[Senate Hearing 117-153]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 117-153

                 NOMINATION OF ISABELLA CASILLAS GUZMAN
                       TO BE ADMINISTRATOR OF THE
                   U.S. SMALL BUSINESS ADMINISTRATION

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

                                HEARING

                               BEFORE THE

                      COMMITTEE ON SMALL BUSINESS
                          AND ENTREPRENEURSHIP

                                 OF THE

                          UNITED STATES SENATE

                    ONE HUNDRED SEVENTEENTH CONGRESS

                             FIRST SESSION

                               __________

                            FEBRUARY 3, 2021

                               __________

    Printed for the Committee on Small Business and Entrepreneurship

[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]


        Available via the World Wide Web: http://www.govinfo.gov
            COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP
            
                               __________

                    U.S. GOVERNMENT PUBLISHING OFFICE                    
46-625 PDF                 WASHINGTON : 2022                     
          
-----------------------------------------------------------------------------------   
 
                    ONE HUNDRED SEVENTEENTH CONGRESS

                              ----------                              
                 BENJAMIN L. CARDIN, Maryland, Chairman
                  RAND PAUL, Kentucky, Ranking Member
MARIA CANTWELL, Washington           MARCO RUBIO, Florida
JEANNE SHAHEEN, New Hampshire        JAMES E. RISCH, Idaho
EDWARD J. MARKEY, Massachusetts      TIM SCOTT, South Carolina
CORY A. BOOKER, New Jersey           JONI ERNST, Iowa
CHRISTOPHER A. COONS, Delaware       JAMES M. INHOFE, Oklahoma
MAZIE K. HIRONO, Hawaii              TODD YOUNG, Indiana
TAMMY DUCKWORTH, Illinois            JOHN KENNEDY, Louisiana
JACKY ROSEN, Nevada                  JOSH HAWLEY, Missouri
JOHN HICKENLOOPER, Colorado          ROGER MARSHALL, Kansas
                 Sean Moore, Democratic Staff Director
              William Henderson, Republican Staff Director
                            
                            C O N T E N T S

                              ----------                              

                           Opening Statements

                                                                   Page

Cardin, Hon. Benjamin L., Chairman, a U.S. Senator from Maryland.     1
Padilla, Hon. Alex, a U.S. Senator from California...............     1
Paul, Hon. Rand, Ranking Member, a U.S. Senator from Kentucky....     5

                                Witness

Guzman, Ms. Isabella Casillas, of California, to be 
  Administrator, U.S. Small Business Administration..............     8

          Alphabetical Listing and Appendix Material Submitted

America's Small Business Development Centers
    Letter dated January 20, 2021................................    96
Associated General Contractors of America
    Letter dated January 19, 2021................................    97
Cardin, Hon. Benjamin L.
    Opening statement............................................     1
Coalition of Small Business Organizations
    Letter dated January 15, 2021................................    98
Feinstein, Hon. Dianne
    Prepared statement...........................................   101
Guzman, Ms. Isabella Casillas
    Testimony....................................................     8
    Prepared statement...........................................    10
    Responses to questions submitted by Ranking Member Paul and 
      Senators Cantwell, Hirono, Duckworth, Rosen, Rubio, Ernst, 
      Inhofe, Young, and Kennedy.................................    42
Hispanic Association of Colleges and Universities
    Letter dated February 1, 2021................................   103
Independent Community Bankers of America
    Letter dated February 3, 2021................................   104
National Association of Development Companies
    Letter dated February 1, 2021................................   106
National Small Business Association
    Letter dated February 2, 2021................................   107
Padilla, Hon. Alex
    Opening statement............................................     1
Paul, Hon. Rand
    Opening statement............................................     5
Small Business Majority
    Letter dated January 21, 2021................................   108
U.S. Chamber of Commerce
    Letter dated February 3, 2021................................    36
U.S. Hispanic Chamber of Commerce
    Letter dated February 1, 2021................................   109

 
                             NOMINATION OF
                        ISABELLA CASILLAS GUZMAN
                       TO BE ADMINISTRATOR OF THE
                   U.S. SMALL BUSINESS ADMINISTRATION

                              ----------                              


                      WEDNESDAY, FEBRUARY 3, 2021

                      United States Senate,
                        Committee on Small Business
                                      and Entrepreneurship,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 10:30 a.m. in 
Room 301, Russell Senate Office Building, Hon. Ben Cardin, 
Acting Chairman of the Committee, presiding.
    Present: Senators Cardin, Cantwell, Shaheen, Markey, 
Booker, Coons, Hirono, Duckworth, Rosen, Paul, Rubio, Scott, 
Ernst, Inhofe, Young, Kennedy, and Hawley.

OPENING STATEMENT OF HON. BENJAMIN L. CARDIN, ACTING CHAIRMAN, 
                  A U.S. SENATOR FROM MARYLAND

    Chairman Cardin. The Small Business Entrepreneurship 
Committee will come to order. The purpose for today's hearing 
is to hear from our nominee for the Administrator of the Small 
Business Administration, Isabella Guzman, and I would like to 
welcome her here this morning. I know she came in from 
California and we appreciate very much her being here today.
    I want to start by thanking Chairman Rubio for his 
generosity in scheduling this hearing and allowing me to chair 
the hearing. I also want to thank Senator Paul for his 
cooperation in allowing this hearing to take place and for me 
to have the opportunity to chair this hearing.
    Ms. Guzman, it is good to see you again. Welcome to the 
Committee, and I thank you for your willingness to serve.
    I am going to first recognize our newest Senator from 
California, Senator Padilla, who is here today to introduce our 
nominee. Senator Padilla.

 STATEMENT OF HON. ALEX PADILLA, A U.S. SENATOR FROM CALIFORNIA

    Senator Padilla. Thank you, Senator Cardin, Senator Paul, 
other members of the Committee, for the opportunity to 
introduce Isabel Guzman.
    At a time when small businesses across the country are 
facing unprecedented challenges and economic hardship, we need 
a strong leader who will bring experience and deep 
understanding of the issues to the Small Business 
Administration, and I am confident that Isabel Guzman is that 
leader. As the daughter of a small business owner, Isabel grew 
up experiencing first-hand the entrepreneurial spirit and 
resilience of America's small businesses. She knows the dreams 
that small businesses represent and the opportunities they 
create for families and communities.
    After earning her undergraduate degree from the University 
of Pennsylvania's Wharton School of Business, Isabel has 
dedicated her career to helping small businesses grow and 
succeed. Isabel, herself, was a small business entrepreneur. 
Isabel already has a deep understanding of the Small Business 
Administration, having served both as a senior advisor and as 
Deputy Chief of Staff during the Obama administration. She 
oversaw the agency's adoption of new technologies and programs 
that made the SBA more accessible to entrepreneurs of all 
backgrounds.
    She currently serves as the Director of the Office of the 
Small Business Advocate for the State of California, the most 
populous state in the Nation, which makes up the largest 
economy of any state in the Nation, and home to more than 4 
million small businesses.
    Among the many uncertainties of the COVID-19 pandemic, 
Isabel has worked with small businesses to weather the pandemic 
and has helped implement the largest relief effort of any state 
in the Nation. In addition to overseeing a network of small 
business centers, Isabel's office has launched a Shop Safe, 
Shop Local initiative aimed at helping small businesses reopen 
safely, as well as the Get Digital California initiative, to 
help small businesses adopt new technologies to safely and 
successfully operate during the pandemic.
    Having successfully navigated the high volume and 
sophisticated business environment in California, I am 
confident that Isabel understands the urgent and complex needs 
of this moment. Her expertise is critical to our Nation's 
economic recovery. She is ready to hit the ground running and 
will assure the SBA helps small businesses across America not 
only survive the pandemic but build back better than before.
    Respectfully, I urge the Committee to support her 
nomination. Thank you, Senator Cardin.
    Chairman Cardin. Senator Padilla, thank you very much for 
your introduction and we very much appreciate that and we 
certainly welcome you to the United States Senate. It is nice 
to be your colleague. You are free to go. We are going to 
continue the hearing. I know you have a busy schedule, so if 
you need to leave please feel free to excuse yourself.
    Senator Padilla. Thank you.
    Chairman Cardin. Before I get started I do want to welcome 
Senator John Hickenlooper to our Committee. He is virtually 
with us today and he will be our newest member of the 
Committee, and we just welcome him to the Small Business 
Committee.
    Our Committee has a great tradition of bipartisan 
cooperation, which we are continuing today in the manner in 
which this hearing is taking place, so we very much welcome the 
participation of all members.
    I want to start again by thanking Ms. Guzman for your 
willingness to serve our Nation during this extremely 
challenging time. Serving in public life is not easy, and 
certainly is not easy particularly in this environment. So we 
thank you and your family for your willingness to serve our 
Nation as the Administrator of the Small Business 
Administration.
    The SBA has played an oversized role in COVID-19. It was 
tasked with important aspects of the COVID relief package. SBA 
was called upon to provide an enormous amount of help in 
setting up new programs. The staff worked extraordinarily hard, 
nights and weekends, in order to get these programs up and 
running. Eight hundred twenty billion dollars was run through 
the SBA in COVID relief, establishing a new program, the 
Paycheck Protection Program, and an EIDL advance program, both 
new, and, of course, the eligibility of COVID pandemic for the 
EIDL loan program.
    There was a close working relationship between the SBA and 
this Committee. I particularly want to thank Senator Rubio, 
Senator Shaheen, and other members of this Committee as we 
worked very closely with the SBA in not only setting up this 
program but how it was initially administered. And we hope that 
that close cooperation will continue under the Biden 
administration.
    There were certainly many challenges as a result of COVID-
19. We all recognize, on this Committee, that small businesses 
are the growth engine of America as far as job creation and 
innovation, but the resiliency for small businesses is not as 
strong as larger companies. So when there is a recession or 
there is a challenge in our economy, we need to pay particular 
attention to small businesses, and that is exactly what we did 
in establishing these new programs. The first effort was to get 
money out quickly to protect payroll, and we were successful in 
getting that done. We now need to target the relief to those 
small businesses that have the greatest need.
    We learned, during the initial rollout of the program, that 
we have a challenge in reaching the underserved communities, 
the underbanked communities, minority small businesses, and we 
welcome your thoughts as to how you, if confirmed, would deal 
with making sure we get the relief to the small businesses that 
need it the most. It is critically important in the SBA 
Administration to have a confirmed Administrator as quickly as 
possible to provide steady leadership and permanent leadership 
during these very challenging times.
    Let me, if I might, I want to talk a little bit about your 
background and get your commitments as to how you will proceed 
if confirmed as our Administrator. I am looking forward to 
hearing from you about how your background and record of 
working with and supporting small businesses has prepared you 
to lead the SBA.
    I am especially looking forward to hearing about your most 
recent position as California's Director of the Office of Small 
Business Advocate, as well as your prior service helping to 
lead SBA as a deputy chief of staff and senior advisor during 
the Obama administration. I also want to hear more about how 
working for your family business shaped the way you go about 
supporting small businesses, because that is an experience that 
I and countless Americans have shared.
    My grandfather emigrated to America and started a small 
store. He was able to find a better way to do business, and 
over the years that small store grew to become a very large 
company. In the process, he was able to contribute to his 
community and the economy by creating good-paying jobs. That is 
the American story, and for far too many families right now the 
pandemic is threatening that American dream.
    When I was negotiating the small business provisions of the 
CARES Act and subsequent relief bills family businesses as well 
as the millions of families that rely on small businesses for 
their paycheck were front of mind. I am proud of what we have 
been able to do so far, but clearly more needs to be done.
    In my home State of Maryland, which boasts the highest 
concentration of minority-owned, primarily Black-owned and 
women-owned businesses in the country, the programs created and 
funded by the CARES Act have provided billions of dollars of 
aid to hundreds of thousands of small businesses. To date, 
nearly 100,000 Maryland businesses have received approximately 
$328 million in EIDL advance grants, and the most recent data 
from the SBA shows that approximately 65,000 Maryland small 
businesses have received $3.4 billion in EIDL loans. And my 
colleagues here, from the states they represent, we would see 
similarly large numbers of the small businesses that have 
benefited from the tools we have available.
    I have had conversations with many of those small business 
owners and they have told me that the small business aid that 
they received empowered them not only to weather the storm of 
the pandemic but also to retool their businesses for the new 
normal that will follow. Just two months ago, the members of 
this Committee heard testimony from one of my constituents, 
Mrs. Iman McFarland, who said, ``PPP and EIDL did more than 
just keep our businesses afloat. It created a rising tide to 
support lifting up five employees I was able to bring back, as 
well as the broader community we have been able to serve.''
    While PPP and EIDL worked for Mrs. McFarland and many other 
small business owners, we also know prior to the passage of the 
CARES Act that small businesses in underserved and underbanked 
communities struggled to access PPP due to their minimal to 
non-existent relationship with traditional financial 
institutions. It was with this inequality in mind that Senator 
Shaheen and I drafted the language in the CARES Act instructing 
the SBA and the Treasury Department to issue guidance to 
financial institutions participating in the Paycheck Protection 
Program to prioritize loans for underserved small businesses.
    This issue struck such a chord that a group of advocates 
from the U.S. Black Chambers to the Hispanic Chamber of 
Commerce and Native Women-Led formed the Page 30 Coalition to 
try and get the guidance implemented. Unfortunately, the Trump 
administration did not issue that guidance, which led to the 
SBA IG's finding that the implementation of the PPP did not 
fully align with the congressional intent of the CARES Act.
    So as we negotiate a COVID relief package that passed in 
December, my colleagues and I once again pushed for provisions 
to ensure that small businesses in underserved communities were 
not left behind. I am proud that the initial data that we have 
looked at, in regards to the PPP loans being issued in January, 
we see that they are going to smaller small businesses, and the 
size of the loans are smaller. That is a good indication that 
we are getting a better targeting. But we want to know how you 
will use the position, if confirmed, to reach this target group 
that has traditionally been left out of SBA priority programs 
because of their lack of connection to the banking community.
    No one knows exactly when the pandemic will end so I am 
grateful that the Biden-Harris administration has laid out an 
aggressive plan, the American Rescue Plan, to defeat COVID-19 
by funding vaccination and containing the virus while 
delivering aid to the hardest hit communities and small 
businesses. Because to truly help small businesses recover we 
must defeat this virus. If American consumers do not want to go 
out of their homes, we are not going to help small businesses. 
If schools do not reopen, parents are not going to be able to 
fully participate in our economy and help small businesses.
    Ms. Guzman, as we in Congress enact an American Rescue Plan 
we will be relying on data and insight from the SBA. Here we 
have had bipartisan concern by the way the SBA has made that 
information available to Congress. And, by the way, also the 
General Accounting Office has been unable to get that 
information. We need that demographic information on how the 
program is working so we can adjust it to reach the targeted 
communities that have been traditionally underserved. So we are 
going to be looking for your commitment to make sure that you 
get that information and share that information with those of 
us in Congress.
    Thank you once again for your commitment to serving the 
Nation during this difficult moment in our history, and I look 
forward to hearing your testimony this morning.
    At this time I would yield--I am the Acting Chairman today 
but the Acting Ranking Member, Senator Paul.

   OPENING STATEMENT OF HON. RAND PAUL, A U.S. SENATOR FROM 
                            KENTUCKY

    Senator Paul. Thank you, Mr. Acting Chairman. Welcome, Ms. 
Guzman. I enjoyed our conversation yesterday, and I do wish you 
the best of luck. I think the job will be bigger than the job 
has ever been in the past.
    Philosophically, I have been opposed to borrowing such 
extraordinary amounts of money, and I think it has been a false 
choice in the sense that we say either the economy collapses in 
ruin or we bail it out with money that we do not have. There 
has always been another choice, and that is examining whether 
or not the economic lockdowns have been beneficial.
    There is no evidence, really, that any of the COVID 
lockdowns have affected the trajectory of the virus. Even 
President Biden, in the last week, has admitted as much. The 
virus is doing what it wants to do, regardless of any of our 
interventions. In fact, there was a Stanford study that looked 
at ten different countries and with a variety of economic 
mandates, from very severe to voluntary. I really found no 
difference in the trajectory of the virus.
    In fact, if you look at the trajectory of the daily 
incidence of COVID-positive patients it is growing 
exponentially, despite any of the mandates that we have put in 
place. If you look at state-to-state, between the states that 
have lax parameters to the states that won't let you go 
anywhere, you have to wear a mask outside, or you cannot dine 
inside or outside, there is really not much difference. In 
fact, the states with the severest mandates really often have 
some of the highest incidence. So Florida versus California, 
the incidence in California, on a per-person or a pro rata 
ratio, is actually much higher in California than Florida, 
despite California having the harshest lockdown.
    The reason I bring this up is that there has been a choice, 
and still is a choice, on how we help business in our country 
and small businesses. The small businesses have been devastated 
by government policy, primarily Governors' policy, but they 
have been devastated by these rules. So the choice is not just 
shake the free money tree, print up money, and give everybody 
money, or nothing. The other choice would have been, could have 
been, and still is let's free these businesses up. Let's get 
rid of the mandates that are crippling our business.
    Even with the mandates causing such harm to restaurants and 
hotel industry and travel industry, overall unemployment, 
actually, in Kentucky, is actually lower than it was in seven 
of the eight years of President Obama's two administrations. So 
I think we do need to put things in perspective, and those who 
say this is an existential thing and we have just got to borrow 
whatever, and the debt be damned, and we just have to do 
whatever and not worry about the consequences of the future, I 
think we do.
    Lord Maynard Keynes was sort of one of the early promoters, 
and most prominent promoters, of the free money stimulus, 
government stimulus, where we borrow money and pass it out. He 
was asked, ``Well, it, you know, it seems to work in the short 
run but what about the long term?'' And his response was, 
``Well, in the long term we will all be dead anyway.'' And I 
think that is sort of a callous way to look at the future of 
our country and not worry about what we are doing to the 
currency and what we are doing to the underpinnings of our 
economy by borrowing so much money.
    So I think we should keep that in perspective in the debate 
that we continue to have in Washington over what is best to be 
done. The programs that have been put out before us, PPP and 
the others that are, many of them gradually being shifted from 
being loans to grants, I think actually gives more incentive 
for more corruption. And we are already finding people who have 
bought expensive luxury cars, Lamborghinis, things like that, 
with their PPP money. Some of them are being caught. The more 
of these loans that are turned into grants and have less 
oversight and the people have less verification of what they 
have done with the money, the more corruption we will get.
    So I would argue that within the parameters of the law that 
you will have to obey the law, but let's try not to expand and 
use any authority as the Administrator to try to convert things 
from actually having oversight, such as loans, to things that 
have no oversight. Now Congress has changed some of these 
parameters and we will live with that, but I really do fear 
that a lot of corruption is going to happen, and more 
corruption will happen as more of this is turned into grants.
    So as we move forward, Mr. Chairman, I think it is 
important that we continue to have a debate over what works and 
what does not work. And the virus has been devastating in many 
ways to so many people. You know, I have friends who have died 
from the virus. I have friends who are currently sick with it. 
But simply saying, oh, we must do things, where there is no 
evidence that these things are working, I think it is important 
that we re-evaluate them, and we re-evaluate whether or not 
giving monies to states actually encourages them to open the 
economy or discourages them from opening the economy.
    I, for one, think that the only thing that will change the 
trajectory of this is the vaccine, and I look forward to the 
time when we get the vaccine out to more people. The states 
that are utilizing private entities to help them get it out are 
doing better. In Florida they are using Publix pharmacies. I 
would suggest that we need to very rapidly gear this thing up.
    In my home state, if you call the Public Health Department 
and you want a vaccine you will get a 20-minute message. You 
will be unlikely to find a person, and the first thing they 
tell you on the message is, ``Oh, if you know somebody not 
wearing their mask, let us know their name so we can have the 
police go talk to them.'' Nowhere on the machine or on the 
Public Health website is any place where you can sign up for a 
vaccine. You know, I think what we should be doing is having 
large sign-up sheets with your name, your age, and trying to 
get people on a list where we can call them in to get the 
vaccine instead of being so intent on trying to punish or 
harass people that you do not think are adhering to whatever 
mandates that really do not seem to be appearing to change the 
trajectory of the virus.
    So I think as we continue to have this debate I hope you 
will work very hard. I am hopeful that you will try to oversee 
the administration of these loans without letting them get out 
of hand. And I wish you the best of luck. Thank you.
    Chairman Cardin. Thank you, Senator Paul. I appreciate your 
opening statement.
    Ms. Guzman, if you would rise. It is the tradition of our 
Committee to swear in the nominees for the Administrator of the 
SBA. If you would raise your right hand and repeat after me.
    Do you solemnly swear to tell the truth, the whole truth, 
and nothing but the truth, so help you God?
    Ms. Guzman. I do.
    Chairman Cardin. You may be seated.
    I have two questions that are asked again to all nominees 
to be Administrator of the SBA. Should you become confirmed as 
Administrator, are you willing to appear and testify before any 
duly constituted committee of Congress when requested to do so?
    Ms. Guzman. Yes, I will.
    Chairman Cardin. Are you willing to provide such committee 
as is requested by any such committee the information that they 
request?
    Ms. Guzman. Yes, I will.
    Chairman Cardin. Thank you. You may now give us your 
opening statement. Thank you.

  STATEMENT OF ISABELLA CASILLAS GUZMAN, OF CALIFORNIA, TO BE 
       ADMINISTRATOR, U.S. SMALL BUSINESS ADMINISTRATION

    Ms. Guzman. Thank you so much. Good morning, incoming 
Chairman Cardin, as well as incoming Ranking Member Paul, 
members of the Committee. It is an honor to appear before you 
today, and thanks to Senator Padilla for introducing me to the 
Committee. I am very proud that he is representing California.
    As a product of and lifelong advocate for America's small 
businesses, I am honored and profoundly grateful that President 
Biden has nominated me to serve as the next Administrator of 
the U.S. Small Business Administration. I am deeply committed 
to helping support our Nation's small businesses and 
entrepreneurs and would be proud to lead the SBA and help small 
businesses start, operate, grow, and be resilient.
    Let me tell you about my background. I grew up in a small 
business family in California, visiting and working with my dad 
at his veterinary hospital. What I remember more than anything, 
I loved the connection he had with the clients he served every 
day. At a young age, I experienced first-hand how important 
small business owners are to the communities they serve and why 
we rightly call them the fabric of our neighborhoods. They 
enliven our Main Streets, create the products and services that 
enrich our lives, and innovate to solve the world's problems.
    If confirmed, I pledge to serve as their voice and 
represent the enormous diversity across our small businesses, 
from independent contractors and sole proprietors to startups 
and innovative technology and science-based firms to Main 
Street and manufacturing, of all sizes and all stages of 
development, and all entrepreneurs from diverse backgrounds and 
geographies.
    At over 30 million strong, small businesses power our 
economy. They represent vastly all of our Nation's total 
businesses and employ nearly half of the private workforce.
    But they are facing an unprecedented crisis and need our 
support to survive and thrive again. As this Committee knows so 
well, small businesses across the country have been devastated 
by the pandemic and economic downturn. I feel a sense of 
urgency that we need to work harder than ever, think more 
creatively than ever, and build more collaboration than ever to 
meet this moment.
    Throughout my career, I have started businesses and helped 
entrepreneurs launch and grow their firms, and I appreciate and 
understand the challenges they face every day. We all know a 
small business owner who works so hard, wearing multiple hats 
to tenaciously pursue their dreams, the American dream. As 
California's current Small Business Advocate I have also seen 
the impossible situations and intense frustrations small 
business owners are experiencing as they attempt to survive the 
COVID-19 pandemic. Many have experienced revenue drops, 
increasing debt, and shrinking cash flows as a result of the 
health and safety guidance and lockdown restrictions and 
changing marketplaces.
    Small businesses need a team behind them. SBA must be a 
part of that team, helping them access capital and connecting 
them to marketplaces to build revenues and to networks that can 
help them navigate resources to improve outcomes so that they 
can do what they do best: create our Nation's jobs and help 
spur our economy.
    I am confident that I can hit the ground running and 
deliver the recovery policies of the Administration and this 
Committee. President Biden is committed to addressing 
inequities in our economy and providing relief to those who are 
struggling during the pandemic. He has focused on building our 
economy back better and strengthening our small businesses. And 
America's small businesses are counting on effective and 
equitable implementation of COVID-19 relief and recovery 
programs passed by Congress and implemented by the SBA, because 
their survival is at risk.
    If confirmed, I would leverage my prior experience serving 
in leadership at the SBA and commit to working diligently to be 
a good steward of its programs. I am committed to ensuring the 
agency has the right systems, technology, and operating 
processes in place to advance its mission and reach all our 
small businesses. Most importantly, I will work to ensure funds 
get into the hands of the small businesses who have been hurt 
the most by the pandemic and economic crisis through no fault 
of their own. I also pledge to be transparent, responsive, and 
accessible to this Committee about SBA's operations and needs.
    President Biden has committed to advancing racial justice 
and equity for all Americans. If confirmed, I am committed to 
helping the SBA advance opportunity for all, including our 
underserved entrepreneurs who have faced historic barriers to 
start and grow their businesses.
    I am deeply honored by the President's nomination and look 
forward to getting to work immediately with the mission-driven 
civil servants at the SBA to help all of America's small 
businesses build better futures for their families and their 
communities. Their success is our country's success.
    Thank you, Mr. Incoming Chairman. I look forward to all of 
the Committee members' questions.
    [The prepared statement of Ms. Guzman follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Chairman Cardin. Ms. Guzman, thank you very much for that 
opening statement, and I particularly appreciate your comments 
about working with our Committee and transparency issues that, 
in general, worked well with the Trump administration. We had a 
very fine relationship with sharing of information and 
implementing the new laws that were passed in the CARES Act and 
reinforced by subsequent legislation.
    There was one notable exception, and I mentioned it in my 
opening statement. We had a very difficult time getting the 
granular information on the loans in order to do our oversight 
in Congress as well as to adjust the program to make sure that 
the funds were getting to the small businesses in an equitable 
manner, particularly those in underserved communities. We 
introduced legislation, made requests to require demographic 
information be supplied by the borrowers so we could determine 
where the loans were going from the point of view of 
communities, whether the underserved communities were really 
being treated fairly. And we were basically unable to get that 
information.
    Just very recently, we got some information. On January 
31st, the SBA released data on the performance of the 2021 PPP 
program--this is one that just was passed in December--and 
unfortunately less than 22 percent of the borrowers completed 
the demographic questionnaire.
    So my question to you is, what will you do to improve the 
transparency that you mentioned in your statement so that we 
can get the data we need to make sure that the programs that we 
have created are reaching the intended small businesses in an 
equitable manner, particularly those who have traditionally 
been underserved? How are we going to make sure we get that 
demographic information in order to evaluate and oversight the 
program as well as adjust it moving forward?
    Ms. Guzman. Thank you, Senator, for that question. I do 
believe wholeheartedly that managing with data and information 
is critical. I agree with you that decisions rest on 
performance, and so it would be my priority to ensure that 
communication and collaboration is open on that information, 
you know, further that we are leveraging our technology fully 
and our systems and processes to ensure that we can provide 
insights as we move along for any adjustments as we proceed.
    So it is definitely a priority, especially in ensuring 
strong oversight and control.
    Chairman Cardin. I would just urge you to work with the 
staffs of our Committee on this issue, because it has been a 
real challenge for us, and we have been working in the blind in 
crafting legislation. We had a hard time getting information 
even on the drawdown on the program, when it first started up, 
to make sure there was adequate funding provided.
    So I take your commitment to work with us in a way that we 
can share information so that, as policymakers, we can support 
your mission with timely information to make adjustments, if 
needed.
    Ms. Guzman. Yes, I would completely. Thank you. And I would 
make sure that my staff is available as well to collaborate 
with the Committee and staff and individual members as concerns 
are raised.
    Chairman Cardin. Thank you. I want to deal with eligibility 
for SBA programs for those who have criminal records, and I 
start here because as the Paycheck Protection Program was 
implemented, SBA adopted an entirely new exclusion for partial 
owners convicted of any felony within the last five years.
    Now we raised objections, bipartisan objections. I worked 
with Senator Portman and Senator Lankford and others to try to 
get an adjustment on that. We thought it should be eliminated 
in its entirety. The Treasury and SBA made an adjustment to 
reduce that to one year, but they still did not deal with those 
accused of crime, before their convictions, and still had 
prohibitions that we thought were against what was the intent 
of Congress.
    Tell me how you feel about returning citizens being 
eligible for SBA programs if their criminal convictions had 
nothing to do with any type of an economic crime or they are 
just accused of a crime and they have not yet had their day in 
court.
    Ms. Guzman. Thank you, Senator. Actually, when I served at 
the Small Business Administration we focused on the re-entry 
population, looking at how we could expand the programs to 
ensure that we were working to spur entrepreneurship in this 
community. So if confirmed it would be my pleasure to return to 
that, to some of those programs analysis, and figure out how we 
can continue to support entrepreneurship with the re-entry 
population.
    Chairman Cardin. And then, lastly, let me just call your 
attention to two bills that I have filed with other colleagues, 
one dealing with venture capital in minority businesses and 
emerging markets, the other dealing with partnerships with our 
HBCUs and minority institutions to help in regards to incubator 
and accelerator programs. And I would just encourage you to 
take a look at these bills, see whether we can work together on 
this. Some of this may be able to be handled administratively, 
which is consistent with your statement on helping the 
underserved community. And I just call that to your attention 
and hope we can work together on those issues.
    Ms. Guzman. Thank you. I will definitely pay attention to 
those two pieces and look at the SBA programs and how we can 
fully utilize those programs.
    Chairman Cardin. For the benefit of the members of the 
Committee, we will proceed by seniority order, because I do not 
know when people got on the--we were joined by many people that 
are on the internet. So first on my list would be Senator 
Scott. Let's see how we get you connected here.
    Senator Scott. Senator Cardin?
    Chairman Cardin. We got you. You are on, Senator.
    Senator Scott. Okay. Excellent. Good morning, Senator 
Cardin. Thank you for introducing me, and Ms. Guzman, thank you 
for your willingness to serve. Without much of a question this 
is a really important time to be serving as the Small Business 
Administrator. And I will say to Senator Cardin's last comment, 
as it relates to those who are formerly incarcerated, who have 
paid for their deeds for their crimes, it really is important 
for us to make sure that they are acclimated and then 
assimilated into the line for the access to the Small Business 
Administration, the Paycheck Protection Program.
    And I will note that Senator Booker and myself, we were 
able to get guidance from the previous Administrator of the SBA 
to make sure that those folks who were not involved in 
financial crime, as Senator Cardin just alluded to, had an 
opportunity to avail themselves to the loans, be it the EIDL 
loan or the PPP loans. That is a really important part of 
creating jobs and opportunity and growing equity in this 
country, for those who were formerly incarcerated.
    One of the other issues that is really important to me, Ms. 
Guzman, is the fact that 30 million-plus small businesses 
around the country depend on you to be their voice, to be the 
person that is at the table within this administration when 
talking about some of the common sense priorities that must be 
understood from the prism of a small business owner's 
perspective. I thank you for working as a small business owner 
yourself in your father's business. I certainly am a former 
small business owner and understand and appreciate that the 
more you increase cost, the fewer jobs you create, and the 
devastating impact that it can have in the middle of a 
pandemic.
    That said, I am very concerned that the small businesses 
around the country need a voice at the table as it relates to 
this minimum wage debate that we will be having for the next 
several weeks, if not several years. I am hoping that you will 
be a voice of reason at that table, especially having been a 
part of a small business.
    I will say that last week I had the opportunity to visit a 
restaurant here in Washington, DC, in the Union Market 
District, a restaurant called Bidwell. I had a chance to speak 
with the owner, Chef John, and the bar manager, who did a 
wonderful job of distilling the importance of not increasing 
the minimum wage, particularly in the midst of a pandemic, when 
we have already seen 110,000 restaurants close their doors 
permanently, and thousands, if not millions of others are 
holding on by a thread.
    By increasing the cost of labor you actually reduce the 
number of businesses, and according to the Congressional Budget 
Office the number of businesses that we could see lost is in 
the hundreds of thousands, which will lead to up to almost 4 
million lost jobs in the economy, and those numbers were pre-
pandemic. I can only imagine that those numbers are infinitely 
worse in the middle of the pandemic, and my question to you is, 
as you take all those facts into consideration can we count on 
you being a voice of reason, trying to find a way to explain 
the plight of 30 million small businesses? And I will say that 
that is a really important consideration that small businesses 
would love to understand and appreciate your position on.
    Ms. Guzman. Thank you, Senator. You know, I know that out 
of this pandemic we need a shared recovery. In California, I 
actually work closely with multiple organizations. I believe in 
hearing all voices, and I believe strongly in being the voice 
of small business, that they really do power my work, and those 
stories mean a lot to me, of the different restaurants and bar 
owners and service industry folks that I have met in my 
service.
    And so those stories are really what propel my work, and so 
I do intend on being the voice of small business at the table 
and utilizing the resources, if confirmed, at the SBA, 
including the Office of Advocacy that does extensive research 
and is an independent agency, to make sure that I am aware of 
the issues and can voice those concerns.
    And then in addition, the SBA has great programs to help 
small businesses adapt to the marketplace, and I would want to 
be sure that I can help them navigate through any challenges 
and be----
    Senator Scott. Thank you very much. Yes, ma'am. Absolutely. 
I will make this my last note since my time is running out, 
that the reality of the minimum wage conversation and debate 
really should be one that is concerned from a regional 
perspective. In states like South Carolina, our cost of living 
is about 5.8 percent lower than the average, where in New York 
it is about 52 percent higher, and in California it is 46 
percent higher, and here in D.C. it is 57 percent higher. So 
when you are having a conversation about increasing the cost of 
business, you are not only lowering the number of employees, 
you are also having a national conversation about something 
that has a more regional feel.
    Thank you for your time and I will submit other questions 
for the record. Thank you, Ms. Guzman. Thank you, Senator 
Cardin.
    Chairman Cardin. Thank you, Senator Scott. Senator Shaheen.
    Senator Shaheen. Thank you, Mr. Chairman, and to Ms. 
Guzman, thank you for being willing to be considered for this 
nomination at this critical time. I think everyone has pointed 
out the importance of the Small Business Administration in 
helping our small businesses get through this emergency that we 
are experiencing because of COVID. And I very much appreciate 
all the hard work that those at SBA did after the passage of 
our bills last year to help small businesses.
    But I would like to begin with agreeing with Senator Cardin 
that one of the biggest challenges we had was trying to get 
information from SBA about how the PPP program and the EIDL 
programs were working. And it is not clear to me if the 
challenge is that there are not systems in place to provide 
that data or everyone was so overworked that they were not able 
to get it for us. But I hope you will commit today to--I heard 
you say you will talk to the staff and make sure that they 
produce whatever reports are requested by the Committee. I hope 
you will also agree to come before us and to ensure that any 
staff that is requested come before us as well, to discuss 
concerns that we might have.
    Ms. Guzman. Thank you. Yes, no, I do appreciate that this 
collaboration with the Committee is very important, and so I 
would completely respect that and work hard to do that.
    Senator Shaheen. Great. Thank you. One of the programs that 
was created in the most recent COVID bill, back in December, 
was a new program to help with live entertainment venues. They 
have been particularly hard hit in New Hampshire and across the 
country, because most of them do not have a large number of 
full-time employees. They have part-time employees and so the 
PPP dollars, as you know, did not work quite the same way for 
those venues.
    And under the program, SBA is authorized to make up to $15 
billion in grants, but we still have not seen any of the 
guidance from SBA on how those grants will be made available, 
and we are hearing a great deal of concern from small 
businesses in New Hampshire who are interested in applying and 
are really getting desperate.
    So can you talk about how you might get this program up and 
running as soon as possible?
    Ms. Guzman. Thank you, Senator. If confirmed, my priority 
will be on--number one priority will be on ensuring that COVID 
relief is implemented efficiently, quickly, as well as 
equitably, including the Shuttered Venues Grants. So this would 
be one of the day one priorities, is to understand where they 
are at with this process and make sure that this is implemented 
as quickly as possible.
    Senator Shaheen. Great. Thank you. We had the opportunity 
to talk a couple of weeks ago, which I very much appreciated, 
and one of the things we talked about was the STEP program to 
help states with small businesses with exporting their goods. 
And it is legislation that I care a lot about, because I helped 
to introduce it and see it get passed.
    And when it is working well it is very effective, but as 
you may be aware the GAO identified several outstanding issues 
with the STEP program that I would just call to your attention. 
First that a significant portion of funding has been returned 
to SBA because administrative requirements are too burdensome, 
and that is what I hear on a regular basis, that there is not 
enough flexibility in the program, the paperwork that is 
required is very difficult for, as you know, for many of these 
small businesses they do not have somebody who can fill out 
burdensome administrative requirements.
    And so it has been really challenging, and there is a whole 
list of concerns that GAO expresses. Inconsistent program 
guidance--our small businesses hear from other businesses in 
other states that they have been allowed to do things that our 
folks in New Hampshire are being told they are not allowed to 
do under the grants. Lack of flexibility. Just a whole range of 
things.
    So can you talk about what you might be able to do as 
Administrator to help address some of those long-time problems 
within the STEP program?
    Ms. Guzman. Thank you, Senator. Yes, twofold, I am both 
familiar from my work at the SBA with the STEP program. I did 
implement programs and priorities on behalf of the 
Administrator, operationalizing the vision, and STEP was one of 
those that I worked extensively on, so I do understand some of 
those challenges. In addition, as a recipient in California, we 
administered the program, and I have heard directly from small 
businesses who have had challenges. So I would use those two 
past experiences to really dive in and try to ensure that we 
implement that program as efficiently as possible, and across 
all these programs it would be simplification, understanding 
the experience of small business.
    Senator Shaheen. Well, so given your insights, why has it 
been such problem with this program?
    Ms. Guzman. I understand that there were lots of 
programmatic issues when they first established it and in terms 
of making really strong controls and measures. And so balancing 
that with efficiently and effectively getting the program out 
is, I think, the challenge. And so I would need to dive back in 
and understand where they are at with some of those changes to 
see if there are ways to simplify the program.
    Senator Shaheen. I appreciate that very much. You know, my 
recollection is that this legislation was passed in 2010, so 
after 10 years it seems like these problems should have been 
worked out. So we will stay in touch and I can assure you I 
will continue to ask questions to see how we can make progress 
and stand ready to help you with that. Thank you.
    Ms. Guzman. Thank you.
    Chairman Cardin. Senator Ernst.
    Senator Ernst. Thank you, Mr. Chairman, very much, and is 
it Guz-mon [phonetic] or Guz-man?
    Ms. Guzman. Guz-mon [phonetic.]
    Senator Ernst. Okay. Thank you, Ms. Guzman. I really 
enjoyed our conversation the other day and thank you for making 
time for that.
    I really do appreciate the fact that you are stepping up to 
serve our small businesses across the United States, especially 
during a really difficult time of COVID-19. And for nearly a 
year the members of this particular Committee have worked 
tirelessly to find solutions for the very significant 
challenges that are facing our small businesses, and they have 
been battered, just relentlessly, by COVID-19, and you 
understand that quite well.
    So we really have a great deal of pride in the Paycheck 
Protection Program. We do think it has been very helpful. There 
have been a few hiccups here and there, but again, we are just 
grateful to have come together in providing vital assistance to 
our small businesses and saving millions of jobs across the 
United States.
    And so, Ms. Guzman, if confirmed, I really do look forward 
to working with you and your team. We have got to strengthen 
and improve these programs and find ways to continue to bring 
assistance to all of these wonderful entrepreneurs and small 
businesses across Iowa and across the country, as we continue 
on that path to recovery.
    There is one hiccup that I would like to ask you about, 
which is very concerning to a number of us. In the CARES Act, 
Congress made it very, very clear that SBA's affiliation rules 
must apply to nonprofit organizations in determining the 
eligibility for the Paycheck Protection Program. So in order to 
receive that first draw, those small businesses or nonprofits 
could not employ more than 500 people across each of their 
affiliations. For the second draw on the loan they could not 
employ more than 300 people.
    Despite employing more than 16,000 people nationwide, 
reports emerged last year that many Planned Parenthood 
affiliates illegally applied for and received those PPP loans. 
So as Administrator, will you commit to upholding the CARES Act 
and ensuring that those who violate SBA rules are held 
accountable?
    Ms. Guzman. I would definitely commit to being a good 
steward of the program as the rules and regulations have been 
spelled out, and would look forward to discussing affiliation 
with you further, if confirmed.
    Senator Ernst. Yes, thank you. And we will have additional 
discussions on that. We want to make sure that those 
businesses, those nonprofits that truly do have a need and meet 
the rules are those that are receiving.
    Senator Shaheen also mentioned the Shuttered Venue 
Operators grant program. Really important in Iowa as well. So I 
am very glad that you will be taking time and attention to work 
on the rules there.
    One of the topics that we touched on during our call last 
week was the topic of child care, and it is so important that 
we address this issue. We have a lack of affordable child care 
across the State of Iowa, and the role the SBA could play in 
helping these child care entrepreneurs, we really want to 
develop and explore that.
    So in the last Congress, by colleague, Senator Rosen, and I 
introduced legislation that would allow nonprofit child care 
centers to utilize SBA capital access programs. Can you speak 
to the role that you believe the SBA should play in addressing 
the child care crisis and helping child care operators, 
especially in our rural areas?
    Ms. Guzman. Thank you, Senator, for that question. I know 
President Biden has prioritized the Care Economy, and we know 
how important child care is, especially to our women 
entrepreneurs, in order for them to succeed. The SBA does have 
programs that it can utilize as well as I would welcome the 
opportunity to explore ways that we can better serve the child 
care facilities. So in addition to the current loan programs 
and the Small Business Development Center targeted programming 
that exists, in California there are some great best practices 
of intensive training for child care providers, and I would 
welcome the opportunity to make sure that we are leveraging 
those, scaling those, as well as looking at other opportunities 
to help.
    Senator Ernst. Well, I appreciate that, and I am running 
out of time. I do want to take a moment to say, though, that I 
did enjoy our conversation. I was thoroughly impressed with 
your knowledge of the various programs through SBA, and, Ms. 
Guzman, I look forward to supporting your confirmation, so 
thank you very much.
    Ms. Guzman. Thank you so much, Senator.
    Chairman Cardin. Thank you. Senator Markey by WebEx.
    Senator Markey. Great. Thank you so much, and welcome, Ms. 
Guzman. I enjoyed our conversation last week and I am 
absolutely confident that President Biden made an excellent 
choice to be the new head of the SBA.
    Massachusetts is a huge beneficiary of the SBIR and STTR 
programs. Here are some of the numbers. Since the program was 
created, Massachusetts companies have received 22,000 of the 
grants, and last year alone 593 awards valued at over $350 
million went to Massachusetts companies, which has really 
helped to create an ecosystem of innovation in the State of 
Massachusetts.
    We talked during our conversation last week about how 
strongly I believe that we must ensure that the SBIR program is 
available to truly small businesses. For a long time there have 
been efforts to open up the program more and more so that 
venture capital-backed companies can access the funding. I am 
concerned that if we open up this program too much to venture 
capital funding we will crowd out access to funding needed by 
truly small businesses.
    Do you have any thoughts on proposals to increase venture 
capital involvement in the SBIR program?
    Ms. Guzman. Thank you, Senator Markey, and I did enjoy our 
conversations about this and other topics. The SBIR program, or 
America's Seed Fund, is one of the most critical programs that 
the SBA has. I agree that with the impact great companies have 
come out of that program. You know, I know that ensuring that 
small businesses have access to the Federal research dollars is 
a priority and I would commit to being a good steward to ensure 
that our small businesses, and not only that but the 
underserved communities, including our rural as well as women 
and people of color, have access to this program. I think that 
there are great ideas that exist around our country and 
ensuring that there are these available grants to spur that 
innovation as well as help businesses commercialize is really a 
priority. So I would look forward to partnering to figure out 
how we can maintain that strength of the program and improve 
it.
    Senator Markey. Okay. And again, my question actually goes 
to obviously the role of the venture capital world, which has 
access to plenty of capital it wants to play in moving into 
this sector as well, which I catch arched eyebrows that hit the 
ceiling as I look at their interests in this program, knowing 
how well it is already serving the smallest businesses, the 
entrepreneurial, the innovative businesses in our country.
    And, Ms. Guzman, I would ask for your commitment to ensure 
that the SBIR program continues to be based on merit, and I 
would also ask for your thoughts on how we can provide more 
funding for small businesses across the country who may not 
have access to a Massachusetts or a California business 
university type of ecosystem.
    Ms. Guzman. The program is a great program, and if there is 
an opportunity to continue to expand capital to early stage 
venture companies as well as early stage researchers who are 
trying to formulate these great innovations I think that is a 
strong program that we should deliver against.
    And in terms of the specifics of merit, I think the program 
is very strong, and we need to make sure that we are investing 
in the best ideas across the country.
    Senator Markey. Yeah, thank you. There is always a kind of 
an uncertainty about the funding for the SBIR program. Do you 
support making the SBIR program permanent?
    Ms. Guzman. Thank you for that, Senator, and if confirmed I 
know SBIR reauthorization is right around the corner. You know, 
it is a program that has been emulated, respected across the 
globe, and I do think it is a very critical program that I 
would like to see continued at the SBA.
    Senator Markey. Okay. And do you believe that just 3 
percent of Federal R&D for startups and entrepreneurs is 
adequate, or would you support an increase in the allocation 
percentage that goes to startups and entrepreneurs?
    Ms. Guzman. My role will always be to be the voice of small 
business and advocate on their behalf. In addition, I would be 
a good steward of the programs as implemented by Congress, as 
well as the priorities of the administration.
    Senator Markey. And I am glad that you are going to be 
taking this job and I am very heartened by the level of support 
that you are clearly going to bring to ensure that minority-
owned businesses have the same access to capital as other 
businesses, and it is very heartening to me to hear your level 
of commitment to that goal.
    Ms. Guzman. Thank you, Senator.
    Senator Markey. Thank you. Thank you, Mr. Chairman.
    Chairman Cardin. Senator Inhofe.
    Senator Inhofe. Thank you, Mr. Chairman, for hosting this 
meeting, and Ms. Guzman, I enjoyed our visit. We had a chance 
to talk about some of the--and this is so important to me. I 
think I impressed upon you that Oklahoma is--we are a small 
business community. In fact, I questioned my staff when they 
said that we had statistical data that showed that 99 percent 
of the businesses in Oklahoma are small businesses employing 
over half of the workers in Oklahoma. So I think we are the 
ones that really need this program.
    There are two problems with it, that have nothing to do 
with the pandemic but things I want to call to your attention, 
because they are things that we need to be addressing that you 
may not have thought of before. And I agree with the comments 
that have been made about the Paycheck Protection Program, and 
it is--has been very helpful.
    A problem that we have in my State of Oklahoma, and, of 
course, maybe I am partly to blame, is that our businesses do 
not know what resources are out there, but the SBA does, what 
their mission is, what is available to them. And I have not 
been able to--sometimes I get a response of surprise that 
resources are out there.
    Do you have any ideas on what you could do to maybe work 
together to lift the awareness of what SBA is all about and 
what is there for our small businesses?
    Ms. Guzman. Thank you, Senator Inhofe. I agree that 
connection to resources is one of the biggest challenges for 
small businesses. President Biden has prioritized establishing 
navigators in communities, so local voices who can connect to 
small businesses and inform them of the resources that exist. 
If confirmed, I would want to leverage SBA's field offices, 
resource partners, as well as extensive partnerships across 
chambers and other organizations to help to that end.
    Senator Inhofe. So he has talked to you about this?
    Ms. Guzman. The President has mentioned several times 
navigators in terms of his priorities, and so yes, for the 
Small Business Administration that would be one of our 
priorities.
    Senator Inhofe. And sometimes we run into this in 
government. There are opportunities and they reach a level of 
perfection and yet it is not reaching the ones that are 
supposed to be reached. Because I think there are some things 
that maybe as members, maybe some of my fellow members are 
doing things I am not doing, but I have not been successful in 
doing this and this is something I think really should be a 
pretty high priority. So I look forward to working with you on 
that.
    Now another program that has been promoted, and not just 
due to the pandemic but the program ongoing, is the EIDL 
program. That is the Economic Injury Disaster Loan program, as 
you are fully aware of. It was designed originally for natural 
disasters. Now in my State of Oklahoma we have had more than 
our share of natural disasters, and so this has been very 
helpful.
    But we do hear, quite often, that the EIDL program has 
experienced a lot of delays in process, and also heard of 
significant issues of fraud inside the program, and I believe 
that is true. In fact, one constituent shared that her husband 
did not apply for an EIDL and yet an application appeared and 
information was used fraudulently and used in an application. 
Now I do not know how that happened, but we do hear that it 
does happen.
    Have you addressed the fraud and abuse problem in that 
particular program?
    Ms. Guzman. Thank you, Senator. If confirmed, I would 
prioritize the reduction of fraud, waste, and abuse as well as 
implementing controls and systems and leveraging the technology 
systems, the new technology systems they implemented to ensure 
this program gets into the hands of the small businesses who 
need it. I have heard those same stories in California. Very 
frustrated small businesses are those who could not receive it 
or get an answer, and I want to prioritize making sure that 
we----
    Senator Inhofe. So in your experience you have had personal 
experience with this?
    Ms. Guzman. Correct.
    Senator Inhofe. Well, that is good and I am glad that you 
are aware of that.
    And the last thing I wanted to bring up is the fact that we 
are aware that some businesses are afraid to reopen because of 
frivolous lawsuits, and our businesses cannot stay closed 
because they are afraid of being sued. And these businesses 
will continue to play a central role in rebuilding our local 
economies. I think it is something that we need to be looking 
at, and I would just ask you to agree with me on the importance 
of providing liability protections to these businesses, to 
ensure our businesses are not at risk over frivolous lawsuits.
    Ms. Guzman. Thank you for that, Senator. I know that 
liability is a big concern for small businesses, and ensuring 
that we are addressing the pandemic and making it safe for 
people out in the marketplace is really critical. I will be the 
voice of small business and express their concerns and use 
their stories to be elevated and share those experiences.
    Senator Inhofe. Well, that is good, and I am looking 
forward to working with you in the future and supporting your 
nomination.
    Ms. Guzman. Thank you so much, Senator.
    Senator Inhofe. Thank you, Mr. Chairman.
    Chairman Cardin. Senator Coons.
    Senator Coons. Thank you, Chairman Cardin, and Senator 
Rubio, and I would like to thank the Committee staff, Meredith 
and Sean, for working so hard to schedule this Committee 
hearing quickly, and Mrs. Guzman, it is a delight to be with 
you today. I really enjoyed our call, and I look forward to 
supporting your nomination and to working closely with you as 
you lead the Small Business Administration going forward.
    The crisis that our Nation is enduring at the moment, this 
pandemic and the recession associated with it, is hitting 
restaurants particularly hard, as you well know. And last 
summer Senators Sinema and Wicker, Graham, and I introduced the 
Restaurants Act to provide direct grants, not just loans, to 
hard-hit independent restaurants. I heard just yesterday from 
Sasha Aber, a friend who runs Home Grown Cafe in Newark, 
Delaware. She is a regular at the annual Taste of Delaware that 
we do in the Kennedy Caucus Room, and I hope you will join us 
next year. Sasha was telling me this weekend just how hard-hit 
her business has been and how she and her employees, and many 
other restaurants in my State, need more help.
    I am really encouraged by President Biden's focus on 
helping restaurants in the American Rescue Plan, and I would be 
interested in how you think we can best deliver that, why you 
think grants are more important than loans, and how significant 
you think it is to target assistance to sectors like 
restaurants that have had a particularly difficult time of it.
    Ms. Guzman. Thank you, Senator. I had the pleasure of 
serving on the Governor's Task Force on Business and Jobs 
Recovery during the COVID response, and with the California 
Restaurant Association chairman on small business issues 
specifically, so I have heard from him, you know, many stories 
about how this is affecting California restaurants as an 
example, and that is a microcosm of what is happening across 
the country.
    You know, a lot of these businesses are straddled with 
debt, have limited cash flow, and so grants have been in high 
demand across multiple sectors. So I recognize that for small 
businesses to survive this grants are needed as well, as well 
as targeted relief to ensure that our small businesses who 
really need it are able to survive this pandemic. So I would 
look forward to working with you collaboratively on this issue.
    Senator Coons. I was struck to see this morning, in the 
Delaware Business Times, that Delaware is so far coming in last 
in terms of the second round of PPP loans, in terms of the 
count and volume. To my knowledge, and to my staff's knowledge, 
that is not due to any deficiency on the part of Delaware's 
lenders or businesses. I think it is important the SBA monitor 
the geographic distribution of funds. I hope you will work with 
me on that. I think part of it may be because audits for first-
round PPP loans are more cumbersome than may be necessary. 
There have been days of back-and-forth between auditors, 
lenders, and borrowers, even for loans as small as $10,000.
    How will you balance the important priorities of program 
integrity and efficiency, in terms of speed?
    Ms. Guzman. Thank you for that. I do think that that is the 
challenge of that balance. You know, I am quite familiar with 
the programs, and if confirmed I would look forward to figuring 
out how we can push as much as possible to make these simple 
for our small businesses to understand and leverage, because it 
is very difficult for them to go through mountains of papers to 
try to figure things out. So, you know, I know that we can 
better use our field, our resource partners, and get 
communications out there that help small businesses.
    Senator Coons. And as we spoke about, those resource 
partners can be absolutely critical. Particularly to smaller 
businesses, for those that are women-owned, minority-owned, 
accessible advice and counseling is vital, particularly to 
navigate a crisis like this and to understand SBA's programs.
    Shawnee Inn in Greenwood, Delaware, is an example. It is 
operated by Diane Eby, and Diane asked Cindy Small at 
Delaware's SBDC for help early in the pandemic, and Cindy 
helped her get not just a PPP loan but FEMA approval to house 
Federal employees, which then helped her get through.
    I would be interested in how you see SCORE and SBDCs and 
other resource partners working to make sure that our small 
businesses can access the great programs SBA provides.
    Ms. Guzman. Yes, and as a small business owner I used SCORE 
myself. I learned all about patents from one of their advisors, 
so I know that there are some great resources out there in the 
community. In California, we actually match and leverage the 
Federal resource partners, and they have been critical on the 
ground in informing small businesses. So I would look forward 
to being a good steward of those programs and making sure they 
are reaching communities.
    Senator Coons. As you know, SCORE was founded in Delaware, 
and I look forward to working with you to strengthen it.
    My last question, we discussed the urgent need to support 
new entrepreneurs, entrepreneurs of color, women entrepreneurs, 
those living in distressed communities, and you mentioned the 
lack of runway capital as a major barrier. Please explain that 
problem and the consequences of leaving it unaddressed. I am 
hopeful that the next generation Entrepreneurship Act, which 
Senator Scott and I co-authored, could be a part of the 
solution to this challenge.
    Ms. Guzman. Well, as President Biden has said, our talent 
and our spirit of entrepreneurship, as well as our ideas, come 
from all parts of the country, and unfortunately there are many 
communities that face barriers to capital or have experienced 
historic racism or barriers that have prevented them from 
building the wealth that is needed for accessing capital or 
relying on friends and family.
    And so these entrepreneurs, and their great ideas, need to 
be supported as well for our economy to grow and for job 
creation to happen. So I think it is really critical that we 
look at all of our programs from that lens of equity and make 
sure that we are reaching our underserved populations.
    Senator Coons. Well, Mrs. Guzman, I look forward to 
supporting your confirmation and to working closely with you. 
This has been one of the most functional, productive committees 
I serve on in the Senate, and I am hopeful we will get a great 
deal done together during this period when our small businesses 
need you and the SBA so much. I am so grateful to our incoming 
Committee Chairman for his leadership as well. Thank you.
    Ms. Guzman. Thank you, Senator.
    Chairman Cardin. I now call on Senator Young via WebEx.
    Senator Young. Ms. Guzman, welcome to the Committee and 
thank you for your interest in serving our country in this 
capacity. Congratulations on your nomination.
    Yesterday I reintroduced the Small Business Innovation 
Voucher Act with Senator Cortez Masto. This bill would require 
the SBA to establish the Innovation Voucher Grant Program, the 
first of its kind, to support small businesses in carrying out 
R&D or commercialization of new or innovative products and 
services.
    Now unlike other SBA grant programs, my voucher program 
would achieve a different outcome by reallocating Federal funds 
from larger, later-stage grants to more small, early stage 
grants, and from older firms and regular winners of these 
grants to younger firms and first-time applicants. By building 
on current models, it is our belief that we can facilitate 
public-private partnerships between small businesses and our 
world-renowned research institutions, giving our entrepreneurs 
expanded access to drive innovation.
    We have seen this model work in a number of states, 
particularly my home State of Indiana. Indiana's Innovation 
Voucher Program has proven itself to be quite successful. Going 
forward, small businesses, we believe, will be the key to post-
COVID recovery, but the pandemic has already exacerbated, as 
you well know, several challenges preventing firm footing in 
the marketplace.
    So, Ms. Guzman, I ask you, will you commit to working with 
me and my office, as well as Senator Cortez Masto, to focus on 
legislation such as our Innovation Voucher Program, to 
facilitate these public-private partnership?
    Ms. Guzman. Thank you, Senator, and I enjoyed my 
conversation with you as well as Senator Cortez Masto about 
this issue. I think I shared with you that I implemented a 
small innovation grant in California through the Department of 
Defense program around cybersecurity, and studied those 
programs across the state. So I am familiar and look forward to 
discussing it further with you and working with you.
    Senator Young. Well, thanks so much, and we will look 
forward to following up with you should you be confirmed, as I 
believe you will.
    What are some other ways that you might share with the 
Committee that you would like to see small businesses supported 
to bring innovative ideas to the market, as we have seen a 
decrease in the number of young firms and their survivability 
rate of our smaller firms over the years?
    Ms. Guzman. Well, young firms are really critical. They are 
the large contributors to that two-thirds of net new job number 
that is often cited. They are creating jobs. And, if confirmed, 
I would be the voice of all small businesses, including these 
younger firms and early startups. And so I would look forward 
to partnering to make sure that SBA's programs are leveraged 
and utilized extensively by these small businesses.
    Senator Young. Thank you. I am going to pivot, Ms. Guzman, 
to talking about fintech, financial technology services, these 
online banking platforms that are of such great utility to so 
many Americans now. Unfortunately, some of our smallest 
businesses, such as those with fewer than ten employees, have 
trouble accessing traditional banking networks to obtain SBA-
backed loans.
    As part of the CARES Act, numerous CDFIs, minority 
depository institutions, and fintechs were approved to provide 
PPP loans, so that is a good thing. As a short-term option, 
allowing fintech companies to administer PPP loans during a 
crisis, and therefore offering business owners more seamless 
options, was critical to keeping many businesses afloat. 
However, fintech companies do not have preferred lender status, 
meaning businesses will still be required to access other 
options if SBA loans are out of reach in the future.
    So would you kindly, Ms. Guzman, speak to whether you see 
fintechs as a new, emerging tool for the Small Business 
Administration in its loan programs?
    Ms. Guzman. Thank you for that. Adoption of fintech across 
the banking sector as well as with these new fintech companies 
and our CDFIs, even, is really critical. I think expanding 
distribution for capital will improve access. And so I look 
forward to partnering with the lending institutions broadly, to 
ensure that we can keep them engaged in SBA programs. This has 
been a record high number of different lenders engaged in SBA 
than ever before, and I think we need to take advantage of 
that.
    Senator Young. Excellent. Well, on that issue as well I 
will look forward to working with you and your staff, should 
you be confirmed.
    Lastly, in my remaining amount of time, and I am unable to 
see the clock but it will be less than a minute here, I would 
like to mention the RESTART Act. The RESTART Act was a 
bipartisan piece of legislation that I developed with Senator 
Michael Bennet, receiving 60 bipartisan co-sponsors in the 
Senate, a couple hundred in the House. It would create a long-
term working capital loan to our hardest-hit businesses, 
measured by the amount of revenue loss they experienced on 
account of the pandemic. And then there would be a forgiveness 
element based on, once again, the economic impact these 
businesses have faced on account of the pandemic.
    It is industry neutral in its approach, and, look, we all 
recognize that there are a number of businesses who are still 
reeling on account of the COVID-19 pandemic. My own belief is 
that it is likely that some additional assistance will still be 
required for these businesses. Do you believe that future 
support programs should be modeled after a sort of industry-
neutral, long-term working capital loan program, like the 
RESTART Act proposes, so that we can target those hardest-hit 
businesses?
    Ms. Guzman. If confirmed, I do look forward to evaluating 
all of SBA's lending products. We do have a variety of options, 
from the 7A and 504, and, you know, other programs that we can 
constantly ensure that small businesses are able to access in 
order to get capital, you know, whether it is that long-term 
patient capital or otherwise. So I would look forward to 
exploring options as we go through that analysis and working 
with this Committee and you and your staff to ensure that we 
are able to support all of these businesses.
    Senator Young. Well, I am out of time. It sounds like you 
are open to the RESTART Act. Thank you very much.
    Chairman Cardin. Senator Booker.
    Senator Booker. Thank you, Mr. Chairman. Ms. Guzman, thank 
you so much for taking time to meet with me. I am so excited 
about your nomination and I look forward to supporting you on 
the floor when it comes to your confirmation vote.
    I was kind of excited that my colleagues have already 
brought up this issue, Senator Cardin and Senator Scott, the 
issue of justice-involved individuals. In 2019, there was more 
marijuana possession arrests in our country than all violent 
crime combined, and those people with criminal convictions for 
doing things that two of the four last Presidents admitted to 
doing would be excluded from a lot of the loan programs that we 
have seen in PPP and other SBA financing. That is ridiculous to 
me.
    And I just want to put a finer point on what I am looking 
for, which is just you can do it with the stroke of a pen, can 
empower folks. And you know marijuana laws are 
disproportionately enforced against who?
    Ms. Guzman. People of color.
    Senator Booker. People of color. So we literally have 
college kids, with impunity, smoking pot, but people who are 
Black and brown are four times more likely, even though their 
usage rates are no different. So that ultimately affects, as 
the ABA says, 40,000 collateral consequences, and that is one 
of the reasons why there is such a wealth disparity between 
communities of color, because they are over-policed and over-
conflicted for things that are just unjust.
    And so I am really hoping, with a sweep of a pen, that you 
would change this. It is an administrative function, and I know 
it is something the Vice President and I have worked on these 
issue when she was a Senator. The President and I have talked 
about these issues ad nauseum. I know where their heart is on 
these issues.
    And so I hate to put you on the spot, but would you commit 
to reversing this guidance and creating justice for Black and 
brown folks who have been over-incarcerated for these 
nonviolent drug crimes, to allow them to have access to these 
loan programs?
    Ms. Guzman. Thank you, Senator. I believe I shared with you 
as well that during my time at the Administration we did focus 
on this reentry population as well as making some 
administrative changes to simply access. And so I would 
immediately be willing to dive in and explore what 
administrative changes I could make to open up these loans.
    Senator Booker. Well, I hope we have a conversation on that 
when you stroke that pen, write that out. If you want to see 
the most ridiculous happy dance you have ever witnessed, you 
can have me there, and I will be happy, because this is 
something that is just so painfully wrong. The universe is not 
that big, but you could really become a model for the whole 
Executive branch, where just somebody got in there and quickly 
did right, and I know communities would celebrate as much as I 
will, should and when that happens.
    I am still concerned about Black and brown businesses, you 
know, really benefiting from PPP in sort of the second draw. 
Part of the issue is that we simply just lack the data to 
understand the scope of this sort of issue that a lot of our 
businesses are doing. And over the summer the SBA released what 
little data they had on PPP lenders. About 86 percent of the 
661,218 loans made at the time had failed to provide any 
information about race or ethnicity of the business owner. But 
we know the Black and brown business owners across the country 
are simply not getting the help they need, and I know you are 
intimately aware with that.
    One analysis, by Accountable.US, found that districts with 
the highest Black populations received up to $13 billion less 
in PPP dollars. While we have heard about the improvements to 
the PPP distribution since December, it is clear that there is 
more to be done to make PPP lending more equitable.
    And so I would love to offer my assistance in that. To me, 
I think it is something that you could really be a champion of. 
But I would love to jump really quick to something I think you, 
in your incredible career, have a lot of experience with, which 
is just this idea that these local loan funds, from your work 
in California you have seen this, that really small businesses 
don't have banking relationships, but I really think that these 
local loan funds, one of which you sort of helped to 
administer, could really be the source of a lot of making of 
changes.
    So I put together a bipartisan bill called the RELIEF for 
Main Street Act, that would seed and scale efforts like the one 
you ran in California particularly aimed at businesses with 20 
employees or less. My bill, which I have worked on with the 
Chairman and other members of the Committee, would fund about 
$15 billion in the Heroes 2 bill that passed the House last 
Congress, and I am pleased to see that President Biden's 
American Rescue Plan included a $15 billion designation for the 
kind of flexible funds that you ran, which is now something 
that has me really excited.
    And so I just wonder, in the last seconds I have, could you 
maybe talk about why getting money into the funds like you ran 
in California really provided better advantage for businesses 
that don't have those kind of banking relationships?
    Ms. Guzman. Well, the California Rebuilding Fund, or the 
iBank programs that are administered as loans in California 
have been effective in both leveraging dollars as well as 
working with local CDFIs and mission lenders to advance access 
to capital to underserved communities, specifically. So they 
have had great track record. These are local lenders on the 
ground with connections to communities, so I do think they are 
great programs.
    And then, of course, the California relief grants that I 
have been administering as well, through CDFI networks, through 
our technical assistance providers, have been able to reach 
underserved communities at really high rates as well.
    So I would look forward to bringing those learnings here in 
D.C. and seeing how we can scale and leverage programs like 
that to help our underserved communities.
    Senator Booker. That is great. Well, I want to just put one 
marker down, as I pass it back to the Chairman. One of the big 
concerns I have, and I have seen this in bipartisan 
conversations I have had with other members of this Committee, 
is just the challenge we have with the vulnerability of our 
supply chains in this country. And a lot of times it takes a 
lot of money, up-front capital, and ten-year projections to 
build manufacturing capacity here for things that we now know 
are critical, from penicillin to PPE.
    And I think this is something that I know the 
administration is interested in, and I hope that you could 
partner with members of this Committee, because I believe one 
of the lasting legacies of President Biden's Build Back Better 
could be actually strengthening manufacturing, which would have 
not only an economic plus to us but it would give us a national 
security edge should we face crises in the future, whether they 
be pandemics or, God forbid, military conflicts for us, not to 
be so dependent upon adversary nations for critical 
manufacturing.
    Ms. Guzman. Thank you for that. Yes, in California we did 
look closely at on-shoring, near-shoring, and I worked in 
partnership with the California Manufacturing Technology 
Association while I was on the Governor's task force, and it is 
a critical issue. We want to shore up our supply chains and 
give small businesses an opportunity to access those supply 
chains too, with contracting. So procurement and supply chain 
are very important issues for me, and if confirmed I would take 
that passion to the SBA.
    Senator Booker. Thank you. I look forward to giving a very 
hearty yes when it comes to the vote on the floor, and thank 
you very much.
    Ms. Guzman. Thank you very much.
    Chairman Cardin. Thank you, Senator Booker. We will now go 
to Senator Kennedy by WebEx.
    Senator Kennedy. Thank you, Mr. Chairman. Mr. Chairman, I 
cannot see the clock, so if you would let me know when I have 
30 seconds left.
    Ms. Guzman, congratulations. I want to ask you about our 
tax code first. In 2007, as you probably know, Congress changed 
the way we tax pass-through entities. I am talking about LLCs, 
LLPs, sub-S corporations, partnerships, sole proprietorships. 
Congress exempted 20 percent of income from those pass-through 
entities from the Federal income tax. Was that a good idea? Bad 
idea? What do you think?
    Ms. Guzman. Thank you for that, Senator. You know, I would 
work in partnership with the Office of Advocacy on issues like 
this, to understand some of the research they have done as well 
as be the voice of small business. While I do not have a 
specific opinion on that I would love to get back to you and 
talk to you further about it.
    Senator Kennedy. Well, are you familiar with it? Tell me 
how it works.
    Ms. Guzman. I am familiar that, you know, there has been 
some tax benefits for these types of organizations, but, you 
know, I would need to get back to you on that, in terms of, you 
know, as it relates to SBA and the programs. I would basically 
be the voice of small business, of course, and tax issues, 
regulation issues, all these are of concern, but I do not have 
specifics on that.
    Senator Kennedy. Well, but, I mean, obviously your job is 
to help small businesswomen, small businessmen, and taxes 
represent a cost of doing business, just like your electricity 
bill or your insurance bill. Do you think this provision in the 
law has helped small business, or has it hurt it----
    Ms. Guzman. Senator----
    Senator Kennedy [continuing]. or are you just not familiar 
with it?
    Ms. Guzman. Senator, thank you for flagging it. I am not as 
familiar with the research in terms of whether or not it has 
been effective or beneficial. So, you know, rather than answer 
without any specific knowledge of a research study I would 
rather research that further and get back to you on this issue.
    Chairman Cardin. Senator Kennedy, could I interject for one 
minute? I will not take it out of your time.
    Senator Kennedy. Okay.
    Chairman Cardin. Because you are raising a very important 
point about the tax code impact on small businesses. We don't 
have jurisdiction over the tax code, but I will be in 
conversation with Senator Wyden as to whether we can't have 
some opportunity, either a joint hearing to look at the tax 
code impact on small businesses, because your point is very 
well taken.
    The pass-through, as I understand it, was a rough justice 
to deal with the C rate reductions, since most small businesses 
use the C rates rather than the corporate rate--they used 
individual rate rather than the corporate rate in their taxes. 
And I think we do need to get more information on this, because 
my own personal view is that small businesses have not 
benefited to the same extent that larger companies that use a 
corporate tax rate from the 2017 tax bill.
    I just interject on that because I think this is a subject 
our Committee needs to take a greater look at, and I thank you 
very much for raising today, at this nomination hearing.
    Senator Kennedy. Well, I appreciate that, Mr. Chairman. 
Many of the small businesses in Louisiana are not C corps, 
which, as you know, has the disadvantage of double taxation. 
Many of the small businesses in my state are pass-throughs. So 
this is a very important provision, and I, at some point, since 
Ms. Guzman is going to be the champion for small business, I 
would kind of like to know what her position is on that. I am 
going to submit a question in writing, if that is appropriate, 
Mr. Chairman.
    Ms. Guzman, let me ask you about, are you familiar with 
Small Business Innovation Research grants?
    Ms. Guzman. Yes, Senator, I am.
    Senator Kennedy. And I assume then you are familiar with 
Small Business Technology Transfer awards.
    Ms. Guzman. Correct, yes.
    Senator Kennedy. Okay. Are you familiar with the FAST 
program that we started? FAST is an acronym for a Federal and 
State Technology partnership program. Are you familiar with 
that program?
    Ms. Guzman. Yes, Senator, I am.
    Senator Kennedy. As I understand, the FAST program was set 
up to try to level the playing field and make sure that these 
grants and these awards are more evenly distributed. How has 
the FAST program worked? How well has it worked, in your 
opinion?
    Ms. Guzman. Thank you for that question, Senator. It is a 
really critical issue that we ensure that SBIR and STTR is able 
to be utilized across the country. There is definitely 
disproportionate use in certain geographics. And so I know that 
beyond FAST grants, there's FAST grants as well as agencies 
that participate in SBIR have extended outreach and assistance 
programs to try to reach communities who don't traditionally 
access these programs. And so all of them are priority areas 
for ensuring access to underserved businesses and underserved 
small businesses who want to utilize this America's Seed Fund. 
In terms of----
    Senator Kennedy. Well, can I interrupt you just a second--
--
    Ms. Guzman. Sure. Please, Senator.
    Senator Kennedy [continuing]. because I am about to run out 
of time. I hate to interrupt people. I am going to come see 
you, Ms. Guzman. I don't think the FAST program has worked. It 
is still not leveling the playing field. But we will save that 
topic for another day.
    If I could ask you--and I interrupted you because I want to 
really give you time to answer this question. What is the 
better way, as a matter of policy, to increase people's wages? 
A minimum wage increase or an increase in the earned income tax 
credit?
    Ms. Guzman. Senator, I don't have a--you know, I know that 
my responsibility will be to take the research and the data and 
be the voice of small business, as well as the small business 
stories around this issue. I intend to do so, if confirmed, 
and, you know, to evaluate and look at the research from both 
sides. You know, it has been my practice in California to 
convene working groups with various organizations, with 
difference of opinion, just so that I can hear and listen to 
all the opinions across these issues.
    Senator Kennedy. Well, yes, ma'am, and I appreciate that. 
But in your opinion, what is a better way to increase wages 
without impacting business--minimum wage increase or an earned 
income tax credit increase?
    Ms. Guzman. Senator, I would need to evaluate that. It is 
similar to my response to you on the previous tax question, 
that I would need to further, you know, research the matter and 
share with you, you know, at a different time. So thank you for 
the question.
    Senator Kennedy. How does the earned income tax credit 
program work?
    Ms. Guzman. Well, SBA would--you know, in terms of the 
impact on small businesses, I really honestly could not share 
with you at this time.
    Senator Kennedy. No, just how does the whole program work?
    Ms. Guzman. With the earned income tax credit? I mean, 
businesses are--all of these programs are trying to ensure that 
small businesses are able to, you know, take the tax benefits 
and credits, you know, that can support their businesses. You 
know, again, I cannot offer you anything further. Sorry. 
Senator, I know that this is really a critical issue, and I 
would look forward to partnering with you and your office in 
the future to discuss this further, if confirmed.
    Senator Kennedy. Well, it is a critical issue, Ms. Guzman, 
and I would encourage you to learn more about the earned income 
tax credit. I mean, if we raise the minimum wage to $15 an 
hour, the Congressional Budget Office says it is going to cost 
us 1.3 million jobs in the middle of what some of my colleagues 
say is a recession, during the pandemic. An earned income tax 
credit change--and I am not advocating here; I am trying to 
understand your position on it, because you are going to have 
to be a champion for small business. A change in the earned 
income tax credit, which would also put more hands in low-
income workers, if we paid for it with an offset or a pay for 
in the Federal budget, would increase people's income without 
causing people to be laid off.
    Chairman Cardin. Senator Kennedy, your time is pretty well 
expired.
    Senator Kennedy. Okay. Did I go over by a lot, Mr. 
Chairman?
    Chairman Cardin. Well, I took some of your time, so I am 
trying to equalize it. But I think you are over by about two 
minutes right now.
    Senator Kennedy. Well, I am sorry. Consider this plane 
landed.
    Chairman Cardin. Thank you very much, and I will just 
repeat again, on the tax issues I really do think we need to 
weigh in and we need to have a view on how that tax code is 
affecting small businesses. So I look forward to working with 
you, Senator Kennedy, on that issue. I serve on the Finance 
Committee so I will take that message to the Senate Finance 
Committee.
    Senator Kennedy. And I am sorry I went over, Mr. Chairman, 
but I cannot see the clock.
    Chairman Cardin. Senator Hirono, via WebEx.
    Senator Hirono. Thank you, Mr. Chairman. I, too, cannot see 
the clock, so you need to let me know when I have 30 seconds 
left.
    Ms. Guzman, it is a pleasure to see you again and thank you 
very much for the chance to talk with you a few days ago. I ask 
these two fundamental questions of every nominee who comes 
before any of the committees on which I sit, and while you 
answered a similar question to the committee questionnaire I am 
going to ask you these questions.
    Since you became a legal adult, have you ever made unwanted 
requests for sexual favors or committed any verbal or physical 
harassment or assault of a sexual nature?
    Ms. Guzman. No, I have not, Senator.
    Senator Hirono. Have you ever faced discipline or entered 
into a settlement related to this kind of conduct?
    Ms. Guzman. Yes, I have not.
    Senator Hirono. When I had a chance with you, you made a 
commitment to making sure that underserved small businesses, in 
particular, would have adequate access, maybe more access at 
this point, to the $284 billion for PPP that Congress recently 
approved. Do you have any specific kinds of things that you 
would do to make sure that minority businesses and businesses 
with fewer than ten employees, for example, would have access 
to PPP?
    Ms. Guzman. Thank you, Senator, for that question. It is a 
priority of the Administration to ensure that our underserved 
businesses are able to access resources, and I believe that we 
can better deploy the community-based resources, our resource 
partners, as well as our field offices to ensure that there is 
strong communication, strong awareness, strong training so that 
more businesses can access this program equitably.
    Senator Hirono. And also when we had a chat I mentioned 
that there are a lot of small businesses who have a really hard 
time with all of the paperwork and requirements, so they should 
be as understandable as possible. So I hope you will take a 
look at that.
    I have a question regarding 8(a), the 8(a) program, and I 
think you have a familiarity with that, because we advocated 
for an extension, an additional year for businesses to 
participate in 8(a) programs and you had advocated for this 
extension.
    So the 8(a) programs support, for example, Native 
businesses, Native Hawaiian businesses, Alaska Native 
businesses. So I would like you to reinforce that. Do you have 
a commitment to making sure that the outreach to 8(a) programs 
and support for the 8(a) program remains a commitment on your 
part?
    Ms. Guzman. Thank you, Senator Hirono. I would definitely 
commit to ensuring that all of our programs are utilized fully, 
including the 8(a) program, and that that outreach is conducted 
extensively.
    Senator Hirono. And sometimes the 8(a) participants need a 
little bit more time, more flexibility to meet various 
requirements, so I hope that the 8(a) businesses that may have 
difficulty meeting their business activity targets for 
commercial or non-Federal revenues, that they would be given 
adequate time to meet those requirements.
    Ms. Guzman. Yes. Thank you, Senator. I would look closely 
at that program and make sure that it is aligned with the 
situation that so many of these contractors are facing right 
now, during COVID and on an ongoing basis, so that they can 
fully leverage the program and grow to be successful firms.
    Senator Hirono. So since last year, the Senate Republicans 
have been working to prevent Planned Parenthood local chapters 
from receiving PPP loans. They are trying to disqualify these 
chapters from receiving loans, based on basically an 
ideological perspective. And you signed a letter to SBA arguing 
that local chapters should be eligible for these loans, and 
hear continuing concerns about how SBA tried to apply its 
affiliate rules to disqualify certain nonprofit organization 
from participating in PPP.
    So I hope that you will commit to ensuring a fair, mutual, 
and consistent application of program rules for similarly 
situated entities and not seek to disqualify any organizations 
based on ideological reasons.
    Ms. Guzman. Senator, if confirmed, I would work hard to 
implement the program as per the rules and regulations 
outlined.
    Senator Hirono. You mentioned that you would look to your 
local resource partners, and we had a chat about that, and it 
is good to know that you intend to fully use your local 
resource partners to get the word out to especially minority-
owned and other small businesses as to the availability of PPP 
loans. I think my time is up. I see a clock up there now.
    Chairman Cardin. Yes, your time is up.
    Senator Hirono. I can barely see it. Okay. Thank you so 
much, Mr. Chairman.
    Chairman Cardin. Thank you. Senator Hawley? I am not sure 
your mic is on.
    Senator Hawley. How about that?
    Chairman Cardin. Better.
    Senator Hawley. There we go. Thank you. Let me just start, 
actually, with where Senator Hirono just left off, and I know 
that Senator Ernst asked you about the affiliation rule as 
well. So I just wanted to be clear on the answers that you gave 
to Senator Ernst and now just to Senator Hirono.
    The CARES Act explicitly says, in the text of the Act, that 
nonprofits are eligible for PPP funds only if they and their 
affiliate organizations have no more than 500 employees. Now 
Planned Parenthood employs approximately 16,000 people across 
the country, and according to their own financial statements 
each and every one of its offices, both regional and national, 
each one is affiliated. They are all affiliated together, which 
means that each office is ineligible to receive funds under the 
text of the Act.
    So I just want to be clear that I understand your position 
on this. You will enforce, if confirmed, you will enforce the 
affiliation rule. Is that correct?
    Ms. Guzman. I would implement all the rules and regulations 
as applies to SBA's programs, and I welcome the opportunity to 
discuss affiliation and its application in these instances.
    Senator Hawley. Good, and just on Planned Parenthood in 
particular, can you commit to ensuring that Planned Parenthood 
affiliates, that are affiliated per the CARES languages, will 
not receive funding under PPP?
    Ms. Guzman. The SBA affiliation rule addresses all of these 
issues quite extensively, and I would welcome the opportunity 
to review that with your office as well as with the SBA staff, 
if confirmed, to ensure that we are following all the rules and 
regulations.
    Senator Hawley. Do you regard it as an open question? I 
mean, the Planned Parenthood issue, do you regard that as an 
open question, Mrs. Guzman?
    Ms. Guzman. Senator, I would need to dive into the 
specifics around affiliation and the control. It is about 
independence and control. And so I would definitely need to 
dive into this specific case. I couldn't give you a specific 
opinion about one individual entity at this point.
    Senator Hawley. Let me ask you about a different set of 
nonprofits, religious nonprofits. After the passage of the 
CARES Act, my office, we were inundated with requests from 
churches and other religious nonprofits in my state, the State 
of Missouri, saying that they had been told by some local and 
regional SBA offices that they were not eligible to participate 
in PPP, this despite very clear language in the CARES Act that 
makes religious nonprofits, 501(c)(3)s, eligible for 
assistance, again, provided they have fewer than 500 employees.
    This eligibility was explicitly preserved in the December 
relief bill that Congress passed. And my question to you is, 
can you commit to applying that law and ensuring the churches 
and other religious nonprofits continue to be eligible to 
receive PPP funding?
    Ms. Guzman. Yes, Senator, in this case as well I would 
commit to applying the rules and regulations as defined by 
Congress and implementing them at the SBA.
    Senator Hawley. Very good. And you can commit today to 
ensuring that churches and religious nonprofits receive 
equitable treatment, on the same level playing field as every 
other nonprofit under the rules. Is that fair to say?
    Ms. Guzman. I would want to ensure that all of our district 
offices and our research partners have the communication and 
understanding of the programs so that they could equitably 
distribute these funds.
    Senator Hawley. Good. Thank you.
    The Economic Injury Disaster Loan program, you and I 
visited about this yesterday. I expressed my concern based on 
the number of folks in Missouri who had come to me, who are 
eligible, under the terms of the program, but who had a 
terrible time receiving funding, and then, of course, as I said 
to you yesterday, to see the October OIG report that suggested 
that that program, the EIDL program, was rife with waste, 
fraud, and abuse is particularly--particularly--frustrating, 
given the meritorious applicants who either had significant 
delays or weren't able to get the funding.
    So I know you are aware of the issue. Let me just ask you 
what steps you will take to ensure the EIDL's program integrity 
and make sure that legitimate small businesses are not getting 
crowded out by fraud and abuse.
    Ms. Guzman. Thank you, Senator, for that question, and I 
did enjoy the conversation about that, as we have seen it in 
California as well. But the controls and oversight are really 
critical in these programs so we can ensure that the right 
businesses, who are suffering, get these funds. And so I would 
prioritize implementation of the relief funding across the 
board to ensure that that is the case.
    Senator Hawley. Very good. Thank you very much for your 
time. Congratulations on your nomination. Thank you, Mr. 
Chairman.
    Chairman Cardin. Thank you. Senator Duckworth by WebEx.
    Senator Duckworth. Thank you, Mr. Chairman. Ms. Guzman, I 
appreciated the opportunity to meet with you a couple of weeks 
ago, and I am grateful for the expertise and experience that 
you will bring to this role.
    We are obviously at a critical juncture in our Nation's 
small businesses, and I want to focus today on how we make sure 
that SBA is at the forefront of helping small business owners 
of every demographic get back on their feet.
    My first question is going to be about the SBA microloan 
program. I think it is one of the most important tools for 
expanding access----
    Chairman Cardin. Senator Duckworth, I think we have a 
problem on your connection. Let's see if we can get that re-
established.
    [Pause.]
    Chairman Cardin. While we are waiting for Senator 
Duckworth, let me make a couple of announcements, if I might. 
At the conclusion of this hearing the record will stay open 
until 5 p.m. on Friday for questions for the record, and I 
would encourage the nominee to try to respond to those 
questions as quickly as possible. Once they are completed, I 
will then query the offices to see whether we can't schedule a 
floor consideration as quickly as possible. So your cooperation 
in responding to the questions for the record would be 
extremely helpful, and I would encourage you to do that.
    Secondly, I am going to concur in many of the letters of 
recommendations that we have received from various groups, 
including receiving today the letter from the U.S. Chamber of 
Commerce in support of Mrs. Guzman's nomination being 
confirmed. And they point out that it is very important that we 
act on the nomination as soon as possible. Well, I concur in 
the Chamber's view, and without objection will make that letter 
part of our record.
    [The U.S. Chamber of Commerce letter follows:]
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    Chairman Cardin. You have heard, I think, a consistent 
message from the members of this Committee. We want to make 
sure that the existing tools that the SBA has are targeted to 
those companies that need it the most, particularly during this 
health care pandemic, and that we want to fine-tune it and 
provide the resources and help to make sure that they are 
available.
    And then in regards to new opportunities and tools, we want 
to work with you to see what we can do to provide additional 
help to the small business community in our Nation. We have a 
particular concern about the underserved community, the 
underbanked community, those in minority communities, women-
owned small businesses, that traditionally had a more difficult 
time in accessing these tools, and as Senator Inhofe pointed 
out, looking at ways that we can get into the community in a 
more effective way to get that information out.
    And I know that President Biden has talked about the 
community navigators. We have the resource partners under the 
SBA that all need to be reinforced. I was pleased that this 
year, in this past year, in Maryland, we were able to go from 
one Women's Business Center to three Women's Business Centers. 
That is going to help a great deal in reaching demographics 
that need help in accessing the tools that are available. So we 
want to make sure that we provide that type of assistance.
    The bottom line is working together we think we can really 
help the small business community, and that is why it is so 
important that we share information and we work together.
    I have been informed that Senator Duckworth offers her 
apologies. The video is not working on her computer, and 
therefore she will not be able to ask questions in person at 
this year, and can certainly take advantage of the questions 
for the record.
    I have been told that Senator Rosen is likely to join us 
very shortly, so we are going to stay, if you don't mind, in a 
brief recess, to see if Senator Rosen can be here. We will hold 
this hearing open for ten minutes to see if Senator Rosen can 
come by to ask questions. If you don't mind, we will just take 
a brief recess.
    Ms. Guzman. That would be fine. That would be fine. Thank 
you so much.
    [Recess.]
    Chairman Cardin. The Small Business Entrepreneurship 
Committee will resume its session, and at this time I would 
recognize Senator Rosen by WebEx.
    Senator Rosen. I was just questioning in another committee 
so I am trying to juggle that around. Mrs. Guzman, I just want 
to thank you for being here today, and your commitment to 
serving our Nation. We really had a productive phone call, a 
productive meeting, just last week, and I look forward to your 
plans to revive our Nation's economy, to create those jobs, and 
really just keep our Nation's small businesses afloat. You 
know, amidst a global pandemic it has really devastated our 
small business community, not just in Nevada but across this 
Nation, and I urge this Committee to have a swift confirmation 
of Mrs. Guzman so we can let her get immediately to the hard 
work of bringing our businesses back.
    But I want to talk about something really important to 
Nevada, and, of course, so many other states in the Nation, but 
it is access to PPP loans for gaining small businesses. Last 
year, when the SBA rolled out the Paycheck Protection Program 
that Congress created, small business that earned more than 
one-third of their revenues in legal gaming, operations were 
excluded from the program. This had the potential to starve 
Nevada's small businesses of critical support when they needed 
it most.
    As you know, not all casinos are big businesses. Many, 
including some of our hotel casinos, are small businesses, and 
they employ large numbers of workers who make up the backbone 
of Nevada's economy. Moreover, while people assume that gaming 
only means casinos, in our state there is gaming equipment 
inside restaurants, grocery stores, convenience stores, gas 
stations, and the like. Bans on loans to gaming in businesses 
also affects our gaming equipment manufacturers in Nevada as 
well.
    But thankfully, Senator Cortez Masto and I, along with the 
House delegation, were able to convince the SBA, under the last 
administration, to abandon this misguided policy, and the 
agency's guidance for the next round of PPP also allows gaming 
businesses to access relief.
    So, Mrs. Guzman, given the importance of gaming to Nevada's 
economic recovery, will you commit to working with me to be 
sure that the legal gaming small businesses continue to have 
access to PPP, SBA loans, and the like, as they try to stay 
afloat and revive themselves as we reopen our economy?
    Chairman Cardin. I am not sure your mic is on.
    Ms. Guzman. Apologize. My mic was off. Thank you so much, 
Senator. I appreciated meeting with you and I enjoyed the 
conversation. I am very happy to commit to ensuring that the 
program is as accessible as possible to all of our small 
businesses who qualify, and I look forward to partnering with 
you. I have noted the concern and I will be sure to follow up 
with your staff and coordinate anything in the future that you 
have concerns about specific to those types of businesses.
    Senator Rosen. Thank you. I appreciate it. I also want to 
talk about lifting the caps on EIDL loans and grants. You know, 
my office helped directly nearly 1,200 Nevada small businesses 
with their COVID relief programs, and the complaint that we 
most frequently heard about was the SBA's $1,000-per-employee 
cap on the EIDL advance grants, and the $150,000 cap on the 
EIDL loans. These borrowing caps were not Congress' intent when 
we allocated these funds, and some of our businesses have not 
been able to survive because these caps were inadequate.
    Last year, I introduced, with bipartisan legislation, EIDL 
For Small Business Act that eliminates the borrowing cap on the 
EIDL loans and the EIDL grants, and it replenished the funding 
for the EIDL program.
    And so can you commit this session to work with us to fully 
remove the caps on EIDL loans and grants, and invest the new 
dollars that are needed, 99 percent of businesses in Nevada, 
small businesses, that are needed to give that support that our 
businesses so desperately need?
    Ms. Guzman. Thank you, Senator. Yes, I heard similar 
concerns from small businesses in California, and if confirmed 
I look forward to diving in quickly into all the CARES Act 
support to make sure that we are reaching the businesses that 
need it, at the levels the Congress has allowed. And so I would 
look forward to partnering with you and your staff on ensuring 
that that happens.
    Senator Rosen. I know I just have a few seconds left, so we 
do have legal state cannabis businesses, and so I am just going 
to--we can speak about this offline and I will submit some 
questions. But will you work with our office to commit to 
consider providing legally operating cannabis small businesses 
equal access to SBA resources, the loans, counseling, 
mentoring, and training?
    Ms. Guzman. I commit to further understanding those rules 
and regulations and seeing how we can partner with your office 
to serve all the small businesses who are in need.
    Senator Rosen. Thank you. I appreciate that. Thank you 
again, Mr. Chairman.
    Chairman Cardin. Thank you, Senator Rosen.
    That will complete our hearing, but once again, let me just 
remind the members that we will keep the record open until 5 
p.m. tomorrow, Friday--5 p.m. Friday, excuse me--for questions 
for the record, and would encourage Ms. Guzman, if you would 
respond to those questions as quickly as possible so that we 
can work to schedule Committee action on your nomination as 
quickly as possible.
    Ms. Guzman. Yes, Senator, I will.
    Chairman Cardin. With that the hearing will be adjourned.
    Ms. Guzman. Thank you so much.
    [Whereupon, at 12:34 p.m., the Committee was adjourned.]

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