09/11/08 Business Start-up Hurdles in Underserved Communities: Access to Venture Capital and Entrepreneurship Training Hearing
09/09/08 Opportunities and Challenges for Women Entrepreneurs on the 20th Anniversary of the Women's Business Ownership Act Roundtable
07/30/08 S.3362, A bill to reauthorize and improve the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs Markup
06/25/08 Examining Solutions to Cope with the Rise in Home Heating Oil Prices Hearing
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Press Room: Statements
May 22, 2007
Kerry Opening Statement on Minority Entrepreneurship Hearing
Good morning and welcome. I've called this hearing to examine an issue that is important to the future growth and development of our nation: How do we support the minority community's efforts to open, own and grow their own businesses.
One of our nation's greatest assets is our diversity. We are literally the only nation that looks and speaks like every other nation on the face of the earth. That is a strength that allows us to be the most competitive nation in the growing global marketplace.
The number of businesses in our minority communities continues to grow, adding to our competitive advantage. Over the last 10 years, minority business enterprises accounted for over 50 percent of the two million new businesses started in the United States. There are now more than four million minority-owned companies in the United States, with annual sales totaling $694 billion. These businesses crossed the entire industrial base from financial services and health care to construction and transportation.
While the numbers of minority-owned businesses are a source of optimism and hold promise for the future, much more needs to be done to encourage and strengthen the minority business community. The potential for small business growth and entrepreneurship has not been fully tapped and there are barriers to entry that continue to exist.
SBA's Office of Advocacy has analyzed the most recent business Census data from 2002, noting that although minorities make up 32 percent of our population, minority business ownership is only 18 percent of the population. The Minority Business Development Agency, looking at the same census data, notes that the number of minority owned firms has grown by 35 percent over the five-year period that was surveyed, but the average gross receipts for those firms dropped by 16 percent. In fact, the average gross receipts of minority firms was $162,000 which was considerably lower than the $448,000 average gross receipts of non-minority firms. Clearly, we still have a ways to go before we can say that there is parity between majority-owned and minority-owned firms.
These disparities are why we need federal contracting programs like 8(a) and its business counseling counterpart, 7(j). This contracting program to help minority and disadvantaged firms access federal contracts is still sorely needed to help bridge the gap for small minority firms attempting to break into the market. We also need more lending and investment opportunities through the SBA and, quite frankly, we need to find innovative ways to create access to capital in the commercial market. The question today is whether SBA's contracting and access to capital programs are meeting the needs of those that they were created to help.
One of the keys to small business growth is access to capital, an area where minority firms also still lag behind. When we look at SBA lending, the share of loan dollars to minorities is largely stagnant, and of those dollars, most minorities have seen the average loan size shrink by more than those to non-minorities. For example, over the past seven years, the share of loan dollars to African Americans in the 7(a) lending program, SBA's largest small business lending program, has only increased from 3 to 4 percent. Yet, African American firms constitute five percent of all minority firms. This gap is important to address because as the SBA's Office of Advocacy study found, "higher percentages of Black-owned businesses" use loans from the government or guaranteed by the government." SBA can and should be doing more.
Changing demographics make it all the more urgent that we address the challenges of minority entrepreneurship. We can't afford to leave any segment of our society behind. According to US Census projections between 1995 and 2050, we'll add 131 million new citizens. And 90 percent of that growth will come from the minority population. To address the substantial gap in small business ownership in the minority community, I have introduced the Minority Entrepreneurship Development Act of 2007. Cosponsored by Senators Cardin, Landrieu and Clinton this bill would give grants to Historically Black Colleges and Universities, Hispanic Serving Institutions, and Tribal Colleges to help train the entrepreneurs of the future. This bill was adopted last year in Committee as part of S.3778, the bipartisan reauthorization bill. We need to do all we can to open the door to entrepreneurship in minority communities.
We also need to do more to expand access to capital in the minority community. Small businesses cannot grow unless they have access to working capital and loans to purchase land or equipment, and I am concerned that the very programs created to reach the underserved, especially minority communities, such as the 7(a) and 504 lending programs, are not being sufficiently accessed by these communities. That is why we included a provision in the lending bill we marked up last week to create an Office of Minority Business Development in the SBA. We also adopted this provision last year, as part of S. 3778. If we have offices at SBA dedicated to women, veterans, Native Americans, and Faith Based Community Initiatives, we should have an office that focuses on minority business development, to increase contracting, counseling, and capital to firms owned by minorities.
As our nation is changing, we must preserve our commitment to equal opportunity. We can only do that when we appreciate the value that all of our citizens bring to the table, and when we invest in every segment of our society.
Let me turn to Senator Snowe for her opening remarks.