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23–177 PDF 2005

VETERANS ACCESS TO CAPITAL

HEARING

BEFORE THE

SUBCOMMITTEE ON REGULATORY REFORM AND 

OVERSIGHT

OF THE

COMMITTEE ON SMALL BUSINESS 

HOUSE OF REPRESENTATIVES

ONE HUNDRED NINTH CONGRESS

FIRST SESSION

WASHINGTON, DC, JUNE 21, 2005

Serial No. 109–22

Printed for the use of the Committee on Small Business

(

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

COMMITTEE ON SMALL BUSINESS 

DONALD A. MANZULLO, Illinois, Chairman 

ROSCOE BARTLETT, Maryland, Vice 

Chairman 

SUE KELLY, New York 

STEVE CHABOT, Ohio 

SAM GRAVES, Missouri 

TODD AKIN, Missouri 

BILL SHUSTER, Pennsylvania 

MARILYN MUSGRAVE, Colorado 

JEB BRADLEY, New Hampshire 

STEVE KING, Iowa 

THADDEUS MCCOTTER, Michigan 

RIC KELLER, Florida 

TED POE, Texas 

MICHAEL SODREL, Indiana 

JEFF FORTENBERRY, Nebraska 

MICHAEL FITZPATRICK, Pennsylvania 

LYNN WESTMORELAND, Georgia 

LOUIE GOHMERT, Texas 

NYDIA VELA ́ ZQUEZ, New York 

JUANITA MILLENDER-MCDONALD, 

California 

TOM UDALL, New Mexico 

DANIEL LIPINSKI, Illinois 

ENI FALEOMAVAEGA, American Samoa 

DONNA CHRISTENSEN, Virgin Islands 

DANNY DAVIS, Illinois 

ED CASE, Hawaii 

MADELEINE BORDALLO, Guam 

RAU ́ L GRIJALVA, Arizona 

MICHAEL MICHAUD, Maine 

LINDA SA ́ NCHEZ, California 

JOHN BARROW, Georgia 

MELISSA BEAN, Illinois 

GWEN MOORE, Wisconsin 

J. MATTHEW SZYMANSKI, Chief of Staff 

PHIL ESKELAND, Deputy Chief of Staff/Policy Director 

MICHAEL DAY, Minority Staff Director

SUBCOMMITTEE ON REGULATORY REFORM AND OVERSIGHT 

W. TODD AKIN, Missouri Chairman 

MICHAEL SODREL, Indiana 

LYNN WESTMORELAND, Georgia 

LOUIE GOHMERT, Texas 

SUE KELLY, New York 

STEVE KING, Iowa 

TED POE, Texas 

MADELEINE BORDALLO, Guam 

ENI F. H. FALEOMAVAEGA, American 

Samoa 

DONNA CHRISTENSEN, Virgin Islands 

ED CASE, Hawaii 

LINDA SA ́ NCHEZ, California 

GWEN MOORE, Wisconsin

TOM BEZAS, Professional Staff

(II) 

C O N T E N T S 

WITNESSES

Page 

Elmore, Mr. Bill, Office of Veterans Business Development, US Small Business Administration ............................................................................................. 3

Wilson, Mr. Don, President & CEO, Association of Small Business Development Centers ........................................................................................................ 5

Kerr, Ms. Patricia, Missouri Veterans Ombudsman, State of Missouri .............. 6

Alford, Mr. Harry, President/CEO, National Black Chamber of Commerce ...... 9

APPENDIX

Opening statements: 

Akin, Hon. W. Todd .......................................................................................... 22

Prepared statements: 

Elmore, Mr. Bill, Office of Veterans Business Development, US Small 

Business Administration .............................................................................. 25

Wilson, Mr. Don, President & CEO, Association of Small Business Development Centers ............................................................................................. 36

Kerr, Ms. Patricia, Missouri Veterans Ombudsman, State of Missouri ...... 54

Alford, Mr. Harry, President/CEO, National Black Chamber of Commerce .............................................................................................................. 59

(III) 

(1)

VETERANS ACCESS TO CAPITAL 

TUESDAY, JUNE 21, 2005

HOUSE OF REPRESENTATIVES

SUBCOMMITTEE ON REGULATORY REFORM AND

OVERSIGHT

COMMITTEE ON SMALL BUSINESS

Washington, DC 

The Subcommittee met, pursuant to call, at 2:05 p.m., in Room 

311, Cannon House Office Building, Hon. Todd Akin [Chairman of 

the Subcommittee] Presiding. 

Present: Representatives Akin, Kelly, Poe, and Bordallo. 

Chairman AKIN. I have got a little bit of bad news relative to our 

time schedule. Supposedly, a vote is going to be called in a minute 

and a half to 2 minutes. So I think what we are going to procedurally do is I am going to go ahead and read the opening statements, and then we will adjourn temporarily for a recess, that is 

the word I was looking for, a recess for probably—it is a 15-minute 

vote, and then a 5-minute vote after that, so I would think, perhaps, in total, it will take about 20 minutes for the recess. That 

is the actual vote right now. So we will do that, and then come 

back and pick up. I am sorry, I don’t schedule the votes, I just have 

to vote when they call. 

Good afternoon. I would like to extend a warm welcome to those 

of you who have taken time out of your busy schedules to testify 

before the committee this day. We are here to discuss the current 

obstacles that prevent veterans access to capital, and more specifically, the barriers that self-employed Reservists and Guardsmen 

face in maintaining financially solvent businesses during deployment. 

As we all know, small businesses play a critical role in our economy. Small businesses pay a major portion of our Nation’s taxes 

and employ a majority of our workforce. In fact, small businesses 

employ approximately 18 percent of all Reservists who hold civilian 

jobs. Moreover, the Congressional Budget Office estimates that of 

the 860,000 Reservists in the Selected Reserves, approximately 9 

percent are self-employed. And many self-employed Reservists experience economic hardship, both during deployment and after 

their tour of duty. 

According to one Department of Defense survey, 22 percent of 

the Reservists who had recently been activated said that the damage done to their business was a serious or very serious problem. 

To date, there are several Federal programs that have been set 

up to assist these small businesses. Bill Elmore, from the Small 

2

Business Administrations Office of Veteran Business Development 

is here to discuss some of the programs, and how our soldiers may 

take advantage of them. Welcome, Bill again. 

And then Don Wilson, president of the Small Business Association Centers, SBDCs, will provide us an insight into the role 

SBDCs play in providing assistance to self-employed Reservists and 

veteran small business owners. 

Ms. Patricia Kerr, Veteran Ombudsman for the State of Missouri, is here to explain to us the challenges faced by the soldiers, 

their families left behind, and the States responsibilities during 

their deployment. 

And lastly, we will hear from Mr. Harry Alford. Mr. Alford is 

here in his role as the president and CEO of the National Black 

Chamber of Commerce. He will explain the impact on his members’ 

business, while many of the owners and proprietors have been sent 

overseas in our recent conflicts. 

Witnesses, I thank you for coming. And before we get started, I 

would like to greet my distinguished colleague from Guam, ranking 

member, who has now gone over in the finest of style to vote when 

she is supposed to, Congresswoman Bordallo, and invite her so say 

a few words. If she is here when I return, we will go ahead and 

let her have opening statement, and then after that we will just go 

to each of you. 

I am going to ask each of you to do a 5-minute opening statement, and you know the little light in the thing there gets red 

when you run over your five minutes, and then after that we will 

do questions and answers. 

If there are not too many people here, I like to run these things 

a little bit more as a discussion than having an excessive amount 

of formality. But we will need a little recess. I think there are probably some staff people to help you find the nearest Starbucks or ice 

cream place if you need it for 15 or 20 minutes until we are ready 

to go. Thank you all. The committee is in recess. Thank you. 

[recess.] 

[Chairman Akin’s opening statement may be found in the appendix.] 

Chairman AKIN. The committee will come to order. And we will 

now hear an opening statement from Ms. Bordallo, and our Minority Ranking Member and good friend of the committee, and a good 

friend of small business, proceed. 

Ms. BORDALLO. Thank you, Mr. Chairman. And I apologize for 

being a bit late, but as you know, I represent the territory of 

Guam, so we do not vote on the floor. So that is why you saw me 

standing here during the voting process, I just want to explain. 

Today, more than ever, our Nation’s veterans are facing a myriad 

of challenges in starting and running their own businesses. From 

rising healthcare, regulatory and energy costs, veteran business 

owners are experiencing many obstacles to creating and growing 

their businesses, and I have seen this right at home. 

In addition, many veteran business owners are either being deployed themselves or their employees are be sent overseas, making 

their job of running a business even more challenging, yet many 

small business owners have difficulty qualifying for traditional 

bank loans, and are all too often forced to use various methods of 

3

financing, such as credit cards and personal loans to finance their 

business ventures. So that is why programs such as SBA’s 7(a) loan 

program and the 7(m) micro loan progam are so important to veteran entrepreneurs. These programs are meant to provide entrepreneurs with an affordable and a sensible source Of capital. The 

7(a) loan program provides 30 percent of all long-term loans. And 

in fiscal year 2004 alone, veteran business owners received nearly 

8,000 7(a) loans for over $1.3 billion. 

The micro loan program has a specific mandate, to target veteran 

entrepreneurs for assistance, and in 2003 provided nearly 200 

loans, totaling 2 million, to these enterprises. So clearly, these programs have been heavily used and effective in giving veterans the 

affordable capital they need. 

As the bill is marked up this week in the Senate, it will be up 

to the Senate to take the necessary action to ensure that capital 

is affordable and available to our Nation’s veterans through the 

SBA’s 7(a) loan program. And this is the first big step in lowering 

the increased fees that are currently facing our Nation’s veterans 

small business owners. 

Once this funding is restored, it will be important for this committee to focus on H.R. 1868, the Access to Capital Act, which 

would ultimately lower the fees on both small businesses and lenders. By doing so, Congress will ensure that this large source of capital is both available and affordable to the thousands of veteran 

small business owners that rely on it. 

And that is my opening statement, Mr. Chairman. 

Chairman AKIN. Thank you. Well, we will now proceed with the 

opening statements of the witnesses. And I believe I was corrected, 

they are to be 5 minutes long, and then we will just go into some 

questions afterwards. 

And our first witness will be Mr. Bill Elmore, Office of Veteran 

Business Development, Small Business Administration, hailing 

from Washington, D.C. Bill, welcome, thank you.

STATEMENT OF BILL ELMORE, OFFICE OF VETERANS BUSINESS DEVELOPMENT, US SMALL BUSINESS ADMINISTRATION 

Mr. ELMORE. Thank you, sir. 

Chairman Akin, Ranking Member Bordallo, thank you for your 

invitation to testify today. 

The committee is interested in barriers that confront self-employed Reserve and Guard members who, while activated, must 

maintain their viable small businesses back home. 

The administration is fully committed to supporting Reservists 

who maintain or establish successful small businesses. We believe 

it is vitally important; we offer all of our assistance to every Reservist to minimize damage that may occur. 

Reservists are unique in their dual mission of defending America, 

while maintaining their business. Their skills are vital to our defense and to their success in small business. This dual mission is 

a serious challenge, and simple solutions will not mitigate all the 

potential circumstances activated business owners face. 

4

Thus far, through Administrator Hector Barreto’s leadership, 

SBA has lead Federal government’s efforts. Since 2001, our Military Reservist Economic Injury Disaster Loan has been provided to 

228 small businesses for an average of $88,863 each. SBA initiatives include, special district office outreach, production of Reservist outreach and program tools, directing our four veterans business outreach centers to enhance assistance for Reservists, highlighting our Reservists programs in our Vet Gazette newsletter, 

and establishing a Special Reservist Web page on the SBA Web 

page, with reciprocal links. 

We initiated collaborative outreach with DoD, providing SBA Reserve and Guard fact sheets, and program tools to mobilization and 

demobilization sites and to DoD personnel. We have produced thousands of post-mobilization business planning guides, and an interactive CD being distributed to 17,000 Reserve and Guard units, 

and to thousands of individuals, SBA programs, offices and partners. 

I have presented at more than one hundred events and testified 

and briefed Congress about this. We provided guidance to our participating lenders and our certified development companies. And 

our disaster program, which manages the MREIDL program, provides priority processing to MREIDL loan applications and recipients. 

We provided specific instructions to our 1,100 small business development centers, and SCORE has created a special initiative targeted to self-employed Reservists. 

Two recent reports provide a basis for policy deliberations for 

self-employed Reservists. The first paper, prepared for the Assistant Secretary of Defense for Reserve Affairs, titled, ′′Analysis of 

Employer Costs From Reserve Component Mobilization′′ was released December 2004 by the Institute for Defense Analysis. I have 

a copy, sir, if you would like that. 

The second paper was published by the Congressional Budget Office in May 2005 titled, ′′The Effects of Reserve Call-ups on Civilian 

Employers.′′

These papers provide a formative basis for substantive deliberations for Congress, for SBA, and for DoD. Both reports suggest cost 

consequences are greater for small business than large ones, especially for small businesses owned by Reservists. These papers raise 

fundamental questions of fairness and small business viability. 

They examine approaches that may mitigate problems, but make 

no definitive recommendations. 

Clearly, we understand the issues faced by self-employed Reservists do not present a simple one-size-fits-all program answer. That 

concludes my verbal testimony, sir, and I welcome any questions 

you may have—and ma’am, excuse me. 

Chairman AKIN. Thank you. You ended up redeeming 38 seconds 

of your time, Bill. You are doing very well here this morning. 

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

Chairman AKIN. Our next witness will be Mr. Don Wilson, who 

is President and CEO of the Association of Small Business Development Centers from Burke, Virginia. 

Don, proceed.

5

STATEMENT OF DON WILSON, ASSOCIATION OF SMALL 

BUSINESS DEVELOPMENT CENTERS 

Mr. WILSON. Mr. Chairman, thank you very much, Ranking 

Member Bordallo; we appreciate the opportunity that both of you 

have afforded ASBDC to testify here today. 

As you know, the Association of Small Business Development 

Centers represents the Nation’s 63 small business development 

center programs in all 50 States, D.C., Puerto Rico, Guam, American Samoa and the Virgin Islands. That program every year 

serves about 750,000 small business and aspiring small business 

owners face to face in one-on-one counseling or in training sessions. 

Roughly 8 percent of those are self-declared veterans. Last year 

we served approximately 60,000 veteran business owners, which 

exceeds the numbers of all other Federal management of technical 

assistance programs combined. We actually think, Mr. Chairman, 

that the numbers are larger than that because we are only speaking of self-declared veterans, and as Mr. Elmore knows, oftentimes 

veterans do not self-declare. So we anticipate that actually the 

number of our clients who are veterans may range as high as 12, 

perhaps even as high as 15 percent. 

In February, when I testified before the full committee on the 

SBA budget, I brought to the attention of the committee that we 

were beginning to get very serious anecdotal evidence from our 

counselors in the thousand centers nationwide that Reserve callups were having a real impact on businesses all over the country. 

In May, Ms. Snow had the CBO study, and you have seen the articles in the Post and so forth, and it is very clear that problem is 

growing. 

When a veteran is called up—I mean, when a Reservist is called 

up and is gone for a year or 2 years, it is absolutely, often catastrophic for the business. And capital alone is not the answer. It 

can be very, very important, and certainly the Economic Injury Disaster Loans that the SBA provides and that Congress has provided 

for are very important, and our counselors are some of the leading 

sources of helping Reservists and Guardsmen fill out their applications for Economic Injury Disaster loans. But the biggest issue is 

planning. One of the things we are most concerned about is obviously if you are a Reservist, you can be called up on 24 hours notice. And if you have not planned before then, the likelihood of a 

disastrous impact on your business is very real. 

The publication that Mr. Elmore produces and that we think 

very highly of in our SBDCs, we distribute to clients, we keep them 

in our centers, and I commend SBA and Mr. Elmore for that publication, it is outstanding. One of the things it stresses is planning, 

planning before you are actually activated. And there is where 

SBDCs can come in and make such a real difference in working 

with the Reservist who has not yet been called up. I know one of 

the things that we are talking about with DoL and DoD and VA 

is including additional information about SBDCs and the TAP program for the people who are actually leaving the military. But 

what needs desperately to be done is for Reserve units to make 

anyone who is a small business in their Reserve unit, before they 

are called up, aware, you know, just tell them, look, the Federal 

Government has a resource for you. SCORE and women centers 

6

and SBDCs can help you avoid many of the trouble spots if you will 

go work with them now before you are called up. 

So the numbers are very real. I know when you talk about 

850,000 Reservists and probably 400,000 are called up, or more, 

480, I look at the numbers in the CBO study and I can assure you 

that the numbers that they estimate of small businesses impacted, 

I believe, are truly low. And you will see in my complete testimony, 

Mr. Chairman, that they could be, the complete testimony in the 

record, as one of those reasons. 

So one of the things we want to do, we want them planning with 

there local SBAs, their SCORE chapter, their womens business 

centers to prepare for the contingency of leaving. 

Now one of the things that we do so very well is that once they 

are gone, is that we work with their families, we work with the employees that are left. But it is not just when a Reservist is called 

up, it is when an employee who is a Reservist is called up. I mean, 

people talk about an essential employee, and if you are in a small 

business of 5 or 10, probably almost every one of your employees 

is essential. I mean, if you lose 2 people out of a 10-man firm, that 

is like a 500-man firm losing a hundred people. Imagine what that 

would be like. So that planning is absolutely essential for the people left behind, the training and the counseling that we can provide 

them while the Reservists or the Reserve employee is broad is very, 

very critical, and we are trying to expand that. 

I have proposed to my board, Mr. Chairman, only yesterday that 

the SBAs across the Nation—I am waiting, they will have to approve that—that the SBAs across the Nation provide free training 

to every small business that indicates that they are a small business that has been impacted, either by the loss of the owner or a 

key employee going abroad. 

So the program is there. It has got an amazing footprint with a 

thousand centers. We are prepared to assist—we raised this issue 

back in February, we are delighted to see the CBO and others paying attention to in this hearing, accentuating it, but it needs planning and it needs expansion of capacity for SBDC to be able to tend 

to the number that is coming to our doors. 

Thank you, Mr. Chairman. 

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

Chairman AKIN. Thank you very much for your comments. 

Our third witness is Ms. Patricia Kerr. And you are the Missouri 

Veterans Ombudsman for the State of Missouri. 

Ms. KERR. Thank you, sir. 

STATEMENT OF PATRICIA KERR, MISSOURI VETERANS 

OMBUDSMAN, STATE OF MISSOURI 

Ms. KERR. Well, if I may, thank you for inviting me to be here. 

I have been the former president and CEO of the largest court reporting firm in central Missouri, as well as having two other successful businesses. I am intimately familiar with the requirements 

of a small business person. 

Additionally, I am proud to say that I am the mother of a returned servicewoman, Captain Katherine Numerick, who is with 

me here today, and she deployed during rotation round of OIF. And 

also with me are two fine folks that are with Operation First ReVerDate 0ct 09 2002 16:25 Nov 10, 2005 Jkt 000000 PO 00000 Frm 00010 Fmt 6633 Sfmt 6633 G:\HEARINGS\23177.TXT MIKE
7

sponse, Peggy and Steve Baker. And they work with the very injured out of Walter Reed. 

We, in the State of Missouri, are very proud of the forward 

thinking of our governor, Matt Blunt, a veteran himself, and our 

legislative body, as we have successfully steered several bills 

through the 93rd Missouri General Assembly, including a Family 

Military Relief Bill, which we are excited to sign on Monday. 

As a State Veterans Ombudsman, I work to bring the numerous 

government, private and nonprofit services together to assist our 

wounded and those military returning to their communities. In the 

last 7 months I have had the opportunity to coordinate private contributions for our wounded and financially strapped Global War 

veterans totaling close to 140,000, and have negotiated and kept 

several homes out of foreclosure. 

Today, I received a call from Wisconsin of a Marine amputee who 

is about to lose his home. I have formed a national coalition with 

organizations like the VFW’s Unmet Needs program, the Stan the 

Man Foundation located in Missouri and the Carolinas, USA Cares 

in Kentucky, Operation First Response out of Walter Reed, and the 

Coalition to Salute American Heroes in Virginia in an effort to 

maximize services and accessibility. 

Several hundred of Missouri’s injured military have worked with 

me to sort through problems they and their families faced. Having 

shared that background with you, I thank you for being interested 

and being on this team because it is you who drives the boat. And 

we believe there are four actions Congress can take to improve 

Global War veteran entrepreneurship. 

First, assist with Federal funds for veterans ombudsman in each 

State’s Veterans Commission, with sufficient support staff to provide a single point of contact. In-state personnel incorporate State 

and local specific resources and have the networks in place within 

the communities to quickly access referrals for immediate response 

to the needs of our return veterans. 

Second, eliminate Federal business taxes for Global War veteran 

entrepreneurs during their mobilization and deployment. 

Third, Federally support community-based organizations, underlining community-based organizations, such as the St. Louis Veterans Business Resource Center which has immediate access to financial and professional support resources that can quickly assist 

these Guard and Reservists. 

Fourth—and this is a little bit of a—this one is tough—keep deployments in the Army at a shorter duration. For my doctors, 

shorter duration. For folks like my daughter, make it longer, get 

her home. You can’t win for losing here. 

Why would these four actions make a difference to our Global 

War veteran entrepreneurs? Nationwide, as you said, you said 18 

percent of our military personnel are business entrepreneurs or desire to open a business. In Missouri, there are more than 25 percent of our total population are veterans. Folks, that is an election. 

Failure to support our Global War small businessmen and women 

will result in decreased benefit to local, State, and thus Federal 

economies, and continued peril in recruitment and retention for our 

Armed Forces. 

8

How do I know this? Having worked with hundreds of military 

across the United States, I have also worked with mobilized Reserve physicians in our State who made 5 percent of their annual 

income based on their military salaries. The annual overall loss of 

business for these folks during the 4- to 6-month deployment cycle 

created a 60 percent net loss. While their acts of having other 

health care professionals cover their practice saved the practice, 

the impact of that amount of deployment and care under another 

practitioner may cripple the business in the short term. 

Physicians are not the only service members impacted. Global 

War veteran businessmen and women own Postal Express stores, 

landscaping businesses. And one of our Marine Reservists has reopened his construction business for the third time. 

Currently, there are Military Disaster Loans available through 

the SBA. I encourage our folks to use them. They have used them; 

they have benefited from them. Unfortunately, these are often too 

little too late. They need the dollars much, much quicker. Bill and 

I have talked about this. Even in the best circumstances, a service 

member must return home, reacquire the clients, do the work, bill, 

and wait to get paid; easily a 90-day cycle. If you add that to 120 

days to get your loan through, they are without dollars for close to 

6 months. Add to these the factors of personal, psychological and 

sometimes physical healing that must occur when our veterans return home. 

For our wounded or injured veterans, their return to the United 

States does not provide access to their businesses. CONUS medical 

hold facilities are often far from home, and thus prohibitive for 

travel. Even at a radius of 50 miles one way with the new CBOCs 

can be cost prohibitive when you are working from behind. 

Tax relief during mobilization and deployment will enable more 

Global War veteran entrepreneurs to maintain their businesses 

while serving overseas. Veterans Ombudsmans placed at the State 

level are capable of knowing national and State resources for veteran entrepreneurs, as well as developing and maintaining knowledge and relationships at the local level. No matter how willing 

staff at the VA, the SBA or one source entities may be at the Federal level, the volume of personnel, as Don said, and the diversity 

of available resources and resulting needs are simply insurmountable. 

I want to stop a minute and tell you that I have been asked what 

makes this veteran business person of the Global War on terrorism 

any different than a previous veteran, or for that matter, any different than any other businessman or woman. I submit to you, and 

you know, September 11th. This is the first time since the Korean 

War that there has been a call-out to our military to this magnitude. The use of the States National Guard and Reservists put 

the military member back into civilian life after deployment without a strong military network, such as the one in place for active 

duty. 

Federal participation with State programs is paramount to continued success for these brave Guard and Reserve personnel and 

their families. 

Subject to your questions, I thank you for the opportunity to address this committee. 

9

Chairman AKIN. Thank you so much for coming up here, Patricia, to testify, and for your valuable insight. 

[Ms. Kerr’s statement may be found in the appendix.] 

Chairman AKIN. Our last witness is Mr. Harry Alford, and he is 

president and CEO of the National Black Chamber of Commerce in 

Washington, D.C. So you are nearby then. Thank you very much 

for coming over today.

STATEMENT OF HARRY ALFORD, NATIONAL BLACK CHAMBER 

OF COMMERCE 

Mr. ALFORD. Thank you, Mr. Chairman, Ranking Member 

Bordallo, and distinguished members of the Small Business Regulatory and Reform Oversight Subcommittee. 

I am honored to be given a chance to testify today about the challenges faced today by our most prized citizens, the U.S. Military. 

The challenges are new and in sharp contrast to the environment 

faced by soldiers of the past. This Nation has always, in some form 

or another, recognized its veterans. Land grants, special bonuses 

and eventually the G.I. Bill of Rights have been used to honor the 

sacrifice of those who defended this Nation. The G.I. Bill of Rights, 

subsequent to World War II, is the firm reason for the development 

for the American middle class via opportunities in home ownership 

and education. 

I was drafted into the U.S. Army in 1971. As a college grad with 

a prize job at Proctor & Gamble, a wife and a second child on the 

way, this was going to be a great financial challenge. In retrospect, 

I had two things in my favor, a strong faith in God, and an unconditional love for this Nation. In eight months, I was commissioned 

a 2nd Lieutenant and served 2 years of permanent duty at Dugway 

Proving Grounds, Utah. We made it through it all, and upon discharge I returned to Proctor & Gamble. It was assumed and realistic during those times that your civilian job would be waiting for 

you upon your return. 

I had also had valuable benefits in terms of free education and 

homeownership. It made one so proud to love this country and have 

his country love him back. I am proud today, as ever, about serving 

my country. 

Today’s military is quite different. Many of those serving in combat zones do not exactly know the length of their tour of duty. 

Those in the National Guard and Reserve units can be called up 

suddenly and endure much financial pain and upheaval. To the 

business owner, this could be potentially fatal to his enterprise. 

Today’s economy is not big business or job-oriented as before. 

Small business is a growing and large entity in the United States 

economy. It provides 70 percent of all new job growth in this Nation. The percentage of business owners serving in the Nation’s 

military is exponentially greater than during the conflicts of the 

past. 

Upon returning from combat, an entrepreneur can find financial 

chaos, tragic things such as bankruptcy, credit damage and all the 

ills that come with that, such as domestic stress and emotional disrepair. The veteran benefits for today’s soldier are lacking and 

don’t address modern day society as they should. Let us focus in 

10

on the veteran who is a business owner or is becoming a business 

owner. There should be some kind of benefits that apply to the 

modern economy. 

Let me first say, before I make recommendations, it saddens me 

to hear people say that government guaranteed loans are needless 

entitlements, handouts or taxpayer giveaways. Members of this 

committee, these are not handouts or giveaways, the American veteran has a right to programs to offset the sacrifice made for this 

Nation. It is a debt owed to each and every veteran who has put 

his or her life on the line. 

Many of these combat veterans will not be in that delivery room 

when a child is born; they won’t be there to witness the first little 

league home run by their son; they won’t be there at their daughter’s baptism. No. They will be far away in a strange land catching 

hell. Far too many will not come back home, and far too many will 

not come back alive. These men and women lay it all out for the 

safety of each and every one of us. This Nation is too great and too 

proud to let its heroes go unrecognized. It is time to make the modern G.I. Bill of Rights applicable to the soldiers’ needs of today. 

The current 7(a) loan program SBA guarantee has been quite 

successful in developing new business and creating new jobs. It 

provides 30 percent of all long-term loans and is a proven job creator. Last year alone, the 7(a) program generated half a million 

jobs across America .That is one job for every $33,000 loan. 

As these veterans return from combat, the demand on 7(a) loans 

is going to rise. We need to increase the amount of funding for the 

7(a) loan program, at least reserve a significant pool for modern 

day veterans who can resurrect their business standing after their 

absence. 

In addition to those veterans already in business, veterans who 

may consider entrepreneurship should also be encouraged to take 

advantage of the 7(a) loan program. Veteran incentives, such as 

lower fees and lower interest rates can be established. This is the 

least we can could do for our new heroes. 

Finally, while a business owner serves his or her Nation for indefinite tours, his business suffers from its absence. This absence 

may extend to the point of damaging the growth of his business, 

or maybe even lead to the demise of the enterprise. As the veteran 

puts his life on the line to protect this country, we should provide 

him or her with some form of insurance that could provide some 

type of protection during his absence. 

Key Man insurance, with affordable rates for the veterans business should be provided during combat tours. As the veteran protects us, we can protect his business with some form of alternative 

to financial collapse. Key Man insurance is not costly, and I believe 

a study should be done to determine the feasibility of the such a 

plan for the veteran business owner. 

Key Man insurance, greater availability to the 7(a) program with 

special rates and fees should be considered for the modern day veteran who is an entrepreneur. A Nation that honors and respects its 

veterans is a Nation that can endure. 

Again, thank you for this opportunity. 

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

11

Chairman AKIN. Thank you, also again, Harry. On time, and 

gives us a little bit of time to have a discussion. We will start off 

a little bit formally with a few questions, but I hope people feel free 

to go back and forth— 

Mrs. KELLY. Mr. Chairman, could I have a point of clarification, 

please? 

Chairman AKIN. Yes. 

Mrs. KELLY. It seems to me that this witness was testifying that 

the 7(a) loan program will help veterans. 7(a), as I understand it, 

is set at for minorities which will help women veterans only, and 

minorities, but it is not a program that is set aside that would help 

any—so you have a cohort of male veterans that would not be 

helped by 7(a). The 8(a) program, I believe, is the one that would 

avail the veterans more, and I would like a clarification of the way 

that law works. 

Chairman AKIN. Actually, the 7(a) is open to everybody. Okay. 

Mrs. KELLY. That is not the way I recognize the law in the past. 

Has that changed? 

Thank you. I just got this clarification here. It apparently has, 

and 8(a) is the set aside. 

Chairman AKIN. Right. That is right. 

Mr. ALFORD. Mr. Chairman, if I may add, the 8(a) is not a lending program. It is a procurement program. 

Mrs. KELLY. No. It is a procurement program. 

Mr. ALFORD. It is apples to oranges. It is not a lending program 

at all, the 8(a) program. 

Mrs. KELLY. No, I understand that it, it is procurement. And that 

is part of what we are trying to do. The fight we have with our veterans is to even try to get the DoD to raise up its procurement to 

the 3 percent that we have actually asked the veterans to be able 

to have. They haven’t yet accomplished that. 

I am sorry, Mr. Chairman, I didn’t mean to get interrupted here. 

Chairman AKIN. That is all right. You will have just a minute 

and be able to jump right in here. 

I was going to step back just a little bit. You know, with somebody that has had some small business experience personally, I 

just can’t imagine being called up and all of a sudden in a couple 

of days just dropping because small businesses are not loaded with 

extra resources, they are always lean at best, and then to all of a 

sudden have one or two key people taken out, it is a complicated 

mix, indeed. 

I guess the question I had was, it would seem a little bit odd for 

somebody who was in that position in the small business to be on 

the Guard or Reserve in the first place, though, because you are 

opening yourself up to that possibility. It would seem like, to a certain degree, our first line of defense would be one of maybe preemptively to take a look at, you know, how do we warn people, 

maybe make sure that some people that really shouldn’t be on the 

Guard or Reserve, that don’t sign up for it. Maybe they are in a 

position where they just can’t be spared by that business or their 

wife can’t take over some part of something, and maybe they have 

made a mistake even to be part of that. So if you would respond 

to it. First the front end, the preventative side of it. And you can 

go in whichever order you would like. We will start with you, 

12

Harry, and just go across and let each one of you make a comment 

if you would like. 

Mr. ALFORD. Yes, Mr. Chairman. It makes a lot of sense what 

you are saying eventually, but I believe—let’s start with the first 

Persian Gulf incident. 

Traditionally, when I was growing up being in the Reserves and 

National Guard was a good way to participate serving your country 

without going to active duty or maybe even getting into a combat 

zone. But quickly and suddenly, being that there was no draft, and 

being that there was a need for military, up popped Reservists and 

National Guard being called in 1990, 1991. Now, there are some 

who may have had 10, 12 years invested into the Reserves and National Guard, and they want to make a career out of it, they have 

got this much time, so now they are still there at the time of Iraq. 

So, I think that the military is showing that their recruiting is 

lacking today because there are a lot of people making that decision; I can’t afford to be called up all of a sudden. Eventually we 

are probably going to have to face the music and go back to the 

draft, which I wouldn’t object to at all, being a draftee. 

Chairman AKIN. I was a draftee, too, and I would argue about 

that, but this isn’t the right hearing to argue on that subject. But 

go ahead, Patricia. 

Ms. KERR. Well, and if I may, in Missouri, of course, a lot of the 

communities are very rural and a lot of families rely on that extra 

income for the Guard and Reserve. In this particular instance, with 

OIF and OEF, folks found themselves with 3 days notice. And I 

will tell you, at our house, our daughter called as she drove off to 

drill and she said, mom, will you put dad on the phone, I have got 

to tell you something, that was leaving her 13-month old. There 

was no opportunity to make a plan. 

Did we know that war was a possibility? Absolutely. But at that 

point you couldn’t make a plan, and you certainly couldn’t do planning for your business, and you couldn’t get out of the Guard or 

Reserves because stop loss was immediately in effect. And what 

tour Guard and Reserve officers are finding, unless they are eligible for retirement, and they submit catworks of VF1, they submit 

their officer’s resignation, it is coming back as denied. So while we 

don’t have an in-your-face stop loss, it is actually in place. 

So I think we are well past that. We have been at this, we are 

in our third year now, and these folks have to have a fix that they 

can recoup their losses that they have already incurred. The majority of them, the greatest percentage have gone and are now going 

again. And it is a matter of either their spouses didn’t have the 

wherewithal to run the business, they had employees they could 

not depend upon. The doctors, Dr. Young told me as I was writing 

my testimony, that Pat, I paid six doctors to cover my business, I 

kept my employees on line, and I came back and I was nearly 

bankrupt. And he is a nephrologist and looks at deploying again. 

We have an ER doc that is leaving for his third time—in fact, I 

think he left this week. 

But you put all those pieces there, and then you put our guys 

and gals back with an injury, and the injuries, as all of you know, 

are very significant, and they can’t do it. They are sunk. So I don’t 

think that we can go backwards for what we should have done, I 

13

think that we have to fix the losses that they have incurred in 

some manner, and then find a way to—they don’t have time to 

make a million phone calls, you know, one phone call they have got 

to be able to get the answer because they come back so quickly and 

they have got to hit the roads running so fast. And then they have 

got their families wanting their attention, they have got their employees wanting to know what they can do differently, and frankly 

it is too much. And when you partner that with 1 in 3 or 1 in 5 

with—have some element of post-traumatic stress, it is way too 

much. 

Chairman AKIN. Couple of quick comments and then my time 

runs out, too. 

Mr. WILSON. We have 25 million soldiers in the country, self-employed. I am not sure it is practical to say to those, okay, the risk 

is too great to you to be in the Guard and Reserve. I don’t know 

if our national security can let 25 million self-employed people say, 

okay, we are not going to go into the Guard and Reserve because 

the risk to our business is too great. 

Doctors, for example, we have got to have medical people in the 

Guard and Reserve for when an action like Iraqi Freedom or whatever occurs. So I am not sure you can exempt them. And many of 

them want to serve, they want to serve their country, but they 

would like to have some assistance when they are suddenly picked 

up and moved to a foreign land, some type of assistance for their 

government to help them keep their business afloat. 

Chairman AKIN. Maybe you are answering my question a little 

bit too narrowly. When I said preventive, I didn’t mean to say they 

can’t, I am just simply saying that in some cases it may be that 

they can structure their business in a way that if something happens, they can handle it. Other cases it may be that no matter how 

they structure their business, it can’t handle it. And maybe those 

are the ones we ought to look at them and say, boy, we would love 

to have you sign up, but the cost may be more than you can afford. 

And then the other piece of it is, and I think that, Patricia, you 

were implying this, and that is, if you really want people to be in 

the Guard and Reserve and they have small businesses and the 

small businesses can’t afford to let them go, then is it the policy 

of the Federal Government to pay them for their losses. Those are 

all questions. But they are all what I sort of think of in the preventative side of things in a way. 

Well, Bill, probably that question will come up again. And we 

have got people on short schedules. I know certainly that Ms. Kelly 

wants to speak, but first of all we have got to go to our majority 

leader—minority leader. 

Ms. BORDALLO. Ranking. Whatever you want to call me, Mr. 

Chairman. 

Thank you, thank you very much. I have a question for you, Secretary Elmore. SBA has approved about 228 loans from the military Reservists, Economic Injury Disaster Loan Program over the 

last 4 years; is that a correct statement? 

Mr. ELMORE. That is correct, ma’am. 

Ms. BORDALLO. In that same period of time, almost 1 million 

men and women have cycled through Iraqi and Afghanistan, and 

about 250,000 of them Reserve and Guard. Now you estimate that 

14

30,000 are small business owners, yet we have only provided the 

equivalent of one loan per State per year to these returns veterans. 

Is it possible that despite your efforts, our troops are unaware of 

this program? 

Mr. ELMORE. I think it is clear that—and we have done a lot of 

outreach, and I tried to focus on that in our testimony, but there 

certainly are lots of soldiers who still don’t know explicitly about 

these programs. And I think part of it is attributable to the timing 

questions. If you are activated and you have 3 days or 3 weeks notice, you have a full range of things. If you just go to the National 

Guard Family Support Web site, they have about 12 documents 

posted there that if you download it, it totals somewhere in the 

range of 2,000 to 3,000 pages. So there is an enormous amount of 

things that these soldiers and their families have to go through, 

sometimes on very, very short notice. 

So we have tried to focus on getting the information into their 

hands as they go in and when they come out, and through our outreach with DoD and through our reciprocity with the Web pages, 

trying to get that information out there. But clearly, the numbers 

of people that have been activated, and I think based on conservative estimates, the numbers of business owners that have been activated, we are—I don’t want to say surprised, because I am not 

sure that a loan program like Mr. Wilson said is always the answer, but we are surprised by the lack of use of the MREIDL program itself. 

Ms. BORDALLO. Yes. I certainly agree. And I think, Mr. Chairman, this is something that the agency should look into. Somewhere there has got to be better communication, better ways of allowing these veterans to know what is available to them. And this 

is just unacceptable to me. 

Mr. ELMORE. One of the points that I made in the testimony is 

the interactive CD that we produced has the MREIDL program on 

it and all of the application forms themselves, and we are mailing 

those out to all 17,000 Reserve and Guard units, addresses that 

DoD provided us. So we are hoping through that to get this information into their hands. Now obviously if you send it to a unit and 

the unit has been deployed, there may not be someone there to receive it. So no matter how we approach this, there is always going 

to be gaps in this. 

I think some of the things that Don mentioned, perhaps what the 

State of Missouri has done, for example, with the State ombudsman, because I have gotten to know Pat Kerr now over the last 6 

months or a year that I discovered there was a person in Missouri 

who was paying attention to this from a State perspective, and I 

found it very important and valuable to be able to talk with her, 

and to send her these same materials so as she engages with these 

families, she can help them know what is available from us. 

Ms. BORDALLO. So you are working through the State and territorial SBA offices? 

Mr. ELMORE. We are working through every SBA district office. 

We are working through the regional offices. We have provided information now to every State Office of the National Committee For 

Employer Support of the Guard and Reserve, we have gone out to 

the small business development chapters, we have gone to the deVerDate 0ct 09 2002 16:25 Nov 10, 2005 Jkt 000000 PO 00000 Frm 00018 Fmt 6633 Sfmt 6633 G:\HEARINGS\23177.TXT MIKE
15

velopment centers, we have gone to the SCORE chapters, we have 

gone to the veteran service organizations. Every place we can think 

of where these men and women may come in touch, we are trying 

to get our information out to them to try to mitigate— 

Ms. BORDALLO. Well, I might just say you are working on it, but 

I still feel that maybe we should continue, because these numbers 

here just, you know, are not acceptable to me. 

I have a couple follow-up questions, Mr. Chairman. 

You have heard other testimony that it is too little, too late, and 

it takes 120 days for a returning veteran to get his money. Now, 

would you say it is being used by business owner troops effectively? 

Mr. ELMORE. Back to me, ma’am? 

Ms. BORDALLO. Yes. 

Mr. ELMORE. I think it is effective, but what you need to understand, this is a disaster loan and it is in our disaster loan portfolio, 

that is where Congress chose to put this loan. So by its nature, it 

is restrictive, and it requires certain paperwork processing. We 

have to have certain affidavits provided to us, for example, before 

we can begin to disperse those funds, because we have to be able 

to demonstrate in the files an ability for the loan to be paid back, 

which goes back to the point Don said, access to capital or access 

to loans—and I think I said this in my written testimony—additional debt for some businesses that are being damaged by an activation may not be the best solution. 

So we don’t believe—and I am going to reiterate again what Don 

said, we think this business planning, we think the suggestion that 

you made, Mr. Chairman, if you look at the CBO report, which I 

tried to reference because there is a lot of detail in there, one of 

the options that they touched on was whether or not DoD should 

take a different approach to activating Reserve and Guard. I am 

not suggesting that is the solution, but certainly that is one of the 

issues at play here, business owners that are in the Reserve and 

Guard, and the level and the pace of activations and the kinds of 

resources that are available to them before they are called. DoD 

used to, before September 11, 2001, used to provide exemptions to 

some people from activation, they still do that; but the pace of 

those exemptions, given the war demand, have gone down significantly. So I am not trying to cast any—anything negative towards 

DoD, they have really been a good partner for us, but this is a really broad question that I think the circumstances of individual business owners enter into this as much as the circumstances as being 

activated itself. 

Ms. BORDALLO. Does anybody else on the panel wish to answer 

that or comment on it? 

Mr. WILSON. Well, I think one of the issues, Ms. Bordallo, is obviously folks have got to often have collateral, and some of them are 

unwilling to put up their homes; they simply don’t want to take 

that risk. And that is—and there is no question there are many 

who do not know about them. Some of them, you know, I don’t say 

that the paperwork is overwhelming, some of them don’t know, and 

that is, to some degree, our fault, the resources in terms of marketing what we do, SCORE and so forth. But filling out those applications and having, I believe it is bill 3 years of financials and that 

sort of thing, the person has been gone away 2 years and he comes 

16

back, trying to put all that together to get those applications filed 

and get them reviewed and so forth. 

So I think—I mean, I am somewhat surprised, as you are, by the 

numbers, but the loans are available, and there are a number of 

folks out there who can help walk them through it. It may be a 

choice that they don’t want to go into debt like this. 

Ms. BORDALLO. One final question. The two of you, I guess, if you 

would like to answer it. Should we then concentrate on making the 

7(a) loan program more attractive to them, since the program made 

about 7,000 loans to veterans in 2004 alone. Would you support 

lowering the fees for such loans to veterans? 

Mr. ELMORE. I think if the agency received that question from 

Congress, obviously we would have to take that into consideration 

in our legislative approach in what we are preparing to come back 

to you now with. I can’t give you that sort of an answer here in 

this forum, ma’am. I can tell you that the 8,000 or so loans that 

we made in our 7(a) 504 loans in 2004 was a significant increase 

over the previous year. 

Ms. BORDALLO. So it is 8,000 instead of 7. 

Mr. ELMORE. It was a little over 8,000 loans in 7(a) 504 and 

micro loan—I don’t have the exact number in front of me. But compared to 2000, for example, I think we were in the 4,000 loan 

range. So we have had a real significant growth in the number of 

loans we make to veterans, including Reserve and Guard. 

But again, access to capital, while it is critical for many small 

businesses, for a business that is at risk for damage may not be 

the final solution for many of them. 

Mr. WILSON. And ASBDC is always concerned about the cost of 

access to capital. And years ago, when there were various coalitions, the Chamber and Nagel and others who were concerned 

about the stability of the 7(a) program, we were very concerned 

that there wasn’t adequate dollars for subsidy. Congress, in its 

judgment, has decided that the best way to stabilize that program, 

certainly a year or so ago, was to do away with the subsidy and 

increase fees. 

There are various people that take different—the number counts 

and so forth, what is happening with the number of 7(a) loans, 

whether or not those increased fees have reduced the loans or reduced the size of loans, or whatever. But I can assure you that our 

counselors are always concerned about what it cost a small business person to get access to the 7(a) program. 

Chairman AKIN. I need to jump in here because we are supposed 

to run about 5 minutes. And Mrs. Kelly has been very patient and 

has some questions I am sure. Why don’t you jump in here now. 

Mrs. KELLY. Thank you very much, Mr. Chairman. 

There are a couple of things that go through my mind right now. 

First of all, the SBA has had an excellent program called SCORE. 

It happens that in my area, SCORE is extremely effective, they do 

a great deal of outreach, if my area were to service to serve as a 

model for the rest of the Nation, it wouldn’t be impossible, once a 

Reservist is called, to immediately put a SCORE person into that 

business the next day and quickly divine a business plan that 

would keep that business operational. 

17

That would be, if you had something like a retail business where 

you could rely on other people who new the business. Where you 

have a doctor with a unique set of skills, and that business will 

definitely fail, I am wondering about whether or not the SBA would 

ever consider something like a set figure revolving fund that could 

be drawn upon to rescue, if you will, at least at a certain level that 

small business until the doctor got back to the community, or the 

individual with the unique set of skills got back to the community. 

If you owned a garage, you are a mechanic and you are the mechanic for your village and you get called up, has anybody ever 

talked about the possibility of some sort of way to at least pay off—

continue to pay the mortgage on that garage and the tools, or 

whatever, so that there is some kind of a way, even if it is a 1 percent interest on a revolving back? We do state revolving funds on 

various things, we do other revolving funds. There is a model there. 

Have you ever thought about that? 

Mr. ELMORE. If I might, ma’am, let me try to answer both questions. SCORE actually has been very good on this, and they have 

created a special counseling initiative and it is specifically targeted 

to Reserve and Guard. As you know, 50 percent or more of 

SCORE’s counselors are veterans themselves. 

Mr. ELMORE. And Ken Yancy has been really very good and very 

active and supportive on this. And I try to help, through my presentations, actually to recruit additional volunteers for him. 

On the idea of a revolving fund, or whatever it might be, I think 

what I might do is suggest you look at the Congressional Budget 

Office report that just came out this last month, in May, and look 

at that, that Institute for Defense analysis. They both give you a 

range of potential approaches to try to mitigate the problems that 

we believe these business owners face. And some of those suggestions, that they at least talk about, do include special access to capital and talk about revolving funds and grants and a range of 

things like that. 

So I think instead of asking me to sort of make policy on the run, 

you have got a couple of entities that have already given you some 

policy suggestions for your consideration;and I would urge that you 

look at those. 

Mrs. KELLY. You have read those reports, I haven’t. 

Mr. ELMORE. Yes, ma’am. 

Mrs. KELLY. Is a revolving fund one of those suggestions? 

Mr. ELMORE. I don’t think they mention revolving funds per se, 

but they do talk about special access to capital. They also talk 

about grants, they also talk about tax abatement, they talk about 

special technical assistance, they talk about the effect of the kinds 

of Reservists that are activated and called. So there is a full range 

of things that both of those things touch on, especially the Congressional Budget Office paper which has been only out a month. 

Mrs. KELLY. Having done a lot of disaster work on SBA, on 

straight disasters in my area, I am very careful to always specify, 

when I talk to Chambers of Commerce and any other small business group, the fact that if your business is failing, it is still going 

to be failing even if they give you the money to make yourself 

whole, in all probability, so you need to take a look. That is why 

I’m concerned about business plans. 

18

Absent a good business plan, a way to rescue a business, I agree 

with what you have all stated, essentially you can’t go in and give 

money to a failing business if the business is already failing. However, there may be a way to get into those businesses prior to that. 

And I applaud the SBA for the outreach that they do and for 

SCORE, because in my area, SCORE is just the best resource for 

a lot of our small businesses involving veterans. It has been for 

some time. 

Thank you. 

Chairman AKIN. Thank you very much. You have a little more 

time if you have any follow-up. 

Mrs. KELLY. I only have one comment. 

I want to say that, Mr. Elmore, I think the questions that you 

have posed here again are really good questions for this committee 

and for the Small Business Committee in general to take a look at. 

The small business—I am a small business woman. Small business is unique. We are such a—it is an interesting group of minds 

that drive the economy of the United States of America. We don’t 

need one size fits all. And I think your questions are very well 

taken. Thank you for putting them there. 

Mr. ELMORE. Thank you. 

Chairman AKIN. That comes back to me; I get the next question 

here. 

I am going to start with, I think, three questions for you, Bill, 

and then you choose which ones you want to answer. First of all, 

can you elaborate on the outreach SBA does to veteran business 

owners? 

The second one, how much do you think that your office spends 

per vet in the outreach—per person, that is—and how many of 

these veteran businesses outreach centers are you able to fund? 

Mr. ELMORE. Thank you, sir. 

Outreach, well, my office has three primary responsibilities, and 

the first in that is outreach, comprehensive outreach, on behalf of 

the agency. So the approach that we have taken is to go out initially to what I call the veteran-serving community, which I believe 

is about 10,000 places where a veteran may walk in and go, ′′I am 

a veteran.′′ that includes SBDCs, it includes the VA Hospitals and 

everything in between. 

So we focus on trying to reach out to them and provide them detailed information about the full range of programs. And we have 

done that specifically since September 2001 for Reserve and Guard, 

and we continue to do that. We do it, again, through SBDCs. We 

do it through the Department of Labor. We do it through the Department of Defense. We do it with State Department, Veterans Affairs, and anybody else in between we can find. 

Second, the cost per vet—let me talk about, and I will start with 

your third question. Presently, we fund four veterans business outreach centers. They tend to be regional. One is in Florida, one is 

in Texas, one is in New York, one is in California. Those are four 

of the five largest States for veteran populations, as well as four 

of the five largest States for Reserve and Guard populations. So 

part of where we locate them strategically and part of the evaluation was that geographic location. 

19

The resources that we have put into those over the last 5 years, it has been about $2.5 million. And over those 5 years, we have 

touched somewhere in the range of 144,000 veterans and Reserve 

and Guard. So if you do the math on that, that equates out to 

about $17.35 per veteran that we have been able to touch base 

with. 

I am very proud of that. I don’t know that you can find anyplace 

anywhere in government that works at that level of efficiency. But 

it is not just our efficiency. It is the efficiency of the veterans community itself and how they engage and how responsive they are to 

reach out and help each other. And that is an important part of 

what we do. 

The other thing I will touch on is that we also—and I am proud 

of this—we started 4 years ago with what I called district office 

outreach. And I think we were the first office in SBA to do this. 

And we have funded now 56 district offices, the last 4 years, a total 

of about $130,000. So we are working very efficiently and very economically. We have brought an additional 11,264 veterans into the 

agency to ask and seek and receive our services based on that 

$130,000 outlay. 

So I think in the economy of how we do things, we have really 

been very effective. And I have to thank my administrator, Hector 

Barreto, for allowing me the flexibility to take what were some relatively unusual sorts of outside-the-government approaches by 

stepping into a district office, but also saying, I am not going to 

give you the money unless you bring the State department of veterans affairs, unless you bring the small business development center, unless you bring the American Legion and the VFW, also unless you bring Reserve and Guard units into your outreach efforts. 

And that is what we have done. Through our basic guidance and 

our funding, we have directed them to reach into this community 

and bring those communities together. And we think it works. 

Now, obviously, I think, in deference to the ranking woman, it 

hasn’t perhaps worked well enough. And we continue to strive to 

make it better. I can tell you, for example— 

Chairman AKIN. It sounds like you are going down the track, 

though, of what was being suggested. You are pretty aggressive in 

trying to pursue any possible lead where you can get that information. 

Mr. ELMORE. Exactly. What I know is—and this goes to my core 

philosophy, and this is not now SBA; this is Bill Elmore speaking—

government is not always the answer to all of these things. The answer lies in the hearts and heads and hands of these men and 

women who are business owners themselves. They have to take 

steps. We have to take all the appropriate steps to make sure that 

our resources are available to them in a way that is accessible and 

understandable, and encourage them to use them. 

But they have to take those steps, as well, so part of this is to 

engage with them and help them understand what is available; 

and if they don’t get the assistance they need, to let me know. Because another responsibility I have is to act as an ombudsman. 

So if I get an MREIDL loan applicant who thinks that they 

haven’t been treated fairly, or there is a problem in the process, if 

they find me and we tell them about this in our fact sheet, I will 

20

go to our disaster office and ask them to look at it; and if there 

is an issue that we can resolve favorably, we will. 

And we have done that. 

Chairman AKIN. Thank you. My time has expired and we will go 

into second round of questions. 

Ms. BORDALLO. Thank you, Mr. Chairman. 

My first question, I think Mr. Alford had his hand up, and if you 

would like to continue to answer that question, I think it is still 

on the table. 

Mr. ALFORD. Yes, ma’am, and I think there is some substance in 

your concern that something is missing with the lack of loans out 

of this special program. And it is an education for me today. 

I am the President/CEO of the National Black Chamber of Commerce. We have 130 chapters located in 40 States in this country. 

We have a written MOU with the SBA. We do a lot with the SBA 

district officers, and last week I was on the road with Administrator Hector Barreto. 

But this veterans program is new to me, and I am a little embarrassed personally. I should be on top of this. So I think that me 

and Mr. Elmore need to talk more and get better engaged. Thirty 

percent of our membership are veterans. Fifty percent of my board 

of directors are veterans; some are very good business owners. 

But there is something missing that needs to be in—and your 

concern, I think, is justified. 

Ms. BORDALLO. Thank you. Thank you, Mr. Alford. 

I am just curious, Mr. Elmore—you might check into it; I just 

checked with my staff, and he is not aware of it. I am just wondering, we have a lot of veterans returning in Guam, many professionals. I think you mentioned doctors that are going out there for 

3-month stints. 

Now, do you recall ever making a loan to Guam? I know that is 

kind of a loaded question, and you can check on it and let me know 

later. 

Mr. ELMORE. We can simply follow up with you on that, ma’am. 

Let me help you understand the disaster assistance program is 

not a program my office runs. So I am not involved specifically, 

day-to-day, in where those loans go and how they are approved and 

so on. That is the disaster office that does that. But I provide a lot 

of support and assistance to them. 

So I will get that answer for you. 

Ms. BORDALLO. Good. 

Mr. ELMORE. And find out what loans, if any, have been made 

in Guam. 

Ms. BORDALLO. I just want to point out, Mr. Chairman, per capita, Guam has lost more of its men and women in all the wars beginning with Vietnam than any other State in our Nation. 

We are very, very loyal Americans way out there, but because we 

are so far away, sometimes we are forgotten. So it—to kind of 

round up my round of questioning right now, since you have posed 

a number of questions to us, and you are in a policy position— 

Mr. ELMORE. Yes, ma’am. 

Ms. BORDALLO. You are the Associate Administrator at the agency; you are an expert. So is there anything that—ideas that you 

21

have that you would like to share with the committee that you are 

thinking about— 

Mr. ELMORE. Well, I think— 

Ms. BORDALLO. —to make this program more effective? 

Mr. ELMORE. Obviously, we need to continue to do the outreach. 

I think the missing element here—and again, it is not intended 

to say anything negative, because they have been very helpful—is 

DOD. At its core this is ultimately a DOD issue and a DOD responsibility. 

This is at its core, as well, about the all-volunteer force and the 

whole recruitment and retention side of that. And I think—and I 

am not saying they should be more involved, but I think they have 

a primary responsibility here for their soldiers. And we have done, 

I think, a reasonably good job trying to offer and extend our services and resources through that system. But perhaps a stronger 

joint effort with us, with them, and with the ASBDC and others, 

and SCORE, would be in order. 

Ms. BORDALLO. Mr. Chairman, I want to thank you for holding 

this public hearing here today. I am on the Armed Services Committee. And there is so many stories I hear about our veterans that 

are now returning from Iraq and Afghanistan and other places, 

that are falling through the cracks. So it is not just business people, but it is people with disabilities. 

And I know the programs are there. Perhaps the information just 

isn’t there to get to them. 

Yes? 

Ms. KERR. If I could address that and—address those, outreach 

is great, Bill. I see his folks at our supermarket of veterans benefits, which we have in our state, but honestly, please don’t have 

anyone send any more paper—paper to our veterans. They have 

piles of stuff to read. They can’t read any more. 

I think the best way to reach them is through your television 

media, through your radios, through your billboards. They are all 

driving down the road; they are all catching the radio at some 

point. But to sit down and try to read another piece of paper, they 

are so strapped for time. If they saw a clip on TV that said, Have 

you checked out the SBA? It is a new way. It is a new SBA today. 

You know, wow, they are going to stop and look if they are a veteran businessman. 

Not any more paper. 

Ms. BORDALLO. That is a good point. 

Thank you, Mr. Chairman. 

Chairman AKIN. Thank you. I think that we should do a couple 

of rounds of questions, but we don’t have too many Congressmen 

here. And so with that, the meeting is adjourned. But I will be 

sticking around for just a moment afterwards if there are questions 

or answers. 

[Whereupon, at 3:30 p.m., the subcommittee was adjourned.]

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