So here it is…
Chairwoman Jo Ann Emerson and members of the Sub-committee, thank you for the opportunity to submit testimony about an issue of crucial importance to the American business community.
Please allow me to tell you the story of Chris Saint of San Diego. About three years ago Chris was recovering from spinal cord surgery. When it became clear that he couldn’t return to being a private investigator, he realized that he needed to find another career. One day at a friend’s party, Chris, his wife Jennifer and some others were reminiscing about the ice cream truck when they were kids – the excitement they had when they heard the music, the breathlessness from running in the house, scrounging for change and hoping you didn’t miss the truck, eating the peanuts off the top of a Drumstick, then the chocolate, then the vanilla ice cream, then crunching on the cone.
When they got home, the light bulb went off. Chris and his wife Jennifer decided to modernize the ice cream truck. They drew up plans for a truck with modern pin-striping and a quality stereo system. They took their plan to a regular bank, but didn’t get very far. In fact, the bank didn’t ‘get ice cream’ and told the Saints that they were too much of a risk.
They were referred to ACCION – San Diego by a friend who had worked with ACCION. The greatest thing was when Jennifer and Chris presented their idea to ACCION – they ‘got it’ and loaned the Saints $35,000. “They didn’t laugh,” said Jennifer. “And they went all the way with us which was so cool.” The Saints had it hard in first year. They couldn’t find their niche. Their truck would sit at places for hours on end and make $25. So during their first year, Jennifer called their counselor many times, “’We are struggling, we don’t know what to do’ and they were always supportive. We wouldn’t still be here without ACCION in that first year.’”
The Sweet Treats truck mainly caters to corporate events with a menu that includes Häagen Dazs, Ben and Jerry’s, SnoCones and even dog ice cream. They became so successful that they went to CDC Small Business Finance for a bigger loan to pay off ACCION and buy another truck. They now have three trucks and are looking at a fourth, have two employees besides themselves and hire lots of self-employed contractors.
Chris and Jennifer Saint are one of the 25 million businesses (or 88% of businesses) in the United States considered a micro-business – a business with 5 or fewer employees and start-up capital of under $50,000. Microbusinesses are everywhere – the organic tomato farmer at the Saturday market, the childcare center at work, the technology service firm who fixes your computer when it crashes, your favorite neighborhood restaurant, or the new fancy food truck, your drycleaner, your camera repairman – think of the businesses you frequent on a daily or weekly basis and I’m sure that you’ve encountered several microbusinesses you call your own.
All those micro-businesses add up to big numbers. These businesses generate $2.4 trillion in receipts, account for 17% of U.S. GDP, and employ more than 31 million Americans.
Jennifer, Chris and other microbusiness couldn’t do what they do without the support they get from places like Accion San Diego and CDC Small Business Finance. The two organization and the other 158 CAMEO members provide small business loans and business assistance support to entrepreneurs in California who lack access to traditional forms of credit. There are many others like them around the country. These kinds of organizations – community lenders, small community banks, and non-profit business counseling organizations – are known as Micro Enterprise development organizations (MDO.)
CAMEO reclaims the American Dream, one micro-business at a time. CAMEO members work with every day entrepreneurs to harness their innovative ideas and creativity and empower them to become their own bosses. Our microentrepreneurs work hard to become self-sufficient. They hire locally, pay taxes and in other ways give back to their communities.
From a survey of our members, we know that four out of five microentrepreneurs that receive training and technical assistance from CAMEO members succeed versus one out of five who succeed without training.
CAMEO member clients who start their own businesses also on average create two jobs in addition to their own, over a three-five year period. The Saints of San Diego have been able to create four jobs as well as hire other self-employed people.
CAMEO is cognizant of the current budget crisis, however, it is our belief that programs designed to encourage and promote job creation – especially those with proven track records that are funded by Microloan programs at SBA – require continued support. And that means continuing support for technical assistance funds. Technical assistance funds are a critical component to micro lending. Without technical assistance and business assistance, loans are prevented from getting to businesses in a timely manner. For example, one of our members in Butte County (northern California) returned $750,000 in capital to Rabobank that was going to be lent to small businesses because there wasn’t a pipeline of loan-ready businesses waiting for cash. There are plenty of would-be businesses, but the need some business training to write a loan-worthy business plan and cash flow projections.
The proposed FY2012 SBA Budget would be a real obstacle in the path for these entrepreneurs to start their own businesses and become successful, independent and self-reliant like the Saints have become. To keep the American Dream a reality for the millions of micro-business owners, Congress needs to maintain the small investment it has made in technical assistance. In better economic times, Congress should increase the investment. We ask that
• The proposed FY2012 SBA Budget maintains the Program for Investment in Micro-Entrepreneurs (PRIME), which provides grant money to microenterprise development organizations (MDOs) that provide counseling and technical assistance.
• The proposed FY2012 SBA Budget returns the Microloan Program to FY2010 levels of $22 million.
Also, it is critical that Women’s Business Centers, Veterans Business programs and rural programs are not absorbed into the Small Business Development Centers (SBDC). They all serve completely different entrepreneurs with different needs. A hospital wouldn’t fire its neurosurgeon because it has a cardiologist.
CAMEO would like to thank the Subcommittee for giving us the opportunity to share our views.