[Senate Hearing 116-517]
[From the U.S. Government Publishing Office]




                                                        S. Hrg. 116-517
 
                      CAPITAL ACCESS FOR MINORITY
                  SMALL BUSINESSES: COVID-19 RESOURCES
               FOR AN EQUITABLE AND SUSTAINABLE RECOVERY

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

                                HEARING

                               BEFORE THE

                      COMMITTEE ON SMALL BUSINESS
                          AND ENTREPRENEURSHIP

                                 of the

                          UNITED STATES SENATE

                     ONE HUNDRED SIXTEENTH CONGRESS

                             SECOND SESSION

                               __________

                             JULY 23, 2020

                               __________

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


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


                  U.S. GOVERNMENT PUBLISHING OFFICE 
46-603 PDF               WASHINGTON : 2022        
        
        
        
        
        
            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.......................................................     3

                               Witnesses

Bayles, Ms. Talibah, Founder and CEO, TMB Tax and Financial 
  Services, Birmingham, AL.......................................     6
Busby Sr., Mr. Ronald, President and CEO, U.S. Black Chambers, 
  Inc., Washington, DC...........................................    14
Estrada, Ms. Fabiana, Director of Lending Southeast Region, 
  ACCION, Miami, FL..............................................    24
Bilonick, Ms. Marla, Executive Director and CEO, Latino Economic 
  Development Center, Washington, DC.............................    29

          Alphabetical Listing and Appendix Material Submitted

American Indian Alaska Native Tourism Association
    Prepared statement...........................................    68
Bayles, Ms. Talibah
    Testimony....................................................     6
    Prepared statement...........................................    10
Bilonick, Ms. Marla
    Testimony....................................................    29
    Prepared statement...........................................    32
    Responses to questions submitted by:
      Senator Cantwell...........................................    74
      Senator Hirono.............................................    76
      Senator Duckworth..........................................    82
Busby Sr., Mr. Ronald
    Testimony....................................................    14
    Prepared statement...........................................    16
Cardin, Hon. Benjamin L.
    Opening statement............................................     3
Coalition to Help Everyone Access Resources to Thrive (HEART)
    Prepared statement...........................................    83
Engine Advocacy
    Prepared statement...........................................    89
Estrada, Ms. Fabiana
    Testimony....................................................    24
    Prepared statement...........................................    26
    Responses to questions submitted by:
      Chairman Rubio.............................................    94
      Senator Cantwell...........................................    95
      Senator Hirono.............................................    96
Inclusiv
    Prepared statement...........................................    97
National Association of Federally-Insured Credit Unions
    Letter dated July 22, 2020 to Chairman Rubio and Ranking 
      Member Cardin..............................................   100
Rubio, Hon. Marco
    Opening statement............................................     1
The Spirit of Enterprise U.S. Chamber of Commerce
    Prepared statement...........................................   102


                      CAPITAL ACCESS FOR MINORITY

                  SMALL BUSINESSES: COVID-19 RESOURCES
                  
                    FOR AN EQUITABLE AND SUSTAINABLE

                                RECOVERY

                              ----------                              


                        THURSDAY, JULY 23, 2020

                      United States Senate,
                        Committee on Small Business
                                      and Entrepreneurship,
                                                    Washington, DC.
    The Committee met, pursuant to notice, 10:07 a.m., in Room 
SD-430, Dirksen Senate Office Building, Hon. Marco Rubio, 
Chairman of the Committee, presiding.
    Present: Senators Rubio, Scott, Ernst, Young, Kennedy, 
Romney, Hawley, Cardin, Cantwell, Shaheen, Booker, Coons, 
Hirono, Duckworth, and Rosen.

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

    Chairman Rubio. Good morning. Today's hearing on the Senate 
Committee on Small Business and Entrepreneurship will come to 
order.
    I want to thank everyone for joining us, both in person and 
virtually, for this hearing and sort of getting used to this 
new normal of doing hearing this way.
    I just want to alert everybody. We have two votes. One just 
started now at 10:00, and so what will happen here at some 
point is you will see members shifting in and out to try to get 
into the timing of it. That's the explanation for why you're 
seeing it.
    So I'm going to abbreviate my opening statement just to be 
able to accommodate all that. Obviously, we don't need to 
convince everyone about what impact this pandemic has had on 
all Americans from a health care perspective certainly, but 
also from an economic perspective.
    I also don't think we need to do a lot to convince people 
that small businesses have been disproportionately impacted by 
this pandemic, and all small businesses of every kind have been 
hurt by it across the country.
    The purpose of this hearing is to focus specifically on the 
even greater impact that the pandemic has had on minority-owned 
small businesses. Bad as it is for all small businesses, it is 
catastrophic and terrible. It has been even worse, if you can 
imagine it, among minority-owned businesses.
    Part of this disparity can be explained by the sectors that 
have been hit hardest by the COVID crisis. Construction, 
restaurants, hotels, transportation, these are sectors of our 
economy in which minority ownership is high, higher than it is 
in other sectors.
    But the data from the Census Bureau suggests that only 27 
percent of small businesses have enough cash on hand to cover 3 
or more months of operations. Those numbers, of the number of 
businesses that have enough cash, is much smaller than 27 
percent when we are talking about minority-owned businesses.
    So today the major question we face is one of uncertainty. 
What happens next as communities--some are reopening, partially 
reopening. Some have reopened and have had to pull back. We are 
telling people not to go out. We are telling people not to go 
to places. So, in essence, we are--and they are following our 
advice, hopefully, but as they do, it has an economic toll. It 
is hurting all small businesses, but again, we are seeing that 
disproportionate impact is even higher among those that are 
minority-owned.
    So the two goals we have specifically to address is this 
disparity and the damage that is being done but also the 
concern that there will be a disparity in the recovery, that if 
some of these businesses go under, they will not be there to be 
able to recover and thrive.
    Part of what we have already talked about and continue to 
talk about as we try to prepare the next round of assistance to 
small businesses is not just so we can target the relief to 
more small businesses, but also how do we make sure that 
assistance reaches the most underserved small businesses as 
well.
    So one of the most important lessons we learned in PPP, 
some of the answers some from some of the sectors to save more 
jobs than others. The overall unemployment rate has dropped in 
April, from an April high of 15 to 11 percent; however, the 
African American unemployment rate remains at 15 percent. So 
there is just an example of an employment disparity that we 
need to address.
    There are some clues as to how to go after this. The first 
is, according to the SBA's data, only three sectors supported 
more jobs per dollar of PPP funds in low-income areas than they 
did for the Nation as a whole. So there are three sectors in 
which PPP funds helped support more jobs in low-income areas 
than they did nationally. The three sectors were manufacturing, 
health care and social assistance, and retail. So that tells us 
there that anything we do to be helpful to those sectors should 
have a positive outcome or impact on these communities.
    Another lesson is about access. Many minority-owned 
businesses have experienced problems accessing the capital 
because they lack relationships with SBA-approved lenders.
    There has been progress. As a proportion of the total 
quantity of loans disbursed, minority-owned businesses received 
PPP loans in equal or greater volume than their share of 
business ownership in the U.S. economy. I think some of that 
was due to some of the changes that were made to the program as 
it went on; for example, allowing as many lenders as possible 
to participate was key to this progress. We will need to do 
more.
    The CARES Act and the program within it approved 303 
Community Development Financial Institutions, CDFIs, approved 
171 Minority Depository Institutions, MDIs, and 19 FinTechs, 
financial technology companies, to provide these loans and more 
access. So that was helpful, and it is something we want to 
retain and build on.
    So we recognize that right now as we talk about the future, 
we are in a different place than we were in March when we first 
started talking about it. Some businesses will need additional 
short-term relief. Others are going to need access to low-cost, 
long-term working capital to recover, which was already hard 
for them to access. It will be even harder after this.
    PPP is basically a short-term grant to help keep a business 
open and their employees on payroll, but the hit that many 
small businesses are taking is much deeper than just staying 
open to make up for. They are not going to generate enough 
revenue in this environment to stay open under the 
constrictions that we are facing.
    So that is why one of my proposals, built on input and 
ideas that Senator Young first innovated, is proposing an 
expansion of the SBA 7(a) program to make available targeted 
long-term, low-interest loans to small businesses that are 
located in low-income communities. Obviously, that needs to be 
fleshed out further, but it is something we care about a lot.
    So that is what we will keep working on. Ultimately, 
anything we pass will have to be bipartisan. That has been the 
tradition of our work on this, both because it is better that 
way and because it is the only way to get it done. That is what 
we intend to do. We work very closely with the Ranking Member 
and Senator Shaheen and Senator Collins who is not a member of 
this Committee, Senator Lankford as well, who is not a member 
of this Committee, and then all the members of this Committee 
who have input. And that is what we intend to continue to do 
because we need to do something. We need to do it soon, and we 
need to make sure it is getting to the right people in the 
right way.
    With that, I want to 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, thank you, Mr. Chairman. I really 
want to thank you, not just for holding this hearing on access 
to capital for minority small businesses, but your commitment 
to deal with the inequities that minority small businesses have 
in our system.
    You have been a leader in bringing us together to try to 
find effective ways to make sure that those businesses that 
need the help the most, minority small businesses, small 
businesses in underserved communities get the attention of this 
Committee.
    I want to thank you for the process that we have been able 
to use in this Committee to bring about not only a bipartisan 
product but to get a product that can get to the finish line 
and provide help to businesses.
    Increasing Federal support for minority-owned small 
businesses as well as small businesses in underserved 
communities have been my top priority since I joined this 
Committee in entering the Senate in January 2007, and it has 
remained my priority as Ranking Member.
    My home State of Maryland boasts the highest concentrations 
of minority-owned and women-owned businesses in the country. So 
this issue is particularly important to Marylanders.
    Decades ago, Maryland leaders recognized the key role 
entrepreneurship had in efforts to close the wealth gap. In 
fact, the first Federal set-aside for minority-owned businesses 
was proposed in 1977 by the late Baltimore Congressman Parren 
J. Mitchell, who introduced an amendment to a $4 billion 
Federal public works program that required city and State 
recipients to set aside 10 percent of the funds for minority-
owned businesses.
    Congressman Mitchell understood that any plan to shrink the 
wealth gap in America must include entrepreneurship, and that 
the Federal Government has an important role to play in helping 
minority entrepreneurs overcome the historic, pervasive 
challenges put before them. The most pervasive of those 
challenges is access to capital.
    Mr. Chairman, while our hearing is focused on ensuring an 
equitable recovery, I feel the need to place today's discussion 
in historical context.
    During a field hearing I held on this topic in September 
2018 at Morgan State University, an HBCU in Baltimore, an 
executive of Harbor Bank, which is one of the few remaining 
black-owned banks in the country, stressed that lenders working 
with minorities need to understand borrowers, not only where 
they are going, but where they have been. It is vital that we 
in Congress approach this problem with the same understanding.
    Minority entrepreneurs' inability to get capital they need 
to operate and grow their businesses is not new, and, in fact, 
that minority-owned small businesses have been 
disproportionately harmed by the COVID-19 recession should not 
be a surprise.
    Prior to this pandemic, lending to minority-owned small 
businesses still had not returned to their pre-Great Recession 
levels.
    The protests sparked by the deaths of George Floyd and 
Breonna Taylor have further exposed the public health and 
economic disparities in communities of color, particularly 
black communities that have been made worse by the COVID-19 
pandemic.
    There is a common saying that I have heard many times by 
black leaders in Maryland: ``When America has a cold, black 
communities have pneumonia.'' These disparities exist because 
Civil Rights and true equity are still the unfinished business 
of America.
    More than 50 years ago, the nonpartisan Kerner Commission 
created by President Lyndon Johnson warned of the negative 
consequences of continued inequality. The commission wrote in 
its report that America was headed toward two societies, one 
black, one white, separate and unequal.
    It is no question that our country has made progress in the 
decades since the Kerner Commission released its report, but 
there remains a rooted economic divide between communities of 
color and white America.
    In 1968, a typical middle-class black family had less than 
one-tenth of the wealth of the typical middle-class white 
family. It is the same today. For black small business owners 
and minority entrepreneurs, the wealth gap has worsened the 
disparity in lending.
    Minority business owners are two to three times more likely 
to be denied a loan than nonminority business owners and are 
more likely to receive less funding and pay higher interest 
rates on the loans they do receive.
    Mr. Chairman, it was with this inequality in mind that 
Senator Shaheen and I drafted the CARES Act provision 
instructing SBA and the Treasury Department to issue guidance 
to financial institutions participating in the Paycheck 
Protection Program to prioritize loans for underserved small 
businesses.
    Unfortunately, the administration did not issue that 
guidance, which led to the SBA's IG's finding that the 
implementation of PPP did not fully align with congressional 
intent in the CARES Act.
    Implementation of PPP was not the only program in which the 
administration failed to use every tool in its toolbox to 
prevent minority-owned businesses from falling behind during 
this crisis.
    The administration also failed to implement the EIDL and 
Emergency Grant Program in a way that would benefit more 
minority-owned businesses.
    So, Mr. Chairman, as we discuss how to ensure an equitable 
recovery for small businesses today, we must think about the 
problem historically. We must invest in the programs that we 
know work--the Minority Business Development Agency, which is 
the only Federal agency dedicated to supporting minority-owned 
businesses; the 7(a) Community Advantage Pilot Program, which 
has a long record of successfully getting capital to minority-
owned businesses. I have introduced legislation to make both of 
these vital initiatives permanent and codified because right 
now they are not.
    We cannot stop there. 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 startup 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 we have the next economic downturn, 
we will have the institutions, programs, and knowledge in place 
to support underserved small businesses in a timely way.
    Mr. Chairman, I want to thank you again for calling this 
overdue hearing, especially as we in Congress continue to 
negotiate and debate the next round of economic stimulus.
    Last time, we got the funds out the door quickly and helped 
a lot of people, but far too many minority-owned businesses 
were left behind. The truth is that even with the CARES Act, 
there was inequality in how resources were allocated, including 
inequality in some of the basic underpinnings of the PPP. The 
primary use of traditional financial institutions to disburse 
capital meant minority-owned businesses would have a harder 
time obtaining these important loans, and the focus on payroll 
made the program less useful to many minority-owned businesses, 
which not only have fewer employees on average, but are less 
likely to have any employees at all.
    This next stimulus gives us an opportunity to improve the 
success of the CARES Act and do a better job of providing help 
to minority-owned small businesses. Let us take advantage of 
this opportunity to avoid the consequences predicted by the 
Kerner Commission 50 years ago, so America is not two 
societies, separate and unequal.
    Thank you, Mr. Chairman, and I look forward to hearing from 
our witnesses.
    Chairman Rubio. Thank you.
    So let us move to the witnesses. As I said, there is a vote 
that started now. It will probably end around 10:45, and then 
there will be a second vote. So we will try to time it out so 
someone will be here. I think if we stop and try to restart, it 
is going to be more complicated.
    Our witnesses today are Talibah Bayles. She is the founder 
and CEO of TMB Tax and Financial Services, which is a full-
service tax and revenue planning firm that assists small 
businesses with financial strategies promoting growth and 
stability. She sits on the city of Birmingham's Inaugural Small 
Business Council serving as the chair of the Women Minority and 
Disadvantaged Business Enterprise Subcommittee, belongs to the 
National Small Business Association Leadership Council and the 
National Association of Women Business Owners.
    That is a lot of meetings.
    Mr. Ron Busby serves as the president and CEO of USBC, 
which supports African American chambers of commerce and 
business organizations in their work developing and growing 
black enterprises. He currently serves on the Pfizer Small 
Business Counsel, the National Newspaper Publishers Association 
Foundation board of directors, and the White House African 
American Leadership Council.
    Ms. Fabiana Estrada is the director of Lending for South 
Florida ACCION. ACCION is a Community Development Financial 
Institution helping connect underserved communities to needed 
capital. She was recognized by the U.S. Small Business 
Administration in 2018 with the Mission-Based Lender Award.
    Ms. Marla Bilonick is the executive director of the Latino 
Economic Development Center. She previously worked at Seedco 
supporting businesses in Lower Manhattan that were affected by 
September 11th. She is a member of the board of directors of 
the National Association of Latino Community Asset Builders, 
the Montgomery County Comprehensive Economic Strategy Advisory 
Group, and the Institute for Community Economics.
    I thank you all for being here. Why don't we begin with Ms. 
Bayles because you are here. Thank you for being here. We will 
begin with your opening testimony and then go to Mr. Busby. We 
will do it in the order in which I presented, but thank you so 
much.

   STATEMENT OF TALIBAH BAYLES, FOUNDER AND CEO, TMB TAX AND 
                       FINANCIAL SERVICES

    Ms. Bayles. Good morning, Chairman Rubio, Ranking Member 
Cardin, and members of the Committee. My name is Talibah 
Bayles, and I am the founder and CEO of TMB Tax and Financial 
Services, a 100 percent black and woman owned firm located in 
Birmingham, Alabama.
    As a small business owner and a small business advocate, I 
thank you for the opportunity to speak on today's hearing focus 
of capital access for minority small businesses.
    TMB Tax and Financial Services is a full-service tax and 
revenue planning firm with clients across the United States. We 
are on a mission to help small businesses thrive with air-tight 
financial strategies and tools such as small business tax 
preparation, tax planning, bookkeeping and payroll, and 
business credit and financing coaching.
    I started this company here in the D.C. Metro Area while 
working for the Department of Justice where I worked for over 
12 years. Prior to working for the Department of Justice, I was 
an employee right here in the Senate, where I worked for 3 
years. With over 15 years of Federal Government and small 
business experience, I made the decision to relocate back home 
to Birmingham as a full-time entrepreneur. And my company has 
hit the ground running. So today I have come full circle and am 
extremely honored to have a seat at the table from this view.
    Today's focus on equitable and sustainable small business 
recovery is vital to the fabric of local, State, and Federal 
economies. As you know, small businesses employ nearly half of 
the Nation's workforce. Small businesses have traditionally 
created approximately 2 million jobs a year.
    In Alabama, there are over 400,000 small businesses, which 
represents 99.4 percent of the State's total business count. 
However, since the official COVID-19 declaration of emergency 
on March 13, 2020, small business job creation has declined 
nationally by 17 percent.
    Small business legacies are disappearing. Companies like 
mine have found themselves on a battlefield trying to assist 
troops who are fighting without the proper armor.
    Of course, there were challenges that existed prior to 
COVID-19. In the interest of time, I will only highlight two 
that I believe are the greatest challenges for minority-owned 
businesses.
    The first is the small business survival rate. Eighty 
percent of small businesses survive their first year. That 
number drops, however, to 70 percent at the end of the second 
year. By year five, if businesses are still around, there are 
approximately 50 percent of small businesses that are still 
operating.
    The second greatest challenge is the credit profile of a 
typical small business owner. According to NAV's Small Business 
American Dream Gap Report from 2015, one in five business 
owners who applied for funding in the last 5 years were denied, 
and 82 percent of all business owners surveyed did not know how 
to interpret their credit scores.
    I believe the root of both challenges is a small business 
financial literacy failure. Even further, inequitable access to 
information and expert-level technical assistance should be the 
focus on this Committee.
    Without the information provided to small business owners 
through the services of small business tax preparation, 
bookkeeping and payroll, and financial planning, there will 
continue to be a lack of access to capital for minority-owned 
businesses.
    Equitable access to information and expert-level technical 
assistance, it properly equips the small business troops on 
this COVID-19 battle because now they can see what they are 
fighting against.
    Said differently, equitable access to information allows 
business owners to see the areas that they need to fortify in 
their business. If the deficiency is becoming compliant with 
taxes, well, now they know and now they know how to do it.
    If the deficiency is not having an accounting software so 
that they can produce a profit and loss or a balance sheet to 
show the health of their business, well, now they know it and 
now they know how to do it.
    If the deficiency is the need to restore personal credit or 
to build business credit so that they can actually be approved 
for funding, well, now they know it and now know how to do it.
    Equitable access to information and expert-level technical 
assistance yields equitable access to capital for minority 
business owners.
    TMB Tax and Financial Services has become the perfect blend 
of small business financial literacy and trusted financial 
services. Therefore, through my business, I have launched a 
movement to Get Bankable, and we have experienced wins for our 
clients during this COVID-19 crisis.
    I am a part of a team of six other black women in 
accounting, financial planning, and bookkeeping that has 
collectively accomplished over $1.5 million in CARES Act 
funding for minority-owned businesses. And with a couple more 
weeks left of PPP, we will surpass this accomplishment.
    My clients' high PPP approval rates were accomplished as 
the result of year-round technical assistance in the areas of 
tax preparation, bookkeeping, and payroll. Well before this 
COVID19 crisis, we provided small business financial literacy 
to our clients.
    For our Schedule C entrepreneurs, we trained tax compliance 
and small business tax strategies. We not only focused on the 
importance of year-round recordkeeping of business income and 
expenses, but most importantly, we discussed the importance of 
reflecting a positive net income on the Schedule C tax form.
    We deployed what we call the ``leave something for 
investors and the underwriters'' strategy. Without advising our 
clients of this strategy, we found that most Schedule C 
entrepreneurs were inclined to ``write off'' as much of their 
expenses as possible which results in either a very low net 
income or a negative net income for the business on the 
Schedule C tax form.
    Those clients that actually deployed the ``leave something 
for investors and underwriters'' strategy obtained PPP loans, 
and those loans ranged between $4,000 all the way to $15,000 
for those who applied as Schedule C or Sole Proprietor 
applicants.
    And I think it is very important to note that clients that 
were approved for the smaller PPP loans were just as happy as 
if they had received a million dollars because it motivated 
them to keep their doors open if just for a little longer.
    For our corporation entrepreneurs, we trained on the 
importance of having a formal payroll system in place. We 
stressed the importance of payroll tax withholding and 
compliance and the adverse effects of paying through other 
platforms that do not account for payroll tax compliance.
    And because my company is also a payroll provider, we were 
able to create and maintain formal payroll structures for these 
small business owners, and this actually allowed business 
owners to have those quarterly 941 tax forms and other payroll 
documentation that was required by the PPP process.
    So those clients that deployed the strategy for 
implementing a formal payroll structure, they obtained loans, 
and some of those loans were between $7,000 to $250,000. So for 
these approved applicants, that amount translated in the 
ability to cover payroll and to divert the money saved by that 
loan into keeping the doors open and other expenses paid for 
just a while longer.
    PPP was a necessary short-term lifeline for small 
businesses, and it certainly addressed an immediate need for 
the business owners that were approved. However, to weather the 
storm over the long run, it is critical that business owners 
have access to flexible long-term working capital.
    Minority businesses often do not have significant cash 
reserves or access to traditional capital, and any effort of 
Congress to provide long-term loans with low interest will help 
sustain these businesses, and I wanted to add that especially 
coupled with a blend of expert technical assistance with real 
financial tools so that these business owners can actually be 
approved for these long-term loans.
    In closing, the information that I have shared with 
everyone today is from the front line. I again state equitable 
access to information and expert-led technical assistance 
grants access to capital that businesses owners need.
    Small business owners are ready for it, and we expect it. 
Small business owners whisper stories of courage and strength 
into the fabric of the American dream.
    I grew up seeing the American dream of small business. I 
practically grew up in my parents' office supply business, 
Bayles & Company, which was once located on Second Avenue North 
in Birmingham, Alabama. And today my daughters are practically 
doing the same thing in my office, with the original Bayles & 
Company sign donned on the wall. The grit, the successes, the 
failures, the motivation, the legacy of the small business 
entrepreneur.
    Again, thank you for the opportunity to come full circle 
and testify today. I wholeheartedly offer my blended background 
to a continued discussion on what this very important topic is 
and what it means, and I look forward to working with this 
Committee in the future.
    [The prepared statement of Ms. Bayles follows:]
    
 [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]   
    
     Chairman Rubio. Thank you.
    Mr. Busby?
    [No response.]
    Chairman Rubio. I think your microphone is muted. Just 
stand by one second. There we go.

 STATEMENT OF RONALD BUSBY SR., PRESIDENT AND CEO, U.S. BLACK 
                         CHAMBERS, INC.

    Mr. Busby. Thank you, Chairman Rubio, Ranking Member 
Cardin, and distinguished members of the Committee for the 
opportunity to share testimony with you this morning. Again, my 
name is Ron Busby, and I am the president and CEO of the U.S. 
Black Chambers, Inc., where we serve 145 black chambers located 
in 42 states, with a membership base of 332,000 members.
    U.S. Black Chambers, also known as the USBC, for the past 
decade has been providing committed, visionary leadership, and 
advocacy in the realization of economic empowerment. Through 
the creation of resources and initiatives, we support black 
chambers of commerce and business organizations in their work 
of developing and growing black businesses.
    As the leading voice for black business owners in the 
Nation, U.S. Black Chambers stands on our five pillars of 
service to foster entrepreneurial growth and wealth creation 
within the black community. Our five pillars of service are 
advocacy--the U.S. Black Chamber fights for legislation that 
promotes small business growth, particularly policies that 
address the challenges of black business owners. Access to 
capital. The USBC works with financial institutions with a 
strategic focus on black-owned institutions to create avenues 
in which black businesses can gain greater access to capital, 
credit, and other financial institutions. Three, contracting. 
The U.S. Black Chamber educates members on contract 
opportunities, helping them increase their capacity to vie for 
large-scale contracts and offering resources and information 
that enhance black owners' abilities to compete. Four, 
entrepreneur training. The USBC provides quality educational 
opportunities and professional development resources that help 
our members manage and grow successful businesses; and five, 
chamber development. The USBC leverages our roles as the 
national organization to provide technical assistance and 
leadership training to member chambers, assist with 
establishment of new black chambers, and facilitate the sharing 
of best practices and industry data amongst our members.
    Decades before the advent of the coronavirus pandemic, 
historical discrimination has consistently distorted the 
advancement of black America. The structural and systemic 
racism continues to this day. Unfortunately, the ongoing 
economic and health crisis sparked by the pandemic have 
drastically exacerbated preexisting disparities. Many of them 
have been stated.
    For example, the coronavirus-related labor losses have been 
especially devastating for black America due to the historical 
struggles from higher unemployment rates, lower wages, lower 
income, and the resulting higher poverty rates.
    On the health disparities front, black Americans still face 
the brunt of the crisis. Across the country, black citizens 
experience COVID-19-related deaths at rates nearly twice that 
are present in the population. Remarkably, the rate is three or 
more times greater in some States.
    Clearly, the pandemic and resulting economic disruptors 
have proved particularly disastrous for the Nation's small 
business community. Notably, the onslaught of coronavirus 
closed over 3.3 million, 22 percent, of businesses within a 2-
month period from February to April. In that time, black firms 
suffered at a greater damage among other demographics, as we 
lost 41 percent of black-owned business, nearly 450,000.
    Today's hearing on improving COVID-19 relief resources for 
minority businesses is opportune, but it is really much more 
than that. This is an opportunity to change the course of 
history in a way our country addresses race, discrimination, 
and equity.
    We at the U.S. Black Chambers believe that today's 
discussion should lead to the creation of equitable and 
sustainable Federal policy that will address our Nation's most 
marginalized and underserved entrepreneur population, which are 
black business owners.
    Earlier this month, I provided testimony at the House 
Committee on Financial Services Subcommittee on Diversity and 
Inclusion hearing entitled ``Access Denied: Challenges for 
Women- and Minority-Owned Businesses Accessing Capital and 
Financial Services.'' I testified that despite the presence of 
black-owned businesses in many of the Nation's fastest-growing 
markets, we still experience above the index, economic 
disruptions and revenue loss before the pandemic in part 
because black-owned firms are overwhelmingly represented in a 
high-impact industry, as was stated, lack of accommodation of 
food service, personal care, luxury service, health care, and 
social assistance, which I am so happy that Senator Rubio 
acknowledged because we are already in a weaker financial 
position.
    The U.S. Black Chamber applauds the Committee's recent work 
to mitigate the pandemic economic impact on small businesses 
with the CARES Act, and its subsequent relief legislation has 
deployed over $518 billion to the small business community 
through the Payroll Protection Plan. Likewise, the CARES Act 
has provided nearly $140 billion to businesses through the 
Small Business Administration and the EIDL loan program. Black 
business owners, though, went largely underserved by the 
Federal relief programs.
    In early May, the SBA's Inspector General report on 
implementation of the PPP found that the Trump administration 
was unsuccessful at prioritizing underserved and rural markets. 
In that same time since, the Department of Treasury and the SBA 
have worked to correct the structural barriers within the 
programs. Despite regulatory actions, the truth for black 
businesses remains. Black-owned firms continue to be overlooked 
and underserved in the Federal relief measures across the 
board.
    I will be around to address many of the questions as well 
as the opportunity for a recommendation as we continue this 
conversation this morning.
    Thank you.
    [The prepared statement of Mr. Busby follows:]
    
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    Senator Cardin [presiding]. Mr. Busby, let me thank you for 
your testimony. As you can see, we are doing a little bit of 
rotating here. There are two votes on the floor of the U.S. 
Senate. So Senator Rubio just went over to the floor to vote. I 
have already voted on the first vote. He will wait for the two 
votes and then come back. So we are going to continue with the 
witnesses, and we thank you very much for your understanding 
and patience.
    This is an extremely important hearing, and I can assure 
you that we are listening to all the testimonies, and we value 
your input.
    We will now turn to Ms. Estrada. Glad to hear from you 
remotely. Hope you are safe.

  STATEMENT OF FABIANA ESTRADA, DIRECTOR OF LENDING SOUTHEAST 
                         REGION, ACCION

    Ms. Estrada. Hi. How are you? Good morning, Chairman Marco 
Rubio, Ranking Member Cardin, and members of the Committee. 
Thank you for inviting ACCION to testify about the recuperation 
phase for the small business owners during the COVID-19 
pandemic.
    As Chairman Rubio just introduced, I represent ACCION, a 
Community Development Financial Institution, CDFI, whose role 
is to provide financial services in the form of access to 
capital and economic education in low- to moderate-income 
areas, LMI.
    ACCION also assists underserved small business owners with 
the objective to be considered by the traditional financial 
system in the near future.
    ACCION began funding small business owners back in 1991 in 
New York City. Last year, we supported over 1,000 small 
business owners with $15 million in capital through microloans, 
traditional microloans and also SBA microloans, and SBA 
Community Advantage loans. We disbursed over $1 million per 
month in 2019.
    2020 started with the implementation of our traditional 
industry-related products, like the one supported by the Tory 
Burch Foundation for women entrepreneurs, Brewing the American 
Dream supported by Samuel Adams that supports food and beverage 
entrepreneurs, and our Child Care Express Program which 
supports child providers throughout the State. However, the 
pandemic immediately had us to implement a recovery program. 
One such important program that we implemented was our Paycheck 
Protection Program response.
    Our response has been threefold. First, we educate our 
clients on the criteria and eligibility. We found that many 
minority-owned businesses were confused about the conditions on 
who could apply. For example, some business owners were not 
aware that they could apply as sole proprietors. Second, we 
created an easy process for those borrowers who found 
themselves left out by their traditional lenders. Third, we 
implemented a technical assistance component to the process to 
help ensure that our clients' loans are going to be forgiven.
    We worked to certify that the correct forms were completed 
so that the loan amounts were accurate and effective.
    In addition, our business owners needed guidance on proper 
documentation on how to use those funds for the loan to be 
forgivable in the near future. All these steps were done on a 
one-on-one basis by our organization.
    To date, in Florida we have disbursed $970,000 to 87 
minority-owned businesses. Our average loan size is around 
$11,000.
    At ACCION, we used to say that ``we offer more than a 
loan,'' and during this pandemic, we have continued to live out 
this teaching. We serve minority-owned businesses who without 
our support would have been left out of the PPP program.
    One such client we supported through this process was 
Myriam Encio. She is the owner of Pet Avenue Grooming and 
Boarding, located in Allapattah, but here it is called the 
``Little Santo Domingo in Miami.'' Myriam approached us with a 
business that had proven steady gross sales that is around 
$200,000 yearly and a strong net income of $63,000. However, 
her business had no W-2 employees, and nobody was there to 
guide her with her application or to help her think through how 
to sustain her independent contractor employees.
    A local community organization introduced her to ACCION, 
and we were able to process her PPP in the amount of $12,000 to 
keep her store open. Due to the pandemic, she has to follow 
current guidelines and open at a limited capacity. The PPP loan 
allowed her to pay her groomers, skilled in working with furry 
clientele. If not for the PPP program, Myriam would no longer 
have been able to support paying her groomers. She would have 
lost her skilled labor.
    Due to the pandemic, Myriam had to redesign her business. 
She has gone mobile for booking appointments and for managing 
client visits.
    A second wave of PPP will benefit Myriam and others like 
Myriam with access to capital to a level where she could pay 
accordingly and invest in her sustainability as she works to 
stay open through these very insecure times.
    In conclusion, a small business owner, in particular, 
minority-owned businesses, have other capital needs that has to 
be addressed in order to stay open and keep their employees 
employed. Extending the PPP will allow organizations like 
ACCION to continue to play an important role in serving the 
most vulnerable with a small loan amount, with SBA and 
microloans as well, with the community advantage as well, and 
the traditional microloan program, so business could remain 
open.
    Furthermore, clients need advice on how to re-envision 
their businesses, and here at ACCION, we can play that 
important role of getting funds to those that need it most.
    My last words will be for gratitude for your interest in 
mission-based organizations like ACCION and to your technician 
and your team that they were able to make this online meeting 
possible.
    Thank you very much.
    [The prepared statement of Ms. Estrada follows:]
    
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    Senator Cardin. Ms. Estrada, thank you again for your 
testimony. We appreciate it very much.
    Our final witness will be Marla Bilonick, who is the 
executive director of the Latino Economic Development Center, 
which is one of the largest SBA microlenders in the State of 
Maryland.
    Ms. Bilonick?

STATEMENT OF MARLA BILONICK, EXECUTIVE DIRECTOR AND CEO, LATINO 
                  ECONOMIC DEVELOPMENT CENTER

    Ms. Bilonick. Thank you very much.
    Good morning, Chairman Rubio, Ranking Member Cardin, and 
members of the Committee. It is my sincere honor to be speaking 
with you all today about the challenges that minority-owned 
businesses are facing in light of the COVID-19 pandemic and how 
your decisions can positively impact their return, recovery, 
and rebuilding. My name is Marla Bilonick, and I am the 
executive director and CEO of the Latino Economic Development 
Center, LEDC, and I am also a mom. I have my daughter right 
here next to me.
    LEDC is an organization that is 29 years old with the 
mission to drive the economic and social advancement of low- to 
moderate-income Latinos and other underserved communities in 
the D.C. and Baltimore Metropolitan Areas as well as Puerto 
Rico.
    We operate out of six offices, with over 50 professional 
and bilingual staff providing top-notch, culturally competent 
services to our clients. On an annual basis, we serve well over 
5,000 low- to moderate-income residents, 90 percent of which 
represent an ethnic or racial minority.
    We are an SBA Microlending Intermediary, an SBA Community 
Advantage Lender, a USDA-designated Rural Lender, and certified 
Community Development Financial Institution, CDFI.
    Since we began lending in 1997, we have rolled out close to 
$20 million in capital in small business and consumer loans. We 
have forged close and longstanding relationships with the 
businesses in the communities we serve, and to say they are 
struggling given the implications of COVID-19 would be a severe 
understatement.
    Our businesses are fighting to stay open, keep their 
employees on payroll, and work on their businesses while caring 
for children that are at home indefinitely.
    These blows to businesses come at the grave cost of 
business owners' livelihoods and the livelihoods of the people 
they employ. The ripple effect on communities will be felt for 
months and years to come.
    This year, we have led the charge in our region providing 
PPP loans to small businesses in the markets we serve. This was 
no easy feat, as we had to hustle to fundraise for the 
liquidity needed to make PPP loans on an extremely tight 
timeline as well as aggressively assert our eligibility to 
provide PPP as a certified Community Advantage Lender.
    An analysis of our PPP loans to dates shows that 84 percent 
went to minority-owned businesses and 62 percent to women-owned 
businesses. Eighty-two percent of all of our PPP loans were 
made to businesses in the following six industries: food, 
health, construction, consulting, cleaning, and child care.
    To give you a sense of the demand for COVID-related 
assistance that we have seen, we have provided PPP loans to 
almost 100 small businesses since late April. For context, our 
organization typically provides around 200 small business loans 
per year. So, in just one quarter, we have done almost half of 
our traditional annual volume of loans with just this one 
product.
    We have also partnered with local governments to help 
deploy their small business COVID financial assistance 
products. For example, in partnership with the District of 
Columbia's government, we have provided $4.5 million in 
microgrants to just over 1,100 businesses since April.
    Our staff has been working literally around the clock to 
serve as many businesses as we can humanly support.
    At the national level, the PPP program has not been as 
successful in reaching true mom-and-pop, minority-owned small 
businesses as it could be. I was pleased to see the CDFI set-
aside that came into play during the second round of PPP funds 
in May. However, it feels like engaging CDFIs was an 
afterthought, which is puzzling when CDFIs have historically 
been the most highly leveraged tool that commercial banks have 
used to reach the hardest-to-reach populations in the United 
States. Of the more than 5,400 PPP lenders, only 303 are CDFIs 
as of the SBA's July 20th PPP report, yet in under 3 months, 
those very CDFIs made a total of $7.5 billion in PPP loans.
    Our average PPP loan made has been around $30,000, and our 
overall PPP efforts stand to retain 373 jobs to date. As of 
July 20th, the Nation's average PPP loan size was $105,000, and 
nearly 87 percent of all PPP loans were for less than $150,000, 
which is to say that the PPP program investment stands to have 
substantial impact if distributed properly and equitably.
    It is extremely disheartening and disappointing to see 
high-wealth individuals with direct ties to the Trump 
administration accepting PPP loans in the $350,000-to-$5-
million range. With the funds in just one of the PPP loans made 
to the likes of the Kushner family, Elaine Chao's family, or 
Kanye West, a CDFI like LEDC could have helped more than 10 
times the businesses we have been able to support to date, 
retaining at least 3,700 community jobs. This is a glaring 
example of the perpetuation of systemic inequality that has 
rightfully propelled our country into civil unrest in the past 
weeks.
    In May, Senators Cardin and Booker penned a white paper 
that contains practical suggestions for preventing underserved 
small businesses from falling even further behind than they 
already have due to the implications of COVID, disproportionate 
to the general small business population. We are particularly 
encouraged by the following recommendations of this proposal: 
the recommendation to allocation $1 billion in emergency 
appropriations to the CDFI fund to increase liquidity for 
CDFIs; the suggestion to create an Office of Emerging Markets 
specifically focused on and more attuned to the needs of 
underserved communities; recommended support for SBA's core 
programs to expand them and make them more affordable; the 
suggestion to move SBA Community Advantage from pilot 
designation to permanent program status; and recommendations 
around expanded support for minority-owned, women-owned, and 
returning citizen-owned businesses.
    The House of Representatives has taken an important first 
step by including $1 billion in grants to CDFIs in the HEROES 
Act. Congressional leaders on both sides of the aisle 
understand that CDFIs are the lenders to reach the businesses 
that have been left out of PPP for the most part. The Senate 
and administration must approve $1 billion in rapid response 
CDFI fund grants.
    In addition to financial resources, small businesses 
affected by the implications of COVID-19 require technical 
assistance to navigate their new reality. They have sought out 
support from LEDC in the areas of legal advice, which includes 
commercial lease negotiation, accounting, and reimagining their 
businesses for survival in this new time. We have helped 
countless clients with adding e-commerce, take-out, and 
delivery options into their business models.
    It is worth noting that funding made available through the 
CARES Act restricts access to funding to provide 
entrepreneurial assistance, 80 percent, to SBA-designated Small 
Business Development Centers, the vast majority of which are 
operated by the universities and colleges and a small portion, 
20 percent to SBA's designated Women's Business Centers. The 
legislation does not recognize that SBDCs and WBCs are not the 
only critical elements of our Nation's infrastructure for 
providing entrepreneurial assistance.
    In closing, while there are many stories that make the 
evening news around unicorn businesses that have turned the 
pandemic's lemons into lemonade, the distillery that is making 
hand sanitizer or the T-shirt company that is making face 
masks, the truth is that the majority of small businesses are 
in trouble.
    I am very grateful to this Committee for considering my 
remarks and for the time and effort you dedicate to making sure 
America's small businesses survive and thrive during these 
unprecedented times.
    Thank you so much for your time. I look forward to our 
discussion.
    [The prepared statement of Ms. Bilonick follows:]
    
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    Chairman Rubio [presiding]. Thank you so much.
    I am going to turn it over to Senator Young to start. My 
only request is that apparently our--are those on the WebEx? If 
you would just make sure your mic is turned up as loud as you 
can, just because there are some challenges over here from time 
to time listening to it, so thank you.
    Senator Young?
    Senator Young. Thank you, Mr. Chairman.
    I know all of us feel a share of ownership for the PPP 
program, but I want to commend you and members of your team for 
helping to put that program together and get it done. It has 
provided major relief to thousands of hardworking Hoosiers.
    Of the nearly 80,000 Indiana businesses that have received 
PPP loans, over $9 billion in total, over 85 percent of these 
businesses received loans under $150,000. So we know that this 
program has fulfilled its intent, helping those smaller 
enterprises.
    Ms. Bayles, you have experience working with a diverse mix 
of small businesses, particularly those firms who have been 
applying for PPP loans. In your testimony, you state that PPP 
was a necessary short-term lifeline; however, to weather this 
storm over the long run, you indicate it is critical that 
business owners have access to flexible, long-term working 
capital.
    I could not agree more, which is why I introduced the 
RESTART Act to provide low-interest, long-term loans, which 
allow small business owners greater flexibility.
    Can you expand, Ms. Bayles, on the need for minority-owned 
businesses to have broader access to relief, longer-term loans, 
and greater flexibility for expenditures and loan forgiveness, 
as I propose in my RESTART Act?
    Ms. Bayles. Absolutely. As I mentioned in my testimony, the 
PPP was an immediate fix, and so having the flexibility to have 
funding that will last, larger amounts will definitely go a 
longer way because nothing is more frustrating than getting 
just a short toss in the pot. So having that long-term 
flexibility, larger amounts would greatly be appreciated.
    The biggest piece that I stress in my testimony that I add 
and that has been mentioned by the other witnesses and other 
Senators is really just going to be that technical assistance, 
because even for a long-term loan, you still are going to have 
the credit challenges. You still are going to have the 
financial documentation challenges. So any sort of funding 
opportunity is going to have to be matched with equal access to 
technical assistance to actively get those businesses prepared.
    Senator Young. And when you think about barriers that 
minority-owned businesses face with respect to PPP access and 
financial services education, is this what you are speaking 
to----
    Ms. Bayles. Yes.
    Senator Young [continuing]. or are there other barriers 
that we should be thinking about?
    Ms. Bayles. Well, for PPP, the challenge was a formal 
payroll system, and so getting out there and proactively 
providing the tools to businesses so that they know the 
advantages of using a formal payroll structure would have 
certainly maximized the amount of minority-owned businesses 
that qualify for the PPP.
    But the Schedule C option did certainly help. So just going 
down that road in a more refined fashion, I think, will have 
the greatest impact.
    Senator Young. So this Committee should be aware of what 
you have discussed as we try and support the SBA in advancing 
minority business-related services.
    Ms. Bayles. Yes.
    Senator Young. I think that is really important.
    Ms. Bilonick, in your testimony, you know the critical role 
that NDIs and CDFIs play in providing the needed sources of 
capital to minority- and women-owned businesses, but also as 
related to what Ms. Bayles said, but also as educators on 
financial services and lending tools.
    We can authorize new forms of funding, but it is community 
lenders such as yourself that will ensure the underserved have 
true access to these opportunities.
    So, Ms. Bilonick, my time is running a bit short, but can 
you briefly speak to the importance of prioritizing these kinds 
of institutions as in my RESTART proposal when extending credit 
to businesses operated by traditionally underserved 
entrepreneurs?
    Ms. Bilonick. Absolutely. Thank you for the question.
    You know, I would say I think there is sort of a narrative 
going around that the challenge or the main challenge for 
underserved businesses in terms of accessing PPP is a challenge 
around filling out the application, gathering the necessary 
documents, and while that may be true for a subset of our 
clients, I really think the challenge was around accessing the 
product.
    We had many, many clients come to us that sort of had a 
false-start attempt with their bank and never got to the end of 
the process because they just simply were not a high enough 
priority for their commercial bank based in terms of their 
depository accounts or other factors that put them lower on the 
list of priority.
    So what I really think is that Community Development 
Financial Institutions working in neighborhoods, working in 
communities where we have the trust, where we have the track 
record. We are the resource that small businesses in our 
communities are going to trust and come to first and rightfully 
so. This process has just been an example that underlies the 
fact that commercial banks often turn away our clients who are 
perfectly viable loan clients.
    Senator Young. Thanks so much.
    Chairman Rubio. Thank you.
    Senator Coons, are you ready?
    He just arrived.
    Do you need to catch your breath, or are you ready to go?
    Senator Coons. I am happy to proceed, if I might, Mr. 
Chairman.
    Chairman Rubio. All right.
    Senator Coons. I just want to take a second and thank all 
the witnesses and thank you, Mr. Chairman and Ranking Member 
Cardin, and to my colleagues from Indiana. I just spent time on 
the floor discussing the RESTART Act with our lead co-sponsor 
and look forward to figuring out with you how we might find a 
path forward together.
    I just wanted to share by my own opening, if I might, that 
I am really grateful we are having a constructive and 
bipartisan hearing. I am grateful, Mr. Chairman, that this has 
been a broadly constructive bipartisan part of what has 
otherwise been a very difficult process for responding to the 
pandemic and moving forward.
    I recently spoke with Blanche Jackson. She is the CEO of 
Stepping Stones Federal Credit Union in the East Side in 
Wilmington. They are also a CDFI, Community Development 
Financial Institution, and they provide their services at no 
cost to low-income communities in Wilmington.
    They became a PPP lender. They provided over $1 million to 
small businesses and nonprofits, overlooked by other PPP 
lenders, even those seeking loans under $10,000. So I was 
encouraged to hear that at least in that instance, this worked 
out very well.
    Let me direct a question, if I could, to Ms. Bilonick. In 
my experience in the conversations I have had in Delaware, it 
is clear from Stepping Stones and other CDFIs in my home State 
that additional funding to the CDFI fund is critical getting 
this assistance out to underserved communities.
    I am advocating in this next package for $1 billion for 
certified CDFIs. How do you see additional funding for CDFIs 
actually affecting the viability of the survival, short term 
and long term, of minority-owned businesses?
    Ms. Bilonick. Well, first, let me thank you in advance for 
advocating on behalf of additional funding to CDFIs. Of course, 
that is a self-serving compliment, but I do really think that 
that is where the money needs to go.
    From our perspective, it would be extremely helpful, both 
in terms of additional liquidity, that we could then put out to 
our clients.
    As I mentioned in my comments, we really struggled 
initially because we did not have sufficient liquidity to take 
on this new demand, and so luckily, we had three partners who 
stepped up and were able to provide us with the capital to be 
able to do the additional lending. But, obviously, funding 
through the CDFI fund, which is one of our primary sources of 
capital, would be extremely helpful and then in addition to 
support our operations. So those would really be the two pieces 
of what would help us to be able to serve our businesses even 
in a more robust way.
    Senator Coons. If I could, Ms. Bayles, I have heard--and 
you have testified--there is a lack of community outreach in 
some of these relief programs.
    A program that was actually founded in my hometown of 
Wilmington, Delaware, called SCORE in Delaware has done a great 
job at providing easy accessible outreach in terms of getting a 
business plan done, getting started.
    How can we reach business owners more broadly? How can we 
do a better job of outreach in terms of connecting available 
SBA relief programs to minority businesses?
    Ms. Bayles. Thank you, Senator.
    I would say that the training and the technical experience 
needs to be more diversified to finding businesses where they 
are.
    So SCORE, as you highlighted, focuses on a business plan 
and sort of the startup functions of a business. That is 
definitely helpful. That is vital.
    However, my experience, particularly during this round of 
CARES Act funding, you are dealing with businesses that are 
already started. They are already open. They are trying to keep 
their doors open, so sort of a more advanced approach covering 
things that I testified on, payroll compliance, tax withholding 
compliance, so a more refined technical assistance that finds 
businesses where they are. So it is a little past the startup 
phase. That is where we have had the most success.
    Senator Coons. Mr. Chairman, how much of your patience can 
I prevail upon, given the absence of other members? Because I 
have got two other questions, I am happy to ask, but----
    Chairman Rubio. Go ahead and do those.
    Senator Coons. Thank you.
    Ms. Estrada, if I might. Just interested in whether or not 
authorizing another round of PPP lending, as I am sure you have 
heard from Senators Cardin or Shaheen, we have been working 
hard on a bill to prioritize Paycheck Protection Program, which 
would provide a second forgivable loan to the smallest and 
hardest hit businesses with a set-aside for firms of 10 or 
fewer. And I know we have been in active conversations with the 
Chairman and others.
    But I just would be interested, Ms. Estrada. If Congress 
authorizes another round like that of PPP lending to the 
smallest and hardest hit, how do we make sure that underbanked 
businesses actually are aware and participate?
    Ms. Estrada. Thank you for your question, and it is true. 
There is some need in reference of making the awareness, in 
reference of the CDFI, that we are the ones that we could have 
the relationship with the business owner. And we are the ones 
that we are working close to the minority business owner.
    So the idea for these funds, it will be that we need to 
make sure that this money is going to be in the right hands for 
the ones that they are looking for this assistance, or the ones 
that probably they already covered the payment for the 
employees, and they need right now just to have some additional 
working capital.
    So every business is different, and every business is run 
different. Probably, a major lender, a credit union, maybe they 
do not have the ability to understand in detail what is the 
real need of the business. So the CDFI with the SCORE, with 
SBDC, we are the ones that we are providing this technical 
assistance, this financial allocation, like we used to call it, 
and that is the reason it is important to make this program 
available for the near future.
    Senator Coons. Well, thank you, Ms. Estrada. Thank you, Ms. 
Bayles. Thank you to the audio system which just kicked in.
    Let me just in closing say that in addition to the 
prioritized Paycheck Protection Program I just spoke about, 
which I am excited to work with Senators Cardin, Shaheen, and 
others on, I also think an extension of the Small Business Debt 
Relief Program would make a great deal of sense. It is already 
pay the interest and principal for nearly 300,000 SBA 7(a) and 
504 borrowers, which are, a quarter of them, minority business 
owners. Black-owned businesses are two times more represented 
among SBA borrowers than among small businesses more broadly. I 
think we should extend this critical debt relief program and 
finalize a competitive entrepreneurship fellowship program that 
would focus on distressed areas, both urban and rural, 
providing a living stipend, mentorship, and capital access. And 
I am hoping that I can work with my colleagues on that.
    Thank you very much, Mr. Chairman, for your indulgence, and 
to you and the Ranking Member, I am excited to work with you on 
what I think is a critical part of this next bill.
    Chairman Rubio. Thank you.
    Senator Kennedy?
    Senator Kennedy. Thank you, Mr. Chairman, and I want to 
thank all of our witnesses today.
    I would like each of you to give me a one minute summary of 
your testimony, and specifically, here is what I have in mind. 
In the first 30 seconds, if each of you could tell me why you 
think there is an absence of access to capital, and number two, 
what laws would Louisiana--or rather the Congress should pass, 
not just impacting Louisiana, but impacting every State?
    And I will ask our Chairman to designate the order in which 
the witnesses should go.
    Chairman Rubio. Well, we will start with Ms. Bayles. She is 
sitting right in front of us, and then we will go from there. 
It gives everybody else a chance to think about how to put all 
that in 1 minute.
    Ms. Bayles. I know. Great. I get to start off. Okay.
    So I would say, just to reiterate what was in my full 
testimony, is access to information. So there is a huge busy, 
congested information highway that is out there, and there are 
numerous factors that would prevent a small business owner from 
being able to grasp that, first of all, and then interpret that 
exactly to the fit of their business.
    So that information is then inequitable, and so again, 
opening up and clarifying all the information that is out there 
through the technical assistance is going to be something that 
I will continue to emphasize, and that technical assistance has 
to be diversified to fit more businesses than at the startup 
phase.
    So as far as the particular laws, I would have to say 
without seeing the individual proposals that are currently on 
the floor, what we have discussed so far, and that is providing 
long-term options for financing and more flexible terms for 
those applications is a step in the right direction.
    Chairman Rubio. Ms. Estrada?
    Ms. Estrada. Yes. Thank you, Chairman.
    It is a really interesting question just to give an answer 
in one minute, but what we are seeing is that we cover certain 
gaps, the CDFI, in the financial invitation, education, in 
reference of how it is going to be the process for the PPP.
    But we are seeing right now that there is--okay. We pay the 
employees right now. We have this covered, but I need money. 
Just for example, right now in Florida, we are expecting a 
storm. So we have people that they are doing the landscaping, 
and they need probably money just to buy equipment. And you 
know what? There is nobody who will be doing a loan under these 
terms. If this person, this business owner is going to their 
bank, there is no way that he could get a microloan. Do not 
think about it, something for $10,000 or maybe $15,000, and if 
they are coming to us, we are in a really tough position where 
we need more money just to allocate in the right hands of the 
business owners.
    So it will be a program where we could have the amount of 
money that they need in reference to continuing operation with 
flexible terms, something that we could help with the cash 
flow.
    Remember most of the business owners, they were financing 
their business with credit cards. So the interest rate that 
they are paying is really very high, a lot of confusion, 
because they were applying for the EIDL. They received the 
advance. They do not know if they have to apply. So the 
information is there.
    We have the ability to digest the information for the small 
business owner, but anyway, we need to guide them through the 
process, because what we are seeing, if we are not guiding them 
through the process, predatory lenders, payday lenders, they 
are going to take advantage of the ones that are working hard. 
And they are the ones that are moving our economy. So that 
would be something that we need also to consider.
    Chairman Rubio. All right. Mr. Busby?
    Mr. Busby. Thank you so much. I will try to make it quick.
    Seven quick points. First, transparency. We must understand 
the information early on.
    Second, the information must be clear when we get it, and 
it must be early.
    Third, we must monetize the CDFIs. We understand that 70 
percent of loans made to black homeowners and black businesses 
come through CDFIs. So when we fund CDFIs, we are, in fact, 
funding our citizens, and are funding our communities.
    Third, the 8(a) program. We understand that many black 
businesses have gained great deals of revenue and success 
through the 8(a) program, but we are asking for the program to 
be extended for black-owned businesses. Currently, it is 9 
years: 5 years of growth, 4 years of entrepreneurship, and then 
exit. We are looking for a much longer program, especially 
during the years of 2021 to 2026 for particularly black-owned 
businesses.
    Fourth, prompt pay program. During the Obama 
administration, there was a program that said government 
contractors, they need to get paid within 15 days. That would 
change the outcome of many businesses that have to go and, in 
fact, get a loan just to cover the government's float. We think 
that is something that during these difficult economic times, 
it could definitely be changed.
    Next, codify MBDA. It is the only agency in the United 
States that has the word ``minority'' in it. We have got to 
make sure that they have the resources and the funds that they 
need to have long term.
    And then lastly, fund chambers of commerce, as we have 
discussed. They have boots on the ground. They understand the 
importance of entrepreneurial training, relationships, 
contracting, and making sure that there is a connect between 
what happens in Washington, DC, as well as what goes on, on 
their local communities and local businesses.
    Thank you very much.
    Chairman Rubio. Ms. Bilonick?
    Ms. Bilonick. Thank you. Yes.
    I would concur with the comments that I made and that my 
colleagues made, but I would also add that just sort of in a 
nutshell, the point that I would like to drive home is that 
because the majority of PPP loans that are going out are in the 
$150,000-and-below range, that with equitable distribution of 
the PPP program, there is a high impact to be expected with 
regard to retaining jobs.
    I would say sort of legislatively that the most important 
recommendation that I would make is around the investment of a 
$1 billion emergency appropriation to the CDFI fund to pass 
through two CDFIs that are on the ground working with small 
businesses to access this and other Federal programs.
    And lastly, to answer your question around why there is no 
access, I think we still are struggling with discrimination in 
our country, and I think that is one of the primary reasons why 
our clients are not accessing PPP through the commercial 
banking system and going to CDFIs and other alternative lending 
resources.
    Thank you.
    Senator Kennedy. Thank you, Mr. Chairman.
    Chairman Rubio. Senator Cardin?
    Senator Cardin. Well, let me thank all four of our 
witnesses for their testimony, and I think that your answer to 
Senator Kennedy's question really pinpoints an agenda. And I 
certainly agree with the CDFI points that have been raised.
    Mr. Busby, I want to drill down on what we could do within 
the SBA. They have an Office of Capital Access, but there is no 
specific point person to deal with access to capital for 
minority businesses or women-owned businesses or businesses in 
underbanked communities in rural America.
    Senator Duckworth and I have introduced legislation, and 
one of the things it would do, it would set up an office to 
deal with those underbanked communities.
    Do you have recommendations as to how we can sensitize the 
SBA itself to be more aggressive in helping the underbanked and 
underserved communities?
    Mr. Busby. Great question. Thank you so much for the 
opportunity to speak to that.
    A couple things. One, currently, there is no real 
certification for a black business owner. The government as 
well as private sector understands the importance that the role 
that business owners play in their local communities as it 
relates to moving our agenda forward, but right now if you ask 
the government or private-sector firms how much they are 
actually spending with black firms, they cannot really tell you 
because there is no SBA certification currently that says I am 
a black-owned business. It states that I am a minority or a 
woman or a small business, which I am none. I am black when I 
wake up. I am black in the evening when I go to sleep. We have 
to make sure that we are counting the black businesses that are 
participating in these programs.
    Next, there was $130 billion that was left in the Payroll 
Protection Plan, but at the same time, we lost 441,000 black-
owned businesses. It is not because they did not understand the 
program or did not need the funds. It was about early 
participation, clarity of the program, and ensuring that they 
knew where and how to get the funds. We think that many black-
owned businesses now have the opportunity to grow through 
mergers and acquisitions.
    Again, we lost nearly half a million firms. We have now got 
to go and find those firms, those contracts, and make sure that 
those revenue dollars are staying in our communities, and that 
is going to need a different type of funding. It is not going 
to be based on payroll but based on opportunity as well as 
growth. So we would like to look at the difference that the 
next funding has in reference to how do we move our communities 
forward, keep the businesses that we currently have, as well as 
make sure that there is new opportunities for new businesses to 
grow.
    Senator Cardin. Thank you.
    I want to ask Ms. Bilonick the same question, but I also 
want, if you could, to expand on your point about mom-and-pop 
minority businesses.
    What effort can we make to deal with the really small, 
small businesses which are more likely to be a higher 
percentage of minorities in addition, if you could, respond to 
whether there is a need for a point person within the Office of 
Access Capital?
    Ms. Bilonick. I think it would be very effective to have a 
point person. I think any sort of deliberate and thoughtful way 
of approaching access for minorities, small, black, Hispanic, 
however you want to break down the pie, businesses, can only be 
a positive.
    I think that one area of focus--and I mention it in my 
remarks--is to try to funnel through agencies not only CDFIs 
but also technical assistance providers that work directly in 
communities. I think that is how we will really reach the mom-
and-pops.
    I understand that a lot of the dollars were funneled to 
SBDCs, and with all due respect to SBDCs that are doing 
fantastic work in the communities that we serve, there are some 
limitations around what they are able to do and their reach. 
And so I would say if there were a way to perhaps take the SBA 
PRIME recipients of the past 4 or 5 years and funnel dollars 
through them, I think it is just a little bit of an oversight 
to suggest that the SBDCs are the primary technical assistance 
provider in communities when there are organizations that are 
doing this work fully entrenched and sort of very deeply 
enmeshed in the community.
    Senator Cardin. One of the reasons why we focus on the 
CDFIs--and I would also put MDIs, minority depository 
institutions--is that to make a smaller loan is not as 
attractive to lenders as larger loans, and when we deal with 
the smaller the small businesses or you are dealing with 
minority-owned businesses that tend to be smaller loans. It is 
not quite as attractive.
    So one of the things I think we need to do is how do we 
focus on making it more attractive for the smaller loans to be 
made by traditional lending institutions.
    Ms. Bilonick, do you have a suggestion on that?
    Ms. Bilonick. Yeah. I almost wonder if there would be a way 
to sort of designate different lenders in different ranges for 
lending. So, for example, the CDFIs could be lending in a 
certain range. As I mentioned, our average loan size is $30,000 
under PPP. So I do not know many banks that would be chomping 
at the bit to make that kind of a deal.
    So if there were a way to sort of concentrate the higher-
dollar loans perhaps the commercial banking sector, those that 
are in the millions of dollars, and then keeping those, you 
know, even $150,000 and below, having sort of designated 
tranches.
    Now, this is just what is coming off of the top of my head 
right now. I would happily discuss it further with your team 
and really fully flesh it out.
    Senator Cardin. I would just point out we have allocated 
certain funds to smaller lenders as part of our efforts. 
Senator Coons has suggested walling off a certain amount of 
money for the smaller small businesses.
    I think there are ways that we can try to work together to 
do this, but there is also the need to look at making it more 
financially attractive for lenders to make loans to smaller 
companies.
    Thank you, Mr. Chairman.
    Chairman Rubio. Senator Cantwell?
    Senator Cantwell. Thank you, Mr. Chairman.
    I wanted to see if I could ask Mr. Busby a question. 
Obviously, we want to have a variety of voices communicating 
about what the capital needs are from various aspects of our 
society and certainly have worked on these issues in the past 
when I was the chair of the Small Business Committee, women and 
minority businesses getting such a small percentage of access 
to capital.
    So that told us that you needed larger voices to 
communicate to people about the programs and make the programs 
work, all of the above.
    But one of the things, Mr. Busby, that we are facing is 
that African American news sources are also being challenged by 
the COVID crisis. They are being challenged by the fact that 
advertising revenue is falling off. They are being challenged 
by consolidation of newspapers, and when they get consolidated, 
they do not always--let us just say they are not always 
investing in diversity of local news and opinion.
    So one of the things that we would like to fix in the next 
COVID package is a provision that at least the House has 
considered, which would allow those radio stations or TV 
stations that are owned by a larger consortium to get funds if 
they are going to invest in local content.
    Unfortunately, newspapers and broadcasters owned by larger 
groups were left out of the Paycheck Protection Program. That 
means African American radio stations that are part of Urban 
One and Spanish language stations that are part of Univision 
could not get much needed relief.
    I have been pushing to change that along with Senators 
Ernst and others and still believe we need to find a way to 
help them in the next round of COVID assistance and I hope 
Chairman Rubio and Ranking Member Cardin will help as well.
    So, Mr. Busby, what about that issue?
    Mr. Busby. That is a great point. Many of our businesses 
across the country said that the reason that they did not 
either apply for payroll protection or the EIDL program was 
just lack of information.
    We have partnered early on in our existence with NNPA, the 
National Newspapers Publishers of America, which are the black 
newspapers, and last year, we partnered with NABOB, the 
National Association of Black-Owned Broadcasters, which 
represents roughly 170 to 180 black-owned radio stations and 
roughly 12 black-owned TV stations.
    It is important, especially during these times, for us to 
get the information that is out timely, accurate, and most 
importantly that is coming from individuals and voices that we 
know and trust. So for there to be an opportunity for the black 
media to participate in this, I think, is a very positive step 
in the right direction to ensure that our businesses have the 
opportunity to compete and have sustainability in our 
communities going forward.
    Senator Cantwell. Thank you.
    Could you just expound on that trust issue for a second? 
Because I think it is not fully understood how important these 
radio stations and newspapers are.
    I would say in my State, the Asian publications have the 
same force of veracity. I would say in Indian Country, the same 
thing. People listen to information that--I am sure in the 
Chair's case, there is probably Hispanic publications all 
throughout Florida that are the go-to source of information.
    Why is having this trusted source so important?
    Mr. Busby. It has been gaining that trust over decades, and 
for most of us, it is not just the entertainment piece of it, 
but it really is the information, the data that has been 
shared.
    And I will give you a great example. The U.S. Black 
Chambers was touting and yelling at a lot of our voices, about 
35 to 40 percent of black-owned businesses, we felt were going 
to be closed during the pandemic. No one really heard that, and 
then it came out to our black media that the Bloomberg Report 
came out and actually said that we had lost 450,000, almost 41 
percent of our businesses.
    The information that we get is reliable based upon who is 
telling it, and for black communities, black citizens, that 
information coming from black media is trusted. It has been 
tried, and over the decades, we have learned and gained 
relationships with them to make sure that our voices are being 
heard as well as our concerns are being brought both back to 
D.C. as well as from D.C. to local communities around the 
country.
    Senator Cantwell. Thank you.
    I hope that the Chair and Ranking Member will work with us 
on this important issue. Senator Ernst and other members of 
this Committee are big supporters of this concept, and to me, I 
think it is just something that is a little misunderstood. And 
if people are going to make the investment in local content, I 
think we should try to help them.
    So thank you.
    Mr. Busby. Agree. Thank you.
    Senator Cardin. Mr. Chairman, if I might just thank Senator 
Cantwell for her leadership on this issue. This is an extremely 
important issue, and I hope we all can work together on this.
    Chairman Rubio. Thank you.
    Senator Hirono?
    Senator Hirono. Thank you, Mr. Chairman.
    This is a question particularly for Ms. Estrada and Ms. 
Bilonick because you are both direct lenders.
    So even in normal times, pre-pandemic times, it was really 
hard for minority-owned businesses to have access to capital. 
So based on your experience, because of this pandemic, what 
have you observed? What have you learned? What can we do to 
streamline the process, create some new methods, whatever we 
need to do? Because, as I say, even in normal times, it was 
really hard for minority-owned businesses.
    And I think that, Ms. Bilonick, if I heard you correctly, 
you said that part of the issue was that there has been 
discrimination----
    Ms. Bilonick. Yeah.
    Senator Hirono [continuing]. against minority-owned 
businesses.
    So, anyway, going forward, what can we do as a result of 
this pandemic to lessons learned? What can we do to improve 
access to capital for minority-owned businesses?
    Ms. Bilonick. I can jump in, Fabiana, if that works, unless 
you want to go.
    Ms. Estrada. Okay.
    Ms. Bilonick. Great.
    So I was just going to say something that is interesting in 
this time period is that, yes, it is always a challenge for 
small and minority-owned businesses to access capital, but I 
think that right now, CDFIs and community lenders are actually 
able to do loans that traditional banks are not--well, we are 
always able to do loans that traditional banks do not have an 
appetite for, but I think right now, we are even doing our 
normal lending.
    We have businesses that are taking advantage of new 
opportunities that are provided by this strange new world that 
we are living in, and I think there are lessons that can be 
learned from CDFIs that perhaps traditional lenders could take 
a look at around more flexibility, around credits or 
alternative sources of judging credit, more flexibility just in 
general.
    I mean, I think that nonprofit organizations are known for 
being agile and flexible, and that is really what these times 
demand.
    So to the extent possible, it is feasible that traditional 
lenders could sort of take a page out of the CDFI playbook and 
be a little bit less rigid around their requirements.
    Of course, we have a higher appetite for risk, but it often 
comes with a great payoff at the end.
    Ms. Estrada. If I may, I would like to add as well that our 
entrepreneurs, they need to understand the process for the loan 
application aspect because most of the time, in the older 
times, we have our entrepreneurs that they visited the CDFI or 
the banks, and they are asking for a large amount, let us say 
$50,000, and probably, they are not ready for that loan amount 
because they do not have the financial allocation that our 
colleague mentioned, taxes, or there is an issue with cash 
flow. So we need to work with programs that probably could feed 
different realities.
    In one point of myself being a business owner, maybe I need 
$5,000. There is no need for me to get a loan for $50,000, and 
also the flexibility in reference of inside the allocations for 
the payment, low-interest rates, requirement deferments or 
maybe grace period that it will be okay just to avoid affecting 
the cash flow issues with the borrowers.
    So, anyway, there is a lot of work that we are doing at the 
CDFI level because most of the time when we--let us say in 
January this year. We were working with entrepreneurs, that we 
are frustrated because that were applying for 150- to $50,000, 
but they were not having the capacity to repay this loan. So, 
as well, we need to understand our business. We need to 
understand our credit. We need to understand our cash flow. So 
we need to continue providing the financial allocation.
    And the ones that they are doing during this pandemic, that 
probably, unfortunately, they have to close down doors because 
there is no way that they could recuperate, the idea for us, 
the CDFI and all the community organizations, it will be to 
provide a friendly hand just to close business with their 
pride, taking the right tact, because we do not want for them 
eventually in 2 months or 3 months, reopening another type of 
activity, and they have something negative on credit or they 
were not able to close down their credit cards. So we need to 
also try to avoid in certain circumstances, as well any major 
decision, that it will be affecting the life of this program or 
for the future.
    So the ones that they continue working, continue helping 
them out with flexible terms and conditions, and the ones that 
they probably--they need to face the reality to close down 
business, also give them the hand to close in the proper ways.
    Senator Hirono. All right. So I have one question, Mr. 
Chairman, for Mr. Busby.
    I know that you have participated in the 8(a) program. I am 
a big supporter of the 8(a)'s, but you mentioned just now that 
we need to start thinking about a different kind of funding not 
based on payroll because, as you noted, that half a million or 
so of black-owned businesses have already gone under.
    You mentioned that we should be looking at some sort of a 
program to create new opportunities for them to restart 
businesses or something along those lines.
    So I would like you to talk a little bit more about what 
you had in mind.
    Mr. Busby. Sure. On the 8(a) program, we are looking to 
extend that past the 9 years that it currently operates for a 
business owner. We think that it could go anywhere from 16 
years up to 20 years for black-owned businesses. We feel like 
this will provide some generational wealth for a 9-year 
business, and then to be placed on your own really provides 
challenges that many of those firms cannot handle.
    If you look at the Black Enterprise Top 100 list, every 
year, the top 10 to 20 firms, many of them fall off because of 
their no longer opportunity to be in the 8(a) program. So as 
soon as we get and gain opportunities in statute, we are forced 
out of the program. We would like to----
    Senator Hirono. So we want to change the statute, the 8(a) 
statute, so that it is a longer timeframe for them to be 
participating? That would be a big positive for black-owned----
    Mr. Busby. We think so, and then we think the program would 
also be a big factor, something that could easily be done and 
would then provide real access to capital that many business 
owners do not have to go and get a loan. They could actually 
just live off of the cash flow that the Government is now 
making them go and get credit for.
    Senator Hirono. Thank you very much for that very specific 
suggestion, Mr. Busby.
    Mr. Busby. You are welcome.
    Chairman Rubio. Thank you.
    Senator Duckworth?
    Senator Duckworth. Thank you, Mr. Chairman.
    I just want to thank all the witnesses who are here today.
    I do want to sort of focus a little bit more on some of the 
provisions the Microloan Program Enhancement Act of 2019.
    Ms. Bilonick, as you know, several microlenders have seen 
an uptick in need for microloans, in particular, including 
intermediaries in Illinois. Senate Democrats have released 
proposed changes to the microloan program, many of which are 
included in the Microloan Program Enhancement Act. That bill 
would give intermediaries additional funding for technical 
assistance and lending. It would increase an aggregate and 
annual lending cap, and it would repeal the 155th rule that 
restricts lending in the first half of the year.
    Can you discuss how these changes, Ms. Bilonick, would help 
intermediaries, such as yours, get dollars into the hands of 
borrowers more efficiently and give you the increased resources 
you need to save micro borrowers, particularly at a time when 
there is increased demand such as we are in right now?
    Ms. Bilonick. Absolutely. Thank you, Senator Duckworth.
    I think these changes would be extremely helpful. One thing 
I note, I do appreciate sort of the parallel with technical 
assistance as well, which we find to be useful with regard to 
getting our businesses in the queue and funded.
    While I said that our PPP average loan amount was $30,000, 
our traditional, even though we do go all the way up to 
$250,000 as a community advantage lender, is more in the 13- to 
$17,000 space. So the microloan program is extremely helpful 
for us. It is the most reasonable debt that we have to be able 
to turn back over to our clients versus from either foundations 
or commercial sources, and so it would hugely expand our 
capacity to lend from the microloan program.
    I would also just say with regard to that, the 155th rule, 
we are in support of striking that. It sort of creates a false 
bottleneck that does not need to be there with regard to 
distributing money equitably during the whole course of the 
fiscal year, rather than splitting it up with the first half 
and second half, and so we would certainly view that as a 
positive for our lending ability.
    Senator Duckworth. Thank you.
    And I want to touch also on the need for the SBA to 
dedicate resources toward minority business owners. We have 
already touched on that, on this so far, my colleagues from 
Maryland, but I want to come back to this. We know that small 
businesses, borrowers of color, had a harder time receiving 
adequate capital from traditional lenders prior to COVID-19, 
and unfortunately, this pandemic has only made this issue 
worse.
    Last month, SBA and Treasury created additional set-asides 
in the Paycheck Protection Program for CDFI lenders to better 
serve borrowers of color. While this is a step in the right 
direction, more must be done when it comes to helping these 
folks have access to lenders and capital.
    And I will give you an example. I was just in East St. 
Louis just last week meeting with small business owners, and 
one of them was a black-owned business. All the others were 
white-owned businesses. Some of them were women-owned, but they 
were all white-owned. They, for the large part, received all 
the PPP loans through the full amount that they asked for, and 
yet this black businessman who had a better balance sheet and a 
longer track record only got a small percentage of what he 
applied for. And he could not figure out why he would have 
gotten a smaller percentage.
    In this discussion, it was very interesting because they 
were comparing their backgrounds, how much capital they had. 
They were on similar businesses, and there was no other reason 
where he was different from the others. In fact, he had more 
experience, had better balance sheets, except that he was a 
black-owned business.
    So, Mr. Busby, can you discuss what additional changes 
Congress must make to PPP and to traditional lending structures 
to make sure borrowers of color can access small business loans 
and capital? You touched on this before, but I want to give you 
more time to really emphasize this issue because it is very 
real. And I am seeing it on the ground today.
    Thank you.
    Mr. Busby. Thank you so much for the question because it is 
a real concern. Access to capital is the number one, number 
two, number three concern for black business owners. 
Discrimination exists, and so we are asking for all barriers 
for access to capital to be removed for black-owned businesses.
    We also know that 70 percent of black firms that applied 
got denied, of U.S. Black Chamber members, and 96 percent of 
our members that applied that did get some funding did not get 
what they requested. So either they did not get it, or if they 
did get it, they did not get what they need. And we found that 
to be historic. That is not just now. That is a historic 
pandemic as it relates to our community in reference to access 
to capital. Thus, we cannot grow, so we cannot hire, and if we 
cannot hire, then we cannot continue to have sustainability in 
our communities.
    The credit scores need to be twice as high as our white 
friends. When we go in and ask for a loan, we only get 40 
percent of the funds that we ask for. We have to have twice or 
somewhat almost twice the credit scores of our white peers.
    I could own my home. My white peer could own their home. I 
could go in with a great business plan looking for $100,000. I 
will walk out with $40,000, praising to God for allowing me to 
get that $40,000, only understanding that 90 percent of 
businesses fail within the first year, and the majority of the 
reasons is because they did not have the access to the capital 
that they needed when the first emergency happened.
    The average black family has less than $400 for an 
emergency. The average black business, only 30 percent of them 
have any credit at all, and so when we are in situations where 
things come unexpectedly, it is only going to exacerbate the 
problems that black business owners have during pandemics and 
just regular challenges of businesses itself.
    Senator Duckworth. Thank you.
    I yield back, Mr. Chairman.
    Chairman Rubio. Thank you.
    And before I turn to Senator Scott, Mr. Busby, just to 
clarify, the figures you gave, the 70 percent were denied and 
96 percent got less, was that for PPP?
    Mr. Busby. That was for PPP. Yes, sir. That was our members 
of the United States----
    Chairman Rubio. I want to address that when I get to my--I 
am trying to give everybody a go, but I want to talk to you 
about that. I just want to make sure we are talking about PPP. 
Got it.
    Mr. Busby. Yes.
    Chairman Rubio. Senator Scott?
    Senator Scott. Thank you, Mr. Chairman. Thank you for your 
interest and your passion around helping small and minority 
businesses have access to the Paycheck Protection Programs.
    As we look at this pandemic, the one thing that we can 
conclude without question is that 41 percent of African 
American-owned businesses from February through April declined. 
We know that those numbers are stunning, frankly, especially 
when you compared to other groups. Hispanics declined by about 
32 percent, Asians around 26 percent. So that means that this 
pandemic not only created a health crisis, which African 
Americans, unfortunately disproportionately impacted by this 
global pandemic, and then on top of that, the employers started 
vanishing.
    Mr. Busby, I think this is an accurate depiction?
    Mr. Busby. Very accurate, Senator Scott. Things that were 
being challenged for our community just exacerbated through the 
pandemic, and so for many of us, we said the country was 
willing and able to write a $2 trillion check for a stimulus 
package. The black community is saying, ``Hey, where is our 
support that we desperately need to continue to have 
sustainability in this country?''
    Senator Scott. And I will say to answer that question, in 
part, I just finished an Instagram Live with Secretary Mnuchin 
talking about the important role that CDFIs and MSIs play, 
especially in the second tranche or the second iteration of the 
Paycheck Protection Program, working with folks like Robert 
Smith and others. We were on the call with Secretary Mnuchin 
and redesigning the second half of the PPP. I think if that 
part of the story was in isolation, that part of the story is a 
far more positive part of the story than the overall story 
because we were able to put the focus where it needed to be, 
and if we do that in this next round, we may have far better 
success than we did in the first iteration.
    Is that about right, Mr. Busby?
    Mr. Busby. That is fair to say. I just think that it needs 
to be very transparent, and it needs to be a commitment from 
both the financial institutions that are making the loan as 
well as the Government to ensure that there is accountability 
to the organizations, the banking institutions, to ensure that 
there is equity in loaning and the individuals that they reach 
out to make sure that all businesses have opportunity.
    Senator Scott. Thank you.
    I will say this. I think accountability and responsibility 
goes on both sides because I have been an African American-
owned business for 15-plus years and started three or four 
other businesses, and we definitely have to address some of the 
challenges from the beginning into the crisis as well as the 
crisis on as it relates to minority-owned businesses.
    One of those challenges is that our banking relationships, 
frankly, as African American businesses were weaker. So when 
you come into an institution and they are prioritizing their 
clients, too often we found ourselves frankly in the back of 
that line, and I do not think that is an overstatement. I think 
that is an accurate statement.
    And that lack of relationship creates a domino effect 
throughout the entire Paycheck Protection Program but frankly 
through the entire life of a small business, having been one, 
and I can tell you it is painful when you need something and 
you are trying to get in line after the crisis starts.
    But what I did realize during this crisis--and I think this 
is a part of the silver lining and the good news to come--is 
that FinTechs and technology can be an equalizer when the 
relationship is not there.
    So if you would help me understand how the PPP and the EIDL 
is in a better place when we have FinTech and technology as a 
part of the solution. Can you speak to the importance of that?
    Mr. Busby. I think there are some benefits as well as some 
challenges when FinTech gets involved. The benefits there are 
that it is quick, but for our community, we are not as----
    Senator Scott. Savvy?
    Mr. Busby. No. We are not as committed to quick as we are 
long term. We understand that this is not going to be the last 
opportunity, and what they told us is when this fund came out, 
they said go to your existing banking relationship. FinTech is 
not a banking relationship. That is a transaction. I want my 
individuals to go to the bank, shake that banker's hand, 
because understanding that we are going to have opportunities 
to grow and the only way you are going to be able to grow is to 
have access to capital, access to credit, and relationships.
    When I talk about the future of my businesses, I may want 
to acquire. I may want to merge. I may want to do a joint 
venture. I am going to need a banking partner who understands 
my needs as well as the opportunities that they provide, and 
many times, that does not happen over a FinTech relationship.
    Senator Scott. Well, it is certainly harder to happen over 
technology, without any question, and that is part of the 
problem, and it was the foundation on which we stand was not 
there. So when the crisis happened, I think it only exacerbated 
and brought more light to the actual challenge of banking 
relationships and the importance of those relationships pre-
crisis and frankly during the crisis.
    I know my time is out. Thank you very much, Mr. Busby, and 
I look forward to having a longer conversation with you at a 
later time.
    Mr. Busby. Thank you.
    Chairman Rubio. Senator Booker?
    [No response.]
    Chairman Rubio. You are muted. Senator Booker? Go ahead, 
Senator Booker.
    Senator Booker. Thank you. Thanks.
    I just want to start by thanking the Ranking and Chair. It 
is clear with the attention and care that this Committee is 
really just trying to focus on what is fair, focus on what is 
really important, and I am just happy to hear a lot of 
conversation of my colleagues today.
    So I want to jump right in. The stakes are so high in this, 
not only for each small business owner and employee, but really 
what we are talking about today deals with the entire economy.
    So a July poll just found that 7 percent, 7 percent of 
minority business owners are very confident they will be able 
to maintain payroll if no further Government relief is 
provided. Just 7 percent have that confidence, and McKinsey 
estimates that black communities enjoy the same level of 
economic activity, if they did enjoy the same level of economic 
activity as white communities, our country would enjoy a 1- to 
$1.5 trillion boost to our overall economy. So this is about 
all of us. It is not just about making sure that African 
American businesses get a fair share, fair opportunity, equal 
opportunity. That is obviously important. We all have a stake 
in this.
    Earlier this week, Leader McConnell proposed a second round 
of PPP in this next package. That is wise. That is important. I 
say vital. But we cannot simply put forward the same policy 
again and expect a different result.
    As I see it, the PPP was successful in getting emergency 
assistance to many small businesses to help cover payroll for a 
short limited time, but there are deep structural challenges 
with the program that prevent it from lifting very small 
minority-owned businesses up. And that is the challenge I have.
    Maybe, Mr. Busby, I can just ask you. Could you comment on 
what I believe are facts? And if you have issues with any of 
these facts, I want you to say it, but number one, unbanked and 
underbanked businesses are disproportionately minority-owned, 
and they are less likely to participate in PPP, given the 
program's reliance on a mainstream banking system.
    For minority-owned businesses that do have actually lending 
relationships and have been able to participate in PPP, 
discrimination actually still exists. If there is any doubt in 
that, the National Community Reinvestment Coalition just 
conducted a blind test, in fact, sending black borrowers for 
PPP and white folks in for PPP and matched all the payer 
testers. So the black and the white, they matched them on all 
the details, but they experienced widely different treatment 
when applying for PPP loans, including different levels of 
encouragement to apply and different products offered by banks, 
just by the color of their skin.
    So we know how the fee structure works. This is hurting 
black businesses. Banks also prefer to originate, say, a $5 
million loan than they would a $250,000 loan, a dynamic that 
really disadvantages small businesses and disproportionately 
black businesses.
    Then, finally, Ms. Busby, the last point I would like for 
you to comment on is that many very small businesses have 
short-run, nonpayroll expenses that exceed the 40 percent 
threshold permitted under PPP.
    All of these things combined, Mr. Busby, would you agree to 
make a serious impact on the fairness that African American 
businesses are facing?
    Mr. Busby. So true, Senator Booker, and thank you for the 
comments.
    Let us start with the title of the program: Payroll 
Protection Plan. Of the 2.6 million African American-owned 
businesses today, 2.5 million have no employees. So they are 
not mom-and-pop. They are mom-or-pop, single-employer firms 
doing great work, not because they are small, but because they 
have 1099s or they have subcontractors or they work 
differently. And the whole idea of young people saying, ``I 
want to create my own business, but I want to have the 
flexibility of being my own business owner. I do not 
necessarily want to be your employee,'' and so that is the way 
of the future.
    And now you are telling black business owners, who have 
grown. If you look over the last 10 years, black businesses, 
particularly black businesses, have been the fastest growing 
sector in the country. We have got to now look at them 
differently than we look at the majority of businesses in 
America because we operate differently, and as it relates to 
credit, again, only roughly 30 percent of black firms have any 
credit relationships. And that has a lot to do with the 
discrimination that we have faced over the decades of years, 
the amount that we pay for the credit when we do get it and the 
way in which we are treated when we go in the bank.
    A couple of things, when I go in the bank, I am never 
called by my last name. When I go in the bank, I never meet a 
bank loan officer or a bank president. When I go in the bank, I 
am only having a conversation with a teller. So for now you to 
tell me to go into a bank and apply for a loan on a Saturday 
where the bank is already closed due to COVID is only going to 
put me that much further behind when it talks about getting the 
capital that I need to make it through the most difficult times 
that we have seen in this country.
    Senator Booker. Right. Then just the study where they were 
sending people in with all the same details, the only thing 
different was a black person versus a white person, and they 
found that while differences, all of these are just 
compounding. That kind of discrimination is just compounding a 
lot of the structural inequities that are already there.
    So if we do not address this with a sense of urgency, that 
McKinsey data I showed you before, our overall economy is 
suffering upwards of a trillion-plus dollars annually, and so 
we have to find ways of getting additional channels of capital 
distribution to very small and minority-owned businesses or we 
will fail our overall economy, not to mention--not just the 
discrimination but compounded, because in a crisis time, so 
often minority entrepreneurs or minority communities face 
greater levels of impact than the overall community.
    So I know there is a lot of good energy on this. This is 
why I am grateful for this hearing and we are having this 
conversation again. I have got a bipartisan proposal, the 
RELIEF for Main Street Act, that I am pleased also has the 
support of my fellow Small Business Committee colleague, 
Senator Young. The bill would send $50 billion to States, 
cities, and counties to seed and scale small business relief 
funds.
    We have seen that the funds that pop up in every State of 
this country, but they are massively oversubscribed. These 
funds are over demand, and so our bill would push funding 
closer to the communities that they serve and allow funds to 
make loans and grants to very small businesses less likely to 
benefit.
    So I just want to thank again the Ranking and Chair for 
this business. This is imminent. We are obviously coming up in 
negotiations for this final COVID package. If we fail in this 
moment, we hurt all of America. We hurt our entire economy. We 
hurt a considerable amount of our entrepreneurs and job makers 
in this country, and we perpetuate structural racism in a way 
that unacceptable. We have to address this.
    Chairman Rubio, thank you very much for the time.
    Chairman Rubio. Thank you.
    Senator Ernst?
    Senator Ernst. Thank you, Mr. Chair, and thanks to all of 
our panelists for being here today.
    We do know that our minority-owned small businesses play a 
critical role in the success of all of our communities, and I 
am glad we are having this conversation about how we can get 
these essential businesses the tools that they need to survive 
this crisis and lead then on the front lines for economic 
recovery.
    Earlier this month, I had the pleasure of meeting with a 
number of local leaders of our black community in Des Moines, 
and one of the gentlemen that I spoke with is Izaah Knox. He is 
the executive director of Urban Dreams, which is a nonprofit 
that is focused on financial empowerment for underserved and 
underrepresented populations, very important.
    I was happy to hear about Izaah's experience receiving a 
PPP loan as well as the positive impact it has had on his 
nonprofit. Of course, relying on technical assistance and that 
longtime relationship that he had developed with the bank, he 
was able to overcome some of those initial obstacles to receive 
the loan, and he stressed the importance, just as we have heard 
today, of having a lender who knows the community and has more 
than just the transactional relationship with the borrower as 
well as the training that he had received in this area.
    So we have discussed a lot about that today, but I did want 
to give a shout-out because I think it has been echoed so many 
times over how important it is that our local lenders, our 
local credit unions have that relationship with those in our 
underserved communities.
    So what I will not do, I will not dive into that because we 
have heard a significant amount about how to develop those 
relationships, and we need to lean on our lenders to work on 
developing those relationships.
    But what I would like to pivot to is an area that I am very 
concerned about with the impact that COVID-19 is having on our 
child care businesses, which has seen the significant declines 
in enrollment and revenue. Of these child care businesses, half 
are minority-owned. Forty-five percent of our child care 
workforce are black, Latino, or Asian, and according to a 
recent survey, the National Association for the Education of 
Young Children, two out of five child care providers and half 
of minority-owned child care businesses are, quote, ``certain 
that they will close permanently without additional public 
assistance,'' end quote.
    So it is critical that we are providing additional relief 
to stabilize these businesses, which is why I recently 
introduced legislation that would create back-to-work child 
care grants, and it would provide 9 months of financial 
assistance for child care programs to make sure that they can 
safely reopen and make it through this pandemic.
    Just very briefly, if I could ask our panelists--and maybe 
if we could go to Marla. If you could answer the impact of 
keeping these child care providers afloat and its impact on 
those minority communities, that would be very helpful.
    Thank you.
    Ms. Bilonick. Absolutely. I did not get to it in my 
testimony because the written comments that I made were longer 
than the time allotted, but one of the client profiles that I 
featured was a Latina-owned child care business in Washington, 
DC, Little Angels Child Development. They currently serve seven 
families and have only had three of those seven families 
confirm that they are considering continuing to use them, just 
given all the considerations around COVID, both from a safety 
point of view and then their own economic capacity to pay for 
the service.
    So, yes, child care is actually one of the six industries 
that has been sort of the highest hit of the PPP loans that we 
have made. It is one of the six highest industries that is 
represented in the portfolio of PPP loans that we have made.
    We have always seen, in the Latino and African American 
community, this to be a very strong and vital business type, 
both for starting and expanding. And it has so many ripple 
effects because it is also affecting the ability of the people 
who use the child care center to work.
    As you may have seen earlier, I had my daughter. My 
daughter is literally sitting next to me right now. I do not 
have child care. My other children are in high school, so they 
are less labor intensive. But that being said, this is a real 
struggle that we are all facing, and the child care centers are 
so essential, not just for the owners and their livelihoods and 
their employees and their livelihoods, but for those of us who 
are trying our very best and in many cases having to work even 
harder than ever while juggling children, homeschooling, all of 
this.
    I think part of the reason why I had my daughter show her 
face is because I think we are all sort of living in this 
fallacy that we are not all really juggling this insane balance 
or lack of balance in this time period, and so I think it is 
excellent that you are bringing that bill to bear.
    Senator Ernst. Yes. Thank you very much. This is all very 
important, one, to be able to provide the services and lending 
necessary for our minority communities, but then also the 
ability to provide care for their little ones as well.
    I struggled with that as a young mother, myself, and so we 
want to make sure that all of our businesses are successful. 
And this is one way that we can do it. So thank you so much.
    Incredibly important topic. I appreciate it, Mr. Chair. I 
yield back.
    Chairman Rubio. Did Senator Hawley drop off?
    [No response.]
    Chairman Rubio. Senator Rosen?
    Senator Rosen. Thank you, Chairman Rubio, Ranking Member 
Cardin. This is really an important, critically important 
hearing to ensure that we are doing all we can to support our 
Nation's minority-owned businesses, and I want to thank all the 
witnesses for everything you do and for spending your time with 
us today.
    Over the past few months, the coronavirus pandemic has 
devastated small businesses in Nevada, across the country, and 
put millions out of work. Many minority business owners in 
Nevada work particularly hard due to lack of access to capital, 
like we have discussed.
    Congress stood up emergency lending programs to fill in 
these gaps. My office has heard countless stories from 
minority-owned small businesses struggling with the SBA's 
Economic Injury Disaster Loan, or EIDL, and one of the common 
complaints is that 1,000 per employee cap on EIDL Advance 
grants. And it is arbitrary $150,000 cap on EIDL loans, a 93 
percent reduction from the $2 million level, we in Congress 
authorized in the CARES Act.
    Small business owners. They have contacted my office 
telling me that $150,000 does not provide the support they 
need, and that without further help, they will likely be forced 
to permanently close their businesses.
    This is why earlier this week, I introduced, along with 
Senator Cornyn, bipartisan legislation to address this problem, 
the EIDL for Small Business Act. This bipartisan bill would 
prevent the SBA from imposing any arbitrary limits on EIDL and 
EIDL Advance, including providing $10,000 grants to all 
eligible small businesses, regardless of their size, but also 
appropriate $100 billion of EIDL and $80 billion for the EIDL 
Advance program.
    So, with that in mind, Mr. Busby, as you know, EIDL Advance 
program, well, it has run out of funds. I know that business 
owners in Nevada feel this is a particular problem.
    Ken Evans, he is the president of our Urban Chamber of 
Commerce in Nevada, and he supports my effort. And I want to 
quote him. He said, ``The EIDL for Small Business Act will help 
our businesses secure much needed capital to counter the impact 
of COVID-19 in the Southern Nevada region.''
    So can you please discuss why it is so important for us to 
recapitalize the EIDL and EIDL Advance programs and why it is 
critical that our smallest and most vulnerable minority-owned 
businesses receive the full $10,000 grant, regardless of their 
size?
    Mr. Busby. Thank you so much, and also thank you to Ken who 
is a member of the U.S. Black Chamber, one of our chamber 
members there in Las Vegas. So, again, tell him thank you.
    For us, again, many of our businesses were not able to 
participate in the Payroll Protection Plan. The title was 
difficult to understand. There was a real concern about ``Will 
I be eligible? Do I have to pay the funds back?'' and the 
transparency was really unclear. So for many businesses, we 
said take the other avenue of the EIDL loan.
    The challenge with the EIDL loan was a couple of things. 
Credit was tied to the EIDL loan program, and so many of our 
businesses were not able to apply or to get funding because 
they did not have the credit score appropriate to be able to 
get funding.
    Secondly, I think there was an either/or conversation for 
most business owners. Either I apply for PPP, or I apply for 
EIDL. For us, now that we understand, all of us understand a 
better clarity of both programs----
    Senator Rosen. Right.
    Mr. Busby [continuing]. we are telling folk, ``It is not an 
either/or. It really should have been about both,'' and for the 
businesses that did not have payroll, the EIDL loan was a much 
more appropriate program for them. And so we are looking for 
that to be funded fully.
    As it relates to the smaller businesses, the microloan 
businesses, they should be able to apply for that in the EIDL 
loan, and it should be up to $10,000. It should not be based 
upon other criteria.
    What we heard was during the first tranche of funds, those 
firms that got it did not have the same accountability, 
criteria, and questions that many of the small business owners 
are now having to face as it relates to the EIDL loan program.
    So we are asking for it to continue to be funded. We want 
to make sure that it is there long term so that our businesses 
can be able to participate.
    Senator Rosen. Thank you.
    I just have one last quick question to everyone on the 
panel. How can we strengthen these relief programs to get the 
money out more quickly? Do you have a suggestion what we can do 
to get the money out more quickly to those who need it?
    Mr. Busby. I will start. I think that putting the money 
directly in the hands of the CDFI that we know fund the 
businesses in those local communities. Nothing wrong with the 
big banks, but again, based upon the financing of those large 
loans, many black businesses were not able to get it from the 
larger banks.
    I think, again, as all of us have said, it really is about 
relationships, and many of our businesses have those 
relationships with the CDFIs. And so I would say fund directly 
to the CDFIs as well as funding the nonprofits that can make 
the microloans and the microgrants, I think, are extremely 
important.
    Thank you.
    Senator Rosen. Anyone else like to give a suggestion to us 
quickly?
    Ms. Estrada. For me, nothing more to add because it is 
clear that we have the relationship, and we know the small 
business owner and where is the need. And we could provide the 
financial allocation because, again, the frustration with the 
disaster loan with SBA, sometimes it is related to the cash 
flow, to credit, like Ron mentioned. We need to be sure the 
credit, if there is something we need to work, just to fix 
credit or wrong information that is in credit.
    So, again, we need to give the support, but the financial 
allocation is key because, if not, there is another emergency, 
there is another situation where they are going to be set to 
fail. And we do not want our small business owner to be setting 
to failure.
    Senator Rosen. Thank you.
    I believe my time has expired. So I thank you all for being 
here. I really appreciate the work you do.
    Thank you, Mr. Chairman and Ranking Member Cardin. I 
appreciate it.
    Chairman Rubio. Thank you.
    So just to close the loop now, to use my turn to talk about 
it, let me just first say that there are three common themes in 
the testimony today. The first is the technical help, the 
assistance with all the technical aspects of understanding who 
qualifies, how much do you qualify for--talking about PPP--and 
where can I go get it. The second is the access, finding the 
places that will actually do it for you, and then the third is 
the long-term capital needs, which I think is a critical 
component of it. And I want to take it in that order.
    So on the first point about the technical help, I actually 
think that the point that was raised earlier, the statistic 
that I had asked Mr. Busby to confirm--70 percent of black-
owned businesses were denied, 96 percent that got it got less 
than they asked for--is an important point.
    The way PPP works, not to be redundant here, but it is 
important because it is a new program. This thing was thrown 
together. Senator Cardin and I were there, Senators Shaheen, 
Collins, and others. So we had to come up with something that 
could get out there quickly. I assure you had we put all that 
money in through an existing program, we would still be talking 
about 5 percent of the people having gotten it because it is 
just on the infrastructure for something that is brand-new. And 
there was confusion, and the rules were thrown together. 
Something this big and this new is always going to have those 
problems.
    But the way the PPP works is you apply, and once you apply 
and the banks have it and they run it through SBA, the banks do 
not make the decision about getting it or not getting it. They 
cannot deny you a loan, and if they have, then they have broken 
the law.
    What they can deny you is the opportunity to apply, but 
they cannot deny you the loan. They cannot say you cannot have 
a loan. The loan is 100 percent guaranteed by the Federal 
Government. There is literally zero risk for the bank. In fact, 
the bank pushes its cash out the door and within 8 weeks can 
take it to the Fed and sell of the loan, and they make a 5 
percent fee on the smaller loans to begin with on top of it. So 
there is no denial process. You either qualify or you do not 
qualify.
    What they can deny you is the application, ``We are not 
doing any more PPP loans. We do not do loans for people that 
are not clients,'' that kind of thing, or as was cited, I 
think, by Senator Booker, they can discourage you from applying 
at the bank level. And that is one thing.
    On the amount, the amount is automatic as well. They do not 
get to decide, well, you qualify for 50, but we are only going 
to give you 25. If you are approved, you are approved for up to 
two and a half times of payroll. There is no discretion 
involved there. There is no bank decision, again, because it is 
not their money. They are basically acting as the intermediary 
between the Federal guarantee and the pushout.
    So that drives me to the point that it is--I do not know 
this to be true, but I am guessing that a substantial number of 
those that are a denial are actually not a denial of the loan. 
They are a denial of the ability to even apply, that in 
essence, they went to whatever their existing banking 
relationship is, and they told them, ``We are not doing any 
more PPP loans,'' or they did not have ones they could go to.
    Which leads me to the second point that everyone has 
raised, and that is lender access. I can tell you had it not 
been for regional banks--because the way we had to do it is how 
do you do something like this in 6 days. Well, first, you start 
with a baseline of 1,000 preapproved designated lenders who are 
a part of 7(a), and then you build on it. And it has built over 
4,000 additional lenders, basically everyone, FinTechs and 
obviously the push to get CDFIs in later in the game as well. 
It was a process to get to 5,000. It is an important stable of 
lenders.
    But the regional banks, I think it was Senator Ernst that 
raised this. Without the regional banks, this thing would not 
have worked. It is just that simple. What we found out with a 
lot of the bigger banks is if you were a large account, you 
were processed by the commercial division. If you were a 
smaller account, you were processed by the small business or 
the business division, and there are a lot more business 
applications than commercial applications. The commercial 
applications just moved a lot faster.
    The other thing that I think we learned in time through all 
this, is that one of the things that they did do which worked 
really well is that the SBA designated like a 12-hour window in 
which they would only accept applications from smaller lending 
institutions, and it kind of cleared some of the backlog. It 
allowed those to get--because you can imagine. I mean, these 
larger banks had loaded everything up when that second tranche 
of funds became available, and they just smashed the system 
with these automated applications and almost crashed it. So 
that is important.
    By the way, one of the things that I did want to point out, 
because the mention was made of 1099 employees, they actually 
for the first time ever were eligible for this sort of 
assistance. That is something we added into the bill. They 
would qualify for two and a half times whatever it is they 
make. I get it. It does not cover all their needs, but I think 
that goes back to the technical assistance piece, which is 
explaining to people these are your rights, this is what you 
are eligible for, and this is where you can go. So that, I 
think, highlights that. It also highlights the lender 
accessibility.
    And then the third is the long-term figures because all of 
these impediments that I say do not exist or should not exist 
in PPP most definitely exist going to the market and saying I 
want a long-term, low-interest loan to be able to survive as a 
business, and that is a piece that I think we have to address 
and that we have some ideas on, others have some ideas on. But 
it is one we want to make a priority.
    So just on those first two points, the technical assistance 
and the lender access, I think the point has been made 
repeatedly that CDFIs, whether it is not just making them 
eligible to be lenders, but infusing them with the cash to have 
the capital to transfer the funds, because you have to have the 
money. Money does not come from the SBA. It comes from the 
lending institution. So you have to have the cash in your 
accounts to push it, and then 8 weeks later, you could sell it. 
But you have to have it for 8 weeks, and if you do not have 
enough of that money, it limits the number of loans you can do. 
So that has come through loud and clear.
    On the technical assistance piece, all of you had some 
different ideas about what the appropriate organizations are, 
and maybe I could just flesh out with all four of our 
witnesses. Obviously, all of you are a part of that assistance 
process, but if we wanted to make sure that more of these small 
businesses were aware of what they could get and where they 
could get it--because, by the way, one last point I would make 
is that is valid even now.
    We have over $100 billion of PPP money sitting there right 
now that has not been accessed. So there are small businesses 
out there that are eligible for this that are not applying for 
it as we speak, and that is through to August 6th, thanks to 
Senator Cardin extended it to August 6th, right?
    Senator Cardin. The 8th.
    Chairman Rubio. The 8th, August 8th. So they could still do 
it today. So that tells you that there has to be--something is 
blocking between eligibility of people who need it that did not 
get it and getting after. This program has not ended, and now 
we are going to go into round two of it, which is going to be 
more tailored for the kind of businesses we are talking about. 
This impediment is still there.
    So who is it that can help really sort of create the 
awareness and then the guidance to make sure your application 
is filled out right, you are getting what you are entitled to, 
and then on the forgiveness side, you are getting the pieces of 
it forgiven?
    Let me start with Ms. Bayles, who is here now, and then I 
will go just down the list.
    Ms. Bayles. Thank you, Senator Rubio.
    I would like to maybe provide a deeper level into the 
technical assistance that my testimony did not specifically 
say, and that is the role that service providers like myself 
play in all of this discussion.
    So we get the money out quickly to CDFIs. Great. We allow 
flexible terms, longer terms. Great. But if that business does 
not have a relationship with a service provider, a year-round 
service provider that can make sure that all of the application 
requirements you have taken care of--tax, compliance, 
bookkeeping, to have those financial documents--if they do not 
have a relationship with the service provider, access to a 
service provider, this is all for naught, because they are not 
going to have the capacity because they are not looking at 
their numbers. So that is a little bit more than technical 
assistance.
    I am educating you on the information that is out there, 
how you would qualify for the loan, but now I am also 
interpreting your data so that you can remain a healthy 
business and have the capacity to really use those funds to the 
max. That comes from the service provider perspective. That 
comes from companies like mine that are actually sitting down 
with the employee on a year-round basis after you have received 
the money or even in preparation of the money, but you are 
going to have to have a relationship with a service provider 
that can help you maintain the health of your business once you 
get the money.
    So I think I want to add that piece and make sure that 
piece is not lost in this discussion, the vital role that a 
company like mine plays when it comes to just making sense of 
all of this to the business owner so they can stay open and 
really operate successfully.
    Chairman Rubio. And I would add be eligible for 
forgiveness----
    Ms. Bayles. That is right.
    Chairman Rubio [continuing]. because you have to be able to 
document all that.
    Mr. Busby?
    Mr. Busby. Thank you.
    I think that we should and could fund the Minority Business 
Development Agency. We have seen their work. We know that they 
were created to help and support both technical as well as just 
boosting their acumen in reference to business readiness.
    In our letter, we have requested a $10 million financial 
support to MBDA. We want it codified, and we believe that they 
have made direct relationships with many chambers of commerce 
and other nonprofit organizations around the country to ensure 
that those smaller and many times unrepresented firms get 
access to the capital that they need. MBDA is great at the 
technical assistance as well as the relationships, and they 
have boots on the ground through relationships like the U.S. 
Black Chamber and our 145 chapters around the country.
    Chairman Rubio. OK. Ms. Bilonick?
    [No response.]
    Chairman Rubio. Ms. Bilonick?
    Ms. Bilonick. Yes. I would say that I believe the best sort 
of conduits for the technical assistance would be community-
based organizations and CDFIs. It would not necessarily only 
need to be CDFIs. There are plenty of organizations that 
strictly provide technical assistance and educational services 
to small businesses, but I just think the idea of funding in 
organizations that are entrenched in the community is an 
extremely important priority.
    Chairman Rubio. How are those normally recognized? Are 
those normally (c)(6)s?
    Ms. Bilonick. (c)(6)s? No. (c)(3)s.
    Chairman Rubio. (c)(3)s?
    Ms. Bilonick. Yeah. Or CDFIs.
    Chairman Rubio. Okay.
    Ms. Bilonick. The one thing that I wanted to add, though, 
just to sort of color this is that while we are all saying that 
we have really deep relationships in the community, which is 
true, I think there is an untapped market of businesses that 
could use our services that do not know about the CDFI industry 
at all.
    I was on a call yesterday where someone said it is less 
about what our name it and it is more about what we do. I think 
the name ``CDFI'' is not very easy to digest, and so I think it 
is just an unknown resource that is out there for small 
businesses. I could not tell you how many times we have had 
clients walk in and say had it not been for my neighbor or had 
it not been for my brother, I would have never known that this 
kind of organization exists.
    So in cities like D.C., where we have been for 20 years, we 
do not have that much of a challenge, but I do think there is 
something that could be done. I do not know that it is the role 
of the Federal Government to do it, but there is something to 
be done around broader marketing of CDFIs in general, because I 
believe that there are many, many businesses that could use our 
services, many more than currently use it, that are just simply 
not aware that we are here.
    Chairman Rubio. Okay.
    Ms. Estrada?
    Ms. Estrada. Yes. I have to be in agreement that we need to 
have more awareness about the CDFIs and what we are doing, and 
remember that probably the service that we provide, we work 
really well with the major lenders, with the banks, because our 
mission as well as for this business owner to graduate for the 
traditional lending system.
    Also, with our clients, that they work really very well 
with the MBDA. Also, they work really very well with the SCORE. 
Another, they work really very well with local community 
organizations. So my suggestion, if I may, it should not be 
just to identify only one organization. It should be a network 
of organizations, that we could work well together because, 
like mentioned here today, we need to be all together in order 
to sabotage the economy.
    Chairman Rubio. Okay. Senator Cardin, did you have a 
follow-up?
    Senator Cardin. Yes. Thank you, Mr. Chairman.
    I just really want to thank all four of our witnesses. I 
think this has been an extremely important hearing.
    I just want to make a brief comment. On the PPP program, we 
had some challenges, but we knew from the beginning that there 
were going to be challenges using existing and new lenders. And 
that is why we put the language in there urging the 
administration to make a special effort to deal with the 
underbanked community, and we were disappointed by the initial 
response. We then adjusted the program.
    The Treasury was certainly much more responsive than SBA to 
these issues, and we made certain changes. And it helped the 
underbanked and underserved and minority communities.
    But we also recognized that we needed the EIDL program in 
there. Mr. Busby, I agree with you completely. The EIDL 
program, we anticipated would be a program that could help the 
smaller small businesses, the minority small businesses to a 
greater extent, and you should not have chosen between the PPP 
and EIDL. Both were available, and the EIDL was supposed to 
give you some grant money up fast, quickly, and it didn't. And 
the EIDL program is supposed to be there for filling in the 
gaps, and it was not available. The window was closed, and the 
dollar amount caps were set. Then the information was not out 
there about how these two programs work together, not as an 
alternative.
    So I just mention all of that because as we look at COVID 4 
legislation, the legislation that hopefully we will be 
considering as early as next week, I hope that we can figure it 
in a way to deal with the issues that we have talked about 
today, about making sure that we get it right from the 
beginning, and we do what is right for the underbanked, 
underserved communities that we have seen were at a 
disadvantage at the beginning of the PPP program and were not 
served as well as they should have been under the EIDL program.
    So whether we adjust these programs or we look at the other 
programs that you talked about or we have set-asides, we have 
to make sure that we do a better job from the beginning, and I 
think this hearing has really helped us.
    And I very much appreciate the manner in which the Chairman 
manages our committee, gets the input of all of our members, 
and we all share the same objective, to make sure that all 
businesses in our community are served and there is access to 
capital for those who traditionally have had a much more 
challenging time getting access to capital.
    So thank you, Mr. Chairman.
    Chairman Rubio. Thank you.
    And I took want to thank the witnesses because, I mean, the 
goal coming in here is the following. Set-sides were important 
because it prevents you from running out of money, but I think 
we can all predict that this second round of assistance will be 
much more narrowly targeted at truly smaller businesses and 
those that have suffered tremendously.
    So there will still be pressure on money running out, but 
it will not be as acute as it was the first time. It will still 
be significant. So set-asides are important, but in essence, 
the targeting itself is a set-aside in that way.
    The bigger challenge is we are sitting here saying there 
are still thousands of businesses out there that could be using 
this help and are not accessing it--why is that?--answering 
that question, and I think we have gone a long way today toward 
getting answers to some of those questions. And they are 
complex. Some of it is the organizations that could help 
connect them either do not have the funding or the resources to 
reach them. Some of it is just awareness. We take for granted 
how small businesses, frankly, are just not aware of all the 
stuff that is out there, because they are busy surviving as a 
business, especially in these times.
    So I think today we went a long way toward really 
pinpointing what more can we do. It is not just enough to have 
more lenders. You also have to have people know they exist. You 
have to have people help guide them, how to fill out the 
application, how to manage the funds once they get it so they 
can survive, and how to position themselves for forgiveness as 
well. Otherwise, you wind up in a situation where you actually 
owe some money when you should not be because you could have 
easily met the criteria.
    Again, that is tough to do when the president, the 
treasurer, the CFO, and the employee is the same person, and 
they happen to be the only employee of the company. So the 
smaller you get, the harder that is. So I really do think 
today's hearing has helped us hone in on some of those 
impediments.
    So thank you for your patience. We are two and a half 
hours, as you saw a lot of member interest in this topic. I 
appreciate everything you have told us today. Believe me, it is 
meaningful. I was taking notes and have already passed on a 
bunch of them, if they can understand my handwriting, and then 
I will tell them what it meant.
    And for the members, the hearing record will stay open for 
2 weeks. Any statements or questions for the record should be 
submitted by the 6th of August at 5 p.m.
    With that, this hearing is adjourned. Thank you to our 
witnesses. Thank you. Thank you.
    [Whereupon, at 12:27 p.m., the hearing was adjourned.]

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