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


       EXPLORING THE STATE OF WESTERN KENTUCKY'S SMALL BUSINESSES

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

                                HEARING

                               BEFORE THE
                               
                      COMMITTEE ON SMALL BUSINESS
                             UNITED STATES
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED FIFTEENTH CONGRESS

                             SECOND SESSION

                               __________

                              HEARING HELD
                             JUNE 18, 2018

                               __________

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            Small Business Committee Document Number 115-078
             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
                    BRIAN FITZPATRICK, Pennsylvania
                         ROGER MARSHALL, Kansas
                      RALPH NORMAN, South Carolina
                           JOHN CURTIS, Utah
               NYDIA VELAZQUEZ, New York, Ranking Member
                       DWIGHT EVANS, Pennsylvania
                       STEPHANIE MURPHY, Florida
                        AL LAWSON, JR., Florida
                        YVETTE CLARKE, 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

                               WITNESSES

Mr. Bruce Kimbell, President, First Community Bank of the 
  Heartland, Clinton, KY.........................................     3
Mr. Leon Owens, President, Swift & Staley, Inc., Paducah, KY.....     5
Mr. Edward Musselman, Owner, Musselman Properties, Paducah, KY...     7
Mr. Jonas Neihoff, Owner, Socially Present, Paducah, KY..........    11

                                APPENDIX

Prepared Statements:
    Mr. Bruce Kimbell, President, First Community Bank of the 
      Heartland, Clinton, KY.....................................    26
    Mr. Leon Owens, President, Swift & Staley, Inc., Paducah, KY.    31
    Mr. Edward Musselman, Owner, Musselman Properties, Paducah, 
      KY.........................................................    34
    Mr. Jonas Neihoff, Owner, Socially Present, Paducah, KY......    38
Questions for the Record:
    None.
Answers for the Record:
    None.
Additional Material for the Record:
    None.

 
       EXPLORING THE STATE OF WESTERN KENTUCKY'S SMALL BUSINESSES

                              ----------                              


                         MONDAY, JUNE 18, 2018

                  House of Representatives,
               Committee on Small Business,
                                                    Washington, DC.
    The Committee met, pursuant to call, at 10:10 a.m., at the 
Paducah Area Chamber of Commerce, Paducah Bank Room, 300 South 
3rd Street, Paducah, KY, Hon. James Comer presiding.
    Present: Representative Comer.
    Mr. COMER. Good morning. I call this hearing of the 
Committee on Small Business to order.
    I appreciate everyone coming out today. This is something 
that we have been working on for a long time. Small business is 
important, and I have a statement that I am going to read. But 
just so everyone knows, the purpose of this Committee is to get 
testimony and do a question-and-answer from four leading 
business people in West Kentucky in all different businesses 
that have a huge impact on West Kentucky. I want to be able to 
listen to the success story that each have, but if they also 
have impediments to future growth.
    What we are trying to do with the Small Business Committee 
is find solutions to problems that we can take back to 
Washington to determine future legislation, especially after 
the August recess. I think we will have an aggressive fall in 
Washington, especially in the lame duck session. There are a 
lot of problems that we have as a nation, but I believe that 
these problems can be solved if we work together.
    Let me add that small businesses are the backbone of the 
American economy, making up 99.9 percent of all U.S. 
businesses, and 46.5 percent of all U.S. employees. By the 
latest count, there are more than 30 million small businesses 
in the United States, including more than 347,000 here in 
Kentucky.
    Small businesses employ nearly 57 million Americans, 
including more than 696,000 in Kentucky. Small businesses were 
responsible for 1.9 million net new jobs in 2015, including 
more than 17,000 net new jobs in Kentucky. While in Washington, 
my fellow Small Business Committee members and I regularly held 
hearings and participated in roundtables where we heard from 
small businesses from all across America, subject-matter 
experts and government officials about policy recommendations 
to create an environment that will spur entrepreneurship and 
help small businesses grow and create jobs.
    We also write legislation that will improve federal 
policies and initiatives that will help these small business 
owners and job creators succeed. Access to capital has always 
been a top priority for this Committee. It gives small 
businesses the resources they need to keep the doors open and 
the lights on, to purchase inventory, and to pay employees.
    However, since the financial crisis almost a decade ago, 
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.
    The Small Business Committee is continuing to work to 
ensure that small businesses and entrepreneurs are able to 
access the funds they need to expand and grow their businesses.
    Another concern is one-size-fits-all regulations that have 
a substantially higher impact on small businesses than the rest 
of the economy. We continue to fight career Washington 
bureaucrats to reduce the burden of regulations on small 
businesses so that employers and employees can focus on running 
their businesses rather than dealing with confusing and 
duplicative paperwork.
    As most of you know, Paducah is a dynamic, fast-growing 
city that engages its citizens and is recognized as a regional 
leader on many levels. Paducah is also financially sustainable, 
maintains quality infrastructure and facilities, and has a 
thriving river industry. It is a small city with big 
aspirations that offers great incentives for families and 
businesses to flourish.
    This morning we will hear from a distinguished panel of 
West Kentucky small business leaders. I requested this field 
hearing so that I could hear your concerns and get your advice 
on the policies and initiatives that matter the most to small 
businesses in West Kentucky and Paducah. I will take these 
ideas and recommendations back to Washington and continue to 
work with my colleagues at the Small Business Committee to 
focus on these priorities.
    I appreciate the witnesses for taking time from their 
businesses to be here today, and I look forward to your 
testimony.
    I am going to explain real briefly what we have here in 
front of you. We have to deal with the lights. Each person on 
the panel will have an opening statement that has been 
prepared, and it will be submitted for the record.
    I would like to take a second to explain the lights. You 
will have 5 minutes. Once 4 minutes pops up, you get a warning 
light. If you go over that 5, we are not going to be too strict 
on that rule. But in Washington, you have to have a timer on 
everything, everything. If you didn't, we would still be on the 
floor talking about something.
    But before I do the introductions, I want to thank the 
Paducah Chamber. Senator Wilson is here in the back. Thank you 
for allowing us to be here. Hopefully most people know we have 
a regional district office here in Paducah, upstairs. Marty is 
the field rep in the back. If you ever have any questions or 
concerns, feel free to talk to Marty.
    I also want to recognize Senator McConnell's field rep is 
here, Morgan Alby, in the back. Thank you for being here.
    We have a lot of good friends and business leaders in the 
crowd.
    I would like to take time to introduce our witnesses. I 
will introduce each witness, and then we will start when I 
conclude the introduction. I will let Mr. Kimbell start.
    But I would like to introduce our first witness, Bruce 
Kimbell. Mr. Kimbell is President and CEO of First Community 
Bank of the Heartland in downtown Clinton. He is a graduate of 
the University of Kentucky and a past member of the Board of 
Directors of the Kentucky Bankers Association.
    I would like to also acknowledge Mr. Greg Gunter, Vice 
President of First Community Bank of the Heartland, who is here 
today. I appreciate you being here.
    I look forward to hearing Mr. Kimbell's testimony today.
    Our second witness is Mr. Leon Owens. Mr. Owens is 
President of Swift & Staley in Paducah. Swift & Staley began in 
1979 as a construction contractor and has participated in 
electrical and general contracting. In December 2017, Mr. Owens 
was elected to serve as the 2018 Chair of the Board of the 
Paducah Area Chamber of Commerce, which I might add is by far 
the best Chamber of Commerce in Kentucky, probably in America. 
He is a graduate of Eastern Illinois University and earned an 
MBA from Murray State University. We welcome Mr. Owens here 
today.
    Our next witness is Mr. Edward Musselman. Mr. Musselman is 
the owner of Musselman Properties in Paducah. Musselman 
Properties restored the Coke plant in Paducah as a home for 10 
local small businesses, including the Dry Ground Brewery 
Company, owned by the Musselmans and Socially Present's 
representatives, who are also testifying today.
    I would also like to recognize Ms. Megan Musselman, Co-
Owner of Musselman Properties. Is she here?
    Mr. MUSSELMAN. She is unable to be here.
    Mr. COMER. Okay. We welcome Mr. Musselman here.
    Mr. MUSSELMAN. Thank you.
    Mr. COMER. Our final witness is Mr. Jonas Neihoff. Mr. 
Neihoff is the President and Founder of Socially Present, a 
digital marketing firm in Paducah. Socially Present provides a 
variety of services for clients not only in Paducah but also in 
St. Louis, Nashville, Louisville, and beyond. Mr. Neihoff is a 
graduate of Mid-Continent University in Mayfield. Welcome, Mr. 
Neihoff.
    We appreciate everyone being here. I think this is as good 
of a panel as we could assemble to talk about the challenges 
that we have in small business and to hear some success 
stories. So with that, we will start with the testimony.
    Mr. Kimbell, you may begin.

STATEMENTS OF BRUCE KIMBELL, PRESIDENT, FIRST COMMUNITY BANK OF 
  THE HEARTLAND, CLINTON, KY; LEON OWENS, PRESIDENT, SWIFT & 
 STALEY, INC., PADUCAH, KY; EDWARD MUSSELMAN, OWNER, MUSSELMAN 
    PROPERTIES, PADUCAH, KY; JONAS NEIHOFF, OWNER, SOCIALLY 
                      PRESENT, PADUCAH, KY

                   STATEMENT OF BRUCE KIMBELL

    Mr. KIMBELL. Thank you. Good morning, Congressman Comer and 
other guests. My name is Bruce Kimbell, President and CEO of 
First Community Bank of the Heartland. We are a community bank 
headquartered in Clinton, Kentucky, with five offices here in 
the Purchase area and two in Northwest Tennessee.
    The history of our $220 million bank dates back over 80 
years, and we pride ourselves on being able to serve the 
financial needs of our local area. I appreciate the opportunity 
to be here today to present my views on helping the 
agricultural and small business community through public-
private partnerships like the 7(a) program.
    Here in my time at the bank, the SBA's 7(a) program has 
been an important tool as we resolve to help the small 
businesses in the communities we serve. At my bank, we are 
intensely focused on building and maintaining long-term 
relationships with our customers. We view our customers not as 
numbers but as individuals and business owners. They are our 
friends, neighbors, and job creators in the communities.
    The SBA programs, like the USDA loan programs that we also 
utilize, are an important part of our business in ag lending. 
They help fill a critical gap, particularly for new and 
beginning businesses that need access to longer terms and the 
flexibility that guarantees provide.
    The guarantee is critical to the bank as we seek to manage 
the risk associated with these loans and facilitate 
opportunities that might never have been made without this 
important level of support. Government guarantee programs like 
those provided through SBA have been an important product for 
our institution since my arrival in 1989. 7(a) lending at one 
time was a core product, but unfortunately changes to the 
program over the years have complicated the loan-making process 
not only for us but for several of my peers that I have reached 
out to for comment.
    We continue to try to utilize the program and have had the 
good fortune of helping many beginning farmers as they sought 
to diversify their family farming operation. Our guaranteed 
business lending has assisted a wide variety of enterprises all 
along Main Street, and each of these entities play a key role 
in their local rural community providing job opportunities and 
needed services.
    On March the 6th, 2018, the SBA Inspector General released 
a report on ag lending within the 7(a) program which examined 
11 poultry loans made between 2012 and 2016. The IG then 
recommended taking corrective actions on the loans if 
necessary, and to review current arrangements between 
integrators and growers. My understanding is that the SBA 
examined all loans and found that they were correctly made in 
accordance with SBA policy at the time.
    As you are aware, poultry loans represent approximately 1 
percent of the entire 7(a) portfolio. Our utilization of 
federal and state-sponsored guarantee programs to assist our 
poultry customers and other small ag producers has allowed 
numerous farm families to remain on the farm and to remain a 
viable economic entity. Farmers need to have as many financing 
options as possible as every farmer is different and sooner or 
later will experience both good and bad times. Maintaining 
access to the 7(a) program is critical for the development and 
success of our nation's smaller producers in the overall ag 
economy.
    As with any other program, there is room for improvement, 
and I would like to share some examples of how the program can 
be improved primarily related to the servicing of SBA loans.
    One, we should be able to enable consolidation or 
refinancing by the same lender of a single borrower; provide a 
carve-out for small portfolio lenders such as the First 
Community Bank and other community banks across the country to 
attain a guarantee to avoid regulatory loans to one borrower 
limitation; and then facilitate liquidation of multiple loans 
to a borrower.
    In conclusion, banks play an integral role in promoting the 
economic strength of the communities we serve. The SBA's 7(a) 
loan program is a vital piece of that, as our bank wants to 
facilitate and promote economic growth, and this program should 
be vigorously supported in the future.
    Thank you for having this meeting and my invitation to 
speak. I look forward to any questions you might have. Thank 
you.
    Mr. COMER. Thank you, Mr. Kimbell.
    Mr. Owens?

                    STATEMENT OF LEON OWENS

    Mr. OWENS. Good morning. My name is Leon Owens. I am 
President of Swift & Staley, Inc., a 100-percent employee-owned 
local business, government and commercial contractor. I would 
like to thank the members of the House Small Business 
Committee, especially Kentucky's 1st Congressional District 
Congressman, James Comer, for hosting the field hearing in 
Paducah. We sincerely appreciate the opportunity to share our 
story and provide insight into the challenges we encounter.
    Swift & Staley Mechanical Contractors, Inc., was 
established in 1979. The initial focus was to provide 
electrical and mechanical contracting support services to local 
businesses. In 1994, the company split. The husband and wife 
team, Mr. and Mrs. W.G. Holsapple, Jr., purchased the assets of 
the mechanical portion of the business. The Holsapples had a 
vision for Swift & Staley Mechanical and redirected the 
company's efforts toward mechanical maintenance support for 
area hospitals.
    The Holsapples ultimately wanted to position the company 
for business opportunities in the government contracting arena. 
The vision came to fruition in 2000, when Swift & Staley 
Mechanical Contractors was awarded a general site services 
subcontract by Bechtel Jacobs Company, LLC, to perform facility 
maintenance, roads and grounds maintenance, and janitorial 
services at the site of the Paducah gas infusion plant in 
Paducah, Kentucky.
    The United States Department of Energy Office of 
Environmental Management awarded Bechtel Jacobs a management 
and integration contract for 5.5 years that included a 
provision for Bechtel to serve as a site integrator, which 
meant they were to hire subcontractors through competitive bids 
to accomplish the end mission in Paducah.
    In 2004, recognizing the potential benefit that small 
business could provide, and seeking to improve small business 
contracting goals, DOE solicited requests for proposal for the 
first DOE EM complex-wide small business prime contract, the 
Paducah site infrastructure contract. Based on the excellent 
performance that Swift & Staley Mechanical had experienced as a 
subcontractor to Bechtel, the Holsapples formed a team and 
submitted a proposal for the opportunity. The scope of this 
initial contract included environment safety and health and 
quality, safeguards and site security, roads and grounds 
maintenance, snow and ice removal, property management, fleet 
management, information technology, and janitorial services. In 
June 2005, Swift & Staley Mechanical commenced work as a small 
business prime contractor.
    Since the initial contract award in 2005, Swift & Staley 
has won the re-competitions in 2010, and again in 2015. And the 
contract itself has grown in revenue, as well as employees. The 
contractual scope of the work expanded in 2015 to include 
engineering, construction, and additional facility support and 
maintenance.
    In 2012, the company changed its name to Swift & Staley, 
Inc. This change was made to alleviate confusion with another 
small business of a similar name. And in 2016, Swift & Staley 
and North Wind Solutions, an Alaska Native small business 
corporation, formed a joint venture and submitted a proposal 
for work, similar to what we were performing in Paducah, in 
Piketon, Ohio. The effort was successful and the joint venture, 
Portsmouth Mission Alliance, was awarded a firm fixed-price 
contract.
    Swift & Staley transitioned from a privately-owned entity 
to an employee stock ownership plan in May of 2017. We are 
aggressively looking to expand our service to other federal 
sectors and locations while maintaining our core competencies 
and client focus. On behalf of all small businesses, we would 
like to thank Congressman Comer and the Small Business 
Committee for supporting H.R. 5236, better known as the Main 
Street Employee Ownership Act. As a small business prime 
contractor, we would like to highlight a few of the challenges 
that we have encountered.
    Number one, small business size standard. Swift & Staley, 
Inc.'s primary North American industry classification code, or 
NAICS code, is 561210, Facility Support Services, with a 
revenue basis of $38.5 million on a three-year rolling average. 
Because we obtained additional work to support our client in 
years 2014, 2015, and 2016, Swift & Staley exceeded this 
revenue threshold for 2017. And based on that, we were unable 
to competitively bid any small business set-aside procurements. 
We respectfully request the Committee review the small business 
size standard methodology, simplify the process, and include an 
annual increase in the revenue threshold to allow for small 
business growth.
    Number two, at the national laboratories across the United 
States, the U.S. Department of Energy should require the 
outsourcing to small business of all necessary site functions 
that otherwise distract the labs from executing their core 
mission in high-end science, R&D, and weapons. Example areas to 
be outsourced include environmental compliance, facility 
maintenance, safeguards and security, occupational medicine 
services, IT and cyber, roads and grounds, capital projects, 
engineering construction, maintenance and repair of real 
property. Importantly, every dollar subcontracted to a small 
business by a national laboratory counts toward DOE's prime 
contracting goals.
    Number three, competitive prime opportunities are limited 
for capable small businesses and should be made available 
through a more balanced and fair procurement process. Unless a 
small business possesses extraordinary qualifications, only a 
few companies, large or small, within the DOE sector can 
qualify for most prime opportunities.
    Number four, small businesses are often left with Tier 2 
DOE opportunities that are not meaningful in nature, and 
predominantly staffing contracts or less sophisticated project 
scope that is low price driven or reverse option. The terms and 
conditions for execution are often iron clad, and all risk is 
driven down to small business. Most prime contractors would not 
agree to perform work under these same terms and conditions 
they impose on small business contractors.
    Number five, consistent with unrestricted prime contracts, 
the DOE should consider a 10-year contract term that includes a 
five-year base period and one or two multiple-year option 
periods for small business prime contract set-asides. Longer 
contracts enable small business to bid competitive pricing 
through forward-looking pricing models. It also encourages a 
long-term government contractor partnering where efficiencies 
and execution are gamed and progress is made. It eliminates 
frequent competitive bids that are costly and time-consuming 
for both the government and the contractor.
    Congressman Comer, we want to thank you for chairing. We 
appreciate your consideration and look forward to your 
questions.
    Mr. COMER. Thank you, Mr. Owens.
    Mr. Musselman?

                 STATEMENT OF EDWARD MUSSELMAN

    Mr. MUSSELMAN. Thank you, sir. This is written to all 
members of the Small Business Committee and any other 
interested parties, and thank you for the interest in the 
region. Obviously, you as well have a lot of interest in the 
region. I believe this inquiry is very timely. Western Kentucky 
has been slow to grow over the years. Many of the region's 
larger employers have reduced jobs. Some plants have ceased 
operations altogether. There has been a fear for many years 
about what our region is going to look like in years to come.
    However, there has been a recent mounting of enthusiasm and 
excitement for the creativity that has swelled to relevance in 
Paducah and surrounding areas through small business growth. It 
is momentum that can forever change the landscape of our local 
economies and have a lasting impact on our region, or it can be 
abused and squandered through lip service of support and 
accompanied cash grabs.
    I really don't know if the intent here is to celebrate wins 
in our region or to point out where help may be needed. What I 
want to see is a booming economy of small businesses opening 
and flourishing, increasing the draw to the area for visitors 
and residents alike.
    Over the past 5.5 years my wife and I have worked on a 
project that really depicts what makes small business success 
so difficult. Those ``supporting'' are often the ones who are 
guaranteeing limitations on levels of success and achievement. 
Lenders and government are two specific bodies that come to 
mind. I refuse to accept no for an answer, even when hearing it 
continuously for years, and quitting is not in my nature.
    We took a building that was deemed a liability of no use 
and slated for demolition and put it back to its former 
grandeur. With that said, we saw the opportunity to better 
showcase and promote some creative people and their businesses 
and higher visibility, that it might help them, us, and the 
attractiveness of our community. We have been celebrated 
locally and regionally, featured in publications across the 
state and the country. An economic development group here in 
Paducah has won an international award due to the small 
business undertaking. We have been awarded state preservation 
awards. We and the tenants of the Coke plant employ many 
talented folks and are involved in countless collaborative 
activities with area businesses and non-profits.
    Why was something this appreciated not easy to achieve? 
Answer: Imposed limitations by people doing a job that aren't 
empowered to do anything risky, which really translates to new, 
creative, innovative, or change creating. The only risky thing 
here that I see is if it would have imposed enough fear and 
small thinking onto our project to change the outcome to one of 
failure.
    There have been some helpful contributors throughout this 
process, many of them, in fact, and thank you to the partners 
and supporters. But understand that it took everything that we 
had to get it to go. This was an absolute gut-wrenching 
sacrifice that our family made and had to endure. We put our 
head down, we did what we had to do.
    Why? Why was it that hard?
    There were far more challenges that were necessary to make 
this celebrated thing come to fruition. Why? Why is the climb 
so steep to get a small business around all the naysayers and 
powers-that-be that control one's ability to get open and 
operating successfully? Why is the immediate tax burden so 
high? Are governing bodies so short-sighted that they want to 
grab all they can right out of the gate, rather than foster 
prosperity to the business so they can yield many magnitudes 
greater reward down the road than the cash grab up front, 
followed by yet another vacant storefront and the questioning 
as to why?
    The Affordable Care Act is just one example of several 
federal and state examples of limitations that our government 
brings us. The Affordable Care Act impacts restaurant owners in 
a way that I do not believe was intended. Obamacare was set to 
waive small businesses from penalty. The criteria is confusing, 
and no one is an expert on the subject except the insurance 
companies, and that is questionable. Seeking advice on if you 
need more insurance from an insurance company is like going to 
a car lot and asking if it is time to buy a new car. All 
businesses owned by someone pulled together for the Obamacare 
calculation, and restaurants are very personnel heavy. It is 
not difficult to get to 50 full-time equivalents as a 
restaurateur and heavily penalized by the government.
    Does that make you a big business? I certainly do not 
believe so. Does this discourage hiring, expanding, opening, 
owning additional businesses? I believe it does.
    We have earned federal tax credits through the extensive 
cost of proper historic preservation. The tax credits are 
appreciated, and I want to state that clearly, are appreciated 
and significant, and would be very beneficial in assisting with 
cost reduction of start-up. But unlike the state historic tax 
credits, the federal tax credits are not refundable and can 
only be used against passive income. By the time I have enough 
passive income to use these tax credits, I won't need them 
anymore. I need them now.
    We have active income that applying this credit towards 
would benefit our situation greatly, but it appears it only 
applies toward passive income. This is after consultation with 
accountants and experts on historic preservation at the state 
and federal levels. Despite the belief by some that it is 
intended to and can be used on active income, we have reached 
no definitive path to applying these credits in any manner 
despite some exhaustive effort.
    If these tax credits had immediate value to our situation, 
we would already be undertaking preservation from an additional 
historic building that we own. As it stands, we currently have 
no feasible financial means to that.
    We applied for an SBA loan. During this process, for one of 
our businesses in the Coke plant and after the extensive red 
tape of the application and the obligatory begging process, 
they said yes and strung us along for seven months before 
finally saying no. All that time-wasting run-around did was 
increase the challenge and decrease the time available to 
achieve a baseline of success to avoid foreclosure, then 
bankruptcy and making the naysayers right. It is very easy to 
say something can't work, and there are a lot of people out 
there who are going to prove that that is right.
    It wasn't easy, and it should have been, but I am okay with 
that. I was determined to never quit, and I knew we would make 
it work. I am not sure that everyone would have, and I can say 
with all likelihood that very, very, very few would not have 
quit at some time in the last five years.
    This celebrated landmark has become a blueprint for growth 
in other communities and brought good things to our community 
should not have been able to happen. It is not necessarily 
because I am good at anything. It is because I don't know when 
to quit and I believed in what we were doing. But people who 
are conditioned to quit during tremendous adversity have zero 
chance. Hence, high small business failure rates, foreclosure 
rates, bankruptcy rates, and subsequent tightened lending 
principles mandated by the Federal Government comes as a result 
of the failures of under-capitalized businesses. It is kind of 
cyclical.
    If governments would lower the take from the small business 
owner in the first place, few would be operating short of 
funds. There would be more happy stories and fewer bankruptcies 
and less need for the mandated red tape that slows growth to a 
crawl when approaching lenders.
    We told everyone what was going to happen in this building 
5.5 years ago. They thought we were crazy, but we did it 
despite the necessary roadblocks. There is no reason it should 
have taken five years to get to this point. There are likely 
many, many, many success stories that would stop just short due 
to all the wrong reasons.
    Small business success needs to be available to many, not 
to a few. It needs to be achieved with reasonable effort and 
commitment to necessary challenges with limited bureaucratic 
imposed barriers, and that will be good for all.
    Small business development center I have already stated is 
great. Chris Woodard has been very helpful in our process. 
However, his office and others in the region are underfunded 
and spread thin. The Paducah location of the Kentucky 
Innovation Network has disbanded recently. Also, the focus for 
small business services is typically to get you open, not 
helping keep costs down through services offered once business 
is operational.
    The Forward Paducah initiative through Paducah Economic 
Development is a great vision and road map for this region. I 
believe Entre Paducah is back in action, getting people pointed 
in the right direction. There is a non-profit, Maker Space 
Sprocket. Our Visitors' Bureau is a tremendous asset and 
promoter of creative offerings in our area, but I think there 
is more needed to raise the level of expectation for small 
business growth in this relatively rural region.
    Lower costs, lower payments to governing bodies, and fewer 
mandates are real access to real value provided by those 
governing bodies. If someone has a talent and a business is 
needed to showcase and present their talent for a living, they 
need to first abandon all focus on their skill, which is the 
reason for them opening a business, become a jack of all 
trades. Master accounting, marketing, bookkeeping, legal, HR, 
hiring, et cetera, et cetera, et cetera. It is endless. While 
trying to open a business and attract customers and compete 
with larger companies, they also must learn how to perform 
professional-level services that one may have little interest 
or aptitude for, or hire an accountant, a payroll clerk, 
bookkeeper, an attorney, et cetera, which would make paying the 
many tax bills that much more difficult.
    Obviously, this is a known battle that small businesses 
have to account for, but all this could be outsourced or 
handled adequately in-house if federal, state, and local 
governments were not showing up to the ribbon cutting with 
palms extended.
    There will be jobs. There will be increased values when 
fewer commercial locations are vacant. There will be growth. 
With growth comes money. But there is no growth when the doors 
are shuttered due to an inability to keep up with tax burdens, 
licensing fees, ridiculous and unnecessary increases in cost of 
construction improvement associated with code interpretation, 
which comes down to one hired person's interpretation, and 
there is no means for a small business owner to really 
adequately challenge or question those costly opinions of 
inspectors.
    If you want people to step out and step up to grow and 
change areas, let it happen. Aide if you will, but just 
allowing more money to stay in the hands of those driving 
change and starting businesses will allow for more growth to 
occur.
    One of our small businesses is a brewery. We own a brewery 
and a restaurant under the same roof. The restaurant sells the 
beer that is brewed by the brewery. The three tier system in 
Kentucky prevents self-distribution, and therefore prevents the 
direct sale and transfer of the beer 60 feet from one cooler to 
another. Instead, we are mandated by Kentucky state law to use 
a distributor, a distributor that we don't need, and they must 
transfer our beer 250 miles to here in Kentucky where it must 
sit for 24 hours in a bonded cooler before traveling 250 miles 
on a return trip back to Paducah to the same building where it 
was brewed and mandated by law to have left the day before.
    This is not environmentally friendly. This drives up cost 
for the small business. This potentially diminishes product 
quality, and it most certainly is an unnecessary inefficiency 
felt by buyer and seller, in this case my wife and I on both 
ends. This is a state law, but the state law is hurting 
businesses nonetheless.
    We did something that was very difficult, and now it is a 
jump. Now it is the city and the state and the Federal 
Government's cash cow, and that limits our growth and hiring.
    Having free or reduced access to bookkeepers, accountants, 
attorneys, marketing firms, human resources services, hiring 
agencies, et cetera, et cetera, that would be a real help to 
improving success rates of small businesses. Or better yet, 
just let small businesses keep the money that they are earning. 
Most will be immediately returned to the economy by easing the 
burdens that restrict growth.
    If the cost of doing business is less, more will be able to 
successfully operate businesses while providing an adequate 
living to their family and those that they employ. Fewer vacant 
buildings will strengthen real estate markets. More jobs, more 
offerings, and strong economies will attract additional 
residents and businesses. This is all known; this is all very 
obvious. I am not sure why we are not doing it.
    I certainly mean no disrespect to any individual or 
specific business or organization. I appreciate the willingness 
of Mr. Comer and the other members of the Small Business 
Committee to be inviting feedback in this manner here today. I 
know there is some over-simplification of some complex issues 
that might intertwine with commitments to other stakeholders 
other than small business owners, but I am hopeful that 
consideration will be given to the further reduction of burdens 
placed on the shoulders of the American small business owner.
    Small businesses don't have lobbyists. We appreciate 
opportunities such as these to voice concerns.
    Thank you all very much for the invitation, the time, and 
your attention. Thank you.
    Mr. COMER. Thank you very much.
    Mr. Neihoff?

                   STATEMENT OF JONAS NEIHOFF

    Mr. NEIHOFF. All right. Well, you all have my written 
testimony, so I am going to go off script a little bit and just 
kind of share a little bit. It is probably a horrible mistake, 
but I am going to go ahead and do it anyway.
    Just a little bit of background on myself. I am one of six 
kids. My father is a home painter. My mother cleans homes. We 
grew up in a lot of challenging situations, both my parents 
working for themselves. I saw their struggle. I saw my dad have 
multiple ideas and aspirations and things he wanted to achieve, 
only to hit roadblocks himself and feel that it was just too 
overwhelming. The discouragement of trying to step out and 
start a business when you have a complex business ecosystem 
like we have now with government, but also technology changing, 
it can be very intimidating.
    As Ed said, it is not for the faint of heart. You have to 
have some grit to really get through it. You have to have a 
little bit of your quitter to just be missing in your brain to 
keep going. It is not easy.
    So I saw those challenges, and that is really what inspired 
me to start Socially Present. When I went to school for 
business, I wanted to be able to help those people navigate 
through some of the complexity of business and accomplish some 
of their dreams and their goals, because I saw my own father 
not being able to do that.
    And I have seen time and time again throughout my life with 
this that entrepreneurs who are stepping out and trying to do 
something hitting these roadblocks because everything is just 
overly complicated. It is just overly complicated. We need to 
simplify things. We need to make it easy and provide real help.
    I think a lot of that complexity comes, and where the 
bureaucracy kind of comes is because we take outlined 
situations and we start to build policies and procedures around 
them, and they are outlining situations that don't apply to 
everyone because business is dynamic. Every business, every 
organization is different.
    So we try to systemize, and I understand why the government 
tries to do that, to create their own efficiencies, but it has 
created inefficiencies. We have had all these legal loopholes 
to jump through that slow down our ability to just grow, as Ed 
was saying, being able to just really grow and expand.
    The two sides of what I feel would be the most helpful is--
and when I look back at my success, the question was asked what 
is the biggest resource, and what was your biggest obstacle? I 
would say by far the biggest obstacle is the complexity of 
business. There are just too many things that you have to jump 
through. The government makes it difficult a lot of times, and 
the technology changing, all the different aspects, putting a 
business plan together. It seems like half the time when we 
meet with people, by the time they have their business plan put 
together it is not even relevant anymore. Things just change so 
quick. So by far, the biggest obstacle is the complexity.
    The biggest resource when I look back at what helped me 
was, honestly, the very core of it was a mentor. Having someone 
who had been there and had gone on and accomplished some great 
things to help me along the way and help me navigate the 
complexity of business was an incredible resource. And it 
wasn't always just the education, but sometimes it was that 
encouragement to keep going and to keep moving forward.
    Looking back and after meeting with several business 
owners, I realize how rare that was that I had the opportunity 
to be able to find someone like that and how really valuable it 
truly was. I see these others who don't have access to that, 
and I see organizations like Chris Wooldridge and some of the 
others, that these organizations exist and they are trying to 
fill that gap, but they are incredibly under-resourced. They 
don't have the resources to meet the demand.
    I spoke with a gentleman this week who said that he had 
gotten involved in the SCORE program, and it was six months 
before he even got matched up. I mean, it takes too long to do 
it. In the meantime, and this is kind of a soapbox rant, but I 
see a Baby Boomer generation that is retiring that I think 
would be a great asset to field some of those mentor programs.
    But I think that the biggest two things, again, that I 
think the government and that I would ask that we could do is 
really remove some of the complexity and get rid of some of the 
bureaucracy that it takes and realize that every business is 
different and dynamic and unique; and then the second is to 
meet that need. What I would love to see is a statewide 
mentorship program, whether it be even some of the seminars and 
some of the things that Chris has done, or even matching people 
with others in their industry throughout the state. The 
difficulty of doing that on a local level is a lot of times you 
are matched up with people who might be perceived competitors. 
Statewide, you could give people access to great minds and that 
are a little further along that are willing to share that 
knowledge and help Kentucky grow as a whole.
    That is really all I have.
    Mr. COMER. Well, thank you all very much for your 
testimony.
    Again, this is the Small Business Committee. So when I 
requested to have a field hearing, we wanted to have four 
diverse small businesses in West Kentucky. So we have a 
community banker with a large agriculture portfolio; we have 
one of the subcontractors for the DOE side; we have a real 
estate developer; and we have a startup technology company 
based here in Paducah. So I think that is a pretty diverse 
portfolio of small businesses.
    At this time, what I am going to do is we have notes from 
the testimony that was submitted and from things that I just 
jotted down listening. I am just going to go down the line and 
ask each of you different questions, and when we conclude I 
will probably ask a question to the effect of what would you 
like to see Congress do, what can Congress do legislatively to 
help small business? But that will be the last question, and we 
will be mindful of everyone's time, and we will rattle down 
through these questions, and hopefully we can get everything in 
and then get the concluding statements. Then I will go back to 
Washington and hopefully we can get some results from this 
field hearing, and I think we will. I am very confident.
    I will start with Bruce Kimbell. One of the reasons that we 
asked you to be on the panel is you all do a lot of SBA loans. 
I was with a bank in a rural community that didn't do any SBA 
loans, but the other bank, the other community bank did. This 
Committee has jurisdiction over SBA, SBA loans, and things like 
that.
    What are some things that need to be changed with the SBA 
program to make it easier? I know that Mr. Musselman gave an 
example of someone applying for an SBA loan for a long time and 
then they were rejected. What are some things that can be done 
to tweak the SBA program to make it easier to get a final 
decision quicker? I don't know if Dodd-Frank reform has changed 
that any or what.
    Mr. KIMBELL. I don't know if there is an easy answer for 
that or not. Just as Mr. Musselman was talking about a few 
moments ago, we too have seen the struggles as far as trying to 
deal with some of our borrowers. Most recently, it just so 
happens in the same line, in the same industry, the restaurant 
business, we just recently had closed an SBA loan, I guess 
within the last couple of months, and I think that that 
particular deal took us about a year to get through.
    Mr. COMER. Versus how long would it take a normal loan? If 
you were going to the SBA, your bank was doing it, what would 
that be?
    Mr. KIMBELL. Sixty days, maybe. I am guessing. Sixty to 90. 
You would hope 60. You would hope less than that. But still, 
that particular process to the individual, they were a 
multifaceted company, a husband and wife team. They had two or 
three different lines of business that were all fairly new over 
the last 10 years. So it complicated the process going through 
each one of those entities, where that might not have been the 
case. But just trying to find that, I spoke with--I am sorry, I 
can't remember his name here, the staff member--and the issue 
that I have seen. I started with our bank in 1989. At that 
point in time, there was a regional SBA office in Louisville. I 
can remember the gentleman's name, David Heil.
    When we had a problem with a loan or trying to work through 
a process, we called David. David helped us through that 
process. I haven't seen Mr. Heil in 20 years, but he has 
expertise, he has ability to help us work through that process, 
versus today where everything is automated, everything is 
standardized. You are trying to put everything into a box, and 
just as you spoke of the differences between each one of us and 
the stories we brought, each small business brings that to the 
table also. So it is very difficult to put that into a box. It 
is difficult to make a standardized process.
    Now, I understand the need to be efficient. I see where 
that comes from. But yet anything that we can do to push that 
back down to the local level helps, even if that local level is 
still 300 miles away in Louisville. That is still better than--
I am not sure now, maybe California where we send an 
application today.
    So that, to me, is one step that could very easily help, is 
just trying to bring some of that back down to a closer level.
    Mr. COMER. Thank you.
    I am just going to go down the line. We will do this for a 
few questions, and then we will try to start wrapping it up.
    Mr. Owens, I am intrigued by the ESOP. I didn't know--I 
should have known. I didn't know you all were an ESOP until I 
read your testimony that you submitted. I am a big fan of 
ESOPs. I think one of the most successful companies in Kentucky 
is Hutchinson Industries. I know people who work at 
Hutchinson's. I know low-level workers that were back boys that 
were in the ESOP that retired with just unbelievable pensions 
because the company had grown and stuff.
    One thing I want to mention is our Committee and the full 
House advanced H.R. 5236, which you mentioned, the Main Street 
Employee Ownership Act. The bill allows small business owners 
to participate in ESOPs, which I think is the most beneficial 
program in the world for employees to gain wealth and be part 
of the management team and everything at the company. But this 
bill hasn't advanced in the Senate yet, so we are working on 
trying to push the Senate, our counterparts in the Senate Small 
Business Committee to try to get this bill pushed through. I 
wanted to mention that.
    But can you tell us anything about the ESOP? Has it been 
any type of change going from a private company to an ESOP or 
anything like that?
    Mr. OWENS. Yes, sir. I think it has been a major culture 
change for us because previously, as I stated, we had a husband 
and wife that owned the entire company, and the decision-making 
was centered based on their experience. But now we have a board 
of directors, and that board of directors is made up of 
employees who have been with the company for a number of years. 
But the board of directors also recognizes that for us to 
maintain a level of excellence, and also to be relevant moving 
forward, it is in our best interest to make different decisions 
than if the profits were going directly to individuals, and 
that has been the largest, probably the biggest change.
    I think also the ability to look and venture out beyond 
just our local area, because we currently have another project 
that we are performing in Ohio, and we are branching out into 
Tennessee and then in some other areas and not just be specific 
to one particular governmental agency like we are right now. I 
think being able to diversify is very important.
    Also, Van Meter Insurance, we have had a long-term 
relationship with them, and I think just listening to their 
story has been an encouragement for us as we move forward 
because we just completed our first year in the ESOP world.
    Mr. COMER. That is great.
    The second question to begin with, we get a lot of 
complaints in our office about the definition of size for the 
DOE contracts. You mentioned that in your testimony. We have 
other subcontractors at the DOE site that are in the audience 
today.
    What do we need to do to change the definition of size? We 
want small businesses to grow, and it seems sometimes they grow 
and they slightly exceed the definition of a small business, 
and then they are going to shrink because they are ineligible 
for contracts.
    Agencies are trying to meet the small business goals. That 
is something that we hear about in Washington. The goal of this 
Committee is we want more small businesses awarded subcontracts 
for projects like the deactivation. But the growth of small 
businesses kicks them out once they move past that threshold.
    What do you think needs to be done? You had mentioned 
changing the threshold. What should the threshold be?
    Mr. OWENS. I think, Congressman, if you take a look--and 
again, I will use us as an example. But if you gain additional 
work, if you are already a prime contractor, not a 
subcontractor, not doing staff augmentation, but if you are 
already a prime contractor and you have an opportunity to gain 
additional work, you are always looking to see and you are 
having to work with your accountants to make sure, because--I 
will come back to your question--there is a gap between the 
38.5 and then a large business. As I pointed out, last year we 
were unable to compete as a small business because we had 
exceeded the revenue standard by a small amount, but it doesn't 
matter, we had exceeded it.
    In order for us to then compete, we would have to be in the 
area that is called full and open competition, and that brings 
in all of your large, multi-billion-dollar companies, and you 
can't compete with that. I mean, there is no way that you can 
compete in a full and open.
    There is a whole other discussion about the deactivation 
contract here in Paducah. I can make a strong case to you that 
that did not have to be a large business procurement. I can 
make a case to you that it could have been a small business 
set-aside. I can make a case to you that what that large 
business is doing by subbing out all these pieces of work, a 
small business can do the same thing because it is not about 
performing that work as a large business. It is about managing 
the work that you subcontract out. There is a difference there.
    But I think that there should be an automatic cost-of-
living adjustment that is built in to the revenue size standard 
because we may exceed that again, and if you exceed it one 
year, then you are out of business for a couple of years based 
on that rolling average.
    So I just think that there is a way to have a more 
simplified process. As each one of the panelists has mentioned, 
there has to be a way to have a more simplified process. You 
could tie it to the cost-of-living index. You could have an 
automatic increase. Right now it is 38.5. You could use some 
type of calculation to make that 40, and each year, because as 
businesses grow--I mean, that is what you want. You want your 
revenue to increase. So quite naturally, you would then want to 
have the size standard increase as well.
    One other option, though, too, Congressman, is some of the 
NAICS codes are set aside for a number of employees and/or 
revenue. So you could easily say if you have 250 employees or 
less, or the revenue size standard of 38.5, you would still 
qualify. So there are a couple of options there that could be 
utilized.
    Mr. COMER. Thank you.
    Mr. Musselman, I appreciate your testimony and your story 
and the difference you made in Paducah, especially there at the 
brewery. I appreciate risk takers. In this Congress, I can say 
today, we try to reward risk takers because we believe that 
that is the path to growing the economy, not through the 
government.
    One of the goals of this Committee and of President Trump 
has been to try to reduce unnecessary and burdensome 
regulations to try to be able to free up the private sector to 
where you invest more money into the economy, grow the economy, 
create the jobs and things like that.
    One of the big issues, certainly in the year-and-a-half 
that I have been in Congress, and beyond, has been the 
Obamacare mandate. I want to mention this. The Small Business 
Committee has written the IRS seeking more information about 
enforcement for small businesses with 51 to 1,500 employees for 
2015 and going forward. The IRS, believe it or not, has not 
provided the information, but we are going to continue to 
request that. There has been a lot in the news about Congress 
requesting information from the Department of Justice and the 
FBI on another issue that I certainly don't want to get into 
today, but we are trying to break this bureaucracy. The 
government created a huge bureaucracy over the last decade. We 
are trying to disrupt it. We have disrupters here. You all are 
younger entrepreneurs, more of the disrupters, and we are 
trying to battle the bureaucracy.
    But I wanted to ask a specific Obamacare question because 
you mentioned that in your testimony. While employers with 50 
or fewer employees are not subject to Obamacare's burdensome 
employer mandate, many small business employers still find the 
cost of health insurance unaffordable and options limited. How 
important is it that we continue to fight to repeal and replace 
Obamacare so that Americans have more options for better access 
to care and to try to reduce the cost of health care, or at the 
very least stop the double-digit growth of health care premiums 
every year?
    Mr. MUSSELMAN. Well, that is certainly a very high-level 
question, and thank you very much for the kind words. I am no 
expert on Obamacare, but I have been involved in two restaurant 
operations, one that I was an advisor, one that I am an owner, 
and both I just feel are being brought into Obamacare standards 
outside of the intention of that law. If you are running an 
accounting firm or you are running an architecture firm, you 
have 50 architects, you probably are a big business. Running a 
restaurant with 50 employees is not a big business.
    So I feel like the restaurants specifically are falling 
into a grey area that really--I mean, we want to provide health 
care for employees that are doing a good job for us. It is not 
about that. It is really about the mandate itself, and there 
are so many employees who aren't necessarily in a restaurant 
looking for health care because it is a small business.
    So I feel like the restaurants are falling into a grey area 
that was intended to probably be falling into the small 
business side.
    Mr. COMER. What about the--and if you don't want to answer 
this, you don't have to. When we were doing the tax reform 
bill, the historic tax credit initially was----
    Mr. MUSSELMAN. I would love to talk about the tax credit.
    Mr. COMER.--was taken out, and we got a lot of calls from 
Paducah. Sandra Wilson is a very effective lobbyist in the 
Paducah area, and I will be honest, I didn't realize there were 
as many people in the 1st Congressional District of Kentucky 
that were taking advantage of, in a good way, the historic tax 
credit.
    Mr. MUSSELMAN. I think it is fantastic.
    Mr. COMER. Did you participate?
    Mr. MUSSELMAN. Absolutely. I probably spent, again--you 
know, I don't want to dig into finances. I mean, everybody has 
their issues, needs, wins, losses, whatnot. But I put about 
$10,000, I would estimate, between drawing up the paperwork, as 
well as paying for the process of getting that tax credit, 
probably around $10,000 cash out for a tax credit that is non-
refundable, which means it does not come in the form of cash if 
you can't use it that year. Some do. Kentucky state historic 
tax credit does, and it only applies towards passive income.
    So I would love to be operating passive income at a level 
where I could actually use the tax credit that I earned, but I 
am not in a position to do that. So when I need it, when my 
businesses are in their infancy, when I am trying to grow and 
expand and do more things and I am fighting the burdens of 
short-term loans, unable to take advantage of SBA loans and 
whatnot, we have stepped out on a long limb, and we are very 
proud of what we have done. I am very confident in the 
direction that we are going.
    But if that tax credit could play a role now rather than 10 
years from now, it is a game changer, and I would jump right 
back into another project rather than not be able to.
    Mr. COMER. And I appreciate that. We are obviously taking 
notes. I believe that there will be another tax reform clean-up 
bill. The President calls it Tax Reform 2. One of the goals 
will be to make the individual tax cuts permanent. I think that 
is a very doable goal, but also to kind of tweak some mistakes, 
some unintended consequences of the tax bill. We will certainly 
look at that again.
    Mr. MUSSELMAN. I very much do not want that tax credit to 
go away.
    Mr. COMER. Right.
    Mr. MUSSELMAN. I think it is very beneficial.
    Mr. COMER. And it won't, I am pretty confident. It is very 
popular.
    Mr. MUSSELMAN. It is fantastic, and if I were a wealthy 
individual sitting here, I probably would be using that in the 
next two to three years.
    Mr. COMER. And I want to mention something else that has 
nothing to do with this one, but it does have to do with West 
Kentucky. I stayed at the Meadows Hotel in Fulton. I don't know 
if anybody has been there yet. I highly recommend it. You are 
going to be shocked when you see it. That wouldn't have 
happened without the historic tax credit. That is according to 
the developer that developed that hotel, too. That was one of 
the things that I learned during the tax reform bill, how many 
people were utilizing that, and how many projects probably 
wouldn't have happened without it.
    Mr. MUSSELMAN. Our project was actually on the cover of 
that. I don't know if you are familiar or not. I mean, I was 
very much involved in all of those conversations and very 
much--I mean, between you and I and everybody else listening to 
this testimony, I can make that statement, but it is only 
partially true.
    The Kentucky state tax credit, that is a fact. I got that 
back as a--any that I did not use, any tax burden that was not 
relieved I got as a check to offset expenses. This right here, 
I will go ahead and throw it out there just for the magnitude 
of it. It is $670,000 that I probably won't be able to use in 
the next 20 years, and you can imagine if that were a small 
percentage of the cost of our project, it would be pretty 
valuable to plug in.
    Mr. COMER. Absolutely. Good to know. Thank you.
    Mr. MUSSELMAN. Thank you.
    Mr. COMER. Mr. Neihoff, when we look at one of the 
challenges facing rural Kentucky, rural America but 
specifically rural Kentucky, our best and brightest young 
people, when they graduate from high school they go off. They 
would maybe like to come back to rural Kentucky, but they don't 
have the opportunity there that they may have in a Nashville 
and St. Louis and Louisville, particularly when it comes to a 
technology job, high-tech jobs.
    What are some things that we can do in rural Kentucky to 
try to foster more startups like yours? I know you had 
impediments like every other small business, access to capital. 
You are starting out as a startup with no business plan, 
probably no tax history to be able to obtain a loan in the 
traditional method. But what are some things that we can do to 
try to get more high-tech startups from this next generation, 
from the Millennials and maybe the younger generation, the X-
ers and things like that?
    Mr. NEIHOFF. I think there are really kind of two sides to 
that question, the one of recruiting young people to this area 
and what is important to them, whether they are going to be 
employed or they are going to start a company themselves. Is 
that kind of what you are asking? Do you want to move them back 
here to be employed or to be entrepreneurs themselves?
    Mr. COMER. Either, either/or.
    Mr. NEIHOFF. Okay. Well, I think for me, what I see in our 
area, and when we talk about marketing our area as a whole to 
young people, I have asked all the time why do you choose to 
stay in Paducah and live here? Well, for me it is being on the 
ground level of a community that you know is about to grow to 
the size of a Nashville or one of those other areas. I imagine 
being in one of those larger communities when it was just kind 
of grassroots and it was still growing, you feel like you have 
the ability to actually be part of voicing how that community 
shapes. So that is very appealing to me, and I feel like that 
is probably appealing to a lot of younger people as well, that 
you have the freedom--and Paducah is good about this--the 
freedom as a young person to have a voice. I think that is what 
people are ultimately looking for in the community that they 
live in if they are those Type A, get-`er-done type of people. 
You have that desire to want to create the place that you live.
    As far as entrepreneurs, I go back to it is just that 
everything has become way too complicated, and there are 
barriers to entry for a lot of young people to go out and start 
their own. I think that it is both financial barriers that, 
again, if you try to reach out and get a grant or you try to 
get funding, it is a complicated process that discourages a 
lot; and then also the lack of education and knowledge of 
knowing how to do that. That is where I feel like that 
mentorship program could go a long way because really, I feel 
like successful young people are those who honor and value the 
wisdom of those who have gone before them. I think that is a 
big difference.
    So I guess really, for this area, I don't feel like we 
compete with Louisville and Nashville and St. Louis. I feel 
like that is the wrong conversation to try to even compete with 
them. If people want to live in a larger community, a 
cosmopolitan, metropolitan area, they are going to move to 
those. They are not even going to consider Paducah. But there 
are a lot of people like myself. I have three children--11, 9, 
and 7. I don't want to live in one of those communities. I want 
to live in one that I have a voice in, that I can be successful 
in, that I can have some access to some cool things for my 
family to be able to do, and that is really what I am looking 
for.
    So I feel like if we want to recruit those people, we need 
to better market and communicate who we are as a community, and 
we need to remove some of the barriers and provide them with 
mentorship and encouragement to be able to launch those 
companies and businesses.
    Mr. COMER. A couple of specific questions for your industry 
which we have some jurisdiction over. I want to ask a quick 
question about intellectual property protections and 
trademarks, just real briefly.
    In your experience, are startups aware of intellectual 
property protections?
    Mr. NEIHOFF. Are they aware of intellectual property 
protections? I don't think they are aware, a lot of times, of 
even the laws, what that goes into. You run into a lot of theft 
in that area. A lot of businesses will step out and try to take 
a design or take a piece of creative property without really 
understanding how that even works. So I think there are some 
limitations and really a need to educate the public on those 
types of things.
    Mr. COMER. I am going to ask this question about trademark. 
If you can answer it, that is great. If not, don't worry about 
it. But can you describe the process a small business owner 
goes through to obtain a trademark?
    Mr. NEIHOFF. Talk to an attorney.
    [Laughter.]
    Mr. COMER. Okay.
    Mr. NEIHOFF. That is the extent of what I know.
    Mr. COMER. That is a great answer.
    In the technology field, if you were looking for more 
employees in that field, how difficult is it to find employees 
that are tech savvy, that have a high tech IQ?
    Mr. NEIHOFF. It is very difficult. The reality--and I don't 
know all the statistics on how it all goes, but I hear all the 
time that there are people without jobs, and then there are 
jobs without people. Any time you have that, when you have one 
side saying we can't find work, and you have another side that 
says we can't find employees, you have a workforce development 
issue, and I think that there needs to be better access and 
better training and better promotion of existing programs to 
help people learn those types of skills.
    I think again, kind of going back to the issue of 
complexity versus simplicity, we over-complicate that because 
we put these programs together that, by the time they are done 
and ready, they are irrelevant. Technology changes too fast.
    So again, having access to people who understand those 
things to be able to coach and expand and help young people 
grow in that area I think would be very valuable. I think we 
need to start at a very young age, I think even the middle-
school level and up, that people need to not just learn systems 
and processes but understand how to learn. They need to learn 
how to learn. They need to be critical thinkers of being able 
to figure out how coding and some of those technology things 
work, because if you can teach people to learn, then it doesn't 
matter what is presented to them, they will soak it up.
    I have always said with college and math and things, I love 
math and things of that nature, and people say, well, when are 
you ever going to use calculus? Well, that is not the point. 
What calculus does for individuals is it teaches them to 
formulate a problem and put it together and solve that problem. 
I think that it is an exercise for your brain. Your brain is a 
muscle, like anything else, and you are training people to be 
thinkers and problem solvers, and that is what we need to do. 
We have to get out of the process, the traditional education 
system.
    Mr. COMER. Good deal.
    One thing that the Small Business staff passed along that I 
wanted to mention. We recently, we the Small Business 
Committee, recently had a hearing on intellectual property for 
small businesses. Our considered legislation would provide more 
resources for small business through SBA. But one of the big 
problems with the trade issue now with Canada is stealing our 
intellectual property, and that applies to the big businesses 
much more so than the small businesses. But that is something 
that we wanted to note, something that the Committee is going 
to be delving into as we move forward.
    I want to go back and ask Bruce a couple of quick 
questions, and then we are going to wrap this up. We said we 
would keep it to an hour-and-a-half.
    Mr. Kimbell, we finally have a success story in a piece of 
legislation that small businesses were wanting that passed the 
House, the Senate, it actually passed the Senate first and then 
the House, the President signed into law, and that is Dodd-
Frank reform. For those of you that may not be familiar with 
that, that was a piece of legislation that Congress passed 
after the big banks failed, the big banks being Bear Stearns, 
Lehman Brothers, those Wall Street investment banks.
    The community banks didn't do anything wrong, especially in 
Kentucky. To my knowledge, not one community bank went under, 
not one community bank was even in danger of going under. But 
Congress overreacted and passed legislation that treated the 
community bank in Clinton the same as Bear Stearns or Lehman 
Brothers or Bank of America or Citibank, much different types 
of banking, much different sizes.
    So we passed this Dodd-Frank repeal for community banks 
only. When do you think you will be able to start seeing change 
in the compliance and all that? Have you gotten any indication 
of when?
    Mr. KIMBELL. Hopefully the sooner, the better. As that 
worked its way through the process, the biggest piece probably 
for us is some of the residential aspects, trying to work 
through putting things in our own loan portfolio that would 
allow us to do away with certain underwriting requirements. So 
that is probably going to be very helpful for us as we go 
through, as I have heard from a lot of my peers across the 
state that that is going to be helpful to them. Maybe in some 
of the more populous areas, that is probably going to be more 
of a benefit to them.
    Any time, though, I guess when there is a change of 
attitude as far as the regulatory side where they are trying to 
work with us, just as we all heard today from the regulatory 
side working its way down from one-size-fits-all, that is hard. 
That makes it very hard. From Washington, D.C. to Clinton, 
Kentucky is a long way, and that step there, a lot of things 
can go into something that makes it very difficult for us to 
put into play every day, or makes it very difficult for us to 
do our jobs.
    As a community bank, there is nothing that makes you 
happier than seeing someone, one of your customers being 
successful. I had the good fortune of coming home, to come back 
to our bank. So any time that I can see young people that have 
been successful that I have known their entire lives, that 
makes you very happy as a banker, because we know these folks. 
We see the heartaches, we see the struggles, we see the 
successes, but we don't go off somewhere to a faraway, distant 
place either. We go back home, and so we know these people. 
That makes it a little bit more touching.
    Mr. COMER. Absolutely. That is what I would tell the 
critics that were complaining about Dodd-Frank reform. It was 
going to lead to big banks needing to be bailed out again, 
which I completely disagree with. No bank wants to make a bad 
loan. It is not in your best interest to make a bad loan.
    Mr. KIMBELL. And the larger banks, the whole 
standardization process, the larger banks are the ones who 
appreciate that because they don't have to know the community. 
They don't have to know the people. All they have to know is 
what the process is, and then how can we make that as efficient 
as we possibly can.
    Mr. COMER. Switching gears, one last question. We spend a 
lot of time in the Small Business Committee with the SBA 
program because we have jurisdiction over the SBA. I know you 
all have a big poultry portfolio with SBA. Are there other 
types of agriculture that you can get an SBA loan approved for 
other than poultry?
    Mr. KIMBELL. Pretty much on the livestock side, whether it 
be poultry or pork.
    Mr. COMER. Pork.
    Mr. KIMBELL. Those would be the two.
    Mr. COMER. Vertically integrating----
    Mr. KIMBELL. Vertically integrating. You probably could get 
off into some--I would be guessing, so I can't really speak to 
that. But we have always tried to look to USDA and to SBA to 
try to assist us just because of the specialized nature of 
those buildings and of the whole process.
    Mr. COMER. Okay. Great.
    Well, I appreciate everyone's open testimony and your 
answering the questions.
    I am going to let everyone say if there is anything that 
you have a recommendation for the Small Business Committee. 
Obviously, every word will be in the official record. We are 
taking this back to the Small Business Committee. We want to 
try to get results. Each of you have unique small businesses. 
You have successful small businesses. But you each have some 
challenges that I think government could make life a little 
easier for you to be able to grow and expand your businesses.
    So I will start with Bruce Kimbell, if you have any closing 
recommendation or if there is anything you forgot that you 
wanted to mention for the Small Business Committee in 
Washington.
    Mr. KIMBELL. I would just like to reiterate, number one, 
thank you for hosting this today. I very much appreciate it. 
Anything we can do to promote Western Kentucky is a great 
thing. We have a lot of individuals here today, not only at 
this table but in the back of the room too, that bring their 
best every day to try to make this a great place to live.
    Anything that can be done to push those decision-making 
processes back down to the local level, I think that is always 
where we have to concentrate at. We have to put it back to us. 
We are the ones that live with it. We are not going to do 
something foolish just to expedite something because, as I 
said, we live in the communities. We see the results, both good 
and bad, so why would we put ourselves into that situation? So 
put it back to where we can make those decisions and that we 
can try to work with our customers to help them achieve what 
they want to.
    Mr. COMER. And I appreciate, Bruce Kimbell, in Hickman 
County, Monroe County, where I reside, and all the communities 
around where I reside, the community bank is the best corporate 
citizen in town.
    Mr. KIMBELL. We try to be.
    Mr. COMER. Every sponsorship of every Little League 
program, or any time that they need anything, they go to the 
community banks first. So we appreciate the role that the 
community banks provide as a corporate citizen and as a 
provider of access.
    Mr. KIMBELL. Thank you very much.
    Mr. COMER. Mr. Leon Owens.
    Mr. OWENS. Congressman Comer, again, we would just like to 
thank you for taking the time out of your busy schedule to have 
a field hearing here. I think it is very important. I think 
this is the first field hearing that has been held in Paducah 
since the late `80s. So we commend you for doing this.
    I have two comments that I would like for you to be mindful 
of. In regard to the ESOP, this legislation that hopefully will 
pass the Senate and then be signed by the President, it is the 
first ESOP legislation in over 20 years. We know that there is 
a significant tax benefit that ESOP companies receive. We would 
ask the Committee to please continue to be mindful of that and 
be diligent to ensure that that benefit still continues for 
ESOP companies because we know that any time a business, 
whether it is small or large, but particularly a small business 
is able to receive a tax benefit, that is something that is 
looked at by others in a less-than-favorable manner. So we 
would encourage the Committee to continue to just be supportive 
of any ESOP legislation that might come before you.
    The other thing that I would like to add is small 
businesses, government contractors, it is a dying breed, so to 
speak, because oftentimes--and I will use us as an example--a 
lot of federal agencies do not want to deal with small 
businesses from a prime contract standpoint. They want to deal 
with the large businesses because that is what they are used 
to. As was pointed out, the large businesses have the high-paid 
lobbyists. The small businesses don't. The small businesses 
have to use their existing staff and do the best that they can 
to ensure that their positions are identified and promoted. We 
would ask that any legislation that could be favorable to small 
business be promoted.
    The other thing is each one of these federal agencies, they 
have a small business office, the office of small business that 
is responsible, supposedly, to promote small business within 
that agency. I know that we have found over time that their 
mission is contrary to what is promoted, and that is very 
difficult for small business. I will give you a quick example.
    The contracts that we have been fortunate and blessed to 
win, they are in excess of $100 million, and you need to have 
mature systems, accounting systems, HR systems, to be able to 
successfully manage those contracts. But then I can point to a 
contract that might be $50 or $60 million that should be set 
aside for small business, but it is not. It is considered full 
and open competition for large business. Why?
    Those are the kinds of concerns that we have, that there is 
not a recognition of small business as prime contractors by 
various governmental agencies.
    So again, we appreciate you for taking time to have the 
hearing here.
    Mr. COMER. And we look forward to working with you on that 
as we proceed.
    Mr. OWENS. Yes, sir.
    Mr. COMER. Thank you.
    Mr. Musselman?
    Mr. MUSSELMAN. Yes, thank you very much again for the 
invitation. We really appreciate that.
    I guessing paring it back to what I think is a tangible, 
reasonable request, I think looking at where restaurants can 
fall into the Affordable Care Act, whether or not the intent, 
whichever side of the line the intent was intended for, let's 
clarify that and see. Again, I don't feel like one single 
restaurant should be qualifying people as a big business.
    Tax credits, historic tax credits are a fantastic thing. It 
is very expensive to do proper historic rehabilitation. Many 
times, it is much more expensive than new construction. But 
there is culture, there is history, there is real value in 
protecting and maintaining our built heritage, and the tax 
credits are a tangible offset to that. It still would probably 
not go 1-to-1 on cost, but getting that actual return. So 
seeking whether or not those could be refundable tax credits, 
as they are in the state, that would be a huge change in 
whether or not people are actually continuing with these 
projects.
    And then again, I appreciate your and Mr. Kimbell's 
insights on the Dodd-Frank repeal. It will be interesting to 
see how that impacts the local level. All of our financing has 
been provided at the local level by community lenders, and they 
have been doing the best that they can to provide support. 
Hopefully this will enable them to abbreviate the process and 
get hands--not in mine. I am pretty well to the point where I 
am through the entry to small business. But there are so many 
talented folks in our area that just really need an 
opportunity, and that opportunity is with capital, and 
potentially reduction in taxes as well.
    Thank you very much.
    Mr. COMER. Well, thank you, and I look forward to your next 
big investment in Paducah. I think you all may have missed it. 
I visited your establishment last night.
    Mr. MUSSELMAN. Wonderful. Thank you very much.
    Mr. COMER. Mr. Neihoff?
    Mr. NEIHOFF. I just want to start out by saying thank you 
as well for your time. I appreciate the opportunity to sit up 
here with such a distinguished group here. I feel like why am I 
here sometimes.
    Just to kind of echo what Mr. Kimbell has said, I think 
really it is important to put the resources in the hands of 
local organizations to make those decisions. It is very 
difficult for someone who is hundreds of miles away to make the 
decision on whether or not this business needs these resources. 
I would think even the decision-making on grants and loans and 
things of that nature would be better used on a local level, 
and also funding for organizations like Wooldridge and people 
of that nature, that they can be better staffed and better 
provide programs that can provide education.
    So I think both on the financial side and the education 
side, being able to mentor, those being pushed to the local 
level would be very valuable to any small community or any 
metropolitan area.
    Thank you again.
    Mr. COMER. Great.
    I want to thank again our witnesses for being here today. I 
appreciate both your testimony and your contributions as small 
business leaders in Western Kentucky. With individuals like you 
leading the way, it is no wonder that Paducah has been 
recognized as one of the world's 50 smartest cities and one of 
the 100 best communities for young people.
    I will take your recommendations and ideas back to 
Washington and continue to work with my colleagues at the Small 
Business Committee to improve federal policy so that 
entrepreneurs can start businesses, access the capital that 
they need, and spend more time running their businesses than 
dealing with burdensome regulations.
    I ask unanimous consent that members may have 5 legislative 
days to submit statements and supporting materials for the 
record.
    Without objection, so ordered.
    We are adjourned. Thank you all.
    [Applause.]
    [Whereupon, at 11:31 a.m., the Committee was adjourned.]
                           
                           
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