[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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