STATEMENT
of the
Honorable Nydia Velazquez, Chairwoman
House Committee on Small Business
“Hearing on Recent GAO Reports on Small Business Administration Programs”
Wednesday, July 29, 2009

This past January, the House adopted Rule 11, which requires quarterly hearings on waste, fraud, abuse and mismanagement of programs under the committee’s jurisdiction. In the last six months, we have held 13 oversight hearings on a broad range of issues. Today, we will continue that track record of upholding transparency. Our discussion will include an examination of several SBA programs, and an evaluation of steps that the agency has taken thus far.  

In recent months, Americans have been reminded of the important role that small firms play in our economy. The Recovery Act alone contained several provisions designed to help small businesses, and the majority of those measures fall under the SBA umbrella. That is why it is so important that we take time to asses the agency’s progress.

Even as our economy starts to rebound, small firms are facing significant challenges in accessing capital. The Recovery Act took steps to address those obstacles.  For one, it increased SBA loan guarantees, giving banks greater incentive to lend. Any policy that puts cash back into the hands of entrepreneurs is critical. And yet, SBA has not implemented these provisions as quickly as we would have hoped. Lending measures are vital, and we need to be sure SBA has the direction it needs to put them in place.

As those of us who have been on the committee for some time know, SBA has a history of struggles with lending. Perhaps the most salient example would be the Disaster Loan Program, which faced significant challenges following Hurricane Katrina. At the time, we asked GAO to take a look at the initiative, and to evaluate SBA’s response to the hurricane. The resulting report led to the passage of the Disaster Response and Loan Improvements Act. Later in this hearing, we are going to hear from GAO about what SBA has accomplished since the act was passed. We will also discuss areas in which work is yet to be done. That way, we can be sure the agency is fully primed--and fully prepared-- the next time around.

In addition to obstacles in lending, SBA has often grappled with contracting issues. Perhaps most notably, the embattled HUBZONE program. It’s important that we have an idea of where that initiative stands. Fraud within the program was the primary focus of our oversight hearing in May, and it is this committee’s hope that the abuse has since been rooted out.   

Oversight is a critical part of the legislative process. For federal agencies, it provides an honest analysis of current programs, and an opportunity to change direction. After all, that is the primary purpose of GAO. As the investigative arm of the U.S. Congress, it does not seek to simply point out wrongs. Its ultimate goal is to provide objective recommendations for efficiency and improvement.

In examining the current state of SBA, it is clear that there is still significant work to be done. And the stakes could not be higher. Our economy, while recovering, has a ways to go. Now, more than ever, we are counting on small firms to drive growth and create jobs. In making sure they are able to do that, we need an SBA that can step up to the plate and fulfill its role as a champion of small businesses. With renewed focus and a fresh direction, I feel confident that SBA can play that role. I look forward to seeing progress unfold in the coming weeks and months.