WASHINGTON, D.C. – Today, Chairman Roger Williams (R-TX) led a full House Committee on Small Business hearing titled “Fueling America’s Future: How Investment Empowers Small Business Growth.” The purpose of this hearing was to discuss the role and importance of private sector investment and public-private partnerships in funding small business growth.

“Investors play a crucial role in the success of Main Street America,” said Chairman Williams. “Both private investments and public-private partnerships provide not only the capital needed for entrepreneurs to start and advance their businesses, but they also provide advice, expertise, and other tools to support the business. The testimony we heard today emphasized how investing in our small businesses will fuel economic growth, innovation, and job creation in America.”

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Watch the full hearing here.

Below are some key excerpts from today’s hearing:

Rep. Meuser: “I’m introducing the Investing in All of America Act to expand beyond the cap level of one hundred seventy-five million to increase it by about one hundred and twenty-five million, strictly towards rural investments – that’s  where it’s designated, so it’s on top of what’s currently allocated –  focus on manufacturing and critical technology sectors. So, Mr. Palmer, what do you think of that? How have the SBIC programs been successful in their current operation, and how will the Investing in All America Act help enhance investments in Pennsylvania and in some of the more rural areas of our great nation?” Mr. Palmer: “I think if we get this legislation through and it becomes law, I think you will see every SBIC, or nearly every SBIC, dedicate their business development teams to finding small businesses in those areas because it is a meaningful cap that they have now and that they will continue to have, but if you invest in manufacturing or invest in a rural area – and frankly, most new manufacturing is going to be in rural areas because of taxes, regulations, just where can you afford to buy the land to build a really big building to put this stuff in – I think you’ll see a meaningful pivot for a lot of those business development folks to get out of where they normally are and spread their deal sourcing and small business opportunity seeking to those areas.”

Rep. Wied: “Mr. Baumel, my district is several hours away from large cities like Madison and Milwaukee. What can this committee do to ensure small businesses have access to the capital they need to grow and innovate?” Mr. Baumel: “We have the same situation in Ohio, where Athens is about an hour and a half drive, Dayton’s about an hour drive. So I don’t know specifics other than experienced fund managers who are willing to go out there with SBIC and other money and make that drive and such. Most people that are in these communities, like in Wisconsin, Ohio, do have that passion to follow up. The other thing I say is there’s a lot of macroeconomic things that can be done as well. I know there’s a new Developing and Empowering Our Aspiring Leaders Act that’s coming up as well, that would allow fund managers who have very limited fees –the average early stage fund is about twenty million dollars so about two-hundred thousand to about four hundred thousand of annual fees– to cover all annual fees, to cover all the employees, the rent and everything else. Getting the regulatory burden down with filings with the SEC, allowing these small businesses to expense R&D more quickly, and those sorts of things, so there’s both macroeconomic and microeconomic solutions.”

Rep. Stauber: “The SBICs have been used to support manufacturers in underserved or rural communities, like the one I represent. What more can we do to the outreach? I love when you talk about how ninety percent of the venture capitalists go to the coastal elites, but what about in the heartland? This is the SBIC’s come to the heartland. Are we doing a good job of that, and what can we do even better?” Mr. Palmer: “Well, Minnesota, has a very large number of SBICs, and actually the chairwoman of my board in three years will be from Minnesota. You’re in, is it Baudette? You have a pharmaceutical manufacturer. It’s backed by an SBIC up there. I think the key is, you have to have geographic diversity matters because proximity matters and also, sizes. You have to allow for small SBICs as well as big SBICs, because different check sizes are needed for different places. So, the program has grown from when I started in 2008, from about two billion dollars in capital –between private capital and SBA leverage– to nearly fifty billion dollars today. It’s done that at zero subsidy. That’s continuing. I think that there’s massive room for more growth in that. I think the licensing is helpful. They just licensed their first fund in North Dakota. They’ve just given their first green light to a fund in Mississippi. They’re forming funds in Kentucky. We have a number of them in Texas.”

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