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Letter to Deficit Committee
Tax funded Small Business Development Centers compete with private sector

As you know, SBDCs were created as a temporary measure in the recessionary mid 80’s to assist in starting businesses for the significant number of Americans who would not find employment.

Through lack of an oversight provision to hold SBDCs accountable, as a group they shifted to providing assistance to companies that could well afford to pay private sector and did this solely to justify continued public funding because Congress was intent upon ceasing SBDC funding based on the statistics that clearly demonstrated that SBDCs had become the most expensive job creation program in the nation.  However, by adding the number of employees and tax contributions of established businesses to their output data, the SBDCs stalled Congressional efforts to eliminate them. 

For instance, in the 1994 report, 61% of SBDC clients were not startups, but established businesses, with about 82% having sales of up to $1M, 14.5% having sales of $lM-$5M and 3.5% having sales greater than $5M. The percentage of non-startups serviced by SBDCs has increased in subsequent reports.

In addition to direct competition with private sector small business consultants, here are just a few of the other ways SBDCs compete with tax-paying businesses: #1) computer and software training; #2) workshops/seminars/presentations on popular business themes/subjects; #3) meeting/conference room rentals.

Further, SBDCs were purposefully chartered to not operate in areas where there were SCORE chapters or private sector small business consultants. However, SBDCs derive their greatest statistical return from just such geographic areas.

Further, SBDC funding was to be matched, dollar for dollar, by a host establishment, typically a college or university. However, and again by lack of oversight, the host establishments provide only office space, making the hosting of an SBDC a lucrative profit center for the host.

My name is C. Dean Kring. I own Texas’ oldest business incubator, operated entirely without public funding, grants, gifts, contributions or donations. My incubator clients have won virtually every award for business growth in Houston and continue to do so.

I served on one of the White House Conference for Small Business committees that helped write the guidelines for the SBDCs. 

I started my business with a SCORE counselor and a direct SBA loan in the late 70’s.

I founded a small business development group in the early 80’s as a not for profit cooperative association, again, with no outside funding. More than 44,000 people have attended the various events hosted by this co-op.

I can provide you with whatever level of documentation you require. However, I’m very confident you have superior resources to accomplish same giving you a much higher level of trust in the difficult decisions to be made.

If you wish, you may learn more about me here: http://www.servicesca.org/C-Dean-Kring-bio.htm.

The business incubator here: http://www.servicesca.org/entrepreneurial-development-center.htm

The Co-Op here: http://www.servicesca.org/notact.htm 

Please eliminate SBDC funding. It is “pork.” It competes with the SCORE chapters and the numerous attorneys, CPAs and small business consultants, advisors and mentors in your state.

Successful regards,

C. Dean Kring

Director of Research
Services Cooperative Association

Jim Clyburn (South Carolina) House Democrat
Chris Van Hollen  (Maryland) House Democrat
Xavier Becerra  (California) House Democrat
Fred Upton (Michigan) House Republican
Dave Camp (Michigan)  House Republican
Jeb Hensarling (Texas) House Republican Co-Chair
Jon Kyl (Arizona)  Senate  Republican
Rob Portman (Ohio) Senate Republican
Pat Toomey (Pennsylvania) Senate  Republican
Max Baucus (Montana)  Senate Democrat
John Kerry (Massachusetts) Senate Democrat
Patty Murray (Washington) Senate Democrat Co-Chair

Editorial by C. Dean Kring, who bears sole responsibility for content.

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