STATEMENT
of the
Honorable Nydia Velázquez, Chair
Committee on Small Business
Hearing on Legislative Proposals for SBA’s Microenterprise and International Trade Programs
Thursday, July 12, 2007

I am very pleased to call to order this morning’s hearing on proposals to reauthorize Small Business Administration’s microenterprise and international trade programs. 

As we examine these measures to update the SBA’s policies, I believe there are two important facts to consider.  First, the economy has drastically changed over the past decade.  Most notably, we have seen a broadening of the entrepreneurial base to now include a greater number of women and minorities.  At the same time, the US economy has become significantly integrated with those of countries across the globe – providing new opportunities, but also increased competition. 

However, while many are doing well in these business conditions, some are being left behind.  Microenterprises, the smallest businesses in terms of required start-up capital and employees, face competition without the resources to enjoy an equal playing field in the market.  Global integration poses an additional challenge – leaving many small businesses without the capacity to export their goods abroad or thrive in domestic markets.   Together, these developments are challenging small firms’ ability to remain competitive.

For small firms to thrive in this new environment, it is important that they compete on a level playing field.  The two legislative measures we are discussing today will help accomplish this by expanding and modernizing the tools that SBA can offer.  These proposals will help ensure small businesses can succeed in a dynamic and challenging economy.

In order to support growth in the country’s smallest commercial enterprises, the Committee will hear comments on the Microloan Amendment and Modernization Act, which will be introduced by Mr. Chabot today.  This proposal strengthens and broadens the reach of SBA’s microlending activities.   The measure requires the agency to transmit credit history information to major credit reporting bureaus, which will help borrowers improve their credit scores.  

In response to the evolving needs of entrepreneurs, the legislation permits borrowers to draw on longer term loans – providing them with greater financial stability.  Microlenders are also given greater control of their resources – and as a result will be able to direct technical assistance where it is needed most.   If enacted, this legislation would bolster microlending efforts in the U.S. – and this would occur during a time when such initiatives are being championed around the globe.

While some of these global developments are welcomed, others have created challenges for small firms to compete in the international marketplace.  To help overcome these barriers, Representatives Hall and Sestak introduced HR 2992, the SBA Trade Programs Act of 2007.  This legislationfocuses the agency’s efforts on the trade concerns of small businesses and will help firms dislocated due to globalization better access the assistance they need.  As trade policies are developed, the measure requires the agency to work with federal and international organizations to represent small business interests.  Finally, it requires an annual trade strategy, outlining the agency’s efforts to boost small business’s share in domestic and foreign markets.  Through this trade legislation, the SBA will be more prepared to assist the business community in the international marketplace.

The economic changes we are experiencing today present real challenges to the SBA and its programs, whether it is the changing demographics of entrepreneurs or the reduction of trade barriers.  The fact is that businesses require assistance regarding challenges that were not envisioned when many of the agency’s programs were created.  Going forward, Congress will seek to modernize the agency’s resources so that they remain relevant in an entrepreneurial economy that continues to evolve.

Small firms’ innovativeness and flexibility provide them with a natural ability to remain at the cutting edge of their industries.  With adequate assistance and access to tools to realize their full potential, I believe the two proposed legislative measures will ensure their ability to succeed even in a challenging environment.

To conclude, I would like to extend my appreciation to the witnesses for their testimony today.  I now recognize Ranking Member Chabot for his opening statement.