Wellstone conducts hearing in St. Cloud

Greater access to capital, health care are leading concerns

By RON LARSEN

Journal Staff Writer

ST. CLOUD--Greater access to capital, improved telecommunications and improved health care were recurring suggestions for revitalizing rural America offered during a Senate Committee on Small Business and Entrepreneurship field hearing in St. Cloud City Hall Thursday.

The hearing was conducted by Sen. Paul Wellstone, acting chairman of the Senate committee.

These concerns dovetailed with those of the Minnesota Democrat who told the press prior to the meeting that access to capital "is the first challenge," as well as making health care costs affordable for small businesses and their employees.

He also had greater access to government procurements on his shortlist of challenges.

"How do small businesses get their fair share of procurements?," Wellstone asked.

"That's a very important issue that needs to be addressed."

Ed Daum, district director of the Small Business Administration in Minneapolis, was one of the first to testify.

Providing a "snapshot" of SBA loan efforts in MInnesota, Daum said the agency has "six active micro-lenders, for loans up to $35,000 for very small startup businesses, and four of those are located in rural areas.

"Over $63 million in loans were made in fiscal year 2000 in SBA's Certified Development Company (CDC) program which is specifically for the purchase of plant and equipment."

Over $234 million in guaranteed loans were made in fiscal 2000 through the 7(a) loan program, he said. These loan proceeds can be used for general business purposes that creditworthy start-up and existing small businesses can't obtain on reasonable terms through normal lending channels.

"Small Business Investment Companies (SBICs) that invest in small businesses during their growth stages invested over $66 million in Minnesota in fiscal year 2000," he added.

Daum said about half of the SBA's loan approvals are in areas outside the Twin City seven-county metro area, and it works with nearly 500 different approved lenders just in Minnesota.

Yet, a number of witnesses came forward to tell Wellstone that the SBA efforts were not enough. Venture capital is also limited, Wellstone was told, because only 12 percent of Minnesota venture capital stays in state. The rest goes out of state, mainly to Silicon Valley.

Minnesota Commerce Commissioner Jim Berstein who sat in on the hearings affirmed that complaints about telecommunications in Minnesota's rural areas "are not unfounded. Our department is working hard on this issue. Too few telephone companies in our rural areas have the resources to use high-speed fiber cables, and when they do, their 'take-rates' are low because people don't want to pay the extra money for it."

One proposal offered was to establish cooperatives to handle more sophisticated telecommunications in rural areas, as was done in the last century to bring electricity and telephone service to those same rural areas.

Many participants in the hearing called for continued efforts to improve rural health care while making it affordable.