[Senate Hearing 119-95]
[From the U.S. Government Publishing Office]
S. Hrg. 119-95
FINANCING AMERICA'S MANUFACTURING AND INDUSTRIAL BOOM
=======================================================================
HEARING
before the
COMMITTEE ON SMALL BUSINESS
AND ENTREPRENEURSHIP
OF THE
UNITED STATES SENATE
ONE HUNDRED NINETEENTH CONGRESS
FIRST SESSION
__________
MAY 14, 2025
__________
Printed for the use of 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
60-613 WASHINGTON : 2025
COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP
ONE HUNDRED NINETEENTH CONGRESS
----------
JONI ERNST, Iowa, Chair
EDWARD J. MARKEY, Massachusetts, Ranking Member
JAMES E. RISCH, Idaho MARIA CANTWELL, Washington
RAND PAUL, Kentucky JEANNE SHAHEEN, New Hampshire
TIM SCOTT, South Carolina CORY A. BOOKER, New Jersey
TODD YOUNG, Indiana CHRISTOPHER A. COONS, Delaware
JOSH HAWLEY, Missouri MAZIE K. HIRONO, Hawaii
TED BUDD, North Carolina JACKY ROSEN, Nevada
JOHN R. CURTIS, Utah JOHN W. HICKENLOOPER, Colorado
JAMES C. JUSTICE, West Virginia ADAM B. SCHIFF, California
JOHN HUSTED, Ohio
Meredith West, Republican Staff Director
Sean Moore, Democratic Staff Director
C O N T E N T S
----------
MAY 14, 2025
Witnesses
Page
Mr. John Mickelson, Co-Founder and Managing Partner, Midwest
Growth Partners, West Des Moines, IA........................... 5
Prepared Statement........................................... 7
Ms. Julie Robbins, CEO and Owner, Earthquaker Devices, LLC,
Akron, OH...................................................... 11
Prepared Statement........................................... 13
Addendum Material............................................ 21
Mr. Brian Riley, Founder and CEO, Guardian Bikes, Seymour, IN.... 43
Prepared Statement........................................... 45
Mr. Benjamin Geis, Managing Director, Eagle Private Capital, St.
Louis, MO...................................................... 49
Prepared Statement........................................... 51
Additional Letters/Statements for the Record
Herndon, Philippe
Statement dated May 14, 2025................................. 77
Mission Engineering, Inc.
Statement dated May 14, 2025................................. 79
Skillings, Steve
Statement dated May 14, 2025................................. 82
Questions for the Record
Mr. Benjamin Geis
Responses to questions submitted by Senator Cantwell......... 84
Mr. John Mickelson
Responses to questions submitted by Senator Cantwell......... 85
Mr. Brian Riley
Responses to questions submitted by Senator Cantwell......... 87
Ms. Julie Robbins
Responses to questions submitted by Senator Cantwell......... 89
FINANCING AMERICA'S MANUFACTURING AND INDUSTRIAL BOOM
----------
WEDNESDAY, MAY 14, 2025
United States Senate,
Committee on Small Business
and Entrepreneurship,
Washington, DC.
The committee met, pursuant to notice, at 2:35 p.m., in
Room 428A, Russell Senate Office Building, Hon. Joni Ernst,
chairwoman of the committee, presiding.
Present: Senators Ernst [presiding], Young, Hawley, Markey,
Cantwell, Shaheen, Rosen, and Hickenlooper.
OPENING STATEMENT OF SENATOR ERNST
Chair. I call the Committee on Small Business and
Entrepreneurship to order, and I apologize for my tardiness. I
am excited to hold this hearing to discuss opportunities to
reignite investment in small American manufacturers and ensure
our industrial future is built right here at home.
America is and has always been a nation of builders. Men
and women who roll up their sleeves, put in a hard day's work
and take pride not just in what they make, but what it means
for their families, their communities, and their country. That
entrepreneurial spirit is in our DNA.
For far too long Washington looked the other way as
factories and farms shut down and the jobs that once sustained
many U.S. families were shipped overseas. Despite the
importance of domestic industrial production to our national
security, production of critical goods was offshored to foreign
countries. In doing so, we've made ourselves dependent on an
international supply chain offering fast, mass-produced goods,
mostly coming from China.
This came at a cost, not just economic, but strategic. In
January of this year, the U.S. recorded a $29.7 billion trade
deficit with China. We've been massively reliant on our chief
adversary for the goods and services we consume. Today, the
manufacturing sector comprises only 10.1 percent of America's
gross domestic product, a figure trailing most other
industrialized nations. We've left ourselves economically
beholden to the rest of the world and hollowed out our
industrial core that once employed millions of Americans.
We cannot accept that status quo. I believe in a great
American comeback, one driven by the world's most talented
workforce and a new era of domestic manufacturing ensuring this
nation's economic security. We can make ``Made in America'' the
norm instead of the exception.
Thanks to President Trump's leadership, we are already
seeing the early signs of a manufacturing revival and
industrial boom in Iowa and all across the country. No group is
more eager to lead this charge than small manufacturers who
make up 98 percent of all manufacturing firms in the United
States. They're ready to build, ready to grow, and they want to
do it here in the United States.
But Washington needs to do its part. It's time Congress
acts to ensure that the federal government does not stand in
the way of small manufacturers. We must empower them by
providing them the tools they need to generate new jobs, to
rebuild and fortify American supply chain stability, and to
reduce our reliance on other countries, including adversaries.
However, breaking ground on new manufacturing facilities or
upgrading existing ones is a major investment. In many cases,
these projects require long-term financing options, which can
be particularly difficult for small businesses to access. That
is why I was proud to introduce the Made in America
Manufacturing Finance Act, along with another member of this
committee, Senator Coons. This bipartisan legislation would
double the SBA-backed loan limit from $5 million to $10 million
for small manufacturers.
By allowing manufacturers to access greater capital, my
legislation encourages small manufacturers to invest in their
operations and support the training and expansion of our
manufacturing workforce. This is about leveling the playing
field for American manufacturers on the world stage. It is a
straightforward, common sense and bipartisan solution to unlock
the potential small manufacturers have to secure our national
and economic security.
I am also interested in how we can leverage another SBA
program, the Small Business Investment Company, SBIC, to
support small manufacturers. This program supports the flow of
private capital to small businesses across the country.
I'm grateful that we're joined today by Mr. Mickelson from
Iowa and Mr. Geis from Missouri who invest in small businesses
across the heartland through the SBIC program. I look forward
to hearing from all our witnesses about how we can best align
SBA programs and private investment to spark America's next
industrial boom. The independence, prosperity, and security of
our next generation depends on it.
Thanks to our witnesses for being here today, and I look
forward to your testimony. And with that, I now recognize
Ranking Member Markey for his opening statement.
STATEMENT OF SENATOR MARKEY
Senator Markey. Thank you, Madam Chair, so much. And we are
here to talk about small business manufacturers, which
contribute to our local economies and provide well-paying jobs
for American workers. But we must address the elephant in the
room when it comes to American manufacturing, Trump's
destructive small business killing tariffs.
The Boston Globe, on Friday, that is five days ago, the
headline is Massachusetts Port Authority. That's the entry
point for New England. They expect shipping volume in June to
decrease by 35 percent compared to last year. That's in June.
And we do know this, you know, when there's a 35 percent
decline in those containers coming in, that's the trade. That's
what helps manufacturers.
There are about 40,000 small manufacturers who are hit by
tariffs at both ends as importers and as American producers,
who are going to be affected by this and they're the most
vulnerable. Those aren't the big companies. Those are the
little companies. They just live month to month. And so that's
a very dangerous development. We can't afford to have a one
third reduction in New England of the containers coming in.
That is trade.
And the biggest issue for small businesses, whether they
are manufacturers or clothing shops or restaurants or hardware
stores, is the uncertainty caused by Trump's rollercoaster
tariff policy. Over the past month, the mood on Main Street has
soured. Small business owners planning to hire new employees
has fallen to a four-year loan, as sales decline and the future
remains uncertain. And unlike large corporations, small
businesses cannot absorb tariff costs and ride out the storm,
even as the vast majority of small businesses are seeing
massive tariff induced cost hikes, this administration is
offering exemptions for billion-dollar corporations.
If you can get a dinner invitation to Mar-a-Lago like the
heads of Apple and Google, you can secure an exemption for your
industry. But no small businesses receive support from this
Administration on how to navigate these constant policy
changes. And meanwhile, these tariffs are destroying the small
manufacturing growth we saw during the Biden Administration.
In fact, the Biden Small Business Administration made more
than $10 billion in loans to small manufacturing, contributing
to 775,000 new manufacturing jobs. President Trump likes to
play the hero, but in his first term, his SBA made $2 billion
less in small manufacturing loans than the Biden
Administration, and they lost 200,000 manufacturing jobs. And
now in his second term, he is hitting small manufacturers where
it hurts. The cost of building a factory is skyrocketing
because of the tariffs. The Trump tariffs are not a recipe for
a manufacturing boom. They're a recipe for manufacturing doom.
My witness today who makes guitar pedals in Akron, Ohio did
not have the opportunity to dine with the President of Mar-a-
Lago. Now she is unsure if her small manufacturing business
will survive the uncertainty and crushing cost increases
unleashed when the President began his trade war on Main
Street, turning Main Street into Pain Street. They're the ones
who are feeling this most adversely.
President Trump has kneecapped small businesses that build
high quality products here in the United States, because of his
naive and misguided vision of how supply chains work. With very
few exceptions, American companies that build here must rely at
least to some extent on components made elsewhere. We can't
have 35 percent fewer containers coming into America, into the
Port of Boston of New England. This includes the 40,000 small
manufacturers who are being crushed by tariffs at both ends, as
importers buying parts and as exporters facing retaliatory
tariffs.
So, I've heard from small businesses in Massachusetts,
there's a paranoia which has set in and I've heard from all
across America about the impacts of these tariffs. Last week, I
spoke with Brandale Randolph, founder of 1854 cycling company,
an electric bike manufacturer based in Massachusetts. Brandale
shared with me that his company finally recovered from the $45
million, which they lost during COVID, only to now be forced to
decide whether or not they can weather this new disaster. The
message from 1854 and other small businesses across the country
is clear; these tariffs are going to put them out of business.
And that's why last week I introduced the Small Business
Liberation Act, to exempt small businesses from the Trump
tariffs, just exempt them. Small business owners are our
neighbors, our friends, our family. We must provide the
necessary relief so that they can operate and grow and succeed.
They're not Democrat or Republican businesses. They're not blue
or red small businesses. This should not be a partisan issue.
The National Chamber of Commerce has said that we should
exempt small businesses. I'm with the National Chamber of
Commerce. They're speaking for every Chamber of Commerce all
across the country, exempt small businesses from the tariffs. I
have introduced the legislation; we should try to find a way to
expedite its passage on the floor of the Senate. I thank you,
Madam Chair.
Chair. Thank you, Ranking Member Markey. Again, I want to
extend a warm welcome to all of our witnesses for being here
today. And I'll now introduce the three witnesses who are
testifying today on behalf of the majority. And I am thankful
that you all took time out of your busy schedules to share your
expertise on SBA's Small Business Investment Company program
and attracting investment to manufacturing.
And I am going to start with Mr. John Mickelson, who is an
Iowan, and he is the co-founder and the managing partner for
Midwest Growth Partners, an Iowa-based private investment
partnership founded in 2013. Midwest Growth Partners is a
licensed rural business investment company and small business
investment company.
Mr. Mickelson previously served as a West Des Moines city
councilman--and thank you very much for your service--served on
the board of the State Historical Society of Iowa and currently
serves on the board of the Small Business Investor Alliance and
the Young President's Organization, Iowa.
He received his JD, his MBA, and his BBA from--what
university was that? The University of Iowa. So, from a Cyclone
to a Hawkeye, sorry you couldn't get into Iowa State. So
anyway, thank you John very much. And I will also note he was a
letter winner on the University of Iowa's football team. So, to
that ``Go Hawkeyes.''
Next, Mr. Brian Riley is the founder and CEO of Guardian
Bikes, a children's bicycle manufacturer based in Seymour,
Indiana. He previously was the founder and CEO of SureStop, a
company that developed, patented, and commercialized a
proprietary braking technology for bikes. Mr. Riley holds a
bachelor's degree from California Polytechnic State University.
Our third witness, Mr. Benjamin Geis, is a managing
director of Eagle Private Capital. He formerly served as Chief
Financial Officer of the Fund Manager. Prior to January of
2004, Mr. Geis was in the assurance and business advisory
practice of PricewaterhouseCoopers, LLP, where he started his
career.
He holds an undergraduate business degree from Rockhurst
University and is a member of the American Institute of
Certified Public Accountants, and the Missouri Society of
Certified Public Accountants. And thank you again. And I will
go ahead since Senator Markey stepped out to go vote, I'll go
ahead and introduce you Ms. Robbins.
It's Ms. Julie Robbins, and she is the CEO of EarthQuaker
Devices, a guitar effect pedal manufacturer based in Akron,
Ohio. She was previously a financial planner at First Merit
Bank. Ms. Robbins has a bachelor's degree from Baldwin Wallace
University. And thank you Ms. Robbins for being with us today
as well.
And so, with that, we will start the witness testimony and
you will each have five minutes for your testimony and we will
start with Mr. Mickelson. You're recognized.
STATEMENT OF MR. JOHN MICKELSON, MANAGING PARTNER, MIDWEST
GROWTH PARTNERS, WEST DES MOINES, IOWA
Mr. Mickelson. Thank you, Chair for the introduction, at
least at least most of it except for the Iowa State part. And
thank you distinguished members of the committee for welcoming
us today.
My name's John Michelson and I'm the co-founder and
Managing Partner of Midwest Growth Partners, a private
investment partnership located in Des Moines, Iowa. Midwest
Growth Partners was established in 2013 with a thesis that
institutional capital doesn't flow to many markets where it is
needed.
Notably, small businesses in rural areas don't have a
natural conduit to capital like larger enterprises or
businesses in more populated areas. But those overlooked
markets have great businesses, who employ more than 23 million
individuals in the U.S. and who need access to capital in order
to grow or to facilitate orderly succession plans as business
owners retire. Over 12 percent of jobs in rural America--2.6
million--are in manufacturing.
Our investors include community banks, members of the farm
credit system, commodity advocacy groups such as the Iowa Corn
Growers and Rural Electric co-ops. They want financial returns
for their investment, but they also value supporting U.S. based
small businesses.
Midwest Growth Partners has invested in 42 such small
businesses via two USDA Licensed Rural Business Investment
Company vehicles or RBICs, and one SBA, licensed Small Business
Investment Company vehicle or SBIC. Starting with seven
employees after our first investment in 2014, today, Midwest
Growth Partners companies employ more than 3,000. These jobs
all provide living wages, benefits, much needed off-farm income
for families. The average net job growth at each of our
portfolio companies is over 20 percent.
Smaller businesses, particularly those in low income or
rural areas, tend to have more difficulty accessing traditional
sources of capital because they don't have the balance sheets
of big businesses and are therefore seen as too risky. This is
where RBICs and SBICs fill the gap with capital.
Established in 2002, RBICs fill small business capital gap
by providing patient investments for small businesses
throughout rural America. Today there are 22 RBICs in operation
with over 1.7 billion in committed capital. SBICs have been
around since 1958. SBIC funds are private investment vehicles
that pool capital from institutional investors with leverage
from the SBA, which is invested into businesses to help them
grow. There are 318 SBICs with over 46 billion in committed
capital and SBA leverage. About 20 percent of those dollars are
invested in small manufacturers, all of which are domestic.
I'd like to provide you with a few examples of the impact
that has been made by Midwest Growth Partners Investments,
thanks in part, to the RBIC and SBIC programs.
The first is AgCertain, which is a manufacturer of refined
glycerin and specialty edible oils located in Boone, Iowa, a
community of 12,000. When Midwest Growth Partners invested in
2019, AgCertain employed 22 people. Today they have 42. In
addition to the employment growth, the company has invested
more than $32 million in capital improvements in the facility,
including refinery upgrades, installation of a storage tank
farm, pipe racking creation of two rail spurs, a storm water
container facility, and a new boiler.
Another example would be Shells By Design. A manufacturer
of tart shells and desserts located in Garner, Iowa, population
1,200. When Midwest Growth Partners invested in the Shells
platform in 2023, they had 40 employees. Today they have 67. In
addition to the job growth the company has spent more than
$500,000 in facility improvements and incorporated automation
into their manufacturing process.
Success stories like these manufacturing companies in small
town Iowa don't happen accidentally. Innovative entrepreneurs,
a dedicated workforce and capital formation are critical to
continue to create more of these successes and the need is
there. Midwest Growth Partners routinely reviews more than 800
opportunities a year and executes approximately five.
Capital formation can only be accelerated by providing a
regulatory and policy environment which is reliable for parties
in the capital markets. A good example of encouraging this is
the bipartisan investing in All of America Acts. In this
Congress, the bill was introduced in the house in March, with a
key improvement to direct more investment in domestic
manufacturing.
As mentioned previously, about 20 percent of all SBIC
investments are made in small manufacturers, and if enacted,
this legislation can unlock significantly more for our domestic
industrial base.
The investing in All of America ACT would: increase capital
for the SBIC program which is market driven, and a hundred
percent used for American small businesses, would specifically
target markets like where Midwest Growth Partners is investing
today, such as rural and low-income geographies, and finally it
would provide leverage for small manufacturers additional
leverage. This is all done without new spending, new
appropriations, new subsidies, or new mandates.
Thank you, and I would welcome any questions that you have.
[The prepared statement of Mr. Mickelson follows.]
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Chair. Thank you very much. And next, Ms. Julie Robbins,
you're recognized.
STATEMENT OF MS. JULIE ROBBINS, CEO, EARTHQUAKER DEVICES,
AKRON, OHIO
Ms. Robbins. Thank you, Chair Ernst and all the members of
the committee. I appreciate the opportunity to share my
experience. I'm the co-owner and CEO of EarthQuaker devices, a
guitar effect pedal manufacturer located in Akron, Ohio, and a
member of Main Street Alliance.
As someone who has devoted my life to running a small U.S.
manufacturing business, with a background in banking and in
education and economics, I have many suggestions and
recommendations on this topic. However, without immediate
relief from the tariffs and ensuing trade war, U.S.
manufacturing companies like mine will not survive the summer.
I founded EQD with my husband, Jamie Stillman, 20 years
ago. And after all the challenges and struggles we have faced
over the years, I never imagined that the greatest existential
threat to our company would come from our own government. Since
the tariffs and ensuing trade war have gone into effect, our
business and industry overall have suffered dire consequences.
Our costs have increased and our sales have fallen.
Overall, year to date, our sales are down 15 percent. April was
down 33 percent. We operate on a very thin margin to pay our
employees living wages and competitive benefits. If these
losses persist or widen beyond the next month, we will have no
option but to scale back benefits and reduce our workforce.
Our company grew very much by the bootstraps, by starting
small and continuously investing in the business. We have
utilized the services of the SBA via a 7(a) loan. Our local
export focused SBDC at Cleveland State University, for step
funded export training and matching grants and the Ohio
TechCred grant to upskill employees. We also extensively use
the services of Magnet, a Cleveland based national
Manufacturing Extension Partnership program, for consulting
education and networking.
Today we have 35 employees and we are a 100 percent USA-
based manufacturer, producing over 50,000 pedals per year.
However, the raw materials used for our products are sourced
from abroad because there are no viable domestic manufacturers
of the electronics components we use in our products. While the
components originate overseas, we mostly purchase them from
wholesalers located in the USA.
To be clear, it would have always been a more affordable
option for us to manufacture overseas and another country such
as China. However, our values are to create and maintain good
jobs in our hometown, so we absorb the extra expense to make
this work.
Akron suffered greatly after rubber manufacturers moved
their operations abroad in the seventies and eighties, and
growing up in that environment shaped our mentality on this. No
matter what anyone may claim on our behalf, it is not a cost-
effective solution to source or manufacture our components in
the U.S. It is especially not feasible in the shorter
intermediate term due to the unstable market conditions which
have caused a cash flow crunch.
Prior to the new tariffs in 2025, we paid approximately a
dollar 40 per panel for blank PCBs from our longtime trusted
supplier. Searching for a domestic alternative, the prices
ranged from $20 and 70 cents to $31 and 19 cents per panel.
That is not a viable option and would push our prices up far
beyond what the market will bear, and that is just one of the
components that we use. We have delayed product launches, as
well as completely scrap plans for new releases because of the
increased costs and ongoing confusion.
The changes announced on May 12th are a great example of
the continued confusion and uncertainty, exactly what is the
new tariff rate? Is it official? Can I update my planning?
Things rarely remain the same from week to week. We have
consistently been net exporters. In fact, we were awarded the
2019 exporter of the year by the SBA during President Trump's
first term.
However, today our exports are down as much as 50 to a
hundred percent. Our customers say this is due to anti-American
consumer sentiment, and the global financial fallout from the
chaotic rollout of U.S. tariffs. Small manufacturers in my
industry are all at risk of going out of business. We share
frustration about the lack of government support or resources,
even as this threat being as bad, if not worse, than COVID for
my company. The SBA and MEP network are losing funding at a
time when they're needed most.
Prior to implementing the tariffs, no one asked how we
would be impacted or what we would need to succeed. I feel an
incredible sense of frustration as the disparity between large
and small businesses grow wider, and they benefit from
exemptions and delays that do not apply to us.
[The prepared statement of Ms. Robbins follows.]
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Chair. Thank you, Ms. Robbins. Mr. Riley, you're recognized
for five minutes.
STATEMENT OF MR. BRIAN RILEY, FOUNDER AND CEO, GUARDIAN BIKES,
SEYMOUR, INDIANA
Mr. Riley. Chair Ernst and the distinguished members of the
committee. Thank you for the opportunity to testify today. My
name is Brian Riley and I'm the co-founder and CEO of Guardian
Bikes, a company I started 15 years ago while I was still in
college with a simple mission: to make bicycles safer for
families.
The inspiration to start the company came from a traumatic
accident that my grandfather had on his bicycle. When I was
growing up, my grandpa, Lee Bowman, used to ride his bike
around the neighborhood for exercise. One day, a car cut him
off. He panicked overapplied his front brake, and that sent him
flipping over the front of his handlebars. He landed on his
head and broke his neck. He was found on the side of the road
by someone who called 911. Luckily, he survived, but needless
to say, it was a traumatic experience that my family and I went
through.
When I was in college, I kept thinking about what problem I
could help solve. I decided to work on a new type of bicycle
braking system, which could prevent the type of accident that
my grandfather had. After numerous failed prototypes, the
SureStop braking system was born, an important innovation which
made this type of accident a thing of the past.
In those early years, I was convinced that the right
business model for this was to partner with the major bike
brands to get the SureStop Braking system adopted into their
new bike models. So, from the age of 21 to 26, I traveled
around the world partnering with bike companies to get SureStop
adopted.
During those years, I got an up-close look at exactly how
the bicycle industry worked. I quickly learned that every major
bicycle brand in the United States was partnered with a Chinese
OEM factory to manufacture bikes for U.S. consumption. In fact,
the entire bicycle component supply chain was completely
dominated by China as well. The Chinese OEM would handle the
ordering of the components from brakes to handlebars to hubs,
and would then build a complete bike for each American bike
brand.
That meant that no matter what brand we choose to partner
with, our customer that would buy the SureStop brake components
from us, would actually be the Chinese OEM factory that's
building the bicycle for the brand. That meant I spent a lot of
time traveling to China and seeing all the major factories in
China.
It was an interesting start to a career. I learned how the
entire value chain for bicycles worked, from production to
retail. And contrary to my parents and grandparents'
generation, when bike companies like Schwinn were American
manufacturing powerhouses employing many thousands of people in
the Midwest, when I entered the industry in 2010, not a single
bike brand sold in the U.S. was manufactured in the U.S.
anymore.
In addition, most of the iconic bicycle brands had not only
shored all their production, but over the years, most had
become foreign owned as well. With unique IP in this industry,
and a value chain dominated by China, it was difficult to
control our own destiny being a component supplier. Eventually,
I decided to evolve the company and integrate our SureStop
technology into our own bikes, and build a new type of bike
company from the ground up. This is how Guardian Bikes of today
was born.
As we got started, we imported bikes from China like
everyone else. However, when the 301 tariffs started under
President Trump's first term, and later COVID supply chain
disruptions came, we decided this was the moment to take a big
bet and do what everyone in our industry insisted was
impossible. We decided to start a bicycle factory in the United
States.
In 2022, Guardian Bikes officially opened its factory in
Seymour, Indiana. And in just 36 months, we've quickly become
the first and only large scale bicycle factory to exist in the
United States since the industry decided to completely offshore
production decades ago. We now employ 250 people in Indiana,
making 2,000 safe quality bikes every single day. We're doing
it profitably. We're growing quickly, and we're demonstrating
that reshoring production in the United States is not as
impossible as many might say.
Starting and scaling this business required capital. Early
on, a crucial SBA 7(a) loan helped us get off the ground, but
it was only a starting point. What truly allowed us to execute
on the factory was patient, long-term capital from private
equity investors who believed in our vision.
Senator Ernst's Made in America Manufacturing Finance Act,
which would double the loan limit for SBA 7(a) and 504 loan
programs to 10 million for small manufacturers, would be
instrumental in furthering growth of American companies looking
to reshore production. Increasing working capital through this
legislation would empower small manufacturers to start or
expand production, hire more Americans, and solidify the U.S.
as a viable place to start factories again.
Ultimately, our experience with Guardian Bikes, proves that
reshoring manufacturing isn't theoretical, it's achievable,
sustainable, and it's necessary. By investing in American made
products, strengthening public-private partnerships, and
ensuring our trade policies prioritize domestic production, we
can empower small businesses like mine to lead America's
manufacturing resurgence.
Thank you for the opportunity to share my story.
[The prepared statement of Mr. Riley follows.]
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Chair. Thank you, Mr. Riley. And next, Mr. Geis, you're
recognized for five minutes.
STATEMENT OF MR. BENJAMIN GEIS, MANAGING DIRECTOR, EAGLE
PRIVATE CAPITAL, ST. LOUIS, MISSOURI
Mr. Geis. Good afternoon, Chair Ernst, and distinguished
members of the committee. Thank you for the opportunity to
speak with you today. My name is Ben Geis and I'm a Managing
Director at Eagle Private Capital based in St. Louis, Missouri,
and current chair of the board at the Small Business Investor
Alliance.
I'm proud to be here, not just as representative of my firm
and SBA, but as someone who understands firsthand economic
challenges and the potential of rural and lower income America.
I grew up in a town of just 600 people in Nebraska, and my
partners hail from in and around the St. Louis, Missouri. We're
raised in communities where entrepreneurship is common, but
access to capital is often limited. That's why we chose to use
our backgrounds in finance, not on Wall Street, but to invest
in America's small businesses, particularly in the communities
that shaped us.
Eagle Private Capital was founded in 2003 with a mission to
provide growth capital to small businesses through the public
private partnership of the SBA Small Business Investment
Company Program. Our team brings decades of experience in
commercial lending, investment banking, and accounting. Over
the past 20 years, we've invested approximately 1.27 billion in
162 small businesses through six licensed SBIC funds. Eagle
Fund three was awarded SBIC of the year by the SBA, and an
Eagle Fund IV portfolio company, Paragon Bioservices, was
awarded the 2019 SBIC portfolio Company of the Year by the
SBIA.
Eagle is currently investing out of its six SBIC fund,
which was licensed in August of 2024. From this fund, we have
invested in nine portfolio companies and deployed $71 million
to date, less than one year into our investment period. Those
numbers represent more than capital deployed. They represent
real growth in real communities. Across 91 realized
investments, our portfolio companies have added over 6,000 jobs
and increased revenues by nearly 3 billion. In Missouri alone,
we've invested in 16 companies resulting in 20 percent job
growth, a meaningful impact in places where every job counts.
Let me share an example, close to home in Jackson,
Missouri, a town about a hundred miles south of St. Louis, we
invested in Rapco, a manufacturer and assembler of data cables
and interconnect devices. When we first invested in 2008, Rapco
had 550 employees. By the time we exited the investment in
2017, the company had added 105 jobs, becoming an even stronger
pillar of its rural community.
But our impact isn't limited to the Midwest. We've seen
similar results in 37 other states where we have investments.
In Massachusetts, for example, Eagle has invested in six
businesses across six funds, growing revenues by almost 80
million or 79 percent, and employees by 342 or 83 percent.
One standout is Learn Well, which provides in-person and
virtual academic services for students undergoing mental health
treatment. Since Eagle's initial investment in Learn Well in
January 2018, the company has demonstrated remarkable
resilience and growth. Over the past five years, Learn Well's
performance has been exceptional. The team has grown from 115
to 233 employees, which is 103 percent expansion, and serves
over 33,000 students each year.
These stories aren't one-offs. They're the result of the
SBIC program. We review hundreds of opportunities a year. These
are often companies that are too small, too rural, or too
unique to get the attention of traditional lenders. SBICs like
ours fill this gap, deploying flexible capital to companies
that need it most, while working alongside the management
teams, leveraging their expertise and our experience in the
lower middle market to create a long-term partnership.
Finally, the investing in All of America Act introduced
last Congress, by Senators John Hickenlooper and Roger
Marshall, will enable SBICs to do more of what it already does
well: support small businesses, create jobs, and strengthen the
economic backbone of America, especially in places that too
often get left behind.
Specifically, the bill provides SBICs with bonus leverage
to invest in rural, low-income manufacturing or national
security focused businesses. The legislation would also adjust
the leverage caps to account for inflation that has risen
nearly 30 percent since they were last raised. Adjusting the
caps is necessary to ensure the program's investment power
remains consistent with the broader markets and SBICs can
continue assisting job creating small businesses across the
country.
I'm proud of the work we've done and the communities we've
helped grow and encourage this committee to move swiftly on the
legislation so even more can be done.
Thank you for the opportunity to testify today. I look
forward to your questions.
[The prepared statement of Mr. Geis follows.]
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Senator Young [presiding]. Well, thank you so much. As is
common here, our former Chairman had to depart and I am acting
chairman, I'll say that for the benefit of the staff behind me.
Since I just moved into the seat, I'll ask you, Mr. Geis are
you the last one to deliver your testimony? I'm expecting that
is indeed the case.
Mr. Geis. I am the last one.
Senator Young. All right, great. Thank you. Now that I have
command of this situation----
[Laughter.]
I'll thank all of you for appearing. I am of course
especially glad to see Mr. Riley here. He's invested in the
great state of Indiana, but I am really excited about having
all of you here.
As I often share with our panelists, my father was a small
business person. This is not always known as the committee with
the broadest jurisdiction that touches on every facet of your
life, but it's really, really important. It's important to
people like him, that we optimize the programs and support that
the small business administration in particular gives our small
businesses and give you a platform and a voice.
And so, thank you for being here today. Before I dive into
my own questions, I will give Senator Shaheen an opportunity to
ask hers. Senator Shaheen.
Senator Shaheen. Well, thank you very much Mr. Acting
Chairman. And I appreciate that since I have not yet voted. So
welcome to all of our witnesses. Thank you all for being here
very much. I actually grew up in Missouri and my grandfather
was from Jackson, so I know exactly where you're talking about
Mr. Geis.
One of the programs that I helped create when I got to
Congress and that I continued to think is very important, and
in fact I worked with Chair Ernst on it last year as the State
Trade Expansion Program, the STEP program, which you mentioned,
Ms. Robbins. It helps small businesses sell internationally.
And when we think about the fact that about 95 percent of
our markets are outside of the United States, it's really
important for us to help small businesses get into those
markets because right now, fewer than 5 percent of small and
medium sized businesses do business overseas.
You mentioned in your testimony that you currently
manufacture in the U.S. to sell internationally, but that now
you're having to consider moving production overseas just to
export. Can you talk a little bit more about the impact that
the tariffs have had on actually pushing your production
offshore and what that means for your company long term?
You talked a little bit about the potential to need to
downsize to address that, but in addition to that, what would
the loss of the STEP program and the technical assistance and
grants that that provide mean to your business?
Ms. Robbins. Thank you very much for your question. The
STEP program, the way Ohio disperses the funds is through the
SBDC and an IMAGE grant. The IMAGE grant reimburses us for,
well, partially reimburses us for activities related to
exporting. It also provides education.
So currently we're participating in a program called the
Global Target Program, with a focus on Latin America. It
prepared us for a trip to Brazil last month, and set us up for
success in that market. I'm incredibly grateful to the staff at
the local SBDC, very knowledgeable, they bring in experts and
connect us to others.
But as you mentioned, unfortunately I need to consider
offshoring my manufacturing, and that's because as I mentioned,
our sales are down and sustained losses put us at risk of
bankruptcy by the end of the year. We have perfect credit and
we've never missed a payment, but we're rapidly running out of
liquidity. In addition, the tariffs make our products
exceedingly expensive. My competitors overseas do not have that
problem. And so, in order to compete, I feel that we may need
to diversify and manufacture overseas to serve export markets.
Senator Shaheen. Thank you. And again, if you could speak a
little bit, one of the things that we have learned from the
``skinny budget'' that the Administration has sent as on
appropriations, is that it would eliminate the STEP program
entirely. What would that mean in terms of future, assuming
that tariffs are addressed in ways that allow you to build back
some of those markets, what would that mean for you if you no
longer have access to that technical assistance and the funds
that are available through the STEP program?
Ms. Robbins. It would have a really devastating impact,
especially for businesses that don't have the education
experience that we have. You know, we've learned a lot by
benefit of this program and access to those experts. A new
startup or another small business just starting to get into
exports, they would lose such a valuable resource.
Just an example of what a global target session may be
like. It would be you know, maybe 12 other business owners
looking to increase their exports and they would bring in an
expert or two, to speak about a variety of topics relevant to
exporting, marketing, legal compliance, financing your exports,
taking payments. Things like that helps to demystify the
complexity and also creates a greater network of experts to
reach out to.
So, you know, while I would be hurt, I think that it would
be much harder for businesses that don't have the same
experience that we have to get a leg up. Thank you.
Senator Shaheen. Thank you. Thank you, Mr. Chairman.
Senator Young. Well, thank you, Senator Shaheen. I will
pick up with Mr. Riley giving him the Hoosier privilege, a
Hoosier by choice by way of Sacramento, and his company,
Guardian Bikes located in Seymour, Indiana I think is a prime
example of how a small business can grow into a successful and
thriving American company and even help reshore an industry.
Doesn't happen in every case but we should celebrate it, and
the jobs you create and the opportunities associated with all
of that when it does.
So, your insights Mr. Riley, into how the policies that we
put in place here in Washington, DC, which can be detached and
removed from the daily cadences and concerns of regular people
sometimes, they would be invaluable to our whole process and so
I appreciate all of your comments this morning.
Whether it's developing skilled workers through
apprenticeships or connecting startups to research institutions
and capital, public-private partnerships are already proving
what's possible when sectors work together. Too many small
businesses, especially in rural communities, lack access to the
same networks or infrastructure or talent pipelines that they
need to compete and grow.
Mr. Riley, how have public-private partnerships, if at all,
helped support or scale your small business operations? And you
can expand on that if you would like. In your experience, what
do you see as the most effective roles for the government and
the private sector in making these partnerships work?
Mr. Riley. Thank you, Senator Young. And I'm proud to be a
new Hoosier of a couple years. So, in Guardian Bike's case,
when we were first starting, we did utilize an SBA 7(a) loan
and that was instrumental in getting the company off the
ground, getting some working capital in.
But in our case, when we really started looking into
starting a factory, it was clear that we needed several million
dollars to get this thing started, both because of some of the
equipment that we needed, but also because we were starting
something that no bike company had done in the United States in
many decades. And we knew that there'd be at least say, 12 to
18 months of time where we have to kind of go into money losing
mode to learn how to run a factory to get the thing up and
running.
And so, we relied, you know, on an SBA 7(a) loan, but also
some private equity, not private equity, but I should say
individuals investing some money in for equity in the business.
That was instrumental, but it was also challenging. That
was me going around, you know, pitching a lot of different
individuals, getting them to believe in the vision, taking 50
to a hundred thousand dollars checks, you know, left and right
to try to pile together a few million dollars, in order for us
to really kind of execute on this vision of starting a factory
in the USA.
So, I think to the extent that, you know, what we've done
is challenging and in a lot of industries it is challenging to
actually reshore production and reshore supply chain, and it
does take capital. So, I think to the extent that the
government can make flows of capital easier for companies that
are looking to reshore production and build production in the
United States. That's helpful.
Senator Young. So, I'm just going to stop there, and though
we're both from Indiana, we didn't choreograph this because
that's a great lead in to Mr. Mickelson. And my questions for
you, sir, you mention in your testimony the importance of
programs like the Rural Business Investment Company, RBIC and
the Small Business Investment Company, SBIC, to help create
jobs and drive economic growth in the Midwest, which I
especially care about.
So how can we use our federal investment tools more
effectively, in your informed estimation, to expand access to
capital for rural entrepreneurs and ensure that small
businesses in underserved areas can grow and compete.
Mr. Mickelson. Thank you, Senator, for the question. I'll
stay on the theme here, and stick with Indiana. We actually had
an investment in Franklin, Indiana, which you might be familiar
with. It's not a large metropolitan area. But there were two
great entrepreneurs there that----
Senator Young. I live like a few miles away.
Mr. Mickelson. Okay. So perfect. [Laughter.]
Senator Young. We really didn't choreograph this, but thank
you. Sometimes it happens.
Mr. Mickelson. So, two great entrepreneurs there. They were
young, they were obviously risk takers. They started a
business, but they had not had the resources to scale the
business to professionalize the business.
So, when we invested with them, we brought in systems, we
brought in people. They originally had one location. By the
time we exited the investment, they had 13 locations. They had
a full C-suite of teams. And so that would not have been, you
know, possible without programs like the RBIC and SBIC. And so,
two ways that you could help that, I mentioned the investing in
All of America Acts, passing that would help create more
opportunities for situations like this.
And then on the RBIC side, the RBIC program does not have
leverage like the SBIC program has. And so that's one thing
that we've been working with the USDA with for a long time to
try to get that put into place.
Senator Young. Thanks so much. Unless there are any other
Indiana stories. Senator Rosen, you're recognized.
Senator Rosen. We'll talk a little bit about some Nevada
stories, maybe, how's that? Because in Nevada, we love our
entrepreneurs, our dreamers or small business owners. And for
those of you who don't know, we're really famous for those big
casinos. I know that, but that only makes up 1 percent of the
businesses in Nevada. 99 percent are small businesses. And so,
it is really the heartbeat of Nevada.
And I want to build a little bit upon what Senator Shaheen
talked to you about on the tariffs, because the tariff impact
on Nevada small businesses, they're already facing disastrous
economic consequences of President Trump--that just across the
board tariffs, and small manufacturers in particular are
struggling.
Many businesses and manufacturer in the U.S. rely on
imported parts and materials. And in Nevada, like I said, 99
percent of our businesses are small businesses. And because of
Trump's tariffs, these companies are now calling us. They're
worried, they're trying to navigate increased cost disruptions
in their supply chain and frankly, they're just so worried the
uncertainty of it all. They just don't know what to plan or
prepare for and how to move forward.
So, Ms. Robbins, I'm going to ask you, could you discuss
about how the uncertainty, not just for your business, but for
yourself, your family, and everything you put into it, how have
the administration's tariffs really impacted you and how small
manufacturers are particularly vulnerable?
Ms. Robbins. Thank you so much for your question. Small
manufacturers are really clinging to life right now. My small
team, which I could count on one hand, has spent countless
hours crunching numbers, running models, worst case scenarios,
searching for new suppliers, attempting to set up accounts with
those, forecasting expenses, calculating, and recalculating
price increases only for the situation to change drastically
with no notice.
It creates such an environment of uncertainty that I don't
understand how someone could invest in an economy without
having some level of certainty you can regain your investment.
I've invested $1.2 million into our company to manufacture
guitar pedals. We do all of our manufacturing here in Akron,
Ohio. And to manufacture more than we do now would be like
asking a baker to make flour.
The uncertainty from day to day, we have a weekly meeting
where we discuss the tariff impacts and try to determine how to
proceed. We certainly need to increase our prices as our costs
have just drastically risen. However, the landscape doesn't
stay the same from week to week. I don't know how to proceed.
It's complete uncertainty.
Senator Rosen. And how stressful is that? And how stressful
is for the people who work with you and believe in all of what
you're doing----
Ms. Robbins. Incredibly stressful.
Senator Rosen. And of course, we have a lot of live music
in so I'm sure there's some folks who've been buying them from
you. So, thank you for sharing that. And I'm sorry that you're
going through all of that trauma and hopefully we can get some
certainty going forward.
Because our emerging manufacturing industries, it's just so
important, they're surging investments. You've put in over a
million dollars small businesswomen. Right. But in Nevada, we
have a lot of clean energy. It's wind, water, solar,
geothermal, it's just our geography and geology. And so, our
clean energy technologies, they support our small manufacturing
businesses. It's beneficial for our local and national
economics.
And I've seen the benefits of clean energy firsthand. We
are the only state that has an operating lithium mine. I know
everybody likes their phones. We need that Lithium. Nevada's
become a hub for electric vehicle battery manufacturing in
recent years. And last year I helped secure a tech hub
designation for the lithium loop project, led by the University
of Nevada Reno, which will create even more economic
opportunity in northern Nevada. Businesses are coming,
batteries, recycling, training, engineers, all of it.
So, Mr. Geis, I know that Eagle Capital has a portfolio of
companies in the clean energy space. Can you speak to the
importance of directing investment to emerging industries like
clean energy, and this just the spectrum of energy. We need it
all and ways that small businesses can benefit from engaging
those industries?
Mr. Geis. Sorry, thank you for the question, Ms. Rosen. So,
help me, could you repeat the last part of your question again
just to make sure I address it appropriately?
Senator Rosen. Well, you know, the importance of directing
investments to emerging industries like clean energy. Like I
said, in Nevada, we have wind, water, solar, geothermal,
battery recycling, lithium mining, critical mineral mining, all
of these things. So, they're newer industries and we want to
move capital to us to develop that. So, I just wanted you to
talk about that a little bit.
Mr. Geis. Yes, for sure. I mean, I think our focus as a
small business investment company--a hundred percent of the
investments we make are in small businesses in the United
States, that's a sole focus of what we do. And so, I think we
see lots of wonderful entrepreneurs that are in emerging
industries like you talked about. And really you know, we
provide that capital to help them grow and be more competitive
on a global landscape. And I think it's vitally important to
our country to encourage that entrepreneurial spirit.
Senator Rosen. Thank you. I yield back.
Chair [presiding]. Thank you, Senator Rosen. Senator
Hawley.
Senator Hawley. Thank you very much, Madam Chair. Thanks to
all of our witnesses for being here. Mr. Geis, I want to start
with you because I understand that you are a Missourian and you
are a St. Louis Guy. Is that right?
Mr. Geis. That is correct.
Senator Hawley. Although I think you went to college on the
other side of the state or my nick of the woods. Rockhurst
University?
Mr. Geis. Yes.
Senator Hawley. Okay. Very good. Now, were you born and
raised in St. Louis?
Mr. Geis. I was not.
Senator Hawley. Okay. He's helping me all the time.
[Laughter.]
I could hear you. That's fine. Keep going, you're on a
roll.
Mr. Geis. No, I was not born in St. Louis. I was born in
Nebraska, but I'm not an atypical St. Louis story. I married a
St. Louis girl, so I've been there for 26 years.
Senator Hawley. Oh, there you go. All right. Well, that's
good. Hey, we'll claim you. That's great. You're a Missourian
in my book.
Mr. Geis. Yes.
Senator Hawley. Right. Let me ask you, in your written
testimony, you included the helpful chart explaining how the
SBIC program helped spur investment in small business. And I
wonder if you could just tell us, just give us an overview,
tell us about the SBIC program, what it is, and why it matters
so much to Missouri. Just give us your perspective on that.
Mr. Geis. Yes. So, you know, I think I'd come at it from a
couple of different angles. So first of all, you know, it's a
stable, longstanding program. It's been around since 1958. It's
operated at a zero subsidy from the taxpayer since its
inception. But I think what's critical about what SBICs do in
Missouri and lots of other states, is we provide that critical
next stage of capital to really create the growth to drive to
the next level.
So, you know, oftentimes entrepreneurs' capital invest
their own money to start their businesses, but when they hit
sort of a critical inflection point, they need that next round
of capital to really invigorate growth and that's what SBICs
do.
Senator Hawley. Yes. Very good. In fact, if I've got my
statistics correct, and in FY 24 alone, SBICs invested in
Missouri $192 million in more than 20 small businesses across
the state. That capital supported over 3000 jobs in the state
of Missouri. That's pretty good. We want every single one of
those jobs.
Mr. Geis. And I think, you know, SBICs fill a gap, right?
There are, you know, everybody knows about the capital markets
and the large lenders and larger private equity funds that
ultimately invest those large dollars of capital that we hear
about. But SBICs are squarely in the heartland of America and
small businesses, that's what we do day in and day out.
Senator Hawley. Very good. Let me ask you to talk about the
role that small businesses can play in the manufacturing sector
and how SBIC can be used to help spur industrial growth. I
mean, can you talk about that? Because this is a big need and
the backdrop here that I probably don't have to explain to
anybody on the panel or anybody watching this hearing is that,
you know, in America as a whole, we have lost 4 million jobs.
It is particularly in industrial sector to China since 2001
in Missouri, it's close to 60,000 jobs. We need more industry;
we need more manufacturing of all kinds. Tell us about the SBIC
component here for that.
Mr. Geis. I mean, it's a big focus of what we do. If I look
at the Eagle Funds, 25 to 35 percent of our investments are in
manufacturing companies. And the stories that we could share
within our portfolio are not too dissimilar from my other
panelists here, but, you know, we provide the capital to help
build the new plant, to really spur and change growth. So that
is what the SBIC program does.
Senator Hawley. Very critical. Thank you. Thank you for the
work you do. Thank you for willing to be here, and thank you
for testifying. And with that, I yield back to you, Madam
Chair.
Chair. Great. Thank you. Senator Hawley. And I'll go to Mr.
Mickelson. We'll start with you, and Mr. Mickelson. Oh, I'm
sorry. Senator Hickenlooper.
Senator Hickenlooper. I must look like a wallpaper or
something.
Chair. I missed you. I got caught up there with Senator
Rosen and totally overlooked you. My apologies to you. Senator
Hickenlooper, you're recognized for five minutes.
Senator Hickenlooper. Let me start. Mr. Mickelson, the SBIC
we've been talking about, obviously as a cornerstone of so much
what the SBA does. As a small business person myself, I'd
gotten laid off, was out of work for a couple years and took a
long time to raise the money, as I always would say, my mother
wouldn't invest and she wouldn't.
I think those private investments with coupled coming
through the SBIC, can really bring--well, it certainly brought
hundreds of millions of dollars into Colorado. And I've been
working with Senator Marshall to further build on that success.
I'm sure you're aware of the All the America Act. So, in terms
of your firm operating the SBIC, how would expanding that
program broaden access for capital to what are popularly called
underserved to lower income communities?
Mr. Mickelson. Thank you, Senator, for your question. It is
timely. We actually closed an investment in Colorado last week,
from an SBIC, so your timing's perfect. But you know, certainly
the passage of the investing in All of America Act, which I
know you introduced last Congress and hopefully it'll get
through this Congress, will increase funding to the SBIC
program so there will be more opportunities for investment,
like the one we did last week and Colorado.
It'll also specifically target rural and low-income areas.
And so, Midwest growth Partners invest in rural areas. So that
would give groups like us more opportunities to make those
investments. And then finally, it would provide bonus leverage
for manufacturers. And so, we've talked a lot about the
importance of manufacturing. Right now, 20 percent of dollars
from SBIC roughly go into manufacturers. And so, with some
bonus leverage, we would expect that number to go higher
because there'd be more capital available. And so great.
Senator Hickenlooper. It's okay. You covered it well. I
spent a lot of time in West Des Moines, and when as an
entrepreneur I branched out, one of our brew pubs that we
opened was in downtown Des Moines, but it was the Raccoon River
Brewing Company and the old hotel Fort Des Moines.
Mr. Mickelson. It's a great spot.
Senator Hickenlooper. I probably know a number of your
personal investors. I got them to help invest in that.
Mr. Mickelson. Yes. Perfect.
Ms. Robbins, let me ask you a question. The tariff
situation, obviously as somebody--I can remember every little
bit, when you're a truly small business, every little bit makes
a difference. And I think tariffs went up, then they've been
suspended, now it's three months, that uncertainty is chaos. I
know how hard that is.
How have you guys navigated the uncertainty around the
tariff issue and how to make your planning of when you make
infrastructure investments and how do you assess that? How are
you able to grow?
Ms. Robbins. Thank you so much for your question, Senator.
We're not able to grow under the tariffs. The tariffs have
created complete uncertainty. They're changing from week to
week. You mentioned that they announced a reduced tariff rate
and a 90 day pause. But I'm still not clear on exactly how much
I'm paying in tariffs. Is it 30 percent plus the 2018 plus the
fentanyl? That would put me at 75 percent. That's still huge.
Yes, we do count every penny.
And I used to be a financial planner, and as a business,
we're planning a year out easily. And now I don't know what's
happening next week and three months. And it's impossible to
navigate these circumstances. So, you know, we had forecast a
price increase, things had been the same for two weeks. We were
going to roll it out and now the tariffs have changed. So,
we're going to hold onto that.
I also know that my customers have been loading in on
foreign imports. My customers are retail stores. They've been
loading in on foreign imports during this reduced tariff pause
because they're speculating that it's going to go back up. So
just another way, this is backfiring and hurting U.S small
businesses. Thank You.
Senator Hickenlooper. Good. Thank you. And I love the name
EarthQuaker. I was an old geologist and the Colorado School of
Mines has an earthquake center, and you can get a live feed to
see anywhere in the world when a quake happens. And you ought
to stick one of those in your retail sales or your wholesale
sales office.
Mr. Riley and again, a safer bike. I was a huge bike fan, a
huge believer in outdoor recreation. It's a business. It
creates jobs, but it also makes people healthy. It makes people
feel healthy, I mean, it changes their mental health issues.
You had a unique journey somehow. Mark Cuban never took the
time to let me have--on his TV show. I'm not sure what he was
doing back when I was trying to raise money.
What other suggestions would you give small business owners
who are trying to find capital to invest in domestic
manufacturing?
Mr. Riley. Sure. Thank you, Senator. Yeah, I was very lucky
to have the opportunity to go on the show Shark Tank and I got
an investment from Mark Cuban, but I think the statistics were
something like 80,000 people every year apply to go on the show
and something like 50 or 60 actually get on a season. So, I
still pinch myself that that actually happened for me.
But I would say, you know, for just general advice for
small businesses, I think what we've done is try to create a
U.S. factory reshore production, but really make that a
strategic advantage for us. And not have it really be all about
a tariff advantage, but actually an inventory advantage. A way
that we can, you know, set up the bikes in a really safe way.
The whole brand is built around safe bikes. So, a bike is
only as safe as it's set up. You set up the brakes, you set up
every fastener to a certain torque. So really kind of telling
it--for somebody like us telling that story to investors and
getting investors excited about the strategic advantages of
building a product in the United States that are over and above
just tariffs or whether it's going to be a price advantage in
these things.
That was a really big thing for us and we were able to
secure capital, you know, not only from Mark Cuban on the show,
but from a group of just individual investors----
Senator Hickenlooper. Ripple effect. That's perfect advice.
I mean, that you're exactly right. They got to take the
advantage you have and then use that to go out and compete. I'm
out of time but anyway, I yield back to the Chair.
Chair. Do you have another question? Senator Hickenlooper.
Okay. [Laughter.]
No, thank you. Senator Hickenlooper. Okay. I will go ahead
and recognize myself now for five minutes, and we'll start with
you, Mr. Mickelson. Your investments highlight the next-
generation technologies that are coming out of our farms, that
are creating new jobs across America and helping our nation
remain competitive globally. From your experience investing in
dozens of small businesses in Iowa and across the heartland,
what are their greatest barriers to growth and building here in
the United States?
Mr. Mickelson. Thank you, Senator. So certainly, access to
capital as we've talked about today. So, when, when you look at
a business that's scaling, they're trying to add new people,
more talented people, more educated people, and that comes at a
cost. You think about technology investments and things like
ERP systems, computer systems efficiency in your manufacturing
process, trying to automate as much as you can. All of that
costs money, and that's a big part of just the
professionalization process that you try to do in each one of
our investments.
And so, each investment that we look at, they're
successful, they've done a great job, but we're trying to take
them to the next level and help them grow. And so that takes
expertise and that's largely human capital driven, and it takes
capital to build out property, plant and equipment and invest
in that technology.
Chair. Thank you. And Mr. Riley as well. Again, just
reiterating what Senator Hickenlooper said, you've been
recognized nationally for your efforts to reshore production of
bicycles and industry that had been dominated by China for
decades. And thank you for doing that. I commend you for all
that Guardian Bikes is doing to build higher quality bikes for
children, and something that is possible because of your
ability to source from domestic suppliers.
So, you've been able to raise a significant amount of
private capital to support your vision. Based on your
experience, what added value and benefits do investors seem to
find with Made in America products?
Mr. Riley. That's a great question. The way that we really
went about it was to say, look, the world is changing around
us. Supply chains aren't as secure as we thought they were.
COVID was a perfect example of that. So, to start with,
building product onshore just gives you a lot more supply chain
resiliency.
Over and above that, it really kind of can change a
business, so when you're purely relying on imports, the lead
times are long. You got to ship them all the way here. And so
you have to deal with a lot more inventory. You have to plan
your business just right to figure out what are we going to
sell? What do we need to buy? Sometimes many months ahead of
time.
When you're onshore and you can produce in your own
factory, you can take that demand signal. For example, when the
Barbie movie came out, we started selling a lot more pink
bikes. I don't know how we could have predicted that,
Chair. Right?
Mr. Riley. But when you sell a lot more pink bikes and
you're able to just, you know, paint more bikes pink the next
day, you can just start making more pink bikes and react to
that kind of demand signal. So that's a perfect example of--
there's all kinds of real advantages that come from onshoring
manufacturing that I think so many businesses that have relied
on imports for a long time, they don't necessarily think that
way because they're not in the weeds of manufacturing.
But we found that there really are true business advantages
over and above, you know, any cost advantage or anything like
that. And just running the business, being able to react to
demand, being able to have a resilient supply chain and deliver
safe quality products to lots and lots of consumers. And we
find that those consumers, you know, reward us for making that
decision and they want to do business with a company like us
that's trying to do it here.
Chair. Yes. Thank you very much. And Mr. Geis, thanks for
sharing your experience, both as an SBIC investor and as a
leader in the SBIC industry. As you stated in your written
testimony, 20 percent of SBIC investments fund American
manufacturing companies. How can Congress further target the
SBIC program to investments that are critical to our nation's
economic and national security while maintaining a zero-subsidy
program?
Mr. Geis. Thank you for the question. I would say by
supporting the SBIC Critical Technology Initiative. So that,
for those who don't know, it's a partnership between the Small
Business Administration and the Department of Defense to
license SBICs that will invest at least 60 percent of their
investments in small businesses in sectors that are deemed
critical to our national security.
Chair. Okay. Fantastic. And with that I will recognize
Senator Cantwell for questions.
Senator Cantwell. Thank you, Madam Chair. So good to see
our witnesses. Ms. Robbins, thank you for being here,
specifically, we love music and the Pacific Northwest, and we
like to get our grunge on and do many other things. But, you
know, we had a music stand company in Yakima Washington that
continued to be a big exporter.
And I kept thinking, I'm so proud of you guys. How do you--
they're big supporters of the XM Bank, you know, and I kept
saying, how are you so successful? I would think somebody would
knock this off. And they were like, no, no. You're a symphony.
You need performance out of a music stand. You can't have a big
concert with lots of people coming and have a bad music stand.
So, you are a similar company that makes electronic parts
and turns those into something that musicians can create with.
So how are you thinking about this tariff situation and what do
we need to do to help more businesses like you grow?
Ms. Robbins. Thank you so much for your question, Senator.
I was really fortunate that a lot of the investing that I did
in our business happened before the tariffs were increased. So,
in 2022, we invested in a state-of-the-art PCB assembly line.
And under the current tariffs that would be maybe triple in
price. The tariffs have really made it more challenging for us
to recoup our existing investment in our business and are
putting us at risk of bankruptcy, if these conditions continue.
We have perfect credit and we've never missed a payment,
but like I said, we're running out of liquidity, and our home
is collateral on our loans. So, if we miss payments and we
default, we will lose everything that we work for, including
our home, just as our two daughters are in college.
And I don't see taking on additional debt as the answer. I
also don't know why somebody would invest in a company that is
currently losing money without a clear path to success. I also
find the suggestion that I borrow money and pay interest to
finance taxes and fees, abruptly imposed on me by the
government with no notice and no consideration, I find that
suggestion offensive. And I believe the tariffs seem to be
reversed immediately or at the very least, small businesses
need to be exempted.
Senator Cantwell. Well, small businesses definitely have a
lot less flexibility. Do you have a big export market for your
devices?
Ms. Robbins. We do. We've worked very hard to increase our
exports. They're approximately 30 to 40 percent of our sales,
although just in the last few months, we have seen that number
drop drastically due to anti-American sentiment and the chaos
that the global financial markets have experienced due to this
chaotic trade policy.
Senator Cantwell. You know, I find it takes a lot to become
an exporter. We have in the northwest--we had programs in the
eighties where we just encouraged everybody to do it. I don't
know if it was our geography or just an ethos, but we
encouraged people to do it. And it's hard because you're taking
risk, you're taking a risk anyway as a business person, but
you're taking more risk because now you have less control over.
That's why we support the export import bank so much
because it lessens that risk. But we find that ends up being
25, 30 and you're saying, in your case, 40 percent of sales
opportunities. It makes sense. You have a whole global market
to pursue. What are some of your best markets for exports?
Ms. Robbins. Europe, Australia, Canada, Japan, anywhere
that guitar music is popular, guitar-based music, and where
incomes are high enough to afford some discretionary spending.
Senator Cantwell. Okay. So friendly countries to us anyway,
we should have good relationships with them. And this shouldn't
really be the barrier that it is at this moment.
Ms. Robbins. That's right. But we've offended a lot of our
allies.
Senator Cantwell. Thank you so much. Thank you, Madam
Chair, Ranking member.
Chair. Thank you. Next, I recognize Ranking Member Markey
for his questions.
Senator Markey. Thank you, Madam Chair. Trump's tariffs,
they've been thoughtless, they've been reckless, unpredictable,
overly broad. They've caused economic uncertainty, as I already
said, a 35 percent reduction in the number of huge containers
coming into Mass-port, the port of New England really, for the
month of June. Just absolutely unbelievable. And it has a
profound impact on small businesses and consumers all across
the country. And it places small businesses at a competitive
disadvantage. They're not able to weather the storm the way
bigger companies are.
Ms. Robbins, you are already a 100 percent U.S.
manufacturer, but as you state in your testimony, it's entirely
impractical for you to be able to manufacture all the raw
materials and components that go into your final product in the
United States, especially with the current tariffs. Can you
describe why this would be near impossible at this time?
Ms. Robbins. Thank you for your question, Senator. Yes, I'd
be happy to. First of all, any type of investment like this
would require months or years and a lot of money. And I don't
have that time and I don't have that money right now,
especially as I'm being taxed heavily. I can also share some
data with you.
One of my friendly competitors did an analysis on what it
would take to reshore just one of the components that goes into
a pedal. So, this one that I have here behind these knobs is
what's called a potentiometer. And they are used to adjust
parameters on a pedal such as tone level, distortion, et
cetera. So, his annual volume on this part, he uses 130,000.
So, it's one of his most frequently used parts. And his
current----
Senator Markey. Cost 130,000 what?
Ms. Robbins. Potentiometers.
Senator Markey. Okay. Beautiful.
Ms. Robbins. And his current cost is 22 cents, and his
annual cost is $28,600. The analysis showed that the cost per
part would be $3 and 75 cents for an annual cost of $487,500,
over 17 times the cost.
Senator Markey. For you?
Ms. Robbins. For a company that was attempting to reshore a
single part. So, the tooling would be $238,000, that's eight
times the annual cost, and that's just one part of hundreds
that go into an effect pedal. So, he actually listed here the
nine different parts that go into making this. And I'd like to
submit this for the record, and I'd like to thank John Cusack
for providing me with this evidence today. Thank you.
Chair. Without objection. We'll have that entered into the
record.
Senator Markey. So, as you mentioned in your testimony, you
were named SBA Exporter of the year in 2019. So, no one does it
better than you. You were the number one. And so now tariffs
were imposed. So, describe that in terms of the daily headaches
that you're now confronting.
Ms. Robbins. It's basically, all we do now is try to
navigate this environment. I'll tell you what I'm not doing.
I'm not putting out new products, I'm not growing, I'm not
thriving, I'm not hiring. I've actually canceled job openings.
These are all things that I'm not doing. What I am doing is
worrying, stressing, things changing from day to day.
You know, thinking over my employees and how they're
dependent on our healthcare to manage their chronic conditions
or chronic conditions of loved ones. Thinking of my daughters
and how they're relying on myself and my husband for our
income, to complete their education. This is what I'm doing.
I'm not doing things that are productive.
Senator Markey. Right. So, President Trump's motto of
short-term pain for long term gain. So, you are sitting there,
your short-term pain, but that short term pain could turn into
long-term pain for you. It could be an extinction event.
Ms. Robbins. Absolutely.
Senator Markey. It could be an obliteration event, not a
liberation day, but an obliteration day, if this goes on for
too long. So, do you really feel that he's picking winners and
losers here? Apple gets a pass; other big companies get a pass
and you are down there trying to figure it out all by yourself?
Ms. Robbins. I do. I do think that the disparity between
large and small businesses has grown wider. I'm here publicly
stating how poorly my business is doing while those companies
are meeting royalty in the Middle East. It's a huge disparity.
Senator Markey. Do you have lawyers and lobbyists here in
town helping your company?
Ms. Robbins. No.
Senator Markey. Does Apple? Yes, they have departments.
Does Google? Yes. All these big companies. They do. You have no
one here except for this committee actually, we're supposed to
be your advocates to protect you. So, you just think there's a
disproportionate impact on you?
Ms. Robbins. That's correct. I do have some advocates. The
Main Street Alliance is working hard to level the playing field
and elevate the voices of small businesses. And I really
appreciate their support, but it still does not compare to what
the large companies have.
Senator Markey. So, do you keep a bottle of Pepto-Bismol
now nearby as each day stories, you know, give you something
else to think about and worry about?
Ms. Robbins. As a small business owner, I'm used to
navigating challenges. I have excellent problem solving and
stress management skills, as you must to be in this position.
However, I just don't see solutions. They're just not
immediately available and I need immediate solutions. So, in my
opinion, the only option is to rescind the tariffs, to pass the
bill that you've mentioned exempting small businesses, it's
just not survivable.
As you mentioned, I believe we're facing the mass
extinction of small businesses. We are clinging to dear life.
The reason you're not seeing bigger numbers of the fallout in
the economy, is because of folks like me that are--our house is
on the line. We're going to do everything we can to save our
businesses, to keep our employees employed. We're not also not
like big companies that we're going to slash jobs the moment
the forecast change.
Senator Markey. Just one final question. I appreciate your
indulgence, Madam Chair. When the President announces that he's
in the process of beginning to try to find an agreement with
China, does that just lift the cloud over off your head and all
of a sudden, you're feeling instant relief? And what does that
mean to you when you hear that? That they're trying to get a
deal but they don't have a deal and then there's still 179
countries left to go to get a deal with?
Ms. Robbins. There's absolutely no relief. It just creates
more confusion and uncertainty, and it actually creates some
effects such as, retail stores loading in on products from
China in order to get things in before the tariffs
theoretically go up even higher. That's what happened over the
last month while there's been a break on the other reciprocal
tariffs. So, it absolutely doesn't help us. It just extends the
period of uncertainty.
And I really need to be making changes now. And I can't due
to this uncertainty. In the U.S. where we sell to retailers,
and it is our largest market, if you make a price increase, you
really can't go backwards. You know? And the more that you
increase your price, the less competitive, the less affordable
that you'll be to end users. And you really can't predict how
much further your demand will fall when you raise prices. And
it's certainly not something that you want to do repeatedly.
So having something that I could plan for, you know, we
absorbed the 2018 tariffs. They were 25 percent, that was
difficult, but we did it. What's going on now is absolutely so
challenging. I don't know a way forward.
Senator Markey. So, thank you Madam Chair.
Ms. Robbins. Thank you.
Chair. Thank you, Ranking Member Markey. And I'll just make
my own editorial comments as well. We recognize it is really
difficult Ms. Robbins, and I appreciate your testimony, very
detailed. It is a very complicated situation. We did not get
into this situation overnight and we have had tariffs from
other countries for decades now.
And if we go back and look at those tariffs, we have
forgotten as a nation that those same countries that we are
tariffing now have had tariffs against us. And it's just baked
into the prices of the goods that we consume every single day.
This is a painful time. We recognize that we have got to find a
way forward and we hope that these countries come back to the
table and work with the United States of America.
For those that are able to manufacturing all of their
product in the United States, kudos. We love that. We want to
support you. We want to have more made in America jobs for
Americans. We've got to figure a way forward.
So, I really appreciate all of you coming here today to
give your testimony. This is a very important committee
especially for states like all of ours, where most of our
businesses are small businesses. So, we want to find a way
forward that will work for all of us and make sure that we are
manufacturing here in the United States.
So, I do want to ask unanimous consent that the witnesses
full statements be included in the record and without
objection, so ordered. So, we'll make sure that all of your
full written testimonies are included today. And with that I do
have a closing statement.
I ask unanimous consent that the record of today's hearing
remain open for two weeks for members to submit questions,
revise and extend their remarks, and submit additional
information into the record. Without objection, so ordered.
And again, thanks to our witnesses for being here today.
Really great testimony. Thank you so much. And with that, the
Committee on Small Business and Entrepreneurship stands
adjourned.
[Whereupon, at 3:58 p.m., the hearing was adjourned.]
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]