[House Hearing, 116 Congress]
[From the U.S. Government Publishing Office]


      SBA'S STATE TRADE EXPANSION PROGRAM: THE STATES' PERSPECTIVE

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

                                HEARING

                               BEFORE THE

      SUBCOMMITTEE ON RURAL DEVELOPMENT, AGRICULTURE, TRADE, AND 
                            ENTREPRENEURSHIP

                                 OF THE

                      COMMITTEE ON SMALL BUSINESS
                             UNITED STATES
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED SIXTEENTH CONGRESS

                             FIRST SESSION

                               __________

                              HEARING HELD
                             JUNE 11, 2019

                               __________

[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
                               

            Small Business Committee Document Number 116-026
             Available via the GPO Website: www.govinfo.gov
                   
                   
                               __________
                               

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                   HOUSE COMMITTEE ON SMALL BUSINESS

                 NYDIA VELAZQUEZ, New York, Chairwoman
                         ABBY FINKENAUER, Iowa
                          JARED GOLDEN, Maine
                          ANDY KIM, New Jersey
                          JASON CROW, Colorado
                         SHARICE DAVIDS, Kansas
                          JUDY CHU, California
                           MARC VEASEY, Texas
                       DWIGHT EVANS, Pennsylvania
                        BRAD SCHNEIDER, Illinois
                      ADRIANO ESPAILLAT, New York
                       ANTONIO DELGADO, New York
                     CHRISSY HOULAHAN, Pennsylvania
                         ANGIE CRAIG, Minnesota
                   STEVE CHABOT, Ohio, Ranking Member
   AUMUA AMATA COLEMAN RADEWAGEN, American Samoa, Vice Ranking Member
                        TRENT KELLY, Mississippi
                          TROY BALDERSON, Ohio
                          KEVIN HERN, Oklahoma
                        JIM HAGEDORN, Minnesota
                        PETE STAUBER, Minnesota
                        TIM BURCHETT, Tennessee
                          ROSS SPANO, Florida
                        JOHN JOYCE, Pennsylvania

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

                           OPENING STATEMENTS

                                                                   Page
Hon. Abby Finkenauer.............................................     1
Hon. John Joyce..................................................     3

                               WITNESSES

Mr. Wade Merritt, President and State Director of International 
  Trade, Maine International Trade Center, Portland, ME..........     5
Ms. Jennifer Bacon, Co-Founder, FlapJacked, Westminster, CO......     7
Mr. Clifton Broumand, Founder and CEO, Man & Machine, Inc., 
  Landover, MD...................................................     8
Ms. Jennifer Black, Executive Director, Export Development, PA 
  Department of Community & Economic Development, Office of 
  International Business Development, Harrisburg, PA.............     9

                                APPENDIX

Prepared Statements:
    Mr. Wade Merritt, President and State Director of 
      International Trade, Maine International Trade Center, 
      Portland, ME...............................................    21
    Ms. Jennifer Bacon, Co-Founder, FlapJacked, Westminster, CO..    24
    Mr. Clifton Broumand, Founder and CEO, Man & Machine, Inc., 
      Landover, MD...............................................    27
    Ms. Jennifer Black, Executive Director, Export Development, 
      PA Department of Community & Economic Development, Office 
      of International Business Development, Harrisburg, PA......    31
Questions for the Record:
    Questions from Hon. Abby Finkenauer to Mr. Wade Merritt and 
      Ms. Jennifer Black and Answers from Mr. Wade Merritt and 
      Ms. Jennifer Black.........................................    35
Additional Material for the Record:
    Statement from Iowa Economic Development Authority...........    43

 
      SBA'S STATE TRADE EXPANSION PROGRAM: THE STATES' PERSPECTIVE

                              ----------                              


                         TUESDAY, JUNE 11, 2019

                  House of Representatives,
               Committee on Small Business,
    Subcommittee on Rural Development, Agriculture,
                                Trade and Entrepreneurship,
                                                    Washington, DC.
    The Subcommittee met, pursuant to call, at 10:02 a.m., in 
Room 2360, Rayburn House Office Building. Hon. Abby Finkenauer 
[chairwoman of the Subcommittee] presiding.
    Present: Representatives Finkenauer, Golden, Crow, Craig, 
Chabot, and Joyce.
    Chairwoman FINKENAUER. Good morning. The Subcommittee will 
come to order.
    I would first like to just say thank you to our witnesses 
who came from all over the country to be here today. It means a 
lot that you guys took time out of your busy schedules to be 
here and testify in front of the Subcommittee. It means a 
great, great deal.
    I would also like to thank Ranking Member, Dr. Joyce of 
Pennsylvania for his work on these issues that I know are very 
important to his district, mine, and those of the folks who sit 
on this Committee. Together, we have held a couple of meetings 
now on trade and I am glad that we share this priority. I look 
forward to continuing our bipartisan work on the Subcommittee.
    As a congresswoman from Iowa's 1st Congressional District, 
I know firsthand that for our small businesses and our farmers, 
the ability to access new markets and export goods promotes 
economic success at home and in our communities.
    Today's hearings will focus on how Congress can improve the 
State Trade Expansion Program, or STEP as we call it, which 
offers competitive grants to states and territories to help 
small businesses, agriculture, entrepreneurs, and small 
business manufacturers export their products overseas.
    Given the importance of trade in my home state, especially 
for our farmers and small businesses and manufacturers, I am 
disappointed that no one from the Iowa Economic Development 
Authority was able to join us here today. But to make sure that 
my friends from the Iowa Economic Development Authority, along 
with other hardworking entrepreneurs in northeastern Iowa, have 
the chance to share their experiences with the State Trade 
Expansion Program and provide feedback on how we can make this 
program work better as we look toward our reauthorization, I 
plan to host a roundtable in my district on this same issue on 
July 1st.
    For that reason, I am especially excited to hear from each 
of you today. I hope to share your insights with my 
constituents at home and see how your experiences compare to 
those of Iowa business owners. So, thank you again for taking 
the time.
    Like in Iowa, exporting unlocks opportunities for small 
businesses and entrepreneurs all throughout the country. You 
guys see this every single day. By selling their goods and 
services abroad, small businesses can drive economic growth in 
their communities and in turn create jobs, boost wages, and 
spur innovation.
    Despite the many opportunities, only 1 percent of our 
nation's 30 million small firms sell their products overseas. 
Recognizing both the challenges and benefits of exporting, 
Congress created a three-year pilot program to help small 
businesses export. Five years later, Congress made STEP 
permanent and authorized $30 million in funding through the 
upcoming fiscal year.
    STEP gives small businesses the tools they need to start 
exporting and expanding into new markets and helps connect 
small businesses with international consumers. STEP provides 
grants to states to host trade shows here and abroad and 
organize trade missions for small businesses.
    Many small businesses operate with razor-thin margins, and 
only a few employees. They do not always have the resources to 
attend a trade show, design an international marketing 
campaign, or navigate a foreign country's complex rules and 
regulations. With STEP, small businesses and entrepreneurs can 
focus on building relationships with consumers abroad and not 
worry about the red tape.
    As we prepare to reauthorize the program, it is very 
important to hear from the stakeholders--the folks who are 
doing this day to day--and learn what needs to be done to 
improve the program and make sure that it works as it is 
supposed to.
    Earlier this year, Dr. Joyce and I held a hearing on the 
reports and audits conducted by our nation's watchdogs, which 
raised concerns with SBA's implementation of the program. The 
issues range from short timelines to burdensome reporting 
requirements to a lack of timely and consistent communication 
from SBA. I have also heard similar concerns from the Iowa 
Economic Development Authority about the tight turnaround times 
with the applications. I have testimony from them that I would 
like to enter into the record.
    Today's hearing gives us the chance to hear from 
stakeholders and our states that are working hard to ensure 
small businesses can take advantage of this program, and again, 
make it work how it is supposed to. In order to strengthen the 
program and make it a wise investment of taxpayer dollars, we 
need your input. I have heard just how much the Iowa Economic 
Development Authority (IEDA) appreciates this program, and they 
are proud to offer a cost-effective and efficient way for small 
businesses in the Hawkeye state to explore export opportunities 
around the globe. The IEDA was able to make 37 grants to small 
businesses, and nearly 40 percent of those grants went to rural 
businesses.
    I hope this hearing underscores the importance of STEP all 
across the country and provides us with a roadmap for 
reauthorization.
    I look forward to hearing from the witnesses on the panel 
today and the ideas they have to strengthen STEP. I also look 
forward to hosting a roundtable on this important program in my 
district in the coming weeks.
    I want to thank the witnesses again for being here today, 
and I would now like to yield to Ranking Member Dr. Joyce for 
his opening statement.
    Mr. JOYCE. Thank you, Madam Chairwoman.
    Three months ago, we held an Oversight hearing on the SBA's 
State Trade Expansion Program, what we call STEP. 
Representatives from the U.S. Government Accountability Office 
(GAO) and SBA's Office of the Inspector General (SBA OIG) 
identified to us program management weaknesses and recommended 
reforms. Today, we reinforce our commitment to seeing that SBA 
fulfills its goals relating to this program and maximizes every 
dollar to help small businesses reach their significant 
potential on the international market.
    Two of our witnesses will explain the role of state trade 
agencies as administrators of STEP programs. The other two 
represent countless small businesses that have utilized STEP 
funds to enter into that vast foreign market that our 
Chairwoman just referenced. Each witness will demonstrate the 
innovative ways that STEP funds can be used to alleviate the 
burdens faced by small exporters.
    We know that small exporters have a large impact on the 
American economy. I visited those within my district. I visited 
J&J's Truck Bodies in Somerset County, Pennsylvania. I have 
seen the importance of STEP grants.
    State export agencies use STEP funds for a diverse array of 
services. Each service has its own set of metrics and expected 
outcomes. The program's flexibility benefits participants but 
hinders SBA's ability to measure impact and define the success 
for STEP grants.
    In the small business world, and I come from that small 
business world, one size does clearly not fit all. When Federal 
dollars are involved, there needs to be a happy medium which 
accommodates program flexibility and accountability. Small 
businesses and state officials here today value the STEP 
program and want to see it reach its highest potential. We, in 
Congress, we here today on the Small Business Committee, share 
that sentiment. As we collect feedback from program 
participants today, I hope SBA is listening.
    Thank you for our witnesses for traveling here, for 
providing your valuable insight into the STEP program.
    I yield back, Madam Chairwoman.
    Chairwoman FINKENAUER. Thank you, Dr. Joyce. The gentleman 
yields back.
    If Subcommittee members have an opening statement prepared, 
we would ask that they would be submitted for the record.
    I would now like to take a minute to explain the timing 
rules. Each witness gets 5 minutes to testify and each member 
then gets 5 minutes for questioning. There is a lighting system 
in front of you to assist you. The green light will be on when 
you begin, and the yellow light comes on when you have 1 minute 
remaining. The red light comes on when you are out of time, and 
we ask you to stay in that timeframe that we have set to the 
best of your ability.
    I now would like to introduce our witnesses.
    Our first witness is Wade Merritt, president of Maine 
International Trade Center and state director of international 
trade within the Maine Department of Economic and Community 
Development. In this role, he is responsible for directing the 
trade and investment policy for the state. Mr. Merritt has 
worked his way up from frontline staff, to regional office 
director, to ultimately leading the organization. He has also 
served as past president of SIDO, the national association of 
state trade offices, and currently serves on its board of 
directors. Mr. Merritt has been involved with the State Trade 
Expansion Program since its inception and has a wealth of 
experience. I look forward to hearing about the evolution of 
growth in the program. Thank you for being here.
    Our second witness is Ms. Jennifer Bacon, the co-founder of 
FlapJacked, a small business in Westminster, Colorado, that 
makes high-protein pancakes, muffins, and cookies that are not 
only healthy but tasty. Jennifer and her husband initially 
developed FlapJacked's first product, the protein pancakes and 
baking mix, to encourage her children to eat healthfully and 
ensure their son Jace was receiving proper nutrition. Her 
company has utilized the STEP program to travel to Mexico and 
open new international markets. I am excited to hear about 
FlapJacked and how the STEP program has helped you tap into 
those new markets, and I am very grateful for your time here 
today. Welcome, Ms. Bacon.
    Our third witness is Mr. Clifton Broumand, the founder and 
CEO of Man and Machine, located in Landover, Maryland. Good to 
see you again. Man and Machine is a global leader in community 
peripherals and custom hardware engineering solutions. The 
company develops medical grade keyboards and mice, which allow 
work stations to be easily cleaned and disinfected between 
patients. Under Mr. Broumand's leadership, the company has 
grown from three employees in a small office building to a 
19,000 square office complex and state-of-the-art production 
line. I believe when I first met you, you were introduced as 
``The Big Cheese.'' We are very excited to have you here today.
    I would now like to yield to our Ranking Member, Dr. Joyce, 
to introduce our final witness.
    Mr. JOYCE. Again, thank you, Madam Chairwoman.
    Our fourth and final witness is Jennifer Black, who is the 
executive director of Export Development for Pennsylvania's 
Office for International Business Development. Ms. Black plans 
and directs Pennsylvania's export promotion and international 
trade initiatives, including the Global Access Program, which 
is partially funded by STEP grants. She also manages 
Pennsylvania's authorized trade representatives in Central and 
Eastern Europe, Germany, The Netherlands, India, and assists 
companies in growing sales to these specific markets. Ms. Black 
is a NASBITE Certified Global Business Professional and holds a 
master degree in public and international affairs from the 
University at Pittsburgh.
    Thank you for your hard work on behalf of Pennsylvania 
exporters.
    Madam Chairwoman, I yield back.
    Chairwoman FINKENAUER. Thank you.
    Mr. Merritt, you are now recognized for 5 minutes.

  STATEMENTS OF WADE MERRITT, PRESIDENT AND STATE DIRECTOR OF 
INTERNATIONAL TRADE, MAINE INTERNATIONAL TRADE CENTER; JENNIFER 
 BACON, CO-FOUNDER, FLAPJACKED; CLIFTON BROUMAND, FOUNDER AND 
 CEO, MAN & MACHINE, INC.; JENNIFER BLACK, EXECUTIVE DIRECTOR, 
   EXPORT DEVELOPMENT, PA DEPARTMENT OF COMMUNITY & ECONOMIC 
    DEVELOPMENT OFFICE OF INTERNATIONAL BUSINESS DEVELOPMENT

                   STATEMENT OF WADE MERRITT

    Mr. MERRITT. Thank you, Madam Chairwoman, Chair Finkenauer, 
Ranking Member Joyce, and of course, Congressman Golden.
    Let us try that again.
    Chair Finkenauer, Ranking Member Joyce, and of course, 
Congressman Golden, members of the Subcommittee, thanks for 
having me. My name is Wade Merritt. I am the president of the 
Maine International Trade Center, and as mentioned, a board 
member and past president of SIDO. It is my pleasure to be here 
with you today.
    The State Trade Expansion Program, or STEP, is a 
cooperative program of the Small Business Administration and 
State Offices of International Trade. We are generally 
divisions of state government, but some, like me, are public-
private partnerships.
    For those of you not familiar with what the state are doing 
on international trade, we are generally tasked with promoting 
our individual states to a global audience. I introduce our 
program as ``connecting Maine's businesses and communities to 
international opportunities.'' This has traditionally been 
export promotion and the attraction of foreign investment, but 
also in our case it has included diversification of the defense 
supply chain, promotion of our educational institutions, 
facilitation of research and development connections between 
our state and the Nordic and Arctic regions.
    So the question was asked of us in the summer of 2009, how 
best can SBA best support growth in exporting and convince more 
SMEs to export? Our response was driven from our experience in 
the field: find a way to provide direct support and allow 
states to design and implement programs that best fit the needs 
of their individual business communities.
    That is where STEP is vital to our mission as states, 
providing the resources and necessary motivation to get those 
SMEs to take the leap.
    Maine is not Pennsylvania; and Pennsylvania is not Maine. A 
one-size-fits-all program will not achieve maximum impact and 
efficiency.
    But one that allows for thoughtful and creative methods and 
is able to support states' own plans will. The flexibility of 
the program can be its greatest strength and it can allow for 
the highest possible return on investment.
    As I mentioned, we are a public-private partnership. 
Eighty-one percent of our clients have fewer than 100 
employees; 68 percent of our employees have fewer than 25. Last 
year we worked with over 320 businesses in Maine and completed 
over 1,100 trade assistance consulting and research projects. 
Anybody who has ever visited our state knows that it is very 
rural, with just eight municipalities exceeding SBA's 
definition of urban, and with that type of population mix there 
are always challenges with resource deployment and service 
delivery.
    The STEP program directly supports two of our core 
functions and allows us to extend our resources and be more 
inclusive and expansive in our product offering. These 
programmatic areas are driven by responsiveness to our business 
community, and asking the questions: What do they need? And 
what do they want?
    In 2018, utilizing STEP funds, we launched a refreshed 
trade education series, which reflected a multi-tiered approach 
from basic information to highly advanced topics offered 
through multiple channels to extend our reach into rural 
communities. We have just completed Maine International Trade 
Day with over 400 attendees and a focus on opportunities for 
the state's forest and marine industries and how greater 
engagement with the Nordic region could help drive positive 
economic change. These efforts not only provide much needed 
education but also engagement, bringing small businesses from 
all over the state into our STEP pipeline.
    It is our goal to engage the small business community in 
exporting and to do that through collaboration with our Federal 
and state colleagues and counterparts, and encouraging them to 
use all of the resources available to them.
    Like many states, we organize trade events at international 
trade shows, offering cost-effective opportunities for 
businesses to meet international buyers and distributors. 
During 2018, MITC coordinated a presence at nine trade shows 
supporting Maine's food, seafood, composites, and life sciences 
industries. All of these efforts had some measure of STEP 
support, and the variety of shows and destinations allowed for 
exporters at all levels of sophistication to have a chance to 
participate.
    The results have been inspiring. For the past 2 grant 
years, our small businesses have reported almost $29 million in 
actual sales, from an investment of just $300,000 of Federal 
funds. I will do the math for you. That is roughly a 100:1 
return on investment.
    I want to thank the Committee for taking an interest in 
this program. We look forward to working with you and the 
agency to ensure STEP reaches its full potential. Although 
there are issues with the management of the program that I and 
my peers feel can be worked on and improved, and I am sure that 
we will take questions on, there can be no doubt that the 
outcomes of the program are significant and they are important.
    It is critical that international markets be an integral 
part of small businesses' growth strategy, and it is critical 
that those small businesses have the support, whether 
financial, technical, or even emotional, that they need to play 
offense and to be successful. For many states and the 
businesses we serve, the STEP program is an important part of 
that equation.
    Thank you for your time, and I look forward to the 
discussion.
    Chairwoman FINKENAUER. Thank you, Mr. Merritt.
    Ms. Bacon, you are now recognized for 5 minutes.

                  STATEMENT OF JENNIFER BACON

    Ms. BACON. Chairwoman Finkenauer, Ranking Member Joyce, and 
members of the Subcommittee, I am here and pleased to discuss 
how the SBA's STEP program has impacted my small business in 
Colorado.
    My husband, Dave Bacon, and I founded FlapJacked in 2012 
and believe that healthy meals should not only fuel our bodies 
but also taste fantastic. Of course. We began our FlapJacked 
journey as a result of trying to get our five children to eat 
healthier. We sought cleaner ingredients with more protein for 
our active lifestyles. This was especially important for our 
son who has autism. He has difficulty with the texture of most 
proteins. Jace was not getting the nutrition that he needed to 
thrive, so we set out to reinvent his favorite foods, which are 
pancakes, muffins, and cookies.
    Currently, FlapJacked can be found domestically in more 
than 20,000 stores, including large retailers such as Kroger 
and Walmart.
    It is our goal to expand the brand of Better-for-You space 
in the United States and abroad. We feel that healthy foods 
should be afforded by all people in all economic statuses, 
especially for children, but that can be difficult to 
accomplish while maintaining a healthy margin. Oftentimes, we 
are approached by distributors in other countries asking for 
payment terms with extremely slim margins.
    It took us over a year to establish trust in our first 
export customer. We would not accept terms and were advised by 
our local agricultural agency to beware. This is a huge risk 
for a young company such as ours, and at that time we were 
netting just under $1 million in sales.
    The STEP program funds have enabled FlapJacked to get in 
front of retailers directly and bypass expensive distributors, 
making it easier to offer our products at affordable prices. We 
have benefitted from three grants to date that have allowed us 
to attend trade shows such as Fancy Foods in 2017, and ANTAD 
(Mexico) in both 2018 and 2019. The STEP program also pays 
directly to cover tradeshow expenses such as both, graphics, 
booth set up, shipping of samples, and printing of brochures. 
We have found that the support at the trade shows give us a 
full understanding of the market with great support that 
included meetings with retailers, providing translation 
assistance as well. They take on store tours, meet 
distributors, media. The meetings are face-to-face and are 
incredibly invaluable.
    STEP funds received to date total $6,200, which we have 
attributed about $50,000 in sales in 2018, additionally, and we 
are on track for about $75,000 additional sales in 2019. That 
is greater than a 10x ROI on the money that we have received to 
date.
    The additional income, which is paid 100 percent prior to 
shipping our product from our exporters is instant cash influx 
into the business. Walmart, for example, is net 90, so this has 
enabled us to build the proper team to handle the growth. In 
2018, we added three new hires to the team that were local to 
our community, and in 2019, we add one new hire.
    STEP is not just worth the $6,200 cash reimbursement and 
additional income. To attend a show such as ANTAD on our own, 
it would have cost approximately $12,000 to $15,000, not 
including travel and hotel. The disadvantages would be no 
translation, no direct meetings, our own set up and tear down, 
printing of materials and shipping of samples. The Colorado 
Agricultural Department pays 25 percent for four shows of which 
the STEP funds pay 75 percent of approximately $65,000. This 
allows 10 to 12 Colorado companies to exhibit within a Colorado 
pavilion group of booths at the show.
    Relationships are extremely important to our export 
partners, and STEP funds allow us to create these direct 
relationships with retailers. These relationships now belong to 
us, which is completely invaluable.
    One important factor is it takes time and trust, and it can 
take months and sometimes years--upwards of a year, pardon me--
so the shows are a great facet for meetings for existing and 
new partners to really build those relationships around the 
globe.
    When we show up year after year, it shows that we are here 
to stay. We evoke trust within our partners, and proudly in 
2018, FlapJacked won the Colorado Exporter of the Year. We have 
created a space for Better-for-You categories domestically, and 
now abroad, actively exporting to 15 countries where we receive 
consistent POs and have sold to over 25 countries total.
    FlapJacked would like to advocate for continuing to support 
the STEP program to assist small, women-owned businesses like 
mine to expand and grow beyond our borders and our reach. The 
STEP program not only allows us to grow through export and 
create jobs but to actively stimulate our economy and enhance 
financial security for our communities and families.
    Thank you for your time and attention. I look forward to 
answering any questions you may have.
    Chairwoman FINKENAUER. Thank you, Ms. Bacon.
    Mr. Broumand, you are now recognized for 5 minutes.

                 STATEMENT OF CLIFTON BROUMAND

    Mr. BROUMAND. I want to thank the Chairwoman and the 
Subcommittee for allowing me to speak about STEP.
    Again, my name is Clifton Broumand. I am ``The Big Cheese'' 
at Man and Machine. We do not have standard titles. I do not 
take myself that seriously.
    We manufacture waterproof keyboards and mice, of which I 
have some samples, in Maryland and also in China using our 
molds that we have designed. Most of our competitors are from 
China or Europe but we have an 18,000-19,000 square foot 
facility where I have about 19 employees who work in supporting 
the manufacturer of keyboards and mice that we ship worldwide 
literally from Australia to Europe, all over Europe, and we 
have an office in Europe and in Taiwan. Our customers include 
HP, Dell, GE, Boeing, Coors, Sara Lee, and more hospitals than 
I can mention.
    The reason I am here today is to discuss STEP and the 
successes and failures of the program in regards to small 
businesses such as mine. Notice, I have also brought up 
failures because that is a growth area, too for us. That shows 
us what we need to do to get better.
    Programs such as STEP help prime the pump to develop export 
markets. They do not give us all the money. You have to pay to 
play in these programs. And it helps in two ways. One of the 
ways it helps is with export grants, which allow us to have 
matching funds to attend trade shows. And the second, it allows 
the states to have these trade pavilions, which we are a part 
of because it allows us just to walk in and start showing our 
product without having to spend the money that Ms. Bacon 
explained that we would have to spend for just a small booth 
and all the other costs involved.
    And they also bring together all the small business owners 
so they can learn best practices and learn where other 
companies have made mistakes. So it is not just giving money to 
sell. It is also networking within your own state and with 
other states and learning what they do because most of the time 
you are in a USA pavilion that allows you to learn from others.
    So sales rarely happen immediately in my business. We sell 
business to business, and one of the things that has happened 
is that we are also asked how much have you sold at this trade 
show? And the answer normally is none. It takes years, 
sometimes up to 5 years for people to hear, to literally take 
our product and go through a whole process to put our keyboards 
in a hospital.
    And so one of the questions is measurement, of how 
successful can this program be if you cannot measure sales? So 
with us, we do about $75,000 a year in the Middle East, which 
we use the export grants for, for the Arab Health Show. So more 
than 1 percent of my business is just from the Middle East, and 
it is due directly to these exports grants which is $3,000 
every 2 years. So it is not like I am getting a lot of money 
but we are getting a big bang because of it.
    One of the other things that you might want to measure is 
to see how many companies come back to another trade show, even 
if they do not get the grant, because that is really showing 
somebody it is effective because a business owner is not going 
to spend their money without knowing that there is some return 
if it is all their money at that point in time. So that is 
another option of looking at how effective is this? Are people 
coming back without having to get an export grant?
    In regard to the failures that we have seen in this 
program, I have done the Paris Air Show with Maryland. We have 
done other shows, and other than at the trade show in Paris, 
other than great French food, we really did not get much 
business. But we learned from it and now we have developed an 
oil proof keyboard and mouse that nobody else in the world has.
    So what I see is that there are definitely things that have 
to be dealt with in this program, but that is in any program 
that you have. The question here is, does it, basically, $1,500 
a year that adds up to $75,000 a year in sales is a pretty good 
return on investment. And I would do that any day of the week. 
And I think a lot of small businesses would if they knew about 
this program.
    Thank you.
    Chairwoman FINKENAUER. Thank you, Mr. Broumand.
    Ms. Black, you are now recognized for 5 minutes.

                  STATEMENT OF JENNIFER BLACK

    Ms. BLACK. Thank you.
    Chairwoman Finkenauer, Ranking Member Joyce, and members of 
the Subcommittee, thank you very much for the opportunity to 
appear before you today.
    My name is Jen Black. I serve as the executive director of 
Pennsylvania's Export Development program.
    To summarize my written testimony, I will begin by 
providing some background that I hope will give context to 
further discussion on how we have leveraged STEP funds to 
benefit small businesses across our commonwealth, and ways we 
believe the STEP program can be improved to help all of us 
build upon the success we have already achieved together.
    We know that exporting makes an impact. In 2018, goods 
exports from Pennsylvania were valued at over $41 billion, and 
helped to support 176,000 Pennsylvania jobs.
    Of all the exporters in our state, 89 percent are small- 
and medium-sized firms (SMEs), and it is in support of SMEs 
where our export assistance program, those of our Federal 
partners, and SBA's STEP program play a critical role.
    Through Pennsylvania's Export Development program, 
companies can access customized consulting and in-market 
support services to help them develop and successfully execute 
their international marketing and sales objectives.
    We administer our program in partnership with 10 economic 
development agencies across Pennsylvania, and we also maintain 
15 trade offices worldwide covering 51 markets.
    Last year through our program we worked with 1,009 
companies, the majority of which are SMEs, and confirmed over 
$810 million in client-reported export sales.
    Using economic modeling, we estimate these sales helped to 
support 6,354 jobs in Pennsylvania, and generate $45.8 million 
in state and local tax revenue.
    In addition to our program, Pennsylvania companies have 
access to an extensive `export ecosystem' of Federal Government 
service providers, including SBA district offices, 18 small 
business development centers, and two U.S. commercial service 
offices. Together, we offer a wide variety of complementary 
programs and services to new exporters and experienced 
exporters alike, as outlined in our Federal-State Annual Plan. 
The STEP grant is certainly an important component and asset to 
our share admission.
    Pennsylvania has applied for STEP funding every year. We 
were selected to receive awards in years 1 through 4 and again 
in years 6 and year 7. In the past two funding rounds, our STEP 
awards were less than what we applied for, so we scaled down 
our project plans and opted to put nearly all of our STEP funds 
toward our Global Access program (GAP). Through GAP, qualified 
companies can apply to receive 75/25 matching grants of up to 
$5,000 to help them offset the cost of export activities that 
meet their specific business objectives.
    Last year, we supported 168 companies through the STEP 
program. Of these, 23 were new-to-exporting. We are confident 
the investment of STEP funds we make in support of our 
companies will continue to yield returns.
    But even for a larger state program like ours, with an 
experienced team working on the STEP grant and a comprehensive 
performance metrics and reporting system already in place, 
keeping up with STEP reporting is a challenge.
    Our staff spends a significant amount of time compiling and 
consolidating data and running calculations manually to fill in 
the required forms. And in the end, we question how relevant 
some of the data is to a meaningful and constructive evaluation 
of our program and our progress.
    Of course, we understand the importance of accounting for 
how taxpayer dollars are spent on this program. I mentioned 
earlier some of the key performance indicators and economic 
modeling we used to do the same at the state level.
    But as we prepare for the 8th year of STEP, we encourage 
SBA to take further steps to reduce the administrative burden 
of managing the grant.
    Specifically, we recommend SBA collaborate with states and 
the Committee to do two things. One, identify and define the 
most important data points and performance indicators needed to 
evaluate the STEP program. And two, optimize the application 
process and reporting requirements to capture and compile that 
data more efficiently.
    Doing so will also enhance our ability to make the most of 
additional STEP funds to support more small business exporters. 
We strongly support increased funding for the STEP program to 
$50 million.
    We believe additional funding for the STEP program, 
combined with reducing the administrative burden on clients, on 
states, and on SBA staff, will help all of us achieve our 
shared objectives.
    Thank you and the Committee for your leadership and ongoing 
support of your leadership and ongoing support of the STEP 
program, and for the opportunity to share our state's 
perspective. I look forward to your questions.
    Chairwoman FINKENAUER. Thank you, Ms. Black. Thank you to 
all our witnesses again that are here today. I am really 
excited for the discussion we will be having.
    Let's get started.
    I will begin by recognizing myself for 5 minutes.
    This question is for Mr. Merritt and Ms. Black. I really 
want to highlight that Iowa does a great deal with STEP. In our 
state, STEP has provided $265,000 to help increase exporting 
opportunities for small businesses. I understand your states 
have also received sizeable amounts to expand exports in Maine 
and Pennsylvania. When the Subcommittee held a hearing in March 
on STEP, we learned that a dozen states only used 75 percent of 
their funds in 2015. The GAO credited these leftover funds to 
the fact that the timelines for states were too short. These 
tight turnarounds hindered their ability to fully utilize the 
program.
    The Iowa International Trade Program reported only having 1 
month from the day that the grant was announced to the day 
their application was due. Compared to other programs, I 
understand that timeline is terribly short and very difficult 
to meet.
    Could you please discuss the application process and your 
experiences with it?
    Ms. Black, do you want to start?
    Ms. BLACK. Thank you.
    So I did make some notes regarding the STEP 8 announcement 
this year. So we just submitted our STEP 8 applications last 
week. I think the deadline was Friday, the 7th of June. The 
funding announcement was made on May 1st with an initial 
deadline of the 31st, I believe, of May, and that was then 
changed. There were some problems with the downloads and some 
of the forms, and so the deadline was extended until June 7th. 
So in the end we had a month and a week to submit our 
applications.
    Something I would like to point out is that when we filed 
the applications now that STEP is a 2-year program, we are 
estimating events that are going to happen as far out as 2021 
in this latest round. And so I think having the ability to 
modify our project designs quickly and efficiently as we move 
through the award year would go a long way to states utilizing 
all of the funds.
    I do not want to take all of the response time. But I do 
want to mention that in our case, we distribute funds first 
using state dollars. So we are cutting checks to companies for 
the GAP program with state funds. And then we ask SBA to 
reimburse us later. Because we are using state funds first, and 
we do not have a cushion of state dollars to supplement the GAP 
program, we are over allocating, but as reimbursements come in, 
they are sometimes less than what companies had anticipated. So 
almost by design I do not believe that we would be able to 
achieve 100 percent disbursement on our award. Thank you.
    Mr. MERRITT. I will not go too far into the application 
process. I think I had a very similar experience to Jen Black's 
in Pennsylvania.
    I do want to address the 75 percent utilization. I think we 
have talked a bit about the lateness of the award versus kind 
of our programmatic needs. Generally, our year as far as the 
overseas activities and the work that we do generally starts 
around September. It kind of follows the school year calendar 
if you can imagine that. Unfortunately, we end up not knowing 
whether or not we are going to have our award until September, 
until the middle or even late September. The busiest, or second 
busiest quarter of the year for state trade offices taking 
groups of companies overseas is that October to December 
quarter. So almost by default, we just lose that time as we 
have no idea whether we are going to be able to commit state 
dollars. I mean, commit STEP dollars to these programs, which 
definitely hinders the recruitment process.
    The move to the 2-year award helped because we do not lose 
quarter five, which would be the first quarter of the second 
year. That certainly helps things, but we do lose that first 
quarter oftentimes.
    Chairwoman FINKENAUER. Okay. In your view, would it make 
sense to standardize the process requiring SBA to announce 
grants no later than March 31st, give states 60 days from that 
date to complete the application, and then make sure those 
awards are finalized, for example, by August 1st of the year? 
Would that be helpful?
    Mr. MERRITT. Absolutely. If there was predictability to 
this process and that timeline works beautifully, the earlier 
the better because we are often recruiting for shows in 
November in the summer, so August is great, 60-day window is 
great. And just being able to have a predictable time that we 
know that this is what is going to happen. Part of the issue 
has been, for us anyway, we just do not know when it is going 
to be. And when it appears, it is kind of a bomb in the middle 
of the spring of like you have got 4 weeks to go. So.
    Chairwoman FINKENAUER. Okay.
    Mr. MERRITT. Predictability is important here.
    Chairwoman FINKENAUER. So you can put it on the schedule.
    Would you agree with that, Ms. Black?
    Ms. BLACK. Yes, I would definitely agree with my colleague 
from Maine.
    Chairwoman FINKENAUER. Great.
    Ms. BLACK. Thank you.
    Chairwoman FINKENAUER. I saw your head nodding but I wanted 
to make sure we got it into the record.
    Ms. BLACK. Yes, thank you.
    Chairwoman FINKENAUER. Thank you, Ms. Black.
    With that, my time has expired.
    I will recognize Ranking Member Dr. Joyce for 5 minutes.
    Mr. JOYCE. Thank you, Madam Chairwoman.
    Mr. Merritt, I am going to extrapolate something that you 
said about Pennsylvania not being Maine and Maine not being 
Pennsylvania.
    I will speak from this side. With our Chairwoman, I will 
tell you that Pennsylvania is not Iowa, and Iowa is not 
Pennsylvania. And yet, this is one of the strongest, bipartisan 
Committees you can find in the United States Capitol. We work 
well together. We work for you, and I think that you have to 
hear that from us, that statement has to be made clear.
    I am going to address this to Ms. Black. Can you explain 
regional export network and how it affects trade opportunities 
to small businesses throughout Pennsylvania?
    Ms. BLACK. Sure. Thank you.
    We administer our export development program and 
partnership with these 10 economic development agencies across 
the state, which we refer to as our Regional Export Network. 
Our office provides a grant (using state fund only) to these 
agencies to help them identify and counsel small businesses who 
are interested in exporting. So we have sort of a hub and 
spokes model--the head office in Harrisburg and then we have 
our first points and local points of contact across the state. 
And using that network we are able to broadcast opportunities 
including the GAP program or other STEP-funded activities, and 
we are certainly reaching companies in urban areas and in rural 
areas and a lot of areas in between.
    Mr. JOYCE. Can you continue and expand specifically 
regarding using organizations such as Southern Alleghenies 
Planning Commission within South Central Pennsylvania? How do 
they utilize? How do they work with you in this process, 
please?
    Ms. BLACK. Sure. So this is through our state-funded 
program. We have identified these agencies, and each of them 
are staffed with experienced trade consultants who can provide 
technical assistance to companies. The Southern Alleghenies 
Planning and Development Commission is our partner in the 
Southern Alleghenies region. The manager there is Tina Taylor. 
She manages their international trade program and it is her 
role to be the face of Pennsylvania's Export Development 
Program in the field. And I should comment to Tina that she is 
doing a fantastic job.
    Mr. JOYCE. When you choose businesses, when they are chosen 
in Pennsylvania, how do you look specifically for those that 
you feel are going to have the most advantage from a STEP 
grant?
    Ms. BLACK. So there is a process for that. We do keep our 
Regional Export Network partners as the first point of contact. 
We want companies to submit GAP applications directly through 
them. They will evaluate the company's project plan based on 
the company's objectives and certainly, they are all unique as 
we heard today. The financial need of the company. And we ask 
the companies to specifically highlight to us the impact they 
believe this funding can make on their company in terms of 
sales, in terms of jobs, and certainly just in available 
capital.
    So the first pass is done at the regional level. 
Applications are sent into Harrisburg and they are reviewed by 
Committee there. It is a competitive process, the GAP program, 
and applications are reviewed weekly and funds are awarded on a 
competitive basis, first come, first serve as far as the 
available funds.
    Mr. JOYCE. This question is for all the members, all the 
panelists who are here today.
    I realize how different each one of you and what you bring 
to the table. And so we are faced with what metrics would you 
suggest are best used to measure success? Dollars, certainly 
the amount invested versus the amount of return. Are there 
other measurable metrics that you would recommend that we bring 
into play when analyzing the success of this program?
    Mr. Merritt, I would like to start with you, please.
    Mr. MERRITT. Thank you, congressman, for the question.
    The issue of metrics in the state trade programs has been 
something that our organization, the national organization has 
been working on for years. I can speak to what we are doing in 
Maine.
    We do use the export sales numbers because we think that 
that is the easiest thing to quantify, or it is the closest 
thing to the ground to quantify to say this company, you know, 
we have heard from a couple of them today, because of this, 
because of our participation in a trade show, we were able to 
make this amount of sales. That one is kind of a 
straightforward one.
    The other ones we look at are number of companies accessing 
the programs, but we also look at the number of new companies 
accessing the programs. Number of companies that are repeat 
customers. You know, that was one. The importance of going back 
time and again and making sure that you are developing the 
programs. There are a lot of these.
    And then, of course, when we start getting into the 
qualitative work as well, having success stories from it, that 
is usually the most compelling. You have heard a couple of the 
stories here of this is what we have been able to do with it.
    Mr. JOYCE. Mrs. Bacon, I, too, have a child with autism, 
and I realize what you have done by providing palliative 
protein to children who have sensory issues when eating. That 
is significant on so many levels.
    But again, I am going to pivot back to are there measurable 
metrics besides dollars and cents that we should be using to 
evaluate your success?
    Ms. BACON. For us, it is giving back to the community; 
right? But also the building of the relationships. So you know, 
as we have talked about, it takes a lot of time to build those 
relationships, and once those relationships are established 
they do not go away if you work at them. So like relationships 
with our kids and getting them to eat, it is also the same in 
business for us. But for us also it is adding the people, 
obviously, but really giving back into the community. Right? 
They make a paycheck in our town. They spend it in our town. So 
it is kind of that revolving interest of our team members.
    Mr. JOYCE. Thank you.
    Mr. Broumand, would you please comment to the metrics that 
we are using?
    Mr. BROUMAND. As I said in my testimony also, I look at do 
you go back when you do not have money from the state? I think 
that actually really shows that it is successful for a business 
person because they are looking at what is my rate of return 
without any money coming into their pocket except for maybe the 
pavilion that you are in. It is do you have repeat customers? I 
think you said that, Mr. Merritt, that if I go back, then it 
must be pretty successful for me. If I do not go back, then it 
was not really giving me the return that I wanted and that is 
really telling you, are these programs I think helping small 
businesses?
    Mr. JOYCE. I thank all the panelists. We wish you success.
    Madam Chairwoman, thank you for indulging me the additional 
time.
    Chairwoman FINKENAUER. Thank you, Dr. Joyce.
    I would now like to recognize the Chairman of the 
Subcommittee on Contracting and Infrastructure, Mr. Golden.
    Mr. GOLDEN. People do that all the time. Do not worry 
about.
    Thank you very much.
    Some people probably do not know unless it was in the bio. 
Mr. Merritt actually helped work with the drafting of this 
original program back when Senator Olympia Snowe from Maine was 
chairing the Small Business Committee in the Senate. So we have 
got someone here with a lot of depth and knowledge of the 
program. You have been watching this for a while. So I think we 
have a good opportunity to get some good feedback from you.
    It sounds to me like there has been an appeal from Ms. 
Black and you for a little bit of flexibility perhaps in the 
program once the money is out the door because you are dealing 
now with a 2-year program which was, I think you think, a good 
change, but what you are telling me is the business climate 
changes during the life of the grant program. Is there some 
kind of administrative burden that comes with that? Do you have 
to go back and request permission to modify your program? Or 
what is it that we could work with the SBA to make that process 
easier for you?
    Mr. MERRITT. Thank you, Congressman.
    Yes, absolutely. I mean, as Ms. Black mentioned with the 2-
year program in the STEP 8 program application we are now 
having to predict activities that we would be undertaking in 
the summer of 2021. We are just on the cusp of the summer of 
2019. So that does tend to make things a little bit difficult. 
The world changes a lot. Obviously, we built our expected ROI 
for this year on lobster exports to China, and that 
significantly impacted our ROI. I had to go back to the agency 
a couple times to explain them why we were not meeting our ROI 
targets because it is on the backbone of the lobster industry.
    So the flexibility I think needs to--we do need some 
flexibility in our ability to kind of redeploy resources as 
they come in and recognizing that the plan that we lay out in 
the spring of 2019 is probably not going to have--it may not 
look like what it needs to look like by the time we get to 
2021.
    So the process that works that we do have to go through 
either a request process if the change is under a certain 
threshold, or we have to go through a more formalized process 
which tends to make it a bit more challenging.
    Mr. GOLDEN. All right. So maybe we could look at the 
threshold or something along those lines. But more flexibility. 
So it is like a change package kind of request.
    All right. You brought up lobster so, you know, it is an 
interesting time to talk about that.
    One of the questions I actually had for you is, I mean, I 
know you get in, you do one-on-one. You probably work with the 
Maine Lobster Dealers Association on some of that export, 
increasing that market to China. You know, and one would think 
that they might be looking at other markets. But do you also 
work with cooperatives? Because I know that you have got the 
IAMAW Local 207 group there, and they have done some hard work 
to get out and fine some new markets in years past. But are you 
able to work with cooperatives as well?
    Mr. MERRITT. Good question. We are not allowed to work 
directly with the cooperatives, but we are allowed to work with 
the members of the cooperative. So, yes. And we have had some 
great successes with the Dealers Association for the Lobster 
Industry, but also a lot of the other industry associations in 
Maine that share membership essentially with our organization 
in getting the word out through those communities and helping 
them access the market.
    Mr. GOLDEN. Is there a purpose behind not being able to 
work with a cooperative directly?
    Mr. MERRITT. It is the program is specifically designed for 
for-profit entities. So, an association is a nonprofit, 
therefore, we cannot go directly that way.
    Mr. GOLDEN. Not like the lobsterman is the business?
    Mr. MERRITT. The lobsterman is the business in that case; 
yes.
    Mr. GOLDEN. Right. Yep, okay.
    And just in general, could you just brag about the program 
a little bit in terms of--I just wrote down a list of things I 
suspect you are working on in Maine and I hope you are. So we 
have got small, you know, kind of lighter manufacturing 
development going on in the state. Are you working on 
increasing manufacturing exports? You talked about composites 
and forest products. I would love hearing that. Farming and 
fishing, too. Like, what are you having the most success with?
    Mr. MERRITT. Well, as you all know, our state is a state of 
natural resource-based small businesses. So the lobster 
industry and the forest products industry tend to kind of lead 
the charge. But also, yeah, absolutely. Lighter and small 
manufacturers, the composites industry which comprises 
everything from boat builders to civil infrastructure, some of 
the research, spinouts that are going out of the University of 
Maine. We have been working with those folks. We just completed 
a grant through the Department of Defense. They are an OEA 
program to help diversify the defense supply chain. That grant 
has ended and we are going to start moving those companies over 
to the STEP program. They have been active in the STEP program 
in the past.
    So it is benefitting companies all around the state. And in 
a number of different industry sectors. We pick on the lobster 
industry because that tends to drive the export numbers but 
there is a lot more to it and the companies that we are working 
with.
    Mr. GOLDEN. Well, I am out of time here. I am going to 
probably have a second round, but I do want to just comment 
that----
    Chairwoman FINKENAUER. Well----
    Mr. GOLDEN. Are you going to let me keep going?
    Chairwoman FINKENAUER. Yes. You use the minutes.
    Mr. GOLDEN. All right. Very good.
    You know, it sounds like a good measure of success for the 
program if I am hearing you all correctly, it would be that 
kind of analysis or return on investment because it makes a 
pretty strong argument for why we are making a worthy 
expenditure and a good use of taxpayer dollars. One for 100 is 
pretty good. I think I saw nationally this was like one for 30 
or something along those lines.
    I did want to ask, and this is for anyone, but I think, 
Mr.--is it Mr. Broumand?
    Mr. BROUMAND. Close enough for government work.
    Mr. GOLDEN. I am sorry. Well, I would like it to be better.
    But you kind of indicated, I think, about this a little 
bit, but do you have anything to say about what the program 
could do, or any of you can take this in regard to maybe 
marketing the program itself so that more businesses know about 
it, more manufacturers, more farmers, more lobstermen, whatever 
it may be, know to come out and actually apply. What is it 
about the program that people are not hearing about it maybe?
    Mr. BROUMAND. Well, I think that part of the problem 
inevitably is that everybody gets so insular in trying just to 
survive as a small businessperson that you are not looking out. 
I have always looked out but I think that that is in, like for 
example, in Prince Georges County where my company is located, 
their economic development is trying to do that and it would be 
helping the local, like you have the regional groups in 
Pennsylvania, helping them tell more people, hey, this exists. 
Again, it is more of trying to get people to open up rather 
than just focus on the local area, what they do.
    Mr. GOLDEN. Do you all feel like SBA is doing a good enough 
job of having a strategy for making sure that the word is 
getting out there, or is that something that you think about?
    Ms. BLACK. Well, I do not mean to speak out of turn but I 
think in our case our feeling is that it is our responsibility 
as the state program managers to craft a program that makes 
sense for our states and then to market that effectively to 
companies. Could we do a better job? For sure. We could do a 
better job marketing Pennsylvania's program without a doubt. So 
that is always a challenge. And I think leveraging our 
partnerships with our Federal colleagues across the state makes 
a big difference, and certainly I think word of mouth-companies 
that have utilized these financial assistance programs and can 
talk about the benefits to their company. I mean, we have seen 
here today there is really no better way to tell the STEP 
story, I think, than to hear it right from companies.
    Chairwoman FINKENAUER. And the gentleman's time has 
expired. Thank you, Chairman Golden.
    And I would now like to recognize the Ranking Member of the 
Small Business Committee, Mr. Chabot.
    Mr. CHABOT. Thank you, Madam Chair. And thank you to the 
Ranking Member as well. I just like to step in and see how 
these Subcommittees are going sometimes. This one seeks to be 
functioning very well. So I want to commend both the Chair and 
the Ranking Member.
    I will be brief. I think, and this may have already been 
mentioned as so many things have been. I apologize. But about 
96 percent of the consumers on the globe that we all share live 
outside the borders of the United States. And I know it is a 
pretty small percentage of small businesses. I think 1 percent 
or so of small businesses that actually sell their products 
overseas through trade.
    And so the function that you all have at the state level 
and in conjunction with the Federal Government obviously and 
some of the funding and things is critical. So we thank you for 
the good work that you are all doing.
    But last few years have been kind of tumultuous times when 
it comes to trade for various reasons. It was somewhat 
disconcerting to me as somebody who would consider myself more 
or less a free trader over the years, to see both the 
candidates in the latest presidential race on both sides, for 
example, come out against TPP. And it got kind of a bad name, 
and I think the United States, for example, at the 
international level, rather than be worked about China, so that 
is a reason to keep us out of TPP. It gave them a 
disproportionate share of the power with the United States 
being absent. And so that is my point of view. And the current 
administration does not necessarily share that and they believe 
more in bilateral trade agreements rather than regional 
agreements which I think they are both important and valuable 
to the U.S.
    But going back to what I was saying, kind of tumultuous 
nature, whether it is the tariffs or kind of--I will just leave 
it, let us say the tariffs. What impact has that had on you all 
and what you are trying to do for your clientele, the people 
that you are working with, the emphasis on trying to get more 
people to sell their products on the markets and around the 
globe? You know, what additional challenges are there? Do we 
need to educate the public more about the fact that trade does 
not mean that we are exporting jobs? It generally means we are 
exporting products and jobs are being created here. It does not 
mean that jobs sometimes do not get exported. But if we do it 
right that is not what the effect should be.
    So just sort of, you know, what impact has this general 
environment that we have seen in recent years relative to 
trade, how has that impact what you all do?
    Yes, sir?
    Mr. BROUMAND. It has impacted us a great deal in regard to 
time and effort. As a small business, I am losing focus to 
developing new products and manufacturing. Right now, because 
we sell computer gear, our components come from China and we 
assemble them and sell them all over the world. Now, we have to 
worry about do I build it in Taiwan and bring it into the 
country so I do not get impact in regard to the tariffs? For 
products that I am making for Australia right now, we are 
trying to manufacture in Australia and Europe. I actually have 
to do production now in China rather than bringing it here to 
do the production. People like American made products. They 
appreciate American made products. The quality we bring is 
paramount. But now, if I have to pay tariffs for a product 
coming in to build and then to ship out, I cannot be 
competitive with the Chinese, nor with the Germans. So the 
amount of time I have wasted, I just cannot even--it is so 
frustrating.
    And my brother says, you know, do not buy into it. And he 
is a doctor. Nothing against doctors. But he is not a 
manufacturer and he does not understand all the ramifications. 
For a small business person, you know, GE or General Motors, 
they might have hundreds of people doing this. I have me and my 
operations manager having to figure this stuff out. It is very 
frustrating.
    Mr. CHABOT. Madam Chair, my time is about to expire. I do 
not know if any of the other witnesses might want to respond to 
that question but, thank you.
    Chairwoman FINKENAUER. I would be happy to expand the time.
    Ms. BACON. Hi. For OS, our products are made in the U.S. So 
we do not have a lot of issues in terms of the manufacturing. 
But where we do make decisions because of tariffs are our 
ingredients suppliers and where those come from. Sixty-five 
percent are U.S. The rest is imported. So a lot of times we 
make choices based on how that impacts our business. Thank you.
    Mr. CHABOT. Thank you very much. I yield back.
    Chairwoman FINKENAUER. Thank you, Ranking Member Chabot.
    Thank you to all of the witnesses who came here today. I 
know you took time out of your very busy schedules to be here 
and it means a great deal. Your stories are so important for us 
to make sure that when we reauthorize STEP, we do it the right 
way and fix the things that need to be fixed. We know that STEP 
offers many promising opportunities for entrepreneurs in Iowa 
and across the country. By connecting small businesses with 
customers overseas, we know STEP can help entrepreneurs grow 
their businesses at home and abroad. You showed that here 
today.
    When small businesses succeed, their communities thrive. 
Increased economic activity from exports helps support Main 
Street businesses and gives other companies the chance to grow. 
I wanted to very specifically say thank you to our small 
business owners who came here today, taking time out of your 
very busy schedules. I know there is a lot going on for you 
right now, very specifically when it comes to trade and its 
impact on your businesses, but to hear from you firsthand helps 
us to do our jobs better. Thank you, thank you, thank you, for 
being here.
    I again want to say it is unfortunate the Iowa Economic 
Development Authority could not be here today, but I am very 
grateful I had a chance to hear from folks in Pennsylvania and 
Maine about all the work that you guys are doing when it comes 
to STEP. You know firsthand what works and what does not. I am 
also very grateful for the small businesses sharing their 
stories to really tie this all together.
    We must make it easier for small businesses to compete in 
the global market, especially at a time like this. STEP has the 
potential to help entrepreneurs across the country tap into new 
markets, and we have seen that from what works. Again, we now 
are learning what we need to fix to make sure it continues.
    I look forward to again hearing from Iowans on this program 
in the coming weeks and working with my colleagues on both 
sides of the aisle to take the feedback we have received today 
and make critical improvements to STEP and ensure it better 
serves our communities and small businesses.
    We have a lot of work to do, and I am grateful every day to 
get to work across the aisle and show up for Iowans and our 
country. I'm grateful that you guys are here helping us do the 
job the right away.
    Now I would like to ask unanimous consent that members have 
5 legislative days to submit statements and supporting 
materials for the record.
    Without objection, so ordered.
    And if there is no further business to come before the 
Committee, we are adjourned. Thank you.
    [Whereupon, at 11:04 a.m., the Subcommittee was adjourned.]
    
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