[House Hearing, 110 Congress]
[From the U.S. Government Printing Office]




 
                 SUBCOMMITTEE HEARING: IS THE VETERANS
                    CORPORATION PREPARED TO PROVIDE
                 ENTREPRENEURIAL DEVELOPMENT ASSISTANCE
                        TO SERVICE MEN AND WOMEN
                  RETURNING FROM IRAQ AND AFGHANISTAN?

=======================================================================

              SUBCOMMITTEE ON INVESTIGATIONS AND OVERSIGHT
                      COMMITTEE ON SMALL BUSINESS
                 UNITED STATES HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                               __________

                              MAY 2, 2007

                               __________

                          Serial Number 110-18

                               __________

         Printed for the use of the Committee on Small Business


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                                 house


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                   HOUSE COMMITTEE ON SMALL BUSINESS

                NYDIA M. VELAZQUEZ, New York, Chairwoman


WILLIAM JEFFERSON, Louisiana         STEVE CHABOT, Ohio, Ranking Member
HEATH SHULER, North Carolina         ROSCOE BARTLETT, Maryland
CHARLIE GONZALEZ, Texas              SAM GRAVES, Missouri
RICK LARSEN, Washington              TODD AKIN, Missouri
RAUL GRIJALVA, Arizona               BILL SHUSTER, Pennsylvania
MICHAEL MICHAUD, Maine               MARILYN MUSGRAVE, Colorado
MELISSA BEAN, Illinois               STEVE KING, Iowa
HENRY CUELLAR, Texas                 JEFF FORTENBERRY, Nebraska
DAN LIPINSKI, Illinois               LYNN WESTMORELAND, Georgia
GWEN MOORE, Wisconsin                LOUIE GOHMERT, Texas
JASON ALTMIRE, Pennsylvania          DEAN HELLER, Nevada
BRUCE BRALEY, Iowa                   DAVID DAVIS, Tennessee
YVETTE CLARKE, New York              MARY FALLIN, Oklahoma
BRAD ELLSWORTH, Indiana              VERN BUCHANAN, Florida
HANK JOHNSON, Georgia                JIM JORDAN, Ohio
JOE SESTAK, Pennsylvania

                  Michael Day, Majority Staff Director

                 Adam Minehardt, Deputy Staff Director

                      Tim Slattery, Chief Counsel

               Kevin Fitzpatrick, Minority Staff Director

               SUBCOMMITTEE ON INVESTIGATIONS & OVERSIGHT

                 JASON ALTMIRE, PENNSYLVANIA, Chairman


CHARLIE GONZALEZ, Texas              LOUIE GOHMERT, Texas, Ranking
RAUL GRIJALVA, Arizona               LYNN WESTMORELAND, Georgia

        .........................................................


                                  (ii)

  


                            C O N T E N T S

                              ----------                              

                           OPENING STATEMENTS

                                                                   Page

Altmire, Hon. Jason..............................................     1
Gohmert, Hon. Louie..............................................     2

                               WITNESSES

Blackwell, Walter, National Veterans Business Development 
  Corporation....................................................     3
Elmore, William D., Office of Veterans Business Development, U.S. 
  Small Business Administration..................................     5
Sharpe Jr., Joseph, National Economic Commission, The American 
  Legion.........................................................     8
Celli, Louis J., Committee on Veterans Business Affairs..........     9
Cain, Allan D., Carthage Self-Storage............................    13

                                APPENDIX


Prepared Statements:
Altmire, Hon. Jason..............................................    26
Gohmert, Hon. Louie..............................................    28
Blackwell, Walter, National Veterans Business Development 
  Corporation....................................................    30
Elmore, William D., Office of Veterans Business Development, U.S. 
  Small Business Administration..................................    43
Sharpe Jr., Joseph, National Economic Commission, The American 
  Legion.........................................................    49
Celli, Louis J., Committee on Veterans Business Affairs..........    53
Cain, Allan D., Carthage Self-Storage............................    57

Statements for the Record:
Clair, James A., Ultimate Defensive Driving School...............    60
Wynn, Joe, Veterans Enterprise Training and Services Group, Inc..    63

                                 (iii)

  


                      SUBCOMMITTEE HEARING: IS THE
                     VETERANS CORPORATION PREPARED
                       TO PROVIDE ENTREPRENEURIAL
                     ASSISTANCE TO SERVICE MEN AND
                     WOMEN RETURNING FROM IRAQ AND
                              AFGHANISTAN?

                              ----------                              


                         WEDNESDAY, MAY 2, 2007

                     U.S. House of Representatives,
                               Committee on Small Business,
                 Subcommittee on Investigations & Oversight
                                                    Washington, DC.
    The Subcommittee met, pursuant to call, at 10:00 a.m., in 
Room 2360 Rayburn House Office Building, Hon. Jason Altmire
    [Chairman of the Subcommittee] presiding.
    Present: Representatives Altmire, Gohmert.

             OPENING STATEMENT OF CHAIRMAN ALTMIRE

    ChairmanAltmire. I'm pleased to call to order this 
morning's hearing on the Preparedness of the Veterans 
Corporation to Provide Entrepreneurial Development Assistance 
to Servicemen and Women Returning from Iraq and Afghanistan.
    The Committee is concerned about the country's ability to 
fully meet the needs of our nation's Veterans. I believe that 
we owe no greater debt to the men and women in uniform and to 
date over 600,000 Veterans have come home from Iraq and 
Afghanistan.
    Given the significant number of returning service members, 
it's critical that they're afforded every opportunity for 
economic success at home. And to ensure that the emerging needs 
of Veterans from the Iraq and Afghanistan Wars are being met, 
this hearing today will focus on the effectiveness of the 
National Veterans Business Development Corporation.
    Congress created the Veterans Corporation in 1999 to help 
Veterans transition their skills and leadership experience into 
economic success. Its mission is to provide entrepreneurial 
development resources for these heroic Americans to start small 
businesses. The organization operates customized small business 
assistance programs including access to capital and 
entrepreneurial development resources.
    Today, we will examine the Veterans Corporation's level of 
readiness to meet the emerging needs of Veterans. This 
Committee wants to work with all involved to ensure that the 
Corporation can fulfill its mission.
    Within the last few years, the organization significantly 
changed its operations, shifting much of its service delivery 
responsibilities to public and private entities such as the 
SBA's Veterans Business Outreach Centers. There has been great 
unease about the organization as it implements its remaining 
direct services. The Veterans Corporation services should be 
reflective of the needs of Veterans returning from Iraq and 
Afghanistan.
    In addition to generating rapid growth in the sheer number 
of Veterans returning, the wars being waged in Iraq and 
Afghanistan have affected the composition of our nation's 
Veterans. For example, 30 percent of these troops represent the 
National Guard and Reservists; 1 in 5 are now service-disabled; 
and 15 percent are women. This unique composition of Veterans 
creates unique needs as many return and seek economic stability 
through entrepreneurial opportunities.
    The Veterans Corporation must operate new programs for 
service-disabled and female Veterans and its reservist programs 
should be expanded. It's clear that as Veterans continue to 
turn to the Corporation, it must respond appropriately to meet 
these emerging needs. We also need to reduce the Corporation's 
dependence on its partners for the delivery of Veteran 
services. Many of the Veterans Corporation's partners have not 
created programs that address the needs of the current 
composition of separating service members.
    The Veteran population requires customized assistance to be 
successful in starting or expanding these endeavors. By 
delegated the responsibilities, the organization has become 
less accountable in its service delivery performance. Outreach 
efforts have also lagged. Currently, one third of Veterans have 
no knowledge of programs targeted to them to promote small 
business entrepreneurship.
    The Veterans Corporation should utilize its resources more 
effectively and efficiently through improvements in its 
operational strategy.
    With more and more Veterans returning home from abroad and 
re-entering civilian life, I will continue to work to ensure 
the resources they deserve as will the other Members of the 
Committee. I look forward to the witnesses' comments on the 
emerging Veterans' needs and the Veterans Corporation 
performance in fulfilling them. And I wanted to make clear 
before our witnesses today and thank you all for being here, 
that we're here to help you achieve your mission. This is not 
an effort to play gotcha in any way. We're here to see if we 
can identify ways that this Committee can help you and work 
with you in achieving the goal that we all know is important, 
of helping these Veterans when they come back, returning into 
entrepreneurship activities.
    So thank you all and I now recognize Ranking Member Gohmert 
for his opening statement.

                OPENING STATEMENT OF MR. GOHMERT

    Mr.Gohmert. Thank you, Mr. Chairman, I do appreciate your 
having this hearing and I appreciate the witnesses being here. 
It's obviously important or you wouldn't have gone to this 
trouble and we appreciate your efforts.
    I want to particularly welcome a constituent of mine, my 
dear friend, Allan Cain, for making the trip to testify before 
the Committee and I'll be introducing him a bit later.
    But as a U.S. Congressman and former Captain in the U.S. 
Army, one of my top priorities is to ensure that our nation's 
military service Veterans receive the help and care they need 
and deserve. As I repeatedly said, any nation that fails to 
honor those who have honored it with their service will not 
remain a nation much longer.
    As I visit with small business owners in my District in 
East Texas, I'm continuously shocked at the increasing costs 
and number of procedural hoops that small business owners must 
deal with just to open their doors in the morning. Without any 
assistance in navigating the difficult process of starting a 
small business, Veterans may end up paying more, the process 
taking longer, or worse, the Veteran may not open a small 
business at all.
    According to Census estimates, about 4.2 to 5.5 million 
small businesses are owned by one or more U.S. Veterans. With 
the increased number of troops necessary for U.S. military 
operations abroad, there will no doubt be an increase of 
Veterans returning to the country, entering the job market and 
beginning a small business. It is essential we do our part here 
to ensure the transition from the service to small business is 
as simple and trouble free as it can possibly be.
    Again, thank you, Mr. Chairman, for holding this hearing 
and I look forward to hearing from our panel of distinguished 
witnesses. Thank you.
    ChairmanAltmire. I ask unanimous consent that the record 
will be open for five days for Members to submit their 
statements. Hearing no objection, so ordered.
    So I'd like to first, before I introduce the witnesses, 
extend a warm welcome to a constituent of mine, Mr. Jim Clair, 
who took the time to appear at the hearing today.
    Jim, could you stand up? Mr. Clair is a former U.S. Marine 
and a current member of the Army National Guard which he just 
recently rejoined at the age of 40. He is also an owner of a 
driving school business and I want to thank him for being here 
because there's thousands and thousands of Veterans who are 
benefiting from small business entrepreneurship, but I can 
think of no better example than Jim Clair. And I appreciate you 
being here.
    Our first witness today is Mr. Blackwell. He is President 
and CEO of the National Veterans Business Development 
Corporation. The Veterans Corporation was established in 1999 
to provide entrepreneurial development services for our 
nation's Veterans and I want to thank you, Mr. Blackwell, for 
being here and we look forward to hearing your remarks.

STATEMENT OF MR. WALTER BLACKWELL, PRESIDENT AND CEO, NATIONAL 
           VETERANS BUSINESS DEVELOPMENT CORPORATION

    Mr.Blackwell. Chairman Altmire, Ranking Member Gohmert and 
distinguished Members of the Subcommittee, thank you for giving 
me this opportunity to testify before you today.
    I request that my written testimony, along with a copy of 
TVC's annual report be entered into the official record.
    ChairmanAltmire. Without objection.
    Mr.Blackwell. My name is Walter G. Blackwell. I'm President 
and CEO of the Veterans Corporation and a Navy Veteran. I'm 
joined today by two of our three ex officio members of the 
board, Linda Oliver, representing Defense Secretary Gates; 
fellow panelist, Bill Elmore, representing SBA's Administrator 
Preston; Scott Deniston, representing Secretary of Veteran 
Affairs Nicholson wanted to be here today, but his schedule did 
not permit.
    Together, these agencies and TVC are creating and 
delivering tools and opportunities for Veteran entrepreneur 
success. Joe Sharpe, also on this panel here today, from the 
American Legion and Joe serves as chairman of TVC's Veteran 
Service Organization Council. Bill Ferguson, sitting behind me 
of the Iraq-Afghanistan Veterans of America, our newest member 
of that VSO, is also in attendance today.
    Today, you've asked us is the Veterans Corporation, TVC, 
prepared to provide entrepreneurial development assistance to 
servicemen and women returning from Iraq and Afghanistan. Our 
answer is a resounding yes. The Veterans Corporation is 
uniquely positioned to assist our nation's Veterans. The needs 
of Veterans returning from the current conflict are really no 
different from the needs from past conflicts, however, this set 
of servicemen and women, returning from Iraq and Afghanistan, 
is the first set of Veterans comprised of those who embrace and 
implement on-line electronic tools for communications and 
education.
    TVC has made extensive efforts over the last several years 
to accommodate this fact in creating and assembling an on-line 
tool box for business in transition. TVC has leveraged the 
knowledge and experience gained in delivering face-to-face 
programs, education, mentoring and counseling since 2001 by 
expanding the essential elements of business education, 
mentoring and counseling into on-line deliverables. During the 
summer of 2006, we further enhanced TVC's website to provide a 
straightforward format to access the extensive resources 
available to today's Veteran entrepreneurs. Details of these 
programs can be found in my written testimony.
    Iraq and Afghanistan Veterans, like Veteran entrepreneurs 
from all generations, have three critical business needs: 
access to capital, access to bonding, and access to education 
through coursework, mentoring, and counseling. TVC's status as 
a 501(c)(3) organization has allowed us to create valuable 
mentored public/private program partnerships not available 
through any current government agency. Two of TVC's private 
sector partners are with me today: Jim Mingey, President and 
CEO of the National Economic Opportunity Fund. Jim operates 
TVC's access to the capital program and works with Veteran 
entrepreneurs who need business loans, financial assistance or 
strategic financial planning. Also joining me is Lynn Schubert, 
President and CEO of the Surety and Fidelity Association of 
America. Lynn and her organization facilitate TVC's fully 
mentored access to bonding program providing Veteran 
entrepreneurs involved in contracting fields such as 
construction with a complete set of bonding products.
    TVC continues to fund three Veteran business resources: in 
St. Louis, Missouri; Flint, Michigan; and Boston, 
Massachusetts. The Committee will hear from Lou Celli, the head 
of our Boston hub this morning. Lou is currently working with a 
soldier recovering from a traumatic brain injury at Walter 
Reed, who is interested in opening a Dunkin' Donuts franchise.
    Let me give you just one example of our current work with a 
newly returned Veteran. David Barker is an Army Reservist 
currently in San Diego, California where he is recovering from 
injuries that he sustained while fighting in Iraq June 11, 
2005. His goal, when he leaves the military next month, is to 
return to his home town and run his family's collision, paint, 
and repair shop. Jim Mingey flew to El Paso, Illinois to meet 
and talk to David and his family and discuss their business 
plans and financial needs. David estimates that he'll need 
approximately $265,000 for a building and two years of salaries 
and expenses. Jim's currently working with David to get that 
financing.
    In my remaining time, I'd like to highlight two significant 
new programs. First is our Boots to Business Transition Skills 
for Success. Boots to Business is a comprehensive on-line 
resource providing educational workplace training, 
transitioning skills, and Boots to Business combines the 
elements from successful programs used independently in 
thousands of vocational schools, job training centers, 
community college, detention and correctional facilities, Job 
Corps Centers, and adult education programs nationally. TVC has 
integrated the best of these elements into a cohesive, 
interactive, on-line program.
    TVC has also launched a comprehensive new program Deploy-
proof Your Business, designed to assist members of the National 
Guard and Reserve in protecting their businesses before they're 
deployed. Deploy-proof Your Business includes sections on 
suspending or sustaining your business, as well as a 
comprehensive section comparing the two options side by side. 
With helpful tools, links, checklists and other on-line 
resources, this site is developed as an on-going program to 
answer the questions and frustrations many National Guardsmen 
and Reservists have when they leave their businesses for 
deployment.
    With us today is also Jim Clair, introduced by the Chairman 
previously. And we're delighted that Jim works with us and we 
hope to assist him as he prepares for his own deployment in the 
future.
    Mr. Chairman, I'd be happy to answer any questions you or 
other Committee Members may have. Thank you.
    [The prepared statement of Mr. Blackwell may be found in 
the Appendix, on page 30.]

    ChairmanAltmire. Thank you, Mr. Blackwell.
    The second witness is Mr. William Elmore. He's the 
Associate Administrator for the Veterans Business Development 
at Small Business Administration. He heads the Office of 
Veterans Business Development, administers the Veterans 
Business Outreach Center, and is an ombudsman for Veterans 
Affairs at the agency.
    Welcome, Mr. Elmore.

 STATEMENT OF MR. WILLIAM ELMORE, ASSOCIATED ADMINISTRATOR FOR 
THE VETERANS BUSINESS DEVELOPMENT, UNITED STATES SMALL BUSINESS 
                         ADMINISTRATION

    Mr.Elmore. Thank you, sir. Chairman Altmire and Ranking 
Member Gohmert, distinguished Members of the Committee, thank 
you for your invitation and the opportunity to share with this 
Committee the initiatives of the U.S. Small Business 
Administration with regard to our efforts to support and assist 
the success of Veterans, National Guard and Reservists, as well 
as to share with you some of the assistance that we are 
presently providing to members of the U.S. military who have 
been or who may be activated for the global War on Terror.
    I am Bill Elmore, the Associate Administrator for Veterans 
Business Development. Before I begin my testimony, I would like 
to express my deepest sympathy for the loss of your colleague 
and a Member of this Committee, Congresswoman Juanita 
Millender-McDonald.
    On behalf of Administrator Preston and the SBA, I want to 
thank you for the opportunity to be able to share some of SBA's 
accomplishments over these past six years. On January 24, 2007, 
Administrator Preston and Office of Federal Procurement Policy 
Administrator Dennett, jointly issued a memorandum for heads of 
departments and agencies. This memorandum expressed SBA's broad 
commitment to enhancing all of our entrepreneurial programs and 
services for our nation's brave service members, more 
specifically those members returning from duty in the global 
War on Terror, who are injured or disabled.
    SBA's Office of Veterans Business Development plays an 
important role in assisting and supporting Veteran 
entrepreneurs, however, it is important to note that SBA 
support efforts go beyond the activities of my specific office.
    To keep SBA's commitment to our service members, we have 
tasked our loan programs, our business counseling and training 
programs, and our procurement assistance programs with 
expanding and improving services for Veterans and specifically 
service-disabled Veterans. We have significantly increased 
loans to Veterans. The number of new loans to Veterans has 
grown from 4,800 in FY 2000 to approximately 8,000 in FY 2006.
    Prime contracts have a three percent government-wide 
federal procurement goal established by Public Law 106-50 for 
small businesses owned and controlled by service-disabled 
Veterans. In addition, 106-50 establishes a best efforts clause 
for Veterans in federal procurement at the subcontracting 
level. Though the Federal Government has yet to achieve the 
required three percent goal, it is making progress towards 
accomplishing it. In 2004, President Bush issued Executive 
Order 13360 to strengthen opportunities in federal contracting 
for service-disabled Veteran-owned small businesses. 
Preliminary data shows that SBA and the Department of Veterans 
Affairs both exceeded the three percent goal for SDV small 
businesses in Fiscal Year 2006.This accomplishment demonstrates 
leadership by example and represents a significant improvement 
for both agencies over our achievements in FY 2005.
    The number of small businesses owned by SDVs who are 
expressing interest in federal procurement by registering in 
Government Central Contractor registration has grown 
significantly and continues to grow.
    I wanted to share with you that SBA is strengthening our 
full range of programs, including our Small Business 
Development Center program, SCORE; our Women's Business Center 
program; our Veterans Business Outreach Center program that you 
mentioned; our Special District Office Outreach Initiative; our 
Surety Bond Guarantee program. We're going to be implementing a 
new matchmaking initiative very soon, specifically for Veterans 
and service-disabled Veterans and we're strengthening the role 
that our Procurement Center representatives play in the whole 
federal procurement arena, specifically for Veterans and 
service-disabled Veterans.
    I would now like to speak to SBA's efforts to assist small 
business owners who are members of reserve components that have 
been or may be affected by activation. In FY 2001, we began 
offering and continue to promote a disaster loan program as one 
tool that can be of great assistance to an activated reservist 
business owner. I am proud to report to you that SBA initiated 
and continues to lead the federal effort to conduct outreach, 
develop assistance for and design program efforts to enhance 
pre- and post-mobilization business planning, lending and other 
assistance for small business owners who may be at risk of 
economic damage when activated.
    In the wake of September 11, 2001, attacks on America, we 
established an SBA working committee to coordinate agency 
outreach and service delivery to Reservists. In 2002, we took 
several steps to assist Reservists by creating the Reserve and 
Guard Fact Sheet which has been distributed to hundreds of 
thousands of mobilizing and de-mobilizing Reservists, as well 
as establishing a special webpage specifically for Reserve and 
Guard Members.
     We have also produced and we have distributed in excess of 
40,000 of what we refer to as our Reserve and Guard kits which 
is at least at last state of production, comprehensive, 
compilation of all the services and programs of SBA and every 
other agency organization that we could find across America. 
And those were included in there.
    It is important to note that we include Reservists with 
Veteran status in our Community Express Loan Program presently 
and last year Congress enacted our proposal for the authority 
to include Reservists in our definition of Veteran for purposes 
of our comprehensive outreach program. We recognize the 
importance of supporting and maintaining the civil skills of 
the self-employed Reservists involved in the global War on 
Terror as our nation's efforts against terror continue. We 
understand the importance of SBA's programs in providing 
assistance and support to our brave men and women and we are 
proud of the efforts of service-disabled Veterans, Veterans and 
Reservists and we intend to continue our aggressive efforts on 
their behalf.
    And I want to thank you for this opportunity to testify 
before you today. I am proud of the progress we have made and 
we look forward to continuing to assist our brave men and women 
who unselfishly serve our nation proudly.
    This concludes my testimony, and I welcome any questions 
you may have. Thank you.
    [The prepared statement of Mr. Elmore may be found in the 
Appendix, on page 43.]

    ChairmanAltmire. Thank you, Mr. Elmore.
    Our third witness is Mr. Joseph Sharpe, Jr. He's the third 
witness. He is the Deputy Director of the National Economic 
Commission for the American Legion. The American Legion, which 
has nearly three million members was founded as a community-
service organization in 1919 to assist war-time Veterans.
    We're honored to have you here today, Mr. Sharpe. We look 
forward to your testimony.

  STATEMENT OF MR. JOSEPH SHARPE, JR., DEPUTY DIRECTOR OF THE 
         NATIONAL ECONOMIC COMMISSION, AMERICAN LEGION

    Mr.Sharpe. Mr. Chairman and Members of the Committee, I 
appreciate this opportunity to share the views of the American 
Legion on whether the Veterans Corporation is prepared to 
provide entrepreneur development assistance to servicemen and 
women returning from Iraq and Afghanistan.
    American Legion views small business as the backbone of the 
American economy. It is the mobilizing force behind America's 
past economic growth and will continue to be the major factor 
as we move well into the 21st century.
    Presently, more than 9 out of every 10 business firms 
produce approximately half of the gross national product. 
Currently, over one half of the nation's workforce is employed 
by small business with the average company employing 
approximately 11 persons.
    Small businesses created by some estimates, 60 percent to 
80 percent of the net new jobs, therefore providing a central 
element for strong economic growth. Government should assist in 
the creation of new jobs by encouraging qualified entrepreneurs 
to start and expand their small businesses. No group is better 
qualified or deserving of this type of assistance than our 
Veterans.
    Congress enacted the Veterans Entrepreneurship and Small 
Business Development Act of 1999, Public Law 106-50 to assist 
Veterans and service-connected disabled Veterans own businesses 
by creating the National Veterans Business Development 
Corporation. In the beginning of its inception, the Veterans 
Corporation created a Veterans Entrepreneur Training program to 
provide and foster successful Veteran entrepreneurship within 
the Veteran Business Committee. But this program no longer 
exists.
    Currently, the organization's main efforts have been to 
provide distance learning education, would-be Veteran 
entrepreneur training and how to start and expand their own 
businesses to include training and finance, accounting, and 
contracting. The Veterans Corporation has gone through a number 
of mission and staffing changes since its inception. Its latest 
vision to assist Guard and Reserve in transitioning members of 
the Armed Forces and their families with establishment of their 
own businesses. However, the Veterans Corporation and the 
American Legion are currently involved in the discussion on the 
best method or methods of assisting these deserving Veterans. 
TVC has in the past stressed creating on-line education 
programs to assist Veterans with obtaining basic literacy 
skills hosted by other third-party organizations. Their current 
plans are to create an on-line platform to match Veterans with 
entrepreneur education and career opportunities and to provide 
grants to small business development centers around the country 
and other business development organizations to specifically 
assist Veterans.
    In conclusion, the American Legion realizes the National 
Business Development Corporation created through Public Law 
106-50 was uniquely positioned to provide American Veterans 
with superior entrepreneurship training and business resources 
that shows them how to start or grow a business and in turn 
contribute to the economic well-being of the nation. The 
American Legion believes that the Veteran Corporation has not 
fulfilled all the mandates of Public Law 106, and is actively 
moving away from those mandates into a different direction by 
focusing their efforts and funding on on-line entrepreneur 
programs they believe would maximize their available resources 
and reach more returning Veterans. Therefore, the American 
Legion strongly recommends that the Small Business 
Administration Office of Veterans' Business Development, be the 
lead agency to ensure Veterans returning from Iraq and 
Afghanistan are provided with entrepreneur development 
assistance. Comprehensive training should be handled by SBA, 
and augmented by TVC's on-line training. The American Legion 
strongly supports the mandates of Public Law 106-50 that were 
designed to assist all Veterans wishing to start or expand 
their businesses and to protect their businesses.
    If there's a true desire to assist Veterans returning from 
Iraq and Afghanistan in developing small businesses, we must 
work together to enforce the mandates of Public Law 106-50.
    Mr. Chairman, this concludes my testimony. I appreciate the 
opportunity to present the views of the American Legion.
    [The prepared statement of Mr. Sharpe may be found in the 
Appendix, on page 49.]

    ChairmanAltmire. Thank you, Mr. Sharpe.
    Our fourth witness today is Mr. Louis Celli. He is the 
founder and CEO of the Northeast Veterans Business Resource 
Center which trains Veterans to start and grow small 
businesses. He is also chair of the Advisory Committee on 
Veterans Business Affairs which provides advice to the 
Administrator of the Small Business Administration, Congress, 
and the President.
    Welcome, Mr. Celli.

 STATEMENT OF MR. LOUIS J. CELLI, JR., CHAIRMAN, COMMITTEE ON 
                   VETERANS BUSINESS AFFAIRS

    Mr.Celli. Good morning, Chairman Altmire, Ranking Member 
Gohmert, and distinguished Members of this Committee. Thank you 
for the invitation to come before you and share my experiences 
and work within the Veteran business-owner community. I'm a 22-
year Veteran of the United States Army, a disabled Veteran and 
I've started two businesses. I am the chairman, as you've 
mentioned, of the SBA's Veterans Small Business Advisory 
Committee, and the vice chairman of the American Legion's Small 
Business Task Force.
    My company, the Northeast Veterans Business Resource Center 
is headquartered in Massachusetts and has an office at Walter 
Reed Army Medical Hospital. We're a nonprofit organization that 
teaches, coaches, and mentors Veteran to start and grow micro 
enterprises and small businesses and we receive our funding 
from the Veterans Corporation.
    Over the past four years, we've served over 4,000 Veterans 
through counseling, seminars, and formal classroom-style 
training.
    I'm here today to offer testimony on behalf of these 
clients as well as to offer you the benefits of research and 
opinion of our Veterans Small Business Advisory Committee which 
was established under the same public law, Public Law 106-50 
that created the Veterans Corporation.
    The question before the Committee today is: is the Veterans 
Corporation prepared to provide entrepreneurial development, 
assistance, to service men and women returning from Iraq and 
Afghanistan? In my opinion, the answer would have to be no. The 
Veterans Corporation has neither the reach nor the funds to 
adequately address the needs of the growing number of Veterans 
interested in entrepreneurship.
    Congress, and specifically, this Committee, have been 
working for Veteran business owners for years. This issue and 
specifically the Veterans Corporation is as important to our 
Veterans as it is to you. Public Law 106-50 was written as a 
plan, a plan to assist self-employed Veterans and encourage 
entrepreneurship.
    At the time 106-50 was written, a number of federally-
funded programs were already in place and available to 
Veterans. Small Business Development Centers, Procurement and 
Technical Assistance Centers, better known as PTACs, SCOR, 
Women Business Centers, and yet, Congress finds the following 
and I read directly from Public Law 106-50, ``Veterans of the 
United States Armed Forces have been and continue to be vital 
to the small business enterprises of the United States. In 
serving the United States, Veterans often face great risks to 
preserve the American dream of freedom and prosperity. The 
United States has done too little to assist Veterans, 
particularly service-disabled Veterans in playing a greater 
role in the economy of the United States by forming and 
expanding small business enterprises. The medical advances''--
and this is especially true now seven years later today--``and 
new medical technologies have made it possible for service-
disabled Veterans to play a much greater role in the formation 
and expansion of small business enterprises in the United 
States. The United States must provide additional assistance 
and support to Veterans, to better equip them to form and 
expand small business enterprises, thereby enabling them to 
realize the American dream they fought so hard to protect.
    Each of the entities created by 106-50, the SBA's Office of 
Veterans Business Development, the VA's Office for Veterans 
Enterprise, the SBA Veterans Business Advisory Council, the 
Veterans Corporation, and the Veterans Representative for SCOR 
and all the others were established solely for the purpose of 
expanding the eligibility for certain small business assistance 
programs to include Veterans, directing certain departments and 
agencies of the United States to take action that enhanced 
small business assistance to Veterans and establish new 
institutions to provide small business assistance to Veterans 
or to support the institutions that provide such assistance.
    The Veterans Corporation specifically was established to 
expand the provisions and improve access to technical 
assistance regarding entrepreneurship for the nation's Veterans 
and to assist Veterans including service-disabled Veterans with 
the formation and expansion of small business concerns, by 
working with and organizing public and private resources 
including those of the SBA, the Department of Veterans Affairs, 
the Department of Labor, the Department of Commerce, Department 
of Defense, SCOR and the Business Development staffs at each 
department and agency of the United States.
    And''--and this is most important--``in carrying out the 
purpose described in Public Law 106-50, the Corporation shall 
establish and maintain a network of information and assistance 
centers for use by Veterans and public.''
    In 2004, TVC had built up to I believe it was 12 contracted 
resource partners delivering hands-on training and 
entrepreneurship programs around the country. By February 2006, 
they had consolidated to eight regional hubs and today they've 
been reduced to three.
    In the past six years, TVC has been through four leadership 
changes, four logo and branding changes, and at least as many 
business models. Within the past two years, TVC has focused on 
a variety of different initiatives, each more spectacular than 
the last: an elaborate self-pacede-learning project, SUNY 
University, University of Maryland, the Veterans Economic 
Opportunity Fund, TVC's Governors and Mayors Advisory Council, 
the Veterans Business Directory, a Mobile Entrepreneurial 
Resource Center, branded and sponsored by NASCAR, professional 
artists and announcers providing and donating recorded PSAs and 
the virtual business center just to name a few.
    To date, none of these projects have assisted Veterans and 
over the years, the only success stories and clients presented 
as accomplishments in the fruits of the labor continue to be 
that of the resource centers.
    House Report 106.206 that accompanied Public Law 106-50 
references the Veterans Corporation's most significant and 
single purpose is to establish an independent network, a 
nationwide network of business assistance and information 
centers for Veterans. Chairman Talent, on June 23, 1999, at the 
mark-up hearing for H.R. 1568 said the following in response to 
a question/comment from Congressman Pascrell. ``The gentleman 
exposed a little secret behind this bill. I think these, the 
Veterans Assistance Centers, are in effect going to empower the 
Veterans community to advocate effectively on their own behalf. 
Then you're going to see agencies and also the Congress sit up 
and take notice and give them a high priority.''
    On September 9, 1999, Chairman Talent's statements in the 
House of Representatives included in the following, in a 
section by section analysis of H.R. 1568, a section entitled 
``To Establish a Federally-Charted Incorporation, TVA, for the 
Purpose of Guiding and Monitoring Public and Private Sectors' 
Initiatives and to Assist National Veterans in their Efforts to 
Form and Grow Small Businesses. The most significant purpose of 
the corporation will be to work with the public and private 
sectors and to establish independent nationwide network of 
business and assistance in information centers. These centers 
represent one third of TVC's total direct access to working 
with clients and already stretched to the limit.''
    Our center employs two full-time employees, two part-time 
employees, three volunteers. Our area spans the six New England 
States, New York, and Washington, D.C. We have one resource 
center in Boston and a training and counseling office at Walter 
Reed. We've received over $200,000 in donations this year, 
including over 30 desk top computers, 15 laptops, 7 servers, a 
resource library which would rival that of any small business 
library, complete with over 300 audio and video training 
programs.
    Over the past four years, we've provided training and 
seminars to over 4,000 clients from all over the country. We've 
developed partnerships with major companies and organizations. 
We've received support and donations from a wide variety of 
corporate and federal donors and in 2007 our funding from TVC 
was reduced by 20 percent.
    TVC doesn't actually work with clients, the resource 
centers do. Their website is a collection of links which all 
lead to third-party activities. TVC maintains that they should 
not be required to create a fourth network. That's us.
    What this means is that they don't believe they should be 
required to support the community-based training resource 
centers and in their own words they're trying to get away from 
Public Law 106-50. As you can see from my previous testimony, 
this corporate direction is in direct conflict with the spirit 
and intent of the law.
    I have four recommendations to offer this Committee as you 
consider re-authorizing the National Veterans Business 
Development Corporation. Remove the training mission and 
professional certification board mission from TVC and place 
that mission with the SBA's Office of Veterans Business 
Development with the licensing certification mission belonging 
to the Advisory Committee on Veterans Business Development; 
have future nominees to the board of directors of the Veterans 
Corporation proposed to the Chairman and Ranking Member of the 
Committees of Small Business and the Committee of Veterans 
Affairs of the House of Representatives and the Senate be 
recommended through the Advisory Committee on Veterans Business 
Affairs; assign a permanent oversight committee to monitor the 
progress of programs of the National Veterans Business 
Development Corporation to ensure compliance with congressional 
directive and Public Law 106-50. And lastly, a flagship 
resource center should be created here in D.C., this center 
should be established for the purpose of training, meetings and 
conferences and should be offered to use to the Veterans 
entrepreneurial training community as a resource.
    The resource centers created and supported by TVC, St. 
Louis, Flint, and Boston, have made a significant impact in the 
area of Veterans entrepreneurial development and Veterans 
advocacy. Unless Congress has a plan to grow and support these 
centers independently of TVC, it would be detrimental to 
Veterans on a national level to continue to underfund this 
organization. The Committee on Veterans Business Development, 
as well as my organization, stands ready to assist this 
Committee with detailed suggestions for these recommendations 
should you wish to pursue them any further.
    Thank you very much for your time.
    [The prepared statement of Mr. Celli may be found in the 
Appendix, on page 53.]

    ChairmanAltmire. Thank you, Mr. Celli, and since our final 
witness, Mr. Cain, resides in our Ranking Member's District, 
I'm going to allow him to make the introduction.
    Mr.Gohmert. Thank you, Mr. Chairman. It's my pleasure to 
introduce a constituent of mine, Mr. Allan Cain, who is owner 
of Carthage Self-Storage and a distinguished Veteran of the 
United States Army. I'm just kidding, he was a Marine, too.
    (Laughter.)
    And actually, I was delighted to hear a former Marine would 
come back into the U.S. Army, actually after 9/11, I called the 
recruiting office in Tyler, Texas and said I was interested in 
coming back at 47 years of age or so and they said well, how 
old are you and I told them and they said that's a little 
beyond the 35. I said now I know people that are in older than 
35 and they said well, you can come in if you can deduct your 
years of service from your age and get to 35 and I said well, 
let's see. I was in for four years, I'm not sure that I get 
there. But anyway, I'm greatly respectful of anybody that's 
served our country in the Armed Services and that includes Mr. 
Cain's honorable service in the United States Marine Corps.
    He's a member of the Texas Mini-Storage Association, a 
former board member of the Panola County Chamber of Commerce. 
He's a member of the Carthage Lion's Club and a former police 
officer. Has a Bachelor's degree in Criminal Justice from Sam 
Houston State University and it was from '67 to '70 that he 
served honorably in the United States Marine Corps. Currently a 
member of the VFW and formerly served as the Veteran Service 
Officer from Panola County so is quite familiar with helping 
Veterans on Veterans' issues.
    He gained valuable experience dealing with the broad array 
of Veterans' issues in that capacity. So I didn't realize until 
we got into this that we don't provide the transportation costs 
to witnesses so that makes it even more impressive that someone 
would take time out of their schedule to come. So we appreciate 
your being here. This is a man who has dealt with the issues, 
is out there on the ground. We have folks here that care about 
Veterans. Like I said, I tried to come back into the service, 
but not able, so I had to revert to a far less honorable course 
of service here in Congress.
    Anyway, we appreciate all of you, but Allan, appreciate 
your being here.

   STATEMENT OF MR. ALLAN CAIN, CARTHAGE SELF-STORAGE, OWNER

    Mr.Cain. Chairman Altmire and Ranking Member Gohmert, and 
other Members of the Subcommittee for having me here today, 
it's an honor to testify before each and every one of you.
    I live in a rural East Texas town with a population of 
6200. Our area is predominantly an oil and gas business with 
very limited resources for Veterans wishing to strike out into 
the small business world. Although I was fortunate in my 
entrepreneur ventures in that I had a co-signer for my first 
business, I worked very closely with many East Texas Veterans 
in the numerous organizations and positions I've been in 
including the Veteran Service Officer for Panola County.
    I've seen firsthand the helplessness that overcomes many 
Veterans as they return to a world that has sped past them. As 
a combat decorated Veteran, I experienced the difficulties and 
the troubles with adjusting to fit back in a society that left 
me behind. I was able to finish college and enter into the 
workforce, but all the while coming from a three and a half 
year delayed start, with heavy combat experiences whose effects 
continue to challenge me today.
    As most Veterans in a rural community, I had no background 
for business administration. I understood work and results. But 
conducting business with the public, navigating the complicated 
tax code, contracts, payroll, operating schedules, learning 
curve on ordering supplies, and ordering reliable supplies, 
employee issues and not enough money to turn a profit was a 
challenge. Especially when frustration and lack of 
understanding cost you money that you've worked hard for.
    It can often develop into pressure that ends up in 
bankruptcy and large legal tabs. A strong work ethic, coupled 
with a forgiving God, got me through to where I am today. Most 
Veterans I know are good at their specialty, reliable and 
understand pushing through, but get very lost when having to 
confront starting a business, especially with little capital to 
put into a business while still putting food on the table at 
home.
    I believe that in the mind of the Veteran, when they hear 
``assistance'' they hear someone is going to help me. But 
instead, they get such a volume of paperwork in a language that 
is foreign to them they just lay it aside. I believe that just 
a small amount of help navigating the bureaucratic obstacles 
will go a long way in providing Veterans returning from Iraq 
and Afghanistan with a start they need to re-integrate into our 
great nation.
    An important first step for any organization wishing to 
provide assistance to returning Veterans is an effective 
outreach program. Outreach has always been a challenge when 
delivering information to those who could benefit. How would 
anyone get the intended information and even if they get it, 
they may not remember it two years from now?
    First, we must look at who are the targets, where do they 
live, how do we get to them, hopefully without recreating the 
wheel, sources could be tapped to place the information as 
close as possible all the while understanding fiscal 
restraints.
    In my opinion, there are a few steps of an effective 
outreach program. One, again, with numerous lending 
institutions that participate or can direct a Veteran to a 
program that will benefit the most. Get the information into 
the hands of those who will be in front of the Veteran when 
they drop by. Don't make it only the job of the Veteran to know 
and understand all the options that he qualifies for.
    Two, State Veterans Service Commissions would be a great 
resource for the dissemination of information. The great State 
of Texas has possibly the finest Commission for Veterans in the 
United States. The organization has offices throughout the 
state and also is solely responsible for training and 
certifying County Veteran Service Officers. Again, these are 
the folks who see the Veteran face-to-face.
    Finally, there's an enormous volume of information given to 
transitioning Veterans. This information is often overwhelming 
and leads to more confusion than it's worth. This information 
needs to be precise and distributed to the Veterans from the 
folks that will help them transition most effectively.
    Another important step would be for an extensive education 
program that will be designed to give access to all Veterans. 
In my experience, many Veterans have limited resources and lack 
the understanding they need to truly understand how to begin 
and manage a business. It's important that Veterans be given 
the hands-on learning experience that they're used to from the 
military.
    One, provide more Internet courses. There's a very 
effective, especially cost-effective mode of reaching and 
teaching Veterans. Today's technology-advanced world, many of 
our soldiers will be returning--and that should be Marines, I'm 
sorry--will be returning home from abroad with a solid 
understanding of computer technology. The Internet will provide 
a fast and cheap mode of educating these Veterans on making the 
transition into small business world.
    Two, although the Internet has many benefits, there are 
many who are not computer literate. These folks should not be 
left out of the many benefits that they fought hard to 
preserve. We should have seminars and classes available to 
these people, possibly through their local Veterans 
organizations. While I understand that there will always be 
challenges in trying to reach out and provide education to 
returning Veterans, it is a service that is owed to those who 
gave up many years to defend our great nation. Providing 
effective assistance to those returning home from abroad would 
not only save as many Veterans from years of struggle and 
financial hardship, but it will boost the morale of those still 
fighting. They will not only have family and loved ones to come 
home to, but they will have the tools they need to provide 
better for their families.
    I would like to end my testimony by saying thank you to the 
Government of the United States of America for its gratitude to 
those who serve through the military services and Coast Guard. 
Without the assistance of our elected officials at the national 
and state level, we, Veterans, would have a much more trying 
time in readjusting after giving so much. There is no other 
country or republic that honors and respects its Veterans like 
the United States of America. My family and I thank you and I 
look forward to answering any questions you may have.
    [The prepared statement of Mr. Cain may be found in the 
Appendix, on page 57.]
    I was going to suggest that Mr. Gohmert, we will each do a 
five-minute round of questions and then we'll do a second round 
with follow-up.
    Is that okay with you, Mr. Ranking Member? Okay.
    So my first question is going to deal with, there's several 
issues involved with what you've all talked about. There's the 
issue of returning folks, but I wanted to focus my first set of 
questions on people like Mr. Clair and others who are being 
deployed that currently run small businesses and the issues 
that are associated with that side of the equation, where they 
have to keep this business somehow up and running during the 
terms of their deployment.
    So my first question for Mr. Celli is the Reservists who 
operate the small business and are deployed face many 
challenges maintaining their businesses while they serve 
overseas. What is your experience working with these Reservists 
and what types of resources do they need to most effectively 
protect their businesses during the deployment?
    Mr.Celli. Thank you very much. That's an excellent 
question. The first thing that the business owner has to do is 
make sure that their business has been built and structured 
effectively to operate in their absence. What we like to do is 
we call this the franchise mode. So that every task, every set 
of daily operational procedures, are written down in some way 
so that the business owner can step away, the key employee can 
step away and somebody else can come in and pick up like an 
owner's manual, almost like McDonald's say, and most 
importantly after they leave, or before they get ready to 
leave, they need to make sure that their bank accounts are in 
order, that the right people have access to the funds so they 
can still make deposits to the IRS so that they can still pay 
their bills.
    They also need to make sure that the proper legal paperwork 
is in place to allow people to act in their behalf, depending 
on whether it's a limited liability corporation or a C 
corporation, they can move people around accordingly. That has 
to happen before they even think about leaving that business in 
a state that can still sustain itself.
    The other real concern is the customer base. The customer 
base in many times, especially with small businesses is reliant 
on the personal knowledge and the charisma of the business 
owner. And when that business owner leaves, there's going to be 
a very difficult, it's going to be very difficult for that 
small business to maintain that existing customer base. We see 
this quite frequently with professional trades such as lawyers 
or doctors or tax accountants, these types of professionals 
that have built relationships with their folks and there aren't 
a lot of people that can step in and take that over for them. 
So they have to rely on a network of support that will watch 
over their clients while they're gone and then have the decency 
to give them back when they return.
    So in preparation to deploy, they have to build their 
business accordingly and properly which sometimes means 
completely rewriting their business plan and while they're gone 
it's going to require a very strong hands on support network 
led by an organization that understands small business and can 
work with either the family or the rest of that business.
    ChairmanAltmire. Thank you, and I would also ask Mr. Sharpe 
to address that question from the context of the changing 
nature of these Reservists, given who the American Legion has 
served in the past and now the time on active duty for many of 
these Reservists has doubled or greater and what you see as the 
challenges and the resources that would be required to keep 
that small business up and running during the deployment?
    Mr.Sharpe. I agree with everything Mr. Celli has said. When 
my unit deployed to Iraq back in 2003 to 2004, I'm currently in 
a civil affairs unit where there were quite a few business 
owners, and when I first realized there was a problem was when 
we returned, a couple of my friends lost their businesses and 
others' businesses were under real financial hardship. And a 
result of that is all those individuals leaving the military 
because, of course, we're scheduled to return to Baghdad March 
of '08. And they just could not survive another deployment.
    And I think it's a real issue. I think for Reservists who 
are business owners, there should be some sort of pre-plan to 
assist them prior to their departure. With the new realities of 
the way Reservists are being activated, a Reservist shouldn't, 
especially a business owner, shouldn't have to make the 
decision whether or not to serve his or her country because of 
their business. And that's the problem right now. And I think 
we definitely need more resource centers around the country. We 
need to have centers on a lot of military bases, VA hospitals. 
There should be some pre-education plan prior to a Reservist 
even joining the military.
    ChairmanAltmire. Thank you. I wanted to ask you, Mr. 
Sharpe, one more question that will lead into my second set of 
questions after we hear from the Ranking Member.
    In your testimony, you state that the Veterans Corporation 
increasingly cedes its responsibility for providing 
entrepreneurial development and in your opinion this 
responsibility should be shifted to the SBA. You suggest that 
this would be more effective given the agency's existing 
framework through its Veterans Business Outreach Centers and 
Small Business Development Centers.
    So I wanted you to just clarify that. If I heard you 
correctly, that that's what you were saying and is your 
suggestion to shift training responsibilities to the SBA, the 
Veterans Corporation would permanently see a large portion of 
its mandate and what do you think the outcome of the Veterans 
Corporation would be if that change were to be made?
    Mr.Sharpe. I just don't see the Veterans Corporation being 
able to accomplish those missions as stated currently by 106-50 
with the current resources that they have. I definitely believe 
in hands-on training. SBA already has the SBDCs. They are 
already funding five Veteran Resource Centers. It doesn't make 
sense, I agree with the Veterans Corporation, for them to try 
and duplicate those services. They have seemed to develop an 
expertise on on-line training and I would prefer to see them 
excel in those things that they do best. And I definitely 
believe that the SBA should be the lead organization. They have 
the expertise. They should be provided the funding to expand 
and do the things that they do best.
    ChairmanAltmire. Thank you. Mr. Gohmert?
    Mr.Gohmert. Thank you. I was going to ask Mr. Elmore, has 
the Small Business Administration Inspector General or any 
other SBA organization or official ever examined the Veterans 
Corporation?
    Mr.Elmore. From my understanding, sir, no. We don't have an 
oversight responsibility. The Veterans Corporation, obviously, 
is in the Small Business Act, but we view them as a partner. 
They're not a program of SBA. We've tried to do a lot of 
cooperative work with them and we have accomplished some things 
over the past few years. But from an oversight perspective, as 
I understand the way the law is written that really rests with 
Congress and perhaps with GAO.
    Mr.Gohmert. Are you aware of any programs in the Veterans 
Corporation that may be duplicative of what is offered 
elsewhere?
    Mr.Elmore. I don't think they're duplicative. I think the 
point that Joe made is probably very accurate, that there's 
really great value and we understand that and hands-on, face-
to-face, one-on-one assistance, especially for Veterans who 
come back and the other testimony is correct as well. These men 
and women have been gone for six months, 15 months, 3, 5, 6 
years. They need some assistance if they're capable of pursuing 
entrepreneurship as a real and viable vocation. So we focus 
primarily on that, but we have on-line services.
    I think there is great value in an Internet overlay that 
helps coordinate and deliver those services because regardless 
of how many programs or partners we have, we cannot be 
everywhere. I mean the gentleman from Texas is correct. Those 
County Veteran Service Officers with the State Departments of 
Veterans Affairs, I think, are a critical piece in this whole 
process that bluntly, since I've come to Washington over the 
last seven years, there's a real disconnect between what we 
talk about in this town and what happens where these men and 
women return home to. And I think those pieces in concert with 
what the corporation is trying to do with a robust overlay of 
technical assistance and resources electronically can be a 
really effective and important mix.
    Mr.Gohmert. Thank you. Mr. Sharpe, has the Veterans 
Corporation worked with the American Legion in outreach, making 
known the services it has available?
    Mr.Sharpe. When I returned back from Iraq, and the issue of 
entrepreneurship, especially with the Reserve and National 
Guard became so apparent, American Legion, we became more 
active as far as working with federal agencies that are 
involved in this particular situation and with the Veterans 
Corporation.
    We've asked the Veterans Corporation and Louis Celli who 
works with them, as one of their resource centers, to 
participate in many of our workshops. We've had, last year we 
had our national convention at Salt Lake City and we had a two-
day workshop helping those Veterans who wanted to start a 
business and those Veterans who --
    Mr.Gohmert. I don't mean to be technical, but you said you 
invited them to participate. Did they participate?
    Mr.Sharpe. Yes, they did.
    Mr.Gohmert. Okay.
    Mr.Sharpe. Everything we've asked SBA and the Veterans 
Corporation to do, they've done. They participate in 
practically all our programs and they've been extremely helpful 
to us.
    Mr.Gohmert. What kind of feedback have you heard about the 
effectiveness of Veterans Corporation from people entering the 
American Legion?
    Mr.Sharpe. The workshops that we've had have been quite 
successful and the feedback that we've received has been 
positive, but the positive statements have been directed to all 
the federal agencies and the Veterans Corporation that you 
know, everyone that's participated we've received a lot of 
positive feedback and that went to VA, SBA, DOD and the 
Veterans Corporation.
    Mr.Gohmert. Thank you. Mr. Cain, do you know of particular 
services that could be targeted to Veterans in rural areas?
    Mr.Cain. Rural is the key, just getting these opportunities 
before them. We have to drive 50 miles to get to a bank that 
even might offer SBA services. And I think that's pretty 
consistent with the State of Texas and with a lot of Veterans.
    Disabled Veterans, it's a real challenge.
    Mr.Gohmert. What's the best way to reach them, do you 
think? We heard the Internet overlay mentioned. I don't know 
what percentage of that's coming out, play with the Internet.
    Mr.Cain. A lot of them, if they're steered properly through 
the VSOs, Veteran Service Officers, and so forth, VA has a 
great program, probably one of their best programs that I've 
worked with and that was vocation rehabilitation. And they do a 
marvelous job from diagnostics and assessments and aptitude and 
they do all that stuff and so they're mostly in contact with 
disabled Veterans.
    And then they could give them that information as an option 
and--or however the Committee wants to develop it, but that's--
from my little perspective, that would be a great place to put 
the emphasis.
    Mr.Gohmert. Thank you.
    ChairmanAltmire. We'll do one more round of questions. I 
wanted to give Mr. Elmore the opportunity to respond to what we 
were discussing and what you heard about the idea of the SBA 
recapturing primary responsibility for operating Veterans 
outreach and training programs.
    Mr.Elmore. Sir, I think my answer has to be that if we're 
given that responsibility and that authority, we will. Clearly, 
we have five centers now. I think they're effective. They 
provide assistance to approximately 2,000 Veterans and 
Reservists each year. Our Small Business Development Centers 
alone last year provided assistance to almost 5,000 Reservists 
and in '06 was the first year we got the forms changed so that 
we could begin to track that kind of service, not just with 
them, but with SCOR as well.
    ChairmanAltmire. Is it your opinion that the SBA could do 
it better?
    Mr.Elmore. I don't know that I would say it better, but 
given the size and scope of our reach, we're already in a 
systematic mode where we have processes in place to go out for 
competition to evaluate proposals, to look at who we think 
could be effective in delivery and to oversee that delivery and 
to support it as well with our other field resources. So in 
that sense, I would have to say yes, sir.
    ChairmanAltmire. Mr. Blackwell, would you like to comment 
on that?
    Mr.Blackwell. I think that two things need to be said. 
First of all, I certainly appreciate my other panelists and 
their comments. Many things I agree with, some things I do not. 
And I'll be happy to get back to the Committee formally in a 
written rebuttal if that's the easiest way to do that.
    ChairmanAltmire. Please.
    Mr.Blackwell. Let me just say that 1999 when 106-50was 
finally placed into law was a very different economic and a 
very different political and a very different need for Veterans 
issues. Today, we're faced with monumental issues of multiple 
different Veterans, Veterans that are literally from the World 
War II era into those who will come back over the next several 
years. Clearly, given the resources available to TVC, as you 
know, our funding was cut another 25 percent last year. In 
previous years, going before OMB, we've taken plans to both 
enlarge and enhance services through our networks. Those have 
not been granted to us. Again, I'll refer to that in the formal 
rebuttal.
    I would just tell you that given the resources we have 
chosen to deliver as many programs and opportunities as we can 
by being a virtual catalyst, an ability to assimilate materials 
already available through agencies in a more readable format 
and perhaps more grouped format. I think those are working 
well.
    Currently, our board believes that given our limited 
resources, it's impossible to expand our network beyond the 
three centers we have. I do believe that a fourth network is 
not practical. I do believe in leveraging third party support 
and I believe that our status as a 501(c)(3) should be utilized 
to expand programs that are currently available in the public 
sector that can be leveraged back into the community.
    One of the main issues I would leave you with, although not 
in my written testimony on this particular question, is that 
our access to bonding and our access to capital programs are in 
addition to those programs 7a and 7b by the SBA.
    As you know, the SBA has a limit on the amount of money 
that can be given out into loans and limits the amount of money 
in bonding available to $2 million. Our third-party programs in 
both of these areas have no caps. There are 50 state programs 
and directly mentor and guide Veterans through these very 
tricky processes.
    It's been our experience that Veterans who go before a bank 
too early, without a proper business plan, and without the 
knowledge they need to talk to these folks, generally fail in 
their first approaches. Our goal is to be with them from the 
beginning of the process, through the middle of their 
businesses and obviously be there for the transitions from 
their businesses to other Veteran organizations.
    So I would say the simple answer is given the funding, I 
believe that our current programs are succeeding well and we 
plan to leverage those in the future.
    ChairmanAltmire. On the issue of funding, Mr. Blackwell, 
the charter and the mandate obviously of the organization is 
that you have the ability to go out and raise funds in a way 
that to be candid has not necessarily been fruitful yet. The 
numbers I had was that last year the organization spent 
$230,000 on fund raising, but received back only $150,000 in 
grants of which one came from $100,000 grant. So the question 
is what is the reason that it hasn't been as productive as we 
had hoped and what can we do to help you with that process?
    Mr.Blackwell. The simple answer is private sector funders 
believe that this is not a private sector issue. This is a 
government issue and because it was created by a public law 
that Congress has a definite interest in supporting the needs 
of our Veterans, whether that's in healthcare, whether that's 
well care, whether that's starting a business. They see that as 
an issue that Congress should address directly.
    I can tell you that in my first year, I'm not approaching 
almost 27 months, in my first year, I approached 76 C-suite 
executives personally. Although all of them embraced the idea 
of what we were doing, none of them opened their pay books. And 
the reason for that is they typically see that their dollars 
are put into the local communities where their constituents of 
their companies live. Think about it kind of as a Habitat for 
Humanity model. We put our associates into work in communities.
    I will tell you that we have been very blessed recently to 
become affiliated with SMA Global. SMA Global is owned by a 
Korean conflict Vet and SMA Global is opening doors to us that 
we have not had opened doors to us before, including folks like 
the folks at Hewlett-Packard and Aflac. I've been in meetings 
with them on and off for the last three or four months and we 
hold some promise with that. I will just tell you that 
generally speaking private sector does not see it as their 
issue and typically don't fund it.
    Over the last seven years, 52 different approaches have 
been used to raise capital on the outside. All 52 of those were 
noble efforts. All 52 of those have not garnered enough dollars 
to even offset minimal operation expenses.
    ChairmanAltmire. I would just say in wrapping up before I 
turn it over to the Ranking Member, we all agree that there is 
no group that should stand ahead of our nation's Veterans when 
it comes time to make funding decisions. There's no dispute 
about that and it would seem to me in moving forward that we 
should be in position to work with you and enhance the ability 
to convince some of these folks that you've been visiting that 
they do have a role and it is to their benefit to help 
businessmen in their local communities and service areas to 
position themselves in a way that when they're deployed that 
business is going to stay open and when they return, it's going 
to be fruitful.
    So I would just say that we want to help and not just this 
Committee, but Congress in general. So let's just keep the 
discussion going on ways that we can reach out into the private 
sector in a way that might be a little more productive than 
what we've done.
    Mr.Blackwell. We would welcome that, Mr. Chairman.
    ChairmanAltmire. Thank you. Mr. Gohmert.
    Mr.Gohmert. Thank you. And I am glad that this Committee 
looks at financing situations, says that no one should stand 
ahead of Veterans because we're taking up the Hate Crimes Bill 
that came out of Judiciary last week where we've said we will 
not, the majority said we refuse to put Veterans in a protected 
class so that people are punished more severely if you attack 
one of this group, because they're not entitled to the same 
heightened protection that a transvestite with gender issues 
has. But we'll keep working on that.
    Anyway, with regard to the raising of capital, it is a 
concern. You spend that much money and get less back than you 
spent to raise money and I can't help but draw from my own 
personal experiences, I hear people in East Texas talk about 
yeah, we want to help the Vets. I can't help but wonder if 
maybe if it was--if the fundraising was segmented in such a way 
that people could donate money that would benefit Veterans in 
their area, if that might not help. I don't know if the current 
law or organizational or corporate by-laws would permit that 
kind of segmentation, but Mr. Blackwell, what do you think 
about that concept?
    Mr.Blackwell. Actually, we have started that initial 
concept through visiting with the Governors and in many cases, 
currently in Texas, in San Antonio, with the Mayor's Office, to 
talk about utilizing their offices to mobilize a local campaign 
where giving could be done. By-laws of our organization were 
changed last summer so that we could create a mentor membership 
category. That category allows individuals and/or organizations 
be they city or state, to give money and support Veteran 
issues.
    We have one member in that category at this point. We 
solicit openly the support of both cities and states. As I say, 
we continue to meet with those folks. It's part of our 
outreach. It's part of our fundraising activity. And we'll 
continue to do that.
    Mr.Gohmert. With regard to your expenditures, it appears 
that over $200,000 was spent for outside fundraising, isn't 
that correct?
    Mr.Blackwell. No, that's not correct.
    Mr.Gohmert. That's in-house.
    Mr.Blackwell. It's all in-house, yes. In fact, if you look 
at our annual report, you'll see that over 68 percent of TVC's 
budget last year was put directly back into programs and 
activities. The remaining number of those dollars, that $1.5 
million goes back in direct support of trying to obtain self-
sufficiency as mandated by Public Law 106-50. It is an enormous 
effort. Also in this report you'll see all of the people we've 
talked to, all the reports that have been written and our 
success is growing, but it's very, very, very slow.
    Mr.Gohmert. So what would it take to make itself 
sufficient? We need some kind of tax incentive, tax advantage, 
something to help give you the tools to draw in capital to help 
the Veterans?
    Mr.Blackwell. You already have the tax incentive available 
to you because we're incorporated as a 501(c)(3).
    Mr.Gohmert. But apparently it's not enough, that's what I'm 
saying.
    Mr.Blackwell. That's correct. Part of the problem is that 
many corporations, especially large corporations, are going to 
use marketing dollars and/or foundation dollars to do that, so 
that to the extent of the law available to them it's not a 
significant write off, if at all.
    From a tax advantage, there's no real impetus for them to 
go through that.
    Mr.Gohmert. But I'm asking about potentially new tax 
advantages, things that we could do to help raise the capital. 
Obviously, what's there isn't helping.
    Mr.Blackwell. That's correct. And I will tell you that 
anything Congress can do to assist in this is most welcomed.
    Mr.Gohmert. And I'm asking you what would you suggest is 
that anything we can do?
    Mr.Blackwell. I don't think that having a tax incentive per 
se is going to encourage them. I think the vested self-interest 
of private corporations is just that. What's in it for that 
corporation, if they support this endeavor? And right now, 
private corporations don't seem to believe that starting 
Veteran businesses, basically underwriting the cost of 
entrepreneurship in small business is an advantage to them
    Mr.Gohmert. I guess that's why I was asking if there was 
any heightened tax advantage that they would see to be to their 
advantage to assist.
    But anyway, let me throw that open to the other panelists. 
do you have any ideas for how we could go about raising capital 
from private enterprise? I realize it can be tough because in 
some cases you may be asking people if they mind contributing 
to helping set up a competitor, but --
    Mr.Celli. Thank you, sir. And we, as a 501(c)(3), we share 
and face some of the challenges, many of the challenges that 
the Veterans Corporation face in fundraising. We have our own 
fundraising efforts at the local level and what we find and 
you're probably not going to believe this, in the fundraising 
efforts, larger corporations have foundations that they've set 
up which handles their philanthropy efforts.
    On those web pages, it tells you who qualifies and who 
doesn't and I can point to a very large number of corporations 
that specifically say on their foundation pages, that they will 
not donate to Veterans organizations. It's specifically there. 
And --
    Mr.Gohmert. Why is that?
    Mr.Celli. That's a good question and I asked that very 
question, because they group it right under the VSOs and then 
they put it right next to lobbying activities. So I wrote a 
letter and an e-mail to some of these organizations and I won't 
mention any right now and I asked and I said is this exclusion 
specifically designed to separate your company from that of 
lobbying activities such as Veteran service organizations 
because we are not, we're a training activity that reaches out 
to Veterans to help them start and grow businesses and I got 
back a very polite reply that says we've looked at your 
website. We've looked at your application, but we do not find 
that you are in our corporate giving arena. Thank you very 
much, have a nice day.
    So I gave them the opportunity to kind of re-look at that 
and addressed it to no avail.
    Mr.Gohmert. Could we get a list of companies.
    Mr.Celli. I could supply that list.
    Mr.Gohmert. I think it would be interesting if America knew 
who took a stand against helping Veterans. But if I could get a 
list or the Committee could get a list, either submit it to me 
or the Committee, I would sure appreciate that.
    Mr.Celli. Absolutely. And the primary focus with most of 
these foundations is children who are seeking literacy 
assistance and major diseases, that seems to really be the 
thrust of corporate giving, so we're on the fringe and it's 
very difficult.
    Mr.Gohmert. I could see how that to some people wouldn't be 
as important that we're allowing the children and the others 
needing that help to live in a free country. I don't know.
    Mr. Elmore, you had something before we close?
    Mr.Elmore. Yes, sir. I'd like to try to help respond. In my 
previous life before I came to this position, I had helped 
create and managed a Veterans not-for-profit community program 
in St. Louis for 20 years. And I for those many years looked at 
foundations and they're both correct. There are more 
foundations listed in philanthropic guides that specifically 
indicate they will not consider Veterans than there are 
foundations who say they will consider Veterans.
    And if you really wanted to look at that, you might look at 
some of the organizations that overarch a lot of the 
philanthropic community like independent sectors and ask them 
that question. I'd love to hear their answer, just as a guy who 
has been doing this work for 33 years.
    Mr.Gohmert. Could you give me--after the hearing, if you 
could supply me the best way to get that information?
    Mr.Elmore. I'll work with Lou and help him understand at 
least from my previous experience, I have to be cautious 
because obviously I'm a federal employee and I'm not looking to 
attack anybody.
    Mr.Gohmert. But you're here testifying and I'm asking for 
your help.
    Mr.Elmore. I will do that, sir.
    Mr.Gohmert. Okay, thank you.
    Mr.Elmore. A second point, in May of 2005, the 
Congressional Budget Office released a paper about the 
effective activation on small businesses that either employ 
Reservists in key positions or they're self-employed Reservist 
small businesses. And they raised what I think was a very 
interesting question that nobody else has really seemed to have 
paid a lot of attention to. They raised a question of 
fundamental fairness. If I recall correctly less than one half 
of one percent of the self-employed people in America are 
Reservists. And if my numbers are correct, please don't hold me 
to this, I think it was either four or six percent of 
businesses in America employ Reservists. The question they 
raised was through those small businesses commitment, through 
USERRA responsibilities and so on, are they, those limited 
number of businesses in America essentially subsidizing the war 
effort because they incurred additional costs when they employ 
Reservists?
    And if you wanted to look somewhere --
    Mr.Gohmert. That's a good question.
    Mr.Elmore. It's a place that I thin really deserves more 
scrutiny and more exploration and take a look at what might be 
doable, if you will, to help spread that cost out across the 
entire American economy, as opposed to just those businesses 
that specifically employ Reservists.
    I think that's an area that could take another looking at.
    Mr.Blackwell. Congressman Gohmert, it occurs to me that 
perhaps a two-plan that would allow companies and individuals 
to take 100 percent tax donation, much like the Katrina 100 
percent tax deduction was in the fall of 2005 might be a good 
option. This would encourage individuals and companies, I 
think, to leverage their donations.
    Mr.Gohmert. You know, any structuring following the example 
of relief to Hurricane Katrina would probably not be a good 
idea.
    Mr.Blackwell. No. Just a similar program like that. It 
could be structured in a completely different manner, but a 
program that would benefit at 100 percent those individuals who 
gave.
    Mr.Gohmert. Thank you.
    ChairmanAltmire. That will conclude the hearing. I want to 
thank the panelists. We heard some different points of view on 
how to achieve a goal that I know that we all agree on. I look 
at this hearing as the first step in this Committee's 
investigation and offer to help what's going on, but I do want 
to just reiterate the fact that this is not a one-time hit for 
us. We want to work with you moving forward. We want to help 
improve the program and most of all we want to make sure that 
these returning servicemen and women who want to get into small 
business and want to have the resources and the ability to do 
that and pursue an entrepreneurial career are able to do so and 
I know that you share that as well.
    Thank you for coming today and we look forward to 
continuing the discussion.
    [Whereupon, at 11:20 a.m., the hearing was concluded.]

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