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Witness Testimony of Mr. William D. Elmore, Veterans Business Development, Associate Administrator, U.S. Small Business Administration

Chairwoman Sandlin, Ranking Member Boozman, and other distinguished

members of the committee, thank you for the opportunity to appear before you today to share information on the state of Veteran entrepreneurship and self employment, and the efforts of the U.S. Small Business Administration (SBA) to assist and support veterans, service-disabled veterans and Reserve Component members who are self-employed or small business owners who have been or may be called to active duty for the Global War on Terror. I am William Elmore, the Associate Administrator for Veterans Business Development (AA VBD). I am pleased to be here representing SBA Administrator Preston and the many dedicated SBA employees who assist veterans and reservists every day. I am grateful for this opportunity to share with you some of the initiatives and accomplishments on behalf of veterans and reservists the SBA has made over the past 6 years. As expressed in the January 24,2007, Memorandum For Heads of Departments and Agencies jointly issued by Administrator Preston and Office of Federal Procurement Policy Administrator Denett, the Administration is broadly committed to enhancing all of our entrepreneurial programs and services for veterans and reservists, especially those returning from duty in the Global War On Terror, and for those service members injured or disabled in service to America.

The very nature of SBA' s mission necessitates coordination, access and delivery of a full range of resources and program activities that support successful entrepreneurship. We deliver most of our lending assistance through thousands of private lenders, and we provide most of our business counseling, training, and planning assistance through our resource partners, which includes approximately 15,000 third party business development specialists and experienced business men and women volunteers. SBA is the central policy and program manager for the federal procurement programs for service-disabled veteran-owned-small businesses, women-owned small businesses, small and disadvantaged businesses, and socially and economically disadvantaged small business owners. This is accomplished through a programmatic, policy, and regulatory framework established by Congress and our technical experts, including procurement goal setting, oversight, and intervention with federal agencies, and facilitating public and private matchmaking initiatives. To accomplish the SBA mission, we maintain a nationwide network of 68 district offices (each one with an assigned Veterans Business Development Officer, VBDO), 10 regional offices, various servicing centers for lending oversight and loan processing, and over 100 field procurement assistance experts. Weare America's disaster assistance lender for both homes and for small businesses; and we provide support for international trade initiatives. Our 68 district offices and other field offices coordinate and deliver local and national support, provide oversight, and help carry out our national program responsibilities.

As the Associate Administrator for Veterans Business Development, I manage our national program for veterans and support Administration programs and policies for veterans and reservists. I coordinate SBA activities with other federal, state and local government programs, and with not-for profit and private partners.

Each year, my office delivers direct assistance to over 25,000 veterans and reservists through five Veterans Business Outreach Centers and through special competitive funding for District Office-Veterans Outreach Initiatives coordinated by our 68 VBDOs. SBA's Veterans' Business Development Office acts as a liaison and technical expert to our federal partners, including the Departments of Defense, Labor, Veterans Affairs and other agencies with procurement authority, and, I act as an ombudsman for full consideration of veterans in every Administration program.

Each year, SBA provides reportable direct and indirect assistance to more than 100,000 veterans and reservists who participate in every SBA program. While improved services are being delivered to veterans, reservists and discharging service members in most of SBA's core programs, Administrator Preston and Deputy Administrator Carranza have tasked each program office at SBA with reviewing their programs and how they support veterans' small business success. We are identifying additional or more specific steps that every program can take to better deliver SBA assistance to veterans, reservists, discharging service members, and family members.

Recent examples of improved services to veterans, veteran reservists and discharged service members is inclusion as a target market in our Community Express Loan program that offers expedited loan processing with mandatory business planning­technical assistance. We have recently improved our Surety Bond Guarantee program for service-disabled veterans and other veterans, and we are exploring new ways to further target the veteran, reserve and guard community through our lending programs. Thus far, the results have been good; the number of new loans being made to veterans has increased significantly. The number of new loans to veterans has grown from 4,800 in FY 2000 to approximately 8,000 in FY 2006.

Public Law 106-50 established a three percent federal procurement goal for prime contracts for small businesses owned and controlled by service-disabled veterans (SDV) and established a best-efforts clause for veterans in federal procurement at the sub­contracting level. While the government has yet to achieve the required three percent goal for federal procurement, we are making progress towards it. In 2004, the President issued Executive Order # 13360, and preliminary data shows that both SBA and the Department of Veterans Affairs each exceeded their respective three percent goals for FY 2006. Leading by example, this represents a significant improvement for both agencies over achievements in FY 2005. This growth toward achieving the three percent goal is due to the ongoing efforts by VA, SBA, federal agencies and their many contracting officials that are making serious and diligent efforts to identify and contract with SDV small businesses.

In 1999, when HR 1568 became P.L. 106-50, there was a serious gap in basic knowledge about and data on veteran business owners in America. For almost 15 years, no effort had been undertaken to understand what this community of existing and prospective entrepreneurs represented or required. Beginning in FY 2001, the SBA's Office of Advocacy, with the support of my Office of Veterans Business Development, initiated research into veterans' entrepreneurship, and Advocacy's initiatives continue. We have learned that prior to 2003, veteran and service-disabled veteran participation in federal procurement was seriously undercounted and underreported for a variety of reasons. We have learned that there were no good or reliable databases of veteran and service-disabled veteran business owners that existed nationally in the public or private sectors. We have learned that approximately 15% of veterans are successfully self­employed or small business owners and that another 22% of veterans are taking steps to become small business owners or are thinking seriously about doing so. We learned that, like all small businesses, access to capital and access to and knowledge about business development programs are key needs of veterans. We have learned that military service is important in leading to veterans' success as entrepreneurs, and that private sector experience is even more important for veterans' success as entrepreneurs. We have learned that the difference between successful self employment rates for veterans and service-disabled veterans is explained in part because some service-disabled veterans do not participate in the private labor market.

As a part of our efforts to increase understanding of the veterans and service-disabled veteran community of entrepreneurs, and at the request of the SBA Office of Advocacy and the veterans' advocacy community, the Census Bureau included two questions in their 2002 Survey of Business Owners regarding the veteran and SDV status of small business owners with employees. The 2002 Census Survey marks the first time we have an accurate estimate of the number of SDV small business owners in America. This 2002 Census survey found that approximately 0.7 percent of small businesses in America with employees are owned by service-connected disabled veterans and that 14.1 percent of small businesses with employees in America are owned by veterans.

Each year, our Office of Entrepreneurial Development (ED) and our resource partners provide small business counseling and training for approximately 1.5 million aspiring, start-up and growing small business owners. Annually, close to 90,000 of these customers are veterans, service-disabled veterans, reserve component members and active duty personnel. One of our ED programs is our Small Business Development Center (SBDC) program. Our SBDC National Office provides program design, core I operational funding and oversight to almost 1,100 SBDCs. In addition, we deliver assistance through the expertise of almost 400 Service Corps of Retired Executives (SCORE) chapters and approximately 11,000 experienced SCORE business counselors, and through 100 Women's Business Centers, whose services are not restricted to women only. We also provide a robust range of on-line business counseling and training opportunities supporting everything from start up and early stage decision making to significant expansion and growth assistance.

Let me turn my attention to our efforts on behalf of small business owners who are members of reserve components of the U.S. Military and have been or may be activated for the Global War on Terror. In August 2001, we began offering and continue to promote the availability of our Military Reservist Economic Injury Disaster Loan (MREIDL) program as one tool that can be of great assistance to an activated reservist small business owner. We have implemented a comprehensive outreach program that includes veterans and reservists, and we have strengthened our business counseling and training programs, most notably our SCORE, SBDC, VBOC and District Office programs to inform, develop and deliver pre and post mobilization business planning assistance that can be critical to economic success and survivability to reservist small business owners. We continue to work with various offices and programs of the Department of Defense, including the National Committee for Employer Support of the Guard and Reserve (ESGR), with the Assistant Secretary for Reserve Affairs, Military Family Support Centers and 676 Committee, and we continue to support the Department of the Army in the envisioning and development of the proposed Army Advantage program. After the September 11, 2001 attacks on America, we established an SBA committee to coordinate outreach and service delivery to Reservists. We created and have distributed more than 400,000 SBA Reserve and Guard fact sheets; and we established special web pages for reservist small business owners, and began working with the Department of Defense. We have and continue to produce detailed business planning guides as part of our comprehensive Reserve and Guard Business Planning kits and have distributed more than 40,000 of these kits directly to Reserve and National Guard units, to reservists, to SBA Resource Partners, to federal, state and local partners, and at hundreds of SBA sponsored events. Two years ago, we requested and secured the authority from Congress to include reservists in our definition of veteran for purposes of our comprehensive outreach effort, and we included veteran reservists in our Community Express Loan Program to provide additional access to capital beyond our MREIDL program.

Again, I thank you for this opportunity to testify before you today. I am proud of the progress we have made in our knowledge of and assistance for aspiring and existing veteran entrepreneurs and I look forward to continuing to enhance these efforts.

This concludes my testimony, and I welcome your questions.