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




                               BEFORE THE

                      COMMITTEE ON SMALL BUSINESS
                             UNITED STATES
                        HOUSE OF REPRESENTATIVES


                             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                     

                 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

Hon. Nydia Velazquez.............................................     1
Hon. Blaine Luetkemeyer..........................................     2


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


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



                       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] 
    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 
    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 
    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 
    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.


    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 
    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 
    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 
    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 
    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 
    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 
    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 
    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 
    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 
    Mr. HAGEDORN. Thank you, Madam Chair. I appreciate you 
holding the hearing. Administrator, it is good to see you 
    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 
    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. 
    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 
    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. 
    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 
    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, 
    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 
    Mr. MADRID. Thank you. Thank you, Congressman, for that 
    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 
    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 
    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 
    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 
    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 
    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 
    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. 
    Mr. EVANS. Thank you, Madam Chair. Thank you for your 
    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 
    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 
    Chairwoman VELAZQUEZ. Yes. Thank you. The gentleman yields 
    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 
    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. 
    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 
    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, 
    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; 
    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 
    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 
    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 
    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 
    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 
    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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