Washington Report: Updates from Capitol Hill

Senate Panel Examines Capital Access Obstacles and Opportunities

The recession may be ebbing but minority-owned businesses are still caught in the grip of an unrelenting credit crunch. They are twice as likely to be denied a loan and twice as likely to not even apply for one because they fear they’ll be rejected. When they are approved, they pay higher interest rates, regardless of the owner’s and the firm’s age and creditworthiness.

The Senate Committee on Small Business & Entrepreneurship held a hearing on Thursday to examine these and other obstacles and explore ways to overcome them.

“Without question, the lack of access to capital and capital formation are the principal factors holding back opportunities for minority businesses and as a consequence wealth and job creation in the minority
community,” testified Robert Johnson, chairman of The RLJ Companies and founder of RLJ Development L.L.C. (No. 8 on the BE Industrial/Service list with $605.2 million in revenue).

Johnson, chairman of The RLJ Companies, recommended that federal and state governments and major corporations consider waiving the 51% equity ownership required to define a company as a minority-owned enterprise. It was originally conceived to prevent these firms from being used as fronts or shams so that non-minorities could take advantage of government subsidies and set-asides. But according to Johnson, instead of serving as a launching pad for success, it places a ceiling on it because it forces entrepreneurs to raise debt and limits their ability to attract investment capital. He believes that other factors, such as stock or voting control should be considered to determine a majority interest.

“Lenders have only one goal, a repayment of debt with interest as quickly as possible. On the other hand, strategic equity partners seek to combine investment and operational synergies with the minority company to maximize long-term growth and value,” he said.

Johnson added that the government would hire a private investment fund to manage the monies set aside to assist minority businesses to make loans and invest in those businesses.

In separate testimony, Robert Fairlie, an economics professor at the University of California, Santa Cruz, said that in addition to racial discrimination in lending practices, limited wealth also accounts for undercapitalized businesses and fewer startups.

“Barriers to growth such as these for any group of business owners in the country limit total U.S. productivity,” he said, which has a negative effect on job creation and innovation and restricts the nation’s ability to move out of the recession and be globally competitive.

Sens.Mary Landrieu of Louisiana and Olympia Snowe of Maine, the panel’s respective chair and ranking member, said that Johnson made compelling arguments. Snowe said that both the committee and the Small Business Administration should evaluate the issues raised by Johnson and others who gave testimony. Landrieu added that she would seek ways to incorporate them in jobs bills that she and Snowe are currently drafting.

“This capital market must work for all Americans,” she said. “While government does have a limited role it could have a very muscular and important role to play in righting injustices.”

To view the hearing, click here.

Senate Committee Urges Support for Small Business Jobs Bills

The Senate Committee on Small Business and Entrepreneurship is one of those rare congressional panels that frequently produce bipartisan support for several measures. In recent weeks, it has passed out of committee a package of small business bills for which Sen. Mary Landrieu, who chairs the panel, is now seeking broader support.

“I’m hoping that as the package continues to develop and take more finite shape that we maintain that kind of bipartisan support that we have coming out of the small business committee,” Landrieu told reporters this week.

The Small Business Job Creation and Access to Capital Act of 2009

(S.2869) would increase the loan limit cap on small business and allow for refinancing of commercial real estate debt. The committee estimates that if passed, within a year the bill would increase small business lending by $5 billion.

A bill to expand trade opportunities for small businesses, the Small Business Export Enhancement and International Trade Act of 2009 (S.2862), would make available more than $1 billion in export capital. Landrieu, who chairs the committee, said that the measure also would provide counseling to help firms figure out the rules and regulations of exporting goods.

Another measure, the Small Business Contracting Revitalization Act of 2010 (S.2928), would increase contracting opportunities. Landrieu says that by increasing the number of contracts awarded to small business by just 1% would create more than 100,000 new jobs.

We have provided tax cuts to help pay for the cost of health care, tax cuts so companies can invest in advanced manufacturing, and provided access to much-needed capital. Together these incentives are supporting entrepreneurs across the country, which is critical to helping our economy and creating new jobs,” said Sen. Debbie Stabenow (D-Michigan), who sits on the Senate Finance Committee. The two panels will be working together to produce another specific small business jobs bill that will build on President Barack Obama’s recommendations.

• –Resources for Small BusinessesBlack Voters Are Warming Up to Climate Change

African American voters will play an important role in battleground states during the November mid-term elections. Like most other Americans, the economy will significantly influence their ballot choices, but climate change also will be a key consideration.

The Joint Center for Political and Economic Studies released a report Thursday that analyzes African Americans’ opinions on climate change and the midterm elections. The findings are based on four random digit dialing telephone surveys of 500 black voters conducted between Nov. 11 and Dec. 1, 2009, in Arkansas, Indiana, Missouri, and South Carolina. The states were chosen because they each will have many closely contested races whose outcome black voters could impact.

Approximately two-thirds of the respondents said they are following news about the mid-term elections either very or somewhat closely while the remaining one-quarter, which was comprised of older adults and people with higher levels of education, said they are following election news very closely. A higher percentage (74%-80%) of people than the number who voted in recent midterms said they will vote this fall.

When asked to rate the importance of climate change, economic recovery, and healthcare reform in determining their vote for U.S. Senator, 52% of the respondents in Arkansas and South Carolina, 45% in Indiana, and 44% in Missouri said that climate change would be very important. In each of the states, between 75- 80% said economic recovery would be very important and a similar percentage (74-84%) indicated that healthcare reform would be very important.

Such surveys are important educational tools that can be used to expand black awareness of issues that, given more immediate and pressing challenges, would otherwise fall by the wayside.

“African Americans seem to always fall behind in the issues that most painfully afflict them,” lamented Missouri Rep. Emanuel Cleaver. In addition to having the highest incidence of asthma, he said, many African American communities also are more likely to be located closer to landfills and sanitary waste water plants, and have homes in which there is asbestos or lead paint.

“All kinds of environmental dangers await African Americans after they’re born and move into predominately black areas and we’ve got to get them involved in environmental justice,” said Cleaver. “We can’t afford to have an ideological argument about climate change as others can, but we are emotional voters and if we don’t have an emotional connection to something or somebody, we turn out in anemic numbers.”

That can pose an electoral danger to many Congressional Black Caucus members, including those deemed safe. “Some, like me, have maybe a 15-17% black voting population,” Cleaver said, and given the current bitterly partisan atmosphere, “it’s a scary time.”

Click here for more BEing Green articles on African Americans, energy, and the environment.

Taskforce Works to Increase Number of Minorities Working on Capitol Hill

House leadership has established a diversity taskforce that will focus on increasing workforce diversity at all House staff levels. It also will sponsor training courses, build a resume bank of potential employees, and publish regular progress reports. The initiative is in part a response to a February report, “Unrepresented: A Blueprint for Solving the Diversity Crisis on Capitol Hill,” which found that the Latinos account for only 5.6% of House staff members and that the Senate has just one Latino committee director and one Latino chief of staff.

“With this new diversity initiative, we not only live up to the basic American ideal of equal opportunity for all, but we strengthen the quality of our workforce,” House Speaker Nancy Pelosi of California said Tuesday. “We invite all House Members and offices, from both sides of the aisle, to take advantage of this new vital resource that will enrich our institution.”

The effort will be coordinated by the Committee on House Administration, which will coordinate its efforts with members of the House Tri-Caucus, which is made up of the congressional Asian Pacific, black and Hispanic caucuses, and the House Chiefs of Staff Association. The Democratic Caucus and the Republican Conference also will be involved.

“The CBC remains committed to the recruitment and retention of a diverse workforce in the federal government and applauds Speaker Pelosi for making this a priority for the House and legislative branch agencies and offices,” said CBC Chairwoman Barbara Lee (D-California).