[House Hearing, 116 Congress]
[From the U.S. Government Publishing Office]




 
          LONG-LASTING SOLUTIONS FOR A SMALL BUSINESS RECOVERY

=======================================================================

                                HEARING

                               before the

                      COMMITTEE ON SMALL BUSINESS
                             UNITED STATES
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED SIXTEENTH CONGRESS

                             SECOND SESSION

                               __________

                              HEARING HELD
                             JULY 15, 2020

                               __________

 [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]                               
                               

            Small Business Committee Document Number 116-086
             Available via the GPO Website: www.govinfo.gov
             
             
             
                            ______

             U.S. GOVERNMENT PUBLISHING OFFICE 
41-297                WASHINGTON : 2021              
             
             
             
                   HOUSE COMMITTEE ON SMALL BUSINESS

                 NYDIA VELAZQUEZ, New York, Chairwoman
                         ABBY FINKENAUER, Iowa
                          JARED GOLDEN, Maine
                          ANDY KIM, New Jersey
                          JASON CROW, Colorado
                         SHARICE DAVIDS, Kansas
                         KWEISI MFUME, Maryland
                          JUDY CHU, California
                       DWIGHT EVANS, Pennsylvania
                        BRAD SCHNEIDER, Illinois
                      ADRIANO ESPAILLAT, New York
                       ANTONIO DELGADO, New York
                     CHRISSY HOULAHAN, Pennsylvania
                         ANGIE CRAIG, Minnesota
                   STEVE CHABOT, Ohio, Ranking Member
   AUMUA AMATA COLEMAN RADEWAGEN, American Samoa, Vice Ranking Member
                          TROY BALDERSON, Ohio
                          KEVIN HERN, Oklahoma
                        JIM HAGEDORN, Minnesota
                        PETE STAUBER, Minnesota
                        TIM BURCHETT, Tennessee
                          ROSS SPANO, Florida
                        JOHN JOYCE, Pennsylvania
                       DAN BISHOP, North Carolina

                 Melissa Jung, Majority Staff Director
   Justin Pelletier, Majority Deputy Staff Director and Chief Counsel
                   Kevin Fitzpatrick, Staff Director
                   
                            C O N T E N T S

                           OPENING STATEMENTS

                                                                   Page
Hon. Nydia Velazquez.............................................     1
Hon. Steve Chabot................................................     3

                               WITNESSES

Mr. Brett Palmer, President, Small Business Investor Alliance, 
  Washington, DC.................................................     5
Ms. Amanda Cohen, Chef and Owner, Dirt Candy, New York, NY, 
  testifying on behalf of the Independent Restaurant Association.     7
Dr. Lisa D. Cook, Professor, Michigan State University, East 
  Lansing, MI....................................................     9
Mr. Pete Blackshaw, CEO, Cintrifuse, Cincinnati, OH..............    11

                                APPENDIX

Prepared Statements:
    Mr. Brett Palmer, President, Small Business Investor 
      Alliance, Washington, DC...................................    33
    Ms. Amanda Cohen, Chef and Owner, Dirt Candy, New York, NY, 
      testifying on behalf of the Independent Restaurant 
      Association................................................    61
    Dr. Lisa D. Cook, Professor, Michigan State University, East 
      Lansing, MI................................................    67
    Mr. Pete Blackshaw, CEO, Cintrifuse, Cincinnati, OH..........    70
Questions for the Record:
    None.
Answers for the Record:
    None.
Additional Material for the Record:
    Blueprint for Restaurant Revival.............................    73
    City Farm Corp...............................................    83
    International Franchise Association (IFA)....................    84
    Jaime A. Guzman-Fournier.....................................    86
    Konza Valley Capital, Inc....................................    89
    Le Poisson Rouge (LPR).......................................    95
    National Association of Federally-Insured Credit Unions 
      (NAFCU)....................................................    97
    National Independent Venue Assocition (NIVA).................    99
    The Paper Box NYC............................................   104
    Small Business Legislative Council Statement.................   106
    Town Stages..................................................   109
    U.S. Hispanic Chamber of Commerce (USHCC)....................   133


          LONG-LASTING SOLUTIONS FOR A SMALL BUSINESS RECOVERY

                              ----------                              


                        WEDNESDAY, JULY 15, 2020

                  House of Representatives,
               Committee on Small Business,
                                                    Washington, DC.
    The committee met, pursuant to call, at 1:03 p.m., via 
Webex, Hon. Nydia M. Velazquez [chairwoman of the Committee] 
presiding.
    Present: Representatives Velazquez, Finkenauer, Kim, Mfume, 
Chu, Evans, Schneider, Delgado, Houlahan, Craig, Chabot, Hern, 
Stauber, Burchett, Spano, and Bishop.
    Chairwoman VELAZQUEZ. Good afternoon. I call this hearing 
to order. Without objection, the Chair is authorized to declare 
a recess at any time.
    I want to thank everyone for joining us this afternoon for 
this official remote hearing. I want to make sure to note some 
important requirements.
    Let me begin by saying that standing House and committee 
rules and practice will continue to apply during remote 
hearings. All Members are reminded that they are expected to 
adhere to these standing rules, including decorum.
    With that said, during the covered period as designated by 
the Speaker, the committee will operate in accordance with H.R. 
965 and the subsequent guidance from the Rules Committee in a 
manner that respects the rights of all Members to participate.
    House regulations require Members to be visible throughout 
a video connection during the proceedings, so please keep your 
cameras on. Also, if you have to participate in another 
proceeding, please exit this one and log back in later.
    In the event a Member encounters technical issues that 
prevent them from being recognized for their questioning, I 
will move to the next available Member of the same party, and I 
will recognize that Member at the next appropriate time slot, 
provided they have returned to the proceedings.
    Should a Member's time be interrupted by technical issues, 
I will recognize that Member at the next appropriate spot for 
the remainder of their time once their issues have been 
resolved.
    In the event a witness loses connectivity during testimony 
or questioning, I will preserve their time while staff 
addresses the technical issue. I may need to recess the 
proceedings to provide time for the witness to reconnect.
    Finally, remember to remain muted until you are recognized 
to minimize background noise.
    In accordance with the rules established under H.R. 965, 
staff have been advised to mute participants only in the event 
there is inadvertent background noise. Should a Member wish to 
be recognized, they must unmute themselves and seek recognition 
at the appropriate time.
    Thank you.
    Since February, the outbreak of COVID-19 has taken a 
significant toll on the entire U.S. economy. This crisis has 
hit America's small businesses especially hard. Three out of 
four small businesses have been experiencing a decrease in 
revenue since March, and an estimated 7.5 million small 
businesses are at risk of permanent closure as a result of this 
crisis.
    As Members of this committee and as legislators at the 
federal level, we have a responsibility to secure funds to help 
America's small businesses survive this crisis. So far Congress 
has allocated over $669 billion in grants and loans through the 
Paycheck Protection Program, the Economic Injury Disaster Loan 
program, also known as EIDL, and a new EIDL emergency grant 
program.
    From the outset, Congress intended for the PPP and EIDL 
programs to provide immediate relief for small businesses to 
withstand the initial economic shock caused by this pandemic. 
As we approach August, we cannot ignore the reality that the 
COVID-19 pandemic has morphed into a much more devastating and 
extensive crisis than even some experts had anticipated, and 
the rhetoric coming from this administration downplaying the 
seriousness of COVID-19 undoubtedly led many states to rush to 
reopen, ultimately exacerbating the problem.
    We must be prepared with long-term solutions that will meet 
the magnitude of this crisis as we push forward to heal as a 
Nation and find better days ahead. We can start by examining 
the policies adopted during and in the aftermath of the Great 
Recession as a model moving forward.
    While we must recognize the inherent differences in these 
two devastating events for our nation, we must also remember 
that back in 2008 the outlook for small businesses was 
similarly uncertain.
    In response to the Great Recession, Congress stepped in and 
passed a series of bills that provided $1.2 billion for small 
businesses through the SBA lending programs. This critical step 
unlocked tens of billions of dollars in guaranteed loans to 
small businesses that could not otherwise access capital when 
traditional credit markets froze.
    Policies enacted then proved to be a critical lifeline for 
thousands of small businesses in danger of closing their doors.
    At the same time the Obama administration focused on how 
small businesses could help contribute to America's recovery by 
accelerating entrepreneurship and unlocking capital for the 
nation's smallest and youngest businesses.
    This money was well spent as small businesses were some of 
the largest contributors to job growth in the recovery, 
especially minority-owned and women-owned businesses who alone 
were responsible for the addition of 1.8 million jobs from 2007 
to 2012.
    The nation's investment in entrepreneurship paid off as the 
United States saw more than 550,000 new businesses open since 
2011 and the economy continued to grow.
    Because of the economic contributions from small employers 
and independent contractors after the Great Recession, it is 
imperative for this committee to explore those proposals and 
how we can modify them for the COVID-19 era.
    I also welcome any discussion of any new ideas brought to 
the table by Members to address the challenges our small 
businesses are facing today.
    Whether it is utilizing traditional SBA programs or 
instituting innovative ideas, long-term recovery requires us to 
think out of the box, but also come together in a bipartisan 
fashion to provide relief to small employers.
    As Congress works to explore additional ways to help 
America reopen and recover, I hope we continue to prioritize 
the smallest of small businesses, minority-owned and women-
owned businesses, the ones that helped rebuild our nation the 
last time we found ourselves knee-deep in what felt like an 
insurmountable crisis.
    Again, I want to thank the panelists for joining us here 
today.
    I now yield to the Ranking Member, Mr. Chabot, for his 
opening statement.
    Mr. CHABOT. Thank you, Madam Chair. And thank you for 
holding this hearing today.
    On this Committee we know how important small businesses 
and startups and entrepreneurs are to the economy. However, one 
of the consequences of this global pandemic is that our Main 
Streets are in very real danger of long-lasting damage or, in 
the worst case, permanent closure.
    Some have warned we could be in only the beginning of the 
worst wave of small business bankruptcies and closures since 
the Great Depression. We must be proactive and effective in our 
attempts to not only sustain but recover and expand the 
influence of America's small businesses and Main Streets all 
over the country.
    Recent research from universities such as Harvard, the 
University of Chicago, the University of Illinois, and others 
have found that some small businesses, especially 
microenterprises, may be the most susceptible to permanent 
closure. We must work together and listen to those like our 
witnesses here today who know and appreciate that critical 
segment of our economy.
    As communities reopen, we hope to find solutions that lead 
to fewer headlines indicating small businesses are closing and 
focus more on the recovery on which we are about to embark.
    I look forward to the testimony of all our witnesses here 
today and to our continued partnership on this Committee.
    And I thank the Chairwoman for again working with me and 
for our side of the aisle in making this, I think, the most 
bipartisan Committee in Congress. And that is why we are so 
effective in, for example, for putting together the PPP program 
and trying to reform the EIDL loan program and so many other 
things.
    So I want to thank the Chairwoman for her continued 
cooperation.
    And I yield back. Thank you.
    Chairwoman VELAZQUEZ. Thank you, Ranking Member. It is a 
pleasure, and it has been an example of how we need to do the 
job on behalf of the American people.
    Now I would like to take a moment to explain how this 
hearing will proceed. Each witness will have 5 minutes to 
provide a statement and each committee Member will have 5 
minutes for questions. Please ensure that your mic is on when 
you begin speaking and that you return to mute when finished.
    With that, I would like to thank our witnesses for taking 
time out of their busy schedules to join us.
    Our first witness is Mr. Brett Palmer, the President of the 
Small Business Investor Alliance. In this role he works to 
foster a healthy environment for small businesses investing in 
a strong and profitable lower middle market.
    Mr. Palmer served in the executive branch from 2002 through 
2005 as a Presidential appointee in the Commerce Department as 
Assistant Secretary for Legislative Affairs, and as Deputy 
Assistant Secretary for Trade Legislation. He holds a history 
degree from Davidson College.
    Our second witness is Ms. Amanda Cohen. Ms. Cohen is a 
James Beard-nominated chef and owner of Dirt Candy, the award-
winning vegetarian restaurant in New York City's Lower East 
Side in my district. Her restaurant was the first vegetable-
focused restaurant in the city and is a pioneer of the 
vegetable-forward movement and is included on the list of the 
ten restaurants that changed America. She received two stars 
from The New York Times and was recognized by the Michelin 
Guide 5 years in a row.
    Welcome.
    Our third witness is Dr. Lisa Cook. Dr. Cook is a professor 
of economics at Michigan State University. Prior to joining the 
faculty at Michigan State, she was a senior economist at the 
President's Council of Economic Advisers from 2011 through 
2012. She also held positions at the National Bureau of 
Economic Research, the Federal Reserve Banks of Minneapolis, 
New York, Philadelphia, the World Bank, the Brookings 
Institution, and the Hoover Institution.
    Welcome, Ms. Cook.
    Now I would like to turn it over to the Ranking Member, Mr. 
Chabot, to introduce our last witness.
    Mr. CHABOT. Thank you very much, again, Madam Chair.
    And our final witness is a fellow Cincinnatian, Pete 
Blackshaw. Mr. Blackshaw is CEO of Centrifuse, a startup 
incubator created by Proctor & Gamble, or P&G as a lot of 
people refer to it, Kroger and Western & Southern and other 
major entities in our greater Cincinnati community.
    He previously served as global head of digital marketing 
and social media at Nestle's global headquarters in 
Switzerland. He recently served as Chairman of the board of the 
National Council of Better Business Bureaus and is now chairing 
a recently chartered supply chain and new commerce restart 
committee.
    Pete is a graduate of Harvard Business School and the 
University of California, Santa Cruz.
    I recently had the pleasure of meeting with Pete via an 
online platform with the Cincinnati Chamber of Commerce and I 
was truly impressed with his forward thinking ideas on the 
recovery. I hope he was impressed, too, on the call.
    I know he will provide valuable insight to the Committee, 
and I look forward to hearing all the witnesses here today.
    And I yield back.
    Chairwoman VELAZQUEZ. Thank you, Mr. Chabot.
    Thank you all for being here today.
    I would now like to begin by recognizing Mr. Palmer for 5 
minutes.

   STATEMENTS OF MR. BRETT PALMER, PRESIDENT, SMALL BUSINESS 
 INVESTOR ALLIANCE, WASHINGTON, DC; MS. AMANDA COHEN, CHEF AND 
 OWNER, DIRT CANDY, NEW YORK, NY, TESTIFYING ON BEHALF OF THE 
     INDEPENDENT RESTAURANT ASSOCIATION; DR. LISA D. COOK, 
PROFESSOR, MICHIGAN STATE UNIVERSITY, EAST LANSING, MI; AND MR. 
        PETE BLACKSHAW, CEO, CINTRIFUSE, CINCINNATI, OH

                   STATEMENT OF BRETT PALMER

    Mr. PALMER. Thank you, Madam Chairwoman. Thank you to the 
Committee for giving me the chance to share SBIA's view on how 
the small business investment companies can accelerate the 
recovery and create jobs for the long-term.
    My name is Brett Palmer and I am president of the Small 
Business Investor Alliance, a trade association representing 
small business investors, including SBICs. SBICs are SBA-
regulated venture capital and private equity funds that provide 
long-term capital into American small businesses.
    For many, but not all, our economy was doing well prior to 
the pandemic and the ensuing government-mandated shutdowns. The 
economic disruption has exposed, amplified, and intensified 
preexisting problems faced by the Nation's small businesses. It 
has also created new ones. These amplifications affect vast 
numbers of small businesses but the pain is not evenly spread 
by geography, industry sector, stage of business, or even race.
    It is also important to remember that the job losses and 
business injury we have experience are only first-order effects 
of the pandemic. There is more coming, but we just don't know 
what.
    We have faced hardship before. We know what good public 
policy can do to help bring the economy back faster and 
stronger and to benefit more Americans.
    Now is the time to improve existing government programs to 
make sure they provide maximum benefit to as many Americans as 
possible. So policy adjustments should be made to address the 
immediate needs of small business in a way that takes into 
account past efficiencies and also meets future needs.
    Instead of normal stimulus spending where the benefit is 
temporary, Congress now has the chance to focus on the long 
term and to empower and amplify the private sector that 
provides outsized job creation and sustainable benefits to 
communities by fully utilizing the SBIC program.
    Our economic problems are intense and will be long-lasting, 
but access to patient capital is the core to many of the 
solutions to the challenges we face.
    Improving the SBIC program will address some of these 
problems that previously existed:
    Challenges accessing patient capital, which is particularly 
acute in low-income areas, both rural and urban, and even more 
acute for equity capital;
    The massive concentration of venture capital and growth 
capital in only a couple of areas of the country, leaving the 
rest of us behind;
    Large disparities in accessing startup and growth equity;
    Underinvestment in domestic manufacturing and domestic 
production;
    Underrepresentation by women and minorities in both funds 
and in small businesses accessing capital;
    And there are too few small funds which provide smaller 
investments that would fit in smaller communities and less 
dense communities.
    There are a host of new problems as well: massive 
unemployment and failure of many small businesses. And some 
estimates are that 22 percent of small businesses are now out 
of business, with the catastrophic failure of minority-owned 
small businesses with some estimates of 32 percent of Hispanic-
owned businesses and up to 41 percent of Black-owned businesses 
lost. That is a national catastrophe.
    The American entrepreneurial spirit is strong, but to 
reemerge and recover, small businesses will need to access 
patient capital. And patient capital is equity capital. It is 
long-term debt and equity-like debt, which is capital that can 
sustain the ups and downs and the fits and starts in any 
economy, even the pandemic.
    We also need to remove unintentional barriers to minorities 
and women forming SBIC funds, and more SBIC funds need to be 
formed that are smaller and serving more parts of the country, 
because smaller funds really are able to handle smaller markets 
and serve smaller businesses.
    So the SBA's framework is a good one, but this experience 
is a very different experience than the last recession and 
needs a tailored response to meet both the old needs that were 
unfulfilled and the new needs. So modifying the existing 
programs is faster and more affordable and effective than a lot 
of other things we could be doing.
    So SBIA proposes a couple of changes to the existing 
program, not creating new programs, just modifying them. We 
would ask Congress to authorize an on-ramp to forming more 
first-time SBICs. A MicroSBIC license would remove 
unintentional barriers to minorities and women entering the 
program, while providing needed smaller-dollar investments 
across the country.
    The SBIC program should also be modified to enable SBICs to 
provide more of the most patient, the most impactful, and the 
most job-creating capital: equity. When the Library of Congress 
looked at the SBIC program, they found that equity investments 
by small business investment companies commonly created over 
400 or sometimes over 500 new jobs per investment, and we need 
those jobs.
    There are also existing SBIC tools that provide patient 
equity-like capital, but they are currently limited by 
geography. These geographic restrictions should be lifted and 
made available to all small businesses?
    And SBA should encourage and enable SBICs to look for 
opportunities to make investments in underserved communities, 
both rural and urban, by making additional leverage available 
for investments in LMI areas and in underserved communities.
    And, finally, it would be very if SBA's Office of 
Investment and Innovation would be fully staffed and have the 
technology they need to be fully effective. They have been held 
back from that for years, and I think there is an opportunity 
for us to do more, and that would be a long-term investment 
that would provide long-term benefits.
    I would also like to thank the Committee for having an 
oversight hearing on the SBIC program last fall. It was 
probably an oversight committee the likes of which I know I 
have never seen before in 25 years, but it was very helpful. 
And under Administrator Carranza's leadership it has been 
transformative and positive, and she has brought in Christopher 
Weaver to run the program, and it is really turned around and 
doing great.
    So thank you for your oversight. Thank you for this 
hearing. I look forward to answering any questions.
    Chairwoman VELAZQUEZ. Thank you, Mr. Palmer.
    Now I would like to recognize Ms. Cohen.
    Please let me remind Members you need to keep your cameras 
on. Thank you.
    Welcome, Ms. Cohen, for 5 minutes.

                   STATEMENT OF AMANDA COHEN

    Ms. COHEN. Chairman Velazquez, Ranking Member Chabot, and 
distinguished members of this Committee, thank you so much for 
inviting me to testify today about my experience with the 
Paycheck Protection Program, the experience of other 
independent restaurants, and what this industry needs to 
survive the rest of the year and beyond.
    My name is Amanda Cohen, and I am the chef and owner of 
Dirt Candy on the Lower East Side of Manhattan. Chairwoman 
Velazquez has been a longtime advocate for business owners like 
me, and I am honored to appear today as a voice for so many 
voiceless businesses.
    Dirt Candy is a fine dining vegetarian restaurant in New 
York with about 40 seats and a bar. We started back in 2008 
with just 18 seats but quickly outgrew our first location. And 
in 2015, we moved to this new one on the Lower East Side.
    I am also honored to represent the leadership team of the 
Independent Restaurant Coalition, a newly formed coalition of 
thousands of chefs and restaurateurs across the country in 
every congressional district who organized for the first time 
in response to the pandemic.
    We represent America's nearly 500,000 restaurants and 
nearly three-quarters of all dining establishments in the 
country who don't have the same access to significant debt 
instruments or private equity as corporate-owned businesses.
    Today I am going to share the story of independent 
restaurants, how we use the PPP, and what we need to do to 
survive, which is really your help.
    Dirt Candy reopened a week ago today for outside seating, 
the first time since New York's shutdown orders. Outdoor dining 
has forced us to dramatically alter our menu and processes for 
serving customers. A number of our dishes are really not 
conducive to heat, the rain, wind. And our seating is on a ramp 
to the Williamsburg Bridge, which really isn't the most 
romantic location.
    I wasn't able to pay my employees during the shutdown. So 
many went on to unemployment or took other jobs. While I 
received a Paycheck Protection Program loan, I chose not to use 
the money at the start because it was unclear when we could 
reopen again. And if my fixed costs of running a business don't 
change and demand for dining out remains low, there is 
absolutely no way Dirt Candy can survive because there is a 
larger issue: Going out to a restaurant is not considered to be 
safe.
    When the pandemic hit, I laid off all 35 employees at Dirt 
Candy. About 6 weeks ago, I rehired one person to help get the 
restaurant ready to reopen in its current form. As of today, I 
have only rehired 17 percent, or six, of my employees, and I 
don't plan on rehiring others for the foreseeable future.
    This was only possible because of the PPP. In fact, the 
changes to the effective date of the PPP that this Committee 
worked on and which went into effect in June are the only 
reason I could afford to reopen Dirt Candy at all.
    But even if my doors are open, there are still 29 more 
people who used to count on Dirty Candy for their well-being 
who are out of work.
    Some independent restaurants cannot access the PPP because 
their bank took care of other customers first or rejected their 
applications. Others were afraid to use the loans they received 
and returned them because they could not afford to make a 
mistake and take on more debt.
    Those who received and used the PPP loans are seeing them 
run out or not bridge the time needed to fund operations in 
this uniquely affected industry.
    The one thing that would be enormously impactful for the 
restaurant industry is passing Congressman Earl Blumenauer's 
RESTAURANTS Act. The Chairwoman has cosponsored this bill, for 
which I am exceptionally grateful, as have eight more members 
of this Committee.
    Independent restaurants generate $271 billion in direct and 
indirect economic activity. Passing this bill would reduce the 
unemployment rate by 2.4 percent. As many as 85 percent of 
independent restaurants say they will close without direct 
help. Passing this bill would help avoid this disaster.
    Restaurants need your help. As you can see from my 
testimony above, the PPP, with the significant changes Congress 
made in late spring, is an 8-week solution to an 18-month 
problem for restaurants. My PPP loan allowed me to reopen, but 
it is not going to allow me to stay open even if it is 
forgiven.
    And Dirt Candy does not stand alone in this. Our restaurant 
support farmers, vintners, brewers, liquor purveyors, and an 
entire supply chain. Most other restaurants can add fishers, 
ranchers, and other parts of the supply chain to this list.
    And imagine planning a trip to New York, Chicago, San 
Francisco, Charleston, Atlanta, or Washington, D.C., without 
being able to visit the great restaurants that they are known 
for.
    Independent restaurants draw millions of tourists from all 
around the world. In 2019, total spending by domestic and 
international travelers on food services in the United States 
was $279 billion. That is more than double the amount spent on 
either recreation or retail.
    Thank you again for the opportunity to be here and to share 
the story of independent restaurants with you. I sincerely hope 
that you will find a way to help independent restaurants with 
all the hard work you are doing on behalf of small businesses 
across the country.
    Chairwoman VELAZQUEZ. Thank you, Ms. Cohen.
    Now I would like to recognize Dr. Cook for 5 minutes.

                   STATEMENT OF LISA D. COOK

    Ms. COOK. Chairwoman Velazquez and Ranking Member Chabot, 
thank you for the opportunity to address the Committee on Small 
Business on the topic of ``Long-Lasting Solutions for a Small 
Business Recovery.''
    The coronavirus pandemic and the resulting human, economic, 
and financial crises are unfolding at breakneck speed, and, as 
a result, small firms are in crisis. The quick action of 
Congress has gone some way to lessen or postpone the pain 
associated with this pandemic-induced recession.
    Specifically, assistance to small businesses to keep paying 
for employees through the $670 billion Paycheck Protection 
Program, PPP, the largest ever investment in small businesses, 
was a critical lifeline for many small businesses.
    Prior to the pandemic, most small firms reported being in 
good shape and 73 reported that their financial health was good 
or stable. Nonetheless, the financial health of small firms 
varied greatly, depending on the race or ethnicity of the 
owner. Compared to 27 percent of small White firms reporting 
that they were at risk or in distress, 49 percent of small 
Hispanic firms and 57 percent of small Black firms reported 
being at risk or distressed. Black and Hispanic firms were less 
prepared to weather an adverse shock like this pandemic.
    According to the Federal Reserve, distressed firms are 
three times more likely to close relative to healthy firms due 
to a 2-month revenue shock. Further, the concentration of small 
minority-owned firms in certain sectors makes them more 
vulnerable in the wake of COVID-19. These sectors in which many 
small minority-owned firms are overrepresented are 
accommodation and food services, personal and laundry services, 
and retail.
    By early May, it is estimated that 100,000 small 
businesses, or 2 percent of small businesses, had already 
closed. By mid-June, of the businesses that are listed on Yelp, 
140,000 of those closing since March 1 were still closed by 
mid-June. Thirty-five percent of shopping and retail businesses 
listed have closed their doors temporarily. Fifty-three of 
restaurants listed have closed their doors permanently.
    The burden of small business closures is also unevenly 
distributed. Forty-one percent of African American businesses 
reported being closed compared to 35 percent overall.
    In the only survey providing demographic data on PPP loan 
recipients, the Color of Change reports that 45 percent of 
Black and Latino businesses will close by the end of the year 
without more relief.
    Minority-owned businesses also report not being able to 
access PPP loans due to the heavy reliance on large banks, with 
whom they have had historically poor relationships.
    Over a third of small businesses reported paying reduced 
rent or deferred rent payments.
    In FiveThirtyEight's most recent survey, the majority of 
macroeconomists believe that there will be a partial rebound in 
economic activity and a slow recovery, rather than a V-shaped 
sharp recovery.
    With a slower-than-anticipated recovery and with the 
experience of PPP, I would urge this Committee to consider what 
it might do in the short and long run to address the small 
business crisis.
    Now, I would support policy action that would modify PPP to 
work alongside the enhanced unemployment insurance benefits 
under the CARES Act. The Rebuilding Main Street Act, from 
Senators Van Hollen, Merkley, and Murphy, proposes such a 
modification. This would provide grants to especially hard-hit 
small firms to cover fixed costs and expenses if the employers 
use short-term compensation arrangements or a system such that 
the employers avoid layoffs and instead reduce hours worked by 
each employee at the firm. Employees would then continue to 
receive unemployment insurance on a prorated basis to 
compensate for reduced wages.
    No matter what the modification, demographic data should be 
collected at the loan or grant application phase in any future 
modified PPP effort, not just on the back end of the program. 
These data were supposed to be tracked such that the most 
vulnerable firms would be prioritized. Not only should these 
data be collected, any current and additional relief should be 
targeted at these firms.
    Policymakers should consider in the long run distribution 
channels for aid in the future that could provide aid to small 
firms directly rather than via banks or other lenders.
    Most importantly, the human and technological capacity of 
the SBA to process and implement swiftly and efficiently such a 
program as the PPP should be increased significantly.
    Given the longstanding importance of small businesses as an 
entry point to the middle class and their contribution to the 
economy overall, this capacity building should have happened 
long ago. And this won't be the last natural disaster or 
economic and financial crisis, and SBA will need to be better 
equipped to meet these challenges.
    Thank you.
    Chairwoman VELAZQUEZ. Thank you, Dr. Cook.
    Now let's recognize Mr. Blackshaw for 5 minutes.
    Welcome. Thank you.

                  STATEMENT OF PETE BLACKSHAW

    Mr. BLACKSHAW. Thank you, Chair Velazquez, Minority Ranking 
Member Chabot, members. Thanks for the opportunity.
    I just have one core message, and that is that the best way 
to help small business owners thrive in this very uncertain 
world is to help them think and act like startups.
    And When I say startups, I don't mean Silicon Valley or Ivy 
League entrepreneurs. I am referring to the next generation 
taking on big, unsolved challenges in every sector of our 
society and turning them on their head.
    And many of the startup founders are women and minorities. 
A growing percentage, I say with pride, are coming from the 
Midwest. And we are living in an age of unending just 
disruption in which economic, social, health-related shocks are 
going to become more common.
    Some call this VUCA--volatile, uncertain, complex, and 
ambiguous--and a VUCA world requires VUCA leadership, precisely 
what a startup mindset enables.
    To be clear, there are urgent needs, as we have heard 
today. Small business owners need help right now, paycheck 
protection, access to capital, streamlined regulation and 
policies, all critical and necessary.
    But we also need to look beyond the present to a future 
that is going to be even more demanding than the moment that we 
are living in today and to do so with urgency.
    Now, many of us talk about reskilling or even upskilling. 
Neither in my view is enough. We need startup skilling.
    A startup mindset prizes speed, rapid prototyping, constant 
iteration, failing fast to learn fast. It is obsessed with 
data, what to see in it, and how to exploit it. It is very, 
very digital.
    I think startup skilling should be a national priority, led 
perhaps by the SBA and involving corporations, universities, 
and startup ecosystems.
    Now, what does startup skilling look like? First, it is 
showing small business owners how they can apply startup 
thinking, technologies, and practices to their own ventures.
    So, for example, at Cintrifuse we hosted a program called 
NITRO! in partnership with JPMorgan Chase. Over one weekend, we 
startup skilled several dozen minority-led businesses. We gave 
them access to mentors. We showed them how to leverage 
technologies. We brought in Google. We taught them the 
principles of startup leadership. And I think this is something 
that we should be doing constantly, every weekend, in fact.
    We are also seeing a promising movement in what is known as 
micro-credentialing, aimed at urban and rural areas. Miami 
University of Ohio, for example, is one such school that is 
kind of taking their faculty outside of the ivory tower, 
bringing them into the community with different types of 
credentialing, focused on new business skills, basic skills in 
finance, marketing, and accounting. We need a lot more of this. 
We need to encourage the universities to do that.
    Second, I think it is about learning from the digital 
natives, the kids who have grown up digital. As we speak, 
Cintrifuse is sponsoring a virtual summer entrepreneurial 
academy. It is way oversubscribed. And these students, high 
schoolers and college, they are developing startup ideas to 
help address pressing challenges related to COVID, 
sustainability, social justice. And we are challenging them to 
explore ways in which radically more transparent supply chains 
might be part of a better future.
    Thirdly, I want you to think about mobilizing and re-
platforming small business services. Don't shoot the messenger, 
but I spent hours before this testimony reviewing government 
and SBA digital apps and websites--you name it. And I think the 
SBA in particular needs a digital startup infusion.
    I would encourage you to consider: why can't government 
create an open innovation platform to crowdsource easier, less 
bureaucratic online solutions for small businesses. It is not 
just about money. It is about time and simplicity. So why not 
take greater advantage of audience-rich big tech, Google, 
Microsoft, Amazon?
    Facebook, for example, has more than 3 billion users, 
including tens of millions of small business users. And I know 
they are taking lots of heat for issues I am not going to get 
into here. But why not invite them to codevelop the next 
generation hub for small business services and startup 
skilling, not a page or an ad campaign, but SBA on steroids? 
That would be a game changer overnight.
    My final observation is that I think there is little 
distinction between a tech startup and a mom-and-pop small 
business. They are both based on an idea, a problem that needs 
to be solved, an entrepreneurial spirit, and the desire to take 
a shot and carve out your own path. And whether we are talking 
about scalable technology or small-town service, we are talking 
about the same things.
    Business is built on the ingenuity, passion, and 
persistence of people who simply want to make the country 
better by finding a better way. That is American 
entrepreneurialism. And I would say the bumper skill is ``Let's 
Startup Skill America.''
    Thank you.
    Chairwoman VELAZQUEZ. Thank you, Mr. Blackshaw.
    Now I recognize myself for 5 minutes.
    Dr. Cook, Congress responded to the Great Recession by 
making a couple of changes to SBA loan programs, including 
increasing the guarantee on 7(a) loans and reducing fees in 
both the 7(a) and 504.
    As Congress weighs long-term recovery proposals for small 
businesses, would you recommend similar changes to SBA lending 
programs right now going forward?
    Ms. COOK. I would, because this has to be encouraged. Take-
up has to be encouraged.
    But I would also echo what Mr. Blackshaw would say, that 
the digital transformation of SBA is something that I was 
promoting when I was at the White House in 2011/2012. I think 
this has absolutely, given the speed of this crisis, I think 
this has got to be matched with the speed of digital 
infrastructure and human capacity building at SBA, yes.
    Chairwoman VELAZQUEZ. This is one of the things that we 
need to keep in mind, especially the administration when they 
submit the budget, because it takes resources in order for them 
to implement those changes.
    Ms. Cohen, as the virus continues to spread in our country, 
we have seen states who had once reopened restaurants and bars 
now shut them down again. How have the multiple closures 
impacted the hospitality industry?
    Ms. COHEN. Madam Chairwoman, multiple closures are 
devastating for restaurants. We lose staff. We lose food. We 
lose our customers' good will. We lose our hope. A second round 
of full closures will finish off a number of independent 
restaurants permanently.
    Chairwoman VELAZQUEZ. Thank you.
    There have been calls for proposals targeted to certain 
sectors that may face a long road to recovery or who may face 
reoccurring shutdowns like the hospitality industry. Why do 
SBA's current economic relief programs not address the 
hospitality industry needs? Why is targeted relief necessary?
    Ms. COHEN. The hospitality industry has unique issues. We 
depend on gathering a lot of people in a small place to 
generate revenue.
    So long as people are not in my restaurant, I will not be 
able to pay suppliers, continue to employ my staff, or generate 
revenue. I cannot take on any more debt with any of these other 
programs. I need something that specifically--or we need 
something that specifically works for the restaurant industry 
that allows us to get back up on our feet without any debt. 
Some of the programs have worked.
    Chairwoman VELAZQUEZ. Thank you. Thank you.
    We have a short period of time to ask all the questions 
that we need to ask.
    Mr. Palmer, the congressional efforts that we have seen so 
far to provide relief for small businesses have focused on bank 
financing, specifically the PPP program.
    As our local economies begin to slowly reopen and recover, 
can you walk us through what some small businesses will need in 
terms of long-term capital and the role that the Small Business 
Administration, or SBIC, program can play for providing that 
capital?
    Mr. PALMER. Thank you, Madam Chairwoman.
    I think Amanda, the other witness, nailed it pretty well. A 
lot of businesses are up to their eyeballs in debt, and they 
are really going to be looking for patient capital. They are 
going to need something that isn't going to cause the banks, 
that are already in forbearance and calling on their loans, to 
provide capital. And they are going to need either equity or 
they are going to need equity-like capital.
    And there is some tools that exist in the SBIC platform, 
particularly the LMI debenture, that are very patient, where 
you can draw a loan but there is no payments for 5 years and 
then you pay after that. And that operates at zero subsidy. 
That is a proven tool right now, but it is limited in 
geography. So a lot of places can't use it.
    Opening up some tools like that, I think, would be very 
helpful in the recovery of businesses. As you add more SBICs, 
being able to offer those I think would be even more 
beneficial.
    Chairwoman VELAZQUEZ. Thank you.
    My time has expired. Now I would recognize the Ranking 
Member, Mr. Chabot.
    Mr. CHABOT. Thank you, Madam Chair.
    And I will begin with Mr. Palmer.
    Mr. Palmer, you have testified before our Committee many 
times. We appreciate you being here again today.
    How important is it that we evaluate current government 
programs to reduce duplication in order to ensure that our 
programs are the most effective that they can be?
    Mr. PALMER. I think it is critical, and I think right now 
Congress has the time to really focus. When the CARES Act was 
created the PPP was a lifesaver, and it is a brilliant program 
and thank you for doing it, but certainly there were some 
problems with it because it was written at the front end of an 
economic tornado hitting.
    Now you have the time to really look at it and make sure 
things are effective, not duplicative, and that they are really 
adjusting to the different industry sectors and geographies 
that need different types of capital. So I think it is 
necessary.
    Mr. CHABOT. Thank you.
    I think I will go to Mr. Blackshaw next.
    How can the NITRO! program that you mentioned serve as an 
example for future efforts? And was there anything that you 
felt could have been improved or any recommendations that you 
would make to us?
    Mr. BLACKSHAW. Thank you for the question.
    My first regret is that we treated it episodically, in just 
one weekend. But looking back, I mean, we can do that nonstop.
    And I want everyone here to think about, just think about 
this hearing right now. Our ability to kind of scale services 
and scale intimacy in the form of any type of training has gone 
up exponentially.
    So it is really easy to parachute in an expert who can help 
a small business owner to pick up a critical skill. And there 
are very critical, foundational types of entry, digital 
capabilities that even the ice cream shop needs to understand 
to be competitive in the marketplace today.
    So I think the big opportunity revolves around scaling. I 
think there is a big opportunity to get more companies to 
subsidize the effort. This isn't just about getting the 
government to kind of pay for it. I think there is a win-win 
for everyone.
    But we have to bring that startup mindset, more for less, 
digital kind of agility. And then definitely leverage this 
power of virtual. Not to take away from the offline, there is 
still some power there, but we can serve a lot of critical 
needs really, really fast.
    Mr. CHABOT. Thank you very much.
    And I think I will go to Ms. Cohen next.
    Ms. Cohen, in your testimony you discussed how people still 
feel unsafe going to restaurants. The same can be said for the 
tourism industry as well.
    What can we do to help people to feel a sense of safety and 
security again so that your restaurant and others will be 
moving in the right direction?
    Ms. COHEN. Unfortunately, I am not sure we can get anybody 
to feel safe until we have a vaccine. I mean, that is the 
reality.
    In the meantime, not forcing restaurants to have to open up 
more tables than they feel comfortable with, or hotels or 
anybody. We cannot congregate too many people in one place. We 
have to make people feel safe.
    It is my job as a restaurateur to make my customers feel 
safe and to know that I have made my employees feel safe so 
everybody can come and dine and feel relaxed, which is what 
they should do in a restaurant. But I can't do that if I am 
looking at my bottom line instead of my payroll.
    Mr. CHABOT. Thank you.
    Dr. Cook, you had said that you felt that we were likely to 
experience a slow recovery. If you had to pick just one thing 
to change that, what would it be?
    Ms. COOK. I would echo the sentiments of Amanda Cohen, that 
there has to be attention paid to COVID-19 first. That is 
absolutely it. There is, like, there is nothing else. If I had 
to choose one thing, it would be that we would provide, say, 
relief to businesses, to the American people that had to do 
with addressing the healthcare crisis.
    Mr. CHABOT. Thank you.
    And I think I have got time to squeeze one more question 
in.
    So, Mr. Blackshaw, I will go back to you again. We are 
obviously both in the Midwest here, and you mentioned the 
Midwest. What specifically is encouraging startups in our part 
of the country in the Midwest, at least prior to the COVID 
crisis, and how can we continue to fuel that startup culture 
that we have been seeing?
    Mr. BLACKSHAW. I think it is critical to lower barriers of 
entry for entrepreneurs. Cost structure contributes to that. I 
am a native Californian, so I don't want to disparage my former 
State. But there is a cost structure that can get in the way of 
being able to kind of jump in early, test, and learn.
    I located my first startup in Cincinnati. The burn rate 
extended much longer. I think there is a quality of life that 
typically gets overlooked. And there is a wonderful synergy, 
especially in greater Cincinnati but also northern Kentucky 
with the large companies that are very, very open in a very 
humble way, if I may.
    Let's work with startups because they can solve big 
challenges that we can't figure out. Maybe we are too 
bureaucratic and we need an external focus that I am seeing 
more in the Midwest than I have seen in other locations.
    I think those are just a few of the factors that really 
play out. I think wherever you are, building a supportive 
ecosystem is critical, and that is public, that is private 
universities. Those formulas can work.
    Mr. CHABOT. Thank you.
    Chairwoman VELAZQUEZ. Thank you. The gentleman's time has 
expired.
    Now we recognize the gentleman from Maryland, Mr. Mfume, 
for 5 minutes.
    Mr. MFUME. Thank you very much. Madam Chair, I want to 
thank you, I want to thank the Ranking Member, obviously, for 
convening this particular hearing. I think it is an extremely 
forward-looking topic that has to be dealt with after, I agree, 
we have been able to deal with the major topic, which is this 
pandemic.
    Madam Chair, I apologize for just getting on. Recently, as 
you know, the Democratic Caucus is underway. And I am on the 
hearing of the Oversight Committee. So I jumped on be on. It 
has been an interesting discussion. I would reserve any time or 
the right to ask questions at this moment so that I am not 
deliberately or undeliberately redundant in what I would like 
to talk about.
    And I will yield back and welcome the discussion that 
continues.
    Chairwoman VELAZQUEZ. The gentleman yields back.
    I now recognize the gentleman from Oklahoma, Mr. Hern, for 
5 minutes.
    Is Mr. Hern on? Okay.
    Mr. Stauber, the gentleman from Minnesota, is recognized 
for 5 minutes.
    You need to unmute.
    I think that he is having technical difficulties.
    Mr. STAUBER. Again, Madam Chair, can I get back in, in a 
minute?
    Chairwoman VELAZQUEZ. Sure.
    Mr. Burchett is recognized for 5 minutes.
    Mr. BURCHETT. Can you all hear me?
    Chairwoman VELAZQUEZ. Yes.
    Mr. BURCHETT. Thank you. I appreciate the testimony, and 
appreciate the Chairlady and Ranking Member.
    Dr. Cook answered this question for me, but I would like to 
know from Mr. Palmer, in your testimony you mentioned that up 
to 22 percent of the small businesses will fail due to the 
COVID-19, but that number rises to an estimated 41 percent of 
Black-owned small businesses.
    That is a huge disparity and that troubles me greatly. My 
whole life I have worked in and around our community and 
business community and lots of Black folks and I am concerned 
about that. How do you think we could address or rectify the 
problem?
    Mr. PALMER. It is a real problem. And once we sort of get 
the economy stabilized with health, which is sort of the 
foundational issue--and I will just set that aside--I think we 
really need to look at really equity capital.
    There was an excellent article by Eddie Brown in The 
Washington Post this last week, the founder of Brown Capital, 
and he called equity capital the rocket fuel for job creation 
and he highlighted how little of it is in the hands of Black 
entrepreneurs.
    I think we need to form more SBIC funds that have more 
Black fund managers and more women fund managers. And that is 
part of that SBIC, the MicroSBIC model, where we can form funds 
by broadening out the funnel of who can come in, and then we 
can harness the private investment that comes in and amplify it 
in a way that really creates jobs and ownership of businesses.
    But we have to be deliberate about the real barriers, 
because most Black entrepreneurs just have less capital. The 
amount of startup capital that a Black entrepreneur has versus 
a White entrepreneur is about 1/36th, and that is a barrier. 
And so they need external capital.
    We need more small private venture funds and more small 
private capital funds around the country and not just 
concentrated in the three areas where they spend most of it 
now.
    So I think getting more of those that are regional or local 
will be of very beneficial help.
    Mr. BURCHETT. What I have found a lot of the time here is 
that in Tennessee is that funds are available but, dadgummit, 
nobody knows how to get to them. And I guess you have got the 
good old boy network, but also it is just a method of educating 
folks, and we do that through the Urban League or chambers of 
commerce or what have you.
    I just see a huge duplication, and I don't see anything 
getting done. I just see the people in these organizations 
driving nice cars and having nice offices, and I am not seeing 
anything done.
    Mr. PALMER. I think that there have been some studies done 
that a lot of Black entrepreneurs don't get loans and part of 
it is because they don't ask for them because they think they 
are going to be turned down. They don't have that connection in 
the community or in that region.
    And I think that the financial providers, both SBIC funds 
and banks and others, need to do a far better job of doing 
outreach and letting folks know how to access the capital, 
because it is there in many cases.
    Mr. BURCHETT. What do you think nonprofits in the private 
sector can do to increase access to capital and promote 
recovery?
    Mr. PALMER. I think the private sector is the driver for 
it. Nonprofits, there are lots of different nonprofits that can 
be facilitators and educators and provide roles. And Mr. 
Blackshaw, as a witness, is an example of that as far as 
training those entrepreneurs about how to access that capital, 
how to ask for the right kinds of capital, the right amounts, 
how to be prepared for it to increase your likelihood of 
success.
    But ultimately we need tax policy and regulatory policy 
that really encourages and augments and doesn't create barriers 
to accessing that capital.
    So we need both working together in a deliberate fashion.
    Mr. BURCHETT. Okay. Thank you.
    Ms. Cohen, I dig your enthusiasm. I have never been to New 
York before, as you can probably tell from my accent. I am not 
even from the north part of Tennessee.
    But I was wondering about the ripple effect that will occur 
in our communities with the restaurant industry operating below 
full employment. What can we do to limit these effects and make 
our economy recover faster, ma'am?
    Ms. COHEN. Well, first off, you are invited to my 
restaurant anytime that you are in New York.
    Mr. BURCHETT. Did you say is it a vegetarian restaurant?
    Ms. COHEN. It is a vegetarian restaurant. It is a vegetable 
restaurant. But it is delicious.
    Mr. BURCHETT. Okay. If you say so.
    Ms. COHEN. So the best thing you can do is actually support 
our RESTAURANTS Act. That will put more money back into my 
restaurant and then I can put it back out into the economy and 
I can start supporting my suppliers again. That is what I 
really need to do, I need to help get them back up on their 
feet, and the only way I can do that is if I have some money to 
spend on them.
    Mr. BURCHETT. How much time do I have left, Chairlady? Have 
I run over?
    Chairwoman VELAZQUEZ. Almost. Two seconds.
    Mr. BURCHETT. Do what?
    Chairwoman VELAZQUEZ. Two seconds.
    Mr. BURCHETT. Okay. Well, I will yield back the remainder 
of my time. And thank you so much. And, once again, I am glad 
that my wife is not here to see you because if she saw that 
wonderful outfit you are wearing, I knew on the way home I 
would have to be looking for that.
    Chairwoman VELAZQUEZ. Thank you.
    Mr. BURCHETT. Thank you so much, ma'am. And you are always 
so hospitable to me. Thank you, ma'am.
    Chairwoman VELAZQUEZ. The gentleman's time has expired.
    Now the gentlelady from California, Ms. Chu, is recognized.
    Ms. CHU. Yes. Mr. Palmer, I am so glad that you are here to 
express how important SBIC is and how much more potential it 
has to address our COVID-19 economic crisis.
    Since its inception, SBICs have created or sustained nearly 
10 million jobs, and yet this program operates at extremely low 
risk to the taxpayer. Even though there is an SBA guarantee the 
private investors' capital has to be completely exhausted 
before that guarantee is even impacted and, as a result, this 
program operates at zero subsidy.
    So because of this success, I introduced H.R. 116, the 
Investing in Main Street Act, to allow banks to invest more of 
their capital in SBICs, and the legislation passed the House in 
this Congress but it still awaits further action in the Senate.
    Can you explain what made the SBIC program so successful 
during the last economic recovery and how the investing 
community made SBICs more effective as our economy recovers 
from the COVID pandemic?
    Mr. PALMER. Well, thank you very much for that question and 
for your support of SBICs and making that correction that would 
allow more banks to put capital into SBICs.
    And I will mention that there are a couple of reasons why 
the program works. First, it works because it passes all the 
private sector requirements. And second, it works because it 
fills a public policy purpose.
    The program really puts the taxpayer in second loss 
position and the private capital in first loss position as it 
always should be, and I think that makes it work.
    I really think right now one of the things that is coming 
out, we have the pandemic, but we also have massive social 
unrest and an awakening to some problems that existed before. 
We need more smaller SBIC funds and I think we need more 
smaller funds serving minority communities. And you have the 
banks that are very interested in doing that now. And so we 
want to take away any barriers that would be in place that 
might limit the ability for capital providers to get capital 
where it is clearly needed and recreate those jobs that have 
been lost and restart up those businesses that may be 
mothballed at the moment and re-empower those entrepreneurs.
    So that is what we do. We would like to do more of it. And 
your legislation is a critical part of it. So thank you very 
much for your support of it.
    Ms. CHU. Thank you so much.
    Dr. Cook, people of color have suffered disproportionate 
health and economic impacts during the COVID-19 pandemic. As 
you mentioned, business owners of color are at higher risk of 
permanent closure, which makes SBA's failure to collect 
adequate demographic data on participants in recovery programs 
like the Paycheck Protection Program especially harmful.
    For example, SBA failed to collect any racial demographic 
data for 94 percent of the nearly 500,000 PPP loans under 
$150,000 that were made in California. That means they only 
collected on 6 percent of the businesses that actually got 
those loans, while given California's diverse population. That 
is unacceptable.
    One thing I know, these businesses need help. So I plan to 
introduce legislation to authorize SBA's Community Advantage 
Loan Program, which provides access to affordable government-
backed capital to underserved markets, and under this 
legislation businesses owned by minorities, women, and 
veterans, and also provide some technical assistance.
    Can you talk about the role of the programs that programs 
designed to reach underserved small businesses should play in 
our long-term recovery?
    Ms. COOK. Well, one of the key features of entrepreneurship 
in America is that it has been a path to the middle class, and 
it has been a path to wealth. And certainly for minority 
businesses, given the losses they suffered--minority suffered--
especially blacks and Hispanics suffered--during the Great 
Recession, this would go some way to close the racial wealth 
gap.
    So I think entrepreneurship is just so critical to the 
American experience to both income and wealth. The kind of 
attention that would be given to it, I think, would be well 
worth it.
    Ms. CHU. And why is the demographic information so 
important?
    Ms. COOK. I am sorry. I didn't hear the last part, why is 
the demographic----
    Ms. CHU. Information so important to have.
    Ms. COOK. Oh, it is because, as I mentioned in my delivered 
remarks, the Black and Hispanic businesses especially were 
already vulnerable. So if you want to really make sure that you 
are making sure that the recovery is even, they should be 
targeted. And this was--I mean, you all articulated that they 
should be prioritized and for good reason. So I think any 
extension, any additional relief going to small businesses, 
make sure to target these businesses and collect the data, the 
demographic data.
    Ms. CHU. Thank you.
    Chairwoman VELAZQUEZ. The gentle lady's time has expired, 
and now we recognize the gentlemen from Minnesota, Mr. Stauber.
    Mr. STAUBER. Thank you, Madam Chairwoman Velazquez, and 
Ranking Member Chabot.
    Mr. Blackshaw, how do you think we most effectively bring 
the, quote, ``STARTUP-SKILL'' you mentioned in your testimony 
to rural America?
    Mr. BLACKSHAW. Thank you for the question. The first thing 
we need to continue to take a close look at, internet, 
broadband access in rural districts, and I think anything we 
can do to kind of equalize access, I think, is really 
important.
    I think in the State of Ohio, there is a big concerted 
effort on that, and I think that is good for any type of kind 
of startup layer. There is no question that digitalization 
pervades everything, and so I think getting that piece work is 
absolutely critical.
    I think one of the great things about what we are all 
experimenting with right now is if the digital infrastructure 
is in place, there is infinite access to training, experts 
parachuted in, virtual mentoring, you name it. And I just 
challenge us to think about how we can move that new 
environment what we are doing right now, on steroids, into a 
completely different model of access even in rural communities 
where I think the one opportunity in certain rural districts 
is, you are going to get to invent everything from scratch. You 
are not burdened by a lot of legacy practices in terms of how 
technology is used.
    You basically put in a whole new broadband pipe and you are 
kind of inventing, almost as a startup would, with a clean 
sheet of paper, so.
    I am very bullish about the opportunity there, but there is 
clearly some investment on technology required and obviously 
probably some funding as well.
    Mr. STAUBER. Yeah. You know, one of the biggest issues that 
has been exposed during this pandemic is limited access to 
broadband in rural America. It has been talked about for many 
years, but many are seeing just how bad it is for the very 
first time.
    So when we come to these hearings and hear the many 
wonderful ideas of how we can help businesses pivot their 
models and help them mobilize and re-platform, it feels that 
the businesses in rural America are not considered. And I think 
it is high time that we actually take that step forward and 
start investing. We need to take steps to bring parity to these 
rural businesses so they can be more resilient in, and as you 
mentioned, Mr. Blackshaw, a volatile, uncertain, complex, and 
ambiguous world. It is critically important.
    And I would just say from your words, Mr. Blackshaw, let's 
definitely work together to bring that start, quote, ``STARTUP-
SKILL,'' to rural America.
    We are seeing the digital divide, the negative effects of 
the digital divide. We have schoolchildren in rural America 
that have to--their parents have to drive them to a bus that is 
a hotspot, so they can download their homework and get their 
homework. That is unacceptable.
    Mr. BLACKSHAW. I agree.
    Mr. STAUBER. And we also know that rural America, this 
broadband is going to help keep our rural schoolchildren 
competitive, our rural hospitals open, and it is going to bring 
the rural economy. People are going to move to rural America 
for our quality of life, and I think we have to--it is time now 
to invest in rural America and the broadband to bring those 
STARTUP-SKILLS to everyone, including, and not only rural 
Minnesota, but rural America, and would you agree with that?
    Mr. BLACKSHAW. Not only that, I am signed up to help in any 
way. I think it is critically important, it is overdue, and the 
opportunity and the upside, the pay-out, will be massive if we 
make that effort.
    Mr. STAUBER. Yep. That is an investment that needs to 
happen.
    And Madam Chair, I yield back. Thank you.
    Chairwoman VELAZQUEZ. The gentleman yields back. I now 
would recognize the gentleman from Pennsylvania, Mr. Evans.
    You need to unmute, Mr. Evans.
    Mr. EVANS. Thank you, Madam Chair.
    Ms. Cohen, many of my constituents in Philadelphia are 
restaurant owners like yourself and are barely surviving. 
Coming from a city where nearly half of the population are 
minorities, I am interested in solutions that can help as many 
groups as possible. That is why I support the Restaurant Act.
    Minorities make up over 40 percent of the overall 
restaurant workers. Restaurants employ more minority managers 
than any other industry. One in three restaurant owners come 
from a minority background.
    Ms. Cohen, can you tell me why do you think the Restaurant 
Act would be more beneficial to restaurants than the EIDL or 
the PPP program?
    Ms. COHEN. I think that it is more beneficial to us--and 
thank you for the question--because both those programs put us 
into debt. And restaurants operate willingly on a very slim 
margin. We put a ton of money back into the economy. And I 
think it is unfair, at this moment, to ask us to take on more 
debt.
    So the Restaurant Act allows us to receive money without 
debt, and put it back into the economy, and that is why it is 
the best program for restaurants at this moment.
    Mr. EVANS. Okay. Mr. Palmer and Dr. Cook, the Benjamin 
Franklin Technology Partners, which is an initiative of the 
Pennsylvania Department of Commerce and Economic Development, 
suggested an idea to my office on how to increase SBIC 
investment. The SBIC investments have a low, fixed interest 
rate while private investors often negotiate a much higher 
interest rate for its portion of the investment.
    However, private investors must wait until the SBA has been 
fully repaid on this portion of the investment before they can 
start to receive investment. This means that private investors 
often wait years before seeing any return. Can you give me your 
reaction to that idea?
    Mr. Palmer or Dr. Cook.
    Mr. PALMER. Sure. I don't know the full details, but I 
think that--I am actually working with Benjamin Franklin 
partners to use the SBIC program more broadly and make it more 
accessible to small venture funds like theirs across the 
country.
    The private investors that drive these things, who do 
demand a certain rate of return, and we need to make sure that 
whatever products we are offering actually passes the market 
filter there to drive that private capital to them, to make 
sure that the capital is there. Because if it is not, they just 
won't do it.
    But I don't know the specific structure, but I would be 
happy to work with you and your staff on it, because I think 
Benjamin Franklin Funds serve Pennsylvania well. I think they 
are a model for lots of other States, and we would love to make 
the SBIC program more flexible to serve more funds like that in 
more places in Pennsylvania.
    Mr. EVANS. Dr. Cook, any reaction?
    Ms. COOK. I would say that anything that pushes private 
investors to invest in African American entrepreneurs, in 
particular, is well worth it.
    Only 1 percent of African American founders receive venture 
capital funding. So anything that will increase that, that kind 
of private capital, I think, would be well worth it.
    Mr. EVANS. Okay. Mr. Palmer and Dr. Cook, real quick, three 
States--California, Massachusetts, and New York--saw over 70 
percent of all venture capital investment from 2014 to 2018. In 
that same period, my home State of Pennsylvania received less 
than 5 percent of the total venture capital. What suggestions 
would you have that we could do in Pennsylvania to make it more 
appealing?
    Mr. PALMER. I would suggest, and not just for Pennsylvania 
but to the diversification and democratization of venture 
capital is, reimagine an equity platform for the SBICs. When 
the SBICs were able to do more early stage plat--investing, 
they were all over the country, in much smaller cities, and 
outside those three concentrated areas.
    We can do that in a way that is protective of the taxpayer 
and that would fix a lot of that problem. I think that is one 
of the things that the SBA can do and that you have authority 
on this Committee over.
    Mr. EVANS. Dr. Cook, real quick, do you have any thoughts 
on that?
    Ms. COOK. I would say that one of the things that would 
attract capital to areas like yours, like mine in Michigan, 
like Blackshaw's in Ohio, would be to invest in digital 
infrastructure. I hate to keep going back to this.
    I work on the economics of innovation, but the digital 
divide between rural and urban, for example, or from the coast 
and other places in the country, it is critical that this be 
built out. We are not going to be competitive--any kind of a 
competitive economy if we don't do this. So I think this is a 
deep investment that has to be made and be made quickly.
    Mr. EVANS. Thank you, Madam Chair. I yield back.
    Chairwoman VELAZQUEZ. The gentleman's time has expired.
    Now we recognize the gentleman from North Carolina, Mr. 
Bishop, for 5 minutes.
    Mr. BISHOP. Thank you, Chairwoman Velazquez and Ranking 
Member Chabot. Thank you for the hearing. Thank you to the 
witnesses for lending their expertise. I appreciate the 
interesting discussion about some new and long-term solutions, 
some of them potentially expensive, but I hope to address 
briefly one beneficial policy change we can make right away to 
an existing program so more small businesses remain standing 
once this crisis is over.
    Two weeks ago our Committee heard from SBA Associate 
Administrator James Rivera on the implementation of the 
Economic Injury Disaster Loan Program in the course of the 
pandemic. To be frank, I believe SBA's rationale for limiting 
the size of EIDL loans to $150,000, to have left a great deal 
to be desired.
    This decision not only sorely disappointed the expectations 
of businesses hoping to receive relief, it was an 
incomprehensibly bad credit decision. After all, if a business' 
intrinsic financial circumstances warrant the $2 million loan, 
to extend it a $150,000 loan is a futile act, which guarantees 
not only failure of the business but, of course, a default on 
the inadequate loan as well. And that, in turn, negatively 
impacts U.S. taxpayers.
    Unfortunately, it is up to Congress to fix SBA's error. 
When reflecting upon our hearing and talking to constituents, 
one idea suggested was to allow EIDL borrowers to go back for a 
second EIDL, or modify the EIDL loan balance to receive a 
higher amount. The idea would be, if the business received an 
EIDL for less than the appropriate amount, it could receive a 
supplemental loan for the difference between the appropriate 
amount, according to SBA underwriting standards, and the amount 
previously loaned under SBA's misguided $150,000 limitation.
    For example, if company X would have qualified for an EIDL 
for a million dollars to help it weather this crisis but only 
received $150,000, Congress would allow that business to reply 
for a second EIDL worth up to $850,000.
    To restore constituents' faith in our relief efforts and 
those of SBA, it is important, I submit, that we provide them 
the relief that was promised to them on the front end.
    To the panel, Mr. Palmer, we have had good conversations. 
You have always supported and been open about commonsense 
solutions. Do you think this idea of allowing businesses 
effectively to double-dip on EIDL would help more businesses to 
weather the short-term storm?
    Mr. PALMER. I am not sure I would call it double-dipping 
because the statutory language, I think, was a $2 million cap. 
I mean, I think there is an obligation for agencies to follow 
the explicit language of the law written by the legislative 
branch.
    Chairwoman VELAZQUEZ. That is correct.
    Mr. PALMER. One thing, I think it is just the right thing 
to do legally, we are a Nation of laws, but two, there is clear 
expectations from small businesses. If small businesses were 
dedicating their limited time and resources to accessing amount 
that the law specifically allowed and didn't know they could--
but they really couldn't access it, that is not really fair to 
them.
    And this disaster has gone on longer than expected. So I 
think allowing people to go back to get the caps that they 
need, knowing the damages that they have, seems perfectly 
reasonable to me.
    Mr. BISHOP. Thank you, Mr. Palmer.
    And I agree. I think my choice of term is probably a poor 
one. It really is a simply going back and allowing them to have 
what was intended in the first instance.
    Dr. Cook, would you agree with Mr. Palmer's assessment of 
that idea?
    Ms. COOK. Yes. Yes, I would.
    Mr. BISHOP. Ms. Cohen, I heard what you said about the 
restaurant legislation that would provide grants, and I am sure 
that would be your preference, but do you know of any 
additional restaurants that could take advantage of the ability 
to go back and get the full EIDL amount, or something closer to 
it, depending on its own circumstances, that that would be a 
welcome opportunity for some?
    Ms. COHEN. I can't speak for all restaurants, but I 
certainly know that no restaurant I know at the moment could 
possibly sort of fathom the idea of taking on more debt while 
we are still trying to climb out of the situation that we are 
in, unfortunately.
    Mr. BISHOP. Do you think if they had a choice between 
additional indebtedness that would allow them to operate and 
capital to continue, or not receiving any benefit, they would 
prefer they would like to have that opportunity?
    Ms. COHEN. That is a tough choice.
    Mr. BISHOP. Yeah, okay.
    Ms. COHEN. Little bit of a Sophie's Choice there. I am not 
sure. I mean, yes, I think most restaurateurs would like to 
stay open, but I also know that it seems impossible to work 
with this unbelievable debt hanging over your head----
    Mr. BISHOP. Right.
    Ms. COHEN.--at a time it seems like we might never be able 
to actually open at full capacity again.
    Mr. BISHOP. Yeah. Thank you, Ms. Cohen.
    I think ultimately that choice is--that debt is going to be 
hanging over somebody's head, over the taxpayers or over the 
business owners.
    Thank you, Madam Chairwoman. My time is expired, I think or 
just about.
    Chairwoman VELAZQUEZ. The gentleman's time has expired, and 
now we recognize Mr. Schneider from Illinois.
    Mr. SCHNEIDER. Thank you, Madam Chairwoman, and I want to 
thank you and the Ranking Member for having this hearing and 
obviously the witnesses for sharing your perspectives today. I 
know this is a difficult situation for everybody. For anyone 
who is going through the health crisis and has lost somebody, 
it is unfathomable.
    But it is also an economic crisis, and the impact it is 
having on our businesses, but in particular, our small 
businesses, as was noted earlier, I think it is somewhere 
upwards of 75 percent of all businesses have had a negative 
impact on their revenues, on their business.
    None more so, Ms. Cohen, than what you talked about in the 
restaurant industry, especially our local restaurants, that are 
so much a part of the neighborhoods, the communities that we 
all live in, and they are struggling. And I am happy to be a 
cosponsor of the Restaurant Act because I understand how 
important that is.
    But I also will say share the thought with Mr. Bishop. And, 
Mr. Palmer, thank you for saying it is not double-dipping, that 
the law said that these businesses had an opportunity to get 
loans up to $2 million. The $150,000 decision was an arbitrary 
decision. I often use the analogy is, if you build a bridge 
halfway across the river, you may feel good for a while, you 
are still going to get wet, and not make it to the other side.
    We have got to provide a bridge for our economy. Our 
economy is made up of the businesses and the workers in those 
businesses. We have got to be doing everything we can to help 
them.
    And Ms. Cohen, what you were saying, I can't think of any 
small restaurant that is in a position to take on more debt. 
They are just trying to barely hang on, whether it is takeout 
service, delivery service, a few are able to open. But it is 
going to be fits and starts.
    Mr. Blackshaw, I loved your acronym, VUCA, volatility, 
uncertainty, complexity--you might add ``chaos'' into it right 
now--and ambiguity. It is a tough time, and having been in 
business, I understand that, and we are looking forward.
    And I forget who said it, but the idea of an 8-month 
solution for--or 8-week solution for an 18-month problem is one 
of our challenges. So maybe I will turn to the two business 
owners, Ms. Cohen and Mr. Blackshaw.
    Looking forward with this uncertainty, what can Congress do 
to help give some stability, some confidence to help you make 
the hard choices to risk capital, to risk your and your 
employees' future to try to make it to the other side?
    Ms. COHEN. Well, first of all, thank you so much for 
supporting the Restaurant Act. I am deeply grateful for that. 
And not to sound like a broken record, but the best thing that 
Congress can do is support the Restaurant Act. Let's get more 
members to support the Restaurant Act. That is the only way 
that I know and other restaurants know that we can open up 
safely. We don't have to put too many people in our dining room 
at once. We can keep our employees safe, and we can keep our 
customers safe.
    Mr. SCHNEIDER. Mr. Blackshaw, you are in a different type 
of business. What would you suggest?
    Mr. BLACKSHAW. Listen, I think anything Congress can do to 
reward, recognize, credential--you know, innovation in this 
environment is critically important, and some of that is just 
really eyes wide open to what is already happening. I think a 
lot of the answers are out there. We just need to really 
smartly graft the ideas that are taking place maybe in a lesser 
known region and turn it into a big national idea.
    That is what I love about the digital Natives. You know, 
whether we like TikTok or Instagram or not, they are brilliant 
at finding sources of inspiration across the world and scaling 
it. And I think we have this golden opportunity to find those 
programs, those initiatives, those more-for-less ways of 
delivering services and turn them into big opportunities.
    Congress can play a very, very key role, shining a light on 
that. I think that the whole issue of reinventing your 
platforms is so important. It is not enough to say that the SBA 
site is improving 20 percent per year, because we have all, in 
this VUCA world we have gone from, like, a hockey stick on how 
we use Zoom. The expectations are so much higher, and how do we 
bring out a clean sheet of paper on how services are delivered, 
how you apply for loans online.
    And it is all doable. We can learn, and I think a lot of 
these big tech players will probably gladly co-invest. I think 
they are looking for opportunities to show goodwill and--but I 
think they are also genuinely concerned on the issue and they 
bring know-how, and I think Congress can really make a lot of 
those outcomes real.
    Mr. SCHNEIDER. Thank you. And just with my last few 
seconds--thanks for that--I like the idea of the STARTUP 
mentality. We need to create that STARTUP. The challenges we 
face I would describe it not just a hockey stick. It is a 
hockey stick on a spring, bouncing on a trampoline.
    The rate of change is so dynamic and so fast, government 
has to keep up. In fact, we need to make sure the SBA isn't 
just keeping up but leading the way, and I look forward to 
working with my colleagues on this Committee to try to do that.
    Once again, I thank everyone. I know how hard it is, try 
and get there, keep working, together we are going to get 
through this crisis.
    Thanks so much. My time is expired. I yield back.
    Chairwoman VELAZQUEZ. The gentleman's time has expired.
    I now recognize the gentle lady from Pennsylvania, Ms. 
Houlahan.
    Ms. HOULAHAN. Hi. I hope that you can hear me.
    Chairwoman VELAZQUEZ. Yes, we can.
    Ms. HOULAHAN. And I would also like to echo my appreciation 
to the panelists and to the Committee. And I know, as an 
entrepreneur myself, how very, very difficult it is in the best 
of times to be an entrepreneur, and particularly I can't even 
imagine how hard it is now.
    And so please take my questions just as questions because I 
am trying to be as thoughtful and probative as I can be on 
behalf of the people that I represent.
    And so my first question is regarding the restaurant bill. 
You know, shortly after this call, I will be going back and 
sitting with my team, with a legislative lens on, trying to 
figure out what bills to get behind and what bills to not get 
behind. And let me just posit this to you, to Ms. Cohen 
possibly, would probably be the most likely person to answer my 
question.
    Many, many, many businesses have a situation that you have 
right now, where you have taken the PPP loan. You may or may 
not be able to use it or open on time. You may or may not have 
to go in and out of operating your business over this period of 
time.
    I am just west of Philadelphia, and my community just 
barely opened and may be closing back again in the foreseeable 
future. Our businesses like live venue, live theater, are just 
a few of those thanks that I could name that need just as much 
help as the restaurant industry does but may not have quite as 
much of a lobbying power as the restaurant industry does.
    Why does this restaurant industry need the help different 
than any other company? And why wouldn't it be more 
appropriate, perhaps, if the PPP program has been effective, to 
be able to have trigger mechanisms maybe for certain 
industries, maybe for certain regions or zip codes, as we come 
in and out of this problem? Why wouldn't we better be served by 
taking something that is working and tweaking it for everyone, 
rather than one industry?
    Ms. COHEN. Thank you so much for the question, 
Congresswoman.
    For one, the PPP, even if it were to be extended, is still 
just a bridge. It is not a long-term solution for us. And the 
restaurant industry is uniquely and completely reliant on 
social gatherings to generate revenue, which is why the 
pandemic and public health shutdowns affected us more than any 
other business.
    Unlike airlines or big retailers, independent restaurants 
do not have access to debt or capital markets. And as a result, 
independent restaurants face the perfect storm that will force 
more than 85 percent of them to close without intervention. 
That would be disastrous for our Nation's roughly 500,000--
500,000 independent restaurants and the over 11 million 
employees that they employ.
    Ms. HOULAHAN. But wouldn't you agree that something like 
live music or live theater or really almost anything live is in 
just as dire straits as your industry is?
    Ms. COHEN. I am not advocating against any other industry 
receiving money. But I do think that we have less access to 
capital. In particular, independent restaurants.
    Ms. HOULAHAN. And in the situation where you would be able 
to evolve the PPP loan to be able to be, as it is currently, if 
you use it a certain way, it is not a loan, it is a grant, and 
there is forgiveness, why wouldn't we do the same and have 
tranches have multiple times, multiple dips as Representative, 
I believe it was Bishop was talking about with EIDL, but 
actually genuinely in this case, PPP, multiple opportunities to 
access this bucket of capital, would that not in the case were 
it to be converted to a grant, would that not satisfy the 
restaurant industry and other industries similarly?
    Ms. COHEN. I cannot speak on behalf of other industries 
unfortunately.
    Ms. HOULAHAN. Sure.
    Ms. COHEN. But I think for restaurants, part of the PPP is 
about getting employees back on the payroll, and it is 
predicated on that. And that is very hard for what I am looking 
at, for an 18-month problem, where we are going to have 
employees come on and off. And I don't want to--on and off our 
payroll. And I don't want to put employees back on my payroll 
and then have to take them off again. I would rather slowly 
build up to a time where we can actually get fully up and 
running.
    Ms. HOULAHAN. And I appreciate that. I really don't mean to 
put you on the spot. I am just trying to noodle over kind of 
what our opportunities are.
    Do any of the other panelists, with the 39 seconds that I 
have left, have anything to add or offer to that question?
    Mr. PALMER. I would add something, is that, you are right, 
it is not,--I mean, restaurants are taking it on the chin. They 
are a massive employer. They are a significant local economic 
jobs multiplier. But there are other businesses that--in 
particular, staging or lighting--they really have taken it on 
the chin. So your proposal on having tailored PPP now that we 
have time to be thoughtful and deliberative about how we are 
going to structure these things, makes some sense.
    And this isn't based on the Restaurant Act, I know nothing 
about the Restaurant Act. But if we can be deliberate about how 
we define injury, what they can use it for, what their needs 
are, what they--make it a deductible expense--a permitted 
expense under PPE for forgiveness, for example, to make your 
business safe, if you are getting one of these loans.
    There is lots of things we can do, or we could even for 
some of these other grant programs, have it where there is no 
payments for the first 2 years. It is still a loan, but there 
is no payments for the first 2 years because the 10-year 
Treasury right now is running at what, 20 basis points?
    You can do a significant amount for a very small amount of 
time, and then you pay the regular payments after the first 2 
years to give businesses a chance to recover that are currently 
totally shut down. There are lots of creative ways we can look 
at these things, but we do have the time but not a ton of time.
    Ms. HOULAHAN. Thank you. I yield back. I appreciate it.
    Chairwoman VELAZQUEZ. Sure. The gentle lady from Minnesota, 
Ms. Craig, is recognized.
    Ms. CRAIG. Thank you so much, Madam Chairwoman.
    Dr. Cook, I just want to maybe just make a quick comment on 
your point related to the healthcare crisis, the public health 
crisis, that we are in here today.
    My point from day one has been that if we handle the public 
health crisis side of this well, that the economic crisis will 
take care of itself.
    So I just wanted to say, I heard you in your testimony and 
in your Q&A about how critical it is that even though we are on 
the House Committee on Small Business that the Congress 
continues to focus on coming up with a more robust strategy as 
it relates to how we handle the healthcare crisis of COVID-19.
    Ms. Cohen, I also wanted to say to you that I am a strong 
supporter of the Restaurants Act. I am on Representative 
Blumenauer's bill. My only regret is that I didn't author the 
bill first, so thank you for your advocacy of that bill.
    I did, however, introduce a bill that the Chairwoman was 
kind enough to also become an original on, that would allow 
folks who have seen a 50 percent reduction in revenue, as a 
result of COVID-19, as well as have 100 or fewer employees to 
come back and get a second forgivable loan.
    Can you tell me how you think about a bill like that, which 
obviously is less industry-specific, versus the Restaurants 
Act, and sort of compare and contrast the value of those two 
actions from the part of the Congress?
    Ms. COHEN. Thank you so much for sponsoring the bill, our 
bill, and I think that is actually a terrific bill. I think 
that the Restaurant Act takes care of more of our needs and 
that it allows us to pay back our suppliers, actually, get us 
back up on our feet and not just put our money--I mean, putting 
our money into payroll is incredibly important, and I want to 
get all my 35 employees back on my payroll.
    But I would also really, really like to be able to open my 
business and put money back into the economy through my 
suppliers.
    Ms. CRAIG. Thank you so much for that. And I will just, a 
quick follow-up for you is, I know, as we have reopened here in 
Minnesota, many of my restaurant owners, independent owners, 
have been asked to undertake safety measures, obviously to keep 
customers more safe and limit the spread of COVID-19.
    I am hearing from them, even though they serve far fewer 
customers, that they are required to put in place higher 
staffing levels to open those doors. What can Congress and the 
SBA do to help lower those burdens, at the same time, ensuring 
that your employees and your customers remain safe?
    Ms. COHEN. I am not sure what more that can be done. We do 
have to--we have more people employed. For me, personally, I 
have somebody who monitors the bathroom. We don't even have 
dine-in service, but I have guests who come in, and I want to 
make sure that the bathroom is as clean as possible. That is 
not normal. I don't usually have a bathroom attendant in my 40-
seat restaurant.
    So I am not sure what more actually can be done, unless we 
get money that we can specifically use for things like the 
PPP--the PPE or for hiring those extra people, and extra 
cleaning, all those extra stuff.
    Ms. CRAIG. Thank you so much. And I just really appreciate 
your advocacy on the part of independent restaurants.
    And then finally, Mr. Palmer, very quickly, do you think 
certain industries, moving forward, will face unique challenges 
post-COVID-19, into this recovery phase, and you know, any 
thoughts that you have on specifically what Congress can do to 
continue to help business recover?
    Mr. PALMER. Absolutely. There is going to be definitive 
variations, hospitality and events industries. Anyone who has 
to do long-term planning, because right now, we just don't have 
any idea what 2 months are going to look like--things are going 
to look like 2 months from now, much less a year from now.
    I think we need to be providing patient capital as much as 
we can. I think Congress really needs to revisit our policies 
as it relates to manufacturing and domestic production.
    One of things that became clear out of this is that our 
inability to create PPP and other critical infrastructure, the 
fact that we still can't get Lysol disinfectant wipes in a 
supermarket 5 months later because we don't have the chemicals, 
or whatever is causing those type of shortages is kind of 
crazy.
    So I think we need to revisit our access to equity capital, 
the patient capital, and we need to make sure we are making 
this a hospitable place for manufacturing in the United States.
    Ms. CRAIG. Mr. Palmer, thank you so much. I am a founding 
member of the Supply Chain Caucus of the Congress, and who 
would have thought that that would be a sexy topic. With that--
--
    Mr. PALMER. Thank you for doing it.
    Ms. CRAIG. Madam Chairwoman, I yield back.
    Chairwoman VELAZQUEZ. The gentlelady yields back.
    I will go to Mr. Mfume from Maryland if he has any 
questions.
    Mr. MFUME. I do, and I hope everyone can hear me. Thank you 
for returning back to me, Madam Chair. I just have a couple of 
observations, which, to me, are significant and maybe even 
poignant. It was my pleasure to serve on this Committee for 10 
years during my first stint in the Congress, before I decided I 
would just voluntary leave and go do something else in life.
    But one of the things interesting about that is that much 
has changed, and yet much still remains with respect to the 
topical areas that we are dealing with, Madam Chair. And I 
would--again, as I said earlier, this notion of lasting 
solutions is a key phrase because this will be over one day. 
The question becomes, what happens to the small businesses of 
America.
    And lasting solutions are going to require ingenuity and 
creativity but also access to capital and access to credit, 
which was the major driving force in hearings like this in 1989 
and throughout the 1990s, Madam Chair, when you were a member 
of the Committee. It is still a driving issue.
    And I think about SBICs, which we created as a Congress in 
1958, and I think about all the other initiatives, and I was 
very interested in hearing the phraseology about, we need an 
SBA on steroids. We really do, because we really always have 
needed that.
    But there are some other things that I would think 
observationally that we might want to consider as we go down 
the road on this topic in future hearings, one of which is 
that--and by the way, Mr. Palmer, I appreciate your commentary 
and your information. I would slightly disagree with you on one 
matter. You said that minority businesses in many instances 
were not applying for some of the structured loans and other 
programs that are out there, whether it is SBIC or something 
else, because they didn't always have the knowledge.
    I would suggest to you that many have not applied because 
they know that they are going to get turned down, as they have 
been turned down repeatedly, over and over and over again. And 
so my argument here is that we have to be deliberate in terms 
of what we do going forward, that we need a deliberate tax 
policy, a deliberate banking policy, a deliberate SBA policy, 
that we have got to find a way to create small venture capital, 
as someone said earlier, which is absolutely crucial. That is 
within the domain of the Congress itself.
    And we have got to look at some of the other smaller 
things, like overly burdensome bonding requirements, the little 
things that create and push businesses sometimes to the edge.
    So I am looking forward, Madam Chair, actually to this 
discussion continuing and going on, and I appreciate your 
leadership and the leadership of the Ranking Member on this. It 
is something that has fascinated me for a long time.
    And now after having watched this unfold for the last 31, 
32 years, since I first took an oath of office, it is 
perplexing how this issue is not only vexing, but it is 
repeating itself over and over and over again. So there is a 
lot of work to do in this area.
    This notion about making sure that we are taking care of 
urban versus rural businesses is important also. I always say 
``urban and rural,'' and whether we are talking about minority-
owned or women-owned businesses, there are a lot of niches here 
that we have the ability, I think, under your leadership in 
this Committee, to kind of cull together and put forward a kind 
of policy that many of our colleagues in the House would 
appreciate.
    So, again, Madam Chair, thank you very, very much for your 
leadership. I am going to stop filibustering as if I were on 
the other side of the building right now and yield back the 
time that I have.
    Chairwoman VELAZQUEZ. Thank you so much and thank you for 
your contributions and your history of fighting for fairness, 
and especially civil rights, criminal justice reform. How do we 
contribute to make an economy that is just for everyone in this 
country?
    Mr. Chabot, do you have any other question?
    Mr. CHABOT. Madam Chair, I think this has been a very 
interesting hearing. I think the witnesses did a great job, all 
of them and--learned a lot, and hopefully on a bipartisan 
basis, we will put some of this into action.
    So thank you for holding this.
    Chairwoman VELAZQUEZ. Thank you. Thank you.
    Let me just say to all the panelists, thank you for your 
contributions, shedding light onto what is happening, and 
helping us put together an agenda that really reflects the 
unprecedented crisis that we are witnessing.
    People love to say that small businesses are the backbone 
of America, that small business is the engine that fuels our 
economy, and this is a time that has shown that they need help. 
Otherwise, a lot of them are going to close their doors 
forever.
    Dr. Cook, I am going to take an opportunity here in my 
closing remarks, to ask you a question. There are two issues 
that I want to raise, and one was raised by Mr. Bishop. He is 
frustrated because the EIDL program provides for loans of up to 
$2 million.
    However, the administration never expected the 
unprecedented numbers of loan applications, and rather than 
coming back to us to ask for an increase in the funding for the 
EIDL, they decided to cap it to $150,000.
    We are working on bipartisan legislation that will address 
this issue, and Dr. Cook, right now, there is, roughly, $130 
billion in the pipeline regarding the PPP, and I would like to 
see that 50 percent of that money is carved out for minority 
businesses and women-owned businesses.
    One of the issues that we are confronting is that we don't 
know how well the PPP is working, because the data was not 
provided to us until last Friday at midnight.
    Not only that, but by going through the data, we are 
finding a lot of errors. How do you assess the possibility of 
us setting aside 50 percent of the $130 billion so that 
mission-based lenders will have an opportunity to make those 
loans? What impact would that have?
    Ms. COOK. I think that would be critical, and I think it 
would be critical for several reasons. They were at the back of 
the line for many reasons that Ms. Cohen was outlining, but 
also because of these historical relationships, because of what 
Congressman Mfume was talking about, the systemic issues that 
have not yet been addressed. But I think that, yes, setting 
aside 50 percent, I think, would be extremely useful.
    But I think the other thing that is being missed here--I am 
sorry I didn't say it earlier--is that the micro enterprises, 
the newest businesses, are where innovation comes from in 
America, and they are also being left behind.
    So we could have a permanent ding on economic growth if we 
are not attending to those that don't yet have relationships 
with banks.
    So I think for minorities, for the smallest businesses, I 
think we really have to do more. And they should be grant-
based. There can't be this uncertainty that Ms. Cohen is 
talking about, because they don't have the capacity to figure 
all this stuff out, and we shouldn't put that burden on them.
    Chairwoman VELAZQUEZ. Right. Micro lenders provide 
capacity-building for those businesses. We fought to get them 
as part of the mission-based lender in the second tranche of 
money that we passed.
    Well, let me again thank all of the witnesses for your 
participation. I look forward to working together as a 
committee to help guide our country's small business owners 
through these unprecedented times.
    I ask unanimous consent that Members have 5 legislative 
days to submit statements and supporting materials for the 
record.
    Without objection, so ordered. If there is no further 
business before the committee, we are adjourned. Thank you.
    [Whereupon, at 2:43 p.m., the committee was adjourned.]
    
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