"Exploring SBA Programs: Reviewing the SBIC and SBIR Programs’ Impact on Small Businesses"
Summary
The opening statement, as prepared for delivery, of Subcommittee Chairman Meuser at an April 16, 2024 hearing of the House Committee on Small Business Subcommittee on Economic Growth, Taxes, and Capital Access on the SBIC and SBIR programs. The statement describes an SBIC as a privately owned company licensed and regulated by the SBA, which receives SBA matching funds as a loan to invest in small businesses through debt and equity. It explains that SBIR and STTR awards fund small businesses developing products for federal agencies, including through open topics. The chairman says the Committee must reauthorize the SBIR and STTR programs, which expire at the end of next September, and address weaknesses in the due diligence program adopted in the 2022 reauthorization against Chinese infiltration. The statement closes by yielding to Ranking Member Landsman.
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Opening Statements Meuser: “Exploring SBA Programs: Reviewing the SBIC and SBIR Programs’ Impact on Small Businesses” April 16, 2024 WASHINGTON, D.C. – Today, the House Committee on Small Business Subcommittee on Economic Growth, Taxes, and Capital Access is holding a hearing titled “Exploring SBA Programs: Reviewing the SBIC and SBIR Programs' Impact on Small Businesses.” Subcommittee Chairman Meuser’s opening statement as prepared for delivery: Good morning, and welcome to today’s hearing. First, I want to thank our witnesses for joining us today. Your time here is very much appreciated, and I look forward to your testimonies. Today, this Subcommittee on Economic Growth, Tax, and Capital Access hearing will focus on the current function and future of both the SBIC and SBIR Programs. Unlike large corporations, small businesses don’t share the luxury of utilizing debt and equity markets for financing. Main Street is instead forced to bridge the funding gap and utilize resources like SBIC programs, where federal funding is matched with experienced private investors at no risk to the American taxpayer. An SBIC is a privately owned company that’s licensed and regulated by the SBA. SBICs raise capital to invest in small businesses in the form of debt and equity. The SBA doesn’t invest directly into small businesses, but it does provide matching funds in the form of a loan to qualified SBICs with expertise in certain sectors or industries. Those SBICs then use their private funds, along with SBA-guaranteed loan, to invest in small businesses. Through the SBIR and STTR programs, Main Street is also given the ability to develop and commercialize new products for both the government and private sector. For example, SBIR works by infusing federal R&D dollars in phases to small businesses developing new ideas that align with the needs of a federal agency. Federal agencies can offer SBIR and STTR awards by either requesting a product that meets specific requirements or by an “open topic” in which small businesses propose innovative solutions to meet an agency’s mission. The flexibility of open topics allows small businesses to propose new solutions that help agencies meet their mission. The access to and utilization of these two programs is essential to helping many small businesses navigate economic challenges set upon them by Bidenomics and more reckless government spending. As we know, it is now more expensive than ever to do business because of high interest rates, persistent inflation, and newly proposed banking regulations like Basel 3—which have forced banks of all sizes to tighten commercial lending standards. In order to ensure small businesses have continued access to capital, this Committee must work to reauthorize the SBIR and STTR programs expiring at the end of next September. Our first duty is to address challenges within the program and explore various solutions that were left on the table during the programs’ last reauthorization. As leading voices for Main Street, it is our job to work to ensure our nation’s job creators have an economic and regulatory environment they can not only survive, but thrive in. Reauthorization is crucial but not without necessary adjustments regarding flaws like the current CCP infiltration into the SBIR program. During the 2022 SBIR/STTR reauthorization, Democrats did not consider the threat China posed in SBIR/STTR as a serious concern. Republicans, on the other hand, successfully fought to combat Chinese infiltration by requiring agencies to develop a “due diligence” program. While this program has since assessed security risks, Congress has an opportunity to address weaknesses in the due diligence efforts as their effectiveness is further evaluated. As we look to the future of the SBIC and SBIR/STTR programs, one thing remains abundantly clear. We must continue to fight for Main Street and work to empower our job creators with common sense, regulatory relief, and reliable methods of access to capital. These businesses, especially those developing innovative products for federal agencies, work to advance everything from our national security to our education system. We rely on them and their innovation to ensure the U.S. remains a global leader for products across the board. Prioritizing their success and continually motivating their output is essential to America’s continued advancement. With that, I will yield to our Ranking Member, Mr. Landsman.
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