Women's Issues in Congress: House Small Business Subcommittee Considers Women’s Entrepreneurship

Potential is not limited by capital alone. The Aspen Institute’s FIELD program has found that when business owners receive training and coaching help, 80% are still in business after five years, compared to 50% who did not receive such help.21 If we truly want to foster women’s entrepreneurial success, then investing in programs that help women with training, coaching, and technical assistance is the way to achieve this goal.

Similarly, as has been often stated by SBA Administrator McMahon, mentorship plays an important role in developing successful entrepreneurs. If women are unable to find mentors, however, they may fail to reach their full entrepreneurial potential.22 More women business owners who have succeeded in entrepreneurship are needed as mentors. From our perspective, WBCs provide a venue where seasoned women businesses owners can share their stories, knowledge, and best practices. More mentorship, both in WBCs and out, will further build the capabilities of women entrepreneurs.

The need for support in the business community is no more evident than in the complex federal contracting market. As the world’s largest customer, women entrepreneurs must further gains in selling to the U.S. government. Women-owned firms recently achieved the 5% goal of prime contract awards, which marked billions more dollars flowing to these firms. Continuing to increase that market share, while providing training and certification, will better serve the US government with innovative goods and services. Moreover, it will grow women-owned firms, diversify markets, and create jobs.

The Role of Women’s Business Centers

The network of 150 women’s business centers service locations across the country spend each day unlocking this potential — and addressing those exact challenges. The WBC program plays a different role to each of the two million women who have walked through our doors. At times it has helped develop a business plan, explore new markets, or help secure capital. Women view their local WBC as a trusted advisor and partner over the lifetime of their company.

A study of WBC clients done by the Center for Women’s Business Research found that, aside from general business management information, gaining financial management skills, and learning about the legal aspects of organizing a business, what the clients valued highly from their experience in the center was finding a community of other women with whom to build relationships. Unlike a "transactional" short-term course — after which a prospective business owner is on their own — women’s business centers provide a venue for ongoing learning and relationship-building.

Simply put, our role is the glue of the women’s entrepreneurial ecosystem. In communities that have WBCs, entrepreneurs of all kinds are developing the skills and confidence to launch or grow their business. But too many communities do not have access to the unique services provided by WBCs. And in some places, existing centers devote too much time to arbitrary reporting burdens. For example, surveying our members about SBA reviews found an incredible list of requirements for an organization that should spend its time training and counseling entrepreneurs. Some of these include:

 2 yearly DOTR reviews – a midyear and year-end review (a recent review took 10 hours.)
 Financial audits (a recent audit took 3 days)
 Annual work plan
 Annual, semi-annual, and quarterly reports including a financial report and performance narrative; (information required is also included in the quarterly EDMIS reports).
 Quarterly EDMIS reports
 EDMIS discrepancy report (have to submit EDMIS reports and then have to submit a report to explain why the SBA numbers don’t match the WBCs numbers)
 Economic Impact Survey

Policy Recommendations

In order to maximize the ability of women entrepreneurs to succeed, Congress should:

1. Re-authorize the WBC Program including increasing current grant levels. The aforementioned growth in women entrepreneurs makes the WBC program more relevant than ever. Every day, thousands of would-be job creators, existing business owners, and innovators seek WBC assistance to move their business forward. Existing centers are restricted by a 30-year old cap on grant levels they can receive through the program. Second, since the program was established in 1988, the total amount of the grant available from SBA to qualified WBCs is $150,000 a year. Adjusted for inflation, according to the Bureau of Labor Statistics, that amount in 2017 dollars would now be $308,879.23 The legislation would begin to ameliorate this issue by increasing the grant level to $185,000 and allowing for additional grant funding to be available to centers with proven impact.

Currently, legislation already passed by the House of Representatives as part of the FY18 National Defense Authorization Act should be supported in conference and increase the cap centers can receive. If Congress is unable to modernize this program, they will have restricted the ability of centers to assist women entrepreneurs.

2. Increase funding for the WBC Program through FY2018 appropriations. Many centers are ten or more years old and are established and respected resources in their communities. Despite ongoing success, however, their grant size from the SBA has remained flat or decreased since the program’s creation in 1988. These centers consistently demonstrate an ability to effectively and efficiently serve entrepreneurs and they deserve a modernization of the grant system and access to additional resources in order to expand their impact. While the network of centers spans the country, too many communities do not have access to the unique services provided by WBCs. In addition to allowing for the expansion of existing centers, new centers are needed in geographies so far unaddressed by the WBC program. Increased funding will allow the WBC program to expand and reach many more women entrepreneurs than it is currently capable of.

3. Certification in WOSB Program. In addition to helping secure government contracts, Women’s Business Centers assist women business owners with the Women-Owned Small Business (WOSB) certification process. Four WBCs are regional partners of one of the SBA-approved third-party certifiers and perform certifications, while others assist with site visits for third party certifiers.

Of the over 11 million women-owned firms, only 86,000 are in the government system to compete for contracts. It is critical that more businesses become familiar with certification.24 To that end, WBCs can play a greater role in the certification process. As we testified before this Committee in March, the SBA is expected to release new regulations about the certification of women-owned businesses. Expanding the certification options for women should be the goal of the agency as well as leveraging the already existing network of more than 100 WBCs to expedite certification. Congressional attention to this issue can help increase the availability of assistance and bring more women business owners into the government market.

4. Access to Capital. As mentioned previously, women entrepreneurs face particular difficulty accessing capital, and yet if women started businesses with the same amount of capital as men, our economy would benefit from the creation of six million more jobs in just five years. To realize all this potential, Congress should ensure that existing programs that are proven to provide capital to women business owners continue. Budget proposals to eliminate key programs like the Community Development Financial Institution (CDFI) Fund could have devastating impacts on women and minority entrepreneurs.

Moreover, much of our efforts to gauge why the capital gap continues to be so pervasive is limited by a lack of data. Congress sought to remedy this by requiring the sharing of basic lending data for women and minorities as Section 1071 of the Dodd-Frank reforms. Nearly eight years later, however, that element of the law has not been implemented.

Other options, like modernizing credit scores and Intellectual Property (IP) protections impact women business owners as well. Both are areas of financial and business literacy that are necessary elements of a successful 21st century business plan. Training on these issues is an endeavor of WBCs that will continue.

Finally, our partner organizations offer additional policy priorities that should be considered by this Committee. Women Impacting Public Policy (WIPP) has laid out legislative proposals in their 2017 Economic Blueprint report. Similarly, the National Association of Women’s Business Owners (NAWBO) and the Women’s Business Enterprise National Council (WBENC) consistently advocate for an environment supportive of women business owners especially around healthcare and tax policy. All three organizations stressed the importance of WBCs for supporting women entrepreneurs.

Conclusion

In closing, I appreciate the opportunity to celebrate the explosive growth of women-owned businesses and the tremendous impact they are having on our nation’s economy and to update this subcommittee on the role WBCs play in ensuring women entrepreneurial success. Many challenges remain for women-owned businesses, but we have only begun to tap the potential of this economic powerhouse.

With the help of the Congress, the SBA, and the WBC Program, I believe women entrepreneurs and small business owners around the country can realize their full entrepreneurial potential and contribute significantly to economic growth and job creation.

Thank you again for this opportunity to testify.

Editor's Note: We have omitted the footnotes; to view them go to: https://smallbusiness.house.gov/uploadedfiles/10-12-17_ht_pianalto_testimony.pdf;

Congressional information supplied by the Women's Congressional Policy Institute

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