U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Printing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001

39–381 PDF 2007

SUBCOMMITTEE HEARING ON PROGRAM

HARMONIZATION IN RURAL AMERICA -

HOW THE SBA AND USDA CAN WORK

TOGETHER TO BETTER SERVE SMALL

BUSINESSES

SUBCOMMITTEE ON URBAN & RURAL 

ENTREPRENEURSHIP 

COMMITTEE ON SMALL BUSINESS 

UNITED STATES HOUSE OF 

REPRESENTATIVES

ONE HUNDRED TENTH CONGRESS

FIRST SESSION

November 14, 2007

Serial Number 110-60

Printed for the use of the Committee on Small Business

(

Available via the World Wide Web: http://www.access.gpo.gov/congress/house 

HOUSE COMMITTEE ON SMALL BUSINESS 

NYDIA M. VELA ́ ZQUEZ, New York, Chairwoman 

WILLIAM JEFFERSON, Louisiana 

HEATH SHULER, North Carolina 

CHARLIE GONZA ́ LEZ, Texas 

RICK LARSEN, Washington 

RAUL GRIJALVA, Arizona 

MICHAEL MICHAUD, Maine 

MELISSA BEAN, Illinois 

HENRY CUELLAR, Texas 

DAN LIPINSKI, Illinois 

GWEN MOORE, Wisconsin 

JASON ALTMIRE, Pennsylvania 

BRUCE BRALEY, Iowa 

YVETTE CLARKE, New York 

BRAD ELLSWORTH, Indiana 

HANK JOHNSON, Georgia 

JOE SESTAK, Pennsylvania 

BRIAN HIGGINS, New York 

MAZIE HIRONO, Hawaii 

STEVE CHABOT, Ohio, Ranking Member 

ROSCOE BARTLETT, Maryland 

SAM GRAVES, Missouri 

TODD AKIN, Missouri 

BILL SHUSTER, Pennsylvania 

MARILYN MUSGRAVE, Colorado 

STEVE KING, Iowa 

JEFF FORTENBERRY, Nebraska 

LYNN WESTMORELAND, Georgia 

LOUIE GOHMERT, Texas 

DEAN HELLER, Nevada 

DAVID DAVIS, Tennessee 

MARY FALLIN, Oklahoma 

VERN BUCHANAN, Florida 

JIM JORDAN, Ohio 

MICHAEL DAY, Majority Staff Director 

ADAM MINEHARDT, Deputy Staff Director 

TIM SLATTERY, Chief Counsel 

KEVIN FITZPATRICK, Minority Staff Director

SUBCOMMITTEE ON URBAN & RURAL ENTREPRENEURSHIP 

HEATH SHULER, North Carolina, Chairman 

RICK LARSEN, Washington 

MICHAEL MICHAUD, Maine 

GWEN MOORE, Wisconsin 

YVETTE CLARKE, New York 

BRAD ELLSWORTH, Indiana 

HANK JOHNSON, Georgia 

JEFF FORTENBERRY, Nebraska, Ranking 

ROSCOE BARTLETT, Maryland 

MARILYN MUSGRAVE, Colorado 

DEAN HELLER, Nevada 

DAVID DAVIS, Tennessee

(II) 

C O N T E N T S 

OPENING STATEMENTS 

Page

Shuler, Hon. Heath .................................................................................................. 1

Fortenberry, Hon. Jeff ............................................................................................. 2

WITNESSES 

Shear, William, Government Accountability Office .............................................. 3

Carroll, Dale, Advantage West Economic Development Group ........................... 5

Ziegler, Katy, National Farmers Union ................................................................. 6

Myhre, Michael, The Association of Small Business Development Centers ....... 8

Milobar, Leon, U.S. Small Business Administration ............................................ 10

APPENDIX 

Prepared Statements: 

Shuler, Hon. Heath .................................................................................................. 23

Fortenberry, Hon. Jeff ............................................................................................. 24

Shear, William, Government Accountability Office .............................................. 26

Carroll, Dale, Advantage West Economic Development Group ........................... 41

Ziegler, Katy, National Farmers Union ................................................................. 45

Myhre, Michael, The Association of Small Business Development Centers ....... 49

Milobar, Leon, U.S. Small Business Administration ............................................ 64

(III) 

(1)

SUBCOMMITTEE HEARING ON PROGRAM 

HARMONIZATION IN RURAL AMERICA - 

HOW THE SMALL BUSINESS 

ADMINISTRATION (SBA) AND U.S. 

DEPARTMENT OF AGRICULTURE (USDA) 

CAN WORK TOGETHER TO BETTER 

SERVE SMALL BUSINESSES 

Wednesday, November 14, 2007

U.S. HOUSE OF REPRESENTATIVES, 

COMMITTEE ON SMALL BUSINESS, 

SUBCOMMITTEE ON URBAN & RURAL ENTREPRENEURSHIP

Washington, DC. 

The Subcommittee met, pursuant to call, at 10:00 a.m., in Room 

2360 Rayburn House Office Building, Hon. Heath Shuler [chairman 

of the Subcommittee] presiding. 

Present: Representatives Shuler, Gonza ́lez, Ellsworth, 

Fortenberry and Davis. 

OPENING STATEMENT OF MR. SHULER 

ChairmanSHULER. I now call this hearing to order. 

Today we’ll examine some of the SBA and USDA programs and 

whether there are ways to improve their services to small businesses in rural America. 

This Subcommittee wants to ensure that the programs of these 

agencies can be maximized to benefit the nation’s nearly 2 million 

farm owners and their communities. Small businesses are the 

backbone of rural America. And if we are spending Federal dollars 

to assist them, we need to get the most out of the taxpayer’s dollar. 

With cooperation efforts both from the SBA and the USDA can 

promote greater economic development. 

As part of this effort, Mr. Fortenberry and I have led a bipartisan effort to ask the GAO to look at this issue. In June, Mr. 

Fortenberry, Mr. Chabot and I requested that the GAO review and 

report on a collaboration and cooperation between the SBA and 

USDA. These agencies have had success in helping rural economy. 

However, the Federal Government has not looked close enough to 

see if there are ways to improve these efforts. 

Given their similar economic development goals of these agencies 

it only makes sense to look at ways of coordination and efforts to 

help local businesses. 

The agencies have had a role in providing family farmers with 

new business alternatives. These programs at the USDA have 

2

mostly focused on serving our rural economics and agricultural industries. The SBA has also had a role in ensuring that businesses 

in the rural communities have accessed to capital as well as technical assistance. 

Small business development centers and women’s business centers have played a critical role in providing advice and expertise to 

assist these business growth. With access to capital to these areas 

there are significant SBA lending that goes to our rural communities. 

In recent history, however, we have seen how gaps have existed 

between these agencies. One of the most discussed has been the access of disaster assistance program. Farmers are often unable to 

use SBA disaster loans and instead must way for the Federal Disaster Assistance to be declared. 

There have been also questions whether the SBA lending and the 

farm credit services are covering the complete needs of the rural 

small businesses. 

Today’s hearing will allow us to examine the SBA and the USDA 

programs have worked and gain a better understanding of how 

they can better work together. 

Considering that small business dominates rural economies, it 

only makes sense. The Federal Government support through the 

SBA and the USDA to rural Americans assures opportunities and 

stability often spurring the entrepreneurial spirit. 

Today we will have the opportunity to hear from the GAO on the 

status of their report as well as hear from the stakeholders on the 

issues that the GAO should be examining. 

I appreciate all the witnesses being here today. 

And at this time I would like to recognize the Ranking Member 

Mr. Fortenberry for his opening statement. 

OPENING STATEMENT OF MR. FORTENBERRY 

Mr.FORTENBERRY. Thank you, Mr. Chairman. And thank you all 

for coming today and, Mr. Chairman, for your agreement to hold 

this hearing. 

We are here to talk about the harmonization of programmatic 

elements in rural America. Our Government employs a wide variety of tools in its efforts to improve the abilities of families and 

community to better themselves through economic growth and entrepreneurship. Some of these programs are targeted and well coordinated, but we believe that progress can be made in shaping the 

resources of the U.S. Department of Agriculture and the Small 

Business Administration to ensure that they work effectively well 

together. 

We all understand the necessity of drawing efficiency from each 

tax dollar. Part of this efficiency is ensuring that different Government agencies work well in tandem with each other. This challenge 

was identified in a GAO report alluded to by our Chairman two 

years, which recommended that agencies define and articulate common outcomes, agree upon agency roles and responsibilities, operate across agency boundaries as well as reduce cost by pooling resources. 

The USDA through its Rural Development Office and the Small 

Business Administration share the common goal of improving the 

3

economic opportunity for all of America. And particularly economic 

development in rural areas has been the focus of the USDA, and 

Administrator Preston to his credit has made it a goal of the SBA 

to focus on addressing the needs of underserved communities as 

well. 

Rural American certainly fits that definition. The SBA through 

its loan programs, technical assistance, Federal contracting serves 

thousands of small businesses and creates jobs. Rural Development, while organized differently, has a broad network of offices in 

almost every rural county in our country and operates a variety of 

grant and loan programs targeted at rural communities. 

While Rural Development has a wide footprint in rural America, 

the SBA maintains a limited number of offices, mostly in larger cities in partnerships with colleges and universities as well. While its 

effectiveness is not questioned, the SBA is less accessible to rural 

communities, particularly in large states such as my own, Nebraska. 

For an entrepreneur in rural Nebraska a small business development center or Rural Development office may be the point of first 

contact to see what resources are available for beginning a new 

venture. New businesses in rural economies stimulate job growth 

and provide needed diversification to communities that have been 

in the past reliant, perhaps, on a few large employers many of 

whom downsize or close plants. These entrepreneurs need to be 

able to utilize all the appropriate assistance as they begin their 

business. And officials in these officials need to be flexible in directing their constituents to the most productive program. 

The issue we are discussing today holds a great deal of promise, 

I believe, for entrepreneurs and rural communities. The ability to 

coordinate the programmatic elements of these agencies is vital to 

the empowerment of small businesses. And I also believe this effort 

could very well serve as a model to stimulate cooperation among 

agencies in the Federal Government with other similar missions. 

Thank you again, Mr. Shuler, for your leadership on this important issue. And I look forward to our witness’ testimony today. And 

thank you all for coming. 

ChairmanSHULER. Thank you, Mr. Fortenberry. 

We’ll now move to testimony from the witnesses. Witnesses will 

have five minutes to deliver their statement. The yellow light that 

comes on means that you have one minute remaining and red 

means wrap it up. We’re not too technical, as you can see. 

But our first witness is Bill Shear, Director of Financial Markets 

and Community Investments at the GAO Office. Mr. Shear oversees the GAO report on Collaboration and Cooperation of the 

USDA and the SBA Programs. 

Mr. Shear, welcome. And thank you for your testimony. 

STATEMENT OF WILLIAM SHEAR, DIRECTOR OF FINANCIAL 

MARKETS AND COMMUNITY INVESTMENTS 

Mr.SHEAR. Thank you very much. 

Mr. Chairman, Mr. Fortenberry and Members of the Subcommittee, I am pleased to be here today to discuss our preliminary views on the potential for increased collaboration between 

SBA and USDA Rural Development offices. 

4

I will provide preliminary views on: 

First, mechanisms that SBA and USDA have used to facilitate 

collaboration with other Federal agencies and with each other. 

Second, the organization of SBA and Rural Development offices 

across the country, and; 

Third, the planned approach for our recently initiated evaluation 

on collaboration between SBA and Rural Development. 

In summary, first, while SBA and Rural Development are not 

currently involved at the agency-wide level in a collaborative working relationship, SBA and Rural Development have used a number 

of different mechanisms both formal and informal to collaborate 

with other agencies and with each other. 

For example, both agencies have used the Economy Act, a general statutory provision that permits Federal agencies under certain circumstances to enter into mutual agreements with other 

Federal agencies to purchase goods or services and take advantages 

of specialized experience or expertise. 

SBA and USDA use the Act to enter into an interagency agreement to create rural business investment companies to provide equity investments to rural small businesses. In this case the legislation creating this rural investment program recommended that 

Rural Development manage the program with the assistance of the 

SBA because of SBA’s investment expertise and experience, and because the program was modeled after SBA’s SBIC program. 

Second, both SBA and Rural Development have undergone restructuring that has resulted in the downsizing and greater centralization of each agency’s field operations. Currently SBA’s 68 

field offices are still undergoing a transformation to more centralized structure. Rural Development has largely completed its transformation, but continues to have a large presence in rural areas 

through a network of hundreds of field offices. Rural Development’s 

recognized presence in rural areas and expertise in the issues and 

challenges facing rural lenders and small businesses may make 

these offices appropriate partners to help SBA deliver services. 

Third, at your request we have recently begun a review of the 

potential for increased collaboration between SBA and Rural Development. In general, the major objections are to examine the differences and similarities between SBA and Rural Development programs. Any cooperation that is already taking place between SBA 

and Rural Development, and any opportunities for or barriers to 

collaboration involving the two agencies. And then, obviously, looking for solutions on how to address those potential barriers. 

It is a pleasure to be here today. I’d be happy to answer any 

questions you may have. 

[The prepared statement of Mr. Shear may be found in the Appendix on page 26.]

ChairmanSHULER. 

Thank you, Mr. Shear. 

Our next witness is Mr. Dale Carroll, President and CEO of Advantage West Economic Development Group from my District in 

Fletcher, North Carolina. Advantage West is nonprofit, public/private partnership to focus on marketing west North Carolina for 

business and corporation development. 

5

Bill, thank you for being here today. I look forward to your testimony. 

STATEMENT OF DALE CARROLL, PRESIDENT AND CEO, 

ADVANTAGE WEST ECONOMIC DEVELOPMENT GROUP 

Mr.CARROLL. Good morning. And thank you, Congressman 

Shuler and Ranking Member Fortenberry. We appreciate this opportunity very much. 

As the Congressman just mentioned, Advantage West is a regional economic development organization. We serve 23 counties in 

western North Carolina, the mountains of North Carolina. We have 

been involved in economic development for 15 years now. We have 

diversified our program of work over the years. Organizations like 

the Southern Economic Development Council, publications like Economic Development America have noted that we probably have the 

most diversified economic development program of any regional 

EDC in the country. 

Several months ago we implemented through our Blue Ridge Entrepreneurial Council Division a program called Certified Entrepreneurial Community. This program is patterned after a certified industrial site program that we implemented in the mid 1990s. It’s 

a checklist, if you will. Certified Entrepreneurial Community is a 

designation that we currently have 12 counties in our region pursuing as well as the eastern band of the Cherokee Indian. 

The goal of the Certified Entrepreneurial Community Program is 

to make a local community entrepreneurial ready. It takes entrepreneurship and pushes it down to the grassroots level. 

Entrepreneurship is so important in our mountain economy. 

We’ve seen the closure of branch plants in the manufacturing sector. We’ve seen the shifts of the manufacturing base that is so reflective of other parts of the country in rural America. 

In our particular case we have made entrepreneurship a major 

strategy at Advantage West for the future of our region. 

We are here today to recommend to you that as you look at coordinating and collaborating for higher levels of effectiveness the 

programs of the SBA and the USDA, that you consider piloting 

your work with Advantage West in our 23 county area. I’ll give a 

quick example. 

Two of the most popular programs in economic development, and 

I would add they have been very effective in North Carolina, are 

the SBA 504 Loan Program and the USDA Business Industry Loan 

Guarantee Program. Think of it like this: With the new Certified 

Entrepreneurial Community program we have a mechanism in 

place at the local level where we are encouraging the communities 

to become more effective in working with small businesses and entrepreneurs. There literally is a checklist that they have to go 

through. They have to document that they have improved the permitting process at the community level. They have to list all of the 

capital providers that they have in their local area. What organizations can provide technical assistance as well as financial programs 

for startup companies. But the real bonus that comes out of this 

is that improving the business climate in this manner to make a 

community entrepreneur ready also makes it better for existing 

business as well. 

6

So what we are saying is how about the SBA 504 Loan Program, 

the USDA Business Industry Loan Guarantee Program, think of 

those being documented in a handbook and on a web site used by 

a community that achieves the designation as a Certified Entrepreneurial Community. And then we believe there will be better access 

to these programs at the grassroots level. 

Let me close by saying that USDA and SBA have an excellent 

reputation in western North Carolina. I have many years of experience as an economic developer in North Carolina. And we applaud 

you for what you are doing today. When you try to improve the effectiveness of two crucial Federal agencies like this, you’re just 

striving for excellence. And that’s what this Certified Entrepreneurial Community program is all about. So we applaud you for 

the spirit of this hearing and what you’re trying to do. 

Thank you very much. 

[The prepared of Mr. Carroll may be found in the Appendix on 

page 41.]

ChairmanSHULER. Thank you, Mr. Carroll. 

Our next witness is Ms. Katy Ziegler, Vice President of Government Relations for the National Farmers Unions. Prior to joining 

the National Farmers Union in 2003, Ms. Ziegler worked on agricultural policy for Senator Tim Johnson of South Dakota. 

You’ll be recognized for five minutes, and welcome. 

STATEMENT OF KATY ZIEGLER, VICE PRESIDENT GOVERNMENT RELATIONS FOR THE NATIONAL FARMERS UNION 

Ms.ZIEGLER. Thank you, Chairman Shuler, Ranking Member 

Fortenberry for the opportunity to be here today. 

National Farmers Union is a nationwide organization that represents family farmers, ranchers, fishermen and rural residents. 

We are proud of our policymaking process which begins at the local 

level where those who are most impacted by Federal decisions 

make our policy. 

Our members believe that the family farmer and rancher owned 

and operated food, fiber and fuel production system is the most economically, socially and environmentally responsible and beneficial 

way to meet the needs of the nation. While the economy of rural 

America faces many challenges there are also a number of opportunities for growth and revitalization. Because main street businesses 

are an important segment of the rural community and generate 

many jobs, we recommend that Federal policy foster and encourage 

those businesses providing protection from encroachment from big 

business monopolies. 

The SBA provides an invaluable service and our members supports support its continuation. Unfortunately, many in rural America are unaware of the programs available at SBA due to a lack of 

communication and outreach to rural residents. Ample small business loan resources should be made available through the SBA to 

credit worthy applications, including those from farmers as ranchers. 

As producers diversify their income, historic and traditional lines 

of credit options are not always available or affordable. 

7

Last year NFU held numerous listening sessions throughout the 

country to hear directly from producers what they are looking for 

in Federal farm policy. The number one issue of concern was the 

lack of a permanent disaster program. Farmers and ranchers have 

no control over the weather and can face devastating losses when 

a disaster strikes. Without addressing this hole in the safety net, 

producers who suffer from those losses will lose profits and all too 

often their operations. 

According to CRS 34 ad hoc disaster packages have been approved since FY 1989 totaling nearly $60 billion. Each measure approved requires the U.S. Department of Agriculture to recreate the 

program, the implementation plan and often results in new guidelines and delayed sign up requirements for producers. 

One of our highest priorities is to make ad hoc disaster assistance a practice of the past and put in place a standing disaster program that provides producers with an assured safety net in the 

event of a natural disaster and provides USDA certainty, making 

the program more consistent, reliable and timely for producers. 

The advances of renewable energy in fuels from the farm are one 

of the most exciting economic opportunities across rural America. 

As this industry grows, it is vital to ensure that the ownership remain in those communities and in the hands of the local farmers. 

When money is generated from an ethanol or a biodiesel plant it 

makes a real difference in the lives of those rural citizens. All too 

often large corporations invest in rural areas, but they take the 

profits with them instead of reinvesting in the local economy. 

I would encourage this Subcommittee to work with your colleagues in the agricultural sector to ensure that all Federal incentive programs used for renewable energy development give a competitive advantage to farmer owned and locally owned projects. 

Because of the advancement of renewable energy projects and 

production we have witnessed the plywood boards coming off of 

those main street businesses instead of going on. The annual local 

economic impact of a 40 million gallon ethanol plant in significant. 

The highlights include an expanded economic base by $110 million, 

household income increasing by nearly $20 million, about 700 permanent new jobs and an additional $1.2 million created in new tax 

revenues. 

One other exciting economic opportunity for producers is the consumer demand for fresh source verified direct from the farm food. 

It is the fastest growing segment of the food business. A producer’s 

price is based upon quality and freshness and, in turn, consumers 

receive a high quality and fresh product that they can trust. That 

is why there have an explosion of urban farmers markets and direct selling by farmers to consumers, retailers and restaurants 

throughout the country. It is why restaurants like Agraria here in 

town, in Georgetown waterfront, which is owned by Farmers Union 

members is very successful. 

This is an opportunity for USDA and the Small Business Administration to evaluate how each could work more closely together to 

foster the development of this movement. 

Mr. Chairman, I thank you for this opportunity and look forward 

to answering any questions. 

8

[The prepared statement of Ms. Ziegler may be found in the Appendix on page 45.]

ChairmanSHULER. Ms. Ziegler, thank you for your testimony. 

Next our witness will be Mike Myhre, the State Director of Minnesota Small Business Development Center. Mr. Myhre is testifying on behalf of the Association of Small Business Development 

Center. 

Mr. Myhre, you have five minutes for your testimony. 

STATEMENT OF MIKE MYHRE, THE STATE DIRECTOR OF MINNESOTA SMALL BUSINESS DEVELOPMENT CENTER ON BEHALF OF THE ASSOCIATION OF SMALL BUSINESS DEVELOPMENT CENTER 

Mr.MYHRE. Thank you. Chairman Shuler, Ranking Member 

Fortenberry, on behalf of the SBDC and the roughly 5,000 dedicated men and women who are part of the America’s SBDC network and hundreds of thousands of entrepreneurs and small business owners they serve each year, I would like to thank you and 

the members of this Subcommittee for inviting me here today. 

Mr. Chairman, in my testimony today I will seek to focus my remarks on how SBDCs can build upon its current capabilities and 

expertise of its national delivery network. I will seek to point out 

where SBDCs can be leverage by USDA loan and technical assistant programs. I will cite some specific instances where SBDCs have 

been successful in comparable work. The intent of my effort will be 

to demonstrate how Congress and Federal agencies, including 

USDA and others, can reduce the proliferation of duplicative programs and better utilize SBDC partnership program by providing 

direct support to enhance its capacity to serve rural areas. 

First, one of the most serious and historical facing rural entrepreneurs and small business owners is equitable access to adequate 

capital for business establishment or expansion of an existing business. To help fill this gap both USDA and SBA provide for national 

assistance through loan and loan guarantee programs. USDA facilities its Business and Industry Guaranteed Loan Program and SBA 

has its 7[a] loan guarantee and 504 loan program. 

SBDCs provide rural small business entrepreneurs with access to 

these and other capital resources by building and maintaining relationships with various lending resources allowing rural small business entrepreneurs the ability to access and leverage multiple resources to finance a single business venture. 

In Minnesota an average SBDC loan deal consists of three and 

sometimes up to six or seven different sources of capital to complete a successful deal. The fact is that USDA loans have among 

the highest default rates of any Government loan program. I believe the historical high default rates are a attribute to the lack of 

loan recipients not receiving critical financial and cash flow management education and consulting. In Minnesota lenders consistently say and indicate that clients who have a loan deal prepared 

by their local SBDC professional and continue to work with that 

professional are significantly less likely to default on their business 

loan and more likely to pay off their loan before maturity. This is 

an area where ASBDC believes America’s SBDC network could colVerDate 0ct 09 2002 09:55 Dec 20, 2007 Jkt 033615 PO 00000 Frm 00012 Fmt 6633 Sfmt 6633 G:\CLERK SB\HEARINGS\TRANSCRIPTS\39381.TXT LEANN
9

laborate with USDA by being its technical and educational resource 

partner. 

We believe USDA, SBA, ASBDC should work together to develop 

a memorandum of understanding or other workable funding arrangement whereby SBDCs would be formally recognized by USDA 

as a financial training provider for those USDA loan recipients. 

Furthermore, ASBDC believes that if USDA collaborates and 

supports SBDC financial and management training and professional business consulting, USDA loan delinquencies and default 

rates can be substantially reduced by that segment served. 

We also have no doubt that SBDC financial and management 

training and ongoing long term business consulting can greatly enhance the likelihood of long term sustainable and financial success. 

SBDC networks from coast to coast have considerable experience 

and have been recognized for their contributions working with 

small businesses including rural and agra businesses impacted by 

disaster. In light of recent fires, hurricanes, floods, drought and 

disasters like the 35W Bridge collapse in Minnesota, Congress and 

the public are justifiably interested in the effectiveness of Federal 

disaster assistance programs, particularly Federal disaster loan 

programs. In many disasters cooperation and collaboration between 

the USDA, SBA, SBDCs can be extremely important to the going 

concern of businesses in the survival of small towns following a disaster. The fact is in a disaster Federal response agencies lack the 

necessary manpower, and more importantly, the expertise to assist 

hundreds if not thousands and in some instances tens of thousands 

of small business owners in need of assistance. 

One of the most effective ways that SBDCs can assist small business owners after a disaster is help them successfully complete applications for disaster loans, a process which can add additional 

frustration and anger to an already tragic circumstance. If leveraged with appropriate USDA resources for enhanced capacity, 

ASBDC believes that America’s SBDC network effectively use its 

existing national wide structure and expertise to help farmers, 

ranchers and small businesses in rural communities apply for 

USDA disaster assistance. 

We believe that with ASBDC assistance we can significantly improve the ability of producers, small businesses in rural communities to survive, recover and flourish following a disaster. 

In conclusion, one quarter of Americans live in rural areas. Subsequently 20 percent of all businesses are located in rural America. 

Conversely, individual state SBDC network appropriate anywhere 

to 50 to 90 percent of their resources to serving rural communities. 

In Minnesota we appropriate 80 percent of our total resources to 

produce 70 percent of our deliverables in federally defined rural 

communities. This demonstrates a clear commitment by SBDCs to 

serve rural communities and that SBDCs have an existing and established infrastructure to serve rural America. 

USDA Rural Development’s mission is to increase economic opportunity and improve quality of life for rural residents. If USDA 

wants to effectively enhance jobs, economic growth in the quality 

of life in rural America, we should be looking to build funding opportunities for partnerships and collaboration between USDA and 

America’s SBDC network. 

10

I thank the Subcommittee for this opportunity. And we’d be 

happy to take any questions. 

[The prepared statement of Mr. Myhre may be found in the Appendix on page 49.]

ChairmanSHULER. Thank you. 

I’d like to recognize Ranking Member Mr. Fortenberry for introduction of our last witness. 

Mr.FORTENBERRY. Thank you, Mr. Chairman. 

It’s my privilege to introduce Mr. Leon Milobar. He is a Nebraska native and he currently serves as the Small Business Administration’s District Director back home. Welcome, sir. 

Previously he served as the Small Business Administration’s District Director in Portland, Oregon, and was also an Associate State 

Director for the Nebraska Business Development Center. 

Mr. Milobar, welcome and we look forward to your testimony. 

STATEMENT OF LEON MILOBAR, NEBRASKA DISTRICT 

OFFICE, U.S. SMALL BUSINESS ADMINISTRATION 

Mr.MILOBAR. Thank you. 

Good morning, Chairman Shuler, Ranking Member Fortenberry 

and members of the Committee. Thank you for the opportunity to 

speak with you today regarding United States Small Business Administration programs that support rural small business owners 

and entrepreneurs. 

Small businesses account for two-thirds of our rural jobs and 

comprise more than 90 percent of all rural establishments. Under 

Administrator Preston’s leadership the agency has a renewed focus 

on ensuring that its products and services and accessible to entrepreneurs in the nation’s most underserved markets, including the 

rural small businesses. 

I’m Leon Milobar, and I am the District Director of United States 

Small Business Administration, Nebraska. Prior to serving as District Director in Nebraska I served as the District Director in Portland, Oregon. And prior to that, I served as Associate State Director for the Nebraska Business Development Center. 

As an Associate State Director for Nebraska Business Development Center I was responsible for the management and technical 

assistance that small businesses received throughout Nebraska. 

This included SBA Small Business Developments Centers and the 

manufacturing subcontract extension program through the Nebraska Department of Economic Development, and U.S. Commerce 

Department and the Procurement Technical Assistance Center. 

In 2005 while serving as District Director in Oregon the local 

SBA office met with U.S. Department of Agriculture Rural Development and the Oregon Economic and Community Development 

Department in a collaborative effort to provide lender training on 

various Federal and state government loan guarantee programs. 

From 2005 to 2006 approximately 12 training sessions were held 

throughout Oregon and the sessions were attended by over 400 

bankers. This collaborative effort resulted in additional loan activity and exposure for the agencies involved with the rural community. The Portland District Office realized a 30 percent increase in 

11

loan volume over the past fiscal year, an increase we believe our 

collaboration with USDA contributed to. 

During my brief time in Nebraska District Office we have implemented the same basic initiative. I personally visited with the state 

Economic Development Department and the USDA Rural Development shortly after my arrival in Nebraska. In meeting with USDA 

Rural Development I produced the materials and an initiative design that was used in Oregon to spur interest in a USDA/SBA collaboration in Nebraska. The interest level from USDA was considerable, and we began working on the program roll out that very 

day. 

Currently the initiative is only a test phase in Nebraska, but 

we’ve had very good attendance by bank loan officers in the state. 

There have been two programs which have been held, one in 

Omaha and the other in Kearny, Nebraska. The attendance from 

these two events was impressive. Approximately 90 bankers and 

economic development professionals attended. 

This joint training program serves as an important tool because 

it is used to educate and reacquaint loan officers with government 

guaranteed loan programs. There is a significant amount of loan officer turnover and many of the loan programs change. So this lender training is crucial for all parties involved. 

At the end of the event we discuss the technical resources that 

are available throughout the state for the benefit of small businesses. These include all the business assistance programs that 

SBA provides, as well as additional resources that loan officers can 

use in putting a loan package together. 

In Nebraska, this includes 7 SCORE chapters, 7 Small Business 

Development subcenters and a women’s business center with 7 regional locations which are supported by funding through SBA. 

SBA has a good reach in terms of technical assistance with the 

Small Business Development Centers, SCORE and women’s business centers throughout the state. In Nebraska, SBA has a fairly 

large footprint in terms of lenders. We have agreements with approximately 350 banks throughout the state. 

SBA’s fully committed to serving our nation’s underserved markets, including our rural community. In September of this year 

SBA announced a new loan processing initiative designed to spur 

economic growth in rural communities by encouraging rural lenders, including community banks and credit unions, to finance small 

businesses and entrepreneurs with SBA resources. Rural Lender 

Advantage is part of a broader SBA goal to increase access to capital in regions that face unique challenges due to factors including 

population loss and high unemployment rates. This streamlined 

process is part of SBA’s 7[a] loan program and encourages small 

rural lenders to partner with SBA by requiring less paper and offering services on line. 

This process is intended to increase SBA’s market penetration in 

rural areas. It is being tested in Colorado, Montana, South Dakota, 

North Dakota, Utah and Wyoming. The agency expects there will 

be 3,000 to 4,000 loans made in the first year of implementation. 

We are excited about the introduction of this new service and anticipate great results. 

12

American’s rural communities is essential to the nation’s economy, and SBA is committed to encourage entrepreneurs and furthering job growth in rural regions. 

This concludes my testimony. And I look forward to answering 

any questions you may have. Thank you very much. 

[The prepared Statement of Mr. Milobar may be found in the Appendix on page 64.]

ChairmanSHULER. Thank you, Mr. Milobar. 

I appreciate all of your testimony. 

Mr. Shear, I understand that the Office of the Rural Business Investment Program obviously is no longer in existence. But were you 

able to create any cooperation between the two agencies through 

this particular program? Was there any relationship between the 

USDA and Small Business Administration? 

Mr.SHEAR. Based on the work that we’ve begun, it seems like our 

relationship had been developing, as was called for by the legislation creating the program. There were some difficulties identifying 

investment companies, there was a settling at one investment company and there was the rescission of the funding. But it appears 

to us, we were told basically by SBA and USDA that a collaborative relationship was at least developing. 

We know that there was a fairly extensive process for creating 

regulations and rules that would help to govern the program. So 

there seemed to be some collaboration there, and we’ll be following 

up on that. 

ChairmanSHULER. When the SBA and the USDA went through 

their reorganization or reforming—you know, obviously we’ve gone 

through the SBA quite extensively in this Committee. When they 

went that through reprogramming was there any collaboration between the two agencies based on because they’re in some instances 

starting over in a lot of areas, was there any collaboration talked 

about? Here’s what we’d like to do and here’s what we’re going to 

do? But any information that you have so far on your research? 

Mr.SHEAR. At the agency wide level in that so far our interactions have been with SBA headquarters. I was very glad to hear 

of some of the efforts going on, let’s say, in Nebraska and what had 

occurred in Oregon. But at the agency level where we have really 

begun this work, there isn’t evidence that there were collaborative 

working relationships. In fact, it seemed like these MOUs that 

went back a great number of years that no longer are being used 

and there hasn’t been the creation, at least at the agency wide 

level, of anything since. So that’s kind of like preliminary of what 

it looks like to us at this time. 

ChairmanSHULER. And I realize, you know, it’s only been a very 

short time period you’ve been able to do the research. And I thank 

you for the report, the preliminary report that we have. And we 

look forward to, hopefully, hearing the testimony after the report 

is completed and final. 

Mr. Carroll, you know do you find that certain businesses would 

be better off utilizing both the USDA and the SBA technical assistance and lending program as opposed to being just pushed to one 

or the other? 

13

Mr.CARROLL. I think there could be an up side from the collaboration that you’re exploring in this hearing today. And, again, if I 

go back to my earlier remarks, what we’re trying to do through the 

Certified Entrepreneurial Community program is to make the resources more readily available at the grassroots level. And so it is 

in fact not just the loan programs, the portfolio programs, but it 

is the technical assistance and the coaching that’s so important. 

And we think that as a community meets the rigorous standards 

and guidelines to accomplish the CEC designation, that it is going 

to be incumbent on them at the local level to have USDA staff, 

SBA staff, their technical assistance and their programs more readily available to the entrepreneurs in those given communities as 

well as the existing enterprises. 

So, yes, we’re encouraging that collaboration and we think we 

have a platform. Maybe there could be a little test marketing could 

be done through the 12 counties and the Eastern band of the Cherokee Indian that we are currently working with. 

ChairmanSHULER. In the follow up, when a business comes in to 

you and your staff and you’re helping direct loan programs, specifically the SBA or the USDA, how do you help direct them? From 

your experience how do you feel that a particular business is better 

off with SBA or the USDA? 

Mr.CARROLL. Well, the best thing we know to do in a situation 

is to work with a group called the Technology Commercialization 

Center. I’ll summarize it very quickly by saying it’s a program that 

grew out of an effort at Oak Ridge National Labs and in the Knoxville area. We have now brought that to western North Carolina. 

Bob Wilson and Todd Fisher are two very experienced business 

people that are excellent in evaluating business plans. They help 

startup companies develop execution plans. And it’s through that 

high level of technical assistance and their experience, and the fact 

that the TCC, the Technology Commercialization Center is an extension of our Advantage West staff, that we are confident we can 

get people to the right place. 

What we’re advocating here today is that we have to multiple our 

efforts. And where TCC is currently based in the central part of the 

region in Asheville where the Advantage West offices are close by, 

through the CEC program, the Certified Entrepreneurial Community program we could push it out across all 23 counties, starting 

with the 12 counties that are currently involved in the CEC program. 

ChairmanSHULER. Mr. Ziegler, can you explain to the Subcommittee why the permanent disaster program may be necessary 

for agricultural producers? 

Ms.ZIEGLER. Absolutely. I would remind the Committee earlier 

this year Congress passed an ad hoc disaster package, and that included losses that happened in 2005, 2006 and 2007. And that required a significant amount of political will in order to get that 

package approved. And it puts producers in an unfortunate position 

of hoping that if they are a stuck by a disaster, that their neighbor 

is struck by a disaster so that political will builds to pass that disaster package. 

So for three years of disaster USDA just recently announced sign 

up for that program so producers can go into their local USDA ofVerDate 0ct 09 2002 09:55 Dec 20, 2007 Jkt 033615 PO 00000 Frm 00017 Fmt 6633 Sfmt 6633 G:\CLERK SB\HEARINGS\TRANSCRIPTS\39381.TXT LEANN
14

fices and prove their losses and receive some assistance through 

that package. 

So if you had a loss in 2005, today is nearly the end of 2007. 

That’s a long period of time to wait for assistance if you sustain 

some significant losses. Having a standing and a permanent disaster program would eliminate the political will or the political requirement to pass a disaster package, and that’s the number one 

reason that we have pushed so hard is to have that certainly there 

for producers when a disaster would hit. 

ChairmanSHULER. Why do you think there’s been so much resistance of the program? 

Ms.ZIEGLER. Well, disaster happen locally. And unfortunately 

given the budget situation here in Congress, there is not a lot of 

money flowing freely. And when a disaster happens locally some 

folks who aren’t impacted by those disasters aren’t as willing to be 

as helpful as we would like them to be. 

ChairmanSHULER. Thank you. 

Mr. Myhre, from your vantage point can you tell us what lending 

instrument that farmers are asking for when they come into your 

center. What’s the one that’s most asked for? 

Mr.MYHRE. When farmers come into? Probably more than anything, probably the SBA 7[a] loan program. It’s been my experience 

and my knowledge for the business side of that producer. 

My experiences as it relates to USDA loan programs in the state 

of Minnesota has not been very extensive. 

ChairmanSHULER. What discrepancies are you seeing between 

the two? Why is it more readily available for USDA type loans as 

opposed to SBA? 

Mr.MYHRE. Well, in all honesty I think it was communicated earlier by Ms. Ziegler, is its knowledge or recognition of producers or 

farmers of the SBDC being a resource for them to assist them with 

their business and t help them in their loan packaging deals. So 

in all honesty, they don’t make up a very large segment or sector 

of business client for the SBDC network. 

ChairmanSHULER. Mr. Milobar, have you received requests and 

inquiries from farmers who wish to start an agricultural related 

business, and how does the USDA benefit? How does it fit into this 

equation? 

Mr.MILOBAR. Each agency has their own financing programs. 

One of the nice things that I enjoy a very good relationship with 

the business and industry people at the USDA. And in the event 

that I do not think that it fits us, our program, our agency, I will 

call or have the Director of the USDA Rural Development, I will 

have them call. 

I’ve had previous instances when I was in Oregon an individual 

in a rural part of the state asked me, it was a referral from Senator Smith. And we basically, all the agencies stepped forward, 

SBA, USDA and the Oregon Community and Economic Development Department because there’s a variety of things that we could 

each provide, but they were looking for the best possible deal in 

terms of how fast they could get the money, the cost of money and 

overall terms. 

15

So when we get requests, we realize that sometimes we just have 

to go ahead and make that phone call so that the individual, it fits 

the client. 

ChairmanSHULER. Besides a senator asking for the request, how 

often does it happen just from your own judgment standpoint in 

conducting day-to-day business? 

Mr.MILOBAR. I have not tracked. I could not tell you. We get 

quite a few calls from the financial institutions who are calling us. 

We probably get maybe one or two calls a week and there are certain types of ag related businesses that we do and can finance. 

ChairmanSHULER. How do you feel like the coordinated effort is 

between the SBA and the USDA? 

Mr.MILOBAR. As I described in my testimony, I’ve walked across 

the street. I know some of these individuals personally. That’s how 

we typically have done business in Nebraska. So I had a relationship when I was with the SBDC program with the USDA Rural 

Development in a number of other programs. And also with the Department of Economic Development. This was one of those things 

for me to be able to do my job properly, you know, it’s necessary 

for me to go ahead and reach out to other organizations and agencies to go ahead and get it done properly. 

ChairmanSHULER. Do you feel that Nebraska is just an exception 

to the rule or do you feel that there’s a corroborated effort throughout all of the states? 

Mr.MILOBAR. First of all, it depends on leadership and what is 

happening. You know I can address what I see in Nebraska and 

some of my some close colleagues that I’ve worked with in the region. And we’ve done a very good job of trying corroborate and try 

to go ahead and deliver services since we are, you know in my particular region, we’re all rural so to speak. 

ChairmanSHULER. I’d like to recognize Ranking Member Mr. 

Fortenberry for his questions. 

Mr.FORTENBERRY. Thank you, Mr. Chairman. 

I’m just going to walk down the panel right quick and make 

some comments and ask some questions and you all can come back 

to them because I have some comments and questions. 

Mr. Chair, I hope this has been helpful to you today in hearing 

about some of the innovation that’s taking place on the ground 

without the formalization or codification into law or regulation. 

And perhaps that can become an important part of the GAO study 

and report, unpacking some of the initiatives that are occurring 

here to enhance in a more refined or formalized way the collaboration which we’re looking for. So I hope this has been helpful to you 

as well. 

Mr.SHEAR. Did you want me to respond now or go—

Mr.FORTENBERRY. Go ahead, Mr. Shear. 

Mr.SHEAR. Okay. It is very useful for us. In fact, it starts with 

some information that we have asked for and it is kind of trickling 

in from the agencies Washington of trying to see what is going on 

out in the field. And I will just mention one report that we are actually issuing and publicly releasing on Friday that looks at women’s business centers and coordination with small business development centers and the SCORE chapter. 

16

And here what we are looking for is we know that there are certain things that these resource partners do. We know that there is 

certain things that go on in maybe a less formal basis, kind of out 

across the country. And what we are looking for in that case, which 

I think is relevant here, is to what degree can SBA and Rural Development as agencies use to try to kind of bring those practices 

that are efficient, that can improve services and how to create a 

structure where they can be rolled out more across the country. 

Mr.FORTENBERRY. Thank you. 

Mr. Carroll, I am very impressed with your testimony and appreciate your initiatives on behalf of the people of western North Carolina. Who funds Advantage West? And how many counties are involved when you get the Certified Entrepreneurial Community designation, is that a city, is that a county? And then if you could just 

briefly walk through the checklist again of key criteria in which a 

community meets that certification? 

Mr.CARROLL. Advantage West is a public/private partnership. We 

receive a state grant in aid. We also receive support through charitable foundations that are focused on economic development and 

improving the economic well being of our communities. Private contributions are made to Advantage West and we’ve also managed a 

number of Federal grant projects for our 23 county area. 

The Certified Entrepreneurial Community program checklist, the 

key criteria involved in it is better access to capital for entrepreneurs and startup enterprises. Again, improving the business 

climate at the same time for existing companies. 

There is a component focused on community engagement. Community engagement is not only to reach the general public at the 

adult level, but it’s also to drive down entrepreneurial training and 

concepts in the school systems with the communities that are involved. 

There is a telecom broadband component for the Certified Entrepreneurial Community program. We’ve made great strides in our 

region with middle mile telecom broadband infrastructure. CEC 

communities following the checklist are required to develop a plan 

and pursue funding for last mile deployment. Keep in mind most 

of our region is very rural. 

And then the other thing that I mentioned earlier in my testimony is that we are sincere and earnest about trying to improve 

the permitting process for small business people at the local level. 

There has to be a one stop shop of some form or shape documented 

and implemented for a community to receive the CEC designation. 

Mr.FORTENBERRY. When you refer to community, you refer to 

small town, city or county or all the above? 

Mr.CARROLL. Yes, sir. And in response to your other question, 

the CEC designation could be a municipality. For example, we’re 

in discussions right now with the town of Black Mountain, which 

is a small town outside of Asheville. It also can be at the country 

level. And, again, we have 12 counties region wide that are participating in the program. 

As I mentioned earlier, it also can be a hybrid. In our case, the 

eastern band of the Cherokee Indian, their Qualla boundary, as 

Congressman Shuler knows, touches into several countries. It 

crosses some county boundaries. 

17

Mr.FORTENBERRY. So your criteria is basically four fold: It’s access to capital; education, technical assistance particularly as it 

takes the form of broadband access, and; reducing governmental 

regulatory barriers? 

Mr.CARROLL. And the only thing I would add to that is the citizen engagement plan, including reaching young people in the 

school systems. 

Mr.FORTENBERRY. That’s what I meant by education, but yes. 

Thank you very much. 

Ms. Ziegler, thank you for your testimony as well. By the way, 

I’m on the House Agriculture Committee and I offered an amendment that I think would be pleasing to you as establishing a preference in USDA value added grant program for small and medium 

sized farmers to address the very issue you talked about in terms 

of ownership at the lowest possible economic level to ensure there’s 

vibrancy in rural communities and not too much of a concentration 

of the land and wealth and productive means, inputs in the hands 

of a few which are then exported out of the community generally. 

So I appreciate that. 

The other comment I wanted to make regarding local foods, I 

think you’re exactly right. In terms of rural entrepreneurship this 

is an undertaking that can provide tremendous benefits both in 

terms of added value to farmers as well as the social impacts of the 

reconnection of the farm to the family, and then improve nutritional outcomes. So I think you are dead on there. And we actually 

hosted a conference with the University of Nebraska this past August to bring together all of the participants in this seminal growing, I won’t call it industry, but movement if you will. And I think 

you are right on there to begin to expose, unpack, teach, educate 

our country about the potential opportunities there. So thank you. 

Mr. Myhre, you had mentioned regarding the association, are you 

finding some resistance to being called upon more aggressively by 

either USDA or SBA in terms of providing that technical level of 

assistance or is it simply just a process by which we continue to 

develop the good relationships that we are hearing across the panel 

here? 

Mr.MYHRE. On the macro level, yes. On the micro level within 

individual centers with local USDA staff personnel, you do find 

some really good and outstanding relationships. But creating those 

relationships on the state level or even the national level I think, 

you know, we have encountered certain barriers. 

Mr.FORTENBERRY. What would be the reasons for that, or is the 

association not yet positioned to coordinate aggressively with SBA/

USDA? Is it simply the development of this has not yet just come 

to pass? I mean, is it just presenting opportunities here or are 

there legal, regulatory impediments to better coordinated resources? 

Mr.MYHRE. Well, the association and its board members actually 

just convened and put together its strategic plan for the next five 

years. And as part of that plan, it is in working with other federal 

agencies who do compliment what it is that the SBDC national network does. So we’ll be looking at other opportunities and how we 

can further collaborate with the USDA and working with CongressVerDate 0ct 09 2002 09:55 Dec 20, 2007 Jkt 033615 PO 00000 Frm 00021 Fmt 6633 Sfmt 6633 G:\CLERK SB\HEARINGS\TRANSCRIPTS\39381.TXT LEANN
18

man Peterson’s office to assure that SBDCs are then recognized 

within the next Farm Bill reauthorization. 

So we do have certain strategies to certainly do that. 

And we’ve also through the leadership of SBA and its economic 

development office and leadership of the association have sat down 

with OMB, who has basically encouraged or strongly encouraged 

SBA to support SBDCs working with other Federal agencies. 

Mr.FORTENBERRY. Thank you. 

Mr. Milobar, welcome again. And appreciate your testimony. 

I was very encouraged by the initiative you have undertaken, but 

very saddened by the fact that they are not in the First District 

of Nebraska. So I invite you to do what you’ve done in Omaha and 

Kearny and Lincoln, South Sioux City, Auburn or anywhere else 

we can duplicate this. I am very impressed by the outcome of what 

you talked about. And I think you hit on the right point as well 

as you, Mr. Myhre, about leadership being a key in how we duplicate what is happening on a micro level perhaps to a macros level, 

whether that takes the formalization of a codification in law or 

some new spirit of collaboration is less formal; I don’t know. But 

I think your initiative in Nebraska, particularly, is one that could 

or should be duplicated nationwide or can serve as a model or prototype, particularly given the outcome that you suggested of 30 percent advancement in the number of applications in a very short period of time. And that is what we would really like to see. So thank 

you for doing that. 

Is there any opportunity that you can to formalize what you’ve 

done on an informal basis so that it can be shared with the rest 

of the nation in terms of other SBA Administrators and USDA 

Rural Development personnel? 

Mr.MILOBAR. First of all, we are coming to Lincoln. Probably be 

sometime early this winter. As you know, winter is coming to Nebraska very shortly and we have to pick and choose where we are 

going to go ahead and deliver programs so we do not get snowed 

in. 

But regarding the program, we do share best practices. I know 

in Region 10, which is Alaska, Oregon, Washington and Idaho, they 

have looked at these practices that we have had. And as a matter 

of fact, with the congressional—I should say with the boundaries 

for the Portland District office, we have already gone into the state 

of Washington to deliver this exactly same program. 

To date in the last two years, they have had 760 lenders that 

they have touched. USDA asked very shortly after I had left Portland to go ahead and go into another state. 

So the word is spreading. It is a best practice. It is one of those 

things in rural areas that we see that it does work and increases 

our numbers. 

This co-marketing is very, very important. There are advantages 

to both of our programs. And the lenders are a very important contact when that entrepreneur, that business owner comes in looking 

for financing. 

Mr.FORTENBERRY. Do you think it would be necessary for Congress again to codify that best practice in some way, encourage it 

in another way that we may not have thought of yet? 

19

Mr.MILOBAR. It was one of the things, as I said, this initiative 

I have tried—I may tell you something tomorrow or next month 

and we find another initiative that is that much better, and it is 

an evolving process. 

I will tell you, the first year in Oregon we had 400 lenders, the 

second year we had only 350 attend. 

One of the other things that I see with the age of the commercial 

loan officers, that they are half my age and I am somewhat concerned. I am constantly retraining these lenders. So what I do 

today, you know, may be quite different tomorrow. 

Mr.FORTENBERRY. Well, I think you have struck on a key idea, 

just in terms of sharing information about best practices. And, Mr. 

Shear, I know you are listening intently. And I think that would 

be a good one to potentially unpack as we look at new initiatives 

to more formalize this collaboration that is currently at a macro 

level. 

So thank you, Mr. Chairman. 

ChairmanSHULER. I would like to follow up with the other question. We had the Administrator in some months ago. And we had 

talked about sustainable renewable energies when it comes to with 

the SBA and how they have been able to put a program. And that, 

some due to reorganization, they had really not gotten to the point 

where they are talking about the ethanol plants or the biodiesel 

plants, how that is impacted in SBA. Has anyone from the USDA 

had a relationship with, whether it be a biodiesel, ethanol plant for 

sustainable renewable energies and having to be able to get those 

types of loans? Has anyone had any relationship with any business 

that had a difficulty because of the SBA not truly having that organization quite complete yet? 

Ms.ZIEGLER. I believe that some of our members take advantage 

of the value added grant program which is administered by USDA 

and the section 9006, which is included in the Farm Bill. Those are 

two programs geared towards renewable energy that are administered by the Department of Agriculture. And I do not know that 

is because of an absence of SBA being—or having a role in that industry or that area, but they are two programs that I know producers do use and take advantage of for renewable energy projects. 

ChairmanSHULER. It only seems that if we look at some of our 

smaller businesses, smaller producer that the ethanol, the biodiesel 

producing as alternative energies certainly in my area, I mean 

sometimes in our mountains we have what we call vertical water 

culture. It is hard to plant things up on the side of the mountains, 

but we have been producing Blue Ridge biodiesels as a perfect example. They have been able to produce working with our local 

farmers, be able to produce the vegetables that they are utilizing 

in their biodiesel plant. 

You know, Mr. Shear, I think maybe that is a look at an ongoing 

business that seems to me there is a substantial area of growth 

that we can start this collaboration between the USDA and our 

SBA to be able to work together. We can have the funding and, you 

know, truly change the dynamics of our energy policy. Because it 

is going to start with our small businesses. I mean, we can wait 

on the large corporations as long as we want to, but it really starts 

with the small businesses and the entrepreneurship and the spirit 

20

which they have and willing to make a difference and make it a 

change. So that may be one area that we can actually truly plug 

in to say that here is an area that we have not thought about. SBA 

is just now putting together some of their programs that they had 

the testimony some months ago. Maybe it will put that collaborative coordination together. 

Mr. Shear? 

Mr.SHEAR. And I thank you for the suggestion. Because we are 

looking for certain opportunities that would kind of let us look at 

what are the possibilities that might be out there where collaboration could lead to a better outcome. And I think it might be consistent with some of the SBA’s initiatives in reaching out to underserved markets. 

ChairmanSHULER. Ms. Ziegler, the farm credit limits typical is 

limited to on the farm lending. Should the SBA be prepared to assist farmers who wish to engage off the farm business interests? 

Ms.ZIEGLER. I think absolutely. As I mentioned earlier, producers 

are diversifying their income sources and we have producers that 

are wanting to start a grass feed business, who want to sell soy 

wax candles or who have a tractor repair company that they start 

to supplement their income. And some of those types of projects are 

not always traditional or have traditional or historic types of lending. And I think that it is important to have as many options as 

possible for investment and potential credit sources throughout 

rural America. 

ChairmanSHULER. Mr. Milobar, obviously we talked about sustainable renewable energies. Would it be appropriate through the 

SBA program to promote different renewable energy types, I mean 

once that’s in place and have you had any conversation with the 

Administration about renewable energies? 

Mr.MILOBAR. No, I haven’t. That has not come up on the District 

level, and that I would have to go ahead and get back to you on. 

ChairmanSHULER. Well, no one has come in the office and talked 

about renewable energies outside of in the farming area? 

Mr.MILOBAR. Not that I can recall. Not in the last six months 

that I can recall. 

Mr.MYHRE. I can comment on that, Mr. Chair. 

In Minnesota we have had both producers who have come to the 

SBDC seeking to have a small business to help supplement their 

family income, and we have worked with many of those types of 

businesses very successfully. 

As it relates to SBA funding and their 504 loan program, we 

have certainly had a lot of alternative bioenergy biodiesel plants 

come to the SBDC seeking both USDA grants and helping them research and begin those facilities, and then utilizing 504 for the actual facility purchases themselves. 

ChairmanSHULER. Terrific. 

Yes, sir? 

Mr.FORTENBERRY. Let me follow up on that line as well. 

One of the largest wholesale structural changes that is happening in rural communities is the advent of agricultural energy 

production, the wedding of agriculture and energy policy is potentially very beneficial in meeting multiple objectives. 

21

First of all, diversifying our energy portfolio clearly in our country. 

Secondly, with clean renewable resources meeting environmental 

stewardship goals, and; 

Third is increasing income for farmers. 

So as this continues to unfold, as this trend becomes more aggressively emerging, particularly given the market opportunities 

that are there but also some of the underwriting that should we 

have a Farm Bill shortly is going to occur with new initiatives in 

this area as we develop even newer means of means of biomass and 

cellulosic materials, it is going to create the potential for a lot of 

different spin-off activities as it related to that. 

This is a market change in rural America. And so I think the line 

of questioning actually suggests something to you all to be into as 

you do your normalize outreach in terms of market stimulation or 

thinking through market opportunities where you could potentially 

better serve. That one is tremendous. 

I can give you a very small example. I have a chiropractor entrepreneur who wants to begin to build his back support mechanism 

through a corn based—it is not plastics, but corn based material 

versus having it shipped overseas to manufacturers using traditional hydrocarbon. And so the opportunity there, again as we look 

at the diversification of uses of traditional grain stocks, is going to 

be extraordinary for our rural communities. 

And I could tell you story after story about what we are doing. 

Mr. Milobar, I am sure you know in Nebraska in terms of trying 

to position the state to lead this renaissance of rural—the beginning of the renewal resource, renewable energy market that leads 

the way in our country. 

But it is one of those wholesale structural changes coming that 

is in rural America currently. It is also going to have a lot of spin 

off effects that will be potentially—that your programs will be potentially called upon to help and fund. 

ChairmanSHULER. Any more questions? 

I think today we have really made a really good stop for the GAO 

to finish their report, to continue. You know, it is one thing to look 

at it on the Washington level of how the two industries, agencies 

can work together. But it is even more important to recognize how 

on the ground level, how, what the impact the USDA and the SBA 

have been able to work together in some ways and in ways that 

there is void, and that we need to fill that gap to make sure that 

rural America has the resources, has the capital. 

And I want to commend all of you for your comments today, your 

testimony. And certainly Mr. Fortenberry for his true leadership to 

bringing this to the Committee’s attention and truly putting forth 

the effort of getting this hearing being heard today. His leadership 

has been very strong. 

And as you can probably tell, that this is a very bipartisan Committee, both our Subcommittee, obviously, and the Committee as a 

whole. Very bipartisan and we truly want to provide for economic 

development in the rural communities to ensure that the small 

business have the advantages. Because that is the backbone behind 

our economy in America. And we truly create and covet that spirit 

of entrepreneurship. 

22

So I want to commend all of you. 

I look forward to seeing the report. And I hope that the GAO will 

take the testimony today and continue to look on the ground level 

where the impact is truly needed most in so many different ways. 

I ask unanimous consent that the members have five days to 

submit statements and supporting materials to this record. Without objection, so ordered. 

This hearing is now adjourned. Thank you all. 

[Whereupon, at 11:10 a.m. the Subcommittee was adjourned.]

23


39381.001
24


39381.002
25


39381.003
26


39381.004
27


39381.005
28


39381.006
29


39381.007
30


39381.008
31


39381.009
32


39381.010
33


39381.011
34


39381.012
35


39381.013
36


39381.014
37


39381.015
38


39381.016
39


39381.017
40


39381.018
41


39381.023
42


39381.024
43


39381.025
44


39381.026
45


39381.019
46


39381.020
47


39381.021
48


39381.022
49


39381.027
50


39381.028
51


39381.029
52


39381.030
53


39381.031
54


39381.032
55


39381.033
56


39381.034
57


39381.035
58


39381.036
59


39381.037
60


39381.038
61


39381.039
62


39381.040
63


39381.041
64


39381.042
65


39381.043
66

Æ


39381.044