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CHALLENGES TO SMALL BUSINESS GROWTH

FIELD HEARING

BEFORE THE

SUBCOMMITTEE ON REGULATORY REFORM AND 

OVERSIGHT

OF THE

COMMITTEE ON SMALL BUSINESS 

HOUSE OF REPRESENTATIVES

ONE HUNDRED EIGHTH CONGRESS

SECOND SESSION

WASHINGTON, DC, MARCH 1, 2004

Serial No. 108–56

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 

PATRICK J. TOOMEY, Pennsylvania 

JIM DEMINT, South Carolina 

SAM GRAVES, Missouri 

EDWARD SCHROCK, Virginia 

TODD AKIN, Missouri 

SHELLEY MOORE CAPITO, West Virginia 

BILL SHUSTER, Pennsylvania 

MARILYN MUSGRAVE, Colorado 

TRENT FRANKS, Arizona 

JIM GERLACH, Pennsylvania 

JEB BRADLEY, New Hampshire 

BOB BEAUPREZ, Colorado 

CHRIS CHOCOLA, Indiana 

STEVE KING, Iowa 

THADDEUS MCCOTTER, Michigan 

NYDIA VELA ́ ZQUEZ, New York 

JUANITA MILLENDER-MCDONALD, 

California 

TOM UDALL, New Mexico 

FRANK BALLANCE, North Carolina 

ENI FALEOMAVAEGA, American Samoa 

DONNA CHRISTENSEN, Virgin Islands 

DANNY DAVIS, Illinois 

GRACE NAPOLITANO, California 

ANI ́BAL ACEVEDO-VILA ́ , Puerto Rico 

ED CASE, Hawaii 

MADELEINE BORDALLO, Guam 

DENISE MAJETTE, Georgia 

JIM MARSHALL, Georgia 

MICHAEL MICHAUD, Maine 

LINDA SA ́ NCHEZ, California 

BRAD MILLER, North Carolina 

[VACANCY]

J. MATTHEW SZYMANSKI, Chief of Staff and Chief Counsel 

PHIL ESKELAND, Policy Director 

MICHAEL DAY, Minority Staff Director

SUBCOMMITTEE ON REGULATORY REFORM AND OVERSIGHT 

EDWARD SCHROCK, Virginia, Chairman 

ROSCOE BARTLETT, Maryland 

SUE KELLY, New York 

TRENT FRANKS, Arizona 

JEB BRADLEY, New Hampshire 

STEVE KING, Iowa 

THADDEUS MCCOTTER, Michigan 

[RANKING MEMBER IS VACANT] 

DONNA CHRISTENSEN, Virgin Islands 

ENI F. H. FALEOMAVAEGA, American 

Samoa 

ANI ́BAL ACEVEDO-VILA ́ , Puerto Rico 

ED CASE, Hawaii 

DENISE MAJETTE, Georgia

ROSARIO PALMIERI, Senior Professional Staff

(II) 

C O N T E N T S 

WITNESSES

Page 

Griffin, Mr. Randy, CSRA Business Lending ........................................................ 3

Elam, Mr. Terry, Augusta Technical College ........................................................ 5

Logan, Mr. Henry H., Georgia Small Business Development Center Network .. 8

Wilbanks, Mr. Patrick, Economic Development Institute of Georgia Tech and 

Georgia Rural Economic Development Center .................................................. 10

Presnell, Mr. Ed, Augusta Metro Chamber of Commerce .................................... 12

Fowler, Hon. Nuby, Small Business Administration ............................................ 14

Blocker-Adams, Ms. Helen, HBA Group ................................................................ 29

Hughes, Mr. Jesse, Accountant .............................................................................. 30

APPENDIX

Opening statements: 

Schrock, Hon. Ed .............................................................................................. 38

Prepared statements: 

Griffin, Mr. Randy, CSRA Business Lending ................................................. 40

Elam, Mr. Terry, Augusta Technical College ................................................. 43

Logan, Mr. Henry H., Georgia Small Business Development Center Network ............................................................................................................... 45

Wilbanks, Mr. Patrick, Economic Development Institute of Georgia Tech 

and Georgia Rural Economic Development Center .................................... 50

Presnell, Mr. Ed, Augusta Metro Chamber of Commerce ............................. 54

Fowler, Hon. Nuby, Small Business Administration ..................................... 56

(III) 

(1)

CHALLENGES TO SMALL BUSINESS GROWTH 

MONDAY, MARCH 1, 2004

HOUSE OF REPRESENTATIVES

SUBCOMMITTEE ON REGULATORY REFORM AND

OVERSIGHT

COMMITTEE ON SMALL BUSINESS

Washington, D.C. 

The Subcommittee met, pursuant to call, at 2:40 p.m. at the Historic Richmond Hotel, 725 Greene Street, Augusta, Georgia, Hon. 

Ed Schrock [Chairman of the Subcommittee] presiding. 

Present: Representatives Schrock and Burns. 

Chairman SCHROCK. Good afternoon, everyone. My name is Ed 

Schrock, and I am the Subcommittee Chair of the Regulatory Reform and Oversight Committee of the Small Business Committee, 

and I am absolutely delighted to be here in Augusta today with my 

good friend Max Burns. 

I have never been to Augusta but, man, I was an architect major 

in college, and I have been going nuts here today. It is just absolutely magnificent, and I think we will probably get my wife and 

I to come back so I can spend some time and look through some 

of these old buildings. 

Max really wanted me to come here today just to talk to the folks 

of the 12th District about some business issues. We have been 

doing this in different parts of the country. Max Burns—I thought 

I was high energy, and I am, but I am a slacker compared to Max 

Burns who is everywhere all the time doing everything he can for 

the folks down here, and I think you were———. 

Chairman SCHROCK. And he does a great job for the folks down 

here, and I am delighted to be able to be with him today so we can 

listen to some of the issues that involve small businesses and the 

organizations that deal with small businesses, and what I am finding is the message is the same as when we were in Florida, when 

we were in South Carolina, my home state of Virginia, and of 

course the hearings we have had in Washington, D.C. 

In my role as the chairman of this committee I often hear from 

small businesses on challenges to economic growth and prosperity. 

Max has told me what an amazing group of entrepreneurs and 

community leaders reside in this district and, frankly, I am anxious 

to hear from many of them today. 

I want to thank Max for making this event possible. 

Small businesses in America employ more than half of all private 

sector employees, and create 60 to 80 percent of all net new jobs 

2

in this country. Small businesses are always the leaders in bringing our economy back to strong economic growth and job creation. 

Small businesses in this country face the same problems as many 

other businesses: High energy prices, the high cost of health insurance for employees, the high cost of regulatory compliance, and a 

tax code that is not always helpful to them. In fact, most of the 

time it is not helpful at all. 

It is incumbent upon Congress and the President to do everything in our power to remove barriers to small businesses’ success 

and survival, and Max and I are working on many initiatives in the 

House of Representatives to do just that. 

We have worked on tax relief for small businesses, we have 

passed a bill to provide association health plans, and health savings accounts, and our committee is working to reauthorize the 

Small Business Administration in a way to make it help the largest 

number of small businesses, including manufacturers. 

I am absolutely convinced that the reason we have as many regulations as we do is because the bureaucrats that sit up in Washington, D.C. have to create regulations to justify their existence. 

Frankly, I am and sick and tired of that; I think it has gone on 

entirely too long, and hopefully these hearings will help generate 

legislation to put a stop to that sort of thing. But like many of the 

bureaucrats they are probably going to be there a lot longer than 

I am going to be in Congress, and they think they can outwait us. 

Well, they have got a surprise on their hands. I intend to stay, and 

Max intends to stay until we get something done about it. 

So with that, Max, let me thank you for inviting us, and I look 

forward to the witnesses’ testimony, and if you do not mind if you 

can introduce them so we can get started that would be great. 

Mr. BURNS. Thank you, Mr. Chairman. I want to add my welcome. I appreciate the opportunity to hold a field hearing here in 

Augusta, Georgia. 

We have the opportunity to do this periodically in Washington. 

Unfortunately, sometimes when we do it in that environment it is 

not as informative, it is not as intense and as detailed as we can 

do here in Augusta and throughout the district. 

Actually I will be doing two hearings this week, one here in Augusta, and one out in Houston on Friday on an agricultural issue 

dealing with animal identification. So when you start dealing with 

issues, the best place to learn about them is where the challenges 

lie, where they exist. 

So I want to thank the Chairman for coming to the 12th District 

to join us here today. I told him about our weather, and indeed it 

is beautiful. I told him about our food, and Calvin was great, Calvin Green was great in sharing his expertise with us———. 

Chairman SCHROCK. I am taking Calvin home with me. 

Mr. BURNS. That is right, and I had a chance to take him by Enterprise Mill for a minute or two just to get a feel for the architecture and the history and the heritage of our community. 

And we have, we are home, and you know it, to a number of 

small businesses in our communities and in our region that really 

contribute to our local economy, and what we are going to talk 

about today is jobs. We want to talk about opportunity, we want 

to talk about the future. 

3

And what we asked this panel to do is to bring us your input, 

bring us your ideas, bring us your suggestions, and once we have 

an opportunity to hear from these individuals we are going to open 

up our dialogue and give any of you a chance to provide your input 

to us, and we welcome that. 

The design of the hearing is really to inform and to enlighten us, 

and as the Chairman pointed out we have some opportunities for 

improvement, we have some challenges; we have successes as well. 

So we want to celebrate the successes, but we want to focus on the 

challenges and making those better, and ensuring that indeed we 

create jobs in Augusta, and Richmond County, and the CSRA on 

both sides of the river, and ensure that indeed the future is bright 

for our community. 

I appreciate Chairman Schrock coming to the 12th District of 

Georgia. 

Chairman SCHROCK. Max, may I just make one more comment? 

Mr. BURNS. Sure. 

Chairman SCHROCK. Max and I really could not serve in Congress if it were not for the strong support we have from our wives, 

because it takes us out of town and away from our family a lot, 

and I just want to recognize his wonderful wife Laura who is the 

back of the room. 

Mr. BURNS. She slipped in. 

Chairman SCHROCK. About the only time she is able to see Max 

is when he is doing things like this and, Laura, we appreciate you 

being here. 

Mr. BURNS. It is a challenge, but it is a great opportunity, and 

I appreciate the privilege. 

I want to start with Randy Griffin. I am going to ask Randy to 

share with us some expertise and some insights that he has. He 

is the President of CSRA Lending—what is the right word, Randy, 

lending? 

Mr. GRIFFIN. Business lending. 

Mr. BURNS. —business lending, I had to get the right combination of words—but the key thing that he provides to our community 

are opportunities for financial support and assistance, as well as 

other measures of small business support. 

So, Mr. Griffin, if you would please share with us your insights 

on small businesses and small business challenges and successes. 

STATEMENT OF RANDY GRIFFIN, CSRA BUSINESS LENDING 

Mr. GRIFFIN. Well, thank you, Chairman Schrock and Congressman Burns for holding this hearing. On behalf of our board of directors and all our small businesses that we work with in the area 

we appreciate this opportunity to talk to you about things that are 

going on here in eastern Georgia, and primarily things that the 

Small Business Committee has oversight over. 

Chairman Schrock, I am Randy Griffin, President of CSRA Business Lending. We are a nonprofit corporation that is licensed and 

has licensed lending agreements with the Department of Agriculture, the Department of Commerce, but primarily the agency 

that we have a relationship with and I want to talk to you about 

today is the U.S. Small Business Administration. 

4

Over the last five years our organization has funded 189 projects 

for $87.4 million in the Augusta area, and those projects have created 1,352 jobs. 

Since our expertise is small business and rural loans, I will talk 

to you in those areas mainly about rural communities, and the first 

program I want to speak to you about is the SBA–504 program. 

Mr. Chairman, as you know right now there is a train coming down 

the track that the 504 program that is our primary lending program operates at zero cost to the federal taxpayers through fees 

that are paid on the loans, and are collected by the Small Business 

Administration. The reauthorization of that program has to reoccur 

by March the 15th, and I am sure that is something that you are 

well aware of. 

There are really three issues. In addition to reauthorization 

being the most pressing with the 504 program, there are two more 

things that really could help our process. And the first one I want 

to give you an example. I am going to show you two SBA–504 loan 

applications. 

Congressman Burns, this is one in downtown Sylvania, your 

home town. This is recently a Mexican restaurant we did here in 

Augusta. Now, Congressman, if I take a yardstick and I put it on 

those applications, this Mexican restaurant is just a hair over four 

inches thick. Congressman Burns, the cotton gin that we did in 

Sylvania is just a hair under four inches thick. 

Now, I have my hand an SBA Low-Doc application from the 7(a) 

program, in SBA’s other program, that is two pages. 

Chairman SCHROCK. You look like a ditech.com commercial. 

Mr. GRIFFIN. If SBA can have a low-documentation application 

for smaller loans in the 7(a) program, certainly they can have it in 

the 504 program, and prevent both myself, and small businesses, 

and banks from having to go through this process to obtain capital 

in smaller amounts. 

One other issue that is coming up that would be covered by 

House Bill H.R. 2802, the reauthorization act in the 504 program, 

is the changes in definitions of rural areas. 

Now, Congressman Burns, both you and I spend a lot of time in 

Swainsboro, that is part of our territory. Swainsboro recently went 

over 20,000. When they did that in the eligibility for the 504 program they are no longer considered a rural community. 

One of the other provisions of 2802 will make Swainsboro automatically eligible under the rural provisions for the 504 program 

without job creation. 

Chairman Schrock and Congressman Burns, I would urge you to 

contact Chairman Manzullo of the Small Business Committee and 

Speaker Hastert, and if there is any way possible we can get 2802 

to the floor for a vote prior to March 15th and get a bill signed by 

President Bush that is definitely a priority for America’s small 

businesses. 

Congressman Schrock, in Norfolk in your area Tidewater Business Financing Corporation from the stats I saw has done $18.5 

million, funded 16 projects. Excuse me, has funded 19 projects in 

the last 16 months in the same program. So it works here in Augusta, and it works in your hometown. 

5

The second issue I want to talk about is the SBA 7(a) loan program. As you are aware, there have been major funding problems 

in the SBA 7(a) program. The pace of loans has far exceeded the 

amount that was appropriated by Congress both under the continuing resolution and proposed in the 2004 budget. As a result of 

that, SBA has had to put a cap on the program, and as a long-term 

solution they are proposing to reduce the maximum amount of the 

guaranty under the 7(a) program from 75 percent down to 50 percent. 

We can think of several, almost close to a dozen SBA 7(a) loans 

that we have packaged in the eastern portion of the state of Georgia that combined have probably saved close to 1,500 jobs where 

Rural Bank has done that loan, and would have only done it if the 

federal government would have stepped in in that troubled business and provided a 75 percent guaranty. 

I would urge you to find a way—and, Congressman Schrock, I 

know you are on the Budget Committee as well—one of the solutions that I think would make sense is to eliminate the USDA B&I 

program. It is a program that makes guaranties very similar to the 

7(a) program. The program has a very high subsidy cost, and a 

very high appropriation. Those funds could be diverted to the 7(a) 

program. The programs are duplicative, they in essence are the 

same except the B&I program is larger. 

There has not been a B&I loan done in the state of Georgia in 

the last two years, even though there has been close to $14 million 

allocated to it. 

The reason is if you think these applications are thick, you have 

seen nothing yet. I literally would have had to have brought a 

wheelbarrow in here to get that application in. 

In closing, Congressmen, I would hope that the 7(a) program as 

you work on that issue in the Small Business Committee that you 

find a way to get that program funded and appropriated and continue to have the 75 percent guaranties under the SBA 7(a) program. 

That concludes my comments, and I would be happy to answer 

any questions you have, or we can hold those until everyone has 

testified. 

[Mr. Griffin’s statement may be found in the appendix.] 

Chairman SCHROCK. Thank you, Randy. 

Mr. BURNS. Thank you, Mr. Griffin, we appreciate your input. 

Like you say, we will probably have a chance to have a dialogue 

discussion when we complete the prepared statements. 

I want to next introduce Mr. Elam, Dr. Terry Elam, who is the 

President of Augusta Technical College. He has done a great job for 

our community in helping prepare a capable and quality workforce. 

I know that one of his primary focuses is on preparing workers 

and those in our communities for the active workforce. Dr. Elam, 

if you would share with us your input. 

STATEMENT OF TERRY D. ELAM, AUGUSTA TECHNICAL 

COLLEGE 

Mr. ELAM. Chairman Schrock and Congressman Burns: I am 

happy to be here today. 

6

My comments will be more on some successful things that we are 

attempting to do at the college, because the job market being built 

on small businesses of course will be the place that most of our 

graduates will go to work. 

We are under a pretty strict mandate from the State that 85 percent of our students go to work in the field that we train them in, 

so it is very important that we have businesses to support those 

students once they graduate. 

We have always been involved in economic development, but we 

have take two new initiatives in the last four or five years, and we 

are beginning to see some success on that, and I of course talk 

about both of those in my prepared document. 

I will not need the full five minutes, but I would like to just talk 

to you about two things that we were involved in. Seven years ago 

we participated with the local government and other organizations 

to get a grant from EDA to build an incubator. The incubator was 

originally going to be run by the local Richmond County through 

a contract with another agency. That incubator was built next to 

our campus. As a matter of fact, our foundation sold the property 

to the government so they could build the small business incubator. 

It is about 18,000 square feet. 

To be honest with you, it struggled at the first because of the 

high cost of operating the facility. Having to do all of that was just 

a costly thing for the government, and of course they just did not 

have an office that was in charge of that. 

We came in about a year and a half into the operations of the 

particular facility, and we agreed by handshake to take over the 

Richmond County Small Business Incubator. We basically staffed 

it with one person, but we kept the structure that was already 

there, the advisory board, the support group, all of the things that 

we put together in the incubator, including Internet connections 

and so forth. The incubator was about fifty percent full at that 

point. 

We cut the cost, and we then brought in one other organization, 

the Quick Start program that helps new businesses in Georgia, primarily large businesses, but just having them there was an inspiration to the folks in the incubator. We immediately went from five 

clients up to about nine, and now we are at eleven. 

We do have graduates of the incubator that have gone on now 

to establish their businesses off-site. Two of those were featured in 

the newspaper this past week, Double-dot-com, and Mental Soup. 

They have combined with another company to form a very large 

company in the information technology field. 

We have seen success with this, but the issue is we do not have 

enough money to build these incubators in all our communities, 

and what we would like to see is some way that the federal government along with the state in partnerships would develop strategies 

that we could do virtual incubators, that small businesses in 

Stillmore, Georgia could be a part of an incubator and have access 

to that information. 

They may not need the space, but they need the business expertise that comes from that type of partnership. So we are proposing 

that in some way we accelerate the idea of incubation, but with 

technology today you do not have to have the physical facility, beVerDate 0ct 09 2002 19:31 Aug 17, 2004 Jkt 000000 PO 00000 Frm 00010 Fmt 6633 Sfmt 6633 G:\HEARINGS\93893.TXT MIKEA
7

cause you could very well be part of that incubator that we have 

on a virtual sense anywhere in the country, anywhere in the world, 

but primarily we are talking about our country. So we think that 

that is one that will work. 

When we started the incubator I can tell you we were told how 

unsuccessful it would be, and we would not allow that to happen. 

We just would not accept failure as a way to do business. 

So we are investing about $30,000 of Augusta Tech money, and 

we will get it back. Close to thirty employees coming out of the 

building each year who are productive, and they are able to live 

and produce, and hopefully grow to the point that most of them 

will be out of the incubator within the three-year time limit. 

The other thing that we decided to do is that a lot of our students wind up in business. They have technical skills, they know 

how to go out and do things, they know how to make things, they 

know how to create, but they do not have the business savvy, so 

we have decided to start teaching entrepreneurship as a course to 

students who are currently in school, or even students who are 

coming back to school, and in that entrepreneurship course it is 

really teaching them about the legal environment, how to start up 

a business, how to do a business plan, how to do a plan for success, 

and obviously the legal environment that you are going to have to 

operate in. Understanding the legal environment is so important. 

It is not that we have to agree or disagree with the environment, 

but you must understand it. 

The best intentions could still lead to failure if you do not hit 

deadlines based on the legal environment, whether it is a state, 

local, or federal lay. And, by the way, federal law, state laws are 

no less cumbersome because you can still run into a regulatory 

issue that will just sidetrack your business. 

The other thing we are trying to teach these young entrepreneurs is that you have to put a certain amount of your own capital, not necessarily money, but the best way to make a pay check 

is also work in your business. Everyone cannot come up with a 

bright idea that someone else is going to do all the work, so we are 

trying to instill in these young entrepreneurs that you must be 

willing to put in some capital based on what you can do, and we 

think that these two programs will help our community in the successful ventures that will be started, because most of the jobs in 

the future will come from small businesses, small start-ups. The 

number that we can keep in business, and some will become gazelles and just grow and flourish. We do not know when we are 

going to have the next EZ-Go, a business that was started here and 

how it is huge; we do not know when we are going to have the next 

Club Car; we do not know when John Deere is going to start again. 

Because all of these businesses started off small. 

I do not know of any business in this country that started off at 

the size it is today. So all of our business starts are from small 

businesses. The more savvy students have, the more entrepreneurship spirit that they have, the better and the strong our community, and the better and the stronger our nation is going to be. 

Thank you for this opportunity. 

[Mr. Elam’s statement may be found in the appendix.] 

Chairman SCHROCK. Thank you very much. 

8

Mr. BURNS. Thank you, Dr. Elam. We appreciate your input. 

I want to recognize Mr. Hank Logan. Hank is the State Director 

of the Georgia Small Business Development Network, SBDC, and 

as a graduate student too many years at Georgia State I worked 

with the SBDC out of that environment and with small businesses 

in and around the Atlanta area, and I will tell you as a young professional with already a Master’s Degree in business, an engineering background and a Master’s Degree, it was a tremendous opportunity for me to work with this particular agency as it works with 

small businesses. 

So, Mr. Logan, if you would please share with us your input. 

STATEMENT OF HENRY H. LOGAN, GEORGIA SMALL BUSINESS 

DEVELOPMENT CENTER NETWORK, THE UNIVERSITY OF 

GEORGIA 

Mr. LOGAN. Chairman Schrock, Congressman Burns: 

Thank you very much for asking my participation in this very 

important hearing today. It has been my pleasure to be with the 

University of Georgia SBDC Network for fourteen years now, and 

I have become quite a disciple. I think it is quite interesting, I did 

not realize it until today, Congressman Burns, but 25 percent of 

our nineteen offices are located within the 12th District. 

Mr. BURNS. That is good. 

Mr. LOGAN. We are really pleased. 

Mr. BURNS. That is because 40 or 50 percent of all education in 

the state of Georgia is in the 12th District. 

Mr. LOGAN. As you know, our program is a partnership with the 

Small Business Administration and nine universities and colleges 

throughout the state, and through this network we provide business consulting and continuing education opportunities to all Georgia entrepreneurs. 

Chairman Schrock mentioned some of the important statistics 

about small business, and we hear those quoted on a daily basis. 

One of the more interesting statistics I believe I have ever heard 

is that at any given point in time 6.2 individuals out of 100 over 

the age of 18 is in the process of starting a business venture. That 

is quite amazing when you figure that you have 500,000 businesses 

started every year that actually come to fruition. 

Now, I feel like, and have thought for years that by working with 

the thousands of businesses—5,431 to be exact—during the year 

we are positioned to get a clear perspective on the challenges and 

special issues that face small businesses and must be overcome on 

a daily basis. 

We do both formal and informal needs assessments so we can 

keep a pulse on the business community to develop our consulting 

tools and our training programs to be a direct response to the 

greatest need. 

Now, over my years with the SBDC the most frequently-stated 

obstacle to small business owners and aspiring entrepreneurs is 

their need of access to capital. Obviously Randy’s testimony talking 

about the working capital loans, I think it is without question a big 

issue. I think there is also an indisputable fact, though, that most 

small business owners do not have the knowledge and experience 

9

that is needed to prepare loan document requests, certainly not as 

we see in front of us here. 

Now, I would say further that most small business owners do not 

even have the experience or knowledge that gives them a reasonable chance to succeed in their venture. I think that probably equal 

to the problem of a lack of access to capital is the lack of ability 

to manage and even do the necessary paperwork to obtain that capital. 

As a matter of relaying this message I would like to share a client story which I always found very interesting. It happened just 

this past—well, actually within the past eight months. Mr. Tim 

Moore was the owner of American Equipment Services. He was a 

military reservist, and he was called to active duty and eventually 

deployed to Iraq. Now, initially Tim laid off his two employees, he 

canceled his business property lease agreement, and he employed 

his business manager, his bookkeeper, to fill out the necessary paperwork to apply for a military reservist’s economic injury disaster 

loan. The SBA rejected the loan due to incomplete and inconsistent 

information. 

While Tim was serving in Iraq, his wife Vicki was referred to the 

Valdosta State University SBDC for assistance in preparing another loan package. With the assistance of the SBDC consultant 

Scott Manley, Tim and Vicki were eventually awarded the 

MREIDL loan that hopefully will tide the business over until Tim 

can return from active duty. 

Now, the interesting aspect of the Morris case was during the 

course of their counseling session it became obvious that they had 

no idea that they were keeping inadequate financial records over 

the life of their business, which was approximately four and a half 

years. They had no idea that the financial statements they were receiving from their bookkeeper were totally inadequate and very 

problematic in this case. 

After working with Scott Manley for approximately three months 

they did receive a loan, but they also hired a more professional 

bookkeeper. And I will tell you today that Tim and Vicki probably 

would not be able to fill out a loan package like this, but they 

would at least be able to talk to a loan officer with some reasonable 

certainty about the facts of their business. 

And the other thing is they might not be able to prepare any 

kind of sophisticated financial statements, but they certainly have 

a good basis of understanding now of what they are getting, and 

they do not just routinely file them away without looking at them. 

So we feel like that in the truest sense that the assistance that 

they received from the SBDC was probably equally valuable to the 

loan. 

Now, I will go on to say today, and it will come to nobody’s surprise, the MBAs, the people graduating with MBAs are not starting 

businesses. As Dr. Elam said, it is the electricians, it is the information technology consultants, it is the veterinarians, it is the 

music teachers, and these people have excellent technical skills, 

but they do not have the first beginning of the basic knowledge 

that they are going to need to create that business and make it 

successful. 

10

Just a comment. The Georgia SBDC Network, it has been a real 

pleasure for me to be with them. We are proud of the service that 

we have given to our state and the entrepreneurs in our state. 

We know we are successful because every year we do an impact 

analysis on our consulting, and every year we are able to show that 

the incremental tax revenues generated by our clients are over and 

above those of the average Georgia business. As a matter of fact, 

it far exceeds the budget for the Georgia SBDC Network. 

Thus, the federal and state governments are earning a positive 

return on the investment that Georgia SBDC Network gains. 

Only through the continued support of Congress would the SBA 

and the SBDC be empowered to assist small businesses to bring innovations to the world market and jobs to our citizens. 

And, Congressman Burns, Chairman Schrock, I appreciate the 

support you have given in the past, and look forward to answering 

any questions you have. 

[Mr. Logan’s statement may be found in the appendix.] 

Chairman SCHROCK. Thank you very much. 

Mr. BURNS. Thank you, Mr. Logan, I appreciate it. And I commented to Hank earlier, it is very effective when he provides me 

information from the SBDC that is specific to the 12th District of 

Georgia, and I appreciate that, because it helps me visualize, 

quote, readily what SBDC has done in our environment. 

Let us shift a bit. Along the same lines I appreciate Patrick 

Wilbanks being with us here today. He is with the Georgia Tech 

Economic Development Institute. In partnership with SBDC and in 

partnership with a number of other support organizations and consulting organizations they help our small businesses being successful. 

I believe that Mr. Wilbanks is going to share with us how we are 

focusing on technology and technology-based entrepreneurship, the 

types of things that we are working hard to do in Georgia to create 

jobs in the high-tech environment. So, Mr. Wilbanks, share with us 

your input. 

STATEMENT OF PATRICK WILBANKS, GEORGIA TECH ECONOMIC DEVELOPMENT INSTITUTE AND GEORGIA RURAL 

ECONOMIC DEVELOPMENT CENTER 

Mr. WILBANKS. Chairman Schrock and Congressman Burns, on 

behalf of Georgia Tech’s Economic Development Institute and the 

Georgia Rural Economic Development Center, I appreciate this opportunity to testify today regarding the opportunities to improve 

small business growth in Georgia as well as the nation. 

Entrepreneurs and small business growth are vital to growing 

Georgia’s economy. Small businesses with less than twenty employees generated 61 percent of all small business growth over the last 

four years, creating 50,000 jobs in Georgia. These businesses represent 85 percent of all Georgia firms. 

Unfortunately, rural communities in Georgia have a difficult task 

in growing technology-focused entrepreneurs due to lack of resources, vision, and exposure to technology and innovation. In fact, 

over 75 percent of Georgia’s mostly-rural Tier 1 and Tier 2 counties 

experienced declining, flat, or only single-digit growth of small 

businesses with fewer than 20 employees for 1999 to 2003. 

11

Other Georgia statistics represent a need for improvement in our 

climate for technology-focused small businesses. Patent applications are below national averages in Georgia, and rural entrepreneurs in Georgia lag national averages in research and development commercialization. 

Georgia Tech has a long history of helping to grow Georgia’s 

technology-focused entrepreneurs and small businesses through 

several organizations. Our Economic Development Institute, EDI, 

which is a member of the Manufacturing and Extension Partnership, a national organization, the Advanced Technology Development Center incubators, ATDC, Georgia Tech Research Institute, 

and ENet which is a new branch which provides entrepreneur development assistance not to entrepreneurs, but to the communities 

within. 

Georgia Tech EDI has been involved in assisting many small 

businesses in the 12th Congressional District, including recent clients Jebco, Incorporated, Career Personnel, Jenkins Comfort Systems, and Storm Shelter Electronics Corporation. 

To get their innovations to market, technology-focused entrepreneurs need a wide variety of management and technical resources and assistance that are seldom available in rural communities. In 2001 EDI partnered with East Georgia College’s Georgia 

Rural Economic Development Center, GREDC, in an innovative effort to foster entrepreneur development in rural Georgia. The 

GREDC and EDI program has helped 110 entrepreneurs and small 

firms start and grow businesses in a 21-county region of rural 

Georgia that have created more than 430 jobs. 

Currently Georgia Tech and the Georgia Department of Economic Development are proposing to replicate the success of this 

rural program in other areas of Georgia, rural Georgia, to improve 

the entrepreneur and small business climate by providing the technology resources needed to grow innovative businesses. 

The first component of this proposal is Georgia Tech ENet that 

works with the rural communities and the Georgia Department of 

Economic Development will educate and assist rural communities 

in enhancing entrepreneur development activities. 

The second component is Innovation Centers located in Georgia’s 

smaller cities outside of Atlanta will identify leading problems in 

industry and develop innovative solutions through research and development. 

And the third component of this is Georgia Tech EDI’s Business 

Start-Up Facilitators which will provide on-site management and 

technical assistance and mentoring to technology-focused entrepreneurs and small businesses with fewer than 20 employees in 

rural Georgia’s Tier 1 and Tier 2 counties. The goal will be to commercialize these innovative solutions into new products and services. 

These efforts by Georgia Tech and the Georgia Department of 

Economic Development will leverage many state and federal resources, as well as complement Hank’s existing Small Business Development Center network. These combined resources will provide 

more specialized management and technical assistance to entrepreneurs and start-ups to foster innovative businesses in rural 

Georgia. 

12

In addition, there are some other opportunities to improve Georgia small business climate and grow entrepreneurs. We need to upgrade the SBA program to better assist entrepreneurs and businesses. The 7(a) loan program needs to be increased to the $2 million level to include a $1 million guaranty, or adjust the 504 program to allow debt refinancing. Also, the unscheduled shut-downs of the 7(a) loan programs 

needs to be prevented. There is a lot of good, legitimate business 

opportunities that are not able to be financed through SBA because 

of these issues. 

We need to continue tax relief to small business to spur economic 

development. The Jobs and Growth Tax Relief Reconciliation Act of 

2003 is an effective federal initiative to encourage small businesses 

to purchase new, more efficient equipment to become competitive, 

especially in our global marketplace today where manufacturing is 

having a tough time competing. 

We need to expand youth apprenticeship programs, or youth entrepreneurship programs such as REAL, Rural Entrepreneurship 

Action Learning, in Georgia. We need to continue to expand programs to assist and support our growing number of immigrants 

and minority entrepreneurs. The Second Annual Regional Minority 

Enterprise Conference and Expo held here in Augusta last week 

exemplifies efforts to assist minority and nonminority business development by regional, state, and federal agencies. Georgia Tech 

EDI just recently opened the Georgia Minority Business Development Center funded by the Department of Commerce’s Minority 

Business Development Agency. 

Small businesses are the heart and soul of our economy. They 

generate jobs and revenue, and manifest the American traditions 

of innovation, self-reliance, and a pioneering spirit. But entrepreneurs and small business owners do not have access to all the 

resources they need to grow. It has been our experience that selected tax incentives and loan opportunities, low-cost technical assistance, and sometimes simply the right information at the right 

time can determine whether these small businesses thrive or not. 

Thanks a lot. 

[Mr. Wilbanks’ statement may be found in the appendix.] 

Chairman SCHROCK. Thank you very much. 

Mr. BURNS. Thank you, Mr. Wilbanks. I appreciate your input. 

We are going to now ask Mr. Ed Presnell, the President of the 

Augusta Chamber of Commerce, an individual who works with literally hundreds of small businesses in our community to share 

with us his input and his insights into the opportunities as well as 

the challenges that we face here in the CSRA. Mr. Presnell. 

STATEMENT OF ED PRESNELL, AUGUSTA METRO CHAMBER 

OF COMMERCE 

Mr. PRESNELL. Thank you. 

I would like to take the opportunity to thank the Chairman, Congressman Burns, and the others on the Committee on Small Business for taking the opportunity to be in Augusta today and explore 

our needs as we try to grow our community. 

I am Ed Presnell, and I am President of the Augusta Metro 

Chamber of Commerce. Our Chamber is made up of over 1,800 

13

members, most of which are small businesses. Each one of our 

members faces the challenges of an increasingly competitive and 

turbulent marketplace. I marvel at the ingenuity and resourcefulness of our small businesses as they turn their dreams into reality. 

We are all aware that launching a small business is a risky activity and that the failure rate sometimes is high. But those that 

do succeed and grow are the backbone of our economy , and the 

greatest producer of new jobs in our community. That is why the 

Augusta Metro Chamber of Commerce has focused on providing 

services to small businesses, as well as assuring that our community is a business-friendly environment. I know your Committee 

shares the same goals. 

Small businesspeople often start with little more than a vision. 

Many obstacles stand between them and even starting a business. 

The greatest of these obstacles of course is money. Everyone has 

at one time had an idea for a business. Most of these pass quickly 

from mind as the reality of what it takes to start a business ultimately sets in. Even with the many financing options today, funding a new small business remains a challenge. 

Many individuals pass through our Chamber looking for assistance in starting up a business. We often refer them to many of the 

people that you have already heard from. The questions, however, 

are usually the same. How do I get funding for my business? and 

What are the rules and regulations that I must follow? 

Traditional lending sources often shy away from the risk involved in starting a small business. That is why it is so important 

that government support programs targeted towards small business are continued. Secondly, regulation of businesses from the federal level to the local level needs to be simplified and centralized. 

Small business owners often lack the experience with government 

and its maze of procedures, therefore eliminating extraneous regulations and centralizing their administration is important to facilitating new businesses. 

Once a business is established there are new challenges. These 

include finding and keeping quality employees. Businesses of all 

sizes face the challenge of finding the proper mix of skills and education to meet their needs, but small businesses often face an extra 

challenge offering a pay and benefit package that allows them to 

attract quality employees and retain them. 

Health care is an increasingly important part of our lives. As 

costs rise for care, and insurance costs rise along with them, the 

small business owners and their employees are often left on the 

outside looking in. Premiums for quality insurance are beyond the 

reach of most small businesses. Owners find themselves placing 

their future at risk so as to keep their business growing, and employees find themselves forced to look for employment where they 

are able to get better benefits. Programs that allow for increased 

options for small businesses in obtaining health care should be pursued. 

Retirement is the second benefit often associated with employment that is difficult for small businesses to provide. The costs and 

administrative hurdles of providing savings for the future often 

make this needed consideration far too optional for small business. 

As Chairman Alan Greenspan indicated in his comments last week, 

14

our country faces a growing crisis regarding retirement savings. I 

am afraid those involved in small business might be especially vulnerable. Small-business-oriented retirement savings plans should 

be considered. 

Small business is the strength of the American economy. Every 

megacorporation at one point was a small business, and tomorrow’s 

will be as well. Small business does not outsource its employees to 

foreign countries or command expensive incentives to expand in a 

community. Small business simply needs an environment ripe for 

growth. In order to secure the future of small business in our country, and therefore secure our economy of the future, we need to 

make sure that we encourage small business development by removing roadblocks to success. 

In closing, I would like to thank the Committee for taking the 

time to come to Augusta. On behalf of the membership of the Augusta Metro Chamber of Commerce and all small businesses in our 

community, thank you for the work you do to improve opportunities for business, and please continue to look for new ways that we 

can make small business more competitive in today’s marketplace. 

[Mr. Presnell’s statement may be found in the appendix.] 

Chairman SCHROCK. Thank you. 

Mr. BURNS. Thank you, Mr. Presnell. I appreciate it. 

We are delighted to have with us also today Ms. Nuby Fowler. 

Thank you for joining us. I know travel is always a challenge. 

There is a reality that we all face as we move around, and you 

have a very large region, and I know that you have the entire 

Southeast. 

Let me introduce Ms. Fowler. She is the Regional Administrator 

for Region IV for the U.S. Small Business Administration, responsible for delivering SBA programs in Alabama, Florida, Georgia, 

Kentucky, Mississippi, North Carolina, South Carolina, and Tennessee. 

We are delighted that she was able to join us here today in Augusta, Georgia, so that we could share, and I think the great thing 

is she has had an opportunity to hear from many of you who work 

with her agency as we do, and I think it is very important for us 

to recognize that we are partners, we are partners in creating jobs, 

we are partners in sustaining our economy, and the more we work 

effectively together the better that partnership will become. A tremendous history in banking and development work with the Chamber has had a very, very special focus on minority business development—African-American, Hispanic, Asian-American, and certainly women in business, and we are delighted that she could join 

us today. So, Ms. Fowler, if you would please share with us your 

input. 

STATEMENT OF NUBY FOWLER, REGION IV, U.S. SMALL 

BUSINESS ADMINISTRATION 

Ms. FOWLER. Thank you. And let me apologize for my tardiness. 

I am so sorry. And if you are wondering where my accent is from, 

it is a little more Southern than some of yours. I was born in Colombia, South America. 

Mr. BURNS. Not South Carolina. 

Ms. FOWLER. Not South Carolina. 

15

Good afternoon, Mr. Chairman, Congressman Burns, and distinguished guests. I would like to thank you for the opportunity to be 

here to speak on behalf of an organization that truly is at the bottom of my heart, has always been at the bottom of my heart because I have been an advocate for small businesses for a long, long 

time. I owned a small business myself once. However, it was a lot 

of work. It is easier to work for someone else and get the pay check 

every fifteen days. So I know how hard they work, and I know that 

they need us. 

At the SBA we have completed one of our most important years 

ever. The SBA has continued to drive to simplify and improve the 

federal government’s role in providing capital and technical assistance to America’s small business entrepreneurs. The diversity and 

success of companies supported by the SBA has been a major factor 

in the current economic recovery. We are proud of that success. At 

the same time, though, we must keep a watchful eye on the taxpayers’ stake in these programs. As much as we have achieved in 

the past, we have a chance to improve on our record. 

As the President has emphasized, we can ease the unnecessary 

burdens on U.S. companies placed by higher taxes, mediation costs, 

worker compensation and unemployment issues, skyrocketing 

health care costs, tax preparation costs, high energy prices. In 

doing so, we can give our small companies a better chance to grow 

and create new jobs. What is more, if we can encourage private 

risk-taking, then we can give entrepreneurs the boost they need to 

find partners, networks, customers, and access to capital. Encouraging private risk-taking and investments is one of the missions of 

the SBA. 

President Bush understands the vital role that America’s small 

businesses play in creating opportunities. Last March he announced his Small Business Agenda to reduce regulations and 

taxes, and to expand opportunities for small businesses. 

He also recognizes that following times of economic downturn 

small businesses are the ones that play a leading role in bringing 

our economy back. They are the ones that generate the majority of 

the jobs. They actually generate two-thirds of the jobs created in 

our country. The President’s plan for economic growth and job creation, along with the Small Business Agenda, has been successful 

in creating an environment in which entrepreneurship can flourish. 

As you may be aware, SBA is submitting its Fiscal Year 2005 

budget request on February 2nd. Actually we did that already. This 

budget will ensure continuity in SBA’s program for America’s small 

businesses, while reducing SBA’s cost to the taxpayers by approximately $120 million. Through improved management and program 

reforms, SBA will better serve America’s small businesses by 

reaching into communities where our programs have had little 

market penetration. This includes rural areas where SBA district 

and branch offices are often located several hours away from communities in need. 

The most recognizable service SBA provides small businesses is 

financial assistance. Last year a record number of small businesses 

turned to the U.S. Small Business Administration for credit assistance, producing a 29 percent increase in the total number of loans 

that the agency backed in Fiscal Year 2003, including a sharp jump 

16

in the number of loans to women, minorities, and veterans. The 

overall increase in loan approvals under the SBA’s three major 

loan programs came to 29.8 percent, reflecting an increase from 

59,563 loans in Fiscal Year 2002 to 76,465 loans in Fiscal Year 

2003. 

These loans demonstrate our commitment to meeting the unique 

financing needs of small businesses everywhere, and the impressive increase we have posted for the past year validates our approach to making smaller loans more readily available to the real 

job creation engine of our economy. By focusing on smaller average 

loan size, we are leveraging our resources to assist more small 

businesses and create more jobs. Based on statements from our 

borrowers, our financial backing helped the small businesses of 

America create or retain more than 526,000 jobs during Fiscal Year 

2003. 

Ironically, our success in promoting these programs actually hurt 

us earlier this year, as SBA was forced to suspend its operations 

of our 7(a) loan program for a short time. The unprecedented demand and a series of short-term continuing resolutions caused the 

program to run out of budget authority under the last continuing 

resolution. SBA reopened the program as quickly as it could, 

though we did place some restrictions on the program to keep it 

running until a more permanent solution can be reached. Let me 

assure you, Mr. Chairman, that SBA did not, nor does it want to 

permanently close down this crucial program. 

In our Fiscal Year 2005 budget SBA has requested a 30 percent 

increase for this program to $12.5 billion in lending authority. In 

addition, SBA is submitting legislation that is a long-term solution 

for the 7(a) program, and it will have immediate benefits. Our proposal will put approximately $3 billion in additional loans into the 

economy, and help more small businesses and create more jobs. I 

urge your support for this proposal. 

This legislative proposal will allow the agency to guaranty more 

loans, create more jobs, and provide stability to the 7(a) program. 

SBA is listening to its lending partners. They overwhelmingly 

agree that consistency in the program is the first priority. SBA’s 

proposal builds on the success of the SBAExpress loan program by 

simplifying the process and reducing the regulatory compliance 

burden to small businesses and lenders. The government and private sector will be equal partners in program risk, which will potentially lead to a long-term reduction in fees. 

SBA has requested $4.5 billion in lending authority through its 

504 program with no subsidy cost to the taxpayers. The 504 program which was established to increase small businesses’ access to 

real estate and other long-term fixed financing has always had job 

creation as a program goal. SBA has taken steps to increase small 

businesses’ access to 504 loans by encouraging competition and 

strengthening the process. In 2003 this program’s total financing 

accounted for almost $8 billion in projects. 

The Small Business Investment Cooperation program also provides much-needed capital to entrepreneurs. With an average investment size of about $600,000, SBICs currently provide over 58 

percent of all venture capital financing by actual number—that is 

17

8 percent of all financing dollars—and 64 percent of all seed financing dollars. 

SBA is moving forward with the design and implementation of 

the new Rural Business Investment Company program, in cooperation with the Department of Agriculture, which will expand access 

to venture capital for non-farm rural businesses. In Fiscal Year 

2003 SBICs reported investing $871 million—35 percent of all financing dollars—in 588 different small businesses located in nonmetropolitan areas. The program does not have a rural definition. 

And of those investments, $420 million was invested in 404 small 

businesses in low-income, non-metropolitan areas, supporting rural 

communities throughout the country. We expect these levels of investments to remain about the same this fiscal year. All together 

we think that is real stimulus, going to rural markets and other 

struggling communities across America. 

During the course of SBA’s Microloan Program’s 12-year history, 

the private sector lending community has recognized that microborrowers are creditworthy, and that they represent substantial future growth opportunities. As a result, private sector lenders are 

far more willing to lend to very small and start-up businesses, and 

are able to offer more competitive interest rates than SBA’s 

Microloan intermediaries. SBA should not be competing with private sector lenders interested in developing this market, and has 

not requested funds funding for this program in Fiscal Year 2005. 

The well-established 7(a) program provides an adequate incentive 

to lenders that feel that risk mitigation is required to make smaller 

loans. In Fiscal Year 2003 the 7(a) program made over 23,000 loans 

under $35,000, while the Microloan program only made 2,442 loans 

in the same period. 

The President’s Management Agenda requires SBA to continue 

striving for the most effective and efficient means of serving our 

nation’s small businesses. In doing so, SBA believes it can provide 

the full range of technical assistance needed by America’s small 

business entrepreneurs more efficiently through our core infrastructure of Women’s Business Centers, Veterans’ Business Outreach Centers, SCORE chapters, Small Business Development Centers, and our network of field offices. With over 1,500 locations nationwide, SBA and these resource partners are in a position to deliver the technical assistance small businesses require. SBA will 

continue to make more of its resources available to hard-to-reach 

communities by moving materials online and stationing permanent 

SBA employees in rural communities. Examples of these include 

SBA’s establishment of post-of-duty, or what we call now alternative work sites, in rural Maine and two hard-to-reach towns in 

Alaska. And we are planning that for 70 districts nationwide. Each 

district approximately will have about two to three alternative 

work sites, and I am happy to say that Augusta is under consideration because of the demographics and all the elements that are 

coming into play to make this decision. 

We believe we can help more small businesses by utilizing our 

core programs that have a nationwide infrastructure and can reach 

more customers more effectively. Some of SBA’s technical assistance programs did not receive funding in Fiscal Year 2003, yet 

SBA continued to provide small businesses with the assistance they 

18

needed. It is often said that access to information is the key to 

small business success. 

SBA will continue the implementation of our transformation efforts. I have spoken with many of you personally about the importance of transformation to SBA’s future success. These efforts are 

crucial to the agency’s continued relevance in its second half century. 

The administrator has testified that SBA needed to change the 

way it delivers its services to its customers, America’s small businesses. In recent years, SBA’s program delivery has changed so 

dramatically that SBA now works principally through its lending 

and other program partners to provide products and services to 

small businesses. SBA is now realigning is resources, including 

personnel, with this changed business practice using many of the 

private sector’s best practices. Through transformation, SBA is 

shifting field office efforts from administrative functions to more direct relationships with customers and resource partners. SBA’s 

field offices are using outreach, marketing, and customer and resource partner relationship management to ensure that they know 

and meet small business’s needs. 

All of us at SBA are quite proud of the agency’s legacy of 

achievement. Many businesses with household names today received SBA assistance in their formative stages. Who knows which 

of tomorrow’s industry leaders are today receiving their 7(a) loans, 

or their government contracting opportunities, or their counseling 

through SBA’s programs and services. 

However, we at SBA cannot rest on our laurels. The agency must 

continue to keep up with, and ahead of changes in the marketplace. 

We are committed to doing all we can to make sure these entrepreneurs receive all the assistance the agency and its employees 

can provide. But SBA cannot do this alone. We will continue to 

work together with you, our Congressional partners, and all of our 

resource partners to ensure that SBA continues to assist small 

businesses into its next half century. 

Thank you very, very much for the opportunity to testify here 

today, and I would be happy to answer any questions provided I 

have the answers. If I do not have the answers, I will get back to 

you. 

[Ms. Fowler’s statement may be found in the appendix.}

Chairman SCHROCK. Thank you very much, Ms. Fowler. And 

than you all for testifying. It was fascinating to hear where you all 

were coming from and the differing ways things are perceived from 

the organizations you work with. 

Is Tom Gaines here by any chance? Did he come in? We did not 

know if he had slipped in and we did not see him. 

I am going to focus on—one question has to do with SBA, and 

one is what people like Ed Schrock and Max Burns can do to help. 

What experience have you had with the SBA? Do you think they 

are being responsive to the people you represent, and are they 

helping them in trying to do away with some of the unnecessary 

regulations and burdensome paperwork that they have to do? I 

would be curious to know. We have a very good relationship with 

Tom Sullivan in Washington, we work very closely with him, and 

I think we need to get out in the field and ask that same question 

19

to make sure they are doing everything they can, because that is 

their intent I can assure you. I would be curious to get your spin 

on that, and maybe Ms. Fowler can respond to some of that if it 

needs responding to. 

Mr. GRIFFIN. Right now, Congressman, the SBA is going through 

a centralization in their underwriting processes. Where right now 

they process loans in each state location, their 76 district offices, 

they are consolidating. Our loan processing for example, we go to 

Sacramento, California in the next twelve months, but at the rate 

they are doing that and the way they are doing it, it should speed 

the process up with some of the centralized forms that you are 

using. But like any agency, SBA is doing some things good, and 

they are doing some things not so good. 

And in terms of the burden of the paperwork, I have been at this 

sixteen years now, and I would venture to say that the paperwork 

process has grown by about 20 percent. 

What they do, typically what happens with SBA is the paperwork really is not the responsibility of the borrower, it ends up 

being the responsibility of the lender, or the community partner 

that they are working with. 

There is a need to form some kind of task force to streamline 

these loan processes. I think they have focused on it on the 7(a) 

side, and have done a terrific job. Some of their other programs, 

they are in the process of doing that right now. So they are doing 

a lot of good things. But for the program I work in, 504 it could 

be better than it is now. 

Chairman SCHROCK. Ms. Fowler, before you came in, Randy Griffin brought his son Seth’s wheelbarrow in with a bunch of paperwork here, these are loan applications from two different loans, and 

when you look at that some poor business trying to start a business—I would give up after the first three or four pages, and I 

think that is the problem, we have got to narrow that down. In the 

7(a) program for instance, what is it, one sheet? 

Mr. GRIFFIN. Well, 7(a) has gone to a Low-Doc, the Low-Doc application. That is one of the things they are looking to do on the 

504 program that I think is very progressive. It is something that 

is proposed right now in the administration’s plans, so it is something we need to move forward with for sure. 

Chairman SCHROCK. Ms. Fowler. 

Ms. FOWLER. Let me address that. Thank you. I am a banker, 

and I am used to seeing those files on credenzas all over the office. 

The Low-Doc, it is a terrific program. However, we now have the 

SBAExpress. I do not know if your bank does the SBAExpress. 

Mr. GRIFFIN. Well, we are the SBDC, so we do 504 loans, so what 

they are doing———. 

Ms. FOWLER. Well, let me go back to the 504, because you are 

right, that has quite a bit of forms, but remember there is an awful 

lot of information that needs to be gathered. It is not the same to 

lend $35,000 with one sheet of paper versus a million dollars for 

a real estate transaction. So there is going to be more paperwork 

with a 504 loan. However, having said that, I am sure that we 

could streamline it so that you do not have to carry two of those 

folders with you. 

20

Let me address the 7(a)—there are other bankers here—the Express program. The banks are supposed to use their own forms, 

their own processes, and their own closing systems to provide these 

loans. And we have quite a few major banks that are doing that. 

As a matter of fact, Bank of America became number one last year 

in SBAExpress precisely because they like that. So we have 

streamlined the Express program. 

Furthermore, because there are many community banks in rural 

areas, the non-metropolitan areas have smaller banks they are not 

used to this incredible amount of information, also they do not have 

the technical expertise, nor can they afford it, so SBAExpress could 

help them because they can use their own forms, processes, and 

closing. 

The one thing that they were not able to do at one point was join 

that program because they did not meet the criteria. Truly it was 

a little too high. So we are working on eliminating certain parameters so that these smaller community banks can participate in Express lending. 

Chairman SCHROCK. I think you will have to admit if you look 

at those two packets of stuff there that is just overwhelming. Somebody trying to start a new business is under enough stress as it 

is, without having to go through that. 

Ms. FOWLER. Sure. 

Mr. BURNS. If the Chairman will yield for a moment, Ms. Fowler, does the SBAExpress, would it cover both Section 7(a) and 504? 

Ms. FOWLER. No. Right now it is just the 7(a). 

Mr. BURNS. Just the 7(a). 

Ms. FOWLER. Yes. 

Mr. BURNS. Are there plans to potentially address the 504 chal- lenge like you may have addressed the 7(a)? 

Ms. FOWLER. Yes, there is. Just between us, yes, there is. We are 

doing that. 

Chairman SCHROCK. What is the time line on that? 

Mr. GRIFFIN. The bill, 2802, Mr. Chairman, stipulates that within twelve months that the SBA will establish a Low-Doc program 

for the 504 program. 

Chairman SCHROCK. It would certainly help you. 

Mr. GRIFFIN. It certainly would help. 

Chairman SCHROCK. Anyone else? Mr. Burns. 

Mr. BURNS. Thank you, Mr. Chairman. I want to touch base on 

two or three things, and then maybe have several of you give me 

your input on those issues. 

The first thing let us talk a bit about is in the area of entrepreneurship, and incubators, and training. I have heard from Dr. 

Elam and Mr. Wilbanks about the fact that perhaps we are not focusing enough in our educational environment at both the secondary level and at the tertiary level in making young people 

aware of opportunities associated with owning their own business 

and starting their own business. 

What efforts do you see in our region that might help us alleviate 

the problem of awareness and opportunity. Dr. Elam. 

Mr. ELAM. Junior Achievement locally has taken a major step 

forward in helping young people, especially in high school, with entrepreneurship, and really a refocused effort. 

21

I think that a lot of what we do we could do it jointly with the 

high school programs while the student is still in high school. I 

think it is something you have to ingrain into young people, and 

you can do it in educational context about a lot of activities on campus, by having material that just promotes the idea of business 

ownership. 

I mean we learned it home from our parents because they gave 

us an allowance. I mean the first entrepreneurship that I ever 

dealt with was simple. You got 25 cents this week, and you had to 

manage that money so you would have some Saturday. 

Randy is looking at me like ‘‘How old are you?’’

Chairman SCHROCK. Randy is young enough when he was going 

to get an allowance they gave him a car. 

Mr. ELAM. Right. 

[Laughter.] 

Mr. ELAM. So young people are not having to manage because of 

the excess that we have in many of our communities. Paper routes 

are adult functions now. 

Chairman SCHROCK. They sure are. 

Mr. ELAM. I mean so many of the things that we learned to do—

working at a service station, all those things are gone, and because 

of technology it has to be taught. This is something that we used 

to get informally through relatives and through other folks who 

had businesses. 

So we have to have that instruction incorporated into high 

school, but I think even at the post-secondary level, because just 

because you are a great physician does not make you a great 

businessperson. Just because you are a great electrician surely 

does not mean you know how to run a business, and you can lose 

two or three businesses and all of your credit in the process of trying to do that. So I think it is important that we take—we have 

made a commitment, and we would like to see some of the small 

businesses locally who apply for loans be mandated that you have 

to take certain courses to prove that you are really serious about 

this. You know, if there was a course that you had to take through 

whatever organization before you could get that final approval I 

think people would do that. You know, colleges have had to do that 

with student loans because of abuse. 

We would not be against that kind of challenge of having to provide that type of training for businesses who are looking to—and 

that is a regulation, but that is one that I think could add value 

and cut down on failure. 

Mr. BURNS. Mr. Wilbanks. 

Mr. WILBANKS. I would suggest that young entrepreneurship programs become not optional for schools to provide, but be part of the 

regular curriculum just like math, or science, or any other course. 

We see that this is where the jobs are coming from, it is where 

the innovative ideas are coming from. It has to start, and so many 

of our school systems see these other optional programs coming to 

them as more work, or they get lost in the shuffle, but if we make 

entrepreneurship in our school systems talking at the post-secondary and secondary levels, high schools across the board, part of 

the curriculum, part of the process, that this is something new that 

has got to be incorporated, and our educators have got to underVerDate 0ct 09 2002 19:31 Aug 17, 2004 Jkt 000000 PO 00000 Frm 00025 Fmt 6633 Sfmt 6633 G:\HEARINGS\93893.TXT MIKEA
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stand is important that there are opportunities for people to create 

businesses, not just work for big factories, and that is going to be 

more and more in the future. 

The REAL program, the Rural Entrepreneurship Action Learning, has a very well-structured improvement program that works 

especially, and seeks out programs in rural areas, and the National 

Foundation for Teaching Entrepreneurship has the resources available, and I think there should be collaboration with the educational 

system and these groups to develop some type of curriculum and 

structure to start it in elementary school and grow it throughout 

high school, and then people will have the option when they graduate. 

Mr. BURNS. Anyone else? 

Mr. LOGAN. Just reflecting on what you mentioned about youngsters and how we could approach this and encourage entrepreneurship, if we probably polled everybody in this room statistics would 

say that probably five out of six of us would say we had our first 

job at a small business. 

I found it interesting of the eight original Democratic candidates 

for President, seven of them had stated that they had their first 

job in a small business. Now, whether that is true or not I do not 

know, but it sure is politically correct to say you started out in a 

small business. 

But it would occur to me that there has been a lot of mixed reviews on entrepreneur curriculum in high schools and others. It 

certainly should be offered as an elective. It would seem to me if 

we encouraged small businesses, there was some type of incentive 

for them to hire younger employees, to hire student workers, I 

think a lot of policy decisions made over the last ten or fifteen 

years has gone contrary to encouraging them to hire younger employees, and I think that is where they will really get the OJT and 

the mentoring to want to become an entrepreneur and own a business. 

Mr. BURNS. Do the regulations inhibit these young people’s involvement? 

Mr. LOGAN. I think some of the rulings on minimum wage, some 

of the things about maybe school participation and all—not the federal regulations totally—that limited their ability to work in any 

business, plus the fact the emphasis on larger businesses in rural 

communities, the Wal-Marts of the world and other, I do not think 

they are as inclined to hire younger workers as the smaller ones. 

Mr. BURNS. Thank you. Ms. Fowler 

Ms. FOWLER. I just wanted to make an observation. When I was 

coming in I think I heard the issue that MBAs are not starting 

small businesses. There is a phenomenon in metro Atlanta, and 

that is the African-Americans consider Atlanta sort of a mecca for 

entrepreneurship, and a lot of the people that came to see me at 

the bank or at the Chamber were African-Americans looking for 

ways to start a business. They had an idea, and the reasoning behind that was that they have such a tough time in corporate America they were not going to waste their time there, they were going 

to start their own businesses. And I think that has continued, because our African-American loans just in Georgia increased by 78 

percent. 

23

Mr. BURNS. Do you see that among the Hispanic community as 

well? 

Ms. FOWLER. Regretfully, no. In our Hispanic community—May 

I address that issue at this point? 

Mr. BURNS. Please. 

Ms. FOWLER. In our Hispanic community we do have people that 

have been mainstreamed, like myself—I have lived here 42 years, 

and our children are Americans—but then the most visible ones 

are the ones that are out either working on construction, or landscaping, and the mind-set is that most of them, or most of us are 

non-monolithic, and we are not. There are many that are coming 

from other countries, but they do not have the language, so that 

precludes them from doing anything other than work for someone 

else in a menial job. 

But there is a lot of entrepreneurship in the middle class of 

many South Americans that are coming in, but that is minimum, 

that the majority are the ones that are uneducated that do stay 

here and do not become mainstreamed because their mind-set is 

that they are going to go back home, which they never do, so———

. Mr. BURNS. And just following up on that, how would you evaluate the female-owned businesses, the women-owned businesses, as 

far as their opportunities and growth, are you seeing positive responses in that environment? 

Ms. FOWLER. Unbelievable. Our statistics say that women are 

starting businesses at a higher record number than men. Furthermore, they stay in business longer. 

Mr. BURNS. So they are surviving? 

Ms. FOWLER. Yes, they are. 

Mr. BURNS. Anything you might attribute that observation to? 

Ms. FOWLER. Well, I have met a lot of women through conferences, and being a woman myself. I do believe they have certain 

values, certain core values, and certain skills that they try to develop to make sure that they succeed, and they are very good planners, organizers. They do not do things by the seat of the pants, 

they are very thoughtful, and they are hard-working individuals, I 

am sorry to say. 

Chairman SCHROCK. Are these single women, single mothers? 

Ms. FOWLER. They are all across the board, all types. I mean I 

have met retired women that have started a business, something 

at home like a famous recipe of theirs that everybody says they 

ought to bottle it like Newman, and they go ahead and do it. 

Mr. BURNS. To come back to a couple of comments made by Mr. 

Logan, in your testimony you pointed out that there are hotbeds of 

entrepreneurship, and you identified Atlanta, and interestingly Savannah and Albany. Why would you classify those as hotbeds? Anything that we could say that would create a hotbed in Augusta, or 

Athens, or Columbus, or Macon, or other regions? Talk about hotbeds. 

Mr. LOGAN. Well, the Atlanta area is no mystery to anybody, it 

is a good place to do business, a lot of business support activities, 

lending institutions, all kinds of export assistance, everything is located around a fifty-mile radius of Atlanta. There is no question 

why that is. 

24

Albany, I am somewhat surprised at that, and they really gave 

no reason. But I would have to say it is probably leadership. Albany has had a tough time over the past I guess ten or twelve 

years. Plants have closed, they have had to work real hard, and it 

is almost like—I saw one time about businesses. Businesses that 

tend to survive for long, long term are not the ones that hit a level 

and do real good for a long time, but they are the ones that do real 

good, and they will have a crisis, and they will have to respond, 

and then they will do real good. So those are the businesses that 

will really survive and prosper. 

I think maybe Albany is the same way. They have had to develop 

a leadership, they have had to be innovative, they have had to just 

to call on all their resources, and I think that probably more than 

anything is the leadership is what is the reason. 

But there are certain characteristics in communities I think that 

make them attractive to entrepreneurs. Now, I heard Dr. Eric 

Paiges who is a relatively renown entrepreneur consultant say that 

in Georgia—I asked him, I said ‘‘What do you consider rural Georgia?’’, and he said everything outside of Atlanta. 

And I think what Eric was trying to tell us there is there is a 

lot of common elements, whether it be Augusta, Savannah, Macon, 

and Albany, and from my observation there is not a lot of difference between the larger communities in Georgia. I wish I could 

answer that, but I do not know exactly what all he has done. They 

are making some inroads in correcting their economic problems. 

Mr. BURNS. Any other panel members that might talk about a 

hotbed? Mr. Presnell. 

Mr. PRESNELL. Thank you. As I listen to my colleagues I hear—

I am reminded of several things, so I will have to put a commercial 

in for Augusta if I may—but we have several business districts 

that are what I would classify as hotbeds for opportunity for small 

business growth. We are in the middle of one, the downtown central business district which goes from the river up through the 

Lane Walker Business District. The Lane Walker Business District 

is perfectly ripe for gentrification, and renaissance in business in 

the African-American community, and we are real excited about 

the opportunities there. 

If you go just a block down to Broad Street you will see small 

business renaissance of giant proportions up and down Broad 

Street. 

And then in our South Augusta community we have a tremendous opportunity because of the—number one, because of the presence of Fort Gordon which is an attraction to that area, and we 

also have a lot of gateways in South Augusta, and it serves as a 

conduit between Burke County and Jefferson County and so forth 

to get into the Augusta community, and you have got just a vast 

area of opportunity for small business expansion and growth right 

here. 

I was pleased to hear Mr. Elam refer to the Junior Achievement 

program. That program is alive, well, and kicking in Augusta, and 

they do a fine job, and I would also tell you that Mr. Elam does 

a fabulous job in making his campus available to programs such as 

the Contractors College which he has referred to in his comments 

that is a joint effort between the Augusta Metro Chamber of ComVerDate 0ct 09 2002 19:31 Aug 17, 2004 Jkt 000000 PO 00000 Frm 00028 Fmt 6633 Sfmt 6633 G:\HEARINGS\93893.TXT MIKEA
25

merce and Turner Construction Company using Augusta Tech facilities. We are in our second session of that now, and I guess we 

will have probably another 25 or 30 business entrepreneurs that 

are going through a very intense session of training if you will for 

small business development. That could be expanded instantly if 

there were enough awareness there. It has been very successful, 

and the community at large is serving as the faculty, the business 

community is actually mentoring through professional service sharing to the students, a novel opportunity to enhance small businesses. 

Mr. BURNS. Thank you. Mr. Wilbanks. 

Mr. WILBANKS. Yes. I would like to comment now that I think 

as far as hotbeds, hotbeds could be formed by working with especially rural communities and helping them understand that there 

is more to economic development besides just industrial recruitment, waiting for that industry to come to town, we so easily overlook our local entrepreneurs and successes in our communities, and 

forget that they started out as entrepreneurs. 

And having support structure and understanding how to help 

and support entrepreneurs in our rural communities is something 

that our ENet Program is now working with the Georgia Department of Economic Development—used to be Industry and Trade—

to educate our rural communities, and any community across the 

state in what infrastructure and support structures they need to 

encourage entrepreneur development in these communities. 

If you look at communities that have done well, those economic 

development folks, those chambers and development authorities 

understand the importance of entrepreneurs in their community, 

and have recognized that, and are working towards that, and they 

have a dual strategy for economic development, not just recruiting 

industry, but also trying to grow their own. 

Chairman SCHROCK. Yes, Mr. Wilbanks, and your testimony is 

something that really hit me when I was on the plane last night. 

Jenkins Comfort Systems, you said they were creating, they did 

something with a thermal cooling vest system which protects users 

from dehydration, hypothermia, and temperature-related stress. It 

is that kind of thing I would think our men and women in Afghanistan and Iraq could use. Are you marketing that to the folks in 

Washington, or how do you go about doing that? 

Mr. WILBANKS. We connected this entrepreneur to another company that is in Vidalia, Georgia, Savannah Luggage Works, that is 

making all of the vests for our soldiers in Iraq, and he has a new 

design that he is meeting with them this week concerning an insulated barrier underneath the vest that could help cool them, or 

warm them, and we will be supporting them in any way we can 

to make sure that that collaboration occurs. 

Chairman SCHROCK. It is wonderful to read this if they are doing 

this if nobody is picking up on it, but obviously they are. 

Mr. Presnell, you say you have all these hot areas in this area, 

but are you going outside the area trying to bring people in, I mean 

around the state and around the country, or are you just depending 

on local people to do that? 

Mr. PRESNELL. Oh, yes, sir, we are constantly recruiting. As a 

matter of fact, during—we are building up now to the Master’s Golf 

26

Tournament week here, and we will have companies from all over 

the country come in here that will recruit for small businesses as 

well as retail, life sciences, and on up into the industrial side with 

their service, so we have a good cross-section. 

Our real estate, our commercial real estate developers are constantly recruiting folks. 

We have an agency in downtown Augusta, the Main Street Augusta Group, that works very hard at recruiting business activities 

to their area, to that area, to that business district. 

And so you have got a combined effort of external and internal 

forces, but it is all driven from the inside out. You know, we have 

to let the people across the country and the world know that we 

are here. 

Chairman SCHROCK. And your new airport facility is not going to 

hurt. 

Mr. PRESNELL. Oh, no. 

Mr. BURNS. I brought the Chairman in through the airport last 

night about eleven o’clock, and we pointed out, Chairman Johnson, 

that this was a project that we are focusing on in this community 

to provide that economic stimulus that we think is really going to 

help. 

If I might ask one more question——

Chairman SCHROCK. Please. 

Mr. BURNS [CONTINUING] And maybe Mr. Logan and Ms. Fowler 

can make sure we are straight on this, and probably also Mr. Griffin. 

In your testimony, Ms. Fowler, you pointed out that if we expand 

the SBA’s efforts that we could create 500,000 new jobs based on 

22,000 additional loans. 

Now, that would suggest—is that based on the support of HR 

2802? You know, my real question is the estimated impact of these 

changes would be 500,000 jobs. I am all for 500,000 jobs, and I just 

want to make sure I am clear about how is the best way to achieve 

that objective. 

Ms. FOWLER. Create or retain? 526,000? 

Mr. BURNS. I am referring to Mr. Logan’s testimony. 

Chairman SCHROCK. The testimony says 500,000 new jobs. 

Mr. BURNS. The estimated impact of these proposed changes is 

22,000 additional loans, and 500,000 new jobs, and I think that is 

for Fiscal Year 2005. 

Mr. LOGAN. And that information, Congressman Burns, came 

from the SBA’s fact sheet that they put out about their budget—

let me see if I have it———. 

Mr. BURNS. Okay. So again it does quote SBAExpress, it does 

create, it does suggest that we need to expand the SBA 7(a) loan 

program, add 3 billion to the program, create a cap of 2 million, 

and again that is what I want to do is I want to generate some synergy here, and I think that goes back to Mr. Griffin’s point that 

says, and I believe that most of this would suggest that HR 2802 

is the linchpin legislation. 

Mr. GRIFFIN. Well, I would say, Congressman, HR 2802 is sort 

of an immediate impact to SBA’s Number Two loan program which 

is a 504. 

Mr. BURNS. The 504. 

27

Mr. GRIFFIN. To give you an example, in the state of Georgia last 

year there probably about 200 504 loans done, maybe 250, and 

probably about 1,200 to 1,500 7(a) loans done in the state of Georgia. 

Mr. LOGAN. The SBA released data February the 10th, said by 

expanding the SBAExpress loan program which allows lenders to 

apply for 7(a) loans using their own forms and processing instead 

of the lengthy and burdensome government forms, the entire 7(a) 

program would move to a lower guaranty rate of 50 percent. This 

reform would allow the agency to increase lending authority by 

over 30 percent. Based on Fiscal Year 2003 numbers, that increase 

could have resulted in more than 22,000 additional loans to American entrepreneurs. If enacted for Fiscal Year 2004, the lower guaranty rate and increased number of loans could provide capital to 

create as many as 500,000 new jobs. 

Mr. BURNS. But we have a discrepancy about this 50 percent 

loan rate guaranty. Is that a fair statement, Ms. Fowler? 

Ms. FOWLER. Yes. The SBA is proposing this to equalize the partnership between the private sector and the SBA, or the taxpayer 

actually. And I think that is a bone of contention for that. 

Mr. BURNS. I believe the current level is at 75 percent? 

Ms. FOWLER. 75 percent. 

Mr. GRIFFIN. The problem, Congressman Burns and Chairman Schrock, is the OMB subsidy calculation on the 7(a) program is 

greatly, greatly flawed. They are saying that the subsidy rate on 

the 7(a) program currently through OMB is 1.06. In a nutshell, 

that means it costs $1.06 for every $100 in loans that the government guaranties through SBA 7(a). 

The problem is when you look back those programs have returned collected fees from banks and from small businesses in the 

amount of $1.2 billion over the last twelve years. So there is clearly 

a flaw in the subsidy model. 

Until the subsidy model is corrected through OMB, through the 

budget process, I do not see how the administration in this proposal knows what the 7(a) program cots. 

Mr. BURNS. Mr. Chairman, does the CBO make estimates as 

well? I need to ask a question. 

Chairman SCHROCK. No. 

Mr. BURNS. No? 

Mr. GRIFFIN. Common sense, though, Congressman Burns, if I 

have a program that has returned 1.2 billion—and that is not 

budget, that is cash—that is collected cash from small businesses, 

and it is an unfair tax on small businesses. It is intentionally overstating the cost of the programs. It is not SBA’s problem other than 

their connection to OMB, but it is clearly overstated. The facts are 

1.2 billion, they have not disputed that. It is an unfair tax on small 

businesses. They are overcharging their guaranty fees on these 

loans, and now the proposal is that they are going to zero out the 

subsidy rate by collecting more fees. Why do you need to collect 

more fees when you have already returned 1.2 billion to the Treasury? 

Ms. FOWLER. My understanding is to the contrary, that it will reduce the fees. We do not want to increase the fees because the 

small businesses pay for it, and that would be a tax on them. 

28

The issue actually is that banks are definitely doing the lending, 

and they do it at a 75 percent guaranty. The banks are not hurting. 

If they went to a 50 percent guaranty, they would still do the loans. 

Whether they do it or they do not—if they do not do it, they do not 

get anything, but if they do it on a 50 percent guaranty they will 

sill make those loans. 

Now let me just express that I had a lenders’ round table in Columbia, South Carolina, Wednesday. I did need to have that input 

before I went to Washington to be prepared for this meeting, and 

the feedback I got from them of course they are all against the 50 

percent guaranty. They say they will not make the smaller loans, 

they will not take start-ups, they will not do that. 

And these banker were the presidents of the bank, it was not the 

lender itself. I met with the presidents of the banks; that is what 

I needed to hear from. And Bank of America came out and said 

‘‘You know, we are making these loans, and this Community Express is the answer’’ because you use your own paper—and I know 

he is a 504, so there is a difference here—but the fee increase 

would hurt the small businesses if we go that route versus the 50 

percent guaranty. 

Mr. LOGAN. Let me just make a comment also about that. You 

know, the reality in our state, and probably lots of others, there is 

no such thing as a business start-up loan. There is no loan, no 

business assets, there are no working capital loans. The 7(a) loan 

program is very important. Particularly if you go to rural areas in 

Georgia we have small banks, they are mostly very limited asset 

base, they are not prone to make any kind of unordinary or 

inordinary risk. 

Mr. BURNS. Do they make ag loans? 

Mr. LOGAN. They make ag loans on ag businesses. 

Chairman SCHROCK. That is a pretty tough risk. 

Mr. LOGAN. It is, but those are mostly character-type loans I 

would think. 

Mr. BURNS. True. 

Mr. LOGAN. But on the small loans as Nuby just said, if you reduce that to 50 percent it is going to have an incredible effect on 

the smaller communities, because those are the ones that really depend on the guaranties. 

Mr. WILBANKS. Let me make one suggestion in that we are talking about the smaller loans as Hank just mentioned, and what if 

we had a 75 percent guaranty on loans up to a quarter of a million 

dollars, and any loans above that a 50 percent. That would be a 

compromise, but what that would allow is—and I pointed out the 

statistics on start-ups that had 20 or less than 20 employees. Most 

likely those businesses could have been started up with less than 

a quarter of a million dollars, so they would achieve the benefit of 

the higher guaranty rate, and we know that is where more of the 

job creation and businesses are coming from. 

The loans over 250,000—and, Randy, you guys may add to this—

I think when you get to that level there are more partners that can 

be reached for, whether it be investors, more banks, venture capitalists, development authorities come into play and can help support it, state programs such as One Georgia or EIP. So once they 

29

get over 250,000 they are other partners that could come in and 

share, and maybe 50 percent is more practical, but for those under 

250,000 it is going to be tough for those banks to feel comfortable 

doing a 50 percent guaranty. 

Chairman SCHROCK. Could you live with something like that, 

and would the bankers agree? 

Mr. GRIFFIN. Well, right now the guaranty for a loan under 

150,000 is 85 percent. 

Mr. BURNS. Under 150. Would that change under this new proposal? 

Mr. GRIFFIN. Yes. And so I definitely agree, and I think that is 

what we have heard from banks that we have been in meetings 

with, and from the rural bankers, and from our board members is 

that they are hoping that the compromise is exactly something 

similar to what he pointed out that on the smaller loans that a 

higher guaranty will be in place. 

Chairman SCHROCK. Would the bankers agree? 

Ms. FOWLER. Mr. Wilbanks, I wanted to address it. Will you forward that information to me? I am going to give you my card. I 

am gathering information to send to our congressional legislative 

affairs office in Washington, they wanted me to do that, and so if 

you give me that information I will forward that to them. 

Mr. WILBANKS. And I am not sure where the line is drawn. There 

probably needs to be some research done on the number of loans 

and the loan amounts. But if there has to be some reduction in the 

guaranty, what would ultimately result in the most job creation is 

if we could keep it where we are and reduce the fees at the same 

time. 

Ms. FOWLER. Well, if you send that to me, I will forward it, because the legislative proposal is going to be worked on. 

Chairman SCHROCK. I would like very much to have that as well. 

Ms. FOWLER. You would like to have that? 

Chairman SCHROCK. Yes, if you can——

Mr. BURNS. Chairman Schrock is on the committee——

Chairman SCHROCK [CONTINUING] Yeah. I would love to have 

that. 

Mr. BURNS [CONTINUING] And he is in a position to review the 

legislation that is submitted, and then if necessary make amendments, changes to reconcile that, if possible. 

Chairman SCHROCK. Let me change horses in the stream here. 

There are some folks sitting in the audience, and we would like to 

give you all the opportunity to make comments or ask questions, 

hopefully as it relates—I know when two congressmen open a 

microphone up to people we leave ourselves wide open for a lot of 

questions. We did that this morning, and it was quite interesting, 

but I wonder if you had any comments as it related to this particular small business regulation. If you do, please feel fee to stand 

up to the microphone and identify yourself, who you are with, and 

ask the question. 

We have got them all intimidated. 

Mr. BURNS. We welcome your input. 

30

STATEMENT OF HELEN BLOCKER-ADAMS, HBA GROUP 

Ms. BLOCKER-ADAMS. Congressman Burns, this is really—I am Helen Blocker-Adams with the HBA Group, an entrepreneurial 

firm here in Augusta, 13 years old. And, by the way, Congressman 

Burns spoke at that regional minority conference that Patrick mentioned in his remarks. 

Hotbeds, the latest issue of ‘‘Fortune Small Business,’’ the February magazine, that addresses that hotbeds question that you 

asked about, and the different characteristics, and it did say that 

Atlanta is number one. 

Some of the comments they made of what helped it become the number one hotbed, access to resources dealing with small business 

and entrepreneurship, leadership, mentors, the availability and access to mentors for small business owners, and networking activities. Those were four that I can remember from the article that I 

thought might be helpful for you, and it is an excellent article, but 

it is the February issue of ‘‘Fortune Small Business.’’ Chairman SCHROCK. Let me ask you a question. This hotbed thing is kind of interesting. In the state I represent, Virginia, there are a lot of hotbed things in northern Virginia. Everybody thinks if it does not go to Fairfax 

County in northern Virginia it is not worth anything. But, frankly, 

where I live Virginia Beach is a far better quality of life, and I 

think should draw people there. 

I think, frankly, living in Augusta is better than living in At- lanta——

Mr. BURNS. Amen. 

Chairman SCHROCK [CONTINUING] From what I have seen. What 

is the disconnect? Why cannot we get people to understand that 

and move to Augusta, and move to Virginia Beach. 

Ms. BLOCKER-ADAMS. I do not know, but we are working real hard to make that happen, and I think I heard somebody say they 

can answer that behind me, who is also an entrepreneur. 

Chairman SCHROCK. Everybody up here grabbed their microphones, so they have all got answers too, I think. 

Ms. BLOCKER-ADAMS. I am going to let this gentleman come up 

and make a response to that if you do not mind. 

Chairman SCHROCK. Sure. 

STATEMENT OF JESSE HUGHES, ACCOUNTANT 

Mr. HUGHES. My name is Jesse Hughes, I am an accountant here 

locally. I can address that. I moved to Georgia fifteen years ago. I 

am originally from upstate Buffalo, New York, and when I go back 

to Buffalo and tell them I am living and working in Georgia, quite 

naturally they assume I live and work in Atlanta. 

The reason I look at for not being in Atlanta it is a lot more competition than necessary. A lot of people feel that Atlanta is a hotbed because more entrepreneurs are starting there, preferably African-Americans. There are a lot of opportunities to work and grow. 

You have got African-Americans in the legislature, you have got an 

African-American in the governor—not the governor’s, but the mayor’s mansion, so that allows everyone to look at Atlanta as being 

more expedient than Augusta is, looking at Augusta being a lot 

more slower. But opportunity in Augusta is plentiful. 

31

I want to touch bases on Mr. Elam, and I forgot which gentleman 

from the Small Business Development Center. Education is probably the most important thing, and I am going to stress that because I probably have about 1,500 clients, I deal with a lot of entrepreneurs. I mentioned the Small Business Development Center because there is someone over here named Heather Woods that I was 

speaking with tremendously last week, and I am mentioning the 

Small Business Development because I am a speaker for the Internal Revenue that actually puts on the seminars for small business 

development. 

I put on a seminar in Rome, Georgia, and Atlanta, Georgia, and 

supposedly in Augusta that did not work out this week, but we are 

looking to reschedule. In talking to the people, their biggest problem is education. You go back to it, they are excellent electricians, 

they are excellent carpenters as long as you put a hammer and a 

nail and wood in front of them, but when you give them dollars 

that becomes a problem, and they cannot succeed, they cannot go 

forward because all they have to offer to their business is their expertise in that area. Education is a hotbed. 

You go back talking about teaching them in the early classes. My 

two children, I have got an 11-year-old and a 12-year-old, they 

work in my office. They have got three years experience, and they 

have probably got a lot more knowledge than a lot of individuals 

in business today, so that is a stickler with me because again we 

are looking to open up an entrepreneur school for children, and 

that is where we are going to start with the children and work our 

way up. 

I put on a lot of seminars for ongoing businesses, and I keep 

stressing the same thing, the biggest problem is education. We sit 

here talking about giving them SBA loans and the various things. 

What good is it if you do not educate them on what to do with the 

money, and then you complain when we get it and go buy a Cadillac. But no one told us what to do with the money. We borrowed 

the money, we put some of it in our business, and we use it for 

other things that we have not been educated on. 

You know, I am where I am today because of my education. I 

have been in business 15 years. I have got a two-year degree, and 

I can guarantee anyone in here would never know that I had a 

two-year degree. I am an Enrolled Agent with the Internal Revenue, I am an Accredited Business Accountant. I went off and got 

my education. 

My business is thriving under radar, a lot of people is not aware 

of that, because I took the stuff to get the education. I wanted to 

become a leader first instead of a boss. I learned to learn and deal 

with people, I learned how to market my business. I went and got 

experience telemarketing because as a businessman I am going to 

be on the phone constantly. But those are information that I spread 

to entrepreneurs. 

And I differ a little bit with Mr. Elam as far as putting it in 

schools, because I feel a lot of our entrepreneurs need to be taught 

by entrepreneurs, because I learned a lot in school, but in my fifteen years in business nothing in school that I learned that is being 

used in my business today, none of it. The school teach you academics, but it is a lot more behind that, and we want to be able 

32

to—I have got nothing against education, I push that because I use 

the word knowledge, because education is not for everybody, and 

we have to understand that. Everybody cannot go to school and sit 

around and listen to a teacher, so you have go to get your knowledge, be it in a seminar or whatever it takes in order to be able 

to get that. 

Chairman SCHROCK. I hope you do not mean K through 12, I 

hope you agree you have to have that. 

Mr. HUGHES. Oh, yes. What I am stating is, you know, we push 

education. Everybody is not education oriented, everybody cannot 

learn through the education system. 

Mr. BURNS. There are different options for all of us to achieve a 

degree of skills and expertise. It could be in a professional school, 

it could be in an apprenticeship program, it could be in a formal 

college or university environment, it could be any number of 

things. 

I want to just respond. We had lunch with Calvin Greene in Hot 

Foods by Calvin. Let me tell you what, that is an amazing success 

story where we have an individual who lost his job, and three 

weeks later started a business, and has not looked back, now employs 25 people, provides his employees with health care, and with 

401(k)s and IRAs, and you know the interesting thing is he has 

been extremely successful in his quest for a small business, his 

business, and he can take just as you said—and we talked about 

this at lunch today—he can take others and basically mentor them 

and show them how to be successful, maybe not—they should not 

necessarily adopt his dream, but they should identify their dream. 

But many of the skills he has learned are transferrable, and I 

think you are correct. Mr. Elam and I discussed this, and I have 

discussed it with other folks, you know here are opportunities—you 

are an example—who can go and help others understand how to be 

successful, and like you say the pitfalls, the challenges. 

Chairman SCHROCK. It was worth coming here today just to meet 

Calvin. When they said we were going to go to Hot Food by Calvin, 

all right. When I saw his picture on the billboard 20 feet high, huh, 

this guy has really made it and, boy, when you meet him he is upbeat, he knows what he is doing. That is the kind of guy you need 

to get out in the community talking to people and teaching them 

how to do it. I do not believe in cloning, but if I did I would want 

to clone Calvin to go everywhere. He is the role model for business 

in America, he really is. 

Did you want to comment, Dr. Elam? 

Mr. ELAM. And I agree education is far more than classroom. 

Chairman SCHROCK. It is. 

Mr. ELAM. And I would just like to give a personal note. Augusta 

probably has the largest percentage of African-American electrical 

contractors of any city that I know. There is probably 15 businesses 

in this community that are owned by African-Americans who are 

electricians. And the reason I can say that, because in 1955 there 

were none, there was not one master electrician in this community. 

My uncle was the first. He trained another uncle who trained 15 

who now run businesses. That is entrepreneurship at its best. 

33

Education plays a role, but also working with people who are 

successful is just as great a role. I mean going to school is fine, but 

you have to have success. 

I started my first business when I was fifteen years old, I made 

$30 for working six hours. You do the math, that was a lot of years 

ago. I was fifteen years old, 1965. I thought I was rich. I then became an electrician. 

Chairman SCHROCK. And then you got rich. 

[Laughter.] 

Mr. ELAM. And then I decided I did not like crawling under 

houses. 

[Laughter.] 

Mr. ELAM. The point I am making is that one person can plant 

that seed that can impact a tremendous number of people in one 

area. I saw that, I have seen it my whole life. 

We do not know the area, we do not know what the niche is 

going to be. It could be a Calvin developing six more Calvins. As 

a matter of fact, if you go back and look at it, Calvin comes from 

another restaurant that has produced several restaurants in this 

community. That is entrepreneurship at its best. Entrepreneurship 

at its best is seeing an auto dealer like the Hodges Group that 

came out of another dealership in Charleston and came here, and 

now there are four or five dealerships under that umbrella. 

So we have great examples of great entrepreneurship. When you 

marry academic training with hands-on experience your success 

level is increased. You do it the opposite; you cannot do it all in 

the classroom, and you cannot do it all just practically. 

Chairman SCHROCK. The classroom is great, but there is nothing 

like OJT, on-the-job training, it has got to be there. 

Mr. ELAM. And you have to incorporate OJT into practical training. That is why we are a technical college, that is why we are not 

the university. 

Mr. BURNS. Just a comment. When I was visiting Augusta a year 

and a half or two years ago, one of the things we were looking at 

was what is the one thing that we can do in this community to improve the opportunities for job growth and development, especially 

in the biotech community we have not really addressed biotech that 

is such a major portion of our community and our economy here 

in the CSRA, the comment was improved air service. And because 

of the access issue, the issue of being able to get the right folks in 

and out of this community to participate in high-tech industry, to 

participate in that development, and I want to commend the Augusta Airport Commission for their efforts in improving air service, 

but I also want to commend them for their efforts in ensuring minority business participation in the development of that entity. 

We are going to invest some number of millions of dollars over 

the next several years, and it is extremely important that as those 

dollars are spent that they stay in this community, that they stay 

with small businesses here, that they stay with minority businesses here, and they circulate in our community, and they create 

a stimulus for the future master electricians, and the future master 

carpenters, and plumbers, and brick masons, and general contractors, and whatever the opportunities may be, but the point is we 

34

utilize that as a mechanism for stimulating the local small business growth. 

Chairman SCHROCK. Let me ask one final question to all of you, 

and then I will let Congressman Burns wrap up. 

When your congressman and I go back to Washington, what can 

we do, what do you think is the best thing we can do to help the 

business climate for small businesses getting off their backs? Is it 

regulation, or what is it? What do you think we need to do to get 

this thing turned around so that small businesses can not only be 

established, but can flourish and grow and not have to worry about 

all kinds of burdensome government regulations? 

He and I cannot do anything about the state level or the local 

level, but we certainly can at the federal level, and I have a feeling 

that may be the biggest problem, and if it is we need to know that. 

Mr. ELAM. In the educational area from the side of the retraining 

of workers, making sure that those programs are able to focus on 

those kinds of activities that will allow those people to take advantage of these opportunities, and I say that to make sure that there 

are no restrictions out there for free-flowing ideas of entrepreneurship for someone who wants to participate in a retraining program 

because they have lost their job. It does not do any good to retrain 

someone in an area that the job is not coming back. 

I mean if you are in the textile business all those associated jobs 

are going to leave, the problem is to create that new economy in 

the community, so making sure that there are no artificial barriers 

out there to make sure that people have to leave their communities 

to go elsewhere to look for work because there are just no opportunities available in the local business climate. 

Mr. GRIFFIN. First of all, thank you all for having this event, 

thank you for inviting us. 

I think as far as SBA paperwork is concerned, and that is my 

area of expertise, it seems to me like a lot of forms that are in the 

process where you certify to something and you acknowledge something, that they can combine eight or nine forms into one. 

Chairman SCHROCK. Where you answer the same thing over and 

over again; is that what it is? 

Mr. GRIFFIN. You are certifying that you won’t use lead-based 

paint, you are certifying that you will comply with certain job employment, and carrying workers’ compensation insurance, and 

things that you certify to in the application. 

It seems like there are certain forms that are stand-alone forms 

that they could consolidate them and combine all that onto one 

form. I think that would help our process in the banking community under 7(a) and under 504 more than anything else. 

Mr. LOGAN. I guess from the SBDC’s perspective the number one 

issue that I would ask, and I want to emphasize that we have had 

an excellent relationship with our district SBA office, but there appears to be from a national perspective more and more emphasis 

put on body count——

Chairman SCHROCK. What? 

Mr. LOGAN [CONTINUING] By contact meeting, the number of people you meet. 

I have in my tenure with the SBDC tried to emphasize that we 

are not a business assistance entitlement program, we want to help 

35

those that have potential that have done the basis to get their businesses off the ground. Many times our greatest successes come in 

more rural areas of the state, less urbanized areas. We cannot get 

the number of contacts and just the number of face time with individuals and really be effective. We would like to see it for a minimum of seven to eight hours per client on an average so it will 

be effective. So that is one of the things that I would really like 

to emphasize when it comes to technical assistance is let us help 

the ones that are willing to help themselves, that are prepared to 

start their own business and not just to try to greet and meet everybody and do more of a handshaking session. 

Mr. WILBANKS. I think improvements to the SBA program that 

have been mentioned, youth entrepreneurship, incorporating that 

some way into our educational system, and continuing support of 

the Manufacturing Extension Partnership that allows Georgia Tech 

and folks like us to provide technical assistance that cannot be 

found in other agencies and resources available to entrepreneurs 

and small business, whether in Atlanta or if they are in a rural 

community somewhere. 

Mr. PRESNELL. I also thank you for the opportunity. As you go 

back and contemplate what your recommendations would be consider two or three sources of entrepreneurship originations. 

One of course the youth, and then you have your folks coming 

out of technical school or colleges that are going to be trying to 

start new businesses, and now we are at the end I believe of the 

last downturn in the economy. You have got quite a few displaced 

older folks who are rather than perhaps going back to work for a 

corporation, they may be starting their own businesses. 

Intertwined with all of that I think we need to be very sensitive 

to the need for family security in terms of retirement benefits and 

health care packages. Those two things go back to the security of 

not only the businessperson themselves, but also the employees 

they are going to hire, and the stability of a business is centered 

around how they can reduce their turnover rate. And it is easier 

for them not to have to worry about that if they have benefits that 

will attract good, sound employees to help them grow their business. 

Ms. FOWLER. Thank you so much for the opportunity to be here. 

I just would like to address the issue of the legislative proposal, 

and all I want is for people to realize that this is a starting point. 

If we did not do anything we probably would collapse, frankly. 

Right now our credibility is very shaken in the field, our partners 

are concerned—and I am talking about lending partners and technical assistance partners—because of all the issues that we have 

had to contend with in the prior year, and consider this as a starting point and all the feedback that comes from this type of forums 

and the information that we are going to be sending to our people 

at headquarters to start the dialogue, but something needs to be 

done, and the best way that we knew how to do it was following 

our administration’s agenda because we do not want to increase 

the fees to the small businesses. That is a tax to them. That is the 

bottom line. 

36

So we need to work it out where we are on equal partnership 

with our lenders to be able to provide what the small businesses 

need, access to capital. 

Thank you. 

Chairman SCHROCK. Mr. Burns. 

Mr. BURNS. I just want to add my thanks to the panel, and to 

the participants. I know it has been a long afternoon, it has been 

a productive afternoon. I will tell you that if we do this in D.C. we 

cannot get this kind of dialogue, we cannot focus on this issue with 

the intensity we have been able to do this afternoon, and I want 

to thank you for your input, and I want to thank you for your time. 

I want to thank the Chairman for his willingness to come to Augusta, to come to the 12th District, to listen to our input and our 

opportunities, and then to take it back and to provide results, results that will create the jobs in this community and around our 

state, and around our nation, and it is going to be because of your 

willingness to share your knowledge and expertise. Thank you. 

Again I am delighted that Chairman Schrock would join us here 

in Augusta and have an opportunity to talk about the real segment 

of our economy that is going to create the vast majority of the future of America, and I want to say thank you. 

Chairman SCHROCK. Thank you. 

Let me say one more thing. We did not do this, and I did not 

come here just because I did not have anything to do on Monday. 

I came here because this is deadly serious and because Max wanted me to come here and, believe me, we are not going to have this 

hearing and have everybody think it was a great hearing, we are 

going to do something about it. 

I am fed up—I got into this elected arena at the State Senate 

level in Virginia and at the Congressional level because I was fed 

up with the government bureaucracies ruining this country, and 

with some of the horrible regulations that they have imposed on 

business, and everybody for that matter, and if we get enough people in Richmond and in Washington to take on that mantra and 

try to do something about it, something could be done. We have a 

very passionate chairman of the full committee, Don Manzullo from 

Illinois—I do not know if you know him or not—but he is just dogged about this, and he is not going to let go until people give in. 

Trying to get the federal agencies in downtown Washington to respond to even members of Congress is next to impossible. I am 

tired of that. We are the elected people, we have a right to ask 

questions and expect results from these people, and we do not get 

it. They ignore us, they treat us like we do not belong there, and 

that is going to stop, and I think more and more classes of congressional people that come in—Max’s class is unbelievable—I came in 

with the 107th, he came in with the 108th—the 108th is not going 

to put up with this. We are not either, because we are the new 

guys on the block, we have had to live it out there, and we have 

go to do something about it. 

So I can assure you with the staff we have and the things we 

hope we can accomplish—unfortunately Rome was not built in a 

day—I am very impatient, I am the worst Type A personality in 

the world, I want it done now, because when I see a wrong I want 

37

it done now, but, guys, it just does not work that way in Washington, it really does not. 

But we are going to keep at it, and I think the more we hammer, 

the more we have these hearings, the more we bug the agencies 

and pick on them, and pick on them, and pick on them they are 

finally going to say for God’s sake let us just get it done and get 

it over with. 

I had a very bad reputation with one of the agencies in the State 

Capitol of Virginia in Richmond, so bad that one time when I called 

I heard the lady say before she stuck me on hold ‘‘Oh, my God, it 

is him again,’’ but that was a good thing. They knew when I called 

that I was not going to let go until we got things done, and we had 

good results. And we have to do that in Washington, and the more 

of us that do it the better, and I am going to continue to do it, and 

I know Max Burns will, and we just ask you to bear with us. 

I know everybody says that all the time, but it takes a while, and 

we are going to do it. 

I really thank you for coming here and sharing with us today. 

I really appreciate the time you took, and I have thoroughly enjoyed being here, and if I can look for an excuse to come back again 

I will. 

Again thank you very much, and this hearing is adjourned. 

[Whereupon, at 4:45 p.m. the subcommittee meeting was concluded.]

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