Marco Rubio: Time to Expand Economic Opportunity for Small Businesses and Entrepreneurs

On Wednesday, U.S. Sen. Marco Rubio, R-Fla., the new chairman of the U.S. Senate Committee on Small Business and Entrepreneurship, convened a hearing titled “Oversight of the U.S. Small Business Administration,” with U.S. Small Business Administrator Linda McMahon testifying.

Rubio’s opening statement was as follows:

 

Today’s hearing of the Senate Committee on Small Business and Entrepreneurship will come to order.

I want to thank you all for being here, and welcome Administrator McMahon.

This hearing is incredibly important to me as it marks my first, full hearing as Chairman of the Senate Committee on Small Business and Entrepreneurship.

It is an honor to lead this Committee with my good friend, Senator Ben Cardin.  Senator Cardin and I also serve as Chairman and Ranking Member of the Foreign Relations Subcommittee on the Western Hemisphere.

Ranking Member Cardin and I have worked on a number of issues together, and I look forward to continuing the bipartisan traditions of this Committee as we pursue a full reauthorization of the Small Business Act this Congress.

I also want to welcome three new members to the Committee, Senator Romney, Senator Hawley and Senator Rosen.  We appreciate your service and look forward to working together this Congress.

The issues under the jurisdiction of this Committee are of great importance to this entire nation as 58.9 million Americans own or work for small businesses – nearly half of our workforce.

This nation has a long history of innovation, entrepreneurship, and hard work.

When American ingenuity, innovation, access to capital, access to markets, and access to workforce are all in place, we can create dignified jobs.

Dignified jobs create upward mobility. And with upward mobility, lives are changed for the better, communities are changed for the better, and the country is changed for the better.

My priority as Chairman is to pass bipartisan legislation that will expand economic opportunity for small businesses and entrepreneurs who are forced to take on personal risk and sacrifice to compete in the global marketplace.

As everyone in this room is aware, we got off to a slow start in Washington this year.

However, by most accounts, Administrator McMahon and the Small Business Administration have responded well following the government shutdown.

I commend the SBA staff for their hard work to process the backlog of loans to get expansion plans and small business growth back on track.

Following a historic year of small business growth and optimism, I look forward to solutions from this Committee that will continue this pattern of growth.

Bringing dignified jobs back and increasing opportunity in the areas of our country that need it the most are priorities of mine and will be priorities for this committee during the 116th Congress.

In times of distress, small businesses bring communities together and are vital for boosting morale.

I have seen firsthand in my home State of Florida the effects of natural disasters – and the subsequent assistance that the SBA offers to revitalize the area.

Last October, Hurricane Michael hit Florida’s panhandle with the third-most intensity of any Atlantic storm.

The SBA is now processing more than 14,000 loans that will inject more than $651 million into recovering and rebuilding the homes and businesses in Georgia and the Florida panhandle.

Hurricane Irma, the strongest storm to ever exist in the open Atlantic, hit Florida, Georgia, South Carolina, and Puerto Rico in August and September of 2017.

Hurricane Maria, the worst natural disaster on record for Puerto Rico, struck just two weeks later.

The SBA was quickly on the ground with nearly 2,000 field staffers and has handled more than 675,000 phone calls from Puerto Rico alone.

The region could not have survived without the $7.37 billion in loans that SBA distributed in the wake of Hurricanes Harvey, Irma, and Maria.

In times of tragedy, small businesses are the gathering places for the community and centers of optimism.

We must make sure the disaster loan process operates at its peak efficiency, streamlining the process and making recovery dollars quickly available.

I look forward to working with the SBA to find the most effective way to serve disaster survivors.

Another focus of my time as Chairman will be on the competitiveness of American entrepreneurs and small businesses.

Yesterday, I released a report, “Made in China 2025 and the Future of American Industry,” that evaluates China’s 2025 plan to become the global leader in innovation and manufacturing.

Our report highlights the challenges posed by China’s blatant industrial espionage and coercion – actions that threaten our economic framework and our national prosperity.

The report also offers policy recommendations to strengthen the American system against its rivals.

The role of government is to align our economic policies with the right national priorities.  For too long, we have the wrong priorities.

Our most important priority should be creating dignified work through investment and innovation.

I see a real opportunity through this Committee to bolster SBA’s programs that provide capital for innovative, high growth-potential firms.

It is the goal of the SBA’s programs to act as a launching pad for small businesses and there are specific programs at SBA that fill a gap in capital to startups and entrepreneurs who may have the next great robotics product.

One of these programs, the Small Business Investment Company (SBIC) program, introduced the concept of venture capital.

Through this program, SBA licenses privately owned SBICs and provides them with leverage from SBA guaranteed loans that the SBICs then couple with their own capital to invest in small businesses.

This venture capital tool is a great way to fuel innovative, high job growth industries and companies.

Last Congress, I introduced the Spurring Businesses in Communities Act to increase the number of SBICs in states, like Florida, where there are fewer investment companies.

I am proud to say that Congress passed this bill, and the President signed it into law in December.

I am eager to hear from Administrator McMahon on the SBA’s progress in implementing this new law.

Unfortunately, an issue Congress needs to address is the timing for getting a SBIC license approved. Already an arduous application process, licenses can take more than a year to be approved, hampering access to capital for innovative startups.

This is an example of the need to streamline agency processes so we are not leaving money on the table and keeping businesses from starting, growing, and innovating.

Another set of SBA programs that are focused on innovation are the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs.

These programs provide an opportunity for small businesses to partner with the government to conduct Research and Development (R&D) that can ultimately fill a government need and provide the small business with funding to develop their ideas and technologies with the goal of commercializing that technology.

Though these programs represent a very small percentage of extramural R&D for participating agencies, they show an impressive return on investment.

The Navy commissioned a study in 2016 that showed the commercialization of SBIR and STTR technologies resulted in $14.2 billion in sales of new products and services and $7 billion in sales of new capabilities and products to the U.S. military from the Navy alone.

The economic impacts of the program tell a similar story. Of a nearly $2.3 billion investment from 2000 – 2013, the program provided a 19:1 return on investment with an economic output of $44.3 billion and the creation of nearly 200,000 jobs.

I understand a Defense-wide report on these programs is expected in the coming weeks and I have no doubt the numbers will be similarly impressive.

This is the kind of program, and investment, we need to make in the continued development of innovative firms that will bolster American jobs and global competiveness.

While I intend to focus on innovation and competitiveness, it is also important that we work together to streamline processes at SBA, and conduct appropriate oversight of the agency to ensure small businesses are able to access the programs they need.

An area that small businesses will always come to SBA for is capital. Access to capital remains a top issue for entrepreneurs across the country, so any changes made at SBA that affect programs providing capital should be considered thoughtfully.

It is also important that as we work to streamline processes, we are not skipping over the very small businesses that the SBA exists to serve.

A proposed lending rule that the SBA issued in October appears to have failed to consider the effect of the regulation on small entities.

Aside from some questionable changes that the rule would make, it is concerning that the Small Business Administration is making rules without considering small business impacts through a detailed Regulatory Flexibility Analysis.

SBA requires other agencies to do this analysis when a proposed rule will have a “significant economic impact on a substantial number of small entities,” yet their rule contains no analysis of the potential impact of these provisions on smaller loans, under $350,000, and the negative potential impact on small business access to capital.

I look forward to discussing these things today and to working this Congress to ensure that the SBA is working as effectively as possible for the American people.

I also look forward to learning how this Committee can provide the support that the SBA needs to carry out.

 

U.S. Sen. Marco Rubio, R-Fla., was first elected to the U.S. Senate in 2010.

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