[Senate Hearing 117-240]
[From the U.S. Government Publishing Office]
S. Hrg. 117-240
WOMEN ENTREPRENEURS:
AN ECONOMIC GROWTH ENGINE FOR AMERICA
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON SMALL BUSINESS
AND ENTREPRENEURSHIP
of the
UNITED STATES SENATE
ONE HUNDRED SEVENTEENTH CONGRESS
FIRST SESSION
__________
OCTOBER 27, 2021
__________
Printed for the Committee on Small Business and Entrepreneurship
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Available via the World Wide Web: http://www.govinfo.gov
__________
U.S. GOVERNMENT PUBLISHING OFFICE
47-359 PDF WASHINGTON : 2022
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COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP
ONE HUNDRED SEVENTEENTH CONGRESS
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BENJAMIN L. CARDIN, Maryland, Chairman
RAND PAUL, Kentucky, Ranking Member
MARIA CANTWELL, Washington MARCO RUBIO, Florida
JEANNE SHAHEEN, New Hampshire JAMES E. RISCH, Idaho
EDWARD J. MARKEY, Massachusetts TIM SCOTT, South Carolina
CORY A. BOOKER, New Jersey JONI ERNST, Iowa
CHRISTOPHER A. COONS, Delaware JAMES M. INHOFE, Oklahoma
MAZIE HIRONO, Hawaii TODD YOUNG, Indiana
TAMMY DUCKWORTH, Illinois JOHN KENNEDY, Louisiana
JACKY ROSEN, Nevada JOSH HAWLEY, Missouri
JOHN HICKENLOOPER, Colorado ROGER MARSHALL, Kansas
Sean Moore, Democratic Staff Director
William Henderson, Republican Staff Director
C O N T E N T S
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Opening Statements
Page
Cardin, Hon. Benjamin L., Chairman, a U.S. Senator from Maryland. 1
Paul, Hon. Rand, Ranking Member, a U.S. Senator from Kentucky.... 3
Witnesses
Lucas, Dr. Tammira, CEO, The Cube Cowork, Baltimore, MD.......... 5
Waterman, Ms. Candace, President and CEO, Women Impacting Public
Policy, Washington, DC......................................... 11
Alphabetical Listing and Appendix Material Submitted
Cardin, Hon. Benjamin L.
Opening statement............................................ 1
Engine
Statement dated November 3, 2021............................. 26
Lucas, Dr. Tammira
Testimony.................................................... 5
Prepared statement........................................... 8
Responses to questions submitted by Senators Coons, Hirono,
and Rosen.................................................. 30
Paul, Hon. Rand
Opening statement............................................ 3
Waterman, Ms. Candace
Testimony.................................................... 11
Prepared statement........................................... 14
Responses to questions submitted by Senators Coons, Hirono,
Rosen, and Inhofe.......................................... 34
WOMEN ENTREPRENEURS:
AN ECONOMIC GROWTH ENGINE
FOR AMERICA
----------
WEDNESDAY, OCTOBER 27, 2021
United States Senate,
Committee on Small Business
and Entrepreneurship,
Washington, DC.
The Committee met, pursuant to notice, at 2:48 p.m., via
WebEx and in Room 301, Russell Senate Office Building, Hon.
Benjamin L. Cardin, Chairman of the Committee, presiding.
Present: Senators Cardin, Cantwell, Duckworth, Rosen,
Hickenlooper, Paul, Ernst, and Hawley.
OPENING STATEMENT OF HON. BENJAMIN L. CARDIN, CHAIRMAN, A U.S.
SENATOR FROM MARYLAND
Chairman Cardin. The Senate Small Business and
Entrepreneurship Committee will come to order. It is good to
have Senator Ernst with us. We have adjusted the schedule
because of the rolling votes. We have just started two votes on
the floor of the Senate, so I think members might be tending to
their vote.
Senator Paul, I understand, was here. He just left in order
to cast that vote and then he will be coming back, and when he
arrives we will allow him to give his opening statement.
At this point I want to just welcome our two witnesses and
thank you all for joining us today for this important hearing
on how the Federal Government can empower women entrepreneurs
and unleash the potential of women-owned small businesses so
they can continue to be a growth engine for our economy as we
recover from COVID-19 pandemic.
This hearing comes as we close National Women's Small
Business Month, during which we recognized the contributions of
women entrepreneurs to our local and national economies. I look
forward to National Women's Small Business Month each year
because women entrepreneurs should be celebrated, for
prospering in spirit of the historical barriers to success that
persist.
National Women's Small Business Month is particularly
important in my home state of Maryland, as it boasts the
highest concentration of women-owned small businesses in the
country--we are very proud of which--many of which are owned by
minority women. It is a distinction that fills me with great
pride and informs my work as Chair of this Committee.
Today's hearing also falls two days after the 33rd
anniversary of the Women's Business Ownership Act being signed
into law. This landmark bill eliminated state laws that
prevented women from securing a business loan without a male
co-signer, and it established the Women's Business Center
Program at the Small Business Administration.
We are now far removed from these antiquated state laws,
but the past 18 months of COVID-19 pandemic has demonstrated
that women entrepreneurs still face many structural barriers
when they start, operate, and attempt to grow small businesses.
Throughout the pandemic, women entrepreneurs have been more
likely to report a significant decline in the health of their
business than their male counterparts, according to the
research conducted by the Kauffman Foundation.
And historically, women-owned small businesses lag behind
male-owned small businesses in four key indicators of future
business growth: investment plans, revenue projections,
staffing expectations, and access to capital. While the
pandemic has shined a light on the structural barriers women
still face, it has also demonstrated that the Federal
Government can play a key role in breaking down those barriers
and empowering women entrepreneurs.
A recent report issued by the Government Accountability
Office found that the policies championed by Senate Democrats
in the Paycheck Protection Program and Health Care Enhancement
Act, Economic Aid Act, and the American Rescue Plan made later
rounds of the Paycheck Protection Program more equitable and
accessible for underserved communities. While small business
owners received only 9 percent of the initial PPP loans
authorized by the CARES Act, the report found that the share of
loans made to women-owned small businesses, following changes
made by Congress, increased that to 16 percent. This is in line
with the percentage of small businesses owned by women, which
is also 16 percent.
This report is proof that through thoughtful, concerted
efforts it is possible to bridge the historical gaps that
prevent underserved entrepreneurs from starting and growing
small businesses.
I was proud to work with my colleagues in the Senate,
including several on this Committee, to secure those
improvements to the PPP, and I am looking to build upon that
work in the months and years ahead.
Now as Congress continues to negotiate President Biden's
Build Back Better agenda, a once-in-a-generation investment in
our families, communities, and small businesses, it is vital
that we build on the lessons learned during the pandemic to
continue investing in women entrepreneurs. That is why I am
looking forward to hearing the testimony of Tammira Lucas,
founder of The Cube Cowork in Baltimore and co-founder of Moms
As Entrepreneurs. Dr. Lucas will shed light on the unique
barriers that women, including mothers, face on the path to
business ownership. I would also like to congratulate Dr. Lucas
on The Cube Cowork's grand opening of its expansion last week,
making it the largest Black-owned coworking space in the
country. Congratulations.
I am looking forward to hearing from Women Impacting Public
Policy's President and CEO, Candace Waterman, who advocates on
behalf of women business owners to Congress. I know that that
organization is celebrating its 20th anniversary next month, so
Candace, I want to thank you and your colleagues for your
tireless efforts to empower women small business owners over
the last two decades.
I hope to hear from you both about the tools and resources
Congress can create and improve to support women on their
entrepreneurship journey and ensure their success.
The COVID-19 pandemic interrupted a period of tremendous
growth for women-owned businesses. Women-owned businesses
employed 9.2 million people, 8 percent of the total private
sector workforce, and they generate $1.8 trillion in annual
revenues, 4.3 percent of the annual private sector revenues.
While these numbers seem small on the surface they tell a
remarkable story about the potential women-owned small
businesses. From 2007 to 2019, total employment by women-owned
businesses rose 21 percent while employment for all businesses
declined by 0.8 percent. In other words, for the past decade
women-owned small businesses have been the drivers of economic
growth in our economy, despite the myriad headwinds they face
in the path to success.
This fact is even more evident when it comes to minority
women. Between 2007 and 2019, businesses owned by minority
women grew by more than 163 percent. Imagine what our women
entrepreneurs could do if there were less obstacles in their
way and if they had more support during their entrepreneurship
journey.
Supporting small businesses through the COVID-19 pandemic
has been the most challenging and the most important thing this
Committee has ever done. Our efforts to build back better in
the years ahead will be another incredible challenge, but they
are our opportunity to help our economy grow in a fairer, more
productive way.
We simply cannot waste the time that we have to make the
process in these areas. We must commit ourselves to using this
opportunity to create thoughtful policies that will empower
women entrepreneurs for generations to come.
And with that let me yield to the Ranking Republic Member,
Senator Paul.
OPENING STATEMENT OF HON. RAND PAUL, A U.S. SENATOR FROM
KENTUCKY
Senator Paul. Thank you, Mr. Chairman. The Chairman makes a
great point that women are doing very well in small businesses
across America, and I think every way have shown themselves to
be the equal of men, if not often the superior to men. But it
is also, I think, inadvertently an argument for why we do not
need special set-asides for women. I think they can compete on
their own two feet, just with men.
You know, when I took over as Ranking Member of this
Committee I believed that our charge would be to create an
environment in which all small businesses can flourish.
Instead, our work here, though, has focused almost exclusively
on which side of the scale the heavy hand of government should
place its thumb. While some businesses may have just been too
large to qualify as small businesses and were ineligible for
the Paycheck Protection Program, the Biden administration has
continued to violate the law, to pay back, with taxpayer
dollars, their political ally, Planned Parenthood.
Then came the Restaurant Revitalization Fund, whose race
and gender preferences were struck down by the Sixth Circuit
for violating the Fourteenth Amendment's guarantee of equal
protection under the law. It is simply galling that after
Democratic governors shut restaurants down, shut the economy
down, that Congress would insist that before owners receive
assistance they are first asked whether they are a man or a
woman, Black or White, Pakistani or Iraqi, and that the answers
to these questions determine whether you go to the front of the
line or the back of the line.
Which brings us to today's attempts by the Biden
administration to favor one set of races and genders over
others. Rather we should embrace the words written by Justice
John Marshall Harlan, in his dissenting opinion in Plessy v.
Ferguson. He said, ``Our Constitution is colorblind and neither
knows nor tolerates classes among its citizens.''
The free enterprise system is consistent with those words.
Free enterprise empowers those who innovate, who take risks,
who work hard, including women. In other words, free enterprise
is the great equalizer. The facts demonstrate that women
entrepreneurs do not need government handouts. While just shy
of 60 percent of Small Business Administration's microloans go
to women-owned or women-led businesses, a majority of women
entrepreneurs use private loans and sources of funding to start
their own businesses, compared to just 20 percent who use SBA
loans. Moreover, women-owned businesses have a nearly 70
percent success rate with crowdfunding, outstripping male-owned
businesses by nearly 10 percent.
The history of women in business is a great one. Private
tech companies led by women achieve a 35 percent higher return
on investment than similar companies led by men. Look around.
Women are succeeding like never before. Whether it be in
academics or business, women have proven themselves to be the
equals of men. Frankly, it is insulting to think that women
need affirmative action.
A century of economic history demonstrates, beyond a doubt,
that the best way to promote economic growth and upward
mobility for all is to adhere to free market principles. Those
are the policies that should be on the agenda today, but they
are not. If the Biden administration and most of my Democratic
colleagues in the Senate were truly interested in discussing
the issues facing female entrepreneurs today we would be here
to discuss the impact of rising inflation, the growing supply
chain crisis, inflation throughout the system, and the effects
they are having on American small businesses. Instead,
Democrats are planning to exacerbate these issues by spending
trillions--trillions more of Americans' dollars, money that we
do not have, in their attempt to remake America.
At a time when 86 percent of small businesses today say
they are concerned about inflation and 74 percent say inflation
hurt their businesses, Congress is now, led by the Democrats,
doubling down on failed big government socialist policies in
precisely the wrong prescription, making it harder on small
business. Rather, we ought to rediscover old economic truths,
that all entrepreneurs thrive when they are encouraged to
innovate and compete in a marketplace.
This Committee should work to end discriminatory and
patronizing programs and instead focus on policies in which all
small business owners, no matter their race or gender, are most
likely to thrive. Thank you.
Chairman Cardin. Thank you, Senator Paul.
[Pause.]
Chairman Cardin. We will first hear from Dr. Tammira Lucas,
who is a ``mompreneur,'' a mother and entrepreneur. She is CEO
of The Cube Cowork, a coworking space in Baltimore that also
provides childcare services, and co-founder of Moms As
Entrepreneurs, an organization that focuses on decreasing
chronic poverty by helping mothers build sustainable
businesses. As of 2019, Dr. Lucas' program, Moms As
Entrepreneurs, has helped over 100 moms launch businesses in
Baltimore, and she recently expanded The Cube Cowork space to
increase opportunity for even more entrepreneurs with children.
Dr. Lucas, it is a pleasure to have you here.
STATEMENT OF TAMMIRA LUCAS, Ph.D., CEO, THE CUBE COWORK
Dr. Lucas. Good afternoon, Chairman Cardin, Ranking Member
Paul, and members of the Committee. Thank you for having me
today. I am Dr. Tammira Lucas, CEO of The Cube Cowork,
Baltimore business leader, and business professor.
As a mom, wife, and entrepreneur, I struggle to choose my
business or my family. I quickly learned that I was not the
only mother faced with these struggles, after training hundreds
of mom entrepreneurs locally and nationally through my
organization, Moms As Entrepreneurs. I spent two years
researching solutions to these problems that many women
entrepreneurs battle.
The results of my extensive research determined that mom
entrepreneurs all shared the same wants: more time, a network,
and support services to grow their business. I created a
solution to address these barriers to success for women
entrepreneurs, The Cube Cowork. The Cube Cowork is the largest
Black-woman owned coworking space in the United States, to
provide a space where parents no longer have to choose their
businesses over their families. The Cube Cowork provides onsite
babysitting services, business-building resources, a network,
and office space rental.
The vast majority of growing businesses in the United
States are women, and more specifically, Black women.
Unfortunately, this same demographic experiences multiple
pandemics, including the lack of financial capital, human
capital, race inequities, and social capital to break the
ceiling of 40 million to increase impact hiring. During the
pandemic, women entrepreneurs, especially Black women
entrepreneurs, were the most resilient, yet received the least
support. With the lack of capital that already existed pre-
pandemic, women entrepreneurs had to figure out a way to
survive during and after the pandemic.
What we saw in communities like Baltimore was women using
their creativity, social platforms, and the power of working
together to ensure their businesses sustain. In theory, this
sounds profound, but in reality, this should not be the case.
We saw women business owners being pushed out of financial
bailout opportunities like the first round of the PPP loans and
EIDL, where big corporations, who had the resources, benefited,
and small women-owned businesses continued to struggle. This
should not be the case.
This catastrophe taught us that women entrepreneurs need
more access to capital and resources that Women Business
Centers provide. The Women Business Center should continue to
be funded and supported to help bridge the gap of support
services needed to sustain a business. For example, many women-
owned businesses could access resources like the PPP loans in
the beginning because they did not have proper accounting
systems, banked with large financial institutions, or had a
payroll. Women-owned businesses tend to not be in a place to
have the resources to set up proper system or hire full-time or
part-time staff.
Sixty-one percent of Black women entrepreneurs start
businesses in retail, beauty, health, education, or social
service sectors. They are typically small, informal businesses
with low margins and crowded, competitive markets, and are more
challenging to sustain over the long term. This is due to the
lack of knowledge, financial resources, and family
consideration. However, these businesses are keeping the lights
on and food in the refrigerators of families. These businesses
are the ones that are setting a foundation to close the wealth
gap in Black communities.
According to the Kauffman Foundation, 37 percent of moms do
not start businesses because of family considerations like
childcare access. For those who do start their businesses,
nearly half of them do not believe their businesses will
succeed, which is why Black women have fewer established
business owners compared to their high rate of new venture
startups.
Access to key resources needed for entrepreneurship is
unevenly distributed in U.S. society, reinforcing the advantage
of certain groups while impeding the entry and catching-up of
certain disadvantaged groups. Black mothers are often pushed
into necessity entrepreneurship, which often generates low
income, and they have fewer choices in how they engage
economically.
Mothers who choose entrepreneurship as an attractive
economic opportunity with access to the right resources are
better able to start businesses and grow it. Mom entrepreneurs
are ideally situated in close proximity to their potential
customers and collaborators in the center of their often-
overlooked communities despite these added pressures. They are
in an ideal position to identify business voids that address
community needs and provide opportunities to generate income
and wealth.
The socioeconomic reality for Black mothers and women
entrepreneurs in Baltimore and similar cities are defined by
the legacies of structural racism, including redlining and
underfunded education, in addition to the wage gap women face.
The actual reality is that our economy would not sustain if it
were not for women entrepreneurs and women consumers.
I have seven recommendations.
Number one, continue to fund and expand Women Business
Centers in underserved communities and cities.
Number two, accelerate finalizing the funding opportunity
for the SBA Community Navigator and ensure the organizations
that receive funding to implement these services have the
capabilities to reach the underserved demographics. Too often,
funding opportunities are given to organizations that do not
have the capabilities to reach the actual people that need the
services.
Number three, under the Office of Women Business Ownership,
create an advisory board that is solely focused on addressing
the issue mom entrepreneurs face such as family considerations.
Mom entrepreneurs continue to be grouped under women
entrepreneurs, and there is a huge difference between being an
entrepreneur as a woman and being an entrepreneur as a mom.
Number four, create an advisory board that will help the
SBA interface look less daunting to everyday women
entrepreneurs and provide relatable outreach services. Most
entrepreneurs do not access resources offered by the SBA
because the interface is not friendly to those that need it
most. We have to design access to services that are equitable
for all.
Number five, access to capital should be made easy for
women entrepreneurs to access, taking into consideration that
more than half of the 11.6 million entrepreneurs are moms
living below the poverty level and may not have a great credit
rating or collateral. This should not be the defining factor in
whether they should access capital to start or sustain their
businesses and create generational wealth for their families.
Number six, provide affordable childcare to women starting
and growing businesses. Often these resources are given to
women who are looking to go into the workforce but not women
who are creating the workforce.
And Number seven, provide access to affordable health care.
Women entrepreneurs' hesitation to start businesses often
includes the barriers to affordable health care as an
entrepreneur. Because of the lack of affordable health care for
entrepreneurs, women tend to work full-time jobs to obtain
health care while working in their business full-time. Women
should not have to balance both or choose.
In closing, in order to encourage more women to be
entrepreneurs, they need to know that they have the resources
and support to do so. This is not just business resources but
this includes adequate housing, childcare, education, and
mentorship.
Thank you for your time and the opportunity to share my
expertise and thoughts.
[The prepared statement of Dr. Lucas follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman Cardin. Thank you, Dr. Lucas, and we are very
proud of your activities in our city of Baltimore.
We will now hear, via the Web, from Mrs. Candace Waterman,
who is the President and CEO of Women Impacting Public Policy,
a national, nonpartisan public policy organization, advocating
on behalf of women business owners and its coalition of 79
business organizations.
Mrs. Waterman has over 35 years of experience spanning
across the private and public sector, owning companies herself
in the medical, real estate, and hospitality industries. In her
current role she works in a bipartisan way with lawmakers like
ourselves to impact and influence policy that provides economic
equity, procurement inclusion, and access to the global
marketplace to women entrepreneurs.
Mrs. Waterman, pleased to hear from you.
STATEMENT OF CANDACE WATERMAN, PRESIDENT AND CEO, WOMEN
IMPACTING PUBLIC POLICY
Ms. Waterman. Thank you so much, and good afternoon
Chairman Cardin, Ranking Member Paul, and members of the
Committee. It is an honor to meet you and to be invited to
speak to the Committee today.
My name is Candace Waterman, I serve as the President and
CEO of Women Impacting Public Policy, a national nonpartisan
organization advocating on behalf of women entrepreneurs,
strengthening their impact on our Nation's public policy, and
creating economic opportunities while and forging alliances
with other business organizations.
Thank you for the opportunity to speak at today's hearing,
which will highlight the strength of women small business
owners during the COVID-19 pandemic, the ongoing barriers to
success these entrepreneurs face, and how Congress and the
Small Business Administration can better support small business
owners and encourage more women to pursue entrepreneurial
opportunities.
Women Impacting Public Policy is a national nonpartisan
organization which educates and advocates on behalf of women-
owned businesses across the country. Since its inception in
June 2001, WIPP has reviewed, provided input, and taken
specific positions on many economic issues and policies which
affect the bottom line of our membership. The issues cover a
broad range of current legislation and/or policies such as
affordable health care, leveling the playing field for women-
owned businesses, opening up Federal procurement policies for
women-owned businesses, the implementation of well-established
Federal law which seeks to encourage women in the marketplace,
tax policies, energy, telecom, and more. Matters which are not
directly relevant to the economic health and well-being of
constituent businesses are not part of our agenda.
Since its founding 20 years ago, WIPP's policy priorities
have shifted to meet the times and to address the emerging
policy areas impacting the economic health of women-owned small
businesses, such as digital infrastructure and workforce
development. Additionally, at its core, WIPP's advocacy has
always been focused on increasing parity and equity for women-
owned small businesses in Federal contracting and access to
capital.
As an organization which represents the country's over 12
million women-owned businesses, we have within our ranks
Republicans, Democrats, Independents, liberals, conservatives
and every variety of opinion. We urge and encourage our members
to become involved and politically active as their consciences
dictate.
Our organization surveys its membership on a regular basis
to determine which issues are priority issues for them, and we
maintain the issue committees to review options and
alternatively look to them for advice on legislation that meets
the needs of our membership.
In order to further our objectives, we maintain
relationships with all Members of Congress, as well as the
incumbent Administration, regardless of political affiliation,
and we intentionally maintain our nonpartisan approach.
WIPP has tackled Federal contracting issues since its
inception. Access to Federal markets continues to be a
challenge for WOSBs, given that the Federal Government has only
met its modest goal of 5 percent awards to WOSBs twice. One
missing piece is good data on these large, multi-year contracts
also known as MACs. In addition, the government does not have
sufficient data on whether subcontracting commitments have been
met. A significant legislative victory was achieved in 2018,
giving small firms more ``runway'' to transition out of the
small business set-aside program and into full and open
competition. The law allows businesses to average revenues over
five years rather than the previous three years for purposes of
determining their size standards.
WIPP will continue to advocate for changes to acquisition
policies that will generate more contract awards for women-
owned small businesses. Current efforts include support for
expanding sole source awards to small businesses,
reinvigorating education and support for the women-owned small
business procurement program in Congress and in the agencies.
WIPP's efforts to level the playing field cuts across a
wide set of issues relating to the government's acquisition
policy. Without our advocacy, small businesses and women-owned
small businesses will continue to lose ground as procurements
become larger and longer.
Access to capital remains the top concern for women-owned
small businesses. As members of this Committee are aware,
women-owned small businesses have experienced great levels of
hardship due to the pandemic, and have struggled to access the
capital necessary to keep their businesses afloat. Without
delving too deeply into these hardships, it has been widely
reported that businesses owned by women were more likely to lay
off employees, report losses in revenue, or close permanently,
more than any other demographic.
Also, in regard to financing, even when women successfully
secure financing, it is often less than what they originally
requested and certainly far less than what is needed. In a
similar vein, women apply for less funding, due to what I call
application anxiety. On average, they ask for $35,000 less than
men.
With all of that said, WIPP has committed to making access
to capital one of our top policy priorities. To that end, we
frequently engage with leaders in Congress and in the private
sector to amplify measures that would increase women's access
to capital. This includes engagement with banks, fintechs,
financial institutions, NGOs and nonprofit organizations.
We also host monthly advocacy updates for our members to
keep them abreast of updates on the Hill as well as provide an
opportunity to hear from policymakers like yourselves.
Additionally, WIPP hosts regular educational sessions for our
membership on access to capital.
WIPP was founded in 2001, with the sole intention of
serving America's women-owned businesses through advocacy and
education. Since our founding, we have consistently prioritized
the economic health and well-being of constituent businesses
and have maintained bipartisan relationships at the state,
local and federal levels.
Like many organizations, WIPP has been confronted with the
rapid changes in the small business community as it relates to
Federal contracting and procurement, technology, infrastructure
and economic opportunity. As these changes have occurred, WIPP
has made great strides to confront them head-on through our
greatest strengths, and that is advocacy, education, and
mobilization of the WIPP network.
Over the years, WIPP has been heavily involved with
policymakers and experts in the private sector, whether that be
through participation in hearings, like the one we are having
today, meetings with key staff and committees, and through
developing strong partnerships.
Our actions have brought strong results on behalf of women
business owners. For example, WIPP fought for implementation of
the women-owned small business procurement program which gives
Federal agencies the authority to set-aside contracts for
WOSBs. In 2015, WIPP pressed for, and achieved, the swift
implementation of sole-source authority to the WOSB Procurement
Program. More recently, WIPP has joined Senator Cardin, the
Rockville Economic Development and the Maryland Women's
Business Center for a roundtable discussion about the issues
that women business owners face running their businesses.
WIPP also advocates for the collection of meaningful data
as it relates to financing and Federal contracting for small
businesses, an issue that has become increasingly important
throughout the pandemic. It is critical that policymakers
understand how aid is allocated and what can be done to better
serve demographics that are passed over for aid.
I would like to thank the Committee for inviting WIPP to
testify today, and thank you, Chairman Cardin, Ranking Member
Paul, and members and staff of the Committee for all of the
work that you do on behalf of America's women small businesses.
I look forward to answering your questions and a robust
discussion.
[The prepared statement of Ms. Waterman follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman Cardin. Mrs. Waterman, thank you very much for
your comments and your incredible record on advocacy on behalf
of women-owned small businesses.
We have been joined earlier, as I said, by Senator Paul and
Senator Ernst. We also have Senator Hawley who has joined us by
WebEx, Senator Hickenlooper, and Senator Rosen, also by WebEx.
As I explained earlier, the members are coming in and out. If a
member on WebEx wishes to ask a question, if they just show
their video we will call on those that are on the WebEx.
But let me get--and I see Senator Hickenlooper took me up
on that suggestion, so let me call upon Senator Hickenlooper.
Senator Hickenlooper. I did not want to usurp your role as
asking the first question but since you have called on me,
first I just want to thank both our guests and I appreciate how
much work they have done, and as busy as they are taking time
out for our hearing. It is important, and it makes a big
difference, and it is important for us to get more perspective
on some of the challenges we are facing.
Women-owned businesses obviously are not getting their fair
share. If you look at startups, the percentage of venture
capital that goes to women-led startups is under 3 percent,
which defies any possible measure of what is going on. We have
got a bill we put together, the Small Business Investment
Program, to try and make sure that the actual professionals who
are directing and expanding the access to that kind of early-
stage funding, that there are more women and more people of
color in those roles.
I also come from Colorado, and some of you might know Guild
Education. It is a women-started business that provides a
marketplace for connecting large corporations, for these large
corporations to get their employees connected to various
colleges and community colleges. It was founded and is still
run by a woman named Rachel Romer Carlson, who, if she was on
this call, she would provide a lot of context of so many of the
challenges that she faced and chilling, really chilling
stories. They had this great idea. Her business is now valued
at over $3 billion, and she is one of those rare success
stories.
Anyway, I would like to ask both of our witnesses today,
you know, I mentioned that we are working on diversifying the
pool of asset managers. Do you think that will help lead more
capital to businesses like yours? Is that something that you
think would help, and what else could the SBA be doing to
encourage, or to make sure and facilitate more venture capital
going to women-owned businesses?
Chairman Cardin. Why don't we start with Dr. Lucas.
Dr. Lucas. Could you clarify, I did not hear the first part
of your question.
Senator Hickenlooper. So there are serious professional
restraints on who qualifies. You know, the SBA has a program
called the Small Business Investment Program. It creates pools
of money that are directed and usually in partnership with
private money, but for early stage investors, for venture
capital.
The people who run these funds are generally all white
males, and have been for a long time. This seemed an
appropriate place to reach out and propose legislation that
would change that. So I was wondering if there are other things
you are aware of that the SBA should be doing to facilitate
getting more funding to women-owned startups and startups that
are not just by women but people of color, other marginalized
communities. What could the SBA be doing that would provide
even more help?
Dr. Lucas. Great question. So, of course, one of the
challenges, that, like you said, small businesses have is
access, but it is access to patient capital. And so if there
were funds available, let us just say $5,000 to $15,000, like a
revolving fund, tied to technical assistance, there is a good
chance that there could be more mom- and women-owned businesses
to thrive.
Senator Hickenlooper. Mrs. Waterman, do you want to add
anything to the answer?
Ms. Waterman. Yes. I would just like to add, on top of Dr.
Tammira, this sort of mezzanine funding, if you will, or this
sort of bootstrap funding, to, you know, make payroll, or pay
for certifications. I think that is really needed. And I think
the other thing is we need to look at the way that we are
funding, because it is not a one-size-fits-all. We need to meet
the businesses where they are to ensure that the methodology is
appropriate when providing funding.
Senator Hickenlooper. Got it. No, I appreciate that, and I
agree completely.
I am almost out of time, but just quickly, patents, the
people that apply for patents are predominantly men. Twelve
percent of investors filing for patents in 2019 were women.
That is painfully low. Most of the best innovators I know,
starting with my wife, are women, and yet somehow we have made
that process feel foreign.
And I guess we are running out of time. I will file this
question and you can answer it in more detail, but I would just
quickly as each of you, is there anything the SBA can be doing
to facilitate getting more women into that process of filing
patents?
Chairman Cardin. Mrs. Waterman, do you want to start first?
Ms. Waterman. Thank you. I would say by and large it is
education. Some people do not even understand the process, so I
think education is key at all levels, to understand, one, how
to protect themselves, how to protect their IP, and more
importantly, how to make certain that that IP is sustainable.
Senator Hickenlooper. I love that. You are right.
Chairman Cardin. We have been joined by Senator Cantwell. I
am going to give her a moment. Senator Cantwell.
Senator Cantwell. Yes. Thank you, Mr. Chairman. Thank you
so much for your----
Chairman Cardin. A former Chair of our Committee, I might
point out.
Senator Cantwell. Thank you. I love our partnership,
because even when we work, the Chairman of the Committee, you
did such great work in helping us with access to capital, and
now that I am over at Commerce and you are here we are
partnering again with your great help on the Minority Business
Development Agency----
Chairman Cardin. Thank you.
Senator Cantwell [continuing]. And hopefully we will get a
record. That was your legislation that was authorizing that
organization.
Chairman Cardin. And I just want to underscore that point.
We were able to get the SBDA language included in the
infrastructure thanks to Senator Cantwell, give it permanency
and expand its applications, which is a critical tool to help
the underserved and minority communities of small business. And
Senator Cantwell, thank you so much for your work on that.
Senator Cantwell. So we are very excited about that,
because one of the issues is now, obviously, putting more money
into that. So I do not know if the witnesses--you know, we have
a couple of organizations in the State of Washington that are
very focused on minority women business organizations and try
to grow access to capital. So I do not know if the witnesses
want to talk about access to capital. What we like about the
MBDE is similar to the gap we found at SBA, there are the
programs but where is the advisory help and support and some of
those mentoring programs, the most senior people in business.
Well, guess who they ended up being? White men. So when it came
to the products and services that women might be offering, they
were not as expert on what those products and services might
be, or the interest.
So anyway, I just do not know if somebody wants to comment
on access to capital issues as it relates to trying to marry
up, particularly for the minority community, what we need to
do.
Chairman Cardin. I think maybe Dr. Lucas can give her
personal experiences that she confronted in her efforts.
Dr. Lucas. Absolutely. So let me first say, access to
capital has always been a hot topic and a huge barrier for
women, especially minority women entrepreneurs. And the major
problem with access to capital is that often minority women,
especially those in underserved communities, do not have the
credit score or the collateral to access funding. And I believe
Congress could better support these entrepreneurs with early
startup funding that does not have many barriers or
contingencies.
Let's think about the mom from West Baltimore, me, who
desires to start a business and is currently working a job that
barely pays her bills. The chances of her having a good credit
or collateral is very low. She should not have to give up on
her entrepreneurial dreams because of generations of poverty
and structural racism that she was more likely born into.
There is a huge opportunity to align access to capital to
federally funded social service program, because contrary to
what people think, many individuals who qualify for social
services want more for themselves, but we have to design
programing and opportunities to allow them to obtain more.
Senator Cantwell. Thank you, Mr. Chairman.
Chairman Cardin. Let me followup on some of these points.
First, Dr. Lucas, thank you for your seven-point suggestion,
and both of you have mentioned access to capital issues and the
challenges with capital. I want to go down some of these issues
and I want to get to the experiences under the Paycheck
Protection Program, which I think underscores some of the
structural challenges we have in underserved communities.
First, in regard to Women's Business Centers, we are very
proud of our Women's Business Centers. Thank you for that
recommendation. We just opened up one recently in Morgan, and
we also, by the way, opened up one in Salisbury. So we are now
fortunate to have three Women's Business Centers in the State
of Maryland, and they are all very valuable.
In regard to the navigator program as part of the American
Rescue Plan, your suggestions there are good suggestions. We
have got to make sure it is implemented in the way that reaches
the underserved communities.
The family considerations. Senator Cantwell's point was so
well taken, the challenges that you have in your answer. Cowork
is truly unique, and we are blessed to have you in Baltimore,
but there are so many communities that do not have a Cowork,
where a woman can take care of her family obligations as well
as enter the workforce and be an entrepreneur.
We are trying to correct that in the Build Back Better
agenda. Now that is being negotiated as we are here today. We
hope this is going to be successful within the next 24 hours.
But we deal with childcare, affordable childcare. We deal with
health care access, which are critically important if we are
going to be able to get the full entrepreneur participation in
our economy, as you both have pointed out so well.
But let's get to capital because capital really is, I
think, the driving force. Senator Hickenlooper mentioned the
SBIC. It is one of the tools available for capital, but it is a
closed shop today. It is a narrow group of entrepreneurs who
can benefit from the SBIC. And one of the areas that we are
trying to expand that is to get fund managers that represent
our community, particularly the underserved community, so that
we can get startup capital and venture capital to minority
small businesses and women-owned small businesses. Today the
percentages, as Senator Hickenlooper pointed out, is virtually
non-existent, the availability of venture capital. So we need
to be able to do a better job in all of that.
So my question to you is, what do we take away from the
Paycheck Protection Program? This was the largest single
program ever devised to help small business--$800 billion of
funds were made available in a relatively short period of time.
Now here is a program where there was no risk to the bank
because it was 100 percent guaranteed by the government. We
paid their costs. We did everything we could to make it easier
for them to accept applications quickly in order to get money
out to save small businesses. And yet we know, during the first
rounds of PPP, the underserved, underbanked communities, women-
owned small businesses were not represented in the numbers that
represent the number of women-owned small businesses in our
community.
So I guess my question to you, what is the lesson learned
from this? We did modify the program as we went forward,
including making sure that there were allocations to mission
lenders that have a much better record in underserved
communities, and we did expand the EIDL program, which is much
more direct SBA involvement rather than the banks. And then
lastly, we had a grant program because, as you pointed out, Dr.
Lucas, in some cases small businesses cannot take out loans.
The credit is just not there. The assets are not there. They do
not want to take out additional loans. They need grants.
So my question to you is, as we look at moving forward,
what is the lesson learned from the PPP experience, which got
off to a rocky start with women-owned small businesses. As we
look at building back better, access to capital, women-owned
small businesses, where should we put our priority?
I will start with Mrs. Waterman. If you have some view on
this I would appreciate it.
Ms. Waterman. Absolutely. Thank you. You know, we totally
understand that the pandemic took its toll, right, on
businesses, particularly on those women and minority firms,
with more than 71 percent of them having a decreased business
revenue. I think that PPP and EIDL did work. I think that it
worked for what it was. I think as we look at next steps, if
you will, in our lessons learned, we have got to understand
that the funds that were provided during that time, many people
took it out of desperation. And so as they are desperate to
keep the doors open, desperate to pay their employees,
desperate to keep homes afloat, we have got to have the
education for people to understand the cash flow, what is the
funding that they are receiving, what does that mean, you know,
what funding is right for them? Some of our members, I had a
few who said, you know, they actually did not really want to
have what it is that they received, meaning because the terms
and conditions of it were just too stringent for them.
So I think, one, education is key. Having us understand the
true impact on the businesses that receive this funding, where
are they at now, what funding do they need going forward, and
are we ensuring that we are educating them on how to manage the
P&L so that it can be a sustainable funding, not just a ``right
now'' type of funding.
Chairman Cardin. That is very helpful, and Dr. Lucas, your
recommendations on the navigators would certainly help in that
education and outreach suggestions to make sure the capital
gets out in a more equitable way.
I am going to yield to Senator Duckworth, who is on WebEx,
and give her a chance to ask questions.
Senator Duckworth. Thank you very much, Mr. Chairman, and I
want to thank the folks for being here on this very important
topic.
Earlier this year a joint survey of nearly 1,200 female
entrepreneurs was conducted to understand how they were
affected by the pandemic, and the survey findings demonstrated
the resilience of women entrepreneurs and just how important
they are to rebuilding our economy. For example, many of the
women surveyed had started a new small business over the past
year, and of these new ventures, nearly half were owned by
women of color.
Ms. Waterman, could you address how increasing Federal
investments in women entrepreneurs would deliver a strong
return on investments for local economies and job growth?
Ms. Waterman. Absolutely. You know, I say investing in
women is an investment in our future and our economy. We know
that women make 85 percent of the decisions in the household,
they influence the other 15 percent, and when you overlay that
with a business owner being a woman, and opening businesses at
record rates prior to COVID, showing their resilience and
innovation, I think those are the components, right, and the
recipes for success in terms of knowing that the return on
investment is there as you invest in women-owned small
businesses, or in women businesses, in particular. They will
have the funding to, again, not to startup their companies but
to grow their companies and then be able to impact our economy
in a very strong manner, as we are looking to make certain that
we are moving from crisis to recovery.
Senator Duckworth. Thank you. I could not agree with you
more about the importance of supporting women-owned small
businesses at the Federal level and the need to specifically
help female entrepreneurs. It is why this summer I reintroduced
my Interagency Committee on Women's Business Enterprise Act. I
was proud that our Committee chairman, along with Senators Tim
Scott and Susan Collins, joined me to introduce this bipartisan
bill that simply seeks to restore the Federal interagency
committee that was originally created to lead a whole-of-
government effort to support and promote women entrepreneurs.
Ms. Waterman, in your testimony you mentioned the need to
better understand how Federal aid is reaching, or failing to
reach in your answer to the Chairman just now, as well, how
Federal aid is reaching or failing to reach women small
business owners, particularly women of color? Do you believe
that restoring and reinvigorating the Interagency Committee on
Women's Business Enterprise would improve Federal Government's
efforts to solve longstanding challenges, such as making sure
that Federal support is actually reaching women-owned business
enterprises, sending them the most appropriate support that
they need?
Ms. Waterman. I say a resounding yes, and I say that, in
June of this year we submitted a letter to Speaker Pelosi and
leaders Schumer, McConnell, and McCarthy, to express our
support of the Interagency Committee on Women's Business
Enterprise Act. And we know that that agency is really critical
to the Federal Government as it develops policies that would
support these women business owners.
After the last 18 months that we have had, which has been
exceedingly challenging for women businesses, in particular, it
is our hope here at WIPP that Congress can work together, in a
bipartisan manner, so that Federal Government can provide
targeted assistance to this demographic of women entrepreneurs
as they seek to start and grow their businesses.
Senator Duckworth. Thank you. I want to switch gears a
little bit and talk about the care economy. I have been
frustrated with a recent debate that sort of tries to separate
so-called real infrastructure investments like roads and
bridges and airports from investments in other economic
programs that I think are just as important in the care
economy.
I think there is a false dichotomy here that ignores the
reality that the care economy investments would empower more
parents to start new businesses and level the playing field for
small businesses that struggle to compete with large
corporations because those large corporations can afford paid
leave but the small businesses that are just starting out just
simply cannot afford it, no matter how much they want to
provide it.
That is why I led 14 of my colleagues in sending a letter
to Senate leadership pushing for major investments in
caregiving as part of any Build Back Better package.
Dr. Lucas, you highlighted mom entrepreneurs in your
testimony. Could you address the caregiving challenges
confronting mom entrepreneurs and address how enhancing our
caregiving infrastructure from expanding affordable childcare
to making home and community-based services accessible to our
loved ones could help these entrepreneurs to start and grow
their businesses?
Dr. Lucas. Absolutely. Thank you. So just to kind of put
some context to this, the median annual income for full-time
female entrepreneurs is $40,000. The average cost of childcare
just in Maryland is $15,335, the average yearly rent is
$16,800, and the average yearly grocery bill is $8,600 for a
family of three. Women are expected to raise families without
assistance or work unfulfilled jobs, right? So in order for you
to qualify for daycare vouchers, that is just a whole different
battle by itself. A family of three has to only have an income
of no more than $60,000, right. And so a Maryland resident,
they either have to take their spouse or the child's father
down for child support.
There are all these guidelines in order to receive
assistance. And so these requirements are not realistic, nor do
they support the mom who desires to start or run a business,
and I think that is extremely important for us to really look
at how our social service system is set up and how we are
constantly pushing mothers into low-income jobs.
Senator Duckworth. Thank you so much. I am over time, Mr.
Chairman. Thank you.
Chairman Cardin. And let me thank Senator Duckworth for her
leadership in regard to the Interagency Task Force. Your work
has been incredible there on behalf of women, so thank you for
your leadership on these issues.
I want to thank both of our witnesses for their testimonies
today. We are going to have a chance to deal with the issue
Senator Duckworth was referring to in the care economy. We
clearly are going to make that one of the major centers of our
Build Back Better budget that we are working on right now. We
are looking at strengthening the tools in the SBA toolkit to
deal with the underbanked, underserved communities, with women-
owned small businesses. We are optimistic. We are working very
closely with the Biden administration, and we are together in
our priorities and with our counterparts in the House.
So I particularly want to thank our stakeholders who have
been working with us, including the Women Impacting Public
Policy. You have been a great partner for us in these efforts.
And as I said earlier, to Dr. Lucas, we are very proud of what
you do in Baltimore, filling such an important need so that
entrepreneurs, women, moms can enter the entrepreneurial space
and help themselves and help our community.
With that the Committee will stand adjourned with the
thanks of the Committee to our witnesses.
[Whereupon, at 3:44 p.m., the Committee was adjourned.]
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