STATEMENT
of the
Honorable Nydia M. Velázquez, Chair
House Committee on Small Business
Full Committee Budget Hearing
Thursday, February 8th, 2007
Today, we will review the FY08 budget for the Small Business Administration. This request continues a trend that has seen a systematic decline in these critical programs that help entrepreneurs. Over the past six years, the Bush administration has continually made cuts to the agency. This year, the cuts may be different but the results are the same.
We hear time and time again how small businesses are the drivers of the economy and create the majority of jobs. However, under this budget, no program receives a substantial increase – leaving small businesses without the resources they need to succeed.
While I am so pleased to see the enthusiasm Administrator Preston has for working on behalf of our nation’s entrepreneurs, it also takes adequate funding to run these programs.
Of SBA’s core programs, 75 percent of these are cut, terminated or flat-funded. One example of this is the Women’s Business Center (WBC) program. The administration plans to eliminate funding for at least 7 WBCs. With the face of business changing --- cutting the one program whose sole goal is to help the fastest growing sector of the small business community makes no sense.
In addition, Microloan, one of the only programs that provides small loans to low-income communities, will now be self financed -- forcing start up businesses to pay thousands of dollars more. These changes are completely contrary to fostering a successful business model for these entrepreneurs.
At a time when we need to be showing small businesses that we are committed to their growth and expansion, the administration continues to treat small business as an afterthought. Year after year, we see more and more programs for entrepreneurs getting cut and under-funded. This budget request is no different. When you compare SBA’s core budget request to overall federal spending, it is the lowest it has ever been during the Bush administration.
These are all valuable programs that have contributed to some of the greatest entrepreneurial successes stories in the country. They have opened the door for so many small business owners to pursue and achieve their dream of running a business.
What is most concerning is that the administration is acutely aware of the problems and yet still proposes insufficient funding. The reality is that if you do not supply more resources, you simply cannot effectively run these programs. This is why we are seeing 9/11 loans used for the wrong purpose – the problems during Katrina, small business contracts going to the likes of Rolls Royce, and an agency unable to detect fraud in the loan programs.
To correct these challenges, only 1 percent of the budget is dedicated to address these challenges. That is shortsighted and will allow these problems to persist.
Its clear that since 2001 there has been a failure to provide the resources needed at the SBA. For that reason, it has been frustrating to continue to hear how things are getting better for entrepreneurs. What we have before us does nothing to reverse the shortcomings of previous year’s budgets and is just more of the same.
We need to provide proper funding for SBA’s core programs so they not only run efficiently but expand and help even more small business owners. This nation’s 26 million entrepreneurs cannot succeed in this economy alone. I understand that this is Administrator Preston’s first term and I appreciate his thoughtfulness so far.
I look forward to working with him and Mr. Chabot to ensure that the SBA has the funding it needs in the future. If we want to invest in small business and boost our economy then we have to do more than what is being proposed today.
Thank you.
