WASHINGTON, D.C. – Today, Chairman Roger Williams (R-TX) led a full Committee on Small Business hearing titled “Unleashing Main Street’s Potential: Examining Avenues to Capital Access.” Chairman Williams issued the following statement after today’s hearing.

“Today’s hearing was incredibly important because, as this Committee has heard repeatedly, access to capital is a top concern facing our entrepreneurs,” said Chairman Williams. “I’ve been in business for over 50 years, and I’ve owed a bank money every day. Capital is not just needed to start a business, but also to help existing businesses grow. We must continue to work to ensure that small businesses have adequate access to capital so they can more easily compete in the marketplace and have a fighting chance at success.”

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Watch the full hearing here.

Below are some key excerpts from today’s hearing:

Chairman Williams: “You mentioned in your testimony that you were not able to get your first business loan until 2016 when you used a building you purchased the prior year as collateral. Since this time, your capital needs have changed, as you've indicated since your business has grown. So my question is for the other entrepreneurs that might be listening to this hearing, can you talk about how your capital needs have changed through the life cycle of your business?” Ms. Bommarito: “Thank you, Chairman Williams. Yes, they have. When we started, you need basically money to be able to build your inventory and get cover your receivables. As you grow, that grows exponentially and will continue to do that. With that, you are also seen as a higher risk as you're growing and anything over 10% is considered risky. From what I've been told from banks and, you know, small businesses often do grow more than 10% a year. It's the large organizations that are happy with a 2% or a 5% increase in profits. So in growth and it changes over time, it will continue to change. We need to have the access at the local level from our community banks in order to grow our businesses.”

Rep. Luetkemeyer: “As a former banker and former regulator, when they say that this is only going to affect the top group of banks, these things roll downhill. Even your community banks, at some point, the regulators are going to sort of wink and nod and say, this is a really good idea. You need to be implementing this. What's your thought process on this rule and its effects on capital access by the small business?” Mr. Holtz-Eakin: “So, you know, the financial markets are by definition interconnected. And so to impose these capital requirements. So as you say, like the operations risk my discontent with the proposed rule is there's no quantification of how large is operations risk. There's no quantification of the benefits to holding particularized capital against operations risks. It's just hold this and we’ll assign it to operations risk. I think they could do a better job in defending the proposal. Costs are costs, that's not going to be confined to operations. They're going to have to raise the revenue to cover those costs. That means all credit will get more expensive. This is going to get embedded across those banks’ pricing structures and the smaller banks often rely on larger banks for funding needs of various maturities. And it'll spill over to the smaller banks.”

Rep. Ellzey: “When they do these regulations, they harm people like Ms. Bommarito with her family business, and then it sends them to somebody like Mr. O'Leary, who's made a great business. And I'm so glad you're here to speak the truth the way you do. It's very enlightening, Mr. O'Leary. But you don't want to send your business or sell a part of your heart and soul, Ms. Bommarito, to somebody like Mr. O'Leary. You want to access that capital in a much better way because you're giving away. You know you're going to sell him your leg. You no longer have access to that leg with your business, and he might let it die... Mr. O'Leary, why would we do this to ourselves?” Mr. O’Leary: “There's a competition in the world today for capital. And it doesn't have a nationality. It looks for the path of least resistance and it goes to the place of greatest safety. The unique situation of America is if you have a project and I referenced this earlier, like a data center, which pencils out at 11 to 15 percent return for 20 years, where are you going to put that in the Ukraine? No, you're going to put it somewhere in the United States where it's safe. If you can get the permits and the regulatory environment is good and the state taxes are competitive, and you can get the customer like an Amazon or a Microsoft or the IRS or a government agency. These are huge projects. And normally you would go to the domestic money center bank to say, I got a 1.2 billion project. You're penciling out at 11 to 15. I've got lots of interest in it, but I need a banking partner. When you stick this Basel thing in here? We're not going to be talking in New York. We're going to be talking to Abu Dhabi.”

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