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

                 SMALL BUSINESS ADMINISTRATION'S FY 2023 BUDGET

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

                                    HEARING

                                   before the

                          COMMITTEE ON SMALL BUSINESS
                                 UNITED STATES
                            HOUSE OF REPRESENTATIVES

                        ONE HUNDRED SEVENTEENTH CONGRESS

                                 SECOND SESSION

                                   __________

                                  HEARING HELD
                                 APRIL 27, 2022

                                   __________

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                Small Business Committee Document Number 117-053
                 Available via the GPO Website: www.govinfo.gov
                       HOUSE COMMITTEE ON SMALL BUSINESS

                                 ______

                 U.S. GOVERNMENT PUBLISHING OFFICE
    47-393                 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
                            PETE STAUBER, Minnesota
                            DAN MEUSER, Pennsylvania
                            CLAUDIA TENNEY, New York
                           ANDREW GARBARINO, New York
                             YOUNG KIM, California
                             BETH VAN DUYNE, Texas
                             BYRON DONALDS, Florida
                             MARIA SALAZAR, Florida
                          SCOTT FITZGERALD, Wisconsin

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

                                C O N T E N T S

                               OPENING STATEMENTS

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

                                    WITNESS

    Hon. Isabella Casillas Guzman, Administrator, United States Small
      Business Administration, Washington, DC........................     4

                                    APPENDIX

    Prepared Statement:
        Hon. Isabella Casillas Guzman, Administrator, United States
          Small Business Administration, Washington, DC..............    46
    Questions and Answers for the Record:
        Questions from Hon. Velazquez to Hon. Guzman and Answers from
          Hon. Guzman................................................    55
        Questions from Hon. Golden to Hon. Guzman and Answers from
          Hon. Guzman................................................    56
        Questions from Hon. Phillips to Hon. Guzman and Answers from
          Hon. Guzman................................................    57
        Questions from Hon. Houlahan to Hon. Guzman and Answers from
          Hon. Guzman................................................    58
        Questions from Hon. Luetkemeyer to Hon. Guzman and Answers
          from Hon. Guzman...........................................    60
        Question from Hon. Fitzgerald to Hon. Guzman and Answers from
          Hon. Guzman................................................    72
        Questions from Hon. Van Duyne to Hon. Guzman and Answers from
          Hon. Guzman................................................    72
        Questions from Hon. Salazar to Hon. Guzman and Answers from
          Hon. Guzman................................................    74
        Questions from Hon. Meuser to Hon. Guzman and Answers from
          Hon. Guzman................................................    77
    Additional Material for the Record:
        Credit Union National Association (CUNA).....................    79
        Letter to Hon. Merrick B. Garland, Attorney General, United
          States Department of Justice from Hon. Blaine Luetkemeyer..    81
        Letter to Hon. Richard Delmar, Acting Inspector General,
          United States Department of the Treasury from Hon. Blaine
          Luetkemeyer................................................    83
        National Association of Federally-Insured Credit Unions
          (NAFCU)....................................................    86
        U.S. Small Business Administration Office of Advocacy........    88

            SMALL BUSINESS ADMINISTRATION'S FISCAL YEAR 2023 BUDGET

                                  ----------

                           WEDNESDAY, APRIL 27, 2022

                      House of Representatives,
                   Committee on Small Business,
                                                        Washington, DC.
        The committee met, pursuant to call, at 10:00 a.m., in Room
    2360, Rayburn House Office Building, Hon. Nydia Velazquez
    [Chairwoman of the Committee] presiding.
        Present: Representatives Velazquez, Golden, Davids, Mfume,
    Phillips, Newman, Bourdeaux, Carter, Chu, Evans, Delgado, Andy
    Kim, Craig, Luetkemeyer, Williams, Stauber, Meuser, Tenney,
    Garbarino, Young Kim, Van Duyne, Donalds, Salazar, and
    Fitzgerald.
        Chairwoman VELAZQUEZ. Good morning. I call this hearing to
    order.
        Without objection, the Chair is authorized to declare a
    recess at any time.
        I would like to begin by noting some important
    requirements. Standing House and Committee rules continue to
    apply during hybrid proceedings. All Members are reminded that
    they are expected to adhere to these 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.
        In the event a Member encounters technical issues that
    prevent them from being recognized for their questioning, I
    will move to the next available Member of the same party and I
    will recognize that Member at the next appropriate time slot
    provided they have returned to the proceeding.
        I want to thank Administrator Guzman for appearing before
    the Committee today. When your tenure began, small businesses
    were experiencing a once in a lifetime crisis. Since your
    confirmation, you and the staff at SBA have worked tirelessly
    to stand up new programs, institute new protections against
    fraud, and handle unprecedented demand for traditional SBA
    programs.
        Today, the worst of the pandemic is believed to be behind
    us and there is some good news to report. Since President Biden
    took office, our economy has added over 7.4 million jobs,
    unemployment is down to 3.6, and entrepreneurs have started new
    businesses at record rates. With that said, the deep wounds
    inflicted by the pandemic and the conflict in Ukraine continue
    to fester. As small employers work towards a full recovery,
    they will need our utmost support.
        Moving forward, we must utilize the SBA to drive success
    and empower entrepreneurs. That is why SBA programs must have
    the funding necessary to meet the needs of small business
    owners. We have an opportunity to discuss the SBA's 2023 budget
    request and learn how it will help our main streets flourish.
    The administration's proposed budget lays out the investments
    needed to build a stronger, better, and more equitable America.
        The funding outlined in this plan will help lower costs for
    families, create good-paying jobs, and drive our recovery
    forward. The proposal also places a strong emphasis on
    supporting the needs of entrepreneurs with three overarching
    goals: ensuring equitable design and delivery of programs,
    building resilient businesses and a sustainable economy, and
    implementing strong stewardship of resources.
        The pandemic taught us that access to critical resources is
    often unequal among businesses, particularly those owned by
    women and people of color. The SBA's focus on equity will help
    ensure that all firms have access to the resources they need to
    succeed. I am also pleased to see that the proposal includes
    funding and investments in key programs, modernization,
    customer service, and core contracting initiatives.
        I am eager to discuss how the money requested in this
    budget will strengthen and improve initiatives that increase
    access to capital, improve disaster assistance, and create more
    government contracting opportunities for small firms.
        Administrator Guzman, you have been at the forefront of the
    recovery effort and your work has kept millions of businesses
    open and people on the payroll. I look forward to hearing from
    you about the specifics of this request and the agency's top
    priorities for the upcoming year.
        I would now like to yield to the Ranking Member, Mr.
    Luetkemeyer, for his opening statement.
        Mr. LUETKEMEYER. Thank you, Madam Chair, and thank you,
    Administrator Guzman, for joining us in person this morning to
    discuss the Biden administration's Fiscal Year 2023 budget
    request.
        The SBA has played an outside role in assisting the
    American economy recovery from the COVID-19 pandemic. As the
    nation moves away from the emergency period of the pandemic and
    into recovery, it is critical that we evaluate SBA's role
    moving forward. To do so requires a full and complete
    evaluation of the agency's performance, including the critical
    pandemic relief programs.
        Unfortunately, a full evaluation of one of the largest
    pandemic relief programs, the Paycheck Protection Program,
    continues to be hindered by Secretary Yellen's failure to
    appear before this Committee. In the CARES Act, the Department
    of Treasury was charged with onboarding new lenders into the
    program. Yesterday, on the 1-year anniversary of Secretary
    Yellen missing her first deadline to testify before this
    Committee, and thus America's small businesses, I sent two
    letters requesting follow-up investigations in this matter. The
    first letter I sent was to Attorney General Garland asking for
    a Department of Justice Investigation into whether Secretary
    Yellen remains in violation of the law by failing to appear
    before this Committee. The second letter I sent was to the
    Department of Treasury's Acting Inspector General, Richard
    Delmar, requesting an investigation into the department and
    Secretary Yellen.
        I ask unanimous consent to enter into the record these
    letters, Madam Chair.
        Chairwoman VELAZQUEZ. Without objection, so ordered.
        Mr. LUETKEMEYER. Thank you.
        It has been just over a year since you assumed the role of
    administrator and you have faced no small task, Administrator
    Guzman, from unprecedented state and local shutdown orders that
    forced small businesses to either operate at a reduced capacity
    or close their doors entirely to rising inflation, labor
    shortages, and supply chain disruptions. The SBA has its work
    cut out for it. So if there is ever a time for the agency to
    rise to the occasion, this is it.
        Despite the country moving toward recovery, American small
    businesses continue to feel repercussions thanks in no small
    part to the actions and failures of this administration.
    Headwinds are blowing stronger by the day, and if that sounds
    familiar, it is because economic indicators were bad the last
    time you were here in November and since then have only
    continued to go in the wrong direction. Prices are now rising
    at the highest rate in 40 years. Job openings continue to rise,
    even in just a few months since you last testified, and
    creating staffing headaches for small business owners across
    the nation.
        If it is not the labor shortage, it is a supply chain issue
    as more and more small businesses are finding it nearly
    impossible to obtain goods and products. Add to that the
    concern among small business owners when they hear of tax
    increases this administration is routinely proposing, and it is
    no wonder so many small business owners have begun to question
    who is supposed to be standing up for small business?
        I can answer that question, Madam Administrator. It is you.
    You are the one who should be advocating for small businesses
    in this administration. If a policy or regulation creates red
    tape or a cost for small businesses, it is you who should be
    pointing this out to the president.
        The American Action Forum has studied the regulatory costs
    associated with the Biden administration's first year in
    office. Unfortunately, those costs come to a staggering $201
    billion. Let me repeat that, $201 billion in just 1 year of
    compliatory costs. This is unacceptable.
        If the Biden administration continues to impose tax
    increases, you should be pointing out that no matter how they
    spin that increase, the impact on small businesses is, in fact,
    going to be hurting them. Now more than ever, we need a Small
    Business Administration that is responsive to the nation's 32
    million small businesses, entrepreneurs, and startups. Yet, we
    continue to see the same thing.
        This hearing is scheduled, and magically, our letters and
    inquiries start to receive responses. The speed at which our
    concerns are being addressed is improving but more work needs
    to be done. With $1.2 trillion flowing through the agency's
    doors, the American public needs accountability and
    transparency. Plain and simple, the SBA needs to be improved
    and I have a plan to do it.
        Now, more than ever, small businesses need an SBA that is
    responsible and fulfills the statutory mission day in and day
    out. The core responsibilities that are outlined in law need to
    drive the agency's decision making. Anything else is
    irresponsible. Unfortunately, that is what we see with your
    budget, more spending without outcomes for main street USA.
        Moreover, fraud is fraud, Madam Administrator. As
    Republican leader of this Committee, I do not care when it
    happened, it needs to be addressed. The integrity of the SBA's
    programs need to be restored fully and comprehensively. I stand
    ready to work with anyone and everyone to ensure the SBA has
    the oversight and metrics in place to deter and catch bad
    actors. The agency must be cleaned up.
        And that brings us to voting. There is no place in the
    Constitution that supports the SBA getting involved in
    elections. That is squarely in the state's purview. With a 30
    percent fraud rate on one of your loan programs, and having to
    close two of your women's business centers because of dubious
    activities, what makes you think the SBA would be able to
    protect the integrity of voting? It is a question we are going
    to have to answer.
        With that, Madam Chair, I look forward to today's
    conversation, and I yield back.
        Chairwoman VELAZQUEZ. The Ranking Member yields back.
        With that, I will now introduce our distinguished witness,
    The Honorable Isabella Casillas Guzman. Administrator Guzman is
    currently serving as the 27th Administrator of the Small
    Business Administration. Her previous experience includes
    serving as Director of the California Office of the Small
    Business Advocate and Deputy Chief of Staff at SBA. Outside of
    her time in government, Administrator Guzman has advised
    entrepreneurs and owned her own small business, giving her
    extensive insight into the needs of entrepreneurs.
    Administrator Guzman earned a Bachelor of Science from the
    University of Pennsylvania Wharton School of Business.
        Welcome, Ms. Guzman. Ms. Guzman, you are now recognized for
    5 minutes.

         STATEMENT OF THE HONORABLE ISABELLA CASILLAS GUZMAN,
       ADMINISTRATOR, UNITED STATES SMALL BUSINESS ADMINISTRATION

        Ms. GUZMAN. Thank you, and good morning, Chairwoman
    Velazquez, Ranking Member Luetkemeyer, and distinguished
    Members of the Committee. Thank you for the opportunity to
    appear before you today to discuss President Biden's Fiscal
    Year 2023 budget request for the U.S. Small Business
    Administration.
        The president's budget requests a total of $1.06 billion to
    foster growth and opportunity across America's economy by
    supporting the SBA's critical small businesses programs and
    disaster assistance. This funding level generates practical
    investments in economic progress, and with your support, allows
    us to continue delivering crucial programs and services for a
    surging wave of new American entrepreneurs.
        Over the past year, I have visited small businesses across
    28 states and Puerto Rico. I have had the opportunity to visit
    many of the communities you represent and witness the strength
    and resilience of American entrepreneurship firsthand.
        Despite hardships from the pandemic, America's small
    businesses and innovative startups are creating new jobs,
    powering our economy, strengthening our global competitiveness,
    and supporting working families.
        And Americans are launching businesses at record rates.
    Business applications have risen more than 30 percent from pre-
    pandemic levels, and in 2021 alone, 5.4 million Americans
    applied to start a business.
        One of this administration's top priorities is making sure
    the opportunities of this growing economy are reaching all
    Americans. President Biden often says that ability is spread
    evenly but opportunity is not, and that is important because
    building equity, ensuring access and opportunity are open to
    all, is not just the right thing to do, it is good for
    business.
        Thanks to historic legislation passed by Congress, the SBA
    has been able to deliver critical relief and help millions of
    small businesses, especially in the hardest hit communities,
    survive the pandemic.
        In Fiscal Year 2021, the SBA distributed more than $450
    billion in financial relief through the Paycheck Protection
    Program, the COVID Economic Injury Disaster Loan and Advance
    programs, the Restaurant Revitalization Fund program, and the
    Shuttered Venue Operators Grant program. Those vital relief
    funds saved jobs in every community in the country.
        Now, we are delivering on the promise of PPP forgiveness.
    To date, 87 percent of all eligible PPP recipients have
    submitted forgiveness applications, and nearly all, 99.4
    percent of qualified applicants have had their loans partially
    or fully forgiven.
        SBA has not only delivered on pandemic relief, but our core
    capital programs, which support hundreds of thousands of jobs
    are also breaking records. Demand for SBA capital support is
    outpacing the resources available with a 62 percent increase in
    7(a) loans and a 41 percent increase in 504 loans approved.
        Given the high demand for SBA's capital programs and their
    effectiveness for our small businesses, President Biden is
    requesting a 13 percent increase over our core programs for a
    total of $71 billion.
        In addition, the budget recognizes that SBA needs
    additional support to service those $361 billion in COVID-EIDL.
    The budget requests authority to reprogram existing balances in
    targeted COVID-EIDL funding to advance to support and service
    loans for the 3.9 million borrowers.
        A large percentage of these borrowers will start making
    payments in the months ahead, requiring SBA to shift from
    origination to servicing. As we enter this new phase of
    recovery, SBA must provide borrowers with needed resources and
    the quality customer service that they deserve.
        While my written testimony outlines other budget
    priorities, one additional key area I want to highlight is our
    efforts to upgrade our systems and processes to detect and
    prevent fraud. During this administration, the SBA has acted
    quickly to protect taxpayer dollars, first by restoring
    controls and deploying new technology to mitigate fraud. Our
    work to implement or enhance fraud control has been recognized
    by federal accountability agencies and watchdogs.
        I also recently announced the creation of a new Fraud Risk
    Management Board to replace the Fraud Risk Management Council.
    This new board provides the oversight and agency-wide
    coordination recommended by the GAO. Additionally, I designated
    a Special Counsel for Enterprise Risk to work directly in my
    office to further limit fraud and risk across the agency in
    coordination with our established fraud management framework.
    To recover taxpayer funds, we are working closely with the
    Office of Inspector General and other federal authorities to
    refer suspected fraud to law enforcement. Effective stewardship
    is necessary for the SBA to achieve our mission. I am committed
    to working with stakeholders, including Congress, to protect
    SBA's programs from abuse and ensure that legitimate businesses
    have a clear path to access the financial resources Congress
    has created for them.
        Thank you again, Chairwoman Velazquez and Ranking Member
    Luetkemeyer, and distinguished Members of the Committee for the
    opportunity to appear before you today. And I look forward to
    the questions.
        Chairwoman VELAZQUEZ. Thank you, Administrator Guzman.
        I will begin by recognizing myself for 5 minutes.
        Ms. Guzman, access to capital, as you know, is critical to
    small businesses and the SBA loan programs have had a banner
    year. How will you continue this success and also expand to
    employee-owned businesses and cooperatives as mandated by
    statute?
        Ms. GUZMAN. Our capital access team is positioning and
    their whole agency is positioning to make sure that we can
    serve not only those new 5.4 million entrepreneurs but all of
    our firms across the country. And we know that access to
    capital remains a really important issue for so many of them to
    overcome. In particular, around the Main Street Act, we are
    really committed to making sure that all businesses have
    pathways to accessing capital, including those that are
    employee-owned and those ESOPS. And so we have worked with the
    advocates in the industry to see what we can do to assess and
    adapt our programs to fit their needs and we have made some
    important changes. And we will continue to assess those
    programs as we move forward and as we see more loan volume
    coming through so that we can work with ESOPs and work with
    cooperatives. We know that as small businesses exit, employee
    ownership is a good pathway in many cases to transition and
    exit their firms successfully. And we would like to make sure
    that capital is available.
        Chairwoman VELAZQUEZ. How is SBA using new technology to
    streamline loan processes and focus outreach to promote the
    programs, particularly to the undeserved?
        Ms. GUZMAN. Across all of our loan programs we, of course,
    rely on our 68 district offices, our over 1,300 resource
    partners, and now our newly established community navigators to
    really reach out to more small businesses to get them capital
    ready. In addition, we have a strong network of lenders and
    have looked to expand that with the Community Advantage pilot
    program that we recently overhauled, as well as opening it up
    so that we can allow new licensees to come into the program,
    especially those mission lenders.
        Chairwoman VELAZQUEZ. Thank you.
        Fraud controls previously removed in 2020 to expedite
    relief were reinstituted under your leadership. At our hearing
    in January, the IG commended SBA for its action implementing
    his recommendations. Can you expand on your efforts to prevent
    fraud and abuse related to the agency's COVID and relief
    programs?
        Ms. GUZMAN. President Biden is really committed to making
    sure funds get into the hands of those businesses it was
    intended to serve, and the administration early on, we ensured
    that we could put in those controls, some of those across our
    COVID-EIDL program, of course, in which that was a unique case,
    a tale of 2 years, truly. We have also leveraged technology so
    that we can assess our portfolios and make sure that fraud is
    indicated. And created strong partnerships in collaboration and
    transparency with the IG, as well as the GAO. We want to make
    sure that we are implementing fraud detection at inception of
    design and that is what we have committed to do.
        Chairwoman VELAZQUEZ. How often are you meeting with the
    IG?
        Ms. GUZMAN. I meet with the IG biweekly to make sure that
    we are coordinated on all of the reports and that we are ahead
    of the game because obviously fraud is an iterative process and
    we need to continue to evolve. And then with the GAO, I meet on
    a quarterly basis and just recently met with Comptroller
    General Dodaro to discuss the SBA.
        Chairwoman VELAZQUEZ. Thank you.
        SBA is requesting $20 million to implement the VA-SBA Act,
    which mandated SBA to become the sole provider of formal
    certifications for all veteran-owned small businesses. What is
    SBA's plan to stand up this certification program and why is
    this funding critical?
        Ms. GUZMAN. Within our funding request, our budget, we are
    requesting $20 million in 2023 to continue our efforts. We have
    been collaborating with the VA on this transition and we are
    looking forward to it. In talking to the veteran stakeholders
    across the country, we have found that they are looking forward
    to the transition and that SBA has a host of services and
    offerings that they can access. Going to a one stop shop in
    essence will be beneficial to them. Working closely with the
    VA, we have made sure that we are aligned on transitioning
    personnel, technology, and that we can have a seamless
    transition so there is no interruption of service for veterans
    and we can expand it to more veterans across the government.
        Chairwoman VELAZQUEZ. Thank you.
        Now, my time basically has expired even though I have other
    questions.
        The Ranking Member, Mr. Luetkemeyer, is now recognized for
    5 minutes.
        Mr. LUETKEMEYER. Thank you, Madam Chair.
        I would like to begin with something that I mentioned
    earlier in my opening statement, Ms. Guzman. The SBA has just
    come through 2 years of unprecedented activity. The attention
    on SBA has been heightened and with that your actions should
    carry a lot of weight with this administration. I want to focus
    on this.
        When reports come out by groups that identify over $200
    billion in regulatory costs that were added by President
    Biden's first year in office, what has been your response? Have
    you discussed these numbers and their impact with the White
    House?
        Ms. GUZMAN. I continue to track, especially through our
    Office of Advocacy, as you know, which tracks all regulation,
    any impact on small business and continue to travel around the
    country to make sure that I am----
        Mr. LUETKEMEYER. The question, I am sorry to interrupt, but
    the question is, have you discussed the impact with the White
    House?
        Ms. GUZMAN. We continue to, you know, share learnings about
    small business with our partners across the whole of
    government, including the White House.
        Mr. LUETKEMEYER. What has been their response when you tell
    them that $200 billion worth of increased compliance costs is
    crushing small business? What has been their response?
        Ms. GUZMAN. I cannot speak to that specifically, that
    number, but I can share with you----
        Mr. LUETKEMEYER. That number is the administration's
    number. We pulled that from each agency when they propose a
    rule, it also has to give the cost of that. When you total
    those things up it is $201 billion last year, Ms. Guzman. That
    is devastating to small businesses.
        Ms. GUZMAN. What I can share with you, Ranking Member, is
    that, of course, we have our Ombudsman office that works with
    all small businesses that have to navigate regulatory issues so
    that we can continue to support them on the back end on the
    front end of the Office of Advocacy.
        Mr. LUETKEMEYER. My point of the question, let me claim my
    time, my point of the question is that you should be advocating
    for small businesses and tell the administration stop the
    onslaught of rules and regulations. It is killing small
    businesses. If you truly have been to 28 states I think you
    said a while ago----
        Ms. GUZMAN. Correct.
        Mr. LUETKEMEYER.--over the last year, and you have talked
    to small businesses, you have got to come back with a sense
    that rules and regulations are one of the top things that they
    are concerned about. The costs of those things are enormous. I
    can tell you in my district this is a concern of it. Inflation
    is the next one. Are you talking at all with the administration
    about the effects of inflation and high energy costs on our
    small business community?
        Ms. GUZMAN. Yes. The president is, of course, very
    sensitive to the fact that the inflationary pressures and cost
    pressures impact American families as well as small businesses.
    And I continue to track what those impacts are.
        Mr. LUETKEMEYER. Have you talked to them about the impact
    of this? Have you advocated and offered solutions to this
    problem?
        Ms. GUZMAN. The president's actions speak for themselves.
    He is trying to address these costs----
        Mr. LUETKEMEYER. Oh, my gosh, ma'am.
        Ms. GUZMAN.--for our small businesses and their families.
        Mr. LUETKEMEYER. They speak for themselves? They're
    devastating. He adds more fuel to the fire. He continues to
    allow energy prices to go through the roof. He adds $200
    billion worth of regulatory costs. He adds more money to the
    money supply, which is extremely important when it comes to
    inflation. That is one of the drivers of inflation. Are you
    talking at all about those things with him and say, please, Mr.
    President, stop the onslaught of these nonsensical things that
    are under your control?
        Ms. GUZMAN. I tis important to note that there are multiple
    impacts on our small businesses and we continue to track and
    share them and make sure that our small businesses get the
    support that they need.
        Mr. LUETKEMEYER. I assume the answer is no. I cannot get a
    yes or no from you this morning, ma'am, Ms. Guzman, so I assume
    the answer is no, you have not talked to the president about
    this. You are an advocate for small business. You should be
    standing in front of his office once a week. Say, Mr.
    President, the businesses that I oversee are struggling. Please
    help me to help them by stopping the nonsense of your office
    continuing to support and enhance inflation in this country
    through all the things that they are doing. If you are not
    doing that, then you are not doing your job, Ms. Guzman.
        One more quick thing here. The last 2 years have seen the
    agency has gone under stress and there is no question what
    agency is under stress. You can also see some of the problems
    and weakness of that agency. Fraud and oversight metrics are a
    weakness of this agency. You mentioned a minute ago that you
    are trying to work on fixing them. But fraud is fraud. It has
    got to be addressed somehow, some way. And I know that, it
    would appear to me that with regard to the PPP loan program and
    with regard to the EIDL program, there seems to be a difference
    in the ability of those two programs to operate. Would you
    agree that the private sector lenders that initiated the PPP
    loans were more efficient at delivering these dollars and
    deterring fraud than the SBA's direct EIDL program?
        Ms. GUZMAN. Our lending partners on PPP have been very
    effective. In the COVID-EIDL instance, it is a tale of 2 years.
    As I had said earlier, COVID-EIDL, in 2020 when the majority of
    the loans were through and where you see the IG and GAO reports
    on, had no controls. And so in 2021, we have reinstituted the
    controls. We have leveraged technology to ensure----
        Mr. LUETKEMEYER. So your answer is yes. The private sector
    did a really good job of getting the money out the door, almost
    three times as much money as what the EIDL program did with
    probably one-sixth of the fraud rate.
        Ms. GUZMAN. I would add that PPP3, which was implemented in
    2021, had the loan volume higher than in 2020, also had
    controls and speed in place and thanks to the administration's
    actions to put those controls in place. And so my answer was
    not yes but that we are implementing controls----
        Mr. LUETKEMEYER. If it cannot be yes, you are not doing
    your job if that is the case. You are totally misunderstanding
    the question or you are misunderstanding how your agency runs
    if your answer is not yes, unfortunately.
        Ms. GUZMAN. What I am saying is that----
        Mr. LUETKEMEYER. My time is up. I yield.
        Ms. GUZMAN. Thank you.
        Chairwoman VELAZQUEZ. Now the Chair recognizes the Chairman
    of the Subcommittee on Oversight, Investigations, and
    Regulations, Mr. Phillips.
        Mr. PHILLIPS. Thank you, Madam Chair. Welcome, Ms. Guzman.
        I am sorry for how you were treated with disrespect by
    certain Members of this Committee.
        I am a small business owner. I know what it takes to build
    a business. I know how tough it is, especially recently. I have
    traveled the world in the business world. There is no place in
    the world in which small businesses can thrive like the United
    States. Are we perfect? No. Is there a lot we all can do? Yes.
    I hope we can do it together.
        I actually admire what you have done and your team in
    extraordinary time with little preparation, and frankly, little
    experience amongst any of us to face the circumstances that we
    have. And I want to thank you, and I hope you extend our
    gratitude to everybody that works at the SBA for doing the best
    with what we had with the time we had. And frankly, saving
    millions of jobs and hundreds of thousands of small businesses.
    Thank goodness. And we did so in a bipartisan fashion and we
    should continue to do so.
        As Chairman of the Subcommittee on Oversight, I also
    applaud the creation of the Fraud Risk Management Board. I
    think it is a great step. We have to use taxpayer dollars well.
    Every dollar that we have lost to fraud is a dollar that has
    not gone to the very businesses that you look out for and all
    of us want to see succeed.
        I want to also applaud the increased funding for the
    Entrepreneurial Development program. By the way, I hope that is
    something that we can all talk about bringing into high schools
    in this country to teach entrepreneurship at some point, but
    perhaps that is for another day.
        Our nation's small businesses and owners deserve the best
    opportunity to access financing and counsel from their
    government and support so that we can ensure that the American
    dream is accessible to everybody, whether they live in
    Brooklyn, New York or Brooklyn Park, Minnesota that I
    represent, or even little tiny Brooklyn, Texas.
        So with that in mind, many of us believe deeply in economic
    equity and racial equity. I do not think we talk enough about
    geographic equity. What can the SBA do to ensure that the
    programs that we support, that we discuss, that we provide
    oversight for can serve entrepreneurs in the tiniest parts of
    this country that are often overlooked?
        Ms. GUZMAN. Thank you so much for your comments and your
    question.
        I could not agree with you more. During the pandemic, we
    found that connection was key, and being able to be aware of
    resources and prepare to access those resources was really
    critical. And so that is why you see within our budget request
    an increase within our Entrepreneurial Development programs and
    why in addition we launched the Community Navigator pilot
    program so that we can better reach the 32.5 million small
    businesses and the newly created firms that are being birthed
    every year.
        Rural communities, geographic equity is really important to
    me, and I continue to ask that we distribute our resources and
    make sure that we are reaching into those communities. I think
    we will go a long way with broadband being built up in
    communities so that every community can have high-speed
    Internet. More micro entrepreneurship occurs when there is
    high-speed Internet according to studies. And so I was pleased
    that nearly half of the Community Navigators are focusing on
    rural communities and making sure that they have services to
    deliver and connect to those communities. And as we expanded
    our women's business centers, as well as focused on our SBDCs,
    we commit to making sure that we can serve those communities.
        Mr. PHILLIPS. Terrific. Also, I am a deep believer in
    employee ownership. I think that also is a bipartisan notion.
    That is the American dream, in fact.
        What can the SBA do better to reduce barriers, to employee
    ownership, to promote the concept, to educate small business
    owners especially as it relates to succession planning? How can
    we do better in that area with the resources available to you?
        Ms. GUZMAN. In my home state of California, we actually
    looked at this issue quite extensively as communities were
    finding with a lot of retiring small businesses, they wanted to
    be able to retain those businesses and look at employee
    ownership as an option. There are folks focused especially on
    manufacturing where we do not want to see businesses close
    down. We want to see businesses take over, and some are
    focusing on ESOPs in particular. I think we can highlight those
    activities to show small businesses a path forward for exists
    through ESOPS or employee ownership. Our SBDCs actually have
    expertise around the country that are focusing on this and so
    we need to continue to cultivate that, build best practices,
    and share them across the country.
        Mr. PHILLIPS. And what can we do in Congress to support
    that?
        Ms. GUZMAN. And I would look forward to partnering more
    with you on that to try to identify some of those best
    practices on training because it does take quite a bit to
    transition a business to employee ownership and we need to help
    and support the owner. So funding that additional
    entrepreneurial development support will help us expand that
    type of technical assistance. But in addition, on the capital
    front, we are continuing to monitor the additional changes that
    we have made on our capital programs in compliance with the
    Main Street Act and we look forward to continuing to have
    discuss about that with those borrowers to see what we can do
    to do more for them.
        Mr. PHILLIPS. Thanks, Ms. Guzman.
        I yield back the balance of my time.
        Chairwoman VELAZQUEZ. The gentleman's time has expired.
        Now we recognize the gentleman from Texas, Mr. Williams,
    Vice Ranking Member of the Committee.
        Mr. WILLIAMS. Thank you, Ms. Guzman, for being here.
        I want to say for the record I have been to Brooklyn,
    Texas. You need to go to Brooklyn, Texas, and find out what
    they think about the SBA.
        Ms. GUZMAN. I would love to.
        Mr. WILLIAMS. You need to go talk to those people.
        Also, I think that the head of the SBA, regardless of party
    preference or whoever the president is, should always be for
    less taxes and less government. You should always stand for
    that regardless of who nominated you.
        I am a small business owners. Have been for 51 years.
    Hundreds of employees today I employ. And so I feel like I am
    Main Street America.
        So, I have a few questions to start. It will be simple.
    Keep your answers to a quick yes or no.
        First of all, the rollout of the Save Our Stages program
    which you mentioned, it was disastrous. The delays and
    dysfunctions your agency faced during the implementation
    prolonged critical aid to small businesses. Indeed, many of
    them could not stay in business waiting for you. This is
    unacceptable, and main street businesses want answers.
        So quickly, yes or no, have you held anyone accountable for
    the failed rollout of the Save Our Stages program that delayed
    billions of dollars in emergency aid?
        Ms. GUZMAN. I was not happy with----
        Mr. WILLIAMS. Yes or no.
        Ms. GUZMAN. Yes, I transitioned the program.
        Mr. WILLIAMS. Okay. Thank you.
        Ms. GUZMAN. Thank you.
        Mr. WILLIAMS. While our economy faces a looming recession,
    you still publicly support the Biden administration's tax hikes
    saying it will clearly affect large corporations.
        So yes or no, would you support raising taxes on small
    businesses or individuals earning less than $400,000 per year?
        Ms. GUZMAN. President Biden's plan----
        Mr. WILLIAMS. Yes or no.
        Ms. GUZMAN.--will not affect any businesses under $400,000.
        Mr. WILLIAMS. Yes or no. Do you believe in raising taxes to
    small businesses? It is a simple question.
        Ms. GUZMAN. I agree with the president. Yes.
        Mr. WILLIAMS. Okay. You will raise taxes. Let the record
    show----
        Ms. GUZMAN. No, that President Biden will not raise taxes
    under $400,000.
        Mr. WILLIAMS. Okay. Well, that is not true. And then do not
    forget inflation. He has already raised taxes. Okay? And done
    nothing about that.
        So we are here today to discuss the Biden administration's
    SBA budget request of $1 billion, a $135 million increase from
    Fiscal Year 2021. However, this proposal outlines initiatives
    that go beyond your agency's core responsibilities. You must
    want to get into everybody's business.
        The SBA is tasked with aiding, assisting, and advising
    small businesses across the country; correct?
        Ms. GUZMAN. Correct.
        Mr. WILLIAMS. Which is why it is unclear to me and many
    others why you would request more taxpayer dollars for climate
    change within the SBA.
        So in lieu of directing more money to actually small
    businesses' aid, this request is further proof that President
    Biden's SBA is completely out of touch with main street.
        Businesses in my district are concerned about their ability
    to compete in the future and are looking at the SBA to be a
    nonpartisan, which we do not have, resource that has their best
    efforts to be looked at in mind.
        Administrator Guzman, why should Congress increase funding
    for your agency without first addressing underlying problems
    such as your failure to rollout business saving aid, the
    significant fraud we have talked about with the SBA programs,
    and general underperformance? Why should we give you more money
    to just continue to do that?
        Ms. GUZMAN. SBA has successfully scaled to meet the needs
    and really helped millions of businesses, over 8 million unique
    businesses during COVID relief. Done a remarkable job in your
    districts, across our 68 field offices to support small
    businesses.
        Mr. WILLIAMS. Well, not in my district and not in Brooklyn,
    Texas.
        Ms. GUZMAN. And in addition, we have implemented fraud
    controls so that we can better get the funds into the hands of
    the businesses it was intended to serve.
        Mr. WILLIAMS. Well, okay.
        Ms. GUZMAN. And we are committed to making sure that they
    have the capital that they need, the market access they need,
    and the technical assistance that they need. That funding for
    climate is about making sure that businesses can prepare and
    mitigate----
        Mr. WILLIAMS. But you do not control that. You have no
    business being----
        Ms. GUZMAN. It is not for me to engage in climate but for
    me to give loans----
        Mr. WILLIAMS. Well, that is fine.
        Ms. GUZMAN.--to help mitigate.
        Mr. WILLIAMS. I am running out of time. Let me move on.
        Ms. GUZMAN. Thank you.
        Mr. WILLIAMS. But you do not need to be in everybody's
    business. Take care of the people that you are required to take
    care of--the small business owner; the guy trying to make the
    payroll; the guy that signs the front of the check, not the
    back of the check; the guy who is drawing a line of credit.
    Help him. He needs help. He does not need to worry about the
    climate change which is not even part of what you are staffed
    to do.
        So small businesses across the United States are still
    desperate to fill job openings. These labor shortages are
    hindering business operations and they are a driving factor in
    the supply chain model and inflation issue. I can tell you all
    about that.
        A recent report by the Jobs Opening and Labor Turnover
    Survey found that President Biden's worker shortage remains at
    historic highs with more than 11 million job openings.
        So Administrator Guzman, that is nearly a 4 percent
    increase since the last time you testified before this
    Committee. Main street businesses are bearing the weight of
    this unsustainable worker shortage and their optimism is very,
    very low. So, real quick, what recommendations are you making
    to small business owners, like me, who have open jobs that they
    cannot fill?
        Ms. GUZMAN. When SBA provides services to support small
    businesses----
        Mr. WILLIAMS. But you can tell me. I am a small business
    owner.
        Ms. GUZMAN. I appreciate that.
        Mr. WILLIAMS. So I would like to know what to do.
        Ms. GUZMAN. I appreciate that, Congressman. And I
    appreciate your expertise having run and successfully built a
    business with hundreds of employees. The small businesses that
    we serve, obviously, are facing workforce shortages and
    challenges and have had to compete in this marketplace, this
    tight labor market. We are prepared by providing them with
    technical assistance. About half of our time of our small
    business development centers and our women business centers is
    often spent on workforce development issues, as well as
    strategic planning for the businesses.
        Mr. WILLIAMS. I believe my time is up.
        Ms. GUZMAN. So we are committed to helping those businesses
    survive.
        Chairwoman VELAZQUEZ. Time has expired.
        I would ask the Members, please, stop badgering the
    witness. Treat her with the respect that she deserves. Allow
    her to answer your questions. We never got into this when we
    were in the minority. We always treated the witnesses with
    respect with Ranking Member Mr. Chabot.
        Mr. LUETKEMEYER. Madam Chair----
        Chairwoman VELAZQUEZ. Let's have a decent, respectful
    discussion.
        Mr. LUETKEMEYER. Madam Chair, the reason that we are having
    to interrupt her responses is she is not responsive. She is
    taking a page out of the Secretary Yellen, the Federal Reserve
    folks who sit there and tap dance around every single question.
    We cannot get a straight answer. So the only way to talk to her
    is to request our time back and then redo the question. If she
    will give us a straight answer, we will be glad to continue to
    have a dialogue with her. But we cannot have a dialogue when
    she will not answer the question.
        Chairwoman VELAZQUEZ. She is answering the questions.
        Mr. LUETKEMEYER. She is not answering the questions. With
    all due respect, Madam Chair----
        Chairwoman VELAZQUEZ. When it comes to fraud and abuse,
    fraud happened because fraud controls were taken away from the
    previous administration. She reinstituted that and now you
    continue to raise the issue of fraud while the IG and the
    Office of the Comptroller has stated for the record that they
    have access to the administration, that they have been
    implementing their recommendations, and you just continue to
    bring the same talking points.
        Mr. LUETKEMEYER. If you want to talk about the Inspector
    General report, let's talk about the entire report. The entire
    report when he was here, we asked the question, okay, are those
    changes being implemented? He said yes. Why are we not seeing a
    drop in the problem with fraud? Because the employees are not
    adhering to the new principles, the new protocols in place.
    That is a problem.
        Chairwoman VELAZQUEZ. Okay.
        Mr. LUETKEMEYER. That goes back to leadership. That is what
    we are trying to get at.
        Chairwoman VELAZQUEZ. The Chair recognizes the
    congresswoman from Georgia, Ms. Bourdeaux, for 5 minutes.
        Ms. BOURDEAUX. Thank you, Chairwoman Velazquez, and thank
    you for holding this hearing. And thank you, Administrator
    Guzman, for your continued work as SBA administrator and for
    joining us here today.
        The president's budget request of Fiscal Year 2023 includes
    a 21 percent increase in SBA funding levels for a total of $914
    million in discretionary funding. And much of this funding is
    aimed at increasing access to SBA resources and services in
    communities like mine which have historically had difficulty
    accessing some of the critical tools that the SBA provides to
    entrepreneurs and would-be entrepreneurs.
        The budget also includes several indications about the
    SBA's priorities for Fiscal Year 2023 and areas for potential
    collaboration with Congress. The administration's Fiscal Year
    2023 budget in particular says that SBA is establishing an
    agency priority goal to increase the number of community
    financial institutions in SBA's lender match portal, something
    I am very pleased to see. Each of the federal bank regulators,
    however, have offices dedicated to CDFI and MDI engagement and
    have initiatives to support their activities.
        So my first question is, do you think a similar office at
    the SBA would help the SBA get more community-based lenders
    into programs like the 7(a) program? And what else is being
    done concretely to really engage the CDFI and MDI community?
        Ms. GUZMAN. Thank you so much for that question as we know
    that access to capital is a big issue. Forty-four percent of
    small businesses get their funding through a bank and we would
    like to leverage SBA's programs to expand that.
        Within our Office of Capital Access, we do have an office
    dedicated to working with mission-based lenders through our
    Microlending program, as well as our Community Advantage
    program. And so we feel that we are well prepared to be able to
    expand with this group of lenders who serve underbanked, as
    well as unbanked and underserved small businesses.
        We are currently making efforts to streamline our programs.
    We have launched with the Community Advantage overhaul which
    included an expansion of licenses that we will be able to
    extend to CDFIs and CDCs to expand our Community Advantage
    program and really focus on small dollar lending and ensuring
    that we can fill those gaps as that has been in decline as
    well. So we look forward to working with you and your offices
    as well as all of the Members to make sure that we can expand
    the number of lenders who participate and can reach into
    communities and geographies that are not served.
        Ms. BOURDEAUX. Wonderful. We are very excited about this
    initiative.
        One other question. SBA data shows that most PPP borrowers
    who have not yet applied for forgiveness are the smallest of
    businesses. And these are borrowers with loans of $50,000 or
    less. In my district, I know this includes many minority
    immigrants, women-owned small businesses, and I just wanted to
    touch bases with you again about what the SBA is doing to
    address this gap in forgiveness of these applications.
        Ms. GUZMAN. We definitely want to deliver on the
    forgiveness of PPP to all the communities and borrowers. We
    have done a couple things. Firs and foremost, of course, we
    wanted to make sure that our lenders were equipped to deal with
    this next phase of PPP and we set up a streamlined offering of
    technology for them to be able to utilize over 1,000 banks, and
    lenders have signed up to use our technology to process
    forgiveness. And we have also, of course, streamlined for
    $150,000 and under as per the statute. So we are working hard
    to make sure that all of our borrowers can access these
    programs through the lenders.
        However, we know that some of that requires technical
    assistance. Our Community Navigators are working hard, many of
    them to work with PPP borrowers to make sure that they can
    access forgiveness, as are all of our centers.
        Ms. BOURDEAUX. Thank you. Thank you so much. And thank you
    for your service to our small business community and for your
    service to the country.
        I yield back.
        Chairwoman VELAZQUEZ. The gentlelady yields back.
        Now we recognize the gentleman from Pennsylvania, Mr.
    Meuser, Ranking Member of the Subcommittee on Economic Growth,
    Tax, and Capital Access.
        Mr. MEUSER. Thank you, Madam Chairwoman, very much.
    Administrator, thank you very much for being with us again. We
    appreciate it.
        Clearly, there is maybe some misunderstanding of the
    frustrations that exist because I spend a lot of time with my
    small businesses in my district. I do tours probably twice a
    week when we are in district and visit with five, six, seven,
    or eight in a row. And it is usually the same feedback. The
    feedback is that they are struggling. Their sales might be up.
    Their margins are weaker, are constricted, and they cannot get
    people to work. And they are concerned about inflation. They
    are concerned about gasoline price spikes. They are concerned
    about the deliveries that do not come in because of the supply
    chain issues. And they are concerned about the added
    regulations. And I think when speaking with you since you are
    the advocate for the small business, if we are not hearing that
    these issues are being addressed, we are the voice of those
    businesses. We represent them and advocate for them. So we have
    got to provide the oversight and ask these questions for them.
    That is the purpose of this hearing and that is why I very much
    appreciate you being here.
        Now, with the budget plan, inflation is rising as we stated
    at record paces, 1991 paces. Right? Labor shortages, supply
    chains. I went through it. Many plagues of small business. Yet,
    in the budget that we saw for the SBA, we are not seeing any
    solutions to these very serious issues that are not going away
    anytime soon, by the way. Okay? But we do see a lot of climate
    change. Okay? Which is terrific, but not the issue that people
    are bringing up when we are visiting them and what is keeping
    them perhaps from going out of business.
        We are also stating that you want to be the first federal
    agency to get the designation as a voter agency. Okay? This is
    just off the grid of what truly is important on main street.
        So do you believe that these requests and initiatives
    illustrate a sufficient focus on your mission, on the advocacy,
    on finding solutions for the small businesses that make up 75
    percent of the employment throughout my district and most
    districts throughout the country? If you would not mind
    answering that question.
        Ms. GUZMAN. Thank you. Thank you for the question. And I
    agree with you that our small businesses are facing those
    inflationary pressures, workforce shortages. They tell me about
    the individual prices that they are paying higher within their
    product mix. And so they have had to adapt and pivot and change
    their model and access capital in order to survive during this
    time. So I appreciate what the SBA can do specifically on these
    issues. We know that for small businesses, they need that
    advisory service to make sure that their financial management,
    their supply chain management, their strategic sourcing and
    strategic planning overall is really strong during this time
    because those businesses recognize that the only constant for
    them is going to be change and they need to be very adaptive.
    And so our technical assistance and that request for increases
    is supportive of small businesses to help them. I will speak to
    the----
        Mr. MEUSER. But it is not in the budget. I do not want to
    interrupt you but let's just focus on inflation if we would.
    Okay?
        Ms. GUZMAN. Sure.
        Mr. MEUSER. What are some of the solutions to help small
    businesses and help America reduce inflation? Because the only
    thing that comes up in the budget regarding inflation is how
    wages need to stay up with inflation. That is the only time it
    is mentioned.
        So what are we doing about the high gasoline prices, and
    heating prices, and increase of delivery costs, and so much
    manufacturing that goes up because of the high fossil fuel,
    domestic fossil fuel increases? What are we doing about that?
        Ms. GUZMAN. Well, the president's budget really tries to
    address and create a more productive economy to improve our
    supply of goods here in the United States which will help in
    the long term as we look towards supply. He is also trying to
    address some of those pocketbook issues, like childcare, and
    that is where SBA also has a role. We are trying to train up
    more childcare facilities around the country. Those
    entrepreneurs. We offer bootcamps for childcare entrepreneurs
    so that they can start those businesses. Those costs are
    meaningful to our small businesses, to families across the
    country.
        And the president, consistently, is trying to address
    energy costs as well. But when we go to what the SBA authority
    is and what we can do, you know, obviously, we are the agency
    that provides capital and technical assistance and tries to
    give market access. So we are also working to try to increase
    the revenue side of the equation.
        Mr. MEUSER. And I believe childcare is important. Most
    private businesses tend to deal with that and that is a story
    in itself.
        I am running out of time but I would like to get from you
    later on the 504 lenders getting to the Express program, why
    has that been delayed?
        Madam Chair, I know I am over my time but administrator, if
    I can get an answer on that, because that would be really
    helpful for many small businesses if that Express program could
    be finalized and created ASAP.
        Thank you. I yield back.
        Chairwoman VELAZQUEZ. The gentleman yields back.
        Now we recognize the gentleman from Pennsylvania, Mr.
    Evans, for 5 minutes.
        Mr. EVANS. Thank you, Madam Chair.
        I am dedicated to increasing minority entrepreneurship,
    especially Black entrepreneurship. Small business ownership is
    a tool in the economic toolbox to help lift communities out of
    poverty.
        Early this month, SBA released its Equity Action Plan in
    conjunction with the Executive Order to advance racial equity
    and support for underserved communities through the federal
    government.
        Can you expand on some of the details of this plan? And how
    can Congress support these efforts?
        Ms. GUZMAN. Thank you so much for that question on equity,
    congressman.
        Obviously, we know that the face of entrepreneurship is
    changing. That women and people of color are starting
    businesses at the highest rates, and that is across the
    country. And so we want to make sure that our programs are
    accessible and available to all. So that is underlying
    everything we do. And our equity plan is focused on ensuring
    that we can get capital distributed to all of our
    entrepreneurs. And you saw the increase in our focus on the
    Community Advantage program to focus on small dollar loans
    where our small businesses are facing the largest gaps in the
    financial services marketplace.
        In addition, we want to focus on the revenue side of the
    equation because we think that, you know, of course, small
    businesses need to grow their revenues and be able to compete
    in order to deliver the products and services that we all
    depend on. And so with that, we are focusing in on the federal
    contracting space. We are the largest buyer in the world and
    making sure that there is equity in government contracting and
    that all small businesses can access contracts. We have seen a
    40 percent decline in the number of small businesses doing
    business with the federal government and that is not good for
    our industrial base or innovation. And so we are focused on
    making sure that emerging entrepreneurs and all entrepreneurs
    can access contracting. As well as the technical assistance.
    And obviously, the Community Navigators pilot program has
    enabled us to level up our outreach into more communities,
    build bridges to underserved communities across the country so
    that they can better access the resources of the federal
    government, in particular, the SBA and the capital programs and
    the contracting and other market access programs we provide.
        So with those actions, we hope to continue to expand our
    reach, and beyond that though. Of course, this is a moment for
    the SBA to step into a broader role in entrepreneurship. We are
    seeing increased rates of entrepreneurship. We want to leverage
    the attention through the Paycheck Protection program and all
    of our relief programs to now better reach and serve and build
    trust in communities that we have seen come into the SBA's
    programs. I said over 8 million unique small businesses have
    tapped into those relief programs. More sole proprietors and
    mom and pops where we know people of color are over indexed and
    we want to make sure that we are serving them with the products
    and services that meet their needs and meet them where they
    are.
        Mr. EVANS. Community development financial institutions
    were critical to getting PPP loans to small businesses in my
    home city of Philadelphia. During the pandemic, several
    minority-owned were turned away from larger banks. The budget
    says SBA is establishing an aging priority call to increase the
    number of community financial institutions in SBA. Each of the
    federal banks where they have offices dedicated to CDFIs and
    Minority Depository Institutions. Do you think a similar office
    would help SBA get more community-based lenders into the 7(a)
    program?
        Ms. GUZMAN. We have within the Office of Capital Access, a
    team dedicated to growing lenders in our communities starting
    with the Microlending Intermediary program and then as well
    with our Community Advantage attracting CDFIs and CDCs. We have
    increased and strengthened our relationship with the key CDFI
    organizations to ensure that they have access to our programs
    and are familiar. We also offer technical assistance across to
    all lenders, community banks, and CDFIs and others to make sure
    that they can access our programs. And we know that the most
    important thing is to simplify our programs across our
    portfolio. We have started with the Community Advantage program
    in trying to simplify eligibility in underwriting to make sure
    that we can support the lending institutions with these small
    dollar loans that are just as expensive as doing larger dollar
    loans.
        And so we want to enable the industry to better support
    small businesses through our programs and we believe that the
    existing structure that we have in place will allow us to do
    so.
        Mr. EVANS. I want to thank you sincerely for coming to
    Philadelphia and walking down 52nd Street. I really appreciate
    your leadership and the way that you are operating. And I thank
    the Chairperson who also was in Philadelphia and spent time
    with us. So again, I thank this collective leadership. Us,
    working together collectively, it is in our interest for the
    sake of small businesses being Small Business National Week. I
    thank you again.
        And I yield back to you, Madam Chair.
        Chairwoman VELAZQUEZ. The gentleman yields back.
        Now we recognize the gentlelady from California, Ms. Kim,
    Ranking Member of the Subcommittee on Innovation,
    Entrepreneurship, and Workforce Development, for 5 minutes.
        Ms. YOUNG KIM. Thank you, Chairwoman Velazquez. And I want
    to thank Administrator Guzman for joining us today to discuss
    the administration's Fiscal Year 2023 budget request for SBA.
        Small businesses that you represent are facing many
    economic headwinds with supply chain disruptions, record-
    setting inflation numbers, and increase in gas prices. I am
    sure you saw the report from NFIB that reports that the number
    of small business owners expecting business conditions to
    improve in the near future has fallen to the lowest level in
    nearly 5 decades. And that is a troubling report considering
    small business owners are some of the most optimistic people
    that we know.
        Back in my district in Orange County, the average gas price
    is close to $6 now. That is $2 more than what it was a year
    ago. So, Administrator Guzman, my question to you is, can you
    tell us if there is anything in the budget request for SBA that
    specifically helps small business owners overcome some of the
    issues that they are facing with high inflation, labor
    shortages, and energy costs? And what are you and your
    department, SBA, doing to regain the confidence from small
    business owners moving forward?
        Ms. GUZMAN. I thank you so much for that question. As I
    know, I share that empathy with small businesses and the
    challenges they are facing, and I am hearing from small
    businesses that they have these issues. I know that within the
    SBA's budget specifically, you know, we try to make sure that
    we are offering support for our small businesses for all the
    impacts to their bottom line and helping them to ensure that
    they are strategically positioned around their pricing
    strategies, around ways that they can improve operational
    efficiency, their staffing strategies, so that they can
    navigate any challenges that come their way.
        And so within our budget, we are expanding entrepreneurial
    development across our key program offices. And importantly,
    within some of our grant programs that hope to improve their
    revenue creation as well. The 7(j) grant program is about
    making sure that our businesses are contract ready and can grow
    their businesses, bring in the revenue through federal
    contracting, as well as fast grants which, of course, support
    innovation to strengthen economies locally. So I do believe
    that those are really core to helping small businesses and our
    advisor network around the country do work daily with small
    businesses, helping them to ensure that their business models
    are strong to navigate and to connect them to capital when that
    is a solution for them.
        Ms. YOUNG KIM. Glad to hear that. But are you deploying any
    SBC resources such as SBDC, women business centers, the veteran
    business centers, as well as SCORE mentors, how are you
    deploying those?
        Ms. GUZMAN. So what we have asked them to do is to come up
    with specialized programming. One of the SBDCs has a
    specialized program on supply chain and they are trying to
    share those best practices around the country so that they can
    better train businesses on supply chain management. Others,
    there is a veterans focused center that is working with local
    military spouses to connect them to businesses for employment
    so that we can help with those wage pressures. So there are
    specific programs within our centers that focus targeted on
    these issues.
        Ms. YOUNG KIM. Thank you.
        I want to talk about the recent report of the Office of the
    Inspector General that some loans totaling $66.4 billion that
    SBA did not meet the 90-day statutory requirement to remit the
    forgiveness payments to lenders. Additionally, the report
    states that SBA did not meet the 90-day requirement for over 98
    percent of those loans over $2 million.
        So can you talk about why is it that SBA is failing to meet
    that 90-day statutory requirement? What is your plan to develop
    a plan to ensure that the forgiveness reviews and remittances
    are completed within the 90 days as required by the law?
        Ms. GUZMAN. The Office of Capital Access continues to work
    with the lending institutions to make sure that they get the
    technical assistance they need to follow through on all the
    forgiveness requirements. We continue to support our lending
    institutions on that front as well as on the backend try to
    help with the small business preparedness. And so we will----
        Ms. YOUNG KIM. Can you give us a little more specifics on
    that?
        Ms. GUZMAN. I can have my team follow up with your staff,
    as I know, to make sure that we give you the full plan on
    forgiveness.
        Ms. YOUNG KIM. Okay. Well, thank you very much. My time is
    up.
        Chairwoman VELAZQUEZ. The gentlelady yields back.
        Now we recognize the gentleman from Maine, Mr. Golden,
    Chairman of the Subcommittee on Underserved, Agricultural, and
    Rural Business Development for 5 minutes.
        Mr. GOLDEN. Thank you, Madam Chair.
        One thing I want to ask about is the Office of Advocacy.
    You talked about that office a little earlier. Earlier this
    year, the Office of Advocacy actually put out a recommendation
    that the Department of Correction--not Department of
    Correction, Department of Commerce, revisit the timeline for
    implementation of some regulations that were first announced
    under the previous Administration but this administration is
    still moving forward with. This has to do with right whale
    regulations and our fisheries in New England, and specifically,
    in Maine.
        So, I wanted to ask, the Office of Advocacy does not
    frequently just put out these positions. I think they cross
    their Ts and dot there is and in this instance what they have
    said is the market really does not have the equipment necessary
    to comply and therefore, the Department of Commerce should
    delay the deadline. We have yet to see that recommendation
    adhered to or really had any engagement from Commerce about it.
        So what role does SBA play working with the Office of
    Advocacy to make sure that when they put out a recommendation
    that it is consumed and hopefully acted upon?
        Ms. GUZMAN. The Office of Advocacy is an independent office
    that reports directly to Congress, as well as me and the
    president. As they track these regulations that are being
    promulgated by the different agencies, they flag when there are
    small business concerns so that they can take into account
    those issues and final rule. On this specific issue, I would
    need to follow up with my chief advocate, acting chief
    advocate, Major Clark, to understand a little bit more and see
    if there is something that the SBA can do to support.
        Mr. GOLDEN. Thank you. I appreciate that very much. And the
    suspense on that is pretty tight. I think it is a May 15
    deadline.
        Ms. GUZMAN. Thank you. My team will follow up for sure with
    your staff.
        Mr. GOLDEN. Thank you.
        I really appreciate the focus on trying to identify fraud
    where it is taking place through some of these programs,
    particularly the ones related to COVID programs. Obviously,
    very important to put in good, new standards to prevent that
    from being an ongoing problem in the future. But I think
    finding the right balance is really important, too. And I am
    thinking specifically about a constituent back home who has an
    EIDL loan that is pending and it has been quite a long time
    now. Small businesses really I think need a timely response as
    much as they also need it to be adjudicated correctly.
        So how do you see the SBA finding the right balance between
    doing what we need to do to prevent the fraud and make sure we
    identify any that has taken place and hopefully pursue working
    with the other partners? How do you find the right balance to
    make sure that you are going to be able to process these loan
    applications quickly enough for them to be helpful?
        Ms. GUZMAN. Thank you so much.
        We believe that you do have to have speed and certainty,
    and so a balance of both. We want to make sure that the
    customer service experience is also really strong. And with the
    programs that I have been able to control for the full
    environment, like the Restaurant Revitalization Fund program or
    after we have made changes on Shuttered Venues, you know, we
    feel that we have tried to put the customer experiences at the
    forefront as much as possible. With COVID-EIDL, regrettably,
    although we have been putting out still an average of $700
    million a day through June when I made all the significant
    changes to overhaul the process and move it to my Office of
    Capital Access, we put out $1 billion a day, as high as $3
    billion a day. The largest banks in America put out $1 to $2
    billion a month on all loans, including credit cards. And so,
    our scale and the amount of support that we have been able to
    give to small businesses has been large. But I know that there
    are still a few thousand businesses that remain. On average, it
    is taking 2 to 3 weeks to process every loan under $500,000.
    Above $500,000, up to a month. Most of the cases for those who
    are remaining are through their second or third request for
    reconsideration. And so we are taking all of those
    reconsideration requests seriously. But it is important to note
    that a lot of the borrowers that were processed in 2020 without
    any controls have now had to come back to the table and provide
    tax documentation and clear some of the fraud controls.
        We are happy to work with your team on specific constituent
    requests to see if we can help shepherd any issues that they
    might be having.
        Mr. GOLDEN. Thank you. I appreciate that very much. And we
    will follow up.
        Ms. GUZMAN. Thank you.
        Chairwoman VELAZQUEZ. The gentleman yields back.
        Now we recognize the gentleman from Wisconsin, Mr.
    Fitzgerald, for 5 minutes.
        Mr. FITZGERALD. Thank you, Administrator Guzman, for being
    here today.
        On April 7, the House passed H.R. 3807, which I will be
    kind, I think it was a disingenuous piece of legislation. I
    will be kind and not call it an all-out fraud on the restaurant
    industry, the relief for restaurants and some of the other
    small businesses that were directly affected. And basically, I
    think you are probably well aware, it provided $44 billion in
    appropriations for restaurant revitalization. An additional $13
    billion to stand up some of the brand new grant programs, I
    guess, is the best way to describe them. And then it was sold
    as, you know, this was going to be paid for with EIDL and PPP
    fraud monies recovery.
        And so I think the most recent estimate is, and this is
    from Secret Services, that $1.1 billion in the fraudulent
    pandemic loans has been recovered. So with the total estimated
    $84 billion in fraudulent payments, I mean, I hope we can agree
    that there is not enough time or money or personnel to possibly
    get that number to match up and recover the $57 billion.
        So let me ask you this. Is it fair to say the SBA does not
    currently have the capability to recover the $57 billion needed
    to pay for the bill that the House has already passed?
        Ms. GUZMAN. My understanding is that that bill would
    rescind funds from COVID-EIDL targeted advance and advance that
    were remaining, not on the fraud side. It is remaining funds
    from those unused programs as well as, you know, Shuttered
    Venues and EIDL.
        Mr. FITZGERALD. Yeah. Well, let me interrupt you. Because
    the ENTREE Act is what was introduced by my colleagues here on
    the Committee. And in fact, you know, the Committee for
    Responsible Government is saying there is still $884 billion
    out there that could be recovered, that could be brought back.
    But that does not seem to be happening at all. And I think what
    we are frustrated by is that there is this idea that this
    product is being sold out on the street as, hey, no problem. We
    are going to do the due diligence on this and the fraud and we
    are going to recovery all these funds and then it is going to
    be readily available for the restaurants. But the math does not
    add up at this point and I am wondering what your comment is on
    that.
        Ms. GUZMAN. What I would also share is that the SBA works
    closely with the IG and other federal authorities who actually
    recover funds. We report fraud. We collaborate with them.
        Mr. FITZGERALD. That is great. That is great. I am asking
    you more about the numbers though. It is just not going to
    happen though, is it? Can you admit that it is not going to
    happen?
        Ms. GUZMAN. They are going to be working really hard to
    investigate all of this potential fraud and actually prosecute
    their final----
        Mr. FITZGERALD. Well, that is awesome but like I said, I do
    not think that gets the job done. And this is the frustration I
    think. It is like some of my colleagues said earlier, we have
    got to go back to the district. And when you talk to these
    restaurateurs, they are like, well, I just read in the paper
    yesterday that the money is coming. But the fact of the matter
    is there is no way to et these two figures to match up. The
    recovery, the amount of fraud and abuse recovery that is
    happening out there does not match up with what restaurants are
    being told throughout this nation is going to be available to
    them.
        Ms. GUZMAN. Well, I know that the IG himself has not
    completely estimated how much would be recovered. I know they
    work hard every day to ensure that that happens. Our budget
    request actually requests a nearly 30 percent increase for the
    IG budget so that they can continue to manage to those resource
    constraints.
        Mr. FITZGERALD. So I am just going to make the assumption
    that it is not going to happen. That you are not going to be
    able to recover those funds at a rate that is going to fund
    H.R. 3807.
        So what would the strategy be from this point moving
    forward? How would we address that once it is obvious that
    there is a shortfall and that the wheels fall off of this
    entire thing?
        Ms. GUZMAN. The SBA stands ready to implement the program
    if it is moved forward by Congress. And in terms of the
    decisions from any remaining funding or any other sources of
    capital, I would not be able to speak further about that.
        Mr. FITZGERALD. I mean, you know, clearly, I think that the
    speaker put the Bill 3807 on the floor to develop some
    political cover for her Members. And I think there are even a
    few Republicans who have voted for it. Shame on them. Because
    it is disingenuous. It is not going to happen. And the
    restaurants of this nation need to hear that and need to find
    that out. And I would hope that the SBA be part of not only
    disseminating that but lowering the expectations that this
    bailout is coming any time soon.
        Ms. GUZMAN. What we are trying to do is continue to support
    our restaurants. We know, we agree with you, they have been
    impacted and continue to struggle and face challenges. And we
    would stand ready to implement anything Congress decides on.
        Mr. FITZGERALD. Thank you, Madam Chair. I yield back.
        Chairwoman VELAZQUEZ. Time has expired.
        Now we recognize the gentlelady from Illinois, Ms. Newman.
        Ms. NEWMAN. Thank you, Madam Chair. And good morning to
    everyone.
        So first of all, Administrator Guzman, thank you so much
    for your tremendous work. I know you were handed a proverbial
    hot mess and you have done a really good job. So thank you from
    this Committee, but all of Congress.
        A couple of other clarifying comments. You know, I hated
    taxes when I was a small business owner as well. Absolutely
    hated it. I thought it was unfair and all of that. But as we
    know, and as you articulated very clearly, that largely small
    businesses will not be affected by President Biden's new tax
    model. So I just want to be clear and reiterate that again for
    the record that that is not true that small businesses will be
    affected adversely. In fact, what it does do is will make large
    businesses pay at a fair rate and do their job and be good
    patriots and Americans in this country.
        So a couple of other clarifying comments before I get to my
    question about access to capital and a few other things.
        So, you know, I am very certain you are talking to the
    president all the time about advocating. So thank you for your
    advocacy on behalf of small business. I truly appreciate it.
        I do want to make a comment about climate. Climate change
    is everybody's business. It is small business's business. It is
    my business. It is everybody's business. So, the fact that you
    are supporting green entrepreneurs, I am introducing a green
    incubator act pretty soon that will coordinate with the SBA.
    And it is critically important that we all engage. So thank you
    for your advocacy there.
        So my question. Staying consistent with the topic of
    capital access, I would like to segue into poor climate
    decisions. How does the SBA intend to update policy on
    addressing small business capital access needs on climate
    crisis issues within the existing 504 program or the Microloan
    program?
        Ms. GUZMAN. Thank you so much for your comments and the
    question. I will agree that small businesses, according to the
    Treasury 97 percent of them would be not impacted by the taxes.
        With the climate, specifically, the request that was made,
    we would hope to shore up our lending specifically. We know
    that small businesses and communities that are increasingly
    impacted by disasters are the ones that are hardest hit and
    they have the hardest time recovering. They need to mitigate
    for future disasters, especially when you look at communities
    that have been hit time and time again and continue to have to
    draw disaster assistance. They need to mitigate so that they
    can have less damage. So that funding would go a long way
    towards helping small businesses mitigate. I have repositioned
    my Office of Disaster Assistance to focus on resilience and
    really make sure that small businesses are aware of these
    resources, and communities. Because, obviously, we do
    homeowners and renters as well within our disaster programs.
    So, we would definitely want to lean in on supporting small
    businesses in that effort.
        As well as across our 504 program. It is a perfect example
    as well. As we are funding, we would want to level up and allow
    them to make those mitigation changes as they develop property
    to make sure that they are prepared for any natural disasters
    on the horizon. And of course, within the 504 program, it is a
    really critical asset-building resource for small businesses as
    they expand in property.
        I think within the programs that SBA offers on innovation,
    that is why there is also quite a bit of excitement around
    climate. We are funding technologies overall within the federal
    government on the SBIR-STTR program and SBA is the one that
    channels those funding supports to small businesses and helps
    with education. We will continue to lean in on that and all the
    issues that are challenging our nation and the world, whether
    it is health, agtech, or climate, or any other issue.
        Ms. NEWMAN. And then I have one final question I am going
    to sneak in at the end here. Anti-trust related.
        In light of President Biden's most recent executive order,
    do you feel like the SBA has enough money to fund, study, and
    report on the federal government's effort to protect small
    business competition through anti-trust enforcement?
        Ms. GUZMAN. Well, the SBA, obviously, we have requested an
    increase in our budget of 2.5 percent just to support all of
    our activities around entrepreneur development and capital
    access. We continue to just provide advisory services and
    support to small businesses. And that is the purpose of our
    focus around the entrepreneurial support and continue to try to
    position them to compete and expand our productive capacity
    within this country.
        Ms. NEWMAN. And just very quickly, Administrator, because
    it is important to note, and that is terrific and I so
    appreciate that, but there is no specific money identified to
    really reckon with the fact that large businesses are always
    first in line for business in general. So, we are not studying
    that right now?
        Ms. GUZMAN. Not within the core SBA budget funding. So we
    are, of course, always working with small businesses to better
    compete in government contracting and better position them. And
    that is the extent of our work.
        Ms. NEWMAN. So we have work to do and I yield back.
        Chairwoman VELAZQUEZ. The gentlelady yields back.
        Now we recognize the gentlelady from Texas, Ms. Van Duyne,
    Ranking Member of the Subcommittee on Oversight,
    Investigations, and Regulations.
        Ms. VAN DUYNE. Thank you very much, Madam Chair, and to the
    Ranking Member for holding this hearing today. And thank you,
    Administrator Guzman, for appearing before us.
        This has been interesting and entertaining comments that I
    have heard from some of my colleagues. But to say that the
    president's proposed tax plan does not negatively affect small
    businesses is just completely not only disingenuous but
    dishonest. To believe that small businesses do not get a pass-
    through cost from large businesses or that small businesses are
    not paying more as a direct result of this administration's war
    on the oil and gas industry, it is not only naive but it is
    completely dishonest and it is completely wrong. But again, it
    has been entertaining.
        Before I begin, I wanted to thank you, Administrator
    Guzman, for coming to visit Texas 24 earlier this year to hear
    directly from our businesses and their current challenges. If
    you recall, one of the restaurant owners, she highlighted
    exactly how difficult it was right now. And I think you heard
    from almost everybody at that table to find labor. Labor that
    was willing to work and not just leave after a few days on the
    job or demand a wage that would bankrupt them. I think you also
    heard from one of our local homebuilders who discussed just how
    costly the skyrocketing energy costs have been as they disrupt
    every single aspect of business.
        So again, to say that somehow this administration's
    policies are not affecting small businesses is completely
    dishonest. But I think we both know that these concerns
    continue to consist today. And I am really hoping that you
    benefitted from your time down in District 24 and that you
    heard these things directly from those business owners.
        I do want to talk to you about the EIDL program and some of
    the fraud and direct lending issues that we have seen from SBA.
    SBA gave out approximately $369 billion in the EIDL program.
    Within the EIDL program, the OIG identified approximately $84
    billion in potentially fraudulent activity associated with
    direct loans and direct grants from within the program. So
    almost one out of four of the loans were considered fraudulent.
        And based on that fraud rate, do you think it is best that
    SBA expand direct lending in other programs?
        Ms. GUZMAN. Thank you so much, Congresswoman, and I
    appreciated visiting with your businesses and learning about
    their challenges. So, I really appreciate that time that you
    took with me.
        With the COVID-EIDL program, it is a tale of 2 years in
    terms of implementation as well. And the 2020 EIDL without
    controls limited the agency's ability to control for fraud
    completely. In 2021, thanks to the Economic Aid Act, we were
    able to then reinstitute reviewing tax documentation from all
    these businesses. And that is, of course, help to the Agency
    limit fraud as well as we now again checked the Treasury's do
    not pay list.
        Ms. VAN DUYNE. I just have a question since you brought it
    up. Between 2020 and 2021, can you tell me how much money was
    fraudulently released in 2021?
        Ms. GUZMAN. The IG and GAO reports largely address the 2020
    funding. And so----
        Ms. VAN DUYNE. Do we know how much money was fraudulently
    released in 2021?
        Ms. GUZMAN. The IG is still monitoring and assessing----
        Ms. VAN DUYNE. I mean, your statement that all these things
    happened in 2020 and then you had controls in 2021, how do you
    know how to compare if we do not have the 2021 numbers yet?
        Ms. GUZMAN. What I have is that the IG and GAO have been
    pleased by the controls that we have implemented and agree that
    that will go a long way towards addressing fraud and----
        Ms. VAN DUYNE. So the idea is that when we get those
    numbers that they are going to be considerably, substantially
    lower than in 2020?
        Ms. GUZMAN. That is the expectation from the watch dogs as
    well as the agency based on what we are seeing. And keep in
    mind that----
        Ms. VAN DUYNE. Do you know when we can expect those numbers
    to come out?
        Ms. GUZMAN. No, I do not have any assessment on that. So,
    we continue to work with the IG very closely and as I know he
    does with you as well to make sure that you receive that
    information in a timely manner. But with the EIDL program----
        Ms. VAN DUYNE. And I know I have only got 45 seconds left.
    Since you are talking about fraud, I also want to mention that
    there is over $100 billion of fraud estimated in various small
    business relief programs. One hundred billion going overseas,
    to put it plainly, our federal government dollars literally to
    billions of taxpayer dollars and handed it over to fraudsters
    who put in minimal effort to obtain those funds. And as you
    know, this fraud limited the amount of access that well-
    deserving businesses had to relief. This is all unacceptable.
        But Administrator, how does the SBA relieve fraud--how do
    you estimate that will end to sending money outside of the
    U.S.? I mean, it seems like we have already had a quarter of
    the money going out illegally for the EIDL program, and now we
    are sending hundreds, you know, billions of dollars overseas
    fraudulently.
        Tell me how the SBA is going to be handling that in the
    future.
        Ms. GUZMAN. We have implemented the super robust fraud
    controls, as well as mitigation. And recently, I announced a
    Fraud Risk Management Board to replace the Fraud Risk
    Management Council to ensure that across the whole of agency,
    across all of our key program offices, we are putting in fraud
    at the design of programs, as well as ensuring that the
    controls are strong across the agency. So, we feel with these
    added measures, we can have strong controls for all the funding
    to be controlled.
        Ms. VAN DUYNE. Well, I look forward to getting those
    numbers for 2021. Thank you very much.
        I yield back.
        Chairwoman VELAZQUEZ. Time has expired.
        Now we recognize the gentlelady from Kansas, Ms. Davids,
    Chairwoman of the Subcommittee on Economic Growth, Tax and
    Capital Access.
        Ms. DAVIDS. Thank you, Chairwoman. Thank you again,
    Administrator Guzman, for joining us here today to talk about
    our Fiscal Year 2023 SBA Budget proposal. The SBA is requesting
    $4 million for the manufacturing hub proposal, which is a new
    initiative to address supply chain deficiencies that have been
    both exacerbated and made more visible during the COVID-19
    pandemic. I am really interested to hear more about this effort
    on expanding and strengthening our small business manufacturing
    bases. It is going to be incredibly important as part of our
    diversification of and building up of our supply chains. That
    is something I have been particularly focused on. I am very
    fortunate to have been named a conferee alongside Chairwoman
    Velazquez as we look at the supply chain and manufacturing
    legislation that we are hoping is going to actually address
    some of this stuff.
        I am curious if you could elaborate a bit on the scope of
    the manufacturing hub proposal and how that will work or the
    intention behind it. And then, you know, what the proposal will
    involve in terms of the resources being requested.
        Ms. GUZMAN. Thank you, congresswoman. And this is SBA's
    effort and contribution in trying to expand the productive
    capacity in the United States. We know that 75 percent of
    manufacturers are 20 and under employees. Still over 90 percent
    small overall. And so, we want to make sure that we support
    them and give them access to especially government contracting.
        We focused this initiative within the government
    contracting business development space because we want to make
    sure that the government is buying from Made in America, and so
    we are hoping to expand our outreach, our training, as well as
    technical assistance to more manufacturers to engage in
    government contracting. But in addition, beyond that, we want
    to make sure that we are deploying resources to help more
    businesses interested in manufacturing in the United States.
        Just recently, I met with a small business owner who was
    specifically wanting help in trying to manufacture her products
    here in the United States as she is having to deal with supply
    chain global issues in her business currently. And so, these
    are the types of businesses that we want to support by giving
    them the technical assistance around manufacturing in the
    United States.
        Ms. DAVIDS. Thank you. And I am sure our office will be in
    touch as that program gets stood up and starts moving forward.
    There are a lot of smaller, like 75 percent of manufacturers
    being under 20 employees. There certainly are a lot in the
    Kansas 3rd that fit into that criterion.
        I wanted to switch over really quickly to the Fraud Risk
    Management Board that we have heard a bit about this morning. I
    think getting those guardrails in place, making sure that
    moving forward we are addressing and preventing fraud.
        Can you talk a little bit about what kind of structures are
    being implemented through the board? And then kind of what they
    are replacing?
        Ms. GUZMAN. With the Fraud Risk Management Board, I hoped
    to integrate a more holistic approach to fraud risk management
    so that all of our program offices would be engaged. All of
    them have a role in setting up programs and making sure that
    they design them with good controls.
        And so, the management of the Fraud Risk Management Board
    includes all my key program office leads, as well as it is
    chaired by my CFO. So that is an important addition. We want to
    make sure that controls are guided by the organizations that
    deliver our capital access programs, our disaster assistance
    programs, our government contracting, and entrepreneurial
    development.
        But in addition to that, as well as building a more
    collaborative effort across the agency, I wanted to make sure
    that the framework complied with the GAO standard. And this new
    Fraud Risk Management Board does that and ensures that we
    satisfy that requirement of the GAO. The structure itself, it
    will report in through the Enterprise Risk Management Board
    that was established back in 2015 and reports directly to me.
    In addition, my Special Counsel for Enterprise Risk will sit as
    an advisor on the Fraud Risk Management Board to ensure that
    there is a constant tracking of their activities. And
    importantly, we embedded fraud risk management into the
    performance of all the key members of the Fraud Risk Management
    Board, which I think also goes a long way to ensuring that they
    know that the agency takes this seriously.
        Ms. DAVIDS. Thank you.
        Chairwoman VELAZQUEZ. Time has expired.
        Ms. DAVIDS. I yield back.
        Chairwoman VELAZQUEZ. The gentleman from New York, Mr.
    Garbarino, is recognized for 5 minutes.
        Mr. GARBARINO. Thank you, Madam Chair. Administrator
    Guzman, thank you for being here today.
        We have already heard a lot of questions about the fraud,
    dealing with the EIDL. And when they say possibly $86 billion,
    that was the last report, and I think a new report is going to
    come out which is probably going to raise that number. I do not
    think you can talk about it enough, about how bad this fraud
    was with these programs, with the COVID-programs.
        I am hearing in my office people who have still had
    applications in over a year. We have had to deal with a couple
    of cases where people have had EIDL applications in for COVID
    over a year and you said before you are getting some
    applications done with another program with maybe 2 weeks to a
    month. Why is it taking over a year for some of these
    applications to be processed? I understand that not everyone is
    back to work yet? Career employees are still working from home
    or have the option. Could that be leading to it? I mean, why
    are these taking over a year to get them?
        Ms. GUZMAN. Actually, the COVID-EIDL program is the program
    I was referencing in which the average turnaround time is 2 to
    3 weeks for $500,000 and under. And it is about a month for
    those above. And that is the one that we are processing about
    $700 million a day and have been on average since the summer, a
    billion dollars a day. Within COVID EIDL, I was not happy with
    the way it was and I actually moved it to my Office of Capital
    Access to streamline processes. In the fall, we also changed
    the customer service contractor so that we could improve
    customer service to the small businesses.
        With those borrowers that you are finding, who have been in
    the system for that long, they are under multiple
    reconsiderations. In other words, they have been denied and
    have come back for further reconsideration. In many cases, the
    majority of their cases, they did not have their 2019 taxes
    filed or reported or needed a modification. And so that adds
    some additional time but it should not be a full yar.
        So, what our district offices are doing, we have also
    empowered them to access the information about the EIDL
    program. We are happy to work with you and your team to
    investigate any specific cases that we can unstick in the
    process.
        Mr. GARBARINO. I would appreciate that.
        The teams have been helpful when we reach out but everybody
    does not call their congressman every time, so it moves once we
    call but small businesses are dealing with a lot of other
    things that having to get in touch with us.
        Ms. GUZMAN. If I could add, we have added a lot of
    resources to those pending applications so that we can continue
    to get them down as we close out this program.
        Mr. GARBARINO. I appreciate that. Thank you.
        Now, are all the SBA employees back to work or are you
    still having people work from home?
        Ms. GUZMAN. We have had a return to work stance in February
    and we are still transitioning with our union employees but we
    are, you know, a majority of our headquarters have returned to
    work. But that has not impacted. Obviously, we have scaled to
    put out $1.2 trillion in relief and have been very productive
    over these past 2 years.
        Mr. GARBARINO. What would you say a majority is, 51
    percent? How many people are back to work and not working from
    home anymore?
        Ms. GUZMAN. In the headquarters area, it is over 70
    percent.
        Mr. GARBARINO. Okay. Thank you.
        I notice as part of the budget, also, the administration is
    requesting authority to transfer $320 million from the targeted
    COVID-EIDL Advance account to support loan servicing and other
    related programs. I think there has already been over $4
    billion has been used for salaries and whatnot for servicing.
    Why do you need another $320 million?
        Ms. GUZMAN. The COVID-EIDL program is, of course a 30-year
    loan. And so, we will now be servicing $3.9 borrowers. And the
    SBA anticipates needing additional funding to continue to
    manage this portfolio into the future and make sure that they
    have the resources and the customer service that is expected.
        Mr. GARBARINO. How much has been put, I mean, it has been
    over $4 billion though, has it not, that has been put towards
    the program already and you are transferring another $320
    million?
        Ms. GUZMAN. The program has disbursed nearly $4 billion in
    funding correct loans to small businesses.
        Mr. GARBARINO. I am just going to switch to one more
    question since I have a little bit of time left. From small
    business, what is the top issue that you are hearing? What is
    their biggest concern?
        Ms. GUZMAN. Across the board, we need small businesses. And
    note that we have also had a surge of new entrepreneurs as
    well.
        Mr. GARBARINO. Just top issue. I have got 20 seconds.
        Ms. GUZMAN. The top issues are multiple though. So Capital
    Access is always one of the top issues. And in addition, when
    managing their business----
        Mr. GARBARINO. Anybody talking, sorry to interrupt, but
    anybody----
        Ms. GUZMAN.--supply chain, inflation----
        Mr. GARBARINO. Inflation. That is what I am hearing.
        Ms. GUZMAN.--and workforce issues across the board.
        Mr. GARBARINO. Inflation.
        Ms. GUZMAN. So I would put all of those four.
        Mr. GARBARINO. But inflation is what I am hearing a lot
    from all different businesses. And I am running out of time but
    what does this budget do to address inflation?
        Ms. GUZMAN. for SBA in particular or broadly? The
    president----
        Mr. GARBARINO. SBA.
        Ms. GUZMAN. For SBA, specifically, we are leaning in to
    entrepreneurial support, to help small businesses navigate the
    issues that they have had to face. Obviously, we look towards
    helping them with strategic planning, and financial management,
    supply chain management, and our centers offer specific
    targeted support and technical assistance in those areas.
        Mr. GARBARINO. I am out of time. Thank you very much.
        Chairwoman VELAZQUEZ. The gentleman's time has expired.
        The gentleman from Louisiana, Mr. Carter, is recognized for
    5 minutes.
        Mr. CARTER. Madam Chair, thank you very much for the
    opportunity to address, and Administrator Guzman, I would like
    to personally thank you for touring my district and having the
    kind of attention to deal that my constituents certainly
    deserve and certainly appreciate that you undoubtedly provide,
    and the care that you give. We know that you have a very tough
    job but we certainly appreciate the hard work that you and the
    Members of your team are providing for the people of American.
        One observation and two questions. First observation is
    that there were comments that were made earlier that suggest
    that somehow climate change was not a part of SBA and it should
    not be a part of the discussion. I would like to very
    respectfully challenge that premise.
        In my district, we have had substantial impacts from
    climate, whether it is hurricanes, floors, or tornadoes that
    have incredibly impacted our small businesses to the tune of
    people having to borrow money. To only have to come back and
    borrow money again from SBA because of natural disasters that
    were no doing of their own. So, climate change is very much a
    part of the world that SBA plays in helping businesses,
    particularly small businesses, stand back up after these
    horrific natural disasters.
        So, I thank you. I thank your administration. The
    administration, the Biden administration, and certainly your
    administration, Ms. Guzman, for being very attentive.
        So, one quick question. Is a real life issue that happened
    in my district. There was an individual that applied for an
    EIDL grant, received notice that she had been approved, and
    that money had been transmitted to her account.
        Now, I have been in communication with a number of your
    staff people. But I want to bring this to your attention
    because we have not gotten a positive result yet, but I think
    one should be in order. She applied for an EIDL grant. Was
    approved for the EIDL grant, was notified by SBA that the funds
    were being transferred to her account.
        Several days go by. She realized the money has not. It was
    determined by SBA that there was a glitch and that the money
    was supposed to have been transferred but never made it to her
    account. By the time she brought that to their attention to the
    time that they attempted to correct the glitch, meaning to then
    send the money to the proper account, she was told that, oh,
    the program rules have changed and you are no longer eligible
    for the funds that you previously, only a week earlier, had
    been approved for.
        Well, listen, that seems terribly wrong. If the person was
    approved and then somewhere in the process there was a rule
    change, I think it is only reasonable that some exception be
    made to assist this individual. I will not give her name or any
    of that information on an open line, but your staff is well
    aware of this and I will share it again to your office.
        Can you talk about that very briefly? And I suspect that
    this is not a one-off. This may have happened to other people
    throughout the country, but certainly, it is a travesty and it
    is no fault of the applicant but they should be made whole.
        Ms. GUZMAN. Thank you so much for the time that you spent
    with me in your district. It was very informative, especially
    with the businesses impacted by repeat natural disasters.
        I will say on the COVID-EIDL program, as well as the
    Advance program, we obviously, you know, those programs closed
    December 31. We continue to administer funding on any
    modifications for the EIDL program. I am happy to explore this
    further. My team will follow up immediately with your staff on
    this constituent request in particular. I am not pleased with
    the EIDL program overall and obviously made some significant
    changes over the summer to move it, reposition it, add new
    processes and procedures, and in the fall, changed the customer
    service support.
        Mr. CARTER. And I am sorry to cut you off, Madam, because
    my time is going to go up. I want to be very clear and
    complimentary of your staff. The Region 6 administrator has
    gone as far as he could with trying to explore this. Your
    people have looked at it and have been extremely helpful,
    albeit not getting it over the goal post. So, your extra
    attention to this would be critically important, particularly
    to my constituent in Louisiana who has been very patient but
    has clearly been wronged.
        And with my final 10 seconds, I want to just once again
    make a play for something that I have spoken to you before and
    others, and again, I want to thank you. And that is individuals
    who have had to apply for SBA loan each time there is another
    natural disaster. I would ask again that you would consider
    some loan forgiveness.
        Chairwoman VELAZQUEZ. Time has expired.
        Mr. CARTER. And I thank you.
        I apologize for overrunning.
        Could she at least answer that, ma'am, speak to that?
        Chairwoman VELAZQUEZ. Time has expired so if you could
    answer in 5 seconds.
        Ms. GUZMAN. We do not have forgiveness authority on the
    disaster programs so we will continue to follow up with your
    office on any specific requests.
        Mr. CARTER. Thank you.
        Chairwoman VELAZQUEZ. Now we recognize the gentleman from
    Florida, Mr. Donalds, for 5 minutes.
        Mr. DONALDS. Madam Administrator, it is good to have you
    back. Thank you for being here. I will say in all honesty,
    Administrator Guzman, I do appreciate you coming. We are still
    waiting for Secretary Yellen to materialize in the halls of
    Congress. Not quite sure where she is. I see her on CNBC. I see
    her on TV randomly. She somehow finds her way to the Senate but
    she has not appeared in this Committee, which she actually has
    responsibility to do. But I do appreciate you taking this
    responsibility being here, answering questions from the
    Committee.
        I want to start here. Obviously, the president's entire
    budget has come out. Yes, we are focused on the small business
    budget. But the small portion of the president's budget
    obviously impacts businesses, large and small, Americans,
    whether they are rich, whether they are middle income, whether
    they are poor. Under the president's tax proposals, he is
    calling for rises in the top marginal tax rate back to, I
    believe, 39.6. He is calling for tax rate increases from 21 to
    28 percent on the corporate income tax side. Essentially,
    undoing the Tax Cut and Jobs Act. Is it the opinion of the
    Small Business administration that these tax increases are
    going to be to the betterment of small businesses in the United
    States.
        Ms. GUZMAN. Thank you so much for your comments and
    question. I will say that we know from Treasury's analysis that
    97 percent of small businesses would not be affected by any tax
    increases. And the president has been committed to ensuring
    that nobody under 400,000 would be impacted. And so, we
    continue to try to support our small businesses with all their
    bottom line impacts at the SBA and providing the technical
    assistance and capital access and market access to help them
    thrive in any economy.
        Mr. DONALDS. I am glad you mentioned Treasury because once
    again I will say, where is Secretary Yellen? Because this
    actually falls right into her wheelhouse. It will be great to
    have this dialogue with her, somebody with an economic mind. We
    can have that jujitsu, if you will. But what I would ask is,
    obviously, maybe small businesses, they incorporate many
    different ways. Some of them are C corporations. Obviously,
    they would be directly hit by a raise in the corporate income
    tax rate. A lot of them are S corporations. Or they are sole
    proprietorships. So, the business income actually falls to
    their personal income taxes. So, I go back to my time in
    banking. A lot of small business owners, their business income
    actually flows through their personal income taxes which would
    put them in the window of paying higher taxes because the top
    marginal rate would increase.
        The only other thing I would add to that is even under the
    president's budget, the $400,000 number is for a couple. But if
    it is individuals, you are talking more than $215,000. If you
    are somebody who is single and runs a small business and you
    are earning more than $300,000, your taxes are going up. And
    typically, if you are earning over $300,000, you are probably
    employing maybe less than 10 people. So, we are talking about
    the smallest of the small businesses who operate a sole
    proprietorship, maybe partnerships, that are going to be hit by
    rising taxes. Do you think that is problematic?
        Ms. GUZMAN. Well, again, I mean, those 3 percent of the
    businesses that would be affected, 4 percent are C corps, and
    of course, those pass-through entities as well. But again, only
    3 percent would be impacted, and my position is to continue to
    try to support small businesses with the programs that SBA has
    available for them--capital access, as well as market access,
    and technical assistance.
        Mr. DONALDS. Well, I think it is important to understand
    that we can quibble on what the percentages are. I think it is
    obviously more than 3 percent. I would love for Secretary
    Yellen to actually dig into this a lot more for us. But let's
    be also very clear. Some of those businesses in that 3 percent,
    I am going to use your number, they employ the vast majority of
    people in the United States.
        I am going to move on.
        Obviously, inflation is a big issue dealing with everybody,
    whether you want to talk about individuals or the fact that the
    producer price index, the thing that does not get talked as
    nearly as much about is up around 12 percent year over year
    which is catastrophic for businesses across the United States.
    Have you and your administration had a conversation with
    President Biden, Chief of Staff Klain, VP Harris, or the
    Council of Economic Advisors? Have you had conversations with
    them about the impact inflation is having on small businesses
    in the United States and on the ability for businesses to repay
    the EIDL loans that have been actually executed by SBA?
        Ms. GUZMAN. Whenever I engage with those individuals, as
    well as the White House, we continue to share insights on small
    businesses and the impacts that they are having around
    inflation and supply chain. That is why we focus on----
        Mr. DONALDS. I have got 23 seconds left. I do not mean to
    cut you off. But let me ask you this question. This is a better
    question. What do they say? What do they say the remedies are?
    What do they say they are going to do to help small businesses?
    I would like to know what the president's opinion is on this.
        Ms. GUZMAN. The president has expressed concern with the
    rising costs on American families, as well as small businesses,
    and he is taking actions to try to address those pocketbook
    issues, as well as supply chain----
        Mr. DONALDS. What actions?
        Ms. GUZMAN.--to expand our productive capacity with----
        Chairwoman VELAZQUEZ. The gentleman's time has expired.
        Mr. DONALDS. All right. Thank you again, ambassador--
    Administrator. I gave you another promotion. Thank you,
    Administrator Guzman.
        Chairwoman VELAZQUEZ. The gentlelady from California, Ms.
    Chu, is recognized for 5 minutes.
        Ms. CHU. Administrator Guzman, I would like to make a
    statement about the 504 program and then ask a question about
    SBICs and then Community Advantage.
        We know that SBA's 504 loan program is so critical to
    helping small businesses with startup costs like purchasing
    commercial buildings or expensive equipment. And in fact, last
    year, SBA saw a 41 percent increase from the previous year.
    Unfortunately, that same year the program exceeded its $ 7.5
    billion lending authority in September and was forced to pause
    lending for the remainder of the year, meaning that eligible
    small businesses were left without funding.
        This year, the 504 program is again going to run out of
    funds by summer. And that is why I strongly support the
    president's budget for 2023, which includes a $1.5 billion in
    lending authority. And SBA's request for flexibility and the
    authority to raise the 504 program's cap by up to 15 percent,
    which is the same flexible authority for SBA's 7(a) loan
    program. I think it is so important to make sure that everyone
    can get the loans that they need and that there is not a
    disruption in dispensing them.
        And then my question about SBIC. I am a big supporter of
    the Small Business Investment Company. I am proud that my
    legislation to allow more capital to be invested in SBICs, the
    Invest in main street passed the house in December and that
    this Committee included these provisions in the reconciliation
    package that passed the House in December.
        Certified SBICs are one of the government's lowest risks,
    highest impact tools to grow the businesses, but it is not
    doing enough to reach our most underserved small businesses. In
    2021, in fact, only 6.9 percent of the companies receiving SBIC
    financing were women, minority, or veteran owned.
        So, could you talk about how the 2023 budget request would
    diversify the SBIC so that there would be greater
    representation?
        Ms. GUZMAN. Thank you, congresswoman. And I agree with your
    earlier statements on 504. It is an important program that we
    continue to try to focus. And to an earlier question that was
    asked as well, we are looking to promulgate rules on the
    Express 504. We have implemented that already.
        On the SBIC program, I agree wholeheartedly that we want to
    make sure that that capital is accessible across the country,
    whether that is rural communities, diverse communities, as well
    as veterans. We want to see capital spread equally across the
    nation. The SBIC program, we are looking at from an outreach
    perspective, as well as the actual rules and regulations and
    the SBICs themselves to diversify and ensure that they are
    diversifying across not only the types of borrowers that they
    are supporting across the country but as well in the types of
    funding. We want to make sure that at all stages of a
    business's development, that they are able to access capital.
        And so, we have been working closely with the industry to
    make sure that we can support an expansion of the servicing and
    offerings to the SBICs across the country.
        Ms. CHU. Well, if I may, I also wanted to ask about
    Community Advantage, which has been very powerful in reaching
    significantly more female and minority small businesses than
    traditional lending programs. So, I introduced legislation to
    make this program one of SBA's core lending program which the
    House passed last year.
        Earlier this month, SBA noticed that it would be extending
    the pilot for another 2 years, opening up the program to new
    lenders and making some reforms to the program. However, there
    is currently still no official notice or new Community
    Advantage participant guidance reflecting these changes.
        So, can you tell us when Community Advantage lenders should
    expect to see reviewed participant guide and what the content
    would be?
        Ms. GUZMAN. That is in process. Of course, we put the
    federal registered notice about, you know, less than 30 days
    ago and we will be putting out those rules so that we can
    expand the program as soon as possible.
        Ms. CHU. Do you know when that will be?
        Ms. GUZMAN. That is in the coming weeks. We are working on
    that and prioritizing that now.
        Ms. CHU. And how about there was also an evaluation on
    whether the program should remain permanent. And I thought that
    the program had proven itself
        Ms. GUZMAN. I know that there was a statutory proposal to
    make it permanent. We have extended it within the priority of
    the pilot.
        Chairwoman VELAZQUEZ. The gentlelady's time has expired.
        Now, we recognize the gentlelady from New York, Ms. Tenney.
        Ms. TENNEY. Thank you, Madam Chairwoman and Ranking Member
    Luetkemeyer. We are grateful, Administrator. Thank you for
    being here in person.
        As a small business owner for many years, I know what I
    hear from my own employees, from my own colleagues, and from
    other small business owners. Inflation, labor shortages,
    subsidies by big government to other big companies, high
    regulations, high taxes, particularly coming from a state like
    New York are what we see as small business owners really
    hurting us. And so, when we see these items coming from
    government and this huge spending and we look to the Small
    Business Administration for help to rescue us because we cannot
    afford compliance costs. We cannot afford to manage the big
    business advantages that they have. We look to the Small
    Business Administration, and sometimes I hear today in this
    meeting things that look like mission creep away from small
    businesses and helping large businesses, and businesses that
    may not even be considered a small business. And I worry about
    that because of how vitally important it is as you, as an
    administrator, and all of us to really be careful in how we
    spend taxpayer dollars, particularly in inflation and small
    businesses have to scrimp and save for every penny, just to
    survive in this situation.
        So, administrator, I want to jump to something really
    important right now in terms of a small business looking at a
    big business, gaming and getting advantage in the system. Would
    you say that Planned Parenthood affiliates are in the same
    category as a hotel or a restaurant?
        Ms. GUZMAN. You know, with Planned Parenthood, I am
    assuming you are talking about the Paycheck Protection Program.
        Ms. TENNEY. Right. Would you say that a Planned Parenthood
    operation, an affiliate, is in the same business and same
    relationship as a hotel or a restaurant?
        Ms. GUZMAN. My understanding is that Planned Parenthood
    affiliates are independent and are individual entities within
    that community.
        Ms. TENNEY. Right. And you know why I am asking this
    question because obviously we sent you a letter in February.
    Thank you, we got it yesterday, so we appreciate at least
    finally getting an answer. Because, as you know, under the
    Paycheck Protection Plan created by the CARES Act, Congress
    specifically stated that companies could not, particularly SBA,
    could not issue forgiveness for PPP loans to any entity with
    over 500 employees unless that affiliate was a hotel or a
    restaurant. So that is why I asked you the question. So, I
    think we can agree that Planned Parenthood is not a hotel or
    restaurant. And the question is whether or not they are
    considered an affiliate. But 34 individual loans, totaling over
    $67 million, were given to affiliates of Planned Parenthood,
    the Planned Parenthood Federation of America. And as you know,
    Planned Parenthood is not just an innocent bystander. They are
    the nation's largest abortion provider with over 16,000
    employees, well beyond the 500 employee threshold established
    by Congress for this PPP eligibility.
        So, I wanted to clarify that assessment that you have about
    Planned Parenthood because they clearly are not an affiliate
    like a hotel or restaurant. They do not fit within that
    exception. And so, you sent me a letter indicating, it was very
    vague, actually, about whether or not this affiliation status
    indicated that there was control by the national affiliate for
    Planned Parenthood. And so, Planned Parenthood did have
    exercise and control over its affiliates. And let me give you a
    couple of examples.
        First, becoming a Planned Parenthood Federation of America
    affiliate requires a certification by the PPFA corporate board.
    That is the national affiliate controlling the 16,000 jobs.
    Second, each affiliate is governed by written bylaws which must
    conform to the PPFA's corporate policies nationally. That looks
    like control to me. And finally, the PPFA's corporate
    headquarters imposes affiliation mandates on local affiliates.
        Anyone who is looking at this control statute, and I have
    it in front of me, clearly talks about the power to control has
    to exist. It does not necessarily mean that it exists but there
    are numerous examples of this happening with Planned Parenthood
    and its affiliation where they exert that control, not just
    that the control exists, where they exert it.
        So, would you not agree that it is inappropriate for the
    SBA to issue these exemptions and forgiveness for loans for the
    Planned Parenthood Federation affiliates?
        Ms. GUZMAN. I can share with you that the Trump
    administration issued a preliminary determination letter. Any
    of those borrowers, there were multiple, beyond Planned
    Parenthood, only Planned Parenthood received that specific
    attention. Anyone within that hold code, I put back into the
    normal processing. And so, of course, our review teams
    thoroughly reviewed all of those loans with those specific hold
    codes, not just Planned Parenthood, all of them in order to----
        Ms. TENNEY. Right. This is my time. You are mincing words.
    I mean, this looks like we are doing an end run around a law to
    fit a political agenda, not actually good stewardship of
    taxpayer dollars. And specifically, prohibiting a law in place
    that prohibits the ability of these types of national entities
    with 16,000 employees to be able to take precedence over small
    business community members who were left without the resources
    because we prioritized a political agenda.
        Chairwoman VELAZQUEZ. The gentlelady's time has expired.
        Ms. TENNEY. Thank you.
        Ms. GUZMAN. I will be happy to follow up with your office.
        Ms. TENNEY. Thank you. I would appreciate that.
        Thank you. I yield back.
        Chairwoman VELAZQUEZ. The gentlelady from Minnesota, Ms.
    Craig, is recognized for 5 minutes.
        Ms. CRAIG. Thank you so much, Madam Chair. And thank you in
    particular to Administrator Guzman for your testimony today and
    for your dedication to America's small businesses.
        I would be remiss if I did not mention how proud I am of
    the work of several Members of this Committee in long overdue
    passage of the Relief for Restaurants and Other Hard-Hit Small
    Businesses Act. I hope to see the Senate act in short order on
    this necessary bill.
        Administrator Guzman, I have been hearing from several of
    my constituents who have been waiting for months, some nearly a
    year, to see their COVID-EIDL applications approved. These are
    everyday small business owners like Donald Wineland of DRW,
    Inc., an Air Force Veteran from Prior Lake, and John Huseth of
    Clay View Dairy from Dennison. In total, my constituents are
    waiting on nearly $2.2 million worth of decisions from the SBA.
    Can you give us a little bit of an update as to when COVID-EIDL
    funds may run out? And how many applications remain under
    review? These are vital dollars to my constituents, their
    businesses, and the communities that they serve.
        Ms. GUZMAN. Thank you so much for that question. We have on
    COVID-EIDL, obviously, it is a program that we are heightened,
    our attention is on as we round out this funding. There still
    is funding remaining that we are using for loan modification
    requests as well as any reconsiderations. It sounds like the
    constituents are in the fold of reconsideration. We have just a
    few thousand that remain in that bucket of reconsideration that
    we are working through urgently every day just to make sure
    that funding gets into the hands of the businesses that are
    eligible for this funding. And we are happy to follow up with
    your office on the specific constituent requests to make sure
    that we are tracking them.
        Ms. CRAIG. Thank you. I really appreciate that. And again,
    anything you and your staff can do to help expedite these
    applications I would be grateful.
        As a Member of the Oversight Subcommittee, I would also
    appreciate if you could provide the Committee with an update on
    SBA's current anti-fraud efforts, especially with respect to
    PPP and EIDL. All of us here have deserting constituents and
    businesses in our district in need of these loans. And of
    course, we all need to know that our taxpayer dollars are not
    going to bad actors.
        Ms. GUZMAN. Yes, I am happy to do so. From day one, we have
    implemented strong controls in the Biden-Harris administration
    to make sure that we could avert fraud. We have been working
    collaboratively with the IG and the GAO to ensure that their
    recommendations are implemented and that we continue to track
    best practices as our response to fraud is iterative.
        With the framework that we have recently solidified,
    strengthened by replacing the Fraud Management Council with the
    Fraud Risk Management Board, we have launched a strong
    leadership approach to fraud for the years ahead. We are
    ensuring that our senior leaders within our program offices
    have accountability as well as can share insights, as well as
    implement best practices across the agency. I really value the
    leadership of my career team that has been working on this
    issue for the past year and ensuring that we have been
    implementing the strongest controls, as well as leveraging
    technology to assess our platform and continually report fraud
    to the IG and collaborate with them to ensure that we can
    support their recovery.
        Ms. CRAIG. Madam Administrator, I just want to end my
    comments by saying thank you. I know that the SBA has been
    asked to step up and perform under enormous pressure during a
    public health crisis. And as much as we sit here and we say
    let's make sure there is no fraud, absolutely, let's make sure
    that our taxpayer dollars are being used appropriately,
    absolutely, I do not want any of us to not think about every
    single day just the extraordinary effort your team over the
    last couple of years has gone to starting in the previous
    administration, into this administration, we have asked a lot
    of you in a short amount of time, and I, for one, as I travel
    my district and I see so many of my small businesses that would
    otherwise be out of business still going strong and expanding
    and creating jobs, I just could not be more proud. So, I want
    to say thank you for the work that your team has done,
    especially here locally. I want to call out Brian McDonald here
    from our region who has just been an extraordinary partner
    during a very difficult time.
        And with that, Madam Chair, I yield back.
        Chairwoman VELAZQUEZ. The gentlelady yields back.
        Now we recognize Ms. Salazar from Florida, Ranking Member
    of the Subcommittee on Contracting and Infrastructure.
        Ms. SALAZAR. Thank you. And wonderful to see you again,
    Isabelle Guzman. And thank you for your visit to my District
    No. 27, City of Miami. It was a highly productive visit I
    should say and I am sure that from now on my small business
    owners are going to be enjoying the best service that SBA can
    provide. So, thank you for that. Thank you for taking the time
    and catching a plan and going to Miami. Very grateful.
        I just want to share a few small glitches that we have. One
    of them, for instance, is $140 billion problem. And what is
    that? It is the COVID testing. Every time someone comes to this
    country, an international tourist, that person needs to get
    tested 24 hours before getting on that plane and that measure
    is killing the tourism industry in Florida. Specifically, in
    Miami. And you know, Miami is the hub of international tourism
    in Florida.
        So, could you please tell the president next time you see
    him in one of those Cabinet meetings that we need to do away
    with that measure? Will you be able to do that?
        Ms. GUZMAN. I will definitely relay your concerns to the
    White House and our team will continue to flag this issue and
    work with you to see what we can do to help better support our
    travel and industry small businesses which we know have been so
    impacted by so many factors.
        Ms. SALAZAR. Because, you know, Florida is open for
    business and my small business community is eager to be selling
    those services. But if you do not have people, then you cannot
    make the payroll at the end of the month. So, you understand
    that. So, since you are there with the president, I would very
    much appreciate it if you can tell him that this is killing us.
        Ms. GUZMAN. I continue to advocate for our small businesses
    and I appreciate that in particular.
        Ms. NEWMAN. But will you do that? Could you, will you able
    to tell the president in one of those cabinet meetings that
    this is happening and it is crushing our small business
    entrepreneurs?
        Ms. GUZMAN. I will definitely flag for the White House the
    issue.
        Ms. NEWMAN. Thank you. All right.
        So, you have a pretty good budget, over $1 billion, and it
    is getting bigger probably next year. But we discovered
    something that is troubling, Madam Guzman, is that the budget
    assigned for salaries, for regional and district offices is
    going down, not up. But in the meantime, your decision has been
    to increase the money in the hands of the Washington
    bureaucrats.
        I believe that someone who is sitting in D.C. cannot serve,
    understand, or care as one of your guys sitting in one of those
    district offices that the budget is getting cut for the
    salaries in those. And even more, I am going to share with you
    what is happening in Miami, or in Tampa, is that we only have
    one district office in South Florida for 2 million small
    businesses. We do not even have a permanent district director.
        So, any reasoning behind cutting money at the regional
    level and giving it to D.C.?
        Ms. GUZMAN. Over time as we have had to increase salaries
    and benefits and decrease some of these positions, you know, I
    understand that all of our offices have been impacted. This
    budget would allow us to retain some of those positions across
    the agency, and we have continued to try to empower the field
    to make sure that we gather those key insights that our team on
    the ground can share with us.
        Ms. NEWMAN. But you empowered them by hiring more people
    and paying them good salaries. But right now, you know, you are
    cutting those budgets.
        Ms. GUZMAN. We are, you know, committed to making sure that
    we can help improve our staffing plan across the field. And
    that includes trying to ensure that their positions are
    maintained and that they are receiving the benefit of our
    expansion.
        Ms. NEWMAN. Finally, I have 1 more minute. I just want to
    ask you a personal question. You are one of the most prominent
    Latinas in this administration so we have the same cultural
    code. Your parents are Mexicans. You understand the border. You
    know what is happening down there. Are you not concerned? That
    is the concern that I have. That what is happening at the
    border is giving a very bad rap to the Hispanics, to the
    Latinos, because we do not have any type of legality down
    there. And my concern is that it could be changing the
    favorable perception that other groups have of us, the largest
    minority in the country. So, when you sit with the president,
    do you not express that from a very personal point of view
    because your parents are of Mexican descent? Mine are Cuban.
    So, we belong to the same minority. Please give me your
    personal thoughts if you want to share them with us.
        Ms. GUZMAN. Well, what I would share is that I continually
    advocate and make clear that the face of entrepreneurship is
    changing and I would like to portray Latinos as the ones who
    are leading on that because they are starting businesses at the
    highest rates and across most states according to McKinsey
    studies. And so that entrepreneurship and that face of
    entrepreneurship is what needs to be important.
        Ms. NEWMAN. And we know that. But we create, probably we
    are the highest creators of jobs. But when it comes to the
    border, that could be harming the rest of our plans and wanting
    to live the American dream. Yes or no, do you not think that
    that is happening right now?
        Chairwoman VELAZQUEZ. The gentlelady's time has expired.
        Ms. GUZMAN. I agree that I would want everyone to know that
    small businesses, the face of the Latino community is
    entrepreneurship.
        Chairwoman VELAZQUEZ. The gentleman from New Jersey, Mr.
    Kim, is recognized for 5 minutes.
        Mr. ANDY KIM. Thank you, Madam Chair. And thank you,
    administrator, for taking the time to be able to come before
    us.
        As we had a conversation before in pervious hearings about
    the path and the trajectory of SBA, coming out from this
    pandemic and talking through what comes next, one thing that I
    wanted to relay is as I have talked to different businesses
    that engaged in the Paycheck Protection Program, and honestly,
    that was their first time engaging with the SBA, engaging with
    government services when it comes to small businesses, I have
    asked them, are you going to be able to continue with SBIR? Are
    there other types of support that you need? Have you been able
    to learn about some of the other offerings? And many of them
    said that they still do not know too much about what SBA has to
    offer about different avenues that they might be able to
    benefit going forward beyond just the Paycheck Protection
    Program.
        So, I guess I wanted to ask you as we are coming out from
    this pandemic, SBA has been in touch and connected and helped
    so many more businesses than ever before, has there been a
    formal process in following up with those businesses that
    engage in the Paycheck Protection program or EIDL and others in
    terms of informing and educating and working with them, if
    there are other needs that they might have that might be
    serviced by other aspects of what SBA does?
        Ms. GUZMAN. Yes. And on the eve basically of National Small
    Business week which starts next week, I want to say that the
    SBA has tried to leverage this moment to better serve small
    businesses, that awareness of SBA and its offerings is higher
    than any other time in history. And I think that we do need to
    leverage this moment. So, across our resource partners, our
    Community Navigators, as well, we have charged them with trying
    to make sure that the small businesses are aware of the capital
    programs, the technical assistance, and the market access
    resources that we have at the SBA to support businesses. And I
    would welcome the opportunity to partner with you on that to
    ensure that more businesses in your district are aware of SBA
    resources and it is critical that they build awareness. Of
    course, we do not have a CMO or huge funding for that type of
    outreach, but we can leverage our district office, leverage our
    partners, leverage our lenders to better connect to those small
    businesses. And we have started to systematically focus on
    these new businesses that we have served through PPP and COVID-
    EIDL.
        Mr. ANDY KIM. So I am glad that that kind of outreach is
    happening and that, you know, if there is additional funds or
    resources needed for that, please let me know. I would like to
    work with you on that.
        But just more specific, I did want to just follow up. So,
    there has been formal follow up, like has there been an email
    or what to businesses that had the Paycheck Protection program
    about like laying out some of the other aspects? I am just
    trying to get a sense if there has been something of that
    nature so I can flag it for these businesses in case they
    missed it?
        Ms. GUZMAN. Within the EIDL program, which is our direct
    program, of course, we have had extensive outreach to our
    businesses. Our new portfolio on PPP, we work with our lenders
    on a regular basis to make sure that they are providing all of
    SBA insights. They are familiar with our programs but PPP was
    administered through the lending network. And so, our direct
    contact is not there. So, as we do forgiveness and support
    those businesses, of course, we have those contacts and will
    reach out.
        Mr. ANDY KIM. Okay. That is helpful context in terms of
    understanding. And like I said, I would like to try to see if
    there are some creative solutions for this, especially for
    those paycheck protection plan ones dealing with lenders and
    maybe getting towards the businesses.
        But that raises the other aspect of this, is that, you
    know, I saw recently a really extraordinary statistic about how
    prior to the pandemic there were about 1,900 different lenders
    participating in different SBA programs but that during the
    pandemic, over 5,000 lenders were participating in the Paycheck
    Protection Program.
        I guess I wanted to as a similar type of question. When it
    comes to the lender side, has there been ability to grow the
    number of lenders participating in more forma SBA programs?
    Drawing from that pool that was working on the Paycheck
    Protection program. I am curious if this has been sort of a
    forced multiplier and whether or not there has been a sizeable
    increase already in terms of the lenders that are at the
    disposal of the SBA.
        Ms. GUZMAN. Our goal across our network is to increase the
    number of lenders. We have seen a decline in small dollar
    lending. We want to expand the number of lenders in our network
    to make sure that we can get more capital to businesses. And so
    formally, of course, we are expanding to the Community
    Advantage lenders, so more CDFIs who participated in PPP can
    participate in SBA's programs. Those new to SBA lenders, we
    want to try to bring in and provide technical assistance. But
    more importantly, we need to simplify our capital access
    programs so that it is easy for a lender to come in and access
    SBA guarantees. And so that is what we are aiming to do is to
    replicated the successes of PPP and the simplicity.
        Mr. STAUBER. Time has expired.
        Chairwoman VELAZQUEZ. Now we recognize the gentleman from
    Minnesota, Mr. Stauber, for 5 minutes.
        Mr. STAUBER. Thank you, Madam Chair. Thank you to Ranking
    Member Luetkemeyer for holding this hearing. And I know this
    hearing is about the budget. But I would like to use my time to
    talk about WOTUS, the Waters of the United States.
        As everyone well knows, small business owners, farmers and
    ranchers, were very negatively impacted by the Obama Waters of
    the United States rule. It expanded federal jurisdiction far
    beyond what was authorized by Congress and resolved it in the
    burdensome requirements and widespread certain for Americans
    across this nation and small businesses.
        The Trump administration rightly chose to heed the concerns
    of these small businesses and entities and created the
    Navigable Waters Protection Rule.
        Unfortunately, the EPA is back to interpreting the waters
    rule and actually announce their intention to revise the waters
    rule and make it even worse.
        Administrator Guzman, given that you are supposed to be the
    leading champion for small business, can you give me specific
    examples of what you have done to speak with small businesses
    on this topic. And furthermore, can you give me an example, of
    an incidence where you have heard a comment from a small
    business owner and actually conveyed that concern to another
    agency like the EPA in this case as they look to review their
    role?
        Ms. GUZMAN. Thank you. We do have our ombudsman office that
    works regularly with small businesses through regulatory
    fairness boards across the country. And they have received
    concerns about this and continue to work with small businesses.
    So not directly. I have not spoken to any of those businesses
    directly.
        Mr. STAUBER. Madam Administrator, so you cannot give me an
    example?
        Ms. GUZMAN. I have not spoken directly to a business on
    this issue but know that my ombudsman office has connected with
    small businesses. In addition, as you know, the Office of
    Advocacy tracks our regulations.
        Mr. STAUBER. Have you reviewed the small business Office of
    Advocacy's numerous concerns with the EPA's handing of the
    Waters Rule?
        Ms. GUZMAN. I am familiar with Office of Advocacy's work
    and have seen some of their statements and have spoken to our
    acting advocate, Major Clark.
        Mr. STAUBER. And are you aware that they have yet to
    convene an official small business panel in accordance with the
    Regulatory Flexibility Act?
        Ms. GUZMAN. I am not aware that he has not yet done that
    but we connect regularly with the Office of Advocacy. I have a
    regular meeting and so I will make sure that I can relay your
    concerns.
        Mr. STAUBER. And then you will have them hold an official
    business panel?
        Ms. GUZMAN. I will talk to them about that. Yes. And follow
    up with your team as well to find out that timing.
        Mr. STAUBER. I appreciate that.
        And then can you explain for the Committee, as Mr. Clark
    from the Office of Advocacy did for our Subcommittee a few
    weeks ago, why going through an official SBREFA panel is so
    important to understanding the significant economic impacts the
    Waters Rule will have on small businesses and small entities?
        Ms. GUZMAN. I can follow up with you on that and provide
    more specifics but I would not be able to comment further on
    it.
        Mr. STAUBER. Do you believe that a SBREFA panel is
    important to recognize the small business concerns?
        Ms. GUZMAN. I am not familiar. I need to follow up with you
    on that. And I definitely will.
        Mr. STAUBER. Okay. Will you commit to working with the EPA
    to ensure the SBREFA panel is held?
        Ms. GUZMAN. On this issue specifically, now that you have
    flagged it for me and I know it is an issue that Advocacy
    continues to track and it is a significant one for small
    businesses, I will definitely follow up as well.
        Mr. STAUBER. Thank you.
        And then, Madam Chair, I would like to enter into the
    record the comments of the Office of Advocacy submitted to the
    EPA regarding the proposed rule revisions to Waters.
        Chairwoman VELAZQUEZ. Without objection, so ordered.
        Mr. STAUBER. Thank you very much.
        I have a little over a minute yet. Congressman Donalds
    asked you a question and he ran out of time so I will just ask
    it again. What has the Biden administration taken to help the
    middle class and small businesses reference the inflation?
        Ms. GUZMAN. The president has taken action on energy costs,
    as well as trying to focus on pocketbook issues within this
    budget.
        Mr. STAUBER. Tell me what energy costs.
        Ms. GUZMAN. He has made available the million dollars a day
    to try to control some of the gas costs which we know are
    affecting our small businesses.
        Mr. STAUBER. Right.
        Ms. GUZMAN. But there is also pocketbook issues, and the
    budget directly addresses some of those such as child care.
        Mr. STAUBER. Is strategic petroleum reserve what you are
    referring to?
        Ms. GUZMAN. Correct.
        Mr. STAUBER. One hundred eighty million barrels?
        Ms. GUZMAN. A million barrels a day, I believe, through
    June.
        Mr. STAUBER. One hundred eighty days?
        Ms. GUZMAN. Correct.
        The strategic petroleum reserve really should be held for
    national emergencies, not failed policies. I think you
    recognize that.
        So my concern right now is the administration is not acting
    quick enough with the inflationary costs going up on small
    businesses. And I think that we need to, we are really looking
    for your leadership when you are in the meetings with President
    Biden and his cabinet to really support small businesses. So I
    look forward to the hearing.
        Mr. STAUBER. And my time is up, Madam Chair. Thank you.
        Ms. GUZMAN. Thank you.
        Chairwoman VELAZQUEZ. I want to thank Administrator Guzman
    for appearing before the Committee again today, and for all the
    work you do every day for our nation's small business
    community.
        Small firms are the backbone of the economy and the
    communities they operate in. By empowering the SBA, we empower
    entrepreneurs to thrive and grow.
        Without objection, Members have 5 legislative days to
    submit statements and supporting materials for the record.
        If there is no further business to come before the
    Committee, without objection, we are adjourned.
        [Whereupon, at 12:16 p.m., the committee was adjourned.]

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