addition to the financing programs noted earlier, I 
would like to take a moment to highlight some of SBA's other 
services, in particular our counseling assistance programs that 
are set up in North Florida. If a small business seeks 
additional funding but perhaps needs some technical assistance 
to polish their business plan, we can absolutely help with 
that. Our office can connect a small business with a vast 
network of counseling services through the Small Business 
Development Centers and other resource partners that we have 
here. We have found that these services are invaluable in 
preparing a small business to seek additional funding.
    I am proud to work for the SBA, and I am proud to serve 
this community here in Jacksonville. Thank you again for 
inviting me today, and I look forward to speaking with you 
further.
    Mr. COMER. Thank you, Mr. Van Horn.
    Ms. Almond?

                  STATEMENT OF HILLARY ALMOND

    Ms. ALMOND. Thank you for allowing me to testify today.
    Just to give you a little background, I am Hillary Almond. 
I am President and Founder and majority owner of Almond 
Engineering. About 14 years ago we started. We have actually 
been in business for 12 years now, but our journey started 
about 14 years ago when I resigned from JEA, the local utility 
company here. I was an engineer for JEA and got promoted to a 
manger, and I actually handled all of the operations and 
maintenance for the department. So I had all the maintenance 
personnel. I sat on negotiation committees. I had a lot of 
experience dealing with a lot of different stuff.
    I resigned after our first child was born. I was going to 
stay home. After a year of doing that I told my husband if I do 
one more load of laundry in front of Oprah, I think I am going 
to go stir crazy. So he encouraged me to reach out and talk to 
old clients, and I started doing an engineering project here 
and there. I called it my naptime job. While my son napped, I 
would do a little work, and one job grew to two, to many.
    My husband is also a civil engineer. We realized it was 
time. I had too much work. We had another child by that time, 
and we wanted to go out on our own. So three weeks later we had 
a little office in San Marco, no clients except for the ones 
that I had brought on. He did not walk away with any of his 
clients. We had almost no savings because when I quit I took a 
60 percent pay cut, and it was just a leap of faith. We started 
Almond Engineering.
    Now we are eight strong, eight employees, and in our first 
year we are projected to make a million dollars this year. A 
lot of people say, wow, that is a lot of money. Well, over 
$850,000 of that goes back into the business with employees, 
taxes, and insurance. So you might be grossing a million 
dollars, but you are not making a lot. And every dime that we 
made goes back into the business. You are buying computers and 
you want to hire people, but you don't have the money to do it. 
It is a hamster wheel that you can't get off of. It is very 
difficult to grow your business. We have been trying for years 
now. We just don't have the funds to hire another PE, which are 
very expensive positions, to do the work.
    So, Jacksonville is a unique market for engineering firms. 
As a woman in business, we have gotten our Jacksonville Small 
Emerging Business certification, our JSEB, our DBE, and 
unfortunately shortly after the recession we went for our 8(a). 
I went through 80 percent of the application process, and my 
ambassador actually had me stop because she said because I was 
white, I would not be considered for 8(a).
    That was unfortunate, and I have been very shy to go back 
after 8(a). It is unfortunate. I should probably go after it 
again because it is an amazing opportunity.
    So getting loans, getting capital, it is very difficult as 
a small business. My husband and I are the only owners. We are 
the only shareholders in the company. So when you go to do an 
SBA loan, the banks shy away. Maybe that is something the SBA 
can work on. But when you go to a bank and you want to do an 
SBA, they constantly tell you no, no, let's go to provisional. 
They really do not help with the SBA process. So we have not 
been successful in that.
    We have never had government assistance. The only time we 
have ever gotten a loan was during the recession, and I don't 
know how we got through those years, but we did. We never had 
to fire a single employee. We paid them before we paid 
ourselves, and I refuse to go back and look at the books 
because I don't know how the bills were paid, but they were. It 
is very tough. Now, I wouldn't change it for the world, a lot 
of sleepless nights. There are a lot of rewards in owning your 
own business. But, yes, having government assistance would be 
wonderful.
    I mean, right now I need all new computers. I need to hire 
about three more employees. It is a wonderful problem to have, 
but unfortunately I just don't have the capital to bring those 
employees in, because you have to float their salaries for 
about six months in order to wait for the jobs to get done and 
the money start coming in.
    That is a very difficult problem for small firms. We hit 
the ceiling where we just can't break a little higher. We are 
working on it, but maybe something like AA would help or 
working with SBA to get something that would float us for a 
year for that business, because we definitely have the 
clientele and the book work.
    Thank you very much.
    Mr. COMER. Thank you.
    Ms. Phillips?

                  STATEMENT OF ROSLYN PHILLIPS

    Ms. PHILLIPS. Good morning. I am Roslyn Phillips. I am the 
Vice President of the Hester Group, a small, woman-owned, 
minority business that is certified as an 8(a) as well as a 
HubZone by the SBA.
    Thank you for the opportunity to speak with you this 
morning on the subject of small business disparities in access 
to capital.
    The inability to access much needed capital, as was just 
stated, already is quite a daunting task or an obstacle to many 
small and minority businesses, and it continues to make it 
difficult for them not only to survive but for them to thrive, 
not stifling the opportunity to grow as the banking industry 
continues to, it appears, tighten its lending policies for 
small business investment.
    Business owners who have not adequately positioned 
themselves to meet the credit standards find themselves 
utilizing credit cards or lenders of last resort with extremely 
high interest rates. That further erodes the ability of the 
small business to retain their equity to reinvest into the 
business or to improve their financial standing that would 
position them or allow them to get a traditional loan. Small 
business owners, when in crisis, often resort to taking second 
mortgages on their homes or even exhausting their savings in 
order to continue to survive.
    Hester Group, as I said, is a woman-owned, minority firm. 
Hester Taylor Clark, the owner and founder and president of The 
Hester Group, having received a computer for Christmas in 1998 
from her family, she really had had the desire to start her own 
business and be an entrepreneur and to have work/life balance 
with her two small children that they were raising at the time. 
And harboring that dream of owning her own business, she worked 
at warp speed, and by year end of 1998 Hester Group was a 
reality. Ms. Clark used her savings to capitalize her micro 
business in the early years, and as her business development 
efforts began to result in contracts, she was able to self-fund 
the initial growth of her business and hire a couple of people 
to work with her on the contracts that she had received.
    Entrepreneurs in many instances are excellent at performing 
the work of the business and providing the services, but 
oftentimes they don't have the skills or the ability to handle 
the business of the business, if you will. They either lack the 
time or lack the business acumen to manage the business, or 
they fail to realize the importance of the business side in 
ensuring the continuation and the longevity of their business, 
and that includes things like strategic management, financial 
planning, marketing, and the overall operations of the 
business. They are often too busy seeking new opportunities 
and, in many cases, as I said, performing the work and 
providing the services.
    Once, when asked how she knew her business was successful, 
Ms. Clark responded that she had money in the bank. It was 
successful. Well, that might have been true, but what she did 
not have was corporate infrastructure to make informed 
decisions to support the growth that she envisioned for her 
company.
    In 2011, having been in business for nearly 13 years and 
growing from a micro business to a thriving small business with 
about eight employees, Hester Group was ready to move to the 
next level. It was at that time that the recession hit, and it 
was in full force, and dollars that might have been available 
for marketing and communications, PR, which was the business 
that Hester Group was in, were tightening, and the need to 
diversify business revenue was apparent if the company was to 
grow.
    Having been successfully awarded local and state government 
contracts, Ms. Clark began to explore Federal contracting, and 
at that point it led her to the SBA. Ms. Clark spent months 
researching best practices for managing and growing her 
business, and available resources for training and business 
development. SBA became an invaluable partner to Ms. Clark as 
she sought to grow her business. In particular, she utilized 
the 7J Training Program and established a line of credit 
through the Loan Guarantee Program with the SBA.
    She identified mentors that helped her recognize what she 
needed to grow. As a result of that, she sought me out. We had 
known each other in the past, and she was looking to bring on 
someone with accounting and management background, the 
financial experience that I brought to the company at that 
time.
    Mentors were very important to her in helping her identify 
and make those decisions. Fortunately, the owner was always a 
step ahead of what was needed to grow the company to the next 
level, making sure that she positioned herself by adding me to 
the team to put in financial infrastructure that led to her 
ability to access capital when needed.
    From my more than 30 years of experience working with small 
businesses, it is my observation that the more things change, 
the more they stay the same for small businesses. The 
infrastructure is not in place when needed most of the time 
that allows them to get the capital that they need. The 
obstacles that have been identified over the years are lack of 
a solid business plan to make a case for loan or venture 
capital investment; lack of equity to invest; insufficient 
financial documentation that demonstrates past performance and 
profitability to support a loan; lack of knowledge of available 
resources such as the SBA, SCORE, MBDA, SBDC, Jacksonville 
Chambers Women's Center, Athena Link and others, all that were 
utilized by Ms. Clark in making her case and getting the 
information, the education that she needed. Understanding the 
importance of establishing a business relationship with a bank 
before you go in to get a loan is very, very critical in 
ensuring your ability to access capital.
    I know my time is up, so I am going to wrap this up.
    Continuing investment in education and outreach for small 
businesses is an investment in a thriving economy. The work of 
the SBA and its partners is just invaluable. Hester Group has 
been in operation now for 20 years. We are ready to move to our 
next level of growth. We are looking at the changes at SBA with 
the Protege Program, how we might be able to formalize some of 
the mentorship that we have had in the past in order to help us 
do that. We are an example of when things go right and you take 
advantage of the resources, and you are aware of them--a lot of 
times companies are not aware of the resources that are 
available to you and put those support systems in place.
    Hester Group now has nearly 30 employees and over $3 
million in annual revenue, and we appreciate the opportunity to 
present this morning.
    [The statement of Ms. Phillips follows:]
    Mr. COMER. Thank you very much.
    Mr. Grey?

                     STATEMENT OF DANE GREY

    Mr. GREY. Thank you, Congressman Al Lawson, Congressman 
James Comer, and the U.S House of Representatives Committee on 
Small Business for coordinating this hearing and for inviting 
me here to speak today. I would also like to thank the 
Jacksonville Chamber of Commerce for hosting this hearing and 
for its continued leadership in supporting the business 
community here in Northeast Florida.
    I am the President and CEO of Elite Parking and Elite 
Transportation Services. We specialize in transportation and 
parking management services for municipalities, downtown urban 
markets, airports and hospitals across the United States.
    Our company, which I founded in 2007, is known for its 
focus on innovation in parking and transportation. It started 
as a part-time project from my dormitory room at JU. We are now 
a national company with over 400 employees.
    We recently announced the expansion into the autonomous 
vehicle industry by becoming the exclusive provider of 
operational and management support for an autonomous self-
driving shuttle known as Olli, which is manufactured by the 
only U.S.-based manufacturer of autonomous vehicles, Local 
Motors of Arizona. Local Motors developed Olli in 2016 as a 
self-driving shuttle designed for sites using low-mass transit, 
such as airports, campuses, hospitals and municipalities. The 
shuttles, which will be operated by Elite Transportation, have 
a maximum speed of 25 miles an hour and include speech 
recognition capabilities that allow the vehicles to talk to 
passengers.
    From airports to university campuses, the future of 
autonomous vehicles will transform the way we think about mass 
transportation. Our company is preparing to offer expertise in 
transportation support and technology, making it easier for 
organizations and local communities to own and operate their 
own fleet of autonomous vehicles.
    We obviously look forward to continuing to develop our 
technology and transportation offerings such as autonomous 
vehicles throughout Florida, including here in Jacksonville, as 
well as Miami, Tampa and Orlando. We are also looking to expand 
into other areas around the country that are embracing this 
technology. Cities such as Jacksonville, San Jose, Ann Arbor, 
Boston, Pittsburgh, and Austin have been identified as areas 
that are embracing new transportation technologies in the field 
of transportation such as autonomous vehicles. In addition to 
those cities, we as a company are looking at expanding into 
additional places such as Kansas City, Akron, Cleveland, 
Atlanta, Savannah, Montgomery, Nashville, and Southern 
Kentucky.
    We have been blessed that our company continues to grow. We 
have great capital partners such as Signet Enterprise, a global 
private investment firm that provides us with capital 
investment to grow as an organization. As a small business 
which is growing, without the access to capital, our economic 
footprint in this sector would not be where it is today. While 
our company has seen success in accessing the much-needed 
capital investment, there are many stories of companies that 
have stalled or closed due to a lack of investment. While 
government at times can focus on assisting large businesses, 
which is important, ensuring that foundations are laid so 
smaller businesses can succeed is equally as important.
    Thank you again to the Jacksonville Chamber of Commerce for 
being such a great regional partner to businesses in Northeast 
Florida, and thank you again, Congressman Lawson and 
Congressman Comer, for allowing me this opportunity today. I 
look forward to answering any questions you may have.
    Mr. COMER. Excellent opening statements. Mr. Lawson, you 
assembled a very impressive panel for discussion here today. 
Since I am a Tennessee Titans season ticket holder, I was 
advised I should yield to you, since you are from Jacksonville, 
to begin the questioning.
    Mr. LAWSON. Thank you very much, Mr. Chairman.
    One thing I wanted to say before we start the questioning 
is you see us as politicians, but besides coaching basketball 
for eight years, I have also been in the insurance business for 
36 years. The Chairman here has also been in business. Serving 
on the Small Business Committee, we know the importance of 
accessing capital and the importance of how small business has 
contributed to the economy and employment here in America. So 
we are not only politicians but business owners too, and it 
gives us the opportunity to try to remove some of the obstacles 
in the way of small businesses to see how we can get more 
people in business.
    Mr. Van Horn, the micro-loan program has long been used by 
minorities and women entrepreneurs, yet the program only 
provides about $50 to $70 million per year in financing, much 
lower than the $23 billion in the 7(a) loan. Is this program 
meeting demand? And if not, what recommendation do you have to 
make it more effective?
    Mr. VAN HORN. I thank you for the question. I think the 
micro-loan program is doing a tremendous job. As a matter of 
fact, this is my first year in Florida. I spent the last 10 
years in Denver, Colorado, where I saw the micro-loan program 
exclusively produce a tremendous amount of small business loans 
to start-up capital for businesses that are just getting going.
    This also gives the ability for those small business owners 
to work with a technical assistance program through the micro-
loan program to actually build the business. They don't just 
give them the loan, pat them on the back and say good luck. 
They actually work with them on a number of different things--
their marketing, Quick Books, whatever it is they need 
assistance with to grow, and then ultimately getting them to 
the point where they are able to go to the larger lending 
institutions.
    I view the small business micro-loan program as a 
fundamental step toward small businesses that are just getting 
going and for those businesses that are just needing a small 
amount of capital.
    Something that we have also done through the SBA is give 
these intermediary lending institutions the ability to lend on 
the 7(a) platform as well. The Community Advantage Loan Program 
is a loan program that is our micro-loan program. Institutions 
are able to access it as well, and those loans are just like 
the 7(a) lending program that you would find in a bank. The 
purpose of this is to try to get more programs out to 
communities that don't necessarily have the lending 
institutions in place to offer these 7(a) loans.
    Mr. LAWSON. Ms. Almond, your testimony is very interesting. 
The problem is you don't have access to capital. Do you want to 
comment on the question I asked of Mr. Van Horn in terms of the 
capital resources that are available?
    Ms. ALMOND. I don't see that. Maybe we just are going after 
the wrong channels. The only capital we have been able to 
access is a line of credit based on our own personally. As I 
said, we go to the banks, and I have actually tried to go 
through several banks, and the bankers, the people who do the 
loans there don't even want to talk about SBA. It is uncanny. 
They don't even want to discuss it. I hit a brick wall every 
time, because I would love to get an SBA loan. That would help 
me, and I don't know if they can do it based on hiring people, 
but I do need new equipment. We just trickle in a computer 
here, trickle in a computer there. We just have the same 
$15,000 on the server. I had to front all that, because I have 
not found anybody who is willing to help us.
    We are a healthy company. We are not struggling in the 
sense of--yes, I do worry about the payroll, but I have not 
seen that available to us. I will be talking to you after.
    Mr. VAN HORN. Yes, absolutely.
    I work in the field for the SBA. Again, like I said, I 
cover 43 counties all throughout the Panhandle, all the way 
down to Orlando. There are two lending specialists in my 
district office, two to cover 43 counties. So what you just 
described is something I deal with on a daily basis, and I tell 
business owners that the best advocate I can be for you is to 
sit down with you one-on-one, find out what industry you are 
in, how much money you are looking for, and what you are going 
to be using those things for within the business. Something 
that the actual government has complete access to our number of 
systems that I can go back and draw upon for financial history 
to see what lending institutions are lending to industries such 
as yours.
    Too often, a business will walk into a bank that may just 
not be lending in the industry that they actually are in. And 
despite being a viable business and the cash is flowing well, 
it just may not be something that the institution is looking to 
finance. So finding the right banking lender at the right time 
is crucial to small business, and that is one of the biggest 
services that I can provide, working with small businesses one-
on-one.
    Mr. LAWSON. Ms. Phillips, you seem to have a great deal of 
success in cutting through all the problems. Would you really 
talk about how you were able to access capital in your group 
and what you all have done to gain access to SBA?
    Ms. PHILLIPS. Thank you, Representative Lawson. The Hester 
Group early on established a line of credit with the bank that 
we have a banking relationship with, but it was based on a 
personal line of credit and not from the business. We were 
ready to move into the next level once we had received our 
designation as SBA. The types of contracts that we were looking 
at required that we had a much greater need for access to 
capital than the $50,000 allowed for. Although we had a long-
term relationship with that bank, for the business, instead of 
using that bank, we went to a community bank, and it was 
through the community bank working with SBA that we were able 
to get a loan guarantee that allowed us to access money as 
needed for the contracts that we were receiving. Having those 
contracts in place obviously was a great benefit to us because 
it helped to show our ability to repay those loans. But I think 
the first thing is that Mr. Van Horn is correct. Sometimes you 
are not going to be able to go to your established bank because 
they may not be making loans of the type that you are looking 
at for the industry that you are looking at.
    Our first contract, our first major contract, we needed to 
have the ability to pay 20 employees. That is a hefty contract, 
and these were licensed employees that might have been 
engineers or what have you, so they demanded a high rate of 
pay. Hester Group at that time found that support through the 
community banking industry.
    Now, what has happened with some of the changes that 
happened during the recession is many of those banks have been 
bought up. The one that we went to is no longer in existence. 
It was bought by someone else. So making sure that you have all 
that information and that you don't just stop at that one door. 
If one door closes, you just go to the next one and knock on it 
until you get what you need. Again, the SBA has lots of 
programs, lots of support, and one of the challenges I think is 
that people really don't know what is available to them as far 
as counseling and support and training through the SBA, and 
making sure that there are avenues to get that word out is very 
important.
    Mr. LAWSON. Mr. Grey, starting your business from a dorm 
room at JU, how have you been able to access capital and move 
all across the country?
    Mr. GREY. What we did initially, going back to Ms. 
Phillips' statement, was we put together a business plan. Back 
then I knew that it was just something we were doing as a side 
project. I was working a full-time job and at the same time 
growing my company. Once I went and jumped out to do it full 
time, I knew I needed to do a few things.
    One is to create something different, something that would 
change the world. And two, have a viable product that our 
customers can actually use. And three, put together a business 
plan that can actually help us with a group that understood our 
business. So it was a combination of different things.
    After we went and presented for our capital, then we 
decided it was important that we put together a board so that--
I still have my controlling interest, but a board that made me 
accountable as a CEO for the things that I did and decisions 
that I made. That helped us tremendously as we began to grow, 
because capital then came because we had something we could use 
to go to market and say here, look at what we do, and this is 
how we do it, this is why we are different. That was tremendous 
for us to grow and has been tremendous for us to keep growing.
    Like every company, growth is great, but it also comes with 
significant complications and problems. I can tell you from 
running a payroll and thinking I love off payroll weeks and 
love the regular weeks. You go through your mind, and as the 
company is growing it constantly becomes more and more 
important to have access to capital, and our partners have 
provided that for us. So it has been something great to be part 
of programs where the SBA has funded, such as the DB programs. 
You know that the program has helped more companies grow and 
expand.
    Mr. LAWSON. I can't tell you how many Committee meetings we 
have had in the past year. One of the questions that we always 
ask so that we can work on issues that are really important, 
what are some of the problems? What do you see that we could do 
in Congress to help SBA, especially in the application process, 
undo regulations that you all see that we have on small 
business that we might be able to change?
    Mr. VAN HORN. I think something you have heard from the 
panel here is the lack of communication, something that 
oftentimes is, quite frankly, one of the biggest obstacles that 
we face as the SBA. Getting our name and our programs out there 
so that people know within the communities that we serve what 
is available to you, what can you get access to, that is a huge 
obstacle for a lot of small businesses. I think just the fact 
of knowing what an SBA loan is or how it works or how to get 
one, where do you go as far as where the banks are.
    Unfortunately, SBA can't make a banking institution make a 
loan. These loans have to actually go through their committees, 
their boards, and ultimately our service is through that 
banking institution. So depending on what type of lender it is, 
they can make a credit decision right there in-house without 
SBA even giving final approval prior to them actually 
disbursing funds.
    There are a number of different programs. We have 11 
different lending programs. Currently, right now, we are making 
term loans through lines of credit, cyclical financing types of 
loan programs.
    Things that primarily get in the way, you could have credit 
problems. Credit is an issue. There are a number of collateral 
that one must pledge to get an actual loan, something that we 
can work on as far as the programs and how they work. We are 
providing a Federal guarantee for these loan programs so that 
we can shore up a little bit of the risk for the banking 
institutions taking these loans on. But maybe we should get 
them to look at that a little bit differently.
    Mr. LAWSON. That's fine. I am going to yield back to the 
Chairman and maybe come back for some other questions. But I 
want the Chairman to be able to ask some of the questions that 
are critically important.
    Mr. COMER. Thank you, Mr. Lawson.
    Touching on what you said, Mr. Van Horn and Ms. Almond's 
testimony, I will just give you a brief summary of my 
background. My business is agriculture. I am a farmer by trade. 
I have been in Congress 16 months. Before I came to Congress I 
was commissioner of agriculture in Kentucky, which is what Adam 
Putner is here in Florida. We worked together on some issues.
    But I also was a director of a community bank for 11 years, 
and being from a very rural, poor community in Appalachia in 
Kentucky, we had two community banks. Unfortunately, the bank 
that I served as director of did not do very many SBA loans, 
very few. The other bank did. I am not a director of the bank 
anymore. I resigned when I became commissioner of agriculture.
    But how can we get some of these community banks that, for 
whatever reason aren't doing many, if any, SBA loans--and there 
are several in Kentucky, throughout Kentucky. There are banks 
that really love this game. There are some that do not. What 
can be done to get the banks to utilize the SBA more?
    Mr. VAN HORN. SBA lending in itself is somewhat of a 
specialty in the banking industry. The larger banks have entire 
divisions that are dedicated to doing only SBA loans. They may 
have 30 to 40 loan officers that understand how to originate 
service from start to finish, whereas a community bank in a hub 
in a rural area may only have one individual who hasn't even 
ever done an SBA loan.
    Something the SBA has done here within the last five years 
to make credit easily accessible to those rural communities is 
brought all of our systems online and utilize a system called 
SBA-1 which takes a loan from origination all the way to the 
back end. This is a system that ultimately can be easily used 
at a bank, and it takes just a little bit of training from the 
district office to those institutions to be able to get on the 
platform with SBA.
    And then really helping the bank understand and recognize 
an SBA loan when it walks in the door. That is something else 
we can train our banking institutions on. Unfortunately, like I 
said, I am one of two individuals in the district that covers 
43 counties. Getting out to all these banks is something that 
is very daunting. I spent the last week in Pensacola and 
visited a number of smaller institutions that may only have one 
or two individuals.
    The biggest thing I can do for them is be a resource to 
them when they think they have an actual SBA loan in front of 
them, someone they can call, someone they can get in touch 
with. I have also offered a number of different avenues to get 
eligibility questions and credit analysis questions answered to 
these financial institutions. We have a website called 
7(a)Questions.com, 504Questions.com, where they can send in an 
eligibility piece describing what kind of loan they are looking 
at and seeing if it is eligible for SBA and then taking it 
further beyond that.
    So we are working very hard to get into these communities 
and really spread the word about SBA. Again, I go back to that 
community advantage program. That was something that was 
brought on by the Small Business Jobs Act, and it was developed 
to reach more rural communities and communities in which we are 
trying to gain more access to capital out there because of the 
lack of lending institutions they may have to choose from. We 
are getting the opportunity for these 7(a) loan programs to 
actually be done through micro-loan institutions, all the CDFIs 
that we can qualify out there to offer these for more access to 
capital.
    Mr. COMER. Great.
    Switching gears a little bit, Mr. Grey and Ms. Phillips, 
what could be done to get more minority entrepreneurs? I know 
access to capital has to be a huge impediment. That is a huge 
impediment to a lot of small businesses. But you all are 
absolutely huge success stories. What can be done to get more 
minority-owned businesses started? Is the SBA in your opinion 
doing enough to help with educating young minority 
entrepreneurs about services that are provided? Is there more 
that the government can do?
    In Kentucky--I don't know about Florida, but in Kentucky, 
there are few minority-owned businesses that we have, and that 
is something that, when I was campaigning for Congress, I 
wanted to try to work with. We have Murray State University in 
my district, which remember them when you are filling out your 
brackets against West Virginia.
    [Laughter.]
    It has a tremendous program there to try to get more 
minority entrepreneurs.
    What advice do you have to try to expand minority 
entrepreneurship in America?
    Mr. GREY. Well, if I had to give my opinion, I think first, 
as far as the community, we as a community have to reach out to 
those schools and let people know what it means to be an 
entrepreneur and how they can get started.
    The second thing is that the Federal Government should fund 
micro-loan programs to help small businesses that are starting 
out. I mean, I know the Chamber has a great one here locally 
that they try to use to get these smaller companies, whether it 
be innovations or payroll, because when you think about it, if 
you are looking in a segment to start a new company, you have 
to make payroll. Are you going to put it on your credit cards? 
You are going to max them all out, which is going to run your 
credit score down. Or you are going to use every dollar you 
have in your savings. To do that, to go to a traditional bank 
to get an SBA loan is going to be fraught.
    So there are more roadblocks set up to stop you from being 
able to grow your company than there is roadblocks that are 
avenues to help you grow your company. So micro-loan programs 
represent a great opportunity to do so, and they can also give 
the companies what they need to continue to grow.
    Ms. PHILLIPS. If I could add, one of the points that I was 
going to make earlier before I ran out of time was the impact 
of the educational system on even the belief or the 
preparedness of individuals to want to be entrepreneurs. The 
lack of educational achievement, what is going on in many of 
our cities and our urban communities, and the disproportionate 
involvement with the criminal justice system I think negatively 
impacts small businesses and entrepreneurs going in.
    I think it starts back with even the public school 
educational system, the need for having more technical 
education programs where people get skills and learn a trade 
that would influence their ability or their desire to become an 
entrepreneur would be a part of it.
    Many of the businesses that we do see being developed are 
developed by default, if you will, out of a necessity because 
of that lack of education or skill or having had some kind of 
involvement in the criminal justice system, people can't access 
the jobs that are available. So by default, they decide to 
start a small business of some sort based on something that 
they feel that they can do. But because of that lack of 
education or involvement in the criminal justice system, they 
cannot access any capital in any arena.
    So looking at ways in which we can assist those micro-
businesses and providing some funding to them as they grow and 
as they are able to do something, because if you start a small 
yard maintenance business and your lawnmower breaks and you 
have nowhere to go in order to replace that lawnmower, then you 
are out of business and you may not have other options or those 
kinds of things.
    So micro-loan programs, small business programs I think 
will help many smaller businesses and those businesses that are 
by default or out of necessity, because they want to make a 
legitimate earning to provide for themselves and their families 
I think is important. But as you grow into the larger 
businesses too, ensuring that there is an avenue to success by 
having available education and counseling support, as well as 
we used a lot of mentors. They were informal mentors. So having 
people that are successful that are willing to give of their 
experience and knowledge to young people or smaller businesses 
is important as well.
    Mr. COMER. Great.
    Mr. Grey, you mentioned in your expansion you were looking 
into Southern Kentucky. Give me a call if you ever end up in 
Southern Kentucky, we will see if we can be helpful.
    One last question, and then I will yield back to Mr. 
Lawson, and I am switching gears again.
    With respect to the potential of having community bank 
Dodd-Frank reform, would that have any impact on the SBA? 
Because I think that has been--I was on a bank board before 
Dodd-Frank and after Dodd-Frank, and I understand why Congress 
passed Dodd-Frank, because you had a lot of bad actors, like 
Lehman Brothers and some of the big Wall Street banks, Bear 
Stearns. But in my opinion, and this is my opinion, it had an 
adverse effect on community banks because community banks are 
very different than the big banks, and the community banks 
didn't violate any laws, they didn't have hardly any bad loans 
on the books.
    If Congress is able--and the Senate, I believe, has a 
legitimate chance at passing some type of reform, at least to 
reduce the regulatory burden and the compliance requirements 
for community banks, just community banks, not Wells Fargo or 
Citibank or any of those but community banks--would that, in 
your opinion, Mr. Van Horn, have any impact on the SBA 
especially or community banks' ability to provide access to 
capital?
    Mr. VAN HORN. With regard to Dodd-Frank and community bank 
lending, actually SBA provides quite a bit of liquidity to the 
bank if properly utilized. They can sell our loans on the 
secondary market. Our loan programs actually offer quite a bit 
to the community banking industry. I have seen community bank 
lending utilizing our programs because of what has happened 
with Dodd-Frank and what-not.
    Working for the Federal Government, I would love to give 
you an opinion on what I think. Unfortunately, I don't think 
that would be prudent. If you would like to speak later, I 
would love to talk. Fortunately, sir, like you have heard on 
the panel here, there are a number of things we can do.
    Just the programs and services I have gone over today, that 
just touches on a small amount of the actual resources that we 
provide. We have a robust resource network partnership here in 
the local area. Our counselors and women businesses are 
unmatched throughout the country. I have been a part of a 
number of them across the country.
    I think educating entrepreneurs and individuals that want 
to become entrepreneurs, even in an earlier setting, high 
school settings, those types of settings would be crucial for 
providing the resources and just the knowledge of what is 
available out there.
    But to get back to Dodd-Frank and the banks, I take things 
as they come, and I react to markets. I hopefully can get our 
programs out to more entrepreneurs here in the future.
    Mr. COMER. Great. Thank you.
    I will yield back to Mr. Lawson.
    Mr. LAWSON. Thank you, Mr. Chairman.
    One of the things, the gentleman stated that when you are a 
politician and you are running for office, one of the first 
things you say is I am going to bring jobs into the community. 
But when you get to Congress, even coming from the state 
legislature, you get into Congress and all of a sudden it hits 
you in the face, what jobs are you going to bring to the 
community? Are you going out to recruit corporations?
    For example, Amazon, we participated in the application 
process to try to bring Amazon to the Jacksonville area, which 
probably could attract 5,000 more jobs. But there was other 
competition throughout Florida and other places for Amazon to 
be located, and we subsequently found that they went someplace 
else. We didn't learn right away that the success of job growth 
is related to small minority businesses, and they are growing 
at a very fast rate.
    So the first thing you want to do is try to see what can 
you do with SBA and other obstacles, just as the Chairman 
talked about, Dodd-Frank, to make access to capital one of the 
biggest things that affects small business growth. So as a 
result, on the Small Business Committee, one of the things that 
Congress, what we tried to do is to bring these hearings all 
across the country down into the communities where the small 
businesses are located to let the small businesses tell you 
what you can do in Congress in order to make it easier for them 
to get capital, to hire employees, et cetera.
    So one of the questions that I have is how small business, 
SBA, improve the application process and procedures so that 
more minority and small business can take advantage of the 
program. So, Mr. Van Horn, I know we asked you a lot of 
questions, but it is critical that we find out whether there 
are major obstacles that stand in the way that need to be 
changed that we can bring in before the Committee. We hear 
stories like Ms. Almond's all the time. So what I am going to 
tell you is that one of the things I am going to do with the 
staff that we have here is to make sure that we do everything 
we can to help you in your situation. You can go ahead.
    Mr. VAN HORN. So in regard to getting more access to 
capital, can you repeat the last part of your question again?
    Mr. LAWSON. Let me just read the whole question. How can 
SBA improve the application and the processing procedure so 
that more minority small businesses can take advantage of the 
program? I know one of them you said earlier is lack of 
communication. In the application process, you also help them 
through the application process, because it may become 
expensive. They have to get an attorney or someone else to help 
them file the application.
    Mr. VAN HORN. Yes, sir. I will touch on a number of things 
that you alluded to. So again, I have been with the SBA for 10 
years. When I first started with SBA, I worked with a number of 
career employees who have been with the agency for 20, 30, 40 
years. The communication to the public about SBA loans may be 
from business owners, may be from bankers that don't want to 
deal with SBA lending. There are a lot of misnomers out there 
about the Small Business Administration, and I am here to tell 
you that during my time I have seen the SBA makes leaps and 
bounds to try to make access to capital easier.
    What I mean by that is when you walk into a bank and ask 
for an SBA loan, first of all you need to speak to a 
specialist, and you need to speak with the person who knows how 
and what to do to identify you and what they are going to 
require of you. Again, this is not a stack of paperwork 
anymore. This is an online program. When the Small Business 
Jobs Act came out and they raised the limits on the 7(a) loan 
program from $2 million to $5 million, you are right, a lot of 
lenders started to do those bigger loans, starting working with 
a lot more existing businesses.
    So what we did was kind of tailor that back to what we call 
the 7(a) small loan, which was an expedited loan processing 
that with the system that we are utilizing now, SBA-1, can 
qualify you and ultimately get you funds within a week's time. 
These systems were put in place to where you can sit down and 
actually do an application with your banker right there and 
know if you have a conditional approval for funding.
    Time is money. I realize that. These individuals realize 
that. But when it comes to getting our access to capital and 
what we are doing to try to help that, we are improving our 
systems daily. Ultimately, again, we are a government 
organization. We are a little bit behind what you would see in 
the public sector as far as accessing systems. That may be 
something that you can help us with, getting more access to 
faster operating systems and things that we can utilize to get 
access out. But we are trying to do everything we can.
    Most importantly, we are trying to listen to the community 
that we service and find out what they need and what is it that 
we can do here locally to try to make those things happen. I am 
not trying to change the markets in Nebraska or Tennessee. I am 
trying to change markets here in North Florida, the territory 
that I cover. So I am working hard and my district is working 
hard to make sure that the individuals that are looking for 
capital are going to get service the right way.
    Mr. LAWSON. Ms. Almond, what should we take back to 
Washington tomorrow?
    Ms. ALMOND. Mr. Grey hit the nail on the head. He said 
something so profound. As a small business owner with eight 
employees, I have eight employees, and that is eight families 
that I am responsible to make sure that they pay their bills. 
If I couldn't get my 8(a), getting government contracts in 
Jacksonville as a small business is very difficult, especially 
for a civil engineering firm, because the set-asides are 
usually poor. Other types of businesses can get concrete work, 
or maybe janitorial services. But a civil engineering firm--and 
I know I am being very specific here--the only way we tend to 
be able to get government contracts is to piggyback on a larger 
firm. A larger firm that goes out to these are engineering 
firms. They are not willing to hire a civil engineering firm to 
get credits. They are going to get another--they are not 
competing with their work.
    So our business is very heavily dependent on the private 
sector. I would say 95 percent of our work is private sector. 
Anybody who works with developers knows that payment is not 
always going to come out on time. You love to get a government 
contract because you know you are going to do the work, you are 
going to do it on-site, you are going to get paid in a certain 
amount of time.
    The problem that I see, as Mr. Grey said, is you want to 
make payroll. So if that client doesn't pay you--hey, the check 
is in the mail--it doesn't show up and you have payroll, you 
are on the credit card. Or in my case, I can't tell you how 
many times I have not taken my pay, my paycheck, because it is 
important to me that my employees get paid, and I cannot count 
how many times that means I am late on a bill. But that is my 
responsibility to my employees. So our credit is not stellar, 
where some other people's would be.
    All the banks we talk to are SBA loan banks, and I am 
talking to the SBA people. But if you don't have 800 credit or 
above, they just don't want to deal with you. But we deal with 
a cash flow crisis because we are private sector dependent. 
That is a big problem. I mean, our credit is not bad, but it is 
not stellar. We have great clients, we have a great reputation, 
we have backlog, but they don't want to look at that. So that 
is a huge problem for small businesses. Just something to 
consider.
    Mr. LAWSON. Okay. And what I was piggybacking on is in 
saying that when we go back tomorrow--and maybe Ms. Phillips 
can comment on that--oftentimes we ask the Chairman of the 
Committee and so forth to try to find out when we are out in 
the field what situation can we change. Do we need more capital 
for SBA? A lot of people probably in this room today are small 
business owners, and the idea also to get information on what 
we might be able to do in Congress to help them grow their 
business and at the same time change because we have the people 
coming over at SBA that we are trying to find out what we can 
bring back to them for them to change. They seem to be pretty 
willing to make those changes.
    One other thing I want to say, Ms. Phillips, is you said 
something in your statement that because of the criminal 
justice system, how some people automatically, because they 
can't get into the job market, it is by accident they start 
their own business. Well, Congress should look at that area. 
When I was in the state legislature, we tried to make sure 
that, for the first time, that some people involved in the 
criminal justice system that was not heinous crimes and so 
forth be given another opportunity, because it doesn't make any 
sense that they cannot become full citizens in the community.
    So as a result, that is one area that I will be working on 
in the congressional area to try to see what can we do to set 
up special programs where we can review those applications a 
little bit differently so that they will have the opportunity 
to grow their business. It might be one mistake, but we aren't 
going forward by preventing people from having an opportunity 
and resources, because we have a lot of businesses now that are 
beginning to hire these individuals and giving them the 
opportunity so they can really take care of their families. So 
I just want you to know that I really appreciate you saying 
that. Maybe you can comment on what we might be able to do to 
make it better.
    Ms. PHILLIPS. Thank you. It sounds like you are on the 
right track. Again, many times people do have a skill or a gift 
or a talent that they could utilize in order to gain if not 
employment, to start their own business and to be able to be 
productive and create income for their families. So you are on 
the right track.
    But again, education is key, making sure that people are 
aware of what is available, the resources that are available to 
them. Here at the Chamber, the Women's Center has been an 
invaluable partner to us, working specifically with women and 
the issues that women address or women face in business. The 
Hester Group is a woman-owned minority business, so we have 
obstacles that come at us from many angles as we begin to look 
at moving to the next level and growing the business.
    But making sure that there is not only the programs in 
place, and SBA certainly I would think, based on the testimony 
of Mr. Van Horn being only one of two in a 43-county area, that 
they could use more resources, getting the word out and making 
sure that there are field people that can work with the lending 
institutions as well as with the businesses that need the 
support is helpful. The SBDC has been very helpful. But if you 
don't know about these resources, then you can't tap into them. 
The Hester Group started as a PR marketing firm. We can help 
the SBA with that.
    [Laughter.]
    Ms. PHILLIPS. I had to say that. The boss is in the 
audience.
    [Laughter.]
    But making sure the information gets to the people that can 
use it is very critical and very important to making sure it 
works.
    The 8(a) program and the Federal programs that are set-
asides and that kind of thing that you have to qualify for, 
they are not the golden egg for small businesses. We run into 
SBA-approved businesses every day that have never received a 
Federal contract. De-bundling some of the very large contracts 
is really important for small businesses to be able to access 
and get awards of contracts that would support going to a 
lending institution maybe and showing their repayment ability 
or stream of income to repay that helps get the approval. But 
when you have $100 million contracts that are being let by the 
government, there is limited opportunity for small businesses 
to really compete to get those kinds of contacts. So de-
bundling those contracts or making them smaller so that we can 
be competitive is something that the Hester Group for many 
years has been addressing and talking about.
    The business of being in business is hard work, and I am 
sure all of these business owners spend a lot of time in 
business development. Relationships are very important. We talk 
to people for years, years, before we are able to identify an 
opportunity where we can work with an agency. It doesn't happen 
overnight.
    Mr. LAWSON. Mr. Grey, if you were testifying before the 
congressional committee next week, and they asked you the 
question what can Congress do to improve or remove some of the 
obstacles and so forth, I know that probably in the type of 
business you are in, there is a lot of paperwork and a lot of 
things. What can Congress do to remove some of the obstacles 
that keep you from growing your business?
    Mr. GREY. Well, first, we are a little bit different. A lot 
of our stuff is regulated because we are transporting the most 
precious cargo ever, humans. So I can understand some of the 
regulations. From the small business side in terms of access to 
capital and growth, I think some of the policies or regulations 
that are created for small companies are kind of almost like an 
oxymoron. Going back to small business access to capital and 
having to have an 800 credit score but you are using your 
credit cards, it doesn't kind of go hand in hand.
    So having an opportunity or creating legislation or a 
vehicle that can help small business gain access to capital and 
then go through the education process of gaining more 
opportunities would help small businesses tremendously.
    Mr. LAWSON. Ms. Almond, since you have had a lot of 
difficulty in terms of being able to employ those eight people, 
if we can take a message back that can help you more for you to 
be able to grow your business, is it just access to capital 
sources that you can go to?
    Ms. ALMOND. Well, we still are a very healthy company. I 
don't want anyone to think we are dying down here. No, we are a 
very strong company. We do what it takes to get work.
    Having access to capital is only one aspect. I don't like 
how difficult it is to get government contracts. It is 
extremely difficult, and I have been working on it for 12 
years. I worked for JEA, and getting a JEA job is almost 
impossible. Everybody wants to use the big, expensive firms. We 
do the same quality work for a lot less, so why are small 
companies not given more set-asides?
    Like I said, having government contracts is a very nice, 
steady stream of income. They are not going to disappear one 
day, which happens a lot in the private sector. So it is a two-
fold system. Yes, access to capital right now would be enormous 
for my company, because I am at that precipice where I need it 
because I need to hire more people to handle the workload that 
is coming in. It is incredible what is happening today. Our 
work has exploded, but I have to handle that with the staff I 
have, which is incredibly difficult. But again, it is private 
work, so we hope we get paid at the end of the day.
    So I think it is two-fold. Make it easier to get SBA loans, 
let us know more about it. The places I go, I am asking around 
people who have not gotten SBA loans but know the process. So I 
am talking to, I think, the right people. But also, don't make 
it so difficult to have qualified small firms do government 
work. I love Jacksonville. I was born and raised here. But it 
is a good ol' boys network. I mean, I know I am not saying 
things that nobody knows. So it is incredibly difficult to go 
out there and just try to prove yourself that you can do these 
jobs. I think it is a two-fold system here. I don't think the 
access to capital is the end-all and be-all of helping small 
firms.
    Mr. LAWSON. I am going to ask the man to change all that.
    [Laughter.]
    You wanted to comment, Ms. Phillips?
    Ms. PHILLIPS. Yes. In preparing for today, I actually 
reached out to several small business owners and just asked 
them what some of their experience has been, and the access to 
capital they confirmed was one of the greatest challenges that 
they have.
    One of the things that they mentioned, and I knew a number 
of things that I mentioned in the testimony that people use 
their charge cards and other things, but there are these 
alternative finance companies, I will say. They named several 
of them. Several of them named the same companies that small 
businesses are now going to, and based on their bank statements 
and the revenue that they are generating on a monthly basis, 
they can very quickly get loans. But some of these loans are at 
30 percent interest, 30 percent interest. The devastation that 
that has on a business, that is 30 percent of whatever the 
amount they are lending that they can't reinvest into their 
business or that they cannot use to make payroll or what have 
you.
    One individual told me yesterday that she borrowed $20,000 
after the hurricane in order to make repairs to her building so 
that she could continue to operate, and though she paid it back 
in 11 months, she paid $6,000 in interest on $20,000. That is 
tantamount to loan sharking, it seems to me.
    So I don't know if there is any regulation that can be done 
with those kinds of things or not, but certainly that was a bit 
of a surprise to me, and I heard it from more than one.
    Mr. LAWSON. Mr. Chairman, with that, I yield back.
    Mr. COMER. Thank you.
    One thing I want to catch up on that we hear a lot, and we 
have had a few Committee hearings, we the Small Business 
Committee, pertaining to the difficulty with small businesses 
to obtain government contracts. I have two huge entities in my 
district that have a lot of government subcontractors, 
contractors and subcontractors, Fort Campbell military base in 
Fort Campbell, Kentucky, and then we had in Paducah, Kentucky a 
uranium enrichment plant that is being deactivated by the 
Department of Energy. So that is a huge, huge project, and a 
lot of our small businesses complain that only the big 
corporations get in and that they are at the mercy of those big 
corporations when they can do the same thing. So that is 
something that the Committee has heard in the past. It is 
something that I am going to try to do everything I can to see 
that the small business is on a level playing field with the 
big, mega, publicly-traded companies. So I appreciate that.
    Mr. Lawson, that concludes my questioning. I will yield 
back to you for any further questions. If not, then you can 
provide your closing statement.
    Mr. LAWSON. Okay, Mr. Chairman. I just have one question. 
For those of you who have previously applied for SBA loans, 
what help or insight can you offer for those considering 
applying for loans?
    I might start off with Mr. Van Horn and just go through the 
panel before we make any closing statements.
    Mr. VAN HORN. What insight can I provide to someone 
considering an SBA loan?
    Mr. LAWSON. Right, considering an SBA loan.
    Mr. VAN HORN. I would consider utilizing our full service 
of resource partners to help you develop a business plan that 
you are going to be able to walk into the bank with and have 
all the different things that they are looking for addressed.
    I would also consider being very realistic with the money 
you are asking for. If you want $100,000, if you want $1 
million, know where you are going to be putting that money, and 
make sure it is clearly defined in your business plan. The 
first thing a banker or a banking institution is going to do is 
read your executive summary to find out who you are, and then 
they are going to flip to your financials. They want to look at 
your cash flow projections and/or, if you are an existing 
business, they are going to want to see what that cash flow 
looks like, and they want to know what are you going to be 
utilizing those funds for within that business, because 
ultimately they want to know how you are going to repay them is 
what it comes down to.
    Can I touch on a couple of different things as well?
    Mr. LAWSON. Yes.
    Mr. VAN HORN. As far as 8(a) goes, I work in an office that 
has about five individuals that work with the 8(a) program. 
Something I have done with the financial division within our 
district is to start working with the 8(a) firms that are first 
coming on and then working our way through the existing 8(a) 
businesses to connect them with banking institutions that are 
familiar with their industry so that they have an avenue of 
capital to reach out to when they need that. I think that is 
crucial. From the beginning hopefully that can happen, and I am 
trying to make sure that that is happening at this point now.
    But to get back to what would prepare an individual, I 
would ask that an individual considering SBA financing--and I 
know this might come off a little brazen, but I would like to 
talk to you. I would like the opportunity to sit with you. I 
would like the opportunity to utilize the information I have at 
my fingertips to help put you in the right seat in front of the 
right person at the right time. I have found that that is one 
of the biggest things that I can do to help a small business 
such as yourself, Ms. Almond, such as yourself, Ms. Phillips. 
Those are the types of things that I can personalize and try to 
get the right answer or the right lending institution to you at 
the right time.
    So again, be realistic, and have a firm, developed business 
plan, and utilize the resources that we have here. Most of the 
resources that we have are actually free of charge or a small 
charge, and that is few and far between when it comes to small 
business. Nothing is free in business. But we would like to 
make sure that you are getting the information and the mentors 
ultimately that you need to be successful.
    Mr. LAWSON. Ms. Almond, did you want to comment?
    Ms. Phillips?
    Ms. PHILLIPS. I think he touched on all of the points that 
I made earlier, that solid business plan and the importance of 
it to attracting venture capital or getting bank financing, 
making sure that you have some equity. Financiers want to see 
some skin in the game, they say, in order to show your 
commitment to the business and your willingness to invest your 
own funds into it.
    Financial documentation. Having graduated from FSU with a 
degree in accounting, you need to make sure that your finances 
are in order, your tax returns, all of those things, that you 
are meeting those responsibilities and those requirements and 
have them in place.
    Being able to show your past performance and your 
profitability in that past performance, your success there, is 
important.
    Utilize your resources. The Women's Center here, as I said, 
we utilized quite a bit. If they cannot help you, they 
certainly have the referrals to the resources that can assist 
you as you go through your financing.
    Understanding the importance, again, of having a banking 
relationship is also important, I believe.
    So if you do all of those things, as well as finding a 
unique niche--Hester Group is very good at managing and 
attracting good talent to fulfill the needs of our clients. So 
what makes you different from all of the other small businesses 
that are out there competing to do the very same thing and 
being able to share that. You have to have an elevator speech, 
and everybody you talk to, you need to have your business cards 
and you need to be passing them out.
    But as it relates to getting the capital that you need, 
utilize your resources. Get a mentor.
    Mr. LAWSON. Mr. Grey?
    Mr. GREY. My last thing would probably be a lot of 
companies would probably look for infrastructure to grow upon. 
So that type of capital is very complex capital because it 
sometimes has great yield, and it can also be a great loss as 
well. So understanding core values and aligning your 
organization. Core values would be one of the areas where I 
would say we struggled in our initial set-up and having to 
figure out how to get the right people, because when you start 
off as a company of 100,000 and you get to a company of a 
million, and then two, and then 15, you are a whole different 
organization. So having that type of brain power to help you 
grow is something that is crucial, and understanding how to 
manage that brain power as well is critical for any business 
owner.
    Mr. LAWSON. Okay, thank you very much.
    Before I make my closing comments, I understand that Mr. 
George Morgan is here from the City Commission.
    Will you please stand? Thanks for being here with us today.
    [Applause.]
    Ladies and gentlemen, first of all I want to thank the 
panel here for their input today, and I want to thank all of 
you all for coming here today. Hopefully in some way, the 
information that was provided from the panel will be very 
helpful to you in the business process.
    I would like to say that I have several of my staff members 
who are here that can be very helpful to you. Margaret is a 
legislative director. Jenny, who we got from Jacksonville, is 
here. Tony is here. The staff director, Cardinal Wesley, is 
here. We are located, as you know, on David Street.
    So I really would like to take some of the personal 
situations that you experienced, Ms. Almond, that we can really 
help you through the whole process. And I want to say, Mr. Van 
Horn, we will take back that other staff as needed in order for 
all of the areas that you have to cover--I would just like to 
say, I think you are doing a tremendous job.
    I would like to say to the Chairman from Kentucky, since 
this is March Madness, I wanted to remind you that in 1972 we 
beat Kentucky on our way going to the national championship. So 
I don't want to forget about that.
    [Laughter.]
    You were there in '72? That was a great feat. I might say 
that last year I had a March Madness party that I had for 
Congress whenever she was playing Xavier. So I did all that 
bragging, and when we got there they blew us out and I didn't 
have very much to say. So I hope it will be a little bit 
different this time in playing Missouri.
    [Laughter.]
    But I learned a long time ago, and certainly in the 
legislature, that the reason why we are here is because you 
want us to work on your behalf. That is what my philosophy has 
always been, and this is what Congress should always be about, 
is bringing committees to the communities. There have been 
several in here I know who have traveled up to Washington, 
D.C., but this is what it is about, is bringing the committee 
down here so you can hear firsthand.
    I am so fortunate that the Chairman and I came from similar 
backgrounds, rural. He used to tease me that when he passed 
through my city, if you blink your eye, you miss the city. But 
that is where it all started from. So we want to make sure that 
we are going to grow the economy and have more jobs, that we 
remove all of the obstacles that stand in the way of small 
businesses.
    So we are here to work with you and take this message back. 
It is going to be kind of busy up there the next couple of 
weeks, but let us know when you are coming by so that we can be 
there for you.
    SBA, I guess we asked a lot of questions, but it is real 
helpful, a lot of the information that you gave us today.
    With that, Mr. Chairman, I yield back to you.
    Mr. COMER. Well, thank you, Mr. Lawson. Thank you for 
coming up with the idea to have the field hearing here in 
Jacksonville today.
    I want to thank our witnesses for your testimony.
    I especially want to thank our business owners for the 
economic impact, for the risks that you have taken, for the 
jobs that you have created, and we hope that you have continued 
success and continue to grow and expand your businesses.
    I ask unanimous consent that members have 5 legislative 
days to submit statements and supporting materials for the 
record.
    Without objection, so ordered.
    This hearing is now adjourned. Thank you.
    [Whereupon, at 11:32 a.m., the Committee was adjourned.]
                            
                            
                            A P P E N D I X


                          Testimony of

                             James Van Horn


                Lead Lender Relations Specialist

                 North Florida District Office

               U.S. Small Business Administration

                     HOUSE SMALL BUSINESS COMMITTEE


                             FIELD HEARING


                         March 12, 2018

    Good morning Mr. Chairman, thank you and the entire House 
Small Business Committee for inviting me to testify on behalf 
of the Small Business Administration today. My name is James 
Van Horn, and I am the Lead Lender Relations Specialist in the 
North Florida District Office here in Jacksonville. The North 
Florida Office is responsible for the delivery of SBA's many 
programs and services throughout the region. Today's hearing 
topic of Access to Capital and supporting minority firms is one 
of the core missions of the SBA.

    SBA has a number of programs that provide access to 
capital. The most common and widely known is the 7(a) loan 
program. The role that the SBA and the Office of Capital Access 
plays in our credit markets fills an important gap in the 
lending marketplace. Our agency aims to help small businesses 
obtain credit which is otherwise unavailable through 
conventional lending. As many of you know, oftentimes 
entrepreneurs have the will and drive to succeed, but access to 
capital unfortunately proves to be an insurmountable hurdle. 
That is where we come in. Our programs have been helping small 
businesses get on their feet and grow for decades, particularly 
here in North Florida.

    The 7(a) loan program is the Small Business 
Administration's primary program providing financial assistance 
to small businesses. This loan program offers guaranteed loans 
to small businesses of up to $5 million on reasonable terms and 
conditions that can be used for business purposes, including 
acquiring land, purchasing or constructing a building, 
purchasing equipment, or working capital. The SBA works with 
lenders to provide loans to small businesses. The agency 
doesn't lend money directly to small business owners through 
the 7(a) loan program. The lender provides the loan to the 
small business and SBA provides a guaranty to the lender. The 
SBA has established credit criteria and terms and conditions 
for loans made by its partnering lenders, community development 
organizations, and micro-lending institutions. The SBA reduces 
risk for lenders and makes it easier for small businesses to 
get loans.

    Administrator McMahon and our Office of Capital Access in 
headquarters have been stressing to our lending partners that 
we want to see more small-dollar loans being made to 
entrepreneurs. Our focus is on helping those who need capital 
most--that includes minority-owned businesses, women-owned 
businesses, our veterans, and all of our emerging markets.

    For those small businesses who need longer-term loans for 
real estate, fixed assets, or large equipment, we have the 504 
Certified Development Company program. The SBA 504 Loan program 
is a powerful economic development loan program that offers 
small businesses another avenue for business financing, while 
promoting business growth, and job creation. 504 loans are made 
available through Certified Development Companies (CDCs), SBA's 
community based partners for providing 504 Loans.

    504 Loans are typically structured with SBA providing 40% 
of the total project costs, a participating lender covering up 
to 50% of the total project costs, and the borrower 
contributing at least 10% of the project costs. Under certain 
circumstances, a borrower may be required to contribute up to 
20% of the total project costs.

    For business needs at the smaller end of the dollar 
spectrum, SBA has the direct Microloan program. Microloans are 
loans in what would be considered ``smaller'' amounts than 
conventional business loans. SBA's Microloan program, for 
instance, provides loans of up to $50,000 to help small 
businesses and certain not-for-profit childcare centers start-
up and expand. SBA makes loans to not-for-profit lending 
intermediaries who then make microloans to small businesses for 
up to $50,000. However, the program has an average loan size of 
just $13,800. Year-over-year, we have seen a 5% increase in 
these loans which have supported an estimated 17,500 American 
jobs. Another interesting fact is that over 8% of our microloan 
recipients have gone on to receive larger loans from the SBA to 
support their continued growth. This is incredibly encouraging 
and we would definitely like to see this number continue to 
increase. The key to this program is the Technical Assistance 
the microlender provides to the borrower.

    It is incredibly encouraging to see the impact that the 
Microloan program has had for so many American small business 
owners. This program is a way for aspiring and existing small 
business owners to access capital at a reasonable rate, 
especially when you compare it to maxing out multiple credit 
cards at much higher interest rates.

    All of SBA's loan programs have unique eligibility 
requirements. In general, eligibility is based on what a 
business does to receive its income, the character of its 
ownership, and where the business operates. Also, businesses 
must meet size standards, be able to repay the loan from the 
cash flow of the business, and have a sound business purpose. 
Even those with bad credit may qualify for an SBA-guaranteed 
loan.

    In addition to the finance programs noted earlier, I would 
like to take a moment to highlight some of SBA's other 
services. In particular, our counseling and assistance 
programs. If a small business seeks additional funding, but 
perhaps needs some technical assistance or to polish their 
business plan, we can help with that. Our office can connect a 
small business with a vast network of counseling services 
through the Small Business Development Centers and other 
resource partners. We have found that these services are 
invaluable in preparing a small business to seek additional 
funding.

    I am proud to work for the SBA and to help the local 
community here in Jacksonville. Thank you for inviting me here 
today and I'm happy to answer any questions you may have.
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    Roslyn Mixon Phillips March 12, 2018

    Statement to the House Small Business Committee hearing on 
``Disparities in Access to Capital: What the Federal Government 
Is Doing to Increase Support for Minority Owned Firms.''

    Good morning,

    I am Roslyn Mixon Phillips, Vice President of Hester Group, 
a small, woman-owned, minority business, certified as an 8(a) 
and HubZone by the SBA.

    Thank you for the opportunity to speak with you this 
morning on the subject of small business disparities in access 
to capital.

    The inability to access much needed capital, already quite 
a daunting task/obstacle for many small and minority 
businesses, continues to make it difficult for them survive not 
to mention stifling any opportunity to grow as the banking 
industry tightens their lending policies. Business owners who 
have not adequately positioned themselves to meet credit 
standards find themselves utilizing credit cards and lenders of 
last resort with extremely high interest rates. That further 
erodes their ability to retain equity for reinvestment or to 
improve financial standing that would position the business for 
tradition loans. Small business owners when in crisis often 
resort to taking 2nd mortgage loans on their homes or exhausted 
their savings just to survive.

    Hester Group (HG) is a small, women owned, minority firm. 
Having received a computer as a Christmas present from her 
family and a desire to have work/life balance as she raised her 
two children, the dream that she had harbored of owning her own 
business moved at warp speed and by year end HG was a reality. 
Hester Taylor Clark, the Founder and President of HG, used her 
savings to capitalize her micro business in the early years and 
as her business development efforts began to result in 
contracts was able to self-fund as she bought on staff.

    Entrepreneurs in many instances are excellent at performing 
or providing the service but not as good at handling the 
business of the business. They may either lack the time, lack 
the business acumen to manage the business or fail to realize 
the importance of providing for the strategic management to 
include financial, operations and marketing. They are often too 
busy seeking new opportunities and, in many cases, performing 
the work.

    Once when asked how she knew her business was successful, 
Ms. Clark responded that she ``had money in the bank''. That 
was true, but what she did not have was corporate 
infrastructure to make informed decisions to support the growth 
that she envisioned for the company. In 2011, having been in 
business for nearly 13 years and growing from a micro business 
to a thriving small business, HG was ready to move to the next 
level. It was at a time the recession was in full force and 
dollars that had gone into PR and marketing were tightening and 
the need to diversify business revenue was apparent, if the 
company was to grow.

    Having been successfully awarded local and State government 
contracts, Hester began to explore federal contracting 
opportunities which lead to the SBA 8(a) Program. At this point 
self-funding was no longer an option.

    Ms. Clark spent months researching best practices for 
managing and growing small businesses, available resources for 
training and business development. SBA became an invaluable 
``partner'' in the company's growth through the 7J Training 
Program and establishing a line of credit through its loan 
program.

    Additionally, she identified mentors that helped her 
identify what she needed to prepare for growth. Identification 
of mentors is vital to transitioning the business and 
identifying obstacles and how to overcome them. Mentors are not 
all one size fit all and HG has had several informal mentors 
depending on the issue/need. With the recent changes to the SBA 
Mentor Protege Program, HG is currently looking to identify a 
formal mentor as we move to the next level of growth.

    Fortunately, the owner of Hester Group was always a step 
ahead of what was needed for the next level which positioned 
her to have the financial infrastructure in place to access the 
capital when needed.

    From my more than 30 years of experience working with small 
businesses, my observation is the more things change, the more 
they stay the same, the infrastructure is not in place. The 
obstacles to accessing capital for small and minority owned 
businesses have not changed:

           Lack of a sold business plan to make case 
        for loan or venture capital

           Lack of equity to invest

           Insufficient financial documentation that 
        demonstrates past performance and profitability to 
        support ability to repay

           Lack of knowledge of available resources and 
        support such as SBA, SCORE, MBDA, SBDC, Jacksonville 
        Chambers of Women's Center, Athena Link and others

           Understanding the importance of establishing 
        relationship with Banker/Financial Institution

    An additional point I would like to add is the impact of 
education and criminal justice system on small minority 
businesses that are businesses by default. Many of these 
businesses are born out of necessity as the owners have no 
other options to generating income to provide for themselves 
and their families. Opportunities for these micro small 
businesses to access capital don't exist as the barriers are 
insurmountable for most, if not all, existing programs or 
financiers.

    Continuing investment in education and outreach for small 
minority businesses is an investment is a thriving economy.
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
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