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regulators, the Office

of Advocacy developed a

study entitled

"Small Business Leriding in the United States."

This was first

published in 1995, covering lending in 1994. A subsequent edition of this study was issued in 1996, covering lending activity in 1995, and a third edition is in the final stages of internal review for 1996, I have copies of the 1995 study for Texas with me. each study all 9,670 commercial banks are ranked by a number of

criteria on how responsive they are to small business credit needs.

Small business persons now have an independent source of data on bank responses to small business credit needs. This methodology has been picked up by the Wall Street Journal, Entrepreneur Magazine, The Washington Post and

other business publications. In 1996 also issued a companion piece to the


banking study called "The Top Small Business Banks in the United

States" which looked at the record of small business credit

programs by the fifty largest bank holding companies as well as the top three banks in terms of small business loans outstanding for

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The 1996 "bank holding company" study is in the

process of being released and will appear in the American Banker

published by the American Banking Association and will be reviewed

by Business week in the near future,

The second project addresses equity financing needs.

By way of background, the White House conference on Small Business held in June 1995 identified the problem that small businesses were having in getting equity financing. Many small businesses could raise up to $250,000 from their own personal assets and those of family members and friends. The organized venture capital industry, initial public offerings or organized capital markets often had little interest in deals under $5 willion. Thus, a "capital gap" between $250,000 and $5 million exists, To the extent that this gap is being closed today, it is

being met by "business angels"

high net worth individuals who

make private investmonts. Many of these "angels" are successful entrepreneurs who have harvested their investments in their firms.

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capitalists or by going public and plowing back these funds into

small businesses as private equity investors. In addition, they have the experience to be "value added" investors and help close the "capital gap" from these firms in which they invest.

The gap exists and the challenge is to close the gap for even

wore firms.


Working with the University of New Hampshire and eight regional "angel" capital networks including the Texas Capital Network in Austin, the Office of Advocacy has developed the Angel Capital Electronic Network

an Internet based system which allows entrepreneurs to present their need for capital to accredited investors throughout the country. Accredited investors are high net worth individuals who have the knowledge and resources to do their own "due diligence", i.e., in-depth research into the investment to make informed decisions.

Several legal hurdles had to be addressed, including Federal

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issued a mno action letter" to ACE-NET on October 25, 1996.


system has also been designed to satisfy State legal requirements

and has received the encouragement and support of the North Amorican Securities Administration Association (NASAA). The system

should be operational by the end of April.

Mr. Chairman, I appreciate the opportunity to appear before this Subcommittee today. I will be happy to answer any questions

that you or any of che other members may have.

Thank you.



P.O. BOX 119

Larry Combest
Aft: Jimmy Clark
1205 Texas Ave.
Room 810
Lubbock, TX 79401

Dear Sir:

I am writing you this letter in regards to the scrvice (or should I say the lack of service) that is being provided by the Hockley County Farm Service Agency. As a local business owner, I get concerned when people that I and other business owners respect as customers ger treated the way that they do hy the FSA.

Not trying to single any one person out, but Carla Sires seems to have the biggest influence on the quality of service being provided. In the last ninety days, she has worked four of those days. Being in the position of office manager, I would think a person needs to work more than four days out of ninely to provide the service that farmers count on. She has also made very negative conuments that she could care less is a loan is approved or not. This type of behavior should not have to be tolerated by anyone.

One example of poor service is the length of time to get an application for a loan approved or denied. An application that was submitted for a loan took Eighty-nine days to process before it was denied. This is truly too long of a time for the approval process of a loan application.

Please take time to help resolve this situation so that we can depend on the SERVICE that should be provided by the Farm Service Agency,

Sincerely yours,

Larry Beseda

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It has been several years since we have participated in the FHA guaranteed program.

There are several reasons we are not interested in making FHA guaranteed loans. The first problem is that the guarantee agreement and monitoring requirements are extremely complex and difficult to comply with. fail to dot every I and cross every T, FHA will try to avoid performing on the guarantee.

If you

We also find it impractical to expect any customer to wait for months to be approved or denied by FHA. Most farmers need to be making management and other farming related decisions long before they hear from FHA. These slow loan and loan renewal commitments are ridiculous.

Many small farming operations certainly have a need for the FHA loan program. I am afraid however, that if improvements are not forthcoming it will be to little to late for many of them.

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