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27–253 2018

FIELD HEARING IN PHILADELPHIA, PA: SMALL 

BUSINESS CAPITAL ACCESS: SUPPORTING 

COMMUNITY AND ECONOMIC DEVELOPMENT 

HEARING 

BEFORE THE

COMMITTEE ON SMALL BUSINESS 

UNITED STATES 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED FIFTEENTH CONGRESS 

FIRST SESSION 

HEARING HELD 

OCTOBER 20, 2017 

Small Business Committee Document Number 115–042 

Available via the GPO Website: www.fdsys.gov 

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Congress.#13
(II) 

HOUSE COMMITTEE ON SMALL BUSINESS 

STEVE CHABOT, Ohio, Chairman 

STEVE KING, Iowa 

BLAINE LUETKEMEYER, Missouri 

DAVE BRAT, Virginia 

AUMUA AMATA COLEMAN RADEWAGEN, American Samoa 

STEVE KNIGHT, California 

TRENT KELLY, Mississippi 

ROD BLUM, Iowa 

JAMES COMER, Kentucky 

JENNIFFER GONZA ́ LEZ-COLO ́ N, Puerto Rico 

DON BACON, Nebraska 

BRIAN FITZPATRICK, Pennsylvania 

ROGER MARSHALL, Kansas 

RALPH NORMAN, South Carolina 

NYDIA VELA ́ ZQUEZ, New York, Ranking Member 

DWIGHT EVANS, Pennsylvania 

STEPHANIE MURPHY, Florida 

AL LAWSON, JR., Florida 

YVETTE CLARK, New York 

JUDY CHU, California 

ALMA ADAMS, North Carolina 

ADRIANO ESPAILLAT, New York 

BRAD SCHNEIDER, Illinois 

VACANT 

KEVIN FITZPATRICK, Majority Staff Director 

JAN OLIVER, Majority Deputy Staff Director and Chief Counsel 

ADAM MINEHARDT, Staff Director 

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(III) 

C O N T E N T S 

OPENING STATEMENTS 

Page 

Hon. Brian Fitzpatrick ............................................................................................ 1 

Hon. Dwight Evans ................................................................................................. 1 

WITNESSES 

Ms. Dafina Williams, Vice President of Public Policy, Opportunity Finance 

Network, Philadelphia, PA .................................................................................. 4 

Ms. Leslie Benoliel, President, Entrepreneur Works, Philadelphia, PA ............. 7 

Mr. Lin Thomas, Chief Executive Officer, EMSCO Scientific Enterprises, 

Inc., Philadelphia, PA .......................................................................................... 10 

Mr. Steve Dorcelien, Owner, Bright Yellow Creamery, Philadelphia, PA .......... 13 

APPENDIX 

Prepared Statements: 

Ms. Dafina Williams, Vice President of Public Policy, Opportunity Finance Network, Philadelphia, PA ................................................................ 27 

Ms. Leslie Benoliel, President, Entrepreneur Works, Philadelphia, PA ...... 36 

Mr. Lin Thomas, Chief Executive Officer, EMSCO Scientific Enterprises, 

Inc., Philadelphia, PA ................................................................................... 41 

Mr. Steve Dorcelien, Owner, Bright Yellow Creamery, Philadelphia, PA ... 44 

Questions for the Record: 

None. 

Answers for the Record: 

None. 

Additional Material for the Record: 

None. 

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(1) 

SMALL BUSINESS CAPITAL ACCESS: 

SUPPORTING COMMUNITY AND ECONOMIC 

DEVELOPMENT 

FRIDAY, OCTOBER 20, 2017 

HOUSE OF REPRESENTATIVES, 

COMMITTEE ON SMALL BUSINESS, 

Philadelphia, PA. 

The Committee met, pursuant to call, at 2:45 p.m., in Studio C 

at the Enterprise Center, 4548 Market Street, Philadelphia, PA, 

19139, Hon. Brian Fitzpatrick presiding. 

Members present: Representatives Fitzpatrick and Evans. 

Mr. EVANS. I would like to say good afternoon to you, and it is 

my pleasure. First, I would like to thank the chairman—first, I 

would like to thank Mr. Fitzpatrick for being here today and taking 

the time to visit my district to hear the stories of local small businesses. It is great to be here, and he will call it to order. 

Mr. FITZPATRICK. Okay. Good afternoon. I call this hearing on 

the House Committee on Small Business to order, and before we 

begin, I want to thank Mr. Evans for inviting me to be in his district, and I can tell you, as a fellow freshman colleague of Mr. 

Evans, not only is he a phenomenal legislator, he is an even better 

human being. Huge heart, and it is just an honor to serve with him 

in Congress. While we may be from different political parties, we 

are both proud Philadelphians and enjoy working in a bipartisan 

manner in our Committee for the owners and employers of southeastern Pennsylvania. 

To give you a little bit of background on the nature of the bipartisanship between our members, every single bill we have passed 

through our Committee has been voted on unanimously. That is 

not always the case with other Committees in the House. Quite 

frankly, it is refreshing. Dwight and I have worked together on numerous pieces of legislation, and I thank him for his leadership on 

this Committee. So again, I appreciate his invitation, and I am 

looking forward to hearing the testimony of our witnesses. 

Being a small business owner in America is a very tough job. No 

matter what your business, you must wear many different hats. In 

addition to doing what you went into business for in the first place, 

you probably have to tackle responsibilities such as a tax accountant, advertising executive, regulations expert, fundraiser, and 

human resources expert as well. Yet throughout our history, entrepreneurs in America have done all these things, and more. But to 

be in business, there is one thing that is necessary above all else, 

and that is access to affordable capital. It is the fuel that each and 

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2 

every small business needs to move forward. From the neighborhood ice cream parlor to a local manufacturer, to the high tech research and development company, access to capital is paramount. 

Our Nation’s entrepreneurs and small businesses continue to experience a difficult lending environment, which is at best stagnant. 

In fact, recent research has shown that the total value of loans by 

small domestic banks has remained flat since the recession and depressed compared to levels before the recession. 

All too often, small firms cannot access conventional lending, so 

they have nowhere to turn for the capital to grow their businesses 

and to create jobs. Despite being credit-worthy, they are often not— 

do not have the proven track record for traditional lending. With 

limited options in conventional markets, more and more small businesses are turning to the Small Business Administration’s lending 

programs as a means to help finance their dreams. From the flagship 7(a) and the 501(c) CDC programs to the microloan SBIC programs, there are many options at the SBA to help small firms find 

affordable capital products. 

While by and large these programs seem to be doing well, we can 

always do better. The more capital we free up for deserving small 

businesses, the faster our economy will grow, and the sooner our 

communities will be revitalized. That is why we are here today. We 

want to hear your stories and hear your recommendations that can 

help improve access to capital. I am a firm believer that the best 

ideas in Washington don’t come from Washington. They come from 

folks like you, and I am eager to discuss these critical issues with 

you today. 

And with that, I want to thank you all for taking time out of 

your undoubtedly busy schedules to be here today, and I now yield 

to Ranking Member Mr. Evans for his opening remarks. 

Mr. EVANS. Thank you, Mr. Chairman. 

I want to thank the Chairman as someone who is a neighbor. He 

is from the 8th Congressional District, and we are really more than 

just professional friends, we also are real personal friends. We have 

worked together in the short period of time we have both been 

there, and this is the thing that needs to happen in Washington. 

People working together from the bottom up. 

As the economy continues to strengthen, more entrepreneurs will 

seek capital to start ventures to expand existing businesses. Traditional lending sources often ignore many communities around the 

country, resulting in small firms utilizing other financial programs. 

Today’s hearing will explore those programs promoting affordable 

lending, investing products, and often firsthand account for local 

small businesses. 

At the federal level, the SBA provides entrepreneurs with access 

to capital by the extension of guaranteed loans through such as the 

flagship 7A program. But while the overall number of loans have 

increased, the percentage going to minorities and women only firms 

has remained fairly consistent since 2010, and is lower than before 

during the recession. This is—and this is a consistency that we 

have heard at hearings at roundtables by the Committee. That is 

why as Democratic members of this Committee, we have emphasized that lending to women and minority-owned businesses must 

be improved. 

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3 

The Microloan Program has been recognized by members of the 

Committee as a way to improve lending. The need for more small 

business dollar loans is really particularly among the most underserved markets. Nearly 50 percent of the SBA microloans have 

gone to women-owned businesses, 20 percent to Hispanics, and 

more than 25 percent to African Americans. This program was specifically designed to reach those that can’t qualify for traditional financing in order to fulfill and develop their chances at success. 

Thus by recently passed legislation increasing the intermediary 

loan limits for the microloan, we have extended the reach of the 

SBA programs. 

Mission-based lenders such as CDFIs and certified development 

companies also play an intricate role in the small business lending 

space. As they focus on expanding economic opportunities in their 

communities, their work has benefitted a great number of communities across the country, and through 2017, originated more than 

$42 billion in financing in urban, rural, and native communities. 

Lending outside the traditional consumer banking, better known 

as FinTec, has become increasingly popular for small businesses. 

And while the speed and the flow of capital may be an advantage, 

we must work to ensure that proper protections are in place for 

that. For this very reason, the Committee intends to continue to 

engage small businesses in the lending in this topic. 

Another key aspect of capital financing is equity investment. 

While traditional debt financing tends to cater more to established 

small firms, start-ups may lack adequate revenue streams and 

credit history. Angel Investing, Venture Capital, regulatory investment funds like small business investment companies, all target 

new and early stage firms. And like other forms of capital, there 

remains an unmet need for those types of finances for small businesses. 

With these various areas of lending and investing in mind, today’s hearing will provide the opportunity to explore what works 

and where improvement can be made. Overall, this Committee 

seeks to ensure that mechanisms are in place to promote the 

growth, development, and continued success of small businesses. I 

look forward to hearing from our witnesses and gaining insight into 

their experiences. 

I thank you all and yield back the balance of my time, Mr. Chairman. 

Mr. FITZPATRICK. Thank you, Mr. Evans, and if Committee 

members have opening statements prepared, I ask they be submitted for the record. That is just a procedural thing I need to say 

in case anybody back in Washington wants to add anything to our 

hearing for the record today. 

I would like to take a moment to explain the timing lights for 

you. You will each be afforded 5 minutes to deliver your testimony. 

The light will start out as green, and when you have 1 minute remaining, the light will turn yellow. Finally, at the end of your 5 

minutes, the light will turn red. I ask that you try to adhere to the 

time limit, but given the fact that there are just a few of us here, 

we will be very lenient with those instructions. 

So I believe we will start with Mrs. Williams—oh, Mr. Evans. 

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4 

Mr. EVANS. Thank you. Thank you, Mr. Chairman. To give you 

a little background on Mrs. Williams. Mrs. Williams is vice president for the public policy at the Opportunity Finance Network, the 

leading national network of Community Development Financial Institutes, CDFIs. She joined the Opportunity Finance Network in 

2006 and leads the organization in policy development around 

housing financing, small business lending, healthy food financing, 

and coalition building. She also manages the organization’s regulatory advocacy, state and local policy efforts. She has presented at 

numerous industry conferences and contributed to several community development financial publications. She also graduated Magna 

Cum Laude from Temple University. She received a BBA in economics. In her spare time, she serves on a Board of the Friends, 

an international nonprofit providing access to quality education in 

Latino America. And as a member of the city’s Millennium Advisory Committee, we welcome Ms. Williams. 

STATEMENTS OF DAFINA WILLIAMS, VICE PRESIDENT OF 

PUBLIC POLICY, OPPORTUNITY FINANCE NETWORK, PHILADELPHIA, PENNSYLVANIA; LESLIE BENOLIEL, PRESIDENT, 

ENTREPRENEUR WORKS, PHILADELPHIA, PENNSYLVANIA; 

LIN THOMAS, CHIEF EXECUTIVE OFFICER, EMSCO SCIENTIFIC ENTERPRISES, INC., PHILADELPHIA, PENNSYLVANIA; AND STEVEN DORCELIEN, OWNER, BRIGHT YELLOW 

CREAMERY, PHILADELPHIA, PENNSYLVANIA 

STATEMENT OF DAFINA WILLIAMS 

Ms. WILLIAMS. Thank you. Good afternoon, Representative 

Evans and Representative Fitzpatrick. Thank you for holding this 

hearing on small business capital access. My name is Dafina Williams, and I am Vice President of Public Policy at Opportunity Finance Network, and I am pleased to be here today to testify not 

only on behalf of OFN, but also as a constituent of the 2nd District 

of Pennsylvania. 

OFN is a national network of CDFIs, mission-driven community 

banks, credit unions, loan funds, and venture capital funds investing in opportunities that benefit low income and low wealth, and 

other under-resourced communities. CDFIs are financial intermediaries that connect communities to capital that creates jobs, 

supports small businesses, builds affordable housing, cultivates 

healthy food and energy efficiency, and promotes safe borrowing 

and lending. 

Currently, there are more than 1,100 CDFIs certified by the Department of Treasury’s CDFI fund. CDFIs in OFN’s network 

alone—that is about 230 of the 1,100—have originated more than 

$54.9 billion in financing in urban, rural, and native communities 

through 2016. With cumulative net charge-off rates of less than 1 

percent, CDFIs have proven that they can lend both responsibly 

and effectively in under-resourced communities. 

Today, I would like to provide an overview of some of the challenges facing small businesses in accessing credit, how CDFIs are 

helping to address these challenges, and the role that the federal 

government can play in providing resources that further stimulate 

that flow of capital. 

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5 

Although lending conditions have remained relatively stable for 

the past several years, credit standards for loans have remained 

tight since the Great Recession. Less credit-worthy borrowers, like 

those in communities disproportionately impacted by the financial 

crisis, face significant challenges to accessing capital to grow or 

start their businesses. For women-owned and minority-owned small 

businesses, these challenges are even more pronounced. 

However, there proven solutions to meeting these challenges: 

specialized targeted lending, technical assistance, and community 

partnerships can help improve capital access, create new markets 

for small businesses, expand networks, strengthen the borrower to 

traditional lender relationships, and support broader economic development goals. 

Small businesses are an important driver of economic growth, 

but they face both macroeconomic and microeconomic challenges 

when attempting to access credit. Some of these challenges include 

contractions in the banking system and lending to small business, 

a decline in the availability of small dollar loans, weak or limited 

credit history, lack of business and financial management skills, 

access to entrepreneurial networks, and limited awareness of lending options. These barriers are, of course, particularly high for entrepreneurs who are low to moderate income, women, racial minorities, and other traditionally disadvantaged populations. 

So a little bit about some of the macroeconomic conditions. U.S. 

bank branches closed about 4,800 branches between 2009 and 

2014. This has created banking deserts, which has particularly impacted low income communities, rural communities, and communities of color, limiting access to basic financial services, as well as 

credit. 

A decline in the number of bank branches and community banks 

impacts the availability of credit to small businesses who typically 

rely on relationship lending from their local lenders. In 2015, both 

the number and dollar amount of CRA reported loans to small 

businesses with revenues under $1 million had declined 40 percent 

below their 2007 levels. There has also been a decline in the availability of small dollar loans. The number of CRA reported loans of 

less than $100,000 in 2015 was 58 percent lower than it was in 

2007, even as demand for these loans remains high. The Federal 

Reserve’s 2016 Small Business Credit Survey found that 55 percent 

of applicants actually sought less than $100,000 in finance, so 

there is a huge credit gap there. 

I am going to let my colleague, Leslie, talk a little bit more about 

some of the microeconomic issues impacting some of these small 

businesses, but I will move on a little bit to talk about online lending. 

For a lot of small businesses as the brick and mortar financial 

institutions continue to retract and close, they are left with few options and a lot of them are turning to new online lenders who have 

entered the marketplace. And to an extent, these lenders—they are 

filling a gap and they are providing access to financial credit and 

services. However, some of these online lenders are providing high 

cost loans targeting the most vulnerable small businesses with little transparency about loan pricing and terms up front. Online 

lenders may make it fast and easy to get capital, but they certainly 

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don’t make it cheap. Often, small business owners are not aware 

that they may have other affordable options available to them, or 

that responsible lenders like CDFIs even exist. 

Another thing to consider is that racial and gender-based biases 

can also prevent small businesses from entering mainstream lending. Even when controlling for things like personal wealth and 

credit scores, people of color and women are disproportionately denied financing at rates higher than their white male counterparts. 

Despite these challenges, underserved businesses continue to 

grow and create jobs. A boost in local small business ownership can 

have a positive impact on the economic development of our region. 

Analysis of U.S. Census data shows that the greater Philadelphia 

area actually lags behind other large metropolitan areas when it 

comes to the rate of growth in small businesses. Additional investments and proven solutions and programs like those that support 

the work of CDFIs will stimulate the flow of capital to business 

owners, generating economic activity that can catalyze community 

development, create jobs, generate income and wealth, and help 

chip away at the city’s persistently high poverty rate. 

CDFIs are an important part of the small business lending ecosystem. They provide capital to businesses that cannot access traditional financing. For small businesses with financial impediments 

to securing financing, like lack of collateral, cash flow challenges, 

modest business revenues, CDFIs address these issues by providing 

a variety of financial products, including working capital, equity investments, bridge loans, senior unsubordinated debt, sometimes at 

below market rates and with lower and fewer fees that what is traditionally available in mainstream lending, and also with more 

flexible underwriting criteria, credit standards, collateralization, 

and debt service requirements. 

But CDFIs also recognize that not all the challenges facing small 

businesses are financial. Some of them have to do with the financial and business management and provide—that businesses have, 

and so to address this issue, CDFIs also provide technical assistance and development services to their lenders. So that means they 

are taking a holistic approach to looking at the business, identifying not only what the financial weaknesses are, but also looking 

at where they might need help with their accounting or their payroll, or some of these other non-financial issues that will really help 

the business be not only ready to take on financing, but also to ensure that they are able to be successful once they are able to get 

a loan. 

So there are a couple of ways that the federal government can 

support the work of CDFIs. There are a few programs that you 

mentioned already through the SBA, but there are a couple more. 

The first is the Treasury Department’s CDFI Fund. This provides 

patient, flexible equity capital to CDFIs that allows them to go out 

and attract private sector capital that allows them to then amplify 

the impact of their lending. For every dollar of CDFI fund awards 

that is provided by the federal government, CDFIs generate an additional $12 in economic impact. The Markets Tax Credit Program 

is also an important source of private sector financing, but is set 

to expire in 2019 and its future is currently uncertain as Congress 

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vantage Program pilot program at the SBA would be made permanent. Currently it is also set to expire in 2020. And that there will 

be continued expansion of the Microloan Program and the technical 

assistance that it provides to the SBA. We also think that another 

round of funding through the state Small Business Credit Initiative, which is a $1.5 billion lending program created through the 

Small Business Job Act of 2010 would also help increase the flow 

of capital to underserved businesses. That $1.5 billion was actually 

leveraged to provide about $10.7 billion in total financing, and 

more than 40 percent of that capital went to underserved businesses across the country. And finally, strong borrower protections 

are key to ensure that small businesses have full disclosure of understanding of fees, terms, and pricing of any of the loan products 

that they are accessing. Without these sort of protections in place, 

business owners are often susceptible to predatory lenders or online lenders, and currently, these protections do exist in the mortgage lending and consumer finance space, but no current protections exist for small business borrowers of that same nature. 

So thank you for the opportunity to testify today, and I would be 

happy to take any questions. 

Mr. EVANS. The next person—this is the first time, Benel, right, 

Leslie? 

Ms. BENOLIEL. Benoliel. 

Mr. EVANS. Benoliel—is the President and CEO, of Entrepreneur Works, a not for profit organization that provides comprehensive business training, business advisory service, microloans 

to entrepreneurs and small business owners of low income, minority, immigrants, and other underserved throughout the greater 

Philadelphia region. Combined over 30 years of banking and community development experience, Leslie has built Entrepreneur 

Works into an effective, nationally recognized, high impact micro financing and small business development. She has successfully implemented several national small business initiatives that brought 

new corporate resources to invest in a region—community. 

Starbucks—created jobs. That is a long list. Leslie has served on 

the boards of Pennsylvania Minority Enterprise Coalition, Sustainable Business Network of Greater Philadelphia, and currently 

serves on the advisory committee of the Philadelphia Office of Community and Economic Development. 

STATEMENT OF LESLIE BENOLIEL 

Ms. BENOLIEL. Thank you. Good afternoon Representative 

Evans and Representative Fitzpatrick, and members of the Small 

Business Committee. Thank you very much for this invitation. It 

is a great honor. I am also a constituent of the 2nd Congressional 

District. My name is Leslie Benoliel. I am the president and CEO 

of Entrepreneur Works. We are a nonprofit CDFI that provides access to loan capital and business training to entrepreneurs and 

small business owners throughout the Philadelphia region. We 

serve between 200 and 300 entrepreneurs a year, and primarily in 

underserved communities. Our constituents are 84 percent minority, 68 percent low income, and 60 percent women. 

I am here today to express how critically important it is to support small businesses and to ensure that they have better access 

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to capital. As it has been mentioned before, and you know very well 

in this Committee, small businesses are vital to and are a key segment of our region and our national economy. Small businesses— 

and those are 500 employees or less—represent by far the largest 

proportion of all firms, private sector firms, 99 plus percent, and 

they account for roughly half of all private sector jobs. This is true 

of Pennsylvania and the Philadelphia region. 

It is widely known that small businesses are the largest creators 

of jobs in the U.S. year after year, and SBA data supports this. 

That said, small business owners are at a disadvantage. The Philadelphia area ranked 31 out of 40 large U.S. metropolitan areas for 

start up activity, according to the Kaufman Foundation Index of 

Start Up Activities. 

Who are these small businesses? Well they are your childcare 

providers, coffee shops, food trucks, dry cleaners, landscapers, barber shops, professional and health providers, and we see them 

throughout our neighborhoods and our communities, on and near 

commercial corridors, corridors such as Germantown Avenue, East 

Oak Lane in west Philadelphia. We see, engage, and rely on these 

small businesses every day. They are the lifeblood of our neighborhood economies. So I will offer several reasons why I think small 

businesses are so important. 

They provide valuable goods and services. Small businesses create jobs and they—research has shown that small businesses that 

are in our communities mostly hire from the communities that they 

serve. Small businesses keep the money that they make circulating 

locally. Small businesses generate tax revenues, and small businesses make our neighborhoods and communities more vibrant, diverse, and interesting, thereby attracting visitors, new residents, 

and bringing in investment. Small businesses create wealth for 

their employees and for themselves, and this is especially critical 

in our lower and disadvantaged communities. 

Entrepreneurship is a viable and critical path to break the cycle 

of poverty and for improving economic self-sufficiency. Research 

shows that there is a substantial wealth advantage for those that 

are business owners compared to those that are not, and this is especially pronounced among minorities and women. An AEO study, 

Association by Enterprise Opportunity, done a few—couple years 

ago shows that the median net worth for black-owned businesses 

is 12 times higher than for black non-business owners. Furthermore, minority and women-owned business creation rates are far 

exceeding those of non-minority and men. And immigrant-owned 

businesses are rapidly on the rise as well. 

So there are persistent barriers that stymie small business 

growth, especially among underserved populations. Three major 

factors are low starting wealth, limited access to credit, and a trust 

gap. Access to capital is chief among these needs. Small businesses 

that—many small businesses, and this is especially true of underserved, do not meet bank and traditional financing standards. They 

have low credit scores, insufficient collateral, and limited equity to 

put in the business. Minority business owners face deep barriers— 

steeper barriers than their white counterparts. With fewer assets 

and less disposable income, they don’t have the resources to invest 

in their businesses, enough runway to get them off the ground, and 

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not enough assets to leverage other resources. Furthermore, banks 

are reluctant to make the smaller loans. Typically—they may say 

but they often don’t make loans less than $50,000, and some don’t 

make loans less than $100,000 to small businesses. They say it is 

unprofitable. 

Minority business owners also feel intimidated by banks, according to surveys. It is especially acute among black business owners. 

They tend to get discouraged and they do not feel welcome, and 

that is that trust gap that I mentioned. 

Business owners are increasingly turning to these online lenders, 

the thin tech lenders, and many of these alternative lenders are 

predatory and onerously expensive. The unsuspecting, uninformed 

borrower can easily get caught in a debt cycle, leaving them in 

worse financial shape, and this is where we can—CDFIs like Entrepreneur Works and the Enterprise Center Capital Group can play 

an important role. We provide a lot more than just capital. We provide the trusted guidance, the technical assistance, either directly 

or partnering with other community-focused organizations such as 

women business development centers and small business development centers, to help business owners navigate the complexities of 

owning and starting up a business. And I would like to emphasize 

this point. The capital needs to be coupled with this technical assistance to ensure better success rates of the business, and Dafina 

mentioned this in her testimony. With TA, technical assistance, the 

small business owners are better prepared to take on a loan, are 

better prepared to use the capital to build their business, and they 

are better able to pay the loan off and thus access to other resources. 

CDFIs, WBDCs, and SBDCs form the foundation of a vast network of business support and business capital. We are embedded 

in our communities. We have a deep understanding of the needs 

and challenges, and we are trusted partners. Support for programs 

such as—support from programs such as those from the CDFI 

Fund and the Small Business Administration are so critically important and have allowed us to reach hundreds and help hundreds 

of entrepreneurs a year. And furthermore, we are very effective at 

leveraging private sector dollars in combination with these public 

dollars. 

So what else can we do to unleash the economic potential of 

small businesses? I want to offer just a couple of other promising 

solutions. We need to help individuals build their assets with asset 

building tools, IDAs, individual development accounts are an example. Greater assets allow these entrepreneurs with more runway 

capital, more room to get off the ground. They also need patient 

capital, equity, and these can be in the form of innovative lending 

programs that include forgivable loans, loan guarantees, and loan 

equity blends. So they need more runway capital, they need more 

patient capital so once they get off the ground, they can stay off 

the ground. 

Crowdfunding is an interesting delivery model that is just coming into play. I think that merits some further look as a way to target specific populations, and of course, greater support for the nonprofits that work with these small business owners. We have a 

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good track record. We don’t—we want to continue that work. We 

want to be able to do more work. 

So in closing, I want to just emphasize that small businesses are 

indeed the engine of our economies. It is imperative that the public, 

private, and nonprofit sectors work in concert to support the 

growth and sustainability of our small businesses, and especially 

for our underserved populations. So I would like to commend the 

Small Business Committee for your efforts to raise the awareness 

about the disparity of access and capital, and for your work to ensure that all businesses can grow and prosper. Thank you. 

Mr. EVANS. Mr. Chairman, you have now heard sort of the 

mechanism—and as you know, we talk a lot about the access of 

capital and availability. You have heard that and I think both have 

done a great job. 

Now we are going to go to two entrepreneurs, and it is important 

for the entrepreneurs to give their perspectives and outcomes. 

The first one is Mr. Thomas. He has two dynamic enterprises, 

one called ESCO? 

Mr. THOMAS. EMSCO. 

Mr. EVANS. EMSCO Scientific Enterprises, and the other one is 

called? 

Mr. THOMAS. SUPRA Office Solutions. 

Mr. EVANS. SUPRA Office Solutions. It is a laboratory and 

pharmaceutical supply company founded in 1980 which serves university and national enterprises. The office product company serves 

national and small, large corporations and is headquartered in 

Philadelphia. Prior to his current position, he served several top 

positions over a span of 15 years of Alpha Office Supply, 

headquartered in Philadelphia, and before Alpha, Mr. Thomas 

served as a managing partner for over 10 years as tax and financial consultant. Lin attended the Kellogg School of Management of 

Northwest University, and has a Bachelor of science degree in accounting from Morgan State University. 

Mr. Thomas? 

STATEMENT OF LIN THOMAS 

Mr. THOMAS. Good afternoon, Congressman Evans, Congressman Fitzpatrick, Committee—U.S. Committee chair, as well as my 

fellow colleagues here today. It is an honor to represent small businesses, and I want to just start off by saying that I want to incorporate the comments by Ms. Williams and Ms. Benoliel as—and 

the recommendations that I think are very, very relevant having 

been an entrepreneur and having to have developed a small business. I want to also indicate that this very same Committee here 

speaking today in my career, I worked for Congressman Parren J. 

Mitchell, who in 1983, ’82, during that period of time was the 

Chairman of the U.S. Committee on Small Business. So within my 

career, I did work for the Committee on Small Business in Washington, D.C. 

I just want to start off by making a few comments. Let me just 

adjust my glasses here. I have worked as an accountant, generally 

speaking, for years and I have had a host of minority business clients, and also worked as a consultant for PMBDA, the Pennsylvania Minority Business Development Authority, our firm that was 

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responsible for financing and—as a financial consultant to that 

agency. We were sort of the group that analyzed their loan projects 

for providing technical assistance and financing to minority businesses. This was during the late ‘90s—no, the early ‘90s, pretty 

much during the Casey Administration. 

My experience afforded me the opportunity over the years to 

have worked with smaller enterprises that maybe only had capital 

of—or sales of $5,000 or so a year, and over the course of my experience, I have had some interactions with larger enterprises with 

sales as much $100 million a year. 

Most importantly, significantly to me is that perhaps 50 of smaller minority businesses that I have interacted with over the years, 

I have witnessed that withered or died on the proverbial vine because of a lack of access to capital, and that was very discouraging. 

Individuals that had phenomenal opportunities to grow, develop 

various enterprises that could have had a significant impact on jobs 

and opportunities, and essentially it was only because of a lack of 

capital that these businesses either didn’t get the funding that they 

needed as talked about as the runway funding, or the more patient 

capital that they needed to extend. And that is discouraging, very 

discouraging. Conversely, I experienced a period in my career 

where I witnessed the positive results and meaningful, favorable 

economic impact of businesses that were created, fostered, revived, 

and thrived as a direct result of a receipt of capital via economic 

development enterprise funds, primarily received, in those days, 

from the Commonwealth of Pennsylvania as well as from the City 

of Philadelphia. And these funds were funds that were provided absent the stringent typical underwriting criteria of most banking institutions. They were funds that were provided where there 

wasn’t—they were not 100 percent collateralized or innovative collateral approaches were instituted for the funds where the owners 

didn’t have A-1 capital or credit, rather, ratings. They had, in fact, 

depressed credit ratings. But where what was looked at was the potential of their enterprise, the opportunity of that enterprise to 

generate jobs, and that there was a good sales or a good business 

projection program that was offered for that business opportunity. 

Simply stated, I just want to place in the record a few observations over the years. One, small businesses provide the jobs, and 

that has been stated, more jobs directly in America. There is no 

such thing—and this is important—as the growth and development 

of small businesses absent increased innovative, and relaxed mainline bank underwriting for small businesses. Okay. You will not be 

able to support small businesses without innovative, relaxed underwriting criteria for these small businesses. Also, there likely does 

not exist any—in any business bank portfolio—and this is what I 

have learned also. There is always—we talk about whether or not 

there is a high delinquency of default rate with small businesses. 

There is, in fact, a relatively high delinquency and default rate 

with large business portfolios. There is no portfolio that I have ever 

seen for financing opportunity that does not have D&D, or writeoff. 

Now what do the banks do? Typically, imagine 1,000 loans in a 

portfolio. If there are, let’s say, 50 of those loans that are non-performing in that active portfolio, the bank typically takes those 

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12 

loans out of the active portfolio and they place them in work-out. 

So they are no longer calculated in the calculation of D&D rate, 

okay, and once they work out these loans, either write them off or 

do whatever they are going to do, or restate those loans and place 

them back in the active portfolio, the bank produces a portfolio that 

appears acceptable. This doesn’t necessarily happen with most of 

the smaller loan programs. So there is a tendency to say that there 

is a higher rate of delinquency and default. We did a study with 

the State’s programs and once we restated loans that had been 

placed in that portfolio for years, that portfolio performed just as 

effectively as the average bank at the time. 

Small businesses must be offered the opportunity to be created— 

excuse me, I have some gum in my mouth. I apologize for that. 

Small businesses must be afforded the opportunity to be created, 

grow, and contribute to the economy as in any loan portfolio. Some 

will fail. Some will falter and recover. Some will grow, thrive, and 

make major contributions and reinvestments in the economy. Absent access to capital with slightly relaxed or more innovative underwriting criteria, these potentially phenomenal contributors to 

our existence and economy will likely never come into being or development. 

What are some of the methods—and thank you, Congressman 

Evans, for mentioning the microloan funds and some of the other 

funds that exist within the SBA portfolio. One of the other big 

problems is a lack of communication to the individuals that would 

best benefit from what does exist, and I would suggest that SBA 

very seriously look at advertising on urban radio stations and that 

we look at advertising in minority or minority traditional newspapers, we look at advertising in minority or oriented TV shows, 

and social media. It is important to communicate what is available 

to the individuals where they are that need the resources that are 

relied upon through this agency, as well as the fact that we need 

to extend further opportunities. 

In closing, I just want to state—utilize two quotes, and perhaps 

they will be considered relevant here. One is ‘‘What happens to a 

dream deferred? Does it dry up like a raisin?’’ That is Langston 

Hughes. Paraphrase, a dream deferred is a dream denied. Alternatively, ‘‘Give me a lever long enough and a fulcrum on which to 

place it, and I shall move the world.’’ That is Archimedes. So if we 

are—if we—one, if we deny minority businesses the access to capital, we are killing opportunities that exist for so many people that 

is needed today, and number two, if we provide access to capital, 

we can move the world. Thank you very much. 

Mr. EVANS. Thank you. Mr. Chairman, this next person I am 

going to introduce, I overheard in the audiences that people were 

looking for samples of his product. I just said, Mr. Chairman, I 

have never tasted it. This is the first time meeting him. Steven 

Dorcel? 

Mr. DORCELIEN. Dorcelien. 

Mr. EVANS. Dorcelien—founder and owner of Bright Yellow 

Creamery, is a graduate of Seton Hall University and earned his 

MBA from the University of Connecticut. Prior to Bright Yellow 

Creamery, he was a business development and lead at a Global 

Law Firm in New York City. 

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13 

Steven started Bright Yellow Creamery with a vision of serving 

a delicious treat as pure as possible through simple process and 

real ingredients. That is important, real ingredients. To hone his 

skills in creating and operating an ice cream business, he attended 

and completed Penn State ice cream short course in early 2017. 

Bright Yellow Creamery is now served at many of the largest farmer markets and gourmet grocery stores in Philadelphia. Steven currently resides in Philadelphia, PA, with aspirations of opening his 

first brick and mortar in 2018, and maybe he can open it up in the 

8th. 

Mr. FITZPATRICK. That would be great. Thank you. 

Mr. EVANS. Steven? 

STATEMENT OF STEVEN DORCELIEN 

Mr. DORCELIEN. Thank you. First, I would like to apologize for 

not bringing any, but needless to say, hi, I’m Steven Dorcelien. I 

would like to thank Representative Fitzpatrick and Representative 

Evans for having me today, as well as the Committee and the Enterprise Center. 

My journey up to this point has been a few years in the making, 

and many hurdles in between. They say it takes a village to raise 

a child. I say it takes the same to raise a small business. I have 

been lucky enough to have had a village help raise the artisanal 

ice cream company I always dreamed of having, but it hasn’t been 

easy. 

My journey started roughly 2 years prior to launching Bright 

Yellow Creamery. Before stepping into the entrepreneurial world, 

I always envisioned opening my own cafe as I worked tirelessly for 

one of the largest law firms in the world. With a clear goal in mind, 

and the knowledge of how tight access to capital would be for new, 

and what banks would call ‘‘high-risk’’ companies, I accelerated my 

savings by picking up a second job on weekends, renting my apartment out for additional funds, and diverting my retirement contributions to low interest bank savings. The approach not only 

came at the expense of leisure but also the long-term safety net of 

retirement planning. But I knew the gamble before I served my 

first ice cream cone. I knew that there was a facade around the 

level in which major banking institutions would cater to small businesses. 

I quickly found out that despite a near 800 credit score, 2 years 

worth of savings, a post-graduate business degree, and a clear and 

concise business plan, I was simply too ‘‘high-risk’’ for traditional 

institutional lending. The nostalgic image of a young person going 

to their neighborhood bank for a loan to open their first business 

was met with a harsh reality. Without years of business returns 

and substantial collateral, the funds I had saved or risky online 

lending, as some of the folks had mentioned today, would be my 

only option. I truly bootstrapped with our first piece of equipment 

and our mobile vending unit nearly depleting all I had. 

Despite this, I have been fortunate. Contrary to what most financial advisors would recommend, I have been fortunate being in this 

situation that allowed me to pour out my retirement to jumpstart 

my dreams, while many don’t share these luxuries. 

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14 

I met quite a few fellow entrepreneurs in the walls of the Enterprise Center, many of whom have families to provide for, loved 

ones to care for, and dreams worth chasing. The money that they 

may have used for some form of savings, however, are used for 

basic necessities in life. They, like me, aspire to use their business 

as a vehicle to vitalize their community and create jobs. 

This shared mindset is one of the reasons why I have used Philadelphia’s Enterprise Center as the backbone of my business. Their 

efforts in assisting minority enterprises with business resources 

and support is what drew me in to being a part of their organization, and their food business incubator gave me the space I needed 

to make—and I am a little biased, but some of the best ice cream 

in the city. 

My journey has been viable and certainly worthwhile thus far, 

mostly emotionally. Yet, I continue to find myself in the same 

shoes as many others in our inability to tap into traditional bank 

lending for continued acceleration. The ability to purchase larger 

equipment, hire staff, and secure a brick and-mortar location are 

natural progressions for any business with aspirations of growth, 

but with limited options to capital, slow growth appears to be the 

only way for some of these companies to move forward. 

These businesses quickly become motionless as output is capped 

with a lack of resources. Without capital to grow, expansion quickly 

becomes impossible, growth—job growth suffers, and communities 

suffer. 

I am also not naı ̈ve in understanding that money doesn’t grow 

on trees. We shouldn’t expect to get funding solely based on 

dreams—solely based on a dream on paper, but as entrepreneurs, 

knowing that there are real lending options out there if we put together a sustainable business is critical to our success and psyche, 

not as a safety net if something goes wrong, but as fuel to help us 

go faster. Programs like 7(a), CDC/504, and Microloans provide 

lending options for small businesses where there aren’t any. Small 

business owners are asked to sacrifice almost everything they have 

today and their financial future to match their ambitions. I hope 

the Committee recognizes that these—I hope the Committee recognizes just how vital these capital lending programs are to helping 

these ambitious entrepreneurs, even if it is with just a half step 

forward. 

Mr. FITZPATRICK. Okay. Well thank you. I yield myself back 

some time to ask a few questions. 

I want to start by thanking each one of you again for coming. 

Each one of you are incredible, impressive individuals in your own 

right, and I can see why Mr. Evans invited you to testify today. 

And now that your testimony is a part of the record, it is now part 

of the congressional record, which means you are now permanently 

part of American history. 

So I want to start with a very important question. Dwight and 

I sit on the Small Business Committee together, obviously. We are 

geographic neighbors. We are also friends. We come from different 

political parties, but we share a common view in the purpose of 

this hearing today, which is how to incentivize and help grow underserved populations in the business community, to include minority-owned businesses, women-owned businesses, veteran-owned 

SBREP-219A with DISTILLER

15 

businesses, and underserved geographic segments of the population. 

A lot of times the targets make their way towards places like 

New York or Silicon Valley and they miss places like inner city 

Philadelphia, and there is plenty of talent here that we are well 

aware that is deserving of the support of the federal government 

and of the SBA program. So what can Dwight and I bring back to 

our Committee, tangible action things that we can do on our Committee that we can translate into legislation that he and I can advance through our Committee and through the House of Representatives that will make it easier for you to do what you do, and make 

it easier for the intended target that we have here to be able to 

grow and to expand? 

And we can start with Ms. Williams. 

Ms. WILLIAMS. That is a great question. So I think that a lot 

of times, cities like Philadelphia are not necessarily viewed as having viable opportunities for small—I think we are sort of glossed 

over because there may be reputational issues there, or there is 

just a perception that, you know, we don’t have the requisite skills 

or infrastructure that is needed in order to be able to support small 

business growth. So I think to the extent that, you know, you can 

continue sort of taking stories back from, you know, the lenders 

and the community organizations, the business development organizations that are on the ground and sort of lifting up things that 

are working and showing that there is actually a lot of promise and 

opportunity within this market. That, I think, would sort of help 

people understand that, you know, there are resources here and 

there is a lot of opportunity. 

Ms. BENOLIEL. So yeah, the list is long. I think we do continue 

to support—and it is important—support and fund some of the programs that are effective, and the SBA Microloan Program, the 

Community Advantage Program that is the equivalent of 7(a) but 

for nonprofits, are critical programs, as is the CDFI fund, which offers more flexible capital to build the capacity of lending—nonprofit 

lending organizations primarily to do the work. 

I will also say that it is very important that the support for organizations—and there is a lot of talk about is there a lot of overlap 

with SB—with the Small Business Development Centers and the 

Women’s Business Development Centers and Community Development corporations. The need is so great out there, I would argue 

that there is not much overlap. We tend to serve specific geographies or specialize in specific populations, so I think it behooves 

us to support all of those—or we as a country, as taxpayers, to support all those efforts. I think the guidance is—and the technical assistance guidance that goes with the capital is so critically important. Because a loan is just a transaction, and we provide a lot 

more than transactions. We are with the—when I say we, it is our 

organization and CDFIs like us that are with the business throughout their lifetime and help them through the—navigate the ups 

and downs. And the longer they stay alive, the longer they survive, 

the greater the likelihood that they will survive and grow. 

So anything that helps, you know, secure that ground. 

Ms. WILLIAMS. Can I just add to Leslie’s point? I just want to 

pick up on something she said, and I think that credit enhanceSBREP-219A with DISTILLER

16 

ments are really important for lenders so, you know, it is not necessarily always just about making sure that the CDFIs or the other 

lenders have the capital that they need, but they also might need 

risk mitigation for their own lending as well. And so a lot of these 

programs that are, you know, guarantees or really helping bring 

down the risk to the lender, that then allows them to be able to 

not only provide capital, but also to be able to afford to pay for 

some of these technical assistance and development services, which 

are quite time consuming and expensive to provide. And honestly, 

that is why you see a lot of traditional banks don’t necessarily provide them, because it is expensive and difficult to provide the level 

of technical assistance that a lot of businesses need in order to be 

successful. So to the extent that the federal government can provide, you know, credit enhancements, credit support, and support 

those types of programs, that is going to stimulate the work that 

CDFIs and other mission-based lenders are able to do on the 

ground. 

Mr. THOMAS. Let me just respond and give three quick examples. For us today, we just won our companies out at inner city 100 

fastest growing companies in the United States. We just came in 

two on the list of 100 fastest growing companies in inner city 

United States. We just came in with sales last year north of $20 

million. We were turned down for an SBA guaranteed loan I guess 

about a year and a half ago or so because of my credit report. Fortunately, PMBDA, the Pennsylvania Minority Business Development Authority, had lent us $100,000, okay, so their criteria, they 

were able to support us at a key point in our business’ development. Later, fortunately, the West Philadelphia Financial Services 

Enterprise was able to lend us $100,000. PMBDA was paid off in 

full. We are paying as agreed to West Philadelphia Financial, and 

probably not long ago, TEC, the TEC here lent us $200,000. 

So the irony of this is that—and these things, these loans were 

critical in our company’s development that allowed us to acquire 

EMSCO Scientific Enterprises for $2-1/2 million, and the borrowed 

funds from private investors and others to get us to the point 

where we grew as an enterprise earlier on and throughout. But the 

irony of it all is that the underwriting criteria that SBA placed on 

the bank that was going to lend to us, they wouldn’t do it because 

of some of the lending criteria. Even though we had contracts in 

hands worth millions of dollars, we had a track record that showed 

growth, we were demonstrating profitability in our enterprise, 

some of the criteria was, okay, your credit report as an entrepreneur, which is obviously—as the gentleman here, I took all my 

money out of retirement in the earlier years, placed everything and 

every dollar I had in our company and ran my credit cards up to 

the hilt, but every single dollar was pretty much tied right to the 

development of our enterprise. 

So one of the things that I see is that other enterprises have the 

capability to look at—a board has the capability to look at a company, look at the holistic aspect of a company and say according 

to contracts or other things, we can collateralize this loan differently or we can do something innovative. It seems as though 

even though SBA guarantees banks, for some of these programs 

that the underwriting criteria it is still difficult for the bank to acSBREP-219A with DISTILLER

17 

tually do the loan. So I would suggest, Representative Fitzpatrick, 

to answer your question, and for Representative Evans, that you 

look at very, very—have someone on your Committee very, very 

carefully look at the underwriting criteria and figure out is there 

any kind of innovative relaxation or alteration of the underwriting 

criteria that can be looked at? 

And again, secondly, I just—to answer your question, I think 

there are some good programs that these young ladies are working 

with and others are working with that simply need to be communicated. And I think there is a number of individuals out there that 

might—could benefit from what does exist, they just don’t know. 

And it is probably very important to advertise, whether it is for 

veterans in your district, minorities, women, to advertise, okay, on 

the media that individuals are tuned into, these programs. 

Mr. DORCELIEN. So for me, I think there—I would like to see 

more resources put into educating to what I would call two pulls 

of hooks. Sort of the small business owners first, and not only with 

educating them on lending options that are available, but also just 

the basics on how to run a business, how to read a financial report. 

I think a lot of the fellow entrepreneurs right here have many basic 

questions that they don’t know where to turn to for these sort of 

resources. 

And also, I think that there should be a little more emphasis and 

efforts put into educating the students within this town on the 

businesses that are out here. I don’t necessarily think that Comcast 

should be the only company that folks think about when they see 

Philly. There are plenty of viable, really, you know, successful companies, and we have students from Penn, Drexel, Temple who are 

leaving town, who we need to make a better effort on keeping here. 

Mr. FITZPATRICK. I yield to my colleague, Mr. Evans. 

Mr. EVANS. I would like to sort of follow up and start with you, 

Steven, to what the Chairman said. Because you just made a point, 

and I want to probe a little bit on your thinking. What key piece 

of advice would you share with inspiring small business owners 

who seek to convert their hobby into successful businesses, and is 

there anything that you would have done differently, you know, 

now that you have a chance to sit back and you have heard all this 

conversation. If you were to put yourself today where you were 

when you started, I am just very curious what was the hurdle that 

made you decide that you want—because you were in a law firm, 

right? 

Mr. DORCELIEN. Sure, right. 

Mr. EVANS. And that is a very successful thing, retirement and 

all that stuff that goes with it. But you said I am going to take that 

plunge. 

Mr. DORCELIEN. Yeah. I have been lucky enough to have 

known a lot of small business owners who gave me a lot of advice. 

What I would have changed most is probably save a little bit more, 

and I say that because I have talked to many folks who dive into 

sort of any endeavor without much sort of knowledge or financial 

backing. And what I see is that they turn to not only these online 

lending options, but folks—I am going to say in their neighborhood 

or just folks that they know and they borrow money from, these 

sort of frivolous characters who charge them, you know, these high 

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18 

interest rates and put them in more debt. So they are starting a 

business with substantial amount of debt, and I just—you know, 

that is just a recipe for disaster. 

So myself personally, I would have changed probably saving 

years prior, but if I were to talk to someone, I would say education 

most of all, and not only that, not only education on your product, 

but how to run a business. A lot of folks don’t even know how to 

use Excel, don’t know how to read a financial report, don’t know 

P&Ls, and stressing the importance of that is, you know, I go 

above and beyond to try to stress the importance of that to anyone 

I try to talk to, so that is what I would recommend to folks. 

Mr. EVANS. I am going to piggyback a little bit more. 

Mr. DORCELIEN. Sure. 

Mr. EVANS. You said you know a lot of folks and at some point, 

you decided to make that leap. 

Mr. DORCELIEN. Yes. 

Mr. EVANS. Once you made that leap, did you suddenly say how 

do I get back on that—you jumped in that water and then all of 

a sudden—— 

Mr. DORCELIEN. Back to sort of the 9:00 to 5:00? 

Mr. EVANS. Yeah, how to get back to—— 

Mr. DORCELIEN. For me, never. 

Mr. EVANS. Okay. 

Mr. DORCELIEN. For me—I can’t speak for every small business owner, but once you step out into that world, then you are 

fighting for your own dollar, and you know, you are feeding yourself without having to, you know, go and clock in, punch in, punch 

out. There is no sort of better feeling. And I don’t want to be, let’s 

say, romantic about small businesses, the idea of it, because you 

know, there are many sleepless nights. It is super stressful, super 

hard, but for me personally, just sort of the mentality that I have, 

you know, just fighting for what I love to do has been rewarding. 

Mr. EVANS. Leslie, the reason we are conducting this field hearing is to get a better sense of the needs of the small business community in the Philadelphia area. What are the top concerns that 

you hear from local small businesses regarding the access to capital? And we just heard Steven and you hear from your perspective. 

I mean, what is one or two things that you hear from—— 

Ms. BENOLIEL. From—yeah, from the business owners that we 

work with, they almost are self-defeating because they sort of expect, well, a bank is not going to approve me so they don’t even 

try. So there is that trust issue that I talked about a little bit in 

my testimony. They don’t know what they don’t know, and I think 

a lot of it has to do with they don’t have the confidence to get out 

there and who to turn to to learn more. The trust thing is a big 

issue. They don’t want to necessarily go to a bank and they don’t 

necessarily want to share their business idea. 

So how do you resolve that? We need to develop those relationships and build that trust, and then help them do the homework 

that they need to do before they plunge in. 

I want to piggyback on the comment that you made, and this is 

what we see a lot of with a lot of the aspiring business owners that 

come to us for assistance and capital is they are about to sign that 

lease. They are about to purchase out a piece of equipment without 

SBREP-219A with DISTILLER

19 

really understanding what market they are going to serve, and if 

we get them early enough, we help them do more of that homework 

before they commit to some fixed costs that will quickly eat up 

what existing resources they have put in from their personal side, 

and to the extent that they have to borrow money. I think a lot of 

it is about that at that early education and building that trust and 

building that relationship, and helping them create more of a runway before they try and take off and then just—— 

Mr. EVANS. The Chairman said—I want to piggyback on what 

he said. He asked in a very specific way—and I don’t want to put 

words in your mouth. I assume you say that you think the existing 

programs as described, Microloan and others, are sufficient to meet 

the needs, because what I heard the Chairman say, what specifically we could do together. Do I hear you say supporting those existing programs, or is there something to be tweaked to what Steven said? I am piggybacking on what he said, the Chairman. 

Ms. BENOLIEL. I will—yes, they do need to be tweaked. I mean, 

fundamentally they are good. The intention is good, but the devil 

is in the details. 

The Small Business Microloan Program has a component to it 

that supports the delivery of technical assistance. The way that is 

structured is most of that assistance is post-loan assistance. In 

other words, I think it—I don’t know what the percentages are, 

that most of the monies that support that are after you make the 

loan, whereas in reality, a lot of the assistance is prior to getting 

that borrower, that applicant ready to take on the loan. But the 

support isn’t there. That type of thing needs to be relaxed, more 

flexible, so that we know what the borrower needs, when they need 

it. We should not be held beholden whether it is before or after. 

That is certainly one area that needs to be looked at, and I know 

there has been a lot of work done with the SBA to try and change 

that particular stipulation. 

Mr. EVANS. I yield back to the Chairman. 

Mr. FITZPATRICK. Just a question for the panel, and I believe 

you had testified to this earlier, I think so, that the current status 

of minority-owned businesses in Pennsylvania, I believe by some 

measures it has increased pretty significantly as of late. Is that 

your understanding? Is that the case, and if so, what do you attribute that to? What is working currently in the program, because 

in addition to talking about what we should improve, we also need 

to know what is working to know that we need to bolster those 

areas as well. 

Ms. BENOLIEL. I think some of the factors that are helping attributing to that increase is that after the recession, there were not 

a lot of jobs and a lot of individuals turned to self employment as 

a way to create their own job. And some of that has continued on. 

I will note, though, that the minority-owned businesses, while they 

are increasing at a faster rate, they tend to stay much smaller, and 

that is problematic. I think to the extent that we can support their 

growth through capital and the support programs where they can 

grow and start to hire employees, we will start to see a real shift 

in these communities where employment—unemployment rates 

have been persistently high. 

SBREP-219A with DISTILLER

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So while there is an increase in the number of establishments, 

they are very small and they tend to be non-employer owned. In 

other words, they have zero employees. So I think it is really—— 

Mr. FITZPATRICK. So that is an accepted stat, then, that they 

are increasing in number but not necessarily in success? 

Ms. BENOLIEL. Right, and size, and success. 

Mr. FITZPATRICK. And you think that is because they have not 

been targeted for assistance like some other small business operations? 

Ms. BENOLIEL. I think also the type of assistance that is provided, they don’t have the resources, they don’t have the education 

necessarily. So some of the programs are—the guarantee programs 

are—they do have some requirements that you meet a certain credit score threshold, you have a certain amount of collateral on hand. 

So that works for a certain size of business with a certain asset 

base, but it is not going to work with these tiny businesses. They 

just won’t qualify. So we need to build that pipeline, and what do 

we need to do to connect when they are early established and get 

them to that point, and that is where there are some real gaps. 

Mr. FITZPATRICK. Mr.—is it Dorcelien? 

Mr. DORCELIEN. Dorcelien, yes. 

Mr. FITZPATRICK. You had mentioned education. Would that 

be a suggestion of actually entering into the realm of educational 

policy, which is something we also take up in Congress? Not necessarily specifically to the Small Business Committee, but when we 

are developing curriculum and we are funding the Department of 

Education and we sort of provide guidance to what we should be 

teaching our kids, both in grade school and high school. Do you 

think that it is worth our while to address business-related curriculum to teach the young folks, not just necessarily here, but 

across the country, about entrepreneurship, about risk taking, 

about various things? Or are you just referring to education as far 

as like the incubators and accelerators which we see popping up a 

lot, which are also part of the SBA program, which allow for experienced business leaders to mentor new and upcoming entrepreneurs? 

Mr. DORCELIEN. Without a doubt, both. There is no harm in, 

you know, school-aged kid learning basic accounting, so the earlier 

we can start, the better. I live in a reality where a lot of the folks 

that I deal with day to day don’t have the basic sort of knowledge 

on, again, accounting and financial planning and that sort of nature, so what I mentioned earlier was just solely focused on those 

folks. Obviously I would like to see it start earlier and earlier, but 

unfortunately, some of the kids that I have sort of interacted with 

aren’t necessarily thinking that long-term or thinking that accounting is all that important when they are in grade school. 

So I would love to see it and I would love to see them focus on 

it. In a perfect world, you know, they will take it seriously but I 

am not sure if that happens all that often, and a lot of times folks 

get into these small businesses out of desperation, whether it is losing a job or bad economy and whatnot, and they are getting in 

there with sort of—without the tools that they really, really need. 

So I don’t know if, you know, we can attach that sort of educational 

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requirement to a lending option or something like that, but I think 

that that is vital to their success. 

Mr. FITZPATRICK. Does anyone else on the panel have any 

thoughts on the educational component? 

Ms. BENOLIEL. Well I think it is critically important. Financial 

literacy is the fundamental—the most fundamental of that, to integrate that into our educational curriculum. And role playing, learning by doing, there are lot of—there are a number of tools out there 

that have been used in developing countries where you are not 

reading something, but you are actually acting out a village where 

you can buy and sell and employ, and it is those sort of things— 

the tools exist and it would be wonderful to integrate some of that 

into our curricula. 

Mr. THOMAS. Yeah, and if I can add that technical assistance 

surrounding credit, maintenance of credit, the importance of how 

business individuals ought to—can develop their credit and also 

avoid—some individuals aren’t aware of what they can do to repair 

their credit. That is really critical. As well as someone to provide 

some technical assistance on understanding what financial statements are and the impact of financial statements are also very, 

very, very relevant, critical issues, as well as tax implications of 

business decisions. 

So those probably—those are three that are critical, understanding how to repair if there is damaged credit, or maintain—the 

importance of maintaining quality credit, the importance of understanding what a balance sheet and income statement is from at 

least a simple perspective, and what they mean to a business, as 

well as understanding the tax implications of financial decisions 

and importance of maintaining and having a tax professional and 

having some understanding of those implications as well in a business are important up front as well. Yes. 

Mr. DORCELIEN. And if I may add one thing. I am not sure if 

this reaches sort of the arm of this Committee, but I think there 

has to be more efforts in not necessarily stopping, but educating 

small businesses on how to avoid sort of lending from—or receiving 

money from predatory lenders. I mean, a lot of times folks will see 

these, you know, get money fast commercials or billboards and 

whatnot, and automatically think that, you know, it is a simple five 

percent or it is the same as a bank lend—bank loan, when it is obviously not. 

So I think that—I don’t know if it starts with the education on 

the side of the small business or, you know, going after some of 

these folks who just take advantage of the poor and uneducated. 

Ms. WILLIAMS. I just want to say that I completely agree. I 

think that one of the main places where the federal government 

can be incredibly useful is by enforcing and creating strong borrower protections for small business borrowers, and I mentioned 

that in my testimony earlier. But you know, they really don’t have 

the same protections that are in place now for some of the—when 

you are trying to get a mortgage or even now when you are trying 

to get a pay day loan, and so when you couple the sort of availability of predatory financial products with business owners who 

don’t necessarily have good financial management skills, it is kind 

of a recipe for disaster and so making sure that there are strong 

SBREP-219A with DISTILLER

22 

borrower protections in place in the small business lending space 

is key to protecting some of these borrowers, especially those who 

have limited resources, might be the only savings or investment 

that you have, you know, it is important to have some guardrails 

in place for lenders. 

Mr. FITZPATRICK. I was just advised by our member of the 

Committee staff that next Thursday we are having a Committee 

hearing on online banking, is that right, which might be relevant 

to that. 

On the educational piece, I just want to ask this as well. Business education when we grew up is obviously much different than 

it probably should be now, learning basic bookkeeping. How important—because you people operate in this space every day. How important is technical knowledge, IT-based, computer-based knowledge inextricably tied to small business start-ups in minority business enterprises? Is that educational component necessary, or I 

guess another way of saying it is are most of these small business 

start-ups, do they require that sort of IT-based knowledge, given 

sort of the generation we are living in where so many new products 

and ideas are based on something with a genesis in IT, whether 

it be the product itself or the ability to drive the product. 

Ms. BENOLIEL. I will jump in. Absolutely, but if you look back 

well before you were born, maybe not before you were born—I 

mean, cash registers changed tremendously. We had wired phones 

and—so technology has always been a piece of that. I think it is 

a tool, and the tools are changing, and the tools are changing so 

in many ways it is cheaper to run a business, but it is—it can also 

make it more expensive. 

We integrated a lot of technology learning into our educational 

programs, because a lot of entrepreneurs don’t know about these 

tools that can make—allow them to transact business in a much 

more cost efficient way. It also allows them to reach their markets 

in a much broader way. But what we are trying to teach them is 

how do you target your message—so some of this is through technology tools, but it is—the marketing is also what has changed tremendously because of technology. How do you refine your message 

so that you are reaching the particular audience you know who is 

going to have an interest in your product or service, and that is not 

necessarily intuitive for a lot of business owners that are just 

struggling to—I need to buy that piece of equipment to make the 

ice cream, to sell the ice cream, but they haven’t spent a lot of time 

on how am I going to get people to come to me to buy my ice 

cream? But technology is absolutely critically important, but it has 

been there all along because at one point we didn’t use telephones 

to conduct business and then the telephone came around. 

Mr. DORCELIEN. Yeah, to quickly piggyback, it is critically important. 

What I have seen is that technology obviously has made my life 

a lot easier, whether it is Intuit or whether it is the accounting 

software or whether it is social media platforms to market, I mean, 

there is no better time than now to sort of open a business with 

all the tools and resources that are available. However, there are 

many folks who sort of don’t know how to use these tools. A lot of 

the older entrepreneurs I know don’t necessarily know how to use 

SBREP-219A with DISTILLER

23 

the social media but know to balance a checkbook, while a lot of 

the younger folks I know, know how to use the social media platforms but don’t know how to balance a book. So there’s that dynamic. So I think as much as we can do to sort of educate these 

folks on the tools that are available, because I know folks who are 

still literally balancing their checkbooks—I mean, not checkbooks, 

but whatever they are—balance sheets by paper, and it is easy for 

me to say it, but doing it online is so much easier, so much cleaner. 

But they just—they don’t feel comfortable. So I think educating on 

not only the young, but the old as well. 

Mr. THOMAS. And my experience has been, you know, fortunately our organization is technologically very, very strong in terms 

of our ability on a larger level to communicate, but what I have 

seen is that the technology is changing so totally rapidly. I guess 

that is a very good point that you are raising that it is helpful for 

someone to have technological training or someone in there that is 

going to stay on top of the times. For instance, Square is a way. 

I just went to a nonprofit fundraiser, you know, and I mentioned 

to a gentleman that it was a lot easier if he would figure out in 

30 minutes how to get someone to help him realize that he can just 

take his phone, order Square, and at the door have people use credit cards, okay? So if there is a fundraiser and you are showing up, 

I want to use my credit card. I don’t have to go through the problem of getting my accountant in our office or CFO or someone to 

cut a check and go through all this trouble. I can just show up, 

here is my credit card, and pay. That is easy. 

So there are a lot of things that are going on today in terms of 

purchasing by way of phones, and these applications that are just 

changing so rapidly and you can have money in your bank account 

like that that entrepreneurs need to be aware of, and it is going 

to continue to change. So whoever is involved in this process has 

got to be somebody who is pretty dynamic that can stay on top of 

it. But that is another area of technical assistance that is going to 

be required in the evolving business world. 

Mr. DORCELIEN. One more thing, sorry. But I also don’t think 

that technology has to be the sort of end all, be all for running a 

business. I think as a small business owner, we wear many hats. 

We do it all. We are IT, we are accounting, we are PR, we are everything. But I think connecting sort of the smaller businesses 

with, for instance, with high school kids and whatnot, so if I need 

a marketing person, maybe I can get a high school kid to do some 

marketing stuff for some intern credit or something like that. I 

think connecting those dots are vital, because folks aren’t often 

thinking about that. So that is just something that benefits both 

parties. 

Mr. FITZPATRICK. Mr. Evans? 

Mr. EVANS. One last thing. One thing I haven’t heard—I only 

heard you mention it is the ‘‘t’’ word, taxes. And obviously we are 

talking about small business access supporting community and economic development. And you know there is a large debate about 

tax reform. Tax reform, tax cuts depends on where you sit and 

where you talk about it, but you know, I haven’t heard in terms 

of that—in terms of the equation. Talk to me a little bit about the 

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24 

eral government. That is a debate that is going on right now. Any 

comments on that? 

Ms. BENOLIEL. Okay, I will comment, and I will comment from 

the perspective of the constituents that we typically serve. 

Mr. EVANS. Go ahead. 

Ms. BENOLIEL. They may say taxes are owners’ problems, but 

most of our clients are in that early emerging stage, and they are 

not generating any profits to be taxed. So that—it is not the most 

critical—— 

Mr. EVANS. Not an issue. 

Ms. BENOLIEL. —issue, even though it is part of the list. It 

tends to—when you look at surveys that the Fed has done, they do 

a small business survey. Taxes usually fall among fourth or fifth 

out of a list of 10, so it is usually—not that it isn’t an issue, but 

it is not one of the critical issues. 

Mr. THOMAS. And let me comment, and what is not mentioned—I started my career with Pricewaterhouse as an auditor, 

and I guess for 10 years one of our expertises in my accounting 

firm was taxation for small businesses. And what Leslie states is 

very important also, and that is a number—when you all talk on 

Capitol Hill about small businesses and taxation of enterprises, oftentimes there are larger, more established ‘‘small businesses’’ such 

as ours, because a small business is almost anything that is not a 

major business. 

So that is an issue when you start to make money and you have 

profit. That is a major issue. On the flip side, people talk about 

writing off for taxes. Taxes don’t mean a darn thing if you have 

losses, okay, in a sense, or you are not making a profit because 

then you are not necessarily sharing. So it is really a mixed bag. 

Now I think on the federal level—on the city level it is very relevant, very, very relevant on a city level because the city has its 

tax on gross receipts whether you make a profit or not, and they 

are trying to work with that. That is a real impediment to smaller 

business enterprises. Some of the larger businesses are going to 

probably, quite frankly—I think the tax code—let me speak very 

honestly—is dedicated. The changes that we are talking about are 

going to be directed to support individuals that are making relevantly significant amounts of money, either personally where they 

have 250, 300, 400, 500,000 up in revenue that is coming to them 

that they have the—they are going to get a tax break on versus 

those that are in the middle who probably—the 100,000, 70,000, 

40, 50, $60,000 a year individuals are going to wind up suffering. 

So—and quite frankly for businesses, businesses had a capability 

to write more things off from a tax perspective, quite frankly. 

So I would just say that when it comes to successful larger small 

businesses and to really the mega businesses, they pretty much can 

afford to pay the tax burden that exists, okay? If there is going to 

be any kind of tax considerations, it really needs to be some consideration for those that are, let’s say, the really micro—the much 

smaller businesses. And if we take away some of the things like 

state tax deductions and city tax deductions and things of that nature, I think it is going to hurt those enterprises or those small 

business people who are generating less than $100,000 a year, 

where most are. 

SBREP-219A with DISTILLER

25 

Mr. DORCELIEN. And just lastly, I fully agree with the larger 

companies being able to afford and pay the tax burdens, while for 

me—to sort of go back to that education aspect of it, that smaller 

businesses don’t necessarily know about the benefits that they have 

in deductibles, options that they have. A lot of folks don’t know 

that, you know. Between their start-up costs, to even less known 

things like mileage and whatnot, they aren’t aware that these can 

be deducted, and a lot of folks are just going to, you know, their 

neighborhood—I don’t want to call out any companies by name, but 

like, you know, the quick tax turnarounds for, you know, a certain 

amount of money. They can’t afford, necessarily, a CPA to help 

them out. So a lot of folks are taking these tax, you know, returns 

on their own and not going to a professional because they simply 

can’t afford a professional. So I think more education behind how 

the taxes can, I guess, help them would be crucial. 

Ms. WILLIAMS. I just want to add sort of a different perspective 

on the tax issue which is related to the New Markets Tax Credit 

Program, which attracts private sector investors to invest in low income and underserved businesses, and you know, there is a little 

bit of concern right now that a reduction in the corporate tax rate 

would have a negative impact on the demand for those types of 

New Markets Tax Credit, which could definitely have an impact on 

the sort of availability of capital from those type of investors if, you 

know, there is not necessarily a need for them to go seek out tax 

credits like New Markets, which are a little bit complicated, a little 

bit sort of more difficult to implement. If they are already seeing 

a reduction in corporate tax rate, it just might mean that there is 

not necessarily as much of a market for these types of credits that 

are really being used, you know, for underserved businesses. 

Mr. FITZPATRICK. Anything else, Mr. Evans? 

Mr. EVANS. That is good, Mr. Chairman. 

Mr. FITZPATRICK. Okay. Well I just want to offer my sincere 

thanks to each one of you for giving up your time today. You know, 

everything you say is part of the record. We actually can get this 

printed out and myself and my colleague, Mr. Evans, are going to 

review everything that each one of you have said. We are going to 

try to digest it and figure out what we can take as far as action 

items back to our Nation’s capital, and what we can do to address 

those things. We will discuss it with our fellow Committee members and the end goal of these hearings is not only to—for us to 

hear real world examples of people that are living and breathing 

these things every day, as you are. That is how you benefit myself 

and Mr. Evans, but to actually turn it into action. 

So I personally have taken notes here, and I know we are going 

to pull the transcript and review that. And beyond today’s testimony, if you ever have anything to offer to our Committee, you are 

the best resource we can have on that Committee, and therefore, 

you are the best resource for the Small Business Administration 

and the best resource for Congress and for the country, because 

you are the people that are seeing the struggles, you are seeing the 

regulatory burdens or the tax inequalities or unfairness in the system, and that is how we can learn about what we need to fix. So 

I just want to thank each one of you for coming out. I want to 

thank Mr. Evans for inviting me into his beautiful district, and I 

SBREP-219A with DISTILLER

26 

ask unanimous consent that members have 5 legislative days to 

submit statements and supporting materials for the record. Without objection, so ordered. 

We are adjourned. Thank you. 

[Whereupon, at 4:12 p.m., the Committee was adjourned.] 

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A P P E N D I X 

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OPPORTUNITYFINANCE llli NETWORK !ill ill 

Testimony Submitted by 

Oafina Williams, Vice President, Public Policy 

On behalf of 

Opportunity Finance Network 

before the 

House Small Business Committee 

October 20, 2017 

Philadelphia, PA 

Good afternoon, Representative Evans and Representative Fitzpatrick. Thank you for 

holding this hearing on "Small Business Capital Access: Supporting Community and 

Economic Development." 1\ly name is Dafina Williams, and I am Vice President of 

Public Policy at the Opportunity Finance Network. I am pleased to be here today to 

not only testify on behalf of the Opportunity Finance Network (OFN), but also as a 

constituent of the 2nd Congressional District of Pennsylvania. 

OFN is a national network of community development financial institutions (CDFis): 

mission-driven community development banks, credit unions, loan funds and venture 

capital funds investing in opportunities that benefit low-income, low-wealth, and 

other under-resourced communities across America. CDFis connect communities to 

capital that creates jobs, supports small businesses, builds affordable housing, 

cultivates healthy food and energy efficiency, and promotes safe borrowing and 

lending. 

Currently there are more than 1,100 CDFis certified by the Department of Treasury's 

Community Development Financial Institutions (CDFI) Fund. CDFis In OFN's network 

alone have originated more than $54.9 billion in financing in urban, rural, and Native 

communities through 2016. With cumulative net charge-off rates of less than 1 

percent, CDFis are able to lend prudently and productively in unconventional 

markets often overlooked by conventional financial Institutions. 

Today I would like to provide an overview of some of the challenges facing small 

businesses in accessing credit, how CDFis are helping to address those challenges, 

and the role the federal government can play in providing resources to further 

stimulate the flow of capital to businesses that need it most. 

Although lending conditions have been relatively stable for the past several years, 

credit standards for loans have remained tight since t!1e Great Recession. Less 

credit-worthy borrowers - like those in communities disproportionately affected by 

the financial crisis - face significant challenges to accessing capital to start or grow 

their businesses. For women-owned and minority-owned small businesses, these 

chaHenges are even more pronounced. 

We Believe in Oppor;~;~~: OFN.ORG 620 Chestnut Street, Su1te 572 • Phi!adelphta, PA 19106 

215.923.4754 • F: 215.923 4755 • info@ofn.org 
28 

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However, there are proven solutions to meeting these challenges: specialized, 

targeted lending, technical assistance, and community partnerships can help to 

improve capital access, create new markets for small businesses, expand networks, 

strengthen the borrower-to-traditional lender relationships, and support broader 

economic development efforts to revitalize distressed rural and urban communities. 

Underserved Businesses Lack Access to Credit 

Small businesses are important driver of economic growth but face macroeconomic 

and microeconomic challenges when attempting to access credit. Some of these 

challenges include: contractions in the banking system and lending to small 

business; a decline in the availability of small dollar loans; weak or limited credit 

history; lack of business and financial management skills, access to entrepreneurial 

training and networks, and limited awareness of lending options. These barriers are 

particularly high for entrepreneurs who are low- to moderate-income; women; racial 

or ethnic minorities; and otherwise traditionally disadvantaged populations: 

m Bank Consolidation -U.S. banks closed 4,821 branches between 2009 and 

2014, reducing the total number of branches by about 5 percent. 1 A Harvard 

Business School report found that: 

"A decades-long trend toward consolidation of banking assets in fewer 

institutions is eliminating a key source of capital for small firms. 

Community banks are being consolidated by bigger banks, with the 

number of community banks falling to just over 5,000 today, down 

from over 14,000 in the mid-1980s, while average bank assets 

continue to rise. "2 

This decrease in bank branches has created banking deserts, especially in 

low-income communities, rural communities, and communities of color. The 

Federal Reserve Bank of New York found that people in low-income census 

tracts are more than twice as likely to live in a banking desert than their 

counterparts in higher income tracts. 3 As branches close, access to banking 

services as well as credit and loans is diminished for the areas served by the 

branches. 

1 Morgan, Donald, Maxim Pinkovskiy, and Bryan Yang, "Banking Deserts, Branch Closings, and 

Soft Information", Liberty Street Economics, Federal Reserve Bank of New York, March 2016. 2 Mills, Karen Gordon and Brayden McCarthy, "The State of Small Business Lending: 

Innovation and Technology and the Implications for Regulation Working Paper 17-042, 

Harvard Business School, http://www.hbs.edu/faculty/Publication%20Files/17-042 30393d52-

3c61-41cb-a78a-ebbe3e040e55.pdf. 

3 Id. at 1. 

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IIi Contractions in lending to small businesses -A decline in the number of 

bank branches and community banks impacts the availability of credit to 

small businesses, who typically rely on relationship lending from their local 

lenders. After increasing rapidly from 2001-2007, small business lending 

declined precipitously between 2007 and 2010, then rebounded slowly 

starting in 2015 according to data reported under the Community 

Reinvestment Act (CRA). 4 Large bank lending, has in fact been increasing, 

with loan approval rates at big banks (those with $10 billion or more in 

assets) improving for the seventh time in the last eight months in September 

2016. 5 

In spite of the increase, large banks approved only 23.4 percent of loan 

requests by small business owners, meaning more than three quarters of 

applicants were not able to receive the requested financing. 6 For small 

businesses with less than $1 million in revenue, access to capital issues are 

even more pronounced. A report from the Woodstock Institute, Patterns of 

Disparity, found the number of CRA-reported loans nationally to small 

businesses with gross revenues under $1 million was just 15 percent higher in 

2015 than in 2001, but 41 percent lower than the peak in 2007, while the 

total dollar amount of those loans in 2015 was down more than 41 percent 

from the amount in 2007 and down 21 percent since 2001. 7 

Ill Decline in availability of small dollar loans - There has also been a 

decline in the availability of smaller dollar loans. Patterns of Disparity also 

stated the number of CRA-reported loans under $100,000 nationally in 2015 

remained 58 percent lower than in 2007 and two percent lower than in 2001. 

The total dollar amount of those loans decreased nearly 47 percent from its 

peak in 2007 but rose by 16 percent, from $67.0 billion to $77.9 billion, 

between 2001 and 2015. 8 At the same time, the demand for loans of less 

than $100,000 remains high. The Federal Reserve's 2016 Small Business 

Credit Survey of employer firms found that 55 percent of applicants sought 

$100,000 or less in financing. For businesses with less than $1 million in 

4 "Patterns of Disparity: Small Business Lending in the Detroit and Richmond Regions", The 

Woodstock Institute, January 2017. Accessed August 24, 2017. 

http: 1/www. woodstocki nst. orq/sites/default/files/attachments[Detroit%20a nd %20Richmond%. 

20Report%20Website. pdf 5 Biz2Credit Small Business Lending Index, September 2016, 

httos: 1/www. biz2cred it.com/small-business-lend inq-i ndex/september-2016 6 Id. at 4. 7 Id. 

8 Id. 

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revenue, 70 percent of respondents sought financing of $100,000 or less. 9 

This results in a significant access to capital gap for business owners. 

Ill Weak or limited credit history /collateral -Tight credit markets can have 

an impact on small business owners who may have weak or limited credit 

history, lack of collateral, poor financial documentation, and modest business 

revenues. Many of these small business owners use their personal credit to 

finance their business. The 2016 Small Business Credit Survey found that 42 

percent of small businesses rely exclusively on their owners' personal credit 

scores to secure debt, and another 45 percent use both the owners' personal 

scores and business credit scores. 10 Weak credit history makes it more 

difficult to secure financing from mainstream sources and makes these small 

business owners more vulnerable to predatory online lenders. 

m Lack of Business Training and Financial Management Skills - Lack of 

business training and financial management skills is one of the biggest 

challenges facing small businesses seeking financing. CDFis have noted the 

need to provide specialized training and technical assistance to small business 

borrowers to identify areas of weakness in the business, develop a strategy 

for delivering technical assistance to that borrower, and helping build capacity 

to ensure the business owner is prepared for financing. This hands-on 

approach to business development is a key component to the success of 

CDFis lending to small businesses. 

Ill Access to business and professional networks - Small business owners 

often lack access to business and professional networks and can have a hard 

time accessing venture capital or other institutional capital. Further, 

underserved business owners often lack personal capital and do not have a 

strong friends and family network who may have access to capital. Access to 

business networks and mentors can build relationships or lead to financial 

opportunities. The greater Philadelphia region has a relatively robust network 

of organizations that support entrepreneurship, but could benefit from better 

coordination among those groups so business owners know where to seek 

resources needed to start or grow their businesses. 

IIi limited awareness of lending options- Often small business owners are 

not aware that they may have affordable options to finance their businesses, 

or that responsible lending alternatives like CDFis are available. It is also 

important to address the role of online and marketplace lenders in the small 

9 2016 Small Business Credit Survey: Report on Employer Firms", Federal Reserve System, 

April 2017. Accessed August 22, 2017. 

https: //www. newyorkfed .org/ medial ibra ry/media/smallbusiness/20 16/SBCS-ReportEmployerFirms-20 16. pdf 10 Ibid. 

Page 4 of 9 
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business lending space. The emergence of online lending has produced a 

seismic shift in the delivery of capital and financial services to consumers and 

business owners. As access to traditional brick and mortar institutions 

continue to retract and reduce their numbers, and credit remains difficult for 

small businesses to secure, new online lenders have entered the small 

business marketplace. To an extent, marketplace lenders are filling a gap and 

providing a financing option to people with limited access to business credit 

and financial services. However, not enough is known about their business 

models, underwriting methods, and portfolio quality. There are some lenders 

providing high-cost loans targeting the most vulnerable small businesses with 

little transparency about loan pricing and terms upfront. The lack of oversight 

in the online lending market limits the ability of business owners to make 

informed decisions. 

IIi Discrimination - Racial and gender biases can also prevent small businesses 

from entering mainstream lending. Studies show that diverse small 

businesses are less likely to apply for a loan due to fear of rejection. A 2015 

Independent Business Survey conducted by the Institute for Local Self 

Reliance reported that of the business owners of color who applied for a bank 

loan in the last two years, 54 percent were rejected. The SBA's research 

shows minority business owners are disproportionately denied financing even 

when controlling for factors such as business credit scores and personal 

wealth. 11 

The Minority Business Development Agency's (MBDA) research finds that 

minority business owners are denied loans at nearly three times the rate of 

non-minority owners. 12 Even when controlling for credit and collateral 

differences, when diverse small business owners do access capital, they often 

receive lower loan amounts and pay higher rates. 

Women-owned businesses also face access to capital challenges. Women 

account for only 16 percent of conventional small business loans and 17 

percent of SBA loans even though they represent 30 percent of all small 

11 Kymn, Christine, "Access to Capital for Women- and Minority-owned Businesses: Revisiting 

Key Variables by Advocacy", Issue Brief 3: Access to Capital, Small Business Administration, 

Office of Advocacy January 2014. Accessed January 11, 2017. 

bllP~JJwww.sba.gov/sites/delaul!fflLes/Issue%20Brief%203%20Access%20to%20Capital.pdf. 

12 Fairlie, Robert, Ph. D. and Alicia M. Robb, Ph.D., "Disparities in Capital Access between 

Minority and Non-Minority-Owned Businesses: The Troubling Reality of Capital Limitations 

Faced by MBEs", U.S. Department of Commerce, Minority Business Development Agency, 

January 2010. Accessed January 11, 2017. 

http://www. m bda. qov /sites/ default/files/DisparitiesinCapitaiAccessReport. pdf. 

Page 5 of 9 
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companies. 13 Of conventional small business loans, just $1 of every $23 in 

conventional small business loans goes to a woman-owned business. These 

access to capital gaps start from the startup of the business. On average, 

men start their businesses with nearly twice as much capital as women 

($135,000 vs. $75,000). 14 Similar to business owners of color, women are 

more likely to be turned down for loans or receive loans with less favorable 

terms than their male counterparts. 15 

Despite these challenges, underserved businesses continue to grow and create jobs. 

Nationally, in recent years, businesses owned by people of color have grown rapidly, 

with data showing the increase in Black and Latino business ownership outpaced 

population growth from 2007 to 2012, when the black population increased by 6 

percent but black business ownership increased by 34 percent, and the Latino 

population increased by 17 percent while Latino-owned businesses increased by 46 

percent. 16 This national growth in businesses owned by people of color indicates 

enormous untapped potential for entrepreneurial growth in a city like Philadelphia, 

where 41 percent of the population is Black or African-American and 14 percent is 

Hispanic or Latino. 

A boost in local small business ownership could also have a positive impact on the 

economic development of our region, and make the region more competitive with 

other large metropolitan areas of the country. Analysis of U.S. Census data by 

American City Business Journals found that the Greater Philadelphia area Jagged 

behind the metro regions of Boston, New York, Baltimore and Washington, D.C., in 

small business growth rates. 17 Additional investments in proven solutions and 

programs like those that support the work of CDFis will stimulate the flow of capital 

to business owners, generating economic activity that can catalyze community 

13 "21st Century Barriers to Women's Entrepreneurship", US Senate Small Business 

Committee, July 23, 2014, Accessed August 29, 2017. 

https: //www .sbc. senate. gov /public/ cache/fi les/3/f/3f954386-f16b-48d2 -86ad698a 7 Se 33cc4/F7 4C2CA2660 14842F8A3D86C3AB619BA. 21st-century-barriers-to-women-sentrepreneurship-revised-ed. -v.l.pdf 14 Coleman, Susan, and Alicia Robb, Ph.D., "Access to Capital by High-Growth Women-Owned 

Businesses SBAHQ-13-Q-OA63," National Women's Business Council, April 3rd, 2014. 

Accessed August 27, 2017. https://www.nwbc.gov/research/high-growth-women-ownedQ\J_Sin~~s~capital 

15 Economics and Statistics Administration, "Women-Owned Businesses in the 21st Century," 

U.S. Department of Commerce for White House Council on Women and Girls, Issued October 

2010. Accessed August 22, 2017. http://www.dol.gov/wb/media/WomenOwned Businesses in The 21st Centu.rY.&ctf. 16 McManus, Michael, "Minority Business Ownership: Data from the 2012 Survey of Business 

Owners", Issue Brief Number 12, September 14, 2016. 17 G. Scott Thomas and Alison Burdo, "Phila. Small Business Growth Rate Lags Behind Other 

Major East Coast Cities", Philadelphia Business Journal, Nov 21, 2016. 

https://wvyy'Lb_@ournals.cQIDLJ2biL~hiaLnewsLZ016/llL21/small-busines~wth-philly: 

lancaster-allentown. htm I 

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development, create jobs, generate income and wealth, and help chip away at the 

city's persistently high poverty rate. 

Role of CDFis in Small Business Lending 

CDFis are an important part of the small business lending ecosystem, providing 

capital to businesses that cannot access traditional financing. As mission-driven 

lenders, increasing access to affordable, responsible capital for business owners with 

limited options: women, people of color, startup firms with limited revenue and less 

than perfect credit, is a key component of their strategy. CDFis lend successfully in 

distressed markets and communities of persistent poverty by taking a localized 

approach to lending, adjusting their strategies and products to meet the needs of 

their communities, and by being accountable to the communities they serve. 

For small businesses owners with financial impediments to securing financing like 

lack of collateral, cash flow challenges, modest business revenues, or imperfect 

credit, CDFis address these issues by providing a variety of financial products, 

including working capital, equity investments, bridge loans, senior and subordinated 

debt, sometimes at below market rates with lower and fewer fees, with more flexible 

underwriting criteria, credit standards, collateralization and debt service 

requirements than what is otherwise available in the marketplace. 

As mentioned previously, some of the challenges facing small businesses served by 

CDFis are financial, while others are related to the business management practices. 

However, the experience of CDFis has shown that both issues must be addressed for 

the business to be successful and grow. To that end, CDFis address this issue by 

providing financial education, technical assistance, and capacity-building 

development services to their borrowers, including business training and access to 

social and professional networks. 

Beyond providing capital and technical assistance, CDFis often have relationships 

with community stakeholders including nonprofits, foundations, chambers of 

commerce, government agencies, and financial institutions, allowing them to connect 

entrepreneurs to a rich network of resources and opportunities. Many CDFis also 

have referral relationships with local financial institutions, whereby a bank may refer 

a potential borrower who is not quite ready for conventional financing to a CDFI, 

where the business owner can receive any needed training or technical assistance as 

well as financing. For many CDFis, the goal is to help the borrower strengthen and 

grow their business, improve their financial position, and eventually be able to 

"graduate" to traditional financing from a mainstream institution. 

There are currently 17 certified CDFis located in southeastern Pennsylvania, with 

more than half providing small business loans. CDFis lending to small businesses in 

the Philadelphia region are able to address a spectrum of capital needs: from 

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EntrepreneurWorks and the Economic Opportunities Fund providing the smallest of 

microloans, sometimes as little as $500 in initial seed capital to turn an idea into a 

business, to The Enterprise Center and FINANTA who provide critical growth capital 

in the range of $50,000 to $250,000, to the Philadelphia Industrial Development 

Corporation that provides multimillion dollar financing for larger businesses poised 

for growth. But often, CDFis themselves face access to capital challenges and require 

support from the federal government to provide the flexible, patient capital or credit 

enhancement programs needed to reach underserved businesses and communities. 

Federal Support of Small Business Lenders 

The federal government already has several tools at its disposal that can increase 

the supply of capital to mission driven lenders like CDFis, who are adept at 

channeling those resources into distressed communities. The following are 

recommendations that will preserve and expand key federal programs that help 

increase the availability of capital for small businesses: 

Iii Full funding for the Department of Treasury's CDFI Fund's Financial 

Assistance and Technical Assistance program to allow certified CDFis 

access to the flexible, patient capital needed to provide financing to 

underserved businesses, and to provide critical technical assistance and 

development services to help small businesses grow and thrive. The equity 

capital provided through the CDFI Fund's programs is crucial to attracting 

private sector capital, allowing CDFis to leverage public sector dollars for 

greater impact. For every $1 in CDFI Fund awards, CDFis generate $12 in 

financing to bring economic opportunity, growth, and prosperity to rural, 

urban, and Native communities where mainstream capital is scarce. 

IIi Permanent reauthorization of the New Markets Tax Credit (NMTC) 

Program - The NMTC program increases the flow of capital to businesses 

and low-income communities by providing a modest tax incentive to private 

investors. Over the last ten years, the NMTC has proven to be an effective, 

targeted and cost-efficient financing tool valued by businesses, communities 

and investors across the country. The NMTC expires on December 31, 2019. 

Ill Make permanent the Small Business Administration's Community 

Advantage Pilot Program -The Community Advantage program provides a 

credit enhancement for small business loans made by mission-driven lenders. 

The program, set to sunset December 31, 2020, should be made permanent 

and the maximum loan amount increased to $500,000. The SBA's Microloan 

program should also be expanded and should provide additional technical 

assistance funds. 

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Iii Reauthorization of the recently expired State Small Business Credit 

Initiative (SSBCI), a $1.5 billion program created through the Small 

Business Jobs Act of 2010 to increase access to capital for small businesses, 

with a focus on reaching underserved communities. CDFis made nearly 

11,000 loans or investments supported by SSBCI funds, totaling $835 million 

in new financing through 2016. In fact, CDFis accounted for 60 percent of the 

total number of SSBCI-supported loans and investments in Pennsylvania. A 

new round of funding for the program could further increase the supply of 

credit for underserved businesses. 

Iii Strong small business borrower protections that ensure business owners 

have access to better information, clear disclosure, and understanding of the 

loan terms and agreements so they can make informed financial decisions. 

There are substantial disclosure requirements in the mortgage lending and 

now, the consumer lending markets but no such protections or requirements 

currently exist for small business borrowers. 

Thank you for the opportunity to testify at today's hearing. I would be happy to 

answer any questions. 

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U.S. House of Representatives 

Small Business Committee Field Hearing 

Philadelphia, PA 

October 20, 2017 

Leslie Benoliel 

President and CEO, Entrepreneur Works Fund 

Small Business Capital Access: Supporting Community and Economic Development 

Introduction 

Good afternoon, Representative Evans, Representative Fitzpatrick, and members of the 

Small Business Committee. Thank you for the invitation to provide testimony on this very 

important topic. 

My name is Leslie Benoliel, and I am the President and CEO of Entrepreneur Works 

Fund (EWF), a non-profit organization that provides access to loan capital and business 

training to entrepreneurs and small-business owners in the five county Greater 

Philadelphia Region. 

Over the past 18 years, Entrepreneur Works Fund has assisted more than 5,000 

entrepreneurs and has disbursed over 450 loans totaling $1.7 million for business startup and expansion. 

EWF serves 250-300 small business owners each year, and targets small business 

owners living or operating in low- to moderate-income neighborhoods in this region 

In Fiscal Year 2016, 84% of our clients identified as members of a racial minority (73% 

of whom identified as African-American): 68% resided in low- to moderate-income 

households: and 60% were women. 

I would like to commend the Small Business Committee for their hard work and efforts to 

acknowledge the disparity in access to capital in the state of Pennsylvania for deserving 

small-business owners, particularly those in underserved communities. 

I am here today to express my support of this committee's work to ensure better access 

to capital for aspiring entrepreneurs and small business owners looking to build 

successful businesses, build wealth, achieve economic self-sufficiency, create jobs for 

their neighbors, and make their communities better places to live and work. 

Small businesses are vital to and key segment of our region's and the national economy 

Small businesses (firms with less than 500 employees) represent the largest proportion 

(99+%) of all firms and account for roughly half of all private sector jobs. 

In Pennsylvania, 1 million small businesses represent 98% of all PA firms and account 

for 2.4 million jobs, almost 47% of PA private sector employees 

The smallest of businesses are microenterprises (those with 5 or fewer employees). 

They numbered 27.6 million in the US in 2015 and account for 16.2% of all private sector 

jobs. 

SBA data consistently show that small businesses are the largest creators of jobs in the 

U.S., year after year, with rare exceptions: microbusiness employers (those with 1-19 
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employees were responsible for 11% of the 13.7 million private-sector net job gains from 

2010-2016. 

Small businesses make up over 96% of businesses in Philadelphia and account for 

more than half of all jobs in the city. In 2013 there were 103,369 of small businesses with 

fewer than 20 employees. 

In the five county Greater Philadelphia region there were 359,182 small businesses 

However, aspiring small business owners in the Philadelphia region are at a 

disadvantage. The Kauffman Foundation's 2015 Index of Startup Activity ranks Greater 

Philadelphia 31st among the US's 40 largest metropolitan areas across multiple 

measures of new business and startup activity. 

Who are these small businesses? 

We find most small businesses in our local neighborhoods, on and near commercial 

corridors and along "main streets" of our region's smaller cities and townships: 

neighborhoods such as Germantown, East Oak Lane and West Philadelphia, often 

clustered around commercial corridors such as along 52nd Street and lancaster and 

Germantown Avenues. Also in county townships such as Bristol in Bucks County. 

We, as residents, see, engage with and rely on with these small businesses every day. 

They are child care centers, coffee shops, food trucks, dry cleaners, landscapers, 

exercise studios, clothing boutiques, barber shops, professional and health service 

providers to name a few. 

Others are operating in basements, attics, shared spaces or on the internet: software 

developers, graphic designers, translation services, as examples. 

These businesses are the lifeblood of our neighborhood economies and are important 

contributors to our region's economy and to our collective community health. 

Why are small businesses so important? 

1. Small businesses provide the goods and services that we want, need and value 

2. Small businesses create jobs, especially for those who face challenges (low income, low 

skills, young adults, people that need flexibility, immigrants). Research shows that small 

businesses mostly hire from the communities that they serve 

3. Small businesses tend to keep the money they make circulating locally. In the 

Sustainable Business Network's Taking Care of Business report, it was found that 

money spent at a small business in Philadelphia is 71% more likely to stay in the 

community versus money spent at a national chain 

4. Small businesses make our neighborhoods and communities more vibrant, diverse, and 

interesting, and that attracts visitors and new residents 

5. Small businesses create wealth for their employees and themselves 

6. Small businesses invest in and support their communities: offer space, contribute 

dollars, offer themselves and their employees as volunteers 
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Small businesses create important pathways of wealth-building and economic 

opportunity for underserved populations 

For many entrepreneurs, particularly those that are low-income, minorities, women, 

immigrants, veterans and returning citizens, entrepreneurship is a viable and critical path 

to break the cycle of poverty and for improving economic self-sufficiency. 

These populations often lack social networks/relationships, education or training, and 

other resources needed to obtain a skilled job with a livable wage. 

Small business ownership offers a viable and attractive option for them to move up the 

economic ladder. 

Research shows that there are substantial wealth advantages for business owners 

compared to non-business owners: the median net worth of business owners is more 

than two times greater than that of non-business owners. 

This advantage is even more pronounced for minorities and women. 

For example, a recent study (The Tapestry of Black Business Ownership in America 

(2016) commissioned by the Association of Enterprise Opportunity (AEO) shows that the 

median net worth for Black-owned business is 12 times higher than for Black nonbusiness owners 

Furthermore, minority- owned and women-owned business creation rates are exceeding 

those of non-minority males which is indicative of the desire and interest 

In recent years, we've seen an inspiring increase in Hispanic, African-American, and 

other minority-owned businesses; with a 37% overall increase in minority-owned 

businesses in Pennsylvania, which was reported by the Sustainable Business Network 

in December 2015. 

There are barriers persist that stymie small business owners' access to capital 

Three major factors hinder small business owners' path to success: (1) Low starting wealth, 

(2) limited access to capital and (3) a "trust gap" 

While most individuals face challenges to get a business off the ground, the need is 

greatest among underserved and marginalized populations. 

Access to capital is chief among these needs. 

Other resources needed include training, guidance, mentoring and access to markets 

and business networks. Starting and growing a business can be costly and very 

complex. Business owners also need and value the guidance helping them navigate and 

prioritize. 

There are many who say they offer capital for small-business owners in Philadelphia, 

including banks. Unfortunately, much of this is unaffordable, inaccessible and, in some 

cases, harmful. 

Many small businesses don't meet the bank standards to qualify them for loans: credit 

score thresholds; insufficient collateral; limited equity to put in the business; limited 

experience; and lack of networks and relationships that could support their endeavors. 

Minority business owners face steeper barriers than their white counterparts: lower 

starting wealth, fewer assets and less disposable income. 

When they do qualify for a bank loan, the loan amounts are often less than what was 

requested and less than what is needed by the business 
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Furthermore, banks are reluctant to make smaller business loans (less than $50,000) 

because they are unprofitable. 

Many minority small business owners feel intimidated by banks according to several 

national surveys recently conducted. This is especially acute among Black business 

owners. 

Banks and other lenders can be difficult with which to establish relationships. 

With limited professional networks and limited knowledge about how to navigate our 

complex financial system, it is difficult and, indeed, intimidating for small business 

owners to establish relationships with banks. 

The business owners often become discouraged from applying and are increasingly 

turning to alternative types of financing -particularly on-line lenders to source capital. 

Many of these "alternative" lenders (particularly online lenders) are predatory and 

onerously expensive. The borrowers can easily get caught in a debt cycle leaving them 

in worse financial shape. 

Important roles CDFis like Entrepreneur Works Fund play in supporting small business 

Entrepreneur Works Fund, among other CDFis, in the Greater Philadelphia Region, 

provide much more than just a loan transaction for entrepreneurs and small-business 

owners. 

We provide the trusted guidance (technical assistance) either directly or by partnering 

with other community-focused organizations such as the Women's Business 

Development Centers (WBDC), Small Business Development Centers (SBDCs), 

community development corporations and business associations. 

I'd like to emphasize this point: mere access to capital isn't always enough. Capital 

needs to be coupled with technical assistance (trusted guidance) and appropriate 

training to ensure the small-business owner is prepared to take on a loan, to use the 

capital to build the business and, lastly, ensure he/she is capable of paying off the loan. 

Traditional lenders, such as banks, and on-line lenders do not offer this support. 

CDFis, WBDCs, SBDCs form the foundation of a vast network of business support and 

business capital. 

• Organizations like ours have built strong, trusted relationships in the communities and 

among the populations we serve. 

We have built a deep knowledge of the need of the small business community and 

developed effective ways to reach and serve them. 

Our successes and that of our small business clients would not be possible without 

funding and capacity-building support from the Small Business Administration and the 

U.S Treasury's Community Development Financial Institutions Fund (CDFI). 

Support from these sources have allowed us to reach hundreds of entrepreneurs each 

year- particularly those that are low- to moderate-income; women; minorities; 

immigrants; and returning citizens 

To amplify our reach and channel more resources to small-business owners, 

Entrepreneur Works and organizations like ours are continually seeking more capital to 

disburse, as well as the resources to be able to provide the technical assistance 

(guidance, mentoring and coaching) these small-business owners truly need and value. 
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Promising solutions to unleash the economic potential of small businesses 

What can we, as lenders, business support providers, policy makers, and donors do to bridge 

this gap and connect those wishing to start small businesses and others looking to grow their 

business with appropriate resources? 

Help individuals looking to start businesses build wealth through innovative asset 

building tools. Greater assets to begin with provide the entrepreneur with more "runway 

capital". 

Support innovative lending programs and products: forgivable loans; loan guaranty; loan 

and equity blends ("patient capital") 

Look at crowdfunding delivery models that target specific populations 

Provide greater support to non-profits that support underserved small business owners 

and help them build their capacity to reach them, develop trust with them and deliver 

culturally competent products and support services in their community. Meet them where 

they are. 

Facilitate and support efforts that build social and business networks. Peer mentoring is 

one example 

These are a few strategies that can help small business owners build credit worthiness, 

business competencies, broaden their networks and build trust and confidence. 

Closing Remarks 

In closing, small businesses are the back-bone and the engines of our economy in 

Philadelphia, in Pennsylvania, and the nation as a whole. 

It is imperative that we, from the public, private and non-profit sectors work in concert to 

support the growth and sustainability of small businesses especially in our underserved 

communities 

I want to thank you again for this opportunity to testify and for continuing to champion small 

businesses. 

Respectfully submitted, 

Leslie Benoliel 

President and CEO 

Entrepreneur Works Fund 
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EMSCO 

SClENTlFIC ENTERPRISES, INC, 

Showroom Address: 5070 Parkside Avenue, Suite 3200 Philadelphia, PA 19131 

Mailing Address: P.O. Box 28032 Philadelphia, PA 19131 

• Phone: 215,477.5601 • Fax: 215.477.2526 • Toll Free: 800.542.6026 

October 17, 2017 

CONGRESS OF THE UNITED STATES 

U.S. House of Representatives 

Committee on Small Business 

2361 Rayburn House Office Building 

Washington, DC 20515 

ATTN: U.S. Rep. Steve Chabot, Chairman 

U.S. Rep. Dwight Evans, Member 

RE: HEARING: "Small Business Capital Access: Supporting Community and 

Economic Development" 

Good afternoon Committee Members: 

For the record, I began my professional career 39 years ago, as an auditor with Price 

Waterhouse & Co.; worked as Vice President of Finance for a group of small businesses; 

worked for this very same U.S. House Committee on Small Business for then Chairman 

Congressman, Parren J. Mitchell; founded a Public Accounting Firm which firm served 

as a Financial Consultant to a Commonwealth of Pennsylvania Minority Business 

Economic Development Agency; worked as a minority shareholder in a national small 

business enterprise; and today I serve as a majority shareholder and CEO of two 

Emerging Minority Business Enterprises, operating on a national basis doing business 

with Fortune 100 enterprises. 

My experience has afforded me the opportunity to work with small businesses with 

annual sales ranging from $ 5,000.00 to greater than $ 100,000,000.00 per year, in 

annual sales. 

Perhaps more significantly are the over 50 small and minority businesses, I have 

interacted with over the years, that withered and died on the proverbial vine, because 

of a lack of access to capital. 
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RE: HEARING: "Small Business Capital Access: Supporting Community and 

Economic Development" Page 2 

Conversely, I experienced a period of my career, where I witnessed the positive results 

and meaningful favorable economic impact of businesses, that were created, fostered, 

revived and strived, as the direct result of receipt of capital, via economic development 

enterprise funds primarily received from the Commonwealth of Pennsylvania, during 

the early 90's and to some degree from the City of Philadelphia during the late 90's and 

early 2000's. 

Simply stated: 

A. Small Businesses provide more jobs and contribute more to America's economic 

growth. 

B. There is no such thing as the growth and development of Small Businesses, 

absent Increased, Innovative, and relaxed mainline bank underwriting for Small 

Businesses. 

C. There likely does not exist any, Bank Business Loan Portfolio, Venture Capital 

Business Loan Portfolio, that does not have a percentage of Delinquent or 

Defaulted loans, combined within the Portfolio along with neutral performing 

loans, and High Performing Profitable loans included within the loans, which 

drive the larger economy. 

D. Many large bank portfolios of loans, simply extract non-performing or poor 

performing loans OUT of their active group of loans, and place these loans in 

"work-out", which causes the calculated performance of Delinquent or Defaulted 

Loans, to have a lower rate and less active impact on the Reported Loan Portfolio 

Delinquency and Default Rate. 

E. Small Businesses MUST be afforded the opportunity to be created, grow and 

contribute to the economy, as in any loan portfolio some will fail, some will falter 

and recover and some will grow, thrive and make major contributions and reinvestment in the economy. 

F. Absent access to capital, with slightly relaxed and more innovative underwriting 

criteria, these potentially phenomenally contributors to our existence and 

economy will likely never come into being or development. 
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RE: HEARING: "Small Business Capital Access: Supporting Community and 

Economic Development" Page 3 

Perhaps the following quotes will prove relevant: 

'What happens to a dream differed? Does it dry up like o raisin .... " 

Langston Hughes. 

"A Dream Deferred is a Dream Denied." 

Langston Hughes 

"Give me a lever long enough and a fulcrum on which to place it, and I shall move the 

world." 

Archimedes 

Distinguished Gentlemen, let's not have a hearing for the hell of it, but let's do 

something to really make capital more accessible to Small and Minority Businesses. 

Thank you, 0; 

{f2.t~fft~::~ 

f.~c:::: .. m, '"'"•'''~• In< 
44 

‘‘Small Business Capital Access: Supporting Community 

and Economic Development’’ 

The Committee on Small Business 

2:30 P.M. on Friday, October 20, 2017 

Studio C at The Enterprise Center 

4548 Market Street, Philadelphia, PA 19139 

Steven Dorcelien 

Owner 

Bright Yellow Creamery 

They say it takes a village to raise a child. I say it takes the 

same to raise a small business. I’ve been lucky enough to have had 

a village help raise the artisanal ice cream company I always 

dreamed of having, but it hasn’t been easy. 

My journey started roughly two years prior to launching Bright 

Yellow Creamery in the Spring of 2017. Before stepping into the 

entrepreneurial world, I always envisioned opening my own cafe ́ as 

I worked tirelessly for one of the largest law firms in the world. 

With a clear goal in mind, and the knowledge of how tight access 

to capital would be for new—and what banks would call ‘‘highrisk’’—companies, I accelerated by savings by picking up a second 

job on weekends, renting my apartment for additional funds, and 

diverting my retirement contributions to low-interest bank savings. 

This meticulous approach not only came at the expense of leisure 

but also the long-term safety net of retirement planning. 

But I knew the gamble before I served my first ice cream cone. 

I knew that there was a facade around the level in which major 

banking institutions would cater to small businesses. I quickly 

found out that despite a near 800 credit score, two years worth of 

savings, a post-graduate business degree, and a clear and concise 

business plan, I was simply too ‘‘high-risk’’ for traditional institutional lending. The nostalgic image of a young person going to their 

neighborhood bank for a loan to open their first business was met 

with a harsh reality. Without years of business returns and substantial collateral, the funds I had saved would be my only option. 

I quickly found myself pouring out years of savings to jumpstart 

my dreams. Bright Yellow Creamery was truly bootstrapped with 

our first piece of commercial equipment and a mobile vending unit 

nearly depleting all I had. 

With equipment and a framework for the business in place, I 

found myself, like many other first time entrepreneurs, at Philadelphia’s Enterprise Center. Their efforts in assisting minority enterprises with business resources and support is what drew me in. 

Under their guidance, my business was born out of their food business incubator, The Dorrance H. Hamilton Center for Culinary Enterprises. Seven months later, the savings initially poured into the 

business has returned in earnings and the equipment purchased 

carries a zero balance. The journey has been viable and certainly 

worthwhile thus far, both financially and emotionally. Yet, I continue to find myself in the same shoes as many others in our inability to tap into bank lending for continued acceleration. The 

ability to purchase larger equipment, hire staff, and secure a brickSBREP-219A with DISTILLER

45 

and-mortar location are natural progressions of any business with 

aspirations of growth but, with limited options to capital, painstakingly slow growth appear to be the only way for some to continue 

their dreams. These businesses can quickly become stagnant as 

output is capped with a lack of resources. Without capital to grow, 

expansion becomes near impossible, job growth suffers, and communities suffer. 

I’ve been fortunate in my ability to save in the way I did. With 

the support of friends. I used my residence as a means of generating revenue while I stayed elsewhere. I worked for family members in part-time, flexible roles. And am, somewhat, young enough 

to sacrifice a few years of retirement savings for short-term gain. 

Many others don’t have these luxuries. The peers I know from the 

Enterprise Center are chasing their dreams with families to provide for and loved ones to care for. The funds that may go into 

some form of savings are used for basic necessities in life. They, 

like me, aspire to use their business as a vehicle to revitalize a 

community and create jobs. Programs like 7(a), CDC/504, and 

Microloan provide lending options for small businesses where they 

aren’t any. Often, small business owners are asked to sacrifice almost everything they have today and in the future to match their 

ambitions. I hope the Committee recognizes just how vital these 

capital access programs are to helping those ambitious entrepreneurs, even if it’s with just a half step forward. 

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