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STATEMENT

of the

Honorable Nydia Velazquez, Ranking Member

House Committee on Small Business

"The Health Care Law: Implementation and Small Business"

April 24, 2013

Today’s consideration of SBA’s budget request comes at a time of mixed economic news.  GDP grew 3.2 percent over the past year while the Dow has recently reached the 14,000 mark for the first times since 2007.  However, what looked like a robust recovery has stumbled in recent months.  Further exacerbating these woes is the sequester cuts that became effective in March, sending a ripple through the economy.  The current squeeze is yet another hurdle for small businesses who have faced a prolonged period of reduced sales, challenges obtaining capital, and seen federal contracting opportunities dry up.

Today, we find ourselves in a familiar position, trying to make sure that small firms have the tools they need to create jobs – but also doing so in a manner that is responsible to the taxpayer. In light of current fiscal constraints, a number of tough decisions need to be made about which programs will survive and which will be left on the cutting room floor.

This is not the first time SBA has been faced with drastic budget cuts.  The second Bush Administration cut the agency’s budget by nearly 40 percent, making ill-advised decisions along the way that reduced access to capital and ultimately set back growth in the nation’s small business community.  With history as our guide, SBA must take a thorough look at each program to find savings while maintaining the level of service small businesses have come to expect over the past 4 years.

The bulk – $100 million – of the savings found in SBA’s budget is due to the 7(a) lending program returning to zero-subsidy. SBA projects it will be able to not only collect enough in fees to operate the program at no cost to the taxpayer, but also eliminate the fees on small-dollar loans to boost access to capital for micro-businesses.  This is a laudable achievement, and I am eager to see whether the health of the small business economy will be as robust as predicted by SBA in 2014.

Notwithstanding these savings, SBA is again faced with making tough budgetary decisions to non-credit programs. Unfortunately, its request does not make sound judgments, prioritizing a number of unauthorized initiatives at the expense of proven entrepreneurial development, technical assistance, and contracting programs. 

This includes SBA’s request for $40 million to fund new, untested entrepreneurial education programs while drastically cutting SBDCs, WBCs, PRIME, and 7(j) technical assistance.  SBA has not provided any evidence this new initiative will be cost-effective or reach more underserved communities than the proven programs that will be cut. It should be noted this initiative constitutes 20 percent of SBA’s budget for non-credit programs.

Instead of using limited resources for projects whose effectiveness is in question, SBA should focus on its core authorized programs and address issues raised by its Inspector General to reduce waste, fraud, and abuse in the access to capital and contracting programs.

Even when faced with severe budget cuts, SBA remains the government’s best resource for small business, be it capital access, training, or contracting opportunities.  The agency and its staff has always stood ready to assist, and as a result, helped create or retain millions of jobs in the past 4 years.

It is essential that we try to balance the objectives of being fiscally responsible, while ensuring that small businesses have the resources they need.  In these times of austerity, it will be a challenge, but one I am confident we can overcome.

Thank you and I yield back.

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