[Senate Report 110-185]
[From the U.S. Government Publishing Office]
Calendar No. 386
110th Congress Report
SENATE
1st Session 110-185
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SMALL BUSINESS LENDING REAUTHORIZATION AND IMPROVEMENTS ACT OF 2007
_______
September 26, 2007.--Ordered to be printed
_______
Mr. Kerry, from the Committee on Small Business and Entrepreneurship,
submitted the following
R E P O R T
[To accompany S. 1671]
On June 26, 2007, the Senate Committee on Small Business
and Entrepreneurship to which was referred the bill (S. 1671)
to reauthorize and improve the entrepreneurial development
programs of the Small Business Administration, and for other
purposes, having considered the same, reports favorably thereon
with an amendment in the nature of a substitute and recommends
that the bill, as amended, do pass.
I. INTRODUCTION
The Entrepreneurial Development Act of 2007 (S. 1671) was
introduced by Senator John F. Kerry, for himself and Senator
Snowe, on June 20, 2007. The bill reauthorizes the SBA's
entrepreneurial development programs for Fiscal Years 2008,
2009, and 2010. In addition to updating the SBA's
entrepreneurial development programs, the bill authorizes four
new pilot program initiatives.
During markup of the bill, the Committee unanimously
adopted by voice vote, a bipartisan managers' substitute
amendment, offered by Chairman Kerry for himself and Ranking
Member Snowe. The bill was subsequently adopted as amended by a
roll call vote of 19-0.
S. 1671 is based on S. 3778, the Small Business
Reauthorization and Improvements Act of 2007, which was a
comprehensive reauthorization bill developed under Senator
Snowe, then the chair of the Committee, incorporating virtually
all of the entrepreneurial development provisions that were
adopted by the Committee in the 109th Congress. S. 1671 builds
on the Committee's work in the prior Congress, making a few
changes to the provisions, including updating the language to
reflect passage of Senate Amendment 187, which created a
permanent three year renewal grant program for Women's Business
Centers. S. 1671 also calls for a National Small Business
Summit. Aside from technical changes, other changes include
extending SBDC privacy requirements to SCORE clients and
increasing from 9 to 10 the Members of the National Small
Business Development Center Advisory Board.
II. DESCRIPTION OF BILL
Authorization of Programs
Title I--Reauthorization
The bill reauthorizes the Small Business Development Center
(SBDC) program, SCORE and the Paul Coverdell Drug-Free
Workplace program for Fiscal Years 2008, 2009, and 2010.
Title II--Women's small business ownership programs
During the Committee's SBA reauthorization in 2003, the
Committee determined that the SBA's programs had not evolved to
meet the changing needs of women-owned small businesses.
Specifically, women business leaders expressed their
frustration with the agency, the lack of results from agency
programs and services for existing women business owners, the
inactivity of the National Women's Business Council and
Interagency Committee on Women's Business Enterprise, and the
lack of connection with the `real world problems' facing women
entrepreneurs on a day-to-day basis.
In response, Senator Snowe introduced the Women's Small
Business Programs Improvement Act (S. 1154) and Senators Snowe
and Kerry introduced the Women's Business Centers Preservation
Act of 2003 (S. 1247). Provisions from these bills were then
incorporated into S. 1375, the Small Business Administration
50th Anniversary Reauthorization Act of 2003.
However, in Fiscal Year 2005, a revised version of SBA's
reauthorization was inserted into Division K of H.R. 4818, the
Consolidated Appropriations Act for 2005. While this version
included the reauthorization of the Women's Business Center
program, it excluded the authorization for the Women's Business
Center Program Sustainability Pilot program. The pilot program
was created in bipartisan legislation, the Women's Business
Center Sustainability Act of 1999, sponsored by Senator Kerry
and cosponsored by Senator Snowe. Since 2005, the pilot program
has been only reauthorized on an annual basis in Appropriations
bills, leaving the most experienced centers, in years five
through ten, operating with the uncertainty of whether they
would have an opportunity to continue to participate in the
program.
To address these concerns and to meet the increasing demand
for the program's services, in 2006, Senators Snowe and Kerry
introduced the Women's Small Business Ownership Programs Act of
2006 (S. 3659). The provisions of that bill were then
incorporated into S. 3778. Senate Amendment 187, sponsored by
Senators Kerry, Snowe and Sununu, also addressed this issue and
was unanimously passed by the Senate as an amendment to H.R. 2,
the Fair Minimum Wage Act of 2007, on January 24, 2007. The
Fair Minimum Wage Act was subsequently attached to the U.S.
Troop Readiness, Veterans' Care, Katrina Recovery and Iraq
Accountability Appropriations Act of 2007. The President signed
this legislation into law on May 25, 2007. The legislationwould
allow established women's business centers--those beyond the first five
years of funding--to apply for 3-year renewal grants on a continuous
basis.
The legislation is similar to language that passed out of
the Committee on Small Business and Entrepreneurship as part of
S. 3778 and based on the Women's Business Center Sustainability
Pilot Program Senator Kerry created in 1999. Senator Snowe
cosponsored the bill.
Small Business Administration Office of Women's Business
Ownership
The bill provides authority for the SBA's Office of Women's
Business Ownership to develop and make available new programs
and services for established women owned businesses addressing
issues in the areas of women in manufacturing, technology,
professional services, retail and product sales, travel and
tourism, international trade and Federal government
procurement. The Committee expects that these new programs and
services will be developed in consultation with the National
Women's Business Council, the Interagency Committee on Women's
Business Enterprise, and representatives of the women's
business centers associations.
The bill also directs the SBA to conduct training for
District Office Women Business Ownership Representatives
(existing personnel who are responsible for marketing and
outreach activities) and District Office Technical
Representatives (existing personnel who are responsible for
grant programmatic and financial oversight duties) as well as
providing resources for the District Offices to carry out their
responsibilities.
The Women's Business Center Program, established in 1988,
provides long-term training and counseling to encourage small
business ownership through more than 100 non-profit
organizations. The Women's Business Center program has been
well received and has become a unique resource for women
entrepreneurs--proving to be of great benefit to the SBA in its
quest to serve greater numbers of entrepreneurs. Therefore,
some members of the Committee have questioned agency actions in
support of opening new centers in new locations before
stabilizing established centers through continued funding
opportunities. The SBA has stated that after initial funding,
the centers should be able to provide services independent of
the grant program. However, since a requirement of the Women's
Business Center program is to conduct outreach and long-term
assistance to the under-served markets on a `no-fee' basis, it
would be difficult for many centers to become self-sufficient.
The Committee supports the agency's positioning itself to first
meet the obligations of renewal grant funding for productive
centers before creating new centers.
To improve this process, the bill directs the agency to
streamline and reduce the reporting requirements and costs of
the centers, recognizing the limited grant award and limited
human resources within the centers. All of the eligible
associations that represent Women's Business Centers will also
have an opportunity to consult with the SBA Office of Women's
Business Ownership for the purpose of developing training
programs for centers and recommendations to improve the
policies and procedures governing the operations and
administration of the program.
National Women's Business Council
The National Women's Business Council was created by the
Women's Business Ownership Act of 1988 to serve as an advisory
body to the President, the Congress and the SBA. Its members
came from the public and private sectors, and it was
constituted to respond to criticism of the Interagency
Committee's inactivity. By separating from the Interagency
Committee, the Council was better able to focus on its advisory
mission. The 1997 Small Business Reauthorization Act provided
for improved reporting duties and Council appointments. The
2000 Small Business Reauthorization Act increased the annual
authorized appropriation from $600,000 to $1 million to allow
the Council to broaden its scope in research and reports,
establish advisory councils, conduct conferences, and establish
an interstate communication network.
To build upon the foundation previously established for the
Council, the Committee incorporated the Council's requests to
change its research formula and establishes a 30 percent
allocation of appropriated funds for specific research. In
addition, the bill provides the Council with the authority to
create an electronic clearinghouse on women's business
ownership. At the Council's request, the bill enables the
Council to establish working groups. The bill also provides the
Council with the same cosponsorship authority as the SBA in
order for it to expand research and program activities for
women-owned small businesses.
To ensure the Council's continuity and independence, the
bill clarifies membership representation. The Council has 15
members representing small businesses and small business
organizations, with the Chairperson appointed by the President,
six members representing women's business organizations, and
the remaining eight members appointed by the SBA Administrator
based upon recommendations of the Chair and Ranking Members of
the Senate Committee on Small Business and Entrepreneurship and
the House Committee on Small Business. Of these eight `party-
affiliated' members, four are to come from the same political
party as the President and four are not to be of the
President's party.
In 2003, Senator Landrieu proposed an amendment, which was
adopted by the Committee, to establish fairness in the
appointment of Council members as a result of an imbalance in
membership representation between the two political parties.
This amendment calls for equal representation of the two
political parties in the process of appointing members to fill
vacant seats on the Council and requires the Administrator to
report to Congress on vacancies that remain unfilled for more
than 30 days. In 2006, as part of S. 3778, the Committee
clarified the amendment to recognize a party balance for the
eight `party-affiliated' members. The report must cite in
detail the status of all vacancies, identifying the type of
vacancies, the process the Council will follow, and the notice
of any anticipated delays in filling the vacancies.
Interagency Committee on Women's Business Enterprise
In 1977, an interagency task force was formed and was
subsequently renamed the Interagency Council in May 1979 by
Executive Order 11213. In 1988, the Women's Business Ownership
Act (Public Law 100-533) replaced the Interagency Council with
a joint public-private sector National Women's Business
Council. The SBA Reauthorization and Amendment Act of 1994
(Public Law 103-403) revised the Interagency Council's
structure, returning all public-sector participants to comprise
an expanded Interagency Committee on Women's Business
Enterprise.
In 1994, by separating the private-sector Council from the
public-sector Interagency Committee, it was intended that the
Council would be the pro-active force to inspire action by the
Interagency Committee. The 1997 Reauthorization Act
incorporated a requirement that representatives on the
Interagency Committee report directly to the head of their
agency on the Interagency Committee's activities. There is no
funding authorization provided under current law to support the
activities of the Interagency Committee. Nor are there clear
directives on the operations and interaction of the Federal
agency and department representatives.
Currently, the Interagency Committee includes
representatives from the U.S. Departments of Commerce, Defense,
Education, Energy, Health & Human Services, Labor,
Transportation, and Treasury, the SBA, General Services
Administration, Office of Federal Procurement Policy, National
Aeronautics and Science Administration, Environmental
Protection Agency, the Federal Reserve, and the Executive
Office of the President.
The Federal agencies and departments represented on the
Interagency Committee allocate existing personnel and resources
to support participation on the Interagency Committee. The
Interagency Committee is required to submit an annual report to
the President and Congress, through the SBA, but there is no
recent record of annual reports being prepared or forwarded to
the President and Congress. In addition, the President has not
appointed a Chairperson to carry out the mission of the
Interagency Committee, and therefore, the Interagency Committee
is inactive.
To reactivate the Interagency Committee so that it can
accomplish its intended mission, the bill directs the SBA
Deputy Administrator to assume temporarily the responsibilities
of the Interagency Committee Chair, if vacant, until the
President makes an appointment. This action provides for the
continuity of activities and avoid periods of inactivity. The
bill also provides operational direction for the Interagency
Committee by requiring that the Interagency Committee conduct
three official meetings each year to plan upcoming Fiscal Year
activities; track year-to-date agency contracting goals; and
evaluate Fiscal Year progress and begin the report process.
The bill also establishes, as a subcommittee to the
Interagency Committee, a policy advisory group consisting of
representatives from the SBA, the Department of Commerce, the
Department of Labor, the Department of Defense, the Department
of the Treasury, two individuals and two organizations that are
members of the National Women's Business Council. The Committee
believes that the policy advisory group will return the
Interagency Committee to a mix of public/private members to
provide the support and direction so badly needed to revive the
intent of the Interagency Committee.
Title III--International trade
Exporters support over 12 million jobs and pay wages 18
percent higher than average. Ninety-seven percent of exporters
are small businesses and account for almost $300 billion of
yearly export sales--nearly one-third of total U.S. exports.
Over the last decade the number of small businesses that export
has increased by more than 250 percent. Exporting offers the
opportunity for small businesses to retain and create jobs,
position themselves for growth, enter new markets, expand their
customer base, and add product and service lines.
The SBA plays an important role in this growth through
United States Export Assistance Centers (USEACs), which provide
small or medium sized businesses with local export assistance.
In particular, USEACs provide lending and technical assistance
and help small businesses in obtaining adequate export
financing. The Committee is aware that, at a cost of less than
$2 million per year, the current group of SBA International
Finance Specialists has obtained bank financing for more than
$10 billion in U.S. exports since 1999. The $10 billion in
export sales financed by these specialists has helped to create
over 140,000 new, high-paying U.S. jobs.
However, despite these figures, the Committee is concerned
that this program is experiencing a record staffing low of 16
specialists nationwide as of July 2007--down from a peak of 22
specialists in January 2000. These vacancies force the current
group of finance specialists to cover more extensive
territories, often with limited travel budgets, which
negatively impacts U.S. export potential in high export
markets. In order to expand and assist small businesses
exporters, the bill expands the trade distribution network by
ensuring SBA maintains a sufficient level of USEAC employees.
The bill ensures that in filling USEAC positions, the SBA must
first address existing positions that have been vacant since
January 2003 before filling new positions.
This provision was included in S. 3778 but originated in
the 109th Congress from S. 3663, the Small Business
International Trade Enhancements Act of 2006, introduced by
Senator Landrieu on July 14, 2006 and co-sponsored by Senators
Bayh, Kerry, and Pryor. This provision was also included in S.
738, the Small Business International Trade Enhancement Act of
2007, introduced by Senator Landrieu in the 110th Congress on
March 1, 2007. Cosponsors included Senators Snowe, Kerry, Pryor
and Coleman.
Finally, to improve the overall administration of the SBA's
international trade loan programs, the bill designates one
individual within the SBA as a trade financial specialist to
oversee the ITL programs. This provision was also from S. 3778
and included in S. 738.
Title IV--Native American Small Business Development Program
The SBA's Office of Native American Affairs implements the
agency's outreach program for Native American communities on or
near tribal lands. The bill codifies the Office of Native
American Affairs, and outlines the qualifications and
responsibilities of the Office and its head. Additionally, the
section establishes a program that provides financial
assistance to tribal governments, tribal colleges, Native
Hawaiian organizations, and Alaska Native corporations to
create Native American business centers. These centers shall
conduct five year projects that offer culturally tailored
business development assistance. A Native American business
center may enter into a contract or cooperative agreement with
a Federal department or agency to provide specific assistance
to Native American and other under-served small business
concerns located on or near tribal lands, to the extent that
such contract or cooperative agreement is consistent with the
terms of any federal assistance received by the Native American
business center. This program would be authorized at $5 million
per year for Fiscal Years 2008 through 2010.
The bill establishes two Native American small business
development pilot programs. First, the Native American
Development Grant Pilot Program awards Native American
development grants to provide culturally tailored business
development training and related services to Native Americans
and Native American small business concerns. The grants may be
awarded to (i) any small business development center, or (ii)
any private, nonprofit organization that has members of an
Indian tribe comprising a majority of its board of directors,
is a Native Hawaiian organization; or an Alaska Native
corporation. The program would be authorized at $1 million per
year for Fiscal Years 2008 through 2010.
Second, the American Indian Tribal Assistance Center Grant
Pilot Program awards not less than three American Indian Tribal
Assistance Center grants to establish joint projects to provide
culturally tailored business development assistance to
prospective and current owners of small business concerns
located on or near tribal lands. The program would be
authorized at $1,000,000 per year for Fiscal Years 2008 through
2010.
The Native American small business development programs
contained in S. 1671 are originally from legislation introduced
in the 109th Congress--the Native American Small Business
Development Act (S. 1907), sponsored by Senator Johnson and
cosponsored by Senators Kerry, Pryor, Cantwell, Akaka,
Stabenow, Boxer, Dorgan, Inouye, Murray, Smith and Enzi, and an
amendment sponsored by Senators Thune and Enzi. S. 3778 also
incorporated this language.
Title V--National Small Business Regulatory Assistance
The Committee continues to strongly advocate for a targeted
regulatory reform agenda that would reduce the burdens that
Federal regulations bear on small businesses. Small businesses
are essential to the health of the U.S. economy, and future
economic growth, especially in a globally competitive world,
will depend on the success of the small business and
entrepreneurial sector of the economy. Small business
entrepreneurs are risk takers who are currently producing over
50 percent of our Gross Domestic Product and creating
approximately three-quarters of all new jobs. Reducing
regulatory burdens for the nation's 25 million small businesses
will help to stimulate innovation and creativity, lower the
costs of starting and operating a business, and provide the
tools and resources that small businesses need to grow and
expand.
Unfortunately, as the number and complexity of Federal
regulations increase, there is often a greater burden placed on
small businesses than on larger businesses. A recent report
prepared for the SBA's Office of Advocacy found that in 2004,
the per-employee cost of federal regulations for firms with
fewer than 20 employees was $7,647. That number is 44.8 percent
higher than the $5,282 per-employee cost faced by businesses
with 500 or more workers.
At the same time, small business owners have found it
increasingly difficult to meet their regulatory obligations
while trying to successfully operate their businesses. In many
cases, small business owners do not learn about their failure
to comply with a regulation until it is too late and an
inspector or auditor walks through the door. The Committee
believes that small business owners need additional compliance
assistance tools and resources to both understand and comply
with complex regulatory actions. To that end, in the 109th
Congress, Senator Kerry introduced the National Small Business
Regulatory Assistance Act, S. 1411, cosponsored by Senator
Snowe. The provisions of S. 1411 are included as Title V of
this bill.
Title V establishes a pilot project for SBDCs to expand
their small business regulatory compliance assistance programs.
This title capitalizes on the current SBDC structure, which
provides management and technical assistance counseling and
educational programs to small business owners across the
country. Currently, there are over 1,100 SBDC service locations
in every state and territory.
The bill also establishes a four-year pilot program to
provide resources to SBDCs so they may provide free regulatory
compliance assistance and counseling to small business owners.
Section 1703 would require the SBA to provide matching grants
to SBDC programs in two states in each of the SBA's 10 regions.
The grants would be more than $150,000, but less than $300,000
and shall be consistent with the matching requirement under
current law. The bill also authorizes $5 million in
appropriations for the first fiscal year beginning after the
date of enactment, and $5 million in appropriations for each of
the three subsequent fiscal years.
The bill also requires the SBDCs to use the grants to
provide: access to information and resources, including current
Federal and State non-punitive compliance and technical
assistance programs; conduct training and educational
activities; and offer confidential, free-of-charge, one-on-one,
in-depth counseling to small business owners regarding
compliance with Federal regulations.
SBDCs participating in the pilot program would be required
to submit a quarterly report, and the SBA would have
responsibility for evaluating the pilot program and making
recommendations on the extension of the program to other SBDCs.
Finally, the SBA would promulgate final regulations to carry
out the pilot program within 180 days of passage.
Title VI--Other provisions
Minority Entrepreneurship and Innovation Pilot Program of
2007
This section was based on the Minority Entrepreneurship
Development Act of 2007, (S. 98), introduced by Senator Kerry,
on the first day of the new Congress in January 2007, and co-
sponsored by Senators Cardin, Landrieu and Clinton. Modeled
after a program launched by the Kauffman Foundation, the goal
of this section is to target minority students who are pursuing
careers in highly skilled fields such as engineering,
manufacturing, science and technology, and guide them towards
entrepreneurship as a career option. Minority-owned businesses
already participate in a wide variety of industries, but are
disproportionately represented in traditionally low-growth and
low-opportunity service sectors. Promoting entrepreneurial
education to undergraduate students at colleges and
universities expands the pool of potential business owners to
technology, financial services, legal services, and other `non-
traditional' areas in which the overall development of minority
firms has been slow. Growing the size and capacity of existing
minority firms and promoting entrepreneurship among minority
students already committed to higher education will have a
direct relationship on the employment rate, income levels and
wealth creation of minorities throughout the nation.
Beyond offering business courses, this program is intended
to transform the way colleges and universities prepare students
for success by making entrepreneurship education available
across campuses that serve large minority populations. The goal
is to enable any student, regardless of field of study, to
access entrepreneurial training and to involve faculty and
students from a variety of academic disciplines.
Specifically, the bill directs the Administrator of the SBA
to make grants to historically black colleges and universities,
tribal colleges, and Hispanic serving institutions, or to any
entity formed by a combination of such institutions: (1) To
assist in establishing a campus-wide entrepreneurship
curriculum for undergraduate or graduate studies; and (2) for
the placement of SBDCs on the physical campus of the
institution. The bill requires an institution of higher
education receiving a grant to: (1) Develop a curriculum that
includes training in various skill sets needed by successful
entrepreneurs, including business management and marketing,
financial management and accounting, market analysis and
competitive analysis and innovation and strategic planning; and
(2) open a SBDC to provide business counseling, training and
referrals to small businesses in the local community
surrounding the campus. The SBDC is intended to foster a
culture of entrepreneurship on the campus by bringing together
the local small business community and the academic community,
the faculty and students. Recognizing the economic challenges
faced by many of these campuses serving minority communities,
the institutions are not required to provide matching funds for
the establishment of the SBDC.
The bill authorizes the pilot program for two fiscal years,
to provide grants of $500,000 per fiscal year for institutions
of higher education, and it authorizes appropriations of $10
million for each of FY 2008 and 2009.
The bill also includes protections to ensure that the funds
are not diverted to other campus expenses or budgets not
directly related to implementation of the Minority
Entrepreneurship and Innovation program.
Institutions of higher education
The bill requires SBDC grantees that are institutions of
higher education to be accredited and grandfathers any SBDC
grantee institution of higher education that is not yet
accredited but is seeking accreditation.
Health insurance options information for small business
concerns
The most pressing issue facing small business today is the
rising cost of health insurance. Small businesses face a crisis
when it comes to securing quality, affordable health insurance
for their employees. Health insurance costs are skyrocketing,
and small businesses are trapped in stagnant, dysfunctional
state insurance markets that have little, if any, competition.
Further compounding matters, many small businesses do not
possess the resources, the personnel, or the information to
navigate the complex health care landscape.
The Committee supports efforts to increase small business
awareness of all health insurance options available to them.
The bill establishes a four-year, pilot grant program to
provide information, counseling, and educational materials to
small businesses, through the well-established national
framework of the SBDCs. The Committee believes that SBDCs
provide an appropriate mechanism to disseminate information
about health insurance options to small businesses.
This section is based on the Small Business Health
Information Options Act of 2007, S. 1690, introduced by Senator
Snowe in the 110th Congress and cosponsored by Senators Kerry
and Bennett. It is based on recent research conducted by the
non-partisan Healthcare Leadership Council, which found that
with a short educational and counseling session, small
businesses were up to 33 percent more likely to offer health
insurance to their employees.
Specifically, the bill requires the SBA Administrator to
establish the pilot, competitive grant program within 30 days
of enactment. The program will make grants to SBDCs to provide
information and educational materials regarding small business
health insurance options. The grant amounts authorized under
the program shall be not less than $150,000 per fiscal year,
and not more than $300,000 per fiscal year.
The bill also requires each participating SBDC to submit a
quarterly report to the Administrator and Chief Counsel for the
SBA Office of Advocacy. Finally, the bill authorizes $5 million
in appropriations for the first fiscal year beginning after the
date of enactment, and $5 million in appropriations for each of
the three subsequent fiscal years.
National Small Business Development Center Advisory Board
Although SBDCs are grouped into 10 regions throughout the
country, the National Small Business Development Center
Advisory Board presently only has 9 members on its board. In
order to ensure that all regions are represented on the board,
this bill would allow 10 members to serve on the board.
Office of Native American Affairs pilot program
To identify and implement Native American economic
development opportunities available from the Federal government
and private enterprise, the SBA's Office of Native American
Affairs is directed to develop and publish a self-assessment
tool for Indian tribes that will allow such tribes to evaluate
and implement best practices for economic development, and
provide assistance to Indian tribes, through the Inter-Agency
Working Group.
Privacy requirements for SCORE chapters
Maintaining the privacy of clients is of vital importance
in allowing a client to share business details and thus receive
help from a counselor. This provision extends the privacy rules
which apply to SBDC clients to SCORE clients.
National Small Business Summit
The last national small business summit, the White House
Conference on Small Business, took place over 12 years ago.
Many of the recommendations from that conference were enacted
into law and have helped small businesses continue to drive the
American economy. However, much has changed since that time,
and small businesses continue to face new challenges such as
rising health care costs, increasing regulations and low cost
competition. This summit will be an opportunity to highlight
the importance of small businesses in the economy and focus
attention on the problems and the solutions necessary to
address the obstacles that may be hindering the ability of
small businesses to start up and grow.
III. COMMITTEE VOTE
In compliance with rule XXVI(7)(b) of the Standing Rules of
the Senate, the following vote was recorded on June 26, 2007.
A motion by the Chair to adopt the Entrepreneurial
Development Act of 2007, as amended, to reauthorize the Small
Business Administration's (SBA) entrepreneurial development
programs, was approved by a unanimous 19-0 recorded vote with
the following Senators voting in the affirmative: Kerry, Levin,
Harkin, Lieberman, Landrieu, Cantwell, Bayh, Pryor, Cardin,
Tester, Snowe, Bond, Coleman, Vitter, Dole, Thune, Corker,
Enzi, and Isakson.
IV. COST ESTIMATE
In compliance with rule XXVI(11)(a)(1) of the Standing
Rules of the Senate, the Committee estimates the cost of the
legislation will be equal to the amounts discussed in the
following letter from the Congressional Budget Office.
August 9, 2007.
Hon. John F. Kerry,
Chair, Committee on Small Business and Entrepreneurship,
U.S. Senate, Washington, DC.
Dear Mr. Chair: The Congressional Budget Office has
prepared the enclosed cost estimate for S. 1671, the
Entrepreneurial Development Act of 2007.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Susan Willie.
Sincerely,
Peter R. Orszag.
Enclosure.
Summary: S. 1671 would authorize funding for a number of
Small Business Administration (SBA) programs that provide
technical support and assistance to small business owners in
targetedpopulations including Native Americans, women, and
minorities. The bill also would create new grant programs to assist
business owners in finding affordable health insurance for employees
and meeting federal regulatory requirements.
Assuming appropriation of the authorized amounts, CBO
estimates that implementing S. 1671 would cost $32 million in
2008 and $509 million over the 2008-2012 period. (Those totals
include $3 million per year for estimated administrative
costs.) Enacting the bill would not affect direct spending or
revenues.
S. 1671 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act (UMRA);
implementing the bill would benefit public institutions of
higher education and tribal governments.
Estimated cost to the Federal Government: The estimated
budgetary impact of S. 1671 is shown in the following table.
The costs of this legislation fall within budget function 370
(commerce and housing credit).
------------------------------------------------------------------------
By fiscal year, in millions of
dollars--
---------------------------------------
2008 2009 2010 2011 2012
------------------------------------------------------------------------
CHANGES IN SPENDING SUBJECT TO APPROPRIATION
Additional Grants:
Authorization Level......... 190 197 205 10 0
Estimated Outlays........... 29 88 152 126 99
Additional Administrative Costs:
Estimated Authorization 3 3 3 3 3
Level......................
Estimated Outlays........... 3 3 3 3 3
Total Changes:
Estimated Authorization 193 200 208 13 3
Level..................
Estimated Outlays....... 32 91 155 129 102
------------------------------------------------------------------------
Basis of estimate: S. 1671 would authorize appropriations
mostly through fiscal year 2010 to continue several SBA
programs that provide assistance to small business owners. The
bill also would authorize SBA to create pilot programs to
provide training and information to small business owners in
targeted populations, and to offer certain research and
information to small business owners.
The bill would reauthorize the Service Corps of Retired
Executives (SCORE) program, the Small Business Development
Center (SBDC) program, and the Drug-free Workplace program
through 2010. S. 1671 would authorize the appropriation of $459
million over the 2008-2010 period for those three programs. CBO
estimates that implementing those provisions would cost $22
million in 2008 and $379 million over the 2008-2012 period,
assuming appropriation of the specified amounts.
S. 1671 would reauthorize SBA's Women's Small Business
Center program and the National Women's Business Council for
three years. CBO estimates that implementing those programs to
support businesses owned by women would cost $2 million in 2008
and $42 million over the 2008-2012 period.
Several programs supporting business ownership by Native
Americans would be authorized through 2010 under the
legislation as well. S. 1671 would create a small business
developmentprogram for Native Americans and two pilot programs
to provide assistance that is tailored to the needs of the Native
American small business community. CBO estimates that those provisions
would cost $1 million in 2008 and $17 million over the 2008-2012
period.
The bill would create a program to provide grants to
historically Black colleges and universities, Tribal colleges,
certain institutions that serve Hispanic, Alaska Native, or
Native Hawaiian populations, or any entity formed by a
combination of such institutions to establish small business
development centers to provide management training, research,
and referral services to minority-owned small businesses. CBO
estimates that implementing this program would cost $2 million
in 2008 and $26 million over the 2008-2012 period.
The bill would authorize the appropriation of $40 million
over the 2008-2011 period to fund two new programs to provide
specific information to small business owners through SBA's
network of SBDCs:
One pilot program would authorize SBA to award
grants to SBDCs to help business owners comply with federal
regulations. For this program, the bill would authorize $20
million over the 2008-2011 period. CBO estimates that
implementing this provision would cost $1 million in 2008 and
$15 million over the 2008-2012 period, with an additional $5
million to be spent after 2012.
A second pilot program would authorize SBA to
award grants to SBDCs to provide information to small
businesses about health insurance options. The bill would
authorize $20 million over the 2008-2011 period for this
program as well. CBO estimates that implementing this provision
would cost $1 million in 2008 and $15 million over the 2008-
2012 period, with the remaining $5 million in outlays to occur
after 2012.
Finally, based on information from SBA, CBO estimates that
the agency would need an additional 16 full-time equivalent
positions to establish an Office of Native American Affairs
within SBA, and to fully staff and expand the operations of
SBA's Office of International Trade. Costs for that additional
administrative support would total an estimated $15 million
over the 2008-2012 period.
Intergovernmental and private-sector impact: S. 1671
contains no intergovernmental or private-sector mandates as
defined in UMRA. The bill would benefit public institutions of
higher education and tribal governments by authorizing grants
for small business development programs. Any costs those
entities would incur to comply with conditions of federal
assistance would be incurred voluntarily.
Previous CBO estimate: On June 15, 2007, CBO transmitted a
cost estimate for H.R. 2359, the SBA Entrepreneurial
Development Programs Act of 2007, as ordered reported by the
House Committee on Small Business on May 23, 2007. The House
bill would authorize two programs that are similar to programs
authorized in S. 1671--grants to SBDCs to provide assistance
with federal regulations and to provide information on health
insurance options. CBO estimated that implementing those
programs would cost $48 million over the 2008-2012 period.
Estimate prepared by: Federal Costs: Susan Willie. Impact
on State, Local, and Tribal Governments: Elizabeth Cove. Impact
on the Private Sector: Jacob Kuipers.
Estimate approved by: Peter H. Fontaine, Deputy Assistant
Director for Budget Analysis.
V. EVALUATION OF REGULATORY IMPACT
In compliance with rule XXVI(11)(b) of the Standing Rules
of the Senate, it is the opinion of the Committee that no
significant additional regulatory impact will be incurred in
carrying out the provisions of this legislation. There will be
no additional impact on the personal privacy of companies or
individuals who utilize the services provided.
VI. SECTION-BY-SECTION ANALYSIS
Section 1. Short Title. The Entrepreneurial Development Act
of 2007.
Sec. 2. Table of Contents.
Sec. 3. Definitions.
Title I--Reauthorization
Sec. 101. Reauthorizations: Reauthorizes the Small Business
Development Center (SBDC) program, SCORE and the Paul Coverdell
Drug-Free Workplace program for 2008, 2009, and 2010.
Title II--Women's small business ownership programs
Sec. 201. Office of Women's Business Ownership. This
section amends the Small Business Act by directing the SBA
Office of Women's Business Ownership to develop new programs
and services for established women-owned businesses. In
addition, this provision requires the Office of Women's
Business Ownership to consult with the associations
representing the Women's Business Centers, the National Women's
Business Council, and the Interagency Committee onWomen's
Business Enterprise. It also requires that training be provided for SBA
District Office personnel responsible for carrying out Agency programs.
Finally, this provision requires the Administration to improve the
women's business center grant process and the programmatic and
financial oversight process.
Sec. 202. Women's Business Center Program. Reauthorizes the
Women's Business Center (WBC) program for 2008, 2009, and 2010.
Also recognizes the existence and activities of any
associations of women's business centers representing 30
percent or more of the WBCs. Requires the SBA Administrator to
consult with any association of WBCs to develop training for
WBC and improvement for the WBC program. Directs that grants to
WBCs in the initial five years of funding to be equally
allocated. In addition, the bill clearly sets forth the process
and criteria that the agency must follow in administering the
women's business center grant program. It requires the SBA to
disburse grants as quickly as possible and to provide
justification if new WBCs are located within 50 miles of an
existing WBC.
Sec. 203. National Women's Business Council. Reauthorizes
the National Women's Business Council for 2008, 2009, and 2010.
Provides the council with cosponsorship authority and clarifies
membership representation on the Council. Also establishes
working groups under the direction of the chairperson. In
addition, provides authority for the Council to serve as an
electronic clearinghouse for information on small business
owned and controlled by women. Changes the Council's research
allocation from $550,000 to 30 percent of appropriated funds.
Sec. 204. Interagency Committee on Women's Business
Enterprise. Provides an acting chairperson of the Interagency
Committee on Women's Business Enterprise and establishes a
Policy Advisory Group to assist the chairperson in developing
policies and programs, and defines the composition of the
Policy Advisory Group. The bill also provides operational
direction for the Interagency Committee by requiring that the
Interagency Committee conduct three official meetings each year
to plan upcoming Fiscal Year activities; track year-to-date
agency contracting goals; and evaluate Fiscal Year progress and
begin the report process.
Sec. 205. Preserving the independence of the National
Women's Business Council. Requires an equal number of members
appointed to serve on the Council representing each of the two
major political parties. This also requires that if a vacancy
is not filled, or if there exists an imbalance of party-
affiliated members on the Council, in a 30-day period, a report
must be submitted to the Senate Committee on Small Business and
Entrepreneurship and House Committees on Small Business and
Entrepreneurship.
Title III--International trade
Sec. 301. Small Business Administration Associate
Administrator for International Trade. This provision
establishes an Associate Administrator for International Trade
and outlines responsibilities.
Sec. 302. Office of International Trade. This section
expands the trade distribution network to include the United
States Export Assistance Centers. This section also designates
one individual within the Administration as a trade financial
specialist to oversee the international loan programs. This
provision establishes a floor of International Finance
Specialists at the level the SBA had in January 2003.
Title IV--Native American Small Business Development Program
Sec. 401. Short title. Native American Small Business
Development Act of 2007.
Sec. 402. Native American Small Business Development
Program. The bill codifies the Office of Native American
Affairs, and outlines the qualifications and responsibilities
of the Office and its head. Additionally, this section provides
financial assistance to tribal governments, tribal colleges,
Native Hawaiian organizations, and Alaska Native corporations
to create Native American business centers. These centers shall
conduct five-year projects that offer culturally tailored
business development assistance. This program would be
authorized at $5 million per year for fiscal years 2007 through
2010.
Sec. 403. Pilot programs. Native American Development Grant
Pilot program. This section awards Native American development
grants to provide culturally tailored business development
training and related services to Native Americans and Native
American small business concerns. The grants may be awarded to
(i) any small business development center; or (ii) any private,
nonprofit organization that has members of an Indian tribe
comprising a majority of its board of directors; is a Native
Hawaiian organization; or is an Alaska Native corporation.
American Indian Tribal Assistance Center Grant Pilot Program.
This section awards not less than three American Indian Tribal
Assistance Center grants to establish joint projects to provide
culturally tailored business development assistance to
prospective and current owners of small business concerns
located on or near tribal lands.
Title V--National Small Business Regulatory Assistance
Sec. 501. Short title. The National Small Business
Regulatory Assistance Act of 2007.
Sec. 502. Purpose. To establish a four-year pilot program
to provide resources to SBDCs so they may provide free
regulatory compliance assistance and counseling to small
business owners.
Sec. 503. Small Business Regulatory Assistance Pilot
Program. This section requires the SBA to provide matching
grants to the SBDC programs of two states in each of the SBA's
10 regions. The grants shall be more than $150,000, but less
than $300,000 and shall be consistent with the matching
requirement under current law. SBDCs are required to use the
grants to provide: access to information and resources,
including current Federal and State non-punitive compliance and
technical assistance programs; conduct training and educational
activities; and offer confidential, free-of-charge, one-on-one,
in-depth counseling to the owners and operators of small
business concerns regarding compliance with Federal and State
regulations derived fromFederal law. SBDCs participating in the
pilot program would be required to submit a quarterly report, and the
SBA would have responsibility for evaluating the pilot program and
making recommendations on the extension of the program to other SBDCs.
This section includes language stipulating that new programs not
duplicate regulatory services already provided by Federal or State
programs.
Sec. 504. Rulemaking. The SBA must promulgate final
regulations to carry out the pilot program within 180 days of
passage.
Title VI--Other provisions
Sec. 601. Minority Entrepreneurship and Innovation Pilot
Program. This provision directs the SBA Administrator to make
grants to historically black colleges and universities Hispanic
serving institutions, Alaska Native-serving institutions,
Native Hawaiian-serving institutions, or to any entity formed
by a combination of such institutions: (1) To assist in
establishing an entrepreneurship curriculum for undergraduate
or graduate studies; and (2) for the placement of small
business development centers or a small business incubator on
the physical campus of the institution. Requires an institution
of higher education receiving a grant to: (1) Develop a
curriculum that includes training in various skill sets needed
by successful entrepreneurs; and (2) open a small business
development center. Authorizes this pilot program for two
fiscal years, and authorizes grants of up to $500,000 per
fiscal year for any one institution of higher education. In
addition, there is authorized to be appropriated $10 million
each FY 2008 and 2009.
Sec. 602. Institutions of higher education. This provision
requires SBDC grantees that are institutions of higher
education to be accredited and grandfathers any SBDC grantee
institution of higher education that is not yet accredited but
is seeking accreditation.
Sec. 603. Health insurance options information for small
business concerns. Provides that, within 30 days of enactment,
the SBA Administrator shall establish a pilot, competitive
grant program to make grants to SBDCs to provide information
and educational materials regarding small business health
insurance options. The grant amounts authorized under this
section shall be not less than $150,000 per fiscal year, and
not more than $300,000 per fiscal year. Requires each
participating SBDC to submit a quarterly report to the Senate
Committee on Small Business and Entrepreneurship and to the
House Committee on Small Business. Authorizes $5 million to be
appropriated for the first fiscal year beginning after the date
of enactment and authorizes $5 million to be appropriated for
each of the three fiscal years following the year of enactment.
Sec. 604. National Small Business Development Center
Advisory Board. The bill adds one member to the National Small
Business Development Center Advisory Board for a total of ten
members, to ensure that all ten SBDC districts are represented
on the board.
Sec. 605. Office of Native American Affairs pilot program.
This section authorizes a two-year pilot program for the Office
of Native American Affairs to develop and publish a self-
assessment tool for evaluation and implementation of best
practices for economic development for Indian tribes. The
provision includes a reporting requirement on the effectiveness
of the self-assessment tool. It also authorizes assistance in
identifying economic development opportunities to Indian tribes
through the Inter-Agency Working group, which is comprised of
key federal agencies. The provision does not include nor
require authorization of appropriations.
Sec. 606. Privacy requirements for SCORE chapters. This
provision extends the privacy protections afforded to SBDC
clients to SCORE clients.
Sec. 607. National Small Business Summit. Directs the
President to convene a National Small Business Summit before
December 31, 2009 to examine the present conditions and future
of small businesses in the United States. The summit shall
include small business owners, representatives of small
business groups, labor, academia, nonprofit policy groups, and
State and Federal governments. In addition, no later than 90
days after the summit, the President will release a report
identifying key challenges and making recommendations for
promoting entrepreneurship and the growth of small businesses.