[Senate Hearing 116-605]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 116-605

               IMPLEMENTATION OF TITLE I OF THE CARES 
                                  ACT

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

                                HEARING

                               BEFORE THE

                      COMMITTEE ON SMALL BUSINESS
                          AND ENTREPRENEURSHIP
                          UNITED STATES SENATE

                     ONE HUNDRED SIXTEENTH CONGRESS

                             SECOND SESSION

                               __________

                             JUNE 10, 2020

                               __________

    Printed for the Committee on Small Business and Entrepreneurship
    
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        Available via the World Wide Web: http://www.govinfo.gov
        
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                    U.S. GOVERNMENT PUBLISHING OFFICE                    
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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
                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.......................................................     4

                               Witnesses

Mnuchin, Hon. Steven, Secretary of the Treasury, U.S. Department 
  of the Treasury, Washington, DC................................     7
Carranza, Hon. Jovita, Administrator, U.S. Small Business 
  Administration, Washington, DC.................................    12

                          Alphabetical Listing

American Council of Life Insurers
    Statement dated June 10, 2020................................    92
Cardin, Hon. Benjamin L.
    Opening statement............................................     4
Carranza, Hon. Jovita
    Testimony....................................................    12
    Prepared statement...........................................    14
    Responses to questions submitted by Ranking Member Cardin and 
      Senators Shaheen, Scott, Booker, Ernst, Coons, Young, 
      Hirono, Kennedy, Duckworth, and Rosen......................    52
Independent Community Bankers of America
    Statement dated June 10, 2020................................    94
Mnuchin, Hon. Steven
    Testimony....................................................     7
    Prepared statement...........................................    10
    Responses to questions submitted by Ranking Member Cardin and 
      Senators Shaheen, Scott, Booker, Ernst, Coons, Young, 
      Hirono, Kennedy, Duckworth, and Rosen......................    52
National Associated Federally Insured Credit Unions
    Letter dated June 9, 2020....................................    97
Rubio, Hon. Marco
    Opening statement............................................     1

 
               IMPLEMENTATION OF TITLE I OF THE CARES ACT

                              ----------                              


                        WEDNESDAY, JUNE 10, 2020

                      United States Senate,
                        Committee on Small Business
                                      and Entrepreneurship,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 10:00 a.m., in 
Room SR-301, Russell Senate Office Building, Hon. Marco Rubio, 
Chairman of the Committee, presiding
    Present: Senators Rubio, Risch, Scott, Ernst, Young, 
Kennedy, Romney, Hawley, Cardin, Cantwell, Shaheen, Booker, 
Coons, and Rosen.
    Also present: Senator Collins.

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

    Chairman Rubio [In process]. As nationwide lockdowns shut 
down the economy, we, who worked on this, every member of this 
Committee and those outside of it, have two main priorities--
the size of it, we wanted to make sure it reached enough 
businesses and people, and we needed to do it fast. This was 
not something we had weeks or months to work on. And I am proud 
that both of those goals were met.
    The scope of the lockdown meant we needed sizeable relief. 
The appropriated funds for this program are now at $670 
billion. It sounds--it is a lot of money. It is larger than any 
other program enacted by the CARES Act. It is larger than the 
2008 stimulus bill. By some estimates, it is the largest 
program since the New Deal.
    But the speed of the lockdown also meant we needed to get 
funds to small businesses quickly. The CARES Act, just to walk 
everybody through this, was signed into law on March 27th. 
Exactly seven days later, thanks to extraordinary and tireless 
work, which is easy to criticize for some who are watching from 
the outside, but we are talking about people that were there 
overnight, 4, 5, 6, 7 in the morning, you know, barely time to 
get home, shower and change their clothes--thanks to the 
tireless work of people working under Secretary Mnuchin, and 
the Secretary himself, people working under Administrator 
Carranza, and herself, the Paycheck Protection Program began 
approving loans seven days after Congress passed it and the 
President signed it.
    Small businesses received PPP funds before, millions of 
Americans received tax refunds before people started receiving 
unemployment checks, and other lending programs run through the 
Federal Reserve are only just now beginning to operate. That is 
not a criticism of those things. That is just to describe the 
extraordinary effort that it took to stand up a program that 
did not exist in just seven days.
    When this program began on April 3rd, no one on Planet 
Earth had ever made a PPP loan, had ever approved a PPP loan, 
had ever processed a PPP loan, or had ever applied for one, and 
in seven days that began.
    The achievement of these priorities came at the expense of 
others. Some companies who should not have received the loans 
received them. We have read all about it. It should not have 
happened. They represent the minuscule percentage of the 
overall program, however, and most have since returned them. 
Computer systems were strained under unprecedented levels of 
activity. Guidance released to solve problems created 
unanticipated problems.
    But again, I want to be clear. The bumps in the road were 
and are the price to pay, unfortunately, for a program that, in 
hindsight, we now know is among the most successful programs 
that government has ever done to rescue an economy.
    Economists and financial forecasters predicted last month 
that May 2020 would be the worst month for job losses during 
the duration of the pandemic. It was expected. This is what 
everyone expected--eight million Americans would lose their 
jobs in May. They predicted that unemployment would be 20 
percent. Some even speculated that it might end up surpassing 
the Great Depression's 24 percent rate.
    What would that have looked like, and what would that have 
looked like given everything else that is going on in the world 
and our country right now? Well, I can tell you, on an economic 
point, it would have bankrupted the central promise of economic 
opportunity in our Nation. Without PPP's temporary lifeline, 
tens of millions of Americans would have been permanently 
separated from their livelihoods and stripped for long periods 
of time from the opportunity of dignified work. Many would 
quickly be condemned to poverty, some over generations. Parents 
would be unable to provide for their families, tied 
indefinitely to government assistance.
    Without PPP, we would have faced the extinction of small 
businesses we know, and countless blocks of urban and suburban 
America would have been hollowed out. Vast expanses of empty 
lots with brick-and-mortar stores once stained communities. It 
is tough out there. There is still a lot of suffering, economic 
pain, and, of course, the pain related to this terrible 
disease.
    But the most catastrophic visions did not come to pass. 
Instead, forecasters--to the surprise of forecasters and 
everyone, last month, 2.5 million Americans got their jobs 
back. The over $500 billion in Paycheck Protection Program 
funds disbursed through April and May enabled businesses to 
keep or to quickly rehire workers as conditions allowed.
    To date, 4.5 million American businesses have received 
loans equal to over $500 billion, and this--we will know more 
when the forgiveness begins to come in--but this is equal to 50 
million jobs. The average loan size is now down to $112,000, an 
amount that, based on eligibility criteria, means that the 
average business receiving a PPP loan would one with 10 
employees.
    A recent survey by the National Federation of Independent 
Businesses noted that 77 percent of surveyed small business 
owners had applied for a PPP loan, and of that 77 percent, 93 
percent had received funding.
    As of June 6th, there are currently 424 community 
development financial institutions and minority depository 
institutions now in the program. They have accounted for more 
than 190,000 loans, valued at $15.8 billion. And the SBA and 
Treasury have also set aside $10 billion in PPP funds for CDFIs 
to continue to lend.
    This is the record of a successful program, and again I 
want to thank everyone--the Secretary, the Administrator, all 
the members of the Senate, and our partners in the House, and, 
of course, the President--for not just passing this but working 
to implement it.
    I do want to comment on the Economic Injury Disaster Loan 
program. The SBA, for the first time in its history, 
administered a nationwide disaster and grant advance program 
through an expanded version of the EIDL program, offering 
direct government lending and grants to eligible entities 
suffering injury due to the pandemic.
    To date, the SBA has approved more than $1.13 million 
loans, of these loans, emergency loans, totaling about 79, 
almost $80 billion, and 3.1 million emergency EIDL advances 
totaling another $10.2 billion. The program has realized 
numerous challenges, both previously in responding to regional 
disasters, and, of course, under this current one.
    In drafting the CARES Act, I raised concerned with the 
deficiencies of the existing EIDL program as a whole, which 
only accounts for roughly 2 percent of the disaster loans made 
by SBA. In particular, I was concerned that it would be 
challenging for the agency to handle a disaster of this 
extraordinary magnitude. As such, the concept of using 
traditional lenders instead of direct government loans to 
ensure capital was reaching the hands of small businesses as 
fast as possible was one of the reasons that gave rise to PPP.
    I commend the agency for standing up the EIDL program 
nationwide to respond to an unprecedented volume of 
applications within a very short period of time. Today, 
unfortunately, we see similar and new EIDL challenges for 
borrowers, including long processing and disbursement timelines 
and communication issues. As many businesses are also relying 
on assistance through EIDL to rebuild after the economic 
disruptions caused by this pandemic, we look forward to the 
agency addressing the current EIDL challenges and how Congress, 
how we, on this side, can work to support the agency in making 
improvements to this program.
    Today is an oversight hearing. There are many issues that 
myself and members of this Committee would like to raise to 
help keep this program running smoothly, especially as some 
businesses approach filing for loan forgiveness as early as 
this month. But we should begin by putting these issues in 
perspective and recognizing the choices that Congress and the 
administration had to make in order to make this program 
succeed.
    With that I now recognize the Ranking Member, Senator 
Cardin, for his opening statement.

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

    Senator Cardin. Well, Mr. Chairman, first thank you for 
convening this hearing, but more importantly, thank you for 
your leadership in the role that this committee has played in a 
nonpartisan manner in order to help the small businesses of 
America. This has been a proud moment of our Senate careers in 
working together to develop three very, very important programs 
to help small businesses during COVID-19. We did that in a way 
that put the interest of our Nation first and the interest of 
small business and their workers.
    Secretary Mnuchin, welcome to the Committee. I personally 
want to thank you for your availability. You have been always 
available to talk with us, to try to work out how this program 
could be administered in a seamless way. And I thank you for 
your personal leadership to make these programs work as 
effectively as we can through the administration and then 
working with Congress as to the need for legislative changes.
    Administrator Carranza, please accept our appreciation for 
the incredible work of your agency. As Senator Rubio pointed 
out, you stood up a program literally overnight that has 
provided 4.5 million loans, over $510 billion, in an incredible 
effort, and we thank you very much for the hard work of the 
members of your agency.
    This Committee helped craft, and I was proud to be part of 
a drafting committee consisting of four Senators--Senator 
Rubio, Senator Collins, who is with us today, Senator Shaheen, 
and myself--that put together and listened to all the members 
of this Committee and the Senate and stood up three programs--
the PPP program that has received most of the attention, but 
also the EIDL grant program, as well as the loan forgiveness 
program.
    When we initially created the 8-week-long PPP program in 
March, we thought that our economy would be performing at a 
more normal level than it is today. So an 8-week period for 
small businesses to spend their loan seemed reasonable. As 
communities began the process of reopening, it is now clear 
that many small businesses will not be up and running at the 
end of the 8-week period, which, for many, as Chairman Rubio 
has pointed, will occur this month.
    I was proud to see the Senate act responsibly last week, 
passing bipartisan legislation that gives businesses with 
existing and new PPP loans the discretion to use those loans 
over a 24-week period, rather than the 8-week period.
    PPP is working for many employers, and the May monthly job 
report released by the Labor Department last Friday is proof. 
Of the 2.5 million jobs added back to the American economy last 
month, more than 1.4 million were jobs of employers in the food 
service industry, many of whom secured loans through our 
programs.
    However, the depth of the economic challenge facing this 
country, the National Bureau of Economic Research announced 
this week that the United States economy is in a recession, and 
that the unemployment rate remains at a historic high level, 
13.3 percent, a level that we have not seen since the Great 
Depression. For minorities, the unemployment rates are even 
much higher.
    While the PPP's success is a laudable accomplishment, there 
have been challenges in the program that have come into sharper 
focus, given the massive protests our Nation has witnessed over 
the past two weeks. The protests sparked by the death of George 
Floyd has raised the awareness of the disparate public health 
and economic consequences of the COVID-19 pandemic on 
communities of color, black Americans in particular.
    Civil rights is still the unfinished business in America. 
More than 50 years ago, the Kerner Commission created by 
President Lyndon Johnson warned of the negative consequences of 
continued inequality. That was 50 years ago. The Commission 
wrote in its report that America was headed toward two 
societies, one black and one white, separate and unequal.
    Mr. Chairman, there is no question that our country has 
made strides in the decades since the Kerner Commission 
released its report, but there remains an economic divide 
between black and white America. In 1968, a typical middle-
class black family had less than one-tenth of the wealth of a 
typical middle-class white family. It is the same today, and it 
exists at every level of education attainment. A 2018 report 
found that there are no actions that black Americans can take 
unilaterally that will have much of an effect on reducing the 
racial wealth gap.
    For black small business owners and other underserved 
entrepreneurs, the wealth gap is even made worse by the 
difficulty in getting lending. Minority business owners are two 
to three times more likely to be denied loans than non-minority 
business owners, and are more likely to receive less funding 
and pay higher interest rates on the loans that they do 
receive.
    It is with this inequality in mind that Senator Shaheen and 
I drafted language in the CARES Act instructing the SBA and 
Treasury to issue guidance to financial institutions 
participating in the PPP program to prioritize loans from 
underserved small businesses. We wanted to prevent history from 
repeating itself, because we knew that during the 2008 
financial crisis, small business lending to minority-owned 
businesses fell dramatically and never fully recovered.
    Secretary Mnuchin and Administrator Carranza, these well-
documented disparities are why I was so disappointed to read, 
in the SBA IG's recent Flash Report, which was prepared at the 
request of Senators Schumer, Brown, and myself, the report 
found that the SBA's implementation of PPP did not fully align 
with congressional intent of the CARES Act, because the SBA did 
not provide guidance on prioritizing underserved and rural 
markets.
    Further, the report found that the SBA has failed to 
collect demographic information for small businesses seeking 
SBA loans. While I appreciate the SBA will be collecting 
demographic information on loan forgiveness forms, and has set 
aside an additional $10 billion, that the Chairman mentioned, 
and Secretary Mnuchin announced in regards to the CDFIs, it is 
important that the SBA follow the Inspector General's call to 
provide guidance to lenders that prioritize underserved 
markets.
    Underserved markets often do not have access to traditional 
banking institutions. That is why the SBA's existing Economic 
Injury Disaster Loan and grant programs are so important. I 
remain discouraged that these programs, which have great 
potential to help small businesses seek to adapt to the new 
reality of the post-COVID economy, have reached fewer small 
businesses than we had hoped.
    We are not alone in this. We have a copy of a letter from 
all the members of the House Small Business Committee, all the 
Democrats and Republicans, expressing their frustration on the 
administration of the EIDL program, the slowness of getting 
grant applications approved, the closing of the window in 
regards to non-agricultural applications, the arbitrary cap 
that was put on the program, as well as the fact of the lack of 
transparency.
    We need to do better. EIDL serves a particular role for 
businesses. It can be used for working capital needs and may be 
more desirable for the smallest of small businesses that do not 
have many employees. The program is especially important for 
minority-owned and other underserved small businesses, which 
are less likely to have more than one employee, and have fewer 
employees on average.
    Unfortunately, the administration has not administered EIDL 
in a manner that makes it a reliable resource for small 
businesses. The administration has put in place requirements 
and limitations without notifying borrowers, such as a decision 
to cap the loans at $150,000, even though the statute allows 
the loans to go up to $2 million.
    In May, the administration also made the decision to stop 
taking applications from non-farm small businesses, meaning 
restaurants, retailers, and other mom-and-pop establishments 
have not had access to EIDL since mid-April. Small businesses 
are relying on you to make EIDL loans more accessible. The 
administration must become more transparent. In the months 
since the passage of the CARES Act, Congress has been pushing 
for additional data on who is receiving this aid, and I 
appreciate that Chairman Rubio and I have joined together in 
making that request, and we have worked with the 
administration, and we have gotten some of the information, but 
we need more of the information.
    We are extremely disappointed to learn that GAO has had the 
same problems that we have had, and has not gotten the 
information they need to carry out their oversight function in 
the Executive branch, as well as the difficulties we have in 
the Legislative branch. How can we know which businesses still 
need help if we do not know which businesses have received 
help?
    Senators Coons, Shaheen, and I are pursuing legislation to 
help those most in need to receive additional PPP funding, but 
we need the data to ensure this assistance is as effective as 
possible. I think we all agree there is going to be a need for 
a second round, but how are we able to get that second round if 
we do not have the full information on how the first round has 
operated?
    We believe that the aid should go to the smaller of the 
small businesses. We believe it should go to those that are 
most in need. There should be a needs test. We believe it 
should go to the underserved communities, particular rural 
areas, minority businesses, but we need to have the data in 
order to make those decisions.
    Finally, we must do more to ensure that underserved small 
businesses have the tools and resources they need to adjust to 
the long-term economic effects of COVID-19. I was proud to work 
with Senator Booker to release a plan outlining steps Congress 
can take to provide greater help for small businesses in 
underserved communities with regard to start-up and operating 
capital, as well as technical training and mentorship.
    The aim of our plan is to ensure that when we make it 
through this pandemic and when we have the next economic 
downturn we have institutions, programs, and knowledge to 
support small businesses, underserved small businesses in a 
timely way.
    Mr. Chairman, I am under no illusions about the tall tasks 
ahead of the Senate as we work to finally rid our Nation of 
these inequalities. Before we can begin to make further 
progress we must work hard to secure the progress we have 
already made, which is at risk in regards to COVID-19.
    Last week, at our hearing, Connie Evans of the Association 
of Enterprise Opportunity, told our Committee that the economic 
consequences of COVID-19 are projected to erase decades of 
minority enterprise growth in the underserved markets. We 
cannot let that happen.
    The Wall Street Journal headline today says ``Virus 
Obliterates Black Job Market.'' We need to take action to make 
sure this does not happen.
    I look forward to this hearing and learning more from 
Secretary Mnuchin and Administrator Carranza about what the 
Trump administration is doing to ensure that minority-owned and 
other underserved businesses are not left behind during this 
crisis.
    Thank you, Mr. Chairman.
    Chairman Rubio. Thank you. I will now turn to our 
witnesses. Secretary Mnuchin, welcome to the Committee and 
thank you for joining us here today.

 STATEMENT OF HON. STEVEN MNUCHIN, SECRETARY OF THE TREASURY, 
                U.S. DEPARTMENT OF THE TREASURY

    Secretary Mnuchin. Chairman Rubio, Ranking Member Cardin, 
and members of the Committee, thank you for this opportunity to 
highlight the efforts of the Treasury and the SBA to provide 
relief to businesses and their workers through the Paycheck 
Protection Program. We are committed to working with you to 
ensure that every American gets back to work as quickly as 
possible.
    America's economy has begun to rebound and our recovery is 
underway. While estimates predicted nearly 8 million jobs lost 
in the month of May, the actual data showed 2.5 million jobs 
gained, the largest one-month jobs gain in recorded history. 
Both the jobs that were saved and the jobs that were hired are 
a large extent as a result of this program, so thank you very 
much.
    Several other indicators show that we are well-positioned 
for a strong, phased reopening of our economy. The U.S. Chamber 
of Commerce announced last week that 79 percent of small 
businesses are at least partially open, with half of the 
businesses that remain closed planning to reopen very soon.
    The personal savings rate, released on May 29th, had a 
record high 33 percent of disposable income, indicating that 
people have built up cash reserves during the pandemic and will 
be in a position to resume consumer activity as businesses 
open.
    This economic positioning is the direct result of the 
administration and Congress working together to pass bipartisan 
legislation to provide necessary liquidity to workers and 
markets. The PPP has kept tens of millions of employees 
connected to their jobs. The National Federation of Independent 
Business found that 73 percent of its members surveyed rehired 
or retained workers due to the PPP. Economic Impact Payments 
and enhanced unemployment insurance are providing relief to 
millions of families and workers experiencing distress. The 
announcement and implementation of the Federal Reserve lending 
facilities are also enhancing the flow of credit for industries 
across the economy.
    We continue to monitor conditions closely, as certain 
industries are rebounding more quickly than others. For 
example, after losing nearly 1 million construction jobs in 
April, nearly half of those jobs returned in May. By contrast, 
retail lost over 2 million jobs in April and 16 percent of 
those positions returned in May. We remain confident that the 
overall economy will continue to improve dramatically in the 
third and fourth quarters of this year.
    Turning to the PPP, the SBA and Treasury worked together to 
launch this unprecedented program in a very, very short period 
of time. In less than two months, the PPP is supporting the 
employment of approximately 50 million workers and more than 75 
percent of the small business payroll in all 50 states. This is 
an extraordinary achievement and we appreciate the work of this 
Committee.
    As you might expect with a program of this magnitude 
executed on a national scale in record time, we initially 
experienced some complications. We resolved them quickly. To 
implement this program, our teams have worked with Members of 
Congress on a bipartisan basis to issue a series of rules and 
guidance to provide clarity to the members of the public, as 
well as borrowers and lenders. By standing up the program 
quickly, we were able to support tens of millions of workers 
who may have otherwise been laid off or furloughed.
    Aside from the administration's implementation efforts, we 
have worked closely with Members of Congress in both parties to 
pass two subsequent pieces of critical legislation. We reached 
agreements on a second round funding for over $300 billion, 
providing businesses with more time and flexibility to keep 
their employees on the payroll, and ensure continued operations 
as we safely reopen. Thank you, Mr. Chairman, and the other 
members of this Committee for your work in building this 
program and helping workers and families throughout our Nation.
    I would note that while the PPP is a very important part, 
it is only one part of the CARES Act, but the single largest 
economic relief effort in history. Treasury has been hard at 
work:
    Economic Impact Payments. We have distributed nearly 160 
million payments worth more than $260 billion, in record time.
    Programs to Support Aviation and other Eligible Businesses. 
We have approved the disbursement of over $27 billion to more 
than 500 airlines and other businesses, preserving hundreds of 
thousands of jobs.
    The Coronavirus Relief Fund. We have disbursed nearly all 
of the $150 billion appropriated for state, local, and tribal 
governments. In doing so, we have provided recipients with as 
much flexibility as possible under the statute.
    And with the Federal Reserve Facilities, we have committed 
approximately $200 billion in credit support for Federal 
Reserve lending facilities under the CARES Act. That money that 
is going to promote the flow of credit to businesses, 
households, and state and local governments, as well as to 
restore liquidity and funding to credit markets. The Federal 
Reserve, in consultation with the Treasury, has modified the 
terms of the lending programs since they were announced to 
ensure broad access to credit and liquidity. We have over $250 
billion remaining to create new or expanded programs with the 
Fed, as needed.
    In conclusion, I am proud of the work we have done with all 
of you. We will overcome the unprecedented challenges before us 
together and make sure that every American gets back to work as 
quickly as possible. I look forward to your questions. Thank 
you.
    [The prepared statement of Secretary Mnuchin follows:]
    
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Chairman Rubio. Thank you. And Administrator Carranza, 
welcome back to the Committee.

 STATEMENT OF HON. JOVITA CARRANZA, ADMINISTRATOR, U.S. SMALL 
                    BUSINESS ADMINISTRATION

    Ms. Carranza. Thank you, Chairman. Good morning, Chairman 
Rubio, Ranking Member Cardin, and members of the Committee. 
Thank you for inviting me to testify on the progress in 
implementing the CARES Act.
    The CARES Act created extraordinary programs for the 
agency. Our work over the last three months has been 
unprecedented. Let me provide you with some perspective on the 
historic work that the SBA has been engaged in over the last 
several months.
    SBA, in very close coordination with Treasury, stood up the 
multi-billion-dollar Paycheck Protection Program in a matter of 
days. The dedicated and professional staff at SBA helped to 
launch the program three days ahead of the 10-day deadline 
imposed by the CARES Act. In fact, during the first round of 
funding, SBA processed more than 14 years' worth of loans in 
less than 14 days. In order to help businesses who needed 
assistance, we also created a simple, two-page application for 
borrowers, to streamline the process.
    Since late March, we issued 16 interim rules and 48 
Frequently Asked Question documents, while providing your 
offices with regular reports on daily lending data, coupled 
with detailed program overviews.
    As of today, the PPP has approved over 4.5 million loans 
for over $511 billion in much-needed financial relief to 
America's small businesses.
    We administered this program with an eye focused on 
recognizing that this pandemic had been particularly harmful to 
socially and economically disadvantaged businesses. In fact, 45 
percent of the PPP loans, both in terms of volume and total 
value were disbursed in low-income areas.
    To achieve this, we also reduced administrative roadblocks 
so that more lenders could participate in the program. The 
agency signed up 3,600 new lenders, including community banks, 
credit unions, fintech companies, farm credit lenders, and 
hundreds of CDFIs and MDIs that specialized in providing 
liquidity in unprecedented communities--in underrepresented 
communities.
    As of today, the PPP still has $130 billion in available 
funds. I ask for your assistance in continuing to raise 
awareness among your constituents that funds are still 
available for small businesses that need assistance. In our 
Entrepreneurial Development Program, the agency worked closely 
with the resource partner associations as well as Committee 
staff to allocate dollars for 62 SBDCs and 113 Women Business 
Centers. We also allocated funds and worked with the 
associations on deployment of a web site now available for all 
small businesses to utilize.
    With our Disaster Assistance Program, the Agency worked 
around the clock to create and implement a new system for EIDL 
advances. This was a first for the Agency, and we have now 
processed and disbursed monies to all businesses requesting an 
emergency grant, except for certain businesses that still need 
to clarify their information.
    With our EIDL loans, we have distributed more dollars for 
COVID than for all disasters combined in the 67-year history of 
the Agency. All of you remember the devastation created in 
2017, by Hurricanes Harvey, Irma, and Maria, three of the 
costliest storms on record. SBA disbursed over $7 billion. That 
amount represented 8 percent of the total COVID-related 
disaster funding approved by the Agency since mid-March.
    With respect to the debt relief provisions of the Act, SBA 
issued guidance and conducted outreach to lenders and 
borrowers. The Agency has provided over $2 billion in principal 
and interest payments on current SBA business loans over the 
last two months.
    Before I close, let me briefly discuss how we are improving 
SBA's operations. Under my leadership, we have managed all the 
CARES Act programs while also continuing to build an 
organization. I have created an internal oversight plan for 
each CARES Act program, and to manage the millions of business 
and disaster loans. The Agency has brought on thousands of 
staff to support our COVID disaster operations, while still 
servicing 175 natural disaster declarations.
    We have hired a new CFO, CIO, General Counsel, and Program 
Director for the Office of Faith-Based Initiatives. I have also 
overseen changes within our contracting and investment 
programs, which many of you raised with me previously. For 
instance, in March, I changed leadership in the Office of 
Investment and Innovation, streamlined the licensing process, 
and licensed our first active SBIC in Puerto Rico in over two 
decades. We are also on track to fund new licenses for women 
and minority firms.
    I have partnered with other Federal agencies, among them 
USDA, CFPB, Treasury, GSA, and FEMA. They have helped inform 
our immediate economic response efforts and several continue to 
advise us on the important task of long-term small business 
economic recovery, and we have done all this while operating on 
a telework status, as many of you have.
    Thank you again, Mr. Chairman and members of the Committee, 
for the opportunity to testify today.
    [The prepared statement of Ms. Carranza follows:]
    
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Chairman Rubio. Thank you to both of you. I am going to 
defer the balance of my questions so we can get to all the 
members. I just have one sort of matter I want to clear up.
    Secretary Mnuchin, in a joint statement you released with 
the Administrator this week you indicated that borrowers which 
failed to spend 60 percent of their loan on payroll costs will 
continue to be eligible for partial loan forgiveness. Can you 
confirm that this statement means that borrowers failing to 
meet the 60 percent requirement will still receive loan 
forgiveness equal to their payroll costs and a proportional 
amount of non-payroll costs?
    Secretary Mnuchin. Yes.
    Chairman Rubio. Thank you. To the Ranking Member, Senator 
Cardin.
    Senator Cardin. Once again, thank you both for your work 
and for being here today. I want to ask my first question on 
the EIDL program, and we have talked about this, but I just 
want to underscore why this is so important to us. And I am 
going to give you a specific example of a Maryland Small 
Business owner, Nick Johnson, who runs a small furniture 
company, 28 workers. He applied for a PPP loan and got it. He 
applied for the EIDL, because he needed the funds for working 
capital and it gave him a 30-year loan program so that he could 
use it for working capital.
    He applied for it immediately, in March. Two months later, 
he heard he was eligible to receive $380,000 under the formula, 
but was capped at $150,000, rather than $380,000. As a result 
of not being able to get those funds, he had to go into his PPP 
funds and lay off workers.
    So we intended for the EIDL program and the PPP program to 
work together. And Madam Administrator, I appreciate the fact 
that you have issued so many EIDL loans compared to the 
historic record, but we have never had a universal disaster 
before. And the volume level, as we understand it, only 15 
percent of the loans were processed and that there is still a 
huge backlog in processing these loans. And we made 
significantly more capacity available to you through the 
appropriation process so that you could issue a lot more of 
these loans.
    You put a cap on the program. We do not understand why. You 
have delayed the applications of those that have already been 
filed, and you have closed the window on non-agricultural 
programs. Why is the EIDL program not being used to its full 
capacity, and what can we expect in the future, moving forward?
    Ms. Carranza. Senator Cardin, I agree with your frustration 
and your assessment of the delayed process. However, let me 
start out with the agricultural, small farms and the co-ops. We 
have since, when it was announced that we were able to accept 
the ags, over 146,000 ag concerns. They have several billion, 
close to $2 billion in loan value. They have also taken 
advantage of the advance, the grant.
    The average loan that we are experiencing currently is 
$68,000. We expected them to really be the community that was 
going to access the $150,000.
    We were averaging about--we were anticipating about $83,000 
in average loan and they are coming in at $63,000, $65,000.
    Senator Cardin. But what is the rationale for $150,000 cap 
when the law says--the statute says up to $2 million?
    Ms. Carranza. Well, when we first opened up the portal to 
accept disaster, or EIDL COVID applications back in March, we 
went from 85,000 loans in one day, and in four days the input, 
the demand increased to 3.8 million applications.
    Senator Cardin. But as I understand it, with the additional 
appropriations you can go up to $350 billion in EIDL loans, and 
I do not think you are anywhere close to a fraction of that 
today.
    Ms. Carranza. Yes, but at that time, sir, we had $7 billion 
available. We exhausted those $7 billion to the subsidy, given 
the approval----
    Senator Cardin. The same thing was true with PPP. We made 
money available. The window opened quickly. You processed the 
new loans quickly. You have not done that for EIDL. We made 
more funds available and they have not been processed.
    Ms. Carranza. I understand, sir, but when you look at an 
EIDL government loan program it is exactly that, whereas PPP 
was designed with various distribution channels. So if you go 
from 1,800 banks in the PPP up to about 5,400 banks, they now 
have--the small businesses have over 5,000 access channels, 
whereas----
    Senator Cardin. I understand that. So let me just point 
out, the PPP applications have slowed down. We have not seen 
the EIDLs pick up. This is unacceptable. The EIDL program has 
to operate at a much more efficient level. You need to let us 
know if you need more help.
    Secretary Mnuchin, I want to ask one question in regards to 
those who had criminal records. You issued a regulation that 
prevented them from participating in the PPP program. We have 
talked about this. There is bipartisan legislation and broad 
support in the Senate to allow those that have repaid their 
debt to society to be able to participate in the PPP program, 
with the exceptions of those that have committed economic fraud 
type offenses.
    We have been trying to do this administratively. Can we get 
it done administratively, or are we going to have to pass a 
bill?
    Secretary Mnuchin. So thank you, and first of all we 
appreciate all the communication we have had with you on this 
issue and other issues. We are actually in the process of 
putting out guidance that I think will come out today, reducing 
it from five years to three years, as a result of your input, 
and we are happy to work with you and the Chairman to see if we 
should reduce it even more.
    Senator Cardin. Well, I appreciate that. I did not 
appreciate it was put in in the first place, but I appreciate 
the fact that we have made some progress. I can assure you that 
we would like you to go probably further than that. We will 
have those conversations, and if we have an opportunity let's 
work together on legislation so we do not run into this problem 
in the future. It is bipartisan.
    Senator Portman, Senator Lankford and others have all 
joined in this legislation. The Chairman has interest. So let's 
see whether we cannot work that out.
    Thank you, Mr. Chairman.
    Secretary Mnuchin. And I would suggest, I am happy to speak 
to you and Chairman Rubio tomorrow, and if you want us to 
shorten it we will consider that even more quickly.
    Senator Cardin. Thank you. I appreciate it.
    Chairman Rubio. Senator Risch.
    Senator Risch. Well, Secretary Mnuchin, I think this is a 
historical moment, the first time we have had the Secretary of 
the Treasury before this Committee, I think.
    Chairman Rubio. I think it was the change in leadership.
    Senator Risch. Yeah, I think it is probably the strength of 
the leadership of the Committee that has caused that. But 
anyway----
    Chairman Rubio. He was up here----
    Senator Risch. He knows that. Steven, when they write the 
history of this, I think you are going to have your own chapter 
in that history book. You know, I have spent all my life in 
public service, one way or another, and I have got to tell you, 
when this whole thing hit, this was a tremendous challenge for 
the United States of America. And I always am reticent to 
believe that the government can step in and fix things easily. 
Sometimes they make things worse than what they are.
    But I have to tell you, I have just been incredibly 
impressed by your leadership as we have gone through this. I do 
have some inside information, because Senator Crapo and I are 
very, very close personal friends, and I know you and he are on 
speed dial with each other and talk regularly. And I had some 
issues with it, with the program, like everybody did, and I was 
just absolutely stunned at the way that you stepped up, 
personally, to take on these issues, and the team that you put 
around you to take on these issues, and your willingness to be 
flexible as far as making these things work.
    This has been a great success. You do not read that in the 
media or hear it on cable news. They are focused on the 
glitches, and when you are talking about throwing $3 trillion 
against the wall there are certainly going to be glitches.
    They are focused on that.
    But I can tell you, as I get out there and talk with the 
business people in Idaho, and for that matter around the 
country, there is tremendous appreciation for what the 
government has done, particularly appreciation for what the 
United States Treasury has done administering these programs. 
And there are millions of businesses and there are tens of 
millions of people who are a lot better off, because of your 
leadership and the administration's leadership in taking this 
thing on head-on.
    So thank you for what you did. I want you to know that 
notwithstanding a lot of the stuff you read, there is great 
appreciation amongst the American people. I think history is 
going to judge you very favorably as we go forward.
    I have got just a couple of quick questions for you. Number 
one, are you as surprised as I was as to how the economy is 
bouncing back? I mean, if somebody would have told me 60 days 
ago that the NASDAQ was going to set a new record in early 
June, I would have bet the farm against that. Were you as 
surprised as a lot of people that the economy is coming back as 
quickly as it is coming back, admittedly with some sectors more 
so than others. What are your thoughts on that?
    Secretary Mnuchin. Well, let me just say, first of all, 
thank you for those kind words. As I have repeatedly said, this 
was a unique situation. This was not due to economic issues. 
This was due to government action and shutting down the economy 
as the result of COVID-19. So as I have said before, the 
traditional economic models are not good at predicting things. 
I was somewhat surprised, and very pleasantly surprised, by the 
recent numbers. I thought that we were going to actually bottom 
in June and not May.
    But let me just say, as it relates to the markets and the 
economy in these numbers, this is a direct result of the 
bipartisan work of the Senate and the House in responding in 
unprecedented fashion. So not only the $3 trillion that we 
pumped into the economy but the money that you entrusted to us 
to work with the Federal Reserve has unlocked markets. And 
without spending a dime of taxpayer dollars, companies like 
Boeing, who we thought would have to come to the government for 
help, were able to raise $25 billion in the markets. Thank you.
    Senator Risch. Well, thank you. I am just absolutely amazed 
that the tools that really have been developed over the years 
were used as well as they were used in this regard, and the 
fact of the matter is that, really, it was the first test of 
them. The fact that they worked so well is just stunning.
    I have written to you about creating a little bit more 
simple process for PPP loan forgiveness. I hope you have gotten 
that communication. Seeing as how you have looked at everything 
else, I have no doubt you are going to look at that. We are 
getting some input from the sector that the process and the 
application is overly complicated. If you would have a look at 
that, I would sincerely appreciate it.
    Secretary Mnuchin. Let me just comment. As a result of the 
safe harbor that is in the new bill, we will be writing new 
guidance and new forms which will make it substantially 
easier----
    Senator Risch. Thank you.
    Secretary Mnuchin [continuing]. For people to check the 
safe harbor.
    Senator Risch. We appreciate that, and I have no doubt--I 
had no question that you would probably do that.
    Let me just say, Administrator Carranza, my time is up, but 
you are getting the same kind of kudos out there from the small 
business community, as far as being able to make the programs 
work that you have had, so we appreciate that. And I want you 
to know that appreciation is there for you too.
    The criticisms that have been made, you guys have stepped 
up, both of you, and America sincerely appreciates it. Accept 
America's thanks, both of you, for what you have done.
    Ms. Carranza. Thank you, Senator Risch, and I am very 
pleased to announce that by next week all of the EIDL loans 
will be in the process, in the loan portal. So all of the 5 
million applications that we have, that actually represent over 
7 million employees, and obviously 5 million small businesses, 
will actually be in the loan portal. There are two sections to 
that portal. One is the application and the other one is the 
loan processing, which means within a week's time that those 
loans will be processed and we will be over with the EIDL.
    Senator Risch. Well, again----
    Ms. Carranza. I feel really encouraged by that.
    Senator Risch. In closing, just let me say that, again, the 
media has really focused on some glitches, but the big story 
here--and it is a big story--is how successful all this has 
been. And you are to be commended for it. You will not get the 
credit that you deserve for it, at least now. Maybe you will in 
the history books. But again, thank you for what you have done.
    Thank you, Mr. Chairman.
    Chairman Rubio. Thank you.
    Senator Cantwell.
    Senator Cantwell. Thank you, Mr. Chairman. Well, let me add 
my thanks to you, Mr. Chairman, and Ranking Member Cardin, for 
your bipartisan effort, and to those who are also 
participating, Senators Shaheen and Collins, for all the work 
that has gone into the small business agenda. It is really 
historic to show this bipartisan level, and frankly, we need 
it. We are not through this and we need it to come through 
again.
    Access to capital is a persistent issue for small business, 
and one of the great things, I was proud that our side focused 
on, was the CDFI issue. I can see, in my state, where the CDFIs 
are basically getting out and marketing themselves and getting 
access to capital to, frankly, small businesses who just got 
turned down by banks. So I know you cannot guarantee how banks 
operate, but obviously this has been a problem, and we need to 
figure out solutions. People with good banking relations got 
turned down, and people without good banking relations probably 
never had a chance. So the CDFI process has been working, and 
we should figure out how to continue it.
    The issue that comes before us now today is that there are 
a lot of women- and minority-owned businesses, always also a 
pervasive problem with access to capital, and this Committee 
has done good work with that in the past, prioritizing smaller 
loan grants and a whole variety of things to get capital.
    But I do think that we should be looking at what my 
colleagues, Senators Cardin and Shaheen, are recommending that 
we prioritize smaller-sized small businesses. I particularly 
think 10 and under, but make sure that we are getting access to 
capital. There are a lot of women and minorities that are small 
businesses under, you know, 10 employees, and again, how do 
they keep that business going if they do not have access to 
capital?
    So I hope in this next round we will prioritize that, and I 
hope both of you will agree on that.
    I can say, because I worked a lot on various aspects of 
other parts of the bill, in addition to the small business, 
that I saw Secretary Mnuchin many hours, day and night, working 
around the clock on these provisions, so I thank him for that.
    I want to ask you--so do you both agree that we should 
prioritize--figure out some way to make sure we are sending a 
message that we want small businesses prioritized, under 10 
people?
    Ms. Carranza. Yes, absolutely. There is a focus at SBA--and 
I apologize for jumping in--there is a focus at SBA with sole 
proprietors and independent contractors, because they are 
really not ones that are going to aggressively pursue loans. 
And so we have a task force at SBA dedicated to those 
particular communities, as well as dedicated resources to look 
at how we can optimize the CDFI community. We have done really 
well up to 400, 430-plus, but we can do more.
    Senator Cantwell. Thank you. I have two questions for you, 
Mr. Secretary of the Treasury, Secretary Mnuchin, and that is, 
when we were doing the aviation part of the bill we definitely 
thought that the aviation supply chain was critical to 
America's security. We thought of that as the aviation 
commercial supply chain, not just the defense supply chain.
    So we have had a couple of hearings in Commerce, and we 
want the dollars to go out the door to someone who is in the 
supply chain, who is making commercial manufacturing parts for 
the supply chain. We think that those dollars should be 
eligible to them. Do you agree?
    Secretary Mnuchin. I am more than happy to follow up with 
you and talk to you about that. Many of the aviation supply 
chain is getting advances we have been monitoring, but to the 
extent there are specifics, I am happy to address them with 
you.
    Senator Cantwell. Well, the $17 billion that was there, we 
believe the definition of important to national security is 
commercial. You did not have to be engaged in a defense 
contract, that keeping the commercial supply chain is critical 
to our national security, because if we do not have an aviation 
sector it is going to impact us. So definitely want those 
dollars out the door, and there seems to be a problem.
    Another area that there are problems with is $8 billion for 
our Tribal governments, and as somebody who represents 29 
different entities in the Northwest, definitely want to see 
those dollars out the door. Can you tell me when the $8 billion 
for Tribal governments will be distributed?
    Secretary Mnuchin. Yeah. I will tell you, the second 
tranche of that money is going to go out tomorrow, and that the 
only thing that is going to be held back at that point is the 
litigation issue associated with Alaska.
    Senator Cantwell. Okay, on the Tribal issue, you are 
saying.
    Secretary Mnuchin. Yes.
    Senator Cantwell. Okay. Thank you.
    Secretary Mnuchin. Yeah, but the money--the first tranche 
went out.
    The second tranche is literally going out tomorrow.
    Senator Cantwell. Thank you.
    Secretary Mnuchin. Or actually maybe Friday. I apologize. 
It is either tomorrow or Friday. But it is going out this week.
    Senator Cantwell. Okay. Well, then I am going to follow it 
up with aerospace, and again, everybody, let's keep working in 
a bipartisan basis but let's not forget those that are getting 
left behind. It is complex. It has always been a problem. 
Getting access to capital, for those who are small, is always 
hard. Thank you.
    Chairman Rubio. Senator Scott.
    Senator Scott. Thank you, Mr. Chairman, and thank you to 
the panel for being with us this morning. I certainly 
appreciate both of you all's commitment to making sure that we 
have the resources available to really help small businesses 
survive the economic crisis that they have never seen in their 
lifetimes. Every single small business owner that I spoke to 
around the country had the exact same words, that without the 
Paycheck Protection Program they would not have survived.
    So survival was the key and the focus, but now the focus 
turns from survival to recovery. And so as we think about 
recovery, my question is, as June 30th comes sooner than some 
would like, many are asking about a second bite of that apple. 
Is there an opportunity, as you all think through where we 
should go, is there an appetite for folks to perhaps see 
another four weeks of the PPP in addition to what they already 
have, and/or are there any other ideas that are on the table 
that speak to the recovery aspect of where we are and not 
simply the survival mode that we have been in?
    To either panelist.
    Secretary Mnuchin. Senator Scott, thank you, and I 
appreciate all of your help. I definitely think we are going to 
need another bipartisan legislation to put more money into the 
economy. I think as we have said, we do not want to rush into 
that, because we want to be both careful, at this point, in 
seeing how the money is in the economy. A lot of the money is 
still not in it. And two, I think we need to be much more 
targeted at this point.
    So I think at the point when we were in an emergency we had 
to put a lot of money in the economy, and we know that it would 
not be perfection. But I think whatever we do going forward 
needs to be much more targeted, particularly to the industries 
and small businesses that are having the most difficulty in 
reopening as a result of COVID-19. And we look forward to 
working with you and the rest of the Committee over the next 
few weeks as we think about that.
    Senator Scott. Thank you. Administrator, as we rolled out 
the program, one of the--perhaps one of the more exciting 
aspects of the roll-out included taking the 7(a) program from a 
few, 800 lenders to I think over 5,000 ultimately were engaged 
in the process, which was phenomenal from our perspective.
    The fintech world also provided a lot of traction to 
smaller businesses that may not have had that relationship. I 
certainly think that we are emerging into a new part of the 
process where fintech and unorthodox folks should be a part of 
that process going forward. What was your experience, and how 
should we anticipate the use of fintech as a part of the next 
wave of opportunities?
    Ms. Carranza. Thank you for your question, Senator, because 
this allows me an opportunity to share with the Committee that 
we had dedicated resources to work with the fintech companies 
that approached us and indicated that they could provide 
microloans to thousands of people in the underserved markets. 
And so that seemed like a real appeal for us and a way to 
really penetrate the underserved community.
    So I will not mention their names but we had four fintech 
companies. We had two dedicated resources, one from Treasury, 
and the other from CFPB, to be focused in on working with 
Treasury to get them licensed or authorized to be a preferred 
lender for us. So it really worked well. And they are still in 
play.
    Senator Scott. Excellent. My final question to either, as 
Senator Cantwell discussed, CDFIs, that was not one side of the 
aisle or the other side of the aisle. That was frankly just 
common sense from both sides of the aisle. But perhaps America 
needs to see a little bit more common sense from both sides of 
the aisle.
    Secretary, you and I had many conversations, that I recall, 
on MDFIs as well as CDFIs and MSIs. And I hope that as we look 
into the future with the new fintech platform, looking for ways 
to serve minority communities that have had a challenging time 
of having access to capital, that that will be a part of our 
forward looking. And the ability to help fund some of the MSIs 
to market, as we did through the Minority Business Development 
Agency, to provide resources for the marketing of these 
resources in minority communities also proved to be helpful as 
well. So more of a comment than a question.
    Secretary Mnuchin. If I could just comment on, you know, 
the technology and working with the CDFIs is very important. I 
want to give a shout-out to Robert Smith, who spent a lot of 
time with us, and has dedicated technology without making any 
fees to those CDFIs, so that they can outreach more people. But 
he and his company have been very accessible, and I think we 
have done a good job, but we need to do a much better job going 
forward.
    Senator Scott. Yes, sir. Thank you. Any final thoughts, 
Administrator?
    Ms. Carranza. I was just going to comment on Robert Smith, 
but you beat me to it. We were collectively working with that 
entity.
    Senator Scott. Robert has a very busy phone because he 
keeps calling because he has good ideas, and they actually 
work. So thank you all for being receptive to the private 
sector being engaged in this process. I think it was one of the 
bright spots of the relief package, without question. Thank 
you.
    Thank you, Mr. Chairman.
    Chairman Rubio. Thank you.
    Senator Shaheen.
    Senator Shaheen. Thank you, Mr. Chairman and Ranking Member 
Cardin, and thank you both for being here this morning. I 
certainly applaud, as all of us do, the important difference 
that the small business programs made, the PPP programs and the 
EIDL programs have made for businesses in New Hampshire. We 
have had 22,000 businesses that have received over $2.5 
billion.
    Senator Cardin, though, very eloquently expressed my 
frustration at not being able to get information, as we were 
looking at changes that we need to make to the program, so that 
we could ensure that what was working continued and what was 
not working could be changed. And so it is like closing the 
barn door after the horse has gotten loose, but I think all of 
us would like to feel like we are getting regular information, 
so that as we are trying to perform not just our oversight 
mission but to look at what we need to do to make changes, that 
we have that data in front of us. And so I hope that that will 
be more forthcoming in the future than it has been in the past.
    I want to follow up on Senator Scott's question about a 
second round of help, because we are hearing--our office is 
hearing from a lot of small businesses in New Hampshire who got 
the original PPP loans, who are about to run out of money this 
week or next week. They did everything that was prescribed in 
the program. You know, they hired back their people, they, you 
know, have been waiting to start up their businesses, many in 
the hospitality and tourism industry, which are the last to 
open up, and in New Hampshire that is a significant part of our 
economy.
    And now they are about to run out of money, about to be in 
the position of having to lay off those employees again, and 
are worried about whether they are going to go under in the 
next couple of weeks.
    So I have been--Senator Cardin talked about the legislation 
that he and Chris Coons and I have been working on to try and 
look at a second round. When we have got $140 billion still 
remaining in the PPP program, I would hope that we could all 
agree that this is an opportunity that we should take advantage 
of for those businesses that need continued help.
    I know the jobs numbers were better than expected last 
week, but 13 percent unemployment is still not acceptable, and 
we do not want another whole round of layoffs because we have 
small businesses who got help and now cannot get additional 
help when they need it.
    So I hope you will both be open to that. I do not know if 
you have a view. You talked, Secretary Mnuchin, about needing 
some more time to look at that, but for some of these small 
businesses they do not have extra time.
    Secretary Mnuchin. Again, let me just emphasize, we are 100 
percent committed to making sure that people that have lost 
their jobs get back to work, and people that have their jobs 
can keep their jobs. That is an absolute priority of ours. As 
you have said, the unemployment rate is still way too high, no 
fault of their own, and there is no question that small 
businesses in many industries are going to need more help.
    So we looking forward to working with the Committee and the 
rest of the Senate, on a bipartisan basis, to include 
incentives, and whether it is through the PPP or others or tax 
credits, we are open minded. But we absolutely believe small 
business, and, by the way, many big businesses----
    Senator Shaheen. Sure. Absolutely.
    Secretary Mnuchin [continuing]. In certain industries are 
absolutely going to need more help.
    Senator Shaheen. Thank you. Administrator Carranza, you 
talked about the effort to move the EIDL loans through the 
program, and I think that is probably the program that we have 
heard the most frustration from businesses in New Hampshire 
about. And we are still hearing from them on a daily basis, 
that they cannot get information about the status of the EIDL 
loans.
    So you talked about expecting all of the ones that are in 
the queue to be approved by next week, or to be acted on by 
next week. What can we tell those businesses that are calling 
our office about how to get information, because they are not 
able to get through on the toll-free line and the SBA to get 
answers to their questions.
    Ms. Carranza. Senator, I will emphasize the amount of 
resources that we have added at the phone center. There are 
3,000 versus the few hundred that we had a couple of months 
ago, and then we have added approximately another 1,000 when we 
talk about the paralegals and whatnot, to reconcile some of the 
loans.
    With regards to--and I will--I am going to get in the weeds 
a little bit to explain----
    Senator Shaheen. Good.
    Ms. Carranza [continuing]. Why the visibility of a loan is 
not realized with this new automated system. What we 
understand, on the traditional legacy system, it had a lot of 
visibility. That is the system that would manage all of the 
natural disaster loans. When we had to ramp up and do a surge 
processing, input and throughput, what was not built was what 
we call a loan tracking visibility, and that is why it has 
limited visibility. We have visibility on the intake, and then 
when they get notified by email that their loan is progressing, 
and now it is a matter of they make a decision whether they 
want to pursue the loan and whatnot.
    So there is this gap that there is no visibility. We did 
not have--because of time, because of the urgency to just get 
that machinery up and running, we did not allow the engineer to 
build that piece. And so now it requires particular loan 
officers to view that. We are in the process of fixing that, 
because we are now being prepared to accept more applications, 
besides the ag, and we have a few hundred thousand waiting in 
the queue, and we would like to take them on. We have learned a 
lot--the amount of communication that is necessary, the amount 
of personal face-to-face contact, not just emails. Because we 
have made available up to nine contacts within the time frame 
that we are speaking to, about a loan status.
    We have about 65,000 that want to re-enter and be 
reconsidered for more funds, and we are working through that as 
well. So there are about two or three portfolios we are working 
through to make sure that we provide a lifeline. It may not be 
the $2 million, but what we can provide is a lifeline to many 
more at that particular cap. And so we are looking to active 
that.
    When I made reference to applications being all in the 
queue by next week, all of the 5.4 million applications that we 
have had since March to this date are now going to be in that 
loan portal, which they are making an assessment on. And the 
reason we are able to do that is that we went from a production 
where a loan officer processed about 3 to 5 loans a day, to now 
50 loans a day. And so because of that surge we are realizing 
more efficiency, and I look forward to resolving those issues 
very quickly.
    And I do look forward to communicating with you now more 
often. We did have conference calls with the Committee and 
members, such as the Chairman and the Ranking Member, Senator 
Cardin. It was not frequent enough. But I have pulled away from 
the operations and now I will be able to personally meet with 
everyone and update you much more frequently.
    Senator Shaheen. Well, thank you. I think that is very 
important, and I am out of time. But the more transparent we 
can be, the more people understand what is going on with the 
program, the less frustration and the more understanding we 
will have.
    So thank you both, and I hope we can continue to have a 
bipartisan approach to helping the small businesses in this 
country. Thank you.
    Chairman Rubio. Senator Kennedy.
    Senator Kennedy.
    Senator Kennedy. Yes, sir.
    Chairman Rubio. Unless you have nothing to say, which I 
doubt.
    Senator Kennedy. Thank you, Mr. Chairman. Thank you, Mr. 
Secretary and Madam Administrator. I have had some oral 
surgery, as you can probably tell, so my speech is--my accent 
is the same but my speech is a little impaired. That is a 
blessing or a curse.
    Mr. Secretary, do you have economists on your staff that 
can put a value on the amount of damage that was done to 
businesses from the looting and the burning from the rioting, 
not the economic impact of the peaceful protests, protests in 
America, or as American as baseball, but felony looting is not. 
Do you have economists that can put a value on the economic 
impact of those small and larger businesses?
    Secretary Mnuchin. I do have economists. I will ask them 
whether they have data that they can look at and do that, and 
get back to you. I do not know the answer.
    Senator Kennedy. Okay. We have about, what, $130 billion we 
have not disbursed for the PPP program. Is that correct?
    Secretary Mnuchin. That is.
    Senator Kennedy. So it would appear we are going to have 
some money left over. Is that correct?
    Secretary Mnuchin. It is.
    Senator Kennedy. I am going to introduce a bill that I 
would like you and your very able--and I mean that sincerely--
colleagues at Treasury to look at, to take some of that money 
and make it available to the businesses, mostly small 
businesses, but to the businesses that have been lost as a 
result of the burning and the looting and the felony rioting. I 
think they are going to need help.
    Secretary Mnuchin. We are more than happy to look at that 
with you.
    Let me just comment on the----
    Senator Kennedy. Pull that mic closer for me, if you would, 
Mr. Secretary.
    Secretary Mnuchin. I said we are more than happy to follow 
up with you on that. And let me just comment on the extra 
money. As you recall, Congress gave us an extra $60 billion, 
more than we needed, because everybody was so skeptical that we 
were going to run out. So some component of this extra money we 
did not anticipate we would be able to put to work, but we look 
forward to working with you on potentially repurposing it.
    Senator Kennedy. Well, I am going to introduce that bill--
we are drafting it now--and if we do have an additional 
coronavirus bill I would like to consider--I would like you to 
consider making that a part of it.
    Secretary Mnuchin. We will absolutely work with you, Mr. 
Senator.
    Senator Kennedy. And I would like, if you could put some of 
your best minds, you and the Administrator, to quantifying the 
damage done from the rioting.
    Secretary Mnuchin. I will----
    Senator Kennedy. I would envision that we have arrested a 
lot of people, our law enforcement authorities, who caused 
this, who did the burning and looting, and I would, we are 
probably going to put a provision in our bill where the 
authorities have to go after them for civil liability, 
basically take their assets and offset the money that taxpayers 
would have to spend. But I would like you to take a look at 
that.
    Secretary Mnuchin. We will. Thank you.
    Senator Kennedy. And talk to the President about it.
    Number two, I want to cut to the chase here. If you were 
king for a day, what would you put in the next coronavirus 
bill, other than the idea I just articulated to you?
    Secretary Mnuchin. If I were king for a day I would say we 
should spend the next 30 days looking at a lot of different 
things that will be in that bill.
    Senator Kennedy. Yes sir, but--I know you have been 
thinking about it, and I would like to get your general 
thoughts now of what we should be thinking about.
    Secretary Mnuchin. I think that, one, we are going to need 
money for business, to encourage businesses to rehire people, 
especially in areas that have been most impacted. So whether it 
is the travel, leisure, restaurants. You cannot get hotel 
capacity back up to speed without hiring people first. I will 
just use that as an example.
    Senator Kennedy. What else?
    Secretary Mnuchin. I think we are going to need to fix 
unemployment. So we knew there were issues with the enhanced 
unemployment, where, in certain cases, we were paying people 
more not to work than work. I think we have seen, from the 
recent numbers, that did not have a big impact because people 
want their jobs. But we will have a significant amount of 
unemployment and we are going to need to look at doing 
something that. I think we are going to seriously look at 
whether we want to do more direct money to stimulate the 
economy.
    But I think this is all going to be about getting people 
back to work, and we look forward to working with the entire 
Senate on this.
    Senator Kennedy. What about--and I am going to try to be 
quick here--what about incenting investors to invest in the 
economy, capital gains treatment that would be relaxed, that 
sort of thing?
    Secretary Mnuchin. It is something we have discussed. My 
opinion right now is that the Fed facilities have unlocked the 
capital markets. There is a lot of liquidity for investment. 
That is something we will look at. But I think we are much more 
targeted at getting people back to work, and I think investors 
are prepared to invest a lot of liquidity that they have right 
now.
    Senator Kennedy. Well, the Federal Reserve has done a great 
job, and yes, they have unlocked the credit markets, but at 
great expense. We can talk another day about the size of the 
balance sheet now at the Federal Reserve. But, look, I think 
Jay Powell is a rock star. I think he did great.
    Final thought. A lot of the banks and the small 
businesswomen and businessmen think that the Federal Government 
is going to double-cross them on the forgiveness of these 
loans. You need to be mindful of that. You and the 
Administrator need to take some of those smart minds in your 
office, and you have plenty of them, and try to reduce that 11-
page form to about half. And you both need, in my opinion--I am 
not trying to tell you how to do your job, but articulate to 
the businesspeople out there that the Federal Government is not 
looking for ways to catch the banks or the businesses who took 
this money in a minor mistake so the loans can be turned into 
loans.
    Secretary Mnuchin. I assure you that is the case. And let 
me just emphasize, in the recent bill there is an extension 
from 2 years to 5 to 10 years, but I do not expect businesses 
are going to need to use that, because I think the majority of 
this money is going to be forgiven in the next few months, and 
that is our intent. And I would just highlight----
    Senator Kennedy. And know that, Mr. Secretary, but they do 
not trust us.
    Secretary Mnuchin. I understand----
    Senator Kennedy. And for good reason.
    Secretary Mnuchin [continuing]. And that is why we are 
going to get the job done quickly. And there is also--let me 
just give a little pitch--there is a third-party calculator 
that you can put in all the information and you can get the 
forgiveness forms done in 15 minutes. And as I said, with the 
next legislation, with the safe harbor, it is going to be even 
easier.
    So trust me. I have had people ask us about the form EZ, 
Senator Collins and others. You know, I would like to make this 
as easy as possible. We do have a law that we are required to 
work within. But I want to assure people that have taken this 
money, our intent is to get this stuff processed quickly.
    And I should have also mentioned, you know, we have been 
speaking with you and others, obviously, on the state issue, 
and I know you have potential legislation, so I should have 
also put that on the list, obviously, that we will address on a 
bipartisan basis.
    Senator Kennedy. Think about helping the businesspeople who 
were hurt from the looting and the burning.
    Secretary Mnuchin. Thank you.
    Senator Kennedy. Thank you, Mr. Chairman.
    Chairman Rubio. Senator Coons.
    Senator Coons. Thank you, Mr. Chairman, Ranking Member 
Cardin, and thank you, Secretary Mnuchin and Administrator 
Carranza. As many of my colleagues have remarked, this is a 
rare bright spot of bipartisanship and of partnership that has 
delivered a lot of relief to millions of businesses and lots of 
households and families. There are some aspects of our work 
together that have not been realized as quickly as many of us 
had hoped. The EIDL loans have ended up being a challenge to 
deliver. There are others where there is more work to be done 
together to make the forgiveness process swift and clear and 
appropriate.
    I want to focus for a few minutes on a piece of the CARES 
Act, the Small Business Debt Relief Act that maybe has not 
gotten the visibility it needs and where we could, I think, 
make some more progress.
    Before COVID-19, African American business owners were 
typically denied bank loans at triple the rate of non-minority 
business owners, and some of the pressures of this recession 
are compounding preexisting inequalities, and that is exactly 
one of the core reasons I worked, and many colleagues worked to 
get the Debt Relief Act into CARES Title I. It gives six months 
of principal, interest, and free relief for 7(a), 504, and 
microlending programs, programs that, by definition, existed in 
order to help those who were denied loans elsewhere.
    Just a quick example. Orange Theory Fitness in Pike Creek, 
Delaware, right near where I grew up, is a black-owned business 
that is now saving $9,000 a month because of this automatic 
debt relief program. I spoke to its owner, Yvonne Gordon, last 
week, who has been working tirelessly to reopen her small 
business and to go back to serving customers.
    But I am concerned that there are not enough small 
businesses that are required, not just eligible but required by 
law to receive this benefit. There are some remaining who have 
not.
    So Administration Carranza, if you would, has the SBA 
identified all the businesses eligible to receive this 
automatic relief and who their lenders are, and what are you 
doing to make sure that every single covered borrower is fully 
participating in this automatic relief program of six months?
    Ms. Carranza. We have seen an uptick. It started off with 
about one and a half billion and now it is up to two billion 
that have recognized the principal and the interest and 
coverage. And the email was sent out. We spoke to the banks, 
but we have to do a better job of that, another level of 
outreach. We saw the increase, and we need to do a better job 
of not only tracking the businesses but also making sure we 
work with the lenders. It is supposed to be an automatic 
transaction and it has occurred for many, but I believe 
knowledge is power and we will have to do a better job in that 
area, sir.
    Senator Coons. Thank you, Administrator. I do think we are 
still falling short in reaching every business. The businesses 
I have heard from in Delaware that have benefited from this, it 
has made a critical and timely difference.
    There is also a question that Senator Duckworth wanted me 
to ask. She is at an Armed Service Committee hearing. We have 
both worked on--it is a small technical issue. It was a 
drafting error, I am convinced, in the CARES Act--but the cap 
for 7(a) and PPP are tired. We passed, on a bipartisan basis 
here in the Senate, a technical fix. It has been held up in the 
House. Just if you would speak briefly to how important is it 
to avoid a shutdown of the 7(a) loan program because of this 
drafting error?
    Ms. Carranza. We do not see an exposure on the 7(a) 
shutting down. We actually have available funds for that 
particular program. So I need to get back to you on that. I 
have not heard of any such position at this point. We are 
actually doing really well on our 504 and our Community 
Advantage. We are looking to develop another loan option for 
our underserved communities. So I look forward to getting back 
to you on that.
    Senator Coons. I am happy to talk to you about it.
    Ms. Carranza. Please.
    Senator Coons. I know it is a minor issue but it has been 
flagged by staff on both sides of the aisle, and I think we can 
work through it.
    Three more quick questions, if I can. The CARES Act gave 
$200 million to the GAO for oversight. The Ranking Member, 
Senator Cardin, referenced this. The SBA makes data on 
individual loans available on its web site for the 7(a) loan 
program, and the administration says it plans to do so for PPP 
loans at a future date.
    Why have you not made individual loan PPP data available, 
and can you assure that the GAO is going to get the access to 
the data they need to do their job of oversight within the 
Executive branch?
    Secretary Mnuchin. I can comment on that.
    Senator Coons. Thank you, Mr. Secretary.
    Secretary Mnuchin. First of all, let me just say we 
absolutely believe in transparency and we were very clear 
across the programs on agreeing to significant transparency, 
especially in the Fed facilities, which were not required.
    As it relates to the names and amounts of specific PPP 
loans, we believe that that is proprietary information, and in 
many cases for sole proprietors and small businesses is 
confidential information. So the reason why we are not 
disclosing the names and individual amounts, unlike in the 7(a) 
program, is because of that issue, but we are working with the 
GAO from an oversight to make sure that they are comfortable 
and they do have access to information.
    Senator Coons. Thank you, Secretary. I do think it is 
critical that GAO have access to all the data they need to do 
their job. And a quick question for you, Mr. Secretary, to 
follow up on something Senator Kennedy referenced. As retail 
and hospitality are reopening, there are supply chains which 
often rely on credit, or finding, you know, three months later 
there is a lot of concern about the cost. There is much more 
liquidity. But credit insurance and factors are becoming key 
blockages.
    I have heard from a number of restauranteurs and folks in 
retail that rely on credit to finance restarting, that they are 
really having difficulty. I hope you are looking at credit 
insurance and sort of the backstop end of the credit side of 
those supply chains.
    Secretary Mnuchin. Yes, and I am happy to follow up with 
you and your office on that.
    Senator Coons. Thank you. Your engagement has been 
terrific.
    If I could ask just one last question.
    Secretary Mnuchin. Have you looked at the clock?
    Senator Coons. I am. I am a minute and 45 over, and in 15 
seconds I will simply say I hope for a positive response on a 
bill referenced by Senators Cardin and Shaheen that we are 
introducing for a Prioritized Paycheck Protection Program. For 
a genuinely small business that has suffered significant 
revenue loss, it would give them a chance for another PPP loan 
if they have responsibly completely one, given that we have 
$140 billion in unused funds.
    Thank you for your forbearance.
    Chairman Rubio. Senator Romney.
    Senator Romney. Thank you, Mr. Chairman. I want to 
subscribe to the comments that Jim Risch indicated about 
support across our country for the help that your respective 
agencies has provided for our economy and for the people who 
work in our economy. I also recognize there have been more than 
a few glitches and concerns and errors that have occurred. I am 
thinking about the banana stand on Arrested Development. If 
they went from 2 customers to 2,000 customers, it would make it 
kind of difficult for the guy dipping the bananas in the 
chocolate sauce, and the peanuts, and so forth. And you have 
had to staff up very quickly, and I think what you have done 
has been to rescue many, many jobs for our country, and I 
appreciate that very much.
    What I hear as I talk to people in our small business 
community is how much they appreciate these loans, but also 
they are beginning to be concerned about whether or not they 
are going to be qualified for forgiveness. And they note that 
in some cases they tried to rehire employees. They found it 
hard to do so. In some cases, people are making more by not 
working than they were by working, so they are not able to get 
them back, or others have moved elsewhere to get employment or 
opportunity elsewhere with family.
    I hope, and underscoring what Senator Kennedy said, that as 
you look at ways to determine if people qualify for 
forgiveness, that we are not sticklers, that we instead are 
looking to help people get forgiveness as opposed to exacting 
penalties on that.
    That being said, in terms of loan forgiveness, I am 
concerned about circumstances where businesses applied for a 
loan, received money, but actually saw no reduction in revenues 
at all, and remain fully profitable. And I hear about those 
circumstances. I see them written about in various journals. 
And I believe that given the fact that in the loan application 
you noted, quote, ``that this loan is necessary to support 
ongoing operations,'' that if a business did not see a 
reduction in revenue that it should not qualify for 
forgiveness, that it should be maintained as a loan.
    Is that something which you think guidance can be provided 
on, or do you subscribe to that thought?
    Secretary Mnuchin. So, Senator Romney, thank you, and, you 
know, I personally had the opportunity to talk to you about 
these issues and many others. I know that the revenue test was 
something that the Committee actually considered when this was 
written at the time, and I think the general idea we had was so 
many people were going to be impacted by this, not to include 
the revenue test.
    Now as I have said publicly, when we put in that 
certification we thought that people would self-select 
appropriately, and unfortunately there were a number of 
companies that were high profile that took the loans, and I 
publicly came out against that. We did get about $12 billion 
returned. I think to a large extent it was from large public 
companies and some large sporting teams that I am a big fan of.
    You know, and I had many discussions with many people on 
this Committee on a bipartisan basis about this test on the 
certification. We made a judgement that the majority of the 
small businesses, 98 percent by number, were under $2 million, 
and most likely legitimately took it, so we issued a safe 
harbor. And on 2 percent of the loans, that are the larger 
loans, we will do a review. Some of that will be an automated 
review. And we hope to have the proper balance on that.
    Away from that there will be a more general audit, just to 
make sure that people--there is not fraud in other things. But 
I look forward to speaking to you and others on this issue.
    Senator Romney. Thank you. Mr. Secretary, you noted in your 
opening comments that we expect a strong, phased recovery in 
the third and fourth quarter, that there has been substantial 
cash resources of our consumers, and that we expect a dramatic 
improvement in Quarter 3 and Quarter 4.
    So I am puzzled by the statement that you make that we are 
going to need a stimulus to get the economy going again. I 
understand very much that there are going to be certain sectors 
of the economy--hospitality and so forth--that will need 
ongoing help, but there may be small businesses that will need 
help and, therefore, we may want to extend the PPP program 
beyond the end of the month.
    But do you believe that we are going to need a stimulus, or 
is the economy poised to come back--again, with those outliers, 
is the economy poised to come back without further stimulus?
    Secretary Mnuchin. Well, I said it is one of the things we 
want to consider, and the reason not to jump into CARES 4 is 
hopefully we will not need a CARES 5 and a CARES 6. I do think 
the economy is going to rebound significantly, but I would also 
say there is still significant damage in parts of the economy. 
And we are going to consider using all of our fiscal tools, 
working with Congress, to make sure that we restore this 
economy back to where it was and where it should be, and to 
make sure that the many Americans that still do not have job 
get back their jobs.
    So we look forward to your business experience and working 
with you and others to make sure we do this appropriately.
    Senator Romney. Thank you, Mr. Chairman.
    Chairman Rubio. Thank you. And before I turn it over to 
Senator Booker, I just want to comment on the revenue thing. We 
talked about it quite a bit, and Senator Cardin, Collins, and 
Shaheen will recall. We had two concerns about it. The first, 
on the front end, is that it would create all this paperwork. 
The small business would have to accumulate all of this 
paperwork to show what the revenue was so they could compare 
it. So I was concerned it would slow down that process. Because 
I know at first blush, especially, we were all very--I am very 
sympathetic to this argument that if you are making a bunch of 
money, why do you need this loan?
    The other thing we were concerned about is what is a 
business do, and sometimes they get creative and they reinvent 
themselves in a crisis. For example, maybe you made clothes but 
now you are making masks and PPP, not just to keep people 
employed but reinvent themselves and provide a need. And we did 
not want to discourage or punish people from doing it. It is a 
complicated issue. I think it is one we should continue to talk 
about. We certainly do not want people taking advantage of it.
    But those are some of the things we were worried about when 
we were talking about all this at the front end. Senator 
Booker.
    Senator Booker. Thank you very much. I just, first of all, 
want to just echo a lot of the comments that have been made by 
people on both sides of the aisle about the work that not just 
the two of you have done in this really difficult time in 
American history but, frankly, your teams, the civil servants 
that work under you. Your agencies have been able to do things 
that we could not even imagine just at the end of last year. So 
I just want to give my gratitude for the difference it has made 
in my state. It has just been extraordinary, and there are a 
lot of folks that are happy.
    And I just want to echo, also, the pride I have in working 
in such a bipartisan way. We have seen people on both sides of 
the aisle on this Committee come together and just do really 
good work, I think. In Senator Rubio's opening comments he 
talked about the fact that so many of us rose to the occasion, 
put aside politics, and really focused on people and 
businesses. So I am really thankful for that.
    I come at this next issue in a very personal way but also a 
very bipartisan way. A lot of it is my own faith in Matthew 25, 
just being concerned with people who are often marginalized. 
Eighty-seven of us Senators voted to think that a lot of the 
sentences we give to people are just too dag-nab long.
    And we are, in a bipartisan way, doing a lot on criminal 
justice reform. I worked with the administration, talked to 
Jared. My Fair Chance bill passed, about people coming out of 
prison and eliminating that box that they often have to check. 
And so I am still perplexed, though I am grateful that you, 
Secretary Mnuchin, offered to revisit this issue.
    And I am grateful, again, in a bipartisan way, Senators 
Portman, Cardin, Lankford, and others put together legislation 
to eliminate the restrictions that are preventing people from 
getting access to these loans, incredible entrepreneurs in 
cities and communities all across America who are now denied 
the aid, or seeing their small businesses collapse, which are 
often critical pillars in many communities. This bipartisan 
issue, it has been endorsed and supported by everybody from the 
ACLU to the American Conservative Union, and FreedomWorks.
    And so I just, again, Mr. Secretary, want to know, do you 
believe in an individual who has started a business, is 
contributing to the local economy, is creating jobs, who has 
prior unrelated convictions, should really be barred from 
participating in the PPP program?
    Secretary Mnuchin. Well, first let me say we want to work 
with you and others to fix this and fix this really quickly. As 
I said, the original 7(a) program had seven years. We reduced 
it to five years. We thought we would reduce it. We are happy--
if there is bipartisan support we are happy to make the change 
this week and reduce it even more.
    So again, I know there is--we obviously have some issue 
about people who were convicted for financial crimes and other 
things.
    Senator Booker. You and I both know that is an easy thing 
to eliminate, the financial crimes.
    Secretary Mnuchin. Again, this is--we are happy to be 
responsive on this.
    Senator Booker. I am grateful. I have limited time so I 
will just say that this is not a small issue. This is thousands 
of people, affecting tens of thousands of jobs. This just basic 
ideal of justice. It seems incredible.
    And to that extent I would like to put something else on 
your radar screen, something called pretrial diversion. We know 
what pretrial diversion is, but for those who may not, these 
are specifically designed programs to allow individuals to 
plead guilty, and subject to completion of certain court-
mandated programming their guilty plea is vacated, and they do 
not have that mark of a criminal record, which has 40,000 
collateral consequences if you have a criminal conviction.
    It is a good program. And it only happens when the judge, 
the prosecutor, and the defense attorney, all components of our 
criminal justice system, agree. They come together and agree 
that the individual should not have to suffer those collateral 
consequences associated with a criminal conviction.
    So despite the consensus of the entire criminal justice 
community, we are doing the contrary. We are denying people 
that are in these pretrial diversion programs, who are 
entrepreneurs, contributing to our economy, employing other 
Americans, we are denying them what prosecutors, judges, and 
defense attorneys all agree should not be a bar, should not be 
a bar on collateral consequences.
    The PPP program is being denied to those folks, and this 
should shock the conscious of us all.
    Secretary Mnuchin. Yeah. Let me just say, I am not aware of 
that but I will work with the Administrator, and if that is the 
case we will make that fix immediately.
    Senator Booker. Oh, hallelujah. Thank God. Pass the 
collection plate. Thank you, sir. I really appreciate that. 
That commitment is noted, and I am really grateful.
    I want to be respectful of the time. In 10 seconds, I just 
want to echo what a lot of my colleagues have already said 
about still not an equitable distribution of the funds. A lot 
of minorities are falling out of this program, and a lot of it 
is just because small businesses, the smallest sort of, as we 
call them, mom-and-pop shops, are not. Senator Daines and I 
have mentioned it to you before, have a bill to help those 
funds that are started up--New Jersey has one through our 
Economic Development Authority, they are all across our 
country--to seed them with resources to help, because they are 
better targeted toward those smaller mom-and-pop shops. It will 
address issues of equity and getting a lot of funds out the 
door.
    I just, again, make that appeal to my colleagues on this, 
to look at our bipartisan effort to do this. And again, I 
respect and appreciate your willingness to help this. But thank 
you very much for the comments you just made about people in 
pretrial diversion. It makes me extraordinarily happy. So thank 
you.
    Thank you, Mr. Chairman.
    Chairman Rubio. Thank you, and thank you for raising that 
issue.
    And, in fairness, the Secretary has told us, in numerous 
conversations, that if we could come up with bipartisan 
language that we support, he would be more than happy to 
facilitate it on the criminal justice issue. I think we are 
fairly close on that, and I think time is of the essence, given 
the June 30th date that awaits on the cutoff of the program.
    Secretary Mnuchin. Yeah, and I will reiterate that, on 
behalf of the Administrator and I. If we get a letter from the 
Chair and the Ranking Member, we will institute the changes. We 
had said that on the call. So again, we will make your change 
immediately, but in regards to other changes on this issue, we 
are happy to implement them as soon as we get guidance from 
both of you.
    Senator Booker. Thank you very much.
    Chairman Rubio. Thank you.
    Senator Ernst.
    Senator Ernst. Thank you, Mr. Chair, and I would like to 
associate myself as well with the concerns of Senator Booker. 
In Iowa, of course, we are very short in our labor pool, and we 
truly value those that have served their time, their commitment 
to the great State of Iowa and those that want to find a 
positive path forward through entrepreneurship, and starting 
small businesses. So certainly I think that a number of us 
would want to engage in those activities to make sure that we 
are extending opportunity for everyone that does deserve that 
opportunity.
    But thank you, Chairman, and thank you, Secretary, very 
much, for being here. And we are seeing some strong numbers 
coming forward, and I am thrilled. And I think because of the 
work that has been done through the Small Business 
Administration, through the Treasury, through especially the 
Paycheck Protection Program, we have been able to save, 
preserve a number of small businesses and jobs across the 
United States, and that has been reflected in the numbers that 
we are seeing. In May, it was projected that we would lose 8 
million jobs, and instead we were able to add back 2.5 million. 
And again, I credit so much the program that you have put into 
place, that we have enacted, in playing a key role for a really 
stunning turnaround in the economy, so thank you for that.
    I do appreciate your hard work in implementing the program. 
There is still a lot of work to do, things that have been 
identified, just as Senator Booker did. But we are definitely 
heading in the right direction.
    I do have a question, Administrator. Last month we found 
out that Planned Parenthood affiliates received $80 million 
through PPP, despite the fact that SBA's affiliation rules 
disqualify them. What actions are being taken to ensure that 
Planned Parenthood returns those funds and is held accountable 
for the violation of SBA rules?
    Ms. Carranza. Well, SBA takes the affiliation rules very--
we look at it very closely and very fairly. And at this point I 
would just say that all affiliations are being looked at, and I 
am not in a position to speak about any one particular borrower 
at this point.
    Senator Ernst. But they will be reviewed, not just Planned 
Parenthood but all of the other affiliations that have unfairly 
taken advantage of the SBA.
    Ms. Carranza. Yes. The necessary course of action, yes.
    Senator Ernst. Okay. Thank you.
    Ms. Carranza. Thank you.
    Senator Ernst. And then, as well, for the Secretary, 
forgiveness, of course, has become a large issue now that we 
are moving into a state of recovery. The PPP forgiveness 
application, it is very complicated, and I hear that from 
Iowans time and time again, where the application process was 
fairly simple for them, but the forgiveness portion of that 
application process is very confusing.
    Our banks and our small businesses have told us that a team 
of lawyers and accountants would be necessary just to help 
those businesses fill out that forgiveness application, which 
puts our smallest businesses at a significant disadvantage.
    Do you believe that Treasury and SBA have the authority to 
simplify the application for small borrowers, and if not, would 
you be willing to work with the Committee on this issue?
    Secretary Mnuchin. First of all, let me just tell you, I 
personally looked at and helped design the application form, 
and I personally reviewed the forgiveness form, and I do not 
want this to be any more complicated than all of you do. There 
are requirements in the bill that make it difficult on the 
forgiveness. I do think, in the new law, the safe harbor, for 
people who check the safe harbor, will make it significantly 
easier, and will not have to do most of the calculations.
    And we are coming out with new forms for people who check 
that.
    And again, I would also just advertise, there is a third-
party calculator that if you put in all the information it 
fills it out in 15 minutes, but I can assure you we will work 
with you very closely. We want to make this easy for people to 
do, and now with the safe harbor most people will have the 
benefit of that.
    Senator Ernst. Very good. I appreciate that. Thank you very 
much.
    Chairman Rubio. We just got a call from the lawyers and the 
accountants. They are upset at what you just said.
    [Laughter.]
    Senator Rosen. Senator Rosen. The light is on, but I think 
it----
    Secretary Mnuchin. I figured out in the beginning it works 
without the light.
    Senator Rosen. All right. You can hear me now, anyway. I 
want to thank you, Chairman Rubio, for always taking my call. 
Ranking Member Cardin, Administrator Carranza, Secretary 
Mnuchin, you know, you have really provided leadership in 
helping our small businesses; especially for those of us in 
Nevada, you really helped us with that critical support that we 
needed during these challenges and unprecedented times. I want 
to really thank you in public for your willingness to provide 
our small Nevada gaming business up and down the state. People 
think of just the big hotels and the strip, but it is up and 
down our state everywhere, and everyone is very, very 
appreciative.
    But I want to talk a little bit about EIDL reform, and 
over, of course, the past few months, the coronavirus pandemic 
has just devastated small business in Nevada: 99 percent of our 
business is small business. We also have, unfortunately, the 
highest unemployment rate, 28 percent, up over 24 percentage 
points from last year. And so it is clear that our unemployment 
rate, of course, is a reflection of the overall state that the 
pandemic has had on small business.
    My office has directly helped more than 560 of these small 
businesses with their questions with the CARES Act. I am going 
to give a shout-out to our Small Business Administrator, Joe 
Amato. He has done over his hundredth webinar. I have been able 
to participate on a lot of those. But the one common complaint 
that we have received repeatedly is about the SBA's $1,000 per 
employee cap on EIDL advance grants and its $150,000 cap on the 
EIDL loans. That is a 93-percent reduction from the $2 million 
level that we authorized in the CARES Act.
    Many Nevada businesses, of course, have contacted my 
office, telling me that the $150,000 just is not enough, does 
not provide enough support, and they are going to probably have 
to permanently close their businesses.
    So Ranking Member Cardin earlier spoke about this. These 
filing caps were not the intent of Congress when we passed the 
CARES Act. They were not part of any deal that small business 
owners thought when they applied for their EIDL support. 
Senator Cornyn and I and others, we have sent a letter recently 
on this same issue back in April. I have raised it up. I raised 
it a few weeks ago when we were on the phone.
    So, Administrator Carranza, following up on the Ranking 
Member's question earlier, why has the SBA placed that $150,000 
borrowing limit on the EIDL loans? How did you come up with 
that number? And if the reason is funding, why didn't you come 
back to us for support?
    Ms. Carranza. Senator Rosen, I appreciate your question 
because it has been raised, and I have been dealing with it 
personally because small businesses approach my office as well. 
I mean, I get personal emails and follow-up on their requests. 
So I am very close to the situation.
    But I want to reassure every member on this Committee that 
it was not an arbitrary number. It was a matter of realizing 
that we had over 5 million applications in the queue, and 
thanks to this Committee and thank you, Senator Cardin, for 
providing the council the opportunity to speak with you and the 
Chairman about what was in the pipeline, the fact that we had 
already exhausted the $7 billion that we had in the pipeline, 
and then also what we had available was to ensure that we gave 
not just something but based on 6 months of operating cost, 
that is basically how the formula is calculated. And the 
average loan at that given time was being realized at about 
$83,000, so we thought if I can manage that--the decisions were 
made that if we could manage the 5 million applicants that were 
already in the queue, that had been waiting for the funds, that 
we could cover all with the $50 billion subsidy.
    Senator Rosen. And the $1,000 per employee, that has also 
been extremely difficult.
    Ms. Carranza. Well, the grant was the same calculation in 
the sense that we looked at $1,000 per employee. The first 
applicants, where there were about 700,000 that were sole 
proprietors, they had one to four employees, and, again, to 
allocate that many applicants a grant, we needed to scale to 
cover----
    Senator Rosen. So how will you be assessing this going 
forward so my businesses in Nevada, over nearly 300,000, which 
only about 83,000 have been able to take advantage of PPP or 
EIDL.
    Ms. Carranza. Yes, Senator Rosen. We did not want to 
discourage anyone in that queue, in the EIDL queue, and we sent 
them a couple of emails indicating and demonstrating the 
comparison of EIDL, what was available, and what they could 
achieve with the PPP program because there were still 
sufficient funds in the program up to this point. And that is 
the other option we tried to clarify, that there is another 
loan option that they can consider if they are in need of 
greater funds.
    At this time, as I mentioned earlier, there are individuals 
that miscalculated their operating costs from 6 months to 3 
months. We are revisiting those particular businesses----
    Senator Rosen. I had a chance to reply.
    Ms. Carranza. Yes, yes. And so we have about 65,000 of 
those that we are reconciling, so that if they needed up to 
150,000, we have it available to them. And as of next week, we 
will be taking in new applicants as well, the non-ags.
    Senator Rosen. Thank you.
    Ms. Carranza. You are welcome.
    Senator Rosen. We are not a very large ag state. We have 
some but not as much as others, and so that has hurt us 
disproportionately.
    Ms. Carranza. But I look forward to working with your 
office. If there is a particular sector that is really 
problematic, I look forward to working with you on that.
    Senator Rosen. Thank you. I appreciate it.
    Ms. Carranza. You are welcome.
    Chairman Rubio. Thank you. All right. Just to update you, 
we have a nearly perfect attendance today. We have Senator 
Hawley, Senator Collins, and then if there are any wrap-up 
items, I will ask them, and then we will send you on your way.
    Senator Hawley.
    Senator Hawley. Thank you very much, Mr. Chairman. Thanks 
for holding this hearing.
    I have been closely monitoring the implementation of the 
relief programs, the various relief programs Congress has 
established, and I have to say I am thrilled, given last week's 
job numbers, I think, that the PPP has played a vital role, has 
been a vital lifeline during the shutdowns. It has clearly 
helped to stop the economic hemorrhaging and put us in a place 
now for recovery. And so that is, I think, a great success 
story, and I want to thank the Chairman for his outstanding 
work on this.
    I do have some questions about EIDL, following up on what 
Senator Rosen was just asking about. I want to come back to 
those. Let me start, Administrator Carranza, with you, just on 
the Planned Parenthood issue. Planned Parenthood has 16,000 
employees. And this is not a gray issue; it is a black-and-
white issue. They talk about it in all of their organizing 
documents. I am just wondering. When 37 Planned Parenthood 
offices, 37 separate offices, applied for PPP funds, why did 
the internal system at the SBA not flag the applications?
    Ms. Carranza. Senator, our system accepts applications and 
assigns a loan number, and then loan arrangement is made 
between the borrower and the lender. So when you have about 5 
million applications being injected into our system, we do not 
have a system that flags affiliations or any particular 
industry. It just assigns a loan number, and that is why it is 
very important for us that when we looked at sectors--and some 
sectors had certain tendencies and certain loan values, we 
then--and the affiliations were one of them--we started to 
assess, you know, the value of how they exercised or 
interpreted the----
    Senator Hawley. So what you are telling me is that the SBA 
did not have any safeguards in place on this particular 
question. You did not have any system in place to flag 
applications like----
    Ms. Carranza. At that given time, that is correct.
    Senator Hawley. Despite the fact, I might add, that the 
affiliation rule was pretty fiercely debated as part of the PPP 
package, as part of the CARES package, amended several times.
    Tell me about the Planned Parenthood affiliates that 
wrongly received funds. How many of those has SBA contacted 
now.
    Ms. Carranza. At this point I would not be able to speak 
about a particular loan situation, so----
    Senator Hawley. Why?
    Ms. Carranza. It is proprietary information, and it is----
    Senator Hawley. I am not asking you about a loan situation. 
I am asking you how many you have contacted. The SBA has put 
out a statement saying that you have contacted the affiliates. 
You have sent letters. That has been publicly reported. How 
many?
    Ms. Carranza. The office did receive your letters, and we 
acted accordingly. But at this point, given the detail on a 
particular borrower would just not be----
    Senator Hawley. So you can confirm for the record that you 
have sent letters to Planned Parenthood affiliates, but you 
will not tell us how many? That is your testimony?
    Ms. Carranza. No. I am saying that the affiliation or any 
borrower that we are taking a course of action is that indeed, 
and I do not talk about the particulars.
    Senator Hawley. How many Planned Parenthood affiliates have 
returned the funds?
    Ms. Carranza. Again, I have to take the position that I am 
not able to share that borrower information at this----
    Senator Hawley. When are you going to be able to? And how 
are we going to conduct oversight if you will not give us the 
information?
    Ms. Carranza. I look forward to speaking with you in your--
--
    Senator Hawley. I am sorry?
    Ms. Carranza. I look forward to meeting with you and 
discussing the situation, but at this point, I will not be able 
to speak to it publicly.
    Senator Hawley. Well, what is different between discussing 
it with me in person and discussing it here when you are under 
oath?
    Ms. Carranza. Just to clarify, again, the SBA position, I 
would not be able to divulge any of the details, just explain 
what our practice and our policy is.
    Senator Hawley. Well, how are you going to provide this 
Committee with information about this breach of the rules that 
are in the statute so that we can conduct oversight? How are we 
going to conduct our oversight if we do not know any of the 
details? And since you will not do it now, when will you do it? 
What are the guidelines that you will follow in disclosing this 
information?
    Ms. Carranza. Well, Senator, what I would like to do is to 
review with you the controls that we have put in place and the 
course of action that we take with all affiliations, not just--
--
    Senator Hawley. Okay. We will follow up with you. For the 
record, I would like to state it is important that this 
Committee conduct its oversight of rules that are written in 
the statute, and I want answers about how Planned Parenthood, 
which it is forbidden by the statute that this Congress wrote 
and passed into law--it is not a rule; it is not a regulation. 
It is in the statute. I want to know how it happened that $80 
million was diverted to Planned Parenthood affiliates that is 
plainly not permissible under the statute. This Committee has 
an obligation to perform oversight, and I want answers on that. 
And I will not accept that you cannot tell us or that you do 
not know. So I want answers.
    So we will follow up with you. We will follow up with the 
Department of Justice. But I am just saying for the record it 
will not be acceptable to me that you are not going to tell us, 
you are not going to get back to us, you are not going to be 
responsive.
    Ms. Carranza. No, Senator----
    Senator Hawley. And, frankly, the pattern of 
unresponsiveness from the SBA throughout this process has been 
disturbing, which I have said for the record and I will say it 
again today, I am disturbed by it.
    Mr. Chairman, one other question, if I could, just on----
    Ms. Carranza. Senator Hawley, if I----
    Senator Hawley. I have got to move on. You have made your 
position clear----
    Ms. Carranza. I want to let you know that I do know the 
status----
    Senator Hawley [continuing]. And you are not being 
responsive.
    Let me ask you another question while I have got you here. 
On the EIDL applications, you answered an earlier question that 
EIDL applications are now in the portal. I would like to know 
the timeline of when they will be processed. I have had 
applicants in my state that have waited 80 days--8-0 days--for 
any kind of a response on their EIDL applications. Senator 
Rosen was just talking about there are similar problems in her 
state. When will they be processed. We have repeatedly asked 
for answers. They cannot get answers. I cannot get answers. 
When will they be processed? And when will these good folks get 
some response to their application?
    Ms. Carranza. Senator Hawley, I can extract all of the 
applications that pertain to your particular state, and I can 
review with you the status of them. At this current time, we 
have about 2.5 million applications that have been processed. 
There is a high number of declines. We are reinstating those 
particular declines once they fix their information. The other 
two and a half will be injected by next week, so all of the 5.4 
million applications that we had in the queue since March will 
now be in what we call the ``loan processing portal.''
    I will have visibility when that loan is positioned there, 
and I can share with you exactly where your loan portfolio 
stands.
    Senator Hawley. My time has expired. I will follow up with 
you. I just want to emphasize again that it is absolutely vital 
for people who have been waiting for 80 days plus that----
    Ms. Carranza. I agree with you, Senator.
    Senator Hawley [continuing]. Their application be 
processed. And they do not care what you label the queue, you 
are in this queue or that queue. They just want it processed. 
They need an answer. They are waiting on a vital lifeline. So 
we look forward to working with you on that.
    Thank you, Mr. Chairman.
    Ms. Carranza. Thank you, Senator.
    Chairman Rubio. Thank you.
    Senator Collins.
    Senator Collins. Thank you, Mr. Chairman.
    Mr. Chairman, let me start by thanking you for the 
invitation to join your Committee today. I also want to say 
what a rewarding experience it was to work with you, with 
Senator Cardin, and Senator Shaheen in developing the PPP 
program, which has been of tremendous benefit to more than 4 
million small businesses and their employees.
    I want to turn to our witnesses, and, first, I want to 
emphasize a point that many other Senators have brought up 
today, and that is that many small businesses are reaching the 
end of their 8-week loan period. And yet they are still unable 
to fully reopen because of state restrictions. For example, in 
the State of Maine, there are three counties that still are 
under tough restrictions where they cannot have in-restaurant 
dining.
    I want to read to you the words from a restaurant owner in 
Portland which really summarizes it well. It is a woman-owned 
restaurant, a great place to eat. She writes: ``The PPP is the 
only thing that has kept us in business up to this point. Our 
staff has been so grateful. It has not only allowed us to pay 
them and open for business, but allowed us to pay our rent in 
full. There is no question without the PPP we would not be 
operating right now and would have furloughed all of our staff. 
With that being said, we did just run out last week. We now 
have curbside and only six outdoor tables, and we can only 
serve a maximum of 28 people a night.''
    She writes that she lives in fear of a rainy night, in 
which case she cannot serve anybody in those outside tables. 
And she says, ``Without the State easing the restrictions on 
indoor seating, I just do not see how we can continue much 
longer.''
    This is an extremely viable business that was doing very 
well until the state restrictions and the coronavirus hit. So 
we now know that we have $130 billion of funding for this 
program that remains available. So I want to press you a little 
bit more. I know you have said that you do think that there 
should be more support. But would you support allowing small 
borrowers in heavily affected sectors, such as the tourism 
industry, that cannot fully reopen because of state 
restrictions, to seek additional PPP funds, apply again or 
extend perhaps for another 4 weeks, so that they can just make 
it through this period where they are forced to be closed? 
Because they are viable businesses, and it is not their fault.
    Mr. Secretary.
    Secretary Mnuchin. Well, first of all, I want to personally 
thank you for your involvement in this, and we have become 
texting buddies, so all of your help along the way. I am 
especially sympathetic to the restaurants. I would just say we 
had a large number of restaurant owners and industry people 
come in and meet with the President, and we heard the 24-week 
issue. And I am very pleased that Congress responded to that.
    As I said before, I think that restaurants, and hotels in 
particular, do need more help. We have taken great pride in the 
bipartisan work, so if there is support for you in the 
Committee on a bipartisan basis, we are very seriously going to 
look at that issue.
    And let me just give a pitch on indoor seating. I am happy 
that in D.C. they have now allowed restaurants open. I have 
tried to support restaurants. I do not see why on an indoor 
basis socially distanced that restaurants cannot be serving 
indoors, particularly in parts of the country where COVID is 
under control. So I agree with you this distinction between 
indoor and outdoor seems a bit random, and I do not know what 
people would do when it rains.
    Senator Collins. Thank you.
    I have one technical question, if the Chairman would 
indulge me. It is a very quick question for the Secretary, and 
that is, I am getting a lot of questions about the timing for 
seeking forgiveness, and there are some businesses that have 
gone through the 8 weeks. They are reopened, and they would 
like to close it out now. But they are wondering, with the 
extension to 24 weeks, if they have to wait until the 24 weeks. 
Can they close out at any time?
    Secretary Mnuchin. If you have used all your money, you can 
apply for forgiveness. The 24 weeks is only meant to be an 
option for you. If you have not used your money, specifically 
if you are not open or otherwise, you can extend it. But, no, 
we would encourage people that, as they have used all their 
money properly, please seek forgiveness so we can process these 
loans and get them off of the books.
    Senator Collins. And that would be helpful for workload 
purposes for both of you as well. Thank you very much, and 
thank you both.
    Thank you, Mr. Chairman. Thank you, Senator Cardin.
    Chairman Rubio. Thank you. Since I reserved my time, I am 
just going to touch on some quick points here. We will go to 
the Ranking Member who has some additional thoughts, and we 
have a vote that starts at 12:15 so we are almost done here, 
and very nearly perfect attendance today, which is--we have not 
had that before, so I appreciate you both coming in.
    Just a quick question. After the changes that were made 
last week with the additional flexibility, down to 60 percent 
for payroll, 24 weeks to pay it back, have we seen businesses 
that said the old PPP did not work for me, but the new one 
does? Have we seen any sort of uptick or any indication that 
there are more businesses lining up now to use the program as a 
result of that change?
    Secretary Mnuchin. My expectation is that we will 
definitely see businesses that were on the sidelines and now 
take it, especially restaurants that had issues. But, yes, I 
would expect we will see that.
    Chairman Rubio. So we just do not know on the nightly 
numbers if that has been reflected yet?
    Ms. Carranza. We do not have actual numbers at SBA, but 
there has been expressions of relief that there is more time, 
so it is worthwhile for----
    Chairman Rubio. I guess the curiosity is whether--I am 
confident that people have already gotten the loan or feel 
better about being able to use what they already have. I am 
curious whether there are people out there or businesses out 
there now who think this works for us and may access this. We 
will keep a close eye on that as we get down the stretch here 
with about 2\1/2\ weeks left before the June 30th cut-off.
    The observation, I am glad you talked about targeted relief 
and what we do moving forward. One of the things that does 
concern me is a disparity in the recovery. I will just give you 
one example of what I just read awhile back, not long ago, 
earlier today, on what was what a recent study estimated. It is 
pretty shocking. It found that in majority African American 
neighborhoods, 95 percent of small businesses in those 
neighborhoods had a cash buffer of less than 2 weeks. In 
majority white neighborhoods, non-white, non-Hispanic 
neighborhoods, 30 percent had less than 2 weeks cash on hand. 
Clearly, the 30 percent in those neighborhoods need help. There 
is no disputing that. But 95 percent versus 30 percent is a big 
disparity.
    And so one of the things that I think we need to think 
through as we structure this, is avoiding those--[audio system 
cuts out]--is that what it is? They cut out the microphones?
    So this is something we want to keep an eye on.
    I think we are up to 5,400 total lenders, something around 
that number, something over 5,000. And about 4,400 to 5,400 
appear to be smaller community-based lenders, nonbank lenders. 
And I would just say as we move toward future efforts, whether 
it is a program like this or some things we do in the future, 
this is, I think, a really important infrastructure that has 
been created for delivering relief that I do not think we 
should abandon the mechanism, that we should look for 
opportunities to repurpose for just general operations but for 
any additional relief. To this is an impressive stable of 
participants that I think is going to matter a lot.
    I have two questions for the Administrator. First, it was 
the clear intent of us who sat around and wrote this up that 
you use them both PPE and EIDL, that you use them both as long 
as they were not for the same purpose. We specifically 
discussed the case of someone who had already applied for EIDL 
before PPP was created, and we wanted to make sure that once 
PPP came online they had the opportunity to go back and either 
get PPP or swap it out or what have you. We still do not have 
any guidance, we are awaiting guidance on how these two 
programs are supposed to intersect. When are we going to have 
guidance, Administrator, on these two programs and how they 
would work together and particularly businesses in that 
predicament?
    Ms. Carranza. Yes, our staff has been working all weekend 
to process that. I believe that has been released. Yes, that 
has been released.
    Chairman Rubio. Do we have that guidance? Okay. We say we 
have not seen that. You say we haveB
    Ms. Carranza. No, Senator, I am corrected by my assistant 
administrator. We have worked on it. It has not been released 
but we are soon releasing it.
    Chairman Rubio. All right. That is important.
    Ms. Carranza. Yes.
    Chairman Rubio. And my last question is GAO has reached out 
to numerous congressional offices, including my own, as 
recently as yesterday, and here is what they are saying. They 
are telling us that the SBA is preventing the GAO from 
accessing the information it needs to fulfill, something we 
required in the statute, and that is that they report to 
Congress. So the CARES Act requires the GAO to issue bimonthly 
reports to Congress on agency implementation of the act with 
the first report due on June 25th, which is coming up. This is 
what they are telling us. They are saying that of all the 
agencies, the SBA is the only one that has not cooperated and 
that lack of cooperation has impacted their efforts to gather 
information that they need to fulfill the mandated reporting 
requirement that we put in place in the law.
    I imagine you have heard the same thing from them. What is 
happening there? Because we need to get that solved.
    Ms. Carranza. Chairman, I spoke to Chairman Quigley 
yesterday from Appropriations, and I expressed to him that by 
next week we should be able to resolve some data that his staff 
has been asking for. So I told him that we would be very 
punctual with it and as thorough as we possibly can. So we had 
a meeting of the minds yesterday and clarified what the delay--
the reasons for the delay. But that should not continue.
    Chairman Rubio. So your expectation is that at some point 
next week----
    Ms. Carranza. Yes.
    Chairman Rubio [continuing]. This should no longer be an 
issue?
    Ms. Carranza. We are preparing the data for the DATA Act, 
and so that is in about a week or two, max, yes. Chairman, I 
will keep you posted on when that is going----
    Chairman Rubio. Yeah, we just need to get that fixed. That 
is something that is in the law, and it reflects poorly on----
    Ms. Carranza. Absolutely.
    Chairman Rubio. Okay.
    Ranking Member.
    Senator Cardin. Well, let me thank both of our witnesses 
again. This was very, very helpful. A couple observations.
    First, on the EIDL program, you are hearing from all the 
members of this Committee that it is not working at the level 
that we anticipated it. I think we can understand that 
initially there were certain administrative decisions that had 
to be made because of the volume. But two things have happened 
that are really not acceptable, and that is, people, business, 
have been left in the dark as to the status of their EIDL loans 
and have been delayed beyond it being useful for them to plan 
their businesses during this period of time. That needs to be 
corrected.
    And, secondly, the cap that was put on, the $150,000, 
really makes no sense today. I will be very surprised if the 
final numbers of loans given out under EIDL come anywhere close 
to the capacity that you have as authorized by Congress. So I 
would just urge you to look at correcting the program as 
quickly as possible from the timely status of applications and 
the dollar volume.
    The second thing, there seems to be a growing consensus of 
a need for a second round for small business, and, Mr. 
Secretary, in response to one of our members, I could not agree 
with you more. We had to get money out quickly on the first 
round. The second round we can be more discerning. So I hope 
that we can start that conversation now about how we could 
configure a second round for small business. I understand you 
might have beyond small businesses, but it would be helpful, I 
think, to try to get those discussions started now because, as 
the Senate normally operates, as Congress normally operates, we 
usually get panicked around a deadline. So it would be nice if 
we could flesh this out a little bit earlier.
    We took a little bit earlier lead on small business than 
the other parts of the CARES Act, and it allowed us to have, I 
think, a more thoughtful draft legislation than some of the 
other sections.
    The third point is that it seems to me, in regards to those 
that have criminal records, there is a consensus, and I would 
hope that this week we could get all of us together and try to 
resolve that issue in a broader manner, as we have talked about 
at this hearing.
    The last point I want to mention is Senator Hawley's 
comments in regards to the affiliate rules. I could not 
disagree with him more as it relates to the conclusory 
statements he made in regards to Planned Parenthood, and I 
appreciate the Administrator not talking about a specific case, 
which I think is appropriate. So I agree with you on that.
    But let me just point one of the reasons we would like to 
get more granular data so that we can understand the scope of 
the issues. We wrestled with how to deal with affiliates for 
the new categories of businesses that qualify for the PPP 
program that did not qualify for the traditional 7(a) program, 
including the nonprofit and veterans organizations. And we 
specifically put the provision in the CARES Act that said the 
provisions applicable to affiliations under Section 121.103 of 
Title 13, Code of Federal Regulation, to a nonprofit 
organization or veterans organization in the same manner as 
with respect to a small business concern. So we expected you to 
use the same affiliate rules that you use currently to quality 
for 7(a) loans for the for-profit community for the new 
eligible PPP 7(a) borrowers.
    So it would be helpful for us--and then we were concerned 
when publicity arose under the Planned Parenthood that we do 
not start imposing an ideological test on affiliation, and the 
Democratic members of the Senate wrote a letter in May to you 
saying it is critical that the SBA implement the PPP as 
Congress directed without ideological efforts to treat certain 
nonprofit organizations from others.
    So I just really want to put that in the record in regard 
to Senator Hawley's comments, but it does underscore how 
important it would be for us to get the granular information as 
to the number of loans that are issued to affiliates and so 
that we can get a feel for how many organizations would not 
have qualified if we included all the affiliates in the numbers 
for the 500.
    But it is also true in the NIC code exception. It would be 
nice for us to have that granular information. It might also be 
helpful for us to have that information in regards to use that 
use the alternative test for determining the number of 
employees to qualify for a small business loan.
    So the more of that type of information we can get, we can 
then analyze what those exceptions mean. But we should not draw 
a conclusion that one particular organization was treated 
differently than any of the other organizations because of 
their organizing mission, and that is one thing that I would 
just urge us to be very careful that we do not start to 
discriminatorily implement ways of implementing laws that are 
passed by Congress.
    Ms. Carranza. I understand that, Senator, and I look 
forward to meeting with you to discuss the process that we have 
found.
    Senator Cardin. Thank you. Thank you, Mr. Chairman.
    Chairman Rubio. Thank you. Look, we are very grateful that 
you came in today. It is important. As you saw, the level of 
interest is extraordinary in the Senate, across the country, 
and obviously, we have got some follow-up to work through. But 
we appreciate the answers you gave us here today. They are 
important.
    As a housekeeping item, the hearing record will remain 
open, and any statements or questions for the record should be 
submitted by Wednesday, July 1st, at 5:00 p.m. And, with that, 
thank you both and this hearing is adjourned.
    Ms. Carranza. Thank you.
    Secretary Mnuchin. Thank you.
    [Whereupon, at 12:19 p.m., the Committee was adjourned.]

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