Romney: $750K net worth is too high

      Sen. Mitt Romney, R-UT, is raising objections to small businesses receiving federal set-aside contracts while their owners are allowed a net worth of up to $750,000, without including their personal residence.

      That amount “is well above what I would consider for a person who is disadvantaged and needs help,” Romney said at a Senate committee hearing on June 12.

      The Senate Small Business and Entrepreneurship Committee held the hearing to begin reauthorization of the Small Business Act, which governs small business federal contracting, among other programs.

      Currently, a woman business owner in the Economically-Disadvantaged Woman-Owned Small Business Program (EDWOSB) may have up to $750,000 in assets, not including their home.

      In addition, under current rules, applicants to the SBA’s 8(a) Business Development Program must have a net worth below $250,000 when applying for entry into the program, not including the value of their primary home. Once they enter the program they may have up to $750,000 in assets (without their house).

      The SBA recently proposed to allow 8(a) business owners a net worth of $750,000 at time of application. SBA officials said the goal is to align the requirements for being considered disadvantaged in both the 8(a) and EDWOSB programs.

      Also, the SBA said in its proposed rule that an 8(a) owner could have a net worth of up to $6 million, including his or her home and business, up from $4 million currently, and the owner could receive a gross average salary of up to $350,000 a year. The gross average would be calculated as an average of three years’ salary.

      Romney, at the hearing, took issue with the SBA’s proposed rule. Saying he “does not like set-asides in general,” he went on to criticize the proposed $750,000 net worth limit.

      With a median net worth of $97,000 for the average US household, Romney took issue with the idea that a person with a $750,000 net worth is disadvantaged.

      “$750,000 hardly strikes me as a program for underprivileged individuals,” Romney said.

      Romney suggested that it is not appropriate to ask taxpayers with a much lower net worth to subsidize small business owners with a net worth of $750,000. He suggested that a net worth of $50,000 or $100,000 might be more appropriate to define disadvantage for set-aside programs.

      Robb Wong, SBA’s associate administrator for government contracting and business development, defended the $750,000 level.

      “$750,000 is a ceiling, not a floor,” Wong said at the hearing. If the ceiling is reached, the business owners are withdrawn and no longer eligible for set-asides under those programs, he added.

      Furthermore, Wong pushed back on the idea of setting the limit at only $50,000 or $100,000, because he said such a small firm likely would not hire many people.

      Romney’s response was to say that a person with a net worth near $750,000 can obtain a bank loan and hire people for his or her business, without the government’s help.

More Information:
Watch video at 1:58: https://bit.ly/2WHOyKV

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