Small Business Committee Democratic Site

STATEMENT
of the
Honorable Nydia M. Velázquez, Ranking Democratic Member
House Committee on Small Business
Hearing on Small Business Development Center (SBDC) Legislation
July 13, 2005

Thank you, Mr. Chairman.

At a time when our country continues to struggle toward an economic recovery - with 40,000 less jobs created last month than expected - it is clear that today's environment is not conducive to our nation's entrepreneurs.

Small businesses, the main job creators, are capable of turning these payroll numbers around - if they have the right tools to do so. Clearly, aspiring entrepreneurs require management skills, organizational skills and technical assistance - all of which are provided by the Small Business Development Centers (SBDCs).

The SBDCs have a proven track record of spurring entrepreneurship and economic development. In 2003, long-term counseling clients by SBDCs generated over 56,000 new jobs. Studies have shown that for every dollar spent on SBDC services, the program returned nearly three dollars to the Treasury.

Despite all of the benefits this program provides not only to small businesses - but also to the economy. The administration has effectively cut this program by over thirty percent in the last five years, when compared to the overall government spending during that time.

If you look across the country, over half of the states are feeling the effects of these cuts. For example, the state of Illinois would receive $156,000 less in FY06 than it did in FY01 through the SBDC program - and New York would receive $403,000 less. While the numbers of businesses only continue to grow throughout the country, states are receiving less for their SBDC programs.

These cuts are clearly having an effect. For the first time in five years the number of client hours of SBDCs has decreased. This is not because the demand is not there - businesses are waiting in line for these services. It is because the funds are not there.

While we are here to talk about some new enhancements to the program, the truth is that these discussions cannot take place until we examine the glaring funding shortfall.

Clearly, these proposals sounds great - and who would find fault in spurring business expansion, providing regulatory assistance or helping Native American entrepreneurs? In fact, three of these bills have already passed in the House during past Congresses.

We will also review a new initiative, H.R. 3207, which is targeting larger businesses. Our intent is not only to maximize the role of the SBDCs, but to ensure that any changes to the program do not take it beyond its scope, which is to help develop small businesses.

While we are here to discuss and evaluate these new initiatives, how are they ever going to reach their true potential if we continue to inadequately fund the underlying program. It simply makes no sense.

If the administration is truly committed to SBDCs, they need to stop the talk about the loans, contracting opportunities and all of their other rhetoric-filled press releases, and start facing up to the question - are you going to fund this great program? So far the answer is no.

The SBDC program enables entrepreneurs to take communities from poverty to prosperity. It is this program - and the SBDC employees - who are on the front line, talking to and serving our nation's entrepreneurs every day, providing them with the assistance and skills they need to keep our economy going.

The thanks we give them is insufficient funding. These are the same people that see filled waiting rooms every day, and know first hand the challenges in offering their services to entrepreneurs because of a lack of funding.

Today is an opportunity to truly assess the current conditions facing SBDCs. This is only the third time this Congress that this committee has held a hearing under its jurisdiction - which is clearly a contributing factor to why this agency is in such a state of disarray.

Once again this is an incomplete hearing - there is no one here from the administration to explain why the SBDC is receiving insufficient funds.

More and more it is evident that this administration is allowed to skip these hearings because they won't be able to answer the questions such as - how will they turn around the drop in client hours - why isn't the administration providing the resources that would enable SBDCs to perform at their fullest potential and - what are they doing to help develop small businesses?

Unfortunately, this administration has promised a lot, and delivered little to this nation's entrepreneurs. If we want to move forward, provide new initiatives, and strengthen the outreach of our SBDCs - then this administration, and this committee, must start backing up its rhetoric with some action. And the first step is by providing adequate funding. Thank you.