[Senate Hearing 116-110]
[From the U.S. Government Publishing Office]


                                                     S. Hrg. 116-110

          OVERSIGHT OF THE U.S. SMALL BUSINESS ADMINISTRATION

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

                                HEARING

                               BEFORE THE

                      COMMITTEE ON SMALL BUSINESS
                          AND ENTREPRENEURSHIP
                          UNITED STATES SENATE

                     ONE HUNDRED SIXTEENTH CONGRESS

                             FIRST SESSION

                               __________

                           FEBRUARY 13, 2019

                               __________

      Printed for the use of the Committee on Small Business and 
                            Entrepreneurship

[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Available via the World Wide Web: http://www.govinfo.gov
        
        
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                    U.S. GOVERNMENT PUBLISHING OFFICE                    
35-698 PDF                  WASHINGTON : 2020                     
          
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            COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP

                     ONE HUNDRED SIXTEENTH CONGRESS

                              ----------                              
                     MARCO RUBIO, Florida, Chairman
              BENJAMIN L. CARDIN, Maryland, Ranking Member
JAMES E. RISCH, Idaho                MARIA CANTWELL, Washington
RAND PAUL, Kentucky                  JEANNE SHAHEEN, New Hampshire
TIM SCOTT, South Carolina            EDWARD J. MARKEY, Massachusetts
JONI ERNST, Iowa                     CORY A. BOOKER, New Jersey
JAMES M. INHOFE, Oklahoma            CHRISTOPHER A. COONS, Delaware
TODD YOUNG, Indiana                  MAZIE K. HIRONO, Hawaii
JOHN KENNEDY, Louisiana              TAMMY DUCKWORTH, Illinois
MITT ROMNEY, Utah                    JACKY ROSEN, Nevada
JOSH HAWLEY, Missouri
             Michael A. Needham, Republican Staff Director
                 Sean Moore, Democratic Staff Director
                           
                           C O N T E N T S

                              ----------                              

                           Opening Statements

                                                                   Page

Rubio, Hon. Marco, Chairman, a U.S. Senator from Florida.........     1
Cardin, Hon. Benjamin L., Ranking Member, a U.S. Senator from 
  Maryland.......................................................     4

                                Witness

McMahon, Hon. Linda E., Administrator, U.S. Small Business 
  Administration, Washington, DC.................................     6

                          Alphabetical Listing

Cardin, Hon. Benjamin L.
    Opening statement............................................     4
McMahon, Hon. Linda E.
    Testimony....................................................     6
    Prepared statement...........................................     9
    Responses to questions submitted by Chairman Rubio and 
      Senators Risch, Inhofe, Booker, and Hirono.................    67
Risch, Hon. James E.
    Prepared statement...........................................    38
Rubio, Hon. Marco
    Opening statement............................................     1
Small Business Investor Alliance
    Statement dated November 7, 2017.............................    39
    Letter dated August 10, 2018.................................    50
    Letter dated February 27, 2019...............................    64

 
          OVERSIGHT OF THE U.S. SMALL BUSINESS ADMINISTRATION

                              ----------                              


                      WEDNESDAY, FEBRUARY 13, 2019

                      United States Senate,
                        Committee on Small Business
                                      and Entrepreneurship,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 2:30 p.m., in 
Room 428A, Russell Senate Office Building, Hon. Marco Rubio, 
Chairman of the Committee, presiding.
    Present: Senators Rubio, Risch, Ernst, Young, Kennedy, 
Romney, Hawley, Cardin, Shaheen, Markey, Booker, Coons, Hirono, 
Duckworth, and Rosen.

OPENING STATEMENT OF HON. MARCO RUBIO, CHAIRMAN, A U.S. SENATOR 
                          FROM FLORIDA

    Chairman Rubio. This hearing will come to order, the 
Committee on Small Business and Entrepreneurship. I want to 
thank all of you for being here. I want to welcome 
Administrator McMahon. It is an important hearing for me. It 
is--actually, it is my first. We have done subcommittees 
together but this is our--so there is really no baseline, so 
today is the baseline for how to judge the other ones. But--and 
it is really an honor to lead this Committee and to do so with 
the Ranking Member, who I also serve with, in the same 
capacities, on the Subcommittee on the Western Hemisphere and 
Foreign Relations. So people are starting to say we look alike, 
which is--we have done a lot of bills together as well.
    And we have three new members to the Committee--Senator 
Romney, Senator Hawley, Senator Rosen. We appreciate your 
service and look forward to working with you this Congress. The 
issues under the jurisdiction of this Committee are of great 
importance to the whole country. Over--close to 60 million 
Americans work for a small business so that is literally half 
of our workforce.
    And this Nation has a long history of innovation and 
entrepreneurship and hard work. And when American ingenuity, 
innovation, access to capital, access to markets, access to 
workforce--when all of that is in place we are a Nation that 
creates dignified jobs, and dignified jobs create upward 
mobility, and with upward mobility lives are changed for the 
better, communities are changed for the better, and the country 
is stronger for all of that.
    So my priority here as Chairman is to pass bipartisan 
legislation that will expand economic opportunity for small 
businesses and for entrepreneurs who are forced to take on 
personal risk and sacrifice to compete in this new global 
marketplace.
    As everyone in this room is aware, we got off to a slow 
start here at the beginning of the year in Washington. However, 
by most accounts, Administrator McMahon and the Small Business 
Administration have responded well, following the government 
shutdown. I commend you, your staff for their hard work to 
process the backlog of loans, to get expansion plans and small 
business growth back on track.
    Following a history year of small business growth and 
optimism, I look forward to solutions from this Committee that 
will continue this pattern of growth, because bringing 
dignified jobs back and increasing opportunity in the areas of 
our country that need it the most are priorities, I believe, of 
every member of this Committee and should be the priority of 
this Committee during this Congress.
    In times of distress and challenge, small businesses bring 
communities together and are vital to boosting morale. I have 
seen it first-hand in Florida, after the effects of natural 
disaster and the subsequent assistance the SBA offers to 
revitalize the area. Last October, Hurricane Michael hit our 
Panhandle, with the third-most intensity of any Atlantic storm, 
and the SBA is now processing more than 14,000 loans that will 
inject more than $651 million into recovering and rebuilding 
the homes and businesses in Georgia and in the Florida 
Panhandle.
    Previous to that, Hurricane Irma, the strongest storm to 
ever exist in the open Atlantic, hit Florida and Georgia, South 
Carolina, and Puerto Rico, in August and September of 2017. 
Hurricane Maria, the worst natural disaster on record for 
Puerto Rico, struck just two weeks after that. The SBA was 
quickly on the ground with nearly 2,000 field staffers and has 
handled more than 675,000 phone calls just from Puerto Rico. 
The region could not have survived without the $7.37 billion in 
loans that the SBA distributed in the wake of Hurricanes 
Harvey, Irma, and Maria.
    In times of tragedy, small businesses are the gathering 
place for the community and they become centers of optimism. So 
we have to make sure the disaster loan process operates at its 
peak efficiency, streamlining the process, making recovery 
dollars quickly available. And I look forward to working with 
the SBA to find the most effective way to serve disaster 
survivors.
    Another focus, I hope, of this Committee will be the 
competitiveness of American entrepreneurs and small business. 
Yesterday we released a report, ``Made in China 2025 and the 
Future of American Industry'' that evaluates China's plan to 
become the global leader in innovation and manufacturing. Our 
report highlights the challenges posed by China's blatant 
industrial espionage and coercion, actions that threaten our 
economic framework and our national prosperity. It offers 
several policy recommendations to strengthen the system against 
its rivals.
    The role of government is to align our economic policies 
with the right national priorities, and my personal view is 
that for too long we have been aligned behind some of the wrong 
priorities. Our most important priority should be creating 
dignified work through investment and innovation, and I see 
real opportunity through this Committee to bolster SBA's 
programs that provide capital for innovative, high-growth-
potential firms. It is the goal of the SBA programs to act as a 
launching pad for small businesses, and there are specific 
programs at SBA that fill a gap in capital to startups and 
entrepreneurs who may have the next great robotics product, as 
an example.
    One of these programs, the Small Business Investment 
Company Program, introduced a concept of venture capital. 
Through this program, SBA licenses privately owned SBICs and 
provides them with leverage from SBA-guaranteed loans that the 
SBICs then couple with their own capital to invest in small 
businesses. This venture capital tool is a great way to fuel 
innovative, high job growth industries and companies.
    Last Congress, I introduced the Spurring Business and 
Communities Act to increase the number of SBICs in states like 
mine, like Florida, where there are fewer investment companies. 
I'm proud to say that bill passed. The President signed it in 
December, and I'm eager to hear from Administrator McMahon on 
the SBA's progress in implementing this new law.
    Unfortunately, an issue Congress needs to address is the 
timing for getting an SBIC license approved. Already an arduous 
application process, licenses can take more than a year to be 
approved, hampering access to capital for innovative startups. 
This is an example of the need to streamline agency processes 
so that we are not leaving money on the table and keeping 
businesses from starting or growing or innovating.
    Another set of SBA programs that are focused on innovation 
are the Small Business Innovation Research and Small Business 
Technology Transfer Programs. They provide an opportunity for 
small businesses to partner with the government to conduct 
research and development that can ultimately fill a government 
need and provide the small business with funding to develop 
their ideas and technologies with the goal of commercializing 
that technology. Though these programs represent a very small 
percentage of extramural R&D for participating agencies, they 
show an impressive--very impressive return on investment.
    The Navy commission to study, in 2016, it showed that 
commercialization of SBIR and STTR technologies resulted in 
$14.2 billion in sales of new products and services and $7 
billion in sales for new capabilities and products to the U.S. 
military from the Navy alone.
    The economic impacts of the program tell a similar story of 
nearly $2.3 billion investment from 2000 to 2013. The program 
provided a 19-to-1 return on investment, with an economic 
output of $44.3 billion and the creation of nearly 200,000 
jobs. I understand a Defense-wide report on these programs is 
expected in the coming weeks and I have no doubt that the 
numbers from them will be similarly impressive.
    But this is the kind of program and investment we need to 
make in the continued development of innovative firms that will 
bolster American jobs and bolster American global 
competitiveness.
    While I intend to focus on innovation and competitiveness, 
it is also important that we work together to streamline 
processes at SBA and conduct appropriate oversight of the 
agency to ensure small businesses are able to access the 
programs that they need. An area that small businesses will 
always come to the SBA for is capital. Access to capital 
remains a top issue for entrepreneurs across the country. So 
any changes made at SBA that affect programs providing capital 
should be considered thoughtfully.
    It is also important that we work to streamline processes 
that we're not--as we work to streamline processes that we're 
not skipping over the very small businesses that the SBA exists 
to serve.
    A proposed lending rule that the SBA issued in October 
appears to have failed to consider the effect of the regulation 
on small entities. Aside from some questionable changes that 
the rule would make, it is concerning that the Small Business 
Administration is making rules without considering small 
business impacts through a detailed regulatory flexibility 
analysis. SBA requires other agencies to do this analysis when 
a proposed rule will have a significant economic impact on a 
substantial number of small entities, yet this rule contains no 
analysis of the potential impact of these provisions on smaller 
loans, under $350,000, and the negative potential impact on 
small business access to capital.
    So I look forward to discussing these things today and to 
working with this Committee and this Congress to ensure that 
the SBA is working as effectively as possible for the American 
people, and I also look forward to learning how this Committee 
can provide the support the SBA needs to carry out its 
important mission.
    I turn it over to the Ranking Member.

OPENING STATEMENT OF HON. BENJAMIN L. CARDIN, RANKING MEMBER, A 
                   U.S. SENATOR FROM MARYLAND

    Senator Cardin. Well, Senator Rubio, first congratulations 
on your selection as Chairman of this Committee. I can tell you 
on behalf of not just the Democratic members but all members of 
this Committee we look forward to working with you. We are 
excited about your strategies for what this Committee needs to 
undertake during the 116th Congress, and we look forward to 
continuing the great tradition of this Committee to work in a 
nonpartisan, bipartisan manner to help the small business 
communities in this Nation.
    And to Senator Risch, congratulations on your term as 
Chairman of this Committee. The two of us look forward to your 
leadership on the Foreign Relations Committee, since we serve 
on that committee with you, but it has certainly been a legacy 
that we intend to continue.
    Administrator McMahon, it is nice to have you here. As you 
noticed, we both are the leadership of not only this Committee 
but Western Hemisphere, so we expect that you will be putting 
the priority on trade between small businesses in the Western 
Hemisphere countries. So we will be asking you to report back 
to us on that. But it is good that we really have, I think, a 
very ambitious but important agenda.
    I also want to join the Chairman in welcoming our new 
members. Senator Rosen, it is good to have you here on this 
Committee and I look forward to working with you. And to 
Senator Romney and Senator Hawley, it is good to have both of 
you on our Committee and we look forward to your participation 
on this very important Committee. And welcome back, Madam 
Administrator.
    Chairman Rubio went through a lot of the issues that are 
extremely important. The bottom line is that small businesses 
are the driving force behind our economy. We know that. That is 
where job growth is going to take place. That is where 
innovation takes place. I am always so energized when I visit 
small businesses in Maryland and see the creativity that is 
taking place in these businesses. It is not only exciting 
because I know it is going to translate into more jobs, and 
good-paying jobs in our community, but I know that we are going 
to do things better as a result of their innovation.
    Our job is to make sure that the tools that are available 
are used in the most effective way to encourage the growth of 
small businesses in our community. And Chairman Rubio went 
through many of those particular areas, and I support what he 
has said. What I hope, on the oversight function that this 
Committee plays, that we can look at the essential tools that 
are under the SBA jurisdiction to see whether these tools are 
being operated in the most effective way or whether we also 
need to, in a reauthorization process, look at ways that we can 
make these tools more effective.
    Whether they are the access to capital, the 7(a) program, 
the 504 program, whether it is the SBIC that the Chairman 
talked about, what we are doing on high tech, on the SBIR 
program--all those are areas where we can try to see whether 
these programs can even be made more effective than they are 
today, in accomplishing our mission not only to help small 
business growth but to make sure it is done in a fair manner, 
so that underserved communities have access to these tools in 
order to be able to build the capacity in areas that we may not 
have had a fair allocation in the past.
    So I look forward to that type of discussion during this 
Congress. I think we can make tremendous progress.
    The Chairman also mentioned the disaster loan program, and 
I have mentioned this before in the Committee. Thank you again 
for the work that you did after the tragedies in Maryland. In 
Ellicott City, your people were on the ground, literally, when 
the waters were still flooding. You were there immediately and 
provided tremendous assistance. The only complaint I have from 
the small businesses is that your people had to leave the 
community at some point. They would have liked you to stay 
there because the services that you were providing were 
extremely helpful for these small businesses to get back on 
their feet. So I thank you very much for that service.
    I do want to say your presence here is very timely in that 
we went through the longest shutdown in the history of this 
country. The SBA was operating, as I understand, with about 
one-third of your workforce during that period of time. I want 
to first thank the dedicated workers at the Small Business 
Administration--these patriotic people, many of whom showed up 
for work without pay, doing their jobs, others not knowing 
whether they would get a paycheck, who were furloughed. And 
they are dedicated people and please express, on behalf of this 
Committee, our thanks for carrying out the mission.
    I know that many small businesses were inconvenienced 
during this period of time. I had--we know that loans were 
slowed down dramatically, came to a stop in several areas. The 
number I heard is that we lost as much as $100 million a day in 
loans that were not made during this period of time. We know 
that some of the contracting was not done. We know that the 
mentoring services had to be curtailed. The certification 
process for women, for HUBZones, and for 8(a) programs all were 
jeopardized during the 35-day shutdown. So I would be 
interested in your testimony as to how well we are back 
functioning since the government reopened, and we certainly 
hope that by tomorrow night, midnight, we will have a budget so 
we do not have to go through this again.
    But I just really want to comment. I, along with Senator 
Van Hollen, we had a meeting, a town hall meeting in Montgomery 
County, Maryland, not far from here, with small businesses. 
Small businesses that were there were not directly involved 
with the Federal Government. They did not have contracts with 
the Federal Government. They were not located in Federal 
facilities that were shuttered. And yet the dozen or so small 
businesses that were represented, their volume of business 
during the shutdown was down 20 to 60 percent from a year ago. 
The general impact on our economy was felt by all businesses, 
but small businesses do not have deep pockets, and it was 
extremely difficult and challenging for them to be able to 
maintain their workforce.
    We heard from one company that had to lay off 46 employees 
during this period of time. We know that the Community 
Advantage lender program, we heard that there were loans that 
were held up. In one case it was a restaurant in D.C. that 
wanted to locate in Baltimore, a $100,000 loan. That was put on 
hold during this period of time. We also had a situation with a 
504 lending program that could not close on a real estate deal 
by December 31st because they could not get their 504 loan. We 
are happy to report that that company has now gotten their loan 
but they missed their original date so it put them at a 
tremendous disadvantage.
    So we would like to hear from you how we are getting back 
up to work speed and dealing with the challenges that were 
created during the shutdown, and how confident you are that we 
can make up for those days and provide the services necessary 
for our small business community.
    And with that, Mr. Chairman, I look forward to hearing our 
Administrator and am looking forward to our exchange.
    Chairman Rubio. Thank you, and now I would like to welcome 
the Administrator of the U.S. Small Business Administration, 
Linda McMahon. She is head of the SBA since February 14th of 
2017, so a year ago tomorrow--two years. Is it 2019 already?
    And as an entrepreneur she co-founded the World Wrestling 
Entertainment and led the company to grow from a 13-person 
regional operation into a publicly traded global enterprise 
with more than 800 employees.
    I want to thank you for being here today. We look forward 
to your testimony.

 STATEMENT OF HON. LINDA E. McMAHON, ADMINISTRATOR, U.S. SMALL 
            BUSINESS ADMINISTRATION, WASHINGTON, DC

    Mrs. McMahon. Thank you, Chairman Rubio, Ranking Member 
Cardin, and members of the Committee. I appreciate the 
opportunity to visit with you again.
    Tomorrow will be two years, appropriately Valentine's Day, 
since I was sworn in as the Administrator of the SBA. In my 
testimony today I want to look back on my service, provide 
updates on our agency's progress, and outline some areas where 
I hope we can work together.
    Let me start by reporting on our activity following the 
lapse in appropriations. As a result of the lapse, our lending 
programs were closed for a total of 20 business lending days. 
During that time, SBA was unable to approve loans and was not 
able to accept new applications.
    Over the last two years I placed a great deal of emphasis 
on loan process improvement. By the end of 2018, we were able 
to reduce our processing times by half. Those improvements have 
clearly helped us following the lapse.
    Since lending activity resumed in all lending categories 
but one, our application volume is back to pre-lapse levels. In 
12 days of lending, we have approved over 5,700 loans, totaling 
over $2.5 billion.
    During the funding lapse, the agency had close to 2,000 
staff that were furloughed. While most routine activity ceased, 
we were able to perform limited risk management of our loan 
portfolio. We were also able to support contracting actions for 
DoD and other funded agencies. Our disaster staff were exempt 
from furlough and our operations continued as normal. The 
agency's work in responding to natural disasters stands out as 
an area that has touched so many members in so many states.
    Following the hurricanes in 2017 and 2018, I traveled to 
all of the impacted regions. Our work in many of these areas is 
ongoing. To give you a sense of scale to date, SBA has approved 
over 170,000 loans totaling $8.3 billion for those five 
hurricanes.
    In addition to the major disaster events, many of you 
certainly know and identify with more localized events in your 
states. Working with you and your governors, SBA has helped 
businesses and homeowners get back on their feet following 
flooding in Maryland, algae blooms and red tide in Florida, 
wildfires in Idaho and Washington, and volcanic eruptions in 
Hawaii, just to name a few. And speaking of Hawaii----
    Senator Hirono. Aloha.
    Mrs. McMahon. Aloha--snow in your State yesterday. Oh my 
goodness.
    Last year I updated you on my Ignite Tour, Senator Hirono, 
after I returned, and my goal to visit all 68 SBA district 
offices. I'm happy to report that I completed that tour in 
December and my last stop was in Honolulu. The purpose of my 
travel was to meet our field staff, see our SBA services are 
delivered to our customers and visit with small business 
owners, over 800 in total. I was pleased that many of you were 
able to join me.
    Highlighting some other accomplishments, in the last 16 
months we have closed 27 GAO and 144 Inspector General audit 
recommendations. We have made great strides in our agency's 
information technology and our IP protection. Also, we have 
increased our yearly SBIC license approvals from 15 to 25. We 
continue to improve the application process for Federal 
contracting through our certified system. We want to utilize 
the system this year for certifying women businesses and 
potentially service-disabled veterans.
    In the area of training, this spring we plan to launch a 
digital platform to provide learning resources for women 
entrepreneurs. This will enhance our outreach to more than 1 
million women, up from 150,000. We also will launch a 
leadership program for veteran entrepreneurs in conjunction 
with the VA.
    With our lending programs we will continue to expand our 
outreach in rural areas, as well as to minority populations. I 
am pleased with the success of our Microloan and Community 
Advantage programs and I hope we can build on them.
    I continue to examine workforce challenges, an issue I 
heard so much about during my travel. And lastly, we are 
reviewing our international trade initiatives so as to bolster 
export opportunities.
    In closing, I have shared with many of you how much I 
appreciate the bipartisan approach of this Committee and your 
support of the agency. We worked together last year on a number 
of items. This year I would invite you to experience SBA with 
me. Perhaps we can schedule time for site visits or roundtable 
discussions with small business owners in your State. Also, we 
could drop by our SBA district office or visit any of our 
resource partners--a university-based SBDC, women's business 
center, or a SCORE chapter.
    Two years ago I began my service as Administrator and every 
day I have valued our work on behalf of America's small 
businesses' men and women. I look forward to a productive 2019 
and to our continued work together, and I thank you very much 
for having me today and giving me the opportunity to speak with 
you.
    [The prepared statement of Ms. McMahon follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Chairman Rubio. Thank you, and thank you for being here.
    Let me start with this. There is a--and I mentioned this in 
my opening statement. The proposed rule that has been released 
and makes significant changes to the rules governing the SBA's 
lending program, it has resulted in about 4,000 individual 
comments. Now what I have heard from some lenders in Florida 
about the impact on the rule, especially those receiving loans 
under $350,000, I have heard a lot of concern about it.
    The change in the rule, I think, generally requires a full 
discussion, but the part that I am troubled by is it appears 
that it did not consider how the rule would affect small 
businesses. The Regulatory Flexibility Act requires agencies to 
consider the impact of their proposed rules on small entities 
and to consider less burdensome alternatives if the rule would 
have significant impact on a substantial number of small 
entities.
    The SBA Office of Advocacy, which monitors compliance with 
the Regulatory Flexibility Act, has looked at this rule and has 
asked the SBA to look for a less-burdensome way to regulate the 
loan program.
    So what analysis, if any, did the SBA perform to determine 
the impact of this rule on small entities?
    Mrs. McMahon. Primarily--and thank you for the question, 
Senator--primarily, we looked at this rule change relative to 
fees. And what jumped out at us, in fact, our Oakland office 
suddenly saw a few outliers in the fee structure. For instance, 
one particular loan in the amount of $22,000 had fees of 
$11,000. That prompted us to look across loans in very 
different areas of lending, different amounts, and we looked at 
about 65,000 of those loans, and we found that there were some 
outliers. But by and large, about 90 percent of the lenders 
were right in the area of the fee proposal caps that we took a 
look at. So we were comfortable with that range of the fee 
caps.
    And we looked at--you know, there were about 4,100 
responses now. We are still in the rulemaking process. So 
clearly as we continue to review those responses during the 
rulemaking process we will evaluate if we need to make changes 
in the rule and we will certainly report back to you, and I am 
welcome to have discussions with you at any time about that.
    Chairman Rubio. Well, just to be clear, at this moment the 
SBA's rationale is that this rule would not have a significant 
impact on a substantial number of small entities?
    Mrs. McMahon. I think in the lending process. What the rule 
is to do is to protect the borrowers, because the borrowers are 
the ones that were being gouged----
    Chairman Rubio. I see.
    Mrs. McMahon [continuing]. With exorbitant, I think, fees, 
fees that were being charged, both to the lender and to the 
borrower. So we wanted to make sure that we have strengthened 
the program to protect small entities, not in any way to 
negatively impact them.
    Chairman Rubio. So obviously if moving forward it is to be 
discovered that the SBA did not properly consider how the rule 
would affect small entities, would you commit to being open to 
re-examining the----
    Mrs. McMahon. Certainly, and we are continuing the 
rulemaking process and we definitely will look at what those 
responses are.
    Chairman Rubio. On the issue of disasters--and there are 
several of our members here who have been impacted by it--I 
don't need to tell anyone here what role this played. I 
outlined it in my opening statement. And making programmatic 
improvements should be one of our top priorities, because these 
events have shown both the strength of the program and some of 
the places where we can get better.
    As you know, the physical presence of SBA in the form of 
business recovery centers is crucial to being able to receive 
necessary support, especially as a natural disaster leaves 
millions without access to power, to the Internet. For example, 
most recently in the aftermath of Irma and Michael, thank you 
for hearing our calls to have these ground resources there.
    So I want to begin the discussion with SBA's disaster 
recovery program and get your take on what efforts Congress 
should prioritize. After responding to so many natural 
disasters, what are the lessons learned and how can the SBA 
better coordinate with FEMA and other government agencies in 
disaster response? How can you better coordinate with FEMA and 
what can Congress do to assist in that effort?
    Mrs. McMahon. I have an incredibly good relationship with 
FEMA, Administrator Brock Long. He and I have met several 
times. I have traveled with him to disaster zones. You know, 
FEMA is first on the ground. SBA is right behind them, or at 
the same time, and we co-locate in the FEMA offices. FEMA is, 
first of all, taking care of the immediate needs of housing, 
food, et cetera, and SBA comes behind for lending to those 
homeowners, as also business owners, to get them back in their 
homes and back on their feet.
    I think we have a really good relationship with FEMA. One 
of the things that I have stressed with our disaster department 
is the, you know, response time we are there, working on the 
ground, I want to see our application time for loans be 
reduced. And we are working with new technology that we are--I 
am very proud of what we have already accomplished.
    In terms of the five hurricanes that hit in 2017 and 2018, 
we processed our applications in half the time that it took for 
the prior series of storms relative with Katrina and that 
group. So I think we are making great progress. There is always 
room for improvement.
    Chairman Rubio. I have one final question before I turn it 
over to the Ranking Member. I don't--the critical gap that SBA 
fills in making capital available to victims is important. So 
last November, a provision expired that allowed disaster 
victims to apply for physical damage disaster loans up to 
$25,000 without having collateral required. Led by our 
colleague and member of the Committee, Senator Kennedy, 
Congress passed a one-year fix, but to my view that it is 
necessary to permanently increase the cap of the physical 
damage disaster to $25,000 so the victims may have adequate 
resources to fully recover from these tragedies.
    What is the average physical damage disaster loan amount 
requested, and I guess aligned with that is what are the 
negative consequences of not--if we do not increase the loan 
limit?
    Mrs. McMahon. Well, as you can imagine, I am not sure what 
the average is, but I can respond this way. Critically, as soon 
as a disaster happens, the sooner you can get funds into the 
hands of those folks who have lost businesses or need to 
rebuild homes, the better it is, and the larger amount that we 
can get in their hands is better. So having to revert back to 
the $14,000 really would have limited our ability to be able to 
service those needs--$25,000, hopefully we can make permanent.
    Chairman Rubio. Thank you. Ranking Member.
    Senator Cardin. Well, thank you, Mr. Chairman. Again, thank 
you, Madam Administrator, for your work.
    You had one of the largest percentages of workers that were 
laid off or furloughed as a result of the government shutdown. 
Have all of the workers received their back pay since the 
government has reopened, under the Small Business 
Administration?
    Mrs. McMahon. I'm happy to report yes, and when our workers 
came to work on Monday morning after the furlough they had a 
letter from me on their computer that said my number one 
priority was to get them paid. We had processed the paperwork 
to get them paid and they would get paid by Thursday of that 
week. I am glad to report they were paid by Tuesday night of 
that week.
    Senator Cardin. Well, thank you. I appreciate that, because 
it was pretty desperate.
    There is also, I assume, some of your workforce that laid 
out money for travel, et cetera, that was reimbursed by the 
government. Has that also been processed to make sure that they 
are reimbursed for their out-of-pocket expenses?
    Mrs. McMahon. You know, I will check on that and get back 
to you. I do not know that answer.
    Senator Cardin. I appreciate that.
    Mrs. McMahon. But I can tell you it was pedal to the metal 
for me, to make sure everybody was made whole.
    Senator Cardin. Thank you. The numbers that we have is that 
during the shutdown there was approximately $117 million of 
7(a) and 504 loans that were held up as a result of the 
shutdown. You have given us some impressive numbers since you 
have reopened. Is there a backlog today, or how are you dealing 
with the inability to give the loans during those 35 days?
    Mrs. McMahon. Well, the good news is, as I mentioned in my 
testimony, that we had put process and procedures in place even 
prior to the storms, just in good business practice, that we 
had reduced the processing of our loans in half. So that really 
helped us coming out of the furlough period.
    So we caught up on our loans in about two weeks. There is a 
bit of a backlog still relative to some 504 servicing issues. 
All of our delegated loans moved through quickly. It was the 
non-delegated loans that took us a little bit of time to catch 
up. So basically it is just the servicing of the 504s, and 
that, I think, they will be finished pretty quickly.
    Senator Cardin. Good. You mentioned in your prepared 
testimony about servicing the agencies that were still open for 
their small business set-asides--Department of Defense and 
others. But those agencies that were shuttered as a result of 
the shutdown, how are they complying with their small business 
commitments now that government has reopened? Are you confident 
that they will put small business as a priority in dealing with 
the contracting, as required?
    Mrs. McMahon. Well, any that we find that are not--and I 
have not come across any yet that are not complying--we would 
certainly be urging them to make sure that small businesses are 
a priority for them.
    Senator Cardin. One of the areas that we heard about is the 
mandatory training required for 7(a) Community Advantage 
lenders, and that that was postponed, canceled during the 
shutdown and has not yet been rescheduled. Do you know whether 
you are scheduling the mandatory training so that Community 
Advantage lenders can satisfy that requirement, new vendors?
    Mrs. McMahon. It will be rescheduled. I do not have the 
time with me today but I can let you know.
    Senator Cardin. Would you, because that is a priority. 
Because I know Community Advantage program, it is one of the 
major efforts we have to help disadvantaged communities, and it 
was a major setback to have that mandatory training canceled, 
which you had to do during the shutdown.
    You have heard both Senator Rubio and I talk about wanting 
to make these programs work better for the small business 
community. We would like to work with you and evaluate how 
these programs are working. We have not reauthorized these 
programs for many years, and it is, I think, incumbent upon the 
Congress to reauthorize the major programs.
    Can you assure us that your staff will work with us in a 
way that we can look at the legislative authority on your major 
programs and look towards a reauthorization that would help us 
work together to focus on how we can make these tools work 
better and help disadvantaged communities?
    Mrs. McMahon. I look really forward to doing that. I think 
we have shown, over the last couple of years, not only your 
willingness to work with us but our willingness to be with you 
too. In fact, I have enjoyed traveling with many of you in your 
states, and Senator Coons, Senator Shaheen, I have certainly 
been there, and I am really happy. I have not been with Senator 
Kennedy but I have enjoyed my trips down to New Orleans and 
Louisiana. So we look forward to that.
    Senator Cardin. Well, and I just would confirm that you 
have been very accessible and your staff has, and we appreciate 
that.
    One last question, if I might, dealing with small 
businesses that had--were doing work for the Federal Government 
that were not paid during the shutdown, that had service 
workers. We are looking at legislation to try to help them. Are 
you--do you have a way to reach out to small business 
communities that may have had difficulty in maintaining their 
workforce that had contracts with the Federal Government to see 
whether you can assist them in mentoring them as to how they 
deal with protecting the workforce that was disadvantaged 
during the shutdown?
    Mrs. McMahon. We are gathering some of that information 
now, but as you can imagine it is--those contracts across all 
agencies of the government are those that we are working more 
closely with firsthand, with DoD and others. We had more 
information but it is a pretty big task, but we are certainly 
reaching out to all of those contracting offices to see how we 
can help.
    Senator Cardin. And would you keep us informed----
    Mrs. McMahon. Yes.
    Senator Cardin [continuing]. As to how that--because that 
is an area that, I agree, we did not anticipate this, but I 
think would be good for us to get an understanding of the risk 
factors that we have in regards to contract workers.
    Thank you, Mr. Chairman.
    Chairman Rubio. Senator Romney.
    Senator Romney. Thank you, Administrator McMahon. It is 
good to have you here today, and I want to express appreciation 
on behalf of my State for the work the SBA does to help create 
small businesses, particularly in areas that are most affected 
by changing economics. Rural parts of our State have been an 
area where there has been a great deal of SBA focus, for which 
I express a great deal of appreciation, and also areas where 
there is a disruption as a result of changes in technology.
    Specifically, we have a county called Coal County--excuse 
me--Carbon County, which obviously is a place where a lot of 
coal is mined, and there has been a lot of loss of employment 
there, and the SBA has played a real role in helping get people 
on their feet with new enterprises.
    I am of the view that it would be wonderful if the 
Administration were to do the same thing that President Kennedy 
did when he talked about his challenge to go to the moon, if we 
would have a challenge to have a transformative initiative in 
the world of energy, so that we could find ourselves not 
reliant upon energy sources that are creating, or contributing 
to global warming.
    And I wonder if it is possible for the SBA to, in any way, 
encourage enterprises that have, as their interest and their 
focus, changes that will make us perhaps someday achieve an 
objective like that. And I wondered to what extent the SBA is 
able to have influence in the types of purposes of businesses 
to which you make loans.
    Mrs. McMahon. Well, clearly that is a big goal and a lofty 
goal and one I think we all aspire to get to. We do not have a 
particular focus in SBA at this particular point on that 
development, except to say that through all of the technology 
support that we give, especially through SBIR programs, STIR 
programs, there are so many incubators that are looking at 
developing technology to help in energy and across all sectors. 
So to the extent that SBA is supporting all of those technology 
programs clearly the forms of energy would be part of that.
    Senator Romney. Thank you. I think we all are familiar with 
the statistics that the great majority of jobs that are 
created, millions and millions of jobs are created every year 
by small business. At the same time we know that millions and 
millions of jobs are lost every year by small business.
    A professor at Harvard Business School, Michael Porter, has 
indicated that there are two categories of businesses, some he 
calls export businesses, which sell goods and services to a 
broad community throughout a State, throughout a country, 
perhaps even globally, and then there are other businesses that 
are support enterprises--hair salons, auto repair shops, and 
the like. And the latter, it would seem, tend to rotate more 
coming in and out of business. The others have the potential to 
be longer-term contributors to the economy with more permanent 
job opportunities for those that are employed there.
    And I guess the question is, can you make efforts to 
encourage those kinds of enterprises to be the recipients of 
support from the SBA?
    Mrs. McMahon. Well, I can tell you that one of the reasons 
why we do have our resource partners located all over the 
country--our SCORE offices, our SBDCs that are co-located with 
universities, our women's business centers, our veterans, our 
outreach centers--because they are mentoring and helping 
businesses understand not only how to start and to grow, but 
once they get to a certain position then how to scale. Because 
I have often said there is no status quo in business. You can 
start but unless you start to grow you're going to eventually 
start to decline. So how do we help them scale?
    And that happens more often in understanding their business 
and their business plan in our resource partner offices, which 
are, you know, free to those who are going to those offices. 
And I have spent the last 20 months traveling the country--you 
were not here so I will just be repetitive--traveling. I have 
been to every State and I visited every SBA district office. 
There are 68 of them. I have made it a point to sit with 
businesses in roundtable discussions and visit their 
businesses, because I want to make SBA not the best-kept secret 
in the country for those mentoring and networking 
opportunities.
    And I think we have made some good progress because I have 
done local media in all of those areas to talk about the 
programs from SBA, and I think we are seeing, you know, an 
uptick in those offices. We are incredibly supportive of our 
SBDCs. There is a really fine one in Utah. And we just want to 
encourage people to go there. The small businesses can go but 
they do not understand their business plan. And the biggest 
single factor for small businesses to fail is cash flow 
management, so we are hoping to help them understand that 
better.
    Senator Romney. Thank you, Administrator.
    Chairman Rubio. Senator Shaheen.
    Senator Shaheen. Thank you, Mr. Chairman, and 
congratulations on your new position.
    Administrator McMahon, I want to begin by thanking you and 
the SBA for your commitment to sign the Notices of Award for 
those SBDCs that operate on a calendar year. I met with the 
folks from our SBDC in New Hampshire who talked about how 
important that is in giving them clarity for how to go forward 
this year, so thank you very much for that.
    And I would put that on the list, to follow up on Senator 
Cardin's comment, of programs that we need to reauthorize. We 
need to do it as soon as possible. It has been a very long time 
since that reauthorization has happened, and as you pointed 
out, the SBDCs do some of the best work of any of those 
resource partners for the SBA. So I hope that we can work with 
you to get that done this year.
    I want to talk about, to begin by talking about the role of 
women in small business, and you are now the third woman in a 
row to serve as SBA Administrator, so that's been a very good 
sign, I think, in the trend for SBA.
    But while we have seen the number of women-owned businesses 
grow from just 4.6 percent of all firms in 1972 to 40 percent 
of all firms in 2018, unfortunately just 15 percent of U.S. 
venture capital dollars went to firms with a female founder in 
2017, and women-owned businesses still secure only about 5 
percent of Federal Government contracts, based on the last 2016 
SBA data.
    So can you talk about what more you think SBA can do to 
help support those women-owned firms, which are growing despite 
the challenges, and just think what they could do with a little 
more support and access to capital?
    Mrs. McMahon. Thank you, Senator. It is a subject very 
close to my heart. Before I came to SBA I had actually founded 
a company that was to support women in business, so it is 
something I like to keep a sharp eye on.
    One of the things that we are doing, this upcoming year--
and we have already been working on it, and I mentioned it in 
my opening remarks--it is a new platform. It is an interactive 
learning platform for women entrepreneurs. It will be first at 
SBA, and then we hope that all agencies will be able to use it. 
You know, right now we reach about 150,000 women through our 
WBCs and other offices. This platform will enable us to have an 
outreach into rural areas and to other--for women to use it at 
their own time. And we think we are going to be able to reach 
about 1 million women.
    And this, again, will start out--the first program that is 
on it is about scaling. It is about growing your business, 
because a lot of women will get to a certain point, and then 
they will need capital and they do not know how to get to that 
next step. So this is going to be an interactive learning 
program that I really am confident is going to be a little bit 
state of the art, and even though I have sort of announced it 
now, the official rollout is going to be in May, with National 
Small Business Week. I think this is going to be an incredible 
tool.
    We have also authorized, I think it was nine more women's 
business centers since last year, so we are up to 100--I am 
going to get the number wrong--114, 117. I will clarify that 
for you. But just having more--women have more access, again, 
to these mentoring services I think is incredibly important. 
And the mentoring is not just about, you know, business plans 
and marketing, but it's also where to go to try to get capital, 
you know, for your businesses.
    And I have met with some incredible venture capitalists, 
you know, that are in the marketplace, that do, more 
specifically, for women, like Springboard. So I try to learn 
from them more thoughts of how we can push women towards them 
or in ways that we can encourage our lenders to have more women 
through that pipeline, because I think that's really important, 
and to encourage women, you know, to take that risk to get more 
capital. And so I think, combined, we will have a good program 
moving forward.
    Senator Shaheen. Well, I hope when you roll out the 
platform that you will let us know so we can share that with 
the businesses that each of us deal with in our own State.
    Mrs. McMahon. We definitely will. Maybe you will get a 
preview when we are doing the beta testing, just for you.
    Senator Shaheen. Good. Sign me up for that.
    One of the real challenges that our young entrepreneurs 
have, I think, is the amount of student loan debt that so many 
young people are graduating from college with these days. In 
New Hampshire we have the second-highest student loan debt in 
the country. And as we look at some of the biggest, most 
transformative, exciting businesses, many of them were started 
by young people right out of school who then were able to grow 
those businesses. You know, Facebook comes to mind as one of 
those.
    So in thinking about young people starting businesses and 
wanting to be entrepreneurial as they come out of college, 
would you support the idea of deferring student loans for a 
period of time for young people who are starting their own 
businesses?
    Mrs. McMahon. I think so, because it would give them a 
little bit of a breathing time to do that.
    Senator Shaheen. And do you have any thoughts about how we 
could actually put that idea into place, and whether that is 
something SBA might be willing to help with?
    Mrs. McMahon. I would like to come and talk to you more and 
get more of your thoughts on that as to how we could--how we 
could be helpful together.
    Senator Shaheen. Good. Thank you. Thank you, Mr. Chairman.
    Chairman Rubio. Senator Ernst.
    Senator Ernst. Thank you, Mr. Chair, and Administrator, 
thank you very much for being here. I appreciate it.
    During the first two years of the Trump administration we 
have really taken some big steps to reduce excessive 
regulations on small businesses, and, of course, as a result 
our job creators are spending less time on compliance issues 
and sorting through regulations, and instead they are focusing 
on growing their businesses and investing in their employees.
    I have started my 99-county tour this year, doing the full 
Grassley, and as I am working across the State of Iowa I do 
hear an overwhelming sense of optimism from our small business 
owners. They really are the lifeblood of our Iowa and our rural 
communities, so we appreciate their hard work and your advocacy 
on their behalf.
    And during the 2017 National Defense Authorization Act, 
Senator Gillibrand and I included legislation that requires the 
SBA to submit a report on small business participation in 
multiple award contracts, and currently the Federal Government 
is increasingly using large contracts, but there is very little 
data regarding these awards, and whether adequate awards are 
being given to women, to veterans, and to minority contractors.
    And the deadline for the report was June of 2018. Do you 
happen to have an update on when we can expect that report to 
come out?
    Mrs. McMahon. Well, I saw a letter from you in January 
indicating that that report had not gotten to you yet, which 
made me go find out why. And it was a more complex answer than 
I expected to have. To say I am disappointed that you have not 
had a response from that, I can assure you that there is a lot 
more focus and attention on it at the moment. But what I found 
out was that we have to go across all agencies and not just go 
to one to find out, you know, where the schedules are that 
small businesses can then get onto to participate and to be 
there, you know, to participate in these contracts.
    So we are doing that. We are in the process of doing that, 
and I will not be much longer before I get back to you.
    Senator Ernst. Okay. Well, very good. And that just speaks 
to the----
    Mrs. McMahon. And I apologize.
    Senator Ernst. Oh, no, that is--that is--it is unfortunate. 
We would really like to be moving forward. If there is a way we 
can craft legislation to find a way to really engage some of 
our minority contractors, those women, those veterans, we want 
them engaged in the contracting process within DoD. And if we 
can further that we certainly want to do that.
    So just another question then. The Federal Government is 
consolidating contracts more and more into much larger awards. 
What steps do you think the Small Business Administration can 
take to ensure that those small businesses are not being left 
behind in that process?
    Mrs. McMahon. Well, you know, we do have a formula, you 
know, with the Federal Government that, you know, 23 percent of 
Federal Government contracts must be awarded to small 
businesses. So we are vigilant about that. Also, as part of 
that breakdown, the percentage that goes to women and other, 
you know, minorities, you know, for those contracts.
    So our Office of Advocacy keeps a sharp eye on that. We 
want to make sure that we are meeting all of those demands. I 
think as Senator Shaheen said, you know, women are like 5 
percent of those contracts that are being awarded, and I 
really--I want to see that--sometimes we fall a little short of 
meeting that 5 percent. I want to exceed that 5 percent. So we 
want to make sure our small businesses are part of that 
program.
    Senator Ernst. Right. Outstanding. I will yield back my 
time. Thank you.
    Chairman Rubio. Senator Rosen.
    Senator Rosen. Thank you. Thank you, Chairman Rubio, 
Ranking Member Cardin. Thank you, Administrator, for your work, 
your presentation. I look forward to being on this Committee 
and supporting small business and entrepreneurship around our 
country.
    This past weekend, in Las Vegas, I hosted a roundtable at 
the Urban Chamber of Commerce with members of the Las Vegas 
African American small business community. We had a really 
robust discussion about ways to continue to promote economic 
growth across Nevada. And so one of the top concerns that they 
had this weekend, and something I actually hear every time that 
I go speak with small business owners and all of our local 
chambers, is the need for quicker, easier access to capital. So 
more resources, I believe, need to be given to small business 
development centers, especially to assist our minority business 
owners.
    And so what are you doing to increase capital specifically 
for minority-owned businesses?
    Mrs. McMahon. Well, we want to make sure, first of all, 
they are aware of where to go, you know, to get capital, to 
apply for their loans. And that's why I am trying to make sure 
more people are aware to go to sba.gov and look at all of the 
resources that might be available to them.
    You know, between our 7(a) loans and our 504 loans, which 
are the two biggest loans, we have about $30 billion each year 
in appropriations for those loans, and so we want to make sure 
that those who need them know where to go to find them, and 
that we can help them do that.
    So we do it through outreach from our district offices, 
through our own online presence, through workshops that we have 
in the communities, through outreaches through our lender 
resource specialists that interact with our lenders in the 
community to make sure that those who are seeking capital, you 
know, can know where to find it.
    Senator Rosen. Perfect. And do you think that the current 
funding levels for your small business development centers are 
adequate as it stands today?
    Mrs. McMahon. I think it is, because often we find that 
there is some carryover from year to year at the SBDC. So I 
want to make sure that we are spending those dollars 
effectively.
    Senator Rosen. Perfect. I want to move on to another issue 
that I like to talk about a lot, which is cybersecurity. So 
small business owners don't often consider that they are going 
to be attacked, and they often don't have the resources, of 
course, that large businesses have, just due to their size and 
the nature of their business.
    But the majority of all targeted cyber attacks were 
actually directed at small businesses. And so 60 percent of 
businesses that are attacked will go out of business within six 
months after the attack. You think about dog groomer or a hair 
salon, those things. They do not have the resources to recover 
if all that information is gone from them. So they have the 
valuable information cyber criminals want--those credit cards 
and customer data, employee accounts.
    So I know that you have been working with NIST and the FBI 
to improve the small business cybersecurity, so can you discuss 
any other initiatives that you might be working on to help 
protect our small business owners and partner with them so they 
can protect themselves against hacking?
    Mrs. McMahon. I think what you talked about are some of the 
greatest ways to do it, you know, working with the FBI, and we 
have, you know, internally, before we even went externally at 
SBA, we wanted to make sure that our--you know, our data was 
very well protected, and we made great strides and great 
efforts to do that. As a matter of fact, we have, you know, 
received awards now for where we are in our cybersecurity 
platform.
    So taking that kind of a role model to kind--we cannot role 
out exactly what that is to small businesses, but I think 
making small businesses aware of the threat of cybersecurity, 
we found was one of the things that they did not ever think 
about when they were setting up their businesses. You know, 
some of them are more interested, okay, how do I take Square 
and bill immediately? How do I, you know, reduce the time frame 
of my paperwork through some of the technology that is 
available? And yet they really never thought about, oh, it is 
just me. I do not have much of a customer base, so I am not a 
target.
    So I think with more publicity, more education for our 
small businesses, and it is part of the program that we are 
rolling out to them through our district offices and our 
resource centers, is to make businesses aware of hacking and to 
look at programs for anti-hacking.
    Senator Rosen. And I hope that as you roll out some of 
these websites and platforms for people to find on-ramps you 
can also maybe consider having links to cybersecurity sites, or 
ways that they can do that kind of hygiene, or give them the 
tools to search out what they need and help them in that way, 
because they often do not know where else to go.
    Mrs. McMahon. Sure, and link from the sba.gov website on 
that too, as well, would be a good thing.
    Senator Rosen. Thank you. I would appreciate. I yield back.
    Mrs. McMahon. Thank you.
    Chairman Rubio. Senator Kennedy.
    Senator Kennedy. I want to thank Senator Hawley for letting 
me go first. I am going to ask you one question, after making a 
quick statement. I think you are doing a fantastic job, Madam.
    Mrs. McMahon. Thank you, sir.
    Senator Kennedy. And I know you are working hard. I am 
sorry I missed you in Louisiana.
    Mrs. McMahon. Me too.
    Senator Kennedy. I will catch you next time.
    I have just got one question. You have been on the job now 
for two years. You knew a lot even before then about business. 
You know even more now. What impact do you think the Green New 
Deal will have on small business in America?
    Mrs. McMahon. Well, I think I would have to see how it 
exactly rolls out. There will be a lot of impacts on small 
businesses that I think would be very difficult, but I think I 
would rather reserve my comment until I really know more about 
it.
    Senator Kennedy. Well, do you think it will have a positive 
impact or a negative impact? Let us start there.
    Mrs. McMahon. Well, I----
    Senator Kennedy. I agree with you that it will be 
impactful.
    Mrs. McMahon. I guess that depends on what kind of 
businesses do what under the Green Deal. If it is technology 
development, looking at other sources of energy, they will 
probably exceed. If it is impacting small business farmers, 
especially, and some of the issues that we are looking at, I 
think that those would be harmful. So----
    Senator Kennedy. What about the taxes that would be charged 
to small business in order to pay for it?
    Mrs. McMahon. I do not know if we know where that is yet, 
but I am not sure we could--from what little I know, I am not 
sure we could tax enough to pay for it.
    Senator Kennedy. Okay. Well, you have had two years of 
experience here in the Federal Government. Suppose a President 
turned to you and said, ``Here is the Green New Deal. Implement 
it.'' Where would you start?
    Mrs. McMahon. I would have to take a look at it and see 
where we would need to start. I am not trying to be evasive 
with my question but just to implement a whole new program you 
have to look at where it is going to start. And you are talking 
about specifically relative to new business. Do we look at 
farmers? Do we look at technology?
    Senator Kennedy. Well, I am thinking----
    Mrs. McMahon. Do we look at bankers or lenders, and how do 
we do that?
    Senator Kennedy [continuing]. Suppose the President turned 
to you and said, ``I want you to implement a program that would 
guarantee a good-waged job to every American,'' if they wanted 
to work. If they did not want to work they did not have to. How 
would you go about doing that?
    Mrs. McMahon. With great difficulty.
    Senator Kennedy. Okay. Thank you, ma'am.
    Mrs. McMahon. Thank you, Sir.
    Senator Kennedy. Thank you, Senator.
    Chairman Rubio. Senator Coons.
    Senator Coons. Thank you, Chairman Rubio, Ranking Member 
Cardin. Congratulations, Chairman Rubio, on your new role.
    Senator Kennedy and I are, in this Congress, going to be 
the Chair and Ranking of the Financial Services and General 
Government Subcommittee, and I look forward to talking with 
you, Madam Administrator, about your budget priorities for this 
coming year. I just--I want to congratulate you on everything 
you have gotten done. Your report back to us about cutting loan 
processing time in half, increasing backup to the pre-slowdown 
level, digital training and outreach for women entrepreneurs is 
just another reminder of why I enjoy working with you and enjoy 
being on this Committee.
    I recently met, actually yesterday, with the head of the 
SBDC from Delaware, to hear about some of their concerns and 
what they are doing operationally, and to being encouraged 
about their work. I look forward to reauthorizing SCORE in this 
Congress, something Senator Risch and I have now tried two 
Congresses in a row.
    And SBA is making a great impact in Delaware. Last year you 
guaranteed 195 loans to small businesses, totaling about $73 
million, the second-best year on record in the State.
    So thanks for our recent conversations about poultry loans. 
I look forward to continuing to work with you to ensure our 
poultry farmers have access to appropriate and relevant 
financing and there is sufficient oversight of lenders under 
delegated authority.
    I want to express my appreciation for your working with my 
staff to improve the method for designating rural areas. A 
State as small as Delaware does, in fact, have rural areas, and 
because of your office's attentiveness all business in Sussex 
County, Delaware, is now eligible to benefit from the Rural 
Lending Initiative's fee waiver.
    Take a minute if you would and just help me--and I assume I 
will have a chance to do this with Senator Kennedy on the 
Appropriations Subcommittee--but just at a high level tell me 
what your funding priorities will be for FY 2020, and I am 
hoping that in the next day we will pass the FSGG approps bill 
for FY 2019. That will be the first time in 20 years, because 
it is typically a divisive bill. SBA is the one area in the 
bill that has never been divisive. So tell me what your top 
funding priorities are for this coming year, if you would.
    Mrs. McMahon. Well, always, clearly we look to make sure 
that our lending programs have sufficient funding, and so that 
would always be a concern. But I would work with you, and if 
there were any particular issues, and my staff would be working 
with your staff to make sure that we are looking at all the 
programs. And if we think there are funding opportunities that 
we should enhance, then we will come to you and we will talk 
about that.
    The women's initiative that I talked about, that's a--it's 
platform driven so there's technology investment in that, you 
know, through appropriations. I think we're good but to move 
forward and roll it out we might look for, you know, some 
additional funding on that.
    Also, I really--one of my priorities this year is I 
traveled all across this country, over the last 20 months. My 
goal over the next year is to travel more internationally to 
look for more export markets, and how can we develop that?
    I've had great outreach from many countries that talk to us 
about the model that the United States has for SMEs, small and 
medium enterprises, equivalent to our SBAs. How do we do it? 
How do we work with the government? How do we set up our 
training programs? And so I want to focus more on that, as well 
as making sure that our STEP programs in our different states 
are exposing those businesses to the opportunity for trade and 
for export. And so I think that is going to be a really 
critical program for what we are doing. It is going to be a big 
program and I really want to see that grow.
    And now if we have USMCA, I think that is going to really 
enhance that, especially, you know, that is a treaty that, for 
the first time, has a total chapter on small businesses. And I 
would hope to see that chapter incorporated in other treaty 
deals as well.
    Senator Coons. I look forward to working with you, in 
particular on the international aspects, both trade growth and 
export. But women's entrepreneurship programming, I have been 
to more than 20 African countries and there is a rapid rise in 
women's entrepreneurship in the developing world.
    Let me talk about apprenticeships with you for a minute, if 
I could. I appreciate your reference to the importance of 
workforce development. I think apprenticeships offer a terrific 
cost-effective way to develop skills for good jobs. But small 
businesses, in particular, have a hard time developing 
apprenticeships and sustaining them.
    Senator Young is also on this Committee and I introduced 
the Apprenticeship Hubs Across America Act in the last 
Congress. It would fund workforce hubs, intermediaries which 
help small businesses design and run apprenticeship programs 
and provide support services to help apprentices complete their 
training, especially in sort of non-traditional areas--not in 
the building trades, not in areas that have had apprenticeships 
for a long time, but things like hospitality, for example, or 
health care.
    In your travels around the country, what did you hear about 
workforce needs for small business and how do you think an 
expanded apprenticeship program might help with this? I 
recently talked to the Secretary of Labor about this particular 
idea.
    Mrs. McMahon. And I work with Secretary Acosta a lot, and 
looking at the apprentice programs, workforce development is 
one of the--or access to a skilled workforce is one of the 
greatest challenges that I hear from small businesses all over 
the country--small and big business. You know, we are--we 
clearly are at a great unemployment level, which makes the 
demand for those workers even more. So how do we skill those 
workers?
    I have also been working with the Secretary of Education to 
look at programs that are not just traditional, you know, in 
our high schools and in our colleges. Apprentice programs, I 
think, are critical.
    And I will give you just a quick side story, if I may. I 
was with a landscaper and he started--he is not just a 
landscaper. He is in big equipment business and clearing and 
all of that. And he said when he was in high school he used to 
drive his dump truck. He had a second-hand dump truck and he 
would drive it. He said it did not do much for his dating life 
but it really helped him start to build his business. And his 
friends always made fun of him.
    He said, but he now has a really big, flourishing business. 
And I encouraged him. I said, ``Are you talking to your 
guidance counselors at your schools, et cetera?'' He said, ``As 
a matter of fact, I go at least once a month and talk to kids 
in assemblies and whatever about apprenticing. Come over to my 
shop. Let me show you not only how to operate, you know, this 
big equipment, but how to manage your business, how to grow, 
how to do sales, how to do marketing.'' I do not think you 
could do better than to have that kind of one-on-one experience 
to help young people grow and develop.
    Senator Coons. Well, I appreciate your tireless advocacy 
for growing small businesses and the relevant workforce. I will 
close by just referencing that Chairman Rubio and I--we are 
joined with Senators Kennedy and Jones--recently introduced the 
Small Business Credit Protection Act to help make sure that 
small business owners have the same protections against data 
breach, compromising their credit, that many other larger 
businesses enjoy. So I hope you will be willing to work with 
us, and with small business owners, to build and protect their 
commercial credit.
    I really appreciate your testimony and I appreciate the 
Chairman's forbearance in allowing me to extend beyond my time. 
Thank you.
    Mrs. McMahon. Thank you very much.
    Senator Coons. I welcome you back to Delaware at any point.
    Mrs. McMahon. Thank you. I look forward to that.
    Chairman Rubio. Senator Hawley.
    Senator Hawley. Thank you, Mr. Chairman. Administrator, 
thank you for being here.
    I have two questions for you. Thank you for the excellent 
work that you are doing. But let me start with a concern, one 
that has already been raised by the Chairman, related to the 
proposed loan rule change.
    I want to ask you about the affiliation provisions. I have 
heard from a lot of farmers in my State that they are concerned 
about the changes, the proposed changes to the affiliation 
provisions. Missouri, as you may know, is one of the top 10 
poultry producers in the United States. Poultry farmers, in 
particular, in my State, are concerned that a lot of smaller 
operations who depend on partnerships with larger poultry 
operations will be swept in by this rule change and, therefore, 
no longer eligible.
    Will you take--and I am sure this is showing up in the many 
thousands of comments you have received--will you be taking 
these sorts of things into account as you assess going forward 
with this rule?
    Mrs. McMahon. Oh, we absolutely will, and that is exactly 
what we are doing now, as part of the rulemaking process, is 
evaluating those statements that have come in.
    You know, SBA operates under the umbrella of making sure 
that our lending goes to right-sized businesses. So we need to 
make sure that they are, in effect, small businesses, under all 
of the guidelines, and there is no credit elsewhere available. 
So as we look at all the responses that are coming in we will 
then report back.
    Senator Hawley. Great. I look forward to that. Thank you, 
and thank you for your attention to this.
    Let me ask you about the Rural Initiative Pilot Program. As 
a guy who grew up in a very small town in rural Missouri, and 
familiar--all too familiar with the difficulties that rural 
parts of our country and of my State are facing in terms of 
keeping good jobs, attracting new businesses, starting a 
business in a rural area--I mean, there are significant 
challenges across all these fronts.
    Your Rural Initiative Pilot Program, to increase access to 
capital in rural areas, I think is extremely promising and much 
needed. I wondered if you could describe that to us and the 
progress that you are seeing there, or making there.
    Mrs. McMahon. Well, I have signed a Memo of Understanding 
with Secretary Perdue at USDA, because we want to combine our 
service. He has greater outreach into rural areas. They have 
96,000 people in the field in USDA. So what we are doing is 
combining our marketing materials as well as loans that we 
have, loans that USDA has, and providing those marketing 
materials into the marketplace so that more and more of our 
potential rural business development can see exactly what is 
available, you know, for them.
    In addition, I think that--I am not doing it but Secretary 
Perdue, under USDA, has launched, you know, a rural toolkit for 
broadband penetration. That is going to also help, I think, 
significantly in helping our rural businesses grow.
    Senator Hawley. Great. Thank you so much. Thanks for your 
leadership on this.
    Mrs. McMahon. Thank you.
    Senator Hawley. Thank you, Mr. Chairman.
    Chairman Rubio. Senator Hirono.
    Senator Hirono. Thank you. Thank you very much for coming 
to Hawaii.
    Mrs. McMahon. I enjoyed my visit but it was much too short.
    Senator Hirono. Oh, well. You are welcome any time.
    Mrs. McMahon. Thank you.
    Senator Hirono. Hawaii has had a number of disasters in 
2018, so I did want to go over some of these disasters and how 
SBA has been very helpful.
    So we had disasters including severe storms, floods, 
mudslides, volcanic eruptions, earthquakes, and hurricanes. 
These disasters displaced homeowners, disrupted businesses, and 
had an enormous impact on individuals and families in our 
communities, as well as State and local resources. And even 
today, people in my State are still working to recover from 
these disasters.
    And when you last appeared before the Committee in 2018, in 
May, we had the opportunity to discuss the record rainfall that 
flooded Kauai. In fact, it was the most rainfall that had 
fallen anywhere in the United States in the history of the 
United States----
    Mrs. McMahon. Wow.
    Senator Hirono [continuing]. And Oahu communities. And 
since that time Hawaii has experienced other natural disasters, 
including, of course, the volcanic eruptions on the Big Island.
    So to date, roughly 500 disaster survivors in Hawaii, 
including business owners, individuals, and families and 
homeowners have received more than $48 million in disaster 
assistance from the SBA, primarily through the SBA's low-
interest disaster loan programs. And with this assistance 
businesses have been given access to SBA resources that will 
help them rebuild, including, of course, replacing damaged 
machinery, equipment, inventory that may have been affected by 
those disasters.
    And, furthermore, homeowners--I think there was something 
like 2,000 homeowners who are displaced because of the volcanic 
eruption, and they have been given access to resources that 
will help them rebuild by allowing them to repair their homes, 
refinance mortgages, and make improvements to better prepare 
for future disasters.
    So needless to say that SBA has been right there. And at 
one point we were having all of these natural disasters on a 
recurring basis, and when I was on the Big Island there were 
dozens of Federal people, including, of course, the State and 
county people and SBA there. They were there for months at a 
time, as it turned out.
    And yesterday afternoon I had a chance to meet with local 
directors from Hawaii's Small Business Development Center, and 
they, as you know, provide businesses counseling services, and 
they have many examples of how they hands-on help entrepreneurs 
to succeed, including, I think you mentioned, money management 
and how to use computers to keep track, as opposed to 
handwriting, you know, their receipts and all of that. So that 
is really important.
    They reiterated the challenges that businesses in the State 
faced last year related to these disasters, and, of course, 
were really appreciative of SBA's coordinated efforts.
    So as an island State, when disaster strikes we are 
particularly vulnerable so I will continue to work with you. 
And now I have some questions, a few questions to ask you.
    You were asked several times about the set-asides for 
women. And in the country, we put out about $400 billion worth 
of contracts to various businesses. And I am wondering whether 
the set-aside for women-owned small businesses, which is 5 
percent of this $400 billion--is part of the challenge for 
women-owned businesses that they do not provide the kinds of 
goods or services that the government wants to contract for?
    Mrs. McMahon. That is a good question.
    Senator Hirono. Is that the problem?
    Mrs. McMahon. I have not done that kind of analysis but I 
think that is a really good question to raise, one I will look 
into, and I will get back to you.
    Senator Hirono. Could you please, because I know that a lot 
of small businesses that I have encountered, they work really 
hard but they--I think they do not produce things that the 
government wants. I mean, I love chocolates and cupcakes.
    Mrs. McMahon. But I can tell you, I have been to a couple 
of women-owned businesses----
    Senator Hirono. Right.
    Mrs. McMahon [continuing]. That produce manufacturing 
parts, you know, and supply for, you know, the larger prime 
contracts. Those women are--it is unbelievable how they run and 
operate their businesses.
    Senator Hirono. So as you expand your outreach to rural 
areas, and especially to women in these rural areas, I think it 
would be helpful to encourage them to perhaps get into those 
kinds of goods or services that can enable them to vie for the 
$400 billion in contracts.
    I also had discussed with you last time, and I am running 
out of time, the importance of supporting the ability of Native 
Hawaiian-owned businesses or NHOs in Hawaii, or Native--Alaska 
Natives, American Indians. You have a Native American outreach 
program. And I would like to make sure that you are doing 
everything you can to continue to enable these minority-owned 
businesses, these very particular minority-owned businesses to 
be able to successfully be able to get government contracts.
    Mrs. McMahon. I think, under my tenure so far, I think we 
have made a good start. I just recently--we had a team on the 
ground with outreach to the Hawaiian Native Americans to look 
and to see what the--if there were issues, if there was help we 
could do, et cetera. And so it has been certainly an 
instruction from me that we must do more of that outreach.
    And I had a great time when I was in Hawaii. Was the 
Dawson----
    Senator Hirono. Mm-hmm.
    Mrs. McMahon [continuing]. The Dawson family, their whole 
business.
    Senator Hirono. I know them well.
    Mrs. McMahon. And, oh, my goodness, they were involved in 
contracting, and they bring so many businesses in and support 
so many businesses.
    Senator Hirono. Yeah.
    Mrs. McMahon. So I talked to them about how we could even 
be more helpful and work more closely with them, because they 
seem to have such a great footprint. So I will look forward to 
continuing that as well.
    Senator Hirono. Thank you, and, Mr. Chairman, just one more 
thing. I want to pitch Hawaii on the Hill, because Hawaii on 
the Hill is an opportunity for Hawaii's small businesses to 
bring their products and services to Hawaii. And they come the 
farthest to highlight their products and services. And I would 
like to extend to you, as the SBA Administrator, to participate 
in the policy summit portion, because that is an opportunity 
for Hawaii small businesses to interact with leaders like you 
who will be making decisions that will impact their businesses.
    Mrs. McMahon. Is it called Hawaii on the Hill?
    Senator Hirono. Hawaii on the Hill.
    Mrs. McMahon. When is it?
    Senator Hirono. It is a really hot ticket. Truly. The 
people stand in line to get in.
    Mrs. McMahon. Could I get an inside?
    Senator Hirono. Sure.
    Mrs. McMahon. Could I get a little inside access?
    Senator Hirono. Thank you. Thank you so much. Thank you, 
Mr. Chairman.
    Chairman Rubio. Senator Duckworth. Are you ready.
    Senator Duckworth. I sure am. I just made it. Thank you.
    Administrator McMahon, as you know the Veterans Small 
Business Enhancement Act was recently passed into law last 
year, allowing veteran-owned businesses to be eligible for GSA 
surplus property. Senator Kennedy and I worked very hard to 
make sure our veteran-owned businesses have access to the 
program, with help and support from the dedicated staff at SBA. 
My office has been hearing from veteran-owned small businesses 
eager to take advantage of this new program.
    Can you provide details on how implementation will proceed, 
specifically what SBA, in coordination with the GSA, issue 
general implementing rules before establishing Memorandums of 
Agreement with each State agency, or will SBA and GSA begin to 
get those MOAs drafted and finalized now?
    Mrs. McMahon. What we are--I don't mean--this is not a 
pejorative statement, but what we are waiting on at the moment 
is for GSA to establish and set the parameters for the program. 
We will then be working with them very closely, and I would 
look forward to coming back and talking with you about, here is 
what we are looking at. How do you think we can improve that? I 
would really appreciate your input when we are ready to do 
that.
    Senator Duckworth. Okay. Thank you. Let us hope that it 
moves along quickly.
    Mrs. McMahon. Yes. I think that is such a great--it is such 
a great program.
    Senator Duckworth. Thank you. I have heard from small 
business owners across Illinois that one of their biggest 
challenges continues to be access to capital and the need for 
technical assistance from the Federal Government to help them 
compete with major corporations. That is why I am developing 
legislation that would enhance the SBA Microloan program, which 
helps meet those needs, particularly for women-, veteran-, and 
minority-owned small business and low-income entrepreneurs.
    I think we agree it is an important program and I was 
really pleased to see President Trump request increased funding 
for the program in fiscal year 2019.
    Can you explain why the Administration believes the program 
is important to the small business community?
    Mrs. McMahon. Well, it is one of our fastest-growing loan 
programs as well. And I think it does--and with the technical 
assistance and working closely in the communities I think we 
are developing more and more of those small businesses. So it 
is really that connectivity, and I am really pleased to see how 
well it is doing, and we want to continue to focus on it.
    Senator Duckworth. Great. Thank you. I agree that, you 
know, that is one----
    Mrs. McMahon. And you might be interested to know that the 
average loan is about $17,000 in the Microloan program.
    Senator Duckworth. That goes a long way, does it not?
    Mrs. McMahon. It does go a long way, but sometimes people 
need $500 to start, or $1,000 to start. So that is about the 
average loan.
    Senator Duckworth. That is fantastic. I cannot think of a 
better time to enhance the program, and my legislation would--
my draft legislation would increase microloan intermediaries' 
loan portfolios per year, and overall, and authorize increased 
technical assistance funding, just as you mentioned----
    Mrs. McMahon. Mm-hmm.
    Senator Duckworth [continuing]. The importance of technical 
assistance. I think this would serve as a continuation of the 
success that SBA has had with this program.
    Would you support my forthcoming legislative proposal that 
builds on your progress to further increase intermediaries' 
loan portfolios so that they can take on more--we can give them 
more money that they can loan out more loans to more 
businesses?
    Mrs. McMahon. I would--I would certainly look forward to 
working with you on that.
    Senator Duckworth. Thank you. And also the level of 
technical assistance, increased level of technical assistance 
funding, as well, throughout the country.
    I really think it is wonderful that you are supporting this 
program and actively championing for it. I know across 
Illinois, for example, small businesses are 95 percent of all 
employers----
    Mrs. McMahon. Mm-hmm.
    Senator Duckworth [continuing]. In our State, and so the 
vast majority of people in Illinois work for small businesses, 
and should they not be successful we certainly would not be 
successful as an economy, statewide. So thank you, and thank 
you----
    Mrs. McMahon. Thank you.
    Senator Duckworth [continuing]. For being so available to 
discuss this.
    Mrs. McMahon. You bet. You know, two out of three net new 
jobs in the private sector are created by small businesses.
    Senator Duckworth. Thank you.
    Mrs. McMahon. So that is--we need to take care of them and 
help them grow.
    Senator Duckworth. Thank you. I yield back the remainder of 
my time, Mr. Chairman.
    Chairman Rubio. Thank you. The Ranking Member had some 
questions and then I had one to wrap up, as well.
    Senator Cardin. I had one or two more questions. On 
workforce development, one of the issues I hear over and over 
again is the difficulty of small businesses getting trained 
workers. I know that you mentioned that when you were here 
that, in your travels, you are finding it challenging.
    What steps have you taken to ensure that small businesses 
have easier time finding skilled workers, and is there any way 
that we can help you in that regard to help strengthen the 
tools in regards to small businesses being able to have a 
trained workforce?
    Mrs. McMahon. Well--excuse me--it does become more and more 
competitive as we have low unemployment, because clearly then 
there is a competition for those workers. So that is kind of a 
given as part of the marketplace.
    However, the apprentice programs that we were speaking 
about with Senator Coons, I think they are incredible. They are 
not--those apprentice programs are not only being done by 
schools and private businesses, they are also being done by 
unions who will come in to different areas and offer 
apprenticeship programs. And I think it is going to take more 
and more of the private sector working with our educational 
system, and with government, to make sure that we are 
emphasizing providing funding, you know, for those programs.
    I will give you an example of how this is working so well. 
I was just--I was in Cleveland about a week ago, and I went to 
Tri-C Community College. So not only do they work with the 
private sector to develop their apprentice--apprenticeship 
programs and technological training, but they have gone a step 
further. They actually have taken a tractor-trailer and they 
have portable units for training in the field. And they take 
that tractor-trailer to businesses and will be there for a time 
period to train those workers, at no charge, often, for the 
program. Sometimes it is travel or expense-related 
reimbursement.
    But that kind of innovative thinking, you know, for virtual 
welding, for technology, for computer science, and being able 
to take programs to companies, to schools, is going to be one 
of the ways that we are going to be able to increase our 
workforce.
    Senator Cardin. I would also urge you--the apprenticeship 
programs are critically important. I agree with you. This is 
the Congress that should reauthorize the workforce development 
program, and I would just urge us, this Committee, working with 
you, to take a look at making sure there is a focus on small 
businesses in our workforce development programs and local 
government, using Federal funds----
    Mrs. McMahon. Mm-hmm.
    Senator Cardin [continuing]. To help small businesses deal 
with this shortage of trained workers. Whether it is because of 
low unemployment rates or just difficulty finding trained 
workers generally, it is a particular problem for small 
businesses.
    Mrs. McMahon. Oh, it is, and it is something I talk about 
all the time.
    Senator Cardin. And then, lastly, we passed the Small 
Business Runway Extension Act, which deals with the five-year 
averaging in order that there is not an abrupt qualification 
problem for small businesses in getting the tools available 
under SBA. In talking with your staff I understand the delay in 
implementing that as you are going through a rulemaking 
process. I would just urge you to give this a priority 
attention, because I know this is an area where Congress really 
wants to implement this five-year averaging as soon as 
possible.
    Mrs. McMahon. And I think it is the right timing, as well, 
for the five years, and so, yes, we are going to be pushing on 
that rulemaking.
    Senator Cardin. Thank you. Thank you, Mr. Chairman.
    Chairman Rubio. Just on the SBA disaster loans, last year 
we were able to get language included in the supplemental, the 
2018, that ensures that applicants aren't penalized when they 
apply for but do not accept an SBA disaster loan. That only 
unfortunately applies just to those disasters.
    Does the agency support a permanent fix?
    Mrs. McMahon. Yes. I would like to see a permanent fix. It 
is--you know, it is relative to HUD programming. You know, SBA 
comes in and we make our loans, you know, and in disaster 
lending it is the only time that SBA is actually the bank, to 
make the loans for businesses and for mortgages. So we make 
those loans, but then the--going into the municipality or the 
local district office--not district office, but local 
government--if HUD comes in to make the grant it has been HUD's 
determination that it is a duplication of benefits.
    So we would like to see that clarified, because we come--
you know, we get our stuff done and then we want to make sure 
that those who are receiving the loans are not penalized.
    Chairman Rubio. And then on the SBIC program that was 
created back in 1958, before there was really venture capital--
in fact, some think that is where venture capital got the idea 
from--but it is still, even though we have a lot of venture 
capital today, it still fills a gap that is really important. 
And I think what has been concerning is to see the approval 
process that--well, the approval process takes 18 months, and I 
do not know if that applies to it, but there has been a 
decrease in the number of approved applicants over the last two 
years.
    I'm curious, do you know how many licenses were approved in 
2017 and 2018, or either one of those years, or in cumulative, 
and I guess what is behind the decline, what is being done to 
address it?
    Mrs. McMahon. Well, we have changed. It is not declining 
anymore. We have changed it. It went from 15 approvals to 25 
approvals in 2018. So I am pleased to see the direction change 
on the approval levels.
    It is--part of the timing is because those venture capital 
firms who come in to get the license, they come in and first 
they apply, and they get a green-light letter that says, okay, 
we have verified that they are capable of running the SBIC.
    Then they must go out and raise $75 million. They have 18 
months to do that. Sometimes they do it in a much shorter 
period of time. But they have a length of time to come and 
raise their capital. And they come back and then we have the 
matching program. We put in $175 million. Then from that 
process, you know, the--they just get approved at that point, 
so that is a few more months.
    What we are doing is shrinking the amount of that tracking 
by new technology, and it is called backstop. It will give us 
the ability then to track status of case management. I think 
that is going to cut down on some of the approval time. So I am 
looking really forward to getting that in place. It should be--
it will definitely be before the end of the year.
    Chairman Rubio. Do you have anything further?
    All right. Thank you so much for being here today. We 
really appreciate it. I think we had great attendance and it 
was a good way to start the year. We have a lot of work ahead 
of us but I think you have done a good job at sort of outlining 
what you have done to this point, and, in particular, your 
individualized awareness of so many of the states that are 
applied here. I think certainly a lot of members clearly have 
been interacting with you and are impressed by the work that 
the agency has done.
    So the hearing record for this hearing is going to remain 
open for two weeks. Any statements or questions for the record 
that anyone might have should be submitted by Wednesday, 
February 27th, at 5 p.m.
    Thank you again.
    Mrs. McMahon. Thank you both very much.
    Chairman Rubio. Thank you.
    Mrs. McMahon. Chairman, Ranking Member, thank you both.
    [Whereupon, at 3:58 p.m., the Committee was adjourned.]

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