Streamlining and Coordinating Support for Rural Small Businesses (Senate Small Business Committee hearing, September 18, 2024)
Summary
The printed record of S. Hrg. 118–527, a Senate Committee on Small Business and Entrepreneurship hearing titled Streamlining and Coordinating Support for Rural Small Businesses, held September 18, 2024 and printed in 2025. The committee met at 2:47 p.m. in Room 428A with Chair Jeanne Shaheen presiding; Shaheen and Ranking Member Joni Ernst gave opening statements. Four witnesses testified: Cara Lank, Senior Vice President of Stone Bank, Little Rock, AR; Grant Menke, Deputy Secretary of Agriculture at the Iowa Department of Agriculture and Land Stewardship; Zachary Luse, CEO and Founder of Paragon Digital Marketing, Keene, NH; and Verlin Gus Barker, President and CEO of First Community Bank, Newell, IA. Letters for the record came from the Defense Credit Union Council, Ravenox, the Western Governors' Association and Iowa Governor Kim Reynolds.
Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used
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“Streamlining and Coordinating Support for Rural Small Businesses (Senate Small Business Committee hearing, September 18, 2024).”
Original at www.govinfo.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/streamlining-and-coordinating-support-for-rural-small-businesses-senat-dd492e3e25/
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S. HRG. 118–527
STREAMLINING AND COORDINATING SUPPORT
FOR RURAL SMALL BUSINESSES
HEARING
BEFORE THE
COMMITTEE ON SMALL BUSINESS
AND ENTREPRENEURSHIP
OF THE
UNITED STATES SENATE
ONE HUNDRED EIGHTEENTH CONGRESS
SECOND SESSION
SEPTEMBER 18, 2024
Printed for the use of the Committee on Small Business and Entrepreneurship
(
Available via the World Wide Web: http://www.govinfo.gov
U.S. GOVERNMENT PUBLISHING OFFICE
57–904 WASHINGTON : 2025
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COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP
ONE HUNDRED EIGHTEENTH CONGRESS
JEANNE SHAHEEN, New Hampshire, Chair
JONI ERNST, Iowa, Ranking Member
MARIA CANTWELL, Washington MARCO RUBIO, Florida
BENJAMIN L. CARDIN, Maryland JAMES E. RISCH, Idaho
EDWARD J. MARKEY, Massachusetts RAND PAUL, Kentucky
CORY A. BOOKER, New Jersey TIM SCOTT, South Carolina
CHRISTOPHER A. COONS, Delaware TODD YOUNG, Indiana
MAZIE K. HIRONO, Hawaii JOHN KENNEDY, Louisiana
TAMMY DUCKWORTH, Illinois JOSH HAWLEY, Missouri
JOHN W. HICKENLOOPER, Colorado TED BUDD, North Carolina
SEAN MOORE, Democratic Staff Director
MEREDITH WEST, Republican Staff Director
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CONTENTS
OPENING STATEMENTS
Page
Senator Jeanne Shaheen, Chairman ...................................................................... 1
Prepared Statement ......................................................................................... 3
Senator Joni Ernst .................................................................................................. 9
WITNESSES
Ms. Cara Lank, Senior Vice President, Stone Bank, Little Rock, AR ................. 11
Prepared Statement ......................................................................................... 14
Mr. Grant Menke, Deputy Secretary of Agriculture, Iowa Department of
Agriculture and Land Stewardship, Des Moines, IA ........................................ 19
Prepared Statement ......................................................................................... 21
Mr. Zachary Luse, CEO and Founder, Paragon Digital Marketing, Keene,
NH ......................................................................................................................... 25
Prepared Statement ......................................................................................... 28
Mr. Verlin ‘‘Gus’’ Barker, President and CEO, First Community Bank, New-
ell, IA ..................................................................................................................... 32
Prepared Statement ......................................................................................... 34
ADDITIONAL LETTERS/STATEMENTS FOR THE RECORD
Defense Credit Union Council
Letter dated September 17, 2024 .................................................................... 55
Ravenox
Letter Dated September 18, 2024 ................................................................... 57
Western Governors’ Association
Letter dated September 17, 2024 .................................................................... 58
Kim Reynolds, Governor of Iowa
Letter dated July 23, 2024 ............................................................................... 63
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STREAMLINING AND COORDINATING
SUPPORT FOR RURAL SMALL BUSINESSES
WEDNESDAY, SEPTEMBER 18, 2024
UNITED STATES SENATE,
COMMITTEE ON SMALL BUSINESS
AND ENTREPRENEURSHIP,
Washington, DC.
The committee met, pursuant to notice, at 2:47 p.m., in Room
428A, Russell Senate Office Building, Hon. Jeanne Shaheen, chair-
man of the committee, presiding.
Present: Senators Shaheen [presiding], Cantwell, Cardin, Booker,
Hirono, Rosen, Hickenlooper, Ernst, Young, Kennedy, Hawley, and
Budd.
OPENING STATEMENT OF SENATOR SHAHEEN
The CHAIRMAN. Good afternoon, everyone. I’ll call the hearing to
order in just a minute. I apologize for being late. We have two
votes, one of which just was called and I was waiting to try and
vote, which I did. So, for those of you who haven’t voted yet, know
that the first vote is underway. And we will interrupt at some
point and take turns, Senator Ernst and I, to go do the second vote.
So, at this point, the Senate Committee on Small Business and
Entrepreneurship will come to order. It’s an honor to welcome you
all here today to this hearing on the unique challenges that rural
small business owners face and those federal efforts to help them
succeed. I want to thank all of our witnesses who are here today.
We will introduce you more formally in a few minutes.
But rural small businesses are the backbone of their commu-
nities. They provide jobs and essential services. There are over 4
million rural small businesses employing seven and a half million
people in the U.S. according to a 2024 report from the SBAs Office
of Advocacy. That’s more than 56 percent of all employees in rural
areas. Rural entrepreneurs start businesses at higher rates than
their urban counterparts. Their firms are highly resilient and their
five-year survival rates outpace that of small businesses in urban
areas.
However, rural small business owners do face unique challenges.
In a survey by the Small Business Majority, rural small business
owners identified several key challenges hindering their growth.
The challenges include limited access to capital and technical as-
sistance, difficulty maintaining a qualified workforce, poor prox-
imity to broadband services, and a shortage of healthcare providers
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in their communities.
(1)
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I also frequently hear in New Hampshire about issues related to
the availability of housing and childcare. Very big issues in our
state. These challenges are compounded by a lack of coordination
between local, state, and federal governments and relevant stake-
holders.
In order to break down these barriers for rural small business
owners, it will take a coordinated effort. That’s why the United
States Department of Agriculture, USDA, and the SBA, took a step
in the right direction through the extension of a memorandum of
understanding, an MOU between the agencies in 2023. The MOU
increases collaboration between the two agencies to collectively ad-
dress gaps in capital access, contracting opportunities, and entre-
preneurial development resources for rural small business.
The MOU and Rural Partners Network demonstrate that collabo-
ration between the federal government and local communities can
better tailor solutions to the specific needs of rural areas. Through
continued congressional support, we can enhance the effectiveness
of these programs. By working together, we can empower rural
small business owners to contribute significantly to their commu-
nities and strengthen our economy.
Again, thank you all for joining us today. I want to yield to the
ranking member for her opening statement. I will submit my full
statement for the record, and I will come back to introduce the wit-
nesses in a few minutes. Senator Ernst.
[The prepared statement of Senator Shaheen follows.]
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STATEMENT OF SENATOR ERNST
Senator ERNST. Thank you very much to our chairwoman, and
thanks to each of you for being with us today. We really look for-
ward to your testimony.
Small businesses are the lifeblood of rural America, where they
account for nearly 85 percent of all companies and over 50 percent
of all jobs. I know rural America firsthand. I grew up on a farm
in Montgomery County, Iowa, where I still live today. My parents
and my neighbors ran small businesses, and I learned just how es-
sential they were to local communities and our state’s economy.
Today, we are here to discuss how the federal government can
put rural small businesses on the same footing as those in our cit-
ies and urban centers. The Biden/Harris Administration has left
rural small businesses on life support. Prices are up over 20 per-
cent since President Biden and Vice-President Harris took office.
Inflation caused by the Democrats, Inflation Reduction Act, and
America Rescue Plan is out of control. As if that wasn’t enough, the
Biden/Harris Administration has hit small businesses with more
than $1.6 trillion in regulatory costs. As I travel from river to river
across Iowa, rural folks continue to tell me they think the Biden
and Harris Administration just doesn’t understand or doesn’t care
about their needs.
When my state was hit with natural disasters earlier this year,
it became evident to me why they thought so. I was on the ground
after each of these disasters and heard firsthand from Iowans
about the difficulties they had in navigating recovery efforts. I
heard from folks whose insurance couldn’t cover the full repair or
replacement of homes, businesses, or equipment because reckless
Washington spending has made everything more expensive, even
though they did the right thing and put money away in case of
emergency. Hyperinflation meant it just wasn’t enough.
FEMA and SBA did quickly set up recovery centers, and I want
to thank them for that. But business owners were left frustrated
by the two agencies’ lack of coordination and competence. For ex-
ample, Iowans received conflicting information about eligibility and
application process in Shelby County, which was hit by tornadoes
in the spring. SBA provided outdated and completely wrong infor-
mation, including sending their disaster victims to a dead website.
They didn’t even realize they were doing so until my staff brought
this to their attention. And this is absolutely unacceptable.
But even in the face of such gross incompetence, Iowans weren’t
deterred. The private sector and Governor Reynolds have stepped
up to help rural small businesses where the federal government
has failed. State programs like IowaWORKS are helping folks who
have lost their job or businesses due to the disasters. Our commu-
nity banks are also playing a crucial role. Many are offering loans
to rural small business owners with better rates and faster ap-
proval times than their federal counterparts. I’m proud of Iowans
for coming together and doing what the Biden/Harris Administra-
tion seemingly can’t.
Small business owners who lose their livelihoods in a natural dis-
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aster have no time to spare. It’s incredibly frustrating to repeatedly
hear from those seeking SBA assistance that they thought it was
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a waste of their time. So much so that many walked away and
didn’t complete applications.
For those who stuck it out, SBA loan processing times were in-
credibly slow. It becomes even more challenging when you consider
the fragmentation among federal agencies. A variety of resources
are available after a disaster, including loans from SBA and USDA,
but there is no parity between the two agencies when issuing SBA
loans to underserved and minority borrowers and urban areas.
In 2021, the Biden/Harris Administration insisted their policy to
waive payments and interest accrual wouldn’t cost anything. But
today, when it comes to farmers in rural America, the Biden/Harris
Administration insists it needs an Act of Congress and more money
to extend the same terms. How does that make sense? Either the
administration has been dishonest about the cost of its SBA poli-
cies, or it doesn’t think rural business owners are worthy of the
same benefits as their urban counterparts. Simply put, the Biden/
Harris Administration, in particular the SBA, is leaving these com-
munities behind.
SBA’s lending in rural areas is abysmal at just around 15 per-
cent in the agency’s two main programs. If SBA lending to rural
communities had been in line with population, there would be an
extra $1.3 billion a year available to rural entrepreneurs. But in-
stead of channeling this much needed capital to American entre-
preneurs, the Biden/Harris Administration has chosen to focus on
enhancing its loan programs for favored priorities like green lend-
ing, which overwhelmingly benefits Chinese manufacturers.
That’s a slap in the face to hardworking Americans who are the
ones paying for these programs. The Biden/Harris team must stop
picking winners and losers, and make this assistance accessible to
all Americans. I look forward to hearing from our witnesses today
to see how they have worked to help rural small businesses, and
to understand what improvements our federal programs need.
Finally, I ask unanimous consent to enter into the record a letter
Governor Reynolds and the entire Iowa Congressional delegation
sent to Secretary Vilsack in July, 2024, urging parity amongst SBA
and USDA’s Direct Disaster Loan programs.
The CHAIRMAN. Without objection.
Senator ERNST. Thank you. And with that, I’ll conclude.
The CHAIRMAN. Thank you, Senator Ernst. And again, thank you
to our witnesses for being here today. Let me begin by introducing
Ms. Cara Lank, who is the Senior Vice President of Stone Bank,
which operates as both a USDA and SBA lender. She’s also the
Chair of the Government Relations Committee for the National
Rural Lenders Association. Ms. Lank helps countless rural entre-
preneurs start and grow their business. I’m looking forward to
hearing your testimony and learning from your perspective as a
lender.
Mr. Zachary Luse is the founder and CEO of Paragon Digital
Marketing based in Keene, New Hampshire. He founded the busi-
ness in 2012, and has more than two decades of experience in his
field. Mr. Luse has firsthand experience navigating the complex
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landscape of federal programs, including those administered by
SBA and the USDA.
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So, I will now turn it over to Senator Ernst to introduce our
other two witnesses.
Senator ERNST. Great. Thank you, and welcome Ms. Lank and
Mr. Luse, and thank you for joining us again. And I want to intro-
duce the rest of our witnesses who are testifying today. And I’m
proud that two fellow Iowans have joined us here in Washington,
DC, to share with the committee how we can empower our rural
communities.
So, first is Mr. Grant Menke. Grant, it is wonderful to have you
here. Grant serves as the Deputy Secretary of Agriculture for the
Iowa Department of Agriculture and Land Stewardship. Previously,
Mr. Menke served as vice-president of Market Development for
Iowa Corn. Prior to that, Mr. Menke served as the State Director
of Rural Development for the United States Department of Agri-
culture in Iowa. He earned a bachelor’s degree from the University
of Northern Iowa.
Next is Mr. Verlin, and as we know him, Gus Barker. And Gus
is President and CEO of First Community Bank in Rockwell City
Pomeroy, Fonda, and Newell, Iowa. He is testifying today on behalf
of the Independent Community Bankers of America, where he also
serves as the chairman of their agriculture and rural committee.
Mr. Barker earned a bachelor’s degree from Vista University,
and graduated from the Graduate School of Banking in Madison,
Wisconsin. Gus, thank you so much for being here today. Thank
you.
The CHAIRMAN. Thank you, Senator Ernst. Ms. Lank, would you
like to begin, and we will go right down the line?
STATEMENT CARA LANK, SENIOR VICE PRESIDENT, STONE
BANK, LITTLE ROCK, ARKANSAS
Ms. LANK. Chairman Shaheen, Ranking Member Ernst, and
members of the committee, thank you for allowing me to partici-
pate——
The CHAIRMAN. Can you make sure that your mic is open and
then it’s close so that we can hear you?
Ms. LANK. That better?
The CHAIRMAN. Much better.
Ms. LANK. Thank you for allowing me to participate today. My
name is Cara Lank, and I’m the Chief Credit Officer for Stone
Bank, which is an $815 million community bank based in Arkan-
sas. We currently make SBA 7(a) loans, FSA loans, USDA loans
under Business and Industry and Rural Energy for America Pro-
grams. I have unique insight to work with real businesses because
I grew up in rural America.
My grandparents were farmers. My grandmother started her own
small business by converting an old house into a grocery store that
was in the middle of nowhere. She was very successful, and she
built a larger store later. The store was surrounded by soybean and
rice fields.
In addition to my role at Stone Bank, I’m the Chairman of the
Government Relations Committee—sorry, for the National Rural
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Lenders Association. You can find more information on NRLA in
my written statement.
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Stone Bank has experience enclosing USDA/SBA combo loans.
However, there are key differences between the two most popular
programs, which are SBA 7(a) and USDA’s B&I. Both programs
can assist in providing capital for the same project with B&I loan
guarantees of up to $25 million and SBA loan guarantees of up to
$5 million.
While there are some synergies between the programs, chal-
lenges exist as the underwriting standards and organizational
structure of the two agencies vary significantly. I could provide
more lengthy details, but to keep it brief, I will note that SBA has
a PLP, preferred lender program. PLP lenders are awarded the au-
thority from their proven track record to complete the processing
and ultimate final approval. And as a result, loans can move
through the process very fast. SBA is also most more streamlined
because they use technology in the form of their Tran system,
which allows the lender to enter pertinent loan information, which
checks eligibility requirements.
USDA has no PLP program and no such technology regardless of
lender history and performance. USDA requires all lenders to sub-
mit an entire underwriting packet, which is individually reviewed
by staff specialist and what is commonly viewed as re-underwriting
the loan since the specialist is required to create their own project
evaluation.
Every USDA loan requires a credit decision that goes through
several levels of review and is a very manual process. This causes
significant time delays and is not responsive to the speed of busi-
ness. USDA projects require very patient borrowers and lenders, as
most loans take from nine months to one year for processing and
approval, as opposed to a 90-day turnaround for an SBA loan.
USDA construction loans require extensive environmental studies,
which can take months to complete, and are often very costly. SBA
has very few environmental requirements.
There is also a mismatch in funding in that SBA has a $30 bil-
lion budget, while B&I budget authority is significantly less at a
current level of $1.6 billion. NRLA has been attempting to cure this
mismatch and forecasted demand for the B&I program to be 2.7
billion for Fiscal Year 2024. As of September, 2024, USDA had obli-
gated $1.62 billion in loans with approximately $1.16 billion in
pending requests for a total of 2.78. Currently, we are seeing simi-
lar demand for Fiscal Year 2025.
Turning to the SBA/USDA memorandum of understanding, it
aims to coordinate activities among the two agencies to expand
credit opportunities for rural small business. To meet this goal, the
two agencies should use similar systems for loan application sub-
mission. While the criteria for loans for each program is different,
the basic underwriting process for the lenders is the same. We be-
lieve this action would decrease USDA staff time, eliminate layers
of approval, and significantly reduce operating costs. Separately,
USDA should consider a PLP-type program.
SBA’s process allows for loans to be issued throughout the U.S.
and reduces individual inspection of loan applicant in eligibility.
Additionally, activities that need to be expanded are sponsored
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webinars with SBA and USDA staff. Many USDA offices have held
webinars with SBA state offices to educate lenders about the two
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programs and give examples of how they can work together. This
activity should be encouraged with consistent educational sessions
across the country.
There is much more in my written statement, but NRLA, Stone
Bank, and I thank you for the opportunity to participate today.
And I’m happy to respond to any questions.
[The prepared statement of Ms. Lank follows.]
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The CHAIRMAN. Thank you very much.
Mr. Menke.
STATEMENT OF STATEMENT OF GRANT MENKE, DEPUTY SEC-
RETARY OF AGRICULTURE, IOWA DEPARTMENT OF AGRI-
CULTURE AND LAND STEWARDSHIP, DES MOINES, IOWA
Mr. MENKE. Well, good afternoon, Chair Shaheen, Ranking Mem-
ber Ernst, and members of the committee, and thank you very
much for the opportunity to testify today.
My name is Grant Menke, and I serve as the Deputy Secretary
of Agriculture for the State of Iowa. I’m here today on behalf of
Iowa Secretary of Agriculture, Mike Naig, who is currently on a
trade mission to India with Iowa Governor, Kim Reynolds. He
wishes he could be here, but I am pleased to share his perspective
and that of numerous Iowans in the Ag community who have spent
the last few months recovering from devastating and costly natural
disasters.
Agriculture drives the economy of Iowa. It is our number one in-
dustry. Consumers near and far depend on the productivity of Iowa
agriculture and our multi-generational family farms and Ag busi-
ness. Businesses are proud of this fact.
Unfortunately, many family farms were devastated by a series of
weather disasters earlier this year. While our historic drought of
204 consecutive weeks was busted, this growing season, unfortu-
nately produced historic flooding and a record number of tornadoes
in Iowa.
Secretary Naig spent many days on the road this spring and
summer visiting farms, businesses, and communities that were hit
hard. In many cases, these folks lost nearly everything. Not just
farm buildings and equipment, but also their homes. Secretary
Naig relayed the story of a man from a century farm in Southwest
Iowa. This farm had been in his family for more than 100 years,
and they lost everything in a tornado.
This farmer was clearly feeling the pressure and responsibility
for his farm and the legacy it represents. He was thinking of gen-
erations past, but also of generations to come. Despite his world
being turned upside down, he relayed to Secretary Naig his deter-
mination to turn the page, rebuild, and start the next chapter of
his family farm story.
But as these farms have moved forward, they’ve encountered
challenges like any small businesses with significant equipment,
infrastructure, and operating costs. These farms carry property and
casualty insurance. They also rely on risk management programs
authorized through the Farm bill, including crop insurance. Yet,
there are still significant gaps, especially during this time of per-
sistent inflation.
That’s why farmers and farm businesses have needed to turn to
disaster programs offered by USDA and SBA to access the capital
needed to continue operations through this disaster recovery proc-
ess. Iowans have discovered several frustrating and confusing dis-
parities between these programs, and it is our hope that this com-
mittee can begin the process of addressing these inequities.
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In addition to the overall complexity of these programs, one of
the most significant issues Iowans have faced is the disparity in ac-
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20
cessibility and eligibility between USDA and SBA disaster pro-
grams. Since farmers are not eligible for SBA disaster programs,
these differences have hit farm families, especially hard. For in-
stance, SBA disaster loans typically offer more favorable terms, in-
cluding higher loan limits, lower interest rates, and longer repay-
ment terms than USDA disaster loans.
SBA disaster loans also offer deferral of the first payment and
no interest accrual for the first 12 months, features that are not
available with USDA disaster loans. These discrepancies place an
undue burden on farmers and farm businesses who already operate
on thin margins, especially during the softening Ag economy.
To address these inequities going forward, we encourage you to
align the eligibility criteria, loan limits terms, and conditions for
SBA and USDA disaster programs to ensure that all affected farm-
ers and farm businesses can access the support they need. Due to
gaps in the current USDA disaster programs, the State of Iowa has
already taken action to give agriculture some immediate relief. The
new Disaster Recovery Farm Interest Program announced by Gov-
ernor Reynolds on July 11th offers farm businesses up to $50,000
of reimbursement for one year of scheduled interest payments owed
on eligible loans used to repair or replace damage on insured prop-
erty.
This program essentially aims to align emergency loans with the
same one-year deferred interest financing offered by SDA. Similar
solution is needed at USDA to ensure that assistance is available
for farmers in Iowa and other states facing similar hardships. We
should all be inspired by the optimism, determination, and for-
titude of the farmers and farm businesses in Iowa and around the
country who have weathered these storms in natural disasters.
Family farms are key to the vitality of our rural communities
and essential to making the U.S. a global Ag production power-
house through common-sense reforms to USDA and SBA disaster
programs. We can assure that impacted farms receive the help they
need to recover, rebuild, and write the next chapter of their family
farm’s legacy, which will ultimately contribute to the greater story
of U.S. agriculture. Thank you for your time, and I look forward
to your questions.
[The prepared statement of Mr. Menke follows.]
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The CHAIRMAN. Thank you very much.
Mr. Luse.
STATEMENT OF ZACHARY LUSE, CEO AND FOUNDER,
PARAGON DIGITAL MARKETING, KEENE, NEW HAMPSHIRE
Mr. LUSE. Thank you, Chairwoman Shaheen, Ranking Member
Ernst, and the rest of the committee. It’s an honor to share my
story of entrepreneurship in rural America and my experience
working with government agencies to grow my business.
I grew up in a small town of DeWitt, Iowa, where entrepreneur-
ship was part of my life from an early age. I started my first busi-
ness in the third-grade selling, building, and selling wood benches
out of my dad’s photography studio. In 2010, I ended up in Keene,
New Hampshire, and turned my side hustle into Paragon Digital
Marketing, a company that was focused on helping mid to small
size businesses grow.
Starting a company that provides services over the internet came
with challenges in a rural area where access to the broadband is
limited. Chairwoman Shaheen, I greatly appreciate your work on
this issue. Thank you. As Paragon grew, the need for a larger office
space with broadband was a major challenge.
In 2018, I bought a vacant church listed on the National Historic
Register. I had no idea how much work was ahead of me, but after
a lot of Googling and calls and emails, I found technical assistance
through my state’s Community Development Finance Authority, a
CDFA, to secure a low interest loan using federal dollars to finance
a solar array on the roof of the building.
Additional funding for my project came from my local bank and
the New Hampshire Business Finance Authority. The process of
working with the various organizations and navigating their dif-
ferent requirements was challenging, and I doubt I would’ve com-
pleted this project without the assistance of the CDFA.
In 2020, we moved into our new space amid the uncertainty of
a pandemic, a PPP and EIDL loans from the SBA were crucial to
continued success of Paragon. The solar array now produces all the
energy we need for heating and cooling our business, and it makes
our business stronger and more resilient. When energy costs spike
like they did a couple years ago, it didn’t impact our business at
all.
My entrepreneurial journey continues with a new venture. I’m
opening a beer garden in the sanctuary of the old church, upstairs.
For this project, I’m applying for a USDA REAP Grant that’s due
at the end of the month to install a geothermal heating system to
replace the large oil boiler that currently heats the space.
Clean Energy New Hampshire is providing technical assistance
for this USDA grant which is extremely helpful. I’m also consid-
ering a New Hampshire Department of Energy grant, but the grant
is on a completely different timeline and completely different proc-
ess, along with long approval times for both of the USDA and the
NH Department of Energy grants.
Opening this business will definitely be delayed. Recently, I com-
pleted the New Hampshire Export Accelerator, where the New
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Hampshire Small Business Development Center or the SBDC
brought together the U.S. Commercial Service, SBA, and New
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26
Hampshire’s Office of International Commerce. With advisors from
the SBDC, I developed a plan to export Paragon Services. I’ve been
an awarded a STEP Grant and embark on my trade mission to
Brazil next week.
This is a great example of bringing together resources from dif-
ferent agencies and helping businesses navigate them. It would’ve
taken me a lot of time and research to connect with the people at
each of these agencies and try to figure out how to utilize these
services. This type of multi-agency coordination and assistance is
critical for small businesses like mine. Enhanced coordination
among federal programs that support small business is critical.
Additional resources for rural businesses and organizations that
support us, like the SBDC’s Clean Energy New Hampshire, the
CDFAs would be immensely helpful. We could spend less time
navigating the landscape of federal resources and more time doing
what we do best, running our businesses, creating jobs, building
wealth for families in our communities, and growing the American
economy. The New Hampshire SBDC has been a tremendous re-
source to me assisting with PPP and EIDL loans, and advising on
various aspects of my business. The guidance has been extremely
invaluable.
In my role as the trustee of the Savings Bank of Walpole, our
community bank, I’ve seen firsthand the impact of SBA and USDA
lending programs. One that stuck with me, including two farm
hands who with USDA support purchased the dairy farm that they
worked on from the retiring owners. This would not have been pos-
sible without the backing of the USDA and their programs, and
has changed the trajectory of their lives while keeping this dairy
farm in production for years to come.
I’m curious to learn more about potential synergies between
USDA and SBA. In summary, my rural business would not be
where it is today without the support of federal, state, and local
programs that support us. As a rural business owner, I faced
unique challenges like limited access to broadband, lack of edu-
cational institutions with relevant programs in my area, fewer
service providers to support my business, and more severe work-
force shortages than you see in more urban areas. These programs
make my business stronger and more resilient, but they often exist
in silos that make it difficult to access and navigate them without
help.
So, my ideas for improving coordination between federal agencies
and making resources more accessible to small businesses would be
more staff on the ground that serve as generalists, that connect
and advise on the different programs that are available to small
businesses. More programs like the New Hampshire’s SBDC’s Ex-
port Accelerator that bring together resources focused on solving
specific problems for businesses, quicker approvals.
USDA REAP grants can take several months to get approved,
and the timing and cycles of these programs don’t always line up
with real world business needs. Both my projects involved spaces
that had sat vacant, so I didn’t have any heating history. So, this
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disqualified me from many of the energy efficiency programs that
are available. Exceptions for vacant spaces or adaptive reuses of
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spaces to use energy modeling or other methods to show energy
savings would be very helpful as well.
I appreciate all you do to support small businesses like mine, and
thank you for the opportunity and privilege to share my story and
insights today.
[The prepared statement of Mr. Luse follows.]
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The CHAIRMAN. Thank you very much, Mr. Luse.
Mr. Barker.
STATEMENT OF VERLIN ‘‘GUS’’ BARKER, PRESIDENT AND CEO,
FIRST COMMUNITY BANK, NEWELL, IOWA
Mr. BARKER. Chair Shaheen, Ranking Member Ernst, and mem-
bers of the committee. I’m Gus Barker, President and CEO of First
Community Bank, headquartered in Newell, Iowa. I testify today
on behalf of the Independent Community Bankers of America,
where I’m Chair of the Rural America and Agriculture Committee,
and a member of the board. I thank you for convening today’s hear-
ing on the critical issue of support for rural small businesses.
First Community Bank is a $115 million asset bank, serving four
rural communities in Northwest Iowa. We specialize in agriculture
lending of all types, rural small businesses, and one-to-four family
homes. And now in view of the recent flooding in Northwest Iowa,
I want to put a special focus on community bank support for rural
small businesses in the wake of natural disasters.
In times of crisis, community banks demonstrate their true value
by providing critical resources, counsel, and comfort in their com-
munities. I’m grateful for the opportunity to share the community
bank perspective on this important topic. Iowans have repeatedly
proven their strength and resilience in the wake of natural disas-
ters.
As a 47-year Iowa community banker, I’ve lived through the
great flood of 1993, one of the most destructive floods in recent
memory. Like other Midwestern states, Iowa has experienced tor-
nadoes and droughts, which have laid waste to our most precious
economic resource; crops and livestock. In June of this year, severe
flooding in Rock Valley caused significant damage from which that
local region is still recovering.
Experience has convinced me that the best solutions are local.
Community banks have always been on the front lines of disaster
recovery efforts in Iowa, and I’m proud that local families, farms,
and small businesses have turned to me in their time of need. Now,
federal programs will never displace local community banks, which
are always ready to provide vital resources promptly and without
bureaucratic obstacles.
SBA direct lending and other federal disaster recovery programs
have always played a critical role in the survival of disaster-strick-
en businesses. Unfortunately, these programs are mired in bureau-
cratic red tape. Disaster victims are in no position to complete that
excessive paperwork.
My written statement contains an example from the historic
flooding of ’93, in which I helped a customer with the daunting pa-
perwork of an SBA application. We could not have completed that
application without the support of the local SBA office. Regrettably,
since that time, SBA scaled back its presence in Iowa, and applica-
tions are now approved in San Francisco, a distance that makes co-
ordination much more challenging.
Given the significant hurdles of obtaining agency relief, Iowa dis-
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aster victims often turned to their local community bank. Following
the catastrophic flooding of 2008, it was clear that support from
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33
SBA and FEMA would not be enough to support the recovery, and
that it would come too slowly.
My bank joined efforts with two other local banks to promptly ex-
tend some 50 loans to impacted businesses and families, which I’m
happy to report were repaid with no delinquencies. In fact, I’ve ex-
tended loans at a discounted rate in a number of natural disasters.
Disaster lending of this type takes patience and understanding
from bankers and regulators to allow for this recovery. But this is
very much a core part of our mission of community service.
My written statement contains several suggestions for improved
coordination among the agencies and with private lenders in dis-
aster recovery, which I’ll briefly describe for you. First, SBA is
known to file liens far in excess of the loan amount to secure their
mortgages. These liens tie up their collateral and prevent a com-
munity bank from helping the borrower in any way. In the future,
SBA should be willing to subordinate their loans in the way that
USDA has, for example.
Second, a disaster victim should have the option of packaging
benefits offered by different agencies, such as a FEMA grant and
an SBA loan, neither of which is adequate in itself for the rebuild-
ing today. A victim must choose one or the other. It’s too much to
ask of disaster victims to learn the details of those competing pro-
grams and make an informed judgment of what to do.
Thank you again for raising the profile of a critical issue for Iowa
and the nation. Community banks have a vested interest in the
prosperity of their communities and are always ready to help in
disaster recovery.
I’m happy to take any questions you may have.
[The prepared statement of Mr. Barker follows.]
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The CHAIRMAN. Thank you very much, Mr. Barker, and to each
of you for your testimony, normally what we would do is I would
ask questions, then I would turn to Ranking Member Ernst to ask
questions. And we would go back and forth between both sides of
the dais here for questions. But Senator Ernst is going to vote, so
she’s going to turn over her time to Mr. Budd, and I’m going to
turn over my time to Ms. Rosen because she has to leave. So, Ms.
Rosen, Senator Rosen.
Senator ROSEN. Thank you, Chairman Shaheen, Ranking Mem-
ber Ernst, we really appreciate it. And thank you to the witnesses
for being here today and for your care and for your really smart,
creative, and thoughtful testimony, and really, ideas of how we can
how we can make a difference.
So, I want to talk—I’m just going to ask one question because I’m
going to—I know we all are in votes. We’ve got a lot going on, so
I’ll take good use of my time. I want to talk about bridging. Bridg-
ing the digital divide. You know, Nevada, we have a deep rural
frontier mountainous state. It’s very hard to get there and it’s real-
ly an issue for us.
So, in 2023, online sales in the U.S. reached over $1.1 trillion,
representing nearly a quarter of total retail sales. And one of the
key drivers that supports this expanding all of this in the market-
place is the emergence of digital trade and e-commerce platforms
that enable entrepreneurs to reach markets, right? Maybe employ-
ees, whatever, those are to work for you, even remotely. And a lot
of these have been previously beyond your reach.
So, however, lack of reliable internet connectivity in rural areas
can really hinder and hurt our rural business’ ability to utilize any
of these tools, any of the resources. Your programs now are ap-
proved in San Francisco. You need to be able to get online to do
all of that. Makes it much more difficult.
A 2022 study found that nearly a fifth of rural entrepreneurs
lacked broadband access, which is one of the reasons I’ve been
working so hard to increase high speed internet access throughout
rural Nevada, and I know everybody’s working on it in their state.
So, Mr. Lewis, I’m going to take my one question and ask you,
talk to me about the challenges of access to reliable internet
connectivity. How it might be affecting you, or others, you know,
rural small businesses, and how will it improve if we really give
everybody, let’s say, all the juice they need to be on the internet
and do their jobs?
Mr. LUSE. Yes, great question. That is something I definitely
struggled with my business, and as I grew and trying to find an
office space that was big enough for us to grow into in our small
city. I looked at all kinds of office spaces, and they either couldn’t
get fiber to them at the time or the cost was just astronomical. I
looked at one office space in a newer industrial park, and it was
$28,000 to get fiber to that location——
Senator ROSEN. Oh my.
Mr. LUSE [continuing]. Which is just something small businesses
can’t afford. So that, I think it takes the government and the utili-
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ties, the communications companies, building out that infrastruc-
ture for small businesses to level that playing field curve.
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41
Senator ROSEN. Broadband as a utility, just like electricity and
water.
Mr. LUSE. Yeah. I mean, it’s become that. Children need it for
learning. Businesses need it for doing business. And I feel it should
be treated as more of a utility these days because everyone should
have equal access to broadband.
Senator ROSEN. Well, thank you. I appreciate that. I’m going to
yield my remaining time because we have votes and lots going on.
Thank you.
The CHAIRMAN. Thank you, Senator Rosen. Senator Budd.
Senator BUDD. I thank the chair. And what fortuitous seating. I
could ask my neighbor right here. [Laughter.]
Senator BUDD. So, low seniority has its benefits, sometimes. Ms.
Lank, and all of you, thank you for being here today. Could you
elaborate, I picked up a few ideas from your testimony, and again,
thank you for all of your testimony. But could you elaborate on the
obstacles rural businesses face when seeking financing from com-
munity banks and share how banks like yours in Arkansas have
helped these businesses navigate hurdles to access capital?
Ms. LANK. Many businesses struggle to get the capital that they
need, especially with USDA lending, because they have—there’s re-
quirements, right? Are you buying a business? Are you expanding
a business? Are you constructing a new building? So, there’s limits
on each one of those. So, that is a struggle that they have.
Also, if it’s a startup business, it’s really hard to get a community
bank to take a risk on a startup business. It’s just the facts. So,
there’s definitely some area for improvement on helping them get
what they need to get things started. A lot of them will lack busi-
ness plans, and a plan from A to B, and what they want to do. And
as Mr. Luse referred to the SBDC, SBDC is very good at assisting
people in creating their business plans and moving on from there.
Senator BUDD. Very good. Mr. Barker, anything that your bank
has done that’s unique to help these folks overcome access to cap-
ital problems?
Mr. BARKER. We’re a similar position. It is tough to get capital
for those new businesses, and we rely on that SBDC to help with
those business plans. They rely on us on counsel and giving them
advice. But it would sure be helpful if there were some programs
available to help us with some of those inputs to get those loans
approved and guaranteed
Senator BUDD. Continue with you, Mr. Barker. Given that rural
businesses sometimes face a lot of cash flow problems, whether
that’s a seasonal fluctuation particularly agriculture, how have
your financial institutions created new products or services to help
meet those needs, especially where there’s fluctuations?
Mr. BARKER. I don’t know if we’ve created new products, but if
something isn’t broke, you don’t have to fix it. So, you know, I go
back 47 years. I’ve been doing a lot of the same things during dis-
asters or during cash flow crisis.
And it’s patience. You have to stay with these folks, work out a
plan, how are they going to fix what was broken, figure out what
that was. Maybe they make changes to their plan. Maybe they go
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into digital marketing. We have a lot of boutique dress shops now
that are selling more online than they are in the storefronts right
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42
now. And so, I think things change. We have to adapt and we have
to be ready to make any changes that we need to do for that.
Senator BUDD. Very good. Thank you. Ms. Lank, anything you
want to add dealing with clients that have fluctuating businesses
and how you would approach them? I guess you would put that in
your modeling in your underwriting?
Ms. LANK. Correct. We do have some businesses that have
seasonality to them, and that’s just something that we look at
when we’re underwriting the loan. And we try to sit down and
work with them the best we can. We’ll help them problem solve
whatever, you know, they’re struggling with. If they’re struggling
with capital, there’s a couple of third-party—third party’s not the
right word. There’s some options that we have specifically with
USDA, but——
Senator BUDD. Understood. Thank you. So, one of the things that
has been a concern of mine and many of my colleagues for quite
a while is overregulation. That’s been a significant driver behind
banking consolidation which has reduced the number of local com-
munity banks and limited options for small business owners, par-
ticularly in rural areas.
Over the past decade, the U.S. has seen more than a 30 percent
decline in community banks driven by factors, including regulatory
pressures and increased compliance costs. Policies like the Dodd-
Frank Act, and to some extent, anticipation of Basel III have led
to heightened capital reserve, risk management, reporting require-
ments, which disproportionately impact smaller banks. Many have
been enforced to merge or close due to the inability to bear these
costs.
So, the trend’s particularly concerning in rural areas where com-
munity banks are often the lifeblood of the local economies, offering
tailored loans for small businesses and agricultural ventures. With
fewer small banks, rural entrepreneurs face greater challenges in
accessing the capital they need.
So, how has consolidation driven by overregulation and other
market forces? How has it affected the ability of rural businesses
to secure loans, and what policies could help with this? Mr. Barker.
Mr. BARKER. That’s a big issue right now. All these new regula-
tions that are hitting us, hit the small banks harder than they do
the big folks. I have 25 employees in four locations. I have to ad-
here to the same regulations that the big folks do in the metro
areas of Iowa and on the East and West Coast.
It comes down to the core processor charging for more data and
things like that. The things that are coming, the rules we’re sup-
posed to be gathering, 80-some points of information for our loans.
And in a large metro area, you can identify all those points of in-
terest, and nobody will know who that business is. In a town of 500
or 1,000 in Iowa, you list those points of that business, they’re
going to know exactly who it was and what was going on with that
business. It’s an invasion of privacy in our world. And we think it’s
way off base. And if there’s any way to stop that, we would really
appreciate it.
The other thing we’re finding all across the United States, obvi-
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ously, of course, there’s a history of too big to fail. In the small
bank, we tread lightly on everything to make sure we follow those
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rules. An example of the blatant disregard is happening right now
in the case of check fraud. It’s rampant out there. The big banks
are ignoring the rules and will not respond to the small banks in
Iowa, Alabama.
If there’s a return check that is supposed to be returned for proc-
essing, they just don’t respond. They ignore it. And I’ve had my
peers in Iowa have to hire an attorney to threaten legal action just
to get them to respond for a simple transaction that should go
through bookkeeping, but they don’t care. It doesn’t matter to
them. But if we were to do that, we would have an exam that
would be very criticized. That’s just an example of what we find.
Senator BUDD. That’s very helpful. Chair, do I have time to allow
Ms. Lank to elaborate on that same question? Yeah, thank you.
Any thoughts on overregulation and how it disproportionately im-
pacts a bank like yours?
Ms. LANK. What you don’t know is I used to be a bank examiner.
[Laughter.]
Senator BUDD. Talk about it from both sides.
Ms. LANK. Yeah. It is tough, especially as Mr. Barker mentioned,
especially when you’ve got a small bank, or you’re in a really small
town. It’s hard to find talent and people that are educated in all
of these regulations to be able to handle them all.
You know, from what I know, everyone does the best they can.
You know, I used to go in some banks and you could tell that they
did not have any idea what you were talking about, but most of
them did. Most of them did. So, it’s just, there’s not a lot you can
do. You’ve got to follow the rules so you muddle through the best
you can.
Senator BUDD. Yeah. Understand. Thank you all for your time
today and your testimony.
The CHAIRMAN. Mr. Barker. I bet if you called your senator, she
could get somebody to respond to you. [Laughter.]
Senator ERNST. Happy to help.
The CHAIRMAN. So, in my introductory remarks, I referenced the
MOU that SBA and USDA signed in 2023. It identified areas for
potential collaboration. And as part of the MOU, the SBA, USDA,
and FDIC, the alphabet soup of acronyms that we talk about here,
host a joint regional economic development workshop series called
Path to Prosperity.
These workshops connect rural small businesses with govern-
ment officials, lenders, service providers, and other stakeholders.
We did a small business committee hearing in New Hampshire last
week, and it was on a different issue, but one of the things we did
at the end of the hearing was to include a bunch of resource part-
ners like those I just mentioned, the IRS, SBDCs, USDA a number
of state agencies to be there to answer questions for small busi-
nesses who might have questions and not be sure how to navigate
the federal apparatus.
So, I wonder if you could talk a little bit about how those kinds
of workshops might help your business, Mr. Luse. And also Mr.
Menke, you served as state director for USDA rural development
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about the time that that MOU was signed. Can you speak to some
of your experience on the ground coordinating the SBA and other
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agencies? And I’ll ask you to go first, Mr. Luse, and then Mr.
Menke.
Mr. LUSE. Yeah. I think those programs are great for raising
awareness and even knowing the programs exist. Like the example
of the New Hampshire Export Accelerator that the SBDC put to-
gether, I had no idea that the U.S. Commercial Service would set
up meetings for you with foreign companies and vet them. I had
no idea. There were STEP grants to help pay for trade missions or
developing marketing materials and translations for going into for-
eign markets.
So, I think in that way, it really helps raise awareness for the
programs and connect businesses to the people that they—actual
humans instead of, like, scouring websites trying to find informa-
tion about these programs.
The other thing I noticed in the Export Accelerator that was real-
ly great was there were, during some of the sessions, the commer-
cial service, the SBA, the SBDC, and the State Trade Office, were
all on those webinars. And there were times when they were, those
agencies, asking each other more questions than the participants
were about each other’s programs. So, they were learning from
each other and figuring out ways that they could work together,
and how their programs could complement each other.
The CHAIRMAN. Yeah, no, I think that’s a really important obser-
vation. One of the things that I enjoyed about the resource sphere
was that they were not just answering and talking to the small
business owners who were there, but they were talking to each
other, which sometimes we don’t do as well as we should across all
federal, state, and local agencies. Mr. Menke.
Mr. MENKE. Well, in my time at Rural Development, we coordi-
nated regularly with SBA, and it was a KPI. It was a directive for
us to do so. We did a lot of rural small business road shows where
we would meet with lenders and economic development representa-
tives in communities all across rural Iowa to share information on
those loan programs and services available from USDA, and SBA,
and to help rural businesses start, grow, and expand.
And just to continue to discuss economic development ideas to
grow small businesses and coordinating helped to cross-promote
programs. We were required to refer a project to SBA at USDA.
They were required to do the same thing. We were required to le-
verage a project together to have an SBA and USDA joint-funded
project. So, those were things that we definitely did.
The SBDCs were great to work with as well. And I think we
need to continue expanding that coordination and collaboration to
the state level as well. The more fluent we are in how these pro-
grams work, the more we can be ready to give assistance to rural
small businesses every day. And especially when disasters occur,
we’ve got to be ready to do better.
The CHAIRMAN. I agree with that completely. Ms. Lank, can you
talk about things that you think some of our federal agencies ought
to be thinking about as we try and get out the word to those com-
panies that you see who come into your bank to look at how they
can get help?
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Ms. LANK. We were talking about this earlier, and that’s a strug-
gle. How do you market that? How do people in rural America find
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out what the offerings are? You know, we’ve had people that called
us and we were talking to them about a USDA loan. They’re like,
‘‘We’ve never heard of this before.’’ They had no idea. So, obviously,
when they get to us, we educate them the best we can. But as far
as a small business owner, I mean, who are they going? Are they
going to SBDCs? It’s a challenge for sure. Though that I have a
great answer for that, so.
The CHAIRMAN. And of course, those outreach budgets are some
of the first things that get cut on federal agencies. Senator Ernst.
Senator ERNST. Yes. Thank you, Chairwoman. And we’ll start
with Mr. Menke, and thanks again for being here today. In your
testimony, you’ve touched on how inflation has created that gap for
those in insurance coverage leading to the reliance on USDA and
the SBA programs, those that were impacted by those storms ear-
lier this year.
The State of Iowa even had to create bridge funding for farmers
to cover loan interest payments. You talked about how Governor
Reynolds started this program. How has that program been re-
ceived by Iowans, especially in our rural areas, and are there any
other areas that the state has been able to fill in those gaps left
behind by our federal programs?
Mr. MENKE. Well, the Iowa Department of Agriculture and Land
Stewardship does not run that new program. But I can tell you in
our conversations with Governor Reynolds, that the programs have
been very well received, especially by the farming community. And
again, that program offers up to $50,000 to reimburse one year of
scheduled interest owed on a disaster loan.
And this is important because what we’ve heard from farmers
after the tornadoes and floods was frustration that that deferred
interest option was not available for disaster loan assistance. We
know that the applicants for this program are dispersed well
among the 29 disaster counties in the State of Iowa. And we expect
an uptick in the usage of those programs once more insurance
claims are settled. So, I mean, there are so many farms that have
been affected by this.
And I know you’ve been spent a lot of time in Shelby County. We
had 74 properties that were severely damaged or destroyed just in
that county, including 48 homes, 75 grain bins, 16 livestock con-
finements, and 170 barns. So, this type of assistance is very, very
key. And that’s why the having parity between those loans would
be very important.
Two other programs that the state stood up were related to hous-
ing. One was to provide temporary housing for up to six months at
no cost for eligible disaster survivors as they pursue long-term
housing solutions. And the other was a disaster repair program to
provide up to $50,000 for the repair of disaster impacted homes
that aren’t covered out, they’re outside the scope of insurance or
FEMA individual assistance. So, the State of Iowa’s definitely
stepped up to fill some of those gaps.
Senator ERNST. Yeah. Thank you so much for that. And I spoke
to a gentleman from the Iowa State Extension Service as well
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today, and they were talking extensively about how they can stand
up just temporary housing in the meantime until they can mobilize
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46
contractors to even get into those areas to build. That’s such a
struggle right now.
Mr. Barker, again, thanks for joining us. It’s good to have you
here. And in your testimony, you discussed how paperwork burdens
and SBAs decision to move their loan approval authority to San
Francisco, and California. And the coasts presents challenges for
our rural areas. Can you discuss problems you faced when inter-
acting with SBA loan offices that don’t truly understand who they
are serving?
Mr. BARKER. You know, this dates back a lot of years when they
moved that office. I had great success with SBA as a young banker,
and they were wonderful to work with. I knew the loan officers
that SBA had locally and could deal with that. The minute that
switched and went out West, any application that I sent out there
was delayed. I didn’t have the same person to talk to. I had con-
flicting requests of what I needed to do. And I guess it was basi-
cally a major communication snafu.
And from talking to my friends in Rock Valley, that’s exactly
what they’re running up against in the disaster programs as well.
I saw it in 2008 and the floods there. Total disconnect. There were
multiple people giving multiple answers. They didn’t match. And
when we’re out there, the bankers didn’t know the disaster pro-
grams any better than the public. And we’re trying to help, and
we’re just as lost as they are. And it did create much frustration
that way.
Senator ERNST. Right. And I do know because we spoke to a
number of constituents that had the SBA reps that came in, they
had to come into the State of Iowa. They weren’t local. They were
providing bad and outdated information, which is absolutely unac-
ceptable.
You also mentioned that community banks can oftentimes pro-
vide better loan terms and less confusion than SBA. How do you
manage that?
Mr. BARKER. Well, they talk to us directly. We give them the
same answer every time they come in. Our paperwork is standard-
ized. We know exactly what they have to sign. The folks up in Rock
Valley with the different people they’re talking to get different re-
quests for different forms from different people, and they don’t
match, and there’s no rhyme or reason why they are. And then,
they’re doing duplications of it, and it is just a confusing mess.
Again, the communication issue is a mess. We can talk one-on-one.
We give them guidance and help them through the process.
Senator ERNST. Yeah. Thank you. Personal ownership and a
sense of community, very important. And do we have time to——
The CHAIRMAN. Sure.
Senator ERNST. Yes. Ms. Lank, thank you for being here. And I
am concerned that federal agencies are removing field staff and re-
placing them with more bureaucrats in Washington. It goes back
to some of the issues we’ve heard today. And that of course is
wrapped up into some of the telework policies that exist here in
DC.
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In your testimony, you mentioned as part of SBA and USDA’s
MOU, more can be done to coordinate field staff. Can you discuss
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47
your experiences with the gaps in coordination and what can be
done to better utilize federal field staff?
Ms. LANK. I believe that’s one of the challenges that everyone
has faced is having proper staff, having enough staff. Through
Covid, it all just went crazy. One of the biggest differences, back
to what Mr. Barker said, is if you’re trying to find a person at SBA.
You email 7(a) questions. You don’t call.
USDA, you’ve got people you can pick up the phone. They have
state offices that are staffed. You call them, you tell, like, every
time we have a new loan in a state we haven’t worked in, that’s
the first thing we do. We pick up the phone, we call them, we intro-
duce ourselves. ‘‘Hey, this is our project. We would like to work
with you all the things.’’ And a lot of times they’ll give us really
good advice. Also, if we need to, we can go to national office, de-
pending on the size of the loan with USDA.
So, the telework is a challenge. There’s some people that are
really good at it and some people that are really not, as you’ve
probably seen yourself. So, I mean, it’s just so interesting to me
how different they’re set up.
But finding a person and getting advice is kind of priceless.
Senator ERNST. Right. Absolutely, it is. And final question for
Mr. Luse. Thanks again for making the trip to DC. And in your
testimony, you discussed the challenges rural businesses face ac-
cessing broadband. That is a big topic here in this committee and
many others. Can you elaborate on the challenges and how you’ve
seemed to overcome those?
Mr. LUSE. Yeah, definitely. Great question. I shared a little bit
more earlier about my story with just trying to find an office space
for my business. It was a challenge, and we’re in a small city. The
office spaces I looked at either we couldn’t get fiber to them or
some of them, one was in a newer industrial park, was $28,000 to
get fiber to it. So, it’s just not feasible for a small business to be
expected to outlay that kind of capital, just to get good broadband.
So, it’s crucial, and we really need it in rural areas to level the
playing field with businesses in urban areas who have cheaper,
easier access to those things.
Senator ERNST. But you were able to overcome that then? There
are some programs that have connected your area?
Mr. LUSE. Yeah. So, the old church building I found that was sit-
ting vacant for 10 years had fiber on the poles across the street.
So, that was part of the reason that motivated me to undertake
this somewhat insane project of taking a 150-year-old church and
turning it into an office and a beer garden.
Senator ERNST. Well, good on you. Thanks so much. I appreciate
that. Thank you, Madam Chair.
The CHAIRMAN. I’m sure we’d all enjoy coming to visit the beer
garden. [Laughter.]
The CHAIRMAN. Senator Hickenlooper.
Senator HICKENLOOPER. Mr. Luse, I actually built a bunch of
beer gardens just for the record. I had the first brew pub in Colo-
rado, and then we did one in Omaha, in Des Moines and Green
Bay, and all around. Some of them pretty small, maybe not exactly
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rural communities. You know, the challenges that small businesses
face in rural areas are different than they are anywhere else. And
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I think you’ve already, in your testimonies, you guys all turned and
covered a lot of that.
But I wanted to cover a couple more things, a little more detail.
CDFI is, obviously, a very valuable tool. Flexible. They provide
technical assistance for people that are—you know, when I was a
geologist, so when I first started wanting to start the root hub, I
honestly didn’t know what the word proforma meant, as how
clueless I was. I had a masters in geology, but no background.
And in 2020, CDFIs originated almost $6 billion in financing in
rural areas. And I think it’s a win-win. It allows the banks to meet
their Community Reinvestment Act obligations, but it also is very
powerful for those communities where these businesses can ex-
pand, where they get the investment and can expand.
So, Ms. Lank and Mr. Barker, are your banks partnering with
CDFIs? Is that partnership as an effective and efficient way to
meet the investment needs of small business in rural America? I
mean, do you think that is worth all that effort we put into it, and
what benefits from these partnerships do you see?
Ms. LANK. We currently do not partner with them, but that is
something that is being discussed and worked through right now
at our bank.
Mr. BARKER. Same with us. We don’t locally have access to some-
thing like that right now, but on my Ag committee with the Inde-
pendent Community Bankers, we have been discussing those topics
to see how they could fit in with all the community banks in the
nation.
Senator HICKENLOOPER. Right. Well, I think that they’re—part of
the reason I ask the question is you’re the majority. You’re not the
minority in rural areas. And yet, I think they bring so much value,
especially to the communities, and you guys are community banks,
in essence. That rising tide, I think, affects everybody.
And I want to talk a little bit about AI and marketing. Mr. Luse,
you could take this. The rural businesses are always looking for a
way to innovate. They want to incorporate new technology, AI, you
know, new-fangled software, whatever they can do to help in their
efficiency of outreach to help in innovation of how to serve their
customers better.
As small businesses consider adopting new technology and get-
ting involved with AI and other tools, how should they decide when
to partner with other businesses to address their challenges or
when to build their own expertise in-house?
Mr. LUSE. That’s a great question. I think it comes down to ca-
pacity of the business and whether you’re able to build that exper-
tise in the business. And as a digital marketing agency, clients
come to us because they don’t have the expertise in-house to build
a high-quality website or go through all the complexity of Meta ads
and Google ads without wasting their money.
So, I think it’s a decision each business probably needs to make
based on how comfortable they are developing those skills. It’s pret-
ty easy for a lot of AI to just try it, and not rely on it too much,
and make sure there’s a human checking it. But we use it in our
daily work all the time. It’s been built into a lot of the advertising
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platforms for a long time. But we use it to speed up some of the
slower processes of research and things like that, doing some of the
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49
legwork that you would spend a lot of time researching online. But
we don’t—I wouldn’t say we rely on it. We just use it to kind of
enhance what we’re doing.
Senator HICKENLOOPER. Right. So, and I understand marketing,
also putting the metrics on how successful your marketing is, al-
ways. There’s so many variables. Very hard to do. You know, the
entire time I was in business, I knew for a fact that I was wasting
half the dollars I was spending on marketing. I just couldn’t tell
which half.
As the cliche goes, Ms. Lank, when you look at the variety of
businesses, all sizes, that rely on technology that exposes their cus-
tomers to some level of cyber risk. And in so many rural busi-
nesses, you know, they lack the expertise and the experience to en-
sure that they’re protected against cyber threats.
When supporting rural small businesses, how can local banks,
like your bank. Mr. Barker, you could answer this as well. How can
they help businesses secure and protect their data, the data of
their customers, their financial information?
Ms. LANK. If they don’t have any expertise on staff, definitely
hire a third party. But from our perspective, the best we can do is
ask that question. Make sure they’ve thought through it, make
sure they have a plan. You don’t have a plan; you can’t really do
anything. So, that would be the only advice I could come up with.
Senator HICKENLOOPER. That’s good advice.
Mr. BARKER. And then that’s where we’re at too. The education
we have to keep informing them what we find and our side of the
business and asking them the questions, what are they doing to
protect themselves and give them examples of what we discover in
our daily lives.
Mr. LUSE. I would just love to add that the—I don’t know if this
is at every state, but the New Hampshire’s SBDC has a cybersecu-
rity preparedness program for small businesses, and they do free
assessments for small businesses and training.
Senator HICKENLOOPER. Interesting. Mr. Menke, you’re the only
one who hasn’t answered that question. Do you want to chime in
at all, as an opinion?
Mr. MENKE. Well, I really don’t have anything additional to add,
so thank you.
Senator HICKENLOOPER. That’s okay. Great. I yield back to the
chair.
The CHAIRMAN. Thank you, Senator Hickenlooper. So, in my
opening remarks, I talked about the field hearing that we did last
Friday in New Hampshire. It was focused on how we can help
small businesses lower their energy costs. But one of the things
that one of the witnesses said really struck me because he said—
was talking about USDA’s grant programs that are targeted to
small business. And I think it’s true of many other grant programs
we have. He said, these are reimbursement-based grants. The work
needs to be done upfront, and the federal cash comes in later. It’s
often difficult for our small businesses to front the cash. And that’s
a challenge.
So, I know, Mr. Luse, you received a REAP Grant, which oper-
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ates exactly that way for your solar panels. So, can you talk about
how you dealt with that piece of it? And then I’d like to ask each
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of the rest of you, if you have, and you may have thoughts about
this, too, but if you have any ideas for how we should be thinking
about that problem that small businesses have?
Mr. LUSE. Yeah. So, for the solar panels, I received federal loan,
federal low interest loan through our CDFA.
The CHAIRMAN. So, it wasn’t a REAP Grant?
Mr. LUSE. No. I’m applying for a REAP Grant for the geo-
thermal, but I have to show proof of funds for the REAP Grant.
And geothermal’s expensive. Like this project might be $300,000 or
$400,000, and I’m a small business. So, showing proof of those
funds and then actually spending those funds is pretty difficult to
do for a small business. I think the federal loan that I used for the
solar panels had milestones where they reimbursed based on mile-
stones of the project. Even that case, I had to go to my bank and
get a line of credit to cover some of those gaps. And that was a
smaller project than what I’m looking at with the REAP Grant.
So, I think it would be much easier for small businesses if they
had some sort of milestones like that where they paid out a certain
amount at the beginning of the project, and then when you met a
certain point of the project and showed that you’d completed 50
percent of the project or something, you get a little bit more, and
then you don’t get it all until the project is complete.
I think some arrangement like that might still create cash flow
challenges and capital challenges for the smallest businesses, but
it would be easier to deal with. Like, I don’t know if I went to my
bank and said I need $400,000 to cover this and to this newer tech-
nology that isn’t utilized very much with geothermal heating, I’m
not sure how they would collateralize that. I’m not sure that it
would be something they’d be willing to take the risk on and go
through all the trouble of underwriting a loan like that for a short
period of time to bridge that gap.
The CHAIRMAN. So, potentially, it has the potential to be an issue
for you as well?
Mr. LUSE. Yes.
The CHAIRMAN. Ms. Lank, then I’m going to ask if each of the
other panelists would have any ideas for how we should think
about addressing that.
Ms. LANK. Sure. Thank you very much. It’s definitely a problem
that needs to be fixed. We’ve had several projects that we’ve looked
at who have struggled with this. Because the problem is—I mean,
you know what the problem is, but for USDA loan, you’ve got the
equity has to come in first. So, if you’re not getting it until months
after the deals closed—I mean, yes, it is free money, but you know,
if you can’t front that money, it doesn’t help you be able to close
your loan at all.
You know, there’s a lot of people that use bridge lenders, but
they can be very expensive. Someone has suggested an SBA loan,
but that’s not what SBA’s designed to do. It’s not for short-term fi-
nancing. It’s for long-term financing. So, I don’t have a great sug-
gestion, but it’s definitely something that needs to be worked on.
Thank you.
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The CHAIRMAN. Thank you. Mr. Barker, do you have any
thoughts about that?
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Mr. BARKER. Well, that’s been one of the frustrations in being
small town Iowa. It just doesn’t make sense for any project that we
have. And so, the minute some of these requirements are known,
it just stops the discussion right there. And we have to go a dif-
ferent direction and get it done another way.
The CHAIRMAN. And Mr. Menke?
Mr. MENKE. Just going back to Mr. Barker’s principle of the best
solutions are local. Sometimes utilizing our revolving loan funds
within the state can be potentially options in these situations.
The CHAIRMAN. Well, thank you all. I agree. It’s clearly a chal-
lenge that we’ve got to think about how to address if we’re going
to help our smallest businesses. Senator Kennedy.
Senator KENNEDY [Off mic.] [continuing]. Small businesses, rural
and otherwise. Being against rural small businesses is like being
against Golden Retrievers, I mean so. [Laughter.]
Senator KENNEDY. I thank you for being here. I have a couple
of questions related to that in terms of how are small businesses,
rural and otherwise, might be struggling? Secretary Menke, you’re
an expert in agriculture, obviously. Some people in Washington
have argued, not particularly persuasively in my opinion, but this
is America. They have the right, to their opinion. Some people in
Washington have argued that food inflation has been caused by
price gouging by our grocery stores. Do you believe that?
Mr. MENKE. That would not be my argument. No. Inflation has
impacted everything. And we started talking about disasters. I
mean, when we found farms who had their properties wiped off the
face of the Earth by a tornado, and they had just maybe spent a
couple of years, only in the last couple of years looked at their dif-
ferent insurance coverage, we found that the price of everything
has gone up dramatically. So, I would not assign blame to the gro-
cery stores.
Senator KENNEDY. Okay. Well, let me ask you a question. I don’t
know if you will know the answer or not, but when you go to your
local grocery store and go buy a banquet, frozen fried chicken, TV
dinner, what are the margins like for the grocery store? Are they
making like a 100 percent profit or is it more like 2 or 3 percent
because the competition is so great among grocery stores?
Mr. MENKE. I don’t know exactly, but I’m guessing it’s closer to
the latter.
Senator KENNEDY. Okay. All right. I’ll give you one person’s opin-
ion. This inflation that we have experienced was made in Wash-
ington. And I don’t hate anybody. I look for grace wherever I can
find it. But part of our job is to call it like we see it. And I think
the Biden/Harris Administration has been an inflation machine.
I’ve never seen anything like it. Worst bout of inflation we’ve had
in 40 years.
Now, we’re doing better, the inflation’s down. But all that means
is that the rates are not rising as quickly as they were. The prices
are not rising as quickly as we were. So, we’re having disinflation,
but that doesn’t help with the real problem. The real problem is
these high prices are permanent just because they’re not going up
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as quickly as they were. People are still paying the high prices.
That’s the difference between disinflation and deflation as you
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52
know. How has this job-killing inflation impacted rural, small busi-
nesses? Well, maybe we start down here.
Mr. BARKER. Senator, it’s a mess in Iowa what I’m familiar with.
We don’t have any workers that are working anymore. I used to
have a job opening and get 50 applications for a position in a bank.
I advertised for two months, and I got three applications. One did
not respond when I requested an interview. The other two ladies
are over 60 years old, and willing to work.
Senator KENNEDY. I’m stop you because I want to hear from—
yeah, go ahead. But it’s a problem with workers. We don’t find the
workers and the cost of living is extremely——
Senator KENNEDY. Mr. Luse? I wanted to give everybody a
chance here. Thank you for that, sir.
Mr. LUSE. I think in my world remote work and shortage of labor
really kind of blew up our labor costs. All of a sudden somebody
working, doing web development in New Hampshire could work for
a San Francisco wage from home and pay for cost of living in New
Hampshire. So, that was a big adjustment for us during Covid and
after. I think we’ve compensated with just having a great place to
work that people want to work at. And it seems like some of that’s
leveled off, but it was pretty difficult to find people. And that’s our
biggest expense; is our people.
Senator KENNEDY. Okay. Ms. Lank.
Ms. LANK. From what I’ve talked to the people, I have talked to
that have small businesses, everything costs so much. Like, every
single thing you buy, you know, a ream of paper, pens, you know,
it’s just—it’s also sometimes impossible. And a lot of people have—
a lot of small businesses have closed. I’ve talked to a lot of people
that own restaurants and the food costs are so high that they can
barely make it. So, I’m not the inflation expert, but that’s what I’ve
seen.
Senator KENNEDY. Okay. Thank you all for being here. Thank
you, Madam Chair, and Madam Vice-Chair.
The CHAIRMAN. Thank you, Senator Kennedy. Senator Ernst.
Senator ERNST. Yes. Thank you, Madam Chair. And again,
thanks so much. I’m going to talk a little bit more about rules and
regulations.
Mr. Menke, I’ll turn to you. Recently, the Occupational Safety
and Health Administration, OSHA, published a proposed heat rule,
and OSHA estimates the proposed rule would affect millions of
small businesses and employees. And so, I’m just concerned that’s
just one example of many, many rules that have been pushed out
by this administration. And I don’t know that the administration
is properly considering small businesses when they are publishing
these rules. They’re not taking a look at the unique needs of small
businesses.
So, I’ve heard about this particular rule. It’s just one example.
I’ve heard of many other examples coming from Iowans. In your
current role, how has increased regulation and red tape affected
the agriculture industry in Iowa?
Mr. MENKE. Well, we see it every day, and the Ag industry is al-
ready subject to plenty of regulation, and the list keeps getting
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longer. We’ve got EPAs rolling out its herbicides strategy and pes-
ticide strategy under the Endangered Species Act. New regulations
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53
that are going to be very costly, complex, and with very few compli-
ance options.
We’re also concerned that some of the tools that we have to be
able to use are being taken off the table with the label registration
for over-the-top Dicamba use unlikely to be completed for this 2025
growing season. So, new regulations and red tape need to be con-
sidered very thoughtfully and seriously as adding new layers of
compliance and taking important tools off the table can become a
direct time and cost burden for our producers.
One of Secretary Naig’s biggest priorities is the future of agri-
culture and promoting careers in agriculture. And if farming be-
comes too costly, cumbersome, and limited due to government regu-
lations, we run the risk of driving future farmers away from the
field.
And make no mistake, that overregulation impacts the small
farmers the most and the new and beginning farmers the most. So,
and important to note that the cost of production continues to go
up, and regulation and red tape is a part of that that will eventu-
ally make its way to the cost to the consumer. And we’re seeing
that now in California with Proposition 12 as cost of pork has sky-
rocketed due to that regulation.
So, we are blessed with the safest, most abundant food supply in
the world. That’s something we should never take for granted. And
we don’t want to put that at risk.
Senator ERNST. Yeah, certainly. Thank you for that. Iowa’s home
to over 89,000 small family farms, and I was blessed to grow up
on one of those small family farms. And my fear is with the over-
regulation coming from the federal government. And I think we can
all agree, we all want to be safe with our activities on the farm,
but overregulation it is going to drive these smaller farms out of
business. They’re just not going to be able to comply with all of the
standards that the federal government is laying down on them.
Forces them to sell.
And I hear from federal government all the time about big Ag,
and big Ag industry, and how awful it is, but that unfortunately
is what this federal government is driving us to. So, I think we
need to consider our small family farms as small businesses, and
we need to consider the level of regulation that is heaped upon our
small farms and our small businesses. So, thank you for that.
And let’s see if we’ve got maybe some other questions. Oh, yes.
Mr. Barker, I’m going to go back to you just for a final question,
just very briefly. In your testimony, you stated your bank rep-
resents millions of assets and often has to navigate the same rules
as larger banks. We’ve kind of touched on this, but again, keeping
in that regulatory theme, how do those regulatory requirements
disproportionately burden community banks in comparison to the
larger banks? And how do you see that get passed on to con-
sumers?
Mr. BARKER. Well, it affects us in our costs. We have similar
costs to the larger banks, and so it affects our operating budget.
And when it affects operating budget, it has to be passed on with
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higher interest rates on loans, lower interest rates on deposits,
maybe fees on deposits that we don’t normally want to do and
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54
can’t. So, it stretches us very thin, but eventually it could filter
down to the customer.
Senator ERNST. Yeah. Oftentimes, again, just sticking with that
theme, the regulation that’s pushed out from the federal govern-
ment, when we don’t consider the size of the business or industry,
right, it’s very harmful and we lose more of our smaller banks, our
smaller businesses, and our smaller farms.
And again, just want to thank you all so much. This has been
really helpful for me, understanding the different dimensions from
USDA and SBA. And thank you very much Madam Chair for con-
vening this great panel today.
The CHAIRMAN. Well, thank you, Senator Ernst. And to all of our
witnesses, thank you so much for joining with us and sharing your
expertise and your experiences. I hope that you will stay in touch
with either members of the committee or our staffs. If you have
thoughts about your efforts as you’re looking at, Mr. Luse growing
your businesses, the rest of you as you’re working with small busi-
nesses and thinking about what we might do that would be more
effective and efficient.
Let me point out that the record will remain open for two weeks
for additional questions and statements. And with that, the com-
mittee stands adjourned. Thank you all again.
[Whereupon, at 4:13 p.m., the hearing was adjourned.]
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