STATEMENT
of the
Honorable Nydia Velazquez, Chairwoman
House Committee on Small Business
Hearing on “Oversight of the Small Business Administration and its Programs”
Wednesday, April 21, 2009, 10 a.m.

Washington, DC – In January of last year, the House adopted Rule 11, requiring regular hearings on waste, fraud and mismanagement of programs under the committee’s jurisdiction. Since then, we’ve held no fewer than 18 oversight hearings, spanning a broad range of issues from federal contracting to SBA disaster loans. Today’s discussion is in that vein. It will allow us to build on past oversight hearings, providing a much-needed opportunity to examine some of the agency’s most critical programs. And it could not come at a more pressing time.

Over the last two years, our economy has endured a seemingly endless parade of challenges. While these setbacks have differed in scope and industry, they have managed to have the same impact on small firms. Even today, as we steadily climb back towards recovery, entrepreneurs face obstacles. Now, more than ever, they need the resources necessary to not only overcome those roadblocks, but to keep our recovery strong.

Historically, the SBA has helped deliver that support. It has served as a vital source of stability for small companies, particularly during periods of economic decline. But, as this committee is well aware, the agency has also struggled in areas ranging from lending to procurement. After years of underfunding, SBA continues to wrestle with a legacy of neglect -- one that has eroded its oversight mechanisms and left many of its programs in disarray. With an emphasis on accountability and a strong commitment from the Inspector General, we can tackle those issues directly.  

As Judge Brandeis famously said, sunshine is the best possible disinfectant. And make no mistake -- there is no better tool for scrubbing out waste than transparency. When it comes to holding agencies accountable, the Inspector General has a critical role to play, and I am pleased the IG is with us today.  It is my hope that our conversation will serve as a frank and open forum for examining SBA’s problem areas. Because until we’ve identified those concerns, we can neither move forward with solutions nor expect to see improvements.

When SBA programs are running at full capacity, they are true economic catalysts. Just look at Small Business Development Centers. In 2008 alone, they helped generate 58,000 new jobs at a cost of $3,000 a piece. Or, consider the Recovery Act’s SBA loan provisions. They have allowed the agency to support more than $23 billion in lending. At a time of historic declines in the small business capital markets, that particular effort has been nothing less than a lifeline.  But, unfortunately, not all of SBA’s initiatives have been quite so successful.  

Later this morning, we will look at a number of IG reports, all of which point to problems within SBA programs. In some instances, core initiatives have been wracked by fraud. In other cases, they have been undermined by questionable practices. It is imperative that these troubled programs be restored to reflect their original mission -- strengthening and supporting small businesses. Because at the end of the day, small firms aren’t just the “backbone” of our economy -- they are our greatest source of job growth.

According to a recent study by the Kauffman Foundation, virtually all net new jobs created between 1980 and 2005 came from startup companies. With unemployment at 9.7%, it only makes sense to focus on these firms -- the small and startup businesses that have always provided job security. With a portfolio of strong, well-managed SBA programs, we can do that very thing. I know I speak for all members of the committee when I say we are dedicated to upholding the integrity of the agency’s programs, and to ensuring small firms have the tools and resources they need to thrive.

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