[House Hearing, 117 Congress]
[From the U.S. Government Publishing Office]


                  STATE OF THE SMALL BUSINESS ECONOMY IN 
                             THE ERA OF COVID-19

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

                                HEARING

                               BEFORE THE

                      COMMITTEE ON SMALL BUSINESS
                             UNITED STATES
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED SEVENTEENTH CONGRESS

                             FIRST SESSION

                               __________

                              HEARING HELD
                            FEBRUARY 4, 2021

                               __________

[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
                               

            Small Business Committee Document Number 117-002
             Available via the GPO Website: www.govinfo.gov
             
                              __________
					    
                               

                    U.S. GOVERNMENT PUBLISHING OFFICE                    
43-321                     WASHINGTON : 2020                     
          
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                   HOUSE COMMITTEE ON SMALL BUSINESS

                 NYDIA VELAZQUEZ, New York, Chairwoman
                          JARED GOLDEN, Maine
                          JASON CROW, Colorado
                         SHARICE DAVIDS, Kansas
                         KWEISI MFUME, Maryland
                        DEAN PHILLIPS, Minnesota
                         MARIE NEWMAN, Illinois
                       CAROLYN BOURDEAUX, Georgia
                          JUDY CHU, California
                       DWIGHT EVANS, Pennsylvania
                       ANTONIO DELGADO, New York
                     CHRISSY HOULAHAN, Pennsylvania
                          ANDY KIM, New Jersey
                         ANGIE CRAIG, Minnesota
              BLAINE LUETKEMEYER, Missouri, Ranking Member
                         ROGER WILLIAMS, Texas
                        JIM HAGEDORN, Minnesota
                        PETE STAUBER, Minnesota
                        DAN MEUSER, Pennsylvania
                       ANDREW GARBARINO, New York
                         YOUNG KIM, California
                         BETH VAN DUYNE, Texas
                         BYRON DONALDS, Florida
                         MARIA SALAZAR, Florida
                      SCOTT FITZGERALD, Wisconsin

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

                           OPENING STATEMENTS

                                                                   Page
Hon. Nydia Velazquez.............................................     1
Hon. Blaine Luetkemeyer..........................................     3

                               WITNESSES

Dr. Robert W. Fairlie, Professor, Department of Economics, 
  University of California, Santa Cruz, Santa Cruz, CA...........     6
Ms. Sharon Pinder, President & CEO, Capital Region Minority 
  Supplier Development Council, Silver Spring, MD................     8
Mr. Stephen Schoaps, Owner, Strother Cinema, Seminole, OK........    10
Ms. Karen Kerrigan, President & Chief Executive Officer, SBE 
  Council, Vienna, VA............................................    11

                                APPENDIX

Prepared Statements:
    Dr. Robert W. Fairlie, Professor, Department of Economics, 
      University of California, Santa Cruz, Santa Cruz, CA.......    48
    Ms. Sharon Pinder, President & CEO, Capital Region Minority 
      Supplier Development Council, Silver Spring, MD............    58
    Mr. Stephen Schoaps, Owner, Strother Cinema, Seminole, OK....    65
    Ms. Karen Kerrigan, President & Chief Executive Officer, SBE 
      Council, Vienna, VA........................................    67
Questions for the Record:
    None.
Answers for the Record:
    None.
Additional Material for the Record:
    NFIB Research Center Study...................................    76
    PPP Report...................................................   123
    Associated Builders and Contractors (ABC)....................   146
    ACA International............................................   149
    Brookings Metropolitan Policy Program........................   151
    Engine.......................................................   157
    Hispanic Business Enterprises (HBE)..........................   162
    National Association of Federally-Insured Credit Unions 
      (NAFCU)....................................................   190

 
       STATE OF THE SMALL BUSINESS ECONOMY IN THE ERA OF COVID-19

                              ----------                              


                       THURSDAY, FEBRUARY 4, 2021

                  House of Representatives,
               Committee on Small Business,
                                                    Washington, DC.
    The Committee met, pursuant to call, at 10:01 a.m., in Room 
2360, Rayburn House Office Building, Hon. Nydia M. Velazquez 
[chairwoman of the Committee] presiding.
    Present: Representatives Velazquez, Golden, Crow, Davids, 
Mfume, Phillips, Newman, Bourdeaux, Delgado, Houlahan, Kim of 
New Jersey, Craig, Luetkemeyer, Donalds, Fitzgerald, Garbarino, 
Hagedorn, Kim of California, Meuser, Salazar, Stauber, Van 
Duyne, and Williams.
    Chairwoman VELAZQUEZ. Good morning. I call this hearing to 
order. I want to thank everyone for joining us today for our 
first hearing of the 117th Congress. I welcome all our new 
Small Business Committee Members, and welcome back those of you 
returning to the Committee from the 116th Congress.
    I want to make sure to note some important requirements. 
Let me begin by saying that standing House and Committee rules 
and practice will continue to apply during hybrid proceedings. 
All Members are reminded they are expected to adhere to these 
standing rules, including decorum.
    House regulations require Members to be visible through a 
video connection throughout the proceeding, so please keep your 
cameras on. Also, please remember to remain muted until you are 
recognized to minimize background noise.
    If you have to participate in another proceeding, please 
exit this one and log back in later. In the event a Member 
encounters technical issues that prevent them from being 
recognized for their questioning, I will move to the next 
available Member of the same party, and I will recognize that 
Member at the next appropriate time slot, provided they have 
returned to the proceeding.
    For those Members physically present in the Committee room 
today, we will also be following the health and safety guidance 
issued by the attending physician.
    This past year, COVID-19 sparked a once-in-a-lifetime 
crisis for American small businesses. As we meet today, 
entrepreneurs nationwide are holding onto their businesses for 
dear life. According to the research published by the Federal 
Reserve Bank of New York, the number of active business owners 
fell by 22 percent from February to April 2020, the largest 
drop on record.
    That same research showed minority owned businesses faced 
the worst outcome. This pandemic has hit minority owned 
businesses the hardest. COVID has caused a 41 percent decline 
in Black-owned businesses, a 32 percent decline in Latino-owned 
businesses, and 26 percent decline in Asian-American-owned 
businesses.
    As we start the new year, it is not clear that conditions 
have improved. As the virus has continued to spread, small 
businesses are increasingly pessimistic in their outlook for 
2021. The NFIB Small Business Optimism Index declined 5.5 
points in December to 95.9 percent points, a level not seen 
since 1973.
    Even more troubling is that 20 percent of firms consider 
themselves to be at risk or distressed. The pandemic has hit 
small businesses that rely on large gatherings and foot traffic 
especially hard. According to the New York State Restaurant 
Association, more than half of all restaurants in New York City 
are in danger of closing forever.
    While small businesses in hospitality, retail, travel, 
leisure, entertainment, and others that rely on foot traffic 
for revenue struggle, big businesses strive. Profits soared for 
large corporations like Amazon, Wal-Mart, Home Depot, Best Buy, 
Costco, and others, who gained market share and saw their stock 
prices rise accordingly.
    Forty-five of the fifty most valuable publicly traded U.S. 
companies turned a profit between April and September 2020, one 
of the most tumultuous economic periods in modern history. We 
need to be thinking about big and bold policies that provide 
small businesses with the resources they need to make it 
through this crisis and grow in the future.
    In December, Congress passed a bill reopening the Paycheck 
Protection Program, allocating new funding for EIDL advances, 
and creating the Shuttered Venue Grants Program. These 
initiatives will save jobs and help businesses stay afloat, but 
that relief package was only a down payment on the stimulus the 
small business economy needs. Small businesses are still in a 
crisis, and we must do more.
    Looking forward, we must enact bold relief measures under 
the Biden administration that reflect the dire reality main 
street firms are facing. Small businesses have made it clear 
they need more direct and flexible cash infusions. Throughout 
this pandemic, small business owners told our Committee they 
couldn't afford to take on additional debt during this 
uncertain time.
    Programs like the targeted EIDL advances will provide small 
business owners with desperately needed relief without weighing 
down their balance sheets. We will hear testimony today about 
the benefits of advances and other grants and if more funding 
is required.
    In addition to capital, small businesses also need access 
to customers. The U.S. Federal Government is the largest 
consumer globally, purchasing over $500 billion in goods and 
services each year. The Federal Government can play a unique 
role in supporting small businesses by using the Defense 
Production Act and Buy American policies to increase the 
customer base of the small businesses' economy.
    Our nation's recovery depends on the well-being of small 
businesses and their employees. These are uncertain times for 
American entrepreneurs, and this Committee must help lead to 
the other side of this crisis. Members of this Committee serve 
as the voice of small businesses in the House, and we must work 
tirelessly to support them.
    Today's hearing will give us a clear view of the small 
business economy's state and the work we need to do going 
forward.
    Ladies and gentlemen, the hard work we have been engaged in 
over the past 11 months on behalf of America's entrepreneurs 
continues to date. I am looking forward to carrying on that 
work in a bipartisan manner with our new Ranking Member, Mr. 
Blaine Luetkemeyer of Missouri.
    Let me be the first to welcome you back to this Committee. 
With that, Mr. Ranking Member, you are recognized for your 
opening statement.
    Mr. LUETKEMEYER. Thank you, Madam Chair.
    And, again, I look forward to working with you. I think 
there is a lot of common ground here where we can make a lot of 
progress for our great small business folks back home and 
across this country.
    Appreciate you holding this kickoff hearing. As the 
Committee begins the 117th Congress, there are few topics more 
important within our jurisdiction than examining the small 
business economy during this unprecedented global crisis. It is 
my hope that we continue to explore all facets of this 
significant issue in a bipartisan manner and work efficiently 
to support and ensure all small businesses, entrepreneurs, and 
innovators rebuild and return to economic independence.
    While this emergency period is unparalleled, we know that, 
prior to COVID-19, small businesses were operating at historic 
levels. In 2018 and 2019, optimism reached record heights for 
small business owners, and the unemployment rate was decreasing 
sharply and eventually hovered around 3.5 percent. And, if 
small business have confidence, they are more comfortable 
taking prudent risks and innovating new ideas. These are the 
characteristics that drive our economy forward.
    Our pre-COVID-19 small business environment was constructed 
through progrowth policies that focussed on tax reform and a 
vigorous deregulatory environment that allowed small businesses 
to reinvest their hard-earned dollars into their business' 
employees. Instead of concentrating on mountains of paperwork, 
small businesses were free to focus on their own goods, 
services, customers, and employees.
    Unfortunately, COVID-19 and accompanying protective 
measures struck at the core of the small business community. A 
once busy Main Street became dormant due to the crisis at hand 
and the burdensome shutdown measures instituted by State and 
local governments.
    As a response, Congress and the former administration 
developed tools that could deliver assistance to small 
businesses quickly. One program that has been especially 
effective is the Paycheck Protection Program, known as the PPP.
    According to the Small Business Administration, by the time 
PPP expired on August 8, 2020, it had assisted over 5 million 
small businesses. In total, these loans provided over 2, or--
excuse me--$525 billion to small businesses from coast to coast 
and assisted in saving over 50 million jobs.
    As the emergency period wore on, Congress worked to install 
the PPP with more flexibility and further enhancements. In the 
latest COVID-19 relief bill, signed into law in December 2020, 
the PPP was reauthorized with $284 billion.
    This second round of funding was tailored and targeted to 
ensure small businesses and other eligible entities that were 
truly impacted by COVID-19 received the relief they needed. 
Just last month, the PPP program was officially relaunched, and 
I look forward to working in a bipartisan manner to ensure that 
the program continues to reach small businesses across the 
country that were hardest hit by the pandemic.
    Beyond PPP, the December COVID relief bill extended the 
Economic Injury Disaster Loan Program and reformed the EIDL 
Advance Program. Additionally, it extended debt relief program 
for existing and new 7a, 504, and micro loans. It also created 
the Shuttered Venue Operators, SVO, Grant Program for venues, 
theatres, and museums.
    In total, the December COVID relief bill delivered $325 
billion--targeted dollars to the Nation's smallest and hardest-
hit businesses and industries. Ensuring that programs are 
operating effectively and efficiently remain paramount on this 
Committee.
    The best way, in my judgment, to get these businesses back 
on their feet is to allow them to open up. Let them get back to 
business. It works. In Missouri, my home State, we opened up in 
mid-May. For 2020, we wound up with a 5 percent increase in 
revenues over 2019--2019--that is right--and 2020 had more 
revenue coming into our State coffers than we did in 2019. We 
have a 4.4 percent unemployment rate today and have 200,000 
open jobs in our State as a result of that.
    As these small businesses worked to try and create--as we 
work to try and create an environment for small business to 
rebuild, create jobs, and expand in the future--i.e., get back 
to work--I am concerned that this administration is taking 
steps to institute a regulatory environment that heavily 
burdens small businesses.
    By rescinding the commonsense administrative action that 
required repeal of two regulations for every one created, there 
is concern that heavyhanded regulations are returning. This 
regulatory environment combined with conversations surrounding 
increasing the minimum wage are warning signs for America's job 
creators.
    Our Nation's small businesses are more fragile than ever 
before, and additional rules and regulations are 
counterproductive to the recovery. These hard-working men and 
women are the backbone of this great Nation, and, when they 
succeed, so does our economy.
    I look forward to working with all of my colleagues to 
ensure our Nation's environment is rich with opportunities for 
growth. I would like to thank all the witnesses for joining us 
today, and thank you, Madam Chair.
    With that, I yield back.
    Chairwoman VELAZQUEZ. The gentleman yields back.
    I would like to take a moment to explain how this hearing 
will proceed.
    Each witness will have 5 minutes to provide a statement, 
and each Committee Member will have 5 minutes for questions. 
Please ensure that your microphone is on when you begin 
speaking and that you return to mute when finished.
    With that, I would like to introduce our witnesses.
    Our first witness today is Professor Robert Fairlie, 
Professor of Economics at the University of California, Santa 
Cruz. Professor Fairlie has testified before Congress numerous 
times on policy issues related to small businesses, and we are 
thrilled to have him before us today.
    Most recently, Professor Fairlie was instrumental in 
research regarding the impact of COVID-19 on business owners of 
color, which has helped guide and will continue to guide 
congressional policymaking. We look forward to hearing more 
about this important research and the implications it has on 
federal relief efforts.
    Our second witness is Ms. Sharon Pinder. Ms. Pinder is the 
President and CEO of the Capital Region Minority Supplier 
Diversity Council, a nonprofit corporation whose mission is to 
link corporations and government agencies with competitively 
viable minority business enterprises.
    Prior to joining the council, Ms. Pinder served for 3 years 
as the Director of the Mayor's Office of Minority and Women 
Owned Business Developments for the city of Baltimore, where 
she was responsible for the city's minority and women business 
programs.
    In 2014, the University of Maryland, Eastern Shore, 
recognized Ms. Pinder's dedication to small businesses by 
naming a scholarship, the Sharon Pinder Award for 
Entrepreneurship, in her honor.
    Welcome Ms. Pinder.
    Our third witness is Mr. Stephen Schoaps. Mr. Schoaps is 
the owner of Strother Cinema, a neighborhood theatre with two 
screens, in Seminole, Oklahoma. As with virtually all other 
theatres, music venues, and museums, Strother Cinema was forced 
to close during the pandemic. As a shuttered venue owner, he is 
also looking forward to seeing the newly enacted Shuttered 
Venue Grant Program that will be implemented by the SBA.
    We look forward to hearing about his experiences with these 
programs, especially the role that the EIDL advance played in 
helping keep his business afloat.
    Welcome, Mr. Schoaps.
    I would now like to yield to the Ranking Member, Mr. 
Luetkemeyer, to introduce our final witness.
    Mr. LUETKEMEYER. Thank you, Madam Chair.
    Our next witness is Karen Kerrigan. Ms. Kerrigan is the 
President and chief executive officer of the Small Business and 
Entrepreneurship Council, also known as SBE Council.
    Founded in 1994, the SBE Council advocates for small 
businesses, entrepreneurs, and start-ups. In addition to 
advocacy, SBE Council produces educational resources and 
significant research for our Nation's job creators.
    For more than two decades, Ms. Kerrigan has been a 
prominent voice in supporting small businesses, whether 
providing information on access to capital, discussing funding 
revenues, or leading on regulation and tax reform, Ms. Kerrigan 
has proven herself to be a distinguished advocate for small 
businesses everywhere. She is a frequent television commentator 
on small business growth and has participated in and led small 
business events at the White House and numerous Federal 
agencies.
    She is also no stranger to Capitol Hill, where she has 
testified before various committees before, including this one. 
Ms. Kerrigan is a graduate of the State University of New York 
in Cortland and a member of several Federal advisory boards.
    Ms. Kerrigan, we thank you for your smart approach and 
understanding of the entire small business ecosystem, 
especially during this time of COVID-19. Welcome back to The 
Committee. We look forward to your testimony.
    Chairwoman VELAZQUEZ. I now recognize Professor Fairlie for 
5 minutes.

 STATEMENTS OF DR. ROBERT W. FAIRLIE, PROFESSOR, DEPARTMENT OF 
 ECONOMICS, UNIVERSITY OF CALIFORNIA, SANTA CRUZ, SANTA CRUZ, 
 CALIFORNIA; SHARON PINDER, PRESIDENT AND CEO, CAPITAL REGION 
MINORITY SUPPLIER DEVELOPMENT COUNCIL, SILVER SPRING, MARYLAND; 
 STEPHEN SCHOAPS, OWNER, STROTHER CINEMA, SEMINOLE, OKLAHOMA; 
  AND KAREN KERRIGAN, PRESIDENT AND CEO, SBE COUNCIL, VIENNA, 
                            VIRGINIA

               STATEMENT OF DR. ROBERT W. FAIRLIE

    Mr. FAIRLIE. Thank you, Chairwoman Velazquez, Ranking 
Member Luetkemeyer, and members of the Committee. It is an 
honor to testify before you on the state of small business 
economy. I am a professor of economics at the University of 
California, Santa Cruz, and have studied entrepreneurship, 
racial inequality, and small business policy for over 25 years.
    I have been asked to discuss the findings of my research on 
the impacts of the pandemic on small business owners. As you 
know, obtaining up to date and accurate information on the 
effects of the pandemic has been extremely difficult. I have 
spent the past 8 months compiling and analyzing data to 
investigate what happened to small business owners, especially 
minority business owners.
    From the middle of March to early April, most States 
imposed shelter-in-place restrictions that closed nonessential 
businesses. In my research, I found that the number of active 
business owners in the U.S. plummeted by 3.3 million, or 22 
percent, between February and April of 2020. No other 2- or 
even 12-month window of time has ever shown such a large change 
in business activity.
    For comparison, from the start to the end of the Great 
Recession, the number of active business owners dropped by only 
5 percent. African American businesses were hit the hardest, 
experiencing a 41 percent drop in business activity, Latinx 
business owner activity fell by 32 percent, and Asian business 
owner activity dropped by 26 percent. Unfavorable industry 
concentrations and the smaller scale of minority owned 
businesses were partly responsible.
    Job losses were also much higher for minority workers. 
Black unemployment hit a peak of 17 percent, and Latinx 
unemployment hit a peak of 18 percent. Although many of the 
closures turned out to be temporary, any month of closure 
reflects lost income to the owner of the business. But the 
owner still has to pay rent and other bills.
    It has been especially difficult to figure out how much 
small businesses lost in sales and revenues in the pandemic. 
Using taxable sales data from the California Department of Tax 
and Fee Administration, we found average losses of 17 percent 
in the second quarter of 2020. Normally, year-over-year growth 
is in the range of 3 to 4 percent.
    Sales losses were the largest in businesses affected by 
mandatory lockdowns. For example, we found that hotels lost 91 
percent, restaurants lost 61 percent, and clothing stores lost 
56 percent.
    At the same time, online sales grew by 180 percent in the 
second quarter of 2020. Without a strong online presence, many 
small businesses will not have the resources to weather a 
prolonged recovery. Recent Census Bureau surveys indicate that 
only 15 to 20 percent of small businesses have enough cash on 
hand to cover 3 months of operations.
    One of the stated goals in the CARES Act was to prioritize 
serving underserved markets and businesses owned by socially 
and economically disadvantaged individuals. Did the PPP and 
EIDL programs, which were the key components of the CARES Act, 
get distributed to minority communities?
    Using data on 15 million individual loans, we found that 
funding from these relief programs both flowed to minority 
communities and away from minority communities. If anything, we 
found a positive relationship between PPP loan receipt for 
business in the minority share of the population.
    There is some evidence, however, that the first round of 
funds flowed disproportionately to nonminority communities. 
When focusing on PPP loan amounts per employee, we also found a 
disproportionate flow to nonminority communities. In contrast, 
EIDL loans and advances in both number and amounts were 
provided to minority communities.
    In my continual work tracking how small businesses are 
doing in the recovery, I recently found some alarming trends. 
From April to October, there was constant month-to-month 
improvements in business activity. But, in November and 
December, that pattern reversed. Over those 2 months, small 
business activity dropped by 6 percent.
    The losses I have described here are especially alarming 
for two vulnerable groups: African Americans and Latinx. Prior 
to the pandemic, business ownership and revenues were already 
low for both groups. But, perhaps more importantly, there is a 
huge wealth gap. Half of Black families in the U.S. have less 
than $10,000 in total wealth, and half of Latinx families have 
less than $25,000 in total wealth. White levels of wealth are 7 
to 18 times higher. Many minority business owners will simply 
not have the financial resources to weather prolonged closures.
    I would like to turn to discussing what could help move us 
forward.
    First, consumers need to feel safe again. The number one 
priority for helping small businesses is to get the vaccine out 
faster, enabling customers to go back to small businesses.
    Second, more financial assistance is needed for small 
business owners, especially during the next few months. In 
particular, rent relief and protection could be crucial for 
survival.
    Third, we need to slow down the extensive shift to online 
shopping that occurred in the pandemic and is likely to 
continue. Small businesses need to have more of an online 
presence. Aid in the form of web page assistance could be 
useful. Search engines could prioritize local businesses 
instead of online retailers and big-box stores.
    Fourth, the Federal Government needs to collect more data 
on race and their relief efforts. Demographic information was 
only partially and unevenly collected in the first two rounds 
of the PPP program, and there was much criticism for this 
omission.
    Chairwoman VELAZQUEZ. Doctor----
    Mr. FAIRLIE. Additionally, collection of information----
    Chairwoman VELAZQUEZ. Professor Fairlie, your time has 
expired, and maybe during the question-and-answer period, you 
will be able to expand on any point that you were not able to.
    Mr. FAIRLIE. Yeah, I am finished. Thank you for the 
opportunity to present.
    Chairwoman VELAZQUEZ. I now will recognize Ms. Pinder for 5 
minutes.

                   STATEMENT OF SHARON PINDER

    Ms. PINDER. Good morning, Madam Chairwoman Velazquez and 
Ranking Member Congressman Luetkemeyer and the distinguished 
members of the Committee of Small Business, and I certainly 
have to recognize my favorite Congressman, Congressman Kweisi 
Mfume. Thank you for your service to our country, and thank you 
for this opportunity to speak with you today.
    I am Sharon Pinder, president and CEO of the Capital Region 
Minority Supply Development Council and operator of two centers 
funded by the U.S. Department of Commerce, Minority Business 
Development Agency. We operate the MBDA Business Center, 
Washington, D.C., and the Federal Procurement Center, the only 
one of its kind in this country.
    There is an old economic adage that says, ``When America 
catches a cold, minority businesses catch pneumonia.'' Well, 
now it is worse. America has COVID-19, and both minorities and 
their businesses are dying at dramatic rates. Just like many 
minority individuals have preexisting health conditions, well, 
most minority businesses faced preexisting discriminatory 
conditions that show up in ways like access to capital, lack of 
access to opportunities, mentorship, et cetera.
    PreCOVID, there were 1.1 million minority owned businesses 
employing 6.3 million people, generating more than 1.8 trillion 
in revenue annually. Then, in 2020, the world came to a halt, 
and the data that we, I think, were all talking from, the 
National Bureau of Economic Research, looking at between 
February and April, African Americans experienced the largest 
loss.
    Madam Chairwoman talked about the 41 percent with African 
American-owned businesses, Latinx businesses, 32 percent Asian 
businesses, et cetera. But my organization and our sister 
organizations across this country live this every day, and what 
we know to be true is that our businesses need a lifeline.
    And, as we examine and reflect upon the state of minority 
businesses due to COVID-19, we have to factor in, layer in the 
social injustice piece. Black-owned businesses were especially 
impacted by this.
    Ladies and gentlemen, the failure of our minority small 
businesses places our country at risk why? Because minority 
businesses are poised to become the majority population. We 
need to plug up the cracks in our economic foundation and 
preserve our place in the future global marketplace.
    I can spend hours talking about issues with PPP and all 
those things, but I would like to spend my remaining time 
talking about some solutions.
    We ask that Congress look at some existing assets through a 
different lens. The Defense Production Act statute is one of 
the country's most powerful laws for Federal intervention in 
national commercial activity. Title III of the act establishes 
the President's authority to invest in specific industries.
    The idea of investment in business development would be 
crucial, for example, in jump-starting minority businesses in 
manufacturing. There could be a no-interest loan like those 
provided to businesses to ramp up for defense work.
    A quick example. In the State of Maryland, through the 
CARES Act, we recently implemented funds to--for COVID-19 small 
business relief grant and loan program. Governor Hogan 
allocated $5 million that was allocated or dispensed by 
Meridian Management Group. But the loans were from 25,000 to 
150,000, 0 percent interest the first year, and 2 percent of 
the remaining 5 years. The remaining fund I told you was 5 
million. There was $20 million on request. There is a need. 
There is an identifiable need.
    Title IV of the Defense Production Act includes a section 
that establishes preference for small business contractors. 
Showing a preference for minority businesses as a subset of 
small business by expanding the use of sole source programming 
provisions of the 8a program will put more money into those 
minority businesses that compete in both the Federal and 
private sector.
    Let's look at--further at existing assets. How about Buy 
American. We are excited about President Biden's Buy American 
executive order. The concept of Buy American has been around 
since 1933, but the executive order includes all Federal 
procurement now. That is huge. We hope that it will be 
implemented with--in a manner that is advantageous to minority 
businesses.
    With the Buy American executive order, we propose a 
strategy that involves OEM teaming up with foreign 
manufacturing companies to produce and manufacture goods and 
services in partnership with U.S.-based minority businesses.
    Such a joint venture could introduce a pathway for foreign 
businesses who want to move their organizations to the U.S., an 
avenue to do so, and at the same time provide resources and 
increase support to the development of minority businesses.
    Madam Chairwoman, minority and small businesses are in need 
of an economic vaccine. The Capital Region Minority Supply 
Development Council is a national minority supply development 
council and networks stand ready to support your House Small 
Business Committee in its work to help build small and minority 
businesses.
    My written testimony goes into or provides more detail.
    Again, I appreciate the opportunity to have this 
discussion.
    Chairwoman VELAZQUEZ. Thank you, Ms. Pinder.
    I now recognize Mr. Schoaps for 5 minutes.

                  STATEMENT OF STEPHEN SCHOAPS

    Mr. SCHOAPS. Thank you, Chairwoman Velazquez, Ranking 
Member Luetkemeyer, and distinguished members of The Committee. 
My name is Steve Schoaps. My wife and I own Strother Cinema, a 
small, two-screen movie theatre in Seminole, Oklahoma. Seminole 
is a small town in rural Oklahoma that has been hard-hit by 
COVID-19, like many other small towns across America.
    We are an integral part of our community, and it has amazed 
me that, with everything going on in our town and across our 
country, people call me or talk to me everywhere I go asking if 
we are okay, and when are we going to open the theatre again? I 
guess I didn't understand how many people cared about us and 
the service we were providing our community. Now I do.
    We are hurting, like most other theatres across America, 
from small-town, single-screen theatres to megaplexes in the 
big cities. The pandemic has basically wiped out our business. 
According to estimates from the National Association of Theatre 
Owners, 75 percent of movie theatre companies will be insolvent 
before this spring unless they receive financial aid. Ninety-
five percent have experienced revenue losses greater than 70 
percent. Nationwide, 63 percent of jobs in theatres have been 
lost to furlough or permanent layoff. And, in Oklahoma, we have 
lost 45 percent of the jobs in movie theatres.
    It started out that people were just scared to go to the 
movies, but we put in place comprehensive cleaning procedures 
and social distancing policies that made our auditoriums and 
lobbies safe. But then the movies stopped coming. The film 
slate coming from Hollywood dried up through studio closures 
and the studios' reluctance to take chances with movie assets 
that are worth billions of dollars.
    Comparing our theatre's 2019 revenues to the same time 
period in 2020, we have seen a 92 percent reduction in revenue. 
We have been forced to reduce our staffing to almost nothing 
and have resorted to selling popcorn and concessions to go. We 
have even started renting out our theatre to video gamers who 
play on the big screens.
    We have been able to survive, but not without the help of 
the programs that Congress and the SBA have developed to help 
us. The most important thing that we needed to figure out was 
how to stay afloat without taking on too much new debt. Given 
the scale of our losses and the reduced film slate for 2020 and 
2021, taking on more debt will impact our ability to recover. 
That is why businesses like ours are especially in need of and 
grateful for grant programs provided by Congress and the SBA, 
including our forgivable Paycheck Protection Program loan and 
the upcoming Shuttered Venue Operators Grant Program.
    In particular, I would like to highlight the help provided 
to us through the EIDL grant program, which we received as part 
of our EIDL loan applications. While the loan application was 
being evaluated, we received a $10,000 grant. We were able to 
use the money to pay a myriad of ongoing expenses, including 
rent, utility bills, workers compensation insurance, property 
and liability insurance, technology vendors, our security 
system, and property maintenance, along with many other things.
    These expenses have continued unabated during the pandemic 
and could not be deferred or suspended. Being able to stay 
current with our vendors also helped prevent a secondary crisis 
among the businesses that support our theatre, which helps 
ensure that they will survive the pandemic too.
    We were very challenged when we learned that the EIDL grant 
would count against our PPP forgiveness. The COVID relief bill 
that was passed in late December helped us again by fixing the 
EIDL grant issue, and that will mean a lot when we receive that 
money back from our bank.
    Small businesses are running on razor-thin margins and, for 
small-town theatres, surviving is what it is all about. In many 
towns like ours, we are one of the few entertainment options 
left available locally, and one of the more important communal 
gathering places, and that means a lot to our community.
    Congress' help and the help of the SBA have been an 
integral part of our survival this past year and will be again 
this year. We would love to just go back to the businesses we 
ran in 2019, but that is not going to happen.
    With social distancing, our capacity has been reduced by 
half. And, in other States, it is reduced even more. Movie 
studios will be slow to release big films this year, and their 
streaming services will gobble up what used to be our bread and 
butter.
    Cleaning and maintaining theatres will cost more well into 
the future until we get through the pandemic, and people's 
attitudes about large gatherings will have a damaging effect on 
our business. We are just trying to make the changes necessary 
to survive in the future. The challenges we faced in 2020 and 
the challenges yet to come will be daunting, but we can 
overcome them. We just need your help for a little while, and 
so far you have been there when we have needed you.
    Thank you for everything you have done and are doing for 
small businesses and, in particular, the movie theatre 
industry, and thank you for your time today.
    Chairwoman VELAZQUEZ. Thank you, Mr. Schoaps. Thank you for 
your willingness to share your story with us. Quite insightful 
and compelling.
    Now Ms. Kerrigan is recognized for 5 minutes.

                  STATEMENT OF KAREN KERRIGAN

    Ms. KERRIGAN. Yes. Thank you. Thank you, Chairwoman 
Velazquez. Thank you for your invitation to participate in this 
important hearing today on the state of small business in an 
era of COVID-19.
    The work of the House Small Business Committee has been so 
vital to entrepreneurs, small business owners, and their 
employees over the course of the pandemic last year, and we 
deeply appreciate the engagement and hard work of each and 
every Committee member. And I welcome all the new members as 
well. We look forward to working with you.
    Chairwoman Velazquez and Ranking Member Luetkemeyer, we are 
very grateful for your leadership. We look forward to another 
round of working with you on developing and advancing solutions 
that will help our small businesses and entrepreneurs lead the 
way in digging the economy out of the significant jobs and 
small business hole we are facing.
    As you well know, America's entrepreneurial sector is more 
important than ever, and SBE Council is hopeful and optimistic 
that our Nation can rebound if policies and programs continue 
to provide relief and support for small businesses and to help 
our entrepreneurs transform and grow their businesses.
    Obviously the sudden onset of the pandemic, severity and 
long-term nature of shutdowns and restrictions, followed by 
continuous uncertainty about the course of the disease and when 
and if economic normalcy will return has shocked and deeply 
wounded our small business ecosystem. Countless small 
businesses have been lost. More will be lost, and this 
devastation will take some time to dig out of, particularly in 
certain areas of the country and in business sectors that have 
been hit the hardest.
    Yet, despite the vast hardship on Main Street, there have 
been innumerable stories of survival and resiliency. Many small 
business owners and their employees have discovered new tools, 
new markets, and new methods for operating in the COVID-19 
economy. Moreover, there has been a surge in the number of 
individuals who are pursuing entrepreneurial activity according 
to the U.S. Census Bureau business formation data on high-
propensity business applications--these are likely employers--
over 1.5 million employer applications were filed last year, 
which is an increase of 16 percent compared to 2019. So this is 
really great news. The entrepreneurial spirit is alive and 
well.
    So we really do need to be thinking about and addressing 
policies that will not only support existing small businesses 
get through the challenging months ahead and to the other side 
of the pandemic, but also those that encourage individuals to 
move forward with their intention of starting a business and 
being successful in that endeavor in order to breathe life into 
America's small business ecosystem.
    When I hear from small business owners directly or review 
their current challenges and concerns in a number of regular 
surveys produced by organizations and media platforms--and I 
have highlighted some of those in my written testimony--one 
message comes through very clearly.
    First, small business owners can't afford to withstand any 
new shocks or costs. And, second, more revenue capital is 
desperately needed.
    Of course many small businesses continue to struggle to pay 
their bills. An Alignable January 2021 Rent Poll revealed 33 
percent of small business owners reported that they could not 
pay their rent in January. The number is higher for minority 
owned businesses at 48 percent.
    The year-end Q4 2020 MetLife U.S. Chamber survey found that 
half of small businesses see their operations continuing for a 
year or less before having to permanently shut down.
    Now, hopefully with the added PPP boost and other programs 
running smoothly, an acceleration in vaccine output and 
distribution, and States and localities restarting economic 
activity, these will all help to shift small business optimism 
and outlook in a positive direction--more of a positive 
direction than what was conveyed in the surveys in my written 
testimony.
    Small business owners may be the optimists among us, but 
they are exhausted. They need a period of stability and 
continued support, and our organization looks forward to 
working with all of you on common-ground areas that will help 
restore this sector, help it recover, and bring our economy 
back to robust and sustainable growth.
    So I look forward to our discussions and your questions and 
talking about what these solutions are for moving forward.
    Thank you so much.
    Chairwoman VELAZQUEZ. Thank you, Ms. Kerrigan.
    Now I will begin by recognizing myself for 5 minutes.
    Professor Fairlie, I would like to address my first 
question to you.
    Thank you so much for the type of research that you have 
done demonstrating the negative impact of COVID-19 on 
underserved businesses, particularly Black, Latino, and Asian 
Americans. It was that data and that type of research that 
validated the anecdotal stories that we were hearing from 
businesses that were not able to get any access to the PPP 
program or EIDL program given the fact that they didn't have 
preexisting relationships with financial institutions, and that 
gave the argument to us to insist----
    And, by the way, former Secretary Mnuchin and the 
Administrator both recognized that, yes, there was a disparity 
when it came to underserved communities.
    That gave the basis for us to insist in the December relief 
package to set aside not only PPP for underserved community and 
minority businesses, but also for mission-based lenders.
    Has your research given you any opportunity to look at the 
impact that these programs and targeted relief programs have 
had on the businesses that we intended to help?
    Mr. FAIRLIE. Yes. So that is one of the things that I 
definitely want to start looking into. I looked the other day 
when I was preparing for this testimony and the data have not 
been released yet. So we have no information on that.
    Chairwoman VELAZQUEZ. Okay. Mr. Schoaps, I understand that 
you--but, Mr. Fairlie, is it your estimated guess that more 
businesses that were left behind during the first tranche of 
money will have a better opportunity now to access the PPP 
program and the EIDL program?
    Mr. FAIRLIE. Yes, I do think so. One of the things that I 
found in my research is that the EIDL program did reach 
minority communities, and that was promising. The first round 
of the PPP program did not, right? That was the one that had 
the problems with the established banks, as you mentioned.
    So I think there is just much more awareness, there is much 
more emphasis on fintech and also on, you know, kind of small 
local community banks. And I think that it will make a 
difference, it will help.
    Chairwoman VELAZQUEZ. The latest data that was provided to 
us by the Small Business Administration demonstrated the large 
number of smaller loans that were made after the second--the 
December relief package.
    Mr. Schoaps, I understand you received a few SBA relief 
products, including PPP, EIDL loan, and EIDL advance. Can you 
elaborate on the value to you and your business of receiving 
the EIDL advance?
    Mr. SCHOAPS. The EIDL advance was integral in us surviving. 
It came at a time that the PPP money was running out. It came 
at a time when we were looking, waiting to hear about our EIDL 
loan. And the EIDL grant program was tremendous for us.
    Now, we were thrown for a loop when we found out that it 
was going to go against our PPP forgiveness. However, that has 
since been corrected in the December COVID relief bill.
    But no, it has been integral. It helped us pay our rent, 
our--all the expenses that we had kind of piling up at a time 
when there was no revenue coming in whatsoever.
    Chairwoman VELAZQUEZ. How was your experience with SBA when 
seeking the EIDL loan and advance?
    Mr. SCHOAPS. Our experience with the SBA was phenomenal, to 
be real honest. When I filed for my PPP loan, my banker said, 
hey, you need to maybe consider this EIDL program. Go and fill 
out an application and see if you qualify, and even if you 
don't qualify there is a possibility you can get this grant 
they have.
    And so I went online, filled out an application, and it 
was--I didn't think much about it. I didn't think I had much 
hope of getting it. And just one day I happened to be looking 
at my bank account and there was $10,000 in there from the EIDL 
grant program. And we used that immediately to pay bills that 
were there. I thought it was a simple operation. We went 
online, filled out the application, and it was just an easy, 
easy situation. The SBA has been nothing but great on that 
program.
    Chairwoman VELAZQUEZ. Thank you, Mr. Schoaps.
    My time has expired, and I recognize the Ranking Member, 
Mr. Luetkemeyer, for 5 minutes.
    Mr. LUETKEMEYER. Thank you, Madam Chair.
    I would like to begin with Ms. Kerrigan. One of the things 
that is in the new budget bill that is being promoted by the 
administration is the increasing of the minimum wage.
    This morning, I would like to enter into the record, Madam 
Chair, the NFIB Research Center study, Economic effects of 
enacting the Raise the Wage Act on small businesses and U.S. 
economy.
    Chairwoman VELAZQUEZ. Without objection.
    Mr. LUETKEMEYER. The summary on the front here says it is 
going to cost 1.6 million jobs and have a real output loss of 
more than $2 trillion to our economy. And this is by the 
National Federation of Independent Businesses, which is that is 
the effect on small businesses.
    So, Ms. Kerrigan, my question to you is, what is your 
thought process on the doubling, basically the doubling of a 
minimum wage with regards to how small businesses are going to 
be affected, what kind of response they will have, especially 
since you mentioned in your testimony that the small businesses 
cannot withstand any more new shocks for costs?
    Ms. KERRIGAN. Thank you, Congressman. Gosh, this is going 
to be very, very harmful for many small businesses, 
particularly those who have been hardest hit by the pandemic, 
you know, and in those certain sectors, you know, the 
restaurant industry, et cetera.
    And you are right, I mean, right now, you know, with many 
small businesses being in a position where they are struggling 
to pay their bills, they can't pay their rent. I also noted in 
my written testimony that revenues starting in 2021 are down, 
you know, over 40 percent. Forty percent of small business 
owners report their revenue, you know, is down this year, even 
compared to last year.
    Mr. LUETKEMEYER. Okay. I would like to interrupt just a 
second here, if I could.
    Ms. KERRIGAN. Sure.
    Mr. LUETKEMEYER. What would be the response for the small 
business folks in order to survive? Are they going to lay off 
people, go to automation, just close up altogether? What, in 
your judgment, would you see happening along that line?
    Ms. KERRIGAN. All of the above. I mean, I do think there 
are going to be small business owners who are just--who grinded 
it out up to this point who are exhausted who really can't take 
the cost, and they will throw in the towel for sure. I mean, we 
are seeing that already, given a lot of the uncertainty.
    So, I mean, definitely, the workers' hours will be lost, 
jobs will be lost. I don't know how much they could pass on, 
you know, to--you know, to consumers and stay competitive, you 
know, particularly when they are competing with bigger 
enterprises.
    Mr. LUETKEMEYER. Okay. I apologize. I have got some more 
questions and I have got to move on here very quickly. My time 
is limited.
    Dr. Fairlie, you talk about in your testimony sales losses 
are largest in businesses affected by mandatory lockdowns. I 
will just give you some statistics very quickly here. Due to 
COVID lockdowns, Florida and New York, roughly the same 
population, 19 to 21 million each, Florida has roughly 20,000 
people that died due to COVID, New York 39,000 people, and yet 
Florida is open and New York is not.
    I indicated in my opening testimony how Missouri, my own 
home State, opened up mid May and wound up with a positive 
revenue growth for the year, and we now have 4.4 percent 
unemployment. New York's own survey during the September-
November period show that less than 1.4 percent of COVID deaths 
came from restaurants and bars and hair and personal care was 
one-tenth of 1 percent.
    Lockdowns are killing us, and I think your testimony here 
indicates that. I would like for you to elaborate on that just 
a little bit more, if you would, please.
    Mr. FAIRLIE. Well, it is one of the arguments that I have 
made is that if we can get the vaccine out faster, distribute 
it more, you know, evenly across the population and get people, 
customers to feel comfortable to go back, then we can open up 
businesses and get going again.
    I mean, if you are comparing New York to Florida, it is 
very difficult to compare the two, right? New York has very 
densely populated areas. It is a very expensive place to live. 
You have got multi-families living in the same households. So 
it is just much more of a vector for spreading the disease than 
in Florida, which is much more spread out.
    Mr. LUETKEMEYER. Well, we can talk about that later.
    But, Mr. Schoaps, very quickly with you. Good to hear that 
the program has worked for you. One of the things that I am 
concerned about is the regulators coming in and pressuring the 
creditors, your creditor to foreclose on people who are falling 
behind on their loans, on their debts, and then by doing that 
just decimating entire industries within the communities, 
costing jobs.
    What kind of relationship do you have with your banker and 
creditor? Is this something that would be concerning to you if 
the regulators came in and forced them to do something 
different?
    Mr. SCHOAPS. I don't really think it would. I have spent 
many years even before owning a small business developing my 
relationship with my banker. And if there was one thing I 
would--and I heard you talking about minorities and their 
relation with banks.
    I really think somebody needs to help mentor small business 
owners in developing that relationship with their bank. I have 
literally had my banker call me and say, look, if you have any 
problems or issues, you need to let us know so we can help you 
out. We have some other things we can do.
    And so I think that relationship with your bank is one of 
the key things, and I would really like to see more businesses 
build those relationships with their bankers. Of course, I am 
lucky. I live in a small town. A small town banker might be my 
neighbor. And so----
    Chairwoman VELAZQUEZ. Mr. Schoaps.
    Mr. SCHOAPS. Yes.
    Chairwoman VELAZQUEZ. Thank you so much. Time has expired.
    Now we recognize the Chairman on the Subcommittee on 
Underserved, Agricultural, and Rural Business Development, Mr. 
Golden from Maine.
    Mr. GOLDEN. Thank you, Madam Chair.
    I wanted to direct my first question to Ms. Pinder, and 
then if I have some time left over we will take it from there.
    Ms. Pinder, I am from Maine. I live in a community, 
Lewiston, Maine, which is about 36,000 people. Immediately 
across a river dividing two communities is Auburn of about 
18,000 people. So we are talking about, you know, a population 
of roughly 55 to 60 thousand people, perhaps not as large as 
many an urban area out there, but in the State of Maine this is 
about as urban as it gets. We are one of the more rural States 
that you could look at.
    In Lewiston, we actually have a large amount per capita of 
recent immigrants from Western Africa as well as over the past 
decade of Somali Americans, many of whom have turned to 
entrepreneurship and starting their own businesses, and many of 
their children now graduating from our schools and coming of an 
age where they might look to start their own businesses or take 
on these existing businesses.
    I wanted to ask, in an area like this--I know it is not as 
urban as Washington, D.C. or New York City or many other, you 
know, big urban areas, but in one like this that I have 
described, how might you think the Federal Government could 
support economic development? I know you have talked about the 
Defense Production Act and the Buy American executive order. 
Feel free to talk further about those, but if you have other 
ideas beyond those, we are all ears.
    Ms. PINDER. So, Congressman, you are asking what resources 
are available to provide support to some of those businesses? 
Is that----
    Mr. GOLDEN. Absolutely. As we are thinking about the COVID 
response as well and the things that the Biden administration 
are looking at doing to support small businesses, what do you 
think we should be looking at on this committee?
    Ms. PINDER. Well, in reference to what you were talking 
about your constituents going into entrepreneurship, part of 
what they can take advantage of are some existing programs that 
are in place. We have a national network of--we exist all over 
the country, and so there is access from our MBE Centers as 
well as our Minority Supplier Development Council that your 
constituents can access as well. There are existing resources, 
such as PTAP and things of that nature that can do that.
    But at the end of the day--and the businesses I am assuming 
you are talking about are mostly doing startups at this 
particular point in time. And so as a result of that, looking 
at how to support that, you know, maybe there is information 
they can receive from SBA loans as we are talking about it, you 
know. Information of Pell grants to students to attend colleges 
and things of that nature might help.
    But what I was proposing, in terms of us looking at some 
existing assets through the Defense Production Act and things 
of that nature, looks at how do we then take some policies that 
are in place that kind of help and look at innovative kind of 
ways to kind of help our businesses, in terms of their growth.
    You know, where are the opportunities? It is all about 
opportunities, right? Where are some of the opportunities, 
whether it is in the Federal sector--we support primarily the 
private sector, but identifying where those opportunities are 
and then helping with removing the barrier to the access of 
capital. That is kind of what is key.
    Mr. GOLDEN. On that, Ms. Pinder, you might have some 
advice. Many of our community members who came from, many of 
them from Kenyan refugee camps, these are Somalia Americans, 
you know, many of them have issues with access to capital due 
to issues with lending on interest.
    Are you aware of other resources that are out there to help 
a small business family like this in accessing capital?
    Ms. PINDER. Yes. And what I can do, Congressman, is provide 
you with that, with some information after this session. I 
certainly can forward that information to you, because those 
kind of startups are really prevalent across the country, and I 
certainly can provide that.
    Mr. GOLDEN. That would be very helpful.
    Madam Chair, I am sure I am getting pretty close here, and 
I don't want to put someone in the situation of having just 
seconds to respond, so I will yield my time.
    Chairwoman VELAZQUEZ. Thank you. The gentleman yields back.
    Now we recognize the gentleman from Texas, Vice Ranking 
Member of the committee, Mr. Williams.
    Mr. WILLIAMS. Thank you, Chairwoman.
    Mr. Schoaps, you touched on the Shuttered Venue Operators 
Grant program in your testimony. I was proud to be the 
Republican lead on the Save Our Stages Act in the House, which 
I am sure you know is what this program is based off of.
    The Shuttered Venue program recognizes that businesses like 
yours were some of the first to close and will be the last to 
reopen, as COVID-19 caused some problems. Other aid programs, 
such as Paycheck Protection Program, do not meet the unique 
needs of these highly affected industries. The SBA must swiftly 
implement this program to deliver much-needed relief to small 
businesses like yours that you own.
    So I would say, Mr. Schoaps, I would like to give you the 
opportunity to speak directly to the Small Business 
Administration on how your business is impacted every single 
day this critical program is not accepting applications.
    Mr. SCHOAPS. Well, thank you first of all, Congressman, for 
supporting and sponsoring the Shuttered Venue Operators Grant. 
Every day that that grant application process isn't open causes 
consternation for everybody in the theater business especially. 
We are--a lot of us are closed. If we are not closed, we are 
running at losses, at best.
    And I think every day we don't have that application 
process open, the more worry comes into our lives about the 
future, whether we are going to survive or not. You know, I sit 
down with my wife almost every night and we say, well, how many 
more days do you think we can last? How many more? Are there 
weeks? Is it weeks or days?
    And I think the Shuttered Venue Operators Grant is the hope 
we have for the future, and I think that that is one thing that 
we need to get that application process open as quickly as 
possible. I know it is an involved thing, but----
    Mr. WILLIAMS. Well, we hear you, and we are going to make 
some noise to get that money to you.
    Many Americans are under the false notion that they must go 
to a 4-year college to be successful and make it in America. I 
personally do not think this is true and believe our country 
would be better off if more people utilized trade schools so we 
could have more plumbers, contractors, welders, et cetera, in 
the workforce. Once a person learns a skill, they can translate 
that knowledge into creating their own small business.
    Ms. Kerrigan, what role do you see career and technical 
education opportunities playing to help hardworking Americans 
overcome the economic devastation of COVID-19?
    Ms. KERRIGAN. I think they are critical, I mean, absolutely 
critical, you know, particularly given, you know, where we see 
some of the growth. Actually, the bright spots are in the 
economy now, you know, in terms of home improvement and in 
terms of those other type of services that are really, you 
know, on the uptick, you know, versus some of the other 
sectors. So, obviously, there is a skills gap, and this type of 
training is going to be critical for these workers, moving 
forward.
    And you are right. I mean, you know, in terms of spurring 
entrepreneurship, you know, I think it also is very vital. I 
mean, it is these individuals, these new individuals that enter 
into these professions that actually see things in the 
marketplace, talk to consumers maybe that their current 
employer does not. So there is more competition, more vibrancy, 
more innovation in those industries.
    But yes, moving forward, vital. And I agree with you in 
terms of the 4-year very expensive college education not being 
necessary.
    Mr. WILLIAMS. Thank you. In other words, we have enough 
lawyers. Thank you.
    COVID-19 has caused a massive shift in consumer preference 
from brick-and-mortar retail stores to online shopping. This 
does not seem like a temporary trend. It is likely to persist 
long after the pandemic. Unfortunately, there are so many rural 
areas across the country, including my district, that do not 
have access to high-speed internet.
    This is setting these small businesses up for failure, 
simply because they do not have access to the necessary 
infrastructure to succeed. I plan on pushing for rural 
broadband to be in any infrastructure program that may come to 
the floor.
    So, Dr. Fairlie, in the brief time that we have, can you 
talk about how increasing rural broadband funding would help 
small businesses.
    Mr. FAIRLIE. Yes, I fully agree. I think anything and 
everything we can do to help small businesses have more of an 
online presence is crucial, right? I mean, you just see big box 
stores, you know, the online retailers have done incredibly 
well, right? That was talked about in the very beginning, that 
their revenues are up. Their stock prices are up.
    Small businesses, of course, are not seeing that. And that 
I think is, you know, everything we can do. Broadband access I 
think is a crucial issue, especially for rural small 
businesses.
    Mr. WILLIAMS. Thank you. I yield my time back.
    Chairwoman VELAZQUEZ. The gentleman yields back.
    The gentleman from Colorado, Mr. Jason Crow, Chairman of 
the Subcommittee on Innovation, Entrepreneurship, and Workforce 
Development, is recognized.
    Mr. CROW. Thank you, Chairwoman. And thank you to all the 
witnesses today. You are very insightful, and I appreciate you 
taking time. I know how busy you are doing your normal work, so 
we appreciate your insights.
    I just wanted to start by clarifying something. There was 
discussion earlier about the impact of minimum wage on the 
pandemic. And I certainly understand some of those concerns, 
but also, just to be clear, the Raise the Wage Act doesn't 
actually immediately take effect after enactment. There is a 
delay after enactment, and then is a gradual increase over a 5-
year period. So I think we have to be very careful about how we 
frame this, in terms of its impact on businesses during the 
pandemic. So I wanted to start with that.
    And I represent a community where one of the biggest 
challenges that our small businesses face right now is that 
people can't actually afford to live in the community and can't 
actually afford to patronize the businesses and help them grow 
as well. So we have to I think address this with a level of 
sophistication and look at the multiple dynamics going on here.
    So, with that said, I would like to start with Ms. Pinder. 
Ms. Pinder, I represent one of the most diverse districts in 
the country. Nearly 20 percent of the residents in my district 
were born outside of the country, and I have over 150 languages 
spoken. So I am very concerned and very attuned to the issues 
of underserved communities and their lack of access to capital.
    So, as you might know, we changed the PPP program and some 
of these relief programs to dedicate money to CDFIs, to help 
drive that money to those areas of need. So I would appreciate 
your comments on what are still the barriers for underserved 
communities in accessing CDFI money and money that is allocated 
to try to get to those businesses in great need.
    Ms. PINDER. I think that the second round, there were all 
those problems that were identified with the first round of PPP 
and EIDL loans and all those kinds of things, because of the 
rush to get out and that kind of thing.
    But I think that the intentional nature of looking at how 
to place or push the money down to intermediary types of 
organizations or CDFIs was a good one, because we have to be 
intentional about it. There has to be organizations or 
resources that are, if nothing else to describe this, boots-on-
the-ground kind of approaches.
    And understanding where those communities are--I mean, 
where those businesses are and being able to market and 
communicate the existence of the resources, because that has 
been one of the biggest barriers of entry for achieving this 
money throughout the cycle. It is where are the resources, 
where can I identify those resources, and then the government 
or private sector organizations that have taken this on being 
intentional about making the information known.
    Mr. CROW. Just to follow up on that last point, Ms. Pinder, 
what would be an effective way--and I know I am kind of putting 
you on the spot here a little bit, but what would be a really 
effective way to get that information, that last piece you just 
mentioned, get that information known and communicate what is 
available to some of these communities?
    Ms. PINDER. I think you have to meet people where they are, 
right? And so if you are looking to increase awareness in 
particular communities, what are those--the knowledge of where 
the CDFIs are? How do you use means to advertise that 
information? And whether it is through our churches or through 
organizations that exist in those communities, I think that is 
how you meet people where they are.
    Mr. CROW. Thank you. I appreciate that very much.
    Professor Fairlie, you had also touched on this in your 
written testimony about the changes between the first round of 
funds, relief funds, and the second round of funds.
    So the same question for you, if I may: What are some of 
the barriers that you have determined and seen from your 
research on getting CDFIs connected to those underserved 
communities?
    Mr. FAIRLIE. Well, I think that, you know, the big problem 
in the first round is that it was mainly established banks that 
were providing the funds, and those were going out to mostly 
nonminority businesses.
    And it was the second round of PPP funds that--where they 
really targeted, you know, trying to get this fintech into 
local banks, CDFIs, you know, those types of organizations that 
really made the big difference, right? In the research that I 
show, you can just see this incredible difference between this 
positive relationship with nonminority communities overall in 
the U.S., and then it switches around, totally, you know, 
reverses in that second round.
    So I think it is really important. I think that we need to 
be aggressive. We need to go out and talk to small business 
owners, you know, get that information out to them so that they 
know about these programs, so that they know to apply.
    Mr. CROW. Thank you. Madam Chair, I yield back.
    Chairwoman VELAZQUEZ. The gentleman yields back.
    The gentleman from Minnesota, Mr. Hagedorn, is recognized 
for 5 minutes.
    Mr. HAGEDORN. Thank you, Madam Chair.
    I would like to expound a little bit about these lockdowns 
that our Ranking Member, Mr. Luetkemeyer, brought up. In our 
State of Minnesota, our Governor, Tim Walz, has held onto 
emergency powers and made all sorts of arbitrary decrees, and 
in so doing his central government planning has really affected 
our small businesses. It has crushed a lot of them, put some of 
them out of work, out of business permanently. And you look 
at--some of them just didn't make sense. You had big box 
stores, corporate stores open, small businesses closed.
    And then you get into the rural areas that I represent down 
in southern Minnesota and you have border communities, and the 
Minnesotans were just across the border going to Iowa, South 
Dakota, or Wisconsin to purchase their goods there, go dine, 
and go to a bar or restaurant. And then we were hurt.
    Now we are trying to open back up, but the effects of these 
lockdowns are really hurting small businesses. You have a 
situation where we don't have enough labor. Part of that is 
because the schools are still closed throughout most of 
Minnesota with regulations that don't make sense. Even the CDC 
says it is okay to get the teachers and everybody back in 
school for in-person learning. That would free up the parents 
to be able to go out and do work again in the community, work 
for our small businesses.
    And then at some of the border communities, the employees 
have literally gone to neighboring States and taken full-time 
jobs there, knowing that those States will remain open when 
Minnesota's opening and closing.
    So I guess to Ms. Kerrigan, what are your thoughts about 
that? I would like to hear any other experiences that you have 
learned along the way and just how devastating some of these 
lockdown orders have been to small businesses across the 
country.
    Ms. KERRIGAN. Well, they have been very, very, very 
devastating, obviously. You know, from the beginning of the 
pandemic or very shortly thereafter, you know, we said that, 
yeah, this is a very difficult challenge for the country, 
unprecedented, but still small businesses could operate safe 
and smart. They had every incentive to do so.
    And you are right. I mean, sort of the inequities in 
allowing sort of the larger stores to remain open and closing 
the smaller stores that could have sold some of these goods 
that were provided by the larger stores and, in effect, herding 
a larger amount of customers into bigger stores, you know, 
didn't make sense from our members' perspective.
    So--and what we are seeing now, Congressman, is you do see 
businesses just in these locked down States, I mean, really 
picking up--you know, picking up and moving, moving to other 
States. I mean, it was the trigger for them, actually, to move 
to more business-friendly States, you know, to lower cost 
States, and to States that--you know, where there was a little 
bit more flexibility, you know, in terms of these policies.
    So I don't know if I have one simple answer for you. I 
mean, hopefully with the vaccines and now we are seeing the big 
drop in the disease. I mean, we are on a course here where 
economic activity can, you know, open up and get back to 
normal, whatever that might be, you know, the next 6 months or 
so.
    Mr. HAGEDORN. Sorry to cut you off. I want to get over to--
thank you for that. And that has been our experience with 
businesses and others going to neighboring States like South 
Dakota that have been more open.
    Mr. Schoaps, I have a real quick question for you. Being in 
the business that you are, in the movie theater business in a 
small community, we have communities in my district in Madelia 
and Kasson that have small theaters that haven't been able to 
reopen.
    In some of our rural communities, obviously, we need 
infrastructure for folks to be there, jobs and everything else, 
good, obviously, healthcare and education. But quality of life, 
things to do, entertainment, that is really important in a 
community the size of yours. I think it is what, you have about 
7,000 people. And I see that. What is your thought about that?
    Mr. SCHOAPS. Well, I have to agree with you. I can't tell 
you the number of people that have come up to me and asked when 
we are going to open. They come knocking on our door when they 
see us in the theater. They want us to open.
    But it goes back to what you were talking about just a 
minute ago. As long as L.A. and New York are locked down, they 
represent 25 percent of the revenue that goes into movies, 
movie theaters in the country. And movie studios will not put 
out their movies, their big movies, if they know that L.A. and 
New York are locked down.
    So yes, it is quality of life. Movie theaters are a big 
thing in small towns, simply because it is a gathering place. 
It is a place where--it is a reach out to the rest of the world 
from a small rural community.
    Mr. HAGEDORN. Thank you very much. I appreciate the time.
    Chairwoman VELAZQUEZ. Now we recognize the gentlelady from 
Kansas, Ms. Davids, Chairwoman of the Subcommittee on Economic 
Growth, Tax, and Capital Access.
    Ms. DAVIDS. Thank you, Chairwoman.
    I am definitely cognizant of the fact that it was about a 
year ago that the Small Business Committee held our first 
hearing on how the emerging, at that time emerging pandemic 
might impact small business. And, obviously, so much has 
changed in that time.
    I have been honored--hold on a minute. The buzzing is 
happening in my office.
    I have been really pleased to be able to speak with a lot 
of small business owners in the Third District in Kansas. And, 
first of all, I appreciate folks taking time out of their 
business schedules just like you all have here today to share 
experiences and perspectives.
    And, you know, I think that what we are hearing now and 
what I have heard at home is that, obviously, small businesses 
are in a fight for their lives. And they are getting innovative 
and using every tool at their disposal to keep their doors open 
and employees paid. And there is obviously a lot of work to do, 
continue to do to provide the capital and resources and relief 
that our small businesses are going to need.
    You know, I know we talked about the EIDL or heard about 
the EIDL loan earlier. A small business owner in my district 
was able to apply for and receive the funds almost immediately 
within a day of applying. And it really saved her business, and 
she was able to continue to operate. So know that when these 
programs are working effectively, they can save jobs. They can 
save businesses.
    And I also know that some of the issues that we are facing 
are because we don't have the necessary funds or programs 
available for people to get a second drawdown on the PPP, and 
so we are going to continue to work on that.
    And then finally, I want to mention that when it comes to 
the supply chain and our small manufacturers and medium size 
manufacturers, I have introduced the SUPPLIES Act because I 
know that there are so many businesses, particularly in Kansas, 
who are eager to shift their production over to things like 
personal protective equipment, testing supplies, and even to 
help with the vaccine rollout. I know a lot of healthcare 
workers are still struggling to get all of those things.
    So I am glad to see that the American Rescue Plan includes 
$10 billion of funding for domestic manufacturing, for 
emergency medical supplies and this sort of thing.
    So, Ms. Pinder, I would love to hear you speak a little bit 
to the opportunity to utilize small businesses and particularly 
minority-owned businesses when it comes to the implementation 
of the Defense Production Act. I know you mentioned that in 
your testimony, and would just love to hear you talk a little 
bit more about that.
    Ms. PINDER. Thank you, Congresswoman. One of the things 
that I talked about is how do we then take existing assets and 
see how we leverage them in order to help support what you are 
talking about, because you are right, there is this plethora of 
need that is out there, and how do we identify, specifically 
for those businesses that are hurting the most.
    So traditionally, assets like the Defense Production Act 
and like Buy American has not really looked at or leveraged how 
we then translate some of that that perhaps we could leverage 
with, say, minority and women and small businesses.
    We take, for example--I talked about the title, Title 3, 
that the President has authority to invest in specific 
industries. What you talked about, people pivoting during that 
time, well, what if we could take something of that nature. And 
the goal of Title 3, for example, is expand domestic capacity 
for supplies, but if, indeed, that can be done and implemented 
in mind with supporting minority and smaller businesses.
    I think those are the kind of things that we need--that 
Congress can take a look at. It is all about implementation, 
right? So how do we implement it to make sure that that is 
indicated in those efforts.
    Ms. DAVIDS. Thank you, Ms. Pinder. We will probably follow 
up more after this.
    I will yield back to the Chairwoman.
    Chairwoman VELAZQUEZ. The gentlelady yields back.
    The gentleman from Minnesota, Mr. Stauber, is recognized 
for 5 minutes.
    Mr. STAUBER. Thank you, Madam Chair.
    And at our first meeting of this year, I do not mean to 
kick things off in such a negative way, but I believe this 
situation calls for it.
    Small businesses were crushed at the hands of their State 
and Federal Governments. Speaker Pelosi put politics ahead of 
our country. For months, she made her partisan wish list items 
a priority over the millions of Americans who were suffering. 
It was unacceptable.
    So now here we are a new Congress, and yet we have not 
heard any fresh ideas on how to help America's small 
businesses. Instead, we have the tired old ideas. One of them 
is known to close small businesses across this Nation.
    Ranking Member Luetkemeyer brought this up in his comments, 
the $15 minimum wage. When asked, one of the witnesses stated: 
Jobs will be lost, small businesses will close.
    President Biden's relief plan shows just how out of touch 
he is with the hardworking small business owners of America, 
and it is frustrating. It is unconscionable that a relief 
package took so long. Americans and small business owners 
everywhere deserve better.
    Now to our witnesses. I want to thank you all for being 
here today. Your testimony will provide much-needed clarity on 
policy proposals that can actually deliver effective targeted 
relief to our small business owners, who are the engine of our 
economy.
    As the government has rolled out relief programs, mistakes 
were clearly made. Lenders wrongly doled out PPP loans to 
individuals who should not have qualified. The SBA created 
ongoing guidance, some making loans out of compliance at a 
moment's notice.
    Ms. Kerrigan, in your opinion, where have our relief 
programs failed our small businesses?
    Ms. KERRIGAN. Well, I will start with the good news, that, 
you know, over the course of time there have been lessons 
learned. And, you know, based on this current PPP round, you 
know, there are many things that have been done right.
    But I will agree with you in terms of there was the need 
for speed back, you know, in the summer, where the economy had 
some momentum, where small businesses saw some light, you know, 
at the end of the tunnel, and yet Congress left town in August 
without acting and without extending the PPP program, where 
there was actually money that was left in that program.
    So, you know, getting small businesses that money that they 
needed to weather what we went through in the fall and what we 
are going through currently I think would have been very, very 
important to save a lot of small businesses, save jobs. And 
that is one area, you know, that I will recognize.
    And then just again, you know, I think there just needs to 
be the continuous sort of reevaluation of the program and for 
the SBA and for the Congress, you know, to act on 
recommendations I think a little bit more quickly, in terms of 
getting--making it more flexible, reducing complexity, and 
providing more certainty both for, you know, small business 
owners and the lenders, particularly as we move through and 
into the forgiveness period.
    So, I mean, again, I know it was a big lift, getting this 
money out the door. A lot of small businesses benefited. But 
there could have been things done along the way that could have 
helped a lot more small businesses, and particularly reaching 
those in the minority and disadvantaged communities as well.
    Mr. STAUBER. I appreciate those comments, and I agree with 
you, that need for speed. Once the investments ran out at the 
end of August, it was unacceptable that our small businesses 
across this Nation had to wait almost 4 months before the 
additional relief.
    Ms. Kerrigan, a second question: Can you identify any 
issues in our relief program that have made small business 
owners reluctant to spend money they have received or reluctant 
to turn to the government for aid at all in the future?
    Ms. KERRIGAN. You know, I think some of those issues have 
been resolved, in terms of, you know, some tax issues. You 
know, I still think there can be additional flexibility in the 
PPP program.
    You know, many business owners just don't think that 
program is for them, particularly as it relates to, you know, 
the 60/40 split, 60 percent for payroll, 40 percent for other 
expenses, particularly if they are in high-cost areas and have 
high overhead.
    Mr. STAUBER. Thank you. Ms. Kerrigan, my time has run out, 
and I appreciate all the witnesses. And I yield back.
    Chairwoman VELAZQUEZ. The gentleman yields back.
    Now we recognize the Chairman of the Subcommittee on 
Contracting and Infrastructure and Vice Chair of the committee, 
Mr. Kweisi Mfume from Maryland.
    Mr. MFUME. Madam Chair, thank you very much. And I 
appreciate the opportunity. I assume we will have an 
opportunity also in a second round to expand on everything that 
we don't get a chance to cover here, so I look forward to that.
    A couple of quick things. I want to thank the witnesses, 
all of whom I am sure have busy schedules and lifestyles, for 
making time available. This sort of discussion helps those of 
us, as lawmakers, get a sense of the divergence of thought and 
where some of the urgent matters are that we can apply 
ourselves to right away.
    I must admit, having served on this committee in the 
eighties and the nineties, that this issue that continues to 
come up about the minimum wage is a little perplexing to me. I 
appreciate the Ranking Member introducing it and the response 
that was given, but for me it is a little like deja vu. The 
answers are the same as they were many, many years ago, that it 
would cause job loss and, of course, businesses would be forced 
to close, and that would be the end of small businesses as we 
know them.
    In fact, in 1988, the Federal minimum wage was at $3.35. 
Today, 33 years later, it is at $7.25. So it has taken us 33 
years to give Federal workers a minimum wage increase of $3.90. 
Thirty-three years is a long time, and in the interim, 
businesses did not go out of business. Cost in some instances 
were passed along to consumers.
    But the issue here is one of a lesson, and I think the 
lesson is that we will continue to see an increase in the 
efforts to try to make sure that people have a livable wage or 
a minimum wage that reflects where we are in society.
    I want to associate myself to the remarks of Mr. Crow and 
reiterate the fact that this is not something that takes place 
next week or next year. So I know we are in the middle of 
COVID, but it might be a little bit of a mischaracterization to 
use that backdrop to place this issue as if it is going to 
happen right away. It doesn't really completely happen until 
2025. So, for the record, I just thought I would rhetorically 
ask myself the question, if not now, when? So when has been a 
long time coming.
    I do want to go back to Mr. Fairlie's remarks and Ms. 
Kerrigan's, as you have sort of given us a 30,000-foot view of 
what is going on as a result of the impact the pandemic has had 
on small businesses in general and minority businesses in 
particular.
    In just a couple of minutes, could either or both of you--
and I don't have much time--just indicate, from your 
perspective, when do things get better? Do they get better when 
we open up, or do they get better when we are able to get rid 
of the disease?
    Ms. KERRIGAN. Where I start, I think it is both. I think we 
can, you know, move in kind of a parallel track. And when we 
open up, I think that will definitely help small businesses. 
But certainly, the whole vaccination issue and getting rid of 
the disease, you know, will give consumers the confidence, you 
know, to go to stores and to, you know, get back to sort of, 
quote/unquote, normal economic activity.
    But, again, Congressman, I just have a lot of optimism for 
all these new entrepreneurs. That is the opportunity in the 
marketplace, based on where consumer trends are going right 
now. And to the extent that we can encourage those 
entrepreneurs to move forward to innovate and keep our economy 
competitive, no matter what the normal may look like, the new 
normal moving forward, I think is vital.
    Mr. MFUME. Thank you. And Professor Fairlie?
    Mr. FAIRLIE. I think that we need three things: One, we 
need to get that vaccine out. We need to get it out faster. We 
need to get it out evenly across the country. So there are some 
equity issues about that, of course. That is really important.
    Customers need to feel comfortable. They need to feel like 
they can go into a small business and not worry about getting 
the coronavirus. That is essential. And, of course, once that 
happens, we can start opening up everything, which is really 
important.
    But the third thing, though, that I would not underestimate 
is this kind of trend toward shopping online. People are just 
becoming much more accustomed to doing it. I don't think it is 
going to go away forever. And small businesses somehow need to 
have more of an online presence.
    And so I gave some ideas there about how search engines 
could prioritize small businesses in their local area instead 
of just the big box stores or bigger online retailers. That 
would be one way that we could do that.
    Mr. MFUME. Thank you. Thank you very much. Mr. Schoaps, I 
really empathize with your situation out there in the Midwest. 
To see a 92 percent reduction in your revenue in 1 year is sort 
of unfathomable, and I can only imagine what you and your wife 
are up against, in terms of swimming upstream.
    I am glad to know that the December stimulus bill, in which 
we did correct this whole issue of the EIDL loans, helped you 
to some extent, and that I look forward to President Biden's 
current stimulus bill----
    Chairwoman VELAZQUEZ. Excuse me.
    Mr. MFUME.--in terms of pushing you a little further down 
the road in terms of your own survival.
    I want to underscore two things, one of which dovetails on 
what the professor just said. Innovation is one of the biggest 
enemies that many small businesses face. We saw it with the 
newspaper industry a couple of decades ago. We are seeing it 
now with movies, as it relates to Netflix and On-Demand and 
Pay-Per-View, which affects both television and other losses.
    Madam Chair, were you trying to----
    Chairwoman VELAZQUEZ. Yes. Your time has expired. We are 
discussing with the Ranking Member in a minute if we are going 
to go to a second round, and then you will have an opportunity 
to have Mr. Schoaps answer your question.
    Mr. MFUME. Thank you very much. Actually, it is he and Ms. 
Pinder. So I will await the decision of the Chair and the 
Ranking Member.
    Chairwoman VELAZQUEZ. Thank you.
    The gentleman from Pennsylvania, Mr. Meuser, is recognized 
for 5 minutes.
    Mr. MEUSER. Thank you very much, Madam Chair.
    Thank you to the witnesses. I appreciate your being here 
with us. The PPP, the Paycheck Protection plan, was very much 
of a success. Nationwide, there were 5.5 million, 
approximately, small businesses received loans. $557 billion in 
forgivable loans were issued, with an average of approximately 
$100,000. So that was really the sweet spot. That was the 
intent. In Pennsylvania, my home State, it was very much the 
same sort of metrics, 200,000 loans for $22 billion, so about 
$110,000 per business.
    The EIDL loans were also very successful, the Economic 
Injury Disaster Loan, particularly in Pennsylvania. The SBA 
worked extremely hand in hand with me and with us. 3.6 million 
loans for $200 billion, which works out to be about $6,000 
each, which, again, was right on the mark.
    Nevertheless, that is about a trillion dollars. And with 
another $3 trillion that was put into the economy, that is $4 
trillion thus far over the past year. And yet, one in four 
small businesses still predicts they are going to go out of 
business within the next 6 months, and most of them are 
restaurants. So it is almost that there is almost no amount of 
money that is going to buoy and allow small businesses to 
survive except the free marketplace itself.
    So, Ms. Kerrigan, I will start with you, please. You know, 
there is some talk here about business planning and how somehow 
government is supposed to provide innovative ideas. Anybody who 
has been in the private sector for more than we will say a year 
knows that that is ridiculous. Entrepreneurs figure those 
things out on their own.
    What government does is create a competitive business 
environment for small business and large business to do their 
thing and be competitive and deliver the best products and 
services at the lowest prices.
    Nevertheless, Ms. Kerrigan, I would like to ask you about 
access of capital outside of all of the forgivable loans and 
all and the additional that we are going to provide. I am not 
sure there is--in fact, I am sure there is no alternative to a 
safe and smart opening that is driven by the entrepreneurs and 
the small businesses themselves, where their ideas are applied, 
to assure that their customers and their staff are safe, yet 
they stay open.
    And I would like to get your comment on that, Ms. Kerrigan 
and Mr. Schoaps. Am I saying it right? Mr. Schoaps.
    But first just a quick answer on access to capital. Do you 
have any suggestions for us as to what we should be looking for 
outside of the EIDL and the PPP and standard lines of credit 
that banks have or that businesses have?
    Ms. KERRIGAN. Well, you know, one of the areas that we have 
been very involved with since the Obama administration is the 
whole area of investment crowdfunding. And we are beginning to 
see a big surge in that. Obviously, investment crowdfunding was 
made legal. It took 4 long years, you know, for the rules to be 
written on that.
    But now I see this huge surge in investment crowdfunding I 
think which is really great. It is truly democratizing access 
to capital. Minority-/women-owned businesses are tapping into 
this capital. And what I think the beauty of it is is it 
leverages local capital and local investors.
    And there are new rules now at the SEC that are going to 
lift the limit from $1 million to $5 million and some other 
things that will strengthen equity crowdfunding.
    I think we could work with some tax credits there. I mean, 
the U.K. has, with investment crowdfunding, put together 
actually a fund where if an individual raises, you know, up to 
$250,000 or more--I forget what the actual cap is--that through 
a fund the government will match that, that it will have to be 
paid back.
    So I think what we need to start looking at is ways that we 
can, on the capital formation front, tie the capital and, you 
know, leveraging what I think is a lot of capital out there. 
And investment crowdfunding is the way to do that, one of the 
ways to do that.
    Mr. MEUSER. Thank you. I would love to follow up with you, 
if I can, afterwards and discuss that further.
    Quickly, Mr. Schoaps, I have very little time, what would a 
$15 minimum wage do to your business right now?
    Mr. SCHOAPS. It would, as most small businesses, it is 
going to hurt somewhat. It is not going to force us to close. 
It will force us maybe to raise prices, to look at ways and 
cutting back in other areas. It is not going to close us, but 
it will put some more hardships on us.
    But at the same time, I would--we hire mostly entry-level 
students, the young people. I would like to see some kind of 
maybe a minimum--some tier of minimum wage that addressed that 
kind of entry-level position.
    Mr. MEUSER. Thank you very much. I am out of time. Madam 
Chair, I yield back. Thank you very much.
    Chairwoman VELAZQUEZ. The gentleman's time has expired.
    Now we recognize the gentleman from Minnesota, Mr. 
Phillips, Chairman of the Subcommittee on Oversight, 
Investigations, and Regulations.
    Mr. PHILLIPS. Thank you, Madam Chair. Greetings to my 
colleagues and to our witnesses.
    I want to address a couple things quickly that a couple 
colleagues have brought up, starting with the fact that 
Governors around our country, both Democrats and Republicans 
who imposed lockdowns did so to save American lives, in the 
absence of a strong Federal response or even support or 
guidelines.
    I know how economically painful it was. I can attest to it 
firsthand. But I simply ask my colleagues and remind all of us 
it is incumbent on us in this committee to now help small 
businesses recover. So I invite everybody to invest our time 
and energy in repair and revert rather than regression.
    Relative to the $15 minimum wage which has come up a number 
of times today, I own a chain of small coffee shops. And we pay 
a $15 minimum wage, not because we have to, but because I want 
to. I know the implications, how it helps employees and how 
challenging it is for owners.
    But I think it is fair to say that we all, Democrats and 
Republicans, share the same objective. We want more prosperity 
for everybody, especially those who work hard and are trying to 
make ends meet.
    I think we should balance these minimum wage increases with 
the EITC, earned income tax credit, so we don't reduce 
employment, we don't further hurt businesses, especially in 
rural areas. And I invite my colleagues, anybody who is 
interested, to speak with me about that, because I want to work 
together.
    Now, the numbers and stories we have heard today from our 
witnesses are staggering and painful, to say the least. We know 
that businesses that survive the crisis are going to have to 
adapt in a post-COVID world and with higher relative costs and 
with less working capital than ever.
    We know how many small businesses entered the crisis with 
low financial resilience. About a third were either operating 
at a loss before COVID or breaking even. So we know it is going 
to only get worse over the coming weeks and months before it 
gets better.
    So, as briefly as possible, I want to ask each of our 
witnesses to simply share with me and our committee how we on 
the Small Business Committee can most impact small business 
recovery moving forward, particularly for businesses in rural 
areas, minority-owned firms and women-owned firms.
    Perhaps we can start with you, Mr. Fairlie. What is the 
best way? Where do you want to see us focused?
    Mr. FAIRLIE. I think the best way is to really promote 
trying to get the vaccine out, right? I think that that is the 
key. That is going to make customers feel comfortable going 
back into small businesses. And, as I mentioned before, the 
online presence part I think is crucial.
    Mr. PHILLIPS. Thank you. Ms. Pinder.
    Ms. PINDER. I believe that capitalization is I think the 
most important thing that can be done. And so I talked about 
no-interest loans, zero-interest loans, being cognizant of the 
need versus the demand of it. And providing capitalization I 
think is the greatest thing that can happen.
    Mr. PHILLIPS. And, Ms. Pinder, do you believe existing 
programs, either amplified or in their current form, are 
enough, or do you think it is incumbent on us to consider new 
programs?
    Ms. PINDER. I think it is incumbent upon you to consider 
new programs and look at existing programs to see how you can 
leverage it there. Like the Defense Production Act, you know, 
how do you do investments? Just new ways and innovative ways of 
how we make investments in businesses that are pivoting, 
businesses that are trying to survive, but, you know, bringing 
them to the table and understanding it is not a cookie-cutter 
approach, but how do we approach that need, based on industry 
or based on whatever that need may be.
    Mr. PHILLIPS. I appreciate it. Thank you.
    Ms. Kerrigan.
    Ms. KERRIGAN. Well, access to capital I think is vital. And 
I agree if we could supercharge and work with the existing 
framework of programs, whether it is SBA loans or with 
investment crowdfunding and the platforms that exist there, I 
think it would be really important to do so.
    Look, technology is so important, and making sure that the 
SBA resources in the programs are really focusing on 
technology. And we are going to move into a 5G world, right? So 
things are going to change again, and our businesses are going 
to have to pivot and adapt again. There are a lot of 
opportunities out there.
    And lastly, you are right, access to broadband, that has 
been one of our top issues. If you don't have access to 
broadband, you don't have access to the tools or opportunity. 
So that I think is a very important piece to focus on.
    Mr. PHILLIPS. And one more quick question, Ms. Kerrigan: 
Are you familiar with any countries, any nations around the 
world that support their small business kind of ecoculture, if 
you will, in ways that we can learn from?
    Ms. KERRIGAN. Well, I think there is a lot on the microloan 
front. I mean, certainly over in the U.K. they are--you know, 
how they are supercharging investment crowdfunding there, both 
through the tax credit and also a match program, I think is 
something we can learn from. It has been highly, highly 
successful.
    So we have a regulatory framework there. You know, they 
have this great program. I think if we can look at that and 
perhaps emulate that or least to explore it, I think it would 
be really important, particularly during the recovery period.
    And the fact that, you know, we are going to have to 
leverage private sector capital, you know, we are going to have 
to do that in order to get through this--to move to full 
recovery.
    Mr. PHILLIPS. I appreciate it.
    And with our limited time that we have left, Mr. Schoaps, 
anything that you want to add, anything that you haven't shared 
that would be helpful to the SBA that we can be focused on and 
help the rebirth of small business?
    Mr. SCHOAPS. Well, I think one of the main things is 
somehow we have got to get the communication out to small 
business owners of what is available. When I first got my EIDL 
loan, I mentioned it to several of my friends in the community. 
They didn't know what it even was. I think that we have got to 
somehow get that information out to the people that are in 
need.
    And then I have to go back to what Dr. Fairlie said. The 
number one thing that would help us is to get the vaccine 
widely distributed and to get us at least people believing that 
we are going to get back to normal.
    Chairwoman VELAZQUEZ. Time has expired.
    Mr. PHILLIPS. I am grateful. Thank you.
    Mr. SCHOAPS. Thank you.
    Chairwoman VELAZQUEZ. The gentleman yields back.
    The gentleman from New York, Mr. Garbarino, is recognized 
for 5 minutes.
    Mr. GARBARINO. Thank you, Madam Chair. Thank you to all 
these witnesses that we have today.
    Mr. Schoaps, I just had some questions for you. Can you 
share with The Committee how many employees you had before the 
COVID-19 pandemic and how many you have now?
    Mr. SCHOAPS. Yes. We averaged about 12 employees before the 
epidemic, and--the pandemic--excuse me--and, right now, we have 
my wife and I, and that is it.
    Mr. GARBARINO. Okay. And, before the pandemic, what was the 
average age of your employees other than your wife, not 
including your wife and yourself?
    Mr. SCHOAPS. Probably about 17 to 18.
    Mr. GARBARINO. And the average wage you paid those 
employees?
    Mr. SCHOAPS. Average wage was $8 an hour.
    Mr. GARBARINO. $8 an hour. We have heard a little bit about 
today how the increase of the minimum wage could be $15 an 
hour. That won't happen until 2024, but it starts--it goes up 
to $9.50 this year. That would be a pretty big increase from $8 
an hour.
    Would that prohibit you from bringing employees back this 
year, especially if you didn't have access to the PPP?
    Mr. SCHOAPS. No, it would not. We would--we are going to 
bring them back--we are going to open our business one way or 
the other. We are going to bring employees back. If it means 
our costs go up, we will have to figure out a way to increase 
our revenue to offset that, and our community will have to 
understand that it may include a price increase, it may include 
other things that we try to do to supplement what we do right 
now.
    Mr. GARBARINO. Do you think you would--do you have to 
compete with other major chains--I know--I believe you are a 
small business--like Regal or AMC, or United Artists theatres? 
Do you have to compete with them? Are there any near you?
    Mr. SCHOAPS. We have one about 20--we have one 20 miles 
away and one 15 miles away, and I don't think--we are really 
not in competition with them. We employ mainly local high 
school, local junior college employees, and they want to stay 
locally. So I really--we are not in competition for employees, 
no.
    Mr. GARBARINO. But my question is, if you had to increase--
if you had to increase ticket prices or the costs of your 
concessions to cover the increase in minimum wage this year to 
$9.50 and then all the way up to 15, would--are you concerned 
that your customers would go to other major chains because it 
might be cheaper for them to go there?
    Mr. SCHOAPS. I am always concerned that our customers are 
going to go to the major chains, because they can offer more 
than we do even with--not even counting the minimum wage issue. 
They will be under the same minimum wage requirements we are, 
and I think that, yes, of course I am always concerned about my 
competition. However, I think that we have a--in a small town, 
we have a very loyal following, and I think we will be able to 
get through it.
    Mr. GARBARINO. One more question. Did you have--have you 
tried to bring back any of the 17- or 18-year-old employees 
since you were allowed to reopen? Have you tried to hire 
anybody back and they have refused to come back?
    Mr. SCHOAPS. No, we have had no one refuse. As a matter of 
fact, we had everyone eager to come back.
    What has happened was we opened back in--I think it was 
June or July, we opened, tried to open, and there was just no 
product. Movie theatres are a specialized small business 
because, without the movies there, we have nothing to sell. 
And, without the new movies being released by Hollywood, we had 
nothing really to present. We tried using old, classic movies, 
old blockbusters, and that just did not pay the bills. We were 
forced to close down again.
    But, even now, we--when we are talking about possibly 
opening again in a month or two, we have already contacted our 
employees, and nearly all of them are eager to come back.
    Mr. GARBARINO. Okay. Thank you very much.
    And, Ms. Kerrigan, I have a question for you. It is 
something that I have heard back in my home State of New York, 
and I am wondering if it is something you have heard in your 
dealings, that the PPP and the extension of the increased 
unemployment insurance, $300 or the $400 a week extra, are 
counterproductive because they compete with each other.
    Businesses want to bring employees back, but employees 
don't want to come back because they are making more on 
unemployment. That is something I have heard a lot in New York. 
Is that something that you have come across?
    Ms. KERRIGAN. I think, initially, you know, at the 
beginning of that program and, you know, somewhat into 2020, as 
we moved to a more normalized environment and with the economy 
opening up and I think with employees thinking about sort of, 
again, you know, the long-term prospects, you know, after these 
programs are done, it has become less of an issue right now in 
terms of more employees wanting to go back to work, and then of 
course--and employers, you know, offering them incentives to do 
so.
    So, I mean, I can ask more of our small business owners 
about that now in terms of the current state of play where they 
are and what their issues are, and I will be more than happy to 
get back with you on that.
    Mr. GARBARINO. Thank you very much.
    Ms. KERRIGAN. To see how that stacks up in terms of some of 
their other concerns and whether it is still a major issue.
    Mr. GARBARINO. Thank you very much. I yield back.
    Chairwoman VELAZQUEZ. The gentleman yields back, and now we 
recognize the gentlelady from Georgia, Carolyn Bourdeaux, for 5 
minutes.
    Ms. BOURDEAUX. Okay. Thank you so much, Chairwoman 
Velazquez, and thank you to the witnesses here for testifying 
on behalf of our small businesses.
    I am from Georgia's 7th Congressional District. It is a 
very, very diverse community. Twenty-five percent of the people 
in my district were born outside of this country. And we have a 
vast swath of small businesses, many of which are women and 
minority owned, and they have really struggled during this past 
year to try to stay afloat.
    I just want to cut to the chase, though, and get to some 
questions. One, and this could be for Ms. Pinder or Mr. 
Fairlie. We have talked a lot about issues of disparity in 
terms of getting out the PPP loans, the outreach through the 
EIDL program, and things like that. But one of the things that 
has come to our attention is disparity in the administration of 
the funds, and one of our concerns is that it seemed from a 
quick survey that we did of some of our small businesses that a 
lot of the Black, other minority owned businesses were having 
to pay back the loans, whereas some of our White businesses 
seemed to be more likely to be able to find ways to get the 
loans forgiven.
    And I wanted to see if that was something, Mr. Fairlie, 
that you have come across in your research, and for Ms. Pinder, 
something that you are hearing from minority communities about 
as a particular issue, and, if so, what we might do to address 
that?
    Mr. FAIRLIE. I guess I can go first.
    So, in some of--I haven't actually researched this directly 
myself, but I know that there are a couple of projects that 
have looked at discrimination in terms of, you know, when you 
have a minority lender coming in or a nonminority lender coming 
into a bank to get a PPP loan, but there was definitely some 
issues there.
    And I think that that is really important, right, is that, 
if we don't have kind of an equal system from the very 
beginning, from getting information, from going into a bank and 
asking for help, or into going into somewhere else or looking 
into a fintech, that is a real problem, and I know that there 
is some evidence that that did occur early in the stages of the 
PPP program.
    Ms. BOURDEAUX. Thank you.
    Ms. PINDER. Congresswoman, we can certainly validate that 
that is absolutely true. Part of what we have been doing at the 
council and our MBDA centers is addressing issues our minority 
businesses have found themselves in relative to obtaining PPP 
loans, and then just a whole mystery around the payback of 
them, right? And, because it is a revolving door, the rules 
kind of shifted in midstream. It is very hard to get a handle 
on it.
    And so those things that were problematic in terms of how 
we were able to even get the loans--we have had to make phone 
calls to banks to ask them to look at--to consider these 
particular companies, but we also saw a difference when money 
from--whether it was State level or money that was done from 
foundations or private-sector organizations, that they were 
much more successful in getting directly to the folks that were 
having the problems with the Federal funds.
    Ms. BOURDEAUX. Okay. I just think this might be an area for 
further investigation and trying to understand sort of what has 
happened out there and sort of what is happening as these 
programs are going through the process.
    One other question that has come up a lot is we have a lot 
of small businesses that have--they need to make investments to 
improve ventilation to make their businesses appropriate for 
COVID and to allow them to stay open and operate in these 
situations. I know that some local governments gave grants to 
small businesses.
    But do any of you all have a sense of the needs out there 
to make further investments in getting their operations to be 
COVID safe?
    And I will start with you, Ms. Pinder, since I know that 
you have that--a very good perspective from the minority 
communities.
    Ms. PINDER. I am sorry, Congresswoman. You said--what was 
the last part of your question?
    Ms. BOURDEAUX. Do you have any sense of the additional kind 
of infrastructure needs that small businesses have to make sure 
that their businesses are safe and able to reopen at least 
partially safely right now?
    Ms. PINDER. But, you know, part of it is just an education 
process of how do you safely reopen your businesses, right? It 
is also from the legal perspective, what is your liability 
around when your employees come in? Do you require them to have 
vaccinations? So a lot of it--what I am finding and what we 
have found is just an education program or education 
perspective of what are the rules?
    And so there is absolutely the need to prepare our 
businesses or provide those resources so that our businesses 
can understand what they are liable for, how they can assist, 
how they can then--you know, what are the compliance efforts 
that they have to undertake in order to get that done? And, for 
some businesses, it is actually also where can they reside, 
because they can no longer afford their places of business.
    Chairwoman VELAZQUEZ. Time has expired.
    Ms. BOURDEAUX. Thank you.
    Chairwoman VELAZQUEZ. Thank you.
    Ms. BOURDEAUX. Thank you.
    Chairwoman VELAZQUEZ. The gentlelady from California, Mrs. 
Kim, is recognized for 5 minutes.
    Mrs. KIM of California. Thank you, Chairwoman Velazquez and 
Ranking Member Luetkemeyer, for holding this very timely 
hearing. I also want to thank the witnesses for taking the time 
to join us to share your experience and your relevant and 
important data.
    As a small business owner myself, I am thrilled to be part 
of this Committee, and I look forward to working with my 
colleagues to support our small businesses during and after 
pandemic, because small businesses are the lifeblood of our 
economy and cannot be forgotten.
    You know, in my district, California Authority 9, which is 
a suburban district, 99.8 percent of California businesses are 
employing over 7 million workers. Unfortunately, COVID-19 
shutdowns in my State of California have increased the number 
of small businesses closing, and I have witnessed many of them 
myself in my district.
    More than 19,000 California small businesses have shut down 
permanently due to COVID-19, and every small business that 
closes takes away jobs, causing economic stress to families and 
communities.
    Obviously all industry are badly hurt during the shutdown. 
So I want to ask--but, you know, all industries, but retailers 
in particular. So I would like to ask a question for Dr. 
Fairlie.
    In your testimony, you mentioned trends in shopping habits, 
especially the mood towards online shopping. Do you believe 
small businesses are prepared for this trend to become 
permanent, and can you elaborate on some of the recommendations 
you mentioned in your testimony?
    Mr. FAIRLIE. Yes. I would be happy to. I think that it is a 
trend that is not going to go away. I mean, I think that 
there--there could definitely be some pent-up demand where 
people are really excited when the vaccine is rolled out more 
completely and they want to go back to downtowns, they want to 
go to those vibrant communities, different shops, restaurants.
    But I think that there is also this other, you know, trend 
happening, which is we are just more used to buying things 
online. We are used to that convenience of having, you know, 
UPS deliver a package to our house. And often, almost--well, I 
don't know if often, but very likely that package is not from a 
small business; that package is from a big-box store or an 
online retailer. And so we need to do more to get small 
businesses online.
    You know, we talked a bit about broadband access could be 
essential for rural businesses and businesses in other areas 
that don't have good internet access. Certainly web page 
assistance might be another thing that the Federal Government 
can help out with.
    And then of course, you know, anything that can help, you 
know, with search engines or any other kind of information that 
allows customers to find small businesses and buy from them 
online.
    Mrs. KIM of California. Thank you.
    As small businesses recover from this emergency, what 
should Congress concentrate on in order to create a small 
business environment that focuses on entrepreneurship and 
innovation?
    This question is for Dr. Fairlie.
    Mr. FAIRLIE. Okay. I wasn't sure if it was to me.
    I think there are a lot of, you know, different ways. 
Certainly, you know, we have talked about financial capital as 
being one of the most important. I think that is kind of 
crucial, especially for firms that are creating innovative 
products that are kind of expanding on what we already have, 
that are giving America real strength, right? And so that can 
be crucial, as that kind of funding that helps them with 
scientific discoveries and innovative products.
    Mrs. KIM of California. Thank you.
    I have a question for Ms. Kerrigan. As Congress discusses 
next steps when it comes to COVID-19, what recommendations do 
you have for this Committee?
    Ms. KERRIGAN. Well, when I talk to business owners, I mean, 
what they are really looking for is a period of certainty and 
policy stability. You know, last year was very, very tough in 
terms of the uncertainties, and, you know, obviously sort of 
the massive revenue reduction that they saw last year. So, to 
the extent that we can have a--sort of a period of stability, 
policy stability and certainty, I think that is very, very 
important.
    I mean, obviously the whole issue that we talked about in 
terms of capital formation, access to capital, that will remain 
to be an issue, not only for existing businesses, but also for 
the start-ups and the new entrepreneurs that we see--just, you 
know, the surge in new business applications that we saw last 
year and that continue to this day, is what can we do to 
support them? Again, it is policy stability. It is, you know, 
access to capital.
    And I have to say, you know, in terms of----
    Chairwoman VELAZQUEZ. Ms. Kerrigan, I am sorry, but we are 
running late, and the gentlelady's time has expired.
    Mrs. KIM of California. Thank you.
    Ms. KERRIGAN. I am sorry. Okay.
    Chairwoman VELAZQUEZ. Thank you.
    Now we recognize the gentlelady from Texas, Ms. Van Duyne. 
Is she here?
    Ms. VAN DUYNE. Yes. Thank you. Thank you, Chairman 
Velazquez and Ranking Member Luetkemeyer, for holding this 
important hearing today.
    As a former mayor and businesswoman, I have spent my career 
with people from a wide array of backgrounds and experience who 
fought tooth and nail to grow their businesses only to see 
their doors closed forced by the heavy hand of government due 
to coronavirus pandemic.
    Since being sworn into office one month ago, I have been 
fortunate enough to speak with a number of small businesses and 
franchise owners in north Texas to learn more about their 
experiences in the face of the global health crisis and their 
struggles due to government restrictions that followed.
    Just last week, I held a roundtable discussion to hear from 
these businesses in our community. Many expressed similar 
concerns, but one thing they all had in common, similar to what 
Mr. Schoaps has referenced in his testimony today, is that they 
are doing all that they can, everything in their power, to 
ensure their businesses weather the storm.
    While loan programs, like the Paycheck Protection Program 
and the Economic Injury Disaster Loans Program, were critical 
in keeping their businesses operational, the pandemic has 
brought forth new challenges. And, over time, it became clear 
that these programs needed additional resources and support to 
uplift small businesses and entrepreneurs.
    In north Texas, our economy is made better by the 
innovation and entrepreneurial spirit small business owners 
provide. In talking to the business owners in my community, I 
learned that they are hurting and needing help. They are scared 
that the powerful few in Washington will make politically 
expedient decisions that may force them to permanently close 
their doors.
    Instead of calls to hike the Federal minimum wage to $15 an 
hour, which will kill many small businesses, we should be 
discussing how to improve programs, like the Paycheck 
Protection Program, that could keep them open past the 
pandemic.
    Unfortunately, this administration stands ready to hand 
down destructive policies that will force north Texans out of 
business and demand many change the standards of who they hire.
    I hope the calls for unity thus far are not shallow. Small 
businesses needed us to come together as a Congress, as a 
House, and as a Committee to fix the programs, keeping them 
alive, address their unique situations, and reopen the stores, 
the restaurants, and service centers that keep our communities 
running.
    I look forward to working with this Committee to oversee 
the programs that have aided so many small businesses thus far 
and, as we move past this pandemic, advancing legislation that 
will allow America's entrepreneurs to prosper once again.
    I thank all of the witnesses being here today.
    And, for Ms. Kerrigan, an October report from the 
Government Accountability Office concluded that the streamlined 
process that the SBA implemented to administer COVID-19 loans 
has increased susceptibility to fraud and abuse. Are there any 
activities or program features that you believe we should be 
examining more closely in our congressional oversight of these 
programs?
    Ms. KERRIGAN. Yes. And--yeah, that is a big issue, and 
obviously of concern. I actually read the recent SBA's IG 
report that was released on this very issue, and they have some 
very good recommendations in that report in terms of what can 
be done on the front end to ensure that there is not--in terms 
of the money does not get disbursed to people who may be or 
businesses who may be ineligible, and things that they can work 
on with Treasury--for example, the do-not-pay data source that 
they have over there--again, to sort of, you know, catch this 
fraudulent activity before the money goes out the door.
    So I was happy to see that SBA IG report, the 
recommendations, and also the SBA following through on some of 
those recommendations, but more oversight and follow-up 
definitely needs to be done.
    Ms. VAN DUYNE. All right. I appreciate that.
    One of the biggest concerns for small business owners that 
the pandemic has exasperated has been providing healthcare to 
some of our frontline workers. Our smallest businesses employ 
low-wage workers and can't afford to pay for healthcare, 
especially with revenues dropping. But, due to the pandemic, 
workers are scared to go to work without that safety net.
    So, Ms. Kerrigan, I am going to ask: How would you like to 
see the issue of small business healthcare addressed for our 
smallest of small businesses?
    Ms. KERRIGAN. Well, to the extent that you can provide the 
incentives and support to the workers themselves in order to 
access health coverage, to allow for more, you know, 
flexibility, one size doesn't fit all, certainly when it comes 
to healthcare. And I do think some of the initiatives of the 
last administration, you know, have been helpful. I do believe, 
you know, the pooling initiative, you know, for allowing small 
businesses to leverage their numbers in terms of accessing 
healthcare, was very important.
    But one other critical thing that I see is that we want to 
be able to incentivize. When it comes back to vaccines, 
employers, you know, are looking not to mandate, but to 
incentivize employees to get the vaccine, and we joined a group 
of our allies in sending a letter to the EEOC to make sure that 
proper guidance is put out there, that we are not running afoul 
of any laws. And so those----
    Mr. MFUME. [Presiding.] The gentlewoman's time has expired 
unfortunately. Thank you so much. I do anticipate there will be 
a second round, but I don't want to get in front of the Chair 
on that. She will be back momentarily.
    So, Ms. Kerrigan, if you would suspend, I would like to 
acknowledge Ms. Craig, who has been in the cue and who is up 
next, to be recognized.
    Ms. Craig.
    Ms. CRAIG. Thank you so much, Mr. Chair. Thank you for 
yielding.
    Before I get to my question, I just want to welcome new 
members to the Small Business Committee. Looking forward to 
working with all of you. I have been proud of the work on a 
bipartisan basis that we have been able to accomplish. And I am 
happy to serve on this Committee with members of the Minnesota 
delegation as well.
    Thank you again to our panelists for being with us today 
and for your insightful testimonies.
    As I am sure is true for all of my colleagues, many of the 
issues discussed today have greatly impacted my constituents.
    I would like to address my question to Dr. Fairlie first. 
Thank you for your important research and specifically 
addressing the negative impacts that COVID-19 has had on 
minority owned businesses.
    In your testimony, you touched on the issues that 
restaurants have faced as well amid the pandemic. We are seeing 
the consequences of government-ordered shutdowns on, in 
particular, hospitality and restaurants.
    On top of the financial losses and shutdowns, people are 
anxious to know that it is safe before they return to 
restaurants, and that is not going to happen until vaccines are 
more broadly available in each of our communities.
    The combination of these issues has devastated the 
restaurant industry, and the relief grant program for 
restaurants to address these unique challenges was widely 
supported by my colleagues on this Committee last Congress, 
including Chairwoman Velazquez.
    As we roll out vaccinations, do you believe a targeted 
relief grant program, which would go to independent 
restaurants, similar to last Congress' RESTAURANTS Act--120 
billion would go to the industry in grant--would that assist 
the recovery of these smallest and hardest hit Main Street 
businesses, help them to stay open, and accelerate the recovery 
of our Main Street businesses?
    Mr. FAIRLIE. Yes. I think it could help a lot. I think it 
is important that we save our restaurants. Certainly, you know, 
just going around my own town, I have seen a lot of them closed 
up, and they have closed up permanently. You know, they have 
put up signs saying that they are done. They--you know, they 
are not going to reopen at any point in time.
    And it is sad, right? You sort of--like we really 
experienced these downtowns as part of, you know, what makes 
America great, and, you know, is that being able to go and walk 
through a town with a lot of diverse restaurants and shops, we 
need to provide that assistance to them. And I think directed 
assistance, especially financial assistance, so that they can 
weather the next couple of months to get that vaccine out is 
crucial.
    Ms. CRAIG. Well, we see that light at the end of the tunnel 
for sure.
    I want to open this up to, I guess, any of our panelists 
here just as we circle back around to this topic of the second 
round of Paycheck Protection Program forgivable loans obviously 
did a much better job of assisting minority owned businesses. 
But one of the challenges that I saw in our community is that 
minority owned businesses don't always have access to the same 
information. There are language barriers, et cetera.
    So any thoughts on how we can encourage, really, at the 
local level--how the Federal Government can support making sure 
that the communication and the dollars are getting to these 
minority owned businesses?
    Ms. KERRIGAN. Congresswoman, I can start out with that.
    One of the things--it has been great to, by the way, engage 
with the SBA already early on in the administration where they 
are already having this discussion about how you use local 
organizations, community organizations, sort of a navigator 
approach to actually reach those types of businesses, because 
many of them don't think they are eligible. They are unaware of 
the program. They have technical issues to overcome in terms of 
the financials and all those other things that they need to 
apply for these loans.
    So I think there is--and they have some good models that 
they shared of how this worked in certain areas of the country, 
and I think using that nationwide, I think, would really be 
beneficial----
    Mr. MFUME. Ms. Kerrigan, I am sorry, but the gentlewoman's 
time has expired. I don't want to always have to interrupt you. 
It is----
    Ms. KERRIGAN. I am sorry.
    Ms. CRAIG. I am sorry. I would have done that for you. I 
thought I had 20 seconds left, so apologies to the Chair.
    Ms. KERRIGAN. All right.
    Mr. MFUME. Don't worry. We will roll it over with interest, 
Ms. Craig, trust me.
    Ms. CRAIG. Okay. Thank you.
    Mr. MFUME. The Chair would like to recognize the gentleman 
from Florida, Mr. Donalds.
    Mr. DONALDS. Thank you, Mr. Chairman.
    First of all, to the panelists, thanks for taking the time 
out of your day. This is obviously a very important subject 
matter facing our country through a very important time.
    I am not going to get into speeches. I want to just kind of 
get right to it in the interest of time. This actually--my 
first line of questioning is really for Professor Fairlie.
    Professor, I was going through some of your testimony here, 
and the one thing, especially with respect to the closure rate 
of minority owned businesses, specifically Black-owned 
businesses and even Latin-owned businesses, in your research, 
did you take into account the actual location of these 
businesses, like where they actually reside around the United 
States, or does your research pay no deference to that?
    Mr. FAIRLIE. I did look into kind of regional differences, 
and I found that it was pretty consistent across, you know, 
broader regions of the country. I wasn't able to look at--there 
is a lot of concern that urban areas were hit the hardest, 
right, in terms of closures and also customers being very 
careful about going back to small businesses when things 
started to reopen. Unfortunately we don't have the data on 
that, and that was difficult.
    But the kind of thing that I did look at with the 
California tax data is different types of businesses, and that 
is where, you know, the numbers were just devastating. You 
know, 91 percent of hotels closed down. More than 50 percent of 
clothing stores, more than 50 percent of restaurants closed. A 
lot of those are owned by minorities and immigrants in 
California, and so that is the real concern, is, you know, what 
is happening there.
    Mr. DONALDS. A quick follow-up on that point. So, you know, 
since you have such rampant closures obviously in the State of 
California, could you specifically attribute that to the 
emergency regulatory environment put in place in California by 
Governor Newsom and, with respect to that, local city councils 
and local mayors in the State of California?
    Mr. FAIRLIE. Well, it is attributed to two things, yes. One 
is the mandatory shutdowns for a lot of nonessential 
businesses. But the other is customers. Customers were nervous 
about going to businesses. Often they were very nervous about 
going to small businesses, small restaurants, places where they 
thought they might catch the disease.
    And so that is where, you know, as I mentioned before, this 
kind of shift to online shopping has occurred, that, you know, 
individuals are worried about it, they are waiting to get the 
vaccine, they are waiting for this to get under control before 
they start to go back to small shops and small restaurants and 
back to kind of downtown areas.
    Mr. DONALDS. My last question really is more so for the 
panel. I could get into $15 minimum wage, but I think it has 
been covered pretty extensively here, and I--you know, I think 
it is pretty clear in the record of what happens when you make 
major shifts to your minimum wage in a short period of time, 
even in normal economic circumstances, not to mention the 
current economic circumstances.
    But what I would--my last question is really for the 
overall panel. Does the overall panel think it is appropriate 
for emergency regulatory orders to be essentially cast across 
an entire State with no reflection on whether it is an urban 
area, suburban area, or a rural area? And do you think that the 
impacts on suburban or rural areas in particular provide just 
as many disastrous impacts to small businesses as they would in 
an urban area?
    Anybody can answer that one.
    Mr. SCHOAPS. Well, I think that the effects of the COVID 
pandemic across the State--in our State, rural or urban, has 
been terrible, of course. I don't think the shutdowns would 
have affected us any more than they would have in a rural area 
or an urban area. So I don't--I don't really think there is any 
difference there. It is going to affect all small businesses 
the same.
    Ms. KERRIGAN. I would just say on that, the one-size-fits-
all approach, you know, that is--I mean, obviously that is a--
that is a big problem, both when it comes to government index 
regulation, and certainly when it comes to this, is that it 
would be--would have been ideal if local governments and 
localities were given a little bit more flexibility and 
authority, you know, to make decisions based on local 
conditions.
    So, anyway, one size fits all is--you know, obviously hurt 
a lot of small businesses in areas where the pandemic situation 
was much different than it was, say, in urban areas.
    Mr. DONALDS. All right. I will yield back the rest of my 
time.
    Thank you, Mr. Chairman.
    Chairwoman VELAZQUEZ. [Presiding.] The gentlelady yields 
back.
    Now I will recognize the gentlelady from Florida, Ms. Maria 
Salazar.
    Ms. SALAZAR. Thank you very much.
    Chairwoman VELAZQUEZ. Five minutes.
    Ms. SALAZAR. Thank you, Chairwoman Velazquez, and thanks to 
all of you, and to all of the panel--the panelists that are 
willing to donate their time to enlighten us.
    I come from Miami, Florida, district number 27, where 70 
percent of the constituents are minorities, 80 percent of my 
businesses have less than ten employees, and 70 percent have 
less than five people. So obviously the impact has been brutal, 
specifically for the minority owners.
    For that reason, I promised my constituents something that 
is very unusual, but I think very necessary as time passes--
something called a prosperity center, and what is the 
prosperity center going to do?
    Well, basically three things. Helping everybody find a new 
job or find a job, helping my constituents to learn some--learn 
something new. If they lost their job at the restaurant and 
they wanted to become a welder or an electrician, I could help 
them find those courses.
    And, third, and for me the most important, the one that is 
closest to my heart, is to become a client of the Federal 
Government. I am sure that you guys are aware that the Federal 
Government has $175 billion available to be bought from goods 
and services made by minorities or for minority businesses.
    So what we are going to be offering in the prosperity 
center is a variety of services that includes roundtables, job 
fairs, job training courses, offering the constituents 
computers, personal guidance for my staff, for them to be able 
to regain their economic lives.
    So my question is for the overall panel: If you were to be 
in my shoes, what else would you be offering in that prosperity 
center in order to help those small business owners get back on 
their feet?
    Ms. KERRIGAN. Well, I will just start by saying information 
is power, education is power, and I applaud you, you know, for 
putting this center together.
    Ms. SALAZAR. Yep.
    Ms. KERRIGAN. I would say that there are a lot of self-
employed minority businesses, individual entrepreneurs that do 
not know they are eligible for PPP, EIDL programs, and that 
type of support. And, also, there is a lot of tax credits and 
tax incentives as well. To the extent that you can provide the 
technical information and the training to access these 
programs----
    Ms. SALAZAR. Yep.
    Ms. KERRIGAN.--I think would be vital.
    Ms. SALAZAR. So, when you tell me tax credits and technical 
training, could you please expand on that?
    Ms. KERRIGAN. Well, yeah. So, you know, in the CARES Act 
itself and in the year-end package, there--for PPP and both for 
individuals, there are--well, let's start with tax credits. 
There is tax credits for employers, but also there is tax 
credits for self-employed people. With PPP, there is rules for 
employers, and then there is rules for self-employed people.
    Ms. SALAZAR. I want to stop you there for a minute. So what 
you are telling me is that the government will pay the employer 
to hire the employee?
    Ms. KERRIGAN. Well, no. To maintain--well, and to hold on, 
you know, to their employee, right, so the employee retention 
tax credit, that they held onto that employee despite a drop in 
revenues, okay?
    Ms. SALAZAR. Correct. So that means that the person keeps 
the job. So that is what we want.
    Ms. KERRIGAN. That is exactly right. And so--and those tax 
credits became even more valuable, and they have been extended 
through June 30, I believe, of this year. But, also, individual 
self-employed people have access to these tax credits as well.
    But they--again, many of these entrepreneurs and small 
business owners, they just need the technical expertise and the 
accountants and, you know, the people to help them get through 
these very complicated--not that it is complicated, but just 
the forms that they need, the financials that they need in 
order to take advantage of these programs.
    Ms. SALAZAR. So the information is power, like you said, so 
now we got to another layer where we are going to be providing 
them sort of accounting for legal guidance so they----
    Ms. KERRIGAN. Correct.
    Ms. SALAZAR.--know how to find their way through the maze.
    Ms. KERRIGAN. Through the maze, and then all the way, if it 
is a PPP loan, through the forgiveness process as well.
    Ms. SALAZAR. Now, you kind of--that is one of the most 
important information that we could provide, PPP loans, or the 
info that comes with it, and where to look for opportunities--
for tax opportunities?
    Ms. KERRIGAN. That is right. There is a lot of them in, as 
I said, the CARES Act, and then things that were put in at the 
year-end package as well that was signed into law.
    Ms. SALAZAR. We are going to make the Kerrigan Prosperity 
Center Division. Thank you.
    Chairwoman VELAZQUEZ. The gentlelady's time has expired.
    Now we are going to go to a second round.
    Professor Fairlie, so much has been discussed here 
regarding the impact that the minimum wage increase will have 
on small businesses. I would like to relate for the record here 
that, since nearly 70 percent of our economic activity comes 
from consumer spending, raising the minimum wage will put money 
back into consumers' pockets, back into our main streets, and 
back into our economy.
    In fact, the Boston Federal Reserve data demonstrate that 
raising the minimum wage leads to increased spending on 
groceries, household necessities, and at local restaurants. 
Many of the businesses are saying that they need foot traffic, 
and that they need consumers to walk through their doors.
    The reality is that, unless we successfully vaccinate most 
of the people in this country, consumers will not feel safe 
going into a restaurant, going into a mall, and spending their 
money.
    There has to be synergy between being successful at 
vaccinating most of the people in this country and increasing 
the minimum wage so that we increase consumer spending. The 
people that are going to benefit from increasing the minimum 
wage are not going to go to Florida or Arizona and purchase a 
second home. They are going to go into the grocery store. They 
are going to go into the gas station or local restaurant. Small 
business owners see and know that this is the reality.
    So, Mr. Fairlie, do you see any interconnection between 
being successful in terms of a national strategy of addressing 
and crushing the pandemic, the virus, and also infusing money 
into people's pocket so that they will go out and spend?
    Mr. FAIRLIE. Yes. I mean, I think that, you know, one of 
the issues that we have been discussing in this conversation is 
about increasing the minimum wage, but the fact is the minimum 
wage has gone down over time. If you adjust it for inflation, 
what we have done is we have let it slip. And so the goal here 
is to bring it back to where it was in the past.
    It is one of the only things the Federal Government does 
that is not indexed for inflation. You know, some other 
benefits are often indexed for inflation, but the minimum wage 
is not. And, when you look at the numbers, someone getting paid 
at the next round, you know, a little over $9 an hour, you 
multiply that by a full-time worker over the entire year, they 
are still under the poverty line--the Federal poverty line.
    So there is issues there about, you know, well, what is a 
reasonable amount of money that someone should get in a job? 
And, if they do get that reasonable pay, then they will put 
that money back, as you are saying, in the local economy. They 
will spend it. That will increase their income, and it will 
just shift some income over to these--you know, these low-wage 
workers.
    Chairwoman VELAZQUEZ. Thank you. Thank you.
    Now I recognize the Ranking Member, Mr. Luetkemeyer.
    Mr. LUETKEMEYER. Thank you, Madam Chair.
    And I would like to thank the witnesses today, too, for 
hanging in there. I appreciate your time and your expertise. 
You have been great.
    This responds to a couple of comments that were made by 
some of the members. A couple of them talked about the fact 
that the Raise the Wage Act was phased in, and I mentioned 
that, or at least I--in the report that I asked to put into the 
record, which is an NFIB Research Center report, it is a report 
on the Raise the Wage Act, which is phased in. But the report 
takes into account the phase-in of the minimum wage, and still 
winds up with 1.6 million jobs being cut and a real output loss 
of $2 trillion.
    You know, I understand the need for the minimum wage, and I 
think, to me, it is a testimony on the lack of an economy. When 
you see the economy going down or stagnating, that is the time 
whenever there is the need for--that is where the argument can 
be made, anyway, for the need for a minimum wage. When the 
economy is growing, you don't need a minimum wage.
    We had 1.2 million more jobs right before the pandemic hit. 
They needed people to fill them, and we didn't need a minimum 
wage. Why? Because there was a competition for the workers. The 
wages were going up. That statistically shows that, across the 
board, every demographic was improving wage-wise as well as 
with unemployment numbers going down.
    So we can have an argument on the minimum wage for a long 
time. I am more than happy to get into that.
    Dr. Fairlie mentioned in response to my question a while 
ago with regards to the lockdowns, do populations live 
differently between New York and Florida? I didn't have time to 
really go into a response to that.
    But my response to it is: Yes, they live in a--perhaps a 
little differently the way they are spread across their State, 
but Florida had or New York had twice as many people die from 
COVID as Florida did, and yet their own survey--New York's own 
survey shows that the cause of the cases of COVID were not from 
businesses. 1.4 percent from restaurants, less than 1 percent 
from personal hair care folks.
    That is my point, is that the lockdowns were minimally 
effective, at best, with regards to keeping COVID cases down, 
and yet the suffering by the small business community is 
devastating, as given by my State, Missouri, which did not lock 
down anytime after November, or mid-May. Some communities did. 
Some of them didn't. But, in the process, we have got a 5 
percent increase in revenues and a 4.4 percent unemployment 
rate.
    So that is my point in making this, is that it goes back to 
leadership in the States and the devastating effect that it has 
on small businesses and the jobs that are there for those small 
businesses.
    With regards to my question to Mr. Schoaps with regards to 
his banking relationships, I appreciate his comment. Obviously 
he has got a good relationship with it--with his banker, but 
perhaps part of it could be because, in the first COVID bill 
and the second bill as well, we had provisions in there to 
suspend the TDR, troubled debt restructuring rule, which helped 
banks and credit unions be able to accommodate more lenient 
terms for their customers with regards to how they can approach 
this, with regards to the regulators not going in and forcing 
the banks to foreclose on people.
    So I think--you know, Ms. Kerrigan, I have gone on here a 
little bit, but I wanted to clarify some of those things, 
because I think it is really important to understand the 
precise problems that we are talking about here and the 
solutions that were in the CARES Act, for instance, with 
regards to the troubled debt restructuring rule and CECL, for 
instance.
    So can you explain to me what you have seen or what you 
think is happening here with regards to the small businesses 
being worked with as a result of the TDR extension and banks 
and their customers?
    Ms. KERRIGAN. I think that a lot of the changes that have 
been made to PPP have just been very, very important for small 
businesses, really responded, you know, to many of their needs. 
And so, you know, we, you know, applaud the Congress and this 
Committee's leadership, you know, for making that happen.
    And moving forward, I mean, I think it is just really 
important that we continue to identify [inaudible] as well as 
opportunities, you know, in this next round as it goes out the 
door to make other changes, and maybe--as they may be needed 
where we are in the pandemic right now. So--and I look forward 
to working with you on those.
    Mr. LUETKEMEYER. My time expired. Thank you.
    Chairwoman VELAZQUEZ. The gentleman's--the gentleman yields 
back.
    I now will recognize the gentleman from Maryland, Mr. 
Kweisi Mfume, for 5 minutes.
    Mr. MFUME. Thank you, Madam Chair. At this time, I will not 
take the whole 5 minutes. You were very gracious.
    I would like to go back to the point I was making with 
respect to innovation and finding a way to create more capital 
opportunities, and I didn't get a chance to get to Ms. Pinder. 
And, Ms. Pinder, thank you very much. It is good to see you 
again. I appreciate, whether it is this Committee or other 
Committees, your willingness always to come before members of 
the House and to share your perspective.
    Some of the numbers you gave are a bit startling. I guess 
for those of us who have watched this closely, maybe not as 
startling, but the number of minority owned businesses that are 
Black, Latino, Asian, that have pretty much gone under, those 
that are facing severe budget drains, and those, quite frankly, 
looking for capital--innovative capital initiatives coming out 
of the government.
    The Mentor Protege Program is something that I originally 
wanted to talk to you about, but hearing your testimony, I 
wanted to go into your suggestions that we look at the Defense 
Production Act, which the current administration is looking at; 
specifically, Title III with respect to targeted investment 
initiatives that would create the kind of wave under the small 
businesses that we are talking about that will allow them to 
sail into the future.
    I assume you have got some specific ideas there, and if you 
could take a moment to talk to the Committee about some of the 
things you think that we ought to be arguing for and making a 
case for under the Defense Production Act, specifically Title 
III, as this administration looks at enacting that. That would 
be very helpful.
    Ms. PINDER. Thank you, Congressman.
    I think that part of what we can examine is showing a 
preference--using that vehicle by showing a preference for sole 
source provision and 8a.
    I am having some audio issues. Can you hear me okay?
    Mr. MFUME. I can hear you.
    Ms. PINDER. Okay. By expanding use of sole sourcing with 
provision under 8a, I mean using that act to do that.
    It is an opportunity to look at, as we--as we talked about 
businesses pivoting as a result of COVID, the manufacturing 
industry, of which, under the Defense Act, has supported in the 
past, you know, can we take the opportunity to help engage 
minority businesses in manufacturing? An idea that we have been 
discussing is looking at maybe some foreign investments in 
order to do that, looking at companies that would want to 
invest in U.S., having that partnership, whether it is through 
teaming agreements and joint ventures, with minority 
businesses, and having that as an entre into the manufacturing 
world.
    And so it is looking at that and looking at Buy American as 
to how do we pivot some of these companies to help with--I am 
sorry--to help with supporting our minority businesses.
    The other thing that I think we need to take into 
consideration, Congressman, is the partnering with the private 
sector. You know, my organization, the Capital Region Minority 
Supply Development Council, which is part of a national 
network, is--you know, I think that partnership in with--with 
private-sector organizations can help in writing what some of 
our businesses are doing with support of capital.
    I do apologize. I am having all kinds of issues here.
    So that is--that is basically what I was talking about.
    Mr. MFUME. Okay. Okay. Thank you.
    Before you conclude--and the Chair will interrupt in just a 
second, because time is running out. You had mentioned Title IV 
also of the Defense Production Act, which concerns me, because 
I think it is something a lot of people are not looking at, and 
what you have talked about specifically was reworking the 8a 
program.
    If you could get back to the Committee in writing with some 
of your thoughts, suggestions, or ideas are in terms of 
rewriting or reworking that 8a program, that would be very, 
very helpful, and I would appreciate it.
    Ms. PINDER. No. I appreciate the--I appreciate the 
opportunity.
    Chairwoman VELAZQUEZ. Gentleman's time----
    Mr. MFUME. Madam Chair, I yield back.
    Chairwoman VELAZQUEZ. Thank you. Oh, he left?
    Okay. Well, thank you again to our witnesses for the 
testimony. We appreciate all you have shared with us. As 
Congress continues to debate additional COVID relief for small 
businesses, it is clear the time to act is now. Big and bold 
relief is needed, and it should be targeted to small firms and 
industries that need it the most.
    As we continue to vaccinate more and more Americans, we 
move closer to the end of this crisis, but we are not there 
yet. Until that happens, small businesses will struggle to 
return to pre-pandemic performance, and they will need our 
support.
    That is why targeted EIDL grants for micro businesses left 
out of PPP, supporting those hardest hit sectors of the small 
business economy, and improved entrepreneurial development and 
government procurement programs are so vitally important.
    I ask unanimous consent that Members have 5 legislative 
days to submit statements and supporting materials for the 
record. Without objection, so ordered.
    If there is no further business before the Committee, we 
are adjourned.
    [Whereupon, at 12:35 p.m., the Committee was adjourned.]
                            
                            
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