Rowe Testimony

Summary

Written testimony of C. E. "Tee" Rowe, President/CEO of America's SBDC, before the United States Senate Committee on Small Business and Entrepreneurship on February 1, 2022, for the hearing Review of SBA Entrepreneurial Development Programs and Initiatives. The testimony describes the small business development center system of 62 networks with over 975 locations, its accreditation process, and its work with veterans, underserved and rural communities, exporters, technology firms, cybersecurity and procurement. It states that from 2012 to 2019 SBDCs helped clients obtain over $36 billion in capital, and describes their pandemic response, including assistance with PPP, EIDL, SVOG and Restaurant Revitalization Fund financing. It closes with reauthorization recommendations, including increasing the SBDC authorization level to $200 million.

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                Testimony
                    of
             C. E. “Tee” Rowe
              President/CEO


             February 1, 2022


       Committee on Small Business
           and Entrepreneurship
           United States Senate


“Review of SBA Entrepreneurial Development
         Programs and Initiatives”
Testimony of C. E. Rowe - ASBDC                   2


Chairman Cardin, Ranking Member Paul,

Thank you for inviting me to testify today on behalf of America’s SBDCs. I am the President
and CEO of America’s SBDC, the Association that represents the nationwide small business
development center (SBDC) system of 62 networks with over 975 locations and over 4,000
dedicated professional counselors, advisors, and support staff.

For over 40 years the SBDCs have been providing services to small business owners and
aspiring entrepreneurs. Over the years our member networks have developed a wide
variety of services for small businesses of all sizes, services that are tailored to meet the
needs of regional businesses throughout the nation.

HOW AND WHERE SBDCs WORK

SBDCs operate out of host institutions, primarily colleges and universities, and they
operate (with some exceptions) statewide. California and Texas are the exceptions having
five and four regional networks respectively. Some SBDCs (CO, IL, WV, IN, OH, MT) are
hosted by their state departments of commerce or economic development. The host
institution manages the operations of its SBDC network through its sub-centers and many
of those are at other colleges, community colleges and chambers of commerce. Those host
institutions and their partners contribute matching funds that exceed the federal funding.
Federal funding for SBDCs is allocated based on population census figures with a minimum
funding level established for smaller states (VT, NH, SD, etc.)

Many SBDCs are based at the business schools of their respective colleges and universities
providing the ability to leverage the skills and knowledge of the professors and students
with the practical experience of our advisers. However, while SBDCs may be
headquartered at colleges and universities (or state agencies) our centers are in the
communities. We strive to develop partnerships with local groups to ensure that our
services are reaching as many small businesses as possible in all areas of society. For
example, our centers are located at sites like the Hispanic Chamber in Silicon Valley CA, or
the East Los Angeles Initiative. In Colorado you will find SBDCs at the Municipal Center in
Aurora or the Boulder public library. In Kentucky at the Chamber of Commerce in
Lexington or the City Hall in Berea. SBDCs are located to maximize small business access.
Testimony of C. E. Rowe - ASBDC                3


SBDCs provide services to small businesses at all stages of development. The mix of
businesses usually varies depending on the region and their unique characteristics. A good
rule of thumb is that we have a range of about a 60/40 mix of existing and nascent (start-
up) entrepreneurs. Annually, these ratios vary due to economic conditions and external
factors such as disasters or market conditions. Roughly 50% of our clients are women, and
roughly 10% of our clients are veterans. Every year we provide over one and a half million
hours of counseling and training to over 500,000 small business owners and their
employees.

SBDCs focus on providing free one-on-one consulting and mentoring on how to improve,
finance, market, and manage their businesses. The services SBDCs provide tend to be more in-
depth, and our relationships often span several years. The services will change as the business
grows and its needs shift. SBDCs offer assistance in finance, marketing, procurement, rural
tourism, energy conservation, and international trade among many other areas. We are always
expanding and improving our services to support the growing needs of the small business
sector and to adapt to a changing business environment.

SBDC assistance produces significant results. From 2012 to 2019 SBDCs helped their small
business clients obtain over $36 billion in capital, increase their sales by over $47 billion and
helped them create over 629,000 new jobs. In 2020 alone SBDCs helped small businesses access
$6 billion in capital, increase sales by $7.6 billion and create 71,399 jobs.

ACCREDITATION

SBDCs are unique in that they are subject to accreditation. Each SBDC network is required to
undergo accreditation at least every five years. Each accreditation review involves a weeklong
examination by an accreditation team, a rigorous self-study, interviews, and written reports.
The reports are reviewed by our accreditation committee and SBA. Our accreditation standards
are based on the Malcolm Baldrige Standards for continuous quality improvement. These
standards monitor the skills of our counselors, the strength of our SBDC management, the
commitment of our host institutions, the strength of and adherence to our strategic plans, and
SBDC effectiveness. A key component of every SBDC’s strategic plan is our needs assessment
process. This focuses on the needs of our clients, the changing economy and ensuring that
SBDC services keep up with needs of small business. The SBDC program has been recognized by
the Office of Management and Budget for its accountability and the quality of its performance
data. We’re proud of the fact that our impact data is accurate and verifiable and that we’re
accountable to the taxpayers.
Testimony of C. E. Rowe - ASBDC                 4


VETERANS

SBDCs prioritize assistance to veterans – approximately 10% of our clients are veterans. We
have specialized programs in several states to assist veterans both pre and post deployment.
Many of our networks, particularly in states with large veteran populations (TX, NY, FL, e.g.)
have such programs. Veterans consistently make up a highly entrepreneurial demographic and
often base their businesses on a skill set acquired while serving our nation’s defense; we
believe they have earned our special attention.

UNDERSERVED COMMUNITIES

The SBDC outreach to minority and underserved communities is significant. Our minority
clientele comprises over 38% of our client base nationwide and our members support targeted
outreach programs across the country. In New York for example, the SBDC network hosts the
Organization for Latino Entrepreneurs (Ole) and in Maryland the SBDC network supports the
Branch Avenue project, an inner-city business restoration program, as well as operating a
Hispanic Business Center. Two SBDC networks (DC, USVI) are hosted by Historically Black
Colleges and Universities, and we have centers at 21 HBCUs in 14 states. However, as I will
discuss later, our efforts to reach all communities are not stopping there.

RURAL OUTREACH

SBDCs are mandated to provide service to their entire state. Rural, urban, suburban. Over the
years SBDCs have recognized the difficulties faced by rural communities and have introduced
initiatives to meet their needs. As an example, our Texas SBDC networks have hosted an
annual Texas Rural Conference with a focus on bringing together economic development
organizations to focus on the needs of entrepreneurs in rural communities. In the same vein,
the Virginia SBDC supports a rural outreach program, the Small Town and Merchant Program to
aid small independent retailers and restaurateurs in small communities. Our Alabama SBDC
network is initiating a Rural Strong initiative in cooperation with the USDA to expand it efforts
in rural Alabama. In Missouri the SBTDC in Cape Girardeau works closely with the Delta
Regional Authority to provide the business development assistance that is integral to that
agency’s economic development mission. In Montana the SBDC works with Native American
Business Advisers and the state’s Indian Country Economic Development Program to increase
Native American business opportunities and also partners in regional efforts like the Montana
Economic Opportunity Workgroup in Great Falls.
Testimony of C. E. Rowe - ASBDC                5


EXPORTS

Nationwide SBDC have over 500 certified export assistance counselors to help small businesses
reach the markets outside the US, where 95% of the world’s markets reside. We partner with
the US Census Bureau to provide training in US export regulations and in Massachusetts and
Illinois, as well as other states, the SBDC network is one of the key components of the state’s
export outreach program. The Minnesota SBDC was a charter member and supporter of the
NASBITE Trade Passport system enabling small businesses to access export regulation and
finance information training and assistance online. Recently the Ohio SBDC partnered with the
State of Ohio Office of International Engagement to launch a new program focused on
identifying businesses with export potential across Appalachian Ohio. Businesses work with
SBDC Export Assistance Advisers to develop comprehensive and in-depth export plans, and
have access to a combination of SBDC services, access to state-produced market research,
specially trained interns and enhanced STEP funding to offset costs.


We are also involved in an ambitious effort to spread the SBDC model to other countries.
Working with the Department of State SBDCs have been helping establish small business
support organizations throughout South and Central America, an initiative called the Small
Business Network of the Americas. We consider this effort to have a vital role both in building
markets and export relationships for our small business clients. As a result of our efforts,
particularly through the Southwest Texas Border SBDC at UTSA we have helped establish small
business development organizations in Mexico, Honduras, Colombia, Chile, Costa Rica, Belize,
Guatemala and Panama. Our latest effort is bringing the SBDC model to Kenya through a
project with USAID and Kenyan Ministry of Industrialization, Trade and Enterprise
Development.

TECHNOLOGY

SBDCs are significant providers of assistance for the SBIR and STTR programs. SBDCs across the
country work with small technology firms and assist them in applying for and winning grants to
develop technology for federal R&D priorities and commercialize them.

These small businesses are dealing with some of the Nation’s biggest problems. The Arkansas
SBDC helped their client, Truckish, access DOT funding to development a new platform called
“Relay” that enables drivers to sleep at home while reducing shipment delivery and truck idling
times. The proposed platform incorporates algorithms for changing long-haul trucking from the
conventional point-to-point model to a relay model. This enables drivers to meet and switch
trailers along interstates and return home daily while the trucks and cargo continue to move
towards their respective destinations. In addition, Relay’s decoupling of tractors and drivers
from trailers and cargo could cut delivery times in half, minimizing loss and saving on truck
refrigeration costs.
Testimony of C. E. Rowe - ASBDC                6


CYBERSECURITY

Over the past year the national SBDC network has developed a cybersecurity training program
based on the Department of Defense Cybersecurity Maturity Model Certification Program. The
Delaware SBDC’s DatAssured™ Cybersecurity Program was nationally recognized by the U.S.
Department of Homeland Security and received a national training award from the Federal
Information Security Educators (FISSEA). The program is a leading resource at the state level
and used as a centerpiece for the state’s Secure Delaware Cyber Security Conference. Lastly,
DataAssured has been adopted by over a dozen other state SBDC networks across the country.
The platform encompasses all facets of the DoD, NIST and Homeland Security guidance in order
to provide the ability for SBDCs to provide basic security for small business owners and help
them access higher level services when needed.


PROCUREMENT

27 of the 94 procurement technical assistance centers operating across the country are
supported by SBDCs. In addition, numerous SBDCs offer introductory courses and assistance on
accessing government contracting opportunities. In many networks that government
contracting effort is centered on supporting SBA’s HUBZones and 8(a) procurement programs
for underserved communities. For example, in New York the SBDC provides both federal and
statewide MWBE certification assistance and contractor bonding programs to help meet state
and federal goals.

COVID PANDEMIC RESPONSE

SBDCs have been working long hours over the last two years assisting small business with
handling their response to the pandemic. It hasn’t been easy. I did a quick poll of my
membership, and all together they did close to three years of work in the first 10 to 12 months,
and it has hardly slackened. It’s not unusual for counseling requests to exceed 200% of normal
year over year.

SBDCs hosted and participated in over 3,500 webinars and assisted over 315,000 people in the
early months of the pandemic and provided over 235,000 counseling hours.

We have assisted small businesses with billions in financings through PPP, EIDL, SVOG and now
the Restaurant Revitalization Fund. Throughout the pandemic the biggest problem SBDCs and
their clients faced was conflicting information. We tried hard to help small business, but our
efforts were occasionally hindered by information that came out in fits and starts. We worked
hard to assist small businesses get applications in and get them the help they needed.
Testimony of C. E. Rowe - ASBDC                7


Sadly, a lot of conflicting and sometimes downright bad information came out and that made
our work harder. Motivated by the best of intentions a lot of parties tried to rush information
out in advance of agency guidance. That, compounded by concern, drove a lot of small
businesses to make mistakes and that was compounded by a shortage of actual guidance from
the agencies.

In many situations, SBDCs guided small business by helping them to understand their options
more fully. Taken all at once the combination of Family and Medical Leave Act changes,
unemployment insurance changes, EIDL and PPP loans presented a confusing cocktail for most
small business owners. Many were faced with unpleasant options – take an EIDL loan and save
the business by paying rent but lose your employees. Pay your employees through PPP but not
have enough to pay rent and lose the business. The interplay of the options presented were not
easy to understand. If you put your employees on layoff would there be PPP funds to rehire
them later after the lockdowns?

To respond to the pandemic and the unique problems SBDCs responded in a variety of ways. An
example is our Pennsylvania SBDC network. The PASBDC responded to the pandemic by
launching 9 centers of excellence with specialty services. Within 2 months of receiving the
Cares Act funding these COEs were open to serve clients across the Commonwealth with new
services aimed specifically at helping clients weather the pandemic. Those services included e-
commerce, SEO, life science, agriculture, and hospitality sector focused specialized services,
including a bilingual (Latino) center of excellence to help the community access the various
special loan programs. In our Los Angeles and Hawaii networks SBDCs not only supplied advice
but also critical PPE to help businesses protect their staff and their customers and keep their
doors open.

In our networks, as demand for counseling and training tripled and quadrupled during the
spring and summer of last year with the onset of the economic decline triggered by COVID,
followed by the availability of the new federal loan and grant programs SBDCs shifted quickly to
online counseling and training. The public’s acceptance of on-line counseling and training grew
tremendously based on quarantining and sheltering practices.

The use of on-line methods of working with businesses, although not preferred by everyone,
will remain a significant alternative in the post-COVID environment. These on-line methods will
help reduce drive-time inefficiencies, both in urban and rural areas. On-line counseling also
allows SBDC’s to better utilize specialized skillsets among staff as geographic location becomes
less limiting. At SBDCs we conduct regular needs assessments regarding our small business
clients’ needs. Current survey results show that the most requested educational programming
is “Finding New Customers”, and that is also their most frequently mentioned challenge.
Testimony of C. E. Rowe - ASBDC                8


GOING FORWARD

Based on these results, for the immediate future we see small business as increasingly reliant
on technology to both serve and find customers. As the pandemic recedes, we hope that
people will return to their prior retail habits but it is not improbable that consumer habits
learned during the pandemic will linger. Our concern is how to meet those small business needs
and help small businesses re-establish those customer bases, customer confidence, and regain
lost ground. We are also challenged by the “great resignation”. In many ways we were
pleasantly surprised by the number of new businesses that sprang up during the last two years.
More people than ever have investigated, whether driven by layoffs or just dissatisfaction, and
taken the step into business ownership.

These changes also represent significant challenges. Broadband access limits the availability of
on-line services in many communities. To overcome that SBDCs are continuing to increase their
efforts at outreach with local community organizations. A particular example, the Southlands
SBDC near Chicago worked with the Resurrection Project and the Urban League to ensure that
SBDC services and SBA programs reached underserved communities. Our Ohio SBDC also
collaborated with the Urban League to the same end, ensuring access and equity. Likewise, in
Houston the Gulf Coast SBDC is teaming with the Greater Houston Black Chamber of
Commerce, the second oldest and one of the largest Black Chambers in the US. They have
begun a new initiative creating a "business institute" for underserved communities to improve
their ability to access capital.

Their plan is to create cohorts of 30 businesses and put them through a 6-month intensive
training program that provides access to resources, training and advising that they would not
normally have or would not have access to. The Gulf Coast SBDC will be supporting the program
through sponsorship funding to bring in outside experts on specialized businesses topics as well
as providing our SBDC training. The Gulf Coast SBDC will not only provide advising services
during the program but will be providing ongoing support after the program is over.

This is a continuation of SBDCs’ work to serve all their communities. As I mentioned before,
SBDCs are spread across communities in their states and regions endeavoring to provide service
to all communities. As a continuation of this the SBDCs have begun The Inclusivity Challenge
based on the NorCal SBDC’s Inclusivity Project- https://theinclusivityproject.com/

The challenge is simple – “Do More”. Based on the assessments of each SBDC’s local needs they
will reach out to more communities and establish more connections and provide more services.
Each SBDC participating in The Inclusivity Challenge begins by critically examining communities
within the SBDC service region that are underserved, or face barriers or limitations to building
Testimony of C. E. Rowe - ASBDC                9


sustainable businesses. The Inclusivity Challenge is not just about targeting demographic
groups. It’s about helping all entrepreneurs overcome impediments to their success. Those can
include language, culture, geography, disability, past life experiences (drug addiction, prison
records), etc.

The Inclusivity Challenge is a framework to strengthen current activities and to expand into
other markets. Partners are vital to building connections to businesses within the community
targeted and help to endorse the creditability of the SBDC and build confidence of businesses
to seek SBDC services. Partners include chambers of commerce, merchant associations,
religious institutions, and navigator entities. Past SBDC clients will be tapped as community
ambassadors and to help establish connections to the most relevant partners. Finally, financial
partners will be vital to help address the capital needs of businesses and are important to
achieving the capital access objectives of The Inclusivity Challenge.

We view our effort as complementary to the Community Navigators program. In fact, several
SBDCs are already engaged in pilot programs for Community Navigators. SBDCs look forward to
participating in Community Navigators as Hubs or Spokes, however we can best work with local
navigator organizations to expand access to services and assistance to underserved small
businesses. Our goal is to help as many small businesses as possible, particularly those hardest
hit by the pandemic – businesses in communities of color, come out of the current situation
stronger and better prepared for the future.


THE FUTURE OF SMALL BUSINESS

I also want to mention our ongoing effort to encourage entrepreneurship. SBDCs are intensely
involved in programs to engage students as volunteers and interns, and in addition, we
regularly host events promoting entrepreneurship amongst students of all ages. From
Lemonade Day in Alaska that teaches K-12 children how to plan and launch a business to the
Student Link Initiative in Delaware, the Senior Consulting Projects in Illinois, Youth
Entrepreneurship Service (YES) in New York or the Entrepreneurial Families program in New
Hampshire, SBDCs are constantly spreading the spirit of entrepreneurship.
Testimony of C. E. Rowe - ASBDC                 10


COLLABORATION ACROSS AGENCIES AND PROGRAMS

America’s SBDCs would like to start a discussion on the most efficient and effective ways to
deliver services to small businesses. America’s SBDC and its members don’t believe in a one size
fits all approach to the delivery of services. We recognize our states and regions have different
economies, resources and needs. What we do believe is that the leveraging of the capabilities
available must be accomplished in a thoughtful and efficient fashion.

There are a few themes that America’s SBDC believes need to be developed to move towards
that more efficient system. First, there need to be reasonable uniform standards for the impact
and effectiveness of programs. Small businesses are focused on the bottom line. Yes, small
business owners have a variety of motivations but, at the end of the day nobody goes into
business to lose money. Growth in sales, investment and hiring are key indicators. Obtaining
capital is usually the key measure. America’s SBDC believes that access to capital is vital but if
that financing isn’t leading to an improved bottom line it’s just an output not an outcome.

This goes hand in glove with the need to share information across program boundaries. There
is nothing more unproductive than having to collect different data or follow different rules for
different agencies or programs and keep that information in different formats. This creates
silos that the entrepreneur does not understand or consider beneficial and adds complexity
that distracts from the mission – helping small business. It doesn’t matter whether the
information is being collected for the USDA, SBA, OMB or whoever – incompatible databases
that collect inconsistent information, and conflicting guidance are counterproductive and
fundamentally inefficient.

A complementary theme is cooperation. As I may have pointed out before, several SBDCs co-
locate with women’s business centers. Many SBDCs host SCORE counselors as well. As well
many of the VBOCs and the PTACs are located with SBDCs. SBDCs work hand in glove with the
Delta Regional Authority as well as the Appalachian Regional Commission and many federal
agencies. Yet at the same time, programs and initiatives often arise that seem to duplicate the
efforts of existing programs and ignore capabilities that are already in place in existing
networks. This is not anything new, it happens under every Administration. We believe this
happens because people don’t realize what’s out there already or, they are frustrated by the
limitations. They aren’t wrong, there are nearly 30 million small businesses and there are
significant gaps. However, we need to be clear about the resources we have and how to
leverage them to the best effect. We need to recognize the skills that exist and encourage their
adaptation, expansion, and collaboration.
Testimony of C. E. Rowe - ASBDC                11


REAUTHORIZATION

America’s SBDCs strongly support reauthorization of SBA’s Entrepreneurial Development
programs. It has been sometime since the programs were last updated and we agree that it is
time to review, renew and reinvigorate the commitment to assisting small business.

I would like to point out a few areas where we believe SBDCs services and our relationship with
SBA, and other agencies could be improved to increase the support offered to small business.

     1. Clarify and strengthen the SBA/SBDC partnership through clear negotiation and
        collaboration.
     2. Clarify SBDC marketing and co-sponsorship abilities.
     3. Set forth priorities and goals for the entrepreneurial development programs that reflect
        21st century economics and opportunities.
     4. Strengthen the ability for all federal agencies, and entrepreneurial development
        programs to serve all counties. Rural and inner city alike.
     5. Breakdown the silos that isolate program access and capacity.
     6. Recognize the variety and scope of the entrepreneurial development programs and
        focus on broadening outreach rather than worrying about overlap.
     7. Increase the SBDC authorization level to $200 million, and our partners accordingly.
     8. Involve SBA’s ED programs in workforce development, and apprenticeships.
     9. Support increases in ED program appropriations to build this capacity.

That concludes my testimony. Thank you for letting me share this information about the SBDC
program and our efforts. I look forward to any questions you might have.


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