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House Committee Considers Small Business Role in Economy

On February 11, the House Small Business Committee held a hearing, “The State of SBA’s Entrepreneurial Development Programs and Their Role in Promoting Economic Recovery.”

“Over the past fifty years, the SBA [Small Business Administration] entrepreneurial development programs have grown into a fragmented array of programs, including the Small Business Development Centers [SBDC], Women’s Business Centers, Service Corps of Retired Executives, the Small Business Institute, and more,” said Margo Dorfman, chief executive officer of the U.S. Women’s Chamber of Commerce. She continued, “These fragmented programs have resulted in a disorganized, overlapping, and inefficient delivery of service in a system that is ill prepared to effectively address the challenges of our current economy.” Ms. Dorfman added, “Providing one clear channel for assistance is paramount to the average business owner seeking help. With one unified system, the SBA can provide a much stronger, coordinated response than the current patchwork system…One example is the Women’s Business Center program. While it is clear [that] women business owners are among those emerging market businesses that have not been well served, it is even more important that these firms work side by side with male business owners for a number of important reasons. SBA studies have shown that there are real differences in the backgrounds and resources available to male business owners. On the whole, male business owners have a greater history of entrepreneurial experience than women, better business networks, and greater access to capital. These are attributes to which women should be exposed instead of segregated…We believe the SBDC network should be used as the foundation for a new unified delivery platform of entrepreneurial programs that includes outreach to women and minority entrepreneurs (reflecting the demographics and needs of the community) along with broad community accountability for the effectiveness of their outreach and delivery of value.”

Jerry Cartwright, chair of the board of the Association of Small Business Development Centers, said, “Many of the small business owners who may face the most difficult decisions in this economy are women business owners and minority business owners. SBDCs have been actively engaged in successful outreach to these segments of the small business economy for years and have earned the trust and confidence of women and minority entrepreneurs over the past thirty years. Forty-six percent of SBDC consulting clients in FY2008 were women. This compares favorably to the roughly one-third of small business owners who are women. Nearly 35 percent of SBDC consulting clients in FY2008 were minorities, once again exceeding the percentage of small business owners who are minorities.” Mr. Cartwright added, “The recent expansion of entrepreneurship within the underserved community creates a significant number of comparatively newer businesses within the minority community (African American, Hispanic, women, etc.) Analysis indicates that these businesses may be at greater risk in the downturn, so the SBDC program intends to target outreach and [information] to the underserved community. These efforts will be designed to improve the survivability and continued growth of these firms. Many of these business owners have not experienced an economic contraction and seek business assistance in analyzing the impact of the contraction on their businesses and plans. In order for these firms to survive and help lead the recovery, SBDCs [should] prioritize increased public awareness of the challenges, as well as the opportunities that exist within the economy.”

Barbara Wrigley, executive director of the Association of Women’s Business Centers, said, “There is no question that, aside and apart from streamlining program efficiency and improving the future operations of the WBC [Women’s Business Centers] program, it is critically important that we all address the economic crisis that confronts us today. Historically, small business creation runs in a counter-cyclical fashion to overall national economic health: when the economy is running at ‘full employment’ fewer people are thinking of starting their own businesses, but when the economic conditions deteriorate and layoffs increase, people start their own business in increasing numbers.” Ms. Wrigley continued, “Women’s business centers are in the front lines of this situation; our members are seeing more and more women and men coming through our doors who have been ‘downsized,’ ‘pink-slipped,’ or who are underemployed and looking for a way to put their economic futures in their own hands…Where we see the key challenge at the present time is increasing the flow of capital to our clients not just those seeking to start a business, but especially to our existing clients who are already in business. Capital has dried up for these clients, and they are suffering…Our WBCs report a much harder time with our direct lending portfolios and with the ability to successfully refer our clients to lenders, especially SBA lenders. We feel that it is in times like these, rather than when times are good and everyone is lending, when we should be seeing growth in SBA-backed lending.”

Chuck Wolfe, president of Claggett Wolfe Associates (CA); Carol Gregg, president and owner of Flexible Staffing (MO); and Ron Blackburn, president of ASPIRA, also testified. Please click here to obtain the statements of the witnesses.

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