▶ 0:17:54Chair Ernst: I call the committee on small business and entrepreneurship to order. It is the start of a new year and I'm excited to kick it off discussing the ways we can supercharge main street and promote economic growth across our rural communities.
▶ 0:18:12Chair Ernst: This committee routinely looks at the integral role small businesses play in our economy and our lives, especially in rural communities where small businesses represent over 96 percent of all employers and provide nearly 57% of all jobs.
▶ 0:18:30Chair Ernst: I grew up on a farm in southwest iowa and currently live in -- still today, I know the local small business owners around me and experience firsthand how ingrained they are in our agricultural community. Not to mention the role of america's original small business owners, family farmers. These are my neighbors and my friends. They carry on the spirit of entrepreneurship that runs deep throughout rural america.
▶ 0:19:03Chair Ernst: Despite the importance of these small businesses to rural agricultural communities, they have faced challenges in securing affordable access to capital essential to their survival. The sba loan program was established to help address some of those gaps but under the biden administration mismanagement, we saw the opposite. The share of lending to rural small businesses declined year after year. The reason for the decline is no mystery.
▶ 0:19:33Chair Ernst: While the biden administration was recklessly slashing lending standards and eligibility rules, it was building up regulatory hurdles in the private sector and ignoring challenges faced by small community banks that serve rural and agricultural entrepreneurs including their challenges, in utilizing the program itself.
▶ 0:19:55Chair Ernst: President trump and the sba administrator have oversaw -- overseen a tremendous turnaround with the dollar value of all -- with the first year of the new administration increasing by nearly 20% over last year.
▶ 0:20:14Chair Ernst: However, many rural community banks still find it incredibly difficult to fully and actively participate in the seven a loan program due to unnecessary red tape and over the conflict requirements that do not account for the unique needs and operations of rural small businesses. Many community banks also worry that their inability to dedicate staff to sba compliance will jeopardize their ability to rely on the 7a guarantee.
▶ 0:20:43Chair Ernst: This red team should not be -- red tape should not be what stands in the way of benefiting from 7a. That is why I called don administrator leffler earlier this week to report to this committee on the resources and efforts the sba has made to promote greater participation by rural community banks in sba loan programs. I ask unanimous consent to enter into the record by january nine letter requesting information from the sba on efforts to assist rural community banks.
▶ 0:21:16Chair Ernst: Without objection, so ordered. In the letter I also asked what the sba is doing in the new year to reduce compliance and paperwork burdens for rural community banks so they can reach more rural and agricultural small business owners. We must also do our part in the senate.
▶ 0:21:34Chair Ernst: We made headway when the committee reported that the made in america manufacturing finance act will increase the sba backed loan limit from $5 million to 10 million dollars for small manufacturers. A companion to our bill has passed the house of representatives so I do hope that we can get these low limit increases enacted -- loan limit increases enacted in the next few weeks.
▶ 0:22:02Chair Ernst: I also introduced my modernizing agricultural and manufacturing bonds act which will modernize irs -- it is only through concerted coordinated efforts in thoughtful legislation that we will be able to cut the red tape and give our rural agricultural small businesses the room and capital to grow. I am grateful that we are joined today by our panel of witnesses.
▶ 0:22:29Chair Ernst: I look forward to hearing from them to see how we can help both rural entrepreneurs and the community banks that serve them. I now ranking -- recognize ranking member markey for his opening statement.
▶ 0:22:41Ranking Member Markey: Thank you very much. Today we are here to talk about supporting local farms, grocery stores, food banks and other small businesses that make up the rural agricultural community -- economy and our country.
▶ 0:22:58Ranking Member Markey: These small businesses are key to feeding local communities, creating jobs, unfortunately the agricultural economy is being crushed by the trump administration's attack on rural communities. President trump's playbook, maga really means making agriculture go awry. We are seeing as it cascades down to the kitchen tables of people in america.
▶ 0:23:28Ranking Member Markey: Grocery costs are dramatically up. Beef is up 16%. Bananas are up six point 5%. Food prices went up 3.1% in 2025, in the trump administration. Trump keeps saying that affordability is a fake word but it is not fake for small businesses, not a fake word for consumers when something is up we .1%.
▶ 0:24:01Ranking Member Markey: His agriculture strategy is bananas in terms of what he is doing across the board, from tariffs to every other policy he has. His tariffs threatening to bankrupt thousands of family farmers who are seeing their own prices increase and exporting opportunities squeezed as other countries retaliate with tariffs of their own.
▶ 0:24:26Ranking Member Markey: President trump's immigration policies are spreading here in neighborhoods and making it even harder for rural businesses and small farms to find hard-working employees, a long-standing issue in rural communities. We cannot ignore president trump's disastrous health care policies with the passage of the big bill, hundreds of rural hospitals will likely close or cut services.
▶ 0:24:52Ranking Member Markey: Up to 22 million americans saw a dramatic increase in their health premiums just days ago. 10 million of them are small businesses. A lot of these farmers, part of co-ops, the lifeblood of main street across rural america. He is turning main street into payne street.
▶ 0:25:20Ranking Member Markey: Health care, electricity, energy costs, food costs, all across the board. Republicans are just clueless, callous and it is a cruel decision not to extend the enhanced tax credits. That means thousands of rubble small businesses are going to see health care costs skyrocket.
▶ 0:25:43Ranking Member Markey: They are facing in rural america a 28 percent higher increase than those who live in the cities. America was already struggling with climate change impacts, rising housing costs, retraining workers, finding a path forward for small businesses when they decide to retire but we have to address these issues. Our farmers and ranchers and fishermen, we have to make it not harder for them to exist.
▶ 0:26:15Ranking Member Markey: Thousands of small farms and small businesses that support our agricultural economy. Cutting down greenhouse gas emissions, treating workers fairly and feeding local communities and schools. If president trump were serious about supporting rural communities, he would be investing in small local producers rather than prioritizing large multinational corporations that routinely violate workplace and environmental laws.
▶ 0:26:46Ranking Member Markey: While creating a small business blight, president trump is beefing up the pockets of his billionaire buddies. These corporations receive extreme favorable treatment from the largest buyer of goods answer in the world, the united states government. But the small producers are leading the way in creating local sustainable food systems. Fiscal year 2020 four, nearly $5 billion in spending went to just 25 companies. Those are not small farmers.
▶ 0:27:17Ranking Member Markey: That is why I introduced the affective food procurement act to provide more federal contract opportunities for small producers, small farmers using sustainable practices and treating employees fairly. It is important we provide those small businesses inside of our food systems.
▶ 0:27:45Ranking Member Markey: The health of our environment and a source of growth for many rural economies. Today I look forward to hearing from our witnesses about how we can further our shared goals to help small businesses in the agricultural community.
▶ 0:27:59Chair Ernst: Thank you ranking member markey. I want to extend a warm welcome to all of our witnesses and I am thankful that you took time out of your busy schedules to come to washington, D.C., to share your expertise on how we can improve america's rural agricultural economy. I will now introduce the two witnesses to testify on behalf of the majority. First is melissa spurgin.
▶ 0:28:31Chair Ernst: She is the chief financial officer of first iowa state bank , where she has worked for over 22 years. She previously served as vice president of first iowa state bank. Ms. spurgin holds a bachelor's degree from saint ambrose university and an mba from capella university. Next, Mr. jay funke. He is the owner of dell clay farm equipment, a family-owned farm equipment dealer business.
▶ 0:29:03Chair Ernst: They've been in business for over 25 years and provide new and used farm equipment to farmers throughout northeast iowa. Mr. funke holds a bachelor's from laurus college and thank you again, I now recognizing -- I now recognize ranking member markey to introduce his witnesses.
▶ 0:29:21Ranking Member Markey: Mr. erbin crowell runs a series of co-ops across the state and he has over three decades of experience in co-op businesses and food system development and serves on the boards of the national cooperative association and with the farmers union.
▶ 0:29:48Ranking Member Markey: He lives with his family in rural western massachusetts. Miss maria moreira is the founder and board chair of world farmers, based in lancaster, massachusetts. Her perspective as a farmer, business owner and immigrant has fueled her passion.
▶ 0:30:10Ranking Member Markey: She is also vice chair of the rural coalition board of directors and has served as -- for nine years and as a member of the usda advisory committee and has been a leading voice in establishing opportunities for crops for immigrant and refugee communities and we look forward to hearing from both of you.
▶ 0:30:35Chair Ernst: Wonderful. Thank you ranking member markey. Briefly I will take a moment and explain the lighting system in front of you. There are three lights in front of you. Green means go, yellow means you are running out of time and read means please wrap it up quickly. I ask in a miss consent that the witnesses' full statements be included into the record.
▶ 0:31:05Chair Ernst: As your written testimony has been made part of the record, the committee asks that you limit your oral remarks to five minutes. With that, Ms. spurgin, you are recognized for five minutes.
▶ 0:31:17Ms. Spurgin: Members of the committee, thank you for the opportunity to appear before you today. I am the chief financial officer where we serve rural communities across southern iowa. I appear before you on behalf of rural banks that underutilize the sba loan programs.
▶ 0:31:40Ms. Spurgin: We rely heavily on local knowledge, long-standing relationships and firsthand understanding of our communities, not just standardized financial metrics. It is not philosophical, it is structural. In many rural banks, a single lender may handle commercial ag and consumer lending but sba programs are largely designed for lenders with scale and specialized staff.
▶ 0:32:08Ms. Spurgin: Sba loans require significantly more documentation and compliance than conventional loans, with lender staff requiring continuous training due to frequent rule changes. The departure of just one employee can eliminate a bank's sba capability entirely. It is especially challenging because rural businesses typically need smaller loans, not $10 million in financing.
▶ 0:32:31Ms. Spurgin: Sba servicing costs both in terms of compliance and staffing are largely the same regardless of loan size or market area, so the economics often do not make -- do not work for the small dollar loans most common in rural communities. Little is given to the experience of rural bankers, specifically around aspects of a loan that did not account for seasonal or cyclical income patterns.
▶ 0:32:58Ms. Spurgin: This results in credit worthy businesses failing underwriting not because they cannot repay but because of timing mismatches of cash flow. Equity injection requirements failed to reflect rural asset structures. Many rural businesses are asset rich but cash poor, with wealth tied up in land, equipment and other assets accumulated over generations. Collateral and personal guarantee requirements also need greater flex ability -- flexibility.
▶ 0:33:30Ms. Spurgin: Sba collateral rules can require constant and time-consuming legal restructuring simply to obtain guarantees. Documentation alternatives -- with informal but reliable operating histories. Community bank relationship knowledge should be recognized as a compensating factor in underwriting.
▶ 0:33:52Ms. Spurgin: Aligning sba underwriting with rural economic realities will expand access, increase program utilization for rural markets in and do so without materially increasing default risk. These are flexibility improvements, not loosened standards. Rural banks also have concerns about the risk of technical default and guarantee clouds. Sba guarantees can be denied or reduced due to minor procedural errors even if the borrower performs as agreed.
▶ 0:34:25Ms. Spurgin: We lack the legal teams to manage this risk. A single denial of a guarantee can have a meaningful impact on a small bank. In practice the guarantee is only as reliable as the compliance process and that process has proven unforgiving. As a result, rural banks continue to lend but we do so outside sba programs. We rely on portfolio loans, relationship-based underwriting, faster credit decisions and long-term customer support during economic stress.
▶ 0:34:56Ms. Spurgin: Rural banks are lending, but we are not able to reach every credit worthy rural entrepreneur without sba support. Borrower most affected are startups and those on the economic margins of rural communities. The path to greater rural bank participation is reducing friction in the system. I believe congress and the sba can better achieve the goals of supporting entrepreneurs and increasing access to capital in rural america by doing the following.
▶ 0:35:24Ms. Spurgin: Easing the compliance burden and cost structure for smaller loans in rural areas. Recognizing the value of the judgment and relationship knowledge of the community banker. Providing flexibility and acceptable equity and collateral guarantee requirements. Ensuring greater clarity so bankers can truly rely on sba guarantees without risking a technicality.
▶ 0:35:52Ms. Spurgin: More effectively marketing resources such as the small business development centers to ensure both banks and borrowers understand what support exists. The sba with these reforms can be better and more impactful partners with community banks and iowa -- in iowa and across the country. Thank you for the opportunity to share these perspectives and I look forward to answering your questions.
▶ 0:36:14Chair Ernst: Thank you Ms. spurgin. Is it Mr. crowell?
▶ 0:36:21Mr. Crowell: Either.
▶ 0:36:22Chair Ernst: Ok, very easy. Thank you Mr. crowell.
▶ 0:36:28Mr. Crowell: Thank you chair ernst and members of the committee for this opportunity to testify. We appreciate your focus on this issue and a chance to discuss the role of cooperatives and credit unions in building thriving local economies. My name is erbin co my name is erbin crowell. I'm a board member of the national cooperative business association and the new england farmers union.
▶ 0:36:57Mr. Crowell: I have three decades of experience in the co-op food system development. As the committee works to craft a thoughtful policy, co-ops should continue to have a significant role in creating local economies. I want to recommend the following improvements and supports. Provide access to capital through the sba by crafting alternatives to current lending requirements for co-ops.
▶ 0:37:24Mr. Crowell: Ensuring that a generation of small business and family farms are preserved through outreach, education. Ensuring the key support across the agency collaboration and technical assistance for co-ops is available through programs and initiatives.
▶ 0:37:39Mr. Crowell: In neighboring food crop association was developed to -- we also partner with local producers and other co-ops to strengthen the regional food system economy and collaborate with the ncpa on advocacy related to agriculture, food security. Our region is home to many farm and fishery co-ops, worker co-ops, housing co-ops and credit unions as well as several utility co-ops.
▶ 0:38:08Mr. Crowell: The food co-ops are particularly prevalent. 60 co-ops, 70 storefronts locally owned by almost 3000 people. These range from large multistory retailers to local grocery stores. They focus not just on accessing healthy food but sustaining jobs, strengthening food security and providing markets for local producers with a third of our sales being local products compared to 5% in supermarkets. Half of all U.S.
▶ 0:38:38Mr. Crowell: Farmers are members of at least one cooperative. Co-ops tend to be multigenerational maintaining crucial infrastructure in markets for their members and communities. 70% of agricultural co-ops are more than 50 years old with iowa, texas and california leading. Without these enterprises, rural people would not be able to participate in the modern economy.
▶ 0:39:05Mr. Crowell: Most of our food co-ops in the northeast are rural and in underserved areas. Several were founded during the great depression, the second wave in the 1960's and 1970's with more startups over the past decade. An area where co-ops offer solutions is business succession.
▶ 0:39:24Mr. Crowell: Small businesses are the backbone of our communities and yet we are in the middle of a watershed moment, where across our country, many small business owners are swiftly returned -- swiftly approaching retirement age. While some owners may choose to close or sell to an outside investor, a better idea is to sell to a consumer co-op. This ensures they benefit financially in their legacy is preserved along with accessing goods answer that would otherwise be lost.
▶ 0:39:55Mr. Crowell: In my own region we have an example of a co-op, a rural grocery store. When their members decided to retire, they sold it to the people who love it as much as they did, the people who shop there. We also have a worker co-op that became owned by its workers over 10 years ago. Despite the demonstrated success, impactful resilience of co-ops, an ongoing challenge continues to be access to capital and technical support.
▶ 0:40:24Mr. Crowell: The shared ownership structure of co-ops makes them unable to access financing for sba due to lending requirements that are not feasible for co-op businesses. That can include hundreds or even thousands of member owners. During the covid-19 pandemic, the personal guarantee policy was temporarily removed with many positive outcomes for co-ops.
▶ 0:40:52Mr. Crowell: We also have a retail co-op, franklin community, but has not been named -- numbly been able to grow but plan a major expansion. Unfortunately we have seen a lot of changes and instability in the economy and so we believe that by improving policies, sba can help ensure the small business people, especially young and beginning farmers can harness the power of the co-op business model to address the
▶ 0:41:22Mr. Crowell: Urgent challenges and opportunities in rural communities. For example the improving sba engagement act, the main street 2.0 act and other opportunities to increase interagency collaboration. Co-ops offer a time-tested successful and impactful tool for addressing the challenges we face in these unstable times. They have a track record of success and they can grow and serve our communities better with some basic policy changes.
▶ 0:41:53Mr. Crowell: Thank you again chair ernst and ranking member markey. I look forward to your questions.
▶ 0:41:56Chair Ernst: Thank you very much. Next we will turn to Mr. funke. You are recognized for five minutes.
▶ 0:42:03Mr. Funke: Thank you chair ernst, members of the small business and entrepreneurship committee. Thank you for the opportunity to testify. I grew up on a family farm, attended laurus college, came back and have spent 45 years in ag business, 39 years in ownership and two agribusinesses.
▶ 0:42:31Mr. Funke: A community in northeast iowa with a current population of 904. Our business community has been very active and we've been able to roll with the changes. Working together as a community, supporting local businesses and a strong work ethic with continuity and ownership of businesses. I've been a member of the iowa and nebraska equipment used association since 1992, serving 10 years as a board member, chairman and my current position as past chairman.
▶ 0:43:03Mr. Funke: I have served on many committees and spent over 30 years in economic development and I've been around long enough to experience highs and lows in the agribusiness and the rural economy. The impacts can be felt in small businesses supporting farmers. Our association monitors our member dealers through reports -- who reports large equipment sales are down 27% through october of 2025 versus 2024.
▶ 0:43:35Mr. Funke: The decrease in sales causes other problems. We have larger inventories than needed for current sales volume causing higher interest costs. Ultimately, this creates losses on the statement that will be reflected on the balance sheet and as that happens, we stop buying vehicles, leasing tools, we cut advertising and the list goes on.
▶ 0:44:02Mr. Funke: Rural small business owners all experience problems like these when the farmers they depend on start to hurt. We have always offered financing to our customers and the need today is greater than ever with increasing equipment costs making it harder for small farmers to afford the equipment. We do have a strong business community but we have lost our ford dealership, a restaurant, a realtor and some other small businesses. It is important for rural america to keep these services alive.
▶ 0:44:33Mr. Funke: Otherwise we will continue to lose population to larger cities. I truly believe rural communities are vital to this country and a great place to raise a family. But if we are going to keep them and the small businesses in them alive, then they will need the support of congress and the sba. I want to thank congress for the steps taken to extend tax incentives to small businesses. Small business is poor most of their earnings into growing and improving their business.
▶ 0:45:02Mr. Funke: We do not see a return until we sell or allow the next generation to take over. I want to share some other thoughts to improve our agribusiness and rural economy. Encourage young entrepreneurs and give them the access to financing they need to get their business started or take over businesses that their communities already rely on. We need to keep rural america operating and be able to support our farmers.
▶ 0:45:30Mr. Funke: Invest and support programs to improve and encourage businesses and people to stay in rural communities, especially those under 10,000 people. In most cases a lot of basic infrastructure is in place or could easily be improved if we just offered the advice and support they need.
▶ 0:45:52Mr. Funke: Although not in this community's jurisdiction, increase insurance support and stronger safety nets for farmers would go a long way for helping rural communities they are a part of. Fair and reciprocal trade requests with those countries we are purchasing goods answer from. My brother and I also farm on a family farm and we sell corn to all three green elevators in our community as they do business with us. I think every farmer would rather have markets for their products then rely on government payments.
▶ 0:46:22Mr. Funke: We must make sure those markets treat us fairly and our trading partners live up to the agreements they make. 1% of our population are farmers. They produce food for the rest of this great country and the world, and create thousands of jobs in their communities from all the support businesses required in their quest to feed the world. I am proud to be a farmer and an egg business supporting farmer.
▶ 0:46:48Mr. Funke: These are ideas I hope can be considered and I greatly appreciate the opportunity to testify and I look forward to any additional conversation.
▶ 0:46:56Chair Ernst: Thank you. And finally, Ms. moreira:.
▶ 0:47:03Ms. Moreira: Thank you members of the committee, for the opportunity to offer testimony in today's hearing, growing the small business agricultural economy. I am the founder and cochair of world farmers, a nonprofit that provides access to land and technical assistance to 260 immigrant run farms in massachusetts.
▶ 0:47:29Ms. Moreira: I am also the vice chair of the board of rural coalition, a national coalition with more than 60 member organizations working to protect and sustain land, food in rural communities based in washington, D.C.. In addition, to the credentials you heard in my introduction, I come to you today with 45 years of experience in both creating and operating several successful food and farm businesses and supporting other farmers to
▶ 0:47:59Ms. Moreira: Build successful farming businesses. World farmers's mission is to support small-scale vegetable producers in accessing main street and cultural resources in developing strong viable businesses through technical assistance and land access, production and marketing. Through all my years I dedicated to this work, the last five years have been the most detrimental to farmers.
▶ 0:48:23Ms. Moreira: Farmers are aging, the shifting climate is posing threats to operations, our land prices are ever-changing. Markets posing threats while farmers continue to see pennies on the dollar for their products. We are seeing businesses continue to consolidate across sectors, and their market models are not built to support new beginning small to medium scale farmers.
▶ 0:48:51Ms. Moreira: This has made it increasingly difficult for small family farms to sustain operations, putting undue pressure on them to increase scale to compete. We need to invest in small to midsized farms if we want to see them not only survive but thrive. The local agricultural sector simulates job growth and economic activity along neighboring businesses and individuals choosing to farm our dwindling.
▶ 0:49:22Ms. Moreira: If farmers children are -- in order to support the american people, we need to intentionally prioritize and build a system that facilitates the development and growth of small to midscale agricultural businesses. The most impactful programs for -- across the country was the covid era policy that channeled resources directly to farmers.
▶ 0:49:51Ms. Moreira: They did it in the most effective way possible by purchasing products. This program originated under the trump administration named as the farmers to families program and evolved into the local food purchasing assistance program known as lfpa. We have not witnessed another single program that has provided a similar level of direct financial impacts small and midsized farmers.
▶ 0:50:19Ms. Moreira: World farmers was a contract holder for the first farmers to families program. The first time usda had sourced diversified specialty crops from farmers, it was a big shift for the agency. Although many people I knew said that the bid process was not meant for small farmers.
▶ 0:50:42Ms. Moreira: We applied and we were awarded the contract, recognizing the impact it would have for direct market farmers who did not know if there markets would operate during the pandemic. This program proved their ability to prioritize local farmers and scale. They kept farmers afloat. The programs did similar things for farmers in massachusetts.
▶ 0:51:15Ms. Moreira: Over $14 million invested in partnerships to implement the program. 11 point $3 million was food purchases. That is 80% of the total budget, directly invested in the farmer products. These programs showcase the capacity and success of the mid tier aggregators across the country, connecting with an advancing sales for small and midscale farmers as well as ams's ability to direct spending resources toward small producers.
▶ 0:51:44Ms. Moreira: Another way in which usda can invest in our nations producers is through program outlined affective food procurement, which we thanked senator markey for developing. This bill would shift usda's a significant purchasing power from -- to small to midsized producers.
▶ 0:52:14Ms. Moreira: Just with the lf pa program, this would support farmers, recognizing rising needs for farmers of all states across the nation. We hope usda either of their own accord or through congressional direction will invest in our farmers. Thank you for your time and consideration on these important matters and supporting small business agriculture. I'm ready for questions.
▶ 0:52:42Chair Ernst: Wonderful, thank you Ms. moreira. We will now move into questions and answers. I will recognize myself for five minutes for questions. I will start with Ms. spurgin. In your written testimony, you state quote, the path to greater world bank participation is reducing friction in the system.
▶ 0:53:08Chair Ernst: On her first day in office, the sba administrator noted that one of the goals was to streamline and improve user experience. I know that significant process has been made and I expect to see that continue under this administration. Can you walk us through the process you went through, the last time you tried to utilize the 7a loan program, and how it could be made easier to navigate through?
▶ 0:53:36Ms. Spurgin: Thank you for the question. I will admit it has been five years.
▶ 0:53:42Chair Ernst: That's a problem.
▶ 0:53:45Ms. Spurgin: Yes. The reason being the last sba loan we did took six months to close. It was the purchase of an existing business that was able to provide historical financials and data points. It was a very well positioned business, so there was no reason it should have taken six months to close. The other issue we run into was customer burnout.
▶ 0:54:15Ms. Spurgin: I'm not sure that ever gets referenced in regard to the back and forth that often happens between the sba application portal and the lender and the customer. It has been sometime since we have actually used the portal, so I would be very anxious for the small business development centers and local sba offices to really start to reach out to local lenders and describe the improvements.
▶ 0:54:43Ms. Spurgin: Because it will take turning the boat from small lenders who have experienced frustration with that system to start trying to reconsider.
▶ 0:54:53Chair Ernst: When you describe that customer burnout, it is simply that it takes so long, they go back and forth between the portal or additional information.
▶ 0:55:06Ms. Spurgin: Or we submit something or we deep -- or we need additional documentation or projections. The customer things we are done, and then we get a response and it's we need something else and that is a very long -- it can be very stressful for the customer.
▶ 0:55:24Chair Ernst: Thank you. Mr. funke, last year congress passed the working families tax cuts which extended several small business tax breaks. How will those tax cuts help your business this upcoming tax season and what investments do you plan to make in your own business?
▶ 0:55:50Mr. Funke: First off, the 20% deduction on qualified business income was very helpful and for a small business, we are investing our profits back into our facilities, back into our people and equipment. It is important to have that. In my own instance, the 100% bonus depreciation was a great help to our business.
▶ 0:56:18Mr. Funke: December is the biggest month of the year for sales in the farm equipment businesses and we were able to capitalize on that and have one of our best year ends and we were very fortunate. Talk about farmers losing $200 an acre. We are from more of a livestock oriented farming in our location. It's been very helpful to our business, to minimize the reduction in sales.
▶ 0:56:49Mr. Funke: And for the record, two guys that did by pieces of equipment at the end of the year, both opened a 2026 business. Most of our sales at the end of the year are between $10,000 to $16,000. We didn't sell any big tractors. A couple combines but that was about it.
▶ 0:57:19Mr. Funke: The investments we've made, our biggest one came a year ago when we opened up our additional facility. We added 10,000 square feet of shop space because our shop had been expanding and it is one of the things we worked very strongly for the last several years, to be able to help our farmers and keep them up and operating and even right now, our livestock guys need that to run every day.
▶ 0:57:51Mr. Funke: We have invested in crane hoists , many different pieces of equipment, replacing some vehicles and doing some of those things. In 2026, we are going to be very cautious moving forward because we don't know where the price of commodities is going to go and it will trickle down and catch my livestock guys eventually.
▶ 0:58:11Chair Ernst: My time has expired but just because we maybe have an audience and folks who may be viewing that don't understand the cost of the type of farm equipment you are using, can you maybe give the price of a combine, for those listening or watching?
▶ 0:58:30Mr. Funke: I hope you are having fun with this one. Certain combines are in the $700,000 to $800,000 range for one unit. A 35 foot platform is going to run well over $100,000. -- have done a really strong job.
▶ 0:59:04Mr. Funke: --
▶ 0:59:06Chair Ernst: I use that to demonstrate the cost associated with equipment and farming today through the midwest, so thank you for humoring me. I now recognize ranking member markey.
▶ 0:59:20Ranking Member Markey: Thank you. In december I introduced the effective food procurement act to fix our broken food federal contracting system. This helps more small local producers that care about climate change and sustainability and work to get considered for federal purchasing opportunities.
▶ 0:59:48Ranking Member Markey: We just cannot continue to stick with the status quo of rewarding massive agricultural corporations that are willing to sacrifice worker safety and sustainability while leaving small farmers on the sidelines. They don't get access to this money.
▶ 1:00:13Ranking Member Markey: Federal contractors -- contracts should not just go to the same big companies again and again, almost like socialism built into our system where the biggest get the most every single time. If our government supports small businesses, we should practice what we preach. Public purchasing dollars should support the public good and the small producers. Ms.
▶ 1:00:38Ranking Member Markey: Moreira, what can be done to help small producers build sustainable food programs in their local communities and how would the effective food procurement act help?
▶ 1:00:52Ms. Moreira: It is all about the markets. It is farmers and ranchers across, need investing to improve access to markets.
▶ 1:01:18Ms. Moreira: Opening the markets, existing markets to local family farm businesses and midtier aggregators who work with small farmers by leveraging current investment and shifting procurement practices. -- stable markets for community connected and family operated farms.
▶ 1:01:49Ms. Moreira: Simply by leveraging current investments and shifting procurement practices by usda.
▶ 1:01:53Ranking Member Markey: Thank you. Again, a subsidy program, not access is a hallucination and that is where small farmers are in america. Hoping someday that the goodness and beneficence of the federal government, they will stop giving socialized handouts to the biggest companies. Mr.
▶ 1:02:20Ranking Member Markey: Crowell, what is the role of cooperatives in supporting resilient localized food chains?
▶ 1:02:29Mr. Crowell: Thank you for your leadership and for including co-ops on this legislation. Shifting federal purchasing priorities to small and midsize family farms would make a big difference. It is an effective investment in rural communities and helps expand markets. Particularly by including co-ops it also strengthen farmer owned infrastructure in these communities because these co-ops are owned and governed by their patrons, the users of the products and services.
▶ 1:02:58Mr. Crowell: Their goal is not to maximize profit but to ensure they can meet member needs over time, whether are that his, processing or market distribution. That means there is a built-in incentive for the co-op to stay rooted in the community, to weather economic and challenge -- and environmental challenges and build long-term environment -- infrastructure impact.
▶ 1:03:21Mr. Crowell: You are benefiting not just one business but all the members of that business which in a farmer co-op could be in the thousands, so it is a very efficient investment.
▶ 1:03:30Ranking Member Markey: Talk about the issues around sba lending and cooperatives.
▶ 1:03:35Mr. Crowell: Thank you. As I mentioned -- I will also mention briefly for farm co-ops, we are very focused on local procurement. The average co-op purchases from 169 local farmers but our growth is limited by personal guarantee requirements in sba loans, lack of technical support for people wanting to transition to the business model, understanding what it means to be a member of a co-op and a lack of strong
▶ 1:04:05Mr. Crowell: Interagency collaboration. Those are basic changes we would like to see, many of which are reflected in bipartisan legislation such as the employee ownership act.
▶ 1:04:18Ranking Member Markey: We have to work on a bipartisan basis. Thank you.
▶ 1:04:22Chair Ernst: I just want to mention, it is a topic we should be debating, the effective food procurement act. It has been referred to the agricultural committee. It is not under the purview of the small business committee, but thank you senator markey. Senator husted, you are recognized.
▶ 1:04:43Sen. Husted: I enjoyed the conversation, and listening, having grown up in ohio, in a farming community, watching the industry over the years and how innovation, technology and globalization in all these things affected.
▶ 1:05:06Sen. Husted: I started to do a little math, with my ai partner as I was going through the economics of a family farm and reflecting on the estate tax, a debate that always goes on around farms. I was thinking about a large family farm, 3000 acres, wheat, corn, soybeans. $10,000 an acre, that is a $30 million asset.
▶ 1:05:32Sen. Husted: Once you factor in average input costs and yields and price for what people would be yielding in those crops over this past three years, the estimate of the net profit would be $81,153 a year.
▶ 1:05:59Sen. Husted: Which is great, it is a prophet, but not much of one when you consider the risk involved in that. But when you take that same amount of value and invest it in the s&p 500 this past year, it would have netted you $4.9 million and you could have sat home the whole time. I guess I'm not making a case for farming economically speaking, with that assessment.
▶ 1:06:27Sen. Husted: I'm trying to talk about how important it is that we have people who are willing to do this in our country, to feed america and people around the world who don't have the ability to grow this kind of food. And how important the estate tax exemptions that we put in the bill and the working families tax cut, really were for that very example that I used.
▶ 1:06:56Sen. Husted: Because the tax bill for that, were it not there and you wanted to pass it onto the next generation would have been 12 million-dollar -- 12 million-dollar -- $12 million. When we make policies here with family farms in mind, and we hear the rhetoric around the estate tax, it is just economics.
▶ 1:07:29Sen. Husted: People don't stay in the family farming business if they can't afford it. If they get charged a tax bill they could never pay. So Ms. spurgin, I appreciate you being here. I'm glad you brought my friend adam along with you. Does that sound like the kind of people that are the customers in your bank and the kind of issues that they contemplate when they are making financial decisions?
▶ 1:07:59Ms. Spurgin: Absolutely. It is unfortunate that the piece that is considered when a farmer's transitioning is to sell the farm.
▶ 1:08:13Sen. Husted: Does what we did in the bill to help exempt them from that tax bill save family farms?
▶ 1:08:22Ms. Spurgin: Very much so.
▶ 1:08:23Sen. Husted: I'm glad to know that. I think it is a virtuous goal. I we were able to get that accomplished. At least give them the chance for the economics to work. You talked about in your testimony, compliance burdens.
▶ 1:08:47Sen. Husted: Could you talk more about that as it relates to -- give us a flavor if you could, about that family farm. They come to you looking for financing. Explain what that compliance burden is.
▶ 1:09:04Ms. Spurgin: At the very basic level, a lot of the requirements at the very beginning on the application side when you are talking about business plans, financial statements, projections, and especially for young borrowers or even new entrepreneurs into a new business.
▶ 1:09:26Ms. Spurgin: That is where we see the struggle, just they are all trying to do their work on a day-to-day basis but then to have the additional burden of not opposed to providing projections or any of that.
▶ 1:09:42Ms. Spurgin: It is the level of compliance required and what seems to be a constant back and forth between the application portal and getting with the customer and having them be able to set aside the time that is required to put this together. So that is what we see from the front-end.
▶ 1:10:05Ms. Spurgin: Also, compliance issues related to once in sba loan is done, around the guarantee where we have lived, and unfortunately not all businesses remain as ongoing entities and have lived working through sba on the guarantee and it is not an easy process.
▶ 1:10:29Ms. Spurgin: Something you do at the beginning is you have a guarantee and five years later you unfortunately have to go back on that guarantee with sba and it is a very cumbersome process. Unfortunately, the lender that did the loan five years ago, I asked him, I said have you ever talked to anyone about an sba loan? He said I would never do one again. It was a good business, a purchase, not even a startup.
▶ 1:10:58Ms. Spurgin: But just the time that it took to close the loan and the unfortunate side is the sellers of existing businesses have to be willing to stay hooked with that buyer for it to work through that timeframe and process.
▶ 1:11:13Sen. Husted: Thank you.
▶ 1:11:14Chair Ernst: Senator shaheen.
▶ 1:11:17Sen. Shaheen: One of the things that I think is quite apparent listening to the testimony of all of our witnesses and the questions from you madam chair and the ranking member is that farming isn't the same across the country. When sba or usda tries to make rules that apply to farms, there is a really different ability for farmers to be able to benefit from those programs.
▶ 1:11:49Sen. Shaheen: As senator markey pointed out, the witnesses from massachusetts pointed out, farming in the winglet is a lot different than farming in iowa. In new hampshire we have a lot of small farms, organic farms. They have not been able to take advantage of a lot of the programs that are more available for larger farms. Mr.
▶ 1:12:12Sen. Shaheen: Crowell, you talked about the federal food programs that play an important role in providing a revenue stream for businesses and food producers. We've seen that in new hampshire and we have one of the oldest food co-ops in the country -- I'm sure you are aware, I think it is the second oldest in the country.
▶ 1:12:33Sen. Shaheen: One of the things that has helped that co-op and a smaller community one is the local food purchase assistance cooperative agreement program you mentioned, Ms. moreira. One of the challenges is our federal agencies don't talk to each other. If we want to promote small business farming, then we need to have sba work with usda.
▶ 1:13:06Sen. Shaheen: What we saw with the lfpa program was that it was terminated back in march by usda and what we lost in new hampshire was $2.7 million to purchase food from local farms. If that does -- that may not sound like a lot but it's a lot in new hampshire. Can you talk, Mr.
▶ 1:13:33Sen. Shaheen: Crowell about the consequences of the losses of this federal funding for our small farms and what that means and how we should think about encouraging cooperative agreements between federal agencies to avoid this kind of problem in the future?
▶ 1:13:53Mr. Crowell: Thank you, and for your support of family farms and co-ops in new hampshire. As you mentioned, our farms in the northeast are quite unique. They tend to be much smaller and diversified. They tend to be vulnerable to issues like climate change because they are in very narrow river valleys. Often, services coming from usda aren't quite appropriate.
▶ 1:14:19Mr. Crowell: They are easily addressed but it can be difficult for us, and certainly for food co-ops working to sustain local farms. The support of the government has been very valuable and has a knock on effect in rural communities.
▶ 1:14:37Mr. Crowell: One key support has been the interagency working group on cooperative development, which has representation from across various departments and -- we have seen renewed efforts to better cooperate which would make a big difference for us particularly on programs like disaster assistance, and I think the lending programs coming through better collaboration through usda and cooperative services would make a world of difference for our region. Thank you.
▶ 1:15:08Mr. Crowell: >> thank you. Just a follow-up on that, he spoke eloquently about what wait times do for all small businesses, Ms. spurgin. It's a particular problem for all family farms. We have seen that especially with usda and what some of the programs -- the program that helps with energy costs. The wing one is a big cost and we are very affected by climate change. What happens to a business?
▶ 1:15:41Mr. Crowell: We have four farms in new hampshire that have been waiting for more than a year further funding, what happens to small businesses and farms when they have to wait that long a time in order yto order y -- in order to know whether they are going to get the funding needed to go forward with the project?
▶ 1:15:58Ms. Spurgin: Thank you for the question. My experience as they give up. Which is unfortunate. >> sadly, what we seek. Thinking about how this committee can better work with -- I can talk about the agriculture side -- but how can we better work with the agriculture authorizing committee to look at some of the challenges to promote the small family farms? I hope we can think about ways to do that.
▶ 1:16:28Ms. Spurgin: Thank you, madam chair. >> thank you, senator shaheen, senator young.
▶ 1:16:36Senator Young: Thank you for holding this hearing. I want to thank the witnesses for your testimony today. We have a lot of farms associated with that. A lot of vibrant farm communities. And some that lost some of their vibrancy over the years. One of the many challenges they are facing right now is they are dealing with a silver tsunami. This is not unique to farm country or farm operations.
▶ 1:17:06Senator Young: But it can be especially acute in some of our rural communities. According to the U.S. bureau, half of small businesses are owned by individuals that will reach retirement age during the next 10 years -- within the next 10 years. When these farmers exit agriculture without a clear exit strategy, a succession plan, farms are often sold or consolidated.
▶ 1:17:32Senator Young: Young and beginning farmers face especially high barriers to entry. In rural -- and rural communities lose population and economic activity. Ms. spurgin. What are the biggest barriers young entrepreneurs face one -- face when starting a business or taking over an existing farm or rural small business?
▶ 1:18:01Ms. Moreira: Thank you for the question --
▶ 1:18:03Ms. Spurgin: Thank you for the question. That has been the cash down payment requirements. It is at least a 10% cash down payment. A lot of what we look at with portfolio lending is the seller, however they are transitioning out, the equity may be held, typically land buildings, other equipment. Giving the borrower value for that equity versus having it be all cash.
▶ 1:18:37Ms. Spurgin: >> there are some related challenges in the housing market, there is creative financial instruments that I know are being structured to try and address that. A little outside the scope of what I intend to ask about. But thank you. Our existing sba loan programs are flexible enough to help young farmers and entrepreneurs buy into established operations rather than starting from scratch?
▶ 1:19:04Ms. Spurgin: In lieu of the cash down payment requirements, if it is an established business, I would say yes. Just because the historical financials are there. So you are able to have some data to base your projections off of. But to start something from scratch, I hate to know the number of folks that would not qualify simply for that.
▶ 1:19:32Senator Young: Maybe this is something we take a look at to see if they can accommodate that. I'm going to go ahead and open this up to Mr. fub this up to Mr. funke -- Mr. funke or the others, and they were congress can soft and the impact of this challenge?
▶ 1:19:51Mr. Funke: If you notice in my bio, I list that I am only the sales manager there now, I promoted my daughter to general manager right before I left. [laughter] that is a very important part. I am 67 years of age. I enjoy what I do and not looking to get out just yet but I also know that we need to keep the younger generation involved and get them up there and get them running.
▶ 1:20:19Mr. Funke: We have a small farm in today's world. We are farming roughly around 550 acres that my brother and I own and my two sons jc and matt help us with the farming operation and they just recently purchased 70 acres with help through the usda fsa program. As beginning farmers, I have had them working with us the last 10 years to help build up that ability to do something like that.
▶ 1:20:49Mr. Funke: It is not something that you can do overnight. And the ability to start into farming or any small business is going to require the help of somebody that is willing to get them going whether it is in our business, 25 years, it started in 1974 and that actually goes back to 1947 when it was started by another individual.
▶ 1:21:12Sen. Young: Having just gone through this experience and being fairly versed in it, you clearly took away as you shared with us that you cannot start right as you are looking to retire but were there program adjustments you feel like would make it easier on people like yourself trying to make this transition to the next generation?
▶ 1:21:38Mr. Funke: Absolutely. For this next generation to get going in the correct manner, they need to have some skin in the game. And they need to be able to borrow some money. If all the money is coming from dad or mom or great uncle, that makes it more difficult to get these things going. But to Ms.
▶ 1:21:55Mr. Funke: Spurgin's comment that six months is too long for this to take, the urgency of getting these things done quickly through leasing and longer-term financing with other lenders is very important.
▶ 1:22:15Chair Ernst: We do have just a few minutes before we close, if the rest of you would like to add a comment as well. Mr. crowell.
▶ 1:22:25Mr. Crowell: Sure, thank you. This is another area of succession that co-ops can play a key difference but there is no technical support out there from sba to communicate to business owners that option, what it might look like. How to become a cooperative. We have examples of things like farm supply businesses and hardware stores and have converted to cooperative structures and therefore remained in the community.
▶ 1:22:48Mr. Crowell: Then on the food co-op side, changing personal guarantee requirements for free -- to free food co-ops for purchase of local goods. There are also often areas where new farmers can try new products. They are willing to experiment with new products and services.
▶ 1:23:09Mr. Crowell: And you see many examples of co-ops -- sorry, of local farmers that started just selling to their local food co-op and now are large businesses distributing to major buyers.
▶ 1:23:23Chair Ernst: Ms. moreira, did you have any comments?
▶ 1:23:28Ms. Moreira: I just wanted before closing to focus on the lfba and the need for the lfpa program for small farmers. During the last one, we service 500 -- we purchase and aggregated from 500 farmers. Small farmers in massachusetts and new england. And the effects of the cancellation in march was devastating.
▶ 1:23:55Ms. Moreira: Ok, in march, farmers had already purchased seeds and started the seedlings. All the planning for the season has already been done. They had already invested in the system of doing their crops this season. Finding a market at that point, they did grow the food, finding a market was next to impossible.
▶ 1:24:23Ms. Moreira: So we had -- we did the best we could. All farmers that were part of the program did the best they could. But crops were left in the field unsold. That is really important for us to know how important that program is and still is and how devastating the cancellation of it was. I could go on, but I think my time is up.
▶ 1:24:50Chair Ernst: Thank you. We appreciate the comments today. >> quick question.
▶ 1:24:55Chair Ernst: Of course. >> if I may, thank you. I went to the farm in ireland, my grandmother had to leave. Because this is section program in ireland was -- everyone else moves to america. I went to the farm just to see. And this woman was the twin of my mother. It was down the food chain. I'll have to come to boston.
▶ 1:25:25Chair Ernst: What a beautiful farm -- but a beautiful farm. I could see how that would change what the succession plan was. And my father was a milkman. The milk came from the cows and he would be delivering the books so we moved to the retail side in one generation. That is my relationship with it. I would just like to know, Mr. crowell.
▶ 1:25:59Chair Ernst: What impact the cuts have on small farmers across massachusetts, but across new england in the country?
▶ 1:26:07Mr. Crowell: Yes, thank you for the question. I think really the challenge around the cuts to snap benefits has a deep impact on food security. Particularly in rural areas. It also has a knock on effect. What it meant its people with limited incomes had less money to spend on healthy food and groceries which means sales go down for the food co-op which meant it could not buy as much product from local farmers.
▶ 1:26:35Mr. Crowell: So I think when we think about how these benefits impact not just individuals and families' unlimited incomes, we have to understand they are part of a more sustainable and fair food system that can keep people well fed and healthy overtime.
▶ 1:26:53Ranking Member Markey: Great. Thank you, madam chair.
▶ 1:26:56Chair Ernst: Well, again, I do want to thank the witnesses for being here today. I ask unanimous consent that the record of today's hearing remain open for two weeks for members to submit questions, revise and extend remarks, and submit additional information into the record. Without objection, so ordered, and again thank you very much for this important committee meeting today.
▶ 1:27:24Chair Ernst: With that, the committee on small business and entrepreneurship stands adjourned. Thank you. Nicely done. [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. Visit ncicap.org]