U.S. Sen. Maria Cantwell, D-Wash., arrived in Vancouver on Wednesday seeking answers as to why small businesses and would-be entrepreneurs in Southwest Washington are struggling to secure loans to expand or to get their dreams off the ground.
Cantwell took public testimony and asked questions at Vancouver City Hall during her first field hearing as chairwoman of the Senate Committee on Small Business and Entrepreneurship. In a swipe at Wall Street, she said she wants to boost Main Street’s access to loans, as opposed to handing more “exotic instruments” to the nation’s megabanks, which she said own 50 percent of assets in the U.S.
Cantwell added that she wants to “demystify access to capital” for small businesses. “We’re going to try to get capital out there,” Cantwell told more than 65 people who packed the City Council chambers.
That effort will include moving certain pieces of legislation, Cantwell said, including seeking to raise the cap on the U.S. Small Business Administration’s 7(a) loan program, which provides working capital to small companies.
More help is needed, according to the six small-business owners, lenders and economic development leaders who testified before Cantwell on Wednesday. Amy O’Hara, co-owner of Vancouver-based When the Shoe Fits, described her trials in obtaining financing to launch her successful men’s and women’s full-service shoe stores.
After years of uphill battles, she said, a banker finally told her, off the record, that she needed to take out a home equity loan to show financiers that she had collateral.
“That was the magic moment,” O’Hara said.
But even after that moment, O’Hara later found it difficult to gain financing from traditional lenders to expand, despite having a stellar credit score and track record. Instead, she turned to the SBA to obtain loans to build up her business to four stores today. Without the SBA — and without the help early on of the nonprofit Score, a group of retired executives who advise early-stage companies — When the Shoe Fits never would have happened, O’Hara said.
Loan program performance
During Wednesday’s hearing — dubbed “Capital Access for Main Street: Meeting Opportunities of Growth along the Lower Columbia” — Cantwell released a report on access to capital and the performance of the SBA loan programs in Southwest Washington and Oregon.
While the performance of the SBA’s 7(a) loan program and its 504 loan program — which provides equipment or real estate loans — is strong nationally, the report says, their performance in Washington and Oregon is mixed.
For example, more than 100 lenders have issued 7(a) loans since 2008 in Southwest Washington through the Portland SBA District Office. “But just 30 of those lenders issued more than five loans over the six-year span,” according to the report, “indicating banks are interested in the program, but are not taking full advantage of its opportunities.”
What’s more, the report says, the Portland SBA District “is the only market on the West Coast where approved loan numbers are down from six years ago.”
Several who testified Wednesday said part of the problem is that too many small businesses or entrepreneurs are simply unaware of the SBA’s loan programs or other alternative means of raising capital.
Eric Sawyer, board vice chairman for the Greater Vancouver Chamber of Commerce and an executive with Barrett Business Services Inc., said some business owners don’t have time to make the trip to SBA’s office in Portland. That’s why, he said, the Vancouver chamber hopes to make room for an SBA field office, available once a month.
Cantwell’s visit to Vancouver marked the first stop of a weeklong small-business listening tour in Washington state. She also plans to visit Tri-Cities, Seattle, Snohomish County and Spokane. She is expected to hear from small business owners about several issues, including innovation, access to capital and export opportunities.
The Senate confirmed Cantwell as chairwoman of the Senate Committee on Small Business and Entrepreneurship in February. She’s served on the committee since 2001.