▶ 0:19:26Chair Ernst: I call the committee on small business and entrepreneurship to order, and I apologize for my tardiness. I'm excited to discuss opportunities to reignite investment in small american many factors and enter our industrial future both here at home.
▶ 0:19:50Chair Ernst: Men and women who roll up their sleeves, put in a hard days work, and take pride not just in what they make but what it means for their families, their communities, and their country. That entrepreneurial spirit is in our dna. For far too long, washington looked the other way as factories and farms shut down and the crops that once sustained many U.S. families were shipped overseas.
▶ 0:20:16Chair Ernst: Despite the importance of domestic production to our national security, production of critical goods was offshore to foreign countries. In doing so, we've made ourselves dependent on an international supply chain, offering fast, mass-produced goods, mostly coming from china. This came at a cost, not just economic but strategic. In january of this year, the U.S.
▶ 0:20:41Chair Ernst: Reported the 29.7 billion dollars trade deficit with china . We been massively reliant on our adversary for the businesses and goods which we consume. Today, the manufacturing sector comprises only 10.1% of america's gross domestic product, a figure trailing most other industrialized nations. We've left ourselves economically beholden to the rest of the world and hollowed out our industrial core that once employed millions of americans.
▶ 0:21:13Chair Ernst: We cannot accept that status quo. I believe in a great american comeback, one driven by the world's most talented workforce and a new era of domestic manufacturing insuring this nation's economic security. We can make made in america the norm instead of the exception. Thanks to president trump's leadership, we are already seeing the early signs of a manufacturing revival in iowa and all across the country.
▶ 0:21:43Chair Ernst: No group is more eager to lead this charge than small manufacturers, who make up 98% of all manufacturing firms in the united states. They are ready to build, ready to grow, and they want to do it here in the united states. But washington needs to do his part. It's time congress asked to ensure that the federal government does not stand in the way of small manufacturers.
▶ 0:22:07Chair Ernst: We must empower them by providing them the tools they need to generate new jobs, to rebuild and fortify american supply chain stability, and to reduce our reliance on other countries, including adversaries. However, breaking ground on new manufacturing facilities or upgrading existing ones is a major investment.
▶ 0:22:29Chair Ernst: In many cases, these projects require long-term financial options, which can be particularly difficult for small businesses to access. That's why I was proud to introduce the made in america financing act, along with another member of this committee, senator coons. This bipartisan legislation would double the sba loan limit from $5 million to $10 million for a manufacturers.
▶ 0:22:58Chair Ernst: By allowing manufacturers to access greater capital, my legislation encourages small manufacturing is to invest in their operations and support the training and expansion of our manufacturing workforce. This is about leveling the playing field for american manufacturers on the world stage. It is a straightforward, common sense, and bipartisan solution to unlock the potential small manufacturers have to secure our national and economic security.
▶ 0:23:27Chair Ernst: I'm also interested in how we can leverage another sba program, the small business investment companies, sbic, which supports the growth of small businesses with private capital. I am grateful we are joined by Mr. michelson from iowa and Mr. geis from missouri.
▶ 0:23:54Chair Ernst: I look forward to hearing from all of our witnesses about how we can best align sba programs and private investment to spark america's next industrial boom. The independence, prosperity, and security of our next generation depends on it. Thanks to our witnesses will be here today, and I look forward to your testimony. With that, I recognize ranking member markey for his opening statement.
▶ 0:24:18Sen.Arkey: Thank you, madam chair, so much. We are here to talk about small business. We contribute to local economies and provide well-paying jobs for american workers. But we must address the elephant in the room when it comes to american manufacturing, the small business killing tariffs.
▶ 0:24:48Sen.Arkey: Five days ago, the headline, entry points, they expect shipping volume in june to decrease by 35% compared to last year. That is in june.
▶ 0:25:06Sen.Arkey: And we do know this, a 35% of the clan on those containers coming in, that's the trend, that's what helps many fed first, 40,000 small manufacturers, who were hit by tariffs on both end, as importers and american producers, who will be affected by this. It's not just the big companies, is the little companies.
▶ 0:25:37Sen.Arkey: So that is a very dangerous development. We cannot afford to have this reduction of containers coming in. And the biggest issue, whether they are many factors, restaurants, the uncertainty caused by trauma's roller coaster tariff policy. Over the past month, the news on main street has soured.
▶ 0:26:01Sen.Arkey: Small business owners go into higher newer employees has fallen to 84-year low, as sales decline in the future remains uncertain. Unlike large corporations, small businesses cannot always ride out the storm. Businesses are seeing massive tariff-induced costs.
▶ 0:26:26Sen.Arkey: If you can get a dinner entertained -- invitation to mar-a-lago like the heads of apple and google, you can secure an exemption to your industry, but no small businesses receive invitations from the administration or how to navigate the policy changes. Meanwhile, these tariffs are destroying the small manufacturing growth we saw during the biden administration.
▶ 0:26:47Sen.Arkey: In fact, the biden small business administration made more than 10 billion dollars alone to small manufacturers, contributing to 775,000 new manufacturing jobs. President trump likes to play the hero, but in his first term, his fda made 2 billion dollars less in small manufacturing loans, and they lost manufacturing jobs.
▶ 0:27:15Sen.Arkey: Now, in his second term, he is hitting small manufacturers where it hurts, the costs of building a factory is skyrocketing because of the tariffs. The trump tariffs are not a recipe for manufacturing boom, they are a recipe for manufacturing doom. In ohio, they did not have the opportunity to dine with the president at mar-a-lago.
▶ 0:27:42Sen.Arkey: Now she is unsure if her small manufacturing business will survive the uncertainty and question cost unleashed when the president began his trade were on main street, turning main street into payne street. -- trade war on main street, turning main street into apain street. His naive and misguided vision of how supply chains work.
▶ 0:28:12Sen.Arkey: With very few exceptions, american companies built here must relay at least to some extent on components made elsewhere. 35 percent fewer containers coming into america, into the port of boston, of new england. 40,000 small manufacturers are being crushed by tariffs at both ends, as importers buying parts and exporters facing retaliatory tariffs.
▶ 0:28:44Sen.Arkey: I've heard from all across america about the impact of these tariffs. Last week, I spoke with the founder of an 1864 cycling company, an electric bike manufacturer based in massachusetts. He shared with me that they finally recovered from the 45,000 -- $45 million during covid, and now they are wondering if they can weather this new disaster.
▶ 0:29:16Sen.Arkey: The message from other small businesses across the country is clear, these tariffs are going to put them out of business. That's why last week I introduced the small business acts to exempt them from the tariffs. Small business owners are our neighbors, our friends, and we need them to be able to grow. They should not be part of the issue.
▶ 0:29:44Sen.Arkey: The national chamber of commerce has said we should exempt small businesses. I'm with the national chamber of commerce. Exempt small businesses tariffs from the tariffs. -- exempt small businesses from the tariffs. We should try to expedite its passage on the floor of the senate. Thank you madam chair.
▶ 0:30:11Sen.Arkey: ,chair ernst: thank you, ranking member markey. I want to extend a witness -- welcome to all of our witnesses today, testifying on behalf of the majority, and I'm thankful that you took time out of your busy schedule to share your expertise on sba, small business investment program and attracting small business manufacturing. I will start with Mr.
▶ 0:30:34Sen.Arkey: John mickelson, who is an iowan, and he's a cofounder and managing partner for midwest growth partners, and I would base partnership founded in 2013. Midwest growth partners is a licensed rural business investment companies and small business investment companies. Mr. mickelson previously served as a west des moines city councilman. Thank you very much for your service.
▶ 0:31:03Sen.Arkey: Serves on the board of the state historical society of iowa and currently serves on the board of the small business investor alliance and the young presidents organization iowa. He received his jd with nba and his dba from what university was that? The university of iowa. So from a cyclone to a hot guy. Sorry you could not get into iowa state.
▶ 0:31:31Sen.Arkey: So, anyway, thank you, john, very much. I will also note he was a letter winner on the university of iowa's football team. Next, Mr. brian riley is the founder and ceo of guardian bikes, a children's bicycle manufacturer based in seymour, indiana.
▶ 0:31:59Sen.Arkey: His company developed, patent, and commercialize a priority -- proprietary breaking technology for bikes. Mr. riley holds a bachelor's degree from california polytechnic state university. Our third witness, Mr. benjamin geis, is a managing director of eagle private capital. He formerly served as chief financial officer of a fund manager. Mr. geis was with the insurance and business advisory practice of pricewaterhousecoopers llp, where he started his career.
▶ 0:32:31Sen.Arkey: He holds an undergraduate business degree from rockers unit -- rockers university, and he's a member of the missouri society of certified public accountants. Thank you, again. And I would go ahead, senator markey stepped out to go vote. I will introduce you, Ms. robbins. Ms.
▶ 0:32:57Sen.Arkey: Julie robbins is the ceo of earthquaker devices, a pedal manufacturer based in akron, ohio. She was previously a financial planner at firstmerit bank. Ms. robbins has a bachelors degree. Thank you, Ms. robbins, for being with us today as well. With that, we will start the witness testimony, and you will each have five minutes for your testimony, and we will start with Mr. mickelson.
▶ 0:33:28Mr. Mickelson: Thank you, chair, for the introduction, at least most of it, except the I was a part. [laughter] thank you, distinguished members of the committee, for welcoming us today. My name is john mickelson, and I am the co-founder and managing partner of midwest growth partners, a private investment partnership located in des moines iowa. Established in 2013 with a -- midwest growth partners was established in 2013 with a thesis that institutional capital doesn't flow to many markets where it is needed.
▶ 0:33:55Mr. Mickelson: Notably small businesses and companies that are in small communities, which are often in rural areas, don't have a natural conduit to capital like larger enterprises or businesses in more populated areas. But those overlooked markets have great businesses who employ more than 23 million1 individuals in the U.S. and who need access to capital in order to grow or to facilitate an orderly succession plan as owners retire.
▶ 0:34:25Mr. Mickelson: Over 12% of jobs in rural america -- 2.6 million -- are in manufacturing. Our investors include community banks, members of the farm credit system, commodity advocacy groups, such as the iowa corn growers, rural electric co-ops. They want financial returns from their investment, but they also value supporting U.S.-based small businesses.
▶ 0:34:46Mr. Mickelson: Since its founding, midwest growth partners has invested in 42 small companies, via two usda licensed rural business investment company vehicles, rbic, and one sba licensed small business investment company vehicle, sbic. Starting with seven employees after our first investment in 2014, today midwest growth partners companies employ more than 3000. These jobs all provide living wages, benefits, and much-needed off-farm income for families. The average net job growth at each of our portfolio companies is 20.5%.
▶ 0:35:15Mr. Mickelson: Smaller businesses, particularly those with low income or rural areas, tend to have more difficulty accessing traditional sources of capital because they don't have the balance sheets of big businesses and are therefore seen as too risky. This is where rbic's and sbic's fill the gap with more capital. This capital fortifies the small business's balance sheet enabling them to grow and eventually access conventional bank capital.
▶ 0:35:45Mr. Mickelson: Established in 2002, rbic's fill the small business capital gap by allowing funds to provide patient, more flexible investments for small businesses throughout rural america. Sbic's have been around since 1958. Sbic funds are private investment vehicles that pool capital from institutional investors with leverage from the sba which is invested in businesses to help them grow. There are 318 sbic's with over $46 billion in committed private capital and sba leverage. About 20% of those dollars are invested in small manufacturers, all of which are domestic. I'd like to provide you with a few examples of the impact that has been made by midwest growth partners investments thanks, in part, to the rbic and sbic programs.
▶ 0:36:21Mr. Mickelson: The first is agcertain, which is a manufacturer of refined glycerin and specialty edible oils and is located in boone, iowa, a community with a population of 12,000. When midwest growth partners invested in 2019, agcertain employed 22 people. Today they have 42. In addition to the employment growth, the company has invested more than $32 million in capital improvements in the facility including refinery upgrades, installation of storage tank farm, pipe racking, creation of two rail spurs, a storm water containment facility, a new boiler.
▶ 0:36:49Mr. Mickelson: Another example would be shells by design, a manufacturer of innovative tart shells and desserts located in garner, iowa, population 1200. When midwest growth partners invested in the shells platform in 2023, they had 40 employees. Today they have 67. In addition to the job growth, , the company has spent more than $500,000 in facility improvements and incorporating automation equipment into manufacturing processes. Success stories like these manufacturing companies in small town iowa don't happen accidentally.
▶ 0:37:16Mr. Mickelson: Innovative entrepreneurs, a dedicated workforce, and capital formation are critical to continue to create more of these successes. And the need is there. Midwest growth partners routinely reviews 800 investment opportunities a year and executes approximately five. Capital formation can only be accelerated by providing a regulatory and policy environment which is reliable for parties in the capital markets.
▶ 0:37:42Mr. Mickelson: A good example of encouraging this is the bipartisan investing in all of america act. This congress, the bill was reintroduced in the house in march with a key improvement to direct more investment in domestic manufacturing. As mentioned previously, about 20% of all sbic investments are made in small manufacturers and if enacted, this legislation can unlock significantly more for our domestic industrial base.
▶ 0:38:09Mr. Mickelson: The investing in all of america act would increase capital to the sbic program which is market-driven and 100% used for american small businesses and specifically target overlooked markets like where midwest growth partners is investing today such as rural and low-income geographies, and provide bonus leverage for small manufacturers. This is all done without new spending, appropriations, subsidies, or mandates. Thank you and I would welcome any questions you have.
▶ 0:38:34Chair Ernst: Thank you very much. Ms. julie robbins, you are recognized.
▶ 0:38:42Ms. Robbins: Thank you, chair ernst, ranking member markey, and all members of this committee. I appreciate the opportunity to share my perspective on the topic of today's hearing, financing america's manufacturing and industrial boom. As someone who has devoted my life to running a small manufacturing business, with a background in banking and education in economics, I have many suggestions and recommendations on this topic.
▶ 0:39:08Ms. Robbins: However, without immediate release from the tariffs and ensuing trade war, U.S. manufacturing companies like mine will not survive the summer and certainly will not contribute to a boom. I founded the company with my husband, jamie stillman, who founded the company and designs the products.
▶ 0:39:30Ms. Robbins: Since the tariffs and ensuing trade war have gone into effect, our business and industry overall has suffered dire consequences. Our costs have increased and our sales have fallen. We operate on a very thin margin to pay employees living wages and competitive benefits.
▶ 0:39:59Ms. Robbins: We will have no option but to scale back benefits and reduce our workforce. Our company grew very much by the bootstraps by starting small and continue to invest in our business. We have utilized the services of the sba via a loan, our local export focused sbdc at cleveland state university for export training and matching grants, the ohio techcred grant to upscale our employees.
▶ 0:40:33Ms. Robbins: We also extensively use the services of magnet, a cleveland based national manufacturing extension partnership program, for consulting, education, and networking. Today, we have 35 employees, and we are a 100% usa-based manufacturer. We produce over 50,000 pedals per year. However, the raw materials used for our products are sourced from abroad, because there are no viable domestic manufacturers of the electronic components used in our products.
▶ 0:40:59Ms. Robbins: While the components originate overseas, the come mostly from wholesalers located in the usa. To be clear, it would have always been a more affordable option for us to manufacture overseas in another country such as china, however, our values are to create and maintain good jobs in our hometown, so we absorb the excess work.
▶ 0:41:22Ms. Robbins: Akron suffered greatly, and when manufacturers went abroad in the 1970's and 1980's, and growing up, this affected our mentality on this. It's not a cost-effective solution to source and manufacture our components in the U.S. it is especially not feasible in the short and intermediate term due to the unstable market conditions, which has caused a cash flow crunch.
▶ 0:41:48Ms. Robbins: Prior to the new tariffs in 2025, we paid approximately $1.40 per panel from our long-time trusted supplier. Searching for domestic alternatives, the prices ranged from $20.70 to $31.19 per panel. That is not a viable option and would push our prices up beyond what the market will bear. That is just one of the components that we use.
▶ 0:42:15Ms. Robbins: We have delayed product launches as well as completely scrapped plans for new releases because of the increasing cost and ongoing confusion. The changes announced may 10 are a greater example of the increased uncertainty. Exactly what is the new territory? Is it official? Can I update my planning? Things rarely remain the same from week to week. We have been consistently net exporters.
▶ 0:42:39Ms. Robbins: We were awarded the 2019 exporter of the year during president trump's first term, however, today our exports are down as much as 50% to 100%. Our customer say this is due to anti-american consumer sentiment and the global follow from the chaotic rollout of U.S. tariffs. Small manufacturers in my industry all all at risk of going out of business.
▶ 0:43:06Ms. Robbins: We share frustration about the lack of support or resources, even as this threat being as bad if not worse than covid for my company. We are losing funding at a time when needed most. Prior to intimating tariffs, no one asked how we would be impacted or what we would do to succeed. I feel incredible sense of frustration as the disparity between small and large businesses grow wider and delays do not apply to us.
▶ 0:43:38Chair Ernst: Thank you, miss robbins. Mr. riley, you are recognized for five minutes.
▶ 0:43:45Mr. Riley: Chair ernst, ranking member markey, and distinguished members of the committee, thank you for the opportunity to testify today. My name is brian riley, and I am the co-founder and ceo of guardian bikes, a company I started 15 years ago, while I was still in college, with a simple mission -- to make bicycles safer for families. The inspiration to start the company came from a traumatic accident that my grandfather had on his bicycle. When I was a kid growing up, my grandpa, lee bowman, used to ride his bike around the neighborhood for exercise.
▶ 0:44:15Mr. Riley: One day, a car cut him off, he panicked, overapplied his front brake, and that sent him flipping over the front of the bike. He landed on his head and broke his neck and was found on the side of the road by someone who called 911. Luckily, my grandpa survived the accident, but it was a traumatic experience that my family and I went through. When I went to college, I kept thinking about what problem I could help solve.
▶ 0:44:42Mr. Riley: I decided to work on a new type of bicycle braking system which could completely prevent the type of accident that my grandfather had. After numerous failed prototypes, the surestop braking system was born, an important innovation which made this type of accident a thing of the past. In those early years, I was convinced that the right business model for this invention was to partner with the major bike brands to get surestop planned into their new bike models.
▶ 0:45:07Mr. Riley: So, from the age of 21 to 26, I traveled around partnering with bike companies to get surestop adopted. As I began to work within the industry, I quickly learned that every single bike brand in the united states was importing bikes from chinese oem bike factories. In fact, the entire bike component supply chain was in completely dominated by china as well.
▶ 0:45:36Mr. Riley: These chinese oem factories, who would then sell a complete bike in a box to an entity in the usa, and eventually it would make it to an american consumer. That meant no matter what partner we would partner with, our customer would actually be the chinese oem factory building the bicycle for the brand. That meant I spent a lot of time traveling to china and seeing all the major factories in china. It was an interesting start to a career. I learned how the entire value chain for bicycles worked, from production to retail.
▶ 0:46:08Mr. Riley: Contrary to my parents and grandparents generations, when bike companies like schwinn were american manufacturing powerhouses, employing millions of people in the midwest, when I entered the industry as a young person in 2010, not a single bike brand sold in the U.S. was manufacturing in the U.S. in addition, most of the iconic bicycle brands had not only outsourced all their production, but over the years, most had become foreign-owned as well.
▶ 0:46:43Mr. Riley: It was difficult to control our own destiny. Eventually, I decided to start our own bike company and integrate our surestop braking technology onto our own bikes. This is how guardian bikes was born. Initially, we had to use the chinese oem supply chain to make our bikes, like everyone else.
▶ 0:47:02Mr. Riley: However, as tariffs started in 2017 and 2018 under president trump's first term, and later covid supply chain disruptions started happening, we decided to take a big bet and start a bicycle factory in the united states. In 2022, guardian bikes officially opened its factory in seymour, indiana.
▶ 0:47:22Mr. Riley: In just 36 months, we've become the first large-scale bicycle factory to exist in the united states since the industry decided to completely offer production -- offshore production decades ago. We employ 250 people, making 2000 safe, quality, american made bicycles per day, and are rapidly growing. We are growing quickly and demonstrating that reassuring production in the united states is not as impossible as many think. Starting in scaling this business required capital.
▶ 0:47:48Mr. Riley: Early on, the crucial sba seven(a) loan helped us get off the ground, but it was only a starting point. Which really allowed us to ask -- execute was long-term capital from private equity investors who believed in our vision.
▶ 0:48:09Mr. Riley: Senator ernst's made in america manufacturing finance act, which would double the loan limit for sba's 7(a) and 504 loan programs to $10 million for small manufacturers, would be instrumental in furthering growth of american companies looking to re-shore production. Increased working capital through this legislation would empower small manufacturers to start or expand production, hire more americans, and help solidify the U.S. as a viable place to start factories again.
▶ 0:48:34Mr. Riley: Ultimately, our experience that guardian bikes proves that reassuring manufacturing is not theoretical, is achievable, sustainable, and necessary. By investing in american-made products, strengthening public-private partnerships, and ensuring our trade policy with ties to domestic production, we can empower small businesses like mike duke lead america's manufacturing researchers. Thank you for the opportunity to share my story.
▶ 0:48:57Chair Ernst: Thanks. Mr. geis, you are recognized for five minutes.
▶ 0:49:03Mr. Geis: Good afternoon, chair ernst and distinguished members of the committee, thank you for the opportunity to testify today. My name is ben geis, and I'm current chair of the board of the small business investor alliance. I'm proud not to be here just as a representative of my firm and the sbia, but as someone who understands firsthand economic challenges and the potential of lower income and rural america.
▶ 0:49:31Mr. Geis: I grew up in a town of 600 people in the grasa, and my partners hail from in and around missouri. We were raised in communities where entrepreneurship is common but access to capital is often limited. That's why we chose to use our brat grounds in finance, not on wall street, but to invest in america's small businesses, particularly in communities that were shaken up.
▶ 0:49:57Mr. Geis: Eagle private capital was founded with a mission to provide capital to small businesses through the public-private partnership of the program. Our team brings investment in commercial lending, investment banking, and accounting. Over the last 20 years, we've invested approximately 1.2 7 billion dollars in 162 small businesses.
▶ 0:50:20Mr. Geis: Eagle find 3 was awarded sbic of the year and another was awarded the 2019 portfolio company of the year by the sbia. Evil is currently investing out of six sbic funds in august of 2024. From this, we have invested in nine portfolio companies and deployed $71 million to date, less than one year into our investment period.
▶ 0:50:52Mr. Geis: Those numbers represent more than capital deployed. They represent real growth in rural communities. Our portfolio companies have added over 6000 jobs and increase revenues by nearly $3 billion. In missouri alone, we've invested in 16 companies resulting in 20% job growth and meaningful impacts where every job counts. Let me share an example close to home. In jackson, missouri come of town about 100 miles south of st.
▶ 0:51:19Mr. Geis: Louis, we invest in a manufacturing and assemblyer of connected devices. When we first invested in 28 -- 2008, they have 500 employees. In 2017, the company had added 105 jobs, becoming an even stronger pillar of this rural community. But our impact is not limited to the midwest. We've seen similar results in seven other states where we have investments.
▶ 0:51:46Mr. Geis: In massachusetts, for example, people has invested in six businesses across six farms, growing revenue by 79% and employees by 342 or 83%. One standout provides in person and virtual academic services for students undergoing mental health treatment. Since eagle's initial investment in 2018 come of the company has demonstrated remarkable resilience and growth.
▶ 0:52:16Mr. Geis: Over the past five years, the performance has been exceptional, the team has grown from 115 to 233 employees, a one hundred 3% expansion, and served over 33,000 students each year. These stories are not one-off. They are a result of the sbic programs. We review hundreds of opportunities a year.
▶ 0:52:37Mr. Geis: These are often companies that are too small, to rule -- too rural to get the attention of individual letters. Sbic's like ours fill the gap. We work alongside the management community, leveraging expertise and experience in the middle market is to create a long-term partnership.
▶ 0:52:59Mr. Geis: Finally, the investing in all of america act introduced last congress by senators john hickenlooper and roger marshall last congress and has been reintroduced in the house, and it will strengthen the backbone of america, especially in places that are left behind.
▶ 0:53:25Mr. Geis: To invest in rural, low income it among manufacturing, national security focus businesses. The legislation would account for the gap come that inflation has rose nearly 30% said they were last raised. Adjusting is necessary to ensure the program's investment power remains consistent with the broader market and sbic can continue assisting job creating small businesses across the country.
▶ 0:53:51Mr. Geis: I'm proud of the work we've done and the communities we help grow and encourage this committee to move swiftly on the legislation, so even more can be done. Thank you for the opportunity to testify today. I look forward to your questions.
▶ 0:54:03Sen. Markey: Thank you so much. As is common here, our former chairman had to depart, and I am acting chairman, to the benefit of the staff. Since I just moved into the seat, I will ask you, Mr. geis, are you the last one to deliver your testimony?
▶ 0:54:23Mr. Geis: I am.
▶ 0:54:24Sen. Young: Alright, great, thank you. Now that I have commanded this situation -- [laughter] I will thank all of you for appearing. I am, of course, especially glad to see Mr. riley here. You have invested in the great state of indiana. But I am really excited about having all of you here, as I often share with panelists, my father was a small business person.
▶ 0:54:52Sen. Young: This is not always known as the committee with the broadest jurisdiction that touches on every facet of your life, but it is really important. It is important to people like him that we optimize the programs and support that the small business administration in particular gives our small businesses to give you a platform and a voice, so thank you for being here today for it before I dive into my own questions, I will give senator shaheen an opportunity to ask first. Senator shaheen?
▶ 0:55:22Sen. Shaheen: Thank you very much, Mr. acting chairman. I appreciate that, since I have not yet voted. Welcome, to all of our witnesses, thank you for being here. I actually grew up in missouri, and my grandfather was from jackson, so I know exactly where you are talking about, Mr. geis.
▶ 0:55:44Sen. Shaheen: One of the programs that I helped create when I got to congress, and that I continue to think is very important, and in fact worked with chair ernst on it last year, is the trade expansion program, that program you mention, Ms. robbins.
▶ 0:55:59Sen. Shaheen: It helps small businesses sell internationally, and when we think about the fact that about 95% of our markets are outside of the united states, it is really important for us to help small businesses get into those markets, because right now, fewer than 5% of small and medium-size businesses do business overseas.
▶ 0:56:19Sen. Shaheen: You mentioned in your testimony that you currently manufacture in the U.S., sell internationally, but now, you are having to consider moving production overseas, just to export. Can you talk a little bit more about the impact tariffs have had in actually pushing production offshore, and what that means for your company long-term? You talk a little bit about the potential of a need to downsize to address that.
▶ 0:56:44Sen. Shaheen: In addition to that, what with the loss of the program and the technical assistance and grants that that provide me into your business?
▶ 0:56:55Ms. Robbins: Thank you very much for your questions. The step program and the image grant partially and reimburse us for activities related to export. It also provides education.
▶ 0:57:23Ms. Robbins: Currently we are participating in a global target program with a focus on latin america that prepared us for a trip to brazil last month, and set us up for success in that market. I am incredibly grateful to the staff at the local sbic. They connect us to others.
▶ 0:57:47Ms. Robbins: Unfortunately, I need to consider off shoring my manufacturing, and that is because them as I mentioned, our sales are down, and to sustain losses but is at risk of bankruptcy by the end of the year. We have perfect credit. We've never missed a payment, but we are rapidly running out of liquidity. In addition, the tariffs make our products exceedingly expensive.
▶ 0:58:11Ms. Robbins: My competitors overseas do not have that problem, so in order to compete, I feel that we may need to diversify and manufacture overseas to serve export markets.
▶ 0:58:24Sen. Shaheen: Thank you. Again, if you can speak a little bit, one of the things we've learned about the "skinny budget," administration has sent to us on appropriations, is that it would eliminate the s.t.e.p. Program entirely.
▶ 0:58:41Sen. Shaheen: What would that mean in terms of future, assuming that tariffs are addressed in ways that allow you to build back some of those markets, what would that mean for you if you no longer have access to that technical assistance and the funds available through the s.t.e.p. Program?
▶ 0:59:00Ms. Robbins: It would have a really devastating impact, especially for businesses that don't have the education experience that we have. We have learned a lot by the benefit of this program and access to the experts. A new service or another small business starting to get into exports, it was such a valuable resource.
▶ 0:59:25Ms. Robbins: Just an example of what a global target may be light, it would be maybe 12 other business owners looking to increase their exports, and they would bring an export or two to speak about a variety of topics, marketing, legal compliance, financing your exports, things like that, help to demystify the complexities and also creates a greater network of experts to reach out to.
▶ 0:59:54Ms. Robbins: So, you know, while I would be hurt, I think it would be much harder for businesses they don't have the same experience we have to get a leg up. Thank you.
▶ 1:00:02Sen. Shaheen: Thank you. Thank you, Mr. chairman.
▶ 1:00:06Sen. Young: Thank you, senator shaheen. I will pick up with Mr. riley, giving him the hoosier privilege. A hoosier by choice, by the way of sacramento, and his company, guardian bikes, located in seymour, indiana, I think is a prime example of how a small business can grow into a successful and thriving american company and even help re-shore
▶ 1:00:37Sen. Young: An industry. It does not happen in every case, but we should celebrate it and the jobs you create and the opportunities associated with that when it does. So your insight, Mr. riley come into how the policies that we put in place here in washington, D.C., which can be detached and removed from the daily cadences and concerns of regular people sometimes, they would be invaluable to our whole process, so I appreciate all of your
▶ 1:01:08Sen. Young: Comments this morning. Whether it is developing skilled workers through apprenticeships or connecting start of two research institutions and capital, public-private partnerships are already proving what is possible with sectors work together. Too many small businesses, especially in rural communities, lack access to the same networks or infrastructure or talent pipeline that they need to compete and grow. Mr.
▶ 1:01:35Sen. Young: Riley, how has public-private partnerships, if at all, help support or scale your small business operation? And you can expand on that, if you would like. In your experience, what do you see as the most effective role for the government and the private sector in making these partnerships work?
▶ 1:01:58Mr. Riley: Thank you, senator young. And I'm proud to be a new hoosier of a couple of years. So, in guardian bikes' case, when we were first starting, we did utilize an sba 7(a) loan, and that was instrumental in getting the company off the ground, but in our case, when we really started looking into starting a factory, it was clear that we needed several million dollars to get this thing
▶ 1:02:29Mr. Riley: Started, both because of some of the equipment that we needed but also because we were starting something that no bike company had done in the united states in many decades, and we knew that they would be at least, say, 12 to 18 month of time that we would have to go into money-losing mode, to learn how to run a factory, to get the thing running. We relied on an sba 7(a) loan but also private equity -- not private equity, but I should say individuals investing money for equity in the business.
▶ 1:03:04Mr. Riley: That was instrumental but also challenging. That was me going around, you know, pitching a lot of individuals, getting them interested in the business, taking $50,000, $100,000 checks, to expedite his vision of starting a factory in the usa -- this vision of starting a factory in the usa. It is challenging to re-shore production and resource supply chain commanded us take capital.
▶ 1:03:33Mr. Riley: I think to the extent that, you know, the government can make flows of capital easier for companies that are looking to re-shore production and bill production in the united states, that's helpful.
▶ 1:03:43Sen. Young: So I'm just going to stop there and no rebuy from indiana, we did not choreograph this, because that is a great lead into Mr. mickelson, and my question for you, sir, you mentioned in your testimony the importance of programs like the rural business investment companies, rbic, and the small business investment companies, sbic, to help create jobs and drive economic growth in the wind west -- midwest, which I
▶ 1:04:14Sen. Young: Especially care about. How can we use our investment tools more effectively, and you are informed estimation, to expand access to capital from rural oz ornaments -- to capital for rural entrepreneurs?
▶ 1:04:31Mr. Mickelson: Thanks for the question. I will stick with the theme and stick with indiana. We had an investment in franklin, indiana. It's not a large metropolitan area --
▶ 1:04:41Sen. Young: I live, like, a few miles away. We really did not choreograph this, but thank you. [laughter] sometimes it happens. Yeah. All right.
▶ 1:04:56Mr. Mickelson: Two great entrepreneurs they are, they were young, obviously risktakers. They had started a business, but they had not had the resources to scale the business, to professionalize the business. So we invested with them to be brought in systems, people. They originally had one location. By the time we had our investment, they have 13 locations, a full c suite of teams, so that would not have been, you know, possible without the programs like the rbic and the sbic.
▶ 1:05:26Mr. Mickelson: Two ways you can help that, I mentioned in investing in the all of america, passing that would help create more opportunities for situations like this. On the rbic side, the rbic program does not have libraries like the sbic program has, so that is one thing we've been working with the usda for a long time, trying to get that in place.
▶ 1:05:44Sen. Young: Thanks so much. Unless there are any other indiana stories. [laughter] senator rosen, you are recognized.
▶ 1:05:59Sen. Rosen: Let's talk about nevada stories. We have our dreamers, entrepreneurs, small businesses, and for those who do not know, we are famous for big casinos them I know that, but that only makes up 1% of businesses in nevada. 99% are small businesses. It really is the heartbeat of nevada.
▶ 1:06:17Sen. Rosen: I want to build a little bit upon what senator shaheen talked to you about, on the tariffs, because the tariffs' impact on about a small businesses, they are already facing disastrous economic consequences. President trump said these across the board tariffs, and small manufacturers in particular are struggling, many businesses that manufacture in the U.S.
▶ 1:06:41Sen. Rosen: Rely on sourcing materials , and end of that I, like I said, 90% of businesses in nevada are small businesses. They try to decrease costs in disruptions in the supply chains, and frankly, they are so worried, the uncertainty of it all. They just don't know what to plan or prepare for or how to move forward. Ms.
▶ 1:07:05Sen. Rosen: Robbins, I'm going to ask you, can you discuss about how the uncertainty, not just for your business, but for yourself, your family, and everything you put into it, I will have the administration's tariffs impacted you, and how are small manufacturers particularly vulnerable?
▶ 1:07:23Ms. Robbins: Thank you so much for your question. Small businesses are really clinging to life right now. Mine small team, which I can count on one hand, has spent countless hours crunching numbers, running models, work through scenarios, searching for new suppliers, attempting to set up accounts with those, forecasting expenses, calculating, and recalculating price increases, only for the situation to change drastically
▶ 1:07:54Ms. Robbins: With no notice.
▶ 1:07:54Sen. Rosen: Mm-hmm.
▶ 1:07:56Ms. Robbins: It creates such an environment of uncertainty that I don't understand how someone could invest in an economy without having some level of certainty you can regain your investment. I've invested $1.2 million into our company, to manufacture guitar pedals.
▶ 1:08:17Ms. Robbins: We do all of our manufacturing here in akron, ohio, and to do more than we do now it would be like asking a baker to make flowers. The uncertainty from day today -- we have a weekly meeting where we discussed the tariff impacts and try to determine how to proceed.
▶ 1:08:42Ms. Robbins: We certainly need to increase our prices, as our costs have drastically risen, however, the landscape does not stay the same from week to week. So I don't know how to proceed. It's complete uncertainty.
▶ 1:08:59Sen. Rosen: And how stressful is that? How stressful is it on the people who work with you?
▶ 1:09:04Ms. Robbins: Incredibly stressful.
▶ 1:09:09Sen. Rosen: Of course we have a lot of live music in nevada, so I'm sure there's some folks who have been buying from you. So, thank you for sharing that, and I'm sorry that you are going through all of that trauma. Hopefully we can get some certainty going forward. Because manufacturing of our emerging manufacturing industry, which is so important, surging investments, you have put in one billion --one million dollars, a small business owner, right?
▶ 1:09:34Sen. Rosen: In nevada, we have a lot of clean energy, solar, wind, thermal, so our clean energy technology, to support our small manufacturing businesses, it is beneficial for our local and national economic spirit and national economic spirit have seen the benefits of clean energy firsthand. We are the only state operating with this in mind.
▶ 1:09:59Sen. Rosen: I know we all have our phones, that lithium, that has become a manufacturing hub in recent years, and last year a tech hub designation for the lithium project graded by the university of nevada reno, which will create even more economic opportunity in northern nevada. Businesses are coming, batteries recycling, training, engineering, all of it. So, Mr. geis, no eagle capital has a number of portfolios in the clean energy state.
▶ 1:10:27Sen. Rosen: Can you speak to me about the importance of direct investment in emerging industries like clean energy? We need it all. And the way small businesses can benefit from those industries?
▶ 1:10:38Mr. Geis: Thank you so much for that question. Sorry. Thank you for the question, senator rosen. Yeah. Could you repeat the last part of your question, just to make sure I answer it appropriately?
▶ 1:10:54Sen. Rosen: Well, you know, the importance of addressing investments to emerging industries like clean energy. Like in nevada, we have wind, water, solar, geothermal, lithium recycling, critical mineral mining, all of these things for the newer industries, and we want to move to develop that. So I just wanted you talk about that.
▶ 1:11:14Mr. Geis: For sure. Our focus as a small business investment companies, so, you know, 100% of the investments we make are in small businesses in the united states.
▶ 1:11:26Sen. Rosen: Mm-hmm.
▶ 1:11:28Mr. Geis: Small focus is what we do. I think we see a lot of wonderful entrepreneurs that are in, you know, emerging industries, like you talk about, and really, you know, we provide the capital to help them grow and be more competitive in a global landscape. I think it is vitally important to our country to encourage that entrepreneurial experience.
▶ 1:11:51Sen. Rosen: Thank you. I yield back.
▶ 1:11:59Chair Ernst: Thank you, senator rosen. Senator hawley.
▶ 1:12:01Sen. Hawley: Thank you. Mr. -- I understand you went to rutgers university. Ok. Very good. I can hear you. That is fine. You are on a roll. Were you born in st. Louis? >> no, I was not born in st. Louis could I was born in nebraska, but I married a st.
▶ 1:12:30Sen. Hawley: Louis girl, and I've been there for 26 years.
▶ 1:12:33Sen. Hawley: That's great. You are a missouri and my book. Let me ask you, and your written testimony, you included a helpful chart explaining how the fbi see program help spur investment in small business. Tell us about the fbi see program -- sbic program and why it matters, give us your perspective on that.
▶ 1:12:54Mr. Geis: Yeah. So, I think, coming at it from a couple of different angles, a sustainable, long-standing program, has been around since 1958. It has been using taxpayer subsidies since its inception.
▶ 1:13:11Mr. Geis: What is critical that it does in missouri and other states is we provide that critical, next stage of capital to really give, create that growth, to drive to the next level pete often times, entrepreneurs raise capital, invest their own money to fund their businesses, but when they hit the critical inflection point, they need that next round of capital to really invigorate, and that is what the sbic will do.
▶ 1:13:38Sen. Hawley: Very good. In 2020 four alone, sbic invested in missouri $192 million in more than 20 small businesses across the country, that capital supported over 3000 jobs in the state of missouri. That is pretty good. We want every single one of those jobs.
▶ 1:13:55Mr. Geis: Yeah. Sbic, you know, everyone knows about the capital markets and the large renters and larger private equity funds, but eventually the large dollars of capital hear about, but sbic's are squarely in the heartland of america and the small businesses. That's what we do day in and day out.
▶ 1:14:16Sen. Hawley: C1 let me ask you to talk about the role that small businesses can play in the manufacturing sector. This is a big need. I don't have to explain to anyone that in america as a whole we have lost 4 million jobs.
▶ 1:14:43Sen. Hawley: Particularly in the industrial sector. In missouri, is close to 60,000 jobs. We need more industry and manufacturing of all kinds. >> is a big focus of what we do. The stories we could share in our portfolio, we provide the capital.
▶ 1:15:18Sen. Hawley: That is what we do.
▶ 1:15:19Sen. Hawley: Very critical. Thank you for the work we do. Thank you for being here to testify. >> thank you. So sorry. I got caught up.
▶ 1:15:50Sen. Hawley: I totally overlooked you. My apologies to you.
▶ 1:16:09Sen. Hickenlooper: It takes a long time to raise money. I think those private investments can really bring hundreds of millions of dollars into colorado. I'm sure you're aware of that.
▶ 1:16:38Sen. Hickenlooper: How would expanding your program brought in access for capital? Two lower income communities? >> your timing is perfect. Certainly the passage will increase funding.
▶ 1:17:10Sen. Hickenlooper: So there will be more opportunities for investment. It will also specifically target rural and low income areas. It would provide bonus leverage for manufacturers.
▶ 1:17:38Sen. Hickenlooper: We would expect that number to go higher.
▶ 1:17:43Sen. Hickenlooper: Great. I probably know a number of your personal investors. Let me ask you question. The tariff situation, when you are a small business, every little bit makes a different.
▶ 1:18:15Sen. Hickenlooper: They went up and then they were suspended. That uncertainty is chaos. I know how hard that is. How hard that is. Have you navigated the uncertainty? When do you make investments? >> thank you so much for your question.
▶ 1:18:46Sen. Hickenlooper: They have cap -- created complete uncertainty. They are changing from week to week. I am select they are on exactly how much I'm paying in tariffs. We count every penny.
▶ 1:19:32Sen. Hickenlooper: It is impossible to navigate these circumstances. They have been loading it on foreign imports.
▶ 1:20:01Sen. Hickenlooper: I love that name. I am a huge believer in outdoor recreation. It makes people feel healthy.
▶ 1:20:52Sen. Hickenlooper: >> thank you. I was very lucky to have that opportunity. I still pinch myself that that actually happened for me.
▶ 1:21:25Sen. Hickenlooper: We have tried to make that a strategic advantage for us. The whole brand is built around safe bikes.
▶ 1:21:50Sen. Hickenlooper: Telling that story to investors and getting them excited about the strategic advantages of building a product in the U.S. that are over and above just the tariffs. That was a really big thing for us. We were able to secure capital.
▶ 1:22:11Sen. Hickenlooper: That is perfectly biased. You are exactly right. I am out of time.
▶ 1:22:21Sen. Ernst: Do you have another question? [laughter] thank you. I will go ahead and recognize myself now. You are creating new jobs across america.
▶ 1:22:50Sen. Ernst: And helping our nation remain competitive globally. What are the greatest barriers to growth and building here in the U.S.? >> certainly access to capital, like we talked about today. They are starting to add more educated people.
▶ 1:23:29Sen. Ernst: Trying to automate as much as we can. All that costs money. It is a big part of the professionalization process. They have done a great job. That takes expertise. That is driven by human capital.
▶ 1:23:55Sen. Ernst: Just reiterating what senator hickenlooper said. You have been nationally recognized for your efforts. Thank you for doing that. I commend you for that.
▶ 1:24:27Sen. Ernst: You have been able to raise a significant amount of private capital to support your vision. What added value we find with made in america products? >> the way we really went about it was to say the world is changing around us. Covid was the perfect example of that.
▶ 1:25:01Sen. Ernst: That gives you a lot more supply chain resiliency. They can really change a business. You have to deal with a lot more inventory.
▶ 1:25:30Sen. Ernst: We started selling a lot more pink bikes when the barbie movie came out. You can start making more of those that reacts to that kind of demand. That is a perfect example. There are all kinds of real advantages that come from that.
▶ 1:25:59Sen. Ernst: We have found that there are a business advantages. Over and above any cost advantage. Being able to react to demand. And deliver safe, quality products to a lot of consumers. They want to do business with a company like us that is trying to do it here.
▶ 1:26:23Sen. Ernst: Thank you very much. Thank you for sharing your experience. 20% of those investments fund american manufacturing companies. How can congress further target those for investments that are critical to national security while maintaining a zero subsidy program?
▶ 1:26:53Sen. Ernst: >> I would say by supporting the technology initiative.
▶ 1:27:23Sen. Ernst: They will invest 60% of their investments in small businesses.
▶ 1:27:29Sen. Ernst: Fantastic. >> so good to see our witnesses. Thank you for being here. We had a music stand company. That continue to be a big exporter.
▶ 1:28:02Sen. Ernst: They are big supporters. You cannot have a big concert and have a bad music stand. You are similar company.
▶ 1:28:31Sen. Ernst: How are you thinking about this situation and what we need to do to help more businesses like you grow? >> thank you so much for your question. We invested in a state-of-the-art assembly line.
▶ 1:29:07Sen. Ernst: The tariffs have made it more challenging. We have perfect credit. We have never missed a payment. If we default, we will lose everything we have worked for. I don't see taking on additional debt as the answer.
▶ 1:30:00Sen. Ernst: I find that suggestion offensive. I think the tariffs need to be reversed immediately. Small businesses need to be exempted.
▶ 1:30:09Sen. Cantwell: Businesses deftly have a lot less flexibility. Do you have a big export market for your devices? >> we do. In the last few months we have seen that number dropped drastically.
▶ 1:30:39Sen. Cantwell: Because of the chaos.
▶ 1:30:42Sen. Cantwell: I find it takes a lot to be in exporter. In the northwest we have programs in the 1980's that encouraged everybody to do it. It is hard because you're taking a risk. It is out of your control.
▶ 1:31:15Sen. Cantwell: We find it ends up being 40% of sales opportunities. What are some of your best markets for exports? >> europe, australia, canada, japan, anyway the guitar music is popular. And incomes are high enough to afford some discretionary spending.
▶ 1:31:39Sen. Cantwell: Friendly countries to us anyway. We should have good relationships with them. >> we have offended a lot of our allies.
▶ 1:31:52Sen. Cantwell: Thank you so much.
▶ 1:31:54Sen. Ernst: Thank you. >> thank you. The tariffs have been thoughtless and reckless. They have caused economic uncertainty. That is absolutely unbelievable.
▶ 1:32:27Sen. Ernst: It has taken about -- for about impact. It is entirely impractical.
▶ 1:32:57Sen. Ernst: Especially with the current tariffs. Could you explain why this would be nearly impossible? >> thank you for your question. Any type of investment like this would require months or years and a lot of money. I don't have that time or that money right now. I can also share some data with you.
▶ 1:33:29Sen. Ernst: One of my friendly competitors did an analysis on what it would take to reassure just one of the components. They are used to adjust parameters. This is one of his most frequently used parts.
▶ 1:34:13Sen. Ernst: The analysis showed that the cost per part would increase. That is just one part of hundreds that go into this.
▶ 1:34:45Sen. Ernst: He listed the nine different parts that went into making these. I would like to submit this for the record.
▶ 1:34:53Sen. Ernst: Without objection. We will have that introduced into the record.
▶ 1:34:58Sen. Markey: As you mentioned in your testimony you were named exporter of the year. No one does it better than you. Describe that in terms of the daily headaches >>. It is basically all we do now.
▶ 1:35:27Sen. Markey: We try to navigate this environment. We are not growing or thriving. I have cancel job openings. I am thinking about my employees and how they are dependent on our health care agreement. Thinking about my daughters and how they rely on us.
▶ 1:36:00Sen. Markey: This is what I am doing. I'm not doing things that are productive.
▶ 1:36:02Sen. Markey: President's motto of short-term pain for long-term gain, you are a short-term pain. It could turn into long-term pain. There could be an extinction event. If this goes on. Do you really feel that he is picking winners and losers here?
▶ 1:36:36Sen. Markey: Big companies get a pass but you're down there try to figure it out. >> I do think the disparity is bad. I knew stating up poorly my business is doing. While those companies are meeting with royalty in the middle east.
▶ 1:37:02Sen. Markey: All of these big companies have that. We are supposed to be your advocates. You think there is a disproportionate impact? >> that is correct. I do have some advocates. But that does not compare to what the large companies have.
▶ 1:37:32Sen. Markey: Do you keep a bottle of pepto-bismol nearby? To give you something else to worry about? >> I'm used to navigating challenges. I don't see solutions. I need immediate solutions.
▶ 1:38:12Sen. Markey: It is not survivable. We are clinging to life. We will do everything we can to save our businesses. We are not like big companies that we are going to slash jobs.
▶ 1:38:43Sen. Markey: When the president announces that he is in the process of beginning to do that, does that lift the cloud off of your head? >> there is absolutely no
▶ 1:39:18Sen. Markey: Relief. It creates uncertainty. That is what happened over the last month. While there has been a break on the reciprocal tariffs. This extends the uncertainty. I cannot do that.
▶ 1:39:47Sen. Markey: If you make a price increase, you really cannot go backwards. The less competitive and affordable you will be. It is not something you want to do repeatedly. What is going on now is so challenging.
▶ 1:40:19Sen. Ernst: Thank you. I appreciate your testimony. It is a very complicated situation. We did not get into the situation overnight.
▶ 1:40:48Sen. Ernst: If we go back and look at those, we have forgotten that those same countries have had tariffs against us. This is a painful time. We recognize that.
▶ 1:41:21Sen. Ernst: We want to support you. We have to figure out a way forward. This is very important. We want to find a way forward.
▶ 1:41:55Sen. Ernst: I want to ask unanimous consent that these full statements be put in the record. We will make sure that all of your full written testimonies. I do have a closing statement. This record will remain open for two weeks.
▶ 1:42:29Sen. Ernst: Without objection, so ordered. Thanks to our witnesses for being here today. With that the committee stands adjourned.
▶ 1:42:59Sen. Ernst: [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. Visit ncicap.org]