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

                         SBA'S ENTREPRENEURIAL DEVELOPMENT
                                       PROGRAMS

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

                                    HEARING

                                   BEFORE THE

                          COMMITTEE ON SMALL BUSINESS
                                 UNITED STATES
                            HOUSE OF REPRESENTATIVES

                        ONE HUNDRED SEVENTEENTH CONGRESS

                                 FIRST SESSION

                                   __________

                                  HEARING HELD
                                OCTOBER 6, 2021

                                   __________

     [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                Small Business Committee Document Number 117-035
                 Available via the GPO Website: www.govinfo.gov

                                  __________

                        U.S. GOVERNMENT PUBLISHING OFFICE
    45-779                     WASHINGTON : 2022

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

                       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
                             TROY CARTER, Louisiana
                              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
                            CLAUDIA TENNEY, New York
                           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..........................................     2

                                    WITNESS

    Mr. Mark Madrid, Associate Administrator, Office of
      Entrepreneurial Development (OED), United States Small Business
      Administration, Washington, DC.................................     4

                                    APPENDIX

    Prepared Statement:
        Mr. Mark Madrid, Associate Administrator, Office of
          Entrepreneurial Development (OED), United States Small
          Business Administration, Washington, DC....................    35
    Questions and Answers for the Record:
        Questions from Hon. Velazquez and Answers from Mr. Madrid....    39
        Questions from Hon. Delgado and Answers from Mr. Madrid......    41
        Questions from Hon. Phillips and Answers from Mr. Madrid.....    42
        Question from Hon. Chu and Answer from Mr. Madrid............    44
        Questions from Hon. Luetkemeyer and Answers from Mr. Madrid..    45
        Questions from Hon. Hagedorn and Answers from Mr. Madrid.....    56
        Questions from Hon. Stauber and Answers from Mr. Madrid......    58
        Questions from Hon. Meuser and Answers from Mr. Madrid.......    60
        Questions from Hon. Garbarino and Answers from Mr. Madrid....    62
        Questions from Hon. Young Kim and Answers from Mr. Madrid....    64
        Questions from Hon. Van Duyne and Answers from Mr. Madrid....    65
        Questions from Hon. Donalds and Answers from Mr. Madrid......    66
    Additional Material for the Record:
        CATO Policy Analysis.........................................    67
        CUNA - Credit Union National Association.....................   111

                   SBA'S ENTREPRENEURIAL DEVELOPMENT PROGRAMS

                                  ----------

                           WEDNESDAY, OCTOBER 6, 2021

                      House of Representatives,
                   Committee on Small Business,
                                                        Washington, DC.
        The committee met, pursuant to call, at 10:07 a.m., via
    Zoom, Hon. Nydia Velazquez [chairwoman of the Committee]
    presiding.
        Present: Representatives Velazquez, Golden, Crow, Davids,
    Mfume, Phillips, Newman, Bourdeaux, Carter, Chu, Evans,
    Delgado, Houlahan, Andy Kim, Craig, Luetkemeyer, Hagedorn,
    Williams, Meuser, Tenney, Garbarino, Young Kim, Van Duyne,
    Donalds, and Fitzgerald.
        Chairwoman VELAZQUEZ. Good morning. I call this hearing to
    order.
        Without objection, the Chair is authorized to declare a
    recess at any time.
        I would like to begin by noting some important
    requirements. 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 these standing
    rules including decorum.
        House regulations require Members to be visible through a
    video connection throughout the proceeding, so please keep your
    cameras on. Also, remember to remain muted until you are
    recognized to minimize background noise. If you have to
    participate in another proceeding, please exit this one and log
    back in later.
        In the event a Member encounters technical issues that
    prevent them from being recognized for their questioning, I
    will move to the next available Member of the same party and
    will recognize that Member at the next appropriate time slot
    provided they have returned to the proceeding.
        For those Members and staff physically present in the
    Committee room today, in accordance with the attending
    physician's most recent guidance, all Members and staff will be
    required to use masks in the hearing room. Furthermore, all
    Members and staff who have not been fully vaccinated must also
    maintain 6-foot social distancing from others. With that said,
    Members will be allowed to briefly remove their masks if they
    have been recognized to speak.
        Today, our nation's 30 million small businesses are the
    foundation of the American economy. Small firms employ nearly
    half of the private workforce, account for 44 percent of the
    economic activity, and export over $1 trillion in goods
    annually. It is hard to overstate the importance of small firms
    to the country's economic well-being.
        Recognizing the structural importance of these firms and
    the need for new business formation, the Small Business
    Administration offers a range of free or low-cost counseling
    and training services to entrepreneurs. SBA relies on its
    resource partners to deliver these services: Small Business
    Development Centers, Women Business Development Centers, and
    SCORE.
        These resource partners provide invaluable training to
    small businesses all across America, from first-time
    entrepreneurs to system business owners, these resource
    partners offer training to help small firms succeed.
        Resource partners have a profound impact on the small
    businesses that take advantage of their services.
        A 2013 report from SBA found that small businesses that
    receive 3 or more hours of counseling have higher survival
    rates than firms that receive less counseling.
        We also witnessed the power of entrepreneurial development
    training throughout the COVID crisis. Over the past 18 months,
    SBA resource partners have helped small businesses navigate
    unchartered territory. From shifting business models to stay
    afloat, to instituting health precautions to protect customers
    and employees, these organizations have helped small firms
    overcome enormous challenges.
        The Office of Entrepreneurial Development (OED) at SBA
    oversees the programs and services that support the counseling
    and training needs of small businesses. It is considered SBA's
    technical assistance arm with the resource partners located all
    across the country.
        OED has also been charged with implementing one of
    President Biden's top small business priorities, the new
    Community Navigator Pilot Program. The new program will
    increase outreach to underrepresented small businesses by
    partnering with trusted voices in the community. I look forward
    to learning more about the agency's work to get this new
    program up and running.
        I am also looking forward to learning more about what is
    working and what needs to be improved with the entrepreneurial
    development programs. The Committee plans to reauthorize these
    programs in the coming months and SBA's perspective is an
    important part of this process.
        In sum, the strength of our recovery is dependent on the
    well-being of small businesses. That is why SBA's
    entrepreneurial programs must be well-equipped to offer their
    services to small businesses in need.
        I now yield to the Ranking Member for his opening
    statement, Mr. Luetkemeyer.
        Mr. LUETKEMEYER. Thank you, Madam Chair. And thank you for
    calling this important hearing with Mr. Madrid, Associate
    Administrator of the SBA Office of Entrepreneurial Development.
        As Members of the Committee, it is crucial that we hear
    directly from SBA officials on implementation and oversight of
    the SBA's programs. The success of our entrepreneurs determines
    the success of our nation's economy. Entrepreneurs are not only
    our nation's innovators and job creators, but they are also the
    key to advancing America's economic opportunities.
    Unfortunately, entrepreneurs continue to be hamstrung by the
    Democrats who are forcing through increased government
    mandates, misguided entitlement programs, and reckless
    spending.
        For months, Democrats' failed policies and unemployment
    incentives have paid Americans to stay home and not go back to
    work which has hindered economic growth for small businesses
    and our communities. As reported in the August NFIB's Small
    Business Economic Survey, they have found that 50 percent of
    small business owners have at least one unfilled job opening.
    This was a disincentive for 8.4 million Americans who were
    unemployed in August to stay off the job and on the sidelines
    while there were 10.5 million job openings across the country.
    This is obviously counterproductive.
        Additionally, staffing shortages and supply chain
    disruptions are hindering business operations and limiting
    small businesses from reaching their full potential. The NFIB
    Research Center's September COVID-19 survey found that half of
    small business owners reported supply chain disruptions
    significantly impacting their business.
        Main street USA continues to be left with the bill for
    President Biden's reckless tax and spend agenda. As inflation
    hits a 30-year high, it is no surprise that a recent Goldman
    Sachs 10,000 Small Businesses Survey found that 81 percent of
    small business owners say inflationary pressures have increased
    since June. 84 percent have seen an increase in operating
    costs, and 74 percent report inflationary pressures having
    negatively impacted their business's financial health.
        As Republican leader of this Committee, I appreciate the
    resources and training that the SBA's Entrepreneurial
    Development Resource Partners continue to provide to small
    businesses, especially as they recover from the COVID-19
    pandemic. I also look forward to learning more about these
    programs and how they are supporting small businesses as they
    navigate the previously mentioned government mandates, supply
    chain disruptions, labor shortages, and inflationary pressures.
        However, I remain concerned that taxpayer dollars are not
    being used wisely after several Office of Inspector General
    reports found that SBA did not provide effective oversight of
    both the SCORE and Women's Business Center programs. I am also
    concerned that the Community Navigator Pilot Program is
    duplicative of current resources. This program was signed into
    law in March, yet not a single grant has been awarded and no
    services have been deployed to assist small businesses to date.
    Instead of creating a new program with new providers, I believe
    that resources would have been better spent ramping up Small
    Business Development Centers and existing resource partners.
    This should be thoroughly examined.
        Beyond the SBA resources, numerous private sector partners,
    including nonprofit organizations and companies, exist to
    advocate for entrepreneurs, provide mentorship, increase
    awareness of financial opportunities, and offer support to
    innovators as they stand and expand their businesses. The SBA
    programs must be examined closely to ensure that duplication
    does not occur and that waste, fraud, and abuse is prevented.
        Mr. Madrid, I thank you for being here today. I look
    forward to working together on effective, economical, and
    efficient policies to support entrepreneurs.
        And with that, Madam Chair, I yield back.
        Chairwoman VELAZQUEZ. Thank you, Mr. Luetkemeyer. The
    gentleman yields back.
        I would like to take a moment to explain how this hearing
    will proceed. Our 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 witness. Our
    witness today is Mr. Mark Madrid, Associate Administrator for
    the Small Business Administration's Office of Entrepreneurial
    Development. Mr. Madrid is charged with leading the
    administration's technical assistance arm of the Small Business
    Administration. Before joining the SBA, Mr. Madrid served as
    the CEO of the Latino Business Action Network at Stanford
    University. In 2019, the Silicon Valley Business Journal named
    him the Silicon Valley Non-profit CEO of the Year. In addition,
    he is an honorary colonel of the U.S. Army and a Jefferson
    Award recipient which recognizes individuals and organizations
    for excellence in service at a national or international scale.
    Quite an impressive resume.
        Thank you for joining us today, Mr. Madrid, and you are
    recognized for 5 minutes.

     STATEMENT OF MARK MADRID, ASSOCIATE ADMINISTRATOR, OFFICE OF
       ENTREPRENEURIAL DEVELOPMENT, UNITED STATES SMALL BUSINESS
                             ADMINISTRATION

        Mr. MADRID. Good morning, Chairwoman Velazquez, Ranking
    Member Luetkemeyer, and distinguished Members of the Committee.
    Thank you for the invitation, and I am energized to discuss
    SBA's Office of Entrepreneurial Development. Our mission is to
    help small businesses start, grow, and compete in global
    markets by providing quality training, counseling, and access
    to resources. OED is SBA's technical assistance arm.
        Throughout my career, nothing has been more purposeful than
    truly empathizing with and supporting small business owners. I
    am a product of entrepreneurship.
        Like many of our U.S. small business owners, my dad was
    unrelenting in changing the course of our family's destiny as
    he built a welding business in the Texas panhandle. We are
    proud of my dad for his evolution from the cotton fields to
    being his own boss. Mi Papa, my dad, died of COVID-19 and we
    almost lost my mom. We are thankful to God that my mom
    survived. So I consider supporting small businesses like my
    dad's the honor of a lifetime and I have a proven track record
    of doing so.
        At OED, we oversee SBA's network of resources partners,
    including Small Business Development Centers, Women's Business
    Centers, and SCORE. Additionally, our Office of
    Entrepreneurship Education (OEE) spearheads our Electronic
    Learning Initiative and the Community Navigator Pilot. Over the
    last 9 months, we have made great strides in fighting the
    pandemic and recovering our economy, achieving historic job
    growth for a new administration.
        However, we still have a long way to go, which is why
    President Biden announced the COVID-19 Action Plan, a
    comprehensive national strategy to fight COVID-19 and to
    protect our economic recovery. At the SBA, we are honored to
    support these efforts, making critical improvements to the
    COVID Economic Injury Disaster Loan, streamlining forgiveness
    of small Paycheck Protection Program funding of $150,000 or
    below, and launching the Community Navigator Pilot.
        Enacted by the American Rescue Plan Act of 2021,
    Navigator's goal is to strengthen outreach to our nation's
    smallest businesses, both in rural and urban America,
    particularly those owned by women, veterans, and socially or
    economically disadvantaged individuals. This program will
    advance our reach of SBA services and access to federal, state,
    and local resources by leveraging a national network of hyper-
    local community navigators who, in the words of Administrator
    Guzman, are ``on the ground truly connecting, empathizing, and
    tailoring solutions for our small businesses.''
        The Community Navigator Pilot is a $100 million competitive
    grant funding opportunity. Alongside our Office of General
    Counsel, our office is currently reviewing proposals and we
    look forward to announcing the grant recipients this month.
        Our combined efforts are more critical now given the urgent
    state of recovery of our U.S. small businesses. Thus, in
    addition, Navigator's OED is laser focused on supporting our
    Resource Partners. Supported by our Office of Small Business
    Development Centers, we are proud of our network of SBDCs for
    their tireless work throughout the pandemic, including
    utilization of CARES Act funding to increase support of our
    small businesses over this past year and a half. Between April
    and December 2020, SBDCs were able to use CARES Act funding to
    support 592,000 small businesses.
        Supported by our Office of Women's Business Ownership
    (OWBO), our 138 Women's Business Centers support female
    entrepreneurs through training, technical assistance, and
    providing access to capital, credit, and federal contracting
    opportunities. These hyper-local centers are more important
    than ever as women business owners have been disproportionately
    impacted by the pandemic. We are proud that OWBO has launched
    24 new WBCs this year, including two in Puerto Rico and Tulsa.
        Supported by our Office of Entrepreneurship Education and
    SCORE, our nation's largest network of volunteer business
    mentors, with over 250 local chapters and over 10,000 mentors
    nationwide, provide personalized mentorship to entrepreneurs
    across all 50 states and Puerto Rico. During the pandemic, the
    application of mentorship became increasingly critical and
    SCORE made it accessible through the creation of an online
    resilience HUB.
        I close by stating OED priority to execute strong controls
    to ensure our programs have robust management and oversight. To
    underscore this commitment, we have introduced a next
    generation reporting system to monitor performance and
    accountability. This is a very difficult time for America's
    small businesses, and yet, they continue to embody that grit
    and resilience and hope. And we look forward, alongside your
    efforts, to support them every step of the way.
        Thank you for this invitation. I am honored to be here and
    I look forward to your questions. Thank you.
        Chairwoman VELAZQUEZ. Thank you, Mr. Madrid. My condolences
    to you and your family.
        I will begin by recognizing myself for 5 minutes.
        SBA has been relying on an outdated legacy system, EDMIS,
    to collect data on counseling and training programs. I
    understand that SBA developed a performance reporting system to
    replace EDMIS. To what extent has SBA implemented the system
    and how has it increased operational reliability performance?
        Mr. MADRID. Thank you, Chairwoman, for that question. We
    are definitely leaning in to Administrator Guzman on Technology
    Forward and that also applies to what you are referring to in
    terms of we have had a migration from an EDMIS Legacy system to
    EDMIS Next Generation which will increase our reporting
    capabilities, efficiency, allow for real-time reporting of data
    and data acquisition which will also increase our efficiency of
    human capital. With the Community Navigator Pilot, we will have
    graduated to a new system altogether that will increase these
    capabilities even further.
        Chairwoman VELAZQUEZ. Are all resource partners reporting
    performance data in the system to date?
        Mr. MADRID. That is right. Thank you, Congresswoman. In
    fact, with the EDMIS Next General reporting system as of May
    there was a 100 percent deployment across all resource
    partners--the SBDCs, WBCs, and SCORE.
        Chairwoman VELAZQUEZ. Thank you.
        In a recent hearing, we heard concerns from resource
    partners about delays in notices of awards and grant
    reimbursement. I have since learned that OED worked hard to
    address outstanding reimbursement. Why did the backlog occur
    and what can be done to prevent it from happening again?
        Mr. MADRID. Thank you, Chairwoman.
        First and foremost, that is absolutely on target. We are
    committed to getting those timely reimbursements in place.
    There was a little bit of a delay with the initial funding to
    disburse. Having said that, we also experienced some delays
    frankly with the supply of demands that were in the system with
    the pandemic but now with graduation to our EDMIS NG system, we
    have also created efficiencies within the teamwork. We have
    opened lines of communication. Those delays have been
    mitigated.
        Chairwoman VELAZQUEZ. Okay. Are you telling me that OED
    needs additional support from the Committee to ensure funding
    is disbursed on time or not?
        Mr. MADRID. Well, thank you for that statement. We
    definitely appreciate your support. You know, we are leveraging
    our resources as Administrator Guzman has commissioned us to
    do. So your ongoing support is appreciated. We have established
    new efficiencies. We have opened lines of communication. And so
    thank you for your ongoing support. It is very, very helpful to
    us and we are reaping the rewards from it. Thank you.
        Chairwoman VELAZQUEZ. Thank you.
        Let's talk about the Community Navigator Pilot Program. It
    is projected to begin disbursing grant awards in the coming
    weeks. Can you please tell us or give us an update on where SBA
    is in the grantee selection and funding disbursement?
        Mr. MADRID. Thank you, Chairwoman.
        We are energized that the grantees will be awarded this
    month, in October. We are in the third leg of our review
    process that spans 6 to 7 weeks. It was diligent, and as a
    frame of reference, we were anticipating 200 to 250 proposals.
    We received over 650. That was a product of our message getting
    out, making sure that we increased our outreach plan to all
    communities. So we are excited that we are in the third leg of
    this review process, which is a business management review,
    alongside our Office of General Counsel. And we will be
    announcing the grantees later this month in October.
        Chairwoman VELAZQUEZ. Can you please explain how the
    Community Navigator Pilot Program will work with SBA's resource
    partners to provide counseling and training?
        Mr. MADRID. Absolutely. The Community Navigator Pilot is a
    hyper-local approach which is deploying community navigators
    that know their local territories, their audiences, and most
    importantly, the small business owners that truly connect with
    them in culturally relevant ways. And so through these
    community navigators and this national network, including the
    resource partners and any organizations supporting small
    businesses, we have to support our small businesses during
    recovery. The bottom line is, as reported by our Office of
    Advocacy in the first quarter of 2020, Black-owned businesses
    declined 41 percent, Hispanic declined 32 percent, Asian
    American declined 26 percent, and Women business owners, active
    business owners, declined 25 percent. So it is going to take
    this consolidated effort, which is a coalition-building
    endeavor, and we are committed to it.
        Chairwoman VELAZQUEZ. Thank you. Thank you very much. My
    time has expired.
        Now we recognize the Ranking Member, Mr. Luetkemeyer, for 5
    minutes.
        Mr. LUETKEMEYER. Thank you, Madam Chair.
        Mr. Madrid, on May 4, 2021, the OIG released an audit of
    SBA's oversight of the Women's Business Center program and
    found that SBA did not provide effective oversight of the
    program. Specifically, the SBA did not detect that WBCs had
    failed to remedy accounting deficiencies identified during the
    mandated financial reviews. They did not detect anything that
    the WBCs made improper budget transfers. They did not detect
    that they had used federal funds for unallowable costs. They
    did not detect reported unsupported matching funds and program
    income earned. And they also failed to submit accurate
    financial reports. Even more concerning, SBA program officials
    detected significant noncompliance that warranted removal of
    two WBCs from the program but did not take action.
        So the question, I guess, is how far along is SBA in
    resolving OIG's 10 recommendations? And have any of these WBCs
    been closed in the last few weeks here?
        Mr. MADRID. Thank you, Ranking Member, for your question.
        The Office of Women's Business Ownership is active in
    resolving the recommendations from the IG. And so I can go over
    some of those with you now. Recommendation, there is one that
    has been closed. There is one that is in negotiation in terms
    of our Office of Women's Business Ownership is finalizing
    discussions and receiving feedback from the OIG itself. Three
    recommendations have final closeout dates of September 24, 2024
    as they have financial obligations on the part of WBCs that
    need to be regrouped and reconciled if possible. So OIG has
    agreed to a date of September 24, 2024 for final action. And
    five recommendations have final target dates associated with
    them for the end of this year, calendar year 2021, and these
    five recommendations overall relate to oversight, compliance,
    and monitoring of the WBC program with specific concerns
    regarding finance examination. On this front----
        Mr. LUETKEMEYER. Thank you for that. But one of my concerns
    is that, number one, we knew that at least two of these
    programs had problems to the extent that they should have been
    closed and were not. So I guess my question to you on that is,
    why not? What kind of action have you taken since then to
    rectify the situations? Number two, even though you say that
    these recommendations were implemented, the IG report on a
    couple different occasions on different programs have said that
    the employees do not implement the rules. They do not follow
    the rules. Even though the recommendations are put in place,
    the employees still do not follow them. So what have you done
    to make sure that there is a follow up on this to make sure
    that the employees actually follow through on the
    recommendations? Because obviously, there is no action been
    taken on the two that should have been closed, which tells me
    that somebody is asleep at the switch. And if that is going to
    happen, then who is going to actually push people to actually
    do the job because nobody is pushing people to do the job to
    begin with on these two that we have shown do not work?
        Mr. MADRID. Thank you, Ranking Member. I would like to
    report that three WBCs have indeed been closed.
        Mr. LUETKEMEYER. Good.
        Mr. MADRID. So that is on the one front in terms of action.
        On the second, there is an important, let's say,
    advancement that has occurred here at the Office of
    Entrepreneurial Development, is that there is a strong
    relationship between the office itself and all the offices of
    the department, including the Office of SBDCs, the Office of
    Women's Business Ownership, and our Office of Entrepreneurship
    Education. So there are open lines of communication. And
    another action that has occurred in this administration, this
    leadership, is we have a tracker for all OIG and GAO audits. So
    we meet on those frequently and I concur with the head of
    Office of Women's Business Ownership every week. So I hope----
        Mr. LUETKEMEYER. I support that. I support the Women's
    Business Centers. Do not get the wrong impression here. But by
    the same token, my job is to provide the oversight of all of
    the programs, to make sure they are working properly. And if
    they are not, number one, they are hurting the integrity of the
    program and they are wasting taxpayer dollars. And if they are
    found to do that, which you say they have now closed three,
    that is great. We need to correct those things and fix them
    quickly.
        And another thing is, again, I urge you to continue to
    follow up to make sure that the personnel follow up and adhere
    to the recommendations of the IG once they are implemented
    because what is very concerning to me is that the report on a
    couple of other issues here, EIDL program in particular, the
    employees were ignoring the IG report and the recommendations
    that are set out. And so they really do not do any good, even
    though they are in place, they are still not doing any good
    because if they are not being implemented and followed, we are
    still back to the same place doing business the same way we
    always did. And so I would urge you to look into that. And I am
    sure my time is about up.
        And with that, Madam Chair, I yield back.
        Chairwoman VELAZQUEZ. The gentleman's time has expired.
        Now we recognize Mr. Golden, the gentleman from Maine.
        Let me just say that, yes, Mr. Luetkemeyer, we all care
    about protecting the program from fraud and abuse and taking
    corrective steps. Many of those points that have been raised by
    the IG occurred under the Trump administration. So far, this
    administration has a track record on addressing those issues.
    With that, let me recognize Mr. Golden.
        Mr. LUETKEMEYER. Let me just respond to that, Madam Chair.
    I appreciate that and I acknowledge that some of this was done
    under the previous administration. It does not make it right.
    It still needs to be cleaned up. And I think----
        Chairwoman VELAZQUEZ. But they are. They are, sir.
        Mr. LUETKEMEYER. My concern though is that the IG report
    also showed that the employees of SBA, the staff, was not
    following up and adhering to the recommendations. That is the
    point I am trying to make. We have got to make sure that if the
    recommendations are put in place that they are followed. The IG
    is trying to do their job but if these recommendations are not
    followed, they are worthless. We have accomplished nothing. So
    that is my point. Thank you.
        Chairwoman VELAZQUEZ. Mr. Golden, you are recognized for 5
    minutes.
        Mr. Golden, you are muted.
        Ms. Davids, you are recognized for 5 minutes, the
    gentlelady from Kansas.
        You are muted.
        Ms. DAVIDS. Sorry. Thank you. Good morning.
        I did not realize that Mr. Golden would be unavailable.
    Okay, well, thank you so much. I appreciate, Chairwoman, you
    holding this hearing.
        SBA's Entrepreneurial Development programs have been
    critical resources for small businesses, for small business
    owners and entrepreneurs from before and during this pandemic.
    And our ED partners, our Entrepreneurial Development partners
    have gone above and beyond to provide small businesses across
    the country with information, with assistance during this
    unprecedented public health and economic crisis. In fact, the
    Kansas City Women's Business Center, which is based in and
    serves not just--it is based in the Third District here in
    Kansas but it also serves a pretty wide area here. And they
    helped over 600 clients last year. And helping small business
    owners adjust to things like COVID safe workplaces and
    navigating the various relief programs that we have heard a
    little bit about this morning, it is part of the reason that
    last Congress the Women's Business Center here helped me see
    that the Women's Business Centers Improvement Act was
    necessary. Reauthorizing the WBC program, increasing funding
    levels, increasing the cap on individual center grants is an
    important priority for me.
        A few months ago, the Subcommittee on Economic Growth, Tax,
    and Capital Access held a hearing focused on women's
    entrepreneurship where we discussed the importance of WBC
    programs for entrepreneurs.
        So Mr. Madrid, I was hoping to hear from you about how the
    passage of a similar bill this Congress could expand the WBC
    program and frankly, expand opportunities for female
    entrepreneurs.
        Mr. MADRID. Thank you, Congresswoman, for that question.
        Women's entrepreneurship continues to be the fastest
    growing segment in the U.S. They are contributing to the
    economy. They are job creators. We all know that. We all know
    women business owners. Thank you for that reflection about the
    Women's Business Center in Kansas City.
        It is important to note that the Women's Business Centers
    have risen up to meet the occasion of the pandemic. I can tell
    you that the network overall had almost $10,000 capital
    infusions. On the ground, I have been on the road in Fort Dodge
    Iowa, I have been on the ground in Milwaukie and Brooklyn and
    Nevada, that women business owners were just instrumental in
    pandemic resourcing and they are instrumental as we digitize.
    So the Women's Business Centers have been absolutely critical
    during the pandemic. They continue to be critical for recovery.
    And when you have that stat to reflect upon that in the first
    quarter of 2020, businesses owned by women declined by 25
    percent, you know, in our minds, one business closing is one
    too many. And so we are going to continue on the effort to
    increase the scope of the WBCs.
        Ms. DAVIDS. Thank you for that. And I would just close, and
    I will not take up the entire time, I just thank you for the
    work that you all are doing over at SBA. It has been a long
    year and a half and there has been a lot of pressure put on
    frankly everybody during the pandemic. And I appreciate your
    efforts to continue to work on those OIG issues that have been
    brought up and also to just continue supporting our small
    business owners. We will talk to you soon, hopefully. Thank you
    so much.
        Madam Chair, I yield back.
        Chairwoman VELAZQUEZ. The gentlelady yields back.
        Now, we recognize the gentleman from Texas, Mr. Williams,
    for 5 minutes.
        Mr. WILLIAMS. Thank you, Madam Chair. And thank you,
    Chairman, for being with us today.
        I am an entrepreneur. I have been in business and still am
    51 years. This is my 51st year in business. I employ hundreds
    of people and it is challenging right now. And as you are
    aware, small businesses across the country continue to face
    financial uncertainty as we reemerge from the COVID-19
    pandemic. Unfortunately, we have not seen the necessary speed
    from the SBA that main street America deserves after Congress
    has passed billions of dollars in aid over the past year.
        Now, as a prime example is the Shuttered Venue Operator
    Grants program which I basically wrote which left music venues
    and movie theaters waiting for over 7 months until money was
    disbursed and thousands of businesses did not survive the
    delays that were caused by that. Now, I am concerned that the
    implementation that you talked somewhat about this morning of
    the Community Navigators Program is headed in a similar
    direction and this program has been in the works since April of
    2021 and still have not seen any money from the SBA about the
    selection process. And I just need to remind you, Small
    Business, unlike government employees, where government
    employees have salaries and guarantees, small business owners,
    they are out every morning trying to sell something. They are
    on commission. They need to bill. They cannot have these
    delays. So we need to do better with that.
        And you talk about how you support small business. Well,
    how can you support small business when you support raising
    taxes and raising regulations to small businesses? Can you
    answer me that?
        Mr. MADRID. Thank you, Congressman, and the perspective of
    that you bring as a business owner. Thank you very much.
        In terms of SVOG, the Shuttered Venue Operators Grant, we
    have issued decision on 97 percent of all initial 17,644
    applications. And $11 billion in grants have been awarded, $9.7
    billion disbursed.
        In terms of your question on the Navigator Pilot and the
    timing, just as a frame of reference, there was a hyper-local
    interest in terms of the local institutions that wanted to be a
    part of this process and apply. We had to extend the deadline
    for proposals that we pushed forth the end of July and when we
    had 656 proposals come in relative to the 200 to 250 that we
    were anticipating, we had to make sure and instill a diligent
    oversight process and review process. So we look forward to
    announcing those this week.
        In terms of the tax question under the Build Back Better
    plan, it is important for small businesses to know that no one
    earning under $400,000 incur or experience a tax increase. And
    so I just wanted to make sure and address your points.
        Mr. WILLIAMS. I know that is what you all say but that is
    not true. But we will move on.
        The SBA has also shown an inability to track taxpayer
    dollars in implementing some of these programs. With the EIDL
    program alone, there has been an estimated $1.1 billion in
    potential fraud. Since the Community Navigators program was
    allocated $100 million, we must ensure that we do not repeat
    the mistakes of the past and take the appropriate measures to
    prevent the waste of taxpayers' dollars.
        So Mr. Madrid, can you talk about the measures that the SBA
    has taken to detect fraud with the Community Navigators
    program?
        Mr. MADRID. Absolutely. Thank you, Congressman.
        We are ensuring oversight in compliance is top of mind. We
    are complying with quarterly reporting that will occur at the
    grantee level, so that is going to be one way that we enforce
    compliance and oversight. The technology that also is being
    deployed will increase our accuracy and ensure our accuracy. It
    is real-time, so that is one area that we will keep our eyes on
    very, very diligently. As well, we are collaborating with our
    Office of Field Operations when it comes to the spokes on the
    ground level. And so all that said, we have our mind to
    mitigate fraud, waste, and abuse, and also being compliant to 2
    CFR regulations. And also increasing our open line of
    communications through our GAO and IG tracker that also
    includes internal controls. And that will definitely apply with
    the Community Navigator Pilot immediately as it is launched. So
    thank you for your question.
        Mr. WILLIAMS. In the time that I have got left. Rural
    communities. I have a rural district that face unique
    challenges while recovering from the pandemic. So can you
    elaborate on how the SBA is ensuring rural businesses have
    access to these programs and are made aware, which is
    important, of the assistance that is available?
        Mr. MADRID. Thank you, Congresswoman--Congressman.
        Mr. WILLIAMS. Now you are calling me Congresswoman.
        Mr. MADRID. No, Congressman.
        Mr. WILLIAMS. Because of my hairdo?
        Mr. MADRID. We have our Office of Rural Affairs and that is
    being handled at our Office of Field Operations. Thank you for
    your question on rural entrepreneurs.
        Mr. WILLIAMS. Okay. Thank you very much. And just in
    supporting small business, when you cut taxes it helps small
    business. When you raise taxes, it really hurts small business.
    I yield back.
        Chairwoman VELAZQUEZ. The gentleman's time has expired.
        Now we recognize the gentleman from Maryland, Mr. Mfume,
    for 5 minutes.
        Mr. MFUME. Thank you very much, Madam Chair. I want to
    thank you and the Ranking Member for scheduling this hearing.
    And thank the representatives here who have given written and
    oral testimony.
        The gentleman before me raised the issue of potential
    possible fraud and abuse of the Navigators program. I want to
    just stay on that program for a second and ask you, sir, if you
    would take a moment to talk about expressly the goals as stated
    of that particular program. And then as juxtaposition give us
    on this Committee some sense as to where you are meeting those
    goals.
        Mr. MADRID. Thank you, Congressman, for the question on the
    Community Navigator Pilot.
        The bottom line is small businesses, the smallest of the
    small were left behind of pandemic resources. And some have
    historically been left behind. So our goal is to bridge that
    gap with the Community Navigator Pilot. And that is deploying
    community navigators that are culturally competent in terms of
    understanding their terrain. I say let's fight a ground war,
    not an air war meaning that you are in touch with the ground.
    That you know exactly what their small businesses are facing
    and that is including, of course, in rural America. And so this
    effort here is a chance to build coalitions and in order to
    bridge that gap. In prior positions that I have held supporting
    small businesses we used to say get to know the bank before you
    need the money. In this instance it is get to know the SBA
    before you need the SBA. Also, the Community Navigator Pilot is
    ensuring access to federal, state, and local resources.
        And what I would say as well is those that have not
    experienced SBA for whatever reason including during the
    pandemic, we want to introduce these small businesses to the
    SBA so they keep coming back, not only in the present and the
    future. And that is in line with Administrator Guzman in terms
    of saying we have to to build the customer-first environment,
    technology forward, and advancing equity. That is exactly the
    goals that we will achieve with the Community Navigator Pilot.
    And that includes geographical diversity in terms of service
    commitment. So thank you for your question.
        Mr. MFUME. Well, how long has the program been operational?
    Not conceptually but operational?
        Mr. MADRID. Great question. Thank you very much for asking
    it.
        We will announce our grantees later this month in October
    and then it starts a 2-year period of performance.
        Mr. MFUME. And has SBA developed a matrix to be able to
    measure? I agree with you on the issue of cultural competency,
    but have you developed a matrix to be able to see where you
    actually are in terms of success or lack of success? And what
    has been the feedback back into the SBA from those businesses
    that you are working with specifically?
        Mr. MADRID. That is a great question. I can tell you that I
    have been on the ground in rural America and Iowa and also
    talking to tribal-owned businesses and Native American
    businesses in Nevada. I also had the experience of talking to
    women entrepreneurs in Brooklyn. And so I have talked to
    businesses that were eligible and applied and received our
    pandemic resources, one or the other or combined. I also talked
    to business owners who had not. And I said, what would it take,
    what would it have taken for you to be more engaged with us?
    Give us your feedback. And overall, it was lack of navigation,
    that they had more questions. They did not understand a
    process. They needed help with the paperwork. They did not have
    a scanner. They needed some tax codes in order for document
    preparation. They needed translation services. So all these
    issues here on the ground is what we are trying to resolve with
    the pilot.
        Mr. MFUME. And let me just ask if I might in the time that
    I have left, first, an observation. Racial minorities
    primarily, ethnic minorities secondarily, tend to be
    underrepresented in small businesses and small business
    programs. Can you tell me just what sort of efforts the SBA has
    in place to provide counseling, training assistance to those
    businesses who are doing everything they could do but in
    oftentimes find themselves lacking, or excuse me, not lacking
    but up against procedures and policies that make their job more
    difficult? So whether it is capital standards or bonding
    requirements or anything else?
        Mr. MADRID. Thank you, Congressman.
        We are definitely leaning in to Administrator Guzman. She
    says, let's bring silos amongst the units of the SBA so we are
    working together. The OED, the Office of Entrepreneurial
    Development is working with our government contracting and
    business development unit. We are working with OFO in our
    district offices. We are working with OII, Investment and
    Innovation on innovative startups. So all that said is
    advancing equity is definitely central and all our units
    working independently and collectively.
        Mr. MFUME. Well, my time has expired but I am assuming you
    have done that with that or are doing it with the Women's
    Business Centers as well, and hopefully, we will get a chance
    to follow up in a future hearing. But I may very well have some
    questions directly to you following this.
        I want to thank you. I want to thank the Chairman, and I
    yield back any time I may have.
        Chairwoman VELAZQUEZ. The gentleman yields back. Now we
    recognize the gentleman from Minnesota, Mr. Hagedorn, for 5
    minutes.
        Mr. HAGEDORN. Thank you, Madam Chair. I appreciate you
    holding the hearing. Administrator, it is good to see you
    today.
        I want to focus a little bit on the administration's
    executive orders on vaccinations and how it applies first to
    the SBA. The SBA has many, of course, these small business
    development centers across the country. In the state of
    Minnesota, five of them are located in universities, different
    university systems in our state. And if the administration
    comes along and says people have to be vaccinated that are
    covered contractors and yet they work in a university system
    that may have different rules, how do you square that,
    Administrator? What are they supposed to do?
        Mr. MADRID. Thank you, Congressman.
        As we continue to navigate COVID-19, the administrator has
    made safety and security top of mind.
        Mr. HAGEDORN. I do not need the lecture on that. What are
    they supposed to do? What are the rules?
        Mr. MADRID. Well, we are working directly with the Office
    of OPM, frankly, and leaning into their advice and counsel. I
    can take this back and we would be happy to answer any follow-
    up questions.
        Mr. HAGEDORN. That is fine. That is fine, but I think a lot
    of your people have asked you over the last many weeks what are
    the rules and you have not even discussed it with them. You
    have given the no guidance. And so, again, it looks like you
    have a policy that you are just dumping out and then you will
    try to figure it out later. That does not make a lot of sense.
        Let's move on to the one that President Biden has to force
    every company over 100 employees to have their employees
    vaccinated. First of all, we are in a situation in American
    where virtually, every business, every entity is looking for
    work. And the idea that we are going to go out of our way to
    fire people at this point in time does not make a lot of sense
    with 10 million or so open jobs and 8 million people still
    unemployed. Why the heck would we want to do that, particularly
    when according to the science that I have seen, whether you
    have a vaccination or not, you can still get COVID and you can
    still transmit COVID. The vaccination does not stop you from
    getting it. It just makes hopefully the end result much better
    because it reacts and helps you get through it hopefully
    without death. So it seems like what has happened is the
    president came out and said there is going to be this rule
    under OSHA and then since then he has gotten on the phone with
    American Airlines and a bunch of other companies and used the
    pressure of the federal government in order to get those
    entities to implement his policy so it looks like everybody
    likes what he is doing even though, of course, the federal
    government has a lot of oversight over these companies and
    sometimes can deliver money or not deliver money. And yet, who
    knows when this is coming out? Who knows what the details would
    be? But I do not understand where the administration is coming
    on this. Why is the president and others so intent to get
    people fired and to push this issue when it looks like the
    science is anybody can get COVID and anybody can spread it
    whether you are vaccinated or not. Someone has got to answer
    that question for me.
        But if you could, since we are talking about small
    business, and if you want to help small businesses, please
    deliver this message to the administration. We have 80 people
    in Caledonia, Minnesota, who are going to lose their jobs.
    Eighty good manufacturing jobs down there because Rawlings
    Company and Major League Baseball decided that they want to
    shut down that plant and move the vast majority of those jobs
    to Communist China. Now, the people at that plant, what they do
    is they make batting helmets for the Major League baseball
    players and they make composite softball bats. And the
    president of the United States, he has been out there again. He
    has been calling all these companies, trying to get them to
    implement his policy which is going to leave the people being
    fired and less workforce in America. Here is an opportunity for
    the administration to pick up the phone and call the
    commissioner of baseball and say, look, let's not be shipping
    our jobs to China. Let's keep our manufacturing jobs in the
    United States. And so I hope you will deliver that message to
    the administration that they can help save a small business and
    save jobs and it is very important to the community that I
    represent down in Southeast Minnesota.
        Lastly, the last thing you can take back to the
    administration is they have it exactly backwards. Instead of
    trying to regulate everything and every business and every
    person to go get a shot or not get a shot or whatever, we
    should have a liability shield for businesses, for educational
    entities, and of course, medical care providers. So if people
    cannot just have a bunch of lawsuits and then maybe these
    entities will not have to worry so much about whether or not
    everybody that works for them has the shot. Again, I am
    vaccinated. I think these decisions should be made between
    doctors and patients, not with the federal government,
    politicians, or bureaucrats leading the way, and certainly not
    the heavy hand of the federal government.
        With that, I will yield back. Thank you.
        Chairwoman VELAZQUEZ. The gentleman yields back.
        Now we recognize the gentleman from Minnesota, Mr.
    Phillips, for 5 minutes.
        Mr. PHILLIPS. Thank you, Madam Chair. Greetings, Mr. Madrid
    and colleagues.
        In my past life as an entrepreneur, I engaged with a SCORE
    mentor who shared memorable and really impactful counsel with
    me that I have employed ever since in my business career. So I
    really know firsthand how impactful these programs can be,
    particularly for those who lack the experience or the
    mentorship networks, particularly the access to capital that
    one needs to succeed as an entrepreneur. And I also believe
    deeply that business can and should be a means to an end, the
    end not being how much an owner can accrue in success; rather,
    how much that owner can share with those who made it possible.
    And I really believe strongly that building this kind of
    stakeholder capitalism into business models is best done at
    early stages.
        Earlier in another hearing, Mr. Rowe mentioned succession
    planning and transitioning businesses to employee-owned models
    as an example of how SBDCs can engage in this work. So could
    you explain how OEP can maybe play a role in helping inspire
    more employee ownership at early stages of companies as they
    are seeking counsel to establish themselves.
        Mr. MADRID. Thank you, Congressman, on a very important
    topic in terms of let's talk about ESOPs, for instance. We are
    delighted that the SBDC network in pockets of the county has
    introduced webinars that approach this topic. In fact, there
    was an ultimate linkage that occurred at OED and connecting the
    dots is very, very important to us. And I will talk about SCORE
    here in a moment. But literally, I was talking to an 8(a)
    certified firm that is a Native American business and I was
    talking to the two sisters that opened the company Sister Sky
    that has been in operation for 20 years. And one of the sisters
    had her two daughters there. And she said these two daughters
    are going to take over this family business. I was able to then
    connect that with the ESOP training happening with the SBDC. So
    that is critical. As well, you mentioned mentorship. I have
    very diligent experience and the last experience where I led a
    nonprofit focusing on the largest cluster of scale Latinx firms
    in U.S. history is mentorship was the secret sauce of what
    SCORE has offered during the pandemic and their persistence
    through an online resilience HUB has been beneficial. As well,
    the WBCs are also having trainings throughout on succession
    planning. So I think we have our bases covered on a very
    important topic.
        Mr. PHILLIPS. I appreciate that. And a note to my
    colleagues. I think Democrats and Republicans can agree that
    capitalism works best when we have more ownership, not less,
    and if we can bake some of these principles into early-stage
    businesses with incentives and counsel and mentorship, I think
    we are all better off for it.
        My second question, Mr. Madrid, is relative to the CARES
    Act. Of course, it provided $25 million for SBDC and WBC
    associations to create a centralized platform if you will for
    COVID-19 resources and backend and training platforms for
    counselors. With funding for those programs set to expire in
    April, forthcoming in 2020, how do you categorize the success
    of that platform? And what were the metrics for success? And
    how would OED like to see the platform pivot perhaps to a post
    pandemic use?
        Mr. MADRID. Thank you for that question, Congressman. The
    Resource Partner Training Portal is definitely a coalition-
    building endeavor, so we thank America's SBDC and the
    Association of Women's Business Center for stewarding that
    particular platform. The best way to talk about the platform
    and its success and potential for the future is that most
    recently when we rolled out EIDL enhancements through the
    Office of Capital Access, we partnered with the Resource
    Partner Training Portal and there was an appetite frankly for
    that from the business advisors across the resource partners,
    including SCORE and the VBOCs, the Veteran Business Outreach
    Centers. We had a record attendance that was navigated through
    America's SBDC and the Association of Women's Business Centers.
    And so those are the type of metrics that we want to capture.
    They have captured, of course, attendance, and so we just need
    to keep pushing the metrics further. I was encouraged. I was
    encouraged by the couple of events that we have held together
    and more on the way if it continues.
        Mr. PHILLIPS. I appreciate it, sir. With that, I yield
    back, Madam Chair. Thank you.
        Chairwoman VELAZQUEZ. The gentleman yields back. Now, we
    recognize the gentleman from Pennsylvania, Mr. Meuser, for 5
    minutes.
        Mr. MEUSER. Thank you very much, Madam Chairwoman. And I
    thank the Ranking Member and my colleagues. And Administrator
    Madrid, good to see you.
        Yes, I think the Small Business Development Centers have
    been important throughout my district in Pennsylvania. In fact,
    I have gotten to know a few. They certainly help facilitate the
    PPP loans and they seem very excited and driven to assist and
    create outreach, so that is good. And I think that should
    continue. Many of them are involved with schools where the
    centers are within my district and it is a very positive thing.
        The OIG report, that oversight has got to be taken very
    seriously. I hear what the Chairwoman said, that it happened
    very much in the previous administration. Fine. But we are just
    finding out about it for the most part now. And we are really
    not hearing it being taken completely seriously. We have met
    with the Inspector General and he is a great individual. I
    really appreciate him. But it has got to be taken seriously.
        My next question, Administrator Madrid, was intended to be
    what are your needs to do your job better for our businesses.
    But first, I think it is very important that you have a real
    good understanding of the needs of small business. And I say
    this because even when we met with Administrator Guzman, I
    asked her about taxes and her response was, ``Hmm, we do not
    get into taxes. We leave that for another department.'' And
    that is not an advocate of small business that does not
    understand the taxes. And what you said a little while ago
    about under 400K is not accurate. Okay. But first off, there is
    a tremendous amount of uncertainty that exists with my small
    businesses throughout Pennsylvania, throughout the great
    Commonwealth of Pennsylvania. Tax is just one of the issues.
    Inflation. All right? All this monstrous spending that we want
    to even trickle down on moving forward. Inflation is a big
    problem for small business. Workforce availability, big
    problem. Supply chains, that is other matters are getting into
    effect there. The energy costs. Okay. That is a direct result
    of much of what is going on with the Biden administration. If
    the reconciliation passes, utility costs are going up. That
    affects everyone. Natural gas. You all want to tax natural gas.
    More than half our small businesses get their energy from
    natural gas. And homes. Thousands and thousands of home costs
    are going to go up. So to say it is under 400K.
        And then I am going to just give you a little bit of math
    here. All right? A typical business with 40 to 50 employees
    that does revenues of about $12 million has a net income of
    about 8 percent, which is about a million dollars. If you
    reduce the 400,000 level, because you are looking to reduce in
    reconciliation, in the bill, the 20 percent small business
    deduction. Okay, 20 percent of 600K, the difference between $1
    million and 400K is 600. You take that 20 percent, that is
    $120,000. At the new rate of 40 percent, that is about $50,000.
    That small business owner is probably paying himself $150,00,
    $180,000, maybe $220,000 for him and his family of four. So not
    only will he have to pay $50,000 more in taxes, he will
    probably let somebody go. That is what will probably happen. He
    will try to do more with less and maybe invest in automation,
    but you are also removing some of the cap gains or deductions.
    Not to mention the capital gains increase. How does that not
    affect anybody who makes $50,000 or more that looks to sell a
    stock because their child is going to college? So to say it is
    not under 400K is a complete inaccurate thing to say.
        Stating that, I will now go back, because we need you all
    to advocate for small business like your life depends upon it
    because the small businesses' lives do depend upon it. Okay,
    every day I hear from them.
        Now, I will go back. How can we help your department serve
    and advocate for small businesses?
        Mr. MADRID. Congressman, I would be happy and energized to
    answer questions related to our programming and our purview in
    terms of business counseling and training and education and so
    we appreciate your support with those tenets of OED.
        Mr. MEUSER. All right. Thank you.
        Madam Chair, I yield back.
        Chairwoman VELAZQUEZ. The gentleman yields back.
        Now we recognize the gentlelady from Georgia, Ms.
    Bourdeaux.
        Ms. BOURDEAUX. Thank you, Chairwoman Velazquez and Ranking
    Member Luetkemeyer, for holding today's hearing. And thank you
    to Associate Administrator Madrid for joining us today and your
    employment work with the SBA.
        The local SBDCs in my district have been extremely helpful
    resources as my office ahs helped small businesses navigate the
    effects of the pandemic. I represent a rapidly growing company
    in Gwinnett County where our population has grown by 20 percent
    between 2010 and 2020. And much of this growth has come among
    immigrant and first generation American communities moving into
    our district. These are demographics that we know start
    businesses at higher rates than the rest of the population.
    This means that our SBDCs are serving a larger and more diverse
    population of small business owners with the smaller allocation
    which accompanied our previous census results.
        So my question is, it is very important to me and to small
    business owners that these new census numbers ensure that we
    get federal resources and get them to where they are most
    needed. So I was curious. Now that we have entered fiscal year
    2022, albeit on a continuing resolution, when can SBA's
    resource partners in and around my district expect to see the
    implementation of the new funding allocations based on the
    results of the 2020 census?
        Mr. MADRID. Thank you, Congresswoman. Thank you for your
    work in your area and experiencing that rise.
        I can attest to the fact that our Office of SBDC leadership
    has taken a look at the census. In fact, they reported to me
    most recently that that is happening and occurring. There is an
    open line of communication with the SBDC network on that so we
    look forward to adjusting those measures accordingly. And thank
    you for your efforts and your statements related to immigrant-
    owned businesses, which they declined over 36 percent according
    to our Office of Advocacy data for the first quarter of 2020.
    So as well, through our Resource Partner Network, we have an
    inclusivity for all challenge that has been launched through
    that network. It started in Northern California, and my first
    visit here officially at SBA was in Fort Dodge, Iowa, where the
    Iowa SBDC invited me to be a part of their launch of their
    Inclusivity for All Challenge. And that has extended itself
    thanks to the SBC Network nationwide. So I hope all that
    together that we are looking at making sure that the applicable
    census figures do apply to allocations. Thank you for your
    question.
        Ms. BOURDEAUX. Great. Thank you so much. And inclusivity
    and those kinds of initiatives we look forward to seeing that
    in my community. We just have a lot of very, very diverse
    communities, very entrepreneurial, and I want to make sure that
    they are getting resources.
        One of the other challenges we faced is making sure that
    these very diverse communities are aware of the existence of
    the SBDCs, the WBDCs, SCORE, the VBOCs, so I also wanted to
    know what you are doing to promote awareness of these very
    important resources across diverse communities, communities
    where English may be a second language?
        Mr. MADRID. Thank you for that question.
        Inclusivity in diversity and outreach is definitely central
    with Administrator Guzman's leadership across the agency,
    across units, and definitely here at the Office of
    Entrepreneurial development. We have made measures to make more
    culturally linguistic options available, including pandemic
    resourcing. We did the same when we were rolling out the
    process of the Community Navigator Pilot. We messaged the
    opportunity to minority chambers, regional economic development
    organizations, to mayors, to states, to tribes. It was a very
    successful endeavor in terms of building our ground game. And I
    come back to having experience on the ground, fighting a ground
    war, not an air war, meaning that you are connected to the
    ground, know every part of the terrain. And so we were able
    because of those efforts to receive triple the amount of
    proposals than we were anticipating. So we will continue to
    make sure to lift up the Inclusivity for All challenge with the
    Women's Business Center Network. Several new Women's Business
    Centers have been implanted in HBCU territory and also in rural
    areas. So that continues to be a focus as well. And SCORE has
    also stepped up with their resilience and marketing efforts,
    including a Black-owned business initiative. So I hope all
    those factors combined give you a sense of confirmation of
    reinforcement. I appreciate your question.
        Ms. BOURDEAUX. Great. Well, thank you so much for your
    work, and look forward to working with you more in the future
    to try to continue to build that support network for our very
    diverse community of small businesses.
        Madam Chairwoman, I yield back.
        Chairwoman VELAZQUEZ. The gentlelady yields back.
        Now we recognize the gentleman from New York, Mr.
    Garbarino.
        Mr. GARBARINO. Thank you, Chairwoman. And thank you,
    Ranking Member, for hosting this hearing. I also want to thank
    Mr. Madrid for being here.
        Mr. Madrid, in your opening statement you said your mission
    is to help small businesses to start, grow, and expand.
    According to the NFIB's latest COVID-19 survey, half of small
    employers report supply chain disruptions and staffing are
    significantly impacting their businesses. How is your office
    assisting small businesses in overcoming these supply chain
    disruptions and staffing shortages?
        Mr. MADRID. Thank you, Congressman. I can tell you that
    supply chain vulnerability is a scenario that is being
    addressed by our Government Contracting Business Development. I
    would be happy to take your questions back and get back to you
    on that to support your questions.
        Mr. GARBARINO. All right. Well, I mean, because I have
    friends coming up to me now with little kids that are saying I
    am not going to be able to get Christmas presents and a lot of
    businesses in my district, I am sure most of my colleagues'
    districts, do a majority of their business during the holidays.
    And if they do not have products to sell, they will not be able
    to grow or expand or pay their employees. So making sure supply
    chain issues are addressed is huge. So I appreciate you getting
    back to me with answers, more specific answers.
        I also want to talk about inflation. A key metric measuring
    inflation is at its highest rate since 1991, 30 years. How is
    your office helping small businesses navigate the rising cost
    of goods? What are you doing to educate them or to help them
    grow?
        Mr. MADRID. Thank you for your question. The best way to
    create durable economic growth over the long run that eases
    bottlenecks and inflationary pressures is to increase the
    supply of goods that consumers want to buy, improve the
    resiliency of our supply chains, and reduce the cost of
    producing and getting goods to markets. So that is something
    that we look forward to working with you. I do want our DCBD
    area to get back with you. I assure you that I will get this
    question to you. I can tell you on the workforce development
    front because the resource partners are doing skill building
    scenarios across the network. So thank you for your question,
    Congresswoman.
        Mr. GARBARINO. All right. But I mean, I am just wondering,
    what is the answer. If a business is calling, that you are
    dealing with is calling up a restaurant and saying chicken
    wings. Chicken wings prices have tripled. You know, I cannot
    sell chicken wings for $16. What are you telling them? How are
    you telling them? How are you advising? How is your department
    advising these businesses that do not know what to do with the
    rising costs?
        Mr. MADRID. Well, I would be happy to answer any questions
    related to our programming at OED with our counseling and our
    education and our training. I will tell you that I did meet a
    woman-owned business in Iowa in a rural territory that had
    benefitted from PPP and the Restaurant Revitalization Fund and
    she was talking to me about the increased price of beef. And
    what she did was she pivoted in terms of saying what else can
    we do? What are the alternatives? Can we cut down our costs and
    other endeavors? We have kept our employees. So that is just
    one reflection I have heard on the ground that was offered by
    herself, but she was frustrated with the rising cost of beef
    but she was looking for alternatives. And that is where the
    counseling, the skills building, the digitizing efforts at the
    resource partner level really came to her benefit.
        Mr. GARBARINO. But, I mean, it is hard for a steakhouse to
    pivot when its business is based on selling beef. So, I mean,
    that is an issue. It is not easy for every business to pivot,
    especially small businesses.
        Lastly, I want to bring up something Jeremy, as the Ranking
    Member of the Cyber Subcommittee for Homeland, COVID made
    everybody go digital. Every small business. People that never
    thought they would. It is a new thing we are dealing with.
    Everybody has got to deal with. What is your department doing
    to help small businesses grow and start? How are you handling
    it with cyber? Because it is definitely something that is a
    huge issue. And ransomware, businesses are paying between
    $5,000 and $15,000 to keep their businesses going due to
    ransomware. So what is your department doing on that?
        Mr. MADRID. Thank you, Congressman. Under our purview at
    OED, we are releasing a notice of funding opportunity for a
    cybersecurity grant that will be offered to the state
    government. So more to come on that. And cybersecurity is a
    priority. Thank you.
        Mr. GARBARINO. Thank you. And I yield back.
        Chairwoman VELAZQUEZ. The gentleman's time has expired.
        Now we recognize the gentleman from Louisiana, Mr. Carter,
    for 5 minutes.
        Mr. CARTER. Madam Chair and Ranking Member, thank you very
    much for the opportunity. Thank you for having this hearing.
        Mr. Madrid, how can the Office of Entrepreneur Development
    increase their coordination with HBCUs and minority-serving
    institutions?
        Mr. MADRID. Thank you. Thank you, Congressman, for that
    question.
        HBCU outreach, engagement, and application of engagement,
    meaning results and action, is very, very important to the
    administrator. It is important to our agency and definitely
    resonates at the Office of Entrepreneurial Development. We are
    excited to see with the SBC network that there is over 30
    service centers. And just as a frame of reference, there are
    over 900 service centers. There are over 30 that are implanted
    in the HBCU environment. We need to do more, frankly. And we
    are working here this office knows under this leadership that
    we want documented results. Certainly, our role into the
    platform of EDMIS from a Legacy system to Next Generation
    reporting is going to help us with that.
        And on the WBC side, we are extremely excited. A number of
    new WBCs have been implanted in HBCU environments so that in
    and of itself I think speaks volumes in terms of action. But we
    have got to do more and that extends itself to MSIs, to tribal
    colleges and universities, to Hispanic-serving institutions.
    But we are very, very excited on the progress from HBCUs. And
    you will definitely be learning more from it with our
    implementation with the Community Navigator Pilot as well.
        Mr. CARTER. Excellent. Thank you. Let me ask you this, and
    I appreciate that, and that is incredibly important
    particularly to my district. But tell me, what can we do as
    Members of this Committee or me as a Member of Congress on the
    ground in Louisiana with multiple HBCUs in my district, what
    can I do to assist you or to advance this very noble cause?
        Mr. MADRID. Congressman, we would be happy to work with
    you. And so if you have nuances, sometimes being on the ground,
    what I have learned in my 15 years of supporting small
    businesses, specifically before that I was in the banking
    industry, is I come back to that premise of being on the
    ground. And so if we are several states away, we want to know
    what is happening. So we would be happy to work with your
    office on nuances that are specific on your ground.
        Mr. CARTER. Okay, great. Fantastic. I have two quick
    questions before my time runs out. Tell me about the reentry
    entrepreneurship counseling and training program because that
    is sounding also very important. We know that we have to do
    something different for our recently incarcerated individuals
    if we expect them to be able to survive in main street America.
    Share with me a little bit about what you are doing there and
    how those programs work.
        Mr. MADRID. Absolutely, Congressman. Thank you for that
    question.
        The best way to approach this question is from an example,
    frankly. I will point to an entrepreneur, Larry, who was
    formerly incarcerated in prison 20 years for a first offense,
    nonviolent crime. And with the help of an SBDC in Nashville,
    all Larry has done is launched his new business in the waste
    removal industry. And now they are working together. He is
    trying to obtain a line of credit. So we are committed here at
    OED to expand the footprint of our resource partners and also
    to start the process before release. That is very, very
    important. We have got to be as entrepreneurial as our small
    business owners and we look forward to this particular
    population contributing toward the economy. So starting before
    their release in structured programming----
        Mr. CARTER. I do not want to cut you off but I have got
    just about another, less than a minute. So two quick questions.
        One is we have a program in Louisiana called First 72. It
    is a program that in that significant period of the first 72
    hours of someone being recently incarcerated, there is
    programming set up. I would love to offline have a conversation
    with you to talk about the merits of this program in Louisiana
    and see if there may be some practices that they have that you
    can use or maybe some best practices you can share with them to
    improve on them.
        So lastly, real quickly, my last 30 seconds, there were
    several organizations in my district that applied for Community
    Navigator Pilot competitive grants. If an organization in my
    district was not selected, will they have an opportunity to
    apply again for this funding in the future?
        Mr. MADRID. Thank you, Congressman. I look forward to
    hearing more about First 72.
        The Community Navigator Program is a pilot, so the imagined
    state is that it is institutionalized in some way, shape, or
    form. If it is done through Congress, we are happy to execute
    it. Thank you very much for your question.
        Mr. CARTER. Thank you.
        I yield back, Ma'am.
        Chairwoman VELAZQUEZ. The gentleman yields back.
        The gentlelady from California, Ms. Young Kim, is
    recognized for 5 minutes.
        Ms. YOUNG KIM. Thank you, Madam Chair Velazquez. And I want
    to thank our Ranking Member Luetkemeyer for holding this
    hearing. And Mr. Madrid, thank you for being with us to discuss
    the state of SBA's Entrepreneur Development Programs.
        I want to point to your testimony where you talk about Mr.
    Montgomery of American wagyu cattle. By the way, during the
    pandemic, I am one of those who had mail orders and ordered the
    delicious Wagyu beef because I really like that. So I really
    appreciate you mentioning him and thanks to PPP, Mr. Montgomery
    was able to keep his staff full force and expand his
    businesses. And this is where he attended an event where he was
    able to meet up with his partner, lending partner, find the
    right banker that was able to guide him and tell him about the
    PPP.
        Can you describe how that partnership with local lending
    institutions and the Entrepreneur Development Resource Networks
    makes it easier for small businesses to gain access to capital?
        Mr. MADRID. Thank you, congresswoman. I look forward to
    ordering some wagyu beef myself. So beyond talking about it, to
    do it myself. I look forward to that and we are proud of
    Patrick Montgomery and part of the Missouri SBDC.
        But clearly, at OED, we are trying to forge collaboration
    building as much as possible. That is the case also with the
    Women's Business Centers in terms of some of them being CDFIs.
    That has been helpful to some of the women clientele that have
    had barriers to access to capital. So we will encourage
    coalition building when it comes to getting these
    entrepreneurs. That case specifically, Patrick was a
    serendipitous event as you had mentioned, and so we are glad
    that he was able to pivot to keep up with that mail order
    business, so I hope that is a reinforcement.
        Ms. YOUNG KIM. Other than sharing our love of wagyu beef, I
    want to get to the point of, you know, would you agree that it
    helps to have the bank representatives who know their
    communities on their ground as a resource for the networks?
    Because I say this because a while ago we sent a letter to the
    congressional leadership, both the Republicans and Democrats,
    to ensure that we do not remove the lending institutions from
    the equation and move towards a direct lending approach through
    SBA because there is that talk of that in the latest
    reconciliation package that went through the Committee. So
    should that happen, who will be filling the void of those
    community backers and credit union representatives that are on
    the ground providing information and services to our small
    businesses?
        Mr. MADRID. Thank you, Congresswoman. I believe that you
    are referring to the efforts surrounding direct lending by the
    SBA. And I will just purport to this. I want to preamble this
    by saying we will be happy as well to work with you and get
    questions to our Office of Capital Access. But what I will
    testify to is from being on the ground, those loan amounts,
    that $150,000 or less have been so hard to access for many of
    our communities that have been left behind historically who
    were left out of pandemic resources. It is hard territory and
    we frankly, we feel like we have to step in here. But I would
    be happy to take your questions back specifically to our Office
    of Capital Access. But some of those folks who are trying for
    those loan amounts are subject to very high interest rates and
    we all can agree that that is a very, very difficult
    environment, especially for a business owner who has not had
    access to funding. So sometimes they are first entry. So I look
    forward to any questions that you have that we can take back to
    that office.
        Ms. YOUNG KIM. The point that I want to make and emphasize
    is that we do not need to move away from that public-private
    partnership model that has a track record of success and that
    does a better job in protecting taxpayers from fraud and abuse
    and other SBA direct lending programs like the EIDL because the
    success of our entrepreneurs and small businesses should not be
    reliant upon a greater extension of government on main street.
        So in the remaining time, Mr. Madrid, you also indicated in
    your testimony that you are committed to ensuring ED programs
    have robust programs and that SBA is introducing Next
    Generation reporting program. I think the Chairwoman mentioned
    this, but can you clarify the reporting, the timeline of the
    reporting system and its implementation? Can you provide a
    little information on that?
        Mr. MADRID. Yes, Congresswoman. Thank you.
        In terms of the EDMIS Legacy System, I know I have a couple
    of seconds, but 100 percent was deployed across our Resource
    Partner Network, the SBDCs, WBCs, and SCORE. So we are about on
    the fifth month of implementation there.
        Chairwoman VELAZQUEZ. Time has expired and now we recognize
    the gentlelady from California, Ms. Chu, for 5 minutes.
        Ms. CHU. Mr. Madrid, thank you for being here and
    representing the Office of Entrepreneurial Development and SBA
    resource partners across the country.
        When I came to Congress, I worked hard to bring two SBDCs
    to my district in the San Gabriel Valley in Southern
    California. Now we have two successful locations in Pasadena
    and La Verne that have been immensely important and never more
    so than during the pandemic. One of the reasons why it was so
    important to get the SBDCs into our area is that we have a
    large entrepreneurial immigrant and limited English proficient
    community, and communities, actually. That is why I worked to
    insert language into the CARES Act requiring that we make in-
    language materials available for these business owners.
        So I am especially glad to see that in-language services is
    prioritized in the Community Navigator program but that is
    actually just one part of the equation. When I talk to my local
    SBDCs, they tell me that translations are important but not as
    important as gaining the trust and confidence of the
    communities that are hard to reach. And to do that, they have
    been successful in partnering with different community-based
    organizations that have both the language skills and the
    longstanding relationships. So I am proud that our local SBDCs
    do have these existing partnerships with these groups. But we
    also have one of the largest immigrant populations in the
    country and some well-established community organizations that
    serve them.
        So, this Community Navigator program that you are able to
    reach these immigrant populations that some might consider hard
    to reach that need to have access to those trusted
    organizations. So how are you going to make sure that happens
    through your guidance and awarding process? And I know there is
    a program of having a hub and a spoke. And will the spokes get
    funding? I just want to know how exactly you are going to work
    this to make sure everybody is reached.
        Mr. MADRID. Thank you, Congresswoman. Being culturally and
    linguistically competent is very, very important to us in terms
    of reaching those terrain elements that you speak of. And so we
    were excited in our outreach endeavors with the Community
    Navigator Pilot, that we leverage organizations that know
    different communities where translation is an issue. It was
    very, very important for us to have them at the table. With the
    anticipation of the grantees being announced later this month,
    I can assure you because of the diligent review process that we
    will achieve geographical diversity, as well as diversity of
    sectors being served. And through the spokes, which are the
    community champions on the ground, you know, we have reinforced
    over time different examples of what a navigator could be and
    translators were definitely one of those items of reinforcement
    that we addressed time and time again. So that is a very
    important scenario here.
        With the hub and spoke model, the hubs are grantees, so
    they will be being funded by the SBA. And then the spokes on
    the ground, through consortia agreements with the hubs will
    receive their funding. So we are excited that this model, it is
    a national model but with a hyper-local approach, we are
    excited to go into new ground where folks who have been left
    out running these businesses being job creators have the
    opportunity to truly understand how to connect with SBA. That
    is the first step of many but we are excited to take that first
    step in many instances on the ground through this program.
        Ms. CHU. And will the determination of the funding for the
    spokes be made by the hub?
        Mr. MADRID. That is right. That is right. And that is in
    proposal all together in terms of the review, the review
    process that we have now. It is a proposal of the hubs with
    their spoke engagements.
        Ms. CHU. And let me say also, people really need to know
    about the Community Navigator Program but we know that SBDCs,
    they were not allowed to advertise their services. So what is
    going to be done to make sure that there is an actual awareness
    of the Community Navigator Program? Will there be a role for
    advertising?
        Mr. MADRID. That is right. There will be a role. There was
    an appropriation, aside from the one under our purview, that
    talks about that application of marketing the Navigator Pilot.
    Thank you very much for your question.
        Ms. CHU. Thank you. I yield back.
        Chairwoman VELAZQUEZ. The gentlelady yields back.
        The gentlelady from Texas, Ms. Van Duyne is recognized for
    5 minutes.
        Ms. VAN DUYNE. Thank you very much, Chairman Velazquez and
    Ranking Member Luetkemeyer. And thank you, Mr. Madrid, for
    joining us today.
        Your visit comes at a difficult time for small businesses
    that have endured many challenges and hardships over the last
    18 months. And now as they try to get back on their feet they
    are faced with a slew of new manufactured challenges. Luxurious
    and unsustainable unemployment benefits have played a
    significant role in labor shortages and seemingly never-ending
    stimulus has led to record inflation.
        In addition, Democrats are now trying to force through the
    largest spending bill this country has ever seen, leaving our
    smallest employers fearful of massive tax hikes bound to
    stretch their already small margins.
        I heard your answer to Congressman Roger Williams's
    question about increases in taxes and you said that no one
    earning under $400,000 will experience tax increases. Now, as a
    direct result of this administration's fiscal policies, folks
    making under $400,000 in small businesses are already paying
    more in taxes. We are all suffering from increase in out-of-
    control inflation. For example, and I would hope that working
    for the Small Business Administration you see this, you have
    heard this, and you know this, too. Example is the cost of
    cargo containers. They have gone from $4,000 last year to now
    an average of $29,000. We have seen a 54 percent increase in
    fuel costs, a 7 percent increase in food costs, and escalating
    employee costs if small businesses can even find employees. And
    to that point, Congressman Hagedorn brought up the list of
    impacts that are going to be hitting the small businesses as a
    result of the vaccine mandates.
        I spoke with Members of the aviation industry yesterday who
    are already experiencing drastic shortages of pilots, and with
    this December 8th deadline looming over their heads, cargo
    carriers warn that this mandate will ``have a tremendous
    disruption on commerce in this country.'' So pretty much anyone
    who drives, buys anything, or eats will be paying more and it
    is only getting worse.
        So despite misleading claims pushed by this administration,
    increased taxes, including the Democrat Reconciliation Plan,
    will negatively affect the close to 1.5 million small
    businesses organized as C corporations and most small
    businesses organized as passthrough entities.
        So according to the Texas Public Policy Foundation, I know
    you are a Texan so you will appreciate this, the proposed
    policies Democrats are pushing will result in Texas businesses
    losing well over $650 billion in investments and reduce full-
    time employment by 12,000 jobs. So given that the state
    admission of your office is to ``help small businesses start
    growing in global markets,'' my first question to you would be,
    do you believe increased taxes on small businesses help them to
    grow and compete?
        Mr. MADRID. Thank you, Congresswoman. And a big shout out
    to Texas. Thank you for that.
        Regarding the tax plan, I would love to, you know, we are
    happy to respond to your questions in writing. I would love to
    respond or answer any questions about our counseling and
    training related to the programs.
        Ms. VAN DUYNE. What I asked you is do you believe that
    increased taxes in small businesses help them to grow and
    compete?
        Mr. MADRID. Our forte is not tax policy so we would be
    happy to address your questions in writing but I would be happy
    to talk about----
        Ms. VAN DUYNE. Do you believe increases in inflation helps
    small business to grow and compete?
        Mr. MADRID. I would be happy to take your questions and
    respond to them in writing, Congresswoman.
        Ms. VAN DUYNE. So do you believe federal mandates that
    force small businesses to fire employees in a time when they
    cannot find people to hire helps small businesses to grow and
    compete?
        Mr. MADRID. Congresswoman, I would be happy to respond,
    take your questions back and respond in writing.
        Ms. VAN DUYNE. So you come to us today to answer questions.
    I am asking you what kinds of impacts on small businesses this
    administration's fiscal policies will have. Are you unprepared
    to answer those questions today?
        Mr. MADRID. I would be happy to talk about the Community
    Navigator Pilot, our resource partners, what is happening on
    the ground with our WBCs, our SBDCs, and SCORE.
        Ms. VAN DUYNE. Okay. So the mission, which is to make small
    businesses be able to compete and grow, we are unable to talk
    about that today?
        Mr. MADRID. I would be happy to talk about what is
    happening on the ground to support that mission.
        Ms. VAN DUYNE. Okay. So as the Ranking Member of the
    Subcommittee on Oversight, Investigations, and Regulations, I
    was concerned by the Inspector General's audit of the Women's
    Business Centers earlier this year found that the SBA did not
    provide efficient oversight resulting in close to a million
    dollars of potential fraud. So as the administrator overseeing
    entrepreneurial development programs, can you tell me how many
    people on your staff are designated to provide oversight of
    these programs?
        Mr. MADRID. Yes. Well, the Office of Women's Business
    Ownership and the leadership there is responsible. We have
    closed three Women's Business Centers as elaborated earlier.
        Ms. VAN DUYNE. Can you tell me how many people are
    designated to provide oversight of these programs?
        Mr. MADRID. Yes. We have a grant management officer and the
    supporting staff.
        Ms. VAN DUYNE. Okay. So we have one person or----
        Mr. MADRID. Congresswoman, we have a team supporting that
    effort at OBO that is centered around the grant specialist and
    the supporting staff underneath that.
        Ms. VAN DUYNE. Thank you very much.
        Mr. MADRID. Thank you.
        Ms. VAN DUYNE. I yield back.
        Chairwoman VELAZQUEZ. The gentlelady yields back.
        Now we recognize the gentleman from Pennsylvania, Mr.
    Evans.
        Mr. EVANS. Thank you, Madam Chair. Thank you for your
    leadership.
        Good morning, Mr. Madrid. It is a pleasure to come to speak
    before us today.
        In my home of the City of Philadelphia, Temple University
    and Widener Small Business Development Centers have been
    critical to supporting entrepreneurs especially during the
    pandemic. Many small businesses in my district do not have the
    capital to hire accountants or professionals. During the past
    year, the centers have assisted in starting up 112 new
    businesses, 8,407 jobs, served over 2,600 clients, and helped
    them in forming nearly $40 million in capital for small
    businesses to develop. These centers are especially important
    in cities like mine where nearly half of the population is
    Black and nearly 25 percent is on poverty. However, this brings
    us to an issue around priorities and resources. So I want to
    ask the metric that comes with funding in making these
    decisions. These centers are based on increasing job save and
    capital formation. However, it appears to me that there seems
    to be a mismatch on the goals as is well documented the
    minority Black-owned businesses specifically have less access
    to capital and fewer employees than in fewer White-owned
    businesses. If the SBA keeps increasing the goals around job
    save and capital, is this not counterproductive to the centers
    increasing their already stellar performance of minority women,
    veterans, and rural entrepreneurs?
        Mr. MADRID. Congressman, I apologize but I had an
    interruption. So I heard the first part of your commentary and
    your question. I apologize to the Committee here but can you
    repeat the last part of your question. I apologize, all, for
    that interruption.
        Mr. EVANS. Basically, let me go back. I basically said
    these centers in particular assisted in starting 112 new jobs,
    new businesses, 8,000 jobs, and over 2,600 clients. Now, the
    question I asked, in terms of the goals of job save and
    capital, I asked the question is this counterproductive in
    terms of increasing the centers' already stellar performance of
    minority, women, and veteran entrepreneurs in terms of the
    objectives?
        Mr. MADRID. Yes. Well, thank you for your question,
    Congressman. We certainly want to make sure that we are
    evaluating the performance of the SBDCs. And so we are going to
    continue to reevaluate metrics and be timely with, especially
    what is happening during the pandemic. So we feel like new
    business starts, capital infusion, job creation, of course, is
    important, as well as asking if the folks being served are
    veterans and go deeper on demographic information. So we are
    definitely making sure that the metrics apply to the current
    environment. And we have learned a lot from the pandemic.
        Mr. EVANS. Well, can you talk a little bit about, just in
    your mind, of what you think you have learned in terms of the
    goals that you see of job save and capital? What specific
    example can you give in terms of what you have learned?
        Mr. MADRID. Absolutely. I mean, when it comes to capital
    infusion, I mean, the SBDCs certainly across the network had
    notable advancement there. Some of it was the numbers but they
    had to pivot to a virtual environment. So bringing some of
    those engagements into the fray is very, very important because
    the digital and virtual world is not going to go anywhere
    anytime soon. In other words, the SBDCs that we have talked to
    them about that are going to have to evaluate new measures of
    how that virtual audience is security capital, for instance, is
    one item. With the WBCs, just extending to our resource partner
    network, they had 10,000, almost 10,000 capital infusions. So
    those are examples that were taken into account that also will
    be applied with the Community Navigator Pilot just to connect
    the dots between the resource partners and the open lines of
    communications between our offices and the networks themselves.
        Mr. EVANS. Any way you think that this Committee can assist
    you more in terms of ensuring that you meet those goals?
        Mr. MADRID. Well, we look forward to working with you. I
    mean, I hope that is the commonality that I have across this
    Committee. And so we proposition, we look forward to working
    with you. Thank you.
        Mr. EVANS. Thank you, too. Thank you.
        Madam Chair, I yield back. I yield back to you, Madam
    Chair.
        Chairwoman VELAZQUEZ. Yes. Thank you. The gentleman yields
    back.
        Now we recognize the gentleman from Wisconsin, Mr.
    Fitzgerald, for 5 minutes.
        Mr. FITZGERALD. Thank you, Mr. Madrid, for being with us
    today. The issues being discuss, kind of a cross-section
    obviously on entrepreneurs as well as some of the SBA programs
    and the PPP stuff. So I just wanted to go back to that.
    Congresswoman Kim talked a little bit about it.
        I think the frequent visits or the interactions I have at
    the local level with either local bankers or those that are
    part of the credit union system, oftentimes it is reassuring to
    know that if there is a separate set of eyes on the process,
    and I think this was very interesting when it came to the PPP
    loans. Very successful. Absolutely bailed out a lot of small
    businesspeople across this nation during the pandemic. But when
    you talk to bankers and they say, listen, I had a conference
    table and it was full of folders on people, some clients that
    they knew very well, others that maybe they had just worked
    with a little bit, but you know, they were going through these
    files, making sure that all the T's were crossed, all the I's
    were dotted. And as a result of that you can see in the PPP
    program that there is a lot less fraud and abuse as a result of
    that. And then if you move to the SBA program's direct loan
    programs, and I have talked to individuals that have received
    those loans, far less scrutiny, issued in a way that sometimes
    was a mystery even to those that had received the loans
    themselves.
        So I would once again encourage you to be an advocate for
    this within the SBA to say, hey, listen. If we want to reduce
    those numbers, if we want to bring those fraud and abuse
    numbers down, involve local financial institutions. It is like
    an answer that is staring us right in the face. We just need to
    reach out and make sure we embrace that. And it does not matter
    which side of the aisle we are on. Obviously, we have an
    inherent responsibility to make sure that we take care of the
    taxpayer dollars.
        So that is more of a comment, I guess, than anything else.
    And let me give you a chance to either respond or give me your
    thoughts on that if you would.
        Mr. MADRID. Congressman, thank you. The direct lending
    legislation and lending is based off of our successful 7(a)
    loan program. And this program will not be in isolation. We
    will continue to partner with community banks and credit unions
    and the community financial institutions which will counsel
    borrowers through the application and repayment process. So
    that is a little bit of an answer from this perspective but we
    would be happy to work with you, take your questions back to
    the Office of Capital Access. Thank you for your comments.
        Mr. FITZGERALD. Well, very good. So let me just follow up
    real quickly. I know I have got a couple of minutes.
        So when it comes to entrepreneurs, I have been an
    entrepreneur, small businessperson for many years before I
    became a Member of Congress. Most of the time, small
    businesspeople want you to just get out of the way. They are
    not looking for all these types of programs and assisted grants
    until they are kind of up and running. And Congressman Williams
    talked about this earlier in his experience but, you know, the
    last burdensome government can be and the less taxing that can
    happen, the better off all small businesses will be. I do not
    care if you have got one employee or if you have got 20
    employees, that is something that consumes a lot of the day for
    some of these people that are willing to jump in with both
    feet. And it is a risky thing. And people lose sleep. And
    people go without paychecks week after week who run these small
    businesses. I do not care if it is a woman or a veteran or any
    other group that can have great success in small business. You
    need to develop programs and work to structure programs so they
    may assist only when small business owners ask for their help.
    For too long, the federal government specifically, but in my
    state of Wisconsin, there has been too much intrusion in that
    process and it leaves us in a position of trying to work around
    government versus interacting with them.
        And another thing, I felt, you know, I had the opportunity
    today to talk a little bit about that. I want to thank you for
    being with us today and I would yield back.
        Chairwoman VELAZQUEZ. The gentleman yields back.
        Now we recognize the gentlelady from Pennsylvania, Ms.
    Houlahan.
        Ms. HOULAHAN. Thank you, Madam Chair. And thank you for the
    opportunity to speak. I think this hearing has been very
    reflective of the complexity of small businesses in this
    country and particularly during lots of distressors such as
    this pandemic. Having been one of those people who has lost
    sleep and signed my house over and a variety of other things to
    grow small businesses, I can clearly empathize with the small
    businesses in our community and all of the complexity of these
    questions that people have been asked reflect why we are here
    and why we are trying to be helpful.
        One of the things that I was also struck by that I cannot
    let go because it was mentioned several different times is
    vaccine mandates. It is one of those kinds of things where it
    depends on who you talk to how it is received. Some people,
    business owners, are very positive about that. In fact, the
    vast majority of people whom I have spoke with have been
    extremely positive and grateful for the clarity that has been
    provided by a mandate. One of the things that I find most
    frustrating about the narrative is somehow that this should be
    a choice between a doctor and a person. The irony there is not
    lost on me and that somehow the science tells us that this ends
    up with us just being able to be more safe from being
    hospitalized rather than also to save one another from death.
    And so I get extremely exercised, as you can probably tell, by
    this frustrating narrative that somehow this is contributing to
    the unemployment in our nation other than the fact that we are
    also contributing to helping each other survive in this
    country.
        So the question that I have, Dean actually asked my
    question regarding ESOPs and employee ownerships and the very
    important aspect of making sure that we are thinking about
    stakeholder capitalism, but with the remaining parts of my
    time, if it is all right, I would like to ask about
    cybersecurity which is also something that is true and present,
    a true and present danger to particularly small businesses that
    do not have the ability to protect their businesses, to protect
    their bank accounts, to protect other people's financial
    information. So if you could please in the remaining time that
    I have, offer up what resources that the Office of
    Entrepreneurial Development has for cyberhealth, cybersecurity,
    and cyber awareness. I would appreciate that. Thank you.
        Mr. MADRID. Thank you, Congresswoman. And Happy National
    Cybersecurity Awareness Month to all. That is this month in
    October. And this has been on the minds of the administrator
    and also OED. And I will report on a couple of items, one of
    which is a cybersecurity grant. We are releasing through the
    Office of Entrepreneurship Education a notice of funding
    opportunity for that program that will increase outreach and
    application of cybersecurity, not only of awareness but we know
    that ransomware has been a big issue. We are also partnering
    with DHS on their Stopransomware.gov website to make sure that
    socialize with our small businesses.
        But we are not stopping there. We come back to the terrain,
    making sure that we are on the ground, meeting small businesses
    where they are. The smallest of the small, if we are really
    honest, and I know you all have experienced this, is when you
    talk to a small business owner that has one or two employees
    and you talk to them in corner where they have built trust with
    you and you ask them, do you really know what ransomware is and
    how it can affect your business? Do you feel vulnerable? And
    most of the time I have heard absolutely yes. So we want to
    make that government website translatable and relatable to the
    small business owners.
        There is also another rung and it applies to certification
    and procurement. So we are working with our GCBD, Government
    Contract and Business Development. They are small businesses
    that are certified that need C training, certification training
    in cybersecurity in order to be eligible for procurement
    opportunities. So the bottom line is segmentation, to approach
    it that way. It is not a ``one size fits all.''
        The last thing I will say is that our Office of
    Entrepreneurship Education headlines an electronic learning
    initiative which includes the Women's Online Business
    Curriculum ASCENT and we will add to that a cybersecurity
    pillar. So we are very, very excited about that going forward.
    And it will continue to be a priority in OED and through our
    office of entrepreneurship education.
        Ms. HOULAHAN. Thank you. With what remains of my time, I
    look forward to working with you on those issues of
    cybersecurity because I think they are critical to the success
    of small businesses.
        Here in my community, we will be hosting a job fair where
    more than 100 businesses will come to hopefully find people to
    fill the jobs. It has been a month and a half or so since all
    of these benefits supposedly have expired and still we have
    only 4 percent unemployment in my community and many, many,
    many jobs to fill. So this is a vastly complex situation that
    we are managing. Only I believe it is 7 percent of people who
    returned to the economy in August were women so we really have
    quite a lot of complexity that we need to deal with in order to
    find our way back to a level set in our economy right now.
        Thank you and I yield back, Madam Chair.
        Chairwoman VELAZQUEZ. The gentlelady yields back.
        Now we recognize the gentleman from Florida, Mr. Donalds.
        Mr. DONALDS. Thank you, Madam Chair.
        Mr. Madrid, what is your job? What do you do? I have been
    on the road. So I have been driving from Tampa this morning. I
    was at a prior engagement. So I have been catching the hearing
    and bits and pieces. So what actually do you do at the SBA?
        Mr. MADRID. Well, thank you. Thank you for your question,
    Congressman.
        I serve as associate administrator for the Office of
    Entrepreneurial Development. And we oversee the technical
    resources arm of the SBA through our Office of Small Business
    Development Centers, our Office of Women's Business Ownership,
    and our Office of Entrepreneurship Education. So there is a
    rung there that----
        Mr. DONALDS. I got it. That's cool. I do not need the long
    version. I just need the short version, Mr. Madrid.
        So obviously, your office is responsible for trying to help
    small businesses get off the ground all across the country with
    technical assistance they might need to help their financing
    needs to keep their businesses afloat. That is the short note;
    right?
        Mr. MADRID. We help businesses start and grow. And that is
    through our resource partner network. And we also have an
    education aspect or Office of Entrepreneurship Education
    through an electronic learning initiative. And then we are also
    responsible for the Community Navigator Pilot that will be
    launched.
        Mr. DONALDS. Okay. All right. So I have got a couple
    questions for you. So I had to stop at the gas station.
    Obviously, there are some people who might try to start
    convenience stores. What do you think the increased excise tax
    on cigarettes will have on a small business or sole proprietor
    trying to open up a convenience store or a gas station? Maybe
    not a gas station. There is a little bit more regulations
    involved in that. Let's say a convenience store in the United
    States. What do you think an increase in the excise tax is
    going to do to their ability? Do you think that is going to
    hinder their ability to open and maintain profitability or do
    you think it is going to hurt their ability to stay open and
    help their profitability? Yes or no. Is it going to help or is
    it going to hurt. Yes or no?
        Mr. MADRID. Congressman, tax policy is not in our purview.
    I would be happy to talk about----
        Mr. DONALDS. Oh, Mr. Madrid, but you are a head--Mr.
    Madrid, you are the head of the Entrepreneurial Division. You
    engage with small business owners all across the country. You
    have got to have that understanding of the impact of tax
    policy.
        All right. Let's move on. Another small business tax policy
    in the Budget Req bill. Do you think it will help or hurt small
    businesses getting rid of the section 199A small business
    deduction on small business owners' taxes? Will that help or
    hurt small businesses in the United States, yes or no?
        Mr. MADRID. Congressman, I am not in a position for tax
    policy----
        Mr. DONALDS. Come on, Mr. Madrid, you are in the position.
    You coordinate with small business owners all across the
    country. You said so yourself. That is your job title. You
    provide technical assistance to all types of small businesses.
    So you have to have firsthand knowledge of what is going to
    impact them. If the Section 199A is going to basically be taken
    away from them, I mean, they are going to pay more in taxes,
    you do not know if that is going to help or hurt the same small
    businesses you are trying to provide technical assistance to
    help?
        Mr. MADRID. Congressman, I would be energized to talk about
    our programs at the Office of Entrepreneurial Development, the
    Community Navigator Pilot, how we are on the ground with
    business and counseling and education. I would be happy to talk
    about that.
        Mr. DONALDS. Mr. Madrid, Mr. Madrid, that is not a yes or
    no answer. You are trying to give me bureaucratic speech. And
    to be honest, I have been listening to bits and pieces of this
    hearing and I just find it to be ridiculous. You guys are
    charged with helping small businesses open, thrive, and
    prosper. That is your purpose. But I do understand that you
    cannot talk about tax policy. Frankly, your boss, when she came
    before us, she could not talk about tax policy. We were given
    the same runaround in that hearing as we are getting today.
        Last question. Do you think an increase in the corporate
    income tax rate and/or increase in the personal income tax rate
    for small business owners whose income passes through to their
    1040, do you think that will help or hurt small businesses
    being able to thrive in the United Sates, yes or no?
        Mr. MADRID. Congressman, I am not in a position to, and it
    is not my purview----
        Mr. DONALDS. Mr. Madrid, I am going to reclaim my time.
    With all due respect, if you are not in a position to make a
    very clear delineation on the impact of increased taxes on
    small businesses, then how in the heck are you the
    administrator for entrepreneurial divisions with respect to
    small businesses in the United States? If you cannot understand
    that, then I am very, very concerned about what can be
    understood at the SBA.
        Madam Chair, I yield back.
        Chairwoman VELAZQUEZ. The gentleman yields back.
        I want to thank Mr. Madrid again for taking time to answer
    our questions today.
        SBA's Office of Entrepreneurial Development plays a
    critical role in facilitating the well-being and growth of
    American small businesses and your commitment and dedication to
    small businesses shined through today. For many small
    businesses, counseling from an SBA resource partner can mean
    the difference between success and failure. Going forward we
    must work together as a Committee to ensure those critical
    organizations are in position to thrive and that the OED has
    the resources it needs to effectively implement the various
    programs under their jurisdiction.
        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 to come before the
    Committee, we are adjourned. Thank you.
        [Whereupon, at 11:58 a.m., the committee was adjourned.]

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