(Washington, D.C.) – U.S. Senator Jeanne Shaheen (D-NH), Chair of the U.S. Senate Committee on Small Business and Entrepreneurship, today convened a hearing to discuss federal efforts that support rural small businesses, including the memorandum of understanding (MOU) that improves coordination between the U.S. Department of Agriculture (USDA) and the Small Business Administration (SBA). The committee heard from witnesses who discussed the challenges that rural small businesses face and how federal efforts to streamline services can help their firms grow.
Chair Shaheen introduced bipartisan legislation in July with U.S. Senator John Kennedy (R-LA), which directs the SBA to designate an Assistant Administrator for its Office of Rural Affairs and codifies parts of the MOU between USDA and SBA to improve access to capital and technical assistance for rural small businesses. Photos from today’s hearing can be found here. A recording of Chair Shaheen’s opening statement can be found here.
Read Chair Shaheen’s opening statement, as submitted for the record, below.
The Senate Committee on Small Business and Entrepreneurship will come to order.
It is an honor to welcome you all today to a hearing on the unique challenges that rural small business owners face and federal efforts to help them succeed.
I would like to thank our witnesses for joining us today. We will formally introduce you shortly.
Rural small businesses are the backbone of their communities, providing jobs and essential services.
There are over 4 million rural small businesses, employing 7.5 million people in the U.S., according to a 2024 report from SBA’s Office of Advocacy. That’s more than 56 percent of all employees in rural areas.
Small businesses like grocery stores, health care providers or manufacturing firms are essential in rural areas. The services they provide in these communities are not easily replaced.
As a result, rural America’s entrepreneurial spirit has always been strong and thriving.
Rural entrepreneurs start businesses at higher rates than their urban counterparts. Their firms are highly resilient and their five-year survival rates outpace that of small businesses in urban areas.
However, rural small business owners face unique challenges to success.
In a survey by Small Business Majority, rural small business owners identified several key challenges hindering their growth.
The challenges include limited access to capital and technical assistance, difficulty maintaining a qualified workforce, poor proximity to broadband services and a shortage of health care providers in their communities.
I also frequently hear about issues related to the availability of housing and childcare.
These challenges are compounded by a lack of coordination between local, state and federal governments and relevant stakeholders. In order to break down these barriers for rural small business owners, it will take a coordinated effort.
That’s why the United States Department of Agriculture (USDA) and the SBA took a step in the right direction through the extension of a memorandum of understanding, or an MOU, between the agencies in 2023.
The MOU increases collaboration between the two agencies to collectively address gaps in capital access, contracting opportunities and entrepreneurial development resources for rural small businesses.
For example, as a part of the MOU, the SBA hosts “Path to Prosperity” workshops with the USDA and FDIC that connect rural small business owners with government officials, lenders and other stakeholders.
For one rural small business owner in Mississippi, the workshop connected him with a lender and the local Small Business Development Center.
These connections ultimately helped the business owner solidify a business plan, obtain a loan and expand his company.
The workshop also helped the business owner better understand the federal contracting process so he could pursue government contracts.
Without the MOU, he would not have known of the opportunities available at the different agencies.
Similarly, the Rural Partners Network (RPN), a USDA initiative mentioned in the MOU, is a promising solution for rural communities struggling to navigate federal resources.
In one example, RPN staff in Georgia connected a community college with the Economic Development Administration.
The connection led to half a million dollars in funding for the community college’s truck-driving academy to support the workforce needs of the transportation industry in the state, ultimately benefitting local businesses.
The MOU and Rural Partners Network demonstrate that collaboration between the federal government and local communities can better tailor solutions to the specific needs of rural areas.
Through continued Congressional support we can enhance the effectiveness of these programs.
That’s why I introduced the Coordinated Support for Rural Small Businesses Act with Senator Kennedy. This bill would elevate the SBA’s Office of Rural Affairs and codify SBA and USDA efforts to coordinate support for rural small businesses.
By working together, we can empower rural small business owners to contribute significantly to their communities and strengthen our economy.
Again, thank you for joining us today, and I’d like to yield to the Ranking Member for her opening statement.
