HEARING

BEFORE THE

SUBCOMMITTEE ON

FINANCING AND INVESTMENT

OF THE

SELECT COMMITTEE ON SMALL BUSINESS

UNITED STATES SENATE

NINETIETH CONGRESS

FIRST SESSION

ON

A REVIEW OF THE SMALL BUSINESS ADMINISTRATION'S
FINANCIAL ASSISTANCE PROGRAMS

AUGUST 25, 1967

LAW LIBRARY

U. S. GOVT. DOCS. DEP.

31367

UNIVERSITY OF CALIFORNIA
BERKELEY

Printed for the use of the Select Committee on Small Business

SELECT COMMITTEE ON SMALL BUSINESS

[Created pursuant to S. Res. 58, 81st Cong.]

(90th Cong., First sess.)

GEORGE A. SMATHERS, Florida, Chairman

WILLIAM T. MCINARNAY, Staff Director and General Counsel
DANIEL T. COUGHLIN, Minority Counsel

SUBCOMMITTEE ON FINANCING AND INVESTMENT

JOHN SPARKMAN, Alabama, Chairman

HARRISON A. WILLIAMS, JR., New Jersey JACOB K. JAVITS, New York GEORGE A. SMATHERS, Florida

TIM C. FORD, Chief Counsel

Statement of

CONTENTS

Moot, Hon. Robert C., Administrator, Small Business Administration, Washington, D.C.; accompanied by Howard Greenberg, Deputy Administrator; Logan B. Hendricks, Associate Administrator for Financial Assistance; and Dr. Wilfred J. Garvin, Assistant Administrator for Planning, Research, and Analysis--

III

Page

3

SBA'S FINANCIAL ASSISTANCE PROGRAMS

FRIDAY, AUGUST 25, 1967

U.S. SENATE,

SUBCOMMITTEE ON FINANCING AND INVESTMENT

OF THE SELECT COMMITTEE ON SMALL BUSINESS,

Washington, D.C.

The subcommittee met, pursuant to call, at 10:10 a.m., in room 457, Old Senate Office Building, Senator John Sparkman (chairman of the subcommittee) presiding.

Present: Senators Sparkman, Bartlett, and Javits.

Also present: Tim C. Ford, chief counsel of the subcommittee; Blake O'Connor, professional staff member; Herbert L. Spira, counsel; and Claude A. Stark, economic counsel.

Senator SPARKMAN. Let the subcommittee come to order, please. We have several Senators who have indicated their interest and their hope to be here, but I think we had better get started and let them come in as they will.

I am particularly pleased that we have Mr. Robert C. Moot, the new Administrator of the new Small Business Administration with us today. This is Mr. Moot's first appearance before this subcommittee and I want to take this opportunity to welcome him.

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Now, in scheduling this first hearing on SBA's financial assistance programs, the subcommittee has several areas it wishes to explore. Primarily, we want to determine to what extent SBA's lending programs are actually helping the small businessman. There exists a "g area" in business financing which I like to refer to as the "equity gap." This is the area where business loans are too small for the institutional investors to be concerned with, and yet too large for the family to arrange. We want to find out whether SBA has helped to close this equity gap. We don't want to see the small businessman "squeezed out."

The subcommittee will be very interested in statistics showing how many small firms lose out on financing opportunities when a tight money situation develops.

In my opinion, our national economy will be in serious trouble if small business borrowing is curtailed. There are about 5 million small businesses in the United States, each providing jobs for anywhere from one person to 500 persons.

If many of these firms are squeezed out, the loss in jobs alone would constiute an economic catastrophe. In addition, prices would probably rise as competition became further impaired.

Stated quite simply, when the little businessman gets hurt, this hurt is felt throughout out entire economy. Big business gets hurt too, because big business depends to a larger extent, a must larger extent,