Full Committee Hearing on “The State of SBA’s Entrepreneurial Development Programs and Their Role in Promoting an Economic Recovery”



of the

Honorable Nydia M. Velázquez, Chair

House Committee on Small Business

Wednesday, February 11, 2009

“Even during times of prosperity, starting and running a small business is an enormous undertaking. From drafting their first business plan to learning how to navigate the tax code, entrepreneurs are on a perpetual learning curve. Historically, SBA has helped simplify the process through its entrepreneurial development programs, or ED. Today, those initiatives have the potential to play an even more critical role by encouraging small business growth and creating new jobs for American workers.

Much of the debate surrounding the new stimulus hinges on the importance of creating jobs. Once enacted, the bill will help entrepreneurs do exactly that. But even after restoring stability, challenges will remain.  With a renewed emphasis on SBA’s entrepreneurial development programs, small firms will be able to take full advantage of the Recovery Act.

In today’s hearing, we will explore the role that these programs play in advancing economic recovery.

Entrepreneurial development is critical to small business success. In fact, firms that receive this kind of assistance are twice as likely to succeed as those that don’t. From executive mentoring to veterans business initiatives, they help new and experienced entrepreneurs gain access to the tools they need to flourish. But perhaps most importantly, these programs foster job creation and economic growth.

Following the recession of the mid 1990’s, small firms created 3.8 million new jobs. Not surprisingly, that era was marked by an enormous uptick in entrepreneurship. In fact, 25 percent of laid-off managers over the age of 40 went on to start their own firms.

Fortunately, there is no shortage of that same entrepreneurial spirit today. Each month, 400,000 new companies crop up across the country. That’s 400,000 entrepreneurs looking to create new industry here in the U.S. Imagine if each and every one of those businesses had advisors to help them draft viable business plans. That’s the kind of guidance that small firms could really use, and that’s the kind of support that entrepreneurial development programs provide.

The challenges facing small firms are different today than they were in the past. In order for entrepreneurs to have the same catalyzing effect they had in the 1990’s, they will need all the tools available. This is particularly true for businesses in low-income communities. Those are the areas that have been hardest hit by the recession, and are most in need of economic development.

ED programs provide small firms with the resources they need to expand. Just last year, Entrepreneurial Development helped generate 73,000 new jobs, and drove $7.2 billion into the economy. Through programs like mentorship and distance learning, SBA has helped countless small firms get off the ground. At the same time, it has counseled thousands of experienced entrepreneurs looking to expand. And at the end of the day, every $1 spent on these programs puts another $2.87 back into the economy. That’s a 287 percent return on investment, and just the kind of economic stimulus we need right now.

It’s no secret that times are tough. In January alone, 600,000 Americans were laid off. That figure tops off the 3.6 million positions shed since the recession began. The writing is on the wall–we need to stop the losses, and we need to replace the jobs that are already gone. While there is no silver bullet solution to our economic troubles, small businesses promise the surest path to recovery. Entrepreneurial development programs can help jumpstart that recovery.”

House Small Business Committee Democrats

B343-C Rayburn HOB

Washington, D.C. 20515

(202) 225-4038


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