[Senate Hearing 117-210]
[From the U.S. Government Publishing Office]
S. Hrg. 117-210
THE PANDEMIC RESPONSE AND THE
SMALL BUSINESS ECONOMY: AN UPDATE FROM
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
__________
MAY 26, 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
__________
U.S. GOVERNMENT PUBLISHING OFFICE
46-999 PDF WASHINGTON : 2022
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COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP
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
Paul, Hon. Rand, Ranking Member, a U.S. Senator from Kentucky.... 3
Witness
Guzman, Hon. Isabella Casillas, Administrator, U.S. Small
Business Administration, Washington, DC........................ 61
Alphabetical Listing and Appendix Material Submitted
Cardin, Hon. Benjamin L.
Opening statement............................................ 1
Guzman, Hon. Isabella Casillas
Testimony.................................................... 61
Prepared statement........................................... 64
Responses to questions submitted by Ranking Member Paul and
Senators Duckworth, Rosen, Rubio, Scott, Ernst, Inhofe,
Young, and Kennedy......................................... 113
Let Them Learn in Jefferson County Public School Grassroots
Letter dated May 6, 2021..................................... 50
National Association of Federally-Insured Credit Unions
Letter dated May 26, 2021.................................... 110
Paul, Hon. Rand
Opening statement............................................ 3
Secretary Yellen's Public Engagements
March 2, 2021-May 25, 2021................................... 58
U.S. Senate Committee on Small Business and Entrepreneurship to
Administrator Guzman
Letter dated April 15, 2021.................................. 75
U.S. Senate Committee on Small Business and Entrepreneurship to
Administrator Guzman
Letter dated May 10, 2021.................................... 78
U.S. Senate Committee on Small Business and Entrepreneurship
Roundtable
Transcript dated May 6, 2021................................. 5
U.S. Senator Rand Paul to Secretary Janet Yellen
Letter dated May 6, 2021..................................... 57
U.S. Small Business Administrator Guzman to Hon. Paul Rand and
Committee Members
Letter dated May 25, 2021.................................... 100
U.S. Small Business Administration Letter to Planned Parenthood
of Delaware, Inc.
Letter dated May 19, 2020.................................... 92
U.S. Small Business Administration Letter to Planned Parenthood
of Metropolitan Washington, Inc.
Letter dated May 19, 2020.................................... 88
THE PANDEMIC RESPONSE AND
THE SMALL BUSINESS ECONOMY:
AN UPDATE FROM THE
U.S. SMALL BUSINESS ADMINISTRATION
----------
WEDNESDAY, MAY 26, 2021
United States Senate,
Committee on Small Business
and Entrepreneurship,
Washington, DC.
The Committee met, pursuant to notice, at 1:30 p.m., via
Webex and in Room 215, Dirksen Senate Office Building, Hon. Ben
Cardin, Chairman of the Committee, presiding.
Present: Senators Cardin, Cantwell, Markey, Booker, Hirono,
Duckworth, Rosen, Hickenlooper, Paul, Scott, Ernst, Hawley, and
Marshall.
OPENING STATEMENT OF HON. BENJAMIN L. CARDIN, CHAIRMAN, A U.S.
SENATOR FROM MARYLAND
Chairman Cardin. The Small Business Committee will come to
order. Let me thank our Ranking Member, Senator Paul, for
accommodating the change in time. As I think some are aware,
there is a markup starting this afternoon in the Senate Finance
Committee that some of our members need to be at, and there are
a lot of other things going on. So we appreciate the change in
schedule. It may affect some of our members' ability to be here
in person.
Administrator Guzman, I want to thank you also for the
accommodation so that we could start this hearing at 1:30.
It has been 14 months since Congress passed the CARES Act,
and the SBA had really stood up to the challenge. Over $1
trillion in aid has been provided to American small businesses.
In the Paycheck Protection Program alone, over 11 million
forgivable loans have been issued, and the latest number was to
the tune of about $791 billion. There is now optimism among
small businesses with the rollout of the COVID-19 vaccine that
businesses may be returning to a more normal volume.
So let me first thank Administrator Guzman for your
leadership. You hit the ground ready to go, and you were
particularly focused on our most vulnerable small businesses,
and you made a real difference. I also want to thank your
workforce, because it was an extraordinary challenge for our
Federal workers at the Small Business Administration.
You have supervised the expansion of the Paycheck
Protection Program and the EIDL Advance program, and you have
stood up new programs, the Shuttered Venue Program, the
Restaurant Revitalization Fund, the Community Navigator Pilot
Program.
The key has been Congress and the administration, open
lines of communication, working together to implement these
tools for small business. Transparency is absolutely essential
and sharing information timely. And unlike in the previous
administration where Treasury took a good part of the lead in
regards to the administration and implementation of the tools
for small business, under the Biden administration it has been
the Small Business Administration that has had the principal
responsibility. And I want to thank you for the transparency
and information that you have made available to all the staff
here on the Small Business Committee and to us personally, and
sharing information in a very timely way.
The coordination between Congress and the Executive branch
is incorporated into the Economic Aid Act, which was passed
this past December. Your presence here today, and the Treasury
Secretary's appearance before this Committee, was included in
that Act. So I want to thank you for being here today and
carrying out that legislative responsibility.
We will arrange for a convenient time for Secretary Yellen
to appear before our Committee. We have had some discussions
and we are looking for a date in which she will be able to
testify before the Small Business Committee.
So I am looking forward to this hearing and your update as
to how these programs are working. The traditional lending
programs were enhanced by the Economic Aid Act in December, so
I am curious as to how those modifications worked. We have
changed the eligibility of the PPP program, both by legislation
and by administrative actions, so I am curious as to how those
changes have been implemented.
The EIDL Advance program, which is really one aimed at our
most challenged small businesses, we need to know what outreach
is being given so that those that could benefit from this
program have an opportunity to participate, because we are
concerned that they do not have the same avenues of information
as other small businesses might have, and might be left behind.
The Community Navigator Pilot Program, information notice
was sent on March 3rd. We would be interested to see how that
program is moving forward. The Shuttered Venue Program,
applications opened on April 26th, and you had, I believe,
somewhere around 13,000 applications, so we will be interested
in that program. The Restaurant Revitalization Fund, you
started accepting applications on May 3rd. I understand as of
the middle of this month you had over 300,000 applications for
the Restaurant Revitalization Act. Fifty-seven percent were
businesses of women, veteran-owned, or socially and
economically disadvantaged individuals, which is the priority
in 21 days.
It is my understanding that the funding there is not going
to be enough to meet the demand, and we appreciate your
assessment as to where we are in regards to the moneys that
have been appropriated versus the demand as shown by the
applications that have been filed.
And just to let you know how important these programs are,
last week Administrator Guzman joined me and the Second
Gentleman, Doug Emhoff, in a roundtable discussion, to listen
to restauranteurs in Annapolis, Maryland. And I must tell you,
they made it very clear that they would not be here today but
for the PPP program, the EIDL program, and now the Restaurant
Revitalization Fund.
Let me just relate some of what I heard during that visit.
Monica Alvarado told about the harrowing experiences of
deciding whether she could keep her restaurant opened or not.
There were days that she thought she would not be able to make
it. But the tools allowed her to get through that period. She
became more creative in online and delivery orders, in addition
to in-person dining, and today her future looks very bright.
She was named Annapolis Person of the Year because of her
leading efforts with other restaurant owners to help feed a
community that desperately needed food during the pandemic, and
helped her neighbors, neighbors helping neighbors, and we
certainly know that from our small business community.
And then there is Spencer Jones, who owns Chick and Ruth's.
I mention that because that is an iconic restaurant in
Annapolis. I spent 20 years of my life in the State legislature
in Annapolis. He had to take over suddenly after he lost his
dad. He is optimistic thanks to the SBA tools, and said he had
the busiest week he has had since the pandemic.
So things are coming back, and I think we can take pride in
the fact that we helped that come along.
We now have another opportunity, the American Jobs Plan, a
once-in-a-generation investment in our infrastructure. So how
can we use that opportunity to help underserved and
disadvantaged communities? Last week, in a hearing on this
Committee, we heard about what we could do to help women-owned
businesses and minority-owned small businesses. This must be
our priority as to how we are going to help the underserved
entrepreneurs.
Administrator Guzman, you are the voice of small
businesses, particularly those who have been underserved in the
Biden administration. So we look forward to your testimony and
how we can work together to support our Nation's small
businesses in the months and years to come.
With that let me turn to Senator Paul.
OPENING STATEMENT OF HON. RAND PAUL, A U.S. SENATOR FROM
KENTUCKY
Senator Paul. Thank you, Mr. Chairman. After more than a
year of arbitrary lockdowns and other unnecessary government
regulation, Americans are finally getting some of their
freedoms back. Just a few weeks ago, the CDC started to follow
the science and admit to the public that there is no need for
those who have been vaccinated to continue wearing masks.
Public officials across the Nation are finally beginning to
allow businesses to reopen and children to get back to school.
These actions should have been taken months ago, and are
only the first step as we begin to try to heal our Nation and
the economy from government's unnecessary intervention in our
day-to-day lives.
As inflation rises to the highest level since the Great
Recession, it appears that we are starting to realize the cost
of rampant government spending. I have heard it from many small
businesses who are having trouble filling positions and
experiencing exorbitant increases in the cost of materials.
Earlier this month I held a roundtable with Kentucky small
business owners from a number of different industries. The
message was clear: economic lockdowns, the closures of our
schools, and rehiring workers are the greatest challenges that
small businesses face today.
Mr. Chairman, I ask for the unanimous consent to submit the
transcript of the roundtable into the record today.
Chairman Cardin. Without objection, it will be included in
the record.
[The information referred to follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Senator Paul. Since the beginning of the pandemic, the
Federal Government has spent $4.2 trillion on COVID-19 relief.
Small Business Administration has been authorized to spend just
under $1 trillion, making it one of the largest spenders in the
COVID economy, second only to the Department of Treasury.
Unfortunately, Treasury Secretary Yellen is not here today
to answer for her Department's use of those funds. Despite
being required by law--I repeat that, required by law--in a
bill that was passed overwhelmingly to be here, she is not here
today. Earlier this month I sent Secretary Yellen a letter
reminding her of that obligation, yet I have received no reply.
Mr. Chairman, I ask consent to submit that letter for the
record, along with a list of the public events Secretary Yellen
has recently chosen to participate in instead of coming to this
Committee.
Chairman Cardin. Without objection, it will be included in
the record.
[The information referred to follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Senator Paul. I also hope you will join me in calling on
her to testify, including voting on a subpoena, if necessary.
Now I would like to welcome Administrator Guzman. A few
months ago, at your nomination hearing I supported your
nomination, in good faith, with the expectation that you would
be responsive and cooperative as the Committee fulfills its
oversight responsibilities. Unfortunately, this has not been
the case. Since March, I have sent five letters requesting data
and information necessary for the Committee to conduct adequate
oversight over the SBA's COVID-19 programs. To date, we have
received only two responses, which fail to provide the complete
information we have requested.
The question we have at hand is whether or not groups in
our country are receiving money illegally, against the policy
of the Small Business Administration. We have these questions
on legality, and you are stonewalling us. This is money that is
being given to the Planned Parenthood organization. We found at
least six different loans that have been given. Among the
letters that we sent were multiple requests for specific
information about PPP loans, illegally made to Planned
Parenthood affiliates. Since you have been confirmed, we found
that at least six additional PPP loans have been made to
Planned Parenthood, for $17.6 million.
This money is all in contravention to the SBA policy that
it is illegal to give money to Planned Parenthood. In the
previous administration, they made a ruling that Planned
Parenthood was not eligible, and Planned Parenthood was
directed to send the money back. But this administration is
continuing to send money to an organization that the previous
administration set a policy that was consistent with a
longstanding policy on affiliates getting funds. When your
deputy was here the last time we asked him, ``Have you changed
the policy?'' He said, ``No, the policy is still the same,''
and yet we cannot get any explanation from you. We have given
you the questions in advance.
These loans were approved in defiance of the law, not in
accordance with the law, and are just one of the many glaring
issues with Small Business Administration programs. But
unfortunately we cannot be sure, due to the continued failure
on your part to be transparent and provide the committee with
the information we need to do our job.
I look forward to hearing your testimony, and I am hopeful
that we can find answers to our numerous outstanding questions.
Chairman Cardin. Thank you, Senator Paul. Administrator
Guzman, it is a pleasure to have you before our Committee. Your
full testimony will be made part of our record. You may proceed
as you wish.
STATEMENT OF HON. ISABELLA CASILLAS GUZMAN, ADMINISTRATOR, U.S.
SMALL BUSINESS ADMINISTRATION, WASHINGTON, DC
Ms. Guzman. Thank you so much. Good afternoon, Chairman
Cardin, Ranking Member Paul, and members of the Committee.
Thank you for the invitation to be here and for the opportunity
to discuss SBA's programs in response to the COVID-19 pandemic.
When I appeared before you as a nominee recently I did mention
how this unprecedented crisis has impacted our Nation's 30
million small businesses and innovative startups, and it really
created a sense of urgency for me, as well as my team, to work
harder, think more creatively, and build more collaboration to
meet the desperate need presented by this moment.
In my 2 1 / 2 months as SBA Administrator, I can tell you
that my motivation to deliver for our entrepreneurs has only
intensified, and I have to share how proud I am of my
incredible mission-driven team at the SBA, who despite having
had to scale at such a high intensity over the past 14 months
remain incredibly committed to our Nation's entrepreneurs. They
have been working around the clock to deliver the American
Rescue Plan's crucial relief programs to ensure our small
businesses can survive this disaster and get on the path to
recovery, growth, and resilience.
We are making significant progress, particularly in our
efforts to reach small businesses owned by women and people of
color, who, because of longstanding barriers to capital markets
and networks, suffered disproportionately from this pandemic,
and by many accounts were not able to access relief.
We are seeing the impact, and the latest economic reports
do show that small business jobs have begun to rebound, and
proprietors' income levels have begun to recover. And we are
hearing from the small businesses we serve that both our
traditional and our new relief programs have created vital
lifelines.
Earlier this month, we successfully launched the $28.6
billion Restaurant Revitalization Fund. As of Monday, when the
application portal closed, we have received more than 372,000
applications, representing over $76 billion is requested funds,
and more than half of those applications came from food and
beverage businesses owned by women, veterans, and people of
color who, as directed by Congress, received priority access to
the program.
And we are reaching the smallest of the small food and
beverage businesses, with one-third of the total funds set
aside just for them, including a specific set-aside I created
for businesses with revenues of $50,000 and under. I am proud
of how we rolled out this program in under two months while
focusing on my key priorities of meeting small businesses where
they are and integrating a customer-first, technology-driven
and equitable approach.
We also launched the $16.2 billion Shuttered Venue
Operators Grant Program. As of May 25th, the SVOG program has
received more than 13,000 applications for approximately $11
billion in requested funds. We started awarding our SVOG funds
this week and we hope to continue to help our Nation's venues
hold on until they can bring back the performances and
experience that are the life blood of our American culture.
Through our Paycheck Protection Program and Economic Injury
Disaster Loan Programs we have now gone beyond $1 trillion in
relief, and so far, in 2021, 95 percent of PPP loans have gone
to small businesses with fewer than 20 employees. Our priority
across all our relief programs is to get funds into the hands
of small businesses swiftly, efficiently, and equitably.
At the same time, we are also committed to maintaining a
high level of oversight to minimize fraud and abuse while
elevating transparency and open communication. We have
implemented controls and oversight to better achieve that
balance and reverse some of the previous fraud challenges that
initially plagued the PPP and EIDL programs. I was pleased to
hear both GAO's Bill Shear and SBA's Inspector General Mike
Ware in a recent House committee hearing that transparency at
the SBA has improved under my watch and that our relationship
is off to a very good start. There is a lot of work to do, but
we are working diligently to ensure this relief gets into the
hands of the businesses for whom it was intended.
Beyond our COVID relief programs we are also looking to the
future and our Nation's economic recovery, with an eye toward
equity. Small businesses are starting to reopen but they are
still reeling from major revenue losses, and most expect
recovery to take more than six months. This means that we will
continue to see the need for capital, which is why SBA is
exploring all options to open up capital access, including
direct lending.
Additionally, we know that the best thing we can do for our
small businesses is to help our Nation recover from COVID and
get our marketplaces and Main Streets back to normal. With more
than 61 percent of adult Americans who have taken at least one
shot of the COVID vaccine, we are making progress. The SBA is
doing its part by getting the word out about the American
Rescue Plan's tax credit available to small businesses that
provide paid leave to employees receiving or recovering from
COVID vaccinations.
There is so much more work to do. As the voice for
America's 30 million small businesses, I will be leveraging
every tool at my disposal to bring businesses back, create
jobs, and build an equitable economy that works for everyone. I
look forward to partnering with you to give all entrepreneurs
the tools they need to start, sustain, and grow into the
future.
Thank you, Mr. Chairman, Ranking Member Paul, and all the
members of the Committee for the opportunity to appear before
you today.
[The prepared statement of Ms. Guzman follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Chairman Cardin. Thank you for your testimony. Let me just
follow-up on the Restaurant Revitalization Fund. You have just
given us the most up-to-date information, which looks like we
are oversubscribed by a substantial amount over what Congress
has provided.
Now, I must tell you, this is a bipartisan proposal. The
original numbers that I saw were somewhat in excess of $100
that was going to be needed. So the fact that you have
applications at $76 billion is not really a surprise. I think
that is understood. And you are saying about 50 percent are
coming from the target group of women, veterans, and
disadvantaged communities, and you have that set-aside for the
very small businesses.
It looks like you will have enough resources to handle the
21-day priorities in the set-aside, but you are not going to
have much beyond that unless Congress provides additional
funds. Is that accurate?
Ms. Guzman. That is correct.
Chairman Cardin. Well, we need to work on that, and I hope
that you will try to fine-tune this as to who is benefiting
from the current program, who has been left out, and how much
more we need in order to carry out the intent of the American
Rescue Plan.
Ms. Guzman. We would be happy to share that data as we
continue to award funds.
Chairman Cardin. Now on the Shuttered Venue Program, it
looks like to date you have enough resources in that program to
meet the need. If I understand correctly, you still could
accept up to, it looks like about $5 billion more if the
applications come in. Am I correct on those numbers?
Ms. Guzman. Correct. We can have new applicants, and then,
of course, there is the supplemental.
Chairman Cardin. Absolutely. So I want to get to an issue
that came up in some of my conversations, and that is the
length of time it takes on a PPP forgiveness. We have heard
from some small business owners that they have been waiting a
long time, they do not understand the delay, that they have not
been kept informed. Congress took action in December to
streamline the process for the smaller of the PPP loans--I
should not say smaller--those that are not big of the PPP
loans.
Is there a reason why there is a delay in approving the PPP
forgiveness that we need to know about? We know you have to
audit. We know that you have some where the first applications
were rejected and now they filed a second and you put a hold on
it. I know there are reasons that you have holds, but could you
just share with us if there is any administrative reason why it
would take so long to approve those forgivenesses?
Ms. Guzman. No, and in fact, over 60 percent of those
applicants in 2020 have applied for forgiveness and been
processed, and it is less than 1 percent are within those hold
categories that we are discussing. It is, on average, taking
the SBA six days to process once a lender submits that final
approval and forgiveness. And so we feel strongly that the
current system is working with those being expedited under
$150,000. We know, however, that more forgiveness loans need to
come soon. There will be many businesses applying, and so the
SBA is readying, talking to lenders to figure out a simplified
process as possible to help all of the loans, regardless of
size, be expedited through the process.
Chairman Cardin. Well, a six-day processing time is
certainly very reasonable, so I am glad to hear that.
Is there a way where a business owner who has not heard
within a reasonable period of time can get the status of why
the PPP forgiveness form has not been processed?
Ms. Guzman. All of our communication does go through the
lender portal, so via the lender. We do not directly engage
with borrowers, and so we rely on the lender to share
information about the requests that SBA has for additional
information, if that is the case. In some of the cases it is a
lender hold.
Chairman Cardin. And one last question. Can you just inform
me as to the update on the Navigator Pilot Program, how that is
proceeding, and whether you have been able to identify partners
and how that is likely to be unfolded?
Ms. Guzman. We have done extensive outreach to start
readying partners across the country, and the Notice of Funding
Opportunity was published yesterday and blasted out. So we will
continue to try to hopefully bring in as many applicants as
possible within the next 45-day window and report back to you
once we have some navigator partners across the country.
Chairman Cardin. Well, we will be very interested in
working with you on that, because on the second round I am
going to ask you about the EIDL Advance, and that is one area
where we might be able to get help is through navigators to
connect with more businesses who otherwise are not aware of
what they are entitled to under the EIDL Advance program.
Senator Paul?
Senator Paul. Administrator Guzman, I have sent two letters
to you, signed by 50 percent of the Committee members,
requesting specific information regarding PPP loans to Planned
Parenthood affiliates. We have not gotten a response so far.
How many first-draw PPP loans have been approved to Planned
Parenthood affiliates?
Ms. Guzman. So specifically on specific borrowers, the SBA
has not commented on specific borrowers.
Senator Paul. Well, I am asking you. I am in charge of
oversight over your trillion-dollar agency, and I am asking
you, how many have been approved?
Ms. Guzman. We do not publicly release that information,
and one thing----
Senator Paul. So you are in defiance of Congress? You will
do what you want and not what Congress wants?
Ms. Guzman. We have provided you a full listing----
Senator Paul. You have not provided us with any listing of
Planned Parenthood affiliates who have received money. This is
an ongoing problem. The previous administration said it was
unlawful. This is a big deal. The previous administration said
it was unlawful and told them to return the money. Your
administration is now giving them money. This is a legal
question. This is a big deal. This is not something you come to
Congress and just say, ``I am not going to answer the
questions.''
Ms. Guzman. Not at all. While I cannot discuss specific
borrower information----
Senator Paul. No one is stopping you from discussing this.
In your written testimony, you discussed an individual
recipient of money through the program, so you are willing to
talk about individual recipients. You are just not willing to
talk about Planned Parenthood.
But there is a legal question here. We want to know how
many first-draw loans were given. We want to know how many
second-draw loans. We want to know, since Patrick Kelley, your
associate, came here and told us that the affiliate rule has
not been reversed. The affiliate rule predated, as far as I am
concerned, the Trump administration. It goes back decades,
because it was done to protect small businesses, so small
business programs were supposed to go to small businesses, not
big businesses.
So Planned Parenthood has 16,000 employees. The previous
administration determined that they are a big business, and yet
you continue to give them money, and you will not tell us how
much you are giving. You will not tell us if you have reserved
your policy. Have you reversed the longstanding affiliate
policy that has been part of the Small Business Administration
for decades?
Ms. Guzman. No, we have not, and if I may, what we did
provide to you is the full listing of all of the PPP loans. We
do not have a specific PPP file, but we did provide to your
staff the full listing so that you could look at all of that
information, including any Planned Parenthood.
You know, specifically on the affiliation rule, nothing has
changed with that regard. However, what I would say is that,
you know, specifically on affiliation what applies here is
management.
Senator Paul. Apparently the data you sent us that was in
collection was sent months ago and does not include the new
loans. So we want to know about the new loans. I think we
discovered the old loans, and now we would like to know about
the new loans.
But then we have to have an answer. If it is illegal,
according to the Small Business office, to give money to
Planned Parenthood, how did it become legal if you have not
changed the policy? So the previous administration said they
are a big business. They said give the money back. You are
giving money to the people that the Small Business
Administration said it was illegal to give money to. That is a
conundrum. That is a real problem.
Ms. Guzman. And if I could speak to that letter, that
letter was not a policy statement. It was not processed. In
fact, the letter does not exist in SBA systems as it is not a
formal process.
Senator Paul. Which letter?
Ms. Guzman. The letter that you referenced before in your
letters to us about this issue specifically. And so we do not
have----
Senator Paul. But what are you talking about? What letter
are you talking about? You are talking about the policy?
Ms. Guzman. Right, which I would say is not a policy. How
PPP----
Senator Paul. So you are saying that the previous
administration, when they denied funds to Planned Parenthood
they did not refer to a policy? They did not refer to the
affiliate policy, which is the policy--you are saying that the
affiliate policy is not a policy?
Ms. Guzman. The affiliation rule is a policy. What they
were referring to was general, the affiliation rule, as we
shared with you in our recent letter to you--and I apologize,
that was yesterday, so I am not sure if you have had a chance
to review it--but affiliation arises under certain
circumstances. Some of them do not apply to nonprofits, in the
case of ownership or stock options or relations, identity of
interest, which is more for foundations. But where this does
apply is on management, and that is either where there is
control of the officers----
Senator Paul. You can see how common sense would dictate
that you would put something forward saying that you have now
reinterpreted the policy to say Planned Parenthood is no longer
a big business but a small business, because you are working in
direct contradiction to the previous Small Business
Administration that said they are a big business. They went
through all the same rules you are listing for me, and they
concluded that yes, Planned Parenthood had direct control over
the affiliates, that the policies and the actions were
dependent on the national branch, and that they did not meet
the definition of a small business.
And so you are aware that not only is Planned Parenthood a
politically controversial entity, but it is also one that the
rest of government has controls on. We have put the Hyde
Amendment in for decades to try to prevent taxpayer money from
paying for abortion. But now you are going around the Hyde
Amendment, giving them money, but then you are also
reclassifying them as not a big business, as a small business,
but you are not being forthright.
Ms. Guzman. And if I may, I did not say that the--I am not
judging on the policy specifically with affiliation for a
specific borrower, because again, we do not do that. I am
sharing the affiliation rule with you, for your guidance.
However, basically the borrowers attest to certain eligibility,
and the lenders can rely on that attestation. The SBA does not
directly----
Senator Paul. But they were ruled illegal by the Small
Business Administration, and you are reversing that policy, and
you are saying, ``Oh, we don't ever look at this. It is a self-
attestation.'' Well, someone determined that they were
illegally getting the money and told them to get it back, and
now they are getting the money. I do not know how that can
happen without an explanation from the Small Business
Administration.
Ms. Guzman. And then, just to add onto that, the point at
which SBA would look at that would be at the point of
forgiveness. And so that prior relationship is attestation by
the borrower to the lender----
Senator Paul. But in, I think, Patrick Kelley, when he
testified he said you had thousands of ones that you had
reviewed for honesty, and whether or not they had been honest,
and there were lists of people that had not been, and
apparently Planned Parenthood was on the list. They are still
on the list. So they are on a list of people illegally getting
it. The policy was send it back, and now you are sending them
more. You can see how it does not make sense to us. And then
you are unwilling to comment on it, and you are unwilling to
give us information.
So my conclusion is that you believe you are above the law.
And my only conclusion is that we still want the information.
We are here for oversight, and that our next step would be to
subpoena you. But that is a disappointment to me, because when
I voted for you I thought you said you would be transparent,
and it looks like you are specifically hiding this information
from us.
Ms. Guzman. And just one other thing to note is that,
again, as we go through forgiveness, the SBA then starts to
look at these loans. That is when hold codes can arise as well.
Under those circumstances, you know, we would be happy to work
with your staff to provide further information. But again, SBA,
at this point in the loan processes, is obviously relying on
the attestation of the borrowers as well the lenders.
Senator Paul. So today no Planned Parenthood has been
forgiven. No Planned Parenthood loan has been forgiven.
Ms. Guzman. That is correct.
Senator Paul. So see, you know the information. You are
just not willing to reveal it. So you know all about their
information. The record should state you are unwilling to give
the information to Congress.
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Chairman Cardin. I will certainly support Senator Paul's
request for reasonable information for oversight. I think that
is important for the Ranking Member and any member of this
Committee to get us the information for oversight.
I do want to clarify, for the record, since I was in the
room when the drafting was done on the CARES Act, and it was
done in a very careful, bipartisan manner, Treasury was also in
the room at the time, Small Business was, under the Trump
administration, and we knew that we had a challenge in
expanding SBA program to nonprofits, since nonprofits were not
included in most of the tools available under the Small
Business Administration. And there was a lot of give-and-take
as to how we would handle nonprofits, and specific nonprofits
were mentioned. And we made it clear we were not going to carve
out for specific nonprofits, so we wanted one rule to apply.
So the affiliate rule was by design to apply as SBA had
applied the affiliate rule previous the CARES Act, which
applied mainly to for-profit entities, not for nonprofit
entities. So we recognized that going in, and you are correct
in that there they attest to their certifications and we wanted
SBA to accept that because we wanted to get money out quickly.
So I just really wanted to clarify that for the Committee.
There was no effort made to target into one specific group. We
wanted the rules to apply to all nonprofits the same, and the
former affiliation rules that were used by the SBA.
With that let me recognize Senator Rosen, via Webex.
Let me recognize Senator Hirono, in person.
Senator Hirono. Thank you. So, Ms. Guzman, it is good to
see you again. Whenever we talk about Planned Parenthood there
are all kinds of allegations and perspectives tossed around,
but I know that we were not planning to carve out or single out
Planned Parenthood or any other nonprofit for any special kind
of treatment. So SBA was supposed to apply the affiliation rule
in a nondiscriminatory way, not depending on the political or
any kind of leanings of a particular entity. But my
understanding of the questioning that I just listened to is
that the SBA, I suppose under the previous administration,
wanted the previously awarded funds to the various Planned
Parenthood affiliates back. Is that right? They sent a letter
or something, the previous administration's SBA?
Ms. Guzman. That is my understanding from the information
Dr. Paul shared.
Senator Hirono. And when they did that, was some procedure
supposed to be followed, or does the SBA Administrator or
somebody there just decides that we are going to get this money
back, and we are just going to send out letters? Is that what
happened, or are there not supposed to be procedures for a
reassessment of a previous decision that the SBA had made?
Ms. Guzman. Procedures and process were put in place, and
that was previous to that and did not follow that, correct.
Senator Hirono. So I have serious concerns about why that
was not followed, and who was this person who sent out these
letters saying to the Planned Parenthood affiliates that
suddenly money that had been awarded to them under the program
in an objective way needed to be sent back? Who is this person
who did that, who signed those letters? Do you know?
Ms. Guzman. Previous administration.
Senator Hirono. Is there a name?
Ms. Guzman. Unfortunately, I know that the document exists
as it was included in the documents provided by Dr. Paul, but
that letter does not exist in SBA.
Senator Hirono. Mr. Chairman, there should be a letter
signed by an actual person in the SBA, in the previous
administration, asking for all this money back. I would request
that this Committee get this letter.
Chairman Cardin. We will do our best.
Senator Hirono. And did you say that there is no record of
such a letter within your files?
Ms. Guzman. Within our formal process, our procedures, it
was not a formal process or procedure.
Senator Hirono. See, I find that totally amazing, that they
want to get back millions of dollars without having followed
the proper procedure.
And then as far as the use of the term like the previous
administration had deemed that this was an illegal application,
the word ``illegal'' is a legal term, and I would not apply
that term to what was going on with the SBA and Planned
Parenthood. Let's face it, there are people in this body that
would like to defund Planned Parenthood at every turn.
So let's get back to the PPP program. Before I get to that,
let me ask you about the Community Navigator Pilot Program.
Yesterday, SBA launched the Community Navigator Pilot Program,
and I am very excited about this program because it will
provide an opportunity for businesses to learn about resources
that are available as they continue to recover from this
pandemic. And the program is also a great opportunity for SBA
and others to engage with minority businesses, including Native
Hawaiian businesses.
So what should potential community navigators know before
they apply for the program, and how will SBA reach out to
potential navigators, including those that work with minority
businesses?
Ms. Guzman. We have been doing outreach via our field
offices as well as through various nonprofits who are
collaborating with us, to make sure that this information gets
out to as many businesses, as well as the mayors, to make sure
that entities can apply. And there is guidance on our website
as well as in the Notice of Funding Opportunity, with specific
advice.
Senator Hirono. I think that is one of the concerns that we
have. Whenever the SBA puts out any new program that there
really has to be quite a lot of outreach, and then making the
parts of the program very understandable for people who are
going to apply to it. Because I know you have heard from many
of us, who have heard from small businesses who have a hard
time understanding what is required, what documents, what
information, et cetera. So that is an ongoing concern for you
folks.
And then there have been some programs that were so heavily
subscribed that your website crashed. I do not know if was the
Restaurant Rescue Program where you experienced that. I know
for one of the other programs--I cannot remember, was for
places that do----
Ms. Guzman. The Shuttered Venues.
Senator Hirono. Yes, Shuttered Venues. That site crashed.
So that is an awareness that you have and you are doing
everything you can prevent those things from happening.
Ms. Guzman. Yes, of course, and this will not be at the
same scale. They actually will apply through grants.gov.
Senator Hirono. Thank you. My time is up.
Chairman Cardin. I have been informed by Senator Paul that
the letter in question was made part of our record, so we will
get a copy of that made available to you.
Senator Ernst?
Senator Ernst. Thank you, Mr. Chairman, and thank you, Ms.
Guzman, as well, for being here today to testify on the Small
Business Administration's response to the COVID-19 pandemic.
And our Nation's small businesses continue on their very long
path to recovery, and it is critical that this Committee
continues its work with the SBA to ensure that the COVID relief
programs we have worked on so hard over the past year, whether
it is the Paycheck Protection Program, our Shuttered Venue
Operators Grant Program, and the Restaurant Revitalization Fund
are administered effectively and with transparency.
And I know we are having a very lively discussion today. I
am going to just point out that the Planned Parenthood issue
that is being discussed is very important to a number of us.
Senator Paul, the Ranking Member, has gone through a number of
those issues. And we do want to make sure that these funds have
been directed to small businesses. So I would just echo the
thoughts, we would love your participation and to be able to
sort through this and get to the bottom of it. So please let's
continue to look into that.
I would like to go ahead, since it has been discussed, we
can continue with this conversation as we look for additional
information. But I would like to go on to the issue of the
Economic Injury Disaster Loan fraud that has been raised. There
are a number of reports coming from the OIG, and it says that
the SBA Office of Inspector General has released multiple
reports regarding potential fraud and identity theft within the
EIDL program, along with recommendations for tracking identity
theft complaints.
Can you give us an update on how the SBA is actually
working to combat this fraud and identity theft within this
specific program?
Ms. Guzman. Yes. Definitely, you know, reducing the risks
of fraud and waste and abuse across the board are a priority,
and I have informed my team to be very transparent with the IG
and GAO. We are working collaboratively to ensure that controls
are in place. And beyond that, I have asked them to please
consider all those controls at the onset, at the design.
A lot of these problems with EIDL fraud did occur in the
past year, as originally they were required to issue these
loans without tax documents. And so that led to a lot of
challenges in their ability to provide oversight. But that was
changed in December and implemented in this new year, and so we
are seeing a sharp decline in those rates. But in the meantime
we are collaborating with the IG as well as the GAO to make
sure that best practices for controls, fraud controls, and
compliance checks are in place across EIDL.
And then specifically with identity theft, in February we
did launch a process for businesses who were victims of
identity theft to be able to work through those issues with the
SBA directly. And so there is now an avenue and a procedure for
them to work through those issues.
Senator Ernst. Okay. So those who have had their identity
stolen, you are working with them directly. Are there ways then
to recoup the dollars that have already gone out the door to
those fraudulent applicants? Are you working with law
enforcement agencies? How exactly does that work?
Ms. Guzman. We have increased the number of individuals
within our EIDL fraud team as well, and so we have about 160
people that work collaboratively on investigations with the IG,
and then, of course, the IG, the DOJ pursues any specific
matters that we find. So we are working collaboratively and to
hopefully that end, to collect the funds.
Senator Ernst. Okay. And again, I know that there have been
so many programs to push, not just from this Committee but so
many other committees. But specifically the programs that we
have been working on here, they went out the door very quickly,
and there was necessity to do that. So now we are going through
the very difficult task of oversight and making sure that not
only government funds are protected but the individuals as
well. So identity theft is very concerning. It is serious. We
have had some Iowans affected by that, and hopefully we will be
able to work through a number of those issues.
I have very little time remaining. I do want to bring up
the Restaurant Revitalization Fund as well. I know that we
still have a number of those types of venues that are really
struggling, and I hope that we can continue to work through
that as well, as we are getting our economy back up and going.
But again, thank you for appearing in front of us today,
Administrator Guzman, and I look forward to working further
with you on some of these very concerning issues.
Ms. Guzman. Thank you, Senator.
Chairman Cardin. Senator Cantwell.
Senator Cantwell. Thank you, Chairman Cardin, and thank you
and Senator Rand for this important hearing. We all have a lot
going on today, but we are all here right now because of this
issue that Senator Cardin brought up, Senator Ernst brought up.
I did not hear what Senator Paul said but my guess is we all
are very concerned about the Restaurant Fund running out of
money as of yesterday, I guess, the $20 billion, before the
majority of people really had time to apply.
So I know my colleague asked you about this so I am sorry
if I am going over some detail here. If Congress would approve
more funds, how long would it take to get assistance to those
restaurants? And if they have already been in the application
process, will they receive priority over people who had not
already filled out paperwork?
Ms. Guzman. When we first began outreach on the Restaurant
Revitalization Fund we encouraged businesses to apply
immediately, regardless of their priority or set-aside
category, because it is a first-in, first-out. And so if we
received more funding we would be able to leverage those
existing applicants so that we could speedily get these funds
out to those who have applied.
Senator Cantwell. Do you have any idea how many applicants
you have that were unserved?
Ms. Guzman. Not the specific number of applicants, because
we are still working through the specific awards, so there
obviously will be an excessive number. We have $76 billion in
requests.
Senator Cantwell. Do you have any idea how many restaurants
that you are going to serve versus how many applicants you have
left? I mean, just any idea, like, you know, there is 30
percent more applicants that we did not serve?
Ms. Guzman. You know, I do not have the specific numbers on
how many we estimate at this point, but I can follow-up and get
that to you----
Senator Cantwell. Okay. Thank you.
Ms. Guzman [continuing]. Based on the awards made to date.
Senator Cantwell. That would be great. I would love to see
those numbers. And so you are saying that fairly quickly, is
what you are saying, you could get the dollars out the door
fairly quickly----
Ms. Guzman. Yes.
Senator Cantwell [continuing]. To those who had already
applied. Right? Okay.
So I also, in April, I think my entire Washington
delegation sent you a letter about a technical barrier that
prevented 120 Washington State distillers from accessing the
Restaurant Revitalization Fund. In order to be considered for
the grants, entities must have derived at least 33 percent of
their revenue from onsite sales. Washington State law limits
distilleries to gain no more than 30 percent of their revenue
from onsite consumption. In my State, distillers sell more
through local distribution to restaurants than in tasting
rooms. Could the SBA address this problem and could you revise
the eligibility criteria for Restaurant Fund to accommodate a
limited number of distillers, such as those in Washington?
Ms. Guzman. We spoke with stakeholders in order to
understand what the marketplace needs were, and we would
welcome guidance on that if any additional fund is created.
Senator Cantwell. What does ``guidance'' mean? I am giving
you guidance. I am giving you guidance that it would be great
to solve this problem.
Ms. Guzman. If it could be addressed in statute, that would
be great.
Senator Cantwell. Okay. And then how can we improve the
communication with the venue application process? How can we
improve that?
Ms. Guzman. With the Shuttered Venues we encouraged
everyone to apply up front. We have a sizable group in both the
first priority, second priority, and third priority. We are
processing through those applications as quickly as possible.
It is a very complex program by statute with various types of
entities, which has created a lot of various eligibility
requirements along the way, and it requires intensive
applicant-by-applicant review.
But we have started awarding funds. We have been in
communication regularly with the stakeholders. In fact, my team
just met with them again this week to give them an update. We
will continue to give them updates as frequently as possible,
as well as this Committee.
Senator Cantwell. So you would be surprised then if
somebody had submitted an application, you know, a month ago,
and had not heard anything?
Ms. Guzman. We are still in the process of reviewing, so
no, I am not surprised by that, as we, obviously, in the
initial launch, had some technical difficulties, and then
beyond that have been working through processing and finalizing
the technology to run through the review and award disbursement
side.
Senator Cantwell. Well, I think this is really important on
the communication side. Look, we get the complexity of these
and we are moving fast, but it would be great if people could
say, ``Yes, your application was received and it was completed
and we are reviewing and we will get back to you,'' if they
could get that.
Ms. Guzman. I will verify with the team.
Senator Cantwell. Yes, I think that would be helpful.
Anyway, I know this is challenging in the complexity of the
various programs, given how much SBA played a key role in
everything, but I hope that we will continue to look at this
revenue side of the equation for restaurants and for other
entities, and make sure that we are continuing to move quickly,
as we did on other aspects of the economy.
Thank you, Mr. Chairman.
Chairman Cardin. Senator Cantwell, as I pointed out a
little bit earlier, we recognize this is a bipartisan proposal
in regards to restaurants. I have already alerted the
leadership that we need a vehicle in order to deal with this,
and I know that the leader's office is looking at this now. So
we will get the specific information as a follow-up to this
hearing, but I do think we are going to need additional funds
in this program. We know we need additional funds in this
program, and I am certain we are going to have strong
bipartisan support for that. We will see whether we cannot find
a way to make that a reality.
And I also want to just underscore the points you made
about knowing the status of an application. I think that is
very, very important.
Senator Marshall?
Senator Marshall. Okay. Thank you, Chairman, and welcome,
Administrator. Welcome back to the Committee. The Restaurant
Revitalization Fund is an example of a government solution to a
problem, but as I talk to many restaurants, and really any
small businesses for that matter, the biggest challenge they
describe to me is getting people to come back to work. And they
describe to me one of the barriers is we are paying people $15
to $20 an hour to stay at home and not come back to work. I
signed a paycheck every other week for 25 years for a group of
300 people, as many as 300 people, and so the obvious comeback
is, ``Well, we just need to pay them more to come back to
work.'' But there are certain break points where you just
cannot afford to--you know, in the restaurant industry I do not
think you can make a profit if you are paying all your starting
employees $20 an hour.
Are you hearing that, and don't you agree that if we would
end the Federal supplement that we would be helping these
restaurants out quite a bit?
Ms. Guzman. I am actually hearing a combination of things,
and what I have heard is, first and foremost, very
debilitating, is the ability to attract workers because they
have children at home. And so getting the marketplaces and Main
Streets back to normal I think is really tied to those
vaccination rates, and so I know that is why President Biden is
really pushing to that 70 percent rate. As people are
vaccinated it becomes safer for everyone to go back to schools,
go back to normalcy, and then be able to have the freedom to be
able to work.
So I know that is affecting a lot of especially women in
the workforce. But in addition, across the board, it has been
challenging for businesses to restart up, including attracting
workers, but I am actually hearing a mix of things as well.
So what I would say is that, you know, we want to continue
to try to support them as they grow. I mean, obviously, this
influx of funding in the economy has spurred our economic
growth as well and enabled people to spend. So I think I will
leave it to the economists to fully evaluate the best path
forward on that.
Senator Marshall. Okay. Do you feel Planned Parenthood
should receive PPP funds?
Ms. Guzman. I am not in the business of picking winners and
losers, and I follow the policies that are in place at the SBA
on that front.
Senator Marshall. So you are the Administrator now. You
have read the policy. Is Planned Parenthood, in your opinion,
eligible for PPP funds?
Ms. Guzman. I wouldn't even be the one to assess whether or
not they are affiliated or not. I know that we have 80,000
similarly situated type nonprofits, and SBA, of course, this is
the first time that we have had to deal with this many
nonprofits. But the affiliation rules that apply are most
around management, and we have provided Ranking Member Paul and
those who also joined him on that letter some specific
outlines, guidance, on how the SBA applies the affiliation
rule.
In the case of PPP, as I shared earlier, you know, the
borrower attests to their eligibility, and the bank is allowed
to rely on that.
Senator Marshall. That's good. That is kind of my next
question. What penalties are currently in place for borrowers
who misrepresent themselves on a PPP loan or an EIDL loan
application?
Ms. Guzman. I'm sorry?
Senator Marshall. What are the penalties?
Ms. Guzman. Penalties. Well, I mean, it depends on if they
were honestly misrepresenting, if they were fraudulently
misrepresenting or not. SBA provides investigative support to
the IG, who would then pursue action with DOJ and others.
Senator Marshall. What are the potential penalties, though,
for misrepresenting themselves?
Ms. Guzman. I do not know the dollar amounts. I would have
to follow-up with you to find out what those have been, what
outcomes we have had.
Senator Marshall. Okay. Let's talk about the Shuttered
Venue Operators Grant Program for just a second. It sounds like
the first grants are going out this week. Can you describe any
other specific issues that remain that could prevent grants
from being approved and distributed?
Ms. Guzman. Just that it is a slow process, as we have
shared with our stakeholders. Unfortunately, it is an arduous
review process for eligibility as well as reviewing all the tax
documents and everything else strong fraud controls. So we
continue to work through those issues but do not anticipate any
specific issues.
Senator Marshall. Okay. Let's talk about the Community
Navigator Program, and just my concern about it getting out to
rural communities. How are you ensuring it is getting out to
rural communities? What are you doing, I guess, to market it
and get it out there where people that are living, you know,
two, three, four hours away from the main offices?
Ms. Guzman. Mm-hmm. Yes, those are definitely the
individuals we hope to help with the Community Navigator Pilot
Program. Our district offices are sharing with their networks
broadly, and we have asked them to prioritize reaching
communities that are underserved, both rural and urban, so that
we can get these navigators funded locally and then getting the
information out. So it is just a lot of outreach on our part
through existing organizations that are in our network, and we
would welcome an opportunity to work with your office to
amplify it further.
Senator Marshall. Okay. Thank you so much, Mr. Chairman. I
yield back.
Chairman Cardin. Thank you. Before I recognize Senator
Duckworth via Webex let me recognize the Ranking Member for
some UCs.
Senator Paul. I would just like to ask unanimous consent. I
think we have entered these before, but just to make sure they
are there for people. These are the letters to the Planned
Parenthood of Washington and Delaware. They are from the
Associate Administrator of the Small Business Administration,
under the previous administration, and I am told that these
letters are not sent without a process. Everyone has to review
and sign off on these papers. There is a paper trail. And so it
was said earlier that there was no paper trail, there is not a
paper trail. And this was an official policy of the Small
Business Administration, and I would like to ask unanimous
consent that they be entered into the record.
Chairman Cardin. Without objection, so ordered.
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Chairman Cardin. And Senator Paul, I am going to ask that
the Administrator's response to your letter dated May 25th,
yesterday, be made part of the record. And it does answer
Senator Marshall's inquiry about the penalties, and they are
pretty severe. For false statements it is prison time and heavy
fines. Depending on which section is violated it can be as much
as 30 years and $1 million. But the false statements to SBA
generally fall into the 5-year maximum, $250,000 fine range. So
we will make that part of the record as well.
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Chairman Cardin. Senator Duckworth.
Senator Duckworth. Thank you, Mr. Chairman. Thank you for
having this hearing. Administrator Guzman, as has been
discussed today, millions of small businesses are struggling
and they have survived the most trying times of the deadly
COVID-19 pandemic, and they are starting to see light on the
other side. Moving forward, programs established under the
American Jobs Plan, including the Restaurant Revitalization
Fund and the Shuttered Venue Operators Grant Programs, which we
have already discussed here today, will be vital in achieving a
sustained recovery in my home State of Illinois, and in
communities across the country.
The high demand for participation in these small business
recovery programs is evidence of the need for continued Federal
support. However, I am troubled by the prospect of some
businesses still being left out if funding runs dry before all
eligible entities can apply for relief.
In addition, we know that certain sectors of our economy
have been hit especially hard and comprise those businesses
struggling the most trying to recover. For example, gym and
fitness facilities are estimated to have lost roughly 1.4
million jobs, 44 percent of their industry, and tens of
billions in revenue as a result of the pandemic. And despite
aggressive COVID-19 relief programs, many gym-based businesses
have failed to achieve the financial stability due to months of
closures, high overhead costs, and weakened demand.
Administrator Guzman, during the worst depths of the
pandemic, many in the fitness industry did their part in
closing up shop to protect their employees and customers and
communities. Would you agree with me that now is the time for
Congress to do our part in making sure that this industry
receives the helping hand that will enable these small
businesses to stabilize and recover?
Ms. Guzman. We definitely agree, and in California I saw
the same thing, and I have heard it across the Nation. I mean,
many industries are hardest hit, including the gyms, and so we
would welcome the opportunity to partner with you to provide
you whatever information and support that you need to do that
analysis.
Senator Duckworth. Thank you, and I do concur that we must
support these businesses, and that I was proud to introduce the
bipartisan Gyms Act with Senator Moran.
Based on SBA's experience witnessing how much demand exists
for targeted assistance among small businesses that were not
well-suited for PPP relief, Administrator Guzman, please
address how providing $30 billion for the particularly hard-hit
fitness and gym industry would support small business owners
and their employees while also driving local economic activity.
Ms. Guzman. I would not be able to speak to the specifics
but we know that many small businesses are still hard hit. You
know, obviously we are focused on trying to get the targeted
EIDL Advance program out as well, that would provide grants to
small businesses and leverage all of our programs to support
these smaller entities or these businesses that have seen
massive revenue loss over the past year-plus.
Senator Duckworth. Thank you. So I would like to just have
my final question be on minority-owned businesses. While we are
addressing hard-hit businesses, I want to express my strong
support for enhancing efforts to provide relief to minority-
owned small businesses. You know, despite efforts to prioritize
disadvantaged small businesses in these Federal relief
programs, the reality is that we have a long way to go in
delivering required support to Black, Latinx, and AANHPI small
businesses. I commended the Biden administration for improving
SBA programs to better support minority-owned small businesses
and the communities that they serve, but I firmly believe that
Congress can do so much more to accelerate these economic
justice efforts.
Administrator Guzman, in your view what is the most
important action that Congress could take to supercharge SBA's
efforts to achieve economic justice for historically
disadvantaged small business interests?
Ms. Guzman. There are, of course, critical small business
proposal included in the American Jobs Plan. We know that our
businesses have a long road ahead of them to recover in the
economy, and we want to make sure that they have access to
capital, access to markets, including government contracting as
well as access to networks, those resources, those connection
points that will allow them to grow their businesses. And so we
look forward to supporting and administering any programs that
are able to come out of that plan.
Senator Duckworth. Thank you. I yield back, Mr. Chairman.
Chairman Cardin. Thank you. Senator Markey by Webex.
Senator Markey. Thank you, Mr. Chairman, very much. We have
a great opportunity here with President Biden's American Jobs
Plan to really help small businesses in our country. If you
just look over in the climate area for installation of solar
panels, insulating homes, bringing them up to a higher standard
of efficiency. There are millions of jobs that can be created.
So could you tell me what you are doing inside of the
Administration to advocate for small businesses to be able to
fully participate in the American Jobs Plan, especially because
they have such incredible job creation potential?
Ms. Guzman. SBA has a wealth of resources, as you all know,
that can support innovation as well as those businesses that
would be engaging in any infrastructure proposals. We know that
small businesses are held back by our aging transportation
infrastructure, in particular, and see opportunities both for
growth in terms of market access as well as growth in terms of
contracting opportunities.
So we continue to provide information in terms of the type
of impact we have seen with our contracting programs as well as
our capital programs and our innovation programs, the SBIR/STTR
programs that are so valuable to spur innovation across the
country.
Senator Markey. Thank you so much. And for these small
businesses, you know, broadband is going to be absolutely
indispensable in terms of their ability to fully participate in
hopefully an incredibly expanding economy over the next decade.
So, you know, it is absolutely imperative that every small
business have access to high-speed broadband in the years
ahead.
So talk a little bit about why you believe that small
businesses have to be central in any national broadband rollout
that we add to the statute books of our country over the next
year.
Ms. Guzman. Especially with COVID, we have seen that small
businesses have adopted technology at high rates. E-commerce
continues to grow around the world, and the United States'
ability to compete in those marketplaces is really dependent on
our businesses having full access to broadband, just as a case
on the revenue side, the market side access. So for that alone
it is really imperative that small businesses are put at the
forefront of broadband discussions.
Senator Markey. And SBIR programs, and STTR programs have
been absolutely incredible in Massachusetts, but in every state
in the union as being incubators that have led to massive job
creation in our country. Tens of thousands, if not hundreds of
thousands of jobs in Massachusetts have been created through
that program.
Could you talk about what an increase in SBIR and STTR
programs could mean for small businesses and job growth in our
country?
Ms. Guzman. We know the SBA does play a large role in
coordinating efforts of our R&D agencies around SBIR/STTR, and
we know how valuable that is to furthering the R&D and
innovation goals of the United States, the Federal Government,
as well as ensuring startups, that commercialization happens,
and that businesses benefit from that growth. We know that
innovative startups, science-based or technology-based
companies have a 5x job growth rate, and so we definitely want
to encourage that type of innovation across the United States,
and those programs are really critical in helping to ensure
that.
Senator Markey. Thank you so much. Thanks for your great
work. Thank you, Mr. Chairman.
Chairman Cardin. Administrator Guzman, I would like to--
Senator Hickenlooper is available through Webex. Now that I see
that he is on the line we will recognize Senator Hickenlooper.
Senator Hickenlooper. Great. Thank you, Mr. Chair, and I
appreciate the opportunity to get caught up on some of this. I
have been, like many people, concerned about the slow response
with the Shuttered Venues money going out, and I heard
something about the IRS is somehow part of the reason that even
now I do not think any grants have been made, even to those
venues that suffered 90 percent losses. And I might have missed
this because I was in another meeting--I apologize. What are
some of the details here, and is there anything we can do to
try and facilitate getting these venues back in business?
Ms. Guzman. Yes. I did share earlier that the Shuttered
Venue Operators Grant Program, that we have started to make
awards. It is a slow process, but we have been working closely
with our colleagues at Treasury to make sure that any initial
challenges with accessing tax information have been overcome.
We feel strongly that that collaboration is going to yield
strong results, and as we already have seen we have started to
make awards. So we are feeling good about the program and our
ability to start disbursing awards soon.
Senator Hickenlooper. Great. Well, I think that is
wonderful news. Do we think that once we spend a couple of
weeks getting those worst-hit venues, that next tranche I think
is those venues that suffered 70 percent losses in revenue. Can
we get to them in fairly short order? In other words, once we
have figured out one logjam and gotten that resolved that we
can move and get that next batch out in, let's say, 14 days?
Ms. Guzman. There is definitely learnings and efficiencies
that we hope to try to leverage. Of course, each of these
applications is complex to review from our team, and we do
follow a rule-of-two as well. So we will try to move as quickly
as possible to get to those applicants in the pipeline.
Senator Hickenlooper. Good. I appreciate that. Those were
my most pressing questions. I do want to say, I think that the
SBA has done a remarkable job throughout the entire pandemic,
transforming itself into an enterprise that was willing to
evolve in very rapid transitions. You know, I applied for an
SBA 504 loan back in, gosh, I guess it was 1991, and the
process was somewhat onerous. And just to see how much more
flexible and nimble the SBA had become really was gratifying.
We proposed a package of four bills to try and help expand the
SBA's capacity to give more access to a more diverse group of
borrowers and recipients of support, and I hope that as we go
forward we will be able to work in partnership on getting some
of these, once we get the bills passed, making sure that they
get implemented properly.
Ms. Guzman. Yes, thank you. I would welcome that
opportunity.
Senator Hickenlooper. I yield the rest of my time, Mr.
Chair.
Chairman Cardin. Thank you, Senator Hickenlooper. I can
tell you, I concur in your observations about the ability of
the SBA to stand up these programs and to implement them. It
was a herculean task and it made a huge difference in our
economy for small businesses, no question.
Administrator Guzman, I want to, and maybe we will continue
this through a more informal process, but to get an update as
to how we are dealing with the EIDL grant program. I am really
concerned. This is really the only program for low-income
communities, and it is a challenge. So I hope either through
the Navigator Program or through the other resources at SBA and
your resource partners we will make an effort to reach this
hard-to-serve, underserved community, because this is a
lifeline, and we want to see these businesses survive, and we
think these grants, particularly the two levels of grants, are
important for the survival of disadvantaged small businesses.
So I would ask you to work with us as to how we can do a
better outreach to get this program in a more used way. We have
resources available, and we want to see them go to the intended
purpose.
Ms. Guzman. Yes. Thank you for that. And we concur and we
have been evaluating what we can do to improve the outreach and
improve outcomes. Obviously, we have done the initial outreach
to the priority groups first. Those were those who had already
applied. And we sent over 10 million emails, sent another over
3 1/2 follow-up emails with a pretty good open rate. And
so we continue to try to work with those constituents, and then
in early June we will be opening up the platform so that those
applicants, after December 27th, in the pipeline as well as
just the general public of those eligible businesses can apply,
so low income with those losses. We are continuing to look at
how we can simplify for the process. Obviously providing tax
documents and that revenue history is a challenge, so as much
as we can help them walk through that process, we will.
Chairman Cardin. And please keep us informed. We want to
work with you together on that issue.
My last request is that I would be interested, as the PPP
program is coming to an end, how well the administrative
changes on returning citizens and those with student debt, how
they were utilized. I would be interested in seeing the results
from that administrative change.
And then the changes we made in December to your core
programs, how effective that has been in making the core
continuing programs of the SBA more useful to particularly
vulnerable small businesses. If you could get us that
information I would appreciate it.
Ms. Guzman. Yes, we would be happy to.
Chairman Cardin. Senator, Hirono, anything else?
With that we thank you very much. The record will remain
open for two weeks for questions, and we ask that you try to
respond as quickly as possible. And with that the Committee
will stand adjourned, thanking the Administrator for her
accommodations today.
Ms. Guzman. Thank you. Thank you for your time.
[Whereupon, at 2:45 p.m., the Committee was adjourned.]
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