Small Business Committee: Statement on Full Committee Markup Budget Views and Estimates

STATEMENT
of the
Honorable Nydia M. Velázquez, Chair
Committee on Small Business
Full Committee Markup Budget Views and Estimates
Wednesday, February 28th, 2007

Today, the committee fulfills its responsibilities under the Budget Act with our consideration of the views and estimates for the SBA’s fiscal year 2008 budget.

The views before us today make it clear that the administration’s request is simply not the right priorities for the future of our small businesses. The budget simply does not do enough to help our businesses face the challenges of the 21st century.
The proposed funding continues the six-year decline in federal small business programs. SBA expenditures have now been cut nearly in half in those six years. As such, this represents the lowest percentage of federal discretionary spending on small business programs in decades.

We have heard over and over again that you can’t measure the agency’s success purely by its funding. Yet it is no coincidence that these cuts have occurred at the same time that we have seen a number of mishaps at the SBA.

Loans intended to ease the 9/11 tragedy have gone to the wrong businesses

Small business contracts are being awarded to some of the world’s largest corporations

Allegations of fraud in the agency’s lending programs

And, the debacle that was Katrina still continues.

At a time when entrepreneurs are facing historically high health care and energy costs, and unprecedented competition from overseas, it would seem appropriate to invest in programs designed to assist small businesses. However, 17 out of 26 core programs in the SBA are being cut, flat-funded or terminated by the President’s budget. Not one program receives any significant increase.

Small Business Development Centers, Women’s Business Centers, and SCORE are all flat funded while being directed to provide additional services! Under this budget, the Women’s Business Center program would have seven centers eliminated though it serves the fastest growing business sector.

The administration also proposes elimination of the funding for the Microloan initiative and its technical assistance programs, which provide small loans to low income communities. These attacks on the program are despite the fact the Microloan program has had only two defaults in ten years. Yet the cuts could cost a small borrower $4000 over the life of the loan and reduce demand.

The budget provides nothing to reduce the cost of the 7(a) loan guarantee program for small business borrowers. This comes at a time when the number of participating lenders is declining and the average loan size has fallen by about 40 percent in four years.

It also fails to provide funds to reopen the agency’s venture capital program. This will leave many entrepreneurs without the resources to grow and expand their businesses.

I believe that Administrator Preston wants to run a helpful agency and to be candid and straightforward in working with Congress. I know each one of us aims to help SBA do better. But rebuilding takes more than good intentions and hard work; it also takes faith and some investment in the future of our small businesses.

We can start that process today by adopting these views and estimates and recommending a budget that charts a course towards accountability and recovery for our small business programs. I look forward to working with my colleagues on the committee and in the administration to see to it that SBA has the resources it needs to assist our future entrepreneurs.