Program, which can hinder the ability to grow. Thomas Boston, CEO of economic and statistical research firm EuQuant, and a member of the BE Board of Economists, says that because this ceiling hasn’t been adjusted for inflation since 1988, its real inflation-adjusted value is $558,070.
“A business owner’s personal net worth determines his or her ability to pursue external capital and bonding, which in turn determines the size and capacity of contracts their business is able to perform,” Boston testified. A case study of 17 firms that were forced out of the SDB program once they hit the personal wealth ceiling found that their average revenue decreased by 45% because of their inability to access bonding and external sources of capital to compete as prime contractors.
“Were it not for the fact that the growth of SDBs is being constrained by the personal net ceiling, some of these companies would be prime candidates for venture capital funding. They have the precise profile that [venture capital] funds require,” Boston said. “This committee could facilitate a tremendous leap forward for minority firms in gaining access to capital, bonding, and venture capital funding if it would simply make adjustments to one of the federal government’s own regulations.”
Sen. Kerry hopes that the testimony offered at the hearing will strengthen support for the SBA reauthorization bill by providing further evidence of minority, women, and small business owners’ needs and challenges.