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

                           THE NEXT STEPS FOR THE PAYCHECK
                                   PROTECTION PROGRAM

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

                                    HEARING

                                   BEFORE THE

                          COMMITTEE ON SMALL BUSINESS
                                 UNITED STATES
                            HOUSE OF REPRESENTATIVES

                        ONE HUNDRED SEVENTEENTH CONGRESS

                                 FIRST SESSION

                                   __________

                                  HEARING HELD
                                 MARCH 10, 2021

                                   __________

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                Small Business Committee Document Number 117-005
                 Available via the GPO Website: www.govinfo.gov

                                   __________

                        U.S. GOVERNMENT PUBLISHING OFFICE
    43-606                     WASHINGTON : 2021

    -----------------------------------------------------------------------------------

                       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
                Ellen Harrington, Majority Deputy Staff Director
                         David Planning, Staff Director

                                C O N T E N T S

                               OPENING STATEMENTS

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

                                   WITNESSES

    Ms. Hilda Kennedy, Founder and President, AmPac Tri-State CDC,
      dba AmPac Business Capital, Ontario, CA, testifying on behalf
      of the National Association of Development Companies (NADCO)...     5
    Ms. Lisa Bombin, President and CEO, Unico Communications, Inc.,
      San Antonio, TX................................................     6
    Ms. Lisa Simpson, CPA, CGMA, Vice President of Firm Services,
      American Institute of CPAs, Durham, NC.........................     8
    Ms. Alice Frazier, President and Chief Executive Officer, Bank of
      Charles Town, Charles Town, WV, testifying on behalf of the
      Independent Community Bankers of America.......................    10

                                    APPENDIX

    Prepared Statements:
        Ms. Hilda Kennedy, Founder and President, AmPac Tri-State
          CDC, dba AmPac Business Capital, Ontario, CA, testifying on
          behalf of the National Association of Development Companies
          (NADCO)....................................................    39
        Ms. Lisa Bombin, President and CEO, Unico Communications,
          Inc., San Antonio, TX......................................    51
        Ms. Lisa Simpson, CPA, CGMA, Vice President of Firm Services,
          American Institute of CPAs, Durham, NC.....................    54
        Ms. Alice Frazier, President and Chief Executive Officer,
          Bank of Charles Town, Charles Town, WV, testifying on
          behalf of the Independent Community Bankers of America.....    64
    Questions for the Record:
        None.
    Answers for the Record:
        None.
    Additional Material for the Record:
        AICPA - The American Institute of CPAs.......................    69
        CUNA - Credit Union National Association.....................    72
        Inclusiv.....................................................    74
        Joint Trades Letter..........................................    77
        NADCO - National Association of Development Companies........    79
        NAFCU - National Association of Federally-Insured Credit
          Unions.....................................................    80
        National Association of Realtors.............................    83
        NFIB.........................................................    85

               THE NEXT STEPS FOR THE PAYCHECK PROTECTION PROGRAM

                                  ----------

                           WEDNESDAY, MARCH 10, 2021

                      House of Representatives,
                   Committee on Small Business,
                                                        Washington, DC.
        The Committee met, pursuant to call, at 10:07 a.m., in Room
    2360, Rayburn House Office Building, Hon. Nydia M. Velazquez
    [chairwoman of the Committee] presiding.
        Present: Representatives Velazquez, Golden, Davids, Mfume,
    Phillips, Newman, Bourdeaux, Chu, Evans, Delgado, Houlahan, Kim
    of New Jersey, Craig, Luetkemeyer, Williams, Hagedorn, Stauber,
    Meuser, Tenney, Kim of California, Van Duyne, Donalds, Salazar,
    and Fitzgerald.
        Also Present: Representative Schneider.
        Chairwoman VELAZQUEZ. Good morning. I call this hearing to
    order.
        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 that they are expected to adhere to
    the standing rules.
        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. 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. That includes social
    distancing and especially the use of masks. Members and staff
    are expected to wear masks at all times while in the hearing
    room, and I thank you in advance for your commitment to a safe
    environment for all here today.
        One year ago today, during the early stages of the
    pandemic, this committee held our first hearing on the impact
    of COVID on small businesses. Since that hearing, our committee
    has been working relentlessly to get them the aid they need to
    make it through this crisis.
        One of Congress' earliest and most effective means of
    distributing relief to small businesses was through the
    Paycheck Protection Program. Congress created PPP through the
    CARES Act to provide fully guaranteed, forgivable loans to meet
    payroll costs and other business expenses.
        Today, PPP is still providing urgently needed funding. The
    program accepts applications for first- and second-draw loans,
    and has approved 2.1 million loans, totaling $156.2 billion
    during 2021.
        The high level of demand for PPP loans is a testament to
    the program's effectiveness and the lingering impact of the
    pandemic. It is clear that small businesses still need help,
    but lingering issues in the program have led to the need for
    Congress to consider a short-term extension beyond March 31.
        Across the country, case counts, hospitalizations, and
    deaths are trending in the right direction. At the same time,
    we are vaccinating millions of Americans daily. This is cause
    for optimism, but it does not mean this crisis is over.
        The pandemic has caused unprecedented harm for small
    businesses, and it would be a mistake to withdraw support
    abruptly. Congress must work to understand the current
    realities facing small business owners and extend PPP to meet
    their needs.
        We also continue to address the persistent issue of
    inequity within the program. In the beginning, larger
    businesses with ties to big banks received loans at the expense
    of the smaller businesses. We have instituted numerous reforms
    to empower community lenders to spread relief to underserved
    businesses.
        The Biden administration also took decisive action to get
    funding to small businesses that had previously been neglected.
    On February 22, President Biden announced the implementation of
    a 14-day exclusivity window for small businesses with fewer
    than 20 employees. The President also acted to get more money
    to sole proprietors, make formerly incarcerated individuals and
    those with federal student loan delinquencies eligible for PPP,
    and clarified the use of ITINs.
        I am pleased to report that these changes have been
    effective in getting money to smaller businesses. According to
    the Biden administration, there has been a 20 percent increase
    in loans approved to minority-owned businesses, a 14 percent
    increase in loans approved to women-owned businesses, and a 12
    percent increase in loans approved to businesses in rural
    areas.
        During the exclusivity period, the SBA has served more than
    400,000 small businesses with fewer than 20 employees, nearly
    200,000 of which are first-time PPP borrowers. This is
    meaningful progress and a sign of the impact that delivered
    reforms can have on businesses that are often neglected.
        Today's hearing is timely. I hope that it will give us the
    opportunity to examine the impact the Biden administration
    reforms have made on small business owners and lenders and help
    us identify ongoing challenges we continue to hear about from
    borrowers and lenders alike. I look forward to hearing from our
    panelists about the current state of PPP and their
    recommendations on the program's future.
        And now I would like to yield to the Ranking Member, Mr.
    Luetkemeyer, for his opening statement.
        Mr. LUETKEMEYER. Thank you, Madam Chair, and thank you for
    calling this hearing on this very important topic.
        The title of this hearing is ``The Next Steps for the
    Paycheck Protection Program.'' This is a particularly important
    topic, given the fact that the PPP is set to expire on March
    31, just 3 weeks from today.
        I am interested to hear from the panel before us on how
    lenders and businesses view the program, areas that should be
    improved, and how to adjust the program moving forward. While
    discussion on the next steps is critical, I want to reiterate
    how successful this program has been to date.
        With the State and local shutdowns sweeping the Nation to
    protect against the COVID-19--the spread of COVID-19, the Small
    Business Administration and the Department of the Treasury
    implemented the PPP in a matter of days.
        From the day it opened in early April to the day it
    concluded on August 8, 2020, the first round of PPP provided
    just over 5.2 million loans, totaling $525 billion, with loans
    averaging approximately $100,000. According to the SBA, more
    than 50 million small business jobs were either saved or
    assisted by the PPP through the program's first round in 2020.
        The latest round of PPP includes a second-draw loan for
    businesses still struggling with the pandemic and has provided
    approximately 2.4 million new loans for $164 billion. The
    average loan for the second round is just under $70,000.
        Despite the success of the PPP, this program was always
    meant to be temporary. As a reminder, the PPP was created under
    the CARES Act, which was signed into law by former President
    Trump on March 27, 2020. The program's current end date on
    March 31, 2021, marks almost exactly one year to the day from
    when it opened.
        Across America, we are seeing vaccines in arms and
    lockdowns being lifted. These actions are allowing businesses
    the ability to start turning the corner and recover. The latest
    statistics from the SBA on the PPP reiterate these facts, as
    the demand for PPP loans has slowed.
        Additionally, the SBA has informed lenders that on the
    March 31 deadline, the SBA will stop processing loans, which is
    very concerning. This means that even if a small business files
    the application and a lender submits it to the SBA before the
    deadline, the SBA will stop any and all processing of the loan
    on March 31
        I have spoken to many lenders on this issue, and instead of
    taking applications that will never be processed by the SBA,
    they are planning to shut down the PPP lending until--entirely
    before the March 31 deadline.
        While the PPP has been a bipartisan product throughout its
    tenure from the CARES Act, PPP Flexibility Act, and the
    December COVID package, my colleagues on the other side of the
    aisle decided to make the latest COVID relief package a
    strictly partisan process. In their partisanship, they passed
    legislation that did not extend the PPP deadline, despite
    adding over $7 billion in funding to the PPP and increasing the
    applicant pool of the program. The end result of this is the
    passage of a bill seeking to beef up a program that is already
    winding down and will end shortly.
        Given these realities, I look forward to the hearing from
    the panel--to hearing from the panel today regarding what
    changes we need to make within the program and what steps
    Congress needs to take.
        Congress has important decisions to make, and it is my hope
    that this hearing will assist us as we tackle the topics of
    small business relief and small business recovery.
        With that, Madam Chair, I yield back the time. And I also
    thank the witnesses for being with us this morning.
        Chairwoman VELAZQUEZ. Thank you, Mr. Luetkemeyer.
        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 Ms. Hilda Kennedy, Founder and
    President of AmPac Tri-State CDC in Ontario, California. AmPac
    CDC is a nonprofit certified lender of the U.S. Small Business
    Administration working to finance the growth of small
    businesses. AmPac has provided funding to over 135 with greater
    than $200 million in loans under Ms. Kennedy's direction.
        Our second witness is Ms. Lisa Bombin. Ms. Bombin is the
    President and CEO of Unico Communications, Inc., in San
    Antonio, Texas. Unico Communications is a Latino-owned micro
    business operating in the events space. With assistance from
    the PPP and EIDL programs, she has been able to adapt her
    business to the changing reality of her industry and avoid
    layoffs.
        Our third witness is Ms. Lisa Simpson, Vice President of
    Firm Services at the American Institute of CPAs. Ms. Simpson
    leads the Private Companies Practice Section team at AICPA and
    works on the development of practice management tools that
    address topics most important for accounting firm owners.
        I would now like to yield to Ranking Member Mr. Luetkemeyer
    to introduce our final witness.
        Mr. LUETKEMEYER. Thank you, Madam Chair.
        Next witness is Ms. Alice Frazier. Ms. Frazier is the
    president and chief executive officer of the Bank of Charles
    Town in Charles Town, West Virginia. She also holds several
    positions at the Independent Community Bankers of America,
    which is also known as ICBA, and, today, she is testifying on
    its behalf.
        At ICBA, she is currently the organization's secretary on
    the board of directors and Chair of the Policy Development
    Committee. With the Bank of Charles Town participating in both
    the first and second rounds of PPP, along with her numerous
    roles of ICBA, I look forward to hearing Ms. Frazier's
    perspective on the program as well as what Congress should be
    concentrating on over the next few weeks.
        Ms. Frazier, I would like to thank you and the other
    witnesses for joining us today, and I anticipate a thoughtful,
    informative discussion.
        Thank you very much.
        Chairwoman VELAZQUEZ. Thank you, Mr. Luetkemeyer.
        I welcome all the witnesses, and thank you for taking time
    to be with us today.
        Ms. Kennedy, you are now recognized for 5 minutes.

     STATEMENTS OF MS. HILDA KENNEDY, FOUNDER AND PRESIDENT, AMPAC
      TRI-STATE CDC, DBA AMPAC BUSINESS CAPITAL, ONTARIO, CA; MS.
    LISA BOMBIN, PRESIDENT AND CEO, UNICO COMMUNICATIONS, INC., SAN
      ANTONIO, TX; MS. LISA SIMPSON, CPA, CGMA, VICE PRESIDENT OF
      FIRM SERVICES, AMERICAN INSTITUTE OF CPAS, DURHAM, NC; MS.
     ALICE FRAZIER, PRESIDENT AND CHIEF EXECUTIVE OFFICER, BANK OF
                     CHARLES TOWN, CHARLES TOWN, WV

                       STATEMENT OF HILDA KENNEDY

        Ms. KENNEDY. Thank you, Chairwoman Velazquez, Ranking
    Member Luetkemeyer, my Congresswoman, Judy Chu, and
    distinguished members of the Committee. Good morning, and thank
    you for having me today.
        My name is Hilda Kennedy, and I am the founder and
    president of AmPac Tri-State CDC. We are based in Ontario,
    California. I am thrilled to have the opportunity to tell you
    about AmPac and our participation in the Paycheck Protection
    Program, our commitment to providing access to capital to
    underserved borrowers, and policies that could help the
    Committee in determining next steps.
        AmPac was established and approved as the first faith-based
    CDC committed to helping businesses in economically
    disadvantaged communities and committed to walking hand-in-hand
    with businesses throughout the lending process. I founded AmPac
    in 2005, became a CDC in 2007, and a micro lender and CDFI just
    4 years ago.
        Today, we have helped small businesses obtain more than
    half a billion dollars in SBA 504 loans and served start-up,
    emerging, and scaling small businesses with SBA microloans and
    CDFI loans, and partnered with several local governments to
    help small businesses.
        In the last year, we also served the Paycheck Protection
    Program, but getting started was not without its challenges. At
    first, we had to be approved as SBA lenders for PPP. Then when
    Congress identified community financial institutions, or CFIs,
    to provide needed PPP funding--lending, CDCs, CDFIs, and
    microloans, AmPac stepped in with a firm commitment to help the
    smallest of businesses with loans under $50,000.
        I want to publicly thank my Congresswoman, Judy Chu, for
    helping us to get attention on the issue of establishing
    guidelines for CFIs to start lending. As nonprofit lenders,
    CDCs also face liquidity issues. The availability for CFIs to
    lend through the Federal Reserve liquidity facility, which the
    Fed just extended--thank you--has been a lifeline for
    participating CDCs to continue to deliver PPP loans.
        Being designated as lenders for PPP and addressing the
    liquidity issues were two of the major barriers to nonbank
    lenders participating in PPP. Once we got underway, AmPac
    funded 171 loans, totaling over $3 million, with an average
    loan size of $17,000.
        And to put a face on these numbers, I am reminded of
    Leticia. She got a loan for a party planning business for
    $2,875, and you would have guessed she got a million dollar PPP
    loan. She came to us saying, You have no idea what this means
    to my family.
        When we reached out to Leticia regarding the Schedule C
    changes for a second draw, Leticia qualified for a $20,000 PPP
    loan.
        In my written testimony, I shared a story about Calvin, a
    custodial maintenance company, who had been rejected and
    waitlisted by every emergency relief program. But when the
    Schedule C qualifying calculation changed, Calvin qualified for
    a $13,000 loan. He said, Hilda, I can't believe somebody
    finally said yes. He is now able to pay his employees and keep
    his business afloat.
        We have many Calvins and Leticias in our community, and I
    know several of my colleagues do as well. So many of the
    Schedule C filers missed the opportunity for a higher PPP loan
    in the first round and are in danger of missing out on this
    round of funding. Since it took until March 3 to get the new
    forms, time is not on our side. These businesses need a little
    more help, and they are willing to do the work. Calvin and
    Leticia are among the 95 percent Black and 91 percent Latino
    Schedule C filers who need this relief, and we need time to
    serve them.
        As PPP comes to a conclusion, long-term recovery is top of
    mind, and we believe community advantage is a critical tool,
    especially for targeting businesses in underserved communities,
    and to help PPP stabilize businesses' growth. SBA needs to move
    forward to approve qualified lenders ready to serve.
        As I conclude my comments, I want to thank the Committee
    for the impactful aid to SBA's small business borrowers via
    debt relief payments. Unfortunately, as you know, there is a
    shortfall in this aid. I cannot overstate the fact that these
    payments are critical for these small business borrowers. AmPac
    and my CDC colleagues across the country and in your
    communities are here and available to serve small businesses,
    to help them recover, and to support their growth.
        I sincerely appreciate the opportunity to testify this
    morning and share AmPac's experience with the PPP program and
    our mission to serve underserved borrowers. I look forward to
    answering any questions you have.
        Thank you.
        Chairwoman VELAZQUEZ. Thank you, Ms. Kennedy.
        Ms. Bombin, you are now recognized for 5 minutes.

                        STATEMENT OF LISA BOMBIN

        Ms. BOMBIN. Thank you, Chairwoman Velazquez and members of
    the Committee, for affording me a moment of your time to share
    my story as a Latina small business owner.
        As the founder and owner of Unico Communications, a 16-year
    event production company and a Latina-owned business
    headquartered in San Antonio, Texas, I am proud to say the
    company has a solid reputation of producing large-scale events
    for the Nation's most reputable nonprofit organizations. And I
    am honored to represent a larger event industry that includes
    master storytellers, writers, planners, producers, audio and
    video engineers, caterers, and so many more magicians that
    worked tirelessly behind the scenes of our most memorable
    celebrations, concerts, conferences, and events.
        The pandemic left my business, along with thousands of
    other event companies across the country, scrambling to develop
    a method to sustain my staff and execute payroll in the midst
    of so much uncertainty. The merciless effects of the resulting
    shutdown were evident in the swift volume of event
    cancellations that followed. Our business came to an abrupt
    halt. The only alternative was to suspend my own salary to
    retain as much cash flow, enabling us to keep our staff secure
    and fully employed for the immediate future.
        After several emotional, exhaustive days of seeking a new
    business strategy and plan, we had a glimmer of hope when
    Congress established the Paycheck Protection Program in the
    CARES Act.
        To say the initial rollout was problematic may be an
    understatement. When the application window opened, I, like so
    many other businesses, had been banking with a well-known
    national bank. And along with many small minority-owned
    businesses, we were left in the dark.
        Our financial institution provided no method of submitting
    an application, instead offering only a landing page to stay
    tuned for more details. And I found myself seeing the hours
    slip away and feeling the anxiety rise in what folks like a
    random selection of some of my peers and fellow business owners
    who had confirmed their applications had been successfully
    processed at other banks. All the while, payroll deadlines
    loomed for my team.
        After multiple attempts to submit our application, I
    contacted the U.S. Hispanic Chamber of Commerce to seek advice
    and technical assistance, and they recommended that I submit a
    PPP application through a small community bank, as they had
    been seeing an increased track record of successful submissions
    from other members across the country.
        Furthermore, the USHBC was one of the few national
    organizations providing technical assistance in both English
    and Spanish to minority-owned businesses and worked with the
    SBA to have them translate their resources into multiple
    languages.
        There wasn't a list of lenders from which to start. I
    brought in my husband to help research, and we began making
    calls and scouring the internet through the night to research
    local banks across our State to see if they would accept
    applications from new customers.
        We were incredibly fortunate to have had success in
    submitting and securing a PPP loan in the amount of $26,900
    through Pioneer Bank, a small Texas regional institution.
        Sadly, not all businesses like mine were able to secure a
    PPP loan. There were more than 150,000 Latino small business
    owners that lacked the access to technology and guidance to
    resources in Spanish and, as a result, have succumbed to
    closure.
        According to a study published by Small Business Majority,
    which service small and minority-owned business owners, one in
    three say the process of applying for the PPP was challenging
    due to the calculations and paperwork involved, and nearly one
    in four said that finding a lender willing to accept their
    application was challenging.
        Now more than ever, small minority-owned businesses need
    the U.S. Small Business Administration and its portfolio of
    loans and technical assistance programs. Our business
    membership with the U.S. Hispanic Chamber of Commerce helped me
    navigate this convoluted process through the communications.
        Furthermore, I received technical guidance from the
    University of Texas at San Antonio's Small Business Development
    Center and additional funding through the city of San Antonio's
    Recovery Grant Program facilitated by LiftFund, a community
    development financial institution.
        These three entities were critical in my business success
    during one of the most unprecedented economic times in American
    history. If it had not been for the forgivable loans built into
    the CARES Act, our business would not have been able to
    survive, because we could not sustain more debt.
        As a small business owner, I call upon our Members of
    Congress to expand PPP loans for our Nation's small and
    minority-owned businesses and to provide more support and
    financial resources to the SBA and the Minority Business
    Development Agency to fund critical, technical assistance in
    multiple languages through public-private partnerships with
    chambers of commerce and other business associations across the
    country.
        Our road to recovery is still vast, and organizations like
    these need to be funded and sustained to continue helping
    businesses like mine navigate the ongoing economic crisis.
        Thank you again, Chairwoman Velazquez and members of this
    Committee, for your leadership and continued legislative
    collaboration to ensure the economic survival of America's more
    than 30 million small businesses, of which 4.7 million are
    Hispanic-owned.
        Chairwoman VELAZQUEZ. Thank you, Ms. Bombin.
        Now we recognize Ms. Simpson for 5 minutes.
        Ms. Simpson, you are muted. You need to unmute yourself.
        Ms. SIMPSON. Common for me. I apologize.
        Chairwoman VELAZQUEZ. Okay.

                       STATEMENT OF LISA SIMPSON

        Ms. SIMPSON. Thank you again for the opportunity to talk
    about the Paycheck Protection Program on behalf of the American
    Institute for CPAs.
        I am Lisa Simpson. I am the vice president of Firm
    Services. And in my role, I have been helping support thousands
    of small CPA firms and their business clients navigate PPP
    since the program launched last April.
        I want to thank Congress, the SBA, and Treasury for the
    program and the lifeline that it has provided at a critical
    time. It helped so many businesses and nonprofits keep their
    employees on the payroll, keep the lights on, pay the rent, and
    position their businesses to succeed when the economy is ready
    to reopen.
        In my testimony, I want to talk about how the accounting
    profession is helping PPP borrowers, review some of the major
    challenges within the system currently, and ask Congress to
    extend the PPP application period for at least an additional 60
    days.
        Many small business owners do not have accounting
    professionals in-house, so when PPP opened, they immediately
    turned to their CPAs or their trusted business adviser to help
    with the program. So to help the CPAs and their small business
    clients, we developed free resources, including loan amount
    calculators, loan forgiveness calculators, and we provided
    townhalls to allow for questions and answers to be submitted,
    to provide the latest breaking news on guidance and changes so
    that we could make these free resources available to the small
    business owner who maybe doesn't love accounting as much as I
    do. So we try to approach it from their perspective.
        We also asked to engage with the SBA, Treasury, payroll
    providers, and lenders to create a holistic environment where
    we can talk about the challenges and areas where additional
    guidance might be needed.
        There are current operational challenges, as you have heard
    about. When PPP reopened in 2021, the SBA implemented front-end
    compliance checks designed to limit and reduce the amount of
    fraud in the program. We support those reasons established to
    limit fraud and to protect taxpayer money. However, these
    challenges--these front-end compliance checks have created
    significant challenges for small business borrowers to be able
    to access the SBA system and to get their loans through the
    system and then to the approval process.
        As we discussed, in written testimony, there are over 50
    error codes and flags that can be difficult to decipher and
    resolve by both the lender and the borrower. Borrowers can end
    up being caught in limbo for weeks. We have heard of situations
    where borrowers have suffered as long as 6 weeks waiting for
    their application to either get into the system or make it
    through to the approval process.
        One of those borrowers is Shawnetta (ph), who I spoke with
    several times. Her application was flagged. 2020 was a very
    difficult year for her. She survived COVID and cancer, but her
    loan application in 2021 was stopped. She ended up having to
    give up her warehouse space before her loan ultimately came
    through.
        These flags and the error codes impact the smallest
    businesses and can trigger a loop where there is no way to get
    out. So we are asking for transparency and additional resources
    to resolve these error codes.
        Recent changes to the program for self-employed borrowers
    are well intended to provide additional relief to the smallest
    of self-employed borrowers. However, changing a program
    midstream has caused anxiety, confusion, and delays in the
    process. The guidance was released in--March 3. Lenders are
    still working to update their system to enhance--to accept
    these changes, and now we are hearing that many borrowers--many
    lenders are simply closing their application windows because
    they need time to clear out the applications that are in
    process.
        For these reasons, we are asking for that 60--at least a
    60-day extension on the application window.
        The changes for self-employed borrowers are not
    retroactive, and this is resulting in a situation where
    hundreds of thousands, perhaps as many as 2 million self-
    employed borrowers are not able to take advantage of this
    enhanced loan amount. So they are feeling like they have been
    left behind, and they are not able to get loans that our CPAs
    who support small and minority-owned businesses are saying $7-
    to $10,000 in additional loan amounts could make the difference
    in the survival of these small businesses and return the
    corner.
        In addition to the complexities within the system, CPAs who
    are instrumental in helping their small business clients and
    not-for-profits navigate PPP are also dealing with counting
    around issues like the Employee Retention Credit, EIDL, the
    shuttered venue operator agreement, which we are still looking
    for guidance on.
        So providing additional time will allow the CPA to work
    with small business borrowers to find the program that best
    suits their needs.
        In conclusion, I would like to thank Congress and the SBA
    and Treasury for engaging in a conversation on how to improve
    this program, how to keep it going, and I urgently urge you to
    extend the deadline for at least another 60 days.
        Thank you.
        Chairwoman VELAZQUEZ. Thank you, Ms. Simpson.
        Now we recognize Ms. Frazier for 5 minutes.

                       STATEMENT OF ALICE FRAZIER

        Ms. FRAZIER. Thank you, Chairwoman Velazquez, Ranking
    Member Luetkemeyer, and members of this Committee.
        I am Alice Frazier, president and CEO of Bank of Charles
    Town, a $620 million asset community bank in the eastern
    panhandle of West Virginia, and we serve Hagerstown, Maryland,
    and Loudoun County, Virginia as well. Today, I am testifying on
    behalf of the Independent Community Bankers of America, where I
    serve as Chair of the Policy Development Committee and a member
    of the board of directors. Thank you for this opportunity to
    testify at today's hearing.
        The PPP has been a lifeline for small businesses, churches,
    and other nonprofits in the communities we serve. My comments
    reflect conversations with hundreds of community bankers across
    the country.
        Our firm was a natural fit in the business model of a
    community bank, as we are a small business lending specialist
    with deep roots in the communities we serve. My bank's PPP
    lending is typical of any community bank across this Nation.
        In the first round, we made 557 loans. In the second round,
    we have seen approximately half the demand and have made 272
    loans to date. In each round, about 85 percent of the loans
    were under $150,000, and more than half were microloans of less
    than $50,000. Our PPP lending has saved nearly 7,000 jobs so
    far and is really making a difference in the communities we
    serve.
        Other community banks have had similar results. In fact,
    community banks made 60 percent of the first-round PPP loans,
    which supported over 33.7 million jobs. What is more, community
    banks made over 70 percent of the PPP loans to minority-owned
    and women-owned businesses, and over 60 percent of the PPP
    loans to veteran-owned businesses.
        To obtain most of the value of this program for the
    communities we serve, BCT, Bank of Charles Town, like all
    community banks, is committed to conducting outreach to
    potential applicants. During the first round, we recorded
    podcasts and participated in local radio shows. In the second
    round, after learning that some minority communities lacked
    access to the program, we initiated targeted outreach to reach
    these communities.
        In recent webinars, we sponsored with the local chapters of
    the NAACP. We encountered numerous businesses, churches, and
    other loan candidates that had not previously applied for a PPP
    loan because they thought--they couldn't find help with the
    paperwork or because they were turned away by a larger bank as
    too small.
        To date, we have helped 38 businesses obtain first-draw
    loans during the second round. Just last week, we had an
    African American church applicant for a first-draw loan. Though
    they qualified for a $4,000 loan, they only requested $2,000
    because they were concerned that if it were not fully forgiven,
    they did not want to be left with an outstanding loan. After
    additional education and coaching, they decided to take the
    full loan.
        This program cannot fulfill its potential without a one-on-
    one advice from a lender who is committed to making it work.
    And, as you know, the PPP closes 3 weeks from today, on March
    31, and while demand for the program has slowed significantly,
    there are still businesses and nonprofits that desperately need
    these funds.
        At this moment, thousands of applications are in limbo
    because they were put on hold by an automated screening
    program. With the deadline approaching, we ask this Committee's
    help in urging the SBA to expedite the review of these holds.
        Also, under current law, any application not approved by
    March 31, even if it was submitted prior to that date, cannot
    receive PPP funds. No applicant should be left stranded because
    of bureaucratic red tape. We believe an application submitted
    by March 31 should be eligible for approval and funding.
        Lastly, if the Congress extends the deadline beyond March
    31 or creates another round of PPP, the program should be
    targeted at those industries that have suffered the most in the
    pandemic: hospitality, travel, conventions, and others. These
    industries are major employers in many of the regions of the
    country and will continue to need assistance until the economy
    has fully reopened.
        We have a set of recommendations for ensuring the funds are
    equitably distributed and retain the most value for job
    preservation, and I refer you to my written testimony for more
    detail.
        Thank you again for convening today's meeting, your
    leadership, and the opportunity to offer my perspective. I am
    happy to answer any questions you may have.
        Chairwoman VELAZQUEZ. Thank you, Ms. Frazier.
        Thank you to all the witnesses for the incredible,
    important information that you have shared with us.
        I would like to address my first question to Ms. Kennedy. I
    was pleased to see the Biden administration announce policy
    changes allowing sole proprietors to secure considerably larger
    PPP loans. Given that 70 percent of businesses without
    employees are owned by women and people of color, can you
    discuss the impact the rule will have on them and their ability
    to recover from the pandemic?
        Ms. KENNEDY. Thank you, Chairwoman Velazquez. And I can't
    overstate the significant impact to women and minorities for
    this program. The examples that I gave to you--an African-
    American-owned custodial maintenance company, and Leticia, a
    Latina-owned, women-owned business in the party planning space,
    they absolutely need those resources, and that Schedule C
    change was absolutely critical.
        Our involvement with the Women Business Owners Association
    in our local area and statewide, our involvement with local
    Black and Latino chambers of commerce, they need and want this
    program for Schedule C borrowers, and that change will be the
    difference between them keeping their doors open or closing.
        Chairwoman VELAZQUEZ. Thank you.
        Ms. KENNEDY. Thank you.
        Chairwoman VELAZQUEZ. Ms. Simpson, as a representative of
    the CPA community, you deal with your small business clients
    regularly, and I am sure they bank at different places. We have
    heard feedback that some larger lenders are not currently
    processing PPP loan forgiveness applications for loans made in
    2020.
        What consequences could a serious delay in PPP loan
    forgiveness have on small business?
        Ms. SIMPSON. Thank you, Chairwoman Velazquez. PPP
    forgiveness is computated depending on the amount of the loan,
    and there has been conversations leading up to the legislation
    that was passed December 27 around whether or not the
    forgiveness process can be simplified for loans of $150,000 and
    less, which was approved.
        We do expect that there will be an increase in the capacity
    of lenders to begin expecting the forgiveness applications
    again. They have put all their efforts recently into launching
    these--this new round of PPP, but we know that they are
    certainly--from the conversations we have had, they seem
    willing and anxious to turn to for their next processing.
        We believe that this gives borrowers ample time to navigate
    other release options, such as the Employee Retention Credit,
    which can be an amazing source of much-needed funds, but there
    are complicated interplays between Employee Retention Credit
    and PPP, so taking the time to navigate that is vital.
        Chairwoman VELAZQUEZ. Thank you.
        Ms. Bombin, I understand your initial PPP loan application
    was denied, and you had to find a lender who was willing to
    make a PPP loan to a four-employee micro business such as
    yours. Can you elaborate on that process now that you have
    received your PPP loan? How did your PPP experience change your
    views on banking big versus banking small?
        Ms. BOMBIN. Thank you so much for this time, Chairwoman. I
    want to elaborate that it wasn't that it was denied; it was not
    available. We received notice from this national bank, and on
    their landing page, they simply redirected, as all of the--as
    the grand opening of the PPP had been--window had been opened
    on April 3, they had a statement on the website basically
    letting folks know that because there was significant interest,
    they were not able yet to process, and there has been a high
    volume of interest received, but they were not yet accepting.
        So within that period of time, we--as we scoured and found
    Pioneer Bank, it became our lifeline for our business. We see
    this experience now as eye opening. I feel the value of
    ensuring that we put our business--small business' dollars and
    our worth to financial institutions that respect our
    investment, our time. And the power that we bring as one body
    is critical.
        So after applying through this smaller bank, it became
    clear that the only way we could see change happen is by moving
    your funds and your worth and your revenue to facilities and
    banks that do value you.
        As of this time, we have received funding. We have now
    moved our business accounts over to a smaller local bank. It is
    a very different experience, but every time I call, they know
    my name. It is refreshing.
        Chairwoman VELAZQUEZ. Thank you.
        My time has expired, and now I recognize the Ranking
    Member, Mr. Luetkemeyer.
        Mr. LUETKEMEYER. Thank you, Madam Chair.
        Ms. Frazier, as we all know, the March 31 deadline is
    quickly approaching. In your testimony, you state that
    community banks have seen a demand, or at least your bank has
    seen demand cut in half for the second round of PPP here
    compared to the first round.
        Can you provide a little more detail on what you think is
    the reason for that? Is it just not enough banks--or people
    qualifying, or do you think there is no demand for it, or in
    your particular area, your economy is coming back, or what
    would--can you elaborate on it just a little bit further?
        Ms. Frazier? Unmute, please.
        Ms. FRAZIER. Thank you very much.
        I would say necessarily there would be less folks applying
    for the loans just within with the new rules of having to
    demonstrate 25 percent impact gross revenues over a quarter.
    And there are businesses that have recovered, but there are
    many small businesses that still desperately need this program.
        And as I mentioned in my testimony, there are still small
    businesses that didn't apply the first time that are getting
    their first draw this time. So I would liken it that the
    program with 500 and less employees has diminished the numbers
    that qualify and that the program is far more targeted and
    focused on those that need it the most.
        Mr. LUETKEMEYER. Well, in your testimony, you suggest that
    if we do another round, that it be more targeted. And I am kind
    of curious. What is the reason that the--that the applicants in
    your business did not apply for the first round? Were they not
    in business? They were, you know, struggling to do that, or
    they thought they could do without it and just didn't want to
    go through the hassle, or the bank didn't contact them, or what
    was the reason for, you know, not even being--not wanting to
    participate the first time?
        Ms. FRAZIER. I will give you, if I may, a few examples to
    that.
        First of all, just a week ago, I was speaking with a
    restaurant owner who had tried to apply in the first round with
    their bank, similar to Ms. Bombin. The bank itself was not
    helpful in getting that to her, and she was busy working in the
    business rather than having time to work on the business and
    make these applications. So she now has applied with us for a
    first-round draw. Given the timeframe of March 31 deadline, she
    will not be able to access the second draw, which her
    restaurant will clearly need to continue to survive.
        But I also would state that I don't know that it--it is
    about not having access. I think it is about having
    information, and outreach is critically important, as I cited
    in the testimony, and as--like all banks--community banks have
    done, have really reached into the community to----
        Mr. LUETKEMEYER. Thank you. Well, it is disappointing to
    hear that the banks are not doing their job, which is to try
    and help their customers access the program, because I think
    that is part of their job, is to be able to help their customer
    access this program, be able to help them through the problem
    and help their community. It is disappointing to hear that they
    are not doing it.
        One more question for you before I move on to another
    witness here. With regards to the code problem, there is about
    50,000 loans right now sitting in--at SBA that are--they are
    working through manually trying to get these things done, and
    by end of the month, anticipate somewhere around 10,000 are
    still not being able to be processed because of that code
    problem.
        What is your solution to that? Or have you been talking to
    the SBA? What do they say? Where do you think we stand on that?
        Ms. FRAZIER. That is definitely a difficult issue. We have,
    for example, one borrower that has been in the code issue since
    January 29 that we have been trying to resolve, and we--you are
    forced to use the systems to do that. However, not always can
    you resolve an issue through a system, and you need to speak
    with somebody that is--has expertise and ability to point you
    in the right direction so that the borrower can benefit from
    this program.
        And so if we can have an experienced help desk with a live
    person that can answer the phone and be able to support us, I
    think we would be able to find error resolutions moving along
    much faster.
        Thank you.
        Mr. LUETKEMEYER. I appreciate that.
        Ms. Simpson, you mentioned in your testimony that you think
    there is as many as 2,000--or, excuse me--2 million loans that
    are sitting out there waiting to get money that probably will
    not apply. Where do you get that figure from, and what do you
    think is the holdup on that?
        Ms. SIMPSON. Let me clarify that comment. The 2 million
    represents the number of self-employed business owners who,
    based on the data that we have available, may have already
    applied for either--for a first-draw loan at the reduced loan
    amount. So they can't take advantage of the increase based on
    the new guidance.
        Mr. LUETKEMEYER. Okay. All right. Thank you very much.
        My time has expired. Madam Chair, I yield back.
        Chairwoman VELAZQUEZ. The gentleman's time has expired.
        Now we recognize the Chairman oF the Subcommittee on
    Underserved, Agricultural, and Rural Business, Mr. Golden from
    Maine.
        Mr. GOLDEN. Thank you, Madam Chair.
        I think I am going to try and follow up a little bit
    further with that final question from the Ranking Member, and I
    will direct it at Ms. Simpson.
        So we already know that you mentioned this issue in your
    testimony, where you found that a lot of your members probably
    could have gotten a much higher PPP maximum, maybe around 50
    percent higher, if they are able to retroactively adjust the
    max amount to account for SBA's recent guidance for 1040
    Schedule C filers.
        Do you or your association have any kind of estimates about
    what share of Schedule C filers could benefit from a
    retroactive application?
        Ms. SIMPSON. I don't. I am sorry. We can certainly take
    that back to the team and try to find that information.
        There is a cap on the loan amounts for Schedule C borrowers
    just like all owners of 20,833, so that does limit the cap of
    the loan, but we can certainly take that back and look into it.
        Mr. GOLDEN. Yeah. That would be very helpful. You know, and
    if anyone else on the panel has--thinks they have any idea of
    what the scale is like out there, that could obviously have an
    impact on future discussions about additional appropriations
    for the program if people were allowed to apply retroactively
    for a higher loan amount. So I think that would be very helpful
    information for this Committee and for Congress.
        I guess I would also ask, Ms. Simpson, have you heard any
    examples from clients that your association represents who are
    in the situation with the Shuttered Venue Operators Grant
    program where we have a venue that is publicly owned but
    privately operated who are questioning whether or not they are
    going to be eligible for that program?
        Ms. SIMPSON. There is certainly certain uncertainty around
    the requirements for the--what we essentially call the SVOG,
    and so they are anxiously waiting for that program to open up
    before the process to begin to apply.
        Mr. GOLDEN. So you don't have any early information about
    what eligibility is going to look like for those types of
    entities then?
        Ms. SIMPSON. That is correct. I do not.
        Mr. GOLDEN. All right. That is helpful.
        I think basically everyone on the panel, or at least pretty
    close to, has talked about some of the issues with 2021
    applicants facing delays related to error flags in the SBA
    system. And some of you have suggested that perhaps we should
    ensure that people are eligible beyond March 31 if they, you
    know, miss that deadline through no fault of their own,
    essentially if the flag is dropped and is resolved in their
    favor, but then they find that they are not eligible. So I
    think everyone is in agreement about that.
        But I am also hearing from a lot of constituents who are
    looking at the Shuttered Venue Operators Grant, but they are
    worried that they are going to find out late in the game that
    they are not eligible, and then it will be too late to apply
    for a second-draw PPP or even a first-draw PPP.
        So would you--any of you recommend maybe some kind of like
    safe harbor to address a situation like that where people are
    waiting for the shuttered venue program but could be excluded,
    you know, late in the game, and then miss the ability to apply
    for the PPP?
        Ms. SIMPSON. I believe that there is a current proposal to
    allow PPP almost as a bridge while waiting for the requirements
    around the SVOG to be fully fleshed out, and then that PPP loan
    could be reduced from the amount of any SVOG grant.
        Mr. GOLDEN. And you are aware that that is----
        Ms. SIMPSON. The challenge there----
        Mr. GOLDEN. That is just a proposal, correct?
        Ms. SIMPSON. That is correct. It is just a proposal, as far
    as I understand. But the challenge there is the impending March
    31 deadline on loan application. And I think SVOG-eligible
    entities are just nervous about which way to go.
        Mr. GOLDEN. Thank you.
        If anyone else wants any other feedback, you have got about
    30 seconds left of my time, and I would be happy to let you
    have it.
        Ms. FRAZIER. I would just like to add that I would consider
    that also in the targeted industries, that if you were to
    extend the deadline, that this too would be one of those
    industries that should be eligible for that.
        Mr. GOLDEN. Very good.
        Madam Chair, I yield back.
        Chairwoman VELAZQUEZ. The gentleman yields back.
        Now we recognize the gentleman from Texas, Mr. Williams,
    Vice Ranking Member of the Committee, for 5 minutes.
        Mr. WILLIAMS. Thank you, Madam Chairwoman.
        PPP was designed to help small businesses during COVID-19
    and keep employees on payroll. The program was only designed to
    be 8 weeks long to sustain businesses during short-term
    lockdowns.
        My colleagues on the other side are focused on expanding
    the program for political gains with union members and Planned
    Parenthood overprioritizing hard-working businesses that use
    this program as a lifeline. It is irresponsible for Congress to
    continue expanding PPP unless it targets specific industries
    that have been hit hardest by the COVID restrictions. We don't
    want PPP to become part of an economy. At the end of the day,
    we need to cut taxes.
        So my question to you, Ms. Frazier: What metrics should we
    be looking at as we disperse what is left in PPP, and how do we
    determine what industries should be targeted?
        Ms. FRAZIER. Thank you. I believe the metrics that you
    began with in this what is called second round, where you
    looked at the number of employees and an actual impact to
    revenues to the businesses, actually targeted--began to target,
    as you noticed in the number of applications this time, so I
    would continue along that path.
        As you decide how much more to support, maybe--I can tell
    you from looking at the restaurants, what we have seen is
    anywhere from 40 to 70 percent of revenues are reduced,
    depending upon their business model as an example overall. But
    I do believe the number of employees, the revenue impact of the
    organizations, and the changes to the Schedule C, I believe,
    that were late in the game are critically important, as well
    allowing that route, folks that may have already applied, to
    return and see an increase would be very helpful for them.
        Mr. WILLIAMS. All right. Thank you.
        Many banks have announced that they will no longer accept
    applications, as we talked about this morning, 2 weeks prior to
    the March 31 deadline, when Paycheck Protection Program is
    expected to close. Many of these deadline concerns come from
    the Small Business Administration delaying applications because
    of automated holds due to fraud and abuse. A suggested solution
    has been to put a time stamp on applications to ensure who
    apply up until March 31 are guaranteed to be processed.
        So also to you, Ms. Frazier: Can you elaborate on the PPP
    information gap between the Small Business Administration and
    lenders and how your community bank plans to handle the March
    31 deadline?
        Ms. FRAZIER. Certainly. Thank you. We are asked internally
    what we said was a March 29 deadline, not--mainly because what
    I would speak to is it takes time for any bank, and us
    included, to process the application, ensure we have all the
    documentations, ensure the calculation is correct before we can
    submit to the SBA. And then once submitted to the SBA, it can
    be 24 to 48 hours, assuming there are zero error messages.
        And what we have said to our borrowers or potential
    applicants is that get it in before that date because we can't
    guarantee it will be completely approved by the March 31
    timeframe.
        Mr. WILLIAMS. Okay. Ms. Simpson, you mentioned complexity
    and confusion of tax deadlines stemming from Paycheck
    Protection Program and COVID-19. PPP was intended to be a
    lifeline for small businesses, not an avenue to force
    burdensome tax liabilities and operational challenges on Main
    Street America.
        So, Ms. Simpson, can you talk about some of the most widely
    asked CPAs--questions CPAs have gotten related to PPP loans and
    what guidance would be most helpful to get these issues
    resolved before tax day?
        Ms. SIMPSON. Well, it gets complex and gets into some of
    the nuances of Tax Code. Before we get tax returns filed,
    borrowers are looking for guidance as to how these are actually
    going to show up on the tax returns.
        So some IRS guidance is needed. And, additionally, some
    guidance around, again, how to report ERC as an additional
    credit opportunity that has been made available to PPP
    borrowers who couldn't take it in 2020 but are now eligible.
    There are some complex requirements around when that gets put
    back on the tax return.
        Mr. WILLIAMS. Okay. I thank all of you for participating
    today, and I yield my time back.
        Chairwoman VELAZQUEZ. The gentleman yields back.
        Now we recognize the gentlelady from Kansas, Ms. Davids,
    for 5 minutes, Chairwoman of the Subcommittee on Economic
    Growth, Tax, and Capital Access.
        Ms. DAVIDS. Thank you, Chairwoman Velazquez and Ranking
    Member Luetkemeyer, for holding this important hearing today.
        I am really glad that we are talking about the next steps
    for the Paycheck Protection Program. It has obviously been a
    very, very important program. And with the vaccine rollout
    speeding up, there is real hope for economic recovery and into
    the public health emergency that we are in the middle of.
        And, you know, I think that it is clear we have heard today
    and we have heard over the last couple of months that small
    businesses are still struggling to keep their doors open and
    trying to just figure out how to move forward. And I am really
    glad that so many of us on this Committee are committed to
    providing the support that our small businesses need. Clearly,
    small businesses are the backbone of our economy.
        And I know that the Paycheck Protection Program has, at
    least from a number of people in the Kansas Third, has really
    saved a lot of livelihoods and enterprises from some pretty
    extreme economic difficulties. And I also know we heard about
    the roadblocks, the hiccups, the difficulties that folks have
    faced.
        And I am kind of interested to start off with whether or
    not, Ms. Kennedy and Ms. Simpson, if you could, kind of talk a
    little bit about the second-draw restrictions, whether it is
    too restrictive for the folks that you all are seeing, and then
    also as a follow-up--and this can be for anybody--the major
    challenges that we are seeing that are slowing down the loan
    applications.
        Maybe, Ms. Frazier, if you could answer that second
    question after Ms. Kennedy and Ms. Simpson.
        Ms. KENNEDY. Thank you so much. On the second-draw
    restrictions, I think that the guidelines were very reasonable
    and, certainly, this second rollout of PPP really made a
    difference in helping the communities that needed the most
    service.
        The change with the Schedule C has been really significant,
    and I can't emphasize enough time is not on our side. And so
    the time to help these businesses that are Schedule C, to get
    the funds to underserved communities, that, quite frankly, are
    the greatest impacted in the pandemic if you look at the
    numbers for economically disadvantaged communities and rural
    communities, to be able to get access to these resources, and
    the Schedule C change will make a significant difference.
        And I will say to you in response to your last question,
    the errors in the holds have been a real challenge. There was
    kind of a magic wand after the February 24 changes were made
    that helped to remove some of the errors. But the resources,
    the competent staff to help people address those errors is
    really what is slowing down the process. And with this looming
    deadline, it could absolutely cripple the program and small
    businesses from getting the help that they need if we don't get
    that addressed.
        Ms. SIMPSON. If I may, I will address the second question
    and then go back to the third.
        Regarding the conversations around providing an opportunity
    for SBA to approve applications that are in the pipeline on
    March 31, that is great, but there are still so many
    applications that can't even get through the front door to get
    into the SBA system.
        In our written testimony, we provided some graphics because
    it is really complicated, and so a visual aid has been included
    in the materials to help explain that front door that is
    entrapping so many applicants. So if that could be taken into
    consideration when thinking about that March 31 deadline, that
    would be very helpful.
        As to the first question around the 25 percent revenue
    decline for second-draw loans, we are working with CPAs. We are
    trying to help their clients understand whether or not they
    qualify at that 25 percent level. The SBA and Treasury have
    been very open and flexible in how borrowers can calculate
    that. However, we still need a key piece of guidance as to
    whether some of the other business relief funds that came out
    of the CARES Act, such as Provider Relief Funds and HHS funds,
    are included in gross receipts.
        Ms. DAVIDS. Thank you. And then I will have to follow up. I
    would like to follow up, Ms. Frazier and Ms. Bombin, about a
    couple of other things. So thank you all for your time.
        I yield back.
        Chairwoman VELAZQUEZ. The gentlelady yields back.
        The gentleman from Minnesota, Mr. Hagedorn, is recognized
    for 5 minutes.
        Mr. HAGEDORN. Thank you, Madam Chair. I appreciate you and
    the ranking Republican member for holding this hearing. It is
    very beneficial.
        As we know, the Paycheck Protection Program was designed to
    help businesses and others get from one side of the coronavirus
    to the other and keep people employed and paid. And it has been
    very successful in many ways. Many members of this Committee
    and my Agriculture Committee where I serve worked early on to
    see that farmers and ranchers would also be included in the
    Paycheck Protection Program.
        Unfortunately, there has been a little bit of an oversight,
    I believe, in the last legislation where farmers and ranchers
    are only allowed to use net income instead of gross income for
    calculations to apply for PPP loans. And I offered an amendment
    in the reconciliation process with this Committee. It wasn't
    accepted, but I know there was a lot of folks on the other side
    of the aisle who felt like it was an amendment that we should
    take another look at.
        So I have introduced legislation, the PPP Flexibility for
    Farmers and Ranchers Act. It is H.R. 1411. Has about 70
    cosponsors already, and that would fix this loophole and allow
    our farmers and ranchers to use gross income for their
    calculations.
        And, Ms. Frazier, I noticed in your testimony that you
    discuss this concept. Can you explain to folks why this is so
    important for our farmers and how it will help our communities?
        Ms. FRAZIER. Thank you. Well, as we know, the farmers
    really are the ones that feed us every day, provide the food
    for our tables and for our lunches, et cetera. And they work
    very hard on their businesses, and oftentimes their net bottom
    line is very small in comparison to what they provide at the
    gross revenue level.
        So similar to the Schedule C, this change to the schedule
    act was critically important and has actually given the farmers
    quite a bit of hope. And we saw quite a number of farmers
    coming back, looking for additional funds, and excited to see
    that benefit. So I thank you for those changes and really
    support your initiatives to continue that.
        Mr. HAGEDORN. I appreciate it. Thank you.
        And as somebody who represents southern Minnesota, a lot of
    agricultural interest, I can tell you that, you know, when farm
    families sell out, they usually sell out to bigger operators,
    and bigger operators are not bad folks but it means that we are
    going to have fewer people holding the land, working the land,
    living in our rural communities, shopping on Main Street, going
    to our schools. It puts enormous pressure on our rural
    communities to be sustained. And, of course, it undermines what
    we do in agriculture, which is incredible, providing food and
    quality food at affordable prices for the American people and
    many around the world.
        So I am hopeful that we can gain support for this piece of
    legislation, and if the program is extended in any way, make
    sure that that is included because it would help over 100,000,
    I believe, farmers and ranchers across the country. And so I
    would ask for your support on that.
        Lastly, I think, it seems to me, based on what I have seen
    in the State of Minnesota, best thing we can do to help
    everybody across the board is to get rid of these lockdowns.
    Our State of Minnesota has been locked down as much as almost
    any other State. It has really hurt businesses, farmers. It has
    hurt people across the board, and we are seeing a real labor
    shortage out there. And, unfortunately, with the schools closed
    for the most part for a long, long period of time and not fully
    reopened, you know, parents aren't able to get back into the
    workforce full time. And we are seeing an enormous pressure put
    on for childcare services.
        So I would encourage, you know, if he is watching, our
    governor, to open back up, get the kids back in schools,
    because it is also having a bad impact, not just on businesses
    and so forth, but addiction issues, suicide, people having
    problems with depression, folks like me. I am a stage IV cancer
    survivor. And, unfortunately, there are people that didn't go
    to the doctor and get their screenings, who are probably going
    to have worse problems than they otherwise would if they had
    had that in time. And then you see students in record numbers
    in Minnesota falling behind, dropping out.
        These are the types of unintended consequences of lockdowns
    that really should be examined. I think we need to make strong
    changes in that area.
        So if there is anyone that would like to comment on the--
    well, I only have 35 seconds. I apologize.
        But, with that, Madam Chair, I will yield back.
        Chairwoman VELAZQUEZ. The gentleman yields back.
        The gentleman from Maryland, Mr. Mfume, Vice Chair of the
    Committee and Chairman of the Subcommittee on Contracting and
    Infrastructure, is recognized for 5 minutes.
        Mr. MFUME. Madam Chair, thank you. My thanks to both you
    and the Ranking Member for pulling us together for this hearing
    and for the leadership that you have demonstrated on this issue
    going back over and over again.
        A couple of quick things. First of all, I appreciate the
    previous gentleman's remarks, particularly about the human
    aspect of what is going on, in addition to the very real needs
    of businesses out here in the country.
        For the record, Madam Chair, I was glad that you put in
    your memorandum to us a reminder that we have appropriated $800
    billion in total for PPP. So Congress gets a big ``E'' for
    effort but a much smaller one for effectiveness and efficiency,
    which is why this meeting is so very important, trying to drive
    us to where we ought to be with good testimony.
        I have a question for Ms. Frazier and then one for Ms.
    Kennedy.
        Ms. Frazier, you talked about extending the deadline beyond
    March 31, which I am in support of. And then you said we should
    refer to your written testimony for some of the ideas and
    thoughts that you had along those lines. So I went to your
    written testimony and was wondering if you could expand, Ms.
    Frazier, on a couple of things: first-draw increase
    eligibility, second-draw eligibility, second draw use of
    proceeds, and the requirement that goes with that, as well as
    the Schedule C borrowers and Schedule C filers, the
    implications of that coming out of the SBA change.
        Ms. FRAZIER. Thank you. I will try to remember all the
    great questions that you have.
        So I will begin with first-draw borrowers. Right now, if
    someone were to apply for a first draw, they would not be
    eligible for a second draw, nor would they be eligible to spend
    the money in the 8-week period of time before the March 31
    date. So maybe they didn't have an opportunity to do a first
    draw for, you know, whether the bank didn't support them or
    they didn't get the application in, wasn't aware. We really
    firmly believe that they should have an opportunity for that
    second draw to support their business. So expanding that time
    and giving them the time to spend the money as the rules
    predict.
        But also, being able to go for an increase. Sometimes--for
    instance, in my testimony, I remarked about a Schedule C
    borrower who is a video production firm and sole proprietor who
    outsources the help when he needs it. When he applied for his
    first draw, he only was able to access $4,000. He needed much
    more money, and the round one could do that because his
    business was shut down. So we supported it with an SBA loan,
    express loan of $16,000.
        If the rules that are now in place for Schedule C had been
    in place at the beginning for him, he would have been eligible
    for that full $20,800. And it would now also be forgiven as
    well. So he is left today with a $16,000 SBA loan that we have
    turned out over a period of time.
        He did come back for a second draw, again, early in the
    process, because his business was still impacted, but the rules
    charged. And so our suggestion is, is that businesses like that
    are able to come back and reapply using that new calculation.
    It is very important.
        Mr. MFUME. And, Ms. Frazier, I am going to have to reclaim
    my time because it is dwindling. I would appreciate, though, if
    you could get back to me with expanded thoughts on those areas
    that you listed in your testimony that I just referenced.
        And, Ms. Kennedy, if you could just take a moment to talk
    about section 1112 of the CARES Act which provided 6 months of
    debt relief for existing 7(a) and 504 and microloan borrowers.
    The 6-month period was extended under the Economic Aid Act,
    which was passed in December.
        Could you expand on the importance of section 1112 in terms
    of current SBA borrowers, especially those with unforgiven
    loans?
        Ms. KENNEDY. Thank you so much, Congressman. The section
    1112 payments were really a lifeline for these small business
    borrowers. With the new economic relief aid act, the predicted
    amount of funds were underfunded. We discovered that they were
    underfunded, and some of those small businesses are not going
    to get the SBA debt relief payments that they need most. These
    are community advantage and microloan borrowers as well as SBA
    504 and 7(a) borrowers. And the predicted amount that was
    supposed to be 6 months or 3 months has shrunk down to 3 months
    or 2 months of debt relief payment.
        And so we are asking Congress--we know your intention--to
    consider how we can close that gap and make sure those small
    business borrowers who plan, thinking about inventory, and
    adding additional employees, and supporting their operations
    because of the debt relief payments, to be able to get those
    resources so that they can continue to support their
    communities.
        Mr. MFUME. Thank you very much.
        My time has expired. Thank you, Madam Chair.
        Chairwoman VELAZQUEZ. The gentleman from Minnesota, Mr.
    Stauber, is recognized for 5 minutes.
        Mr. STAUBER. Thank you. Thank you, Madam Chair. And I
    appreciate the witnesses' testimony. Greatly appreciate it.
        I just have a few quick questions for Ms. Frazier. Can you
    elaborate on what the unresolved errors look like in the SBA
    application as you mentioned in your testimony?
        Ms. FRAZIER. The item that I am referring to is actually a
    fraud situation. This is a first-time draw applicant for their
    business. When the application was submitted to the SBA, it was
    determined that the business employer identification number had
    previously been used in the first round as a--for an EIDL loan
    and a first-round draw. And so we have been trying to work
    diligently through this process to find a way to get that
    released off of her so that she could have her first-draw loan.
        Mr. STAUBER. And next question, Ms. Frazier. What changes
    need to be made to ensure that PPP isn't just a bridge to
    nowhere and that business owners are able to take full
    advantage of what the program has to offer?
        Ms. FRAZIER. I think beyond the PPP, what was heard earlier
    in other oral testimonies, I think continued support from the
    SBDC, through the SBA, and also the SBIR programs to help those
    businesses with their business plans, to help them look forward
    and find a way, whether they need to change their business
    model, adapt their business model, or just understand what I
    would refer to as working on the business rather than in the
    business. So I think funding those programs across the minority
    groups, across all groups would be very helpful.
        Mr. STAUBER. And then, in your opinion, are the traditional
    SBA lending programs prepared to pick up where the PPP leaves
    off?
        Ms. FRAZIER. I believe so. And I also believe that, through
    this process, many banks have become much more comfortable with
    the SBA programs and will continue to make use of them going
    forward, yes.
        Mr. STAUBER. The last comment I would like to make is, as
    you supported the PPP program in the lending institutions, some
    of the redundancy for expediency was, you know, left off the,
    you know, the normal way in which you provide a loan. Would you
    agree or not that some of the items of redundancy as we get
    through COVID, we can erase some of the redundancy that you
    were asked to do by the Federal Government as a lending
    institution? And if so, name just a few of those.
        Ms. FRAZIER. May I ask for a clarification on redundancy?
        Mr. STAUBER. So the PPP loans were given out in an
    expedited manner, and some of the redundant--and I would say
    some of the normal things you would do like, for instance, the
    known customers in your respective banks, you--many people--or
    many banks, rather, expedited the loans and not required to do
    all the, quote, normal, end quote, you know, checks and
    paperwork.
        Are you prepared in any way to state that the way you did
    the prior loans should be the same way going forward? And what
    I am getting at is reducing redundancy, which is a third of
    your time preparing for that examiner to come into your
    business.
        Ms. FRAZIER. I appreciate that. Thank you. I can speak for
    my bank and a few others, more than a few others, that I have
    talked to directly. But while the requirements of the PPP
    program did not necessarily require us to submit what we
    normally would for a full loan package, we did do a good bit of
    the work behind it just to ensure. And the goal behind that was
    just to ensure that the borrowers received 100 percent
    forgiveness. And that is what is most important at the end of
    the day, that they didn't have a tail of a loan hanging around
    for them.
        So going forward, I am not sure that I can answer off the
    top of my head. I would like to give that question a little bit
    more thought and get back to you, if that is okay.
        Mr. STAUBER. That would be just fine. Thank you for your
    testimony.
        Madam Chair, I yield back.
        Chairwoman VELAZQUEZ. The gentleman yields back.
        The gentleman from Minnesota, Mr. Phillips, the Chairman of
    the Subcommittee on Oversight, Investigations, and Regulations,
    is recognized for 5 minutes.
        Mr. PHILLIPS. Thank you, Madam Chair, and to our witnesses
    today.
        I am going to follow up on my friend and colleague, Mr.
    Mfume's, questioning about the 1112 program.
        To Ms. Kennedy, you called the relief provided under
    section 1112 under the CARES Act, quote, a lifeline to your
    borrowers. That is absolutely true certainly for the small
    business owners in my district and I presume in all of our
    districts. That is why I am concerned about the gap in funding
    to fulfill the December promise, the so-called December promise
    that was made to businesses in the Economic Aid Act of last
    year.
        In fact, a smoothie bar in my district called DrinkFit was
    approved for a 7(a) loan exactly 1 month after eligibility for
    the first round of debt relief, after that ended, despite
    starting the process a full year earlier. Then the second round
    of additional months of relief under the Economic Aid Act added
    eligibility on both sides of his approval date, leaving his
    business in a literally no-man's land due to how that bill was
    written.
        So, Ms. Kennedy, can you speak to the challenges that the
    businesses that you serve have had with the section 1112
    program running out and what steps you would like to see we in
    Congress take to make good on the promise that we made to the
    employers?
        Ms. KENNEDY. Thank you so much, Congressman. And I think
    your last statement of make good on the promises. We as your
    nonprofit community partners, we reached out to those
    businesses and we let them know what was in the Economic Relief
    Aid Act, and to go back to them and let them know, I am sorry,
    there is not enough funds, that was really tough. And one of
    our small businesses who is a catering company who has
    absolutely been slammed because he cannot open his business, he
    cannot run his business, he called and emphasized, If there is
    anything that can be done to make sure that we can get those
    payments, we would really, really appreciate it. We are trying
    to pivot. We are trying to get our business back open, and we
    need this assistance, and we thought we had it. So we were
    planning, based on having those funds available or that debt
    relief available, and now we need to figure out how we are
    going to make this payment.
        The need is great for those businesses, especially in
    hardest hit industries. And we hope that Congress can figure
    out how we can keep the promise that Congress made and intended
    for these businesses through the section 1112 payments.
        Mr. PHILLIPS. Thank you. You consider your message
    delivered. We have open ears, and I wholeheartedly agree.
        Ms. Simpson and Ms. Frazier, in your comments, you mention
    the changes made by the Biden Administration to the loan amount
    calculation for business owners relying on PPP including sole
    proprietors, independent contractors, and the self-employed.
    And as you mentioned, I am hearing from constituents myself who
    say that the formula change has to be applied retroactively or
    hundreds of thousands of business owners will be unable to
    access the potential of an increased loan.
        So a few questions. To what extent is money being left on
    the table? How much more support would companies be able to tap
    into if this issue were to be addressed? And is your
    recommendation that Congress take steps to correct the issue,
    or can that be done at the administrative level?
        Perhaps, Ms. Simpson, you might begin.
        Ms. SIMPSON. Thank you. We don't know exactly how much
    money will be left on the table. But we do know, based on some
    conversations we have had with CPAs, who have looked at their
    client base of Schedule C filers, that the loan amount could be
    as much as 50 percent more or doubled. So many small business
    owners operate on a shoestring, and their net income, the
    bottom line of their tax filing could show a loss or barely any
    income at all. But if they are able to use this gross receipts
    calculation that is now available to new Schedule C borrowers,
    they would be able to access a substantial amount more, again,
    up to the cap that the SBA has approved.
        Mr. PHILLIPS. And just relative to the question about
    Congress or at the administrative level to address it, do you
    have thoughts on that subject?
        Ms. SIMPSON. I am no constitutional expert, but it is my
    understanding that SBA believes that that would require
    congressional action.
        Mr. PHILLIPS. And Ms. Frazier?
        Ms. FRAZIER. Thank you. What I would like to do is look
    back through our applications and give you a more firm number
    and get back to you. But I do know that we have seen an
    increase in the number of applications over the past week since
    that calculation changed. And I echo what Ms. Simpson said that
    I believe it could be as much as 50 percent, 60 percent
    increase in loans for a good number of those businesses
    overall.
        So, again, I think that to have that--the feedback that we
    have received thus far is that maybe the systems are not
    adequately prepared to accommodate that increase and so maybe
    there needs to be consideration to, I don't want to call it a
    third draw, but a draw increase type format.
        Mr. PHILLIPS. All right. Thanks, Ms. Frazier.
        And I yield back.
        Chairwoman VELAZQUEZ. The gentleman yields back.
        Now we recognize the gentleman from Pennsylvania, Mr.
    Meuser, for 5 minutes.
        Mr. MEUSER. Thank you, Madam Chairwoman. Thank you very
    much to all of our witnesses.
        In the second round of PPP, one of the requirements was a
    25 percent reduction in revenue in a quarter, a quarter of 2019
    versus a quarter in 2020. I offered an amendment which would
    allow to compare any 90-day period in 2019 versus 2020, as
    opposed to a set calendar quarter.
        Ms. Frazier, from a community banker's standpoint, would
    this have been helpful to banks and in the interest of small
    businesses if we could pass such a provision?
        Ms. FRAZIER. Thank you. I think any time period that a
    borrower could review and look at their business, it could be
    helpful certainly for allowing more people access rather than
    just the traditional calendar quarter.
        Mr. MEUSER. But as far as you know, that wasn't a
    significant problem for many?
        Ms. FRAZIER. It would be difficult for me to answer that
    fully, but we did not hear any commentary that it was a
    problem.
        Mr. MEUSER. Okay. From a community bank standpoint, once
    again, do you feel our community banks can handle the pipeline
    of loan requests that exist? My understanding is it is as high
    as 50,000 nationwide that need to be facilitated between now
    and March 31. Do community banks feel that is a problem?
        Ms. FRAZIER. To my knowledge of all that I have talked to,
    we do not feel that this is a problem. We really take pride in
    serving the communities in this way.
        Mr. MEUSER. Okay, great. Were there they sectors that you
    believe, industry sectors such as restaurants, for instance,
    that were underserved or PPP was not well-enough designed to
    serve effectively?
        Ms. FRAZIER. I cannot speak to that directly. I am not
    aware of any that were not addressed or were not eligible. I do
    believe--I will go back to the changes to the Schedule C where
    moving to that gross receipts method, there were many
    businesses that were operating at a net loss that were
    ineligible in matters particularly about an industry but at
    that net loss, and that changed the picture for those folks.
        Mr. MEUSER. I thank you. And, Ms. Frazier, again, do
    community banks have any concerns or many concerns with the
    forgiveness procedures that are currently outlined for the
    loans?
        Ms. FRAZIER. No. It seems to be working smoothly for us,
    and the process continues to improve. And with the most recent
    application, simplified application for loans, $150,000 or
    less, it is working smoothly.
        Mr. MEUSER. That is great.
        Will a loan that is outstanding that has not yet been
    forgiven be used by the bank, for lack of a better way of
    putting it, against the business' line of credit?
        Ms. FRAZIER. No. I will speak only for my bank, is that the
    process we used in helping the buyer access the PPP loans we
    felt assured that they would have forgiveness. And so we
    continued to, even though borrowers that have PPP loans, offer
    them additional loans and support their business needs.
        Mr. MEUSER. Okay. Well, those are very positive answers.
    That is good to hear.
        Are there any aspects of the PPP program that you feel are
    too burdensome to lenders or to your customers that you feel we
    should work on?
        Ms. FRAZIER. I would go back to the errors and being able
    to provide resources such that the process, if there is an
    error identified or something is holding up the system, that we
    have access to folks that can help us resolve it, because you
    have the benefit of actually approving the loans or approving
    the dollars. We have the very wonderful benefit of being able
    to say the loan is approved and then forgiven. And so that is
    our ultimate goal is to get to those answers for the borrowers
    as quick as possible.
        Mr. MEUSER. Last question. Do you think some of those
    resources need to be dedicated to the SBA?
        Ms. FRAZIER. It will help with the errors, yes.
        Mr. MEUSER. Thank you. I yield back.
        Chairwoman VELAZQUEZ. The gentleman yields back.
        The gentlelady from Illinois, Ms. Newman, is recognized for
    5 minutes.
        Ms. NEWMAN. Well, good morning, everyone. And thank you,
    Madam Chair and Ranking Member. I appreciate the time this
    morning. And thank to you all our guests today. Very
    informative and very helpful.
        So this morning, I am directing my questions to Ms. Kennedy
    and Ms. Simpson. The former gentleman was talking about loan
    forgiveness, and I was going to tag off that.
        So in my district, loan forgiveness has been a significant
    problem. We have about 80 percent of our businesses in Illinois
    Three are micro businesses, so under 20 employees and very
    small revenue. So with that, they are busy running their
    business, and getting their loans forgiven has been quite an
    ordeal.
        So I would love to ask Ms. Kennedy and Ms. Simpson, from
    both of their perspectives, what can be done either by the SBA
    or by Congress to make that easier for these loans to be
    forgiven?
        And I will start with Ms. Kennedy.
        Ms. KENNEDY. Thank you so much. You know, we are CFI, a
    community financial institution, as a CDC and micro lender and
    CDFI. And the forgiveness process we have found to be fairly
    straightforward, as Ms. Frazier said, especially for loans
    under $150,000. She also mentioned people--the small businesses
    are working in their business versus on their business. So
    sometimes that takes a little time to get the documentation,
    but the fact that the applications have been streamlined has
    really made a critical difference in helping the small
    businesses get that forgiveness. So we have had fairly good
    experience with that and responsiveness from SBA when there has
    been questions.
        Ms. NEWMAN. Thank you.
        And, Ms. Simpson, as a CPA, what guidance can you give
    businesses to get the--because it is an onerous document. I
    read through the 20-page document. It is fairly onerous for
    people to get through. And luckily, we have a lot of kind CPAs
    and now we have the community navigation program that will be
    helpful in that regard. But what do you recommend to those
    folks who are struggling through that without spending more
    money?
        Ms. SIMPSON. Thank you for the question. We have actually
    worked with a technology provider to create an online platform
    that helps small business borrowers work through the
    forgiveness process using an online platform. So it avoids--
    again, I love Excel. I think it is awesome. Not everyone agrees
    with me.
        So this tool allows small business owners to use a more
    friendly environment to let them input information around their
    payroll costs, their rent, their utilities, and the new
    expanded costs that are now eligible.
        It is really important for small business owners to know
    that there are safe harbors within the forgiveness process. If
    they were shut down, which so many of them were, they can avoid
    some of the implications of a potential head count reduction.
        So understanding that there are opportunities to streamline
    this forgiveness process and that there are online tools to
    help I think would be a good place to start, and I have got a
    lot of resources that I can connect you with to get that
    information out there.
        Ms. NEWMAN. That would be much appreciated. It is a
    significant problem in my district, so I would really
    appreciate that. Thank you.
        And let me just end by thanking the Committee for all their
    great work on the SB program overall. It has helped my district
    immensely, and I really appreciate it. I also would add that I
    very much appreciate the fairness of the program, that it
    addressed many industries. And I think that many industries is
    important and that we emphasize those that were hurt the
    hardest, such as stages and venues and restaurants. So I am
    very happy with the broad breadth of the program. So thank you
    all.
        I yield back.
        Chairwoman VELAZQUEZ. The gentlelady yields back.
        The gentlelady from New York, Ms. Tenney, is recognized for
    5 minutes.
        Ms. TENNEY. Thank you, Madam Chair.
        And good morning to everyone. It is such an honor to work
    with you again on this Committee.
        I want to thank the witnesses for their insight. This has
    been really, really a productive and helpful meeting.
        It has been a long, hard year, and our Nation is finally
    turning the corner to fight this COVID-19 crisis. Small
    businesses are the heart of the economy in New York's 22nd
    District and have been hit extraordinarily hard during the
    pandemic. In fact, 94 percent of the workers in the 22nd
    District are employed by a small business, so they are really
    one of the bright spots in our community, and the Paycheck
    Protection Program has been a phenomenal lifesaver for us. It
    has allowed many businesses in my district to continue to pay
    their employees and to survive the shutdowns that we have
    experienced in New York, especially upstate.
        In New York, just for some information, PPP has provided
    140,000 loans, totaling $12 billion, and has saved literally
    hundreds of thousands of jobs. This has been an effective
    COVID-19 relief program. And we are, as we know, to begin to
    hopefully head into prepandemic life and to a better way
    forward, opening our economy is obviously critical to this. But
    there are many businesses that still need to benefit from PPP.
        And just some good things that have happened: 397 jobs were
    added to the economy in February, well beyond the 166,000
    expected. The unemployment rate dropped to 6.2 percent, which
    is a huge decrease from the peak that was 15 percent that we
    experienced early in the pandemic. The nonpartisan
    Congressional Budget Office has estimated that unemployment
    will continue to fall as vaccines are more widely distributed.
        I am also concerned about where we are going to go, not
    just with PPP, but to make sure that our small businesses
    continue to benefit from the Tax Cuts and Jobs Act as they move
    forward into prepandemic life. I have heard from numerous
    businesses that are concerned about that, as well as
    maintaining and trying to deal with their new taxes, should
    that happen during this crisis.
        The Paycheck Protection Program will expire, as everyone
    has talked about here today, on March 31. And the program has
    nearly $128 billion of funding still available. While I do not
    support all of the provisions of the American Rescue Plan, I
    continue to believe that parts of that bill have merit,
    particularly provisions that would continue to extend relief to
    small businesses and individuals most in need. And i recognize
    that, obviously, while we are entering into recovery, there are
    many businesses who have done better than others and some who
    have not. Some have done well. Some have, unfortunately, been
    forced to close. But I am also a small business owner and I
    understand the difficulties we face, and I am committed to
    doing everything we can to make sure that everyone can return
    to normal life and all businesses can thrive.
        So one of my big questions is: As we head into this complex
    tax situation--and, hopefully, the Tax Cuts and Jobs Act will
    remain in place, because it has been cited as the single
    biggest benefit to my small business community in the last 30
    years--I wanted to ask and turn my attention to Ms. Simpson and
    just to get her expertise as a CPA. Obviously, many businesses
    are struggling with the complexity and confusion around PPP
    that you have discussed. But how is it going to specifically
    impact their taxes? Is there a way that maybe we can put the
    online program you suggested for forgiveness? Can we place
    that? Also, can we do something with dealing with the paperwork
    for taxes as they are coming due right now?
        Ms. SIMPSON. As a colleague said, the Tax Code may never be
    less complex or may never be easy, but we can certainly strive
    to make it less complex. And I believe that you find many
    people who are willing to go along with that statement.
        We are working with the IRS to get guidance on how the PPP
    programs will impact the tax returns of many borrowers. We
    thought the problem was solved when Congress allowed PPP
    expense deductibility. However, there are complicating factors,
    such as States that may not conform to that or they may conform
    in different income caps. So lots of moving parts and pieces to
    navigate across the entire country and how systems are
    operating there.
        We would be interested in talking about a resource that we
    have provided that helps CPAs and small business owners
    navigate the differences between Federal tax treatment and
    State tax treatment. That is a document that we do have
    available.
        Ms. TENNEY. Thank you. My time is expired. But would that
    be something that would be on an online portal?
        Ms. SIMPSON. I can go back and talk to the team about that.
        Ms. TENNEY. Great. Thank you so much.
        Thank you, Madam Chair. I yield back.
        Chairwoman VELAZQUEZ. The gentlelady from California, Ms.
    Chu, is recognized for 5 minutes.
        Ms. CHU. Thank you so much, Madam Chair.
        First of all, thank you to Hilda Kennedy for being here.
    Hilda Kennedy is my constituent, and she was one of the first
    persons to contact my office about the need for a Paycheck
    Protection Program set-aside for SBA micro lenders, certified
    development corporations, and CDFIs.
        And so thank you, Ms. Kennedy, for being here to provide
    the perspective of a small community financial institution and
    especially for the work you have done in my district to connect
    underserved businesses to COVID relief. It was thanks to the
    direct advocacy of constituents like you that made it so clear
    to me that PPP needed a dedicated set-aside for underserved
    businesses. And with the Chairwoman's support, we succeeded in
    creating those set-asides for small banks and community
    financial institutions like your business, AmPac. Those CFIs
    have processed over 110,000 loans directly, but also provide
    crucial guidance and resources to small businesses.
        Can you talk about the kind of services that CDCs have
    provided to small businesses and how they differ from what
    larger commercial banks can offer?
        Ms. KENNEDY. Thank you so much, Congresswoman, and great to
    see you.
        The difference between a CDC and a bank is we are mission-
    based lenders. So our bottom line is the small businesses that
    we serve, and we are not beholden to shareholders. We also
    provide a lot of hand-holding for small businesses. So from
    technical assistance support to webinars and training, to just
    being available when the business plops in your office and just
    needs to be reassured and needs to know how do I complete this
    form, that is the role that we play.
        And we have been working with a number of communities to
    manage emergency relief programs, COVID-19, from counties to
    State to other local governments. So we are in the community
    and part of the mission of serving small businesses.
        Ms. CHU. Well, thank you for that. And also, thank you for
    mentioning the importance of a Community Advantage loan program
    in delivering capital to underserved businesses over the long
    term.
        My legislation to give statutory authorization to this
    program would increase the targeting of underserved markets and
    explicitly include business owners of color in the program. And
    it passed the House last December. It is a top priority of mine
    to pass the bill into law this Congress.
        And what is important is the success of the PPP set-aside
    for CFIs show that the Community Advantage model works at scale
    and is particularly powerful for reaching underserved and
    underbanked communities. Can you describe your interest in
    rejoining the program and talk about the way that these
    Community Advantage loans would benefit the small business
    communities that you serve?
        Ms. KENNEDY. Thank you. I cannot overstate that because
    those small businesses, especially economically disadvantaged
    businesses, critically need this program. And as PPP stabilizes
    these businesses, they are going to be ready to grow.
    Underserved communities were hardest hit as a result of the
    pandemic, and Community Advantage targets those communities. So
    we really need to make the program permanent and need to open
    up for new CA lenders. And we would absolutely want to be part
    of that conversation. We have businesses who need the help, and
    they call us for the help.
        And as a Community Advantage lender, we will be able to
    help this veteran who just called our office the other day. Got
    some new government contracts but needs help from a program
    many that Community Advantage could serve.
        So thank you. We would love to support you in doing that.
        Ms. CHU. Great. And you have also talked about the unique
    challenges facing sole proprietors and PPP. They are more
    likely to be women and people of color who lack access to
    traditional banks. Can you say what issues they have and why
    they need programs like yours?
        Ms. KENNEDY. Well, those businesses by and large need more
    hand-holding. They don't have access to great CPAs or
    bookkeepers. They are putting their information on a
    spreadsheet or maybe they have QuickBooks, but they need hand-
    holding. And it is community-based lenders, mission-based
    lenders who do that kind of hand-holding to make sure they can
    get the resources that they need and then to be able to have
    the resources to provide them.
        So 80 percent of America's businesses are nonemployer
    businesses. Those are the small Schedule C filers. They need
    additional hand-holding. And mission-based lenders or community
    banks really provide that kind of support that they will not
    get at larger, nontraditional banks.
        Chairwoman VELAZQUEZ. The gentlelady's time has expired.
        The gentlelady from California, Mrs. Kim, is recognized for
    5 minutes.
        Ms. YOUNG KIM. Thank you, Chairwoman.
        And I would also like to thank our Ranking Member
    Luetkemeyer for holding this very, very important hearing
    today.
        With the Biden administration announcing five changes to
    PPP on February 22 of this year, the looming March 31 deadline
    does not give our small businesses the time to adjust to the
    new guidelines issued by the SBA. I am also concerned that the
    SBA is not forthcoming and transparent when it goes beyond the
    statutory 90-day period to review the loan. The SBA should be
    communicating with borrowers and lenders about the status of
    the loan if it goes beyond the 90-day period.
        And I would like to engage Ms. Frazier in the next round of
    questioning here. To date, the SBA has cleared approximately 36
    percent of all PPP loans through the forgiveness process.
    However, certain loans that are not processed right away have
    tended to let beyond the 90-day review window imposed by the
    SBA. So has your institution dealt with any of these loan
    reviewers taking longer than 90 days? And what steps can SBA
    take to make the loan forgiveness process more efficient?
        Ms. FRAZIER. Thank you for your question. We do have loans
    that have been in the forgiveness portal for longer than 90
    days. They tend to be the larger loans. They are taking longer.
    And you identified correctly, there is a lack of communication
    to the bank and to the borrower, which is causing a bit of
    stress on the borrower's side because they are concerned about,
    you know, what if it is not forgiven, what happens then. So we
    completely agree with what your statements are.
        I do think communication, where they are in the process,
    what is happening, what they need, would be really helpful
    overall in at least calming the fears of the borrowers and
    allowing us to keep things moving forward and gathering the
    information that they need. That would be the number one
    request of what would need to be done.
        Ms. YOUNG KIM. Well, following up, we have heard from
    numerous sources and constituents about the delays in
    processing loans due to SBA hold codes. Can you comment on your
    experience with these hold codes and what the typical length of
    delay looks like when addressing the code?
        Ms. FRAZIER. The length of delay could be 2 days. It could
    be 2 weeks. It could be, as the example I shared earlier, since
    January 29. It really depends on our ability to access
    information and what that hold code might be.
        If it is something that we can resolve without the SBA,
    maybe there is a piece of documentation missing or there is a
    number that isn't quite right, we can get that done fairly
    quickly inside just a day or two or few days. If it is
    something that we need to rely on the SBA or really need to get
    information from them to clarify what they are looking for, it
    will take considerably longer over time.
        Ms. YOUNG KIM. Well, do you believe extending the March 31
    deadline could help alleviate the delays with the hold code?
        Ms. FRAZIER. It could. It at least would be able to resolve
    them and allow people to access the money that they have
    applied for and be able to take care of those needs.
        Ms. YOUNG KIM. Well, thank you.
        With that, I will yield my time back.
        Chairwoman VELAZQUEZ. The gentlelady yields back.
        Now we recognize the gentleman from Illinois, Mr.
    Schneider--welcome back to the committee--for 5 minutes.
        Mr. SCHNEIDER. Thank you, Madam Chair. It is wonderful to
    be back. I am excited to be working with you and my colleagues
    on this important Committee. Thank you also for holding this
    important hearing. I want to thank the staff for helping us
    work through the challenges in these difficult times and
    obviously thank our witnesses for sharing with us your
    experiences and perspective as we try to understand this issue.
        Very soon we will vote in the House on the Senate amendment
    to the American Rescue Plan and send it to the President for
    his signature. I am very grateful that this legislation
    includes another $7.25 billion for the Paycheck Protection
    Program and expands the businesses eligible for critical
    funding.
        Our goal with PPP has always been helping our businesses,
    in particular our small businesses, get to the other side of
    this pandemic. The American Rescue Plan will help assure that
    when we get to the other side of the crisis, our small
    businesses will benefit from a growing economy and hopefully be
    able to chart a path for recovery and renewal. Obviously, that
    seems to be putting us on that path, on beating back this
    environment, but it is not certain when we will finally get to
    full recovery mode. And that is why providing the support for
    small businesses is so important.
        For many businesses in our district, PPP funds have
    literally made the difference between being able to hang on and
    weather the struggles of the past year or having to close their
    doors oftentimes for good.
        I appreciate everyone's testimonies. I have heard and
    shared with colleagues many of the same concerns that we
    brought up here. I will come to the error codes, but I want to
    talk first and maybe--Ms. Kennedy, you mentioned this. Others
    said it in their testimony as well. As we look to the future,
    people are trying to figure out how will they get through this
    and then think about what is next after, because it is not easy
    to go to the next place. You touched on the need for financial
    education, technology education. What things, whether it is
    your own group, CDC, that is doing this or the SBA, more
    broadly, what type of education and training do you think is
    most important to help businesses get to the recovery and chart
    their future beyond that?
        Ms. KENNEDY. Thank you, Congressman. I think one of the
    things that we have said in this process is the wheat and the
    tares have been separated. And we learned throughout this
    process that business financial literacy, business acumen
    literacy is so very critical. A lot of the small businesses
    that we worked with really did not understand their financial
    statements, didn't understand cash flow, didn't have reserves.
    So the opportunity to pivot, the opportunity to adjust, they
    couldn't do it because they didn't have that training.
        So the SBA has incredible programs through the SBDC and
    SCORE, as you have heard, and through partners like the CFIs,
    CDCs, SBA micro lenders to provide that kind of technical
    assistance to help people understand their technology and
    understand their business financials. That literacy is really
    critical.
        Mr. SCHNEIDER. Great. Thank you. I think it is important.
    We have been having webinars, the support for these companies,
    entrepreneurs. Sole practitioners were just trying to provide
    for their families. I think it is crucial.
        I could talk to everyone about this, but I want to get to
    these error codes as well. Time is of the essence. These
    businesses are literally holding on by the day. It is important
    and applications have been checked for errors and
    inconsistencies that could show fraud. But, oftentimes, as has
    been earlier noted, that there are sometimes flags that go up
    that are not fraud but maybe a clerical error or something like
    that.
        Ms. Simpson, I will turn to you. You talked about how many
    applications have been flagged incorrectly, and a business
    losing a week or even 2 weeks could be the difference between
    getting through this pandemic or not. Any thoughts you have on
    how we can accelerate the process, not of making it easier for
    people who abuse the system, but making it easier for people
    who are incorrectly flagged to get through the system and get
    the support and assistance they need?
        Ms. SIMPSON. Thank you so much for the question. I think
    transparency into what is causing a hold code and what
    resolution steps concretely are needed to move beyond a hold
    code is where so much time could be gained. Having a manual
    that says, if you have got this error code, these are the exact
    steps that either the borrower needs to take or the lender
    needs to take, these are the absolute sources of information
    that, if you supply, the hold code can be released and moved on
    into a loan application process.
        Mr. SCHNEIDER. Thank you. I am out of time. I could ask
    everybody, but I yield back.
        Chairwoman VELAZQUEZ. The gentleman yields back.
        The gentlelady from Texas, Ms. Van Duyne, is recognized for
    5 minutes.
        Ms. VAN DUYNE. Thank you, Madam Chair and to the Ranking
    Member, for holding this hearing today.
        When I talk to small business owners in Texas, they tell me
    two things: PPP was crucial for surviving the most challenging
    days in the pandemic, and that they aren't looking for any more
    handouts. They don't want to just hang on anymore. They want a
    chance to earn a living. They want to be able to open their
    doors and they want to be able to get their customer base back.
    It has been an entire year that we have held businesses back in
    the name of public health.
        The bottom line is the best relief we can give these
    businesses is to remove government-mandated constraints and
    allow them to get back to work.
        The Paycheck Protection Program was designed to be
    temporary and targeted and, unfortunately, as demand for the
    PPP has gone down, my colleagues across the aisle are still
    eager to add more money to the program, even as over $100
    billion dollars remains unused.
        As a Committee, we need to be focused on fixing the
    remaining issues of PPP, while also figuring out a way to bring
    this pandemic-related program to an end.
        And with that, Ms. Frazier, community bankers were on the
    front lines of delivering PPP loans. In your testimony, you
    cited that community banks made 60 percent of the first-round
    PPP loans. Now almost a year later, how do you see this program
    coming to an end and a transition to recovery being made?
        Ms. FRAZIER. Thank you for your question. In round two, I
    suspect that community bankers continue to be meeting in the
    efforts of delivering the PPP loans. I believe the benefit of
    that is the community bankers are able to really work with the
    borrowers and be partners in helping them look forward.
        But beyond PPP, I go back to I think there needs to be more
    investment into the programs that can support these businesses
    in helping them understand, as Ms. Kennedy said, their
    financials, understand their business model, understand how
    they can move forward as well and supporting them. Banks can
    continue to support and partner with the businesses, helping
    them grow, helping them understand the opportunities for them.
    But there needs to be another party that can support them in
    understanding their business overall.
        Ms. VAN DUYNE. So as the Ranking Member of the Oversight,
    Investigations, and Regulations Subcommittee, it is important
    to me that we give our small businesses the best opportunity to
    succeed coming out of the pandemic. And this means removing any
    unnecessary red tape.
        So, Ms. Frazier, again, are there any SBA regulations,
    whether for PPP or other programs, that this Committee should
    be reviewing to help our businesses recover?
        Ms. FRAZIER. For the small businesses, the most recent
    changes to the forgiveness application have been $50,000 or
    less on those loans. I think that has been a huge benefit for
    them and for others. The changes to the second draw has been a
    big benefit. SBA as a whole, I think that continuing to work
    with the community banks, to deploy the other programs and be
    able to, as was noted earlier in the conversation, make those
    approvals more timely and consistent would be very helpful.
        Ms. VAN DUYNE. All right. Thank you very much.
        I want to thank all of our witnesses for being with us
    today.
        And I yield back.
        Chairwoman VELAZQUEZ. The gentlelady yields back.
        Now we recognize the gentleman from New Jersey, Mr. Kim,
    for 5 minutes.
        Mr. KIM. Thank you, Chairwoman, for pulling us together
    here.
        I know many of us are looking forward to the warm weather
    ahead, the summer ahead, and enjoy some outdoor activities.
    Many of the businesses in my district are seasonal businesses
    along the Jersey shore, and they had a really tough season
    last----
        [Audio malfunction.]
        Chairwoman VELAZQUEZ. I am going to yield to the gentleman
    from Florida, Mr. Donalds, because Mr. Kim is dealing with some
    technical issues. We will get back to Mr. Kim.
        Mr. Donalds.
        Mr. DONALDS. All right. Thank you, Madam Chair.
        Listen, this has actually been a great conversation. Madam
    Chair, I thank you, and, you know, thanking the Ranking Member,
    Mr. Luetkemeyer of Missouri, for really bringing us together as
    we begin to unwind the PPP program. And I would stress,
    members, we have to really look at beginning to unwind and
    sunsetting this program.
        It is clear that the program, obviously, we designed it to
    challenge and to help the challenges of the COVID-19 crisis.
    With the rate of vaccinations that are occurring in the United
    States amongst the vulnerable populations, people over the age
    of 65, also combined with the facts that you have many States
    that have already begun reopening, we have to make a decision
    here. And one of the clear decisions is, are we going to
    continue, for how long, this loan guarantee program?
        One of the things that actually really came out to me
    during this testimony from all of the witnesses is that one of
    the issues isn't really, per se, PPP in and of itself, but it
    is an ongoing issue in the United States, and that is the lack
    of community banks to address all of the financing needs of
    small businesses and micro businesses in communities both rural
    and urban and suburban across the United States.
        And if this Congress is going to take this matter
    seriously, we have to begin to take a look at the statutory and
    regulatory environment upon which community banks have to
    operate under, which is why, in part, we have seen an almost 50
    percent decline in the amount of community banks in the United
    States--in the United States, excuse me--since the passage of
    Dodd-Frank more than a decade ago.
        So I think it is time that this body begin to take even
    more steps to allow the community banking industry to flourish
    in the United States so we actually can address systematically
    the issue of banking deserts, the issues of access to capital,
    the issues to actually help all of our small businesses and
    micro businesses, whether they happen to be led by women or
    minorities or anybody else who operates businesses here in the
    United States.
        Really, I just have one question, and it is actually--is a
    piggyback off of the question from Mrs. Kim of California, and
    it is directed to Ms. Kennedy.
        Ms. Kennedy, real briefly, if Congress decided to extend
    the PPP program, how long of an extension do you think will be
    needed to clear the current backlog to help those business
    owners who have applied but they are waiting to get through
    their hold codes and the like?
        Ms. KENNEDY. Thank you so much for the question. You know,
    my association, NADCO, we have not taken a firm position on the
    amount of time, but from talking to our staff, we believe 60 to
    90 days would give the time to address some of those error
    codes and to try and make sure these Schedule C businesses get
    the help that they need after getting the application just
    approved on March 3
        There are so many businesses who need to make sure that
    they can qualify with the new guidelines of Schedule C, and
    there are a number of businesses that need that help.
        So from our personal advantage, a 60- to 90-day could
    certainly help us to get through some of our backlog.
        Mr. DONALDS. Thank you so much, Ms. Kennedy.
        And, Ms. Frazier, same question to you. I know the banking
    community obviously is looking very closely at this, and, you
    know, obviously you guys have a continuing relationship with
    SBA. As a former credit officer in a bank, I have always
    enjoyed my dealings with the SBA--and, yes, I am being highly
    sarcastic--but, you know, Ms. Frazier, with respect to your
    industry group, what would you guys recommend to Congress if we
    decided to actually make a temporary extension to unwind the
    backlog?
        Ms. FRAZIER. First of all, I want to thank you for your
    support of community banks. Really appreciate that.
        And, secondarily, in response to your question, we don't
    have a specific timeline, but I think in agreement with Ms.
    Kennedy's timeline, 60 to 90 days should certainly allow for
    the errors to be resolved overall and to accommodate the
    changes or allow the borrowers that are now eligible under the
    new changes to get through the program.
        Mr. DONALDS. All right. Thank you, Ms. Frazier.
        Thank you, witnesses, for your time.
        Thank you, Madam Chair. I yield back.
        Chairwoman VELAZQUEZ. The gentleman yields back.
        Now we recognize the gentleman from New Jersey, Mr. Kim,
    for 5 minutes.
        Mr. KIM. Thank you. Thank you, Chairwoman. Hopefully, this
    works better this time around.
        But what I was just getting at was just, you know, the
    seasonal businesses that we have in the Jersey shore. And in
    December, Congress, we passed additional help for seasonal
    businesses, allowing them to apply for an increase to their
    first-draw PPP loan based on a 12-week period of their choosing
    that better represents their normal revenue.
        For a lot of seasonal businesses, this first-draw increase
    has been a lifesaver. But I have heard from other seasonal
    businesses in New Jersey that they have been turned away by
    their first-draw lender, basically being told, quote, ``We are
    not doing this,'' or, quote, ``There is too much paperwork.''
    And, unfortunately, they don't have other options to go to a
    different lender.
        My office called one lender, one of the big banks, asked
    why they were turned away, customers for first-draw increases,
    and suddenly they started processing them.
        We contacted another one, and after hearing that their
    policy made by someone up the management train was not to
    process these topoffs, I gave them a chance to correct the
    record in advance of this hearing, but they still haven't
    gotten back to me or processed that increase for a business on
    the shore for about $70,000 that they are eligible for.
        Who knows how many other businesses or others are
    experiencing this or being turned away. I know we are asking a
    lot of lenders right now, and that they worked hard to get all
    this PPP money out over the past year, but Congress did
    authorize first-draw increases to help seasonal businesses. And
    I find it unacceptable that some lenders, particularly the
    larger ones, are simply choosing not to do it.
        I wanted to start with Ms. Simpson. Have you heard of this
    happening, or are there other challenges that you are hearing
    from seasonal businesses when it comes to receiving their
    first-draw loan increases?
        Ms. SIMPSON. Thank you for the question. We are--I am going
    to pick up my phone. I apologize. My headphones died. I have
    been on here for a while. So I apologize for the awkwardness.
        But, yes, we have heard that borrowers are not having much
    luck getting loan increases approved. So that is not an
    isolated incident to the Jersey shore.
        Mr. KIM. Yeah. This is something that I am just trying to
    get a sense of, just that, you know, how--you know, how
    significant this is and how widespread it is.
        Maybe a followup with Ms. Kennedy or Ms. Frazier. As small
    lenders, have you helped any customers with first-draw
    increases? Just trying to get a sense of your perspective from
    your end.
        Ms. KENNEDY. We have tried to help small businesses with
    first-draw increases, and that is part of where we get some of
    the error codes and it becomes an issue for us. And that is why
    this time that we are asking for to be able to work through
    those and get resources on addressing the error and hold codes
    would help us to be able to help more small businesses get that
    increase and address some of those concerns.
        Thank you for the question.
        Mr. KIM. Ms. Frazier, anything you wanted to added on your
    end?
        Ms. FRAZIER. We have not had any seasonal businesses--we
    haven't processed any PPP loans for seasonal businesses for
    that increase. I can't speak directly to that.
        We have had requests only from two borrowers to increase
    their original loan. As part of the process, once it has been
    reported on the form 1502 to the SBA, there is reluctance or
    there is quite a bit of pushback on actually processing that
    increase.
        Mr. KIM. Okay. Well, thank you for that perspective,
    something that I will be looking to follow up on.
        I would also like to just highlight that SBA issued a new
    interim final rule last week allowing sole proprietors or
    Schedule C filers to use their gross revenue to calculate their
    PPP loans. This was a welcomed change, finally making PPP
    worthwhile for more of the smallest, most underserved
    businesses. But as Ms. Frazier noted in her testimony,
    borrowers who had already applied for the PPP loan before the
    rule are being left with a smaller amount and are not being
    made whole.
        SBA is claiming they don't have the authority to make this
    rule retroactive. And, Madam Chairwoman, I know you share my
    view that sole proprietors who already took a PPP loan should
    be able to use their gross income, and I ask to be able to work
    with you and others together on a solution to make sure they
    are treated fairly.
        And so, with that, thank you, and I yield back.
        Chairwoman VELAZQUEZ. The gentleman yields back.
        Okay. With that, let me take this opportunity to thank all
    our witnesses for their illuminating testimony. Your
    experiences have given us insight into the current state of PPP
    and the impact of reforms that the Biden administration put
    into place. I am pleased to hear that these changes have helped
    money reach underserved businesses, but it is clear that there
    is more we must do.
        On this committee, we will continue to work to make the
    program more equitable and accessible for the smallest of small
    businesses. The public health situation surrounding the virus
    is improving, but we cannot let up. Small businesses still need
    our help, and we must work to ensure this program is serving
    their interests. That means continuing to evaluate the coverage
    of PPP and making sure--or making the necessary tweaks to
    maximize the program's reach and impact.
        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.
        [Ms. Lisa Bombin did not submit her QFR's in a timely
    manner.]
        [Whereupon, at 12:16 p.m., the committee was adjourned.]

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