[House Hearing, 117 Congress] [From the U.S. Government Publishing Office] THE SMALL BUSINESS ADMINISTRATION'S ENTREPRENEURIAL ECOSYSTEM: AN UPDATE AND NEXT STEPS WITH SBA'S RESOURCE PARTNERS ======================================================================= HEARING BEFORE THE SUBCOMMITTEE ON INNOVATION, ENTREPRENEURSHIP, AND WORKFORCE DEVELOPMENT OF THE COMMITTEE ON SMALL BUSINESS UNITED STATES HOUSE OF REPRESENTATIVES ONE HUNDRED SEVENTEENTH CONGRESS FIRST SESSION __________ HEARING HELD MAY 19, 2021 __________ [GRAPHIC NOT AVAILABLE IN TIFF FORMAT] Small Business Committee Document Number 117-014 Available via the GPO Website: www.govinfo.gov __________ U.S. GOVERNMENT PUBLISHING OFFICE 44-566 WASHINGTON : 2021 ----------------------------------------------------------------------------------- HOUSE COMMITTEE ON SMALL BUSINESS NYDIA VELAZQUEZ, New York, Chairwoman JARED GOLDEN, Maine JASON CROW, Colorado SHARICE DAVIDS, Kansas KWEISI MFUME, Maryland DEAN PHILLIPS, Minnesota MARIE NEWMAN, Illinois CAROLYN BOURDEAUX, Georgia TROY CARTER, Louisiana JUDY CHU, California DWIGHT EVANS, Pennsylvania ANTONIO DELGADO, New York CHRISSY HOULAHAN, Pennsylvania ANDY KIM, New Jersey ANGIE CRAIG, Minnesota BLAINE LUETKEMEYER, Missouri, Ranking Member ROGER WILLIAMS, Texas JIM HAGEDORN, Minnesota PETE STAUBER, Minnesota DAN MEUSER, Pennsylvania CLAUDIA TENNEY, New York ANDREW GARBARINO, New York YOUNG KIM, California BETH VAN DUYNE, Texas BYRON DONALDS, Florida MARIA SALAZAR, Florida SCOTT FITZGERALD, Wisconsin Melissa Jung, Majority Staff Director Ellen Harrington, Majority Deputy Staff Director David Planning, Staff Director C O N T E N T S OPENING STATEMENTS Page Hon. Jason Crow.................................................. 1 Hon. Young Kim................................................... 2 WITNESSES Mr. Charles ``Tee'' Rowe, President & Chief Executive Officer, America's Small Business Development Centers, Burke, VA........ 5 Ms. Bridget Weston, Chief Executive Officer, Service Corps of Retired Executives (SCORE), Herndon, VA........................ 6 Ms. Corinne Hodges, Chief Executive Officer, Association of Women's Business Centers, Washington, DC....................... 8 Mr. Patrick Montgomery, Founder & Chief Executive Officer, Kansas City Cattle Company, Kansas City, MO........................... 10 APPENDIX Prepared Statements: Mr. Charles ``Tee'' Rowe, President & Chief Executive Officer, America's Small Business Development Centers, Burke, VA.................................................. 26 Ms. Bridget Weston, Chief Executive Officer, Service Corps of Retired Executives (SCORE), Herndon, VA.................... 37 Ms. Corinne Hodges, Chief Executive Officer, Association of Women's Business Centers, Washington, DC................... 47 Mr. Patrick Montgomery, Founder & Chief Executive Officer, Kansas City Cattle Company, Kansas City, MO................ 56 Questions and Answers for the Record: Questions from Hon. Jason Crow to Mr. Charles ``Tee'' Rowe and Answers from Mr. Charles ``Tee'' Rowe.................. 65 Questions from Hon. Jason Crow to Ms. Bridget Weston and Answers from Ms. Bridget Weston............................ 67 Questions from Hon. Jason Crow to Ms. Corinne Hodges and Answers from Ms. Corinne Hodges............................ 69 Questions from Hon. Jason Crow to Mr. Patrick Montgomery and Answers from Mr. Patrick Montgomery........................ 70 Additional Material for the Record: Secure Towns................................................. 58 Veteran Business Outreach Center Testimony................... 60 THE SMALL BUSINESS ADMINISTRATION'S ENTREPRENEURIAL ECOSYSTEM: AN UPDATE AND NEXT STEPS WITH SBA'S RESOURCE PARTNERS ---------- WEDNESDAY, MAY 19, 2021 House of Representatives, Committee on Small Business, Subcommittee on Innovation, Entrepreneurship, and Workforce Development, Washington, DC. The Subcommittee met, pursuant to call, at 10:15 a.m., in Room 2360, Rayburn House Office Building and via Zoom, Hon. Jason Crow [chairman of the Subcommittee] presiding. Present: Representatives Crow, Davids, Phillips, Newman, Bourdeaux, Houlahan, Williams, Tenney, Garbarino, Ms. Young Kim, and Salazar. Chairman CROW. Good morning. I call this hearing to order. Without objection, the Chair is authorized to declare a recess at any time. Let me begin by saying that standing House and Committee rules and practice will continue to apply during hybrid proceedings. All members are reminded that they are expected to adhere to these standing rules, including decorum. House regulations require members to be visible through a video connection throughout the proceeding, so please keep your cameras on. Also, please remember to remain muted until you are recognized to minimize the background noise. If you have to participate in another proceeding, please exit this one and log back in later. In the event a member encounters technical issues that prevent them from being recognized for their questioning, I will move to the next available member of the same party and I will recognize that member at the next appropriate time slot provided they have returned to the proceeding. For those members physically present in the Committee room today, we will continue to wear masks unless we are speaking here and socially distant while the Chairwoman and Ranking Member work with the office of the attending physician on updated guidelines and procedures. Members and staff are expected to wear masks while in the hearing. With that said, members will be allowed to briefly remove their masks when recognized by the Chair for statement and questions. I know we all look forward to returning to normal, but appreciate everyone's patience while we prioritize the health and safety of our staff and each other. America's 30 million small businesses support more than 56 million jobs and account for nearly half of our nation's GDP. It is no exaggeration to say that these small firms are the foundation of our economy. But despite the fundamental importance of these enterprises, the road to small business ownership is fraught and paved with obstacles for prospective entrepreneurs. Recognizing the uphill climb facing many of those wishing to start and run a business, the SBA offers a wide range of free or low-cost counseling and training services to entrepreneurs. To deliver these services, SBA relies on its four primary resource partners: Small Business Development Centers, or SBDCs; Women Business Centers, WBCs; SCORE; and Veteran Business Outreach Centers, VBOCs. From first-time entrepreneurs looking to create a business plan, the long-time business owners looking for new ways to achieve growth, these resource partners support small firms through every step of the business cycle. These entrepreneur development initiatives have proven to be the difference between success and failure for many, many businesses. According to SBA's 2013 Impact Study, small businesses that receive 3 or more hours of counseling have higher survival rates than firms that receive less counseling. In turn, these businesses go on to earn more revenue and employ more workers. Resource partners have also served as a critical lifeline for small businesses throughout the pandemic. When COVID struck, resource partners sprang into action, got innovative, and helped millions of entrepreneurs navigate a once in a lifetime crisis. I saw that myself in my own community as businesses adapted and did what they need to do to survive. I have heard so many stories from my constituents in my district who relied on SBA's resource partners when they had nowhere else to turn. I hope today's hearing allows us to learn more about these programs, hear about challenges they are currently facing, and examine how this Committee can improve and expand their reach. I am especially interested in learning what more we can do to raise awareness of these programs and ensure that the maximum number of small businesses are taking advantage of them. Today we will explore the resource partners' current diversity initiatives and efforts Congress can take to drive an equitable recovery. During the 116th Congress, the House passed three separate bills to improve the SBA's entrepreneurial development programs. If enacted into law, these bills would substantially improve the SBDC, WBC, and SCORE programs and make them accessible to more small businesses. Unfortunately, the Senate did not consider any of these bills. I look forward to updating and advancing similar bills and finding new ways to strengthen SBA's entrepreneurial development programs. With that, I now yield to the Ranking Member for her opening statement. Ms. YOUNG KIM. Thank you, Chairman Crow. Following a year of unprecedented state and local government shutdowns and regulations, and hampered demand due to COVID-19, small businesses are collectively starting to recover. The SBA's entrepreneur development programs have long served as a resource to small businesses across the country. During the COVID-19 outbreak small businesses in record numbers turned to the resource partners to navigate the SBA's emergency relief programs, including the Paycheck Protection Program, the Economy Injury Disaster Loan Program, the Shuttered Venue Operator's Grant, and also the Restaurant Revitalization Fund and many others. Through cooperative agreements, the SBA's ED programs provide our nation's entrepreneurs with free or low-cost training and counseling on marketing, finance, technology, exports, human resources, and more. We have all heard from constituents about how Veterans Business Outreach Centers and Small Business Development Centers, Women's Business Centers, and the Service Core of Retired Executives program can serve as valuable tools to small businesses in their quest to grow their business, expand their consumer base, gain access to capital, navigate government programs and regulations, and meet their labor demands. With states opening and vaccines being distributed, our nation's job creators are eagerly anticipating a return to normal business operations and the SBA's entrepreneur development partners can help. However, as small businesses continue to reopen their doors and start their path to recovery, they are met with the obstacle of proposed tax increases, regulations, and a tight labor market. The Department of Labor reported job openings reached a record high of 8.1 million in March. According to NFIB's April jobs report, small business owners are experiencing the highest-ever reading of unfilled job openings since polling started in 1973. I look forward to learning more today about how the SBA's entrepreneur development programs can serve our small business owners in combatting these challenges so they can continue to create jobs, skill employees, innovate, and serve their communities. As members of the Committee, we must also ensure the SBA is managing these programs properly and administering the necessary oversight. In light of recent SBA Office of Inspector General reports, entrepreneur development programs must be examined closely to ensure duplication does not occur and waste, fraud, and abuse is prevented. Today, we will hear from the associations that represented these programs and also hear from Mr. Patrick Montgomery, who is a small business owner and veteran who has utilized these programs, on the effectiveness of technical assistance programs in supporting small businesses and entrepreneurs in recovering from the pandemic and beyond. So, I want to thank all of our witnesses who are here today in person and on the virtual call for providing your testimonies. And I yield back. Chairman CROW. Thank you, Ms. Kim. The gentlewoman yields back. I want to take a moment to explain how this hearing will proceed. Each witness is going to have 5 minutes to provide a statement and each Committee member will have 5 minutes for questions. Please ensure that your microphone is on when you begin speaking and that you return it to mute when you are finished. And with that, I would like to introduce our witnesses. Our first witness today is Mr. ``Tee'' Rowe, president and CEO of America's SBDC. Mr. Rowe has been with America's SBDC since August 2009. He has a long history for advocating for America's small businesses, including serving as counsel for this Committee from 1991 to 2001, so you have done your time on the Hill. Mr. Rowe has been a valuable advocate for the SBDC program and we are pleased he is joining us again today. Welcome back, Mr. Rowe. Our second witness is Ms. Bridget Weston, CEO of SCORE. As CEO, Ms. Weston provides extensive leadership in works directly and collaboratively with the board of directors to establish a vision and direction of SCORE. In her 10 years with the organization she has developed an in-depth understanding of the needs and challenges facing SCORE staff, its 300-plus chapters, and over 10,000 volunteers. Welcome back, Ms. Weston. And our third witness is Ms. Corinne Hodges, CEO of the Association of Women Business Centers, AWBC. Ms. Hodges joined the AWBC as CEO in 2019 and is charged with bringing about enhanced sustainability and increased capacity to the Association and its members. Welcome back, Ms. Hodges. I will now yield to the Ranking Member, Ms. Kim, to introduce our final witness. Ms. YOUNG KIM. Thank you, Mr. Chairman. Our next witness is Mr. Patrick Montgomery. As mentioned earlier, he is a veteran, entrepreneur, and the chief executive officer and founder of KC Cattle Company. After completing the Ranger Assessment and Selection program in April 2011, Mr. Montgomery reported to the 1st Ranger Battalion, 75th Ranger Regiment. While serving as a ranger, Mr. Montgomery completed two combat deployments to Afghanistan. He served as an assistant gunner, anti-tank team leader, shooter for a sniper team, gun team leader, and weapons squad leader. Following his service in the military, Mr. Montgomery completed his bachelor of science in animal science at the University of Missouri. And during his last semester in 2016, he created the business plan for KC Cattle Company. While building his business, Mr. Montgomery completed his executive MBA program through the University of Missouri College of Business. Mr. Montgomery founded KC Cattle Company with the mindset of bridging the gap between agriculture and the consumer. His company provides the highest quality Wagyu beef via mail order to consumers in all 50 states and is 100 percent veteran-owned and a 100 percent veteran-operated company. Mr. Montgomery, thank you for joining us today and thank you for your service to our great nation. Chairman CROW. Thank you, Ms. Kim. And welcome, Mr. Montgomery. It is good to have a fellow Ranger joining us today. Rangers lead the way, although you did serve in our nation's second best Ranger battalion. That is an inside joke amongst us rangers. But thank you, Mr. Montgomery. I appreciate you joining us here. So, let us begin with Mr. Rowe. Mr. Rowe, you are now recognized for 5 minutes. STATEMENTS OF CHARLES ``TEE'' ROWE, PRESIDENT & CHIEF EXECUTIVE OFFICER, AMERICA'S SMALL BUSINESS DEVELOPMENT CENTERS; BRIDGET WESTON, CHIEF EXECUTIVE OFFICER, SERVICE CORPS OF RETIRED EXECUTIVES (SCORE); CORINNE HODGES, CHIEF EXECUTIVE OFFICER, ASSOCIATION OF WOMEN'S BUSINESS CENTERS; PATRICK MONTGOMERY, FOUNDER & CHIEF EXECUTIVE OFFICER, KANSAS CITY CATTLE COMPANY STATEMENT OF CHARLES ``TEE'' ROWE Mr. ROWE. Thank you, Chairman Crow, Ranking Member Kim, members of the Committee. Thank you for inviting me to testify. I am a little thrown off because I am thinking about mail order Wagyu right now. I am president of America's SBDC, the Association of Small Business Development Centers. For 40 years, SBDCs have been providing services to small business owners throughout the nation. We operate out of host institutions and operate statewide. We may be headquartered at colleges, but our centers are in our communities. That is why you will fine SBDCs at the International Rescue Committee in El Cajon or the East Los Angeles Initiative or the Boulder Public Library. SBDCs help small businesses at all stages. Fifty percent of our clients are women, roughly 10 percent of our clients are veterans, and minority clients comprise over 38 percent of our client base. Every year we provide over 1-1/2 million hours of counseling and training to over 500,000 small business owners and their employees. And that assistance has generated great results. From 1990 to 2019, our clients accessed $76.5 billion in capital, increased their sales by $127 billion, and created 3.3 million jobs, and they generated over $11 billion in tax revenue. As I laid out in my written statement, we offer a wide variety of assistance, and you can find more of that by following the link to our annual report. However, I would like to focus on just a couple of things. First, cybersecurity. SBDCs have a new cybersecurity program based on DOD's cybersecurity maturity model. It covers all facets of the DOD guidance in order to provide security education for small business owners. We also have a new program, Secure Towns. Through it, SBDCs work with chambers, development organizations, and local businesses to raise awareness and reduce cybersecurity threats. Regarding the COVID pandemic response, over the last year we have probably done close to 3 years' worth of work. We have participated in over 3,500 webinars and assisted over 315,000 people in just the early months of the pandemic. As an example, the Pennsylvania SBDC launched nine new centers to provide services aimed at weathering the pandemic. We also assisted in provided helping get small businesses financing through PPP, EIDL, SVOG, and now the Restaurant Revitalization Fund. And as the demand surged, SBDC shifted on line, which will continue to be a significant alternative. It improves our productivity and allows broader use of specialized skills. And our client survey showed that the most requested programming, ``Finding New Customers,'' is also the frequently most mentioned challenge. And they also want strategic planning and digital marketing and social media and search engine optimization. In other words, going forward we see small businesses as increasingly reliant on technology. These changes may present a real challenge to some communities with limited broadband access. To overcome that, SBDCs are increasing our outreach. In Chicago's Southlands, the SBDC works with the Resurrection Project and the Urban League to ensure that services reach all communities. Likewise, the Houston SBDC is teaming with the Great Houston Black Chamber. They are creating a new business institute to improve access to capital and business growth. And to further these efforts, the SBDCs have become the inclusivity challenge based on the Northern California SBDC's Inclusivity Project. The challenge is simple: Do more. Based on local needs, SBDCs will establish more connections and provide more services. It is all about helping entrepreneurs, all entrepreneurs, overcome impediments to their success. That effort is complementary to the new Community Navigators program. In fact, several SBDCs are already engaged in pilot programs for community navigators. We would like to find the best ways to deliver services to all small businesses and leverage all the capacity available. To that end we strongly support reauthorization of the Entrepreneurial Development Programs. We think it is time to review and renew the commitment to assisting small business. Now I have got one last item and that is about the CARES Act and the resource partner training platform. We would really like to know what we should think of for its future. That concludes my testimony. I look forward to any questions. Chairman CROW. Thank you, Mr. Rowe. Ms. Weston, you ware now recognized for 5 minutes. STATEMENT OF BRIDGET WESTON Ms. WESTON. Thank you, Chairman Crow, Ranking Member Kim, and members of the Committee. Thank you for the opportunity to offer testimony today. SCORE is the nation's largest network of volunteer business mentors with more than 10,000 volunteers across 240 chapters, offering free and confidential advices, and educational workshops to small business owners. Founded in 1964 as a resource partner of the SBC, SCORE has helped more than 11 million entrepreneurs start, grow, or troubleshoot their business. Last year, SCORE helped its clients to start over 45,000 new businesses and create nearly 75,000 new jobs. And despite the challenging business climate of the pandemic, SCORE helped 82 percent of our clients stay in business throughout the year. We believe SCORE is the most effective, efficient business formation and job creation engine funded by the federal government. In 2020, our cost to create a new job was $156 and $259 to create a new business. For every $1 appropriated to SCORE, our clients returned $67 in new federal tax revenue, further demonstrating SCORE is a good steward of the federal dollar. SCORE volunteers are the lifeblood of our organization and are passionate about helping small businesses succeed. Volunteers come from all across the country with diverse backgrounds and experience in different industries. Our core services are mentoring, educational workshops, and online resources. Last year, SCORE volunteers held over 315,000 mentoring sessions, guiding and supporting our clients through the tremendous challenges brought on by the pandemic. Many business owners told us they would not have applied for a PPP, EIDL, or Restaurant Revitalization loan without a SCORE mentor to walk them through the process. Our high rates of client satisfaction are captured in our Net Promoter Score of 87, which 70 being considered excellent. In addition to mentoring, SCORE provides virtual webinars on our website. And SCORE chapters offer local workshops that are in-person or virtual. These workshops drew over 464,000 attendees last year. One of SCORE's key areas of focus is fostering diversity, equity, and inclusion for clients and volunteers. Women and minority volunteers climbed to 38 percent of total volunteers last year. This 5 percent increase represents the single biggest annual growth since we began tracking these metrics in 2012. SCORE currently serves a diverse range of small business owners. Sixty percent of our clients are women and 46 percent are minorities. Earlier this year, SCORE launched the SCORE for Black Entrepreneurs as part of our SCORE for All Initiative to help serve disadvantaged businesses. We plan to add more SCORE for All campaigns to help these businesses survive and thrive, supporting women, rural entrepreneurs, veterans, the 50 and older community, and persons with disabilities. SCORE is working harder than ever to reach underserved entrepreneurs, leveraging our community relationship nationally and locally. National partnerships include the BIPOC Support Foundation, Women Entrepreneurs Grow Global, the National Black Chambers, and the Latino Coalition, who introduce us to new communities of small business owners. We also collaborate with our fellow resource partners here today nationally and locally. Across the nation SCORE chapters are integrated in their communities, reaching, guiding, and providing access to necessary resources. When the pandemic hit SCORE pivoted to delivering virtual mentoring and education without missing a day of service. We accommodated a 30 percent increase in services last year. And while the House of Representatives supported additional funding for SCORE's COVID-19 response, ultimately SCORE did not receive any relief funding. Nevertheless, we were able to stand up our Small Business Resilience Program, connecting SCORE mentors and educational resources to entrepreneurs to help them successfully navigate federal and local government programs, adapt to change, launch new businesses and inspire their customers to rally around their business. SCORE's Small Business Resilience hub has served 730,000 people since its launch in March 2020. Now we are at capacity and will not be able to grow without additional resources. Based on SCORE's continued demonstrated impact, increased demand for services, and our plans to reach more business owners in underserved and disadvantaged communities, SCORE is respectfully requesting an increase of 9-1/2 million in funding for a total appropriation next year of 21.7 million. I want to thank the Chairman and Ranking Member for leading the joint letter in support of robust funding for SCORE and thank all of the Members who signed. The additional funding would be spent to increase mentoring and education by reducing administrative burden on volunteers, provide more direct funding to local chapters for community outreach, and focus to help more underserved businesses. With this relatively small investment we can provide even greater value to business owners and the economy. This increased funding would allow us to deliver more than half a million additional client services with a projected outcome of 100,000 additional new businesses started or jobs created. SCORE's mentoring and education are critical to helping small businesses overcome their challenges and succeed. SCORE stands ready to help our nation's most vulnerable small business owners so they can keep their doors open and keep people employed. Thank you very much for your time. I look forward to your questions. Chairman CROW. Thank you, Ms. Weston. Ms. Hodges, you are recognized for 5 minutes. STATEMENT OF CORINNE HODGES Ms. HODGES. Thank you, Chair Crow, Ranking Member Kim, and distinguished members of the Subcommittee. The Association of Women's Business Centers works to secure empowerment and economic opportunities for women by supporting and sustaining the national network of 135 Women's Business Centers that provide counseling, training, mentoring, business development, and access to capital. And while all WBCs operate brick-and- mortar locations, many have opened additional satellite locations, remote support, or even mobile units to serve the hardest to reach entrepreneurs. Women's Business Centers are essential to this period of economic recovery. And women entrepreneurs play a key role in our nation's economy, but, unfortunately, the pandemic has challenged them disproportionately. Women are exiting the workforce to care for families, particularly among low-income populations as well as communities of color. Women seeking flexibility and necessary household income turn to entrepreneurship. For existing businesses the pandemic presented challenging circumstances since women are more likely to have service-based businesses, such as childcare centers, salons, food services, et cetera, where rates of closure reached as high as 40 percent. As a result, an unprecedented number of women have found entrepreneurship at their local Women's Business Center. In 2020, Women's Business centers had nearly 200,000 client engagements and assisted clients in accessing $362 million in business capital, more than double the previous year. They also helped clients retain and create new jobs, nearly 70,000 nationwide. Not only are WBCs seeing more small business clients, those clients are returning for services at a higher rate, averaging 4 hours per client. But we could not have accomplished all of this without the leadership of this Committee, so allow me the opportunity to say thank you to this group of members and their diligent staff. The additional Women's Business Center funding and waiver of the matching requirement allowed Women's Business Centers the resources and flexibility they needed to respond to these surges in demand by hiring additional staff, providing essential counseling, and mentoring to convey rapidly changing federal program and loan guidance. This year provides us a reminder of the importance of serving underserved communities. In 2020, 70 percent of the individuals Women's Business Centers served were women and 56 percent were people of color. And as detailed in my written testimony, Women's Business Centers and AWBC have led the way in reaching BIPOC women business owners and we hope to share these best practices. Women's Business Centers have a proven track record of producing exceptional results with limited resources. While Women's Business Centers exceed their goals when it comes to client service and performance, there are challenges faced within the technicalities of operating the program. And so for this reason, AWBC continues to advocate for reauthorization and modernization. Regulatory and grant compliance inconsistencies and inefficiencies can create challenges for even the highest performing Women's Business Centers. The recent OIG report identified specific findings that we see would be remedied by a modern redesign of the Women's Business Center program. We urge Congress to establish a structured accreditation program that ensures accountability to national standards for client service, including management and operational aspects. In addition, an increased individual grant level would effectively allow centers to raise awareness for their services and to reach deeper into marginalized and rural communities. AWBC endorsed and fully supports the Women's Business Centers Improvements Act from the 116th Congress. Had that legislation been enacted we believe Women's Business Centers would have been better positioned to respond to the pandemic. We urge this bipartisan legislation be enacted swiftly. Similarly, newer and smaller centers would stand to benefit from additional oversight and guidance to achieve maximum results. AWBC is exploring ways to support centers with greatest needs, including the smallest and newest centers. We seek savings for taxpayers using economies of scale for common purchases, like technology tools. We hope to work with this Committee to explore ways to achieve those economies of scale and modernize the program. We are proud of our partnership with SBA to ensure America's resource partners have the important information to support entrepreneurs. We urge Congress to ensure the investment and the resource partners training portal continues beyond COVID. We ask this Committee and the 117th Congress to take the following actions: fully fund the program at $30 million for core funding; provide additional $48 million for COVID-related appropriation; reauthorize the program similar to legislation, like H.R. 4405; and ensure WBCs are partners of choice for engaging women business owners in any future jobs and infrastructure package. Thank you so much. I look forward to your questions. Chairman CROW. Thank you, Ms. Hodges. And Mr. Montgomery, you are now recognized for 5 minutes. STATEMENT OF PATRICK MONTGOMERY Mr. MONTGOMERY. Thank you, Chairman and members of the Subcommittee. I am honored to have the opportunity to represent the health and voice for small businesses across the nation. I consider myself blessed to live in a country where I have the opportunity to address the leaders of my nation coming from my humble beginnings. ``That these dead shall not have died in vain. Government of the people, by the people, for the people, shall not perish from this earth.'' Remembering the rangers who gave all so I can sit here before you, I aim to give an honest representation of my business and experiences for them. According to the Kauffman Foundation, the number of adults owning businesses have been declining since the 1990s. In a separate study by the Brookings Institute, the number of startups has fallen by half since 1978. These studies are troubling for America remaining the leader of the free world. Entrepreneurship is directly linked to job growth, wage growth, GDP, and innovation. Capital and advice are the quintessential needs of a new idea embarking on the journey to become a successful business. My journey to entrepreneurship started during my last semester of my undergrad at the University of Missouri at Columbia. I had put the business plan for KC Cattle Company together and was looking for a seed investment to get started once I graduated. I cleared out my wife and I's savings and contributed to the profit we made from selling our home in Columbia. I researched grants, government subsidized loans, and other government resources. I took advantage of using the University of Missouri's Extension program for advice and grant applications. I spoke with the USDA and banks regarding USDA and SBA loans. I was asking for $250,000 to make it through the first 3 years of owning my business to establish a viable business model. I did not have collateral or historic sales, so selling this to a lender proved impossible. I ended up raising half this amount from friends and family. I boot-strapped those first 3 years and made the resources I had work. I used my GI Bill to complete my MBA. The stipend from the GI Bill was my salary for those first 2 years of owning my business. We found success in our e-commerce business in 2019 and continued thriving in 2020 despite huge restraints on our supply chain from large processors throughout the country shutting down. 2021 is proving to present its own set of challenges with rising costs across the board and constraints on the labor market. From 2017 through 2021, the government resources I used to help scale my business was the SBDC's ScaleUP! KC program, SBDC's marketing data resources, an SBA 7(a) line of credit, an SBA PPP loan, my post 9/11 GI Bill, and the Missouri Extension program. Specifically speaking about the SBDC, ScaleUP! KC was a great resource for thinking through how I am going to scale my business. Developing processes, thinking about our operating environment, and implementing the Entrepreneurial Operating System were some of my key takeaways. While completing this, I discovered I could use the SBDC for gaining specific insights into our target demographic by using information from our email list. I was I the process of paying a marketing firm $8,000 to do this for us. The SBDC did it for free, which allowed us to free up that cash to be able to hire new employees during the height of the pandemic. The resources I used from the government were essential to creating a successful business. As stated before, capital and advice are the lifeblood for startups. Without the resources stated above, I would have never been able to get to where we are as a company. However, these resources are not very easy to find as a small business and not easily accessible those first few years of trying to create a viable business model, specifically at the capital side. A few ideas I had while thinking through my talking points for this discussion. One, when filling out a new corporation with the state, what if the entity received information about available resources along with their formation documents from the state and IRS? Secondly, although the SBA has some great lending options, all of them are for established businesses. What if there was a program specifically for startups trying to breathe life into a new idea? This lending option could be paired with advisors from the SBDC to help work through the problems associated with a startup and help the individual network their new businesses. Startups are risky, but I would argue these loans could be a better investment for the government and the individual than student loans. We need individuals to have the means to pursue good ideas in this country. In conclusion, I believe the resources available from the SBA and affiliate partners are crucial for new businesses to succeed. However, I think these resources are not always easy to find or easy to access when starting a new company. Making resources, both capital and knowledge, available to aspiring entrepreneurs is critical to the United States remaining the gold standard for innovation and envy throughout the world. Thank you for this opportunity to speak with you. And I look forward to your questions. Chairman CROW. Thank you, Mr. Montgomery. And thank you to all the witnesses for everything you shared with us. I appreciate many of the comments and observations. I am going to begin by recognizing myself for 5 minutes. And Mr. Rowe, I want to start with you. You had mentioned cybersecurity as a really essential element here and the cybersecurity maturity model. I represent a state and district that has one of the largest defense aviation and aerospace industries in the country. In fact, I have over 250 primary small- and medium-sized businesses that serve within that industry, and cybersecurity is a huge issue. And, you know, our adversaries looked to target now our supply chain in those small- and medium-sized businesses that oftentimes do not have the resources to adequately bolster their cyber defenses. So, I am particularly interested in how we can assist with that process. Yet, at the same time, many of those businesses in the industry have told me, you know, expressed concern about the maturity model and reluctance to a one-size-fits-all approach because smaller companies, 10-, 15-employee companies, don't have the resources to necessarily comply with that. So, with that lead-in, could you just describe for me the tension there between adequately rolling out that model and those resources? And how do we adequately address the issue that smaller businesses may not have the resources, but, at the same time, they are primary targets as well and they need to be secured? Mr. ROWE. You are absolutely right, Mr. Crow, that those folks further down in the supply chain are a prime target. At the same time, they don't have, you know, a chief information security officer and all of those extra employees that they might need. So, what we focused on with the cybersecurity maturity model is getting more small businesses to what they call level one. They may not be certified yet, but we are getting them the very basics. But we are also working with sponsors to have the opportunity to give them more information, to get them, you know, a firewall or whatever they might need. And that goes along with what we are doing with Secure Towns. Now, we have just started this in Culpeper, Virginia, but we would like to expand it to other towns and cities where it has to become, you know, a global approach. I have got an example. You know, I had a court date cancel because the courthouse got hacked, ransomwared [sic]. It is not just businesses. It is our city governments, it is our courthouses, it is everywhere. And where we are trying to go is giving them the most information they can handle at the time to get them at that first level. And where they have to go from there, it has been a process working with DOD and all the other agencies. Chairman CROW. Okay, thank you, Mr. Rowe. Ms. Weston, I would like to talk about a bill that Mr. Balderson from Ohio, who was the Ranking Member on this Committee last Congress, we have a bill called the Next Generation Entrepreneurship Core Act, which I am sure you are aware of. And really what we aim to do is help catalyze entrepreneurship, particularly in underserved communities with wraparound services, a fellowship program, you know, 320-plus fellows a year to provide mentorship, offset costs, and really help lift up those entrepreneurs by reducing barriers that they face, particularly in the areas where they face more barriers than other entrepreneurs. So, I would just like to have your thoughts on the impact of a bill like that or an effort like that, that recognizes that not all communities face the same barriers to entrepreneurship, and yet there is great value in making some targeted investments within those communities to unleash innovation. Ms. WESTON. Thank you so much for the question. And SCORE is a strong supporter of the Next Generation Entrepreneurship bill. We know that disadvantaged and underserved communities have unique needs and unique challenges. And one of the things that we believe is by creating equity-based programming that brings training and mentorship focused on those needs will help elevate and reduce barriers. And when we see more success with those entrepreneurs who have the drive, have the desire, but have a lot of hurdles in their way, we know that the mentorship and the training will help them overcome. And this bill, the training will then be available for other entrepreneurs. They will see these successes. They will be able to take advantage of the training and the resource partners. And as we heard, awareness is a key problem. Once we can get access to these entrepreneurs to help them learn about the myriad of resources available they are more likely to succeed. So, we are very excited about the bill and hope that it passes. Chairman CROW. Thank you. And then I will add that it is not just bipartisan in the House, but we also have Senator Coons and Senator Scott in the Senate that are championing it in a bipartisan way on the other side of the Capitol as well. So, thank you. My time is done, so I would like to now recognize Ms. Kim, the Ranking Member, for 5 minutes. Ms. YOUNG KIM. Thank you, Chairman. So, thank you so much for all your testimonies. And so we heard that small businesses are unaware of these wonderful programs that are out there. So, what steps have you taken during the pandemic, especially during the pandemic, to help small businesses find your organization? And additionally, who will your organization change and adapt to assist small businesses as they continue to recover? This to all of you. Mr. ROWE. Well, with the CARES Act funding is actually the first time that an SBDC was allowed to use some of the funds for marketing. So, our folks had been reaching out usually through social media because it is actually the most cost- effective. But that has been a huge problem all along as we were literally prohibited from marketing our services by the SBA. I guess the pandemic changed some minds. And so that is where we have gone. We also partner with companies like Google and Microsoft and Thrive to use their resources to get the word out. We had a resiliency guide that we worked on with Google and, you know, expanded our reach through that. Ms. YOUNG KIM. Okay. Ms. WESTON. With SCORE, one of the things we focus on is what our clients and others small business centers are saying that they need help with. And so the content that we create and share with our local chapters is also online and, of course, SEO, search engine optimization, is a key way that people are finding our content, finding it valuable, and then pairing it with a mentor or a workshop. Our local and national partnerships are another key area. By reaching new markets, like not just the partners I spoke about, but other corporate partners, they can amplify the message that SCORE and our other resource partners are here. I do believe that the SBA is a valued partner in helping to get the word out and I think there are things we can do to improve that because we know and we heard from the Chairman's testimony that when people are paired with SCORE or SBDCs or Women's Business Centers, the businesses are more likely to be successful. Ms. HODGES. If I could also just add partnership with constituent offices has been a really valuable way to direct traffic. So, when small businesses are asking who can help us and you send them to any of us, they can locate a center. That has proven to be a huge, I think, source of where a lot of our growth came from, from the Women's Business Center side. There is truly still a problem, though, with the awareness among the communities. I saw a survey from a couple of years ago, still more than 80, 85 percent of women business owners in our case know about a Women's Business Center. And similar numbers in our poll related back to SBDCs and SCORE as well. So, we do have to still continue to push the word, but there are limitations with the funding that has to be applied toward programming versus some of that kind of paid-for advertising. Ms. YOUNG KIM. Sure. I mean, we do know that there are great programs, but many people are having difficulty finding those programs. So, let me direct this question to Mr. Montgomery. In your testimony you mentioned that SBA's resources are not always easy to find or easy to access when starting a new company. So, do you think entrepreneurs would benefit from more streamlined resources? Are four separate SBA resource partners duplicative? Mr. MONTGOMERY. I wouldn't say they are duplicate at all. I just think they are tough to find, you know. Regarding the SBDCs specifically, we actually had a representative reach out to me about that specific program. And once I was able to, you know, participate in the program, I found all these additional resources that I had no idea existed. So, you know, I think probably one of the main touching points is normally a bank that you are trying to go through for an SBA loan, so, you know, maybe there is some kind of synergy there for marketing for these other free programs. Ms. YOUNG KIM. Thank you. Let me direct my last question to Ms. Weston. You know, we talked about in my opening statement the SBA's Office of Inspector General releasing the audit. And that was an oversight of your SCORE association and found that the program officials did not properly oversee SCORE's use of federal funds. And then you also talked about that you did not get any additional funding. So, can you provide an update on the corrective actions that are being implemented by your organization? Ms. WESTON. Absolutely. I appreciate the question. The Office of Inspector General's report was released in April of 2019, and it was on fiscal year 2017 and the first quarter of 2018. Two months after that report, there was a leadership change at the organization and less than a month after that we put together a comprehensive plan to address all of the findings in the OIG report. Less than a year later, every finding was closed. SCORE has a culture of compliance. We have centralized our accounting, so that every chapter dollar that is spent we can recognize and share with the SBA whether it was restricted or unrestricted. We have brought on a compliance manager to ensure that we are following all the processes and procedures related to our terms and conditions in the CFR 200. Our procurement processes have been strengthened. And in cooperation with the SBA, we are following what they have suggested, our board of directors has separated the association and the foundation. Our compensation policy has been enhanced in terms of salary data, limiting performance pay. And our whistleblower policy has been updated and every volunteer sees it every year by taking a required code of ethics. Ms. YOUNG KIM. Thank you. They say that our time is over, so I yield back. Chairman CROW. Thank you. The gentlewoman yields back. Now I will recognize the gentlewoman from Kansas, Ms. Davids, also the Chairwoman of the Subcommittee on Economic Growth, Tax, and Capital Access, for 5 minutes. Ms. DAVIDS. Thank you, Chairman. You know, our SBA resource partners have served a really invaluable role during this pandemic and that includes providing guidance and assistance to small businesses on some of the SBA relief programs that we have talked about today. You know, the resource partners in the Kansas Third have helped a lot of businesses, countless businesses, navigate the federal programs that exist and help access the resources available to them. And, you know, I think while we heard about some of this already, but, you know, when we are talking about the Women's Business Center increasing its reach by like 22 percent, we know that these things are really, really important. So, I want to start, Mr. Rowe, how can we learn lessons from this pandemic and further empower our resource partners in the long term? And, you know, that could be challenges and also opportunities. Mr. ROWE. I think the--and I am as bad with this as I am on a Zoom call. I think the biggest thing we have learned is that we can get a lot more mileage out of being online. But we also have to be really careful not to isolate ourselves. And we do spend an inordinate amount of time collaborating, whether it is with SCORE, Women's Business Centers, or with the Procurement Technical Assistance Centers. And for us the big thing is how do we break down the silos to make sure that all of the information and all of our capability and capacity is getting out to the community? I know we did, you know, gobs of town halls with Members like yourself. We can always do more. I think it would be great if every Member's website had a small business assistance banner on it where they could link to our services. I think we have learned a lot that sometimes folks just can't see because we are not raising our hands. Ms. DAVIDS. Thank you. I appreciate that. And I kind of want to--another piece of this is the Women's Business Centers and I know that, Ms. Hodges, you mentioned this in your testimony that reauthorizing the Women's Business Center program is, of course, really important. I know I was proud to introduce the Women's Business Center Improvement Act. It passed the House in 2019. I intend to reintroduce that piece of legislation later this year. But, you know, can you elaborate a bit on how the Improvement Act might either have better helped you respond to the pandemic, which I think you mentioned, but also just kind of moving forward how that is going to help us get on the other side of this economic crisis? Ms. HODGES. Gladly. Thank you, Representative Davids. Clearly, had we addressed the modernization prior to the pandemic, we would not have been still strapped with the $150,000 grant cap that we had 30 years ago when the program was initially introduced. And so we were in a position with the CARES Act funding, gratefully, to be able to scale up, but we were so far behind. And now as we see the CARES Act funding coming to fruition, we are at a position--we will be in a position to now have to scale back. And so just when the economy is now recovering, we have a tremendous opportunity to take a really strong look at the program. Everything that was in the bill that you introduced and passed was great and was a move in the right direction in terms of increasing the grant cap, introducing accreditation and standards of quality. But the reality is none of those things have been able to be enacted, and so we are back at square one, basically 30 years ago, and still trying to run a modern program serving modern technological challenges, like the Chairman mentioned with cybersecurity, problems that were never envisioned when the program was initially thought of and piloted. And so we really just need to take a modern look at what services we know that women and particularly marginalized communities need to receive. Ms. DAVIDS. Thank you. I have one quick question for Mr. Montgomery. This weekend I am having a cookout. Should I get the ribeye or the strip steak? Mr. MONTGOMERY. I am a ribeye guy all day long. Ms. DAVIDS. Okay, very good. Thank you so much, Mr. Chairman. I yield back. Chairman CROW. Thank you. The gentlewoman yields back. And now I would like to recognize the gentleman from Texas, Mr. Williams, the Vice Ranking Member of the Committee. And I don't always root for the Atlanta Braves, but when I do it is because of you, Roger. Mr. WILLIAMS. Thank you. Chairman CROW. The gentleman is recognized for 5 minutes. Mr. WILLIAMS. Thank you, Mr. Chairman. In April 29th, we talked about the Inspector General releasing an audit of the SCORE association showing some abuses in taxpayer dollars. You have addressed that a little bit today. But it was over 700,000 in federal grants were used for excessive staff bonuses, unallowable contracts, it even covered the cost of alcohol. And these findings were extremely troubling to a lot of us and should make us as lawmakers consider SCORE's ability to continue to receive federal funding unless these changes are made. I guess the question I would have is, were these accusations true? Ms. WESTON. There were some instances where we did not follow proper procedures in terms of contract documentation, proper bidding, and we did not have a formal compensation policy that limited fair pay across all of the staff in the organization. We now have a compliance manager, we have a procurement policy, we have a compensation policy, and those have been addressed now for over a year. Mr. WILLIAMS. Okay. The people that caused the problem, are they still there? And how are they going to change their ways? Ms. WESTON. They are not. Mr. WILLIAMS. They are gone, right? Another question I have is you talked about--I am a small business owner. I own car dealerships back in Texas and 51 years, so main street is important to me and I appreciate what you are doing. But when we talk about tax increases, which is happening now, how is that going to affect your small businesses? Ms. WESTON. Well, I believe that SCORE and our other resource partners are here to help small businesses navigate no matter what challenges and hurdles are put in front of them. Mr. WILLIAMS. But it is going to hurt them, isn't it? Ms. WESTON. I cannot speak to---- Mr. WILLIAMS. If you pay more taxes, you pay more taxes. Ms. WESTON. What we know is that regardless of the hurdles thrown in front of small businesses, we will be able to help them navigate and figure out ways to overcome. Mr. WILLIAMS. To overcome paying more taxes. Ms. WESTON. To overcome the challenges for any small business owner. Mr. WILLIAMS. Okay. All right. Mr. Rowe, in your testimony you discussed Small Business Development Centers' inability to serve all counties. As someone who represents some very rural areas of Texas, I have seen unique challenges facing people who choose not to live in populated cities. Whenever you are dealing with federal programs I am concerned that a majority of funding and focus is being used in major metropolitan or urban areas. So, my question is, how is the SBDCs currently making sure that programs are beneficial to all Americans, no matter where they decide to open their business? Mr. ROWE. Well, just for instance, in Texas, A, if you look at my written testimony, for years the UTSA, South-West Texas Border Region SBDC has been hosting the Texas State Rural Business Conference. So, as a result, I continue to get emails from your colleague, Sid Miller. And that is a very real effort by us to share information with economic development organizations throughout the state of Texas. We have similar efforts, whether it is, you know, Wyoming, Montana, all of the states where we are dealing with significant rural areas. And frankly, in our network that is every place but the District of Columbia. Mr. WILLIAMS. Okay. All right. Having access to capital and a strong business plan are critical components of any entrepreneur looking to take a chance and start a new career. The SBA has resources available to try to help these individuals, but they are often unknown to people, and we talked about that today, who are just starting out or they are difficult to navigate. So, Mr. Montgomery, I am familiar with your industry, also. I run a few head back in Texas. And as someone who benefited from the SBDC assistance, what recommendations can you give the SBA partners to improve outreach to aspiring entrepreneurs? Because you are a great example. Mr. MONTGOMERY. Just like you were saying, Representative, during that initial time period, especially when you are making your business plan and you are searching for capital, you know, that capital is incredibly important to kind of get your start, you are having a lot of conversations with banks specifically. You know, for me it was the USDA, looking at some of those subsidized loans. So, I think there is a touch point there for banks to be able to educate folks about these additional resources that are available, especially SCORE. I didn't even know that existed and what a great opportunity to kind of have an advisor when you are initially trying to avoid making what I like to call tuition payments. In addition to that, social media and also what I was mentioning. I mean, you have to get those formation documents from the government, so maybe an additional pamphlet with some of those free resources I think would be crucial. Mr. WILLIAMS. Okay. Well, you got a great story. We appreciate all of you being here today. I yield my time back. Chairman CROW. Thank you. The gentleman yields back. I would now like to recognize the gentlewoman from Illinois, Ms. Newman, for 5 minutes. Ms. NEWMAN. Thank you, Chairman, and thank you, Ranking Member. And thank you to all of our great guests today. Wonderful comments and my sincere hope is that those pieces of legislation that were offered in the 116th pass in the 117th. And I also want to thank, special thanks to the Women's Business Centers for helping get my amendment passed to extend the waiver. So, bravo on all of you. I do have a couple of questions. The first one is directed to our friends at WBC and perhaps Ms. Hodges could answer. One of the huge issues as we head into a better economy and a healthy America is that women, as you cited, women have been inordinately dramatically lopsidedly affected by the pandemic and their ability to stay in their jobs, mostly due to childcare. Similarly, they are now wanting to start businesses in their homes because they have to be home with their kids. So, with that, what are your recommendations? And is there anything we can do as a Committee or a Congress to supplement your efforts to help all of these women entrepreneurs? Ms. HODGES. Thank you for all of your work and for the question, Representative Newman. I think there are a lot of things that we can do to enhance the capacity of the Women's Business Centers to serve more. Thanks to the pandemic, we have experienced what being at capacity is like. There are, in some cases, Women's Business Centers that a woman who is interested in startup, and I would echo everything you have stated, the startup requests are the greatest need at the present moment. Those are very high, intense, resource- intense types of counseling requirements and training requirements. And we are at capacity. If you had an idea to start a business and called a Women's Business Center, you may have to wait weeks to get an appointment because there is just not available staff or time at even as many hours as they are working in a day. And so I would tell you, I think the single greatest thing we can do is just to increase the capacity of those who are proven to help women succeed regardless of what their goals are, whether it is to work in the home or elsewhere. Ms. NEWMAN. Thank you so much. And I yield back. Chairman CROW. The gentlewoman yields back. I will now recognize the gentlewoman from New York, Ms. Tenney, for 5 minutes. Ms. TENNEY. Thank you, Ranking Member, and also the Chairman. I am so grateful for you to put this Committee together. I am a small business owner as well and I have just a few questions about some of our Small Business Development Centers. My son is also a captain in the Marine Corps and he also deals with issues with some of his command and people that are leaving the Marine Corps and getting their assistance. But you were talking about different--and I am addressing this Mr. Rowe. You mentioned in your testimony that there are specialized programs in several states to assist veterans with pre and post deployment. Veterans, you know, base their--you know, I am just curious in your work with veterans, I would be curious to hear your viewpoint, and I know my son has his own, but what do you think are some of the biggest obstacles in veterans accessing some of these SBA programs when they first come out? Because I know that has been an issue that has been raised by a number of people, a number of veterans in my community. Mr. ROWE. Well, one of the concerns, one of the problems is making sure that we are not siloing off our resources. We have got Veterans Business Ownership Centers working and lot of them go on base. SBDCs used to do this as well offering transition assistance. Ms. TENNEY. Okay. Mr. ROWE. And we sort of got slid out of that. But really it is just talking between organizations to make sure that the services are there. I know, for example, our network in South Carolina has a great relationship with the Marine Corps and has worked there regularly over the years providing transition assistance. Some of it is on us. If we offer someone assistance while they are mustering out and then, you know, they go from, say, South Carolina and they go home to wherever that is, we need to do a better job of making them aware that there can be a continuum of that assistance. They can go from the South Carolina SBDC to the Texas SBDC and continue getting that assistance, get all the information they need to keep moving on. Ms. TENNEY. If you could pick one, Mr. Rowe, if you could pick one policy that you would like to change by SBA to make it better and more accessible to veterans what would it be? Mr. ROWE. I think probably one of the greatest things would be allowing SBDCs to operate and compete for the Veterans Business Ownership Center program offices. We could vastly expand things. It has been a little bit siloed. Ms. TENNEY. Thank you very much. I appreciate that. I just have a quick question for Ms. Weston. I don't see my timer on there, but you stated SCORE respectfully requests an increase of 9.5 million in funding for fiscal year 2022 for a total amount of the appropriation being 21.7 million. Should the SBA recover the 713,000 and change of unallowable and unsupported costs as recommended by the SBA's Office of Inspector General prior to new funding? Ms. WESTON. Thank you for that question. We have already paid back the amount of funding that was required from the SBA. After more work with the SBA and the OIG report, we were able to provide more documentation on the allowability of contracts and we only had to pay back half of that 713,000. It is all paid back. Ms. TENNEY. That is fantastic. I wanted to hear that. Great to hear that and would like to address my next question to Ms. Hodges. I am a woman-owned business. My family business has been around since 1946. Eight out of 10 of our shareholders are women-owned, but, unfortunately, we can't get a woman-owned designation in New York. But I am concerned about, you know, how we continue to outreach to women. I know there is a lot of women mentors and leaders, but what do you recommend, you know, in terms of especially in the lending space? There are a lot of issues with women being able to access money and loans to get their business underway. I am working with a number of women now who have got fantastic business plans and we are struggling to get lenders to really push to get them the money they need. What type of outreach would you do to close this gap? And what do you recommend? If you could just pick one thing because I know my time is short. Ms. HODGES. If I just had to pick one thing it would be to be able to put money into the marketing. We just don't have the money to put into marketing and without dollars it is really difficult to people who don't know that you are trying to reach them. So, whether that is radio or billboards or other paid advertising, definitely there. But access to capital, you are right, is the number one barrier. Ms. TENNEY. Thank you. I appreciate that because it definitely is a marketing issue. We try to mentor as many women as we can and it is a--got great business plans, we just need the lenders to let that money flow to them so they can create and produce jobs. Thanks so much. I appreciate everyone. And I yield my time back. Chairman CROW. Thank you. The gentlewoman yields back. I will now recognize the gentleman from New York, Mr. Garbarino, for 5 minutes. Mr. GARBARINO. Thank you very much, Mr. Chairman. And thank you to all the witnesses that are here today. It has been great testimony so far. My first question is for Mr. Montgomery. Small business owners have expressed concerns regarding the proposed tax increases, regulations, inflation, labor shortages. What do you see as your biggest barrier to growing your business? Mr. MONTGOMERY. Right now it is inflation hands down. I mean, we have seen cost increases across the board on our cost of goods just within the first 3 months of this year. And we expect to see some more in the upcoming months, which is--it is scary, so we are starting to kind of plan around that for probably the next year here. Mr. GARBARINO. How do you plan around that? Do you have to raise your own prices or how are you planning to address that? Mr. MONTGOMERY. Yeah, I mean, we--yes, sir. So, we have done four price increases in the last year. Processing started going up last year with the constraints on that market. I think we are probably at the top of the consumer surplus of what, you know, customers are willing to pay for our product. So, now we have to kind of think smarter and probably less money in marketing and just to offset that cost to make sure that we are not losing money this year. Mr. GARBARINO. Okay. And as a small business, you know, it fluctuates, right? Some years you do well, some years you don't do well. So, if you have a profitable year, do you have to, you know, make those profits last several years in case there is a loss? You know, you are not guaranteed a profit every year, correct? Mr. MONTGOMERY. That is definitely correct, especially being a startup, you know. Mr. GARBARINO. Okay. No, I appreciate that and I appreciate you addressing the inflation issue. We have been hearing that a lot from a lot of different people. I have another question. This is for pretty much any of the witnesses, whoever wants to jump in. According to the NFIB April jobs report, small business owners are experiencing the highest ever readings of unfilled job openings since the polling started in 1973. What can BBOCs, SBDC, WBCs, and SCORE mentors do to help small businesses find employees? Ms. WESTON. Well, I will start. One of the things that I believe all of our resource partners do is really understand what the specific needs of the business are. We have seen since all of 2017 from a SCORE Megaphone of main street report that it was becoming more challenging to hire workers because of various trends, the gig economy being one of them, childcare needs being another. And what we are able to do is sit there and look at the resources and limitations for every small business owner and help them decide is a full-time employee best, a part-time employee, contractors. And make sure it makes sense for them while still working towards that goal of being profitable and maintaining profitability. Mr. GARBARINO. Anyone else? All right. I appreciate---- Mr. ROWE. I think---- Mr. GARBARINO. Oh, sorry, please. Mr. ROWE. Sorry, sir. I just had a quick thought on it. I think one of the big things we work on at SBDCs is--and, for example, some of our SBDCs colocate with the Workforce Development Boards, is trying to understand the changes in the labor market. You know, the pandemic has affected so much behavior that it has almost become a marketing tool sometimes for a small business to say, hey, we have got a safe, serious workplace and we need help. So that is just one of the things we are trying to accomplish. Mr. GARBARINO. I appreciate that. And actually back to Mr. Montgomery. What is the labor situation with your small business? Inflation we said is number one, but are you having any trouble filling spots? Mr. MONTGOMERY. We are. So, we just came out of our slow season and seasonality is our business, so we are just now starting to try to hire some part-time folks. Going into grilling season here. We did a $3 across the board increase on our hourly wage, going from 12 to a minimum of $15 an hour, going up to 18 based on experience, and we are still not getting applicants. So, it is a problem we are working right now and I don't think I have a good solution yet, so. Mr. GARBARINO. No, I appreciate that and I hope you are able to fill those slots so you can remain to be profitable. But that is it with all the questions I have. Thank you, Mr. Chairman, and I yield back. Chairman CROW. Thank you. The gentleman yields back. I will now recognize the gentlewoman from Georgia, Ms. Bourdeaux, for 5 minutes. Ms. BOURDEAUX. Thank you, Chairman Crow and Ranking Member Kim. The SBA's resource partners provide entrepreneurs with some wonderful resources and really advanced this Committee's shared interest in promoting entrepreneurship and small business growth. My office worked closely with our local Small Business Development Centers and have greatly appreciated their efforts during the pandemic. Just a follow-up question, though, on that for Mr. Rowe. One of the questions we received from our Small Business Development Center and we are interested in what your answer might be, is that given how the pandemic has really increased the SBDC's profile in our community, they are concerned about what is going to happen after the pandemic when all of a sudden they are very, very well-known for this great assistance that they have provided? And wanted to get your thoughts about what resources might be needed going forward. Mr. ROWE. Thank you, ma'am. Appreciate the question. What we are looking for, and I appreciate the many Members who cosigned the letter that Congressman Larson and Mr. Balderson and Congressman Young initiated, we are looking for an appropriation of $150 million. What that would do is essentially help us not fall off a resource cliff, if you will. We have our regular appropriation and then the very generous additional appropriation under the CARES Act. We have beefed up staff and resources and we want to be able to maintain those resources because, frankly, we don't see a diminishing amount of demand. Like the Women's Business Centers, very often we are having to, you know, schedule people several weeks out because there is just so many hours in a day. Ms. BOURDEAUX. Okay. In your testimony, well, another issue we have is we have a diverse community in the Seventh District. About 25 percent of the people in my district were born outside of this country. And so we are very, very interested in the Community Navigator program and really working on building our capacity to reach out to these diverse communities, many of whom are very entrepreneurial, they have got small businesses, but they may speak a different language. There may be all sorts of different barriers. In your testimony you mentioned that several SBDCs have already engaged in pilot programs for the Community Navigator program. And I was just curious how those efforts are going. Do you see a use for the Community Navigator model at SBA in reaching small businesses in underserved communities, like the ones I am talking about in my district, beyond the pandemic? Mr. ROWE. Well, I think there is obviously a need. That is why we are working on our own on the inclusivity challenge. The simple fact is there are 30 million small businesses and I don't know how many aspiring entrepreneurs in this country. And it is going to take a massive effort for us to make sure we are hitting everyone. Community Navigators is a great start. We work hard to find the associations and the organizations that we can work with to get out to those communities. And it is a constant effort. Ms. BOURDEAUX. Do any of the other panelists have any thoughts on this? I saw you, Ms. Hodges, nodding on that. Ms. HODGES. Thank you, Representative Bourdeaux. So many fond thoughts of Georgia. I spent many years there and we have a very strong Women's Business Center presence in Georgia and a new one that opened in Savannah. And I think about how the Community Navigator program can complement and can also challenge as we think about our program. We know that the Community Navigator challenge has a tremendous funding instrument attached, $100 million. And really, how can you put a price tag on the health of small business in our economy? However, our experience in working with the Small Business Office of Entrepreneurial Development is that they are themselves somewhat taxed in terms of levels of staff and resources. It is not their fault. This is a situation not by their making or their design. And so, in some ways, we find it can be somewhat of a competition for resources, for attention to do the things that, quite frankly, Women's Business Centers have been doing for three decades and have been doing extremely well with many fewer resources. If you compare the $30 million ask of Women's Business Centers with $100 million ask of a brand-new, never tested Community Navigator program, one can ask a lot of questions. That being said, we embrace every opportunity to partner. We canvass every community for every asset, for every opportunity to reach into those communities and serve. And so as soon as the Community Navigator program officially launches, we will embrace it and we will make the most of it as we do every dollar and every resource we have ever gotten. Ms. BOURDEAUX. Good. Thank you so much. And I yield back. Chairman CROW. Thank you. The gentlewoman yields back. I will now recognize the gentleman from Minnesota, Mr. Phillips, Chairman of the Subcommittee on Oversight Investigations and Regulations, for 5 minutes. Mr. PHILLIPS. Thank you, Mr. Chairman. And thank you to our witnesses today. Mr. Montgomery, I would like to start with you. I celebrate your story and am particularly intrigued by your testimony regarding a lack of lending options available for startups and new businesses compared to the SBA programs that exist that seems to be more focused on existing businesses or incumbent businesses, as politicians would probably prefer to say. I have authored legislation myself, called the New Business Preservation Act, that would enable states to set up pools of capital alongside private investors and venture capital to support scalable high-growth companies headquartered particularly in America's heartland. So, if you would take a moment and provide some more detail on your proposal to increase financial support for individuals pursuing new business ideas and how a program like the New Business Preservation Act might play a role in addressing this gap. Mr. MONTGOMERY. Thank you, Representative Phillips. I appreciate the question. First, I will kid of start with my experience. Like I was referring to in my testimony, you know, we are asking for a quarter-million to kind of make it through those first 3 years of creating a viable business. Obviously, it proved almost impossible. I think the USDA subsidized loans through the FSA office. They offered me 16,000, which was kind of enough to drown myself without actually succeeding. So, I think what you are proposing is exactly what I am thinking. There needs to be capital for people with good ideas, that have a solid business model. Because there is definitely plenty of advice out there for aspiring entrepreneurs, but the capital is not always as easy to come by. And I think that is imperative because you need both those things to get off the ground. Mr. PHILLIPS. All right. I appreciate that. And thank you once again. Mr. Rowe, in your testimony you mentioned that the SBDC accreditation process is built on the Baldrige standards. I have developed another bill that is called the Honest Enterprise Act that would use the same framework to encourage and reward companies for excellence in creating inclusive workplaces. And I think this kind of stakeholder capitalism has to be baked into businesses at the earliest stages. So, what kind of counsel might you provide, if any, that might encourage prospective business owners to consider more than just their profits and the management and benefits of their employees and their communities and the role that they can play in protecting the environment? How can we provide those incentives? Mr. ROWE. Well, I think the first thing is providing incentives. I think it is great to want people to conserve energy, let us say, and have a green workplace. To offer them a tax credit is even better. I think as far as the workplace ethos goes, one of the things we work on at SBDCs is succession planning. We have done a lot of it, particularly in the state of New York, implementing Senator Gillibrand's bill. And that was really how do we take a current business model and help plant it into an employee-owned model? And that, for us, has provided a lot of ways to take both senior entrepreneurs and bring younger businesspeople into the marketplace and sort of open that up. Now, just quick to go back to your question of Mr. Montgomery, one of things we could think about is steering the funds in the SSBCI program towards startup entrepreneurs. That is up to every individual state on how they use those funds, but very often they are tending to a venture model that really is geared toward established businesses. Mr. PHILLIPS. Great. I have to say, your remarks about employees' ESOPs, Employee Stock Ownership Programs, and how we might use thoughtful policy to not just encourage, but provide incentives for businesses of all sizes. To do so is, I think, a grand opportunity for those of us who believe in compassionate capitalism. I see my time has, unfortunately, expired, but thanks again for our witnesses. And I yield back, Mr. Chairman. Chairman CROW. Thank you. The gentleman yields back. No other members? Okay. It looks like we have no other members with questions right now, so I want to thank again all of our witnesses for participating today. Thank you and your organization staff for your efforts in preparing for the testimony and for your work during the pandemic and economic downturn. And I want to thank in particular Mr. Montgomery for your time because I know as a business owner and somebody who is dealing with a lot of challenges, your time is extremely valuable, so taking time to share your insights has been very useful to us. And at the beginning of the testimony you said you endeavor to keep faith with our fellow rangers by giving earnest and honest and good testimony, and I will say that you accomplished that mission. So, we thank you very much for your time. Mr. MONTGOMERY. Thank you, Chairman. Chairman CROW. So, with that, you know, we have identified a number of issues that I think falls within the purview of this Committee and Congress. This Committee has a long history of working bipartisan, in a bipartisan fashion to find practical and pragmatic solutions to these issues. You have identified a number of things and areas of improvement for us to continue to work on. And we appreciate that very much. I look forward to working with all of my colleagues to find those solutions and to make sure that we are fulfilling what is our unified and joint mission, and that is supporting our small businesses around the country to grow our economy, to grow jobs, and to achieve the American dream. So, I would ask unanimous consent that members have 5 legislative days to submit statements and supporting materials for the record. Without objection, so ordered. And if there is no further business to come before the Committee, we are adjourned today. [Whereupon, at 11:36 a.m., the Subcommittee was adjourned.] A P P E N D I X [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] [all]