Swanson Testimony

Summary

Written testimony of Karl E. Swanson, President of PCT Ebeam and Integration in Davenport, Iowa, submitted to the U.S. Senate Committee on Small Business & Entrepreneurship on September 17, 2025, titled Using the 504 Program to Build America's Manufacturing Future. The testimony describes the company's buyback by a group of long-term co-workers and its use of SBA 504 loans to buy and expand its building. It identifies program limitations: the SBA 7(a) guarantee cap of $3.75 million, which left $794,000 available after $2.956 million in 504 financing; loan approval times of more than 30 days; and rent limits under the EPC/OC structure. It supports the Made in America Manufacturing Finance Act of 2025 (S. 1555), which would raise the maximum total loan size to $10 million.

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Using the 504 Program to Build America’s
          Manufacturing Future


                  Written Testimony before the

   U.S. Senate Committee on Small Business & Entrepreneurship



                      September 17, 2025




                         Submitted by:


                       Karl E. Swanson
                          President
                   PCT Ebeam and Integration
                        Davenport, IA
Testimony of Karl E. Swanson, President, PCT Ebeam and Integration


       Chair Ernst, Ranking Member Markey, and distinguished members of the Committee:

I appreciate the opportunity to testify today, and I am humbled by the responsibility to represent

the interests of the hundreds of thousands of small manufacturers that fuel the American

economy.

       My name is Karl Swanson and I, like SBA Administrator Loeffler, grew up on my

family’s farm near Rio, Illinois. I graduated from the University of Illinois with a degree in

Electrical Engineering and from Saint Ambrose University with an M.B.A. Today I am the

President of PCT Ebeam and Integration located in Davenport, Iowa. In that role, I have the

privilege of leading a talented team of outstanding individuals.

       PCT was founded in 1986 by three engineers working at a local aluminum factory. When

the original President and majority owner was looking to retire, the most attractive option was to

be acquired by a Swiss company, which took place in 2015. The integration of the two

companies was not successful, and the business declined to the point that it was decided to shut

down our location. While considering what to do, I found eight of my long-term co-workers

willing to join me in an effort to buy the company back. We shared a common belief that if we

were allowed to make sensible decisions there was still a viable business opportunity. In

November of 2018 we reached an agreement to make this a reality and embarked upon what has

been a challenging and rewarding journey.

       I am proud to be here today on behalf of my valued teammates. We have experienced

first-hand the advantages of once again being an American-owned small business. In seven

years, we have grown from 45 to 65 employees, and we have also re-acquired many of the

critical manufacturing capabilities that were divested by the previous owner.




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Testimony of Karl E. Swanson, President, PCT Ebeam and Integration


        PCT is both a systems integrator and a manufacturer of industrial electron beam systems.

Our ebeam machines are used in a variety of different industries where they enable energy

efficient production of pre-painted steel, are used in the manufacturing of advanced medical

materials, and can be used to achieve more sustainable production of lithium-ion batteries.

Building these specialized machines requires a skilled workforce and specific manufacturing

capabilities.

        Fifty percent of the ebeam systems we build are exported. Our foreign customers often

require their advance payments to be secured by local bank guarantees. The options for a small

U.S. manufacturer to comply with these requirements are limited. For PCT it is critical that we

have access to funds to support our material and labor expenses throughout the lengthy

production schedule. The Small Business Administration has been a major source of support for

our business from purchasing our commercial real estate to expanding our export efforts. While

we are grateful for the opportunities provided, this hearing provides the opportunity to discuss

ways the SBA programs, and particularly the 504 Loan Program, can be further leveraged for

small manufacturers across the country.

        Use of the SBA 504 Program. Following our purchase of the business, we had the

opportunity to purchase our building and thus secure our company’s long-term future in our

current location. The SBA 504 Loan Program was recommended by our local bank and made this

purchase possible. The favorable interest rate and long-term fixed rate financing allowed us to

not only purchase the property, but to also continue investing in the growth of our business.

Following further success in building back the business, we decided to expand our

manufacturing shop. Once again, the SBA 504 was critical in helping us finance this expansion.

With the new space, we were able to add more production capabilities, facilitate better material


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Testimony of Karl E. Swanson, President, PCT Ebeam and Integration


flow, and increase our capacity to assemble and test more ebeam systems. Each time we looked

to invest in our long-term future, the SBA 504 gave us a financing solution that was both

accessible and affordable.

        Our experience shows how central the SBA 504 is to long-term business growth and

competitiveness. But as that growth leads to bigger opportunities, and our business takes on

larger and more complex projects, we have experienced limitations in SBA’s financing programs

that impose undue constraints on the organic and profitable growth of manufacturing firms like

ours.

        Program Limitations and Improvements. The first limitation we faced was when our

financing needs intersected with SBA aggregate program caps. For example, when we recently

received a multi-million-dollar order from a customer in Brazil, we needed to provide bank

guarantees equal to the value of advance payments received before shipment. The SBA 7(a)

Export Working Capital Program would have been the ideal solution, but after securing $2.956

million in SBA 504 financing, only $794,000 remained available under the SBA 7(a) guarantee

cap, which is $3.75 million for a single borrower and their affiliates. As a result, we had to

pursue more expensive alternatives, which significantly increased our costs for that contract.

These limitations create constraints not only for our business, but also for lenders who want to

support U.S. manufacturers competing in global markets.

        The Made in America Manufacturing Finance Act of 2025 (MAMFA) (S. 1555)

introduced by Chair Ernst, and cosponsored by Senator Coons, Senator Young, and Senator

Hickenlooper, to increase the maximum total loan size to $10 million would directly address our

situation. Having access to this additional loan capacity would provide PCT with a cost-effective

means of supporting more export business, which in turn improves our competitiveness in


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Testimony of Karl E. Swanson, President, PCT Ebeam and Integration


foreign markets and enables us to accelerate further investments in additional staff and

production equipment domestically. I strongly support this effort and hope Congress passes this

legislation.

        Another limitation we experienced was SBA loan approval times. With the first 504 loan

PCT received in 2021, delays during the pandemic were understandable given the record-high

loan volume. However, an approval time of more than 30 days can place a significant burden on

small businesses. By comparison, our 504 Loan for the expansion was processed in roughly half

that time—an improvement, but still a reminder of how critical speed is in today’s business

environment. The pace of business is fast, and America’s small businesses must be able to move

quickly to remain competitive. An agile SBA, equipped to scale staffing in response to loan

volume and deliver timely approvals, is essential to supporting the growth and success of our

nation’s entrepreneurs.

        The last limitation I will address is regarding the EPC/OC structure. Under the EPC/OC

structure, SBA allows small business owners to hold title to project property passively and lease

it to their operating company. I understand the intent of the SBA is to ensure buildings are not

purchased for investment purposes. However, SBA has imposed limits on the rent an Operating

Company (OC) may pay to the Eligible Passive Company (EPC), capping it to the level of debt

service plus building-related expenses. While this safeguard is logical, it presents unintended

challenges for the owners of small businesses like PCT. For many of us, our real estate purchase

serves as a cornerstone of our long-term retirement plan. By preventing owners from collecting

market-rate rent, the policy reduces rental income and, ultimately, diminishes the value of the

real estate asset itself. This restriction not only impacts retirement planning but also erodes an

important component of wealth-building for America’s small business owners. I encourage the


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Testimony of Karl E. Swanson, President, PCT Ebeam and Integration


Committee to consider removing this constraint to make this structure more user friendly for

small businesses using the program.

       Conclusion. I respectfully request that you continue your efforts to strengthen and

simplify the SBA 504 Loan Program to ensure that growing manufacturers can expand capacity,

compete internationally, and create more U.S. jobs – without lengthy delays or undue limitations.

It is an honor to submit this testimony. Thank you for considering these requests to improve the

valuable support the SBA provides to American manufacturers through the 504 Loan Program.




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