[Congressional Record Volume 143, Number 91 (Wednesday, June 25, 1997)]
[Senate]
[Pages S6359-S6360]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. KERRY (for himself, Mr. Bumpers, Mr. Harkin, Mr. Grassley, 
        Ms. Landrieu, Mr. Cleland, Mr. Lieberman, Mr. Wellstone, Mr. 
        Levin, Ms. Snowe, and Mr. Lautenberg):
  S. 956. A bill to amend section 7(m) of the Small Business Act to 
establish a Welfare-to-Work Microloan Pilot Program; to the Committee 
on Small Business.


        The Welfare-to-Work Microloan Pilot Program Act of 1997

  Mr. KERRY. Mr. President, I send a bill to the desk and ask for its 
appropriate referral.
  Mr. President, I am pleased to introduce today the Welfare-to-Work 
Microloan Pilot Program Act of 1997, and I do so with Senators Bumpers, 
Harkin, Grassley, Landrieu, Cleland, Lieberman, Wellstone, Levin, 
Snowe, and Lautenberg. I thank and congratulate all of them for their 
commitment to this important program. This legislation will assure that 
Americans who have had to rely on public assistance have the same 
opportunities as other Americans to start and operate a small business.
  Mr. President, America is the home of the entrepreneurial frontier. 
Here, anyone can explore boundless opportunities to try new things, to 
begin again, and to build new lives. Americans have inherited 
characteristics from the frontiersmen--embracing risk, change, and 
individualism--and applied it directly to starting and expanding 
American small businesses. As the ranking member of the Small Business 
Committee and a Senator from Massachusetts, I am honored to represent a 
State that employs more and more people and continues to fuel the 
national economy and job market. Massachusetts' 360,000 small firms are 
employing over 50 percent of our workers. From 1991 to 1995, all 
American businesses with fewer than 500 employees created 11 million 
new jobs, while businesses with more than 500 employees cut three 
million jobs overall.
  I want to open the entrepreneurial frontier to all Americans who want 
to leave the welfare system behind and build new lives for themselves 
and their children.
  The Welfare-to-Work Microloan Pilot Program is geared to assist 
people in moving people from welfare into the work force, not just as 
workers but as entrepreneurs. It is more than a jobs bill. It will not 
only build businesses, but it will build communities. This bill builds 
on the foundation of the SBA's remarkable Microloan Program which 
allows businesses and startup companies to receive development 
counseling and small loans of up to $25,000. The average microloan size 
is only $10,800. Under the Welfare-to-Work Microloan Pilot Program 
local organizations will serve welfare recipients by using SBA grants 
for intensive business development assistance. In addition, the bill 
will allow local organizations to help future business owners overcome 
two of the greatest obstacles that they have, access to affordable 
transportation and convenient child care.
  Mr. President, I urge my colleagues to support this legislation--to 
assure that the American dream can be realized by all Americans and 
future generations. We must build a system now that will help our 
children. One in five of America's children--14.3 million--live in 
poverty. Two-thirds of welfare recipients are children. If we want to 
lift them up and out of poverty, we must give them new opportunities to 
explore and benefit from the resources of America's frontier. We must 
act now to provide their parents and guardians with a map across the 
entrepreneurial frontier.
  Mr. President, the fact is that this type of program has already 
worked, and I just want to share a couple of quick examples with you. 
One of the people who has already received this type of grant under the 
Microloan Pilot Project is Karla Brown, owner of Ashmont Flowers Plus 
in Boston. In 1990, she found herself divorced with a young daughter, a 
mountain of debt, bad credit and unemployed as a result of major 
surgery. After being on disability for 3 years, she decided to start 
her own business. In 1993, she started selling flowers at a subway 
station. As the business grew, she leveraged the resources of local 
organizations, developed a business plan, received an SBA funded 
Microloan, and opened a store in Codman Square, a critical commercial 
node in a low-income neighborhood in Boston. With a $19,000 loan from 
the Jewish Vocational Service in Boston and a tremendous commitment to 
become a successful entrepreneur, she is now the proud owner of a 
business that has annual sales of $100,000 and employs two people part-
time. Karla Brown's big idea of a flower shop was one of many new 
businesses applauded by an article entitled ``SBA Microloans Fuel Big 
Ideas'' in a recent issue of the U.S. Chamber of Commerce's magazine.
  Karla is joined by others on this entrepreneurial frontier. In 1995, 
the Western Massachusetts Enterprise Fund made a loan of less than 
$10,000 to a divorced, single mother who was receiving public 
assistance. The woman believed in her own skills as a hairdresser and 
her own personal efforts. With the help of her community organization, 
she developed a marketing plan, targeted special underserved markets--
homebound elderly, group home residents' and disabled people--and, in 
just 2 years, she is now busy with appointments all day long and has 
never missed a loan payment. In fact, under the SBA's Microloan 
Program, the Government has not lost one dime in the 6 years of 
operation because loan repayment rates are so high. The reason this 
program is so successful is because the SBA provides grants for 
technical assistance for the loan recipients and helps to make certain 
that these ventures are successful.

  Another Massachusetts organization, Jobs for Fall River, Inc., saw 
the potential in a 35-year-old woman who was relying on welfare while 
caring for her elderly mother and her young son. She wanted to start a 
business to design clothing. Her first attempt at the enterprise failed 
because she was not able to afford the child care, transportation 
costs, and operating costs for running the business without a loan. 
However, after attending an 8-week intensive training session, she was 
able, through the assistance of Jobs for Fall River and SBA-provided 
funding, to develop a business plan and receive a loan in May of 1996.
  We can open the entrepreneurial frontier for more Americans on public 
assistance with the Welfare to Work Microloan Pilot Program--partnering 
the resources of the SBA with local organizations like the Western 
Massachusetts Enterprise Fund, Jobs for Fall River, and the Jewish 
Vocation Services in Boston.
  During a recent hearing before the Small Business Committee, an 
inspiring witness from Iowa, Mr. John Else of the Institute of Social 
and Economic Development, told of the successes his organization is 
working with welfare recipients under the SBA Microloan Program. 
Individuals in their program have a business success rate that is three 
times higher than the average for new businesses. His testament, 
combined with the requests of other local organizations for more 
flexibility to help this community, convinced me that we need to expand 
the success of this program.
  Opening the frontier for more small businesses is critical to 
achieving the aims of welfare reform. States are now facing tall goals 
to reduce the welfare roles--their caseloads must be reduced by 25 
percent this year under the new law. The growth in job creation is 
directly parallel to the growth in small businesses. In America today, 
there are over 22 million small businesses compared with only 14,000 
big businesses. We see more women than ever exploring the 
entrepreneurial frontier. Women-owned businesses represent one-third of 
all U.S. companies, contribute more than $1.5 trillion in sales to the 
U.S. economy, and employ more people than the Fortune 500. Women-owned 
sole proprietorships have a start-up rate twice that of male-owned

[[Page S6360]]

businesses. It is important for us to help women move into 
entrepreneurial roles because women comprise a large share of welfare 
roles. I suggest that the program I am introducing today is an 
excellent way to move people from welfare into the marketplace, not 
just as workers and wage earners, but as business creators, as people 
who will be able to provide jobs for other people as well as gain their 
own self-sufficiency.
  Because the record shows that during the 6 years of the Microloan 
pilot project the Federal Government has not suffered one loss, we 
ought to be prepared to replicate these results with programs that 
create more jobs and enhance the economy. I hope my colleagues will 
support this effort.
  Mr. HARKIN. Mr. President, I rise to express support for the Welfare-
to-Work Microloan Pilot Program Act of 1997. The existing Small 
Business Administration [SBA] Microloan Program has enjoyed great 
success in moving people off welfare and helping them start their own 
business. The welfare-to-work initiative will not only continue this 
success, but it will also improve the services provided by the current 
Microloan Program.
  The existing Microloan Program has two components. First, it works to 
provide short-term loans of up to $25,000 to small businesses. SBA 
makes these loans through various nonprofit organizations that have 
close ties to their communities. Second, the Microloan Program also 
provides technical assistance to help clients learn important skills 
such as accounting, marketing, and advertising.
  It is important that we continue the Microloan Program, and we must 
also look to implement other services that will make it more effective. 
The welfare-to-work initiative does just that by establishing a 3-year 
program that will continue and expand upon the existing program. Like 
the current law, this bill will extend loans and technical assistance, 
but it will also allow for more business planning and training 
assistance prior to extending loans to welfare recipients. It will also 
allow intermediaries to use supplemental grants to help borrowers with 
transportation and child care expenses. Extending these services is 
essential in order to allow welfare recipients who don't have the money 
for transportation and child care to participate in the program.
  An example of the Microloan Program's success is the Institute for 
Social and Economic Development [ISED] in Iowa City, IA. ISED is 
different from most development corporations in the Microloan Program 
because it does not extend loans to its clients. Rather, it provides 
technical assistance and will act as an intermediary to set up a loan 
between their client and a bank. ISED's technical assistance program 
provides structured training in which clients develop plans for a 
profitable business. Due to this effort, ISED has enjoyed an extremely 
high success rate, with 70 percent of its client's businesses still 
operational. This statistic becomes even more impressive considering 
that of all the small businesses started across the Nation in the last 
8 years over 70 percent no longer exist.
  We must recognize that the welfare-to-work initiative benefits both 
welfare recipients and our taxpayers. The Microloan Program presents 
welfare recipients with the preferable option of self-employment as a 
means to move off welfare. At the same time, it saves the State money 
and moves people from being welfare recipients to taxpayers. In Iowa, 
nearly 400 welfare recipients have started and maintained their own 
small business, and the total savings to the State have been $1 million 
in welfare benefits alone.
  The welfare-to-work initiative gives welfare recipients the 
opportunity to be self-sufficient. It provides the entrepreneur with 
the money to start a business, and the skills and services to maintain 
it.
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