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27–429 PDF 2006

OVERSIGHT OF THE SMALL BUSINESS ADMINISTRATION’S ENTREPRENEURIAL DEVELOPMENT

PROGRAMS

HEARING

BEFORE THE

SUBCOMMITTEE ON WORKFORCE, EMPOWERMENT 

& GOVERNMENT PROGRAMS

OF THE

COMMITTEE ON SMALL BUSINESS 

HOUSE OF REPRESENTATIVES

ONE HUNDRED NINTH CONGRESS

SECOND SESSION

WASHINGTON, DC, MARCH 2, 2006

Serial No. 109–40

Printed for the use of the Committee on Small Business

(

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

COMMITTEE ON SMALL BUSINESS 

DONALD A. MANZULLO, Illinois, Chairman 

ROSCOE BARTLETT, Maryland, Vice 

Chairman 

SUE KELLY, New York 

STEVE CHABOT, Ohio 

SAM GRAVES, Missouri 

TODD AKIN, Missouri 

BILL SHUSTER, Pennsylvania 

MARILYN MUSGRAVE, Colorado 

JEB BRADLEY, New Hampshire 

STEVE KING, Iowa 

THADDEUS MCCOTTER, Michigan 

RIC KELLER, Florida 

TED POE, Texas 

MICHAEL SODREL, Indiana 

JEFF FORTENBERRY, Nebraska 

MICHAEL FITZPATRICK, Pennsylvania 

LYNN WESTMORELAND, Georgia 

LOUIE GOHMERT, Texas 

NYDIA VELA ́ ZQUEZ, New York 

JUANITA MILLENDER-MCDONALD, 

California 

TOM UDALL, New Mexico 

DANIEL LIPINSKI, Illinois 

ENI FALEOMAVAEGA, American Samoa 

DONNA CHRISTENSEN, Virgin Islands 

DANNY DAVIS, Illinois 

ED CASE, Hawaii 

MADELEINE BORDALLO, Guam 

RAU ́ L GRIJALVA, Arizona 

MICHAEL MICHAUD, Maine 

LINDA SA ́ NCHEZ, California 

JOHN BARROW, Georgia 

MELISSA BEAN, Illinois 

GWEN MOORE, Wisconsin

J. MATTHEW SZYMANSKI, Chief of Staff 

PHIL ESKELAND, Deputy Chief of Staff/Policy Director 

MICHAEL DAY, Minority Staff Director

SUBCOMMITTEE ON WORKFORCE, EMPOWERMENT AND GOVERNMENT 

PROGRAMS 

MARILYN MUSGRAVE, Colorado Chairman 

ROSCOE BARTLETT, Maryland 

BILL SHUSTER, Pennsylvania 

MICHAEL FITZPATRICK, Pennsylvania 

LYNN WESTMORELAND, Georgia 

THADDEUS MCCOTTER, Michigan 

JEB BRADLEY, New Hampshire 

DANIEL LIPINSKI, Illinois 

TOM UDALL, New Mexico 

DANNY DAVIS, Illinois 

RAU ́ L GRIJALVA, Arizona 

MELISSA BEAN, Illinois 

GWEN MOORE, Wisconsin

JOE HARTZ, Professional Staff

(II) 

C O N T E N T S 

WITNESSES

Page 

Mills, Ms. Cheryl, Associate Deputy Administrator, Entrepreneurial Development, U.S. Small Business Administration ....................................................... 4

Wilson, Mr. Donald, President, Association of Small Business Development 

Centers .................................................................................................................. 6

Zinn, Ms. Amanda, President & CEO, E Cubed and Co-Chair, Association 

of Women’s Business Centers ............................................................................. 8

Pyles, Mr. Jim, Chairman of the Board, Service Corps of Retired Executives ... 10

Maneval, Ms. Elizabeth, Owner & Publisher, We Magazine, Inc. ...................... 11

Law, Dr. Carol, Ph.D., President, Drug Free Workplaces, Inc. ........................... 13

APPENDIX

Opening statements: 

Musgrave, Hon. Marilyn .................................................................................. 26

Lipinski, Hon. Daniel ....................................................................................... 28

Velazquez, Hon. Nydia (Ex Officio) ................................................................. 32

Udall, Hon. Tom ............................................................................................... 34

Prepared statements: 

Mills, Ms. Cheryl, Associate Deputy Administrator, Entrepreneurial Development, U.S. Small Business Administration ....................................... 35

Wilson, Mr. Donald, President, Association of Small Business Development Centers ................................................................................................. 40

Zinn, Ms. Amanda, President & CEO, E Cubed and Co-Chair, Association 

of Women’s Business Centers ...................................................................... 49

Pyles, Mr. Jim, Chairman of the Board, Service Corps of Retired Executives ................................................................................................................ 58

Maneval, Ms. Elizabeth, Owner & Publisher, We Magazine, Inc. ............... 65

Law, Dr. Carol, Ph.D., President, Drug Free Workplaces, Inc. .................... 68

(III) 

(1)

OVERSIGHT OF THE SMALL BUSINESS ADMINISTRATION’S ENTREPRENEURIAL DEVELOPMENT PROGRAMS 

THURSDAY, MARCH 2, 2006

HOUSE OF REPRESENTATIVES

SUBCOMMITTEE ON WORKFORCE, EMPOWERMENT AND

GOVERNMENT PROGRAMS

COMMITTEE ON SMALL BUSINESS

Washington, DC 

The Subcommittee met, pursuant to call, at 10:30 a.m., in Room 

2360 Rayburn House Office Building, Hon. Marilyn Musgrave 

[Chairman of the Subcommittee] presiding. 

Present: Representatives Musgrave, Bartlett, Fitzpatrick, Lipinski, Davis and Moore. 

Also Present: Representatives Velazquez and Bordallo. 

chairman MUSGRAVE. This Committee will come to order. Good 

morning to all of you. And thank you very much for being here 

today as we conduct this oversight hearing on the Small Business 

Administration’s Entrepreneurial Development Program. 

Quite often when one thinks of the types of assistance the SBA 

provides, the first thing that comes to mind is financial assistance. 

While it is true that the SBA offers a variety of financing programs 

including small business loans, fixed asset loans, microloans, and 

provides debt and equity capital to small businesses, another critical function of the SBA is technical assistance. The SBA and its 

partners provide technical assistance programs, including training, 

counseling, mentoring, and information services to more than four 

million existing and potential entrepreneurs annually. 

Overseen by the Office of Entrepreneurial Development, the SBA 

provides grants to a network of over 950 small business development centers, or SBDCs; 389 SCORE chapters, which match executives with entrepreneurs for business counseling; and over 80 women’s business centers. 

SBDCs, the largest entrepreneurial network supported by the 

SBA, offer one-stop assistance to individuals and small businesses 

by providing a wide variety of information and guidance in central 

and easily accessible branch locations. The program is a cooperative effort of the private sector, the educational community and federal, state, and local governments. It enhances economic development by providing small businesses with management and technical assistance. 

2

SBDC assistance is tailored to the local community and the 

needs of individual clients. Each center develops services in cooperation with local SBA district offices to ensure statewide cooperation with other available resources. 

The SBDC program is designed to deliver up-to-date counseling, 

training, and technical assistance in all aspects of small business 

management. SBDC services include, but are not limited to, assisting small business with financial, marketing, production, organization, engineering, and technical problems, and feasibility studies. 

Special SBDC programs and economic development activities include international trade assistance, technical assistance, procurement assistance, venture capital formation, and rural development. 

SBDCs also make special efforts to reach minority members of 

socially and economically disadvantaged groups, veterans, women, 

and the disabled. Moreover, they provide assistance to small businesses applying for small business innovation and research grants 

from federal agencies. 

Another important cog in this wheel is the Service Corps of Retired Executives, or SCORE. A 503(a)(3) nonprofit organization, 

SCORE provides a public service to entrepreneurs by offering small 

business advice and mentoring. Counselors work with entrepreneurs through every phase of their entrepreneurial venture: 

generating and assessing ideas, preparing a business plan, raising 

capital, and managing the operations and finances of a growing 

venture. 

SCORE partners with a wide array of companies and organizations, including Citibank, Ford Motor Company, Vetcorp, and the 

American Management Association, to expand small business outreach, services, and resources to communities nationwide. 

Despite the fact that America’s 10.6 million women-owned businesses employ 19.1 million people and contribute $2.46 trillion to 

the economy, women continue to face unique obstacles in the world 

of business. 

Charged with promoting the growth of women-owned businesses 

through programs that address business training and technical assistance, and provide access to credit and capital, federal contracts, 

and international trade opportunities, Women’s Business Centers, 

WBCs, operate with the mission to level the playing field for 

women entrepreneurs. 

I am happy to get started today, but before we hear from our distinguished panel, I would like to yield to our ranking member, the 

gentleman from Illinois, Mr. Lipinski. 

[Chairman Musgrave’s opening statement may be found in the 

appendix.] 

Mr. LIPINSKI. Thank you, Madam Chairman. 

Our nation continues to face an uphill battle in creating jobs and 

ensuring that we remain an economic superpower. The global economy presents many challenges to our domestic firms, but this nation has always found a way to adapt and compete. 

Small businesses, our main job creators, have proven time and 

again that when given the proper tools, they have the ability to 

spur growth by adapting to the changing needs of an evolving economy. Our small business assistance programs are there to provide 

3

these tools. And we must ensure that these programs are able to 

adjust to meet the changing needs of America’s entrepreneurs. 

Today’s hearing will give us an opportunity to identify ways to 

better serve small business owners by making sure our entrepreneurial development programs are evolving to meet the needs of 

the Twenty-First Century. In addition, this hearing will allow us 

to assess the impact that the F.Y. 2007 budget will have on the 

programs that serve small businesses. 

To achieve success, many aspiring entrepreneurs require solid 

management training, organizational skills, and technical assistance, all of which are provided by a host of SBA development programs. These initiatives, including the small business development 

centers, women’s business centers, PRIME, and SCORE, have provided businessmen and women with a place to turn for assistance. 

SBDCs, the cornerstone of SBA’s entrepreneurial programs, have 

been particularly successful in spurring entrepreneurship in economic development. In 2003, long-term counseling of clients by 

SBDCs generated over 56,000 new jobs nationwide. In Illinois, 

SBDCs serving their congressional district counseled and trained 

over 4,000 clients, resulting in 1,430 jobs created and retained in 

our local communities. 

SBDC funding is money well-spent. Studies have shown that for 

every dollar spent on SBDC services, the program returned nearly 

three dollars to the treasury. Long-term clients of the Illinois Small 

Business Development Center have generated a return of over four 

dollars in state and federal revenues for each dollar invested. 

Small business programs serve a diverse clientele. My state’s 

SBDC network, by partnering with the Illinois Hispanic Chamber 

of Commerce, provides small business development and start-up 

assistance to the strong and growing community of Hispanic business owners in southwest Chicago and the surrounding communities. 

Women’s business centers fill a unique role by serving the nation’s fastest growing business sector. As the number of female entrepreneurs continues to grow, so does the importance of this program. A nationally recognized leader in supporting women entrepreneurs, the Chicago Women’s Business Development Center has 

served over 40,000 clients since 1986. It is truly a model for small 

business development. 

We need to ensure in the coming year that new centers are open 

and existing centers are able to continue operating. Unfortunately, 

the administration’s latest budget has again failed to make these 

and other programs a priority for small business owners. 

We continue to hear that the SBA has been able to do more with 

less. Yet, many of these initiatives have received severe funding 

cuts or even faced elimination in the President’s budget. 

Clearly, this year’s budget request is not a good one for small 

businesses. In a report issued today, we saw that out of 100 programs government-wide that assist small businesses, 75 are facing 

severe cuts or elimination. 

Not only do we need to address funding issues, but the SBA 

needs to be reauthorized this year. It is not enough to simply throw 

money at these programs. 

4

Small businesses face a new set of challenges when it comes to 

rising health care and energy costs as well as increased foreign 

competition. It is imperative that the SBA and its program evolve 

and adapt to meet the changing demands of business owners. 

The administration’s failure to adequately support and fund 

these programs as well as provide for improvements will only limit 

their ability to effectively serve America’s entrepreneurs. Our nation’s small businesses deserve more than that. 

We all have a common interest in ensuring our nation’s small 

businesses succeed. If we want to move forward, provide new initiatives, and strengthen existing ones, it is vital that we start here 

with SBA’s entrepreneurial development programs. 

I look forward to today’s discussion and look forward to hearing 

from witnesses. Thank you. 

[Ranking Member Lipinski’s opening statement may be found in 

the appendix.] 

Chairman MUSGRAVE. Thank you. 

Are there any other members that have opening statements? Yes, 

the ranking member of the full Committee is recognized at this 

time. 

Ms. VELAZQUEZ. Thank you, Ms. Chairman. 

I’m sorry I just can’t be able to give an opening statement. I 

would ask unanimous consent to submit to the record. But I just 

would like to say thank you for holding this hearing. And it is really unfortunate that we are not doing this at the full Committee. 

So with that, I just ask unanimous consent to submit my opening 

statement to the record. 

[Congresswoman Velazquez’s opening statement may be found in 

the appendix.] 

Chairman MUSGRAVE. Without objection. 

Chairman MUSGRAVE. Thank you. 

Our first witness will be Ms. Cheryl Mills. She is the Associate 

Deputy Administrator, Entrepreneurial Development of the U.S. 

Small Business Administration. Welcome to the Committee. We 

look forward to hearing from you. 

Ms. MILLS. Thank you. 

STATEMENT OF CHERYL MILLS, U.S. SMALL BUSINESS 

ADMINISTRATION 

Ms. MILLS. Good morning, Chair Musgrave, Ranking Minority 

Member Lipinski, and other members of the Committee. I am 

Cheryl Mills, Associate Deputy Administrator for Entrepreneurial 

Development. Thank you for inviting me here today to tell you 

about the work about the Small Business Administration’s Office 

of Entrepreneurial Development and what we are doing to help 

serve the entrepreneur and America’s small businesses. 

As a former business owner, I am proud to serve the President 

and to help invigorate the entrepreneurial spirit in this country. 

Small businesses are the engine of opportunity and the growth vehicle for jobs in America. 

Our mission in the Office of Entrepreneurial Development of 

SBA is to educate entrepreneurs interested in starting a business 

or small businesses in need of guidance on how to grow their business. 

5

The Office of Entrepreneurial Development manages a strong 

distribution channel of service centers for small businesses across 

the country. The services offered include assistance in preparing 

business plans, loan applications, GSA procurement requests, strategic plans, marketing plans, export advice, pricing plans, and competitive assessments. 

We serve these clients through our three resource partners: 

Small business development centers, women’s business centers, 

and SCORE. In fiscal year ’05, our resource partners trained and 

counseled over 1.1 million clients. In addition, 311,000 clients registered for one of our 23 courses online through our small business 

training network, and over a million accessed the SBA Web site. 

In addition, since 1994, the Office of Native American Affairs has 

worked to address the unique needs of America’s First people. 

SBA provided almost a million in grants under the Drug Free 

Workplace program. The agency will continue to promote these 

grants through our partners. 

Let me tell you about recent enhancements to our ED programs. 

First, as a part of my strategic planning process, we did look to 

identify some of the characteristics of small business owners of the 

future. We have concluded future small business owners will primarily be in the 18-25-year-old age group and the plus-50. 

Next, we focused on ensuring that all of the programs use the 

same measurement system. We have now consistent definitions 

across all programs for counseling sessions, information transfer, 

online counseling, and training. F.Y. ’06 will serve as the baseline 

for measurement for all ED programs. 

To collect this information, we also updated and revised our management information system. The former system was outdated and 

did not have the capability of delivering management reports and 

analysis. 

We have successfully completed the first comprehensive collection of data using standardized definitions across all programs 

using the EDMISII system. This will allow us to do an analysis of 

service provided to clients and of user client demographics. 

Online development has become the most cost-effective way to 

expand and to reach new clients. The SBDCs introduced Microsoft 

Live Meeting to ten pilot sites last year. Live Meeting allows virtual counseling or training sessions online. 

This year we presented the WBC intermediaries with an opportunity to have access to Microsoft Live Meeting. A two-year free licensing of this product has been given to the WBCs to introduce 

the virtual setting and online counseling to existing and prospective clients. 

SCORE has been our pioneer of online counseling. Approximately 

34 percent of their total counseling is done online. We are using 

technology to reach existing and new clients in all of our programs. 

We are also reviewing and improving the oversight and evaluation of these programs. We have also instituted a cross-program financial exam process that allows us to take advantage of the expertise of the SBDC financial examination staff to breakdown 

stovepipes and create efficiencies within the department. 

Our resource partners have been responsive to the President’s 

initiatives for increasing assistance to the manufacturing sector 

6

and veteran’s assistance. SCORE has recently launched two new 

Web sites focusing on veteran, National Guard, and reservist small 

business, and for manufacturers. SBDC lead centers offer manufacturing assistance and reskilling for workers whose plants are closing. And the WBC, for example, has a South Carolina manufacturing extension partnership. 

Additionally, we just launched My Biz for Women, a new portal 

for women to access business information and assistance available 

to them throughout the federal government. This Web site has 

been well received, which is an indication of the interest and demand for assistance from those who want to explore the option of 

owning their own business. 

We will continue to assess the needs of small businesses and the 

entrepreneurs who start and operate them. We are developing an 

interactive online tool that will allow prospective entrepreneurs to 

assess their readiness. SBA will provide them with a list of partner 

resources that they may contact. We expect that this will be helpful 

to the potential business owner as well as the resource partners because those coming to partners will be better prepared. This is a 

first step in a broad view looking to ensure that the needs of potential businesses are met. 

We plan to continue our commitment to small businesses and entrepreneurs on the path to success. 

Chairman MUSGRAVE. If you would just wrap up, please? Thank 

you. 

Ms. MILLS. Absolutely. SBA has requested $154 million for the 

F.Y. ’07 ED budget. 

Thank you so much. I appreciate that. 

[Ms. Mills’ testimony may be found in the appendix.] 

Chairman MUSGRAVE. Thank you. 

I neglected to mention the time. I apologize for that. But if you 

will watch the lights if you can and we’ll keep this on schedule. 

Mr. Donald Wilson is our next witness. He is the President of the 

Association of Small Business Development Centers. Welcome to 

Committee. 

STATEMENT OF DONALD WILSON, ASSOCIATION OF SMALL 

BUSINESS DEVELOPMENT CENTERS 

Mr. WILSON. Thank you very much, Chair Musgrave and Ranking Member Lipinski, and all the members of the Subcommittee. 

We appreciate the opportunity to be here and to testify on both the 

F.Y. 2007 budget and the issue of reauthorization. 

I would like to start my comments by mentioning the role that 

SBDCs have played in disaster relief in the Gulf Coast. They have 

played an integral part counseling and training thousands of small 

businesses that were damaged by those hurricanes. 

Disaster relief is not new to SBDCs, as Ms. Velazquez knows so 

well, the work of Jim King and the New York network on 9/11, the 

Red River floods in ’97, Hurricane Floyd in ’99 and 2000, Hurricane 

Ivan, all of the hurricanes in Florida and so forth. And we are constantly being recognized by various groups for the outstanding 

work that we do. 

SBA recognized the New York network and Mr. King with their 

prestigious Phoenix Award. The Department of Commerce just recVerDate 0ct 09 2002 14:06 Sep 20, 2006 Jkt 000000 PO 00000 Frm 00010 Fmt 6633 Sfmt 6633 G:\HEARINGS\27429.TXT MIKE
7

ognized the SBDC in Florida. And, yet, there is not any institutionalization of the role that SBDCs play in the time of a disaster. 

The states come to us. The local communities come to us. And 

they are hamstrung because of resources. Louisiana is a classic example right now. They want more and more out of us. We don’t 

have the capacity to provide it. 

In the last 25 years—and this is not being partisan in any way. 

In the last 25 years, there has not been one, one, supplemental disaster funding proposal come from SBA that has asked for any additional dollars for the SBDC to address those needs. And when you 

are doing reauthorization, we would encourage you to look at that. 

The other issue is because of any lack of institutionalization, 

FEMA and some of the other federal agencies who are there are 

not sure exactly what our role is. Sometimes we’re welcomed. 

Sometimes we’re not. Small businesses come to the emergency disaster centers looking for assistance in filling out their disaster loan 

applications. We’re not there because sometimes we’re included, 

sometimes we’re not. 

So in looking at reauthorization, I would encourage the full Committee and this Subcommittee to look very closely. We’re there. 

We’re the people on the ground. We are the people who know the 

local small business community. I think it is very vital that we 

begin to institutionalize that relationship. 

Speaking of relationships, I would like to acknowledge the tremendous improvement in the relationship between small business 

development centers and the Office of ED. And I credit that to 

Cheryl Mills, our accessibility to the deputy administrator, our accessibility to Cheryl, we have never had this kind of access before. 

And on a number of issues, whether it’s the EDMIS system, 

goaling, and other issues, Cheryl has been at the forefront in working cooperatively and trying to resolve some of the issues that have 

lingered for a number of years. 

So we appreciate that, Cheryl, very, very much. 

Ms. MILLS. Thank you very much. I appreciate that. 

Mr. WILSON. With regard to the budget, I could not have said it 

any better than Mr. Lipinski did. We’re seeing tremendous demands on our system. 

Recent research by Dr. Paul Rogers indicates that 60 percent, 60 

percent, of small business owners have high school educations or 

less. Twenty-five million small business owners with high school 

educations or less, they have had no opportunity for management 

training. They may have great skills as an auto mechanic or a machinist or a baker, but they have no skills in management. 

Dun and Bradstreet has repeatedly noted that the major reason 

small businesses fail is not because of lack of capital. It’s due to 

management decisions. 

Since 1998, our smaller population states have not had one dime 

in increase. They are being destroyed. They’re laying off counselors. 

They’re closing centers. 

The great manufacturing and industrial states, Ohio, Illinois, 

Michigan, Indiana, Pennsylvania, the same story. The census hit. 

The Mr. Fitzpatrick state, Mr. Davis’ state, disastrous reductions 

in funding. 

8

This has got to be reversed. We cannot continue to dismantle the 

most powerful economic infrastructure, educational infrastructure, 

this country has, which is the envy of the rest of the world. They 

come to my office all of the time wanting to do it in their country. 

And we’re dismantling as we lay off counselors and close centers 

for lack of resources, falling far behind even an inflationary rate. 

We appreciate the language in Congressman Manzullo’s letter to 

the budget urging a cost of living increase. That will make us 

whole in terms of last year, but over the last decade and the last 

five years, it would take $110 million, which the Senate passed last 

year. And, unfortunately, we’re not able to get it out of conference 

in the House. 

So I encourage you to look at the statistics, the return to the 

treasury of nearly three to one, and try to reverse the decline, 

which has been going on for the last decade. 

Thank you, Chair Musgrave. 

[Mr. Wilson’s testimony may be found in the appendix.] 

Chairman MUSGRAVE. Thank you, Mr. Wilson, very much. 

Our next witness is Ms. Amanda Zinn. And she is the President 

and CEO of E Cubed—that’s Essential Entrepreneurial Expertise—

and co-chair of the Association of Women’s Business Centers. 

Thank you for being in our hearing today. 

STATEMENT OF AMANDA ZINN, E CUBED 

Ms. ZINN. Thank you, Chairman Musgrave and Ranking Member 

Lipinski. 

I also wanted to mention that I am the former CEO of Women 

Entrepreneurs of Baltimore, which is a women’s business center in 

Baltimore, Maryland. And I was the CEO for 12 years there, until 

this past August. So, in addition to being the chair of the board, 

I also come with the experience of having run a women’s business 

center. 

I appreciate the opportunity to express the AWBC’s concern 

about the President’s budget, but before I speak specifically to that, 

I would like to mention just very briefly some seminal research 

that has been done in the last several years about the women’s 

business center program. 

The research by the National Women’s Business Council and the 

Center for Women’s Business Research, as well as U.S. Census Bureau data, and the Association of Women’s Business Centers research has shown that the women’s business center program has 

been highly effective since its insemination. During the three years 

from 2001 to 2003, the businesses counseled by the women’s business center program generated an impact, an estimated impact of 

$500 million in gross receipts on an investment of $37 million in 

public funds. That’s a staggering return on investment. 

Demand for the women’s business center program is rising. Seventy-five percent of centers noted an increase in monthly clients 

served in 2004. During 2001 to 2003, the number of women entrepreneurs served nearly doubled, a 91 percent increase. During 2001 

to 2003, the number of new firms created by women’s business centers increased by 376 percent. 

Women’s business centers served women of color at a far higher 

rate than their prevalence in the general population as well as 

9

serving women who are economically disadvantaged. Centers report that 67 percent of all people served have a household income 

level of less than $50,000. 

And between 45 and 60 percent of economically disadvantaged 

people entering the women’s business center program were no 

longer in poverty a year or two later. 

In addition, the jobs the businesses are creating, the tax base 

that is being bolstered as well through the personal income tax increase, retail sales tax, personal property taxes, and corporate 

taxes, all of this to say that the women’s business center program 

has been a very wise investment. 

The creation of the sustainability program back in 1996, I believe, was very important. There were three reasons why this sustainability program was so important. First, it acknowledges the 

importance of women business owners in this economy and how it 

is the fast growing sector of all small businesses. Secondly, it acknowledges the importance of the SBA funding as it helps us leverage other funds to run the centers. And, thirdly, it acknowledges 

the hard work that was spent in building the infrastructure of the 

centers of this long period of time. And the research has shown 

that the longer a center is in business, the stronger the center is 

in terms of its outcomes. 

In response to the President’s budget, we are very concerned about the appropriations. We know that it will take $16.5 million 

to continue the program by funding the current centers and opening some new centers. The President’s budget is only at $11.88 million, which is disastrous for our program. 

Last year we had a cut of only a half a million dollars in the program. And several centers had to change. Many centers had to lay 

off staff. So this reduction is even further detriment to the program. 

Sustainability again I would like to say is a very important part 

of our program. The sustainability centers are the ones that are the 

most productive centers. And so that is a very important part of 

our program. 

I also wanted to mention the authorization in the President’s 

budget. The authorization is to decrease the program, the authorized amount, to 14.5 million. It is currently at 16.5. Obviously that 

again will have a very deleterious effect on the program. Again, in 

order to maintain the existing centers and to add some new centers 

each year, we definitely need to have a budget of a minimum of 

16.5. 

The final thing I wanted to say was the performance criteria. 

Two years ago there was new performance criteria in place to determine what level of funding each women’s business center will receive. And we would really very much appreciate the SBA sharing 

that performance criteria so we can share that with the centers so 

that they can help increase their funding. 

Thank you. 

[Ms. Zinn’s testimony may be found in the appendix.] 

Chairman MUSGRAVE. Thank you very much. 

Mr. Pyles, you are up next. Mr. Jim Pyles is the Chairman of the 

Board of Service Corps of Retired Executives. Thank you for being 

here. 

10

STATEMENT OF JIM PYLES, SERVICE CORPS OF RETIRED 

EXECUTIVES 

Mr. PYLES. Good morning. Madam Chairman. I am delighted to 

be here and speak on behalf of SCORE. Thank you for the opportunity to testify today. I would like to request that my written testimony be placed into the record. 

First I would like to tell you something about myself. I am from 

Elkhart, Indiana. I spent 34 years in sales and marketing with the 

Bayer Corporation. I was a co-founder of a small business and 

founding director of a local bank. I became a SCORE volunteer in 

1996. This is my second year as board chair. 

I am here on behalf of 10,500 SCORE volunteers, who donate 

their time and talent to serve America’s entrepreneurs. SCORE offers business counseling and low-cost workshops. 

Since its founding in 1964, SCORE has helped more than 7 million businesses. Our volunteers donated more than 1.3 million 

hours of service in fiscal year 2005. With an appropriation of $5 

million, SCORE costs taxpayers less than the federal minimum 

wage per volunteer hour. By helping small businesses, SCORE supports job creation nationwide. 

Today SCORE has 389 local offices plus 800 branches. Last year 

SCORE’s expert volunteers counseled more than 300,000 entrepreneurs and provided workshops for more than 115,000 people. 

Last year all of us were deeply saddened by the devastation of 

Gulf Coast hurricanes. Volunteers at local chapters, some of whom 

lost homes and suffered hurricane damage themselves, increased 

efforts to help. 

Baton Rouge volunteers worked at recovery centers. They formed 

a task force to meet local needs and share information on disaster 

loan programs. Many New Orleans volunteers provide counseling 

out of the Baton Rouge office. 

SCORE in Biloxi, Mississippi suffered a total loss. The chapter 

opened a temporary location to meet clients two to three times a 

week. SCORE used the internet to let people know recovery resources within three days of the Hurricane Katrina. For months 

SCORE updated information weekly. And we continue home page 

access to the latest recovery resources. 

Every day SCORE offers free online information on how to start, 

manage, and grow a business. Last year more than 1.3 million people visited score.org. SCORE’s 1,300 online counselors provide expert advice in more than 600 business areas. 

In addition, SCORE offers resources specifically for women, Hispanics and other minorities, young entrepreneurs, and veterans. 

More than half of SCORE’s board and clients are women and minorities. 

As a veteran and former small business owner, I know how important SCORE mentoring is for veterans. Last year SCORE created an online center to assist them. 

SCORE appreciates the continued federal appropriation and your 

support in a challenging budget environment. Since 2000, SCORE 

has been level-budgeted at 5 million. Funding for the SBA was authorized and reauthorized in 2004. At that time, SCORE was authorized to receive up to $7 billion annually. In the following appropriate process, SCORE only received 5 million. 

11

To meet rising costs and to modernize our operations, we request that you consider authorizing the following funding: $7 million in 

2007, 8 million in 2008, 10 million in 2009. With additional funding, SCORE will establish a Web-based one SCORE system to better serve both clients and counselors. SCORE can become even 

more efficient by developing tools to better manage chapters and 

operations. 

For clients, a Web-based system would offer access to online 

learning, online advice, workshop registration, and face-to-face 

counseling. Additional funding for technology will make it easier 

for SCORE to recruit volunteers. New volunteers would be able to 

take online orientation and training. This will attract diverse volunteers to SCORE and expand SCORE’s skills and abilities we 

then could offer to entrepreneurs. 

Madam Chairman, that’s why we’re here: to help local communities and strengthen the U.S. economy. SCORE appreciates the 

successful partnership with the Small Business Administration. We 

also appreciate the support of this Subcommittee and your personal 

support of SCORE. 

I would be pleased to answer any questions that you may have. 

And thank you for this opportunity to testify. 

[Mr. Pyles’ testimony may be found in the appendix.] 

Chairman MUSGRAVE. Thank you very much. 

Our next witness is Ms. Elizabeth Maneval. She is the owner 

and publisher of We magazine. And she is here on behalf of the Association for Enterprise Opportunity. Welcome to Committee. 

STATEMENT OF ELIZABETH MANEVAL, WE MAGAZINE, INC. 

Ms. MANEVAL. Thank you very much. 

Good morning, Chairman Musgrave, Ranking Member Lipinski, 

and other members of the Subcommittee. Thank you for the opportunity to present testimony on the Small Business Administration’s 

Microloan Program. 

I am Elizabeth Maneval, owner and publisher of We Magazine, 

an award-winning general interest publication written by women, 

for women, about women. I am also here today on behalf of the Association for Enterprise Opportunity and Community First Fund. 

AEO is the national trade and membership association for micro 

enterprise development in the United States, with nearly 500 member organizations nationwide. The vast majority of AEO’s membership consists of micro enterprise practitioners, including over half 

of all SBA microloan intermediaries and Small Business Administration PRIME grantees. Community First Fund is a member of 

AEO and the SBA microloan intermediary that helped me to secure 

start-up capital for my small business. Community First Fund’s 

mission is to drive community and economic development in the 

ten counties of Pennsylvania that it serves. 

The SBA microloan program played a key role in helping me to 

achieve my dream of starting a small business, which creates, publishes, and distributes a women’s general interest and lifestyle 

magazine. 

The magazine, by the way, has been in publication for over four 

years. And it truly has become a part of the culture of south central Pennsylvania. I’m sure all of you are aware of Lancaster CounVerDate 0ct 09 2002 14:06 Sep 20, 2006 Jkt 000000 PO 00000 Frm 00015 Fmt 6633 Sfmt 6633 G:\HEARINGS\27429.TXT MIKE
12

ty and Harrisburg. Chester and York Counties are the primary 

counties that we serve. 

We Magazine is the premier voice for women in central Pennsylvania, which celebrates their diversity, offers valuable information 

on topics of interest to them, and provides a vehicle in which 

women and area businesses with products and services targeted to 

women can promote themselves. 

I guess you all know that to promote yourself in a community 

costs an awful lot of money. We Magazine offers a vehicle that is 

very affordable fort start-up businesses, which generally are 

women-owned businesses that want to promote themselves to the 

community in an affordable way. 

Up to 12,000 copies of We Magazine are distributed 6 times a 

year to 250 high-traffic locations in Lancaster and Harrisburg market areas, Chester, and York. 

We Magazine, Inc. was founded in July 2002 with the assistance 

of Community First Fund, which provided technical assistance and 

a $9,000 loan, which I needed for start-up capital. A short time 

later, the first issue of We Magazine premiered October 1, 2002. 

The articles reflect the trends and thoughts on a wide array of 

subjects of interest to women, including health, nutrition, fitness, 

finance, fashion, arts and entertainment, and personal style. 

As a one-woman-owned company, I outsource the various tasks 

involved in the production of the magazine. By outsourcing the 

photography, editing to design, printing to other individuals and 

businesses in the community, We Magazine has helped to support 

the local economy and indirectly creates jobs. 

Since the establishment of We Magazine, Inc., I have continued 

to receive assistance from Community First Fund, a Small Business Administration microloan intermediary, which provides much 

needed business assistance to micro entrepreneurs in central Pennsylvania. 

On subsequent occasions, I was able to secure two additional 

microloans from Community First Fund that responded to my application very quickly. This is really important. When I approached 

Community First Fund for additional money for capital to expand 

the magazine to improve the looks of the magazine and to offer 

other programs to the community, Community First Fund responded very rapidly to my telephone call, like ‘‘Hello. It’s Liz. 

Could you offer any more assistance, any more capital to me?’’ And 

honestly within ten days, I was given a check. 

Other institutions that have approached, they have told me that 

I was on a fast track to receiving loan money. One year and four 

months later, I received that money. That was no help because by 

that time, I had already spent the money that I had saved. So I’m 

really grateful to Community First Fund for the turnaround that 

they provide for getting money. 

I was able to secure two additional loans. And the timing in 

which financing was obtained is frequently, which I just addressed, 

a critical matter for small businesses such as mine. 

The additional microloans were used as working capital in order 

to grow my business and maintain the continued viability of We 

Magazine by improving the quality of the publication. Without the 

SBA microloan program and microloan intermediaries, such as 

13

Community First Fund, I would not have been able to realize my 

dream of starting a small business that publishes a magazine written by women, for women, about women. 

Chairman MUSGRAVE. Thank you very much. 

Ms. MANEVAL. If the Microloan program is terminated, many 

micro entrepreneurs, such as myself, would not be able to secure 

financing. 

Thank you very much for the opportunity to testify, Madam 

Chairman. And I will be happy to answer any continued questions 

you may have 

[Ms. Maneval’s testimony may be found in the appendix.] 

Chairman MUSGRAVE. Our next witness is Dr. Carol Law. She is 

the President of Drug-Free Workplaces Incorporated. Welcome to 

Committee. 

STATEMENT OF CAROL LAW, DRUG FREE WORKPLACES, INC. 

Ms. LAW. Thank you very much. 

Chair Musgrave, Ranking Member Lipinski, other members of 

the Committee, fellow panelists, and attendees, thank you for giving me this opportunity to share with you my experiences and perspectives on the value of companies becoming a drug-free workplace and the important of the Paul D. Coverdell grants in helping 

with that effort. 

As a young social worker in Newark, New Jersey; as a USO director in Vietnam; while assessing homes for possible child abuse 

in Pensacola, Florida; and as a medical psychotherapist in Scottsdale, Arizona, I witnessed the destruction that drugs have on the 

lives of the abusers, their families, their employers, and their community. 

What I saw consistently was that a person with a drug problem 

is willing to give up their wives, their husbands, the children, the 

dogs, but the thing that they hold onto with great ferocity is their 

job. Is it for the money? Yes. But I think also it’s because we as 

Americans identify ourselves by what it is that we do. Evidence the 

fact that probably within the first three sentences, the question 

comes up, ‘‘What is it that you do?’’ 

If we want to intervene, the place to do it is in the workplace. 

Over 75 percent of drug abusers in the United States are employed. 

They are not in jails. They are not in welfare lines. They are in 

businesses, both big and small. Big businesses early on realized 

that this was going to impact their bottom line. And they got very 

proactive in what they were doing about this. 

I had the occasion to speak with the vice president of Tropicana 

who is head of their HR department. And he said what they had 

done was put up a sign on the door. And before you entered into 

their offices to make an application, it said, ‘‘Drug Testing Required.’’ What they saw on a videocamera was that people would 

come up, look at the sign, read it, process what was going on, turn 

around, and leave. 

That in and of itself actually saved the company money, but 

what was more concerning was the fact that those people then 

were going on to small companies, the least able to protect themselves. They were unable and had no HR departments to write 

14

their policies, to get drug testing for them, to tell them what to do 

with an employee that might test positive. 

Tropicana actually gave out grants during the early ’90s to help 

Chambers of Commerce help small businesses become drug-free 

workplaces. The Paul Coverdell grant program through the SBA—

and I will tell you the SBA has done great things with a very, very 

little amount of money—has given out grants. And, in turn, those 

grants have helped small companies across the United States have 

drug-free workplaces, assist them with those programs. 

I would like to read to you a letter that we got from one of the 

small companies. A hauling company in Milton, Florida, a rural 

community in Santa Rosa County and also the home to the U.S. 

naval station at Whiting Field, got a wake-up call when a fatal 

crash occurred not too far from their offices. Two young people 

were killed, and a third was critically injured. 

‘‘Given the fact that we’re a business of driving, we wanted to 

make sure that our five employees, including our drivers, would be 

as safe as possible, both for themselves and for everyone else on 

the road,’’ said Cassie Durbin, the company’s office manager. 

‘‘The company decided to take the steps to ensure that its workforce was drug-free and received financial and technical help to create a drug-free workplace from’’ us, ‘‘a subcontractor through The 

Walsh Group. The program consisted of a written program, employee supervisory training, training for their supervisors, drug 

testing, and an EAP program. 

‘‘Several long-term employees tested positive for drugs when the 

program started. Instead of dismissing them, the company placed 

them in non-safety-sensitive positions while they received professional help. Today these employees value their jobs even more than 

they did before and feel that they have been given another chance,’’ 

the office manager of the company affirmed. 

‘‘We understand the importance of a drug-free workplace. It’s improved our morale and our bottom line. We also feel that we are 

making a difference in the lives of our employees, their families, 

and our communities.’’ 

The funding for this progressively has gotten less and less. At 

this particular time, I think there is a million dollars. The return 

on investment for this kind of funding is astronomical when it 

comes to what we get back in saving lives, saving families, and also 

in helping small businesses. 

Thank you for giving me this opportunity to address you today. 

And I will be willing to answer any and all questions. Thank you. 

[Ms. Law’s testimony may be found in the appendix.] 

Chairman MUSGRAVE. Thank you very much. 

I think I will just come right back to you as we start our questioning. Just what kind of a burden and how difficult is it to get 

a small business to implement a drug-free program? I’m sure that 

every employer wants that, but it is hard to get there. 

Ms. LAW. It definitely is. This program has assisted many, many 

companies in doing that. What it does is give them the confidence 

that there is somebody there who knows how to write a policy, how 

to implement it, how to get their employees assistance. 

What we have tried to do consistently and what we have continued to do is to say, ‘‘Listen, if you had a computer that broke down 

15

and you have invested a great deal of money in that, would you 

then throw it out?’’ The answer, of course, is no. 

What we have helped them do is keep the employee, help them 

get help, help them get the testing, but I think for the employer, 

as you said, that has to wear four and five different hats, they’re 

not secure in doing that. This granting process and the technical 

help that the grantees are able to give those small companies is invaluable. 

Before I came here, I asked my staff to look at the number of 

companies that we helped and then to look at how many stayed in 

the program over the last five years. Every one of them has stayed 

with it. I think that speaks volumes. 

And that letter that I just read to you, I will tell you that that 

is only one of countless numbers of other letters that we get. Last 

week we just had a similar situation. And the person is now going 

to see a counselor, is going to stay with the company, is going to 

have post-rehabilitative drug testing for two years. And so the company saved an employee, a family, and definitely had help in doing 

that. 

Chairman MUSGRAVE. Thank you very much. 

Mr. Pyles, my next question will be for you. Do you have reporting requirements that you must provide to the Small Business Administration? Does that take a lot of effort? And also, just to follow 

up, do the Web-based applications help? 

Mr. PYLES. The answer is yes to those questions in general. Our 

new reporting system will allow us to collect data more efficiently 

and report more accurately on the activities of our branches and 

our chapters. 

Chairman MUSGRAVE. Thank you very much. 

I wanted to ask Mr. Wilson a question about Katrina relief. You 

know, you said that SBDCs can play a major role in that, but it’s 

my understanding that the major relief agencies often neglect to 

utilize them. Do you agree with that? And if so, why do you think 

that’s the case? 

Mr. WILSON. Well, often the folks who come in to work with 

FEMA and the other agencies may not be particularly familiar 

with what we do and what we can do. They’re also coming in from 

out of town. They don’t have the familiarity with the local business 

community. 

It’s one thing to pass out an application for a disaster loan. It’s 

another to fill it out. One of the most important things—and Jim 

King, I believe, of New York, who worked with 9/11 so effectively 

with the New York program, is here in the audience. And you 

might want to ask that same question of him. 

I believe the national rate is under 50 percent of folks who fill 

out loans who actually are successful in getting resources. It’s not 

so much that the application is just absolutely daunting. It’s that 

you have to reconstruct your financial records. 

And most small businesses when their records are blown away 

or flooded or whatever, they truly don’t know how to do that. SBDC 

counselors can work very closely. And one of the things that was 

most helpful this year—and I want to thank the commissioner of 

the IRA—a number of members of Congress had a suggestion I 

made on the Senate side went to the IRS and asked for help in getVerDate 0ct 09 2002 14:06 Sep 20, 2006 Jkt 000000 PO 00000 Frm 00019 Fmt 6633 Sfmt 6633 G:\HEARINGS\27429.TXT MIKE
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ting IRS documents from past tax years to the SBDC centers and 

SBDC counselors in Louisiana and Mississippi. That was extremely 

helpful to be able to help those clients. 

I believe that in Florida, New York, North Carolina, when we 

look back, the clients that we have helped is about a 70-75 percent 

success rate in terms of the applicant receiving a loan. And so I 

know when FEMA comes in or other groups come in, they’re trying 

to set up emergency centers. They may find an SBDC counselor, 

like who are you and what are you here for. 

We’re here at that community to help rebuild entrepreneurial infrastructures, which is vital to everybody else, to get people back 

to work and everything. So if somehow— 

Chairman MUSGRAVE. Well, thank you very much. 

Mr. WILSON. —we can be institutionalized, that I think would 

help tremendously. 

Thank you for the question. 

Chairman MUSGRAVE. Thank you. 

Mr. Lipinski, do you have questions? 

Mr. LIPINSKI. Well, first, Madam Chairman, Ms. Bordallo had to 

leave. And she had some questions that she wanted to submit to 

the witnesses. So I will ask unanimous consent if I could submit 

these questions for the record to the witnesses. 

Chairman MUSGRAVE. Without objection. 

Mr. LIPINSKI. Thank you. 

And, second, I want to right now pass over my turn in line to 

the ranking member of the full Committee, Ms. Velazquez. 

Chairman MUSGRAVE. Yes? Go ahead. I hope you can speak. 

Ms. VELAZQUEZ. Well, what I’m going to do, I’m going to make 

two questions. And then I’m going to submit some questions to Ms. 

Mills. And I will ask that you commit yourself to send those responses before March 15th because we’re going to have the administrator coming before the full Committee. 

Ms. MILLS. Absolutely. 

Ms. VELAZQUEZ. Thank you. 

Chairman MUSGRAVE. It will be done, then, in a timely fashion. 

Thank you very much. 

Ms. VELAZQUEZ. Ms. Mills, I know you are aware of the criticism 

that SBA has been under because of the poor response regarding 

Katrina and the Gulf Coast. It has been well-documented. We know 

the extraordinary backlog that you face over 100,000 long applicants that have not been processed today, 6 months later, the high 

rejection rates of those disaster loans. 

Then you hear Mr. Wilson saying that they have over 1,000 

counselors that are ready to assist SBA in providing the assistance 

that the victims have. But today we are discussing the budget and 

how this budget is going to be impacted, some of the small business 

development centers, the women’s business center. We got a cut for 

the small business development center of $1.6 million and for the 

women’s business center of 500,000. 

I would like to ask you if SBA is willing to support increased 

funding for the small business development centers so that they 

are able to go to the Gulf Coast and provide the assistance that 

they need. 

17

Ms. MILLS. I appreciate your question, Congresswoman. Let me 

say I think there are almost two questions there. But, first of all, 

our disaster relief, as you know, is a different department. And 

they are involved in long-term disaster relief. So that would be an 

area that they would need to address for you. And I would be 

happy to take that question back for you. 

I believe that the legislation right now certainly puts a constraint 

on SBDC counselors traveling across state line. 

Ms. VELAZQUEZ. I’m sorry? I didn’t hear your response. 

Ms. MILLS. I believe the legislation currently constrains counselors from crossing state lines in these situations. So I think we 

all need to look at that legislation and see what we can do to improve the legislation because we, as you know, have to adhere to 

the legislation. So that would be an area that I would recommend 

we start to look at. 

Ms. VELAZQUEZ. Would SBA support giving these counselors a 

greater role as first responders to disasters like this? 

Ms. MILLS. I think, one, I support obviously the President’s budget. I think that is certainly something that I can take back to the 

administrator. 

Ms. VELAZQUEZ. Okay. Ms. Mills, in the Committee, we haven’t 

reported out too many legislations, too many bills, but we reported 

out two bills: one, Mr. Sweeney, John Sweeney, regarding regulation relief for small businesses; and the other one is from Mr. Udall 

that is for Native Americans. 

My understanding is that the two bills have not been brought up 

to the House floor because of SBA objections. Can you tell me what 

those objections are? 

Ms. MILLS. No. I’m sorry, Congresswoman. I’m not aware of the 

objections, and I’m not familiar with the bills. 

Ms. VELAZQUEZ. Would you provide me— 

Ms. MILLS. I would be happy to look into that. Absolutely. 

Ms. VELAZQUEZ. Thank you. 

Chairman MUSGRAVE. Ms. Velazquez, you can have your own five 

minutes if you would like to continue. 

Ms. VELAZQUEZ. No. I will submit those questions for them to respond to me. And I really appreciate if you get those responses before March 15. Previously the record has been three months. And 

this way we cannot operate effectively. 

Ms. MILLS. I appreciate that. I will take that message back. 

Chairman MUSGRAVE. Mr. Fitzpatrick, do you have questions? 

Mr. FITZPATRICK. I do, Madam Chair. Thank you very much. 

As a representative of Pennsylvania, I will go right to Elizabeth 

Maneval and say we’re proud of your business success— 

Ms. MANEVAL. Thank you. 

Mr. FITZPATRICK. —in Pennsylvania. And you certainly have an 

aspiring story. I understand why you are a supporter of the 

microloan funds. There are many in Congress who support 

microloans internationally for minorities and women. Of course, 

charity starts at home. And so we should support those programs 

here in the United States. 

You indicate in your testimony that you started with a $9,000 

loan. How exactly did you invest that in your business to parlay 

18

it into the success that brings you here today? The $9,000 loan, 

how do you use it? 

Ms. MANEVAL. I used it to pay employees that I outsource generally. I have a graphic designer. I have an editor. I have a photographer. I have a production manager with my printing company. 

And I do my own distribution. So I have expenses with my car. 

I went out, by the way, and bought an energy-efficient car to 

save some money. 

Mr. FITZPATRICK. Do you like it? 

Ms. MANEVAL. But I also had to increase some of my equipment. 

I really wanted to increase the quality of the magazine. So I invested it that way as well. There’s paper quality. There’s all kinds 

of details that go into producing a publication. 

Mr. FITZPATRICK. Does your business have other employees, 

other than yourself, at present? 

Ms. MANEVAL. No, it does not. I outsource those services. 

Mr. FITZPATRICK. You hire printers? You hire drivers? 

Ms. MANEVAL. I do. And the employees that I use are all women 

except for the printer that I use. That is owned and operated by 

a family, a substantial family, in Lancaster County. However, the 

other folks, they’re all women. And they all own their own small 

business. And I believe one of them has just received a small loan 

from Community First Fund. 

Mr. FITZPATRICK. Is this Community First Fund called a 

microloan intermediary? Do the community banks of sort of south 

or central Pennsylvania support that loan fund as well? 

Ms. MANEVAL. Absolutely. I will have to get you the names of the 

banks from the folks that I work with, but yes, there is a number 

of banks in the community that work directly with Community 

First Fund. I only know that because I approached them for article 

ideas or advertising. And they tell me that they’re connected with 

Community First Fund. 

Mr. FITZPATRICK. So these are federal funds that would leverage 

in private funds as well into a microloan fund. 

I should know the answer to this question. Perhaps you can help 

me with it. Obviously the administration looks at each of these programs, thousands of them, across the spectrum, in the federal government. From a cost-benefit perspective: what works, what 

doesn’t, what’s the return on investment. Do you know what the repayment history is for microloans generally? 

Ms. MANEVAL. I do not, but I would be happy to research that 

and get back to you. 

Mr. FITZPATRICK. Does the SBA? Do you have any of that information? 

Ms. MILLS. I’m sure we do. Now, you know, microloans is not 

part of entrepreneurial development. That’s part of capital access. 

But I am happy to— 

Mr. FITZPATRICK. I suspect it’s fairly high. 

Ms. VELAZQUEZ. No. The default rate is less than five percent. 

Mr. FITZPATRICK. Right. So the repayment rate is not— 

Ms. MANEVAL. Excuse me. I just got an answer to that. I’m real 

quick. It’s less than one percent. 

Mr. FITZPATRICK. The default rate is less than one percent? 

Ms. MANEVAL. Yes. 

19

Mr. FITZPATRICK. So the repayment rate is very high? 

Ms. MANEVAL. Yes. 

Mr. FITZPATRICK. Which is excellent. Okay. 

Ms. MANEVAL. Yes. 

Mr. FITZPATRICK. Very good. Very good. A question on the Senior 

Corps Retired Executives. Is it Service? 

Mr. PYLES. The Service Corps of Retired Executives. 

Mr. FITZPATRICK. The Service Corps of Retired Executives. I’m a 

fan of SCORE. There are at least three chapters in my district: one 

in Levittown, one in Doylestown, one in Perkasie, all in Bucks 

County, Pennsylvania, southeastern Pennsylvania. 

It is interesting that these chapters are co-located with Chambers of Commerce. The chambers like them for the obvious reasons. 

They bring all of that business experience and acumen back to the 

table that was retired. People want to give back. It’s good for the 

chambers because there is activity within the chambers. It’s good 

for the chamber members because the members are getting great 

advice. 

Frankly, it’s good for the executives. And it’s good generally for 

the country, sort of reminds me of Alexis de Tocqueville and his 

‘‘Democracy in America,’’ and how he talked about the spirit of 

America. And how this country was different than other countries 

because we have that sense of volunteerism. 

The number, I guess, that the administration has proposed is 5 

million. You may have testified, and I apologize if you did, but did 

you have a recommended number? 

Mr. PYLES. Yes, we do. We have a recommendation of 7 million 

in 2007, 8 million in 2008, and 10 million in 2009. Our increasing 

cost for our technology is constantly needing to be upgraded so that 

we can expand our services and do more directly with our clients 

and our counselors. 

Mr. FITZPATRICK. In addition to money—and funding is important—is there something else that we as members of Congress can 

do to help support SCORE? 

Mr. PYLES. We would like to reach out more to outlying areas 

and the rural areas, areas that we’re not currently serving, although we have 800 branches out in those areas, but we need to 

expand more. We need to do more recruiting of our volunteers. And 

that’s part of the reason we need additional funding. 

Chairman MUSGRAVE. Thank you. We’ll do another round if you 

would like. 

Mr. FITZPATRICK. Thank you, Chair. 

Chairman MUSGRAVE. Ms. Moore, do you have questions? 

Ms. MOORE. Yes, ma’am. Thank you so much, Madam Chair and 

Ranking Member Lipinski. Thank you so much for holding this 

hearing. 

I just want to say hello to the distinguished panel here. And I 

want you to know that I have perused through your testimonies 

that I may not have heard earlier. 

I can tell you that I’m from Milwaukee, Wisconsin. It has just 

been chosen as the sixth city for the White House urban entrepreneur ship project. I’ve gotten both feet into this. And I’m very 

excited about the potential of doing things there. And I don’t want 

20

to waste all of my time by talking about the challenges and opportunities that are there. 

I just want to jump right into the question. And I guess I’ll direct 

it to Ms. Mills. You are the type of person that I would, in fact, 

consider if you would consider coming out to visit Milwaukee and 

talk to some of the folks that are involved in this initiative. 

The question I guess that I have relates to the testimony of all 

of these distinguished panelists. You know, Elizabeth Maneval 

talks about how microloans are just the life blood of her operation. 

And, of course, the administration is zeroing that out. Mr. Pyles 

here talks about how technology is very important, how they want 

to do more outreach of rural areas. But SCORE, of course, is being 

flat-funded. 

In our town, the microloans that my good friend Mr. Fitzpatrick 

talked about being so successful, we anticipate that we need about 

$14 million more for that program, which has been wildly successful. And our women’s business initiative in Milwaukee relies on 

those, is the biggest provider of those services, you’re zeroing out 

services or flat-funding services all across the board. 

Now, Ms. Mills, as a person who was a small business owner 

yourself, then recruited by the—I mean, you’re just the perfect person to be inside advocating for us. And so my question is, how do 

you make the numbers work? I mean, I found, you know, that people have a lot of problem with math. They don’t know the quadratic 

equation, but everybody understands subtraction. 

And so my question really is, in your testimony, you say that 

you’re ‘‘proud to serve the President and to help invigorate the entrepreneurial spirit in this country.’’ Small businesses provide 

about what, 95 percent of all—just how do you plan to invigorate 

the entrepreneurial spirit with these kinds of draconian cuts? 

Thank you. 

Ms. MILLS. Well, I want to thank you first for your question. I 

am delighted that you are part of the urban entrepreneurial partnership program. I think that is so exciting. And you are one of the 

six pilot cities. So my congratulations. I know you will be involved 

in it. Yes, I would love to come out to your district. 

I am a small business owner. That is my background. I am a 

supporter of the President’s budget. And I am dedicated to looking 

at cost efficiencies. And part of the administration and part of my 

decision-making ability is to look at those cost efficiencies. 

In addition, it is my job to make sure we are all part of the 

Twenty-First Century. So aptly put by the ranking minority member, Congressman Lipinski, in his opening statement is we have 

got to evolve in the Twenty-First Century. 

And oftentimes we need to take a hard look at ourselves and see, 

are we there yet? And I look at the efficiencies, and I say we are 

not there yet. 

And all of us in this room are stewards of taxpayers’ money. We 

all represent the taxpayers, whether we’re elected, appointed, or recipients of grants. And so it’s all of our collective efforts to look for 

these efficiencies. 

And technology is really where we need to do some serious work. 

We’re not there yet. And that is really what I would like to do. And 

that is my point. 

21

Ms. MOORE. Ms. Mills, I don’t want to be rude, but my time will 

expire and I won’t get a chance to say this. You know, it is not 

without cost to become efficient. You might realize cost efficiencies 

down the line. But I’m sure Mr. Pyles would agree you have to 

make an initial investment. I can’t go to Best Buy, you know, and 

get a computer without any money. 

And so, you know, I realize you work for the President, but, I 

mean, an investment is just that. You have to make investments. 

And you can’t realize efficiencies, particularly if you are going to 

rely on technology to be the ways and means of acquiring these efficiencies, without the investment. We need more money. 

We want you to go in there when the door is closed and say, 

‘‘President Bush, give us some more money.’’ 

Thank you. My time has expired. 

Chairman MUSGRAVE. Thank you. 

I have a question for Ms. Mills also. SBA is supposed to issue 

a report on the Drug-Free Workplace program. And I know that 

that is due on March 31st, and it seems to be a continual problem. 

It’s habitually late. Do you have any idea on the status of that? 

Ms. MILLS. No, but I’m happy to check into that and see if there 

is any problem. And we will make sure that we get that to you on 

time. 

Chairman MUSGRAVE. That would be wonderful. And, as we talk 

about all of these issues that are disappointing to small business 

owners when we look at the budget, I do want to say that the section 179 expensing that’s included in the tax cuts is very beneficial 

for small businesses and helps them to grow. And I hope you are 

appreciative of our efforts on that and the President’s agreement. 

I am going to quickly turn it over because I know we have votes 

coming up shortly and ask, Mr. Lipinski, if you have questions for 

a second round. 

Mr. LIPINSKI. Thank you, Madam Chairman. A couple of questions here. 

It concerns me greatly the budget cuts for small businesses. I 

have many small businesses in my district, many entrepreneurs 

starting out new businesses in my district. 

I want to start out by asking Ms. Mills. I had stated in my opening statement and Mr. Wilson also stated that the return on investment for SBDCs, $3 of the federal treasury for every dollar spent. 

Is this accurate? Do you believe that it does have that high return on investment that we put into them? 

Ms. MILLS. Well, the SBA has—and certainly Don knows this. 

We have been very vocal about it. That really comes from the 

Chrisman study. And we have not recognized the Chrisman study 

and have not really determined the methodology is something that 

we support. So, you know, I think every report will have something 

that one can get behind or not get behind. And I think the agency 

has taken a position in the past that that is a report that they’re 

not fully comfortable with, methodology. 

Mr. LIPINSKI. Okay. Mr. Wilson, is there anything you wanted to 

add onto that? 

Mr. WILSON. Certainly. The methodology of the Chrisman study 

has been peer-reviewed for 20 years. It has been published in almost every major small business journal in the country. 

22

Sates who have taken the Chrisman data, Oregon, Ohio, repeatedly, they use studies such as the IMPLAN modeling; REMI modeling, which they have used to assess whether or not state programs are effective. And because states invest in the SBDC program, we can’t access a federal dollar until we raise a non-federal 

dollar. 

They have studied the Chrisman data. The fascinating thing is 

all of their modeling shows that the program has a much higher 

return than Chrisman. The fascinating thing is OMB in its last two 

presentations has quoted Chrisman. More importantly, while the 

President was governor of Texas, a requirement by Texas law for 

us to be funded, we have to be at least revenue-neutral and the 

comptroller of the State of Texas certifies to the legislature every 

year that we are at least revenue-neutral. 

So we are completely baffled by the fact that SBA does not recognize the modeling in the study of Chrisman. It is a complete mystery to us. 

Mr. LIPINSKI. Mr. Wilson, what has been the response with the 

cut in federal dollars for the money that, the non-federal dollars, 

the money that SBDCs are getting elsewhere? 

Mr. WILSON. Well, I can tell you candidly that obviously, as you 

know from your own state, that in probably about 2002, 2003, 

2004, states had the sharpest decline, the sharpest decline, in state 

revenues at any time since the Great Depression. And, yet, most 

states made a heroic effort to try to maintain their state funding 

of this program because they recognize the contribution it makes 

to their economy. 

And when you realize that small businesses contribute GAO over 

41 percent of the revenues to the treasury and then we look back 

and we see what a tiny percentage of federal funds are invested in 

small business growth and management, it just doesn’t match. 

Mr. LIPINSKI. Another question, Ms. Mills, Ms. Zinn had talked 

about the performance criteria and had suggested that the performance criteria for the women’s business centers is not clear that they 

don’t know what that is. Is there anything that you can say about 

that? 

Ms. MILLS. No, but I’d be happy to go back to the program director and find out if they have discussed it, what they have discussed, why it isn’t clear because it’s not a complicated criterion. 

Mr. LIPINSKI. Okay. Well, I would like to make sure we get that. 

I would like to hear back in regard to that. 

One other simpler question for Ms. Mills. What is being done to 

help manufacturers? Manufacturing is in a terrible condition in 

this country. My district has seen the loss in so many manufacturers. And we still have some, but they are struggling to hold on. 

What is being done to help? 

Ms. MILLS. Well, I think, you know, my department works 

through our resource partners. And, as I mentioned in my remarks, 

I think our partners are doing things. I mentioned the manufacturing assistance program, of which there are 31 of the 63 lead centers for SBDCs that are doing manufacturing assistance. SCORE 

has I believe 100 or 74 counselors or 174—I’ll have to clarify that 

for you—that are—I think it’s 174 counselors, who specialize in 

manufacturing. 

23

And then there is one women’s business center that certainly is 

dedicated down in South Carolina, Columbia, South Carolina, that 

was set up for manufacturing assistance. 

So I think our resource partners, we continue to talk about that 

initiative. It’s obviously very important to the President. We certainly discussed it this year with our resource partners. They have 

it on their radar screen. They’re continuing to— 

Chairman MUSGRAVE. Thank you very much. 

Mr. Fitzpatrick, any more questions? 

Mr. FITZPATRICK. Yes. I would like to follow up with Mr. Wilson 

on that colloquy you had with Chairman Musgrave on the issue of 

small business development centers’ presence at the disaster relief 

centers. 

Mr. WILSON. Yes. 

Mr. FITZPATRICK. You spoke specifically about Hurricanes Rita 

and Katrina in the Gulf Coast, but it is an issue, really, for disasters throughout the country. 

Mr. WILSON. Absolutely. 

Mr. FITZPATRICK. And relief centers opened all the time. My understanding of the way that the centers work is it’s sort of a bottom 

up approach. These disaster relief centers are chaired and organized at the city and county level. It’s a county emergency management director that would organize them. 

And I have been to them, to the relief centers, after disasters in 

Pennsylvania and in my district. And the major governmental and 

nongovernmental organizations or organizations like the Salvation 

Army, the Red Cross, the county emergency management, individuals are coming to those disaster centers a day or two after, say, 

a flood, trying to figure out how to get the water and the mud and 

the debris out of their home or the business, as the case may be. 

And it’s more of an immediate need they have. They’re looking for 

a solution. And they’re getting it mainly from those sort of nonprofit organizations. 

The SBA will be there as well because, I believe, the SBA has 

a loan, some sort of a low-interest loan, program to provide— 

Mr. WILSON. Absolutely, absolutely. 

Mr. FITZPATRICK. —to not just businesses but to individuals who 

need to— 

Mr. WILSON. They maintain two programs: one for businesses 

and one for homeowners. 

Mr. FITZPATRICK. I guess my question is if you’re looking for 

some leadership on the federal level, or from the SBA, to bring in 

the SBDCs to the disaster relief center. But the other way to do 

it is to have the SBDCs on the local level develop a relationship 

with the emergency management directors, state to state and city 

to city. Many times these natural disasters now were getting good 

with technology and predicting when they’re going to happen. You 

actually have a couple of days to get the disaster relief center up 

and running. 

The sort of emergency management folks in a particular locality 

should be contacting you, either directly or through the SBA, knowing what you can provide. 

Do you know what I’m saying, that there are two approaches? 

One is the top down. And as a local government guy myself as a 

24

county commissioner for ten years, I sort of prefer the local approach and get the SBDCs integrated with the emergency management individuals throughout the country and say, ‘‘This is what we 

can provide for you’’ because it is a complicated process. And if you 

get there a day or two after a disaster, people are all over the 

place. So they’re trying to organize. 

I just want to know what your thoughts are. 

Mr. WILSON. I would concur with that. And our local SBDCs are 

usually very familiar with all of the local resources in a community. This is not to criticize anyone, but at times when you bring 

someone in from FEMA, often their resources are the ones that are 

the largest resources and they are leading the effort in setting up 

the emergency centers. And I can tell you candidly that any number of state directors have had in various regions, not always by 

any stretch of the imagination, but it’s a very uneven reception. 

Sometimes the FEMA folks will say, ‘‘Not today.’’ 

Mr. FITZPATRICK. They say that to the SBDC? 

Mr. WILSON. Yes, sir. 

Mr. FITZPATRICK. So what if your advice? 

Mr. WILSON. Well, I think that Ms. Mills would be very willing 

to work with this Committee in trying to develop language in the 

statute such that when federal monies and centers are set up in 

disaster areas, that we’re included as one of those first responders. 

Mr. FITZPATRICK. Okay. Thank you. 

Chairman MUSGRAVE. Thank you very much. 

Ms. Moore, I don’t know how you could top the other round, but 

would you like to ask any more questions? 

Ms. MOORE. Madam Chair, I do have a problem. I talk a lot. And 

it’s frustrating to be a member of Congress when you don’t get to 

talk a lot, but I am geared up. 

Ms. Mills, I am just really excited about this UEP thing. I guess 

I want you to show me the money. You have said that we need to 

realize more cost efficiencies. What the UEP project really seeks to 

do is what the SBDCs have been doing, the women business initiatives have done, the SCORE has done. And UEP proposes to be a 

one-stop shopping service for all of these things. 

We have had a cut in SBA staff. These programs have been either zeroed out or flat-funded. And if we don’t know if there is any 

money connected with the UEP initiative. 

Is it possible that by being the sixth city, we are going to see 

some funds come down the pike in lieu of having additional resources through these other services? 

Ms. MILLS. You know, I really can’t answer that because I don’t 

know all of the structure on UEP. That is not something I am 

working on personally. I do know it’s a public-private partnership. 

And I know that all parties are coming to the table excited about 

this. They are pilots. So nothing is cast in stone. 

And I think all voices will be heard and should be heard. So I 

think as we move forward, as in any pilot, we will see what we 

want to recommend, ‘‘we’’ being you as well, ‘‘we’’ being the collective we. 

Ms. MOORE. So I am really happy about the private sector being 

involved. Of course, the private sector is involved in SCORE and 

numbers of other initiatives. So the cost efficiencies that could be 

25

realized by this one-stop initiative, I mean, if there is no funding 

connected to it, certainly we cannot lay claim to that as a cost efficiency. I mean, this is just a not funded sort of thing. 

I guess the other question since the green light is still on, I wanted to ask a question about the PRIME loans. These are investments in micro entrepreneurs to nonprofit micro enterprise development organizations that provide a lot of technical assistance. I 

mean, there is a lot of evidence and research out there that businesses survive at a much greater rate when they are offered mentoring technical service. And there’s no doubt that that is important. 

Can you share with us why the President has not chosen to fund 

this initiative? 

Ms. MILLS. PRIME is not one of my programs. So I’m sorry that 

it was here today. It should be with capital access. And so I’m 

sorry. But in general terms, you know, certainly you have heard 

from my partners here, SBDC, SCORE, WBC. And I know that 

they certainly give technical assistance to loan program. 

Ms. MOORE. Well, there is really no doubt. Okay? I appreciate 

your answer this is not one of your programs. 

Chairman MUSGRAVE. Mr. Bradley will be having that topic 

brought up in his subcommittee hearing. 

Ms. MOORE. Okay. Good. Well, you know, Madam Chair, I just 

want to reserve the right to write to Ms. Mills and to the department about these programs because I can tell you that as an American, not just representing my district but representing the entire 

country, I know we have got to come up with a strategy that keeps 

us in the game globally. 

And there is absolutely—I don’t think anybody on your panel or 

you or anybody in the administration, Democrat or Republican, 

would disagree that helping our small businesses, 95 percent of our 

employers, to generate, to grow is the strategy. And how we do that 

without this being a high priority, you know, behind funding for 

terrorism and other things that we know we have to do is simply 

beyond me. 

I don’t know how you grow businesses and cut funding, flat-fund 

it, zero it out, not fund it in the first place and eliminate programs 

that focus on mentoring and technical assistance. 

I hope that you will go back and be our advocate. Thank you. 

Thank you, Madam Chair, for you indulgence. 

Chairman MUSGRAVE. You’re welcome. And, of course, you can 

exercise your prerogative to write to them or contact anyone at any 

time. That concludes our— 

Mr. MOORE. Plane fare to come out to our district, we have funds 

for that, Madam Chair. 

Chairman MUSGRAVE. Thank you to all of our witnesses. We certainly appreciate your testimony. And this concludes the hearing. 

[Whereupon, at 11:59 a.m., the subcommittee adjourned.]

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