STATEMENT
Of
the Honorable Nydia M. Velazquez, Chairwoman
House Committee on Small Business
Hearing on Funding Legislation for Programs within the Small Business Act
September 27, 2007

As the American economy continues to evolve and change, so must our economic policies.  This committee has already taken steps to make certain that programs at the SBA are transformed to meet the needs of the nation’s 27 million small business owners.  To this end, we have reported over a dozen bills that will provide technical assistance, access to capital, and the overall tools for success.

 The focus of today’s hearing is to review legislation that provides the necessary authority and funding to implement these reforms.  It is one of the last pieces of the puzzle as Congress moves forward with implementing the first major reform to the SBA in a decade. 

A major challenge for the SBA and its programs has been meeting the growing demand for services.  Nowhere has this been more evident than in the entrepreneurial development programs.  SBDCs and Women’s Business Centers have played a vital role in helping small businesses, but they have been faced with severe budget crunches.

Over the last five years, many centers have seen the administration cut their budgets by up to 20 percent.  This is despite the fact that a $1 investment in SBDCs generates an estimated $3 in tax revenue.  For these programs to maintain experienced staff, they must have sufficient resources. This legislation will provide such funding. 

A primary role of the SBA is to help entrepreneurs that have the drive, but need assistance.  The perfect example is the returning veteran who is prepared to start his or her own business venture  By funding the Office of Veteran’s Business Ownership, this can be achieved.  Veterans often bring a unique skills, but they  -- like other budding entrepreneurs -- struggle in converting these dreams into a successful business.

It is also critical that small firms have the necessary access to capital.  With the growing credit crunch, entrepreneurs are faced with few options when it comes to financing.  The 7(a) and 504 loan programs have filled a critical void when capital is scarce.   
This legislation will ensure that the SBA loan programs will never have to shut down due to excess demand.  And while later today, we will move a bill in the House that puts venture capital in the hands of small businesses; this bill will provide the authority to do so.

Microlenders will also be able to continue serving entrepreneurs who would not have opportunities otherwise. Considering that the default rate on Microloans continues to be at or near zero, it only makes sense to increase the authorization for this program.

Finally, it is important to note that this bill will increase funding for the HUBZone program.  It may seem odd to do so considering the Inspector General has deemed that the program is plagued by fraud.  However, this money will provide the SBA with the ability to carry out the program the way it was intended.

I want to thank the SBA and stakeholders for coming here to discuss these programs and ways to improve them. An authorization bill expresses this committee’s intent on how the programs should be operated. But before making recommendations, it is critical to seek the input of those who carry them out. 

For too long, the administration has either underfunded or underutilized initiatives that have successfully assisted small businesses.  This has been an obstacle to their success.   The legislation we are considering today changes this -- by enabling the SBA and its partners to provide the necessary capital and technical assistance.

 The committee will use this hearing to make any changes so that the SBA can meet their client’s needs.