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Made in Rural America
The SBA Administrator
Made in Rural America
Thank you Martha for that generous introduction and to the Clackamas County Board of Commissioners for hosting us today. I also want to thank Doug McKalip of the White House Domestic Policy Council for his incredible leadership on issues facing rural America and rural entrepreneurs, in particular. And Phil Karsting, who runs the USDA's Foreign Agricultural Service and has been instrumental in promoting ag exports. A special thank you to Tara Rice from the USDA, who has done yeoman's to put this event together.
I also want to introduce the SBA's Chris James, who runs our Native American programs. We had a roundtable this morning with our local tribal businesses and tribal leaders to talk about how they can increase their exports. Thank you all for your attendance. Finally, I want to acknowledge our SBA District Director Camron Doss and his team for supporting Oregon small businesses.
Today, you'll hear from some of our local SBA success stories who've utilized our capital and counseling services to go global. This is the fifth and final regional forum the Obama administration has hosted as part of our "Made in Rural America" series. We hosted wonderful events in Iowa, Arizona, Tennessee, and Pennsylvania. We're wrapping up today here in Oregon.
We have a fabulous program in store, and I want to thank everyone who drove in today from all over Oregon and Washington to be with us. I have a seat at the President's cabinet table and on the President's Export Council, and my job is to be a champion for America's entrepreneurs and small businesses.
"Made in Rural America" is an initiative that goes all the way to the top of the federal government. It was initiated by the White House. The cabinet agencies are here to support the President's goals to promote rural investment and rural exporting. Whether you work in agriculture, manufacturing, energy, health care, infrastructure, or a service industry, our goal is to help you attract new investment and new customers to help you grow your business and your payroll.
Today, you'll hear from experienced exporters and federal officials who have decades of accumulated wisdom. I know Oregon is a major agricultural center in America, so let me start by saying a few words about the importance of agriculture:
"Grown in America" is just as important as "Made in America" and "Invented in America." Food security, quality of diets, biodiversity, greenhouse emissions, economic development, organic farming and advances in molecular genetics are a rich set of topics that affect how we eat and live.
I'm from Los Angeles, where I see daily evidence of the food and nutrition revolution under way in communities across the country. It's a revolution driven by a combination of health, environmental and economic factors. These changes have opened a dialogue on some very big questions that lie at the heart of rural economies in America:
- How do we produce the healthiest food, sustainably and affordably, so that our entire population has access to the best quality and most diversified calories possible?
- Is mechanized farming and production at odds with the organic and sustainable world?
- Do agricultural crops, technology and land uses for alternative energy deliver a better financial return than food production?
Big businesses and venture capitalists have been looking at this sector more closely and more dollars are flowing in. For instance, Pepsico invested in Naked Juice, while Smuckers owns Santa Cruz Organics and Khosla Ventures in Hampton Creek. The next major business breakthrough in America may not be a social media startup or a medical device; it may be something that we cook and eat.
The value chain that lands something on our kitchen table is complex, vast in size and ripe for further innovation. But that kind of innovation requires investment. Rural America is getting a little more attention by banks and equity investors, but my sense is that it should be getting a lot more. We had a robust discussion last month at the USDA's rural investment conference, and I hope we can continue that conversation today.
I've been on the job at the SBA for a little over four months. Prior to coming to Washington, I started a private equity company and a business bank in California. I also served in Los Angeles on the Mayor's Trade Advisory Council and formed a key part of a flagship office charged with expanding export opportunities.
Los Angeles County is the 16th largest economy in the world and we have two of the largest ports in the world. Exporting is in my home city's DNA. I've tried to bring that appreciation and understanding to my work in the administration.
You already know this but it bears repeating: There's an enormous global appetite for "Made in the USA" products. But right now, not enough companies are taking advantage of that demand. Ninety-five percent of the world's consumers live outside of our borders, but only 1 percent of America's small businesses are selling to them. So to say this is an area with enormous growth potential would be an understatement.
The good news is: Last year was also the fourth-straight record-setting year for U.S. exports overall. Let me share a few statistics with you that illustrate the potential we're trying to realize here. Last fiscal year, our agricultural exports reached a record $141 billion. That's more than the GDP of entire countries like Iceland and Albania. And we're on track for another record-breaking year for exports in 2014.
Here's what we know today: Exporting companies grow faster, employ more workers, and pay higher wages than companies that only sell domestically. Overall, exports now drive a record 13.5 percent of our economy. Nearly one-third of all U.S. growth since early 2009 can be attributed to exports alone. Ten million American jobs are supported by exports, and agriculture exports alone support almost 1 million jobs.
Here in Oregon, more than 5,000 companies are exporting on an annual basis, and 90 percent of those firms are small and medium-size businesses. We've seen brisk exporting activity of electronics, agricultural, and machinery to Canada, as well as China, Malaysia, Japan and Korea. So the potential for rural exports in the Pacific Northwest is tremendous, but we know some rural businesses may need a little help to get started. That's what today's all about.
At the SBA, we have an important role to play. I describe our core mission at the SBA with three Cs: capital, counseling and contracts. We work with our national network of lending partners to provide access to capital. We have a vast network of resources to provide counseling to assist entrepreneurs. And we open new markets and connect small businesses with contracts – including international export contracts.
On the first C, capital, SBA broke our record for export financing last year. We supported nearly $3 billion – billion, with a "b" – in export financing to our small business exporters. That's a 29 percent increase over the previous year, and we're looking to build on that success. The SBA backstops export loans up to 90 percent to incentivize our lending partners to approve your requests for low-interest export financing. That's just the financing we've done on export loans. Overall, the SBA has backed nearly 62,000 loans to rural entrepreneurs totaling more than $23 billion since President Obama took office.
The SBA fills credit gaps. We support loans to rural entrepreneurs who do not otherwise qualify for conventional bank loans. So every dollar of rural lending we support is money that would otherwise stay on the sidelines. Our goal is to make it easier to get an SBA-backed loan from your local bank.
I've made it my personal goal to get rid of the fax machines and mountains of paperwork that people have historically associated with the SBA. In my first few months at tenure, I've worked to modernize our agency and institute what I call "smart systems." This summer, we implemented predictive credit scoring that combines your personal and business credit scores. It cuts the time and cost of applying for an SBA loan in half. As a result, we've had hundreds of new banks sign up to be our lending partners. So if you've applied for an SBA loan in the past and been rejected, try again. You may get a better result with our new system in place.
The SBA also runs the Small Business Investment Company program – or SBIC, as it's called for short. We support professionally managed capital investment funds that provide patient capital to entrepreneurs. There are 290 SBICs nationwide that manage over $21 billion in assets. For every dollar an SBIC raises from a private investor, the SBA typically provides $2 of additional capital. SBICs make debt and equity investments in some of America's most promising small businesses. And we're very active in the exporting space. Go to SBA.gov and click on SBIC under the "Loans & Grants" menu to explore whether this program could be a good fit.
SBA also runs the SBIR and STTR programs to support innovation. Essentially, these programs comprise the largest technology seed fund in the world, allocating R&D grants on a competitive basis. They've created life-saving drugs, pioneered breakthroughs in cellular technology, and helped launch the human race into the cosmos. In fact, as we sit here today, the Mars rover Curiosity is exploring the planet's surface with systems designed by five different small businesses that received SBIR funds.
By reserving a specific percentage of federal R&D funds for smaller firms, we help level the playing field with larger corporations. These programs provide grants that put billions of dollars directly into the hands of entrepreneurs nationwide. The SBA will soon launch a new database that will allow us to centralize federally funded technologies available for commercialization. Using this database, an investor can search SBIR-funded projects by industry and end-use applications. This will make it much easier for investors to make strategic investments in small businesses. So we're enthusiastic about this, and encourage those of you who work in the innovation space to learn more about it.
On the second C, counseling, the SBA has 68 district offices and hundreds of Small Business Development Centers, Women's Business Centers, and SCORE chapters. SCORE will pair you with one of 11,000 seasoned executive mentors in their network who specializes in your particular industry. The SBA also supports Export Assistance Centers in more than 100 cities across the country, including Portland, Seattle, Spokane and Tacoma. These offices are staffed by trade professionals who specialize in helping small businesses land international export contracts. You can learn more about these resources in your city if you go to sba.gov and click on the local assistance menu.
On the third C, contracts, the SBA awards grants under our STEP program to help small businesses attend international trade shows and go on trade missions to foreign countries. Companies that go on trade missions have had great success in forging those personal business relationships that lead to contracts with foreign buyers. The Oregon Business Development Department received a half-million grant to help 100 companies explore global opportunities. So we have a lot of programs at your disposal, and we have a lot of experts here today to answer your questions.
So let me close by stressing how personally invested I am in your success. I come from a rural tradition myself. I was born in Guadalajara Jalisco, Mexico, and my grandparents were migrant workers. I immigrated to this country at the age of 5 with my mother and five siblings, not speaking a word of English. My family didn't have much, but what we did have was a belief that America was a land where dreams could come true. My mother worked in a chicken processing plant to give her six kids opportunities that she would never have. When I came to America, my grandmother back in Mexico would write me these wonderful letters. She'd tell me that if I worked hard and played by the rules in America, anything was possible. She said, "Maria: You could even work in an office some day and become a secretary!"
Well, the good Lord heard her. Indeed, I've had the opportunity to become a cabinet secretary – first in California and then in Washington, D.C. Only in America can we harvest such bounty of opportunity.
It's an honor to serve in the President's cabinet and one that I never expected to have. I was living a comfortable life as a grandmother running by community bank in Los Angeles when I got the call that would change my life and move me and my husband to the east coast. I've lived my Dream and now I want you to live yours. I'm passionate about spreading the word about the services the SBA offers. I want to make sure my agency is working for you.
Every big company in America started small. Under Armour, Ben & Jerry's, Nike and Fed Ex were small business who grew into giants because SBA was there to guarantee a loan in their infancy, when the big banks would not. For those of you who haven't partnered with SBA yet, we hope today will be the beginning of a collaborative relationship. We're here to do everything in our power to help your business succeed. I hope you have a productive and informative conference, and thank you for all you do to support your local economy – and promote Made in the USA.God bless you, and God bless the United States.