News from Ranking Member Sam Graves and Committee Republicans:
(Please send any member media activity to angela.landers@mail.house.gov)

• Ranking Member Sam Graves spoke on the Floor in support of H.R. 3614, to extend SBIR and other SBA programs.  View his remarks here on YouTube.

• Rep. Vern Buchanan won Florida's 9th annual SBDC small business award.  View the video footage here.

• Rep. Vern Buchanan with small business owners in the Bradenton Herald: “Buchanan talks health reform.”

• Rep. Steve King was featured in The Hill’s “Meet the Lawmaker.”

• Rep. Luetkemeyer in the St. Louis Post-Dispatch on the H1N1 influenza: “Pig out? Swine flu moniker is a stinker, Luetkemeyer says.”

• Rep. Luetkemeyer on Moberly’s KRES radio: “The Role of Automobile Dealerships in Rural Economies.”

Must-Reads from the Week:

• Kansas City Star:  Small businesses want their share of government contracts

• Dallas Morning News: Cash flow - or dribble? Small firms fight money drain

 Administration and the SBA:

• It was reported this week that the Small Business Administration (SBA) will change the terms of their goodwill financing scheme.  Earlier in the year changes were made by the SBA to limit the level of goodwill financing, or the value of intangible assets.  However, those changes were met with some stiff opposition from the small business community given the difficulties acquiring capital.   According to the New York Times, “effective Oct. 1, good will and other intangible assets can amount to up to $500,000, with no limit on the percentage of the loan.  When intangibles exceed $500,000, the SBA will recommend that banks limit the SBA-backed loan to 75 percent of the purchase price.  The remaining 25 percent of the purchase price would have to come from either buyer equity or seller financing.”  Earlier in the year Ranking Member Graves expressed concerns to the SBA about how the changes to good will financing will impact a small businesses ability to acquire capital and is pleased with the recent actions proposed by the SBA.

• President Obama made two significant visits this week before the United Nations in New York City and before the leaders of the world’s largest economies at the G20 summit in Pittsburgh.  The speech in New York outlined four pillars of U.S. international policy -- nuclear disarmament and non-proliferation, the pursuit of peace, combating climate change, and increasing economic development and opportunity.  President Obama also addressed long-standing issues such as the Middle East conflict, as well as more recent challenges including the global economic recession.   In Pittsburgh, White House officials said that President Obama will be pushing key nations to agree to a plan to combat climate change, enhance energy security, improve public health and the environment, promote faster economic growth and support more effective targeting of government resources for the poor. 

Review of House Activity:
•  On Wednesday, the House passed H.R. 3614, which will extend all authorized programs within the SBA until October 31, 2009.  Included in the extension was a minor change that will enable small businesses with both an ARC loan and a 7(a) loan to use the funding they qualify for  any purpose. Prior, there were limitations in what ARC loans could be used to pay for.    

• On Tuesday, the House of Representatives passed an extension of unemployment benefits by a vote of 331-83.  The bill would provide an additional 13 weeks of benefits eligibility to jobless people who live in high-unemployment states, defined under the bill as states with a three-month average unemployment rate of over 8.5 percent.

• The House Energy and Commerce Committee finally finished its work on the health care overhaul bill this week setting up the difficult task for Democratic leadership to sort out differences between three bills that have been produced by three committees.  According to news reports, Democrats would like to finish this process by next week and give the Congressional Budget Office ten to fourteen days to score it.  Under this timeline, a bill would not be considered on the House floor until mid-October at the earliest.

Legislation and Letters Circulating Around the House:
(If you would like to publicize your small business effort in Congress, please email Paul J. Sass at Paul.Sass@mail.house.gov)

• Rep. Gingrey (R-GA) Seeks Cosponsors for the HEALTH Act of 2009 - During President Obama’s speech to a Joint Session of Congress, he spoke of the need for medical liability reform, the lack of which costs our economy over $100 billion annually.  H.R.1086, the Help Efficient, Accessible, Low-cost, Timely Healthcare (HEALTH) Act of 2009 – modeled after California’s 30-year-old health care litigation reforms – addresses the current crisis without limiting compensation for 100% of plaintiffs’ economic losses or medical costs.  Instead, the bill would limit noneconomic damages to $250,000 and make each party liable only for the proportion of damages for which they are directly responsible.  For more information or to become a cosponsor, please contact Robert Horne at 5-2931 or via email at Robert.Horne@mail.house.gov.   

• Rep. Granger (R-TX) Seeks Co-Sponsors on the Affordable Health Care Expansion Act (H.R. 879) - Rep. Granger is seeking co-sponsors for the Affordable Health Care Expansion Act.  Nearly 52% of uninsured Americans say that they do not have health insurance because it is too expensive.  That’s why Congresswoman Granger has introduced the Affordable Health Care Expansion Act, which provides individuals with a refundable, pre-payable tax credit toward the purchase of health insurance.  The amounts of the credits are as follows: $1,000 per individual / $2,000 per married couple / $500 per child / $3,000 per family, PLUS 50 PERCENT OF ANY ADDITIONAL PREMIUMS ON TOP OF THESE AMOUNTS.  If we are going to fix our health care system, we need to find a way to make sure that every single American has access to health care in a way that is affordable, and in a system the country can afford.  If you would like to cosponsor the Affordable Health Care Expansion Act, please contact Theresa Vawter at 5-5071 or theresa.vawter@mail.house.gov.

 

Review of Senate Activity:

• The Senate Committee on Small Business held a roundtable discussion this week on ways the government can improve their contracting programs to increase the number of awards to small businesses.  According to the committee’s press release, “In 2008 small businesses received $93.3 billion in federal contracts, an increase of almost $10 billion from 2007. However, these contracts made up only 21.5 percent of contracting dollars.”  The government’s statutory goal is to spend 23 percent of contracting dollars on small businesses.  The discussion focused largely on the difficult task small businesses face in obtaining federal contracts.

• On Thursday, the United States Senate unanimously confirmed Peggy Gustafson as Inspector General for the Small Business Administration.

• The Committee on Small Business and Entrepreneurship held a roundtable discussion on Thursday entitled “Minority Entrepreneurship: Evaluating Small Business Resources and Programs.”  For more information on the hearing please visit here.    

House Small Business Committee hearing summary this week:

• On September 23, 2009, the House Small Business Committee held a hearing entitled, “The Impact of Financial Regulatory Restructuring on Small Businesses and Community Lenders.”  The witnesses on the first panel were: David Hirschmann, President & CEO, Center for Capital Markets Competitiveness, United States Chamber of Commerce, Washington, DC; Trevor Loy, General Partner, Flywheel Ventures, LLP, Santa Fe, NM for the National Venture Capital Association; Robert Harris, CPA, Managing Director, Harris, Cotherman, Jones, Price & Associates, Certified Public Accountants, Vero Beach, FL for the American Institute of Certified Public Accountants; Mike Anderson, CRMS, President, Essential Mortgage Company, Baton Rouge, LA for the National Association of Mortgage Brokers; and J. Douglas Robinson, Chairman and CEO, Utica National Insurance Group, New Hartford, NY for the Property Casualty Insurers Association of America. 

The witnesses on the second panel were: Dawn Donovan, CEO, Price Chopper Employees Federal Credit Union, Schenectady, NY for the National Association of Federal Credit Unions; Bill Hampel, Ph.D., Senior Vice President Research and Policy Analysis & Chief Economist, Credit Union National Association, Washington, DC; James D. MacPhee, CEO, Kalamazoo County State Bank, Schoolcraft, MI for the Independent Community Bankers Association; Austin Roberts, CEO, Bank of Lancaster, Kilmarnock, VA for the American Bankers Association; and John Moloney, President & CEO, Moloney Securities Co., Inc., Manchester, MO for the Securities Industry and Financial Markets Association.
Mr. Hirschmann testified that creation of a consumer financial protection agency with broad and ill-defined powers would raise the cost of credit to America’s smallest business owners – the ones who rely most heavily on credit usage similar to consumers rather than lines of business credit.  He suggested that consumer protection should not restrict the capacity of lenders to target products needed by small business owners.  Mr. Loy noted that venture capital firms do not pose systemic risks to the economy.  Venture capital firms, with legal structures similar to hedge and private equity funds, do not use leverage or make investments interconnected with other participants in the financial sector.  Mr. Harris testified that his firm’s clients continue to face difficulty accessing credit markets.  On the subject of the application of a consumer financial protection agency to the services offered by certified public accountants, he testified that they should be exempt from such regulation except to the extent that they offer actual credit products, like tax anticipation loans.  Mr. Anderson testified that mortgage brokers were not the primary cause of the financial crisis created through the bursting of the real estate bubble.  He did note that any consumer financial protection agency that limits the type of mortgages available will undermine the ability of the residential and commercial real estate markets to recover.  Mr. Robinson noted that property and casualty insurance companies are already highly regulated by state insurance commissioners.  He also noted that insurance companies like his do not operate on a highly leveraged basis and thus do not contribute to system-wide failure if a property and casualty insurer fails. 

On the second panel, Ms. Donovan testified that her credit union only had seven employees and could not absorb significant additional regulatory costs without reducing service to members.  Ms. Donovan also noted that credit unions (which have substantial liquidity) are hindered in their ability to lend to small business members due to statutory restrictions on the number of business loans credit unions can make.  Dr. Hampel noted that credit unions do not have the statutory power to purchase many of the exotic financial instruments that were at the heart of the financial crisis.  He concluded that credit unions do have resources to help the recovery but hamstrung by the limitations on commercial loans.  Mr. MacPhee said that independent community banks were relationship lenders that remain conservatively managed.  He noted that responses to systemic risk create problems for his bank.  He concluded that financial reform needs to focus on systemic risk of certain very large institutions rather than rewriting an otherwise sound regulatory regime.  Mr. Roberts testified that his bank stands ready and willing to lend money because it too has been conservatively managed.  However, regulators make it difficult for banks to lend because they are concerned about capital reserves.  In particular, FDIC premium increases reduce the total dollars that a small bank, like Bank of Lancaster, has to make loans.  Mr. Moloney testified that small brokerage houses did not contribute to the financial crisis in 2008.  However, he is concerned that a new consumer financial protection agency could create problems for his business because he might not be able to reconcile conflicting rules of the SEC with the new consumer financial protection agency.

The Chair and Ranking Member noted that the testimony will be useful in Congressional deliberations over the scope of the financial regulatory reform legislation.

• On September 24, 2009, the Subcommittee on Contracting and Technology of the Committee on Small Business held a hearing entitled, “The Roles of Federal Labs in Spurring Innovation and Entrepreneurship Across the United States.”  The witnesses were: Cynthia Lee, Associate Director, Langley Research Center, National Aeronautics and Space Administration, Hampton, VA; Bruce Underwood, Chief of Advanced Projects, Wallops Flight Facility, National Aeronautics and Space Administration, Wallops Island, VA; Paul Sebesta, Ph.D., Director, National Center for Agricultural Utilization Research, Peoria, IL; Hans Seywald, Ph.D., President, Analytical Mechanics Associates, Inc., Hampton, VA; Chris Suber, President, Construction Development Services, Inc., Norfolk, VA; and Peter Johnsen, Ph.D., Chief Technology Officer, Biofuels Manufacturers of Illinois, LLC, Peoria, IL. 
Ms. Lee testified about Langley Research Center’s small business programs.  In particular, she noted that small businesses provide the Center with everything from basic maintenance services to high-technology products.  Mr. Underwood testified that the Wallops Island facility has more than 100 contracts with small businesses totaling almost $50 million.  Mr. Underwood noted that federal procurement plays a vital role in the economy of the lower eastern shore of Virginia.  Dr. Sebesta noted that the Agricultural Research Service’s Midwest area (which includes the National Center for Agricultural Utilization Research) exceeded its FY 2009 goals for small business contracting.  Dr. Sebesta testified that a number of the significant construction contracts for the Center are or will be awarded to small businesses in the Peoria, IL area.

Dr. Seywald told a story about his company which, over time, went from two Ph.D. engineers from Virginia Tech to a company with about 100 employees.  The company now provides NASA with sophisticated technologies, adopts technologies for commercial markets, and participates in NASA’s educational and outreach efforts.  Mr. Suber testified that his firm focuses on construction services for the many federal facilities in the Tidewater area.  He described in detail the reconstruction of facilities on Wallops Island for NASA.  Dr. Johnsen noted that his current firm has developed new methods for creating biofuels but has had difficulty obtaining federal funds for further development.  Dr. Johnsen testified that matching requirements should be reduced for small businesses.
The Chair and Ranking Member said that they would continue to work cooperatively to ensure that federal labs play an even greater role in technology transfer to small businesses.  In addition, they promised to be vigilant about ensuring that federal labs meet their federal procurement goals for small businesses.

Other Small Business off the Hill:

• The US Chamber of Commerce  published a study on the impact of the Consumer Financial Protection Agency on Small Business.

• The Associated General Contractors of America distributed a state by state study showing construction employment declining in 48 states compared to last year.

Looking Forward:
House Small Business Committee hearings next week:
• Full Committee Hearing, September 30, 2009, 10:00 am entitled, “Expiring Tax Incentives: Examining their Importance for Small Businesses on the Road to an Economic Recovery.” 2360 Rayburn House Office Building.