[Senate Hearing 116-234]
[From the U.S. Government Publishing Office]





                                                        S. Hrg. 116-234
 
                  NOMINATION OF JOVITA CARRANZA TO BE
                  ADMINISTRATOR OF THE SMALL BUSINESS
                             ADMINISTRATION

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

                                HEARING

                               BEFORE THE

                      COMMITTEE ON SMALL BUSINESS
                          AND ENTREPRENEURSHIP
                          UNITED STATES SENATE

                     ONE HUNDRED SIXTEENTH CONGRESS

                             FIRST SESSION

                               __________

                           DECEMBER 11, 2019

                               __________

      Printed for the use of the Committee on Small Business and 
                            Entrepreneurship
                            
                            
                            
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]                          
                            
                            


        Available via the World Wide Web: http://www.govinfo.gov
        
        
                          ______                      


              U.S. GOVERNMENT PUBLISHING OFFICE 
40-642 PDF             WASHINGTON : 2020 
        
        
        
        
            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
                Meredith West, 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.......................................................     2

                                Witness

Carranza, Ms. Jovita, of Illinois, nominated to be Administrator, 
  Small Business Administration..................................     5

                          Alphabetical Listing

American Legion (committee insert by Cardin)
    Letter dated December 2, 2019................................    27
Cardin, Hon. Benjamin L.
    Opening statement............................................     2
Carranza, Ms. Jovita
    Testimony....................................................     5
    Prepared statement...........................................     7
    Responses to questions submitted by Chairman Rubio, Ranking 
      Member Cardin, and Senators Cantwell, Shaheen, Scott, 
      Markey, Booker, Coons, Hirono, Kennedy, Duckworth, and 
      Hawley.....................................................    36
Rubio, Hon. Marco
    Opening statement............................................     1


                  NOMINATION OF JOVITA CARRANZA TO BE

                  ADMINISTRATOR OF THE SMALL BUSINESS
                  
                             ADMINISTRATION

                              ----------                              


                      WEDNESDAY, DECEMBER 11, 2019

                      United States Senate,
                        Committee on Small Business
                                      and Entrepreneurship,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 2:34 p.m., in 
Room 428A, Russell Senate Office Building, Hon. Marco Rubio, 
Chairman of the Committee, presiding.
    Present: Senators Rubio, Risch, Ernst, Young, Romney, 
Cardin, Cantwell, Shaheen, Markey, Coons, and Rosen.

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

    Chairman Rubio. The Committee will come to order. Today's 
hearing of the Senate Committee on Small Business and 
Entrepreneurship will be to consider the nomination of Ms. 
Jovita Carranza to serve as the Administrator of the Small 
Business Administration, and we welcome you to the Committee.
    The SBA provides entrepreneurs with vital access to 
capital, technical assistance, and entrepreneurial resources, 
ensuring that American small businesses can start, can scale, 
and can succeed. However, the needs of entrepreneurs and small 
business owners have changed in the more than six decades since 
the SBA was created back in 1953, under President Eisenhower. 
Today there are over 30 million small businesses in the United 
States, employing nearly 60 million Americans. These firms 
operate in a new economic climate in which small business 
dynamism is vital and innovation drives growth.
    In order to continue to serve small businesses effectively, 
the SBA must also become dynamic and innovative. Agency 
modernization is, in my opinion, imperative to make sure that 
programs not only meet the needs of American entrepreneurs but 
also help them compete in what is now a fully global 
environment.
    With China's continued economic aggression and 
manipulations, small businesses must be better positioned to 
support U.S. competition on an international scale. It is my 
view that the SBA ought to provide tailored and accessible 
resources to support American competitiveness. This means the 
agency must expand beyond the traditional offerings and 
incorporate creative programing to spur investments, support 
advanced manufacturing, promote innovation, and expand export 
opportunities.
    This Committee is actively working towards these outcomes 
through a comprehensive reauthorization and modernization of 
the Small Business Act and Small Business Investment Act, and 
together I hope we can create the SBA of tomorrow and not 
simply languish in the agency of decades past, because 
ultimately the status quo is simply no longer good enough.
    American national competitiveness requires successful small 
businesses and so do our communities. Roughly 1.8 million, or 
more than 60 percent of all new jobs are created by small 
businesses. In my State of Florida, in my home state, small 
businesses employ over 3.4 million individuals. Successful 
small businesses mean increased access to dignified work, 
improved local GDP, a healthier economy, and ultimately 
stronger communities.
    Today's hearing, as I said at the outset, is focused on the 
role of the Administrator, who will be our partner in 
addressing these issues and working with us to ensure the 
success of small businesses that propel American 
competitiveness and also stronger communities.
    And with that I want to recognize the Ranking Member.

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

    Senator Cardin. Ms. Carranza, first of all, welcome. It is 
wonderful to have you here. I thank you very much for your 
public service and your willingness to take on this very 
important responsibility, so, first, thank you for your 
commitment.
    When I was elected to the United States Senate in 2006, I 
requested a seat on this Committee. I say that because it is 
not on everyone's priority list to get on the Small Business 
and Entrepreneurship Committee. I wanted to be on the 
Committee. I recognized how important it was in my state for 
job growth, for innovation. And I know that Maryland has a long 
history of using entrepreneurship as a tool for economic 
empowerment for underserved communities.
    It was the late Baltimore Congressman Parren J. Mitchell 
who created the first set-aside program for minority 
contractors. He did that in 1977. Today, Maryland is home to 
the largest concentration of women-owned businesses in the 
country, as well as the largest concentration of minority-owned 
businesses.
    So if you are confirmed you will be leading the SBA at a 
time when the face of business ownership in America is becoming 
more diverse. Minorities, women, veterans, and entrepreneurs 
from underserved communities face specific historical barriers 
to business ownership, and they need an SBA that has 
leadership, vision, and tools required to meet those needs.
    When former Administrator Linda McMahon resigned, I said my 
hope is that President Trump will nominate a successor who is 
as committed to advocating for America's small business as 
Administrator McMahon was. Your career in business and 
government, including your prior service as Deputy 
Administrator of SBA under President Bush, makes me hopeful 
that you will pick up where Administrator McMahon left off.
    While I am confident in your ability to lead the agency, I 
am sure you would agree with me that the best leaders have 
strong teams. If confirmed, you will enter an agency that has 
not had a Deputy Administrator for more than 19 months. I hope, 
if you are confirmed, you will work with the Administration to 
recruit and nominate someone who is committed to serving 
America's small businesses to help lead that agency.
    I would also like to share two of my priorities that I hope 
will be your priorities if confirmed as our Administrator. 
First, SBA must do a better job of reaching underserved 
communities. As I mentioned on the outset, my home state has 
one of the most diverse small business communities in the 
country.
    When I meet with underserved small business owners across 
Maryland, their top concern is always access to capital. 
Capital is the lifeblood of small businesses, and for 
underserved entrepreneurs who have less wealth from which to 
fund a venture and who have lower rates of business loan 
approval, the affordable capital provided by SBA is invaluable.
    Unfortunately, SBA's highest-volume loan program, the 7a 
program, has mirrored the disparities in the credit market 
instead of filling the gaps in the credit market. The agency 
should invest in tools like the Community Advantage Pilot 
Program, which has demonstrated its ability to get capital in 
the hands of underserved entrepreneurs at a much higher rate 
than the 7a program.
    That is why I introduced the Closing the Credit Gap Act to 
make SBA's Community Advantage permanent, expand the geographic 
and demographic reach of the program, and increase the maximum 
loan size from $250,000 to $350,000. I hope you will make 
Community Advantage and other SBA loan programs that serve 
underserved entrepreneurs like the Microloan program a 
priority.
    Second, SBA must do all it can to increase opportunities 
for small business contractors. In 2018, Federal contracting 
accounted for 8 percent of Maryland's GDP, approximately $33 
billion, including $11 billion spent with small businesses. The 
jobs created by these companies have helped thousands of 
families in Maryland enter the middle class.
    So I was very troubled by the Bloomberg Government report 
that found that the number of Federal contractors working on 
unclassified prime contracts is at a 10-year low, despite a 
steady rise in government contract spending over that same 
period of time. This means that while contracts are getting 
bigger and bigger, we are creating an insular club where fewer 
and fewer businesses successfully compete for government 
contracts, creating a less-competitive marketplace and reducing 
opportunities in the process. Small businesses are bearing the 
brunt of this decline.
    The report also found that the Federal Government did 
business with 32 percent fewer small vendors in fiscal year 
2018 than it did in fiscal year 2009. For comparison, the 
number of large vendors fell by only 4 percent.
    So I was pleased to learn that you once chaired the SBA 
Office of Small and Disadvantage Business Utilization Council, 
so I know you understand how vital it is for SBA to advocate 
for small contractors, especially those in underserved 
communities. SBA does a lot of good for America's small 
businesses, but again, it should do more for the underserved 
communities.
    I look forward to hearing your views on all these issues 
and how you will lead, if confirmed, the SBA.
    Chairman Rubio. Thank you to the Ranking Member. 
Unfortunately, our cameras in the hearing room are not working 
so we had to set up that temporary one. So if you want to do 
your statement again, or----
    Senator Cardin. I will turn and do it this way.
    Chairman Rubio. I am kidding. I am joking.
    [Laughter.]
    Well, maybe he does want to do it. No, I think we have got 
it recorded somewhere.
    Well, first of all I want to thank you for that.
    So let me introduce our nominee. On the 1st of August, 
2019, President Trump formally nominated Jovita Carranza to 
serve as the Administrator of the SBA. She enjoys a long and 
successful career in both the private sector and in government 
service. In 1976, she was hired by UPS as a part-time hub 
operations and human resources supervisor. Twenty-nine years 
later, after hard work and dedication, she retired from UPS as 
the Vice President of AR Operations.
    In December of 2006, she was nominated to serve as the 
Small Business Administrator's Deputy Administrator during 
President George W. Bush's administration. Her nomination was 
successfully reported to the Senate floor by this Committee, 
where she was confirmed by voice vote.
    After serving in that role for two years, she began working 
as a logistics consultant. She was again called on by 
government to serve in government on June of 2017, where she 
was named Treasurer of the United States, a position she still 
holds today.
    She has a strong history of community engagement, serving 
as a member of several organizations and on a number of boards 
throughout the years, including that of the American Cancer 
Society and the Hispanic Health Coalition. She has a Master of 
Business Administration degree from the University of Miami and 
spent time studying at California State University Los Angeles 
and Michigan State University, among others.
    She is married to Joel Roque and has one adult daughter.
    I am encouraged by her experience with the SBA and the goal 
we both share of ensuring the agency is best positioned to 
serve America's small businesses.
    So again, welcome to the Committee, and before you give 
your opening statement, as I informed you, if you would stand 
for the required oath of all who appear before us for 
nomination.
    Do you solemnly swear to tell the truth, the whole truth, 
and nothing but the truth, so help you God?
    Ms. Carranza. I do.
    Chairman Rubio. Should you become confirmed as 
Administrator, are you will to appear and testify before any 
duly constituted committee of Congress when requested to do so?
    Ms. Carranza. I do.
    Chairman Rubio. Are you willing to provide such information 
as is requested by any such committee?
    Ms. Carranza. I do.
    Chairman Rubio. All right. Thank you, and you are 
recognized for your opening statement.
    I always wanted to swear in a witness, my whole life. I 
finally got it done. I saw it in the movies all these years. It 
is awesome.

  TESTIMONY OF JOVITA CARRANZA, OF ILLINOIS, NOMINATED TO BE 
          ADMINISTRATOR, SMALL BUSINESS ADMINISTRATION

    Ms. Carranza. It is a real honor to be the first one. Thank 
you.
    Thank you, Mr. Chairman, Ranking Member Cardin, and 
distinguished members of the Committee. I have had the 
opportunity to meet with a number of you recently. I enjoyed 
learning about the small businesses in your state, and I want 
to thank you for sharing your insights into how we can advance 
policies that will help support entrepreneurs.
    I want to thank the President for nominating me, my family 
and friends for their support, as well as colleagues who have 
supported me through this process.
    Our 30 million small businesses play a vital role to our 
Nation's prosperity, helping Americans climb the economic 
ladder and improving the communities in which they operate. 
When they succeed, we all win. Throughout my life, as a young 
girl in a working-class neighborhood, as an executive leader at 
a global company, and as a government official, I have seen the 
transformative power entrepreneurship can have on individuals, 
communities, and the global economy.
    Like you, I believe entrepreneurship and small business 
ownership, in many ways, represents the American Dream. I am 
passionate about empowering entrepreneurs of all backgrounds 
and ethnicities with the guidance and the support needed to 
achieve success.
    I want to share some of the specific priorities I would 
bring to the SBA, but first, I would like to briefly tell you 
how it is that I arrived here today, so that you can understand 
how my life experiences informed the leadership vision I hope 
to bring to the agency.
    My parents were first-generation Mexican Americans born in 
Chicago. They worked hard to provide for their four daughters. 
They ingrained in me the importance of hard work, education, 
and the perils of complacency and settling for ``good enough.''
    I was also taught that perseverance has a way of opening 
doors. My career with UPS began as a part-time, hourly employee 
on the warehouse docks. I was responsible for loading shipments 
onto trucks, and in over three decades with the company, my 
exposure to regional markets expanded to global markets. I led 
operations in Latin America and the Caribbean, managing 
thousands of employees.
    After I retired, I was nominated to serve as Deputy 
Administrator at SBA, where I would oversee 80 national field 
offices and a portfolio of loans worth roughly $80 billion.
    After SBA, I returned home to the city of Chicago, and for 
the next several years I leveraged my private sector and 
government experience to help strengthen and expand nonprofits, 
focused on supporting entrepreneurship among underserved 
communities.
    Almost three years ago, I returned to the public service, 
after the President nominated me to serve as U.S. Treasurer.
    Mr. Chairman, my journey here today has not been an easy 
one. I have experienced some of the same challenges many 
Americans face. I remember what it was like to work two jobs, 
while not only attending college but also raising a child as a 
single mother. If you would have told me then that my signature 
would one day be printed on every earned dollar, I never would 
have believed it. But I sit here before you today the 
embodiment of that American dream.
    I retired from UPS as the highest-ranking Latina in the 
history of the company, and in the years since, I have been 
fortunate to earn the confidence of two Presidents who 
appointed me to serve in their respective administrations.
    Members of this Committee, whatever success I achieved in 
life has been a function of not only hard work, but also 
opportunity, guidance, and advocacy I received from others.
    If I am confirmed to lead the SBA, I will leverage the 
power of this agency to continue to provide the same kind of 
support that I received to entrepreneurs who need it most. I 
intend to put particular emphasis on opening more doors for 
women and for entrepreneurs in underserved communities, 
including military families and veterans, and I intend to 
prioritize disaster preparedness. I will be a tireless advocate 
in the Cabinet for small businesses, as I strive to maintain an 
open and collaborative relationship with members of the 
Committee and your staff.
    Thank you again for your consideration. I am happy to 
answer any questions you may have.
    [The prepared statement of Ms. Carranza follows:]
    
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    Chairman Rubio. Thank you very much. We will start with the 
Ranking Member.
    Senator Cardin. Once again, thank you for being here and 
your willingness to serve.
    You mentioned helping underserved communities. I mentioned 
it in my opening statement. So I want to get to the issue of 
availability of credit. When you look at minority-owned small 
businesses, they are much more likely to be denied credit. They 
are much more likely to get smaller loans. They are much more 
likely not even to apply for loans because of the expectation 
that they will not be able to get the loans, the interest rates 
are going to be higher, and the list goes on and on and on. The 
same thing is true with women. The same thing is true with the 
veteran-owned businesses. The same thing is true in rural 
businesses.
    So my first question to you is, when you look at the 7a 
program today, the biggest program we have under the SBA for 
credit, less than 5 percent of the loans go to black business 
owners. Only 18 percent go to women. Less than 5 percent go to 
veterans. Only 16 percent went to owners in rural areas. I say 
that because that is well, well below the demographics of each 
of those underserved groups in our country.
    What will you do to try to reach out and to deal with this 
gap we have in credit in America?
    Ms. Carranza. Senator Cardin, I appreciate you raising that 
important issue. It is a very apparent condition in our market. 
But let me share with you what I have been involved in as U.S. 
Treasurer these past couple of years.
    I have been tasked to oversee the Office of Consumer 
Policy, and that office is totally dedicated on consumer 
protection, consumer financial inclusion, as well as financial 
literacy and education. And I have worked extensively with the 
community, in particular the underserved, the underbanked, and 
unbanked community. That was a focus that we identified as 
bringing the Main Street to Wall Street, because we recognized 
the disparities as it relates to credit worthiness or credit 
accessibility or just qualifying for access to capital, whether 
it is gender, ethnicity, or particular community limitations.
    So you can rest assured that I am very sensitized to the 
particular area that you have identified, and if confirmed as 
Administrator of SBA, I would look at ways of, as I indicated 
in my opening statement, optimize the performance of all of the 
programs at SBA.
    Senator Cardin. So let me give you one area where you could 
make an immediate help, by helping us. When you compare the 7a 
program with the Community Advantage program, it is a 
remarkable difference. Black owners, as I said, about 7.5 
percent of the 7a programs, 12 percent under the Community 
Advantage. The women-owned businesses are doing much better 
under Community Advantage also, and when we take a look at 
Hispanic businesses, it goes from 8.5 percent under the 7a 
program to 17 percent under the Community Advantage program.
    So I filed legislation to make the Community Advantage 
program permanent. We also want to allow new participants to 
participate in lifting the moratorium. Can I have your 
assurances that you will take a very hard look at this and I 
hope to become an advocate for these changes so that we can 
build on what is working better in the SBA?
    Ms. Carranza. Senator Cardin, as we discussed in your 
office, because you posed that same question to me and I 
mentioned to you that I would work very closely with you as 
well as assess the current impact that Community Advantage. And 
so to your question I answer yes, I will be closely engaged and 
supportive and a very involved advocate.
    Senator Cardin. Thank you. I do not--we do not have a 
reporter in our private discussion so I thought I would put 
that on the record.
    Ms. Carranza. Oh, that is fine. I have it recorded.
    Senator Cardin. Thank you very much.
    Ms. Carranza. You are welcome.
    Senator Cardin. Where you also find tremendous 
underrepresentation in underserved communities is in innovation 
and funds for innovation. Less than 1 percent of all venture 
capital goes to rural businesses, about 3 percent go to women-
owned businesses, and only 3 percent go to black- and Hispanic-
owned businesses. One of the effective ways we have found in 
dealing with this gap is for the SBA to partner with HBCUs and 
minority institutions, because they have the avenues already 
into the community, the credibility in the community.
    Will you work with me to try to engage more of these 
minority institutions and helping develop more opportunities 
for innovation in underserved communities?
    Ms. Carranza. Senator Cardin, that is a very easy question 
to answer. I look forward to working with you and learning more 
about what SBA and the collaboration that they have expanded 
with other agencies. And as an advocate for small business on 
this Cabinet I look forward to also advising and influencing 
other Cabinet members to support this.
    Senator Cardin. Thank you. And one last question, if I 
might. I filed what is known as the New Start Act. I did that 
as a follow-up to legislation that we passed dealing with the 
First Step, recognizing our criminal justice system needs to be 
adjusted and fixed. The Trump administration supported the 
First Step legislation. It was signed into law. We have a lot 
of returning citizens that have a lot of challenges, and they 
are certainly a very much underserved community. If we can get 
them into the entrepreneurship programs they are going to be 
much more productive for our society, for themselves, and for 
our community.
    Will you work with me to find ways in which the SBA can 
help us deal with returning citizens so that they can 
participate in American entrepreneurship?
    Ms. Carranza. Senator Cardin, if confirmed, I look for 
opportunities to address what the resource partners are 
providing, and when I say resource partners, SBDCs and SCORE 
and the Women's Business Centers, in addition to the 
headquarters office and the oversight of the programs. So, yes, 
I look forward to working with your office and expanding their 
footprint in that community.
    Senator Cardin. Thank you. Thank you, Mr. Chairman.
    Chairman Rubio. Senator Romney.
    Senator Romney. Thank you, Mr. Chairman. I am going to 
focus my questions on the inspector general's report on the 
management issues that was put out--of the SBA--that was put 
out in 2020, in October.
    One of the areas that the inspector general focused on was 
the dollar threshold for support, and it was at $750,000 for 
economic disadvantaged, and their view was that that number was 
not economically justified. Their report contends that the SBA 
should develop objective and reasonable criteria based on 
quantitative research and to finalize and implement that 
criteria. That challenge, by the way, was first reported by the 
inspector general in 2003, and yet they noted that very limited 
progress has been made.
    If confirmed, will you take a close look at the 
disadvantaged threshold and fix an issue that has been 
lingering around since 2003?
    Ms. Carranza. Senator Romney, once again I want to thank 
you for having--taking the opportunity to interact with you in 
your office and learning about the areas of concern that you 
have, and to answer your question, I look forward, if 
confirmed, to review the IG report and get back to you on some 
strategies we could develop.
    As I indicated in my opening statement, one of my 
objectives is to really look at performance of the programs and 
optimizing their particular impact.
    Senator Romney. Thank you. One of the recommendations that 
came from the inspector general was improved compliance of the 
requirement that lenders only make SBA 7a loans to credit-
worthy small businesses, or borrowers, who--and this is in 
their words--who cannot obtain credit through a conventional 
lender at reasonable terms. And, you know, I am a believer in 
private markets and in private financial institutions, but I 
know there are many gaps in underserved areas. But I want to 
make sure that the Federal Government does not end up 
subsidizing businesses who do not need to receive that kind of 
subsidy.
    Can you also review very carefully the GAO recommendations 
and act as soon as possible to meet this requirement as well?
    Ms. Carranza. Senator Romney, thank you for raising that 
important issue. Credit worthiness is really critical, not only 
for the banks' risk factor but also for the borrower, because 
we also do not want to put that client prematurely in a 
situation where their credit situation becomes even worse, and 
could not apply even for microloans. So I will look forward to 
working closely with this particular program and ensuring that 
all risk factors are being addressed appropriately.
    Senator Romney. Excellent. I would note that in my state, 
as in many states, I believe, across the country, that the 
technology growth and development in our economy is accounting 
for much of the job growth across America. It certainly is in 
my state. And as you seek to find places to provide support to 
people who are looking for help in starting a business or 
expanding a business, I know that it is important that you 
consider the demographic qualities and characteristics of the 
various borrowers. But I would hope, as well, that emphasis is 
placed on the geographic characteristics of a place where a 
business might be located, as well as on the growth potential 
and the survivability of that business as well.
    I have particular interest in what is happening in the 
rural parts of our country. I am thinking about the rural parts 
of my own state, but I am sure that is true throughout the 
country. Our urban areas are doing particularly well--high job 
growth, increasing wages, and household earnings--but rural 
America is having a difficult time, particularly those areas 
that do not have a very sizeable agricultural community. Even 
ag these days is suffering.
    But do you believe that there has been sufficient focus on 
the rural communities, and is there a way to increase the 
capacity of support for entrepreneurs and innovators in rural 
America?
    Ms. Carranza. Thank you for that question, Senator Romney, 
and as I discussed with several of the Senators that I visited, 
rural community, underserved community, underbanked, food 
deserts, bank deserts, we have addressed a particular need to 
have a focus. I do not believe SBA is the only agency targeting 
an area that like rural, whether it is through issues like 
providing broadband services or banking services to the rural 
area, or just levels of investments with banks.
    So I look forward to working with you and learn, in 
particular, the deficiencies or gaps that you are addressing in 
your particular state, and employ the programs at SBA.
    Senator Romney. Thank you, Ms. Carranza. I would note how 
pleased I am that someone with your extensive experience, not 
just in the world of public service but in the UPS world, the 
private sector world, I certainly hope and believe that that 
experience can serve you well in this new responsibility.
    Thank you, Mr. Chairman.
    Ms. Carranza. Thank you, Senator.
    Chairman Rubio. Thank you. Senator Cantwell. Oh, Coons is 
here first?
    Senator Cantwell [continuing]. So graciously was before me, 
but opened the door to let me walk in. I told him I thought he 
really was here first.
    [Laughter.]
    So I defer to my colleague.
    Senator Coons. And to my colleague, if my wife were not 
arriving in five minutes I would defer to you again, but thank 
you. I am going to rocket ahead with brief questions.
    Chairman Rubio. And the good news is the cameras are all 
working again, so we got this all on tape.
    [Laughter.]
    Senator Cantwell. Thank you.
    Senator Coons. Thank you, Mr. Chairman, Ranking Member. Ms. 
Carranza, welcome. I enjoyed working with your predecessor and 
look forward to working with you as well. This Committee has a 
strong tradition of passing meaningful and bipartisan 
legislation that opens the doors to opportunity and to help 
Americans start and grow businesses.
    One of the highest-impact SBA programs, which was founded 
in little Wilmington, Delaware, was SCORE, which I know you are 
familiar with as a former SCORE board member. In your opinion, 
what value does SCORE contribute to our Nation's entrepreneurs?
    Ms. Carranza. I appreciate that question, Senator Coons, 
and I also regret the lack of opportunity to meet with you one-
on-one to elaborate on this particular subject. But for the 
immediate, SCORE--and I am really impressed with the entire 
infrastructure and the services that they provide. The 
infrastructure consists of more than 10,000 volunteers, retired 
executives that provide hours of coaching and mentoring. I have 
participated in award events with SCORE, where they have 
recognized, for instance, a small business that started out 
with $100,000, and the award event that I attended was this 
particular small business reaching their first million dollars, 
and they attributed it to the coaching and counseling, the 
services and products that the SCORE organization provides.
    It is an essential component in the community, along with 
SBDCs and Women's Business Centers. Collectively, they have 
touchpoints that a lot of other not-for-profits would have. So 
I value the contribution and the impact that SCORE provides.
    Senator Coons. As you know, there were some challenges 
highlighted by the SBA's inspector general. The House has now 
passed bipartisan legislation to reauthorize SCORE and to 
address those challenges, and I am hoping the Senate will do as 
well, and I look forward to working with you on that.
    As I am sure you are aware, SBA told Congress this year the 
7a loan program, the flagship lending program, will require a 
subsidy for the first time since 2013. That projection has 
injected some uncertainty into the program. It was surprising, 
I think, given the strong state of the portfolio and the 
overall economy.
    I am concerned SBA's model is overestimating the cost of 
the program. Two quick questions. Will you work with the 
Committee to open up the model's dated assumptions so we can 
make sure we are doing everything possible to keep the 7a 
program available to small business borrowers? And what is your 
view on an increase in programming fees and how that would 
affect borrowers?
    Ms. Carranza. Thank you for that question, Senator Coons, 
and the opportunity to share that I had mentioned in my opening 
statement that I have three particular areas of focus, and one 
of them is program optimization or maximization in the 
community and the impact that they provide to the small 
businesses that are in need of their services. And 7a is one, 
among other access to capital programs that we have. And so I 
look forward to learning more about the details concerning that 
and get back to you, and work with you personally on that.
    I believe that access to capital is always going to be a 
deficiency and a need, and so we should be able to provide the 
best financing opportunities for small businesses, especially 
with the current growth trajectory that we are realizing in our 
minorities.
    Senator Coons. Thank you. One other area I hope we work 
together on is community development financing institutions, 
which are critical to providing resources to under-resourced 
communities. You, if I understand correctly, serve on CDFI's 
Community Development Advisory Board.
    Unfortunately, Senator Kennedy and I--he is the Chair and I 
am the Ranking on the Appropriations Subcommittee that funds 
all of SBA's work--there are a lot of contentious issues in 
that subcommittee. CDFIs is not one of them. President Trump 
has attempted to eliminate that program now several years in a 
row in his budget, but it enjoys bipartisan support, both 
houses of Congress. I hope that we can work together to 
strengthen CDFIs as a program going forward.
    Ms. Carranza. Senator Coons, I believe that the CDFI has a 
lot of untapped potential, especially under the Opportunity 
Zone incentives, and the Microloan product is a very strong one 
and the Tribal Nations also access CDFIs very strongly. So it 
has a lot of value that I look forward to working with you and 
identifying where can we maximize further those contributions.
    Senator Coons. Thank you, Ms. Carranza. I am proud of the 
work this Committee has done to put together a reauthorization 
package. There are two bills that I have contributed, and I 
just want to thank Mark Santos of my team for helping lead 
that, the Ramp for Innovators Act, to help SBIR awardees with 
commercialization, and the SIGMA Act to improve small 
manufacturers' access to capital. I hope we will have an 
opportunity in this Congress to move forward on authorizing 
legislation, and that would require, I think, some cooperation 
between all of us.
    Last, I would like to invite you to Delaware. Your 
predecessor, Administrator McMahon, made several visits. It is 
a very nearby state. We are very welcoming, and I hope you will 
take the opportunity to make a visit early in your term.
    Ms. Carranza. Thank you, Senator. I look forward to the 
visit.
    Senator Coons. Thank you.
    Chairman Rubio. It is quite accessible by train, 
apparently. Is that right?
    [Laughter.]
    Senator Coons. Train, plane, automobile, bus. You can even 
jog there if you want.
    Ms. Carranza. Thank you.
    Chairman Rubio. So our chairman emeritus, Senator Risch.
    Senator Risch. Thank you. Well, Ms. Carranza, thank you so 
much for agreeing to take this job. Your background in both 
government and especially in the private sector is impressive.
    Ms. Carranza. Thank you.
    Senator Risch. And it does well. Did you meet with the 
President before you--have you met with the President since you 
took this job?
    Ms. Carranza. Yes, as a matter of fact I did.
    Senator Risch. When you met with him, did he ask you to 
autograph his personal copy of ``Why American Small Businesses 
Need Mitt Romney,'' that you wrote in October of----
    [Laughter.]
    Ms. Carranza. That was an interesting question, but Senator 
Risch----
    [Laughter.]
    I will tell you that I had a delightful exchange when he--
when we discussed this particular very responsible role and his 
commitment to small business. And when he expressed an interest 
to continue the progress that our former Administrator had 
made, I mentioned to him that I was there and I would accept 
this role and that my commitment was to exceed his 
expectations.
    Senator Risch. Well, I appreciate that. Thank you for 
taking the time to meet with me. As I explained to you when we 
met, and I want to get here on the record, is I was shocked 
when I heard OMB say that 7a was going to need a subsidy. I am 
a big fan of the 7a program, since I started on this Committee, 
which was when I first got here 11 years ago. I have always 
been an advocate that the programs should run subsidy-free, and 
there is no reason they cannot, if the underwriting is correct, 
if the regulators are in place.
    And so OMB, as we all know, uses Ouija boards, I think, as 
opposed to calculators, to reach the conclusions that they do. 
I would hope that you would get, when you get settled in, take 
a look at that and try to show the OMB why they are wrong on 
those calculations. Those fees are a bad deal when you are 
talking about making these kind of loans, and the increase in 
those fees just would not sell well in the private sector. And, 
indeed, it would not be good for what small business is trying 
to do as far as making the 7a loans. So I hope you will take a 
look at that when you get settled in and be able to show OMB 
why they are wrong.
    Ms. Carranza. Senator Risch, I look forward to sharing with 
you, visiting with you and sharing with you more extensively, 
but I have had the opportunity to visit with small businesses 
as I traveled throughout the Nation doing town hall meetings 
and whatnot. And, inevitably, when you challenge small 
businesses on what SBA can change or address much more 
aggressively for them, it is always the fees being charged. And 
so that is something I will look into and get back to you on 
that.
    Senator Risch. Well, thank you. I appreciate that.
    The other thing that is close to my heart is small business 
investment company licenses that are taking way too long. And, 
indeed, in the reauthorization bill that we are eventually 
hopefully going to try to move forward, we have in their 
provisions to try to rectify some of those. I hope you will 
take a look at that. I know you will get on board when we 
eventually get that passed. I think that there really needs to 
be some reform in that. I am a real advocate for that and I 
would like to welcome you to that party if you are so inclined, 
after you get settled in, and have a look at that.
    Ms. Carranza. Yes, Senator Risch, and thank you for that--
for raising that area of concern. It has been expressed by all 
of the Senators that I had the opportunity to meet, and so one 
of the priorities that I have is to look into the SBIC. I have 
had the opportunity to become, I am going to say generally 
aware, through some of the hearings that I have observed 
online, and understand that there are some areas of concern, 
and I look forward, if confirmed, to really assess the 
complexities of the program and its current impact.
    Senator Risch. Thank you very much. Thank you, Mr. 
Chairman.
    Chairman Rubio. Thank you.
    Senator Cantwell.
    Senator Cantwell. Thank you, Mr. Chairman, and thank you 
for holding this hearing, and to you and the Ranking Member 
Cardin.
    Ms. Carranza, thank you so much for your willingness to 
serve. I wanted to mention export programs because Washington 
is an export state. The SBA State Trade Expansion Program is 
one of the key tools for small businesses to continue their 
export opportunities, so I want to know if you will support 
robust funding for the STEP program and whether you support 
reauthorization of the U.S. Export-Import Bank.
    Ms. Carranza. Senator Cantwell, coming from the 
international arena I understand the value and the importance 
of exports, and not being familiar exactly with what the 
program is providing now I look forward to, if confirmed, to 
assess, become much more familiar, and get back to you, and 
work with you on that. But exports are one of the priorities 
that SBA has in providing growth for small businesses, and I 
look forward to enabling that.
    Senator Cantwell. Okay. So you are not familiar with the 
SBA's program?
    Ms. Carranza. Not in great detail at this point.
    Senator Cantwell. Okay. Well maybe for the record you could 
answer both, the STEP program and the Export-Import Bank.
    Ms. Carranza. Yes, and I look forward to it.
    Senator Cantwell. On cybersecurity, we had a chance to talk 
a little bit about this, but according to the U.S. National 
Cybersecurity Alliance, more than 60 percent of small 
businesses go out of business within six months of a cyber 
attack. So I am pleased to see the passage of the Main Street 
Cyber Act last Congress provided guidance to help small 
businesses reduce cybersecurity risks, but obviously there is 
more that we need to do. The Small Business Development Centers 
across the country are now providing technical assistance to 
small businesses, and I believe that this is an important 
aspect because of the challenges of getting access to capital 
to constantly update technology.
    So would you be willing to consider pilot programs or other 
things helping small businesses access capital to help build 
critical cyber infrastructure?
    Ms. Carranza. Senator Cantwell, as we discussed, small 
businesses, what they face on cybersecurity is not only gaining 
information and being informed of how to prevent, how to 
address it, but also, as you indicated in your question, is the 
access to capital to support the infrastructure, to support 
cybersecurity software and procedures and processes. So I look 
forward to working with you on that.
    Senator Cantwell. So you think it is a good idea to 
continue to focus on how to get small businesses support for 
cybersecurity?
    Ms. Carranza. I look forward to working with your office to 
support more access to capital for cybersecurity infrastructure 
for small businesses, because that is where they lag.
    Senator Cantwell. Okay. I think, Mr. Chairman, instead of 
asking one more question that I do not get a defined answer to 
I think I am just going to wait. Thank you.
    Ms. Carranza. Okay. Thank you.
    Chairman Rubio. Senator Young.
    Senator Young. Treasurer Carranza, good to see you again.
    Ms. Carranza. Yeah, thank you.
    Senator Young. I enjoyed our visit in the office and was 
really encouraged that you are going to be focusing on Small 
Business Investment Company program improvement as one of your 
top priorities, as you step into this role, so thank you very 
much for that. It is really important to Hoosier small 
businesses, and one government program that I think is broadly 
recognized as effective, but can be made more effective.
    I would like to turn to the Office of Advocacy. It is 
tasked with identifying challenges and advocating for small 
business interests when it comes to regulatory reforms. Do you 
believe, Treasurer Carranza, there are more opportunities for 
this Office of Advocacy to be more focused on its core mission 
of removing cumbersome regulations, and if so, maybe you could 
speak to that issue a bit.
    Ms. Carranza. Thank you for that question, and it is a very 
important issue. Heavy regulation is a major burden. It is very 
costly for small businesses. I believe everyone here recognizes 
that. And this Administration has been very focused on 
addressing a reduction in very costly regulations, not only for 
big business but small businesses especially.
    I have had the experience of working with small businesses 
for close to about 25 years in my private sector, and there are 
three major costs for any small business and regulation taxes 
are the top two, and health care for employees. So if there is 
anything that the SBA can focus in on, especially the Office of 
Advocacy, and once I get close, if confirmed, close to that 
office to learn how effective they are, what programs they have 
in place, the communication tools and infrastructure that they 
have moving forward, I will get back to you and tell you what I 
have learned and what we can do more. I know that it is----
    Senator Young. Thank you. My sense is there is an 
opportunity, just for that entity within SBA, to be a little 
more outward focused, perhaps more aggressive as it relates to 
advocating on behalf of small businesses. But hopefully we can 
work constructively together to that end.
    Ms. Carranza. Yes. If confirmed, absolutely, I look forward 
to working with you on that.
    Senator Young. Thank you. The nature of our economy has 
long been changing, moving less from traditional assets and 
more towards the increased valuation of intangible assets, 
whether that is customer relationships or intellectual 
property. And one would think that would pose some challenges 
when calculating valuations of different companies.
    So as the economy continues to evolve, how is the SBA going 
to modernize its lending practices to take into account the 
growth of the intangible assets within businesses?
    Ms. Carranza. If confirmed, I will take it as an 
observation or something that I need to really look at, how we 
are progressing through our strategic planning process, if that 
has been identified as an opportunity for growth, and I always 
call it transformation, and be much more relevant in the 
market. Intellectual property is key, and I know that some of 
the small businesses that are involved with trade have their 
intellectual property challenged, and at this point I would not 
know the department of SBA and how they are addressing this new 
market or new trend.
    Senator Young. So would you be willing to work with me, 
have your staff work with my staff, on this discrete issue? 
Because I do think there is going to be an opportunity, moving 
forward, for the SBA to modernize how it deals with small 
businesses whose main assets are indeed intellectual property.
    Ms. Carranza. Yes, Senator. I look forward to working with 
you, absolutely.
    Senator Young. And then lastly, but not least importantly, 
as the father of three daughters, I think it is essential that 
we continue to do what you have indicated you want to do, in 
your opening testimony, opening more doors for women-owned 
businesses. Currently the SBA and the Office of Women's 
Business Ownership work with many organizations. I know it is a 
collaborative effort, but by any accounts it is a successful 
effort.
    What can SBA do to, you know, in this early stage before 
you have even been formally confirmed, what do you think they 
might be able to do to help women better access capital and 
perhaps even incentivize women who have met with financial 
success to mentor those who are just coming along?
    Ms. Carranza. Thank you for that question, and Senator, let 
me share what I have done in the current role I have as the 
U.S. Treasurer. I have been collaborating with the Department 
of Labor and SBA for the past couple of years developing a 
digital platform that is providing some very relevant, some 
cutting-edge training tools so that--and it is designed 
particularly for women entrepreneurs, startups, and emerging 
small businesses, because there is a unique approach to 
training. And they have about seven portals. We provided, at 
Treasury, the portal that was focused on business financial 
literacy.
    So I have been working in that particular sector and I know 
that SBA could do more in collaborating with other agencies, 
and as a voice on the Cabinet I will--you can be confident that 
I will be a strong advocate to continue that work. I have been 
also asked to serve on the Women's Suffrage Centennial, and so 
there are ample opportunities there also to work with the 
business sector and the community. So advocacy for women 
endeavors has been a lifelong experience, and I look forward to 
working with you.
    Senator Young. Just know that this Senator and so many 
others stand ready to ensure you are successful in furthering 
the interests and dreams of women as they go out there and try 
and meet with success in the free enterprise system. So thank 
you.
    Ms. Carranza. Thank you, Senator, and I think you would be 
pleased to know that a lot of our resource partners have a 
particular interest in that community as well, so I look 
forward to expanding that.
    Senator Young. Thank you, Treasurer.
    Chairman Rubio. Thank you, Ms. Carranza. One of the 
arguments, the core arguments that many of us have been making 
for a while is the sort of broad-based consensus that once 
China got richer they would become more like us, was a 
catastrophic error. And we have seen it play out in some of the 
economic imbalances that I think are now--you see multiple 
efforts to correct it both in the Administration and here in 
Congress.
    The first one I point to is that according to research that 
is out there from the 10-year period from 2001 to 2011, our 
country lost 2.4 million jobs in small- and medium-sized firms, 
that were in manufacturing, due to Chinese import competition. 
These are tens of thousands of small businesses in fields like 
furniture, electronics, auto parts, fabricated metals industry, 
located mainly in the Midwest and Upper South, but that 
included northwest Florida. And these are businesses that went 
under during this time.
    What do you view the SBA's role as being, particularly in 
helping foster domestic investment in the manufacturing, and 
particularly in the advanced manufacturing sectors, so we can 
create the kind of strong, dignified jobs that are critical to 
having strong communities and strong families and so forth?
    Ms. Carranza. Thank you, Senator--Chairman Rubio. The 
manufacturing I agree has always been the life blood of a 
community, and manufacturing provides not only ample employment 
for certain communities but they also have a mission of 
producing the best quality products and services in the world 
here in the United States. And so what I believe that SBA, if 
confirmed as Administrator, is to ensure that we are 
continuously providing access to capital for budding 
entrepreneurs that have a particular product, are looking 
forward to establishing a manufacturing here in the United 
States and exporting. That would be one of the program 
optimizations that I would be assessing, to ensure that we are 
not only providing access to capital but value-added technical 
assistance.
    Chairman Rubio. Thank you for mentioning capital, because 
obviously manufacturing is very capital-intensive.
    Ms. Carranza. Yes.
    Chairman Rubio. You know, the Chinese government also 
outlined a plan. It was Made in China 2025. It is an industrial 
plan. And on it they outline, basically, a roadmap on the key 
industries that they intend to establish global superiority in 
these particular industries, all of strategic importance. And 
the ambition, if you look at that, goes well beyond controlling 
manufacturing at the lower end of the value chain, and it 
includes innovation, design, production at the higher end of 
the value chain.
    With regards to those industries, particularly those that 
we know, because of that plan, China is targeting for 
domination, and that includes unfair trade practices, 
subsidization, reverse engineering, forcing our domestic 
companies to joint venture with Chinese companies with an end 
to putting them out of business.
    So in light of all that, and knowing the strategic 
importance of these industries, what can the SBA do to help 
small businesses compete with these Chinese government-backed 
firms in those strategic sectors?
    Ms. Carranza. Thank you for that question, Chairman, and it 
is a very important one. I have taken the opportunity to review 
some of the components of the USMCA, and Chapter 25, where it 
is dedicated, and very specific about small businesses and what 
we can do to facilitate trade and protect intellectual property 
and spur innovation, and look at cost-effective trades and 
taxes and duties and whatnot.
    So SBA could continue serving as the advocate for small 
businesses in those particular markets, and whether it is the 
International Affairs Program Office at SBA, the resource 
partners, much more sensitized to the Chinese market. But I 
believe that technical assistance is going to be really 
critical to work with small businesses to proactively prepare 
them for international trade, especially a market as trying as 
China.
    Chairman Rubio. I guess my point is that one thing is to 
try to sell into the Chinese market, which obviously will also 
be a challenge. I think the item I was pointing to is you are a 
firm, you are in a sector, industrial sector, in which the 
Chinese are making a concerned government-backed effort to 
globally dominate that sector.
    They do it by not only guaranteeing their domestic 
companies unfettered access to their own market without 
competition, but then also by subsidizing their efforts to 
compete against our companies, here and around the world. And 
since they are subsidized, they can offer much lower price at 
sometimes comparable quality. No company can compete against 
that, because these are not government-backed companies. And 
the result is either they do not happen or they get put out of 
business. Then the Chinese dominate the sector and they can 
charge whatever they want.
    And so I encourage you to look more closely on how we can 
align SBA programs, particularly for companies trying to enter 
those strategic industries, because there is no way that a 
small business, or even a large one, to some extent, can 
compete against a nation state with the size and the power and 
the scope of China, under the governance of the Chinese 
Communist Party.
    Ms. Carranza. Chairman, I share your concerns, and you can 
have the confidence that if confirmed I will work closely with 
your office to address those particular areas.
    Chairman Rubio. Thank you.
    Ms. Carranza. You are welcome.
    Chairman Rubio. Senator Shaheen.
    Senator Shaheen. Thank you, Mr. Chairman, and Ms. Carranza, 
thank you for your interest in considering to be nominated for 
this very important post as SBA Administrator.
    I understand that before I got here that you were asked 
about your commitment to ensuring that SBA works with all 
agencies within government to ensure that they meet their small 
business contracting goals, particularly for women- and 
veteran- and minority-owned small businesses. Did I understand 
that correctly?
    Ms. Carranza. Senator, thank you for the question, and yes, 
it is a matter of--also a topic that I discussed with several 
of the Senators that I met with, yes.
    Senator Shaheen. Thank you. Yes, I appreciated our 
conversation about as well.
    I think you may have been asked about the State Trade and 
Export Promotion program, which we have seen, in New Hampshire, 
has been very important in ensuring that our small businesses 
have some assistance in getting into international markets. One 
of my favorite statistics is that while over 90 percent of 
markets are outside of the United States, only about 1 percent 
of small and medium-sized businesses actually have access to 
those international markets.
    So having a program through the SBA like the STEP program 
has been very important in what I have seen according to the 
most recent performance report, is that STEP has returned $31 
for every dollar invested, when we look at the return on 
investment by small business.
    One of the concerns that I have heard from New Hampshire 
businesses, however, is with the high cost of administering 
that program, and I wonder, if confirmed, will you commit to a 
review of the program requirements for STEP to see how we can 
reduce the administrative burden for small businesses who 
participate?
    Ms. Carranza. Thank you for that question, Senator Ernst, 
and as we discussed when we met, I look for opportunities to 
ensure that the programs that are viable for either trade or 
job growth, access to capital, et cetera, are performing and 
providing the impact that they are designed to--were designed 
and intended for. And so I look forward to working with you on 
ensuring that that STEP program is optimized. It is a vital----
    Senator Shaheen. And reduce the administrative burden.
    Ms. Carranza. I look at ways of that for efficiency and 
facilitation, and so yes, I would look--I look forward to 
working on the administrative burdensome of that program.
    Senator Shaheen. Good. Thank you.
    I was very pleased to be part of the effort, back in 2015, 
to try and provide relief for veterans from certain SBA loan 
fees during the reauthorization of the 7a program, and I have 
been disappointed to see that the SBA now is planning to put 
aside those fee waivers for veterans so that they will be 
paying those fees again. And I wonder if you can talk about why 
you think that is necessary and whether you are willing to 
commit to work with our office and the Committee to try and see 
if we cannot waive those fees again for veteran-owned 
businesses looking for loans.
    Ms. Carranza. If confirmed, Senator, I look forward to 
working with you on that. I do not know the particulars of that 
particular issue of the fee structure, but I will take it as a 
priority to look into it, as we have indicated that we can 
never do enough for veterans, and if there is an opportunity 
there then I will work with the Committee as well to address 
that issue.
    Senator Shaheen. Good. Thank you. And finally, on the SBIR 
program, the Small Business Innovation Research program, has 
been a significant way that we have encouraged innovation among 
our small businesses. It has benefited so many of our agencies 
within government. I am on the Armed Services Committee so I 
see very directly how the SBIR program has provided innovation 
for many of the military equipment and operations needs that we 
have.
    Can you talk about what your views are of the SBIR program, 
and will you advocate to increase those allocations and make 
these small business programs permanent, both SBIR and STTR?
    Ms. Carranza. Senator Ernst, with regard to----
    Senator Shaheen. Excuse me. I am Senator Shaheen.
    Ms. Carranza. I am sorry.
    Senator Shaheen. I know a lot of people are thinking about 
Iowa and New Hampshire together as we----
    [Laughter.]
    Presidential nominating process.
    Ms. Carranza. Thank you very much for clarifying that. I am 
sorry.
    Senator Shaheen. That is okay.
    Ms. Carranza. But I wanted to address the SBIR, which is a 
very worthy program, and as you indicated, the agencies benefit 
from the innovative research and development. And so the 11 
agencies that are providing the partnership with SBA to ensure 
that value, I look forward to working with you on that.
    I have become familiar of the current impact and the 
current trend, level of contribution, and I will take the 
position of saying we probably can do more, and I look forward 
to working with you on that.
    Senator Shaheen. Thank you. Thank you, Mr. Chairman.
    Chairman Rubio. Senator Rosen.
    Senator Rosen. Thank you, Mr. Chairman, and Treasurer 
Carranza, congratulations again on your nomination. I 
appreciate you and your staff visiting me last week to discuss 
Nevada matters----
    Ms. Carranza. Yes.
    Senator Rosen [continuing]. Matters important to everybody. 
And I know that people have already asked you a lot of 
questions, so I just want to put a couple of Nevada stats out 
there and we are going to move on to cybersecurity. But, you 
know, the importance of providing, women-, minority-owned 
businesses more resources and opportunities to grow is so 
important, because Nevada has the fifth-largest Latino 
population per capita in the United States. We have one of the 
fastest-growing AAPI communities in the Nation, and Nevada has 
also led the Nation in the growth of women-owned businesses in 
the past decade.
    Currently there are more than 80,000 women-owned small 
businesses and 70,000 minority-owned small businesses, and 
although sometimes you think of Nevada as the Las Vegas trip 
with our big, wonderful hotels, small businesses in Nevada 
actually make up more than 99 percent of all of our businesses. 
And so very important to us, and we just really want to be sure 
that we can expand our small business base and work with SBA to 
provide those additional resources, and plug those holes where 
we have to.
    So I am going to move on to cybersecurity. We talked about 
this a little bit, cybersecurity for small business, because 
small business owners, they do not often think that they are 
going to be victims of a cyber attack. They think maybe of a 
big bank or a big retail company. So they think, ``Oh, I am 
small. Who wants my information?''
    But last year the majority of all targeted cyber attacks 
were directed at small business, and unfortunately 60 percent 
of small businesses that are attacked go out of business within 
six months, because of the hit that they take.
    So what is your assessment of how SBA can help raise 
awareness to provide and strengthen that training for 
cybersecurity? Tell me about your plans to promote cyber 
hygiene. And we talked about, what I want to say, a cyber 
disaster recovery in the case of ransomware, or how do they 
recover that? You know, it is good to be proactive. How do you 
not go into phishing things? How do you do some of those? But 
how do you recover if you are attacked?
    Ms. Carranza. Well, thank you, Senator Rosen, and I am 
definitely going to get your name correct.
    [Laughter.]
    I am so sorry.
    Senator Rosen. That is okay. I am closer so it is easier to 
read.
    Ms. Carranza. But cybersecurity is of great importance for 
all businesses, both large and small, and as we spoke in your 
chambers--and I learned the word hygiene, cybersecurity 
hygiene; it is a new terminology and a new identity--but that 
is basically what it takes. You were not here earlier but I 
mentioned to the Senators that cybersecurity is not only about 
additional information and we know how to counter an attack or 
how to prepare or what type of software there is, but there is 
also a need, and it was expressed to me, a need to identify 
capital for them, so that they can build infrastructure----
    Senator Rosen. That is right.
    Ms. Carranza [continuing]. And support the systems that 
they have to install and also the services that they have to. 
There are firewalls and whatnot, install, very costly.
    Senator Rosen. Yes. It is very complicated, yeah.
    Ms. Carranza. As it relates to SBA, I believe we consumer 
address not only from the Advocacy Office but also partnerships 
with other agencies, to learn what their best practices are. 
Can we share knowledge so that we can be proactive with small 
businesses? But SBA, and if confirmed, I would be a strong 
advocate on doing more for small businesses and cybersecurity.
    Large organizations are having difficulties, so someone has 
to take the position on behalf of supporting small business, 
especially the 30 million.
    Senator Rosen. Well, and I think you bring up a good point, 
because we see this in telemedicine and telehealth, that we can 
often give money for the actual program but we are not giving 
money for people for the hardware or maybe to bring out the 
broadband, if it is a rural area, that they need. It is kind of 
saying, well, I am going to give you free gas for life but you 
do not own a car yet, if you do not have the other kinds of 
infrastructure that you need.
    And so I think being able to either help provide these or 
help when you make the loans, understand that we have to expand 
the resources they often need to use the tools is very 
important. So I appreciate you looking into that.
    Ms. Carranza. Senator Rosen, I am also a strong believer of 
not only the public sector doing it all but also the private 
and public partnerships that we can develop to address that.
    Senator Rosen. Yeah. Well, thank you. I appreciate it.
    Ms. Carranza. You are welcome. Thank you.
    Chairman Rubio. Senator Markey.
    Senator Markey. Thank you, Mr. Chairman, very much. 
Massachusetts has been a big beneficiary of the SBIR/STTR 
program. I will just give you some numbers. They are massive. 
We so far have received 22,500 grants from those programs since 
its inception, and last year alone, Massachusetts received 593 
awards, worth $350 million, just last year, from the SBIR 
program.
    So this has been central to the growth of the Massachusetts 
economy, and Route 128, along our technology highway, has been 
a big beneficiary, making breakthroughs in new programs that 
actually ultimately help our national security, as well as the 
economic well-being of the State of Massachusetts. And we care 
very much about the integrity of this program.
    Back about eight years ago, there was an effort to kind of 
de-authorize SBIR, and the program limped along through 14 
temporary authorizations. And I just do not think it makes any 
sense for us to ever allow that to happen again. With the 
leadership of Chairman Rubio and Ranking Member Cardin and 
champions like Senator Shaheen and Senator Rosen, we are 
working very hard to show a commitment to ensuring the 
permanency of these programs.
    Do you support making these programs permanent?
    Ms. Carranza. I value the--thank you for the question, 
Senator. I value the contribution that the SBIR and STTR are 
making currently, and you have cited the value that we have 
experienced. And so I would, if confirmed, and become a little 
bit more familiar with the agencies that are participating with 
this particular program, I look forward to working with your 
office to ensure that it maintains as a viable program, and 
let's assess what would it look like five years from now.
    Senator Markey. Okay. Well, I thank you for that and we 
would obviously welcome your advocacy for that goal to be 
achieved.
    During your time at the SBA, most venture capital-backed 
small businesses were not eligible for SBIR funding, and since 
that time Congress worked out an agreement to allow a number of 
participating agencies to award a limited percentage of their 
SBIR allocation to small businesses owned in the majority by 
venture capital. But we made sure, at the time, that if VC 
firms got a piece of the pie, would increase the size of the 
whole pie through larger allocation amounts, so true small 
businesses did not lose their important funding, because for 
many small businesses, venture capital is not going away, not 
in the early formation stages of those businesses.
    What do you think, Ms. Carranza, is the appropriate role 
for VC firms, hedge funds, private equity-backed small 
businesses in the SBIR program?
    Ms. Carranza. Senator, I would be deficient to respond to 
that question currently, not understanding the role and the 
impact that it would make. So I would, if confirmed, I would 
assess it, evaluate, speaking with the particular, again, 
agencies, as well as the program directors that have oversight 
at SBA with that program, and then get back to you on that----
    Senator Markey. Okay. Well, thank you.
    Ms. Carranza [continuing]. On that question, but I will 
take it under review.
    Senator Markey. Thank you. And then on the question of SBA 
program oversight, we asked the SBA to oversee but not 
administer the SBIR/STTR programs, and that means that there 
has to be oversight over these programs. And it is the Office 
of Innovation and Investment that oversees the programs, but 
that office is tasked with overseeing multiple SBA programs and 
does so on a limited budget with limited staff. And currently 
the SBA lacks any sort of enforcement tools for ensuring that 
other agencies comply with SBIR statutes and directives, and 
they are behind in submitting annual reports to Congress.
    So I would like to hear from you what your strategy would 
be for tackling the administrative deficiencies in the SBIR 
program, to make sure the oversight is there and that the 
American taxpayer receives the best return on their investment.
    Ms. Carranza. Thank you for bringing that to my attention. 
It is a serious issue. And so if confirmed I look forward to 
working closely, again, to identify those deficiencies, assess 
why they are occurring, and once I have had the opportunity to 
do that I look forward to reporting back to you, sir.
    Senator Markey. Okay.
    Ms. Carranza. Senator, the fact that I have not been in 
close proximity to any of the programs, it would be short of me 
to address that, but I will take it upon, if confirmed.
    Senator Markey. I would look forward to that report coming 
back to the Committee, and I thank you, Mr. Chairman.
    Chairman Rubio. We are going to enter a second round of 
questions.
    Ranking Member.
    Senator Cardin. Thank you, Mr. Chairman. First I would ask 
consent that the letter from the American Legion supporting the 
fee waiver on veteran loans continue, how important that is, be 
made part of our record.
    Chairman Rubio. Without objection.
    [The letter follows:]
    
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    Senator Cardin. And also just point out to the members of 
the Committee that the SBA did finally issue their rules on 
small business size under the Runaway Extension Act. That is 
good news. That was actually done in a relatively timely way, 
so I thought I would at least bring that to the attention of 
our members.
    I want to--several of our members have talked about needing 
an advocate, as the Administration of the Small Business 
Administration, that is going to be a strong advocate for 
programs. Several members talked to you about permanency of 
programs.
    Now why do we talk about permanency of programs? Only 
because we are 20 days away from missing deadlines again, where 
programs are going to expire. We are a year away from missing 
many programs that did expire, that we are still looking at 
extenders. We are two years away from programs that have 
expired because we have not taken up that issue. And when you 
are dealing with economic tools that are available, 
predictability becomes critically important.
    So I understand your desire to be in a confirmed position 
before taking positions on permanency of programs. I get that. 
But I want to see that passion that when we have tools that 
work, that the Administrator is going to be in there fighting 
to make these tools permanent so you do not have to deal with 
an unpredictable Congress missing deadlines.
    And I think that is some of the frustration you are hearing 
from some of the members today on programs that are no-brainers 
for how important they are. The SBIR program, that is a no-
brainer. Everybody understands how important it is. We need to 
make it permanent. And I would argue the same thing is true 
with the Community Advantage program. Make it permanent. It is 
working. Why do we want to have the uncertainty as to whether 
that tool is going to be available later? So that is some of 
frustration you are hearing from the members. And again, I 
understand your position of wanting to be able to have reviewed 
these programs and understand how they interact with other 
opportunities.
    You have heard several of us talk about we want to have an 
advocate to fight OMB. They are always unreasonable to every 
agency. We understand that. And after decisions are made, you 
have to live by what they do and you have got to support what 
they do. But want you in there fighting to make sure that we 
continue the fee waiver programs for our veterans, and that we 
get an honest presentation on the revenue neutrality of the 7a 
program and not the terrible presentation OMB made this year 
that Congress rejected, both Democrats and Republicans.
    So we want to make sure we have an advocate there to 
maintain these fee issues as it relates to 7a programs, because 
the fees will make it prohibitive for small businesses to take 
advantage of the 7a programs if they get too large.
    And I would add to that, we are working to strengthen 
entrepreneurship programs here, so on the women-owned small 
businesses, let me just give you my own assessment. Maryland is 
a wonderful state. We have one Women's Business Center in 
Maryland, located in the Washington area. There are no 
entrepreneur services for Baltimore for women, under the 
Women's Business Center. That is outrageous. And Baltimore is 
not alone. There are a lot of places throughout the country 
that could benefit from it.
    So we need someone who is going to advocate for a larger 
pie so that we can get more Women's Business Centers opened, 
and larger dollar amounts so that they could do more to help 
women develop entrepreneurships. So we need an advocate there 
that is going to be there fighting for these programs.
    We also know that we had the single source for 
disadvantaged women's businesses, but the problem is that 
unlike the 8a for minorities you have a rule-of-two program 
that, for many cases, eliminates the sole source for working 
for women-owned businesses. So we want to make sure that, if 
you are confirmed as Administrator, you are going to be in 
there fighting for this. You are not going to win every battle 
with this Administration. We know that. Or certainly not with 
OMB, because nobody ever wins every battle with OMB. But we 
want to make sure you are there fighting for this, and that you 
work with us so that the tools for small business, that the 
ones that are working are made permanent, and we do not have to 
worry about missing deadlines in Congress to make sure those 
tools are available to help the small business community in our 
country. That is what we are looking for.
    Ms. Carranza. Well, Senator Cardin, there is a particular 
hearing structure. Otherwise I would be leaping off this desk. 
But I am a passionate advocate for small business. My track 
record reflects that. I am not only a mentor but I am also a 
coach for small businesses. I have family members who have 
started small businesses. I have a niece who graduated from law 
school and then said, ``I want to start a small business.'' So 
I understand the value and the need. They are the greatest job 
creators and wage growth. They are vibrant for the community.
    And let me tell you a little story about OMB and my role as 
the U.S. Treasurer. I have worked very closely with OMB. Some 
people keep them at an arm's distance, like the IG, but I do 
not. I engage them. I actually invite them in, because I want 
to know what their perspectives are and what their limitations 
are, so that I can work around them and at least achieve my 
ultimate goal.
    I reformed the Financial Literacy in Education Commission 
body of work. That is 23 agencies that I worked with to 
convince them that we were not making sufficient impact. I 
asked a very plain question--where was the Financial Literacy 
in Education Commission when Detroit went belly-up? That is 
when a commission should have been very engaged to recover, to 
provide technical assistance and tools and products, coaching, 
and whatnot.
    So that is a prime example of how I can flex the muscle in 
working with other agencies to make things happen. It is just 
that I am composed here.
    Senator Cardin. I get you.
    Ms. Carranza. Okay. The other point, Senator Cardin, it is 
a matter of--if it is a budget, are the resources being applied 
in an area where there is the greatest impact? What I have 
observed in reviewing all of the latest legislation that the 
Committee members have submitted, it is either to expand or 
enhance or a particular--or a current program, which tells me 
that the core competency of that particular program is 
effective, but we need more.
    And so I look at how do we work on either sustainability of 
a program, I know terms like ``cap'' come into the discussion, 
expanding, enhancing, and what I would look at is the current 
available resource available in each program, are we serving it 
or are we just performing status quo? Are we responding to the 
needs of the small businesses, and as an advocate, that is how 
I would assess. Is it the people, is it the process, or is it 
the budget? And I look forward to getting back to you, Senator, 
with my results.
    Senator Cardin. I hear you. I just want you to know you 
have friends on both sides of the aisle here that are going to 
be strong advocates for small business tools under the SBA.
    Ms. Carranza. Thank you very much.
    Chairman Rubio. Senator Rosen.
    Senator Rosen. Thank you. I am going to ask a question 
about access to capital for our cannabis small businesses. You 
know, in Nevada, along with 10 other states and District of 
Columbia, we have legalized the recreational use of marijuana, 
and in our state it is thousands of new, good-paying jobs. And 
I will tell you that the first full year of sales in Nevada, 
our cannabis business has sold nearly $425 million of 
recreational marijuana products, that resulted in $70 million 
of tax revenue for our state.
    And so, however, legal cannabis businesses currently lack 
access to essential SBA resources, such as loans, counseling, 
mentoring, training, that you provide to other small 
businesses. And this new industry is not just growing our local 
business and economy. It is doing it for other states as well, 
and it is one of my top priorities, to ensure that these new 
businesses succeed.
    So what would be your plans to ensure that legally 
operating cannabis small businesses in states like Nevada have 
access to the same SBA programs as other small businesses--
loans, counseling, training--and would you be willing to work 
with me on legislation to help provide them some technical 
assistance?
    Ms. Carranza. Senator Rosen, as I discussed when we met, 
there are some restrictions. SBA's Small Business Act is 
responsive to Federal and appropriate eligible small 
businesses. And at this point it is not--the services are not 
positioned----
    Senator Rosen. Would you be willing to help me work on some 
legislation for those of us who have states----
    Ms. Carranza. I look forward to working with you on the 
potential of that, Senator Rosen. It would be premature to say 
these are the expectations, but I definitely would look forward 
to learning with you.
    Senator Rosen. No, I understand that there are limitations, 
but for those states that have legalized, and I am sure there 
is more that will be coming forward, that if there is that 
possibility I would look forward to partnering with you on 
that, because it really is, as you see----
    Ms. Carranza. Absolutely.
    Senator Rosen [continuing]. Four-hundred twenty-five 
million dollars in the first year. That is a lot.
    Ms. Carranza. No, I look forward to learning more from you, 
and then, Senator, it is an emerging market, as they would 
say----
    Senator Rosen. Yes, it certainly is.
    Ms. Carranza [continuing]. And I look forward to working 
with you on that.
    Senator Rosen. And so I have one last question, an easier 
question, I think, and it is about the Small Business Child 
Care Investment Act. Senator Ernst and I recently introduced 
the Small Business Child Care Investment Act. It is bipartisan 
legislation that would provide nonprofit small business child 
care providers access to the same SBA loans that are currently 
available for the for-profit child care providers. Currently 
those nonprofit child care providers, they may have access to 
microloans but they are barred from applying for other SBA 
loans.
    And so, of course, millions of families in America lack 
access to affordable child care. They have difficulty finding 
it. Sometimes the average cost, I think, is about $10,000 a 
year, more than that in high-density areas. And so a lot of 
people live in what we call child care deserts, with few 
options for licensed child care.
    And so is this an issue that, again, we can work with, and 
your office, to try to expand, especially in those child care 
deserts, underserved communities, the access for nonprofits to 
be able to have good, secure, licensed child care for their 
communities?
    Ms. Carranza. Senator Rosen, as we discussed when I met 
with you, there are a lot of not-for-profits, especially in the 
faith-based community, that provide child care, and I look 
forward to working with you. As a mother and as a single mother 
I fully can appreciate the importance of having reliable and 
cost-effective child care, because it does impact attendance, 
workforce reliability, upward mobility.
    So again, if confirmed, I look forward to working with you 
in that particular area. I know currently the portfolio does 
not support not-for-profit access to capital, but I also know 
that there are microloan contributors or facilitators 
throughout the community that we could talk further about that.
    Senator Rosen. I think this is an area that we could really 
help parents get to work and support their families if we can 
give them good quality, affordable child care where they are. 
It is very important to our economy.
    Ms. Carranza. Yes. I agree with you, Senator Rosen. It is a 
very hot issue, especially when our workforce, women workforce 
is expanding----
    Senator Rosen. Yeah.
    Ms. Carranza [continuing]. As well as these unemployment 
numbers are just phenomenal.
    Senator Rosen. Right.
    Ms. Carranza. So we need to be responsive, so I look 
forward to working with you.
    Senator Rosen. Well, I want to thank you again for your 
willingness to serve. I really look forward to working with you 
on that, expanding your advocacy and all of our opportunities 
for small business, not just in Nevada but across the country.
    Ms. Carranza. Thank you, Senator Rosen.
    Senator Rosen. Thank you.
    Chairman Rubio. I just want to echo on the child care 
thing. I do not know what the statistics are now but in 33 out 
of 50 states, it was the case a few years ago, child care is 
more expensive than going to college. And, you know, if the 
cost of child care is 110 percent of your salary for the week, 
I mean, you are basically--it is costing you money, or if it is 
even comparable.
    So it is a huge issue, and I would also, I mean, in a lot 
of places you see where employees and even small business 
owners, child care is the very nice lady that takes care of 
everybody else's kids on the block, and they are wonderful 
people. But we would love to see more opportunities for not-
for-profits to be able to see children in early childhood 
education settings, not just care.
    We are going off topic a little bit but it is a big deal 
for a lot of parents and it is an impediment to entering and 
remaining in the workforce, because, you know, you do a lot of 
your learning, believe or not--well, a lot of people do not 
know--from zero to five. Those first five years are so 
critical, and it is truly a real challenge, beyond the setting 
of this hearing.
    So I have a few more questions. They are all sort of 
written in a way to just get a quick answer so we could have it 
for our records, so here we go. This is the lightning round.
    All right. If you are confirmed, will you commit to 
addressing the management challenges of the Office of 
Investment and Innovation to ensure the programmatic integrity 
of the SBAIC program?
    Ms. Carranza. Yes.
    Chairman Rubio. If you are confirmed, will you commit to 
appearing before this Committee within 90 days for an oversight 
hearing to report on your progress in addressing these 
problems?
    Ms. Carranza. I look forward to meeting with you, yes.
    Chairman Rubio. If you are confirmed, will you commit to 
going back to the drawing board on the proposed lending rule, 
doing a small business impact analysis, and engaging with 
stakeholders in a productive way to ensure appropriate changes 
are made that will not negatively impact small business access 
to capital?
    Ms. Carranza. As I indicated, Chairman, I look forward to 
working with you after I am confirmed, if confirmed, is to 
assess the particular programs to get back to you on that, yes.
    Chairman Rubio. Okay. So that--okay. If you are confirmed, 
will you commit to communication and transparency to Congress 
on the subsidy models and calculations for all the Federal 
credit programs at SBA?
    Ms. Carranza. Yes.
    Chairman Rubio. If confirmed, will you commit to ensuring 
the backlog of staff needed by the SBIR/STTR team are filled 
within 120 days of your confirmation?
    Ms. Carranza. You have a commitment in my first 100 days I 
will be assessing the shortfalls of any program.
    Chairman Rubio. Okay. I said 120. You said 100, so I am 
going to write 100 here.
    Ms. Carranza. Okay. I always like coming under.
    Chairman Rubio. I hear you. No, that is great. All right. 
If confirmed, do you commit to ensuring that moving forward 
Federal grant money is not used to repay previously misspent 
funds identified by the SBA OIG?
    Ms. Carranza. Yes.
    Chairman Rubio. If confirmed, can you commit to working on 
modernizing the Disaster Loan Program and placing significant 
internal controls to avoid fraud, waste, and abuse in disaster 
lending in line with the recommendations made by the OIG?
    Ms. Carranza. Yes, I am risk averse, absolutely.
    Chairman Rubio. If confirmed, will you commit to having a 
woman-owned small business certification program in place 
within 120 days of your confirmation? 180 days, I am sorry.
    Ms. Carranza. Senator Rubio, and understanding the 
complexity of it, I would just tell you that I would 
expeditiously work on that, if confirmed.
    Chairman Rubio. Okay. All right. So we gained 20 days on 
the other one and this one----
    [Laughter.]
    About 180 days.
    Ms. Carranza. Not bad.
    Chairman Rubio. All right. Very soon.
    The Committee has sent several letters requesting the SBA 
consider several proposals to aid small businesses against 
cyber threats. You have heard a lot about that here today as 
well. To date, we have not received a response to these letters 
from the SBA. If confirmed, will you commit to providing the 
Committee a response within 30 days of becoming Administrator?
    Ms. Carranza. I was made aware of that before the hearing, 
Senator, and you have my commitment that I will expeditiously 
work on that, if confirmed.
    Chairman Rubio. All right. Anything else?
    Senator Cardin. Was that 30 days? Is that--both sides are 
really concerned about not getting a response on that cyber 
letter.
    Ms. Carranza. Yes. I will, again, expeditiously, as quickly 
as I can, much like I came in under loud, I hope to do it even 
sooner.
    Chairman Rubio. Okay.
    Ms. Carranza. Thank you, Senator Cardin.
    Chairman Rubio. Well, we have reached the end of this 
hearing. I want to thank you for the time you have given us. 
The hearing record is going to stay open until tomorrow 
evening, and any statements or questions for the record should 
be submitted by Friday, December 13th, at 12 p.m. And with 
that, this hearing is adjourned.
    Ms. Carranza. Thank you very much. I appreciate it.
    [Whereupon, at 4:02 p.m., the Committee was adjourned.]

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