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36–111 PDF 2007

FULL COMMITTEE MARKUP ON LEGISLATION

AFFECTING SBA’S TRADE AND MICROLOAN

PROGRAMS: H.R. 2992 AND H.R. 3020

COMMITTEE ON SMALL BUSINESS 

UNITED STATES HOUSE OF 

REPRESENTATIVES

ONE HUNDRED TENTH CONGRESS

FIRST SESSION

JULY 19, 2007

Serial Number 110-37

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 

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 

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

STANDING SUBCOMMITTEES 

Subcommittee on Finance and Tax

MELISSA BEAN, Illinois, Chairwoman 

RAUL GRIJALVA, Arizona 

MICHAEL MICHAUD, Maine 

BRAD ELLSWORTH, Indiana 

HANK JOHNSON, Georgia 

JOE SESTAK, Pennsylvania 

DEAN HELLER, Nevada, Ranking 

BILL SHUSTER, Pennsylvania 

STEVE KING, Iowa 

VERN BUCHANAN, Florida 

JIM JORDAN, Ohio

Subcommittee on Contracting and Technology

BRUCE BRALEY, IOWA, Chairman 

HENRY CUELLAR, Texas 

GWEN MOORE, Wisconsin 

YVETTE CLARKE, New York 

JOE SESTAK, Pennsylvania 

DAVID DAVIS, Tennessee, Ranking 

ROSCOE BARTLETT, Maryland 

SAM GRAVES, Missouri 

TODD AKIN, Missouri 

MARY FALLIN, Oklahoma

(II) 

Subcommittee on Regulations, Health Care and Trade

CHARLES GONZA ́ LEZ, Texas, Chairman 

RICK LARSEN, Washington 

DAN LIPINSKI, Illinois 

MELISSA BEAN, Illinois 

GWEN MOORE, Wisconsin 

JASON ALTMIRE, Pennsylvania 

JOE SESTAK, Pennsylvania 

LYNN WESTMORELAND, Georgia, Ranking 

BILL SHUSTER, Pennsylvania 

STEVE KING, Iowa 

MARILYN MUSGRAVE, Colorado 

MARY FALLIN, Oklahoma 

VERN BUCHANAN, Florida 

JIM JORDAN, Ohio

Subcommittee on Urban and 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

Subcommittee on Investigations and Oversight

JASON ALTMIRE, PENNSYLVANIA, Chairman 

CHARLIE GONZA ́ LEZ, Texas 

RAUL GRIJALVA, Arizona 

LOUIE GOHMERT, Texas, Ranking 

LYNN WESTMORELAND, Georgia

(III) 

C O N T E N T S 

OPENING STATEMENTS 

Page

Vela ́zquez, Hon. Nydia M. ....................................................................................... 1

Chabot, Hon. Steve .................................................................................................. 2

Sestak, Hon. Joe ...................................................................................................... 4

APPENDIX 

Prepared Statements: 

Vela ́zquez, Hon. Nydia M. ....................................................................................... 9

Chabot, Hon. Steve .................................................................................................. 11

(V) 

(1)

FULL COMMITTEE MARKUP ON LEGISLATION 

AFFECTING SBA TRADE AND MICROLOAN 

PROGRAMS: H.R. 2992 AND H.R. 3020

Thursday, July 19, 2007

U.S. HOUSE OF REPRESENTATIVES, 

COMMITTEE ON SMALL BUSINESS, 

Washington, DC. 

The Committee met, pursuant to call, at 10:03 a.m., inRoom 

2360, Rayburn House Office Building, Hon. Nydia M. Vela ́zquez 

[Chairwoman of the Committee] presiding. 

Present: Representatives Vela ́zquez, Shuler, Gonza ́lez, Larsen, 

Michaud, Cuellar, Lipinski, Altmire, Braley, Clarke, Johnson, 

Sestak, Chabot, Bartlett, Akin, Davis, Fallin, Buchanan, and Jordan. 

OPENING STATEMENT OF CHAIRWOMAN VELA ́ ZQUEZ 

Chairwoman VELA ́ ZQUEZ. Good morning, everyone. I call this session to order. And let me just say that the first order of business 

this morning was supposed to be voting on a resolution to issue a 

subpoena to the Veterans Affairs Department. But as of 5 minutes 

ago, we are in possession of a letter confirming the attendance of 

Robert Henke, Assistant Secretary for Management of the Department of Veterans Affairs, as a witness for the Committee’s hearing 

on August 2nd, 2007. And I would like to thank Ranking Member 

Chabot and his staff, because I know that you were in conversation 

with the Department of Veterans Affairs. With that, I am pleased 

to call this morning’s markup to order. Today’s markup addresses 

some very important issues for small firms, SBA’s International 

Trade programs and its Microloan Program. These programs have 

proved themselves to be beneficial for small businesses. International trade is a key part of our economic future and competition 

in the global marketplace will only increase in the years to come. 

Small businesses that generate and develop new products have 

shown that they can lead the way in building entire industries, if 

they are provided with basic assistance at the start. 

To a limited degree, SBA’s trade initiatives have helped, but 

more needs to be done. Another equally important role for the SBA 

is to provide direction and resources for those who are looking to 

start and grow their firms. In cases where there is reason to believe an entrepreneur could succeed, but lacks the credit history or 

training, the Microloan Program has found a way to turn these aspiring business owners into employers. To accomplish these missions, the Agency has specific programs that have been successful, 

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but they have not been modernized to keep up with the new economic challenges. 

With that in mind, we are marking up two bills that address 

some small, but frustrating barriers that have prevented small 

businesses from fully utilizing these SBA programs. By doing so, 

we will give entrepreneurs the tools they need to succeed, without 

unduly burdening taxpayers. The bills we consider today increase 

the capacity of the SBA to provide specific, useful solutions to small 

businesses that want to start up or have become sophisticated 

enough that they want to compete overseas. What these bills have 

in common is that they both address the need to update the SBA’s 

programs, many of which have helped build a solid foundation for 

our future economic security. 

The changes we will make will help small firms overcome the 

current challenges that their businesses face. Again, I want to give 

credit to all my colleagues on both sides of the aisle for working 

together to address these issues. Small businesses deserve our effort to listen their problems and remove barriers. Such cooperation 

is good for all of us, because it is these businesses that are the 

most innovative, that create new jobs and produce half our income. 

And they deserve our best efforts. The progress we have made in 

addressing the needs of small businesses and in moving a significant number of bills introduced by both sides of the aisle is a testament to the Committee’s hard work and cooperation. These firms 

continue to broadly support our work and do so again today. I 

would like to specifically thank our ranking member, Mr. Chabot 

and his staff for the Microloan Amendments and Modernization Act 

that he introduced, and which I strongly support. 

Also, thanks to Mr. Sestak, our vice chairman, who, with Mr. 

Hall from New York, has introduced The SBA Trade Programs Act 

of 2007. But as significant as the work we have done to date is, 

there is still more to do. I look forward to our continuing collaboration to do what best serves our Nation’s small businesses.

Chairwoman VELA ́ ZQUEZ. I would now like to yield to Ranking 

Member Chabot for his opening remarks. 

OPENING STATEMENT OF MR. CHABOT 

Mr. CHABOT. Thank you very much, Madam Chair, and thank 

you for holding this markup. As I mentioned previously, this Committee had not carefully reexamined the Small Business Administration’s Microloan and international trade programs in some time. 

Ensuring that America’s exporters and smallest businesses have 

the resources that they need from the SBA constitutes a critical 

function of this Committee. And I would like to thank you for holding this markup and much of the work that was done in making 

this possible. 

Mr. CHABOT. So thank you for that. The first bill, as you mentioned, that we will be marking up here today, let me get that 

straight, my notes straight here, is H.R. 2992. The bill recognizes 

the need for the SBA to increase its focus on the vital role that 

small businesses are playing to reduce America’s trade deficit. 

There is no doubt that small businesses, especially manufacturers 

3

and providers of services, are often overlooked when it comes to the 

development and implementation of trade policy. 

By requiring the SBA to expand its trade outreach initiatives, 

H.R. 2992 will assist America’s small businesses to increase their 

competitiveness in the global economy. I also understand that the 

chairwoman has an amendment in the nature of a substitute to 

this bill that I fully support, because it ensures that the administrator is properly coordinating activities with other agencies that 

have trade responsibilities, and avoids even the possibility of running afoul of our obligation under international trade agreements. 

I would like to thank you in your efforts to work in a bipartisan 

manner, as I mentioned before. 

And the second bill, which had previously been the first bill, but 

we reversed the order, the second bill that we are considering today 

is H.R. 3020, the Microloan Amendments and Modernization Act. 

A number of us introduced this bill, myself, along with the Chair 

and Representatives Clarke and Cuellar and Lipinski, to make the 

Microloan Program more efficient. Given the testimony that the 

Committee had heard, the Microloan Program certainly represents 

value for the money. The Microloan Program is a far more cost-effective mechanism, in my view, for producing jobs than, for example, building roads at taxpayer expense in the Tongas National 

Forest. Although modest in size, the bill accomplishes a great deal 

for the Microloan borrowers and intermediaries, the institutions 

that provide the loans and technical assistance. Microlenders exist 

mainly because normal commercial lending institutions do not provide access to credit for those who are highly credit risky. 

One way to improve that is to have borrowers’ histories pass 

along to the credit bureaus. Although I don’t wish to offer an 

amendment at this time, I think it may be useful to consider, as 

the bill moves forward, to designate an intermediary in each Federal region to handle the transmission of payment history to the 

credit bureaus. The bill also enables the intermediaries to determine the length of credit that will be made available to the borrowers. Given the expertise of the intermediaries, it makes abundant sense for the determinations on the length of loans to rest 

with the intermediaries and borrowers. 

I would emphasize that this change has no impact on the loan 

obligations of the intermediaries to the SBA, so the change involves 

no risk to the Federal Treasury. H.R. 3020 also raises the level of 

the average loan size in an intermediary’s portfolio from $7,500 to 

$10,000. This level has not been changed since 1992, and an adjustment is I believe appropriate to take into account inflation in 

the intervening 15 years. The SBA rightly focuses on the number 

of small businesses that receive help from its entrepreneurial training partners. However, ensuring that only those individuals with 

the right aptitude start small business is as important as the provision of technical assistance to businesses that have been in existence for years. The bill recognizes the importance of this training, 

and increases the amount of pre-loan training that intermediaries 

may provide. H.R. 3020 also provides for an increase in the amount 

of technical assistance training that intermediaries can contract for 

from other sources. As the Committee heard in testimony from Professor Servin of the New School University, this will enable interVerDate 0ct 09 2002 17:04 Jan 25, 2008 Jkt 033615 PO 00000 Frm 00009 Fmt 6633 Sfmt 6633 G:\CLERK SB\HEARINGS\TRANSCRIPTS\36111.TXT LEANN
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mediaries to focus on those services that they are best able to perform. Finally, the Committee heard from two different witnesses 

that the cap on interest rates should be removed. We also heard 

that a rise in interest rates will enable intermediaries to recoup 

more of their costs, thereby reducing the amount of funds that they 

must raise from other sources. 

I would ask the chairwoman to work with me, as the bill moves 

through the legislative process, to ensure that intermediaries have 

maximum flexibility to operate their loan programs with the elimination of the interest rate cap. And I know that the chairwoman 

again will be introducing an amendment in the nature of a substitute on this bill that simply adds the statutory authorization for 

the PRIME program to the Small Business Act, and solely within 

the jurisdiction of the Committee. I fully support this amendment 

of the Chair’s as well in the nature of a substitute, and I urge my 

colleagues to support both these bills. And I yield back the balance 

of my time.

Chairwoman VELA ́ ZQUEZ. Thank you. And I will take that as an 

opening remark and explanation of your bill. Okay. So are there 

any other members that wish to be recognized for the purpose of 

opening remarks? Well, the first order of business is to consider the 

SBA Trade Programs Act of 2007, H.R. 2992. Before recognizing 

the sponsor of this legislation, Mr. Sestak, let me commend him 

and the other sponsor, Mr. Hall of New York, for their timely bill. 

To overcome small exporter obstacles, this proposal increases trade 

finance resources and the size of international trade loans through 

the enactment of the Trade Adjustment Assistance Program, businesses dislocated due to globalization will be better able to draw 

on assistance that will help ensure their competitiveness. 

As trade policies are negotiated and implemented, the legislation 

requires the agency to work with Federal and international organizations to represent small business interests. Finally, it requires an 

annual trade strategy, outlining the agency’s efforts to boost small 

businesses’ shares in both domestic and foreign markets. By enacting this bill, the SBA will be more prepared to assist the business 

community in the international marketplace. And definitely with 

this bill, the small business community, and mainly small business 

exporters and importers, will have a voice at the table. So with 

that, I urge support of this legislation, and I recognize Mr. Sestak 

for a statement on explanation of H.R. 2992. 

OPENING STATEMENT OF MR. SESTAK 

Mr. SESTAK. Thank you, Madam Chair. I appreciate your help, 

and Ranking Member Chabot. I appreciate the opportunity to 

speak about The SBA Trade Programs Act of 2007, and am proud 

to join my colleague, Mr. Hall, as an original cosponsor. This recent 

May, I actually held an economic summit in my district. It was the 

second of three. The third will be next Monday with you, Madam 

Chair. It was done in partnership with the U.S. Export Assistance 

Center in Philadelphia. The day’s program was actually aimed at 

providing business owners more information at the Federal, the 

State and the local level with the services and resources that are 

available to them. In particular, however, we focused on how to 

5

help local small businesses export their products to foreign markets, as well as to how firms interested in expanding their businesses might obtain better trade financing. I was taken by the 

number of small business owners that were interested in expanding their business in overseas for two reasons. One, we have lost 

607 small businesses in the last 3 years in my district, and so they 

are looking for opportunities. And second, it is probably no surprise 

to others here, but 97 percent of all exporters are small business. 

And they have contributed greatly to the growth of exports. And I 

would like to do the same for my district and throughout the Nation, to have it be enhanced even more. There is a lot of promise 

in the economic impact of trade among these small businesses. I 

want to give just one example in my hometown. With the help of 

the Philadelphia Export Assistance Center, Nielsen-Kellerman, a 

small business that designs and manufactures waterproof electronics for use in the rowing industry worked with trade specialists 

to expand globally, and since 2001 has actually signed nine dealer 

agreements in Germany, and successfully sold its products 

throughout the world, from Southeast Asia to Central America and 

the Middle East. The firm continues to use the Export Assistance 

Center for business counseling and guidance to further expand. 

However, I saw and heard during my district’s economic summit 

that small exporters, small business exporters also face numerous 

challenges that were already laid out well, such as higher transaction costs. And they assumed greater risk than larger exporters 

and experienced burdensome custom requirements which limit 

their access to these foreign markets and actually impede small 

firms from maximizing their full potential. That is why I am a 

strong supporter, and ask everyone here to also be one, of The SBA 

Trade Programs Act of 2007. I believe that this bill will help, 

among many other myriad of programs to enhance the global competitiveness of American small business exporters. The legislation 

not only addresses the need to focus on assisting in overseas trading by calling for an annual trade strategy to increase exports, but 

it also enhances the level of export assistance by increasing access 

to capital, which at times is all small businesses really want, and 

establishing programs for trade adjustment assistance to help 

small firms adjust to the ever-changing dynamic global conditions 

and demands we see every day. 

Therefore, I believe that this Trade Act, the SBA Trade Act, is 

a comprehensive legislation that is critical to the economic security 

of our Nation and its future. And I urge everyone, all of my colleagues to support it. Thank you, Madam Chair.

Chairwoman VELA ́ ZQUEZ. Are there any other members that wish 

to be recognized on the SBA Trade Programs Act of 2007? The 

Committee now moves to consideration of the bill, H.R. 2992. The 

clerk will report the title of the bill.

The CLERK. H.R. 2992, a bill to amend the Small Business Act 

to improve trade programs, and for other purposes.

Chairwoman VELA ́ ZQUEZ. I ask unanimous consent that the 

Chairwoman’s amendment in the nature of a substitute for H.R. 

6

2992 be adopted, and that it be used as the base text for purposes 

of any further amendments. Hearing no objection to the request, 

the request is agreed to, and the amendment in the nature of the 

substitute is adopted and will serve as the base text during our 

consideration of other amendments. I ask unanimous consent that 

the bill in its entirety be open for amendments at this time. Does 

any member seek recognition for the purpose of offering an amendment? 

Mr. LARSEN. Madam Chairwoman, I have an amendment at the 

desk.

Chairwoman VELA ́ ZQUEZ. I recognize the gentleman from Washington. 

Mr. LARSEN. As the amendment is distributed, if it is distributed, 

I first want to thank you for holding the markup on this bill, and 

thank Mr. Sestak and Mr. Hall for their efforts in putting this together. This legislation takes a strong step in developing an increased role in the SBA’s Office of International Trade. I want to 

thank you for including a provision in the manager’s amendment 

as well that gives direction to OIT to develop a specific strategy to 

increase small business export opportunities to the Asia-Pacific region. In 2006, 60 percent of U.S. exports went to countries that are 

part of the Asia-Pacific Economic Cooperation forum, or APEC. 

That number is growing. Japan, China, South Korea and Singapore 

currently rank in the top 10 of countries that we export to. I don’t 

believe that any overseas country presents more of a long term export opportunity for small businesses than China. With 1.3 billion 

people and rapidly growing middle class, we need to help our small 

businesses get their foot in the door of this market. 

China, certainly, has its foot in our door. Now with regards to 

the amendment itself, I appreciate the opportunity to present this 

amendment. And after speaking briefly on it, I will ask for unanimous consent to withdraw the amendment. 

Chairwoman VELA ́ ZQUEZ. Without objection, the amendment is 

withdrawn. 

Mr. LARSEN. If I may speak on it first. 

Chairwoman VELA ́ ZQUEZ. Sure. 

Mr. LARSEN. Thanks. Nice try, though. This amendment is for 

grants for Chinese business education programs. So building on a 

theme I touched on, this amendment would create a Chinese business education grant program run by the SBA. My intention is to 

find ways outside the traditional box of the SBA to increase opportunities for small business owners. My amendment would authorize 

a grant program under the SBA to help graduate, undergraduate, 

and community colleges to set up to China market courses. These 

courses would be designed to teach students and professionals how 

to do business in the Chinese economy. 

This would provide more opportunities for local entrepreneurs to 

take a course on the Chinese market, and give future small business owners the learning environment to understand the technical 

process for making small business exports work in China. 

I believe the SBA is uniquely suited to distribute the grants, as 

they understand what types of curriculum would be on the right 

track and what types of curriculum would not be on the right 

7

track. So with that, Madam Chair, I appreciate the opportunity to 

offer the amendment, but I do ask unanimous consent to withdraw 

the amendment. 

Chairwoman VELA ́ ZQUEZ. Without objection. 

Mr. LARSEN. Thank you very much. And with that I yield back 

the balance of my time. 

Chairwoman VELA ́ ZQUEZ. Thank you. I want to thank the gentleman for raising this important matter and with working with 

the Committee on this issue. Increasing exports to the Asia-Pacific 

regions of the world is essential to reducing our nation’s trade deficit. And SBA can play an important role in assisting small firms 

gain access to this emerging market. And I believe that the language you crafted and that we added to the legislation will 

strengthen this effort. So I look forward to working with the gentleman on this issue, and I thank you for your work. And I now 

ask if there is any other member who wished to be recognized for 

the purpose of offering an amendment? Seeing no further amendments, the question is on passing and reporting the bill H.R. 2992 

as amended. All those in favor say aye. Aye. All those opposed say, 

no. The ayes have it, and H.R. 2992 as amended is adopted and 

ordered reported.

So now we are going to move to H.R. 3020, The Microloan 

Amendment and Organization Act, introduced by the Committee’s 

Ranking Member, Mr. Chabot. And he explained basically the bill. 

If you want to add some other comments. 

Mr. CHABOT. Yeah. If the gentlelady would yield, I think we pretty much in-depth explained in our opening what it was, so I think 

it would be superfluous. 

Chairwoman VELA ́ ZQUEZ. There is one issue I would like to mention, and that is I will be offering an amendment in the nature of 

a substitute that will add into the bill the transfer of the PRIME 

program into the Small Business Act. The PRIME program has 

been administered by the SBA since its inception, and it is best for 

our oversight purposes that it be placed in the Small Business Act.

Chairwoman VELA ́ ZQUEZ. Mr. Chabot has agreed to this amendment, and the Financial Services Committee has agreed to this 

transfer. Again, I commend Mr. Chabot for this bill, and I strongly 

urge support of this legislation. Are there any other members that 

wish to be recognized? The Committee now moves to the consideration of the bill, H.R. 3020. The clerk will report the title of the 

bill. 

The CLERK. H.R. 3020, a bill to amend the Small Business Act 

to improve the Microloan Program, and for other purposes.

Chairwoman VELA ́ ZQUEZ. I ask unanimous consent that the 

Chairwoman’s amendment in the nature of a substitute for H.R. 

3020 be adopted, and that it be used as a base text for purposes 

of any further amendments. Without objection. Hearing no objection, the request is agreed to, and the amendment in the nature 

of a substitute is adopted and will serve as the base text during 

our consideration of other amendments. I ask unanimous consent 

that the bill in its entirety be opened for amendments at this time. 

8

Does any member seek recognition for the purpose of offering an 

amendment? Seeing no further amendments, the question is on 

passing and reporting the bill, H.R. 3020, as amended. All those in 

favor say eye. Aye. All those opposed say no. Aye. The ayes have 

it, and H.R. 3020 as amended is adopted and ordered reported. I 

ask unanimous consent that the Committee’s authorized to correct 

sections, numbers punctuation, and cross-references, and to make 

other necessary technical and conforming corrections on the bills 

considered today. Without objection, so ordered. This markup is adjourned. Thank you. 

[Whereupon, at 10:25 a.m., the Committee was adjourned.]

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