[Senate Hearing 119-95] [From the U.S. Government Publishing Office] S. Hrg. 119-95 FINANCING AMERICA'S MANUFACTURING AND INDUSTRIAL BOOM ======================================================================= HEARING before the COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP OF THE UNITED STATES SENATE ONE HUNDRED NINETEENTH CONGRESS FIRST SESSION __________ MAY 14, 2025 __________ Printed for the use of the Committee on Small Business and Entrepreneurship [GRAPHIC NOT AVAILABLE IN TIFF FORMAT] Available via the World Wide Web: http://www.govinfo.gov U.S. GOVERNMENT PUBLISHING OFFICE 60-613 WASHINGTON : 2025 COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP ONE HUNDRED NINETEENTH CONGRESS ---------- JONI ERNST, Iowa, Chair EDWARD J. MARKEY, Massachusetts, Ranking Member JAMES E. RISCH, Idaho MARIA CANTWELL, Washington RAND PAUL, Kentucky JEANNE SHAHEEN, New Hampshire TIM SCOTT, South Carolina CORY A. BOOKER, New Jersey TODD YOUNG, Indiana CHRISTOPHER A. COONS, Delaware JOSH HAWLEY, Missouri MAZIE K. HIRONO, Hawaii TED BUDD, North Carolina JACKY ROSEN, Nevada JOHN R. CURTIS, Utah JOHN W. HICKENLOOPER, Colorado JAMES C. JUSTICE, West Virginia ADAM B. SCHIFF, California JOHN HUSTED, Ohio Meredith West, Republican Staff Director Sean Moore, Democratic Staff Director C O N T E N T S ---------- MAY 14, 2025 Witnesses Page Mr. John Mickelson, Co-Founder and Managing Partner, Midwest Growth Partners, West Des Moines, IA........................... 5 Prepared Statement........................................... 7 Ms. Julie Robbins, CEO and Owner, Earthquaker Devices, LLC, Akron, OH...................................................... 11 Prepared Statement........................................... 13 Addendum Material............................................ 21 Mr. Brian Riley, Founder and CEO, Guardian Bikes, Seymour, IN.... 43 Prepared Statement........................................... 45 Mr. Benjamin Geis, Managing Director, Eagle Private Capital, St. Louis, MO...................................................... 49 Prepared Statement........................................... 51 Additional Letters/Statements for the Record Herndon, Philippe Statement dated May 14, 2025................................. 77 Mission Engineering, Inc. Statement dated May 14, 2025................................. 79 Skillings, Steve Statement dated May 14, 2025................................. 82 Questions for the Record Mr. Benjamin Geis Responses to questions submitted by Senator Cantwell......... 84 Mr. John Mickelson Responses to questions submitted by Senator Cantwell......... 85 Mr. Brian Riley Responses to questions submitted by Senator Cantwell......... 87 Ms. Julie Robbins Responses to questions submitted by Senator Cantwell......... 89 FINANCING AMERICA'S MANUFACTURING AND INDUSTRIAL BOOM ---------- WEDNESDAY, MAY 14, 2025 United States Senate, Committee on Small Business and Entrepreneurship, Washington, DC. The committee met, pursuant to notice, at 2:35 p.m., in Room 428A, Russell Senate Office Building, Hon. Joni Ernst, chairwoman of the committee, presiding. Present: Senators Ernst [presiding], Young, Hawley, Markey, Cantwell, Shaheen, Rosen, and Hickenlooper. OPENING STATEMENT OF SENATOR ERNST Chair. I call the Committee on Small Business and Entrepreneurship to order, and I apologize for my tardiness. I am excited to hold this hearing to discuss opportunities to reignite investment in small American manufacturers and ensure our industrial future is built right here at home. America is and has always been a nation of builders. Men and women who roll up their sleeves, put in a hard day's work and take pride not just in what they make, but what it means for their families, their communities, and their country. That entrepreneurial spirit is in our DNA. For far too long Washington looked the other way as factories and farms shut down and the jobs that once sustained many U.S. families were shipped overseas. Despite the importance of domestic industrial production to our national security, production of critical goods was offshored to foreign countries. In doing so, we've made ourselves dependent on an international supply chain offering fast, mass-produced goods, mostly coming from China. This came at a cost, not just economic, but strategic. In January of this year, the U.S. recorded a $29.7 billion trade deficit with China. We've been massively reliant on our chief adversary for the goods and services we consume. Today, the manufacturing sector comprises only 10.1 percent of America's gross domestic product, a figure trailing most other industrialized nations. We've left ourselves economically beholden to the rest of the world and hollowed out our industrial core that once employed millions of Americans. We cannot accept that status quo. I believe in a great American comeback, one driven by the world's most talented workforce and a new era of domestic manufacturing ensuring this nation's economic security. We can make ``Made in America'' the norm instead of the exception. Thanks to President Trump's leadership, we are already seeing the early signs of a manufacturing revival and industrial boom in Iowa and all across the country. No group is more eager to lead this charge than small manufacturers who make up 98 percent of all manufacturing firms in the United States. They're ready to build, ready to grow, and they want to do it here in the United States. But Washington needs to do its part. It's time Congress acts to ensure that the federal government does not stand in the way of small manufacturers. We must empower them by providing them the tools they need to generate new jobs, to rebuild and fortify American supply chain stability, and to reduce our reliance on other countries, including adversaries. However, breaking ground on new manufacturing facilities or upgrading existing ones is a major investment. In many cases, these projects require long-term financing options, which can be particularly difficult for small businesses to access. That is why I was proud to introduce the Made in America Manufacturing Finance Act, along with another member of this committee, Senator Coons. This bipartisan legislation would double the SBA-backed loan limit from $5 million to $10 million for small manufacturers. By allowing manufacturers to access greater capital, my legislation encourages small manufacturers to invest in their operations and support the training and expansion of our manufacturing workforce. This is about leveling the playing field for American manufacturers on the world stage. It is a straightforward, common sense and bipartisan solution to unlock the potential small manufacturers have to secure our national and economic security. I am also interested in how we can leverage another SBA program, the Small Business Investment Company, SBIC, to support small manufacturers. This program supports the flow of private capital to small businesses across the country. I'm grateful that we're joined today by Mr. Mickelson from Iowa and Mr. Geis from Missouri who invest in small businesses across the heartland through the SBIC program. I look forward to hearing from all our witnesses about how we can best align SBA programs and private investment to spark America's next industrial boom. The independence, prosperity, and security of our next generation depends on it. Thanks to our witnesses for being here today, and I look forward to your testimony. And with that, I now recognize Ranking Member Markey for his opening statement. STATEMENT OF SENATOR MARKEY Senator Markey. Thank you, Madam Chair, so much. And we are here to talk about small business manufacturers, which contribute to our local economies and provide well-paying jobs for American workers. But we must address the elephant in the room when it comes to American manufacturing, Trump's destructive small business killing tariffs. The Boston Globe, on Friday, that is five days ago, the headline is Massachusetts Port Authority. That's the entry point for New England. They expect shipping volume in June to decrease by 35 percent compared to last year. That's in June. And we do know this, you know, when there's a 35 percent decline in those containers coming in, that's the trade. That's what helps manufacturers. There are about 40,000 small manufacturers who are hit by tariffs at both ends as importers and as American producers, who are going to be affected by this and they're the most vulnerable. Those aren't the big companies. Those are the little companies. They just live month to month. And so that's a very dangerous development. We can't afford to have a one third reduction in New England of the containers coming in. That is trade. And the biggest issue for small businesses, whether they are manufacturers or clothing shops or restaurants or hardware stores, is the uncertainty caused by Trump's rollercoaster tariff policy. Over the past month, the mood on Main Street has soured. Small business owners planning to hire new employees has fallen to a four-year loan, as sales decline and the future remains uncertain. And unlike large corporations, small businesses cannot absorb tariff costs and ride out the storm, even as the vast majority of small businesses are seeing massive tariff induced cost hikes, this administration is offering exemptions for billion-dollar corporations. If you can get a dinner invitation to Mar-a-Lago like the heads of Apple and Google, you can secure an exemption for your industry. But no small businesses receive support from this Administration on how to navigate these constant policy changes. And meanwhile, these tariffs are destroying the small manufacturing growth we saw during the Biden Administration. In fact, the Biden Small Business Administration made more than $10 billion in loans to small manufacturing, contributing to 775,000 new manufacturing jobs. President Trump likes to play the hero, but in his first term, his SBA made $2 billion less in small manufacturing loans than the Biden Administration, and they lost 200,000 manufacturing jobs. And now in his second term, he is hitting small manufacturers where it hurts. The cost of building a factory is skyrocketing because of the tariffs. The Trump tariffs are not a recipe for a manufacturing boom. They're a recipe for manufacturing doom. My witness today who makes guitar pedals in Akron, Ohio did not have the opportunity to dine with the President of Mar-a- Lago. Now she is unsure if her small manufacturing business will survive the uncertainty and crushing cost increases unleashed when the President began his trade war on Main Street, turning Main Street into Pain Street. They're the ones who are feeling this most adversely. President Trump has kneecapped small businesses that build high quality products here in the United States, because of his naive and misguided vision of how supply chains work. With very few exceptions, American companies that build here must rely at least to some extent on components made elsewhere. We can't have 35 percent fewer containers coming into America, into the Port of Boston of New England. This includes the 40,000 small manufacturers who are being crushed by tariffs at both ends, as importers buying parts and as exporters facing retaliatory tariffs. So, I've heard from small businesses in Massachusetts, there's a paranoia which has set in and I've heard from all across America about the impacts of these tariffs. Last week, I spoke with Brandale Randolph, founder of 1854 cycling company, an electric bike manufacturer based in Massachusetts. Brandale shared with me that his company finally recovered from the $45 million, which they lost during COVID, only to now be forced to decide whether or not they can weather this new disaster. The message from 1854 and other small businesses across the country is clear; these tariffs are going to put them out of business. And that's why last week I introduced the Small Business Liberation Act, to exempt small businesses from the Trump tariffs, just exempt them. Small business owners are our neighbors, our friends, our family. We must provide the necessary relief so that they can operate and grow and succeed. They're not Democrat or Republican businesses. They're not blue or red small businesses. This should not be a partisan issue. The National Chamber of Commerce has said that we should exempt small businesses. I'm with the National Chamber of Commerce. They're speaking for every Chamber of Commerce all across the country, exempt small businesses from the tariffs. I have introduced the legislation; we should try to find a way to expedite its passage on the floor of the Senate. I thank you, Madam Chair. Chair. Thank you, Ranking Member Markey. Again, I want to extend a warm welcome to all of our witnesses for being here today. And I'll now introduce the three witnesses who are testifying today on behalf of the majority. And I am thankful that you all took time out of your busy schedules to share your expertise on SBA's Small Business Investment Company program and attracting investment to manufacturing. And I am going to start with Mr. John Mickelson, who is an Iowan, and he is the co-founder and the managing partner for Midwest Growth Partners, an Iowa-based private investment partnership founded in 2013. Midwest Growth Partners is a licensed rural business investment company and small business investment company. Mr. Mickelson previously served as a West Des Moines city councilman--and thank you very much for your service--served on the board of the State Historical Society of Iowa and currently serves on the board of the Small Business Investor Alliance and the Young President's Organization, Iowa. He received his JD, his MBA, and his BBA from--what university was that? The University of Iowa. So, from a Cyclone to a Hawkeye, sorry you couldn't get into Iowa State. So anyway, thank you John very much. And I will also note he was a letter winner on the University of Iowa's football team. So, to that ``Go Hawkeyes.'' Next, Mr. Brian Riley is the founder and CEO of Guardian Bikes, a children's bicycle manufacturer based in Seymour, Indiana. He previously was the founder and CEO of SureStop, a company that developed, patented, and commercialized a proprietary braking technology for bikes. Mr. Riley holds a bachelor's degree from California Polytechnic State University. Our third witness, Mr. Benjamin Geis, is a managing director of Eagle Private Capital. He formerly served as Chief Financial Officer of the Fund Manager. Prior to January of 2004, Mr. Geis was in the assurance and business advisory practice of PricewaterhouseCoopers, LLP, where he started his career. He holds an undergraduate business degree from Rockhurst University and is a member of the American Institute of Certified Public Accountants, and the Missouri Society of Certified Public Accountants. And thank you again. And I will go ahead since Senator Markey stepped out to go vote, I'll go ahead and introduce you Ms. Robbins. It's Ms. Julie Robbins, and she is the CEO of EarthQuaker Devices, a guitar effect pedal manufacturer based in Akron, Ohio. She was previously a financial planner at First Merit Bank. Ms. Robbins has a bachelor's degree from Baldwin Wallace University. And thank you Ms. Robbins for being with us today as well. And so, with that, we will start the witness testimony and you will each have five minutes for your testimony and we will start with Mr. Mickelson. You're recognized. STATEMENT OF MR. JOHN MICKELSON, MANAGING PARTNER, MIDWEST GROWTH PARTNERS, WEST DES MOINES, IOWA Mr. Mickelson. Thank you, Chair for the introduction, at least at least most of it except for the Iowa State part. And thank you distinguished members of the committee for welcoming us today. My name's John Michelson and I'm the co-founder and Managing Partner of Midwest Growth Partners, a private investment partnership located in Des Moines, Iowa. Midwest Growth Partners was established in 2013 with a thesis that institutional capital doesn't flow to many markets where it is needed. Notably, small businesses in rural areas don't have a natural conduit to capital like larger enterprises or businesses in more populated areas. But those overlooked markets have great businesses, who employ more than 23 million individuals in the U.S. and who need access to capital in order to grow or to facilitate orderly succession plans as business owners retire. Over 12 percent of jobs in rural America--2.6 million--are in manufacturing. Our investors include community banks, members of the farm credit system, commodity advocacy groups such as the Iowa Corn Growers and Rural Electric co-ops. They want financial returns for their investment, but they also value supporting U.S. based small businesses. Midwest Growth Partners has invested in 42 such small businesses via two USDA Licensed Rural Business Investment Company vehicles or RBICs, and one SBA, licensed Small Business Investment Company vehicle or SBIC. Starting with seven employees after our first investment in 2014, today, Midwest Growth Partners companies employ more than 3,000. These jobs all provide living wages, benefits, much needed off-farm income for families. The average net job growth at each of our portfolio companies is over 20 percent. Smaller businesses, particularly those in low income or rural areas, tend to have more difficulty accessing traditional sources of capital because they don't have the balance sheets of big businesses and are therefore seen as too risky. This is where RBICs and SBICs fill the gap with capital. Established in 2002, RBICs fill small business capital gap by providing patient investments for small businesses throughout rural America. Today there are 22 RBICs in operation with over 1.7 billion in committed capital. SBICs have been around since 1958. SBIC funds are private investment vehicles that pool capital from institutional investors with leverage from the SBA, which is invested into businesses to help them grow. There are 318 SBICs with over 46 billion in committed capital and SBA leverage. About 20 percent of those dollars are invested in small manufacturers, all of which are domestic. I'd like to provide you with a few examples of the impact that has been made by Midwest Growth Partners Investments, thanks in part, to the RBIC and SBIC programs. The first is AgCertain, which is a manufacturer of refined glycerin and specialty edible oils located in Boone, Iowa, a community of 12,000. When Midwest Growth Partners invested in 2019, AgCertain employed 22 people. Today they have 42. In addition to the employment growth, the company has invested more than $32 million in capital improvements in the facility, including refinery upgrades, installation of a storage tank farm, pipe racking creation of two rail spurs, a storm water container facility, and a new boiler. Another example would be Shells By Design. A manufacturer of tart shells and desserts located in Garner, Iowa, population 1,200. When Midwest Growth Partners invested in the Shells platform in 2023, they had 40 employees. Today they have 67. In addition to the job growth the company has spent more than $500,000 in facility improvements and incorporated automation into their manufacturing process. Success stories like these manufacturing companies in small town Iowa don't happen accidentally. Innovative entrepreneurs, a dedicated workforce and capital formation are critical to continue to create more of these successes and the need is there. Midwest Growth Partners routinely reviews more than 800 opportunities a year and executes approximately five. Capital formation can only be accelerated by providing a regulatory and policy environment which is reliable for parties in the capital markets. A good example of encouraging this is the bipartisan investing in All of America Acts. In this Congress, the bill was introduced in the house in March, with a key improvement to direct more investment in domestic manufacturing. As mentioned previously, about 20 percent of all SBIC investments are made in small manufacturers, and if enacted, this legislation can unlock significantly more for our domestic industrial base. The investing in All of America ACT would: increase capital for the SBIC program which is market driven, and a hundred percent used for American small businesses, would specifically target markets like where Midwest Growth Partners is investing today, such as rural and low-income geographies, and finally it would provide leverage for small manufacturers additional leverage. This is all done without new spending, new appropriations, new subsidies, or new mandates. Thank you, and I would welcome any questions that you have. [The prepared statement of Mr. Mickelson follows.] [GRAPHIC NOT AVAILABLE IN TIFF FORMAT] Chair. Thank you very much. And next, Ms. Julie Robbins, you're recognized. STATEMENT OF MS. JULIE ROBBINS, CEO, EARTHQUAKER DEVICES, AKRON, OHIO Ms. Robbins. Thank you, Chair Ernst and all the members of the committee. I appreciate the opportunity to share my experience. I'm the co-owner and CEO of EarthQuaker devices, a guitar effect pedal manufacturer located in Akron, Ohio, and a member of Main Street Alliance. As someone who has devoted my life to running a small U.S. manufacturing business, with a background in banking and in education and economics, I have many suggestions and recommendations on this topic. However, without immediate relief from the tariffs and ensuing trade war, U.S. manufacturing companies like mine will not survive the summer. I founded EQD with my husband, Jamie Stillman, 20 years ago. And after all the challenges and struggles we have faced over the years, I never imagined that the greatest existential threat to our company would come from our own government. Since the tariffs and ensuing trade war have gone into effect, our business and industry overall have suffered dire consequences. Our costs have increased and our sales have fallen. Overall, year to date, our sales are down 15 percent. April was down 33 percent. We operate on a very thin margin to pay our employees living wages and competitive benefits. If these losses persist or widen beyond the next month, we will have no option but to scale back benefits and reduce our workforce. Our company grew very much by the bootstraps, by starting small and continuously investing in the business. We have utilized the services of the SBA via a 7(a) loan. Our local export focused SBDC at Cleveland State University, for step funded export training and matching grants and the Ohio TechCred grant to upskill employees. We also extensively use the services of Magnet, a Cleveland based national Manufacturing Extension Partnership program, for consulting education and networking. Today we have 35 employees and we are a 100 percent USA- based manufacturer, producing over 50,000 pedals per year. However, the raw materials used for our products are sourced from abroad because there are no viable domestic manufacturers of the electronics components we use in our products. While the components originate overseas, we mostly purchase them from wholesalers located in the USA. To be clear, it would have always been a more affordable option for us to manufacture overseas and another country such as China. However, our values are to create and maintain good jobs in our hometown, so we absorb the extra expense to make this work. Akron suffered greatly after rubber manufacturers moved their operations abroad in the seventies and eighties, and growing up in that environment shaped our mentality on this. No matter what anyone may claim on our behalf, it is not a cost- effective solution to source or manufacture our components in the U.S. It is especially not feasible in the shorter intermediate term due to the unstable market conditions which have caused a cash flow crunch. Prior to the new tariffs in 2025, we paid approximately a dollar 40 per panel for blank PCBs from our longtime trusted supplier. Searching for a domestic alternative, the prices ranged from $20 and 70 cents to $31 and 19 cents per panel. That is not a viable option and would push our prices up far beyond what the market will bear, and that is just one of the components that we use. We have delayed product launches, as well as completely scrap plans for new releases because of the increased costs and ongoing confusion. The changes announced on May 12th are a great example of the continued confusion and uncertainty, exactly what is the new tariff rate? Is it official? Can I update my planning? Things rarely remain the same from week to week. We have consistently been net exporters. In fact, we were awarded the 2019 exporter of the year by the SBA during President Trump's first term. However, today our exports are down as much as 50 to a hundred percent. Our customers say this is due to anti-American consumer sentiment, and the global financial fallout from the chaotic rollout of U.S. tariffs. Small manufacturers in my industry are all at risk of going out of business. We share frustration about the lack of government support or resources, even as this threat being as bad, if not worse, than COVID for my company. The SBA and MEP network are losing funding at a time when they're needed most. Prior to implementing the tariffs, no one asked how we would be impacted or what we would need to succeed. I feel an incredible sense of frustration as the disparity between large and small businesses grow wider, and they benefit from exemptions and delays that do not apply to us. [The prepared statement of Ms. Robbins follows.] [GRAPHIC NOT AVAILABLE IN TIFF FORMAT] Chair. Thank you, Ms. Robbins. Mr. Riley, you're recognized for five minutes. STATEMENT OF MR. BRIAN RILEY, FOUNDER AND CEO, GUARDIAN BIKES, SEYMOUR, INDIANA Mr. Riley. Chair Ernst and the distinguished members of the committee. Thank you for the opportunity to testify today. My name is Brian Riley and I'm the co-founder and CEO of Guardian Bikes, a company I started 15 years ago while I was still in college with a simple mission: to make bicycles safer for families. The inspiration to start the company came from a traumatic accident that my grandfather had on his bicycle. When I was growing up, my grandpa, Lee Bowman, used to ride his bike around the neighborhood for exercise. One day, a car cut him off. He panicked overapplied his front brake, and that sent him flipping over the front of his handlebars. He landed on his head and broke his neck. He was found on the side of the road by someone who called 911. Luckily, he survived, but needless to say, it was a traumatic experience that my family and I went through. When I was in college, I kept thinking about what problem I could help solve. I decided to work on a new type of bicycle braking system, which could prevent the type of accident that my grandfather had. After numerous failed prototypes, the SureStop braking system was born, an important innovation which made this type of accident a thing of the past. In those early years, I was convinced that the right business model for this was to partner with the major bike brands to get the SureStop Braking system adopted into their new bike models. So, from the age of 21 to 26, I traveled around the world partnering with bike companies to get SureStop adopted. During those years, I got an up-close look at exactly how the bicycle industry worked. I quickly learned that every major bicycle brand in the United States was partnered with a Chinese OEM factory to manufacture bikes for U.S. consumption. In fact, the entire bicycle component supply chain was completely dominated by China as well. The Chinese OEM would handle the ordering of the components from brakes to handlebars to hubs, and would then build a complete bike for each American bike brand. That meant that no matter what brand we choose to partner with, our customer that would buy the SureStop brake components from us, would actually be the Chinese OEM factory that's building the bicycle for the brand. That meant I spent a lot of time traveling to China and seeing all the major factories in China. It was an interesting start to a career. I learned how the entire value chain for bicycles worked, from production to retail. And contrary to my parents and grandparents' generation, when bike companies like Schwinn were American manufacturing powerhouses employing many thousands of people in the Midwest, when I entered the industry in 2010, not a single bike brand sold in the U.S. was manufactured in the U.S. anymore. In addition, most of the iconic bicycle brands had not only shored all their production, but over the years, most had become foreign owned as well. With unique IP in this industry, and a value chain dominated by China, it was difficult to control our own destiny being a component supplier. Eventually, I decided to evolve the company and integrate our SureStop technology into our own bikes, and build a new type of bike company from the ground up. This is how Guardian Bikes of today was born. As we got started, we imported bikes from China like everyone else. However, when the 301 tariffs started under President Trump's first term, and later COVID supply chain disruptions came, we decided this was the moment to take a big bet and do what everyone in our industry insisted was impossible. We decided to start a bicycle factory in the United States. In 2022, Guardian Bikes officially opened its factory in Seymour, Indiana. And in just 36 months, we've quickly become the first and only large scale bicycle factory to exist in the United States since the industry decided to completely offshore production decades ago. We now employ 250 people in Indiana, making 2,000 safe quality bikes every single day. We're doing it profitably. We're growing quickly, and we're demonstrating that reshoring production in the United States is not as impossible as many might say. Starting and scaling this business required capital. Early on, a crucial SBA 7(a) loan helped us get off the ground, but it was only a starting point. What truly allowed us to execute on the factory was patient, long-term capital from private equity investors who believed in our vision. Senator Ernst's Made in America Manufacturing Finance Act, which would double the loan limit for SBA 7(a) and 504 loan programs to 10 million for small manufacturers, would be instrumental in furthering growth of American companies looking to reshore production. Increasing working capital through this legislation would empower small manufacturers to start or expand production, hire more Americans, and solidify the U.S. as a viable place to start factories again. Ultimately, our experience with Guardian Bikes, proves that reshoring manufacturing isn't theoretical, it's achievable, sustainable, and it's necessary. By investing in American made products, strengthening public-private partnerships, and ensuring our trade policies prioritize domestic production, we can empower small businesses like mine to lead America's manufacturing resurgence. Thank you for the opportunity to share my story. [The prepared statement of Mr. Riley follows.] [GRAPHIC NOT AVAILABLE IN TIFF FORMAT] Chair. Thank you, Mr. Riley. And next, Mr. Geis, you're recognized for five minutes. STATEMENT OF MR. BENJAMIN GEIS, MANAGING DIRECTOR, EAGLE PRIVATE CAPITAL, ST. LOUIS, MISSOURI Mr. Geis. Good afternoon, Chair Ernst, and distinguished members of the committee. Thank you for the opportunity to speak with you today. My name is Ben Geis and I'm a Managing Director at Eagle Private Capital based in St. Louis, Missouri, and current chair of the board at the Small Business Investor Alliance. I'm proud to be here, not just as representative of my firm and SBA, but as someone who understands firsthand economic challenges and the potential of rural and lower income America. I grew up in a town of just 600 people in Nebraska, and my partners hail from in and around the St. Louis, Missouri. We're raised in communities where entrepreneurship is common, but access to capital is often limited. That's why we chose to use our backgrounds in finance, not on Wall Street, but to invest in America's small businesses, particularly in the communities that shaped us. Eagle Private Capital was founded in 2003 with a mission to provide growth capital to small businesses through the public private partnership of the SBA Small Business Investment Company Program. Our team brings decades of experience in commercial lending, investment banking, and accounting. Over the past 20 years, we've invested approximately 1.27 billion in 162 small businesses through six licensed SBIC funds. Eagle Fund three was awarded SBIC of the year by the SBA, and an Eagle Fund IV portfolio company, Paragon Bioservices, was awarded the 2019 SBIC portfolio Company of the Year by the SBIA. Eagle is currently investing out of its six SBIC fund, which was licensed in August of 2024. From this fund, we have invested in nine portfolio companies and deployed $71 million to date, less than one year into our investment period. Those numbers represent more than capital deployed. They represent real growth in real communities. Across 91 realized investments, our portfolio companies have added over 6,000 jobs and increased revenues by nearly 3 billion. In Missouri alone, we've invested in 16 companies resulting in 20 percent job growth, a meaningful impact in places where every job counts. Let me share an example, close to home in Jackson, Missouri, a town about a hundred miles south of St. Louis, we invested in Rapco, a manufacturer and assembler of data cables and interconnect devices. When we first invested in 2008, Rapco had 550 employees. By the time we exited the investment in 2017, the company had added 105 jobs, becoming an even stronger pillar of its rural community. But our impact isn't limited to the Midwest. We've seen similar results in 37 other states where we have investments. In Massachusetts, for example, Eagle has invested in six businesses across six funds, growing revenues by almost 80 million or 79 percent, and employees by 342 or 83 percent. One standout is Learn Well, which provides in-person and virtual academic services for students undergoing mental health treatment. Since Eagle's initial investment in Learn Well in January 2018, the company has demonstrated remarkable resilience and growth. Over the past five years, Learn Well's performance has been exceptional. The team has grown from 115 to 233 employees, which is 103 percent expansion, and serves over 33,000 students each year. These stories aren't one-offs. They're the result of the SBIC program. We review hundreds of opportunities a year. These are often companies that are too small, too rural, or too unique to get the attention of traditional lenders. SBICs like ours fill this gap, deploying flexible capital to companies that need it most, while working alongside the management teams, leveraging their expertise and our experience in the lower middle market to create a long-term partnership. Finally, the investing in All of America Act introduced last Congress, by Senators John Hickenlooper and Roger Marshall, will enable SBICs to do more of what it already does well: support small businesses, create jobs, and strengthen the economic backbone of America, especially in places that too often get left behind. Specifically, the bill provides SBICs with bonus leverage to invest in rural, low-income manufacturing or national security focused businesses. The legislation would also adjust the leverage caps to account for inflation that has risen nearly 30 percent since they were last raised. Adjusting the caps is necessary to ensure the program's investment power remains consistent with the broader markets and SBICs can continue assisting job creating small businesses across the country. I'm proud of the work we've done and the communities we've helped grow and encourage this committee to move swiftly on the legislation so even more can be done. Thank you for the opportunity to testify today. I look forward to your questions. [The prepared statement of Mr. Geis follows.] [GRAPHIC NOT AVAILABLE IN TIFF FORMAT] Senator Young [presiding]. Well, thank you so much. As is common here, our former Chairman had to depart and I am acting chairman, I'll say that for the benefit of the staff behind me. Since I just moved into the seat, I'll ask you, Mr. Geis are you the last one to deliver your testimony? I'm expecting that is indeed the case. Mr. Geis. I am the last one. Senator Young. All right, great. Thank you. Now that I have command of this situation---- [Laughter.] I'll thank all of you for appearing. I am of course especially glad to see Mr. Riley here. He's invested in the great state of Indiana, but I am really excited about having all of you here. As I often share with our panelists, my father was a small business person. This is not always known as the committee with the broadest jurisdiction that touches on every facet of your life, but it's really, really important. It's important to people like him, that we optimize the programs and support that the small business administration in particular gives our small businesses and give you a platform and a voice. And so, thank you for being here today. Before I dive into my own questions, I will give Senator Shaheen an opportunity to ask hers. Senator Shaheen. Senator Shaheen. Well, thank you very much Mr. Acting Chairman. And I appreciate that since I have not yet voted. So welcome to all of our witnesses. Thank you all for being here very much. I actually grew up in Missouri and my grandfather was from Jackson, so I know exactly where you're talking about Mr. Geis. One of the programs that I helped create when I got to Congress and that I continued to think is very important, and in fact I worked with Chair Ernst on it last year as the State Trade Expansion Program, the STEP program, which you mentioned, Ms. Robbins. It helps small businesses sell internationally. And when we think about the fact that about 95 percent of our markets are outside of the United States, it's really important for us to help small businesses get into those markets because right now, fewer than 5 percent of small and medium sized businesses do business overseas. You mentioned in your testimony that you currently manufacture in the U.S. to sell internationally, but that now you're having to consider moving production overseas just to export. Can you talk a little bit more about the impact that the tariffs have had on actually pushing your production offshore and what that means for your company long term? You talked a little bit about the potential to need to downsize to address that, but in addition to that, what would the loss of the STEP program and the technical assistance and grants that that provide mean to your business? Ms. Robbins. Thank you very much for your question. The STEP program, the way Ohio disperses the funds is through the SBDC and an IMAGE grant. The IMAGE grant reimburses us for, well, partially reimburses us for activities related to exporting. It also provides education. So currently we're participating in a program called the Global Target Program, with a focus on Latin America. It prepared us for a trip to Brazil last month, and set us up for success in that market. I'm incredibly grateful to the staff at the local SBDC, very knowledgeable, they bring in experts and connect us to others. But as you mentioned, unfortunately I need to consider offshoring my manufacturing, and that's because as I mentioned, our sales are down and sustained losses put us at risk of bankruptcy by the end of the year. We have perfect credit and we've never missed a payment, but we're rapidly running out of liquidity. In addition, the tariffs make our products exceedingly expensive. My competitors overseas do not have that problem. And so, in order to compete, I feel that we may need to diversify and manufacture overseas to serve export markets. Senator Shaheen. Thank you. And again, if you could speak a little bit, one of the things that we have learned from the ``skinny budget'' that the Administration has sent as on appropriations, is that it would eliminate the STEP program entirely. What would that mean in terms of future, assuming that tariffs are addressed in ways that allow you to build back some of those markets, what would that mean for you if you no longer have access to that technical assistance and the funds that are available through the STEP program? Ms. Robbins. It would have a really devastating impact, especially for businesses that don't have the education experience that we have. You know, we've learned a lot by benefit of this program and access to those experts. A new startup or another small business just starting to get into exports, they would lose such a valuable resource. Just an example of what a global target session may be like. It would be you know, maybe 12 other business owners looking to increase their exports and they would bring in an expert or two, to speak about a variety of topics relevant to exporting, marketing, legal compliance, financing your exports, taking payments. Things like that helps to demystify the complexity and also creates a greater network of experts to reach out to. So, you know, while I would be hurt, I think that it would be much harder for businesses that don't have the same experience that we have to get a leg up. Thank you. Senator Shaheen. Thank you. Thank you, Mr. Chairman. Senator Young. Well, thank you, Senator Shaheen. I will pick up with Mr. Riley giving him the Hoosier privilege, a Hoosier by choice by way of Sacramento, and his company, Guardian Bikes located in Seymour, Indiana I think is a prime example of how a small business can grow into a successful and thriving American company and even help reshore an industry. Doesn't happen in every case but we should celebrate it, and the jobs you create and the opportunities associated with all of that when it does. So, your insights Mr. Riley, into how the policies that we put in place here in Washington, DC, which can be detached and removed from the daily cadences and concerns of regular people sometimes, they would be invaluable to our whole process and so I appreciate all of your comments this morning. Whether it's developing skilled workers through apprenticeships or connecting startups to research institutions and capital, public-private partnerships are already proving what's possible when sectors work together. Too many small businesses, especially in rural communities, lack access to the same networks or infrastructure or talent pipelines that they need to compete and grow. Mr. Riley, how have public-private partnerships, if at all, helped support or scale your small business operations? And you can expand on that if you would like. In your experience, what do you see as the most effective roles for the government and the private sector in making these partnerships work? Mr. Riley. Thank you, Senator Young. And I'm proud to be a new Hoosier of a couple years. So, in Guardian Bike's case, when we were first starting, we did utilize an SBA 7(a) loan and that was instrumental in getting the company off the ground, getting some working capital in. But in our case, when we really started looking into starting a factory, it was clear that we needed several million dollars to get this thing started, both because of some of the equipment that we needed, but also because we were starting something that no bike company had done in the United States in many decades. And we knew that there'd be at least say, 12 to 18 months of time where we have to kind of go into money losing mode to learn how to run a factory to get the thing up and running. And so, we relied, you know, on an SBA 7(a) loan, but also some private equity, not private equity, but I should say individuals investing some money in for equity in the business. That was instrumental, but it was also challenging. That was me going around, you know, pitching a lot of different individuals, getting them to believe in the vision, taking 50 to a hundred thousand dollars checks, you know, left and right to try to pile together a few million dollars, in order for us to really kind of execute on this vision of starting a factory in the USA. So, I think to the extent that, you know, what we've done is challenging and in a lot of industries it is challenging to actually reshore production and reshore supply chain, and it does take capital. So, I think to the extent that the government can make flows of capital easier for companies that are looking to reshore production and build production in the United States. That's helpful. Senator Young. So, I'm just going to stop there, and though we're both from Indiana, we didn't choreograph this because that's a great lead in to Mr. Mickelson. And my questions for you, sir, you mention in your testimony the importance of programs like the Rural Business Investment Company, RBIC and the Small Business Investment Company, SBIC, to help create jobs and drive economic growth in the Midwest, which I especially care about. So how can we use our federal investment tools more effectively, in your informed estimation, to expand access to capital for rural entrepreneurs and ensure that small businesses in underserved areas can grow and compete. Mr. Mickelson. Thank you, Senator, for the question. I'll stay on the theme here, and stick with Indiana. We actually had an investment in Franklin, Indiana, which you might be familiar with. It's not a large metropolitan area. But there were two great entrepreneurs there that---- Senator Young. I live like a few miles away. Mr. Mickelson. Okay. So perfect. [Laughter.] Senator Young. We really didn't choreograph this, but thank you. Sometimes it happens. Mr. Mickelson. So, two great entrepreneurs there. They were young, they were obviously risk takers. They started a business, but they had not had the resources to scale the business to professionalize the business. So, when we invested with them, we brought in systems, we brought in people. They originally had one location. By the time we exited the investment, they had 13 locations. They had a full C-suite of teams. And so that would not have been, you know, possible without programs like the RBIC and SBIC. And so, two ways that you could help that, I mentioned the investing in All of America Acts, passing that would help create more opportunities for situations like this. And then on the RBIC side, the RBIC program does not have leverage like the SBIC program has. And so that's one thing that we've been working with the USDA with for a long time to try to get that put into place. Senator Young. Thanks so much. Unless there are any other Indiana stories. Senator Rosen, you're recognized. Senator Rosen. We'll talk a little bit about some Nevada stories, maybe, how's that? Because in Nevada, we love our entrepreneurs, our dreamers or small business owners. And for those of you who don't know, we're really famous for those big casinos. I know that, but that only makes up 1 percent of the businesses in Nevada. 99 percent are small businesses. And so, it is really the heartbeat of Nevada. And I want to build a little bit upon what Senator Shaheen talked to you about on the tariffs, because the tariff impact on Nevada small businesses, they're already facing disastrous economic consequences of President Trump--that just across the board tariffs, and small manufacturers in particular are struggling. Many businesses and manufacturer in the U.S. rely on imported parts and materials. And in Nevada, like I said, 99 percent of our businesses are small businesses. And because of Trump's tariffs, these companies are now calling us. They're worried, they're trying to navigate increased cost disruptions in their supply chain and frankly, they're just so worried the uncertainty of it all. They just don't know what to plan or prepare for and how to move forward. So, Ms. Robbins, I'm going to ask you, could you discuss about how the uncertainty, not just for your business, but for yourself, your family, and everything you put into it, how have the administration's tariffs really impacted you and how small manufacturers are particularly vulnerable? Ms. Robbins. Thank you so much for your question. Small manufacturers are really clinging to life right now. My small team, which I could count on one hand, has spent countless hours crunching numbers, running models, worst case scenarios, searching for new suppliers, attempting to set up accounts with those, forecasting expenses, calculating, and recalculating price increases only for the situation to change drastically with no notice. It creates such an environment of uncertainty that I don't understand how someone could invest in an economy without having some level of certainty you can regain your investment. I've invested $1.2 million into our company to manufacture guitar pedals. We do all of our manufacturing here in Akron, Ohio. And to manufacture more than we do now would be like asking a baker to make flour. The uncertainty from day to day, we have a weekly meeting where we discuss the tariff impacts and try to determine how to proceed. We certainly need to increase our prices as our costs have just drastically risen. However, the landscape doesn't stay the same from week to week. I don't know how to proceed. It's complete uncertainty. Senator Rosen. And how stressful is that? And how stressful is for the people who work with you and believe in all of what you're doing---- Ms. Robbins. Incredibly stressful. Senator Rosen. And of course, we have a lot of live music in so I'm sure there's some folks who've been buying them from you. So, thank you for sharing that. And I'm sorry that you're going through all of that trauma and hopefully we can get some certainty going forward. Because our emerging manufacturing industries, it's just so important, they're surging investments. You've put in over a million dollars small businesswomen. Right. But in Nevada, we have a lot of clean energy. It's wind, water, solar, geothermal, it's just our geography and geology. And so, our clean energy technologies, they support our small manufacturing businesses. It's beneficial for our local and national economics. And I've seen the benefits of clean energy firsthand. We are the only state that has an operating lithium mine. I know everybody likes their phones. We need that Lithium. Nevada's become a hub for electric vehicle battery manufacturing in recent years. And last year I helped secure a tech hub designation for the lithium loop project, led by the University of Nevada Reno, which will create even more economic opportunity in northern Nevada. Businesses are coming, batteries, recycling, training, engineers, all of it. So, Mr. Geis, I know that Eagle Capital has a portfolio of companies in the clean energy space. Can you speak to the importance of directing investment to emerging industries like clean energy, and this just the spectrum of energy. We need it all and ways that small businesses can benefit from engaging those industries? Mr. Geis. Sorry, thank you for the question, Ms. Rosen. So, help me, could you repeat the last part of your question again just to make sure I address it appropriately? Senator Rosen. Well, you know, the importance of directing investments to emerging industries like clean energy. Like I said, in Nevada, we have wind, water, solar, geothermal, battery recycling, lithium mining, critical mineral mining, all of these things. So, they're newer industries and we want to move capital to us to develop that. So, I just wanted you to talk about that a little bit. Mr. Geis. Yes, for sure. I mean, I think our focus as a small business investment company--a hundred percent of the investments we make are in small businesses in the United States, that's a sole focus of what we do. And so, I think we see lots of wonderful entrepreneurs that are in emerging industries like you talked about. And really you know, we provide that capital to help them grow and be more competitive on a global landscape. And I think it's vitally important to our country to encourage that entrepreneurial spirit. Senator Rosen. Thank you. I yield back. Chair [presiding]. Thank you, Senator Rosen. Senator Hawley. Senator Hawley. Thank you very much, Madam Chair. Thanks to all of our witnesses for being here. Mr. Geis, I want to start with you because I understand that you are a Missourian and you are a St. Louis Guy. Is that right? Mr. Geis. That is correct. Senator Hawley. Although I think you went to college on the other side of the state or my nick of the woods. Rockhurst University? Mr. Geis. Yes. Senator Hawley. Okay. Very good. Now, were you born and raised in St. Louis? Mr. Geis. I was not. Senator Hawley. Okay. He's helping me all the time. [Laughter.] I could hear you. That's fine. Keep going, you're on a roll. Mr. Geis. No, I was not born in St. Louis. I was born in Nebraska, but I'm not an atypical St. Louis story. I married a St. Louis girl, so I've been there for 26 years. Senator Hawley. Oh, there you go. All right. Well, that's good. Hey, we'll claim you. That's great. You're a Missourian in my book. Mr. Geis. Yes. Senator Hawley. Right. Let me ask you, in your written testimony, you included the helpful chart explaining how the SBIC program helped spur investment in small business. And I wonder if you could just tell us, just give us an overview, tell us about the SBIC program, what it is, and why it matters so much to Missouri. Just give us your perspective on that. Mr. Geis. Yes. So, you know, I think I'd come at it from a couple of different angles. So first of all, you know, it's a stable, longstanding program. It's been around since 1958. It's operated at a zero subsidy from the taxpayer since its inception. But I think what's critical about what SBICs do in Missouri and lots of other states, is we provide that critical next stage of capital to really create the growth to drive to the next level. So, you know, oftentimes entrepreneurs' capital invest their own money to start their businesses, but when they hit sort of a critical inflection point, they need that next round of capital to really invigorate growth and that's what SBICs do. Senator Hawley. Yes. Very good. In fact, if I've got my statistics correct, and in FY 24 alone, SBICs invested in Missouri $192 million in more than 20 small businesses across the state. That capital supported over 3000 jobs in the state of Missouri. That's pretty good. We want every single one of those jobs. Mr. Geis. And I think, you know, SBICs fill a gap, right? There are, you know, everybody knows about the capital markets and the large lenders and larger private equity funds that ultimately invest those large dollars of capital that we hear about. But SBICs are squarely in the heartland of America and small businesses, that's what we do day in and day out. Senator Hawley. Very good. Let me ask you to talk about the role that small businesses can play in the manufacturing sector and how SBIC can be used to help spur industrial growth. I mean, can you talk about that? Because this is a big need and the backdrop here that I probably don't have to explain to anybody on the panel or anybody watching this hearing is that, you know, in America as a whole, we have lost 4 million jobs. It is particularly in industrial sector to China since 2001 in Missouri, it's close to 60,000 jobs. We need more industry; we need more manufacturing of all kinds. Tell us about the SBIC component here for that. Mr. Geis. I mean, it's a big focus of what we do. If I look at the Eagle Funds, 25 to 35 percent of our investments are in manufacturing companies. And the stories that we could share within our portfolio are not too dissimilar from my other panelists here, but, you know, we provide the capital to help build the new plant, to really spur and change growth. So that is what the SBIC program does. Senator Hawley. Very critical. Thank you. Thank you for the work you do. Thank you for willing to be here, and thank you for testifying. And with that, I yield back to you, Madam Chair. Chair. Great. Thank you. Senator Hawley. And I'll go to Mr. Mickelson. We'll start with you, and Mr. Mickelson. Oh, I'm sorry. Senator Hickenlooper. Senator Hickenlooper. I must look like a wallpaper or something. Chair. I missed you. I got caught up there with Senator Rosen and totally overlooked you. My apologies to you. Senator Hickenlooper, you're recognized for five minutes. Senator Hickenlooper. Let me start. Mr. Mickelson, the SBIC we've been talking about, obviously as a cornerstone of so much what the SBA does. As a small business person myself, I'd gotten laid off, was out of work for a couple years and took a long time to raise the money, as I always would say, my mother wouldn't invest and she wouldn't. I think those private investments with coupled coming through the SBIC, can really bring--well, it certainly brought hundreds of millions of dollars into Colorado. And I've been working with Senator Marshall to further build on that success. I'm sure you're aware of the All the America Act. So, in terms of your firm operating the SBIC, how would expanding that program broaden access for capital to what are popularly called underserved to lower income communities? Mr. Mickelson. Thank you, Senator, for your question. It is timely. We actually closed an investment in Colorado last week, from an SBIC, so your timing's perfect. But you know, certainly the passage of the investing in All of America Act, which I know you introduced last Congress and hopefully it'll get through this Congress, will increase funding to the SBIC program so there will be more opportunities for investment, like the one we did last week and Colorado. It'll also specifically target rural and low-income areas. And so, Midwest growth Partners invest in rural areas. So that would give groups like us more opportunities to make those investments. And then finally, it would provide bonus leverage for manufacturers. And so, we've talked a lot about the importance of manufacturing. Right now, 20 percent of dollars from SBIC roughly go into manufacturers. And so, with some bonus leverage, we would expect that number to go higher because there'd be more capital available. And so great. Senator Hickenlooper. It's okay. You covered it well. I spent a lot of time in West Des Moines, and when as an entrepreneur I branched out, one of our brew pubs that we opened was in downtown Des Moines, but it was the Raccoon River Brewing Company and the old hotel Fort Des Moines. Mr. Mickelson. It's a great spot. Senator Hickenlooper. I probably know a number of your personal investors. I got them to help invest in that. Mr. Mickelson. Yes. Perfect. Ms. Robbins, let me ask you a question. The tariff situation, obviously as somebody--I can remember every little bit, when you're a truly small business, every little bit makes a difference. And I think tariffs went up, then they've been suspended, now it's three months, that uncertainty is chaos. I know how hard that is. How have you guys navigated the uncertainty around the tariff issue and how to make your planning of when you make infrastructure investments and how do you assess that? How are you able to grow? Ms. Robbins. Thank you so much for your question, Senator. We're not able to grow under the tariffs. The tariffs have created complete uncertainty. They're changing from week to week. You mentioned that they announced a reduced tariff rate and a 90 day pause. But I'm still not clear on exactly how much I'm paying in tariffs. Is it 30 percent plus the 2018 plus the fentanyl? That would put me at 75 percent. That's still huge. Yes, we do count every penny. And I used to be a financial planner, and as a business, we're planning a year out easily. And now I don't know what's happening next week and three months. And it's impossible to navigate these circumstances. So, you know, we had forecast a price increase, things had been the same for two weeks. We were going to roll it out and now the tariffs have changed. So, we're going to hold onto that. I also know that my customers have been loading in on foreign imports. My customers are retail stores. They've been loading in on foreign imports during this reduced tariff pause because they're speculating that it's going to go back up. So just another way, this is backfiring and hurting U.S small businesses. Thank You. Senator Hickenlooper. Good. Thank you. And I love the name EarthQuaker. I was an old geologist and the Colorado School of Mines has an earthquake center, and you can get a live feed to see anywhere in the world when a quake happens. And you ought to stick one of those in your retail sales or your wholesale sales office. Mr. Riley and again, a safer bike. I was a huge bike fan, a huge believer in outdoor recreation. It's a business. It creates jobs, but it also makes people healthy. It makes people feel healthy, I mean, it changes their mental health issues. You had a unique journey somehow. Mark Cuban never took the time to let me have--on his TV show. I'm not sure what he was doing back when I was trying to raise money. What other suggestions would you give small business owners who are trying to find capital to invest in domestic manufacturing? Mr. Riley. Sure. Thank you, Senator. Yeah, I was very lucky to have the opportunity to go on the show Shark Tank and I got an investment from Mark Cuban, but I think the statistics were something like 80,000 people every year apply to go on the show and something like 50 or 60 actually get on a season. So, I still pinch myself that that actually happened for me. But I would say, you know, for just general advice for small businesses, I think what we've done is try to create a U.S. factory reshore production, but really make that a strategic advantage for us. And not have it really be all about a tariff advantage, but actually an inventory advantage. A way that we can, you know, set up the bikes in a really safe way. The whole brand is built around safe bikes. So, a bike is only as safe as it's set up. You set up the brakes, you set up every fastener to a certain torque. So really kind of telling it--for somebody like us telling that story to investors and getting investors excited about the strategic advantages of building a product in the United States that are over and above just tariffs or whether it's going to be a price advantage in these things. That was a really big thing for us and we were able to secure capital, you know, not only from Mark Cuban on the show, but from a group of just individual investors---- Senator Hickenlooper. Ripple effect. That's perfect advice. I mean, that you're exactly right. They got to take the advantage you have and then use that to go out and compete. I'm out of time but anyway, I yield back to the Chair. Chair. Do you have another question? Senator Hickenlooper. Okay. [Laughter.] No, thank you. Senator Hickenlooper. Okay. I will go ahead and recognize myself now for five minutes, and we'll start with you, Mr. Mickelson. Your investments highlight the next- generation technologies that are coming out of our farms, that are creating new jobs across America and helping our nation remain competitive globally. From your experience investing in dozens of small businesses in Iowa and across the heartland, what are their greatest barriers to growth and building here in the United States? Mr. Mickelson. Thank you, Senator. So certainly, access to capital as we've talked about today. So, when, when you look at a business that's scaling, they're trying to add new people, more talented people, more educated people, and that comes at a cost. You think about technology investments and things like ERP systems, computer systems efficiency in your manufacturing process, trying to automate as much as you can. All of that costs money, and that's a big part of just the professionalization process that you try to do in each one of our investments. And so, each investment that we look at, they're successful, they've done a great job, but we're trying to take them to the next level and help them grow. And so that takes expertise and that's largely human capital driven, and it takes capital to build out property, plant and equipment and invest in that technology. Chair. Thank you. And Mr. Riley as well. Again, just reiterating what Senator Hickenlooper said, you've been recognized nationally for your efforts to reshore production of bicycles and industry that had been dominated by China for decades. And thank you for doing that. I commend you for all that Guardian Bikes is doing to build higher quality bikes for children, and something that is possible because of your ability to source from domestic suppliers. So, you've been able to raise a significant amount of private capital to support your vision. Based on your experience, what added value and benefits do investors seem to find with Made in America products? Mr. Riley. That's a great question. The way that we really went about it was to say, look, the world is changing around us. Supply chains aren't as secure as we thought they were. COVID was a perfect example of that. So, to start with, building product onshore just gives you a lot more supply chain resiliency. Over and above that, it really kind of can change a business, so when you're purely relying on imports, the lead times are long. You got to ship them all the way here. And so you have to deal with a lot more inventory. You have to plan your business just right to figure out what are we going to sell? What do we need to buy? Sometimes many months ahead of time. When you're onshore and you can produce in your own factory, you can take that demand signal. For example, when the Barbie movie came out, we started selling a lot more pink bikes. I don't know how we could have predicted that, Chair. Right? Mr. Riley. But when you sell a lot more pink bikes and you're able to just, you know, paint more bikes pink the next day, you can just start making more pink bikes and react to that kind of demand signal. So that's a perfect example of-- there's all kinds of real advantages that come from onshoring manufacturing that I think so many businesses that have relied on imports for a long time, they don't necessarily think that way because they're not in the weeds of manufacturing. But we found that there really are true business advantages over and above, you know, any cost advantage or anything like that. And just running the business, being able to react to demand, being able to have a resilient supply chain and deliver safe quality products to lots and lots of consumers. And we find that those consumers, you know, reward us for making that decision and they want to do business with a company like us that's trying to do it here. Chair. Yes. Thank you very much. And Mr. Geis, thanks for sharing your experience, both as an SBIC investor and as a leader in the SBIC industry. As you stated in your written testimony, 20 percent of SBIC investments fund American manufacturing companies. How can Congress further target the SBIC program to investments that are critical to our nation's economic and national security while maintaining a zero-subsidy program? Mr. Geis. Thank you for the question. I would say by supporting the SBIC Critical Technology Initiative. So that, for those who don't know, it's a partnership between the Small Business Administration and the Department of Defense to license SBICs that will invest at least 60 percent of their investments in small businesses in sectors that are deemed critical to our national security. Chair. Okay. Fantastic. And with that I will recognize Senator Cantwell for questions. Senator Cantwell. Thank you, Madam Chair. So good to see our witnesses. Ms. Robbins, thank you for being here, specifically, we love music and the Pacific Northwest, and we like to get our grunge on and do many other things. But, you know, we had a music stand company in Yakima Washington that continued to be a big exporter. And I kept thinking, I'm so proud of you guys. How do you-- they're big supporters of the XM Bank, you know, and I kept saying, how are you so successful? I would think somebody would knock this off. And they were like, no, no. You're a symphony. You need performance out of a music stand. You can't have a big concert with lots of people coming and have a bad music stand. So, you are a similar company that makes electronic parts and turns those into something that musicians can create with. So how are you thinking about this tariff situation and what do we need to do to help more businesses like you grow? Ms. Robbins. Thank you so much for your question, Senator. I was really fortunate that a lot of the investing that I did in our business happened before the tariffs were increased. So, in 2022, we invested in a state-of-the-art PCB assembly line. And under the current tariffs that would be maybe triple in price. The tariffs have really made it more challenging for us to recoup our existing investment in our business and are putting us at risk of bankruptcy, if these conditions continue. We have perfect credit and we've never missed a payment, but like I said, we're running out of liquidity, and our home is collateral on our loans. So, if we miss payments and we default, we will lose everything that we work for, including our home, just as our two daughters are in college. And I don't see taking on additional debt as the answer. I also don't know why somebody would invest in a company that is currently losing money without a clear path to success. I also find the suggestion that I borrow money and pay interest to finance taxes and fees, abruptly imposed on me by the government with no notice and no consideration, I find that suggestion offensive. And I believe the tariffs seem to be reversed immediately or at the very least, small businesses need to be exempted. Senator Cantwell. Well, small businesses definitely have a lot less flexibility. Do you have a big export market for your devices? Ms. Robbins. We do. We've worked very hard to increase our exports. They're approximately 30 to 40 percent of our sales, although just in the last few months, we have seen that number drop drastically due to anti-American sentiment and the chaos that the global financial markets have experienced due to this chaotic trade policy. Senator Cantwell. You know, I find it takes a lot to become an exporter. We have in the northwest--we had programs in the eighties where we just encouraged everybody to do it. I don't know if it was our geography or just an ethos, but we encouraged people to do it. And it's hard because you're taking risk, you're taking a risk anyway as a business person, but you're taking more risk because now you have less control over. That's why we support the export import bank so much because it lessens that risk. But we find that ends up being 25, 30 and you're saying, in your case, 40 percent of sales opportunities. It makes sense. You have a whole global market to pursue. What are some of your best markets for exports? Ms. Robbins. Europe, Australia, Canada, Japan, anywhere that guitar music is popular, guitar-based music, and where incomes are high enough to afford some discretionary spending. Senator Cantwell. Okay. So friendly countries to us anyway, we should have good relationships with them. And this shouldn't really be the barrier that it is at this moment. Ms. Robbins. That's right. But we've offended a lot of our allies. Senator Cantwell. Thank you so much. Thank you, Madam Chair, Ranking member. Chair. Thank you. Next, I recognize Ranking Member Markey for his questions. Senator Markey. Thank you, Madam Chair. Trump's tariffs, they've been thoughtless, they've been reckless, unpredictable, overly broad. They've caused economic uncertainty, as I already said, a 35 percent reduction in the number of huge containers coming into Mass-port, the port of New England really, for the month of June. Just absolutely unbelievable. And it has a profound impact on small businesses and consumers all across the country. And it places small businesses at a competitive disadvantage. They're not able to weather the storm the way bigger companies are. Ms. Robbins, you are already a 100 percent U.S. manufacturer, but as you state in your testimony, it's entirely impractical for you to be able to manufacture all the raw materials and components that go into your final product in the United States, especially with the current tariffs. Can you describe why this would be near impossible at this time? Ms. Robbins. Thank you for your question, Senator. Yes, I'd be happy to. First of all, any type of investment like this would require months or years and a lot of money. And I don't have that time and I don't have that money right now, especially as I'm being taxed heavily. I can also share some data with you. One of my friendly competitors did an analysis on what it would take to reshore just one of the components that goes into a pedal. So, this one that I have here behind these knobs is what's called a potentiometer. And they are used to adjust parameters on a pedal such as tone level, distortion, et cetera. So, his annual volume on this part, he uses 130,000. So, it's one of his most frequently used parts. And his current---- Senator Markey. Cost 130,000 what? Ms. Robbins. Potentiometers. Senator Markey. Okay. Beautiful. Ms. Robbins. And his current cost is 22 cents, and his annual cost is $28,600. The analysis showed that the cost per part would be $3 and 75 cents for an annual cost of $487,500, over 17 times the cost. Senator Markey. For you? Ms. Robbins. For a company that was attempting to reshore a single part. So, the tooling would be $238,000, that's eight times the annual cost, and that's just one part of hundreds that go into an effect pedal. So, he actually listed here the nine different parts that go into making this. And I'd like to submit this for the record, and I'd like to thank John Cusack for providing me with this evidence today. Thank you. Chair. Without objection. We'll have that entered into the record. Senator Markey. So, as you mentioned in your testimony, you were named SBA Exporter of the year in 2019. So, no one does it better than you. You were the number one. And so now tariffs were imposed. So, describe that in terms of the daily headaches that you're now confronting. Ms. Robbins. It's basically, all we do now is try to navigate this environment. I'll tell you what I'm not doing. I'm not putting out new products, I'm not growing, I'm not thriving, I'm not hiring. I've actually canceled job openings. These are all things that I'm not doing. What I am doing is worrying, stressing, things changing from day to day. You know, thinking over my employees and how they're dependent on our healthcare to manage their chronic conditions or chronic conditions of loved ones. Thinking of my daughters and how they're relying on myself and my husband for our income, to complete their education. This is what I'm doing. I'm not doing things that are productive. Senator Markey. Right. So, President Trump's motto of short-term pain for long term gain. So, you are sitting there, your short-term pain, but that short term pain could turn into long-term pain for you. It could be an extinction event. Ms. Robbins. Absolutely. Senator Markey. It could be an obliteration event, not a liberation day, but an obliteration day, if this goes on for too long. So, do you really feel that he's picking winners and losers here? Apple gets a pass; other big companies get a pass and you are down there trying to figure it out all by yourself? Ms. Robbins. I do. I do think that the disparity between large and small businesses has grown wider. I'm here publicly stating how poorly my business is doing while those companies are meeting royalty in the Middle East. It's a huge disparity. Senator Markey. Do you have lawyers and lobbyists here in town helping your company? Ms. Robbins. No. Senator Markey. Does Apple? Yes, they have departments. Does Google? Yes. All these big companies. They do. You have no one here except for this committee actually, we're supposed to be your advocates to protect you. So, you just think there's a disproportionate impact on you? Ms. Robbins. That's correct. I do have some advocates. The Main Street Alliance is working hard to level the playing field and elevate the voices of small businesses. And I really appreciate their support, but it still does not compare to what the large companies have. Senator Markey. So, do you keep a bottle of Pepto-Bismol now nearby as each day stories, you know, give you something else to think about and worry about? Ms. Robbins. As a small business owner, I'm used to navigating challenges. I have excellent problem solving and stress management skills, as you must to be in this position. However, I just don't see solutions. They're just not immediately available and I need immediate solutions. So, in my opinion, the only option is to rescind the tariffs, to pass the bill that you've mentioned exempting small businesses, it's just not survivable. As you mentioned, I believe we're facing the mass extinction of small businesses. We are clinging to dear life. The reason you're not seeing bigger numbers of the fallout in the economy, is because of folks like me that are--our house is on the line. We're going to do everything we can to save our businesses, to keep our employees employed. We're not also not like big companies that we're going to slash jobs the moment the forecast change. Senator Markey. Just one final question. I appreciate your indulgence, Madam Chair. When the President announces that he's in the process of beginning to try to find an agreement with China, does that just lift the cloud over off your head and all of a sudden, you're feeling instant relief? And what does that mean to you when you hear that? That they're trying to get a deal but they don't have a deal and then there's still 179 countries left to go to get a deal with? Ms. Robbins. There's absolutely no relief. It just creates more confusion and uncertainty, and it actually creates some effects such as, retail stores loading in on products from China in order to get things in before the tariffs theoretically go up even higher. That's what happened over the last month while there's been a break on the other reciprocal tariffs. So, it absolutely doesn't help us. It just extends the period of uncertainty. And I really need to be making changes now. And I can't due to this uncertainty. In the U.S. where we sell to retailers, and it is our largest market, if you make a price increase, you really can't go backwards. You know? And the more that you increase your price, the less competitive, the less affordable that you'll be to end users. And you really can't predict how much further your demand will fall when you raise prices. And it's certainly not something that you want to do repeatedly. So having something that I could plan for, you know, we absorbed the 2018 tariffs. They were 25 percent, that was difficult, but we did it. What's going on now is absolutely so challenging. I don't know a way forward. Senator Markey. So, thank you Madam Chair. Ms. Robbins. Thank you. Chair. Thank you, Ranking Member Markey. And I'll just make my own editorial comments as well. We recognize it is really difficult Ms. Robbins, and I appreciate your testimony, very detailed. It is a very complicated situation. We did not get into this situation overnight and we have had tariffs from other countries for decades now. And if we go back and look at those tariffs, we have forgotten as a nation that those same countries that we are tariffing now have had tariffs against us. And it's just baked into the prices of the goods that we consume every single day. This is a painful time. We recognize that we have got to find a way forward and we hope that these countries come back to the table and work with the United States of America. For those that are able to manufacturing all of their product in the United States, kudos. We love that. We want to support you. We want to have more made in America jobs for Americans. We've got to figure a way forward. So, I really appreciate all of you coming here today to give your testimony. This is a very important committee especially for states like all of ours, where most of our businesses are small businesses. So, we want to find a way forward that will work for all of us and make sure that we are manufacturing here in the United States. So, I do want to ask unanimous consent that the witnesses full statements be included in the record and without objection, so ordered. So, we'll make sure that all of your full written testimonies are included today. And with that I do have a closing statement. I ask unanimous consent that the record of today's hearing remain open for two weeks for members to submit questions, revise and extend their remarks, and submit additional information into the record. Without objection, so ordered. And again, thanks to our witnesses for being here today. Really great testimony. Thank you so much. And with that, the Committee on Small Business and Entrepreneurship stands adjourned. [Whereupon, at 3:58 p.m., the hearing was adjourned.] [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]