Testimony of Cathy Koch, K-Tec Systems — Senate Small Business Committee, July 26, 2023

Summary

Written testimony of Catherine (Cathy) Koch, owner of K-Tec Systems, for a Senate Small Business Committee hearing on July 26, 2023 titled Pathways to Women's Entrepreneurship: Understanding Opportunities and Barriers. The witness describes founding a Detroit-area manufacturer of temperature sensors, wire harnesses and control systems, and states she could not obtain a loan without a co-signer and used $10,000 from a land loan to start the business. The testimony states the company pulled through COVID-19 with PPP, a COVID EIDL loan and a CEED loan from Great Lakes Women's Business Council. It offers three recommendations: more accessible mentoring and coaching for female small business owners, reform of the federal procurement process, and continued modernization of the SBA, including on child care and access to capital.

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Testimony
Catherine (Cathy) Koch, owner of K-Tec Systems
Senate Small Business Committee Hearing – July 26, 2023
Pathways to Women’s Entrepreneurship: Understanding Opportunities and Barriers


Chairman Cardin, Ranking Member Ernst, distinguished committee members and guests, good morning.

My name is Cathy Koch. I am the founder and owner of K-Tec Systems, a Detroit-area manufacturer of
temperature sensors, wire harnesses and control systems. We serve diverse industries, including
Automotive, Aerospace, Food, Medical and Chemical. I am also an alumna of the Goldman Sachs
10,000 Small Businesses program.

It is an honor to be here today. I appreciate your invitation and your attention to leveling the playing
field for female small business owners.

I would like to begin by thanking the Committee for its bipartisan work last week to pass a series of
bills to modernize the Small Business Administration (SBA).

I am here today to share my personal experience as a female small business owner and the unique
barriers we face. And, importantly, what can be done to create equity and level the playing field.

Let me start from the beginning of this journey. The year was 1989. I had a one-year-old daughter, I was
a recently divorced single mother, and I was working in sales in the male-dominated automotive
industry.

1989 was a different time. I loved sales, and I loved being a mom. But I was told by my male boss that a
woman couldn’t do sales – let alone a new, single mom. I disagreed. I knew my value and my talent. So, I
left and went to a competitor.

While things were better at that competitor, I was still being held back. Eventually I realized that the
only way I’d reach my true potential – as a woman in a male-dominated industry – was to start my own
business.

I put together a business plan. I sought a loan from a traditional lender, but because I was a woman, I
couldn’t get one without a co-signer. In fact, I hadn’t been able to secure a loan without a co-signer until
three years ago even though I have been profitable every year in business. Do you think male small
business owners face similar circumstances?

Since I couldn’t get a loan to start a business, I bought a house with a land loan. I used $10,000 from that
loan to finance the start of K-Tec Systems. I had succeeded in overcoming the first challenge female
small business owners face: Far more limited access to capital than their male counterparts.

Starting a business is hard. I made sacrifices. I brought my daughter to work with me regularly because –
like many female small business owners – access to affordable and reliable child care was another barrier
I faced.

Eventually, my hard work paid off. K-Tec hit our stride. We were doing business with every major
automobile manufacturer and had broken into other industries.
Then came the Spring of 2020. COVID-19 changed everything. I didn’t think my company would survive.

Thanks to PPP, a COVID EIDL loan, a CEED loan from Great Lakes Women’s Business Council, and my
great employees, K-Tec pulled through COVID and is thriving again. In fact, we are doing some of our
most meaningful work yet with a new contract to supply temperature sensors for the transportation and
storage of a new cancer drug.

Here’s the truth: My story, while troubling in some respects, is a success story. The challenges that I
faced – and to some degree still face – didn’t stop me. But, those same challenges persist and are a
devastating detriment to a large number of female small business owners.

Simply put, the extra challenges female small business owners face are a drag on our nation’s economic
output. Think of the charge female small business owners could put into our economy if they were
unleashed without restriction.

As this Committee continues its work to establish equity for female small business owners, I offer these
perspectives where Congress and the SBA can focus to give us a fair shake:

    •   First, make mentoring and coaching opportunities for female small business owners more
        accessible and tailored to the women they serve. Along the way, I could have used more female
        mentors who helped me navigate the difficult terrain of starting a business. That is why I mentor
        fellow female entrepreneurs. In my experience, the current mentoring and coaching programs
        and resources from the SBA are hard to find and not what we need.

        I can honestly say the female small business owners I speak to are not aware of Women’s
        Business Centers and don’t know the programs they offer. These programs should be
        modernized, and their reach must be extended.

    •   Second, reform the procurement process. It is nearly impossible for small business owners to
        sell their products to the federal government. I’ve effectively given up – and I’m far from alone.
        It’s no wonder the SBA regularly misses its goal of contracts awarded to female small business
        owners.

        Here’s a true story that should resonate: My products are currently purchased by the U.S. Air
        Force. But they are not bought from me.

        They are purchased from a larger, male-owned business who is, quite literally, the middleman,
        because he can afford the resources to navigate the procurement process.

        If that doesn’t trouble you, consider this: the federal government is paying more for them than it
        would be by buying directly from me because he marks up the price. The only reason for this is
        because the procurement process is just too difficult to navigate.

        It’s past time to cut the red tape.
   •   And third, continue modernizing the SBA to address the challenges of today’s small
       businesses. A lack of access to child care is a workforce issue and a small business issue – and it
       must be treated as such. I’d like to thank this Committee and Ranking Member Ernst for working
       to address challenges small business owners face as it relates to accessing child care.
       We must also examine how the SBA and federal government can increase access to affordable
       capital for small businesses. The truth is female and minority-owned small business owners are
       disproportionately impacted by this challenge.

I could share more as supporting women and female small business owners is a real passion. However, in
the interest of time, I will conclude by thanking the Committee for its time and for inviting me here
today. I look forward to answering any questions you have and stand ready to work with you to find
solutions to challenges female small business owners face today.

Thank you.


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