[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                     
          
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                   HOUSE COMMITTEE ON SMALL BUSINESS

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

                 Melissa Jung, Majority Staff Director
            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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