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82–795 2013

PRIVATE SECTOR INITIATIVES TO EDUCATE SMALL 

BUSINESS OWNERS AND ENTREPRENEURS 

HEARING 

BEFORE THE

SUBCOMMITTEE ON ECONOMIC GROWTH, TAX AND 

CAPITAL ACCESS 

OF THE

COMMITTEE ON SMALL BUSINESS 

UNITED STATES 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED THIRTEENTH CONGRESS 

FIRST SESSION 

HEARING HELD 

SEPTEMBER 19, 2013 

Small Business Committee Document Number 113–036 

Available via the GPO Website: www.fdsys.gov 

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Congress.#13
(II) 

HOUSE COMMITTEE ON SMALL BUSINESS 

SAM GRAVES, Missouri, Chairman 

STEVE CHABOT, Ohio 

STEVE KING, Iowa 

MIKE COFFMAN, Colorado 

BLAINE LUETKEMER, Missouri 

MICK MULVANEY, South Carolina 

SCOTT TIPTON, Colorado 

JAIME HERRERA BEUTLER, Washington 

RICHARD HANNA, New York 

TIM HUELSKAMP, Kansas 

DAVID SCHWEIKERT, Arizona 

KERRY BENTIVOLIO, Michigan 

CHRIS COLLINS, New York 

TOM RICE, South Carolina 

NYDIA VELA ́ ZQUEZ, New York, Ranking Member 

KURT SCHRADER, Oregon 

YVETTE CLARKE, New York 

JUDY CHU, California 

JANICE HAHN, California 

DONALD PAYNE, JR., New Jersey 

GRACE MENG, New York 

BRAD SCHNEIDER, Illinois 

RON BARBER, Arizona 

ANN McLANE KUSTER, New Hampshire 

PATRICK MURPHY, Florida 

LORI SALLEY, Staff Director 

PAUL SASS, Deputy Staff Director 

BARRY PINELES, Chief Counsel 

MICHAEL DAY, Minority Staff Director 

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(III) 

C O N T E N T S 

OPENING STATEMENTS 

Page 

Hon. Tom Rice .......................................................................................................... 1 

Hon. Judy Chu ......................................................................................................... 2 

WITNESSES 

Dina Powell, Managing Director, Goldman Sachs, New York, NY ..................... 4 

Stephen Morgan, Ed.D., Chair, Board of Trustees, My Own Business, Inc., 

City of Industry, CA ............................................................................................. 6 

Damien Stevens, Founder & CEO, Servosity, Greenville, SC ............................. 8 

Kim Pate, Chief External Relations Officer, Corporation for Enterprise Development, Washington, DC ..................................................................................... 9 

APPENDIX 

Prepared Statements: 

Dina Powell, Managing Director, Goldman Sachs, New York, NY .............. 27 

Stephen Morgan, Ed.D., Chair, Board of Trustees, My Own Business, 

Inc., City of Industry, CA ............................................................................. 32 

Damien Stevens, Founder & CEO, Servosity, Greenville, SC ...................... 35 

Kim Pate, Chief External Relations Officer, Corporation for Enterprise 

Development, Washington, DC .................................................................... 37 

Questions for the Reocrd: 

None. 

Answers for the Record: 

None. 

Additional Material for the Record: 

None. 

SBREP-219 with DISTILLER

SBREP-219 with DISTILLER

(1) 

PRIVATE SECTOR INITIATIVES TO EDUCATE 

SMALL BUSINESS OWNERS AND ENTREPRENEURS 

THURSDAY, SEPTEMBER 19, 2013 

HOUSE OF REPRESENTATIVES, 

COMMITTEE ON SMALL BUSINESS, 

SUBCOMMITTEE ON ECONOMIC GROWTH, 

TAX AND CAPITAL ACCESS, 

Washington, DC. 

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

2360, Rayburn House Office Building. Hon. Tom Rice [chairman of 

the subcommittee] presiding. 

Present: Representatives Rice, Chabot, Schweikert, Chu, Payne, 

Meng, and Schneider. 

Chairman RICE. Good morning. 

I want to start out with an apology in advance, and that is I 

have two simultaneous Committee meetings right now, and we are 

doing a markup in the Transportation and Infrastructure Committee, and I have to be there. So I am going to start this meeting 

off and at some point I will introduce my co-panelist, David 

Schweikert, who will take over as chairman of the meeting. And so 

I just want to apologize to you that at some point during this meeting I am going to stand up and excuse myself, but we have a very 

important markup going on in the Transportation and Infrastructure Committee. Unfortunately, the Committees do not check with 

each other’s schedules when they schedule these things. 

I thank every one of you very much for being here in advance. 

Thank you for taking your time to come and educate us. It is so 

very important. And I will go as far as I can and then I will excuse 

myself. So thank you for that. 

The hearing will now come to order. 

Today, we will explore the importance of education and training 

for small business owners and entrepreneurs, and highlight examples of the private sector imparting knowledge to growing small 

businesses around the nation. 

Half of all small businesses fail within five years after opening, 

and recent research has shown that newly formed small businesses 

are creating fewer jobs than in the past. Analysts cite a lack of general business acumen, and an inability to adapt to rapidly changing 

economic environments as a reason for the challenges they so often 

face. Since historically, small businesses have been responsible for 

over two-thirds of new job creation in this country, it is critical that 

we ensure our nation’s entrepreneurs are receiving the educational 

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2 

and training opportunities that provide the knowledge, and in turn 

the confidence, they need to grow. 

Education for those looking to start or grow their businesses 

comes in many forms. Whether it is through a classroom environment, online course, mentorship provided in an incubator or accelerator, or networking through peer-to-peer programs, small businesses are using these avenues to gain the knowledge, expertise, 

and personal connections to help them grow their businesses and 

hire more employees. 

There are numerous examples of the private sector stepping up 

around the country to provide both established, and fledgling small 

businesses with the information they need not only to survive, but 

to also grow and create jobs. Today, we will hear about some of 

these initiatives and how they assist our nation’s job creators. 

We are fortunate to have here with us some of the leaders that 

help to address the critical knowledge gap facing small business 

owners and entrepreneurs, as well as an entrepreneur that has 

participated in and benefitted from such efforts. I look forward to 

learning first-hand from our witnesses today about how their work 

has helped to stimulate economic growth and create jobs around 

the country. Thank you very, very much for being here. 

I now recognize the ranking member for her opening statement. 

Ms. CHU. Thank you, Mr. Chair. 

Today’s hearing will provide insights into a variety of private sector initiatives to train and mentor entrepreneurs and small business owners across the country. We will also hear how these efforts 

are contributing to our nation’s economic growth and job creation. 

In today’s hearing, we have representatives from big and small 

companies, as well as the nonprofit sector. I look forward to hearing about your programs and how we as policymakers can learn 

from your successes and failures to continue supporting small businesses, the growth engines of our economy. 

Initiatives that support small business owners and entrepreneurial development are essential to promoting economic and development growth. Historically, the United States has experienced 

job growth primarily due to business startups. In the last 30 years, 

new firms have generated an estimated three million new jobs 

every year. In fact, small businesses that are less than five years 

old create two-thirds of all net new jobs. 

As the nation continues its recovery from the Great Recession 

and the labor market remains weak, it is vital to support policies 

in the public and private sectors that support entrepreneurs and 

small businesses. If entrepreneurs have the support tools and resources that they need, they will grow to the point where they can 

generate job opportunities for the millions of unemployed Americans. 

We all note that being an entrepreneur and starting a business 

is difficult because it entails having a good idea, finding capital, 

and taking a huge risk. Obstacles exist at every stage of business, 

but they are particularly acute at the earliest developmental 

stages. These challenges include financing, capital access, and uncertainty over regulation and taxes. 

Thankfully, those willing to take the risk can take advantage of 

a number of technical assistance and entrepreneurial development 

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3 

opportunities provided by the federal government and also by the 

private sector which we will be hearing about today. I am excited 

to have the Corporation for Enterprise Development here to discuss 

their efforts to help low and moderate income entrepreneurs formalize their businesses and gain access to tax credits, financial incentives, and credit products. 

Their Self-Employment Tax Initiative (SETI) has helped over 

12,000 entrepreneurs prepare their taxes at little or no cost. Considering the complexities of the tax code, this program offers much 

needed assistance to entrepreneurs who do not have the means to 

pay a professional to file their taxes. 

We also have Goldman Sachs today to talk about their 10,000 

Small Businesses Initiative, a program designed to help small businesses with practical business and management education, as well 

as access to capital and business support services. For the last 

three years, I have invited a representative from the 10,000 Small 

Businesses Initiative to my annual small business workshops to 

talk about this very successful program and how entrepreneurs in 

my district can benefit from it. This is a great program that gives 

small businesses a unique opportunity to network, receive topnotch training, and direct access to top business executives. 

There are also programs that leverage federal dollars with the 

private sector to help entrepreneurs. One of my favorite programs 

is the Small Business Development Centers, which provide small 

businesses with training and counseling for free. SBDCs receive 

funding from the Small Business Administration, but do have to 

form partnerships with the private sector to receive matching 

funds. Last year alone, SBDCs in 900 locations across the country 

provided assistance to 210,000 small businesses. Continuing federal 

and private support for businesses like this and programs like this 

are vital to our economic recovery and future economic growth. 

With this in mind, I am looking forward to today’s hearing which 

will provide insights into what CFED, Goldman Sachs, and other 

private sector companies are doing to help entrepreneurs and small 

businesses grow and succeed. 

Thank you, Chairman Rice, for convening this hearing, and I 

yield back. 

Chairman RICE. Thank you, Ms. Chu. 

If Committee members have an opening statement prepared, I 

ask they be submitted for the record. 

I would like to take a moment to explain the timing lights to you. 

You will each have five minutes to deliver your testimony. The 

light will start out as green. When you have one minute remaining, 

the light in front of you will turn yellow. Finally, at the end of your 

five minutes it will turn red. And we will have a little leeway in 

there. 

I ask that you try to adhere to the time limit, but again, there 

will be some flexibility. 

I want to thank you once again before I start introducing you for 

being here. This is such an exciting and critical time in Washington. A lot of things come together that affect small business, a 

lot of things that will affect our competitiveness worldwide. With 

the continuing resolution, the potential with ObamaCare getting 

ready to kick in, with the debt ceiling coming in, with all these 

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things coming together all at one time, it is an exciting time to set 

up our country for competitiveness and to set up our country for 

the future. So thank you again for being here at this really critical 

time in our nation’s history. 

Our first witness is Dina Powell, Global Head of Corporate Engagement at Goldman Sachs and President of the Goldman Sachs 

Foundation, where she leads its 10,000 Small Businesses Program. 

Prior to joining Goldman Sachs, Ms. Powell served as assistant secretary of state for Educational and Cultural Affairs and was deputy 

undersecretary of state for Public Diplomacy and Public Affairs, 

after serving as assistant to the President for Presidential Personnel at the White House. She also serves as a member of the J. 

William Fulbright Foreign Scholarship Board, the Board of Trustees at the University in Cairo and the Vital Voices Global Partnership, and is a member of the Council on Foreign Relations. Ms. 

Powell, you are a very busy lady, and we look forward to your testimony. 

STATEMENTS OF DINA POWELL, MANAGING DIRECTOR, GOLDMAN SACHS; STEPHEN MORGAN, CHAIR, BOARD OF TRUSTEES, MY OWN BUSINESS, INC.; DAMIEN STEVENS, FOUNDER 

AND CEO, SERVOSITY; KIM PATE, CHIEF EXTERNAL RELATIONS OFFICER, CORPORATION FOR ENTERPRISE DEVELOPMENT. 

STATEMENT OF DINA POWELL 

Ms. POWELL. Thank you, Mr. Chairman. 

It is really an honor to be here today and to join you and Ranking Member Chu and members of the Subcommittee, including 

Congressman Schweikert, Congresswoman Meng, and Congressman Schneider. 

We are really honored to have the opportunity to testify today 

about the 10,000 Small Business Initiative. Goldman Sachs proudly 

launched this effort alongside a coalition of individuals and institutions who are committed to economic growth and job creation in 

our country. These include our co-chairs of the Advisory Council. 

Our CEO at Goldman Sachs, Lloyd Blankfein; Berkshire Hathaway 

CEO, Warren Buffett; and Harvard Business School professor, Dr. 

Michael Porter. They lead an advisory council that includes Dan 

Danner of the National Federation of Independent Businesses, 

Marc Morial, head of the National Urban League; Javier Palomarez 

is head of the Hispanic Chamber; and former education secretary, 

Margaret Spellings. Together this coalition built 10,000 Small 

Businesses, which is an integrated program that offers proven tools 

that small business owners need to grow their businesses. 

This $500 million commitment provides entrepreneurs with three 

key resources. The first is a practical, high-quality business education. The second is growth and working capital. And finally, the 

third, and often mentioned as the most critical, is business advising, networks, technical assistance, and mentors. We believe it is 

this integrated framework bringing all three pieces of the puzzle together that help small business owners in one program. 

We also know that we have tested this program in a global marketplace. This framework has been born out of a program we ran 

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5 

globally, called 10,000 Women, a $100 million investment that was 

seeking to reach female entrepreneurs in 43 countries with business education, mentoring, and links to capital. We are very proud 

that this month marks the graduation of the 10,000th woman in 

the program. We were able to apply many of the lessons of this 

global program and the measurement and the results that we took 

away to building our domestic effort here in the United States. In 

just three years, we have invested in an infrastructure, we validated our model, and we have launched the program in 15 markets 

across the country. Now, 10,000 Small Businesses is active in these 

markets. It is designed for existing small businesses poised for 

growth. In each market, we built a separate and distinct entrepreneurial ecosystem to provide local services, and the partners include respected community institutions, like community colleges, 

community development, financial institutions, local chambers of 

commerce, local community groups, and mayors and local officials 

committed to supporting their small businesses. 

In the interest of time, I will respectfully refer you to my written 

testimony for the full program description, but I would love to use 

my remaining time with you to tell you three lessons we have 

learned along the way and some of our results to date. 

First, as my bosses always tell me at Goldman Sachs, measurement is crucial. We rigorously track the performance of our businesses at regular intervals when they complete the program. We 

are pleased to report that just six months after graduation, more 

than 60 percent of the participants are reporting increased revenues, and nearly half are creating net new jobs. Additionally, we 

were surprised by one metric. We assumed that we would have a 

high attrition rate initially because these are very busy small business owners and this is an intense time commitment and you cannot graduate without completing it all and having a growth business plan submitted. We were surprised and pleased to see that nationwide we have a 99 percent completion and graduation rate. 

One example of success is in Ranking Member Chu’s district, 

Ada Chan from Pasadena, California. Ada runs Fresh Events Company, an event planning firm. Ada’s revenue has grown 22 percent 

since joining the program, and while she was in the program she 

was named ‘‘The Small Business Person of the Year’’ by the SBA 

in Los Angeles, and she was referred by you inviting us to the session where she applied for the program. So thank you very much 

for that, Congresswoman Chu. 

Our second lesson is that public-private partnerships are critical, 

and I am so honored to join my fellow panelists because that is, 

I think, the message that you will hear from all of us. No one institution can do it all and our partnerships have included, as I mentioned, these local community organizations but many members of 

Congress and others who, as you have, have nominated small business owners. We even had Speaker Boehner a few months ago meet 

a roundtable of graduates from Ohio, and he gave them some tough 

lessons of being a businessperson himself. 

A couple of years ago, I was honored to have the opportunity to 

join Ranking Member Vela ́zquez in her district in Brooklyn to tour 

one of our small business owner’s sites, Mike Dimarino, who has 

a tool and die fabrication business in Brooklyn. Mike succeeded 

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very well as our first cohort at La Guardia Community College, 

and then he nominated Andy Dimarino, his brother, who is in Congresswoman Meng’s district. Andy got into the program and taught 

us one of the best lessons, and we have seen this example over and 

over again. He actually merged with a fellow classmate, another 

landscaper in New York, and now together they are competing for 

much larger bids throughout the city. 

This is that important example and the third lesson and final 

lesson learned, the impact of peer-to-peer learning. We see that 

businesses enter the program and they often say to us, ‘‘I feel like 

I am an island all by myself,’’ but when they enter the program, 

they immediately build a network of support and create a tangible 

marketplace together. In fact, 70 percent of our graduates are either doing business together or referring business to each other. 

We are really looking forward to scaling this program across the 

country, and we are honored to use the occasion of this prestigious 

hearing, Mr. Chairman, to announce today that we are launching 

a national expansion of 10,000 Small Businesses. We are now beginning to accept applications for our first ever national cohort. 

Any qualified business across the country may apply. Accepted participants will take the full program at Babson College, and we 

could not be more excited to encourage you to nominate your constituents. 

So I just want to say in closing, on behalf of our partners and 

all of the people at Goldman Sachs, it has been a humbling and inspiring experience to work with Americans across the country, 

these small business owners dedicated to job creation and growth. 

Thank you so much, and I will be pleased to take your questions. 

Chairman RICE. Thank you, Ms. Powell. And thank you so much 

for what you are doing for American business. We appreciate it 

very much. It sounds like you are doing great things. 

Our next witness is Dr. Stephen Morgan, chairman of the Board 

of Trustees of My Own Business, Inc., an organization that provides online training courses to those looking to learn how to start 

or grow a business. In addition to his role at My Own Business, 

Dr. Morgan currently serves as the president of the University of 

the West in Rosemead, California, and was previously president of 

the University of La Verne for 26 years. 

Dr. Morgan, we thank you for being here and look forward to 

hearing your testimony. 

STATEMENT OF STEPHEN MORGAN 

Mr. MORGAN. Thank you, Chairman Rice and Ranking Member 

Chu. It is a pleasure for me to have my paying job in your district. 

Thank you very much. Other members of the Committee, it is a 

great opportunity for us to discuss small business creation, ownership, and most importantly, success. 

I am particularly appreciative of the opportunity to be here as I 

am the volunteer chair of the Board of Trustees of My Own Business, Inc., a Los Angeles-based nonprofit organization providing 

free educational tools and training via the World Wide Web to support successful businesses around the world. As you will know, 

much of the success of our country comes from the fortitude of new 

business creation, often started by those who seek to create new 

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opportunity for their families, and that has been particularly true 

during these very difficult years since 2008. 

Please allow me to share with you a story about how our organization came to be. On April 29, 1992, verdicts were rendered in a 

controversial case involving the 1991 beating of Rodney King. The 

toll of the riots that followed was devastating. More than 50 people 

were killed, over 4,000 people were injured, 12,000 were arrested, 

and a billion dollars worth of property was damaged. 

Southern California entrepreneur, Phil Holland, founder of the 

Yum Yum chain of donut shops in California, watched in dismay 

during those riots. Having already successfully published The Entrepreneur’s Guide and The Moonlight Entrepreneur, Phil decided 

that he wanted to go into the riot-torn area to teach those who 

were in that community how to start their own business. And for 

the next three years, Phil drove weekly to Compton, California, to 

teach those courses. The final session of the class was taught in 

Spanish, and eager, small business owners came by the busload 

from across Los Angeles to hear Phil Holland’s presentation. 

Then, in 1994, Phil Holland created My Own Business, Inc., 

(MOBI), a 501(c)(3) public charity, and he began to build a website 

so people everywhere could take advantage of a free curriculum designed to share with them the dos and don’ts of starting their own 

business. The free website courses include quizzes on all subjects 

contained in the curriculum, business plan templates, 75 video 

presentations by business experts, and a final examination and certificate of completion for those scoring over 80 percent on the quizzes. MOBI’s Growing a Business course includes practical business 

training specifically focusing on 15 topics necessary for expanding 

a business. 

For the past 20 years, MOBI has offered this free business training to nearly 35 million people who have visited the MOBI website. 

Since the launch of the web-based MOBI curriculum, 469,000 have 

completed the courses and nearly 31,000 have applied for the certificate of completion. The MOBI website is viewed monthly by an 

average of 235,000, resulting in 4,000 students’ completion the 

MOBI courses each month. 

In a 2010 study, involving 5,000 MOBI graduates conducted by 

the UCLA Anderson Graduate School of Business, 22 percent of the 

respondents indicated their businesses would have failed if they 

had not studied the topics offered in the MOBI curriculum. Of the 

5,000 MOBI graduates responding to the survey, 56 percent have 

actually started a business, and 77 percent of those who started a 

company were still in business. Nearly 60 percent of the respondents reported that they had been in business for more than two 

years, and nearly one-third reported that they planned to hire at 

least one new employee within the next 12 months. 

Three important partnerships have strengthened MOBI’s outreach since its founding in 1994. First, for more than 10 years, 

MOBI has provided its courses to the World Bank. The second important partnership continues with Cisco Systems, Inc., which primarily has used the program in its internationally-focused Cisco 

Entrepreneur Institute. The third partnership that MOBI engaged 

in was with the Small Business Administration. For a number of 

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years until 2006, a link to the MOBI Starting a Business course 

was provided on the SBA website. 

It has been a pleasure for me to have had this opportunity to 

share the extraordinary service and contributions of Phil Holland, 

an American entrepreneur who sought to significantly give back by 

helping others achieve similar success, and all free of charge. 

Thank you very much. 

Chairman RICE. Thank you very much, Dr. Morgan. It sounds 

like you are doing big things. Thank you for being here. 

Our next witness is Damien Stevens, founder and CEO of 

Servosity, a growing technology company located in the NEXT Innovation Center in Greenville, South Carolina. 

Prior to starting Servosity, Mr. Stevens founded Utopia Net, 

which was the number one ranked web development company in 

the upstate area. He also previously founded GSA Technology 

Council in South Carolina, a community of IT professionals. Mr. 

Stevens is both a high school and college dropout, but he has been 

asked to teach at the very same college he dropped out of and has 

served in advisory capacities for other colleges and universities. 

Mr. Stevens, we look forward to your testimony. 

STATEMENT OF DAMIEN STEVENS 

Mr. STEVENS. Thank you, Mr. Chairman. I appreciate that. 

I want to thank you and the members of the Subcommittee for 

the opportunity to be here and testify at today’s hearing. I am 

Damien Stevens, the founder and CEO of Servosity. 

Servosity provides backup and disaster recovery as a service to 

a national network of partners or technology companies that service small and medium-size businesses. I wanted to talk a little bit 

about the story that we have had in our growth. 

In 2008, I joined NEXT Upstate and began learning from other 

entrepreneurs at events such as their CEO Roundtable. Before joining NEXT Upstate, I made all the mistakes myself without the 

benefit of learning from others, specifically other entrepreneurs, 

and the challenge is unique to high growth companies. 

NEXT Upstate is an organization that attracts and grows high 

impact, technology companies by developing the entrepreneurial 

ecosystem needed by these companies and connecting companies to 

the ecosystem. 

In 2009, Servosity moved into a small office in the NEXT Innovation Center, a collaborative workspace formed by a group of entrepreneurs and the Greenville Chamber, which houses multiple highgrowth companies. Upon moving into this office, I came into contact with Michelin Development and learned of their low interest 

loans they offer to small businesses. After being turned down the 

first time, I persevered and was fortunate enough to be approved 

for $100,000 loan for my small business after applying the second 

time. This capital gave us the bridge to grow from the company we 

were to the company we wanted to be, to that next level. That gave 

us the ability to grow to the point we were able to attract and secure private investment. 

In 2011, and again in 2012, Servosity attracted private investment capital. In 2012, Servosity announced its expansion into a 

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ter in Greenville, South Carolina, and our intention to add 30 jobs 

in the next 18 months. We started off this year with four employees and have 12 now, and we are currently growing and hiring. 

These jobs are just the beginning; we have the opportunity to employ hundreds of people over the next few years. These jobs we are 

adding are for software developers, system engineers, support engineers, sales, account management, and business development. The 

average earnings are $80,000, and some positions are significantly 

higher. Those earnings are more than double the average prevailing wage in South Carolina. Not only are we creating jobs in 

the knowledge economy, we are creating meaningful high-paying 

positions with nearly unlimited growth potential for employees. 

Without the next ecosystem, I would not have learned from other 

entrepreneurs. I would not have met with Michelin Development to 

have the opportunity to secure that growth capital. I would not 

have been able to grow to the next stage to secure private investment capital, been introduced to potential investors, nor would we 

have attracted the top tier talent to required to grow a fast paced 

technology company. 

Thank you for your valuable time today. I enjoyed being able to 

share a very small part of our entrepreneurial journey. I would not 

be here today without the help from so many others. I am so 

blessed. Thank you. 

Chairman RICE. Thank you, Mr. Stevens, for your contribution 

to small businesses in this country. 

I will now yield to Ms. Chu, who will introduce our final witness. 

Ms. CHU. I have the pleasure of introducing Kim Pate. She is 

the Corporation for Enterprise Development’s chief external relations officer. She is responsible for the biannual Assets Learning 

Conference, which brings together over 1,000 leaders in the assetbuilding field to discuss ways that assets can help create prosperity 

and expand economic opportunity for low-income people. 

Kim also coordinates strategic events, partnerships and communications across CFED’s priority areas of work, including asset 

building, entrepreneurship, tribal state, and local economic development, and affordable home ownership. 

Prior to joining CFED, Kim was a deputy director of the national 

projects for Wider Opportunities for Women in Washington, D.C., 

which is a multiple strategy, women’s employment organization 

that is recognized nationally for its skill training models, technical 

assistance, and advocacy for women workers. Kim holds a law degree from the University of California, Los Angeles School of Law, 

and a B.A. in Political Science from Stanford University. 

Thank you for being here, Kim Pate. 

STATEMENT OF KIM PATE 

Ms. PATE. Chairman Rice, Ranking Member Chu, and Member 

Mr. Schweikert, thank you so much for this opportunity to testify 

on behalf of efforts to support entrepreneurs and specifically, small 

and micro businesses. We applaud this Subcommittee’s focus on 

this sector. 

The Corporation for Enterprise Development was founded in 

1979 to support entrepreneurs, and ‘‘enterprise,’’ you may say, is 

our middle name. 

SBREP-219 with DISTILLER

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Microbusinesses—those with four or fewer employees—account 

for nearly 90 percent of all U.S. businesses. So that means that 

roughly one in six South Carolinians and Californians own and operate a microbusiness. This figure is representative nationwide. 

Microbusinesses contribute to community revitalization, and Mary 

Gatch, of South Carolina, who started DwellSmart as a retail shop 

offering environmentally healthy products is a great example of 

this. 

After winning contracts with large green companies, DwellSmart 

needed a location with a warehouse space and a loading dock to be 

able to meet all of the demand. They found an unused building in 

an area of redeveloped downtown Charleston, and with a Charleston local development corporation loan, DwellSmart rehabilitated 

the property and led to more revitalization in the area. 

According to the U.S. Small Business Administration, business 

created by low-income entrepreneurs have high survival rates ranging from 57 to 90 percent. This is higher than the rate for all small 

businesses. Microbusinesses contribute to American economic 

growth and vitality. On average, microbusinesses create 2.9 full 

and part-time jobs per business. Small changes to enhance the capacity of such a large and productive sector could reap major dividends. 

Another microbusinesses example comes from CFED partner 

PACE in Los Angeles. Deborah Stern attended PACE’s entrepreneurial training program while starting a business making 

tamales. She won a PACE award of $5,000, which she used to hire 

two employees and rent a kitchen. Her restaurant, La Guera 

Tamalera in the Silver Lake neighborhood of Los Angeles has become an area favorite. 

Recognizing the importance of microentrepreneurship as a critical strategy, CFED launched the Self-Employment Tax Initiative 

in 2005, and we had three goals. First, build assets for low-income 

households; second, create jobs, and third; increase tax revenue by 

bringing more self-employed into the formal tax system. Most of 

SETI’s local partners are volunteer income tax assistance or VITA 

programs, and these VITA programs provide free tax support to 

low and moderate income taxpayers. There are nearly 6,000 VITA 

community-based sites throughout the country. For example, in 

Horry County, South Carolina, you can find VITA programs at several libraries. In California, VITA assistance is offered through the 

Monterey Park Bruggemeyer and at El Centro de Accion Social in 

Pasadena. VITA is a good example of successful public-private partnership. In South Carolina, California, and the rest of the country, 

the VITA sites represent local community efforts supported by federal grants, state and local funds, and philanthropy all coming together. 

According to a 2012 National Community Tax Coalition (NCTC) 

report, VITA helped more than three million taxpayers claim $2.2 

billion in tax refunds, while saving the federal government 5.5 million in reduced processing costs. So while VITA assists some lowincome entrepreneurs, IRS restrictions on allowable VITA activities 

have prevented many self-employed earners from receiving any assistance at all. 

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Recognizing that VITA’s narrow scope meant that sites were 

turning away microentrepreneurs with few other options, NCTC 

led an effort with CFED and the IRA to build on CFED’s SETI program. In 2010, we launched the Schedule C VITA Initiative with 

16 pilot sites that have served business with up to $25,000 in expenses. In its three years of operation, the Schedule C VITA initiative has not only brought thousands of low-income entrepreneurs 

into the VITA system, it has done so without reducing tax filing 

quality. 

Our current research is examining how other systems, three key 

federal policy systems—tax, but also workforce and post secondary 

education—are supporting or failing these entrepreneurs. And 

while this research will reveal new forms worth considering, this 

Subcommittee need not wait to act in support of microentrepreneurs. As you may know, in the previous Congress, Ranking 

Member Chu proposed one significant step forward, the Entrepreneur Startup Growth Act. And this legislation, which is based 

on CFED’s SETI program, would have provided additional support 

for microentrepreneur tax-filing assistance. The $1.5 million authorized by this legislation could support hundreds of local VITA 

sites to serve thousands of entrepreneurs. 

So in conclusion, Chairman Rice, Ranking Member Chu, members of the Committee, I would like to thank you again for inviting 

me to testify today. We at CFED are eager to work with the Subcommittee to expand economic opportunity, create jobs, and support microenterprise. We would be happy to answer any questions. 

Thank you. 

Chairman RICE. Wow, what a very impressive panel. I sure appreciate what you all do. I do not think there is anything more important than job creation and economic development and you are 

right at the heart of it, and I so appreciate what you do. 

Ms. Pate, I have to correct you on one thing. You said Horry 

County, South Carolina, H-O-R-R-Y. I was the chairman of that 

county and my wife said, ‘‘I am not the First Lady of Horry County. 

It is Horry County, thank you very much.’’ 

Ms. PATE. Duly corrected. 

Chairman RICE. She would be very upset if I did not correct you 

on it. You know, I was a tax lawyer and a CPA in my real life for 

25 years, and I think one of the biggest problems that businesses 

face is uncertainty. I think if they do not know what the rules 

are—it is hard to play the game if you do not know what the rules 

are. And so I think Washington is one of the biggest creators of 

that uncertainty. Here we have been operating under a continuing 

resolution for years. We have not had a budget for years. We are 

considering the adoption of a continuing resolution for a few 

months to get past this, that, and the other. We have got this 

healthcare law getting ready to hit on January 1st. I do not think 

anybody really knows the effect of that. People say they do but I 

do not think anybody really knows the effect. 

What I am curious about is from your perspectives, I am getting 

a lot of calls in my congressional office about these things. How is 

the uncertainty around the Affordable Care Act affecting the small 

businesses that you represent or work with? 

Ms. Powell? 

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Ms. POWELL. Thank you, Mr. Chairman. 

You know, for the past three years we have heard a lot of different challenges from small business owners, and I think that it 

affects certainty—and many of those challenges relate to workforce 

issues. 

Maybe I will just backup a second though because you mentioned 

something about yourself and your career prior to being a member 

of Congress serving for 25 years as a successful tax lawyer. I cannot tell you the amount of legal issues small business owners face, 

and that is probably an area, whether it affects regulation around 

healthcare or employee relations or access to capital, that they 

know the least about and there are the fewest programs out there 

for them. I am sure your law firm in South Carolina used to do pro 

bono work. We have been so pleased to see a number of law firms 

around the country come to us and say, ‘‘Can we work with your 

small business owners?’’ So we now, in every single region that we 

operate, have law firms like Weil Gotshal, Latham and Watkins, 

many, many, doing an entire legal clinic. And I do think one of the 

areas that our small business owners will certainly ask about are 

many of the regulations that affect their workforce. And so I think 

that is something we are hopefully preplanning for by giving them 

an outward connection to these lawyers. 

Chairman RICE. I had a fellow in my office yesterday who owned 

two franchise auto service and he had 40 employees and he did not 

want to open a third one because he would go over 50 employees. 

Are you hearing things like that? 

Ms. POWELL. You know, we are hearing a number of challenges 

but I cannot say it is specifically that. I mean, I will tell you the 

truth, when you get into 10,000 Small Businesses, you are really 

focused on whether or not you are going to be able to grow your 

business. That is one element. But as Ms. Pate was talking about, 

the largest growth opportunity in terms of job creation are coming 

from small businesses—four, five, six employees—but they could 

get to 40, could get to 100. And I think that there are so many 

challenges that we hear. Do you know what the biggest one is? All 

I do is work in my business, not on my business. I do not know 

how to be a CEO. I do not know how to make contacts. I do not 

know how to address all these legal issues. So I would say we are 

hearing a whole bucket of different issues. 

Chairman RICE. Thank you. 

Dr. Morgan, another thing I am hearing from a lot of people, particularly in the service business, is that they are cutting their employees back to 29, 28 hours a week. Are you hearing a lot of that? 

Mr. MORGAN. What we see is that entrepreneurs have a passion. They are driven to start their own business, and that passion 

is a powerful fuel. And once they get into their business, there is 

a great deal of red tape that the small business owner faces. And 

the uncertainty of future legislation, whether it be ObamaCare or 

whether it be other legislation, is what really concerns them, because most of them do not have a staff. They may not have an attorney on retainer. They may not have an accountant on retainer. 

And it is the answers to those questions that puzzle them and trouble them, and certainly they think about that before they hire people or expand their business beyond a certain level. 

SBREP-219 with DISTILLER

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Chairman RICE. Mr. Stevens? 

Mr. STEVENS. I appreciate that, Mr. Chairman. 

I can at least speak for our company. We are not at the size that 

we have to worry about being 50 employees or something related 

to healthcare additional complexities, but that uncertainty has created issues for us. We want to focus on growth, delivering the best 

service to our customers and not be concerned with the uncertainty. So I know from our perspective, uncertainty has been a 

problem, and the way that we addressed it is we are working with 

a co-employment firm and essentially we get to give them the headaches of dealing with the healthcare issues. And whether we are 

at 12 or whether we are at 112 employees, we have a predictable 

path and cost structure to get there. So that was our way of trading uncertainty for certainty, and it certainly has its costs and expenses. I can tell you, obviously healthcare costs continue to rise 

and are a big issue for a small business. And for the first several 

years we were unable to offer healthcare. Financially, it just was 

not feasible. We would have had to hire less people or not grow. 

And I am thankful to say that we do offer, of course, healthcare 

today and that has been a big issue on our minds. 

Chairman RICE. And Ms. Pate? 

Ms. PATE. I think that Ms. Powell pointed out a really important need in the field, which is that entrepreneurs are finding 

themselves surrounded by questions of legality, red tape, taxes, et 

cetera, and this is another thing for them to be worried about. So 

what we—— 

Chairman RICE. And do you agree that most of that comes from 

Washington, D.C.? 

Ms. PATE. Well, to the extent that this is the seat of government 

authority and power, a lot of it is coming from D.C. And so especially the entrepreneurs who are rural, who are disconnected from 

cities, who do not understand the government process or the legal 

processes are feeling very concerned about the viability of their 

businesses with all of this change. So what a lot of successful programs like PACE in Los Angeles are doing is looking at integrated 

service delivery so that they are providing access to taxes, which 

is a moment that you can grab people in and say, ‘‘And by the way, 

are you familiar with the Affordable Care Act and the changes? Are 

you familiar with regulations related to your food business,’’ et 

cetera. So it is like we are meeting the entrepreneurs where they 

are, with every need that they may have. 

Chairman RICE. It is hard to be familiar with regulations that 

have not been written yet. You have to have ESP. 

Ms. PATE. Yes. Or good lobbyists in Washington. 

Chairman RICE. I am a big fan of Michael Porter. You mentioned him earlier. An expert in national competitiveness. And he 

is a firm believer that our tax code makes us not competitive 

worldwide. 

What do you all think about that? Do you think we need tax reform? I do. I am curious. 

Start with you, Ms. Powell. 

Ms. POWELL. Well, can I say one thing about Dr. Porter? I 

think he sees a number of things that the United States could improve on to be way more effective. 

SBREP-219 with DISTILLER

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One of the reasons we were really honored he was a co-chair of 

the program is that over 15 years in running the Initiative on 

Inner City Competitiveness, he actually did an analysis that 

showed these inner cities, these urban communities are really not 

just the right thing to do in terms of an investment but they are 

the smart, economic, strategic thing to do because they are underserved populations that do not have access to capital, that do not 

have access to job growth. And he tracked businesses for 15 years 

and found that 70,000 jobs came directly from those communities 

when the business owners were served. And I think that was something that was new because it was really data that showed there 

is growth opportunity, not just a good thing to do in terms of investment. 

I could not speak directly to the tax reform issue, Mr. Chairman, 

but I do think that the most important thing we have learned is 

that we need to be bringing stories to you of your constituents and 

the small business owners that we see. And increasingly, our small 

business owners know now where to go as they come into our program or some of the programs here, that their voices matter to you 

and that they need to be talking. Certainly, in our legal clinics, 

taxes come up quite a bit. 

Chairman RICE. Thank you, Ms. Powell. 

Dr. Morgan? 

With all due respect to CPAs and attorneys, Mr. Chairman, I 

would like to say that the entrepreneurs who start small businesses would like to spend as little time and as few of their resources on those services as they possibly can and move forward 

with growing their business and being successful entrepreneurs. 

Chairman RICE. So you are thinking a simpler tax code would 

be a good thing? 

Mr. MORGAN. So my belief is that if we can simplify the tax 

code and other laws that are coming down or that are out there in 

uncertainty land, the easier it will be for entrepreneurs to be successful, particularly in challenging economic times. 

Chairman RICE. I completely agree with that. I think we can 

compete with anybody worldwide, but the government stands in 

the way. 

Mr. Stevens, what do you think about that? 

Mr. STEVENS. Mr. Chairman, I agree. I think Dr. Morgan put 

it well that all things being equal, simplicity is better. As a small 

business, and as one that speaks with a number of entrepreneurs, 

uncertainty and complexity are the enemies of growth. We need to 

focus on innovating and creating jobs and serving the customers 

and delivering what we do an spend less time on uncertainty and 

tax issues and other things. 

Chairman RICE. Comply with government red tape. 

What do you think, Ms. Pate? 

Ms. PATE. I think that entrepreneurs that do not understand 

the tax code have three choices. One is to just figure it out themselves. The second is to hire a commercial tax preparer. And the 

third is to not file. If they do it on their own, the chances are that 

they will make mistakes and they will incur liabilities that they 

are not prepared to pay. If they hire a commercial preparer, they 

may be paying exorbitant rates or—— 

SBREP-219 with DISTILLER

15 

Chairman RICE. That is clearly—as a tax lawyer, let me say 

that is money well spent. 

Ms. PATE. Yes. Yes. Assuming they can afford it, right? It may 

be out of their ability, right, as brand new businesses. And third, 

not file. And if they do not file, we know what happens then. They 

are contributing to the tax gap and they are making themselves 

unqualified for any support through the tax code and also for 

earned income tax credits, child tax credits, and other benefits they 

may be eligible for. 

Chairman RICE. Well, I completely agree with you. I think our 

businesses can compete with anybody, but the government has got 

a noose of red tape around their neck and we have got to do everything we can to loosen that and make the road ahead as easy as 

we possibly can. We do not need to be an obstacle; we need to be 

somebody that encourages and makes it easier for business. 

Thank you very much. Next up will be the ranking member, Ms. 

Chu. And I am going to leave now. I cannot thank you enough for 

being here and what you do to encourage business and jobs in this 

country. Thank you. 

Ms. CHU. Thank you. 

I am going to yield to Congressmember Schneider, because he is 

under time pressure due to a competing committee. So 

Congressmember Schneider. 

Mr. SCHNEIDER. Thank you very much. And I thank you for 

letting me jump ahead of the line, so to speak. 

If any of you in your small business or small businesses you advise can try to find a way to be in two places at one time, we all 

would be so grateful. 

Speaking of grateful, let me say thank you for what you all are 

doing. I spent my career as a small businessman mostly advising 

other small businesses. I know the companies you are dealing with. 

In particular, I know startup companies are dealing with so many 

challenges. For a lot of them it is their dream. They are going to 

cobble together all the pennies and nickels and dimes that will get 

them to there, and every single penny they spend is crucial and it 

can be the difference between success and failure. And so much of 

what they are facing they are facing for the first time. So to have 

guidance is also crucial. But they cannot afford the guidance oftentimes, whether it is a CPA or an accountant, or in my case, a strategy consultant. These small companies do not have the resources 

to reach out to people who are providing those for a fee. And 

whether it is a volunteer organization or a group like 10,000 Small 

Businesses from Goldman Sachs or what you are doing, Ms. Pate, 

is critical because these companies grow. They start out. Maybe it 

is a barber shop or a delicatessen or even a food cart, and they 

start out with that but their aspirations are to be something great 

and you provide them the pathway. So let me just again say thank 

you for what you are doing. 

In that context, some questions I would love to explore. 

In today’s environment—and Mr. Stevens, I left you out as a 

small businessman, so maybe I will start with you on the question—there are things I think the government does do to help, and 

yours is a technology business, things like 179, the accelerated deSBREP-219 with DISTILLER

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preciation, how important is something like that as you decide 

where to put your money to grow your business? 

Mr. STEVENS. Thank you. I appreciate that. That is a great 

question. 

That has been help for us, the section 179. I know other business 

owners say it has been the deciding factor whether or not to invest 

further. For us it has not been. We have been fortunate enough to 

grow dramatically either way, and really before growth, even if it 

was not ideal from a tax or other perspective, but I have spoken 

with many entrepreneurs where that influenced their ability to invest in their business, buy additional equipment, do the other 

things they wanted to do, which later led to additional job creation. 

And without that credit they would have either not done it or put 

it off another year or another two years. 

Mr. SCHNEIDER. Great. Thanks. 

From your experience, the rest of the panel, are you seeing 

things like that, other things the government does that helps the 

client companies you are working with? 

Ms. Powell? 

Ms. POWELL. Thank you for the question. 

Ranking Member Chu described one that we have been very 

proud to partner with, which are the SBDCs. These local small 

business development centers are working with hundreds and hundreds of small businesses and they are bringing them in and assessing their needs, and then being able to refer them to one of our 

organizations or many of the other programs out there. So we have 

a large nominating partnership with them across the country. And 

what I think they are also trying to do is one of the things we have 

learned is that 10,000 Small Businesses is not a lecture format. We 

put every cohort in growth business groups, and so they actually, 

as I mentioned earlier, have this peer-to-peer learning and they are 

teaching each other or they are relying on each other. They are like 

living case studies of challenges. The businesses may be extremely 

diverse, but the challenges are common. And one of the most interesting things we have seen is how they then recommend government contracting programs. They teach some of the minority-owned 

businesses—women-owned businesses, and other minority-owned 

businesses to apply for that status, which would surprise you, Congressman, how few businesses out there know there is this referral 

network that is created. So I would highlight the SBDCs and just 

the opportunity in some of the government programs to build these 

networks in communities across the country. 

Mr. SCHNEIDER. Great. 

Dr. Morgan? 

Mr. MORGAN. Congressman Schneider, we refer our students to 

many of the federal government websites, and particularly to the 

SBA for assistance in starting their businesses and in funding their 

businesses. And moving ahead with the challenges of understanding the laws and the rules and regulations. So you are absolutely right. There are many resources available through the federal government for our small business entrepreneurs. 

Mr. SCHNEIDER. So I see I am down to my final 30 seconds, 

so let me just close with a comment. And again, a congratulations. 

The other Committee I am balancing is Foreign Affairs, so conSBREP-219 with DISTILLER

17 

gratulations on 10,000 Women. That is an incredible program Goldman does and is a thing that I think everyone in the United States 

should be proud of. 

With small businesses, the idea of partnerships, the public-private partnerships where government works with nonprofit organizations like what you are doing, with private companies like what 

Goldman Sachs is doing to help drive the engine. Sixty-five percent 

of the jobs in this country are created by small businesses. Fiftyfive percent of the jobs are in small businesses because some of 

those small businesses grow to be large and it moves the numbers. 

If we are going to have another American century, it is going to 

be on the innovation, creativity, and entrepreneurial spirit of the 

companies you are helping. So again, thank you for all that you do. 

Mr. SCHWEIKERT. [Presiding] Thank you to the gentleman 

from Illinois. 

Ms. Chu, can I extend you a courtesy, if you would like to? 

Ms. CHU. Thank you, Mr. Chair. I appreciate that. 

Well, Ms. Pate, your organization’s SETI has awarded more than $500,000 to 40 organizations to offer tax preparation services. If 

these services were not available to small businesses, the microbusinesses, where would these individuals go for tax preparation 

services? 

Ms. PATE. There is not a lot out there for them, frankly. As I 

mentioned before, if they choose to do their taxes on their own they 

may have trouble with that. We only at this point have 16 pilot 

sites in this VITA initiative with the IRS and NCTC, and what we 

are finding is that over 50,000 of the people who go through these 

VITA Schedule C programs return to get their taxes done the following year, so we see a lot of interest and need through just these 

16 pilot sites, so we can only imagine what would happen if this 

was available on a broader scale, and it is possible that that could 

happen through VITA. But we also need efforts like the Entrepreneur Startup Act that you introduced last congressional session 

because it would create much more ability for more than just VITA 

programs to provide free and low-cost tax preparation. It could be 

done at a state agency level. It could be done at a local agency 

level. It could be done in a public-private partnership. There are 

many, many opportunities to expand this model of free and lowcost tax preparation far beyond VITA and make it not as dependent, frankly, on the VITA pilot that we have been pursuing. 

There are a lot of microenterprise development organizations 

that get funding from the small business programs, including the 

program for investment in microentrepreneurs, women’s business 

centers. You mentioned the SBDCs and also the microloan programs that are trying to serve entrepreneurs best as they can but 

their focus has necessarily been on lending and training and technical assistance and not so much in the tax field because you must 

have specialty and expertise as we know. So we need to focus on 

making opportunities much more plentiful for tax preparation than 

they currently are, and the way to do that would be to create some 

legislation that would enable that. 

Ms. CHU. Thank you for that. 

Also in your testimony you mentioned PACE, an organization, of 

course, with which I am very familiar because it is in Los Angeles, 

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and you talked about a business that received a grant from PACE 

for $5,000 which it used to launch a restaurant. From a programwide perspective, how successful is the PACE program in cultivating long-term successes like that of the restaurant owner and 

what could we learn from it? 

Ms. PATE. So PACE is a wonderful example of one of these integrated service delivery approaches that I mentioned earlier. So 

they provide workforce training. They provide business development training, financial education, individual development accounts which are matched to savings accounts. And in the fiscal 

year 2010 through 2011, and cumulative, they had a number of 

successful outcomes. First, they served 3,526 entrepreneurs; they 

started 142 new businesses; 400 businesses were either stabilized 

or expanded; 542 total businesses were assisted; 981 jobs were created; $108 million in sales or gross revenue was obtained; and $9 

million in tax revenue generated for local government by businesses assisted through PACE. So these are outcomes that are 

pretty stunning for a nonprofit but they are not unusual. There are 

a number of other microenterprise development organizations 

throughout the country as evaluated by the field program at the 

Aspen Institute through their Microtracker Program where the 

data suggests that since the Great Recession, microenterprise development organizations have increased their lending by 25 percent 

and the number of individuals assisted by 15 percent. Outcomes 

data collected in 2011 from 1,200 microentrepreneurs served by 23 

organizations demonstrate the power of these small businesses to 

produce jobs for their owners and for others, and many of these 

small business owners are disadvantaged otherwise in the labor 

market. So they were having a hard time getting a job, so creating 

their own job was their best option. 

Ms. CHU. Thank you. 

Ms. Powell, how do small businesses find out about the 10,000 

Small Business program, and what is the best way to reach out to 

these small businesses so they know about it? 

Ms. POWELL. Well, first, we appreciate champions like you who 

refer them to applying, and then that is where I think our community partners really come in, whether it is the NFIB, the local 

chambers, Hispanic chambers. One of the things that was really 

important to Goldman Sachs as a firm was that this is not just our 

effort, but rather it is this consortium of institutions who are committed across the country. It is also why when we go to a market 

we are not trying to have a generic imprint but rather a customized local imprint that is developed along with the local community because that is how we can ensure that it will really build 

a capacity that can last. So we have a lot of advertising for the program the SBDCs recruit. The community college in each district 

puts out calls for applications, and today, with the launch of the 

national program we hope people will go to our website, gs.com/ 

10000smallbusinesses, and learn how to apply from throughout the 

country for this program. 

Ms. CHU. And what businesses are the ideal fit for your program? 

Ms. POWELL. Well, we are really hoping that Damien, that Mr. 

Stevens will apply, because he is a perfect target. As you can tell, 

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he has had a proven track record. He already has 12 employees 

and when he said earlier that he was looking for access to networks, I think that is what we could really provide. I think he 

would be able to pitch Servosity very well to other small business 

owners in the program. But really, it is businesses that have been 

operating a couple of years, at least four employees, that are poised 

for growth, and that we believe this program can really make a difference in. 

Ms. CHU. And you have worked with community colleges to ensure that business owners get training. So far what has Goldman 

Sachs learned about the capacity of community colleges to educate 

entrepreneurs? 

Ms. POWELL. Well, thank you for that question. We have been 

really impressed with the community colleges that we have worked 

with throughout the country. Community colleges, as you know, 

are one of the most important platforms now in higher education 

in the United States, particularly when you have a program where 

adult learning is central to it. And so they are experts in adult 

learning, in short-term programming, continuing education, but importantly, they are often the bedrock of a community, and immigrants and a very diverse set of individuals feel very comfortable 

going to a community college. What we learned though was that 

while they had a lot of workforce training programs, and that is 

certainly an expertise of community colleges across the country, 

they did not necessarily have entrepreneurship centers or centers 

where you are not learning to train for a specific job that someone 

created but rather you want to learn how to create jobs through 

your business and grow your enterprise. And so I think that is 

what we believe is the lasting piece of the infrastructure we have 

invested in which are these entrepreneurship centers. More than 

200 community college professors have been trained through 

10,000 Small Businesses. All of the community colleges have access 

to the curriculum. And then we are very pleased now that we are 

leaving a legacy of local case studies in each of these communities. 

So we have been impressed with their dedication. 

The final thing I will say is that community colleges are entrepreneurial themselves. No offense to the four-year institutions that 

we are also proud of. I will say we see them being incredibly entrepreneurial and this is a program where you have to start from 

scratch, you have to get the results back, and make adjustments 

to make it even better, and we have been really, really pleased to 

see it. And we are honored to have Walter Bumphus who is the 

head of the Association of Community Colleges, on our advisory 

council helping us kind of implement these lasting learnings across 

the country. 

Ms. CHU. That is very impressive, and I am sure you are going 

to see multiplier effects from training so many professors in the 

community colleges. 

Dr. Morgan, it is so impressive that MOBI was able to develop 

its program on its own. Does MOBI work in tandem with the SBA’s 

entrepreneurial programs? And considering your extensive experience training small businesses, what are some of the things that 

similar SBA programs could do better? 

SBREP-219 with DISTILLER

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Mr. MORGAN. Well, as I mentioned, MOBI was on the website 

of the SBA until 2006, and then there was a disagreement about 

intellectual property rights for the MOBI curriculum. And the 

MOBI board did not want to give up the ownership of their intellectual property rights, so the SBA removed us from their site. But 

we would like very much to continue to work with the SBA. We 

have a curriculum. We update that curriculum. In fact, we will 

soon be relaunching our website before the end of the year with a 

more modern, up-to-date curriculum and with new video. And we 

are also looking at technology and how do we continue to expand 

MOBI’s force around the world. So we would like to be in partnership with the SBA. We do refer our students to the SBA on a regular basis for the services that they provide so well. 

Mr. SCHWEIKERT. As you will learn, we have lots of bells and 

buzzers. I have been here three years and I still have not figured 

out which bell means what. 

[Recess] 

Ms. CHU. I will ask then a couple more questions and yield to 

the chairman. 

The other thing I was very impressed by, Dr. Morgan, was you 

talked about the fact that you had classes that were taught in 

Spanish and that prompted eager small business owners to come 

by the busload from all across Los Angeles. Can you share with the 

Committee what kind of difference language access has made for 

non-English speaking entrepreneurs and what training in other 

languages benefit the business community and job creation? 

Mr. MORGAN. Well, we have just launched our 

myownbusiness.org/espanol, and it is the website in Spanish for 

Spanish-speaking patrons of MOBI. And we have now 16,000 people per month looking at that website and beginning to utilize it. 

So we want to continue to expand our MOBI base and we want to 

continue to convert it into additional languages so that all people 

can access it and make use of our curriculum. 

Ms. CHU. Very good. 

Mr. Stevens, based on your testimony it sounds like the NEXT 

Upstate provides an ecosystem for high growth entrepreneurs to 

learn from each other and grow. What sort of information and education were you able to receive from your fellow entrepreneurs that 

you were not able to receive elsewhere? 

Mr. STEVENS. Yes, thank you, Ms. Chu. 

This particular ecosystem has really been fundamental in our 

growth, and I guess as Ms. Powell pointed out as example, the community colleges did not have an entrepreneurial program. A lot of 

those resources to learn how to go from point A to point B and then 

point B to point C were not there and the NEXT ecosystem 

emerged really with entrepreneurs and the Greenville Chamber to 

become its own economic development initiative but driven by and 

chaired by the entrepreneurs. And so the entrepreneurs decide 

what happens, what is needed. The committee decides what we 

need as entrepreneurs. And so it changes. Things change. When 

the Affordable Care Act came up, we brought in people to speak 

about that. When taxes become an issue, we have people speak 

about that. Legal issues, growth issues. So just about anything you 

could mention, we have brought in speakers to help educate. We 

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21 

have had CEO roundtables to help peer-to-peer facilitation. And we 

have even had special groups formed to address certain issues that 

only a subset of the group is interested in. 

Ms. CHU. Thank you. I yield back. 

Mr. SCHWEIKERT. Thank you, Ranking Member Chu. 

And for My Own Business we have actually handed out that 

website many times at many of the different forums. Can I actually 

solicit a couple questions and give me some education here? 

If you were—we will call it a microbusiness—and are we comfortable with the definition under 10 or do you prefer your definition of under four? 

Ms. PATE. Under 10 is fine. 

Mr. SCHWEIKERT. Okay. Under 10. In today’s world, in the 

United States, what do you think your single, biggest difficulty is? 

Ms. Powell? 

Ms. POWELL. Difficulty if you are a microenterprise? 

Mr. SCHWEIKERT. Yeah. So you are the 10-person plumbing 

business or little retail business. Because where I am trying to lead 

to is my understanding from what we have picked up from national 

datasets is access to capital. I have amazing appreciation for education on how to do that but loop it back in. I mean, does anyone 

disagree with being able to find money? 

Ms. POWELL. Well, thank you for asking that, Mr. Chairman, 

because that is why our program believed that you cannot—in 

order to spur the most growth and to support these businesses 

most effectively, you have to have three legs of the stool—education, capital, and mentoring and networking. And that is why we 

actually committed, of the $500 million, $300 million was committed to capital. And a very specific kind of capital if I may describe it. We are actually providing that capital to a nonprofit lending platform called Community Development Financial Institutions. Those are lenders who are trying to give access to capital to 

the business owners you are describing. 

Mr. SCHWEIKERT. Can I back up just a tiny bit on you? We 

have also had some of the folks from—is it Samuel Adams Brewery—come talk to us and the amounts of money they have been 

putting out in the street in microlending to small businesses. 

Ms. POWELL. This is not microlending. 

Mr. SCHWEIKERT. Well, I think they go up to 10,000. 

Ms. POWELL. Yeah, we go up to 750,000, the average loan for 

us. And so we are above the space. I think that is what is important, is there is a lifecycle of a small business owner. So you might 

start out as a four-person Mexican restaurant and you can grow 

into a catering business, et cetera. 

Mr. SCHWEIKERT. I am with you on the—where I am trying to 

get to is okay, we have had a conversation here of there is some 

platforms, though you believe it needs more growth and more government sponsorship, of tax preparation help, of mentoring and 

education. You are actually sort of covering all there with both the 

mentoring and access to capital, and trying to teach. I have done 

these classes where you teach folks how to write a basic business 

plan. One of my great passions and concerns is there are a lot of 

wonderful actors out there in the community. Goldman Sachs, 

what they are doing is at a completely different scale than much 

SBREP-219 with DISTILLER

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of what we see, but if I turn to Dr. Morgan and say your website 

for the Phoenix market or the LA market, can you have on there 

everything? Here is the website for the Department of Revenue. 

Here is how you file your form online. Here is your health license 

at the county. Here is how you get your tax ID number. Here is 

how you make an app for this. Are we seeing any unifying force 

out there that is bringing all those options together? So if I am that 

really busy entrepreneur and do not get to have time to go sit in 

class and sit with my mentor, at least I have access to information 

that also leads me to that capital and leads me to that information? 

Ms. POWELL. Well, I do think you are hitting on something that 

is a great need, Mr. Chairman, and I think one of the best things 

that this Committee hearing is doing is bringing all of us who are 

doing different pieces of the work together. And I do think that is 

an opportunity for this Subcommittee, frankly, to bring together 

more of the public-private partnerships, showcase them together, 

and have us frankly not only work more together but find ways to 

advertise our work in a more comprehensive method. 

On the capital piece, for example, the work that Ms. Pate is 

doing is helping microlenders. We hope that the work that we are 

doing, what we call small and medium-size borrowers who do not 

have access to capital, and then there are other forms at the end 

of that lifecycle when you have—when Damien breaks 100 employees and can go access a large commercial bank loan, that capital 

is we hope increasingly available. What we are trying to do is target markets where capital does not now flow to those borrowers. 

Mr. SCHWEIKERT. Well, we are going to come back and talk to 

that because I still think we are hitting very close to sort of a revolution in access to capital with crowdfunding, if the SEC ever finishes its rule sets and some of these other things out there. 

Dr. Morgan, if I right now lived in wherever in the United States 

and wanted to go online and have a single porthole telling me my 

access to information, my regs, my filings, my access to money, 

does such a thing exist, and are you trying to get it there? 

Mr. MORGAN. Mr. Chairman, you ask a question that our board 

has spent time discussing because to our knowledge there is not 

that location, that website where you can get all of that information. And we have talked about a continuing education program for 

our entrepreneurs, for our graduates, so that we can continue to 

have a discussion where the entrepreneurs share that kind of information. As they seek it out, they would put it on a website. They 

would put it—— 

Mr. SCHWEIKERT. So you would crowdsource the information? 

Mr. MORGAN. So we would crowdsource the information; exactly. 

Mr. SCHWEIKERT. Okay. 

Ms. Pate, in your watching the world, do you see such a porthole 

with that information coming together? 

Ms. PATE. Thank you for that question, Mr. Chairman. 

There are organizations at the national level, like the Association 

for Enterprise Opportunity (AEO), that are working to create these 

kinds of platforms in partnership with the private sector. 

Mr. SCHWEIKERT. Can I ask you just a one-off question? 

Ms. PATE. Sure. 

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Mr. SCHWEIKERT. If you were to think about all the different 

groups that are out there trying to help small businesses, and 

those that we have created here in government, but also those I 

have created from my university, my community college, my NFIBs 

and all the other groups, I mean, just off the top of my head I bet 

you I can name two dozen. 

Ms. PATE. And that does not even count the local organizations 

that are providing that kind of one-stop shopping for their clients. 

Mr. SCHWEIKERT. I am trying to think of the microentrepreneurs that you and I have all met in our political lives. They 

are wonderful people. Their lives are so incredibly busy. Time is in 

many ways their most precious commodity. And my fear is our attempt to help, one of the most powerful things we could all do is 

sort of narrow that portal. 

Ms. PATE. So may I make a suggestion? Years ago, when I first 

came to D.C., I was part of a Clinton administration intra-governmental task force on microenterprise, and it brought together the 

Department of Treasury, the Department of Labor, the SBA, the 

Department of Education, all of the relevant agencies on a monthly 

basis, and we all came together—nonprofits were invited to the 

table, as well as the private sector—to talk about how to be more 

cohesive and aligned in the way we deliver services to the field. 

Mr. SCHWEIKERT. From just a personal standpoint, I believe 

actually Dr. Morgan may actually have the solution and that is the 

crowdsourcing of information. Whenever we build bureaucracies to 

try to help us do it they mean very well but they do not move fast 

enough, and then you get people who fuss over who owns this copyright, who does not do this, or you do not get to be on the website. 

There has got to be a better way to do it because if you have the 

800 pound gorilla, like Goldman Sachs—excuse me, 800 pound 

helper—it is a very friendly, it is a cuddly gorilla. Those sorts of 

resources and talent for all these groups that—I used to be treasurer of a very, very large county and just the number of businesses 

that would come in every day trying to understand where they get 

their licenses, what are their tax liabilities and those things, and 

we found when we built really strong, powerful websites they 

stopped calling because they got the information easy and we 

stopped burning their precious time. 

And the last bit of my rambling here, I really believe with what 

we all did in bipartisan fashion now two years ago in the Jobs 

Act—there are things we are going to have to find a way to clean 

up and fix because there are problems in the design and we need 

still for the SEC to finish its rule sets, but the future crowdfunding 

where it may be the tiny little bakery, it may be up to the million 

dollars, there is a revolution coming for raising money. Will we 

have the backbone to educate our small entrepreneurs out there 

how to access it? 

With that, my friend from New Jersey, you are up. 

Mr. PAYNE. Thank you, Mr. Chairman and Ranking Member 

Chu. I appreciate this opportunity to ask my question. 

The panel’s testimony is very encouraging and I applaud your effort to support entrepreneurs and small businesses. 

I notice that several testimonies reference the use of government 

program or resource supplement to supplement your efforts or atSBREP-219 with DISTILLER

24 

tract additional private dollars. This is also encouraging as we 

work to support and strengthen these programs. So my question is, 

several of the testimonies also spoke to efforts of supporting lowincome or disadvantaged business owners. Can anyone speak to the 

challenges that have been identified facing this particular population and your company’s efforts to address them? And does anyone have suggestions on what we can do at the federal level to better support these businesses? 

Ms. Powell? 

Ms. POWELL. Thank you very much, Congressman Payne, and 

we are honored to have a number of your constituents who have 

graduated from 10,000 Small Businesses, and actually, a number 

of them who came through nominations from Marc Morial and the 

National Urban League in the area. 

I think that one of the learnings from 10,000 Small Businesses, 

particularly because we are implementing our program through 

community colleges, and I was referencing earlier the fact that 

these academic institutions draw from the community and often do 

have a higher percentage of disadvantaged communities. Our businesses, our 10,000 Small Business graduates are actually 50 percent women- or minority-owned businesses, and this is something 

that we have been extremely proud of, although we are open for 

all businesses to apply. But I think what is happening is that this 

particular program and the suite of services it is providing is needed in communities where there are very hard-working, passionate 

small business owners who are saying, ‘‘I just need a little bit of 

knowledge, some capital, and mentoring support and I will do the 

rest of the work. I will make the business grow.’’ 

I will give you one example, if I may, which is Saudia Davis. 

Saudia is a graduate from our first cohort in the New York/New 

Jersey area. Saudia has started a company called Eco-Cleaning in 

honor of her grandmother, who sadly died of cancer as a result, she 

believed, of the carcinogens in the chemicals she used as a housekeeper for more than 25 years. So she wanted to start a commercial cleaning company that used eco-friendly products. She had 

started the business, had been operating for two years, got into 

10,000 Small Businesses, learned how she needed to train her 

workforce better, write a growth business plan, pitch, become a minority-owned business so that she could compete for other contracts. I am so proud of her and the results she has had. She has 

created more than 15 new jobs. American Express named her as 

one of the Make Mine a Million business owners. She accessed capital from Seed Co. Financial, her first loan from a CDFI in New 

York that is one of our nonprofit lending partners, and she is just 

doing terrific. She has become a role model in the community. So 

we have so many examples where if you provide access just to the 

tools, these extraordinary small business men and women will do 

the rest of the work. 

Mr. PAYNE. Absolutely. I totally agree with you because in a lot 

of situations we find just a little technical knowledge, you can see 

the spirit. You can see that they are ready and willing and the effort is there but they do not have the technical knowledge. There 

are certain small aspects that they need to make them successful, 

so I really applaud a program such as that. 

SBREP-219 with DISTILLER

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Anyone else? Dr. Morgan? 

Mr. MORGAN. Congressman Payne, thank you for the question. 

Our program started in Compton, California by Phil Holland, 

and Phil knew that that was an area with a high profile of minority population and a lower socioeconomic community, and he has 

been absolutely committed from day one that our program will be 

offered free of charge so that there is no barrier to people accessing 

the education necessary to start your own business. And one of the 

major emphases of our website is how to develop a business plan 

that will help our entrepreneurs compete for capital in the capital 

market. So MOBI will continue. It is being funded by estate plans 

from Mr. Holland long into the future so that it continues to be 

accessed free of charge by any person who wants to start their own 

business. 

Mr. PAYNE. Thank you, sir. 

Ms. Pate? 

Ms. PATE. Thank you, Representative Payne. 

We, at CFED, have focused for the last 45 years on low-income 

and minority communities, women, people with disabilities, and 

eradicating some of their barriers to starting their own businesses. 

So we fight very hard at the federal level to promote year after 

year funding for the Small Business Administration programs that 

are surveying this population. However, there is never enough 

funding through these programs and they are not, frankly, reaching some of the hardest to serve, most disadvantaged entrepreneurs. And what we are hopeful is that through the work of 

groups like MOBI and others, 10,000 Entrepreneurs, et cetera, that 

we can begin to raise the level of awareness that programs are out 

there and that they are having this kind of wonderful impact and 

maybe get more funding in the market for these groups. I do know 

that the work of the NAACP, in addition to the work of CFED and 

the Northwest Area Foundation will be producing next week in the 

Northwest a series of informational conversations about AfricanAmerican asset building and entrepreneurship in particular, and I 

am helping to lead that effort. So we will be unearthing what we 

think will be some barriers to accessing those services and getting 

a better sense of, well, who are serving entrepreneurs of color and 

women? And what are some of those gaps, and how can we begin 

to close them? 

Mr. PAYNE. Well, I appreciate and commend all your efforts. It 

is my constituents that are looking for these opportunities, and it 

is a leveling of the playing field. I am not looking for people that 

are just going to show up, but we know that there are so many people that have the entrepreneurial spirit but just have not had the 

training and understanding of it. First generation entrepreneurs. 

They do not come from a history of that, their father and their 

grandfather. So this little push and this help in getting this population ready and prepared helps the nation because if they are able 

to build these businesses, then they do not have to look on the 

other side for the help that they need if they are not successful. So 

this helps the nation become stronger in serving its population, and 

I commend all your efforts. Thank you. I yield back. 

Mr. SCHWEIKERT. Thank you, Mr. Payne. 

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With that, I think we are going to shut down. Although I will tell 

you I was all giddy when I heard MOBI was here. Now, for those 

my age it is a very popular musician. I am very fond of him. 

Mr. MORGAN. I am sorry to have disappointed you, Mr. Chairman. 

Mr. SCHWEIKERT. Yeah, it is okay. I think he would be creeped 

out to have a conservative republican as one of his fans anyway. 

But with that I want to thank you for your participation today. 

The testimony given to us and the examples of the private sector 

providing small business with the knowledge that they need to 

achieve and maintain success. Through your efforts, entrepreneurs 

are gaining the skills they need to adjust to the steep learning 

curve that comes with starting their own business in today’s challenging environment. It has been an honor for the Committee to 

have you here. Be prepared. There may be some other questions 

and some other members here who are not here who may reach out 

to you and ask for your help for some input. 

I ask unanimous consent that members have five legislative days 

to submit statements and supporting materials for the record. 

Without objection, the hearing is now adjourned. 

[Whereupon, at 11:29 a.m., the Subcommittee was adjourned.] 

SBREP-219 with DISTILLER

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1http://www.sba.gov/sites/default/files/FAQ—Sept—2012.pdf 

A P P E N D I X 

Testimony from Dina H. Powell 

Director of Corporate Engagement, The Goldman Sachs 

Group, Inc. 

President, The Goldman Sachs Foundation 

House Committee on Small Business 

Subcommittee on Economic Growth, Tax, and Capital 

Access 

September 19, 2013 

Chairman Rice, Ranking Member Chu, Members of the Subcommittee, thank you for the opportunity to testify before the subcommittee regarding Goldman Sachs 10,000 Small Businesses and 

the critical issues of supporting small business growth and job creation in the United States. 

As you know, the success of small businesses is critical for a 

strong national economy. According to the U.S. Small Business Administration and Bureau of Labor Statistics, over the last two decades small businesses have been responsible for creating 2 out of 

every 3 net new jobs and currently employ roughly 60 million 

Americans, half of the private sector workforce.1 But despite general improvement in the nation’s overall economic condition, challenges persist for many small businesses. 

So, with this in mind, and based on the success of Goldman 

Sachs 10,000 Women—our global effort of supporting women entrepreneurs in developing and emerging economies which will serve 

its 10,000th women this year—we launched 10,000 Small Businesses in 2009. 

10,000 Small Businesses, or 10KSB, is a $500 million initiative 

to help small businesses in the United States by providing entrepreneurs through an integrated program a practical business and 

management education, as well as access to capital and business 

support services. The program is based on recommendations from 

leading experts that greater access to this combination of education, capital and support services best addresses barriers to 

growth. The large network of national and local implementing partners that we work with are what make this program a success. 

The program is currently operating in fifteen sites: the metro 

areas of Chicago, Cleveland, Houston, Long Beach, Los Angeles, 

New Orleans, Philadelphia, New York and Salt Lake City, and in 

a number of states with a capital-only offering, including Virginia, 

Kentucky, Montana, Oregon, Tennessee and Washington. In these 

SBREP-219 with DISTILLER

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capital-only states, the program’s partners focus on making capital 

available in underserved rural areas which may lack the presence 

of commercial banks. 

10KSB is designed for small businesses poised for growth. Applicants must demonstrate a commitment to growing their businesses 

and crating jobs within their communities. Business owners targeted include, but are not limited to those with: revenues between 

$150,000 and $4 million; in operation for at least two years; at 

least four full-time employees; and a business model that could 

scale to create more jobs. 

10KSB provides comprehensive support for small businesses 

owners. Based on a high quality curriculum designed in consultation with industry experts—principally Babson College, the U.S. 

News and World Report number one ranked undergraduate business school for entrepreneurship for 17 years running—10KSB enlists community colleges to deliver business training, local missiondriven capital providers to make small business loans, and local 

non-profit partners to provide technical assistance and business 

support services. In addition, Goldman Sachs employees and senior 

management are actively engaged in various aspects of program 

delivery. 

For the educational component, The Goldman Sachs Foundation 

is contributing $200 million to fund business owner training at 

partner community colleges, and faculty training and technical assistance to help build our partners’ capacity. Business owners receive a practical education that focuses on skills they can apply immediately. The 360 degree approach—business training, access to 

capital, one-on-one businesses advising and exclusive networking 

opportunities—that help each participant develop a tailored business growth plan that they begin to implement even before completing the program. Because of this personalized training, the program is able to serve businesses within a highly diverse set of industries ranging from construction, food service and security to 

technology, marketing and health care. 

For the capital component, $300 million has been allocated nationally for a combination of lending and philanthropic support to 

non-profit Community Development Financial Institution (CDFI) 

Loan Funds and other community-based lenders. The investment 

will increase the amount of growth capital available to small businesses in underserved communities and expand the capacity of 

mission-driven lenders to deliver financing and technical assistance 

to small businesses. Goldman Sachs partners with CDFI loan funds 

and other nonprofit lenders due to their ability to flexibly underwrite capital to businesses which typically don’t qualify for bank financing. The CDFI funds not only provide capital, but also provide 

extensive technical assistance to help these businesses become 

‘‘bank-able’’. The loan funds provide loans in amounts less than 

what conventional banks like to offer—the average loan size is 

$200,000 and can often be made as an unsecured loan for working 

capital. In addition, to help our capital partners serve the many deserving businesses, Goldman Sachs provides a loan loss reserve. 

SBREP-219 with DISTILLER

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Separately, 10KSB provides grants to fund the capital partner’s 

operational capacity to increase their lending generally. 

The program’s strength is derived from a network of over 80 

partnerships designed to maximize its reach and results. This includes the leadership provided by the program’s Advisory Council 

co-chaired by Goldman Sachs Chairman and CEO Lloyd Blankfein, 

Berkshire Hathaway Chairman and CEO Warren Buffett, and Dr. 

Michael Porter of the Initiative for a Competitive Inner City and 

Harvard Business School. Furthermore, local partners at each site, 

including both public and non-profit sector participants, are empowered to implement the program in serving the local small business population. This is the linchpin on which the program’s effectiveness relies. Our partners help the program from the design to 

implementation to recruitment of businesses depending upon their 

particular expertise. The program aims to bring together local organizations with similar goals to work together in new ways and develop cooperative relationships that will last for years to come. In 

working with our partner across the United States, the program is 

building capacity and cooperation within local small businesses and 

entrepreneurship ecosystems. These national and local organizations, together with Mayors and other government leaders in the 

communities in which we operate, are working together to support 

this program, small business development in their communities, 

and are building relationships that will long outlast this program. 

Across the United States, 10KSB works. To date, over 1,600 

small business owners have participated in the program. The education component maintains a 99% graduation rate, and just six 

months after graduation, 63% have reported increasing their revenues and 47% have reported creating net new jobs. The program 

is creating a strong network of small businesses as 76% of graduates end up doing some form of business together, keeping more 

money within the local economy. In addition, approximately $56 

million has been funded to over 265 businesses for growth capital, 

of which 75% are located in low and moderate income levels, and 

50% are Women/Minority Business Enterprises. 

The following examples illustrate participating businesses’ success across the country: 

Rhys Powell is the founder and President of Red Rabbit, a 

company that provides alternative and healthy meals for school 

children. He founded the company in 2005 and operates the 

business from Harlem, New York. Rhys joined 10KSB at 

LaGuardia Community College in 2011 to enhance his proficiency in managing the business operations, hone his negotiations skills and gain a framework to plan strategically for 

growth. Since joining the program, he has reported an increase 

in revenues by 300%, winning six new contracts totaling almost $1 million from different schools across New York City, 

and hiring 90 new employees since starting the program. 

Payal Kamdar is the founder of VSolvit, which provides 

geospatial and information technology consulting services and 

solutions to government and private sector clients. Founded in 

2006, VSolvit LLC is an award winning 8(a), HUBZone, 

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Woman Owned company. Payal joined 10KSB at Long Beach 

City College in 2011 and credits the program with enabling her 

to think simultaneously across multiple dimensions to drive 

VSolvit’s growth. Since graduating from the program, VSolvit 

has reported increasing revenues over 500% and growing from 

17 to 120 employees. VSolvit was recently awarded a 5 year, 

$53 million software development contract with the U.S. Navy. 

VSolvit was also selected as the US Department of Agriculture 

(USDA) Woman Owned Business of the Year in 2011 and 

Payal was selected as the 2012 Small Business Administration 

(SBA) Region IX Minority Small Business Person of the Year 

and 2013 Los Angeles Minority Business Person of the Year. 

VSolvit has also begun work on a breast cancer initiative by 

mapping diagnosis rates, then identifying areas where lag time 

of diagnosis is above the national average, which then allows 

teams to send mobile health units into those areas to bring diagnosis timing in line with averages. 

Ryan Walsh is the Vice President of Walsh Electric, a family-owned and operated electrical contracting company based in 

Staten Island, New York. The company provides electrical contracting services to the residential, commercial, and industrial 

markets both in the public and private sectors. Ryan joined 

10KSB at LaGuardia Community College in 2012. Since joining the program, Walsh Electric has reported growing from a 

44 person organization with $4 million in sales to an organization that employs 127 people and is on track to $25 million in 

sales. In addition, Ryan has reported that Walsh business has 

secured a significant credit line used to replace aging tools, 

equipment, and vehicles. Lastly, Walsh is in the final stage of 

moving from their original office to a new facility that is 450% 

larger—and which they will own. 

Angelica Rivera is the co-owner of Colmex Construction, a 

family-owned contractor for residential and commercial construction and renovation. Colmex specializes in working with 

nonprofit organizations. She formed Colmex Construction with 

her husband in 2008. In 2011 she joined 10KSB at Delgado 

Community College in New Orleans to improve her company’s 

cash flow and learn more ways to pursue capital effectively. 

Since then, Angelica reports that Colmex has added 16 new 

jobs and increased revenues over 400%. 

These four businesses are not alone in their success and we are 

pleased today to announce that small businesses owners from every 

state will now have the opportunity apply to be part of the 10,000 

Small Businesses program. 

In the coming months 10KSB will launch our first ever national 

cohort of the 10KSB education program, designed to serve business 

owners from across the county who do not live in the metropolitan 

areas of one of our nine education sites. The program will be held 

at Babson College just outside Boston, Massachusetts and be a 

combination of an accelerated classroom experience coupled with 

online learning. Participants will travel to Babson for two intensive 

4-day sessions separated by a few weeks of online coursework. The 

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program will be at no cost to small business owners so that all of 

the most deserving small businesses can participate. 10KSB is accepting applications now at www.10ksbapply.com for the class that 

will begin in January. The application deadline is October 18th and 

we hope that members of the committee and their colleagues in 

Congress will help us get the word out to their constituents and 

maximize the number of entrepreneurs that can take advantage of 

this opportunity. 

Thank you once again for the opportunity to testify. 

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Tesimony of Dr. Stephen Morgan 

Chair, Board of Trustees 

My Own Business, Inc. 

Before the U.S. House of Representatives Committee on Small 

Business 

Subcommittee on Economic Growth, Tax and Capital Access 

September 19, 2013 

Thank you, Mr. Chairman, and Members of the Committee, for 

providing this opportunity to discuss small business creation, ownership and, most important, success. 

I am particularly appreciative of the opportunity to be here as I 

am the volunteer Chair of the Board of Trustees of My Own Business, Inc., a Los Angeles-based nonprofit organization providing 

free educational tools and training via the World Wide Web to support successful businesses worldwide. Our web-based program is licensed by CISCO for its training programs of small businesses 

around the globe, as well as by the World Bank in its Small and 

Medium Enterprise (SME) outreach worldwide. Given the years of 

experience we have in creating a strong educational toolkit, we 

would like the Small Business Administration to also appropriately 

apply our educational program to its support of America’s entrepreneurs. We have previously supported their initiatives in this regard. 

As you well know, much of the success of our country comes from 

the fortitude of new business creation, often started by those who 

seek to create new opportunity for their families. And, it is particularly pursued as an option for those who have faced job loss in recessions such as the one we have experienced. For my organization, 

we believe it is important that those who strive to create a new 

business and contribute to the growth of our economy should be 

successful. We seek to provide a solid foundation and valuable tools 

to ensure their success, and to help them avoid the most common 

mistakes. 

Please allow me to share with you a story about how our organization came to be: On April 29, 1992, verdicts were rendered in a 

controversial case involving the 1991 beating of Rodney King. The 

toll of the riots that followed was devastating: More than 50 people 

were killed, over 4,000 people were injured, 12,000 were arrested, 

and $1 billion worth of property was damaged. 

Southern California entrepreneur, Phil Holland, founder of the 

Yum Yum chain of donut shops in California, watched in dismay 

at the fires burning and the businesses lost and wondered what he 

could do to give hope. Having already successfully published The 

Entrepreneur’s Guide and The Moonlight Entrepreneur, Phil 

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decided he might help by encouraging residents to start their own 

businesses as a way of rebuilding the neighborhoods and communities most affected by the crisis. He began by teaching a free class 

in one of the most riot torn areas, Compton, California. For the 

three years following the riots, Phil drove to Compton one evening 

each week to teach his class in how to start your own business. The 

final session of the class was taught in Spanish and eager small 

business owners came by the bus load from across Los Angeles to 

hear Phil Holland’s presentation. 

Then in 1994, Phil Holland created My Own Business, Inc., 

(MOBI) a 501(c)(3) public charity and began to build a website so 

people everywhere could take advantage of a free curriculum designed to share with them the dos and dont’s of starting their own 

business. Phil and his Board of Trustee members have recruited 

educators, entrepreneurs and business executives to develop the 

curriculum and share their strategies for successfully starting and 

growing one’s own business. Today the website provides two free 

courses: Starting a Business and Growing a Business. Successful 

completion of the online curriculum results in valuable information 

for those wishing to start their own business or grow the business 

they have already successfully started and a Certificate of Completion issued by My Own Business, Inc. 

The free website courses include quizzes on all subjects contained 

in the curriculum, business plan templates, 75 video presentations 

by business experts, a final examination and the Certificate of 

Completion to those scoring 80% and above on the final examination. MOBI’s Growing a Business course includes practical training 

specifically focusing on fifteen topics necessary for expanding a 

business, including how to prepare for growth and how to maximize 

skills in evaluation of growth opportunities. Students taking the 

Starting a Business course may purchase an accompanying textbook for $39.50 but it is not required for completion of either course 

offered on the website. 

For the past twenty years MOBI has offered this free business 

training to nearly 35 million people who have visited the MOBI 

website. Since the launch of the web based MOBI curriculum, 

469,000 have completed the courses and nearly 31,000 have applied 

for Certificates of Completion. The MOBI website is viewed monthly by an average of 235,000, resulting in 4,000 students completing 

the MOBI courses each month. 

In a 2010 study involving 5,000 MOBI graduates conducted by 

the U.C.L.A. Anderson Graduate School of Business, 22 percent of 

the respondents indicated their businesses would have failed if 

they had not studied the topics offered in the MOBI curriculum. Of 

the 5,000 MOBI graduates responding to the survey, 56 percent 

have actually started a business, and 77 percent of those who started a company were still in business. Nearly 60 percent of the respondents reported that they had been in business for more than 

two years and nearly one-third reported that they planned to hire 

at least one new employee within the next twelve months. 

Three important partnerships have strengthened MOBI’s outreach since its founding in 1994. First, for more than ten years 

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MOBI has provided its courses to the World Bank. The second important partnership continues with Cisco Systems, Inc., which primarily has used the program in its internationally-focused Cisco 

Entrepreneur Institute. The third partnership that MOBI engaged 

in was with the Small Business Administration. For a number of 

years until 2006, a link to the MOBI Starting a Business course 

was provided on the SBA website. 

Behind the scenes, we are continually updating our site to ensure 

that the MOBI curriculum is up to date, that the technology used 

to deliver that curriculum is state of the art, and that the website 

will be easily accessible to as many as possible. The MOBI website 

will be re-launched before the end of this calendar year. A sample 

of the new website can be seen at MOBI’s Spanish website, 

www.myownbusiness.org/espanol. 

It has been my pleasure to have had this opportunity to share 

the extraordinary service and contributions of Phil Holland, an 

American entrepreneur who sought to significantly give back by 

helping others achieve similar success...and all free of charge. We 

hope My Own Business, Inc. will continue to be a valuable tool in 

ensuring the success of America’s small business and of those in 

economies interacting with the United States around the world. 

My Own Business Organizational Background: 

Today Phil Holland continues to serve as the Chief Executive Officer of MOBI, reporting directly to the Board of Trustees. The 

Board consists of 13 independent Board members including business executives, practicing professionals, small business owners 

and educators. MOBI, as a not for profit organization, is funded by 

gifts and licensing agreements. Mr. Holland and his wife Peggy 

give significant amounts each year to fund MOBI and they have included MOBI in their estate plans to provide an endowment to help 

fund My Own Business, Inc. in perpetuity. MOBI’s current annual 

operating budget is $325,000, $260,000 of which comes from contributions, $50,000 from licensing agreements and $15,000 from 

the sale of the non-required supplemental textbooks. 

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35 

Testimony of Mr. Damien Stevens 

Founder & Chief Executive Officer 

Servosity 

Before the U.S. House of Representatives Committee on Small 

Business Subcommittee on Economic Growth, Tax and Capital Access 

Mr. Chairman and members of the Subcommittee, thank you for 

your time and the opportunity to testify at today’s hearing. I am 

Damien Stevens, Founder & CEO of Servosity located in Greenville, SC. 

Servosity (http://www.servosity.com/) provides Backup and Disaster Recovery as a Service to a network of technology companies 

all over the United States. In a location better known for manufacturing and textiles, we are a fast growth technology company that 

is competing at a national level. 

In 2008, I joined NEXT Upstate (http://www.nextupstatesc.org/) 

and began learning from other entrepreneurs at events such as the 

CEO roundtable. Before joining NEXT Upstate, I made all the mistakes myself, without the benefit of learning from other entrepreneurs and the challenges unique to high growth companies. 

NEXT Upstate is an organization that attracts and grows high 

impact, technology companies by developing the entrepreneurial 

ecosystem needed by these companies, and connecting companies to 

this ecosystem. 

In 2009, Servosity moved into a small office in the NEXT Innovation Center (http://www.greenvillenext.com/), a collaborative workspace formed by a group of entrepreneurs and the Greenville 

Chamber which houses multiple high growth companies. Upon 

moving into this office, I came in contact with Michelin Development and learned of their low interest loans they offer to small 

businesses. After being turned down the first time, I was approved 

for $100,000 after I applied for the second time. 

This capital gave us the bridge to grow the company to be able 

to secure private investment. In 2011 and again in 2012; Servosity 

attracted private investment capital. 

In 2012, Servosity announced its expansion into 3,200 square fee 

at the NEXT Innovation Center in Greenville and intent to add 30 

jobs in 18 months. We started off this year with 4 employees and 

have 12 people now and we are currently growing and hiring. 

These jobs are just the beginning; we have the opportunity to employ hundreds of people in the next few years. 

The jobs we are adding are for software developers, system engineers, support engineers, sales, account managers and business development. The average earnings are $80,000 and some positions 

are significantly higher. Those earnings are more than double the 

average prevailing wage in South Carolina. Not only are we creSBREP-219 with DISTILLER

36 

ating jobs in the knowledge economy, we are creating meaningful, 

high paying positions with nearly unlimited growth potential for 

employees. 

Without the NEXT ecosystem, I wouldn’t have learned from 

other entrepreneurs, met with Michelin Development to help with 

growth capital, been able to grow the next stage to secure private 

investment, been introduced to potential investors, nor would we 

have attracted the top tier talent required to grow a fast pace technology company. 

Thank you for your valuable time today, I enjoyed being able to 

share a small part of our entrepreneurial journey. I wouldn’t be 

here today without help from so many others. 

I am so blessed. 

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Written Testimony of Kim Pate 

Chief External Relations Officer, CFED 

Submitted to: 

U.S. House of Representatives Committee on Small Business 

Subcommittee on Economic Growth, Tax and Capital Access 

Subcommittee Hearing: 

‘‘Private Sector Initiatives to Educate Small Business Owners and 

Entrepreneurs’’ 

September 19, 2013 

Rayburn House Office Building, Room 2360 

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Chairman Rice, Ranking Member Chu, and Members of the Subcommittee on Economic Growth, Tax and Capital Access, thank you 

for the opportunity to testify on behalf of the Corporation for Enterprise Development (CFED) regarding efforts to engage, educate, 

and empower small business owners and entrepreneurs. As the impact of the Great Recession continues to ravage communities from 

South Carolina to Southern California, we applaud the Subcommittee’s focus on supporting small businesses and enterpreneurs—the 

true engines of innovation and opportunity in our economy. 

About CFED 

CFED—the Corporation for Enterprise Development—was founded in 1979 on a bedrock belief in the power of America’s entrepreneurial spirit. ‘‘Enterprise,’’ you might say, is our middle name. 

Enterprise development has been integral to our work over the 

last thirty-five years. CFED’s first major publication was entitled 

‘‘Revitalizing the American Economy through New Enterprise Development.’’ In the mide-1980s, CFED launched the Self-Employment 

Investment Demonstration to test strategies for empowering lowincome workers to gain a foothold in the middle class through entrepreneurship and self-employment. In the 1990s, CFED was an 

early advocate for Individual Development Accounts (IDAs), which 

empower low- to moderate-income families and individuals to save 

and invest in buying homes, paying for college, and starting their 

own businesses. 

Today, CFED’s work takes place in three overlapping areas: programs, research, and policy. As a field builder we provide technical 

assistance and training to hundreds of nonprofits across the country and we invest in social enterprises to help these organizations 

create pathways to financial security for millions of Americans. As 

a leading expert on household financial security, CFED conducts 

cutting-edge research on strategies that build and protect assets for 

low-income families, expanding the evidence base in support of actionable strategies that empower financially vulnerable families. 

And as a leading national advocate, CFED coordinates a grassroots 

network of local asset-building organizations—the Assets and Opportunity Network—and promotes federal, state, and local policies 

to expand economic opportunity. 

Importance of Supporting Microbusiness 

In our nearly thirty-five years of work expanding economic opportunity through programs, research, and policy, we at CFED have 

been surprised again and again by the creative and economic power 

of America’s micro-entrepreneurs. Far from a niche market, microbusinesses—those with four or fewer employees—account for nearly 

90 percent of all businesses in the country. Roughly one in six 

South Carolinians and Californians own and operate a microbusiness. This figure is representative nationwide. 

Microbusinesses can contribute the revitalization of entire communities. Mary Gatch of South Carolina started DwellSmart as a 

retail shop offering products that promote healthy, sustainable living—from building products to baby clothes. While enjoying modest 

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profitability in the store, DwellSmart’s online sales were skyrocketing. After winning the distribution rights of two large greenoriented companies, DwellSmart needed to immediately move to a 

location with sufficient warehouse space and a loading dock. The 

company found the perfect spot in an unused building in an area 

of downtown Charleston that was experiencing revitalization and 

redevelopment. With the assistance of a Charleston Local Development Corporation (LDC) loan, DwellSmart made a significant investment in rehabilitating the property using eco-friendly and sustainable products. 

In a nation seeking economic recovery through job creation, supporting microbusinesses like DwellSmart is an important solution. 

According to the U.S. Small Business Administration, businesses 

created by low-income entrepreneurs have high survival rates, 

ranging from 57–90 percent—higher than the survival rate for all 

small businesses. 

Despite the small size of microbusinesses, the sector is a significant contributor to American economic growth and vitality. On average, microbusinesses create 2.9 full- and part-time jobs per business. Cumulatively, these microentrepreneurs and self-employed 

individuals amount to millions of firms and even more jobs. These 

microbusinesses and the self-employed represent new transfusions 

of ideas, talent, competition, and entrepreneurial energy into the 

overall economy. Small changes to enhance the capacity of such a 

large and productive group could reap major dividends. 

At the individual and community level, microbusiness and selfemployment can serve as a ladder out of poverty and into economic 

stability for some of the most disadvantaged populations. Microbusinesses that survive, grow, and become profitable, enhance 

household income and reduce families’ reliance on public assistance. These low-income entrepreneurs gain a sense of security, new 

skills and managerial capacity, build new support networks, and 

increase self-esteem. 

Another example of microbusiness success comes from CFED 

partner Pacific Asian Consortium in Employment (PACE), a Los 

Angeles-based workforce, community, and business development organization. Deborah Stern attended PACE’s entrepreneurial training program in June 2008 while starting a business making 

tamales. She won a PACE award of $5,000, which she used to hire 

two employees and rent a kitchen. From there, Stern attracted 

media coverage and cultivated loyal fans. Today, her business is 

more successful than she ever dreamed: she opened a restaurant, 

La Guera Tamalera, in the Silver Lake neighborhood of LA, which 

has become an area favorite. Stern has had remarkable success, 

but she is not wholly unique among PACE’s clients: in 2010, 65% 

of returning microbusiness tax clients had increased their household income. 

Self-Employment Tax Initiative 

Recognizing the importance of micro-entrepreneurship as a strategy for expanding economic opportunity, CFED launched the SelfEmployment Tax Initiative (SETI) in 2005 with three goals: 

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1) Build assets for low-income households 

2) Create jobs by growing and expanding microbusinesses 

3) Increase tax revenue by bringing self-employed into the 

formal tax system 

To accomplish these goals, SETI has awarded more than 

$500,000 to 40 community-based organizations that offer free or affordable tax preparation assistance to low-income, self-employed 

taxpayers. These local partners have helped SETI identify, test, 

and refine promising practices for using the tax filing process as a 

means of fostering small business development. 

Most of SETI’s local partners are Volunteer Income Tax Assistance (VITA) programs, which provide free tax support to low- and 

moderate-income taxpayers. There are nearly 6,000 communitybased VITA sites throughout the country. In Horry County, South 

Carolina, you can find VITA programs at the Chapin Library, the 

North Myrtle Beach Library, and the Surfside Beach Library. In 

Monterrey Park, California, VITA assistance is offered through the 

Monterey Park Bruggemeyer Library. Down the road in Pasadena, 

you can find VITA at El Centro De Accion Social. 

VITA is a brilliant example of a successful public-private partnership. In South Carolina, California, and the rest of the country, 

these VITA sites represent local community efforts—supported by 

federal grants, state and local funds, and philanthropy—to engage 

low-income taxpayers and ensure that they get a fair shake from 

the tax system. According to a 2012 National Community Tax Coalition (NCTC) report, VITA helped more than 3 million taxpayers 

claim $2.2 billion in tax refunds while saving the federal government $5.5 million in reduced processing costs. 

Expanding VITA to Support Micro-Entrepreneurs 

VITA represents an excellent opportunity to engage and empower micro-entrepreneurs. Frustrated by the complexity of the 

business tax code, many of these entrepreneurs are left with few 

options for learning about and accurately completing their tax filings. The inaccessibility of low-cost or free tax preparation assistance and the complexity of the tax code compel many self-employed 

people to seek tax assistance from costly commercial preparers. 

Those small business owners who do not seek—or cannot afford— 

help from commercial tax prepareers may choose not to file taxes 

at all. 

While the existing VITA program assists some low-income entrepreneurs, IRS restrictions on allowable VITA activities prevent 

many self-employed earners from receiving any assistance. For example, VITA sites are restricted to preparing Schedule C-EZ only, 

and self-employed taxpayers must have expenses below $5,000. 

Recognizing that VITA’s narrow scope meant that sites were 

turning away micro-entrepreneurs who had with few other options, 

the National Community Tax Coalition (NCTC) led an effort with 

CFED and the IRS Stakeholder Partnerships, Education and Communication (IRS-SPEC) team to build on CFED’s SETI program. In 

2010, this partnership launched the Schedule C VITA Initiative. 

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Through this initiative, sixteen pilot sites across the country are 

now able to serve a wider range of low-income entrepreneurs, including businesses with up to $25,000 in expenses, as long as they 

meet certain other qualifications such as no net operating losses, 

no inventory, and limits on business use of the home, among others. 

In its three years of operation, the Schedule C VITA Initiative 

has not only brought thousands of low-income entrepreneurs into 

the VITA program, it has done so without reducing tax-filing quality. According to SPEC’s own reviews of the sixteen VITA sites, 

nearly 95 percent of Schedule C returns reviewed by SPEC staff at 

participating sites were found to be accurate. As the initiative continues next year, it will continue exploring methods for expanding 

VITA assistance for micro-entrepreneurs. 

Next Steps to Expand Support for Micro-Entrepreneurs 

What does this mean for federal efforts to support micro-entrepreneurs? 

CFED is currently exploring additional federal policy reforms 

that would effectively support micro-entrepreneurs. Our research is 

examining how three key federal policy systems—workforce, postsecondary education, and tax—support or fail to support these lowand moderate-income entrepreneurs. Later this year we will release our report detailing recommendations for reforms that would 

significantly expand the ways in which federal policy supports the 

growth and success of these entrepreneurs. 

While this research will reveal new reforms worth considering, 

this Subcommittee need not wait to act in support of micro-entrepreneurs. In the previous Congress, Ranking Member Chu proposed one significant step forward: the Entrepreneur Startup 

Growth Act. This legislation, based on CFED’s SETI program, 

would have provided additional support for micro-entrepreneur tax 

filing assistance. The $1.5 million authorized by this legislation 

could support hundreds of local VITA sites to serve thousands of 

micro-entrepreneurs. 

Conclusion 

Chairman Rice and Ranking Member Chu, I would like to thank 

you again for inviting me to testify on behalf of CFED. We at 

CFED are eager to work with the Subcommittee to expand economic opportunity, create jobs, and support micro-entrepreneurs. I 

would be pleased to answer any questions you and the other members of the Subcommittee may have. 

Æ 

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