House Hearing with SBA Administrator

September 16, 2014

pic-congress-hearingOn Wednesday Sept. 10, the House Committee on Small Business, held a hearing titled, “Small Business Administration: Management and Outlook.” The hearing was led by Chairman Sam Graves (R-Mo.) and examined the SBA’s ability to meet its statutory obligations to the programs that most benefit small businesses and their role in the economy.

In her first appearance before the committee, U.S. Small Business Administration (SBA) Administrator Maria Contreras-Sweet, who has led the SBA since April, served as the sole witness and testified on the priorities and plans of the agency. During the hearing, members questioned the Administrator on a number of major perceived problems within the SBA including: delays with implementing contracting reforms signed into law more than two years ago, pursuing its own initiatives, and inadequate contracting oversight.

In Chairman Graves’ opening remarks he said that while the SBA has had recent success, the committee has concerns with the agency’s management. The SBA continues to “create policy without the benefit of notice and comment rulemaking, thereby ignoring valuable input of those most affected,” stated Chairman Graves, and “the agency has a history of pursuing initiatives it creates on its own, while ignoring congressionally mandated activities.”

Administrator Contreras-Sweet in her statement explained that the agency is “championing bold initiatives to open new business channels for entrepreneurs within the federal government, corporate supply chains and international commerce,” and that they were “working to find new and creative ways to put micro capital into the hands of entrepreneurs.” She further explained that next year the agency will roll out SBA One, an interactive user-friendly online platform designed to simplify the SBA loan process for banks and small businesses. She informed committee members that the program will save banks processing time and money by cutting down on faxed forms and allow for uploading of documents, generation of forms, and allow for electronic signatures. When asked about studies supporting her savings claim, Contreras-Sweet noted that she would report results back to the committee after the roll out.

Another issue addressed by the committee was regarding the SBA’s Fiscal Year (FY) 2013 Federal Contracting Scorecard. While the federal government reached its annual 23 percent small-business contracting goal, the results fell short of their five percent goal for women-owned firms, who received 4.32 percent. Ranking Member Nydia Velázquez (D-N.Y.) and Rep. Janice Hahn (D-Calif.) both expressed concerns over the fact that women-owned small businesses have serious issues with access to capital. Rep. Hahn stated that women-owned firms have endured a decrease in SBA loans from 40 percent before the recession to 16 percent today, and minority-owned firms have also seen a drop from 11 percent to 2.3 percent. Though Rep. Hahn applauded the SBA for recently zeroing out fees on some low-dollar loans, which resulted in increases in loans to women and minority owned firms, she expressed concerns about what efforts the SBA was taking to get more capital to businesses owned by underserved groups.

Contreras-Sweet responded by reiterating the SBA’s commitment to “modernize the agency” by keeping up with society’s technological pace, offer a variety of accessible services and ensured that they are identifying and filling any gaps. In addition, she stated that the SBA is working with the Women’s Business Centers throughout the country to increase business counseling and training services, and improve access to lending and federal contracts for women entrepreneurs.

Rep. Nydia Velázquez (D-N.Y.) also had concerns about small business federal contract funds that went to large companies, such as Northrop Grumman, Raytheon and Chevron. Contreras-Sweet explained that there is a rule in place that once a company gets into a contract with the government they are given five years, and if a large company acquires a small business then it is grandfathered in for a number of years. The Administrator acknowledged that this is an issue they have identified and the SBA has “disbarred more companies in the last four years than in the last ten years combined.” Contreras-Sweet assured the committee that the “program is working,” stating that the SBA has “strong policing activities” in place to make sure large businesses are not getting small-business contracts and small businesses are getting their fair share.

During the hearing, the Administrator made other points leaning in favor of the following: raising the Small Business Investment Company (SBIC) program’s family of funds limit (the amount of outstanding leverage allowed for two or more SBIC licenses under common control); finding ways to help small firms adapt and grow into international opportunities; expanding credit union collaboration; improving disaster program; renewing SBA 504 refinance and enhancing veteran focused entrepreneur programs.

Overall the committee advised that the SBA should more closely follow the intent of Congress, and plans to continue to work with and monitor the SBA to ensure the agency is accountable, engages the public more effectively and operates in the most efficient manner for the benefit of small businesses.

For additional information on this hearing, please visit the House Small Business Committee’s website.