[House Hearing, 118 Congress]
[From the U.S. Government Publishing Office]




    ASSISTING ENTREPRENEURS: EXAMINING PRIVATE AND PUBLIC RESOURCES 
                        HELPING SMALL BUSINESSES

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

                                HEARING

                               before the

                      COMMITTEE ON SMALL BUSINESS
                             UNITED STATES
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED EIGHTEENTH CONGRESS

                             FIRST SESSION

                               __________

                              HEARING HELD
                             JUNE 13, 2023
                               __________



                  [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                               

            Small Business Committee Document Number 118-018
             Available via the GPO Website: www.govinfo.gov




                               ______
                                 

                 U.S. GOVERNMENT PUBLISHING OFFICE

52-424                    WASHINGTON : 2023











                   HOUSE COMMITTEE ON SMALL BUSINESS

                    ROGER WILLIAMS, Texas, Chairman
                      BLAINE LUETKEMEYER, Missouri
                        PETE STAUBER, Minnesota
                        DAN MEUSER, Pennsylvania
                         BETH VAN DUYNE, Texas
                         MARIA SALAZAR, Florida
                          TRACEY MANN, Kansas
                           JAKE ELLZEY, Texas
                        MARC MOLINARO, New York
                         MARK ALFORD, Missouri
                           ELI CRANE, Arizona
                          AARON BEAN, Florida
                           WESLEY HUNT, Texas
                         NICK LALOTA, New York
               NYDIA VELAZQUEZ, New York, Ranking Member
                          JARED GOLDEN, Maine
                         KWEISI MFUME, Maryland
                        DEAN PHILLIPS, Minnesota
                          GREG LANDSMAN, Ohio
                       MORGAN MCGARVEY, Kentucky
                  MARIE GLUESENKAMP PEREZ, Washington
                       HILLARY SCHOLTEN, Michigan
                        SHRI THANEDAR, Michigan
                          JUDY CHU, California
                         SHARICE DAVIDS, Kansas
                      CHRIS PAPPAS, New Hampshire

                  Ben Johnson, Majority Staff Director
                 Melissa Jung, Minority Staff Director








                            C O N T E N T S

                           OPENING STATEMENTS

                                                                   Page
Hon. Roger Williams..............................................     1
Hon. Nydia Velazquez.............................................     2

                               WITNESSES

Mr. Chris Pilkerton, Chief Legal Officer, Accion Opportunity 
  Fund, Tilghman, MD.............................................     5
Mr. Reginald Hodges, Owner and President, Training Center of 
  Central Texas, Harker Heights, TX..............................     7
Mr. Rich Palmer, Managing Director, Launchpad Ventures, 
  Cambridge, MA..................................................     8
Ms. Sonya Smith, State Director Company, New York Small Business 
  Development Center, Albany, NY.................................     9

                                APPENDIX

Prepared Statements:
    Mr. Chris Pilkerton, Chief Legal Officer, Accion Opportunity 
      Fund, Tilghman, MD.........................................    28
    Mr. Reginald Hodges, Owner and President, Training Center of 
      Central Texas, Harker Heights, TX..........................    30
    Mr. Rich Palmer, Managing Director, Launchpad Ventures, 
      Cambridge, MA..............................................    32
    Ms. Sonya Smith, State Director Company, New York Small 
      Business Development Center, Albany, NY....................    36
Questions for the Record:
    None.
Answers for the Record:
    None.
Additional Material for the Record:
    National Association of Federally-Insured Credit Unions......    43







 
    ASSISTING ENTREPRENEURS: EXAMINING PRIVATE AND PUBLIC RESOURCES 
                        HELPING SMALL BUSINESSES

                              ----------                              


                         TUESDAY, JUNE 13, 2023

                  House of Representatives,
               Committee on Small Business,
                                                    Washington, DC.
    The Committee met, pursuant to call, at 2:40 p.m., in Room 
2360, Rayburn House Office Building, Hon. Roger Williams 
[chairman of the Committee] presiding.
    Present: Representatives Williams, Luetkemeyer, Meuser, 
Salazar, Alford, Crane, Bean, LaLota, Velazquez, Landsman, 
McGarvey, Perez, Scholten, Thanedar, Davids, and Pappas.
    Chairman WILLIAMS. I welcome everybody here today and thank 
you for the witnesses and for those who have come to hear the 
hearing.
    I call the Committee on Small Business to order.
    Without objection, the Chair is authorized to declare the 
recess of the Committee at any time.
    I now recognize myself for my opening statement.
    Today's hearing will focus on examining the public and 
private resources available to our nation's entrepreneurs. And 
anyone in our country can become an entrepreneur if they are 
willing to put in hard work to bring an idea to life. That is 
the beauty of our great country. For many people they do not 
know where to even start as they try to accomplish this great 
objective. They can talk to their network of friends and 
family. They can talk to local chambers of commerce or research 
what resources are available in their community, whether that 
be from the private sector or the federal government.
    As we have conducted hearings this year, we have too often 
heard that navigating the federal bureaucracy and figuring out 
what resources are available can be too challenging for many 
small business owners. The data backs up this line as we have 
repeated heard 70 percent of business owners give the 
government a grade of C or below when asked about the 
effectiveness of their programs. While some federal programs 
can be beneficial to small businesses, we must ensure that they 
are being utilized to create successful businesses. These are 
ultimately taxpayer funded programs and it is our duty in 
Congress to ensure that these dollars are being used as 
effectively as possible. The government does not need to create 
a new government program and expand government services 
whenever a new problem arises.
    Unfortunately, the SBA has done this far too many times and 
too often. And while there are programs that have a proven 
track record of success just as SBDCs which leverage federal 
dollars to state and local partners, but there are others that 
are not as effective. For example, the Community Navigators 
Program received nearly $200 million over the last few years to 
do substantially similar work as other counseling services at 
the SBA and their performance metrics are abysmal.
    As we continually look to make SBA more effective and 
efficient, we must look to end this kind of duplication that is 
wasting taxpayers' dollars. Additionally, we have our need to 
be evaluated, and if a program is beneficial and deserves 
funding it is important for us to know that if the private 
sector is already stepping up to fill a specific need. In many 
cases, the private sector is able to adapt more quickly to the 
changing needs of small business.
    If we want to help small businesses in Congress, the best 
thing we can do is enacting pro-growth policies that make it 
easier for them to keep their doors open. Let's not burden them 
with excessive regulations. Let's lower their tax rate so they 
can keep more of their hard-earned money. And let's stop the 
reckless government spending that has caused high inflation and 
high interest rates. This type of waste across the SBA and 
other federal agencies leads to inefficiencies, the misuse of 
taxpayer dollars, and a bloated federal government. Simply put, 
our goal here today is to examine the landscape of the 
resources that are available to help small businesses. Once we 
have an idea it will make it easier for Congress to utilize 
which programs are effective and which ones are duplicative of 
other resources available to our nation's job creators.
    Small business owners dedicate their lives and finances to 
the production of services they bring to the marketplace. We 
salute the small businesses who continue to fight and give 
selflessly back to their communities, and we are eager to enact 
policy solutions that will help pave a path towards success for 
both now and success in the future.
    I want to thank you all again for being here today, and I 
am looking forward to today's conversation.
    So, with that I will yield to our distinguished Ranking 
Member from New York, Ms. Velazquez, who just got here.
    Ms. VELAZQUEZ. Yes. Financial Services.
    Thank you, Mr. Chairman.
    America's 33 million small businesses are the cornerstones 
of our local economies. When a main street business succeeds, 
we see hard earned dollars get reinvested back in our 
communities, along with robust job creation and local economic 
growth.
    Launching a small business is not for the faint of heart. 
When it comes to turning a great idea into a thriving business, 
entrepreneurs can face a number of challenges. But that is 
where the SBA comes in. The SBA fosters a robust 
entrepreneurial ecosystem, one that offers free or low-cost 
counseling and training to small business owners throughout the 
country. Whether it is helpoing to create a business plan, 
access capital, or navigate the procurement process, the SBA 
offers a wide range of resources to help small businesses 
succeed. These programs have a high return on investment. 
Studies have shown that entrepreneurs who receive counseling 
and training are able to incase sales and create more jobs.
    Every year, SBA resource partners assist more than one 
million small business owners. Just imagine how powerful our 
economy and workforce will be with additional resources for 
SBA's programs. We could unleash the power of entrepreneurship 
and innovation in communities all across the United States.
    Of particular concern to me are the barriers that women, 
minority, and rural entrepreneurs face each and every day. Lack 
of access to capital, mentorship, and vital networks are well-
known challenges for underserved entrepreneurs.
    A recent report by the Office of Advocacy confirms that 
large and persistent racial disparities in business ownership 
and outcomes have existed for some time in the United States. 
Only 5 percent of Blacks and 8 percent of Latinos own small 
businesses compared to more than 10 percent of non-Latinos/
Whites. Moreover, Black and Latino-owned businesses have lower 
average sales and hire fewer employees.
    Equally troubling is the fact that roughly 90 percent of 
America's 12 million women entrepreneurs are sole proprietors 
and stay small. Despite representing more than 50 percent of 
the population, women garner roughly 2 percent of venture-
backed capital in 2022. And while rural communities have a 
higher rate of self-employment, they rely more on personal 
savings to launch a business and face acute workforce 
challenges. We have to break down the barriers that keep women, 
minority, and rural entrepreneurs from reaching their full 
potential. That means providing small businesses that are often 
overlooked with access to capital and arming them with the 
resources and technical assistance needed to grow and prosper. 
It also means filling the gaps that are not being met by the 
private sector and state and local economic agencies.
    I am looking forward to today's hearing and I hope to learn 
more about public-private efforts that are underway to help 
small businesses thrive. Thanks to all the witnesses for 
participating, and I hope we have a productive discussion.
    Thank you, Mr. Chairman. I yield back.
    Chairman WILLIAMS. Thank you. And I will now introduce our 
witnesses. But let me tell you, it is pretty simple. You have 
got some lights in front of you and you are going to have 5 
minutes and the lights will turn yellow. They will turn red or 
whatever. And if you hear the gavel, you need to cut it off. 
Okay? All right. So we appreciate you all being here.
    So our first witness today is Chris Pilkerton. Mr. 
Pilkerton is the chief legal officer of the Accion Opportunity 
Fund located in San Jose, California. Accion Opportunity Fund 
is the nation's largest nonprofit community development 
financial institution concentrating on small business support 
for underserved communities. Prior to his time at the Accion 
Opportunity Fund Mr. Pilkerton served as acting administrator 
of the Small Business Administration during the Trump 
administration. During his time at the SBA, he helped 
coordinate federal, state, and local economic development 
efforts to help our nation's job creators. Mr. Pilkerton earned 
his J.D. from Catholic University of America, a bachelor's 
degree from Fairfield University, and a certificate in data 
analytics from Cornell University's College of Business.
    Mr. Pilkerton, thank you for being here today and we look 
forward to the conversation ahead.
    Our next witness today is Mr. Reginald Hodges. I have had 
the pleasure of meeting Mr. Hodges several times over the last 
few years through all the work he does in the great state of 
Texas. He is an owner and president of the Training Center of 
Central Texas College located in Harker Heights, Texas. A 
Former Navy Civil Engineer Corps officer, Mr. Hodges has over 
11 years of military service and over 16 years of construction 
management experience. Mr. Hodges started the Training Center 
of Central Texas with a vision of training men and women to 
enter the solar technology field. Since opening the school, it 
has expanded their curriculum to include a variety of programs 
ranging from dental assistant to substation technician. Mr. 
Hodges earned his Bachelor of Applied Science from the 
University of North Florida and his master's degree in 
electronics engineering from California Polytechnic State 
University in San Luis Obispo.
    So, Mr. Hodges, it is good to see you and thank you 
foremost for your service being here today and we look forward 
to our conversation ahead.
    Our next witness is Mr. Rich Palmer. Mr. Palmer is the 
managing director of Launchpad Venture Group located in Boston, 
Massachusetts. Launchpad Venture Group is an angel investment 
group that provides funding and counseling services to early-
stage startup companies. Mr. Palmer is also on the Public 
Policy Committee of the Angel Capital Association, and prior to 
his time at Launchpad Venture Group he co-founded Gravity Lead 
Product Development at Relationship-Science and was the head of 
the portfolio analytics for S&P Capital IQ's Quantitative 
Intelligence team. Mr. Palmer earned his Bachelor of Science 
from Rensselaer Polytechnic Institute. What are you all? What 
is your mascot? I got you, didn't I? Okay. All right. 
Polytechnic Institute and received his Master of Business 
Administration from Babson College.
    Mr. Palmer, thank you for being here today, and we look 
forward to the conversation ahead.
    And I now recognize the Ranking Member from New York, Ms. 
Velazquez, to briefly introduce our last witness appearing 
before us today.
    Ms. VELAZQUEZ. Thank you, Mr. Chairman.
    It is with greater pleasure that I introduce Sonya Smith 
from my hometown state of New York. Ms. Smith is the state 
director of the New York Small Business Development Center and 
has in-depth knowledge of the challenges our small businesses 
are facing today. She has an MBA from Albright College and has 
risen through the ranks of the SBDC network. She is the first 
woman an first African American to lead the New York State SBDC 
and I am proud that she is testifying before our Committee 
today.
    Welcome, Ms. Smith. Thank you for being here. I look 
forward to your testimony. I yield back.
    Chairman WILLIAMS. Thank you now. And again, we all 
appreciate all of you being here today.
    And I now recognize Mr. Chris Pilkerton for his 5-minute 
opening remarks.

  STATEMENTS OF CHRIS PILKERTON, CHIEF LEGAL OFFICER, ACCION 
    OPPORTUNITY FUND; REGINALD HODGES, OWNER AND PRESIDENT, 
    TRAINING CENTER OF CENTRAL TEXAS; RICH PALMER, MANAGING 
   DIRECTOR, LAUNCHPAD VENTURES; SONYA SMITH, STATE DIRECTOR 
      COMPANY, NEW YORK SMALL BUSINESS DEVELOPMENT CENTER

                  STATEMENT OF CHRIS PILKERTON

    Mr. PILKERTON. Thank you Chairman Williams, Ranking Member 
Velazquez, and to all of the Committee Members.
    Over the last several years I have spent my career focusing 
on issues related to the small business community, with 
particular attention to underserved populations. I served as 
the General Counsel of the U.S. Small Business Administration 
under Administrator Linda McMahon, as well as the Acting 
Administrator of the agency from April 2019 into early 2020 
when I joined the White House to advance the issues that 
included access to capital and workforce development. The 
lessons of those efforts and an associated bipartisan plan 
going forward have been documented more specifically in a book 
I have recently coauthored titled ``Underserved.''
    Since leaving government, I have continued this work in 
various capacities. I serve as the Chief Legal Officer for 
Accion Opportunity Fund, the leading nonprofit community 
development financial institution focused on small business 
lending and technical assistance to underserved borrowers all 
across the country. I have also cofounded and developed an 
initiative called the Small Business Corps at Georgetown 
University Business School, a private sector led program to 
offer underserved small businesses with specific goal-focused 
technical support provided by fellows who are recent college 
and business school graduates. I have also worked closely with 
people like the performing artist Ice Cube to identify 
opportunities for underserved small businesses to scale and 
participate in the Fortune 500 corporate supply chain.
    While access to capital to small businesses is critical, 
academic analyses have shown that technical assistance and 
counseling can be amongst the most meaningful component of a 
business' ability to perform, develop, scale and hire.
    There are technical assistance resource partners that have 
traditionally been an important part of the small business 
ecosystem, organizations such as SBDCs, SCORE, Women's Business 
Centers and Veterans Business Centers.
    As this committee is aware, certain funds to support these 
organizations are appropriated and then distributed via SBA. I 
have worked with all of these organizations and have seen their 
impact on the growth of individual small businesses.
    Given my experience in this arena, I would recommend this 
Committee consider the following methods to advance small 
business technical assistance in the United States.
    First, for any entity that receives technical assistance 
dollars from a government grant or designated appropriation, 
there must be a common menu of meaningful performance metrics 
both before and after distribution of the funds. These metrics 
must be reasonable and realistic, but also be significant 
enough to hold grantees accountable to the provision of quality 
services.
    Second, technology must be central to this process from 
start to finish. Not only should technology be utilized to 
streamline the application process, but the actual technical 
assistance provided must have a substantive online learning 
component as is seen in the SBA's Ascent platform, which was 
championed by Administrator McMahon and continues to be 
highlighted by the agency.
    Third, perhaps not dissimilar to the intent of the 
Community Reinvestment Act, the government must consider ways 
to engage and incentivize the private sector in this work. At 
Accion Opportunity Fund, for example, we work with companies 
like Federal Express and Boston Brewing Company to advance 
online support and coaching opportunities for entrepreneurs. 
Programs like these, or government-initiated opportunities like 
the 2019 Pledge to the American Worker, can also serve as a 
model of the convening power of government to engage businesses 
of all sizes to advance trainings, apprenticeships, and job 
placement all across the country.
    Fourth, in coordination with existing resource partners, 
policymakers must encourage and incorporate new and innovative 
technical assistance stakeholders into this process. During my 
time at SBA, for example, we pioneered a pilot program called 
the Makerspace Hiring Training Collaboration and Hiring (MaTCH) 
initiative, to advance the makerspace incubator system. This 
pilot immediately impacted many businesses across the country 
in places like California, Missouri, New Hampshire, New York, 
Oklahoma, Pennsylvania and Puerto Rico.
    Fifth, Congress should be a partner to the Executive Branch 
as part of the trackable interagency cooperation process. 
Although meetings like these are usually governed by executive 
order or memoranda of understanding, on this topic a 
congressionally-engaged, bipartisan working group for key 
offices such as SBA, MBDA, the Department of Labor's WIOA, 
various secondary education offices within the Department of 
Education, could make huge strides on this topic and avoid much 
of the bureaucratic disruption that can impact any 
administration.
    Finally, I will close by saying that all of this is doable 
right now. However, these would just be part of an overall 
strategy that could be developed in accordance with a 
comprehensive study on these issues. Now, I know that such 
studies are often frowned upon as kicking the can down the 
road, but given the massive size of all of these grants and 
appropriations in their entirety, such a review could set forth 
a government-wide best practices approach that could maximize 
measurable small business and workforce outcomes, while 
ensuring the government is a responsible steward of taxpayer 
dollars.
    Thank you all again to all of you for your work in this 
area, and I look forward to any questions.
    Chairman WILLIAMS. I now recognize Mr. Reginald Hodges for 
his 5-minute opening remarks.

                  STATEMENT OF REGINALD HODGES

    Mr. HODGES. Good afternoon, Chairman Williams, Ranking 
Member Velazquez, and distinguished Members of the House 
Committee on Small Business.
    Thank you very much for inviting me to tell our story. I am 
truly honored to be here today and to share our story of the 
Training Center of Central Texas. We are both a minority and 
veteran-owned business since 2017. The Training Center was 
honored to have had Chairman Williams address our summer 
graduating class of 2021. He was called away to Washington, 
D.C. for a vote on the Infrastructure bill, but he recorded an 
address addressed to our students, which was a memorable moment 
for our 49 graduates, mostly military veterans, of the 
electrical, solar and medical technician programs.
    I am Reginald Hodges, CEO and president of the Training 
Center of Central Texas. I was approached by the congressional 
staff to share our story of our growth and challenges of 
training our students not only for careers but also for 
starting their own businesses.
    The Training Center offers a cost-effective, career-
focused, flexible education and prepares our students for in-
demand jobs in the solar, medical, and electrical industries. 
Having been recognized for 3 years straight as the number one 
trade school in our area, we would not be here today without 
Brian Sunshine, a co-owner, and the first person that every 
students meets when they walk through that door. And also, our 
esteemed director, Jim Bondi, a retired colonel and one of the 
most respected men in our Fort Cavazos community.
    I enlisted in the Navy in 1994 at the Navy Recruit Training 
Command at Great Lakes. There is a building there, Building 
1405, located right there at Boot Camp. And they had a mural of 
the first African American naval officers in the Navy's 
history. They were commissioned there at Great Lakes. These 12 
ensigns and 1 warrant officer went on to serve with distinction 
in World War II. They called themselves the Golden 13. As I 
looked up to those 13 men on a mural, I knew I wanted to be a 
naval officer and I dedicated my life to that goal. The first 
day I arrived at my duty station in Jacksonville, Florida, I 
enrolled in classes for my associate's at the local community 
college where I attended school full time at night. Full time.
    After leaving the Navy in 1998, I was accepted to an 
officer program at the University of North Florida. Upon 
graduation with my bachelor's degree in electrical engineering, 
I attended Navy OCS. The day I was commission in 2001 is still 
the greatest honor I have ever had and I proudly served our 
country for 11 years.
    I am a person of integrity and believe in service in our 
community and building the next generation of skills. I am 
reminded that the students who we serve at the Training Center 
are anywhere from 18 to 30 years old. They comprise 20 percent 
of the population, yet they make up 100 percent of our future. 
We have a strong need to equip our students with the most 
enduring critical skills in health care, in the electrical 
trade, and solar technicians.
    At our school, these skills often get used right where our 
students are in school. Our students work at nursing homes, 
assisted living homes, blood drives, and actually do the 
electrical wiring for Habitats for Humanities all throughout 
our area. As a career school I would hope that we can obtain 
from this hearing additional resources for trade schools to 
partner with local businesses, school districts, and trade 
organizations because by working together we can actually help 
build a stronger workforce and support economic growth in our 
communities.
    Additionally, I hope that we can foster more programs that 
are similar to the very successful Boots to Business program 
for transitioning veterans but for civilians. More 
specifically, high school seniors as approximately 40 percent 
of small business owners do not have a college education. 
However, nearly all of them have a high school education. I say 
let's get the word out about the great resources that the Small 
Business Administratino has because the resources are there but 
few are aware.
    I would like to thank you very much for this opportunity to 
be here. Thank you very much, Chairman Williams, Ranking 
Membmer Velazquez, and you distinguished people here on the 
House Committee of Small Businesses. It has been an honor. It 
is an honor. That is it. Thank you.
    Chairman WILLIAMS. I am sorry. We recognize Mr. Palmer for 
his 5-minute opening remarks.

                    STATEMENT OF RICH PALMER

    Mr. PALMER. Chairman Williams, Ranking Member Velazquez, 
and distinguished Members of the Committee. Thank you for the 
opportunity to testify before you today. My name is Rich 
Palmer, and I am the managing director of Launchpad Venture 
Group and I am here on behalf of the Angel Capital Association. 
I will call it the ACA. I am happy to be here to discuss how 
Congress can improve the federal government's engagement with 
angel investing to better facilitate the flow of capital to 
small businesses.
    ACA is a professional society of accredited angel investors 
who make up the world's most prolific early stage investment 
class. ACA represents more than 15,000 accredited angel 
investors and 250 angel groups, accredited platforms, and 
family offices who together deploy more than $950 million in 
early stage capital every year, supporting more than 30,000 
entreprenerial companies.
    I have spent nearly 20 years focused on entrepenurship. At 
the beginning of my career on Wall Street I eventually 
cofounded Gravity, the leading company for social good using 
AI. I also serve as an entrepreneur in residence at Babson 
College, having invested in dozens of promising startups and 
speak regularly on entrepreneurship.
    In 2022, I became managing director of Launchpad Venture 
Group, a nationally recognized angel network. Launchpad 
currently has more than 185 active angel investors who provide 
human and financial capital to help enrepenur build successful 
companies. Each Launchpad Member is qualified as an accredited 
investor under the definition of Rule 501 of the SEC 
regulatoions.
    Each year, Launchpad invests $8 to $10 million both in new 
and follow-on opportunities. As one of the most active angel 
networks in the United States, Launchpad exemplifies the power 
of angel investing as a driver of entrepreneurship.
    Angel investing supports small businesses in four distinct 
ways.
    First, angel investors provide crucial funding to startups 
and early stage companies that may have difficulty accessing 
traditional sources of capital.
    Second, angel investors provide invaluable mentorship and 
guidance to entrepreneurs as they often have a wealth of 
experience in the industry or sector that they invest in.
    Third, angel investor are willing to take on higher risks 
compared to traditional investors like banks and financial 
insstitutions, and thereby, enable early stage companiesi to 
pursue innovatvive ideas that have the potential for 
substantial growth.
    Lastly, angels lend credibility to a startup. When a 
reputable angel investor conducts due diligence, sits on a 
board, and invests in a company, it signals to other investors, 
customers, and stakeholders that the business has potential and 
is worth considering.
    The facts speak for themselves. A desert angel study found 
that every angel investment dollar has a multiplier effect of 
21X. For example, the average initial investment from a 
Launchpad Member is $25,000, which creates economic value worth 
more than half a million dollars per investor.
    The importance of angel investing is further augmented by 
the reality that existing federal resources were oriented 
towards small businesses, such as the Small Business Agency 
(SBA) failed to capture the entire innovation ecosystem.
    The SBA is undoubtedly an important organization. However, 
the SBA does not focus on the early stage innovative companies 
that angel investors concentrate on. Rather, they focus on 
traditional, established small businesses such as local 
restaurants, flower shops, and so on. Since the SBA does not 
capture the entire innovation ecosystem, SBA should begin to 
leverage local angel groups and our know-how to get more 
capital to entrepreneurs. Importantly, although more than 16 
million Americans qualify as accredited investors, only about 
16,000 are active angels. SBA could help narrow that disparity 
by developing programs that leverage private investment capital 
in early stage companies. Such an initiative would especially 
benefit entrepreneurs of color and women who may not be able to 
leverage connections or family wealth for their investment.
    My colleagues and I are ready and willing to serve as a 
resource of infomration and feedback as you pursue your 
legislative solutions to make capital more readily available to 
our Natino's entrepreneurs.
    Thank you again for this opportunity to share my experience 
with you. I look forward to your questions.
    Chairman WILLIAMS. Thank you.
    And I now recognize Ms. Sonya Smith for her 5-minute 
opening remarks.

                    STATEMENT OF SONYA SMITH

    Ms. SMITH. Thank you, Chairman Williams, Ranking Member 
Velazquez, and to the House Small Business Committee Members.
    Again, I am Sonya Smith, and thank you for the 
introduction. I am the state director for the New York Small 
Business Development Center, and with my experience of over 15 
years of various roles within the SBDC, Small Business 
Development and Economic Development, from my knowledge gained 
from the work and experience with the SBDC, I am understanding 
and learned of the importance of building an ecosystem to 
provide solutions to communities, regions, states, and 
nationwide.
    As stated, both public and private resources can be 
valuable as entrepreneurs look to start or grow their business. 
We must ensure that any taxpayer dollars going towards these 
efforts are being effectively used in a way that is not 
duplicative of private sector initiatives.
    The Small Business Administration offers a variety of 
services to help educate and counsel small businesses, 
including small business development centers. With over 1,000 
locations nationwide, SBDCs provide valuable resources to small 
businesses across the country. Through our partnership with 
SBA, SBDCs are hosted by universities, colleges, state, 
economic development agencies, or private entities, and our 
goal is to help launch and grow small businesses.
    The State of New York is one of the 63 networks represented 
in the nationwide program consisting of all the states and U.S. 
territories. In the state of New York there are 22 service 
centers covering all 62 counties. There is no one size solution 
for our organization for the 33 million small businesses of the 
country. Each business owner or entrepreneur has their own 
unique circumstances that may need the support and assistance 
from several resources.
    As one of the four resource partners of the SBA, SBDCs, 
SCORE, and Women Business Centers and Veteran Business Outreach 
Centers, SBDCs are a nationally accredited program that provide 
one-on-one, no cost, confidential advice to small business 
owners and entrepreneurs, educational training, and research 
and business resources. The SBDC program offers a broad reach 
of resources and opportunities to create an impact on 
businesses at every stage of their business lifecycle.
    The SBDCs across the country deliver high-quality services 
and programming by experienced experts at each center. By 
leveraging the private-public resources and partnerships, our 
program services over one million small businesses nationwide 
and has the opportunity to continue to serve more with the 
multiplier effect.
    With each SBA core dollar, federal dollars, the SBDCs match 
that program with state and institution funds. It is the SBA's 
largest matching grant funded program. This shows not only the 
financial support from the state, local, and host institutions, 
but also the value added the SBDCs provide to stakeholders in 
their communities.
    One of the key functsions of the SBDC is to be a trusted, 
collaborator and connector. The SBDCs tie all these parts 
together in terms of small business assistance across the 
country, and you will see how we partner with entities at the 
state level, as well as the local, city, and county development 
groups to provide consistent support statwide.
    The SBA congressional budget states that the Office of 
Entrepreneurial Development has made noteworthy progress. The 
SBDCs have provided a large share of these achievements. 
Eighty-eight percent of capital infusion, 75 percent of new 
business starts serving over a million clients, as well as 
supporting over 5 million jobs. The success of the program is 
evident and the data shows that the results increased during 
the panic and the demand has stayed up as well as the results.
    When small business owners and entrepreneurs need support, 
one, they do not know where to go or where to start; two, there 
are so many resources available that they are not sure which 
one would be beneficial, too much information at once, and the 
SBDCs have been known as the best kept secret, which is not a 
compliment of the program with the inception year of 1979.
    During the pandemic with the support of CARES Act funds, 
the SBDCs were able to, for the first time, use SBA grant funds 
to develop and pay for marketing and informational materials to 
expand reach to communities. The reauthorization of the program 
would help modernize the administrative concerns and streamline 
processes and provide allocation for marketing purposes.
    SBDCs collaborate with resources and private organizations, 
chambers of commerce, trade and industry groups, and 
associations by providing technical assistance due to staffing 
capacity, training, and educational programs. We are also co-
located in these locations for accessibility.
    Thank you again for your time and your work with small 
busienses and taxpyaers across the country and I look forward 
to your questions.
    Chairman WILLIAMS. Great.
    We will now move to the Member questions under the 5-minute 
rule which we talked about. So I recognize myself for 5 
minutes.
    Mr. Hodges, we have, as we said earlier, met several times 
previously. And before I get started, I want to thank you again 
for your service to our country and the outreach you do to the 
veterans around newly named Fort Cavazos. You know it's better 
than most but our servicemen and women are such great leaders 
and can do amazing things in the private sector when they are 
given the right training and the right opportunities. So, one 
of the most pressing things we keep hearing when we speak with 
small businesses is the ability to find qualified workers.
    Mr. Hodges, my question, can you describe how the Training 
Center of Central Texas is able to adapt to the needs of the 
small business community? And how do you ensure that you are 
able to continue providing value for your customers?
    Mr. HODGES. Mr. Chairman, first of all, there is a shortage 
of electricians right now. While you have the infrastructure 
bill, you have the renewable energy that is going on across the 
country, well, 70 percent of renewable energy jobs are actually 
going to be performed by electricians. And right now we have a 
shortage of 60,000 electricians in the United States. As a 
matter of fact, the average age of an electrician, licensed 
electrician is 57 years old.
    So what our school decided to do was create a program that 
was a short 6 month program that actually addresses need. We 
were partnered with local contractors in the area where right 
now approximately of our students have actually went on to work 
at this local contractor. And also, we have been partnering 
with KISD in our area also to bring in newly graduated students 
to actually come over to the Training Center. And the way this 
is actually working is just yesterday--I am going to give you a 
brief example here. Just yesterday we had two students, recent 
high school students, come in to the Training Center. They 
signed up for our program, for our electrician program, and 
they said they did not want to go to college. They wanted a job 
within the next 6 months. And when they graduate, they are 
actually going to go and work for the local contractor there in 
our area. And it is really a very beautiful thing that we are 
doing there.
    Chairman WILLIAMS. Mr. Pilkerton, you have a unique 
perspective on the topics we are discussing today since you 
served as the acting administrator of the SBA and now are 
focusing on how the private sector can get better engaged to 
help small business.
    So, can you describe some of the work you did during the 
time as acting administrator to coordinate public and private 
partnerships without needing to spend additional federal funds?
    Mr. PILKERTON. Yes, sir. Thank you for the question.
    So I think what I would say from my time at SBA is really, 
the big sort of takeaway from this is meeting businesses where 
they are and including the components of innovation. And let me 
give you an example. So all the resource partners that we have 
talked about here today provide an incxredibly valuable service 
to the SBA. But I do think the SBA, in order to innovate and 
modernize needs to think about how those resource partners and 
perhaps other resource partners could engage as part of this 
sort of small business ecosystem.
    So one of the examples that we used was the Ascent platform 
that I mentioned before. And that was championed by 
Administrator McMahon. And that was focused on women 
businessese. And it was called Ascent because it was 
essentially a mountain process where you would scale your 
business and the technology that supported it was created by 
SBA and labor but it allowed these small businesses to scale to 
sort of where they were. So it is not just starting your 
business but being able to get into that corporate supply chain 
which is innovation.
    The second thing I would say is we did a Makerspace program 
which I referenced in my program. And that is really sort of 
the future of local incubators. So when you talk about trying 
to meet businesses where they are, Makerspaces are very 
critical because they can provide not only resources but the 
kind of SBA information to those businesses in a local fashion.
    Chairman WILLIAMS. Also, Mr. Pilkerton, you mentioned in 
your testimony the need to have consistent performance metrics 
in SBA programs. Can you give us quickly some examples of 
programs at the agency that have unproven track records of 
success but continue to receive taxpayer dollars?
    Mr. PILKERTON. So as I mentioned in my testimony, I think 
that this is a huge opportunity for both the agency and this 
Committee to work together to perform a study of these programs 
because quite honestly, there are programs that are incredibly 
impactful and there are components of those programs that are 
perhaps antiquated and not meeting where the actual business 
owners are.
    So as I mentioned in my testimony, I know we are sort of 
towards the end, I would really encourage a study to be 
supported by this Committee.
    Chairman WILLIAMS. Thank you very much.
    I now recognize the Ranking Member for 5 minutes of 
questions.
    Ms. VELAZQUEZ. Thank you, Mr. Chairman.
    Ms. Smith, as you mentioned and I mentionend in my opening 
statement, there are 33 million small businesses nationwide and 
SBA resource partners provide important counseling and training 
more than 1 million entrepreneurs each year. What can this 
Committee do to help the SBDCs and the other resource partners 
reach more small businesses?
    Ms. SMITH. Thank you, Ranking Member, for the question.
    So what is the main focus I think is the reauthorization of 
the program to be able to assist there with not only the 
administrative side and the proceses and streamlining, but also 
the ability to have an allocation towards marketing and 
outreach. For the first time, CARES Act funds were the only 
allowable grant funds that were utilized for marketing and 
outreach.
    Ms. VELAZQUEZ. Thank you.
    I understand that you formed, Ms. Smith, a partnership with 
host universities in New York to address some of the pressing 
workforce challenges facing small businesses in the state. How 
have these efforts benefitted both workers and small 
businesses?
    Ms. SMITH. Thank you.
    The apprenticeship program is a partnership with SUNY/CUNY, 
so the State University of New York, the City Univerties of New 
York, and Department of Labor. The main focus is the SBDCs 
being a main partner with the community colleges to provide an 
apprenticeship program. This is also to develop client facing. 
So webinars, as well as webinars for our advsiors on workforce 
development. This is the focus on how a business will register 
as a site for an apprenticeship, for on-the-job training. This 
will assist with the Earn as You Learn. And on the other side 
of it, looking at the availability of training at the community 
colleges at the colleges in the area.
    So if a business has some upskill training that they would 
like to do, it is participating in that and getting funds that 
will help utilize and push forward the upper mobility of their 
workforce.
    Ms. VELAZQUEZ. Mr. Pilkerton, increasing access to capital 
for the underserved has been a top priority of mine. Given the 
breadth of your experience with the underserved, can you share 
with this Ccommittee what more can be done to penetrate these 
hard-to-reach communities? And also, how important is 
counseling and technical assistance for these entrepreneurs?
    Mr. PILKERTON. So thank you for the question. I will take 
the last part first.
    So, at Accion Opportunity Fund, we have received feedback 
that 90 percent of our clients who utilize the technical 
assistance would encourage others to do so. So it is clearly a 
huge impact.
    But to your point as far as getting access to capital in 
underserved communities, one of the reasons when I left the SBA 
that I came to a CDFI was to ensure that CDFIs and MDIs have 
that seat at the table with other financial institutions 
because the services that they provide are critical, and the 
outreach that they have to these communities of color, women, 
rural areas, and other groups are really kind of that piece 
that is msising from the financial services system. So the more 
support that they get from the private sector because they are 
really engaged really enhances that opportunity.
    Ms. VELAZQUEZ. Thank you.
    Mr. Palmer, despite representing over 50 percent of the 
population, female founders garner only 2.1 percent of venture-
backed capital in 2022, and the numbers are not better for 
minority led companies. In your experience, what is being done 
to increase diversity on both the investor and investment 
sides?
    Mr. PALMER. Thank you for that question. The Launchpad 
Venture Group, which is the group I represent, I have specific 
statistics. I will read them out because they are a lot better 
than the 2 percent number which it is unfortunate; right? So, 
about 13 percent of our founders are minority by their own 
definition of that. Twenty-six percent have an immigrant on the 
founding team. Thirty percnet have at least one woman on the 
founding team. And about 53 percent of the comapneis that we 
see--that we fund, excuse me--have a combination of those 
three.
    One of the things that we are seeing in the industry is on 
the investor side people, you know, I said 16 million people 
could be angel investors but only 16,000 are. A lot of that 
feels like awareness of this opportunity. You know, I talk 
about what I do on a daily basis and they say, oh, you can do 
that? I can help entrepreneurs? I can make a little money? I 
can do these kinds of things; right? And I think a lot of times 
those opportunities were done on the golf course or behind the 
scenes or any of that kind of stuff.
    And so now, because of that awareness especially at 
Launchpad, we are actively looking to balance and get folks in 
that are female, that are minority.
    Chairman WILLIAMS. Your time is up.
    Mr. PALMER. Oh, excuse me. I am sorry.
    Chairman WILLIAMS. Okay, no problem.
    Ms. VELAZQUEZ. My time is up. I yield back.
    Chairman WILLIAMS. All right, thank you.
    Okay, I now recognize Mr. Luetkemeyer from the great state 
of Missouri for 5 minutes.
    Mr. LUETKEMEYER. Thank you, Mr. Chairman.
    The program is notorious for wasting taxpayer dollars with 
duplicative programs and unnecessary red tape. One of the most 
concerning examples of this within the SBA is the Community 
Navigator Pilot. Although the SBA already had a high performing 
program to help small businesses with training and development 
(SCORE), the Democrat led American Rescue Plan established the 
Community Navigator program which duplicates much of what the 
SCORE program provides.
    Worse in 2022, it was reported that Community Navigators 
received $120 million in funding and it only helped 422 small 
businesses, while SCORE successfully helped 4,000 small 
businesses with $20 million, six times the money, one-sixth of 
the businesses.
    According to SBA's FY24 budget request they want to 
decrease the SCORE program funding and increase the budget for 
the Community Navigator Program.
    Mr. Pilkerton, from your experience do you think that is a 
good deal?
    Mr. PILKERTON. Well, thank you for the question. With 
respect to the Community Navigator Program, my organization did 
not apply or participate so I cannot speak to the metrics that 
you reference. But I can tell you this. The SCORE program is 
excellent. When I was SBA administrator, I traveled the country 
and I will tell you that I went to individual businesses where 
the SCORE mentors knew as much about the business as the 
business owners and they were just as excited about the 
successes of that business. And every small business that I 
went to benefited tremendously by the knowledge, the wisdom, 
and real experience that these folks had had during very 
successful careers.
    Mr. LUETKEMEYER. I come from the Lake of the Ozarks area 
there in Missouri which is a retirement area and we have lots 
of retired executives there. And so that area has a SCORE 
chapter. At one time it was the top SCORE chapter in the whole 
United States because of so many executives retiring there and 
willing to share their expertise and knowledge so it is a 
really, really good program, and I really want to highlight 
that.
    Mr. Palmer, you were talking about developing a program for 
angel investors to help leverage money with the SBA a minute 
ago. Can you expand on that just a little bit?
    Mr. PALMER. Sure. Thank you for the question.
    So for angels, a lot of time what we are looking to do is 
try to figure out what kind of risk we are underwriting; right? 
The goal is to sort of help these companies grow, reach 
critical mass, but also, you know, see what their natural exit 
is. And that typically happens between let's say 50 and a $200 
million exit. We are not talking about the unicorns, if you 
know that word. They are unicorns. They are rare for a reason. 
We are trying to get involved and help these companies win; 
right? Which means we need to start from--if that is the end 
point, we need to make sure that we are not overly sort of 
taking our after-tax dollars and putting them into companies 
and sort of ruining the economics for us and for the founders.
    So what we kind of see is for more capital intensive but 
very worthwhile businesses. Let's say robotics. Let's say AI. 
Let's say chips where an angel does not have the pocket to do 
it or we do not have the time to hold on to. That kind of 
stuff. Working with the SBA specifically through like SBIR 
grants so that the entrepreneur can hold on to more of their 
company through the nondelegated funding and then we take over 
at the commercialization stage.
    Mr. LUETKEMEYER. Quick question for you. With regards to, 
you know, the title of the hearing is with regards to inflation 
problems here with the small businesses, have you seen 
inflation affect the number of businesses interested in having 
angel financing or increased it?
    Mr. PALMER. That is a good question. We see----
    Mr. LUETKEMEYER. I only ask good questions.
    Mr. PALMER. No, it was a great question.
    Mr. LUETKEMEYER. That is why I am on this Committee. We ask 
good questions.
    Mr. PALMER. Thank you.
    Mr. LUETKEMEYER. We ask them of people that have got good 
answers though, too.
    Mr. PALMER. We see about 1,500 to 2,000 companies a year 
that come through our doors. And some are ready for angel 
investment and some are not. A lot are looking for it. I think 
what people are recognizing now is that it is a harder funding 
landscape and some of the, hmm, I will use the word 
``shenanigans'' less defined of sort of the front headlines of 
VC and FTX and Theranos are kind of making this a harder place 
for these small companies to navigate. As the inflation 
affecting the companies that come to us what might affect is 
our angels' ability to actually deploy capital, especially if 
about 10 percent of their, you know, we say about 10 percent of 
your net worth should go into this asset class, maybe no more 
because of the risk. So if something else goes down you are 
overly allocated in this asset class and it could affect your 
deployment.
    Mr. LUETKEMEYER. Thank you. Thank you.
    Mr. Hodges, thank you so much. I do not have time to ask a 
question but I just want to thank you for being here today, for 
what you do for a lot of individuals to get them into the 
workplace. In today's world, technicians are going to be very, 
very important and you are helping them get in that position 
and fill a very important need. Thank you so much.
    With that, Mr. Chairman, I yield back.
    Chairman WILLIAMS. Thank you. And I now recognize Mr. 
Landsman from the great state of Ohio for 5 minutes.
    Mr. LANDSMAN. No questions.
    Chairman WILLIAMS. Mr. Landsman, no questions?
    All right. We recognize Mr. McGarvey from the great state 
of Kentucky for 5 minutes.
    Mr. MCGARVEY. Thank you, Mr. Chairman. Appreciate it. Thank 
everyone so much for being here today. We really appreciate you 
being in front of the Committee. This is a Committee that does 
work together to try and help small businesses succeed in all 
of our communities. We know what an important force and part of 
the backbone of our communities that small businesses are. So 
we want to talk about how we can continue to support the next 
generation of those small businesses.
    Small business development centers (SBDCs) offer counseling 
and training to all sorts of small businesses by developing 
informational tools that will provide for foundational guidance 
to startups and existing businesses alike.
    So Ms. Smith, one of the things you mentioned is that there 
is no ``one size fits all'' approach to this. There are 33 
million small businesses across the country. We cannot just 
have one approach for all of them. But can you touch on how the 
SBDCs work to meet entrepreneurs where they are and how this 
program provides assistance to small business owners of all 
backgrounds?
    Ms. SMITH. Yes. Thank you for the question.
    We focus on meeting people where they are, entrepreneurs 
and small business owners with our outreach within the 
community. Of course, during the pandemic that was a different 
deployment method but we do work with a lot of chambers of 
commerce, nonprofit organizations, as well as our host 
institutions of higher education. The more we look at our 
stakeholders and our partners in our communities is as I 
mentioned a connector and a collaborator, so we meet our 
community members where they are. And that is also the 
diversity of our clients. The Ranking Member spoke about the 
diversity of women and minorities of not understanding the 
resources or not getting the same in sales and access to 
capital so that can be, we call it in some of the centers, ``Be 
on the street.'' So walking down to the community and the 
neighborhoods in downtown, visiting the clients that we already 
served, but also checking in to clients to talk about our SBDC 
services. And as I mentioned, nonprofit organizations, but also 
churches, areas where you may not think about small businesses, 
but there are entrepreneurs and small businesses to reach.
    Mr. MCGARVEY. Thank you. And we want these programs to be 
successful.
    Ms. SMITH. Yes.
    Mr. MCGARVEY. You know, we can be critical of the 
administration. When it is time, we want to also offer praise 
when it is due but we want these programs to work. We want 
these programs to work for our small businesses so we are 
encouraging entrepreneurs and small businesses to grow.
    And I did notice that the administration added a new metric 
that measures client satisfaction with the small business 
development centers and the SCORE was 93 percent favorable, 
which when that information comes back to us is certainly an 
accomplishment.
    So with that score that we have gotten back, how do these 
SBDCs and the other resource partners set themselves apart from 
programs offered at the state and local level in the private 
sector?
    Ms. SMITH. Thank you. We are an accredited program of 
economic development and small business development. So what 
that means is a peer-to-peer method of continuous improvement 
and excellence in service. And so that model is modeled after 
the Baldridge standard. And so that is helpful for looking at 
our networks and the consistency but also reinventing our 
programs. So that is the way that we look at the excellence of 
customer service and our client needs are the most important. 
So how we collaborate together, co-counsel, co-advise, but look 
at best practices across the nation. So that is a big thing for 
us I think as state directors but all partners, is meeting the 
client where, as you mentioned in the first question, meeting 
them where they are but also what success means for that 
client.
    Mr. MCGARVEY. Thank you. I appreciate that. Because as I 
said, we want these programs to work. We also want more small 
businesses. We want people to have access to small business and 
to entrepreneurship, particularly, traditionally, disadvantaged 
groups. And so I appreciate the work there.
    Mr. Hodges, just before my time expires I want to ask you a 
question because I loved your statement that students who are 
between the ages of 18 to 30 comprise 20 percent of our 
population but 100 percent of our future. I could not agree 
more with that statement. And this Committee has discussed 
extensively the opportunities for students to build careers 
outside of the traditional 4-year college route, and I think it 
is important that we create pathways to employment and business 
ownership for every kind of student.
    So what are some ways that we can help more small business 
partners, more small businesses partner with career and 
technical education programs capable of building their skilled 
work force, something I hear that small businesses in my 
district, you know, clamor for on a daily basis?
    Mr. HODGES. Actually, I would have to say awareness. You 
know, when I look at the Small Business Administration and 
everything that they are doing, you can go to the website from 
the very beginning of your business all the way to closing it 
out. All the information is there. But the problem is no one is 
getting to that information.
    I know I am going to run out of time here. But just say, 
for instance, right after the pandemic we were getting a lot of 
emails and marketing materials and stuff about the Disaster 
Relief Fund. It was so helpful for our school. It really was. 
And we took advantage of it. If that same amount of effort was 
given--I am not saying it is not here, but if that same amount 
of effort was given about the Small Business Administration and 
all the things we can do here, it really----
    Chairman WILLIAMS. Your time is up.
    Mr. HODGES. It really would do a lot. Thank you.
    Mr. MCGARVEY. Thank you. I yield back, Mr. Chairman.
    Chairman WILLIAMS. Next, we recognize Mr. Meuser from the 
great state of Pennsylvania for 5 minutes.
    Mr. MEUSER. I appreciate that, Chairman. Thank you very 
much. Thank you very much to our witnesses.
    So I have got a number of questions. First off, I would 
like to ask Mr. Pilkerton, yourself, and Ms. Smith, just 
related to cybersecurity resources and access to information. 
That seems to be an ongoing them here that we have got to talk 
about. But do you feel that small business owners have the 
sufficient awareness of what to do should they come under some 
sort of cyberattack, Mr. Pilkerton?
    Mr. PILKERTON. Thank you for the question.
    So, there is information on the SBA website about how you 
can protect your business against cyber but to the point that 
was just made, that information is on the website. It goes back 
to the idea that not only do you need a process, a program, a 
risk protocol, but how do you communicate that to the small 
business? So you have to do it in an innovative way that is 
actually meeting the small business where they are.
    So to answer your question, you know, I could not give you 
a percentage of small businesses that are aware of the 
cyberthreat, but I think it is incumbent upon the federal 
government and state governments and local economic development 
groups to enhance that and provide that information in an 
efficient way.
    Mr. MEUSER. Okay. Ms. Smith, does the SBDC offer such 
information and connections?
    Ms. SMITH. Yes. Talking about the public and private 
partnership, that is one. We already have one established and 
then developing a new one when it comes to micro enterprises. 
So right now small to medium-sized businesses, we give them an 
intuitive platform with partnership with an entity called 
Posture. On this platform it is training on best practices and 
gaining access to vital resources to help protect their data, 
devices, and security instability for their operations.
    On the other side from micro enterprises is really focusing 
not only on cybersecurity but looking at disaster resiliency 
and succession planning. So most microenterprises do not 
understand cybersecurity or how to protect themselves so trying 
to be more proactive than reactive.
    Mr. MEUSER. Well, that sounds excellent.
    So working with local chambers. I have got some excellent 
chambers throughout my district. In fact, they are outstanding. 
Do you find the SBA and your organizations work effectively 
with the chambers?
    I will ask you, Mr. Palmer.
    Mr. PALMER. I have no experience with that. Sorry, but 
thank you.
    Mr. MEUSER. Is that right?
    Okay. Mr. Pilkerton?
    Mr. PILKERTON. I think they do work effectively. But I 
think it would be much more effective because the chambers are 
the ones that actually are working with those private sector 
companies and have the ability. The U.S. Chamber has a number 
of programs around this but I do agree that that could bring a 
lot more private resources and also great workforce 
opportunities to what Mr. Hodges was talking about.
    Mr. MEUSER. County chambers for angel investors as well as 
for training programs, I mean, you know, talk about know the 
customer. I mean, they spend a lot of time together. They know 
them extremely well.
    Mr. Hodges, do you engage with the chambers?
    Mr. HODGES. Yes, sir. We are very engaged with the chambers 
in our area. And as a matter of fact, we are very community 
focused as a trade school. And one of the reasons why we became 
number one in our area is because every month on our calendars 
we always reach out and do something. And through those actions 
we actually do a lot of business.
    Mr. MEUSER. Let me ask you both this.
    Actually, Mr. Palmer, not you because you don't really work 
with the chambers yet. You should change that though.
    Mr. Hodges, does the SBA or do the local chambers provide 
you better access for your business?
    Mr. PALMER. Yes, sir. Whenever we need any type of services 
for our business, one of the first people that we would 
actually contact is our local chamber. Harker Heights Chamber 
of Commerce as a matter of fact. And it helps us with 
accounting, finding services for electrical work, and much, 
much more.
    Let me ask all of you this question. So the Navigator 
program was introduced in, I think it was the Inflation 
Reduction Act. And it cost $130 million. And it served 422 new 
businesses or helped start up 422 new businesses which works 
out to be about $300,000 per small business star tup. Now, they 
do also do servicing on 16,000 others but you can do the math 
there. That is like $8,000 per outreach. Do you think there is 
a better way of spending money, particularly since it may be 
very duplicative to SBDC? Comments?
    Ms. SMITH. I mentioned some of what we do with our data and 
the strength of the SBDC program. But Community Navigators, 
those relationships were already longstanding before the 
Community Navigators pilot. So some of those books and hubs we 
have already worked with.
    Mr. MEUSER. Thank you. I am over my time. I appreciate it.
    Mr. Chairman, I yield back.
    Chairman WILLIAMS. Thank you.
    I now recognize Mr. Thanedar from the great state of 
Michigan for 5 minutes.
    Mr. THANEDAR. Thank you, Chairman. And I want to thank all 
of you for being here and for your testimony.
    I am an immigrant. And after getting my education I, you 
know, had the entrepreneurial bug and wanted to start my own 
business. And it was a little struggle getting capital. But I 
was able to secure a 504 from the Small Business Administration 
that helped me buy my first building for my business which made 
a huge difference. And then, you now, I got another fire for 
later. So it is hard to access but if you pursue it sometime 
good things happen. My concern, you know, I represent Detroit 
and its surrounding areas, Michigan's 13th District.
    And Mr. Palmer, Ms. Smith, you know, focus on bringing 
entrepreneurship. I feel like I achieved my American dream but 
a lot of people in my district do not have access to it and 
have difficulty having access to the American dream. And part 
of the reason why I am not running my businesses and I sold 
them, I decided to enter public service is because I wanted to 
help out others to achieve their American dream.
    Now, I see, Ms. Smith, you know, really, if you look at the 
percentage of Black-owned businesses, they are substantially 
lower than our Latino businesses, for example. Substantially 
lower than their White counterparts. We also see lower revenues 
for Black businesses. Black and Brown businesses. A lower 
number of employees.
    Mr. Palmer, in terms of capital, I see angel investment is 
much lower in Black businesses, angel follow on investment is 
substnially lower in Black businesses. And here I am trying to 
promote entrepreneurship. And I see a lot. You know, I have a 
woman in my district. She is an amazing baker. She bakes 
amazing things. She has the technical knowledge. She has a 
desire to succeed but does not have the business knowledge. And 
so how does, you know, we give people who have the desire, the 
skills, technical skills. How do we give them the business 
skills?
    Mr. Palmer, I believe you have been to Babson. I was in 
Babson. I took my son there for an interview at that college. 
Purely, being an entrepreneur I was excited to see a college 
that is purely focused on entrepreneurship education. 
Unfortunately, my son did not take my advice and chose an 
alternate school, which was a good school, too. But, so in 
terms of angel investment, again, what can be done to get angel 
investment in poor Black and Brown communities? Where is the 
problem? Is it them being educated? Are there any kind of 
hurdles that we can overcome to rectify that situation? I do 
not have a lot of time left but I want to let you and Ms. Smith 
address some of these concerns if you can.
    Mr. PALMER. Thank you. I will be as quick as I can.
    So Babson College, the number one entrepreneurship school 
for undergrad and grad for the past 25-30 years. Seventy 
percent of the students are actually internaitnoal. And one of 
the things that I do is also as an entrepreneur in residence, I 
am there teaching them how to sort of even navigate which idea 
to go with, let alone the process, let alone cofounders, let 
alone all this stuff that they have not had experience for. So 
half of it is education and the other half is access to the 
funding and not putting any barriers up.
    So one of the things that we do at Launchpad is you do not 
need to know somebody to come in. You can go in through our 
application. Granted, we have 185 Members so they are in the 
community. They are mentoring. They are part of the chamber of 
commerce. I should have said that before; right? But they are 
out there meeting these folks before they even are ready; 
right? And 70 percent of our funding each year, historically 
for 20 years, actually goes into follow-on investments. Because 
first you are investing in the dream. And then you are 
investing in the results. So it is pretty clear the ROI of 
that. But thank you for your question.
    Ms. SMITH. You are out of time. Okay.
    Mr. THANEDAR. Thank you. I yield back, Chair.
    Chairman WILLIAMS. I now recognize Mr. Crane from Arizona, 
the great state of Arizona for 5 minutes.
    Mr. CRANE. Thank you, Mr. Chairman.
    My first question is to Mr. Palmer. How does the government 
interfere most with your ability to invest private capital into 
potential businesses?
    Mr. PALMER. Most is a difficult thing so I will ramble for 
4 seconds; right?
    So one is sort of the regulatory risks surrounding certain 
businesses; right? So I will speak for our industry. We are 
mostly focused in New England based companies and so a 
reflection of what is going on there. You will see high tech, 
you will see life sciences. You will see healthcare. And a lot 
of what we have to contend with is if these companies need to 
go through regulatory hurdles, if there are stages. If there is 
anything like that it impacts our risk, like the risk we are 
underwriting, which will impact: (a) the amount of funding we 
are willing to give, evaluation, any of these kinds of things. 
Second, and I think I sort of mentioned it, we usually see 
angel investors invest maybe 10 percent of their net worth in 
this asset class because of the risks associated with it. But 
that is a relative amount. So if something happens to your 
other money related to your house, related to stocks, related 
to wherever else it is going, which I think the govnerment has 
an imapcat on, that will affect whether we are willing or able 
to put monye toward. So I think those are the two I would like 
to share. Thank you again.
    Mr. CRANE. Next question also to Mr. Palmer. Wh at is the 
area you are seeing govnerment fail small business the most in?
    Mr. PALMER. Where I am seeing it most is--and this is more 
anectdotal maybe. I do not have the data to surround this but a 
lot of companies that could benefit from these SBIR grants that 
I have been talking about are afraid to go through the process. 
They are afraid of the paperwork. They think they need to know 
somebody. They had an entrepreneur that did it and they heard 
about it. But however it was perceived to them it is a barrier. 
And so they go with the hard way. Or they bootstrap it to the 
point where they have no more money left. And so what I am 
seeing there is maybe it is education, maybe it is a streamline 
of this process, but those two things are sort of getting in 
the way of companies. And I think that might be a failure worth 
looking at.
    Mr. CRANE. Follow-on question, Mr. Palmer. How efficient do 
you think the U.S. government is including the SBA?
    Mr. PALMER. I do not know if I can answer that question. 
Not for any reason; I just do not have a good response for you.
    Mr. CRANE. So you do not have an answer on whether you 
think the U.S. Government is efficient or not?
    Mr. PALMER. I know for Launchpad we get entrepenerurs in 
and out of the process in 3 weeks or less and we judge them 
based off of the returns. It is pretty simple the ROI of that. 
I am not sure if I have heard ROIs for the other side.
    Mr. CRANE. What about you, Mr. Hodges? What do you think? 
Do you think the federal government tends to be very efficient 
or not?
    Mr. HODGES. In education it is a little bit different. 
Like, for instance, with a trade school, our----
    Mr. CRANE. Hold on real quick, Mr. Hodges. That is not the 
question I asked you. I asked you, do you think the federal 
government is efficient? Is run efficiently?
    Mr. HODGES. Is it run efficiently? I realy cannot 
effectively say.
    Mr. CRANE. Okay. Does anybody on the panel know how much 
national debt we have here in the federal government?
    Ma'am, I saw you smile at the end. Do you want to take a 
stab at it? Any idea? Just anybody, give me a ballpark. Is it, 
would you say $10 trillion plus, 20 trillion plus, 30 trillion 
plus?
    Mr. HODGES. Thirty trillion.
    Mr. CRANE. Yeah, you are right.
    Does anybody know what it is going to be by January 2025 
due to the bill that we passed in the House or that we passed 
this last week? Anybody know? About 36 trillion.
    My point is is that there are some great people that come 
into this Committee who actually, and I am an entrepreneur 
myself. I love entrepreneurs. I love entrepreneurship. I have 
seen it lfit so many people up, seen it help so many people in 
the community. My point is to this panel and this Committee and 
it is going to continue to be is that the federal government 
should not be heavily involved in it because it does a horrible 
job with the tax dolalrs. And when all this money comes up and 
nobody knows where it went, guess who gets fired? Nobody, ever.
    Thank you for letting me bloviate and go long, Mr. 
Chairman. I appreciate it.
    Chairman WILLIAMS. I now recognize Mr. Pappas from New 
Hampshire, the great state of New Hampshire for 5 minutes.
    Mr. PAPPAS. Thank you very much, Mr. Chairman. I want to 
thank our panel Members for their comments here today. I am 
from New Hampshire where small business is big business. And 
our main street economies drive our state and our regional 
economy.
    Ms. Smith, I am glad that you are here. I have gotten to 
know the work of our small business development centers, the 
way that they work closely with other resource partners in the 
small business space. And just to sort of be able to measure 
the impact that they make, they have helped small businesses 
access more than $44 million in new capital in New Hampshire, 
increase sales by $17 million, and create and retain about 760 
jobs just over the last year. Overall, their economic impact 
was about $207 milllion in New Hampshire's economy. That role 
has expanded since the pandemic as they built new relationships 
and met new entrepreneurs to be able to support.
    Now, several folks have referenced the issue of duplcation 
which I think is an important thing for us to focus on but I 
will address a GAO study that was done about 10 years ago that 
focused on duplication, fragmentation, and overlap of various 
entrepreneurial development programs. No duplication was 
specifically found by GAO at that time. They did find overlap 
and fragmentation. Made recommendations for more collaboration 
within the variety of agencies within SBA and their resource 
partners. All recommendations were resolved, have not 
reappeared on their annual report on duplication, 
fragmentation, and overlap. So, I think that is something that 
is important to reference. And what I see where I live in New 
Hampshire is a great deal of collaboration among resource 
partners. One bill I have introduced helps highlight that 
collaboration. It is actually called the Collaborate Act, which 
builds upon the collaboration between our PTACs or procurement 
technical assistance centers in New Hampshire SBDC. Brings to 
bear some common sense ways that these federal agenceies can 
cooperate.
    So I am wondering, Ms. Smith, that was a long sort of entre 
there, but if you could discuss the role of SBDC as being sort 
of a nexus of resource partners. And if you see any duplication 
out there that we need to address or the ways that you think 
that greater collaboration can be fostered between various 
agencies and resource partners that do this work for our small 
busineses.
    Ms. SMITH. Thank you for the question. And as you 
mentioned, within your state, the more resources we had during 
the pandemic, the more output and success that we had to 
support our small businsses. So that is a way for the support 
to the SBDC program.
    But as you said, the center of collaboration and a 
connector for our community, we are the statewide program to 
help build that federal, state, and local connection for 
collaboration, the ecosystem for small business assistance and 
support. With that being said, a lot of the assistance that we 
provide is why we are co-locatedd with certain locatinos, 
whether it is a chamber of commerce. Of course, our 
institutions of higher education, PTACs, now ATACs, 
accelerators on the established business side. So that whole 
life cycle of a business is where SBDCs are that really trusted 
partner to come and provide the technical assistance but also 
connect the business owner with the resourcers that they need.
    Mr. PAPPAS. Well, thanks for that comment. Small businesses 
are diverse in how they are established, in terms of how they 
procure capital, in terms of their day-to-day needs. And I 
think we need to continue to appreciate that as we think about 
the constellation of resource partners that are out there to 
support them.
    And I will also editorialize here a little bit and say that 
I was very disappointed to see in the president's budget a cut 
proposed to SBDCs, and I hope that Congress can work to 
maintain or increase funding for the work that you all do which 
is a lifeline.
    Maybe in the remaining time I have if I could ask Mr. 
Palmer a question. Congress on a bipartisan basis has been 
focused on how we rebuild the nation's infrastructure, how we 
invest in our industrial base, including in the semiconductor 
industry. We need to see serious workforce development as part 
of that. But maybe you can speak to how public dollars can be 
matched with private investment in the interplay between those 
pools of money.
    Mr. PALMER. Sure. I think I have mentioned it, but thank 
you for the question, a couple of times of underwriting the 
capital intensity of certain opportunities; right? So for 
semiconductors, for training these AI models that seem like 
magic, it takes a significant amount of hardware, a significant 
amount of money, a significant amount of energy to get to that 
magic moment. And so pairing sort of that ability for a longer 
time horizon and potentially deeper pockets with the stage at 
which commercialization can happen and we can build, you know, 
the job creation opportunities, build companies around it and 
all that, I think that is how it gets paired.
    Mr. PAPPAS. Thanks for those thoughts.
    I yield back my time.
    Mr. CRANE. I now want to recognize Ms. Salazar from Florida 
for 5 minutes.
    Ms. SALAZAR. Thank you. And I represent the city of Miami 
which is, according to a study conducted by the federal 
government is one of the best places in America to start a 
small business because for immigrants and for the Hispanic 
community you have your small shop or having your small 
business is living the American dream. So I want to thank all 
of you for coming and sharing with us your experience.
    And specifically to Mr. Palmer, you said here on your 
statement that the SBA should begin to leverage local angel 
groups that are present in every community. So could you be a 
little bit more specific as to which way we could help you 
leverage those local angel groups through the SBA?
    Mr. PALMER. Sure. So thank you for the question.
    One of the things that we like to think about when we, you 
know, I said 1,500 of 2,000 companies come and some of them are 
prepared for venture scale funding, angel scale funding, and 
some are not; right? And knowing the difference between those 
two could be a way to say the small businesses that are the 
local shops that really support that, whatever, maybe it is a 
craft, maybe it is a service, but the scale sort of stops at a 
certain point versus the angel and VC sort of very large scale. 
They are small businesses to begin with and then they grow from 
there. And so knowing how to kind of almost collaborate 
together to say you belong here and you belong with me could be 
one of the best ways to do it. That is joint. That is 
potentially going to local angel groups. We are doing 
mentorships. So if you do mentorship----
    Ms. SALAZAR. To see if I understand a little bit better. If 
you had to write legislation that will rule over SBA, so what 
would that legislation say in order to create what you are 
saying, to leverage local angel groups? Because what you are 
saying here basically is that there is a disparity; that the 
SBA could help narrow the disparity by developing programs that 
leverage that private angel. So what are the programs that we 
would have to create?
    Mr. PALMER. Yeah. So in all honesty I do not know all the 
existing programs, and especially not basically that may be in 
your area. But still, it is finding ways. I do not see any SBA 
folks at my angel group meetings out in the community when I am 
watching pitch competitions which are open to the public; 
right? And so knowing that we are not in the same place. I am 
not sure you need to legislate it or mandate it but we are just 
not in the same place and I think that is doing a disservice to 
companies----
    Ms. SALAZAR. And if we were to be in the same place, what 
is the benefit for the community? What would be the benefit for 
the community?
    Mr. PALMER. So of those 2,000 companies we see, we only 
invest in 2 to 5 percent of them. Some just are not ready and 
some will never be sort of venture scale. Knowing that they are 
not coming with us and they can go with another opportunity, I 
think that is where the benefit to the community is.
    Ms. SALAZAR. You said that there are 16 million, there 
could be 16 million angel investors and there are only 16,000, 
that is a big disparity. What is the number one cause for that 
disparity?
    Mr. PALMER. Awareness that you can be an angel investor and 
how to do it, not, you know, like gambling or willy-nilly. Like 
actually----
    Ms. SALAZAR. Okay.
    Mr. PALMER.--finding the companies, working together, 
guiding them. We sit on the boards of our companies. We are 
with them for between 5 and 10 years. I tis one of those things 
that people just do not understand how the process of angel 
investing sort of works. And maybe they have not had exposure 
to it. But it is awareness.
    Ms. SALAZAR. And how could we help you or help the 
community become aware of those 60 million potential angel 
investors. I am trying to figure out which way we could help 
you.
    Mr. PALMER. Yeah, thank you for that. I appreciate it.
    Marketing. Understanding when someone goes to the SBA and 
they are ventured scaled, like here is what angel investors 
are. Talking to the people around you, constituents, any of 
that kind of stuff. It is an awareness problem which is 
effectively a marketing problem in my opinion.
    Ms. SALAZAR. So you are suggesting for the SBA to become--
that is what I am trying to understand. Marketing, I did not 
think we were in the business of marketing but then how could 
we be within the rules?
    Mr. PALMER. Without going too much farther out on a limb, I 
am not actually sure.
    Ms. SALAZAR. So what you are basically telling me is tat we 
should be marketing to our constituents the fact that there are 
angel investors. But then we are trying to figure out how to do 
that.
    I might flip that if I might. Please do. Maybe I am not 
understanding.
    Mr. PALMER. Sure. So 16,000 angel investors are part of the 
ACA, or excuse me, $15,000; right: We invest about $950 million 
Imagine if there were two more zeros attached to that and what 
that would do. I am not sure how to solve the problem but there 
is something there to unlock.
    Ms. SALAZAR. Okay. Got it. Thank you. I yield back.
    Mr. CRANE. I now want to recognize Ms. Gluesenkamp Perez 
from Washington for 5 minutes. I apologize if I said that 
wrong.
    Ms. GLEUSENKAMP PEREZ. Four points. Thank you, Mr. Chair.
    Mr. Hodges, thank you for being here. I am glad that the 
Committee is highlighting the important work that you do in 
preparing students for employment and career advancement in 
healthcare and construction job trades, job market. But there 
is significant pressure for young people to go to college and 
pursue a 4-year degree. At the same time we know that so many 
small businesses are impacted by ongoing shortages of skilled 
labor and training centers like yours are important to make 
sure that businesses have the skilled labor they need.
    So my question, how do we confront the enormous pressure, 
societal pressure, family pressure on young people to go to 
college and instead get more of them to see the opportunities 
in the trades? How do we set up a pipeline for them to get into 
these jobs and be successful?
    And beyond that, how can we help more businesses partner 
with career and technical education programs to utilize the 
critical skills that students are learning at centers like 
yours?
    Mr. HODGES. Thank you. Thank you for that question.
    One of the things that we really need is a better 
partnership between high schools and the training schools like 
we actually have. For instance, the one thing that sets the 
Training Center apart from a lot of these universities is the 
fact that we can actually train our students in 6 months for 
several ready jobs. And these particular jobs are in in-demand 
fields. A lot of our students, they simply do not want to go 
off to a university and wait 4 years to actually make a decent 
living. And there are actually some great paying careers out 
there in the electrical, in the trades. But the challenging 
thing is right now in the high schools, there is really no push 
to go into these particular trades. And so if we can get some 
help bridging that gap that would be great.
    Ms. GLUESENKAMP PEREZ. I would like to mention that 
apprenticeship provides a really great opportunity for folks to 
get on-the-job training while they learn and data shows that 
businesses can get a really strong return on this. But in my 
experience, I own an auto repair and machine shop with my 
husband and we looked into having a 16-year-old kid come in an 
apprenticeship program and we could not afford the liability 
insurance and very real concerns about inviting the DOL into 
our business in that way. And we decided we could not do it 
until we found a private nonprofit that agreed to cover the 
cost of his liability insurance to have a 16-year-old in the 
shop with us. He has been with us ever since. He just bought 
his first house. These are pathways to a solid middle class. 
But the hurdle for small businesses to access these programs 
and to engage in apprenticeship programs on the capital side 
can be really intense. I wonder if you could sort of speak to 
some of the broader sort of challenges that businesses face and 
engaging in these apprenticeship programs.
    Mr. HODGES. As far as with the trades?
    Ms. GLUESENKAMP PEREZ. Well, some of the challenges that 
they are going to have immediately is just typical business, 
you know, as far as an entrepreneurial education, 
entrepreneurial programs. But also just access to capital. One 
of the challenges that you actually run into when you start a 
business is just keeping your cost down. And if you can 
actually have an entrepreneurial programs in high schools that 
can actually show them how to put together business plans, how 
to put together all of the different steps for operating a 
business, I think that that would be very beneficial.
    Mr. HODGES. Now, we actually are doing something very 
similar to this for the Boots to Business program on our bases 
here for veterans. But I believe that is sorely lacking right 
now out in the regular community for civilians.
    Ms. GLEUSENKAMP PEREZ. Thank you so much to all of our 
witnesses for their testimony today. Thank you for the work you 
are doing.
    Mr. Chair, I yield back. Thank you.
    Mr. CRANE. In closing I would like to thank your witnesses 
for their testimony and for appearing before us today.
    Without objection, Members have 5 legislative days to 
submit additional materials and written questions for the 
witnesses to the Chair which will be forwarded to the 
witnesses. I ask the witnesses to please respond promptly.
    If there is no further business, without objection, the 
Committee is adjourned.
    [Whereupon, at 4:08 p.m., the committee was adjourned.]


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