The Small Business Administration's Entrepreneurial Ecosystem: An Update and Next Steps With SBA's Resource Partners
Summary
The printed record of a hearing of the House Committee on Small Business's Subcommittee on Innovation, Entrepreneurship, and Workforce Development on the SBA's resource partners, on May 19, 2021, published as Small Business Committee Document Number 117-014. Subcommittee Chairman Jason Crow describes the four primary resource partners: Small Business Development Centers, Women Business Centers, SCORE and Veteran Business Outreach Centers. Ranking Member Young Kim raises SBA Office of Inspector General reports and duplication among entrepreneur development programs. The witnesses are the chief executives of America's Small Business Development Centers, SCORE and the Association of Women's Business Centers, and a veteran small business owner. The SBDC association's testimony states that from 1990 to 2019 its clients accessed $76.5 billion in capital and created 3.3 million jobs.
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[House Hearing, 117 Congress]
[From the U.S. Government Publishing Office]
THE SMALL BUSINESS ADMINISTRATION'S
ENTREPRENEURIAL ECOSYSTEM: AN UPDATE
AND NEXT STEPS WITH SBA'S RESOURCE
PARTNERS
HEARING
BEFORE THE
SUBCOMMITTEE ON INNOVATION,
ENTREPRENEURSHIP,
AND WORKFORCE DEVELOPMENT
OF THE
COMMITTEE ON SMALL BUSINESS
UNITED STATES
HOUSE OF REPRESENTATIVES
ONE HUNDRED SEVENTEENTH CONGRESS
FIRST SESSION
__________
HEARING HELD
MAY 19, 2021
__________
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Small Business Committee Document Number 117-014
Available via the GPO Website: www.govinfo.gov
__________
U.S. GOVERNMENT PUBLISHING OFFICE
44-566 WASHINGTON : 2021
-----------------------------------------------------------------------------------
HOUSE COMMITTEE ON SMALL BUSINESS
NYDIA VELAZQUEZ, New York, Chairwoman
JARED GOLDEN, Maine
JASON CROW, Colorado
SHARICE DAVIDS, Kansas
KWEISI MFUME, Maryland
DEAN PHILLIPS, Minnesota
MARIE NEWMAN, Illinois
CAROLYN BOURDEAUX, Georgia
TROY CARTER, Louisiana
JUDY CHU, California
DWIGHT EVANS, Pennsylvania
ANTONIO DELGADO, New York
CHRISSY HOULAHAN, Pennsylvania
ANDY KIM, New Jersey
ANGIE CRAIG, Minnesota
BLAINE LUETKEMEYER, Missouri, Ranking Member
ROGER WILLIAMS, Texas
JIM HAGEDORN, Minnesota
PETE STAUBER, Minnesota
DAN MEUSER, Pennsylvania
CLAUDIA TENNEY, New York
ANDREW GARBARINO, New York
YOUNG KIM, California
BETH VAN DUYNE, Texas
BYRON DONALDS, Florida
MARIA SALAZAR, Florida
SCOTT FITZGERALD, Wisconsin
Melissa Jung, Majority Staff Director
Ellen Harrington, Majority Deputy Staff Director
David Planning, Staff Director
C O N T E N T S
OPENING STATEMENTS
Page
Hon. Jason Crow.................................................. 1
Hon. Young Kim................................................... 2
WITNESSES
Mr. Charles ``Tee'' Rowe, President & Chief Executive Officer,
America's Small Business Development Centers, Burke, VA........ 5
Ms. Bridget Weston, Chief Executive Officer, Service Corps of
Retired Executives (SCORE), Herndon, VA........................ 6
Ms. Corinne Hodges, Chief Executive Officer, Association of
Women's Business Centers, Washington, DC....................... 8
Mr. Patrick Montgomery, Founder & Chief Executive Officer, Kansas
City Cattle Company, Kansas City, MO........................... 10
APPENDIX
Prepared Statements:
Mr. Charles ``Tee'' Rowe, President & Chief Executive
Officer, America's Small Business Development Centers,
Burke, VA.................................................. 26
Ms. Bridget Weston, Chief Executive Officer, Service Corps of
Retired Executives (SCORE), Herndon, VA.................... 37
Ms. Corinne Hodges, Chief Executive Officer, Association of
Women's Business Centers, Washington, DC................... 47
Mr. Patrick Montgomery, Founder & Chief Executive Officer,
Kansas City Cattle Company, Kansas City, MO................ 56
Questions and Answers for the Record:
Questions from Hon. Jason Crow to Mr. Charles ``Tee'' Rowe
and Answers from Mr. Charles ``Tee'' Rowe.................. 65
Questions from Hon. Jason Crow to Ms. Bridget Weston and
Answers from Ms. Bridget Weston............................ 67
Questions from Hon. Jason Crow to Ms. Corinne Hodges and
Answers from Ms. Corinne Hodges............................ 69
Questions from Hon. Jason Crow to Mr. Patrick Montgomery and
Answers from Mr. Patrick Montgomery........................ 70
Additional Material for the Record:
Secure Towns................................................. 58
Veteran Business Outreach Center Testimony................... 60
THE SMALL BUSINESS ADMINISTRATION'S ENTREPRENEURIAL ECOSYSTEM: AN
UPDATE AND NEXT STEPS WITH SBA'S
RESOURCE PARTNERS
----------
WEDNESDAY, MAY 19, 2021
House of Representatives,
Committee on Small Business,
Subcommittee on Innovation, Entrepreneurship,
and Workforce Development,
Washington, DC.
The Subcommittee met, pursuant to call, at 10:15 a.m., in
Room 2360, Rayburn House Office Building and via Zoom, Hon.
Jason Crow [chairman of the Subcommittee] presiding.
Present: Representatives Crow, Davids, Phillips, Newman,
Bourdeaux, Houlahan, Williams, Tenney, Garbarino, Ms. Young
Kim, and Salazar.
Chairman CROW. Good morning. I call this hearing to order.
Without objection, the Chair is authorized to declare a recess
at any time.
Let me begin by saying that standing House and Committee
rules and practice will continue to apply during hybrid
proceedings. All members are reminded that they are expected to
adhere to these standing rules, including decorum.
House regulations require members to be visible through a
video connection throughout the proceeding, so please keep your
cameras on. Also, please remember to remain muted until you are
recognized to minimize the background noise. If you have to
participate in another proceeding, please exit this one and log
back in later.
In the event a member encounters technical issues that
prevent them from being recognized for their questioning, I
will move to the next available member of the same party and I
will recognize that member at the next appropriate time slot
provided they have returned to the proceeding.
For those members physically present in the Committee room
today, we will continue to wear masks unless we are speaking
here and socially distant while the Chairwoman and Ranking
Member work with the office of the attending physician on
updated guidelines and procedures. Members and staff are
expected to wear masks while in the hearing. With that said,
members will be allowed to briefly remove their masks when
recognized by the Chair for statement and questions. I know we
all look forward to returning to normal, but appreciate
everyone's patience while we prioritize the health and safety
of our staff and each other.
America's 30 million small businesses support more than 56
million jobs and account for nearly half of our nation's GDP.
It is no exaggeration to say that these small firms are the
foundation of our economy. But despite the fundamental
importance of these enterprises, the road to small business
ownership is fraught and paved with obstacles for prospective
entrepreneurs.
Recognizing the uphill climb facing many of those wishing
to start and run a business, the SBA offers a wide range of
free or low-cost counseling and training services to
entrepreneurs. To deliver these services, SBA relies on its
four primary resource partners: Small Business Development
Centers, or SBDCs; Women Business Centers, WBCs; SCORE; and
Veteran Business Outreach Centers, VBOCs.
From first-time entrepreneurs looking to create a business
plan, the long-time business owners looking for new ways to
achieve growth, these resource partners support small firms
through every step of the business cycle. These entrepreneur
development initiatives have proven to be the difference
between success and failure for many, many businesses.
According to SBA's 2013 Impact Study, small businesses that
receive 3 or more hours of counseling have higher survival
rates than firms that receive less counseling. In turn, these
businesses go on to earn more revenue and employ more workers.
Resource partners have also served as a critical lifeline
for small businesses throughout the pandemic. When COVID
struck, resource partners sprang into action, got innovative,
and helped millions of entrepreneurs navigate a once in a
lifetime crisis. I saw that myself in my own community as
businesses adapted and did what they need to do to survive. I
have heard so many stories from my constituents in my district
who relied on SBA's resource partners when they had nowhere
else to turn.
I hope today's hearing allows us to learn more about these
programs, hear about challenges they are currently facing, and
examine how this Committee can improve and expand their reach.
I am especially interested in learning what more we can do to
raise awareness of these programs and ensure that the maximum
number of small businesses are taking advantage of them.
Today we will explore the resource partners' current
diversity initiatives and efforts Congress can take to drive an
equitable recovery. During the 116th Congress, the House passed
three separate bills to improve the SBA's entrepreneurial
development programs. If enacted into law, these bills would
substantially improve the SBDC, WBC, and SCORE programs and
make them accessible to more small businesses.
Unfortunately, the Senate did not consider any of these
bills. I look forward to updating and advancing similar bills
and finding new ways to strengthen SBA's entrepreneurial
development programs.
With that, I now yield to the Ranking Member for her
opening statement.
Ms. YOUNG KIM. Thank you, Chairman Crow. Following a year
of unprecedented state and local government shutdowns and
regulations, and hampered demand due to COVID-19, small
businesses are collectively starting to recover. The SBA's
entrepreneur development programs have long served as a
resource to small businesses across the country. During the
COVID-19 outbreak small businesses in record numbers turned to
the resource partners to navigate the SBA's emergency relief
programs, including the Paycheck Protection Program, the
Economy Injury Disaster Loan Program, the Shuttered Venue
Operator's Grant, and also the Restaurant Revitalization Fund
and many others.
Through cooperative agreements, the SBA's ED programs
provide our nation's entrepreneurs with free or low-cost
training and counseling on marketing, finance, technology,
exports, human resources, and more. We have all heard from
constituents about how Veterans Business Outreach Centers and
Small Business Development Centers, Women's Business Centers,
and the Service Core of Retired Executives program can serve as
valuable tools to small businesses in their quest to grow their
business, expand their consumer base, gain access to capital,
navigate government programs and regulations, and meet their
labor demands.
With states opening and vaccines being distributed, our
nation's job creators are eagerly anticipating a return to
normal business operations and the SBA's entrepreneur
development partners can help. However, as small businesses
continue to reopen their doors and start their path to
recovery, they are met with the obstacle of proposed tax
increases, regulations, and a tight labor market.
The Department of Labor reported job openings reached a
record high of 8.1 million in March. According to NFIB's April
jobs report, small business owners are experiencing the
highest-ever reading of unfilled job openings since polling
started in 1973.
I look forward to learning more today about how the SBA's
entrepreneur development programs can serve our small business
owners in combatting these challenges so they can continue to
create jobs, skill employees, innovate, and serve their
communities. As members of the Committee, we must also ensure
the SBA is managing these programs properly and administering
the necessary oversight. In light of recent SBA Office of
Inspector General reports, entrepreneur development programs
must be examined closely to ensure duplication does not occur
and waste, fraud, and abuse is prevented.
Today, we will hear from the associations that represented
these programs and also hear from Mr. Patrick Montgomery, who
is a small business owner and veteran who has utilized these
programs, on the effectiveness of technical assistance programs
in supporting small businesses and entrepreneurs in recovering
from the pandemic and beyond.
So, I want to thank all of our witnesses who are here today
in person and on the virtual call for providing your
testimonies. And I yield back.
Chairman CROW. Thank you, Ms. Kim. The gentlewoman yields
back.
I want to take a moment to explain how this hearing will
proceed. Each witness is going to have 5 minutes to provide a
statement and each Committee member will have 5 minutes for
questions. Please ensure that your microphone is on when you
begin speaking and that you return it to mute when you are
finished.
And with that, I would like to introduce our witnesses. Our
first witness today is Mr. ``Tee'' Rowe, president and CEO of
America's SBDC. Mr. Rowe has been with America's SBDC since
August 2009. He has a long history for advocating for America's
small businesses, including serving as counsel for this
Committee from 1991 to 2001, so you have done your time on the
Hill. Mr. Rowe has been a valuable advocate for the SBDC
program and we are pleased he is joining us again today.
Welcome back, Mr. Rowe.
Our second witness is Ms. Bridget Weston, CEO of SCORE. As
CEO, Ms. Weston provides extensive leadership in works directly
and collaboratively with the board of directors to establish a
vision and direction of SCORE. In her 10 years with the
organization she has developed an in-depth understanding of the
needs and challenges facing SCORE staff, its 300-plus chapters,
and over 10,000 volunteers. Welcome back, Ms. Weston.
And our third witness is Ms. Corinne Hodges, CEO of the
Association of Women Business Centers, AWBC. Ms. Hodges joined
the AWBC as CEO in 2019 and is charged with bringing about
enhanced sustainability and increased capacity to the
Association and its members. Welcome back, Ms. Hodges.
I will now yield to the Ranking Member, Ms. Kim, to
introduce our final witness.
Ms. YOUNG KIM. Thank you, Mr. Chairman. Our next witness is
Mr. Patrick Montgomery. As mentioned earlier, he is a veteran,
entrepreneur, and the chief executive officer and founder of KC
Cattle Company. After completing the Ranger Assessment and
Selection program in April 2011, Mr. Montgomery reported to the
1st Ranger Battalion, 75th Ranger Regiment. While serving as a
ranger, Mr. Montgomery completed two combat deployments to
Afghanistan. He served as an assistant gunner, anti-tank team
leader, shooter for a sniper team, gun team leader, and weapons
squad leader.
Following his service in the military, Mr. Montgomery
completed his bachelor of science in animal science at the
University of Missouri. And during his last semester in 2016,
he created the business plan for KC Cattle Company.
While building his business, Mr. Montgomery completed his
executive MBA program through the University of Missouri
College of Business. Mr. Montgomery founded KC Cattle Company
with the mindset of bridging the gap between agriculture and
the consumer. His company provides the highest quality Wagyu
beef via mail order to consumers in all 50 states and is 100
percent veteran-owned and a 100 percent veteran-operated
company.
Mr. Montgomery, thank you for joining us today and thank
you for your service to our great nation.
Chairman CROW. Thank you, Ms. Kim. And welcome, Mr.
Montgomery. It is good to have a fellow Ranger joining us
today. Rangers lead the way, although you did serve in our
nation's second best Ranger battalion. That is an inside joke
amongst us rangers. But thank you, Mr. Montgomery. I appreciate
you joining us here.
So, let us begin with Mr. Rowe. Mr. Rowe, you are now
recognized for 5 minutes.
STATEMENTS OF CHARLES ``TEE'' ROWE, PRESIDENT & CHIEF EXECUTIVE
OFFICER, AMERICA'S SMALL BUSINESS DEVELOPMENT CENTERS; BRIDGET
WESTON, CHIEF EXECUTIVE OFFICER, SERVICE CORPS OF RETIRED
EXECUTIVES (SCORE); CORINNE HODGES, CHIEF EXECUTIVE OFFICER,
ASSOCIATION OF WOMEN'S BUSINESS CENTERS; PATRICK MONTGOMERY,
FOUNDER & CHIEF EXECUTIVE OFFICER, KANSAS CITY CATTLE COMPANY
STATEMENT OF CHARLES ``TEE'' ROWE
Mr. ROWE. Thank you, Chairman Crow, Ranking Member Kim,
members of the Committee. Thank you for inviting me to testify.
I am a little thrown off because I am thinking about mail order
Wagyu right now.
I am president of America's SBDC, the Association of Small
Business Development Centers. For 40 years, SBDCs have been
providing services to small business owners throughout the
nation. We operate out of host institutions and operate
statewide. We may be headquartered at colleges, but our centers
are in our communities. That is why you will fine SBDCs at the
International Rescue Committee in El Cajon or the East Los
Angeles Initiative or the Boulder Public Library.
SBDCs help small businesses at all stages. Fifty percent of
our clients are women, roughly 10 percent of our clients are
veterans, and minority clients comprise over 38 percent of our
client base. Every year we provide over 1-1/2 million hours of
counseling and training to over 500,000 small business owners
and their employees. And that assistance has generated great
results. From 1990 to 2019, our clients accessed $76.5 billion
in capital, increased their sales by $127 billion, and created
3.3 million jobs, and they generated over $11 billion in tax
revenue.
As I laid out in my written statement, we offer a wide
variety of assistance, and you can find more of that by
following the link to our annual report. However, I would like
to focus on just a couple of things.
First, cybersecurity. SBDCs have a new cybersecurity
program based on DOD's cybersecurity maturity model. It covers
all facets of the DOD guidance in order to provide security
education for small business owners.
We also have a new program, Secure Towns. Through it, SBDCs
work with chambers, development organizations, and local
businesses to raise awareness and reduce cybersecurity threats.
Regarding the COVID pandemic response, over the last year
we have probably done close to 3 years' worth of work. We have
participated in over 3,500 webinars and assisted over 315,000
people in just the early months of the pandemic. As an example,
the Pennsylvania SBDC launched nine new centers to provide
services aimed at weathering the pandemic.
We also assisted in provided helping get small businesses
financing through PPP, EIDL, SVOG, and now the Restaurant
Revitalization Fund. And as the demand surged, SBDC shifted on
line, which will continue to be a significant alternative. It
improves our productivity and allows broader use of specialized
skills.
And our client survey showed that the most requested
programming, ``Finding New Customers,'' is also the frequently
most mentioned challenge. And they also want strategic planning
and digital marketing and social media and search engine
optimization. In other words, going forward we see small
businesses as increasingly reliant on technology. These changes
may present a real challenge to some communities with limited
broadband access.
To overcome that, SBDCs are increasing our outreach. In
Chicago's Southlands, the SBDC works with the Resurrection
Project and the Urban League to ensure that services reach all
communities. Likewise, the Houston SBDC is teaming with the
Great Houston Black Chamber. They are creating a new business
institute to improve access to capital and business growth. And
to further these efforts, the SBDCs have become the inclusivity
challenge based on the Northern California SBDC's Inclusivity
Project.
The challenge is simple: Do more. Based on local needs,
SBDCs will establish more connections and provide more
services. It is all about helping entrepreneurs, all
entrepreneurs, overcome impediments to their success. That
effort is complementary to the new Community Navigators
program. In fact, several SBDCs are already engaged in pilot
programs for community navigators.
We would like to find the best ways to deliver services to
all small businesses and leverage all the capacity available.
To that end we strongly support reauthorization of the
Entrepreneurial Development Programs. We think it is time to
review and renew the commitment to assisting small business.
Now I have got one last item and that is about the CARES
Act and the resource partner training platform. We would really
like to know what we should think of for its future.
That concludes my testimony. I look forward to any
questions.
Chairman CROW. Thank you, Mr. Rowe. Ms. Weston, you ware
now recognized for 5 minutes.
STATEMENT OF BRIDGET WESTON
Ms. WESTON. Thank you, Chairman Crow, Ranking Member Kim,
and members of the Committee. Thank you for the opportunity to
offer testimony today.
SCORE is the nation's largest network of volunteer business
mentors with more than 10,000 volunteers across 240 chapters,
offering free and confidential advices, and educational
workshops to small business owners. Founded in 1964 as a
resource partner of the SBC, SCORE has helped more than 11
million entrepreneurs start, grow, or troubleshoot their
business. Last year, SCORE helped its clients to start over
45,000 new businesses and create nearly 75,000 new jobs. And
despite the challenging business climate of the pandemic, SCORE
helped 82 percent of our clients stay in business throughout
the year.
We believe SCORE is the most effective, efficient business
formation and job creation engine funded by the federal
government. In 2020, our cost to create a new job was $156 and
$259 to create a new business. For every $1 appropriated to
SCORE, our clients returned $67 in new federal tax revenue,
further demonstrating SCORE is a good steward of the federal
dollar.
SCORE volunteers are the lifeblood of our organization and
are passionate about helping small businesses succeed.
Volunteers come from all across the country with diverse
backgrounds and experience in different industries. Our core
services are mentoring, educational workshops, and online
resources. Last year, SCORE volunteers held over 315,000
mentoring sessions, guiding and supporting our clients through
the tremendous challenges brought on by the pandemic. Many
business owners told us they would not have applied for a PPP,
EIDL, or Restaurant Revitalization loan without a SCORE mentor
to walk them through the process. Our high rates of client
satisfaction are captured in our Net Promoter Score of 87,
which 70 being considered excellent.
In addition to mentoring, SCORE provides virtual webinars
on our website. And SCORE chapters offer local workshops that
are in-person or virtual. These workshops drew over 464,000
attendees last year.
One of SCORE's key areas of focus is fostering diversity,
equity, and inclusion for clients and volunteers. Women and
minority volunteers climbed to 38 percent of total volunteers
last year. This 5 percent increase represents the single
biggest annual growth since we began tracking these metrics in
2012.
SCORE currently serves a diverse range of small business
owners. Sixty percent of our clients are women and 46 percent
are minorities. Earlier this year, SCORE launched the SCORE for
Black Entrepreneurs as part of our SCORE for All Initiative to
help serve disadvantaged businesses. We plan to add more SCORE
for All campaigns to help these businesses survive and thrive,
supporting women, rural entrepreneurs, veterans, the 50 and
older community, and persons with disabilities.
SCORE is working harder than ever to reach underserved
entrepreneurs, leveraging our community relationship nationally
and locally. National partnerships include the BIPOC Support
Foundation, Women Entrepreneurs Grow Global, the National Black
Chambers, and the Latino Coalition, who introduce us to new
communities of small business owners. We also collaborate with
our fellow resource partners here today nationally and locally.
Across the nation SCORE chapters are integrated in their
communities, reaching, guiding, and providing access to
necessary resources. When the pandemic hit SCORE pivoted to
delivering virtual mentoring and education without missing a
day of service. We accommodated a 30 percent increase in
services last year. And while the House of Representatives
supported additional funding for SCORE's COVID-19 response,
ultimately SCORE did not receive any relief funding.
Nevertheless, we were able to stand up our Small Business
Resilience Program, connecting SCORE mentors and educational
resources to entrepreneurs to help them successfully navigate
federal and local government programs, adapt to change, launch
new businesses and inspire their customers to rally around
their business. SCORE's Small Business Resilience hub has
served 730,000 people since its launch in March 2020. Now we
are at capacity and will not be able to grow without additional
resources.
Based on SCORE's continued demonstrated impact, increased
demand for services, and our plans to reach more business
owners in underserved and disadvantaged communities, SCORE is
respectfully requesting an increase of 9-1/2 million in funding
for a total appropriation next year of 21.7 million. I want to
thank the Chairman and Ranking Member for leading the joint
letter in support of robust funding for SCORE and thank all of
the Members who signed. The additional funding would be spent
to increase mentoring and education by reducing administrative
burden on volunteers, provide more direct funding to local
chapters for community outreach, and focus to help more
underserved businesses.
With this relatively small investment we can provide even
greater value to business owners and the economy. This
increased funding would allow us to deliver more than half a
million additional client services with a projected outcome of
100,000 additional new businesses started or jobs created.
SCORE's mentoring and education are critical to helping small
businesses overcome their challenges and succeed. SCORE stands
ready to help our nation's most vulnerable small business
owners so they can keep their doors open and keep people
employed.
Thank you very much for your time. I look forward to your
questions.
Chairman CROW. Thank you, Ms. Weston. Ms. Hodges, you are
recognized for 5 minutes.
STATEMENT OF CORINNE HODGES
Ms. HODGES. Thank you, Chair Crow, Ranking Member Kim, and
distinguished members of the Subcommittee. The Association of
Women's Business Centers works to secure empowerment and
economic opportunities for women by supporting and sustaining
the national network of 135 Women's Business Centers that
provide counseling, training, mentoring, business development,
and access to capital. And while all WBCs operate brick-and-
mortar locations, many have opened additional satellite
locations, remote support, or even mobile units to serve the
hardest to reach entrepreneurs.
Women's Business Centers are essential to this period of
economic recovery. And women entrepreneurs play a key role in
our nation's economy, but, unfortunately, the pandemic has
challenged them disproportionately. Women are exiting the
workforce to care for families, particularly among low-income
populations as well as communities of color. Women seeking
flexibility and necessary household income turn to
entrepreneurship.
For existing businesses the pandemic presented challenging
circumstances since women are more likely to have service-based
businesses, such as childcare centers, salons, food services,
et cetera, where rates of closure reached as high as 40
percent. As a result, an unprecedented number of women have
found entrepreneurship at their local Women's Business Center.
In 2020, Women's Business centers had nearly 200,000 client
engagements and assisted clients in accessing $362 million in
business capital, more than double the previous year. They also
helped clients retain and create new jobs, nearly 70,000
nationwide. Not only are WBCs seeing more small business
clients, those clients are returning for services at a higher
rate, averaging 4 hours per client.
But we could not have accomplished all of this without the
leadership of this Committee, so allow me the opportunity to
say thank you to this group of members and their diligent
staff. The additional Women's Business Center funding and
waiver of the matching requirement allowed Women's Business
Centers the resources and flexibility they needed to respond to
these surges in demand by hiring additional staff, providing
essential counseling, and mentoring to convey rapidly changing
federal program and loan guidance.
This year provides us a reminder of the importance of
serving underserved communities. In 2020, 70 percent of the
individuals Women's Business Centers served were women and 56
percent were people of color. And as detailed in my written
testimony, Women's Business Centers and AWBC have led the way
in reaching BIPOC women business owners and we hope to share
these best practices.
Women's Business Centers have a proven track record of
producing exceptional results with limited resources. While
Women's Business Centers exceed their goals when it comes to
client service and performance, there are challenges faced
within the technicalities of operating the program. And so for
this reason, AWBC continues to advocate for reauthorization and
modernization.
Regulatory and grant compliance inconsistencies and
inefficiencies can create challenges for even the highest
performing Women's Business Centers. The recent OIG report
identified specific findings that we see would be remedied by a
modern redesign of the Women's Business Center program. We urge
Congress to establish a structured accreditation program that
ensures accountability to national standards for client
service, including management and operational aspects. In
addition, an increased individual grant level would effectively
allow centers to raise awareness for their services and to
reach deeper into marginalized and rural communities.
AWBC endorsed and fully supports the Women's Business
Centers Improvements Act from the 116th Congress. Had that
legislation been enacted we believe Women's Business Centers
would have been better positioned to respond to the pandemic.
We urge this bipartisan legislation be enacted swiftly.
Similarly, newer and smaller centers would stand to benefit
from additional oversight and guidance to achieve maximum
results. AWBC is exploring ways to support centers with
greatest needs, including the smallest and newest centers. We
seek savings for taxpayers using economies of scale for common
purchases, like technology tools. We hope to work with this
Committee to explore ways to achieve those economies of scale
and modernize the program.
We are proud of our partnership with SBA to ensure
America's resource partners have the important information to
support entrepreneurs. We urge Congress to ensure the
investment and the resource partners training portal continues
beyond COVID. We ask this Committee and the 117th Congress to
take the following actions: fully fund the program at $30
million for core funding; provide additional $48 million for
COVID-related appropriation; reauthorize the program similar to
legislation, like H.R. 4405; and ensure WBCs are partners of
choice for engaging women business owners in any future jobs
and infrastructure package.
Thank you so much. I look forward to your questions.
Chairman CROW. Thank you, Ms. Hodges. And Mr. Montgomery,
you are now recognized for 5 minutes.
STATEMENT OF PATRICK MONTGOMERY
Mr. MONTGOMERY. Thank you, Chairman and members of the
Subcommittee. I am honored to have the opportunity to represent
the health and voice for small businesses across the nation. I
consider myself blessed to live in a country where I have the
opportunity to address the leaders of my nation coming from my
humble beginnings. ``That these dead shall not have died in
vain. Government of the people, by the people, for the people,
shall not perish from this earth.'' Remembering the rangers who
gave all so I can sit here before you, I aim to give an honest
representation of my business and experiences for them.
According to the Kauffman Foundation, the number of adults
owning businesses have been declining since the 1990s. In a
separate study by the Brookings Institute, the number of
startups has fallen by half since 1978. These studies are
troubling for America remaining the leader of the free world.
Entrepreneurship is directly linked to job growth, wage growth,
GDP, and innovation. Capital and advice are the quintessential
needs of a new idea embarking on the journey to become a
successful business.
My journey to entrepreneurship started during my last
semester of my undergrad at the University of Missouri at
Columbia. I had put the business plan for KC Cattle Company
together and was looking for a seed investment to get started
once I graduated. I cleared out my wife and I's savings and
contributed to the profit we made from selling our home in
Columbia.
I researched grants, government subsidized loans, and other
government resources. I took advantage of using the University
of Missouri's Extension program for advice and grant
applications. I spoke with the USDA and banks regarding USDA
and SBA loans. I was asking for $250,000 to make it through the
first 3 years of owning my business to establish a viable
business model. I did not have collateral or historic sales, so
selling this to a lender proved impossible. I ended up raising
half this amount from friends and family.
I boot-strapped those first 3 years and made the resources
I had work. I used my GI Bill to complete my MBA. The stipend
from the GI Bill was my salary for those first 2 years of
owning my business. We found success in our e-commerce business
in 2019 and continued thriving in 2020 despite huge restraints
on our supply chain from large processors throughout the
country shutting down.
2021 is proving to present its own set of challenges with
rising costs across the board and constraints on the labor
market. From 2017 through 2021, the government resources I used
to help scale my business was the SBDC's ScaleUP! KC program,
SBDC's marketing data resources, an SBA 7(a) line of credit, an
SBA PPP loan, my post 9/11 GI Bill, and the Missouri Extension
program.
Specifically speaking about the SBDC, ScaleUP! KC was a
great resource for thinking through how I am going to scale my
business. Developing processes, thinking about our operating
environment, and implementing the Entrepreneurial Operating
System were some of my key takeaways. While completing this, I
discovered I could use the SBDC for gaining specific insights
into our target demographic by using information from our email
list. I was I the process of paying a marketing firm $8,000 to
do this for us. The SBDC did it for free, which allowed us to
free up that cash to be able to hire new employees during the
height of the pandemic.
The resources I used from the government were essential to
creating a successful business. As stated before, capital and
advice are the lifeblood for startups. Without the resources
stated above, I would have never been able to get to where we
are as a company.
However, these resources are not very easy to find as a
small business and not easily accessible those first few years
of trying to create a viable business model, specifically at
the capital side. A few ideas I had while thinking through my
talking points for this discussion.
One, when filling out a new corporation with the state,
what if the entity received information about available
resources along with their formation documents from the state
and IRS?
Secondly, although the SBA has some great lending options,
all of them are for established businesses. What if there was a
program specifically for startups trying to breathe life into a
new idea? This lending option could be paired with advisors
from the SBDC to help work through the problems associated with
a startup and help the individual network their new businesses.
Startups are risky, but I would argue these loans could be a
better investment for the government and the individual than
student loans. We need individuals to have the means to pursue
good ideas in this country.
In conclusion, I believe the resources available from the
SBA and affiliate partners are crucial for new businesses to
succeed. However, I think these resources are not always easy
to find or easy to access when starting a new company. Making
resources, both capital and knowledge, available to aspiring
entrepreneurs is critical to the United States remaining the
gold standard for innovation and envy throughout the world.
Thank you for this opportunity to speak with you. And I
look forward to your questions.
Chairman CROW. Thank you, Mr. Montgomery. And thank you to
all the witnesses for everything you shared with us. I
appreciate many of the comments and observations.
I am going to begin by recognizing myself for 5 minutes.
And Mr. Rowe, I want to start with you.
You had mentioned cybersecurity as a really essential
element here and the cybersecurity maturity model. I represent
a state and district that has one of the largest defense
aviation and aerospace industries in the country. In fact, I
have over 250 primary small- and medium-sized businesses that
serve within that industry, and cybersecurity is a huge issue.
And, you know, our adversaries looked to target now our supply
chain in those small- and medium-sized businesses that
oftentimes do not have the resources to adequately bolster
their cyber defenses. So, I am particularly interested in how
we can assist with that process.
Yet, at the same time, many of those businesses in the
industry have told me, you know, expressed concern about the
maturity model and reluctance to a one-size-fits-all approach
because smaller companies, 10-, 15-employee companies, don't
have the resources to necessarily comply with that.
So, with that lead-in, could you just describe for me the
tension there between adequately rolling out that model and
those resources? And how do we adequately address the issue
that smaller businesses may not have the resources, but, at the
same time, they are primary targets as well and they need to be
secured?
Mr. ROWE. You are absolutely right, Mr. Crow, that those
folks further down in the supply chain are a prime target. At
the same time, they don't have, you know, a chief information
security officer and all of those extra employees that they
might need.
So, what we focused on with the cybersecurity maturity
model is getting more small businesses to what they call level
one. They may not be certified yet, but we are getting them the
very basics. But we are also working with sponsors to have the
opportunity to give them more information, to get them, you
know, a firewall or whatever they might need.
And that goes along with what we are doing with Secure
Towns. Now, we have just started this in Culpeper, Virginia,
but we would like to expand it to other towns and cities where
it has to become, you know, a global approach.
I have got an example. You know, I had a court date cancel
because the courthouse got hacked, ransomwared [sic]. It is not
just businesses. It is our city governments, it is our
courthouses, it is everywhere. And where we are trying to go is
giving them the most information they can handle at the time to
get them at that first level. And where they have to go from
there, it has been a process working with DOD and all the other
agencies.
Chairman CROW. Okay, thank you, Mr. Rowe.
Ms. Weston, I would like to talk about a bill that Mr.
Balderson from Ohio, who was the Ranking Member on this
Committee last Congress, we have a bill called the Next
Generation Entrepreneurship Core Act, which I am sure you are
aware of. And really what we aim to do is help catalyze
entrepreneurship, particularly in underserved communities with
wraparound services, a fellowship program, you know, 320-plus
fellows a year to provide mentorship, offset costs, and really
help lift up those entrepreneurs by reducing barriers that they
face, particularly in the areas where they face more barriers
than other entrepreneurs.
So, I would just like to have your thoughts on the impact
of a bill like that or an effort like that, that recognizes
that not all communities face the same barriers to
entrepreneurship, and yet there is great value in making some
targeted investments within those communities to unleash
innovation.
Ms. WESTON. Thank you so much for the question. And SCORE
is a strong supporter of the Next Generation Entrepreneurship
bill. We know that disadvantaged and underserved communities
have unique needs and unique challenges. And one of the things
that we believe is by creating equity-based programming that
brings training and mentorship focused on those needs will help
elevate and reduce barriers. And when we see more success with
those entrepreneurs who have the drive, have the desire, but
have a lot of hurdles in their way, we know that the mentorship
and the training will help them overcome. And this bill, the
training will then be available for other entrepreneurs. They
will see these successes. They will be able to take advantage
of the training and the resource partners.
And as we heard, awareness is a key problem. Once we can
get access to these entrepreneurs to help them learn about the
myriad of resources available they are more likely to succeed.
So, we are very excited about the bill and hope that it
passes.
Chairman CROW. Thank you. And then I will add that it is
not just bipartisan in the House, but we also have Senator
Coons and Senator Scott in the Senate that are championing it
in a bipartisan way on the other side of the Capitol as well.
So, thank you.
My time is done, so I would like to now recognize Ms. Kim,
the Ranking Member, for 5 minutes.
Ms. YOUNG KIM. Thank you, Chairman. So, thank you so much
for all your testimonies.
And so we heard that small businesses are unaware of these
wonderful programs that are out there. So, what steps have you
taken during the pandemic, especially during the pandemic, to
help small businesses find your organization? And additionally,
who will your organization change and adapt to assist small
businesses as they continue to recover? This to all of you.
Mr. ROWE. Well, with the CARES Act funding is actually the
first time that an SBDC was allowed to use some of the funds
for marketing. So, our folks had been reaching out usually
through social media because it is actually the most cost-
effective. But that has been a huge problem all along as we
were literally prohibited from marketing our services by the
SBA. I guess the pandemic changed some minds. And so that is
where we have gone.
We also partner with companies like Google and Microsoft
and Thrive to use their resources to get the word out. We had a
resiliency guide that we worked on with Google and, you know,
expanded our reach through that.
Ms. YOUNG KIM. Okay.
Ms. WESTON. With SCORE, one of the things we focus on is
what our clients and others small business centers are saying
that they need help with. And so the content that we create and
share with our local chapters is also online and, of course,
SEO, search engine optimization, is a key way that people are
finding our content, finding it valuable, and then pairing it
with a mentor or a workshop.
Our local and national partnerships are another key area.
By reaching new markets, like not just the partners I spoke
about, but other corporate partners, they can amplify the
message that SCORE and our other resource partners are here. I
do believe that the SBA is a valued partner in helping to get
the word out and I think there are things we can do to improve
that because we know and we heard from the Chairman's testimony
that when people are paired with SCORE or SBDCs or Women's
Business Centers, the businesses are more likely to be
successful.
Ms. HODGES. If I could also just add partnership with
constituent offices has been a really valuable way to direct
traffic. So, when small businesses are asking who can help us
and you send them to any of us, they can locate a center. That
has proven to be a huge, I think, source of where a lot of our
growth came from, from the Women's Business Center side.
There is truly still a problem, though, with the awareness
among the communities. I saw a survey from a couple of years
ago, still more than 80, 85 percent of women business owners in
our case know about a Women's Business Center. And similar
numbers in our poll related back to SBDCs and SCORE as well.
So, we do have to still continue to push the word, but
there are limitations with the funding that has to be applied
toward programming versus some of that kind of paid-for
advertising.
Ms. YOUNG KIM. Sure. I mean, we do know that there are
great programs, but many people are having difficulty finding
those programs. So, let me direct this question to Mr.
Montgomery.
In your testimony you mentioned that SBA's resources are
not always easy to find or easy to access when starting a new
company. So, do you think entrepreneurs would benefit from more
streamlined resources? Are four separate SBA resource partners
duplicative?
Mr. MONTGOMERY. I wouldn't say they are duplicate at all. I
just think they are tough to find, you know. Regarding the
SBDCs specifically, we actually had a representative reach out
to me about that specific program. And once I was able to, you
know, participate in the program, I found all these additional
resources that I had no idea existed.
So, you know, I think probably one of the main touching
points is normally a bank that you are trying to go through for
an SBA loan, so, you know, maybe there is some kind of synergy
there for marketing for these other free programs.
Ms. YOUNG KIM. Thank you. Let me direct my last question to
Ms. Weston.
You know, we talked about in my opening statement the SBA's
Office of Inspector General releasing the audit. And that was
an oversight of your SCORE association and found that the
program officials did not properly oversee SCORE's use of
federal funds. And then you also talked about that you did not
get any additional funding. So, can you provide an update on
the corrective actions that are being implemented by your
organization?
Ms. WESTON. Absolutely. I appreciate the question. The
Office of Inspector General's report was released in April of
2019, and it was on fiscal year 2017 and the first quarter of
2018. Two months after that report, there was a leadership
change at the organization and less than a month after that we
put together a comprehensive plan to address all of the
findings in the OIG report. Less than a year later, every
finding was closed.
SCORE has a culture of compliance. We have centralized our
accounting, so that every chapter dollar that is spent we can
recognize and share with the SBA whether it was restricted or
unrestricted. We have brought on a compliance manager to ensure
that we are following all the processes and procedures related
to our terms and conditions in the CFR 200. Our procurement
processes have been strengthened. And in cooperation with the
SBA, we are following what they have suggested, our board of
directors has separated the association and the foundation. Our
compensation policy has been enhanced in terms of salary data,
limiting performance pay. And our whistleblower policy has been
updated and every volunteer sees it every year by taking a
required code of ethics.
Ms. YOUNG KIM. Thank you. They say that our time is over,
so I yield back.
Chairman CROW. Thank you. The gentlewoman yields back. Now
I will recognize the gentlewoman from Kansas, Ms. Davids, also
the Chairwoman of the Subcommittee on Economic Growth, Tax, and
Capital Access, for 5 minutes.
Ms. DAVIDS. Thank you, Chairman. You know, our SBA resource
partners have served a really invaluable role during this
pandemic and that includes providing guidance and assistance to
small businesses on some of the SBA relief programs that we
have talked about today. You know, the resource partners in the
Kansas Third have helped a lot of businesses, countless
businesses, navigate the federal programs that exist and help
access the resources available to them. And, you know, I think
while we heard about some of this already, but, you know, when
we are talking about the Women's Business Center increasing its
reach by like 22 percent, we know that these things are really,
really important.
So, I want to start, Mr. Rowe, how can we learn lessons
from this pandemic and further empower our resource partners in
the long term? And, you know, that could be challenges and also
opportunities.
Mr. ROWE. I think the--and I am as bad with this as I am on
a Zoom call. I think the biggest thing we have learned is that
we can get a lot more mileage out of being online. But we also
have to be really careful not to isolate ourselves. And we do
spend an inordinate amount of time collaborating, whether it is
with SCORE, Women's Business Centers, or with the Procurement
Technical Assistance Centers. And for us the big thing is how
do we break down the silos to make sure that all of the
information and all of our capability and capacity is getting
out to the community?
I know we did, you know, gobs of town halls with Members
like yourself. We can always do more. I think it would be great
if every Member's website had a small business assistance
banner on it where they could link to our services. I think we
have learned a lot that sometimes folks just can't see because
we are not raising our hands.
Ms. DAVIDS. Thank you. I appreciate that. And I kind of
want to--another piece of this is the Women's Business Centers
and I know that, Ms. Hodges, you mentioned this in your
testimony that reauthorizing the Women's Business Center
program is, of course, really important. I know I was proud to
introduce the Women's Business Center Improvement Act. It
passed the House in 2019. I intend to reintroduce that piece of
legislation later this year.
But, you know, can you elaborate a bit on how the
Improvement Act might either have better helped you respond to
the pandemic, which I think you mentioned, but also just kind
of moving forward how that is going to help us get on the other
side of this economic crisis?
Ms. HODGES. Gladly. Thank you, Representative Davids.
Clearly, had we addressed the modernization prior to the
pandemic, we would not have been still strapped with the
$150,000 grant cap that we had 30 years ago when the program
was initially introduced. And so we were in a position with the
CARES Act funding, gratefully, to be able to scale up, but we
were so far behind. And now as we see the CARES Act funding
coming to fruition, we are at a position--we will be in a
position to now have to scale back.
And so just when the economy is now recovering, we have a
tremendous opportunity to take a really strong look at the
program. Everything that was in the bill that you introduced
and passed was great and was a move in the right direction in
terms of increasing the grant cap, introducing accreditation
and standards of quality. But the reality is none of those
things have been able to be enacted, and so we are back at
square one, basically 30 years ago, and still trying to run a
modern program serving modern technological challenges, like
the Chairman mentioned with cybersecurity, problems that were
never envisioned when the program was initially thought of and
piloted. And so we really just need to take a modern look at
what services we know that women and particularly marginalized
communities need to receive.
Ms. DAVIDS. Thank you. I have one quick question for Mr.
Montgomery. This weekend I am having a cookout. Should I get
the ribeye or the strip steak?
Mr. MONTGOMERY. I am a ribeye guy all day long.
Ms. DAVIDS. Okay, very good. Thank you so much, Mr.
Chairman. I yield back.
Chairman CROW. Thank you. The gentlewoman yields back. And
now I would like to recognize the gentleman from Texas, Mr.
Williams, the Vice Ranking Member of the Committee. And I don't
always root for the Atlanta Braves, but when I do it is because
of you, Roger.
Mr. WILLIAMS. Thank you.
Chairman CROW. The gentleman is recognized for 5 minutes.
Mr. WILLIAMS. Thank you, Mr. Chairman. In April 29th, we
talked about the Inspector General releasing an audit of the
SCORE association showing some abuses in taxpayer dollars. You
have addressed that a little bit today. But it was over 700,000
in federal grants were used for excessive staff bonuses,
unallowable contracts, it even covered the cost of alcohol. And
these findings were extremely troubling to a lot of us and
should make us as lawmakers consider SCORE's ability to
continue to receive federal funding unless these changes are
made.
I guess the question I would have is, were these
accusations true?
Ms. WESTON. There were some instances where we did not
follow proper procedures in terms of contract documentation,
proper bidding, and we did not have a formal compensation
policy that limited fair pay across all of the staff in the
organization. We now have a compliance manager, we have a
procurement policy, we have a compensation policy, and those
have been addressed now for over a year.
Mr. WILLIAMS. Okay. The people that caused the problem, are
they still there? And how are they going to change their ways?
Ms. WESTON. They are not.
Mr. WILLIAMS. They are gone, right? Another question I have
is you talked about--I am a small business owner. I own car
dealerships back in Texas and 51 years, so main street is
important to me and I appreciate what you are doing. But when
we talk about tax increases, which is happening now, how is
that going to affect your small businesses?
Ms. WESTON. Well, I believe that SCORE and our other
resource partners are here to help small businesses navigate no
matter what challenges and hurdles are put in front of them.
Mr. WILLIAMS. But it is going to hurt them, isn't it?
Ms. WESTON. I cannot speak to----
Mr. WILLIAMS. If you pay more taxes, you pay more taxes.
Ms. WESTON. What we know is that regardless of the hurdles
thrown in front of small businesses, we will be able to help
them navigate and figure out ways to overcome.
Mr. WILLIAMS. To overcome paying more taxes.
Ms. WESTON. To overcome the challenges for any small
business owner.
Mr. WILLIAMS. Okay. All right. Mr. Rowe, in your testimony
you discussed Small Business Development Centers' inability to
serve all counties. As someone who represents some very rural
areas of Texas, I have seen unique challenges facing people who
choose not to live in populated cities. Whenever you are
dealing with federal programs I am concerned that a majority of
funding and focus is being used in major metropolitan or urban
areas.
So, my question is, how is the SBDCs currently making sure
that programs are beneficial to all Americans, no matter where
they decide to open their business?
Mr. ROWE. Well, just for instance, in Texas, A, if you look
at my written testimony, for years the UTSA, South-West Texas
Border Region SBDC has been hosting the Texas State Rural
Business Conference. So, as a result, I continue to get emails
from your colleague, Sid Miller.
And that is a very real effort by us to share information
with economic development organizations throughout the state of
Texas. We have similar efforts, whether it is, you know,
Wyoming, Montana, all of the states where we are dealing with
significant rural areas. And frankly, in our network that is
every place but the District of Columbia.
Mr. WILLIAMS. Okay. All right. Having access to capital and
a strong business plan are critical components of any
entrepreneur looking to take a chance and start a new career.
The SBA has resources available to try to help these
individuals, but they are often unknown to people, and we
talked about that today, who are just starting out or they are
difficult to navigate.
So, Mr. Montgomery, I am familiar with your industry, also.
I run a few head back in Texas. And as someone who benefited
from the SBDC assistance, what recommendations can you give the
SBA partners to improve outreach to aspiring entrepreneurs?
Because you are a great example.
Mr. MONTGOMERY. Just like you were saying, Representative,
during that initial time period, especially when you are making
your business plan and you are searching for capital, you know,
that capital is incredibly important to kind of get your start,
you are having a lot of conversations with banks specifically.
You know, for me it was the USDA, looking at some of those
subsidized loans.
So, I think there is a touch point there for banks to be
able to educate folks about these additional resources that are
available, especially SCORE. I didn't even know that existed
and what a great opportunity to kind of have an advisor when
you are initially trying to avoid making what I like to call
tuition payments.
In addition to that, social media and also what I was
mentioning. I mean, you have to get those formation documents
from the government, so maybe an additional pamphlet with some
of those free resources I think would be crucial.
Mr. WILLIAMS. Okay. Well, you got a great story. We
appreciate all of you being here today. I yield my time back.
Chairman CROW. Thank you. The gentleman yields back. I
would now like to recognize the gentlewoman from Illinois, Ms.
Newman, for 5 minutes.
Ms. NEWMAN. Thank you, Chairman, and thank you, Ranking
Member. And thank you to all of our great guests today.
Wonderful comments and my sincere hope is that those pieces of
legislation that were offered in the 116th pass in the 117th.
And I also want to thank, special thanks to the Women's
Business Centers for helping get my amendment passed to extend
the waiver. So, bravo on all of you.
I do have a couple of questions. The first one is directed
to our friends at WBC and perhaps Ms. Hodges could answer. One
of the huge issues as we head into a better economy and a
healthy America is that women, as you cited, women have been
inordinately dramatically lopsidedly affected by the pandemic
and their ability to stay in their jobs, mostly due to
childcare. Similarly, they are now wanting to start businesses
in their homes because they have to be home with their kids.
So, with that, what are your recommendations? And is there
anything we can do as a Committee or a Congress to supplement
your efforts to help all of these women entrepreneurs?
Ms. HODGES. Thank you for all of your work and for the
question, Representative Newman. I think there are a lot of
things that we can do to enhance the capacity of the Women's
Business Centers to serve more. Thanks to the pandemic, we have
experienced what being at capacity is like.
There are, in some cases, Women's Business Centers that a
woman who is interested in startup, and I would echo everything
you have stated, the startup requests are the greatest need at
the present moment. Those are very high, intense, resource-
intense types of counseling requirements and training
requirements. And we are at capacity. If you had an idea to
start a business and called a Women's Business Center, you may
have to wait weeks to get an appointment because there is just
not available staff or time at even as many hours as they are
working in a day.
And so I would tell you, I think the single greatest thing
we can do is just to increase the capacity of those who are
proven to help women succeed regardless of what their goals
are, whether it is to work in the home or elsewhere.
Ms. NEWMAN. Thank you so much. And I yield back.
Chairman CROW. The gentlewoman yields back. I will now
recognize the gentlewoman from New York, Ms. Tenney, for 5
minutes.
Ms. TENNEY. Thank you, Ranking Member, and also the
Chairman. I am so grateful for you to put this Committee
together.
I am a small business owner as well and I have just a few
questions about some of our Small Business Development Centers.
My son is also a captain in the Marine Corps and he also deals
with issues with some of his command and people that are
leaving the Marine Corps and getting their assistance. But you
were talking about different--and I am addressing this Mr.
Rowe. You mentioned in your testimony that there are
specialized programs in several states to assist veterans with
pre and post deployment. Veterans, you know, base their--you
know, I am just curious in your work with veterans, I would be
curious to hear your viewpoint, and I know my son has his own,
but what do you think are some of the biggest obstacles in
veterans accessing some of these SBA programs when they first
come out? Because I know that has been an issue that has been
raised by a number of people, a number of veterans in my
community.
Mr. ROWE. Well, one of the concerns, one of the problems is
making sure that we are not siloing off our resources. We have
got Veterans Business Ownership Centers working and lot of them
go on base. SBDCs used to do this as well offering transition
assistance.
Ms. TENNEY. Okay.
Mr. ROWE. And we sort of got slid out of that. But really
it is just talking between organizations to make sure that the
services are there. I know, for example, our network in South
Carolina has a great relationship with the Marine Corps and has
worked there regularly over the years providing transition
assistance.
Some of it is on us. If we offer someone assistance while
they are mustering out and then, you know, they go from, say,
South Carolina and they go home to wherever that is, we need to
do a better job of making them aware that there can be a
continuum of that assistance. They can go from the South
Carolina SBDC to the Texas SBDC and continue getting that
assistance, get all the information they need to keep moving
on.
Ms. TENNEY. If you could pick one, Mr. Rowe, if you could
pick one policy that you would like to change by SBA to make it
better and more accessible to veterans what would it be?
Mr. ROWE. I think probably one of the greatest things would
be allowing SBDCs to operate and compete for the Veterans
Business Ownership Center program offices. We could vastly
expand things. It has been a little bit siloed.
Ms. TENNEY. Thank you very much. I appreciate that. I just
have a quick question for Ms. Weston. I don't see my timer on
there, but you stated SCORE respectfully requests an increase
of 9.5 million in funding for fiscal year 2022 for a total
amount of the appropriation being 21.7 million. Should the SBA
recover the 713,000 and change of unallowable and unsupported
costs as recommended by the SBA's Office of Inspector General
prior to new funding?
Ms. WESTON. Thank you for that question. We have already
paid back the amount of funding that was required from the SBA.
After more work with the SBA and the OIG report, we were able
to provide more documentation on the allowability of contracts
and we only had to pay back half of that 713,000. It is all
paid back.
Ms. TENNEY. That is fantastic. I wanted to hear that. Great
to hear that and would like to address my next question to Ms.
Hodges.
I am a woman-owned business. My family business has been
around since 1946. Eight out of 10 of our shareholders are
women-owned, but, unfortunately, we can't get a woman-owned
designation in New York. But I am concerned about, you know,
how we continue to outreach to women. I know there is a lot of
women mentors and leaders, but what do you recommend, you know,
in terms of especially in the lending space?
There are a lot of issues with women being able to access
money and loans to get their business underway. I am working
with a number of women now who have got fantastic business
plans and we are struggling to get lenders to really push to
get them the money they need. What type of outreach would you
do to close this gap? And what do you recommend? If you could
just pick one thing because I know my time is short.
Ms. HODGES. If I just had to pick one thing it would be to
be able to put money into the marketing. We just don't have the
money to put into marketing and without dollars it is really
difficult to people who don't know that you are trying to reach
them. So, whether that is radio or billboards or other paid
advertising, definitely there. But access to capital, you are
right, is the number one barrier.
Ms. TENNEY. Thank you. I appreciate that because it
definitely is a marketing issue. We try to mentor as many women
as we can and it is a--got great business plans, we just need
the lenders to let that money flow to them so they can create
and produce jobs.
Thanks so much. I appreciate everyone. And I yield my time
back.
Chairman CROW. Thank you. The gentlewoman yields back. I
will now recognize the gentleman from New York, Mr. Garbarino,
for 5 minutes.
Mr. GARBARINO. Thank you very much, Mr. Chairman. And thank
you to all the witnesses that are here today. It has been great
testimony so far.
My first question is for Mr. Montgomery. Small business
owners have expressed concerns regarding the proposed tax
increases, regulations, inflation, labor shortages. What do you
see as your biggest barrier to growing your business?
Mr. MONTGOMERY. Right now it is inflation hands down. I
mean, we have seen cost increases across the board on our cost
of goods just within the first 3 months of this year. And we
expect to see some more in the upcoming months, which is--it is
scary, so we are starting to kind of plan around that for
probably the next year here.
Mr. GARBARINO. How do you plan around that? Do you have to
raise your own prices or how are you planning to address that?
Mr. MONTGOMERY. Yeah, I mean, we--yes, sir. So, we have
done four price increases in the last year. Processing started
going up last year with the constraints on that market. I think
we are probably at the top of the consumer surplus of what, you
know, customers are willing to pay for our product. So, now we
have to kind of think smarter and probably less money in
marketing and just to offset that cost to make sure that we are
not losing money this year.
Mr. GARBARINO. Okay. And as a small business, you know, it
fluctuates, right? Some years you do well, some years you don't
do well. So, if you have a profitable year, do you have to, you
know, make those profits last several years in case there is a
loss? You know, you are not guaranteed a profit every year,
correct?
Mr. MONTGOMERY. That is definitely correct, especially
being a startup, you know.
Mr. GARBARINO. Okay. No, I appreciate that and I appreciate
you addressing the inflation issue. We have been hearing that a
lot from a lot of different people.
I have another question. This is for pretty much any of the
witnesses, whoever wants to jump in. According to the NFIB
April jobs report, small business owners are experiencing the
highest ever readings of unfilled job openings since the
polling started in 1973. What can BBOCs, SBDC, WBCs, and SCORE
mentors do to help small businesses find employees?
Ms. WESTON. Well, I will start. One of the things that I
believe all of our resource partners do is really understand
what the specific needs of the business are. We have seen since
all of 2017 from a SCORE Megaphone of main street report that
it was becoming more challenging to hire workers because of
various trends, the gig economy being one of them, childcare
needs being another. And what we are able to do is sit there
and look at the resources and limitations for every small
business owner and help them decide is a full-time employee
best, a part-time employee, contractors. And make sure it makes
sense for them while still working towards that goal of being
profitable and maintaining profitability.
Mr. GARBARINO. Anyone else? All right. I appreciate----
Mr. ROWE. I think----
Mr. GARBARINO. Oh, sorry, please.
Mr. ROWE. Sorry, sir. I just had a quick thought on it. I
think one of the big things we work on at SBDCs is--and, for
example, some of our SBDCs colocate with the Workforce
Development Boards, is trying to understand the changes in the
labor market. You know, the pandemic has affected so much
behavior that it has almost become a marketing tool sometimes
for a small business to say, hey, we have got a safe, serious
workplace and we need help. So that is just one of the things
we are trying to accomplish.
Mr. GARBARINO. I appreciate that. And actually back to Mr.
Montgomery. What is the labor situation with your small
business? Inflation we said is number one, but are you having
any trouble filling spots?
Mr. MONTGOMERY. We are. So, we just came out of our slow
season and seasonality is our business, so we are just now
starting to try to hire some part-time folks. Going into
grilling season here. We did a $3 across the board increase on
our hourly wage, going from 12 to a minimum of $15 an hour,
going up to 18 based on experience, and we are still not
getting applicants. So, it is a problem we are working right
now and I don't think I have a good solution yet, so.
Mr. GARBARINO. No, I appreciate that and I hope you are
able to fill those slots so you can remain to be profitable.
But that is it with all the questions I have. Thank you, Mr.
Chairman, and I yield back.
Chairman CROW. Thank you. The gentleman yields back. I will
now recognize the gentlewoman from Georgia, Ms. Bourdeaux, for
5 minutes.
Ms. BOURDEAUX. Thank you, Chairman Crow and Ranking Member
Kim. The SBA's resource partners provide entrepreneurs with
some wonderful resources and really advanced this Committee's
shared interest in promoting entrepreneurship and small
business growth. My office worked closely with our local Small
Business Development Centers and have greatly appreciated their
efforts during the pandemic.
Just a follow-up question, though, on that for Mr. Rowe.
One of the questions we received from our Small Business
Development Center and we are interested in what your answer
might be, is that given how the pandemic has really increased
the SBDC's profile in our community, they are concerned about
what is going to happen after the pandemic when all of a sudden
they are very, very well-known for this great assistance that
they have provided? And wanted to get your thoughts about what
resources might be needed going forward.
Mr. ROWE. Thank you, ma'am. Appreciate the question. What
we are looking for, and I appreciate the many Members who
cosigned the letter that Congressman Larson and Mr. Balderson
and Congressman Young initiated, we are looking for an
appropriation of $150 million. What that would do is
essentially help us not fall off a resource cliff, if you will.
We have our regular appropriation and then the very generous
additional appropriation under the CARES Act. We have beefed up
staff and resources and we want to be able to maintain those
resources because, frankly, we don't see a diminishing amount
of demand. Like the Women's Business Centers, very often we are
having to, you know, schedule people several weeks out because
there is just so many hours in a day.
Ms. BOURDEAUX. Okay. In your testimony, well, another issue
we have is we have a diverse community in the Seventh District.
About 25 percent of the people in my district were born outside
of this country. And so we are very, very interested in the
Community Navigator program and really working on building our
capacity to reach out to these diverse communities, many of
whom are very entrepreneurial, they have got small businesses,
but they may speak a different language. There may be all sorts
of different barriers.
In your testimony you mentioned that several SBDCs have
already engaged in pilot programs for the Community Navigator
program. And I was just curious how those efforts are going. Do
you see a use for the Community Navigator model at SBA in
reaching small businesses in underserved communities, like the
ones I am talking about in my district, beyond the pandemic?
Mr. ROWE. Well, I think there is obviously a need. That is
why we are working on our own on the inclusivity challenge. The
simple fact is there are 30 million small businesses and I
don't know how many aspiring entrepreneurs in this country. And
it is going to take a massive effort for us to make sure we are
hitting everyone.
Community Navigators is a great start. We work hard to find
the associations and the organizations that we can work with to
get out to those communities. And it is a constant effort.
Ms. BOURDEAUX. Do any of the other panelists have any
thoughts on this? I saw you, Ms. Hodges, nodding on that.
Ms. HODGES. Thank you, Representative Bourdeaux. So many
fond thoughts of Georgia. I spent many years there and we have
a very strong Women's Business Center presence in Georgia and a
new one that opened in Savannah. And I think about how the
Community Navigator program can complement and can also
challenge as we think about our program.
We know that the Community Navigator challenge has a
tremendous funding instrument attached, $100 million. And
really, how can you put a price tag on the health of small
business in our economy?
However, our experience in working with the Small Business
Office of Entrepreneurial Development is that they are
themselves somewhat taxed in terms of levels of staff and
resources. It is not their fault. This is a situation not by
their making or their design.
And so, in some ways, we find it can be somewhat of a
competition for resources, for attention to do the things that,
quite frankly, Women's Business Centers have been doing for
three decades and have been doing extremely well with many
fewer resources. If you compare the $30 million ask of Women's
Business Centers with $100 million ask of a brand-new, never
tested Community Navigator program, one can ask a lot of
questions.
That being said, we embrace every opportunity to partner.
We canvass every community for every asset, for every
opportunity to reach into those communities and serve. And so
as soon as the Community Navigator program officially launches,
we will embrace it and we will make the most of it as we do
every dollar and every resource we have ever gotten.
Ms. BOURDEAUX. Good. Thank you so much. And I yield back.
Chairman CROW. Thank you. The gentlewoman yields back. I
will now recognize the gentleman from Minnesota, Mr. Phillips,
Chairman of the Subcommittee on Oversight Investigations and
Regulations, for 5 minutes.
Mr. PHILLIPS. Thank you, Mr. Chairman. And thank you to our
witnesses today.
Mr. Montgomery, I would like to start with you. I celebrate
your story and am particularly intrigued by your testimony
regarding a lack of lending options available for startups and
new businesses compared to the SBA programs that exist that
seems to be more focused on existing businesses or incumbent
businesses, as politicians would probably prefer to say.
I have authored legislation myself, called the New Business
Preservation Act, that would enable states to set up pools of
capital alongside private investors and venture capital to
support scalable high-growth companies headquartered
particularly in America's heartland.
So, if you would take a moment and provide some more detail
on your proposal to increase financial support for individuals
pursuing new business ideas and how a program like the New
Business Preservation Act might play a role in addressing this
gap.
Mr. MONTGOMERY. Thank you, Representative Phillips. I
appreciate the question.
First, I will kid of start with my experience. Like I was
referring to in my testimony, you know, we are asking for a
quarter-million to kind of make it through those first 3 years
of creating a viable business. Obviously, it proved almost
impossible. I think the USDA subsidized loans through the FSA
office. They offered me 16,000, which was kind of enough to
drown myself without actually succeeding.
So, I think what you are proposing is exactly what I am
thinking. There needs to be capital for people with good ideas,
that have a solid business model. Because there is definitely
plenty of advice out there for aspiring entrepreneurs, but the
capital is not always as easy to come by. And I think that is
imperative because you need both those things to get off the
ground.
Mr. PHILLIPS. All right. I appreciate that. And thank you
once again.
Mr. Rowe, in your testimony you mentioned that the SBDC
accreditation process is built on the Baldrige standards. I
have developed another bill that is called the Honest
Enterprise Act that would use the same framework to encourage
and reward companies for excellence in creating inclusive
workplaces. And I think this kind of stakeholder capitalism has
to be baked into businesses at the earliest stages.
So, what kind of counsel might you provide, if any, that
might encourage prospective business owners to consider more
than just their profits and the management and benefits of
their employees and their communities and the role that they
can play in protecting the environment? How can we provide
those incentives?
Mr. ROWE. Well, I think the first thing is providing
incentives. I think it is great to want people to conserve
energy, let us say, and have a green workplace. To offer them a
tax credit is even better.
I think as far as the workplace ethos goes, one of the
things we work on at SBDCs is succession planning. We have done
a lot of it, particularly in the state of New York,
implementing Senator Gillibrand's bill. And that was really how
do we take a current business model and help plant it into an
employee-owned model? And that, for us, has provided a lot of
ways to take both senior entrepreneurs and bring younger
businesspeople into the marketplace and sort of open that up.
Now, just quick to go back to your question of Mr.
Montgomery, one of things we could think about is steering the
funds in the SSBCI program towards startup entrepreneurs. That
is up to every individual state on how they use those funds,
but very often they are tending to a venture model that really
is geared toward established businesses.
Mr. PHILLIPS. Great. I have to say, your remarks about
employees' ESOPs, Employee Stock Ownership Programs, and how we
might use thoughtful policy to not just encourage, but provide
incentives for businesses of all sizes. To do so is, I think, a
grand opportunity for those of us who believe in compassionate
capitalism.
I see my time has, unfortunately, expired, but thanks again
for our witnesses. And I yield back, Mr. Chairman.
Chairman CROW. Thank you. The gentleman yields back. No
other members?
Okay. It looks like we have no other members with questions
right now, so I want to thank again all of our witnesses for
participating today. Thank you and your organization staff for
your efforts in preparing for the testimony and for your work
during the pandemic and economic downturn.
And I want to thank in particular Mr. Montgomery for your
time because I know as a business owner and somebody who is
dealing with a lot of challenges, your time is extremely
valuable, so taking time to share your insights has been very
useful to us.
And at the beginning of the testimony you said you endeavor
to keep faith with our fellow rangers by giving earnest and
honest and good testimony, and I will say that you accomplished
that mission. So, we thank you very much for your time.
Mr. MONTGOMERY. Thank you, Chairman.
Chairman CROW. So, with that, you know, we have identified
a number of issues that I think falls within the purview of
this Committee and Congress. This Committee has a long history
of working bipartisan, in a bipartisan fashion to find
practical and pragmatic solutions to these issues. You have
identified a number of things and areas of improvement for us
to continue to work on. And we appreciate that very much. I
look forward to working with all of my colleagues to find those
solutions and to make sure that we are fulfilling what is our
unified and joint mission, and that is supporting our small
businesses around the country to grow our economy, to grow
jobs, and to achieve the American dream.
So, I would ask unanimous consent that members have 5
legislative days to submit statements and supporting materials
for the record. Without objection, so ordered.
And if there is no further business to come before the
Committee, we are adjourned today.
[Whereupon, at 11:36 a.m., the Subcommittee was adjourned.]
A P P E N D I X
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