STATEMENT
of the
Honorable Nydia M. Velázquez, Chair
House Committee on Small Business
Markup of Views and Estimates on SBA’s FY 2009 Budget Submission

Today, the Committee will consider its Views and Estimates of the Small Business Administration’s FY 2009 budget.  The task comes before us at a time when our nation is in dire need of the job creation and growth that are hallmarks of a small business economy. 

Across America, consumers are spending less on goods and services, credit markets are tightening, and—in the wake of the sub-prime mortgage crisis—people are losing their homes.  The situation calls for prompt action, and small businesses are ready to do their part to get the economy back on track.

Unfortunately, the Administration’s budget for FY 2009 is little different from those of the past eight years.  It lacks new ideas and, instead, chooses to continue the systematic eradication of the SBA.  

During the 1990’s, the agency had a seat at the President’s elbow and a budget of one billion dollars.  The SBA expanded essential services to entrepreneurs and helped them lead one of our nation’s greatest periods of economic prosperity. Today, the agency is a shell of its former self—as evidenced by the low morale of its employees—and its budget has been cut by more than 50%. 
 
For FY 2009 alone, 18 out of 26 core programs have been cut, flat-funded or terminated altogether.  For instance, despite a demonstrated need for expanded technical assistance, the Administration cuts the Small Business Development Centers and the Women’s Business Centers. 

Funding is also slashed for the 7(a) loan program, and its lender fees are increased to the highest allowable level.  These would be questionable decisions on an average year, but they are especially troubling when 80% of banks are tightening lending standards and the economy calls out for an immediate infusion of capital. 
The same wrong-headed approach is taken where Microloan are concerned.  Whereas entrepreneurs of the past—including women and minorities in low-income areas—could look to this initiative for capital, the Administration’s budget turns it back on them.  In fact, instead of fostering the growth of these small businesses, it raises interest rates on those who can least afford to pay them. 

It is all remarkably shortsighted, considering that many of these programs have been shown to put two dollars into the Federal Treasury for every dollar invested.  In other words, investing in small businesses is not only good for the economy, it helps reduce the deficit.

Clearly, small businesses—and the American people as a whole—deserve far better than the President’s Budget. 

I for one believe it is time for the SBA to step up to the plate, and draw on its lending, entrepreneurial development, and contracting programs to spur the economy. 

The Views and Estimates we have before us today take needed steps to remedy eight years of shortfalls, and focus on fostering the type of growth that will bring us back from the brink of this looming recession.  Our recommendations include $150 million for the 7(a) program, which will allow the agency to do over $20 billion in lending.  They also fully fund the SBDCs and WBCs, bringing small firms the professional support they require to succeed.

We have an important opportunity to do right thing for small businesses and the country this morning.  In light of that, I urge each of you to support of the Committee’s Views and Estimates.