news

With the economy showing continued growth, it is important to ensure that small businesses have the tools and resources they need to prosper.  And in order for small firms to play their traditional, job-creating role, a number of factors must be in place.  Perhaps the most important ingredient is the availability of capital.  

Lending through the Small Business Administration is always critical for entrepreneurs seeking affordable capital to start new ventures and expand existing businesses.  SBA’s loan programs fill a critical gap in the market for small businesses that cannot access traditional lending sources.  In particular, SBA’s 7(a) Loan program, as a public/private partnership, helps private lenders provide capital to small businesses that would not normally qualify for credit on reasonable terms.

In recent years, 7(a) loans have experienced unprecedented growth, making this hearing particularly timely.  While over 64,000 loans totaling over $24 billion were supported in fiscal year 2016, only 26 percent of 7(a) loans went to minorities, and only 18 percent to women-owned firms.  This is simply unacceptable. In addition to these underwhelming numbers, the SBG OIG has identified lender oversight as a serious management challenge for SBA. The OIG first raised their concerns in FY 2001 and the issue continues to this day.  

As the 7(a) loan program grows, it is vital for the SBA to have the resources in place to conduct lender oversight and guarantee that all entrepreneurs – no matter gender or race --  have equal opportunities to utilize the program. Our committee is dedicated to ensuring that the agency focus on both of these challenges and today’s hearing serves as the first of many to oversee this program. I look forward to hearing from our witnesses and gaining their insights on making the SBA’s flagship program work even better for all small businesses.  

It is vital that loans in the 7(a) programs are targeted to businesses who need them most – particularly those that have been unable to secure capital through private channels.  Putting capital in the hands of the businesses that need it most will help further economic development of America’s small businesses.

On that note, I would like to thank our witnesses for taking time to be here.  Their views and experiences will be valuable to the Subcommittee as we consider how best to meet entrepreneurs’ capital needs. 

Thank you and I yield back.