[House Hearing, 118 Congress]
[From the U.S. Government Publishing Office]


                       OVERSIGHT OF THE SBA'S OFFICE OF
                        ENTREPRENEURIAL DEVELOPMENT

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

                                HEARING

                               BEFORE THE

                      COMMITTEE ON SMALL BUSINESS
                             UNITED STATES
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED EIGHTEENTH CONGRESS

                             FIRST SESSION

                               __________

                              HEARING HELD
                           NOVEMBER 14, 2023

                               __________

[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]                               
                               

            Small Business Committee Document Number 118-030
             Available via the GPO Website: www.govinfo.gov
             
                              __________

                   U.S. GOVERNMENT PUBLISHING OFFICE                    
54-086                     WASHINGTON : 2024                    
          
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                   HOUSE COMMITTEE ON SMALL BUSINESS

                    ROGER WILLIAMS, Texas, Chairman
                      BLAINE LUETKEMEYER, Missouri
                        PETE STAUBER, Minnesota
                        DAN MEUSER, Pennsylvania
                         BETH VAN DUYNE, Texas
                         MARIA SALAZAR, Florida
                          TRACEY MANN, Kansas
                           JAKE ELLZEY, Texas
                        MARC MOLINARO, New York
                         MARK ALFORD, Missouri
                           ELI CRANE, Arizona
                          AARON BEAN, Florida
                           WESLEY HUNT, Texas
                         NICK LALOTA, New York
               NYDIA VELAZQUEZ, New York, Ranking Member
                          JARED GOLDEN, Maine
                         KWEISI MFUME, Maryland
                        DEAN PHILLIPS, Minnesota
                          GREG LANDSMAN, Ohio
                       MORGAN MCGARVEY, Kentucky
                  MARIE GLUESENKAMP PEREZ, Washington
                       HILLARY SCHOLTEN, Michigan
                        SHRI THANEDAR, Michigan
                          JUDY CHU, California
                         SHARICE DAVIDS, Kansas
                      CHRIS PAPPAS, New Hampshire

                  Ben Johnson, Majority Staff Director
                 Melissa Jung, Minority Staff Director
                            
                            
                            C O N T E N T S

                           OPENING STATEMENTS

                                                                   Page
Hon. Beth Van Duyne..............................................     1
Hon. Roger Williams..............................................    12
Hon. Nydia Velazquez.............................................     3

                                WITNESS

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

                                APPENDIX

Prepared Statement:
    Mr. Mark Madrid, Associate Administrator, Office of 
      Entrepreneurial Development, United States Small Business 
      Administration, Washington, DC.............................    25
Questions and Answers for the Record:
    Questions from Hon. Nydia Velazquez to Mr. Mark Madrid and 
      Answers from Mr. Mark Madrid...............................    30
Additional Material for the Record:
    Bipartisan Policy Center Action..............................    39

 
      OVERSIGHT OF THE SBA'S OFFICE OF ENTREPRENEURIAL DEVELOPMENT

                              ----------                              


                       TUESDAY, NOVEMBER 14, 2023

                  House of Representatives,
               Committee on Small Business,
                                                    Washington, DC.
    The Committee met, pursuant to call, at 10:03 a.m., in Room 
2360, Rayburn House Office Building, Hon. Roger Williams 
[chairman of the Committee] presiding.
    Present: Representatives Williams, Stauber, Meuser, Van 
Duyne, Mann, Ellzey, Crane, Bean, LaLota, Velazquez, Golden, 
Landsman, McGarvey, Gluesenkamp Perez, Scholten, Thanedar, 
Davids, and Pappas.
    Ms. VAN DUYNE. [Presiding.] We are going to go ahead and 
get started.
    I recognize the gentleman from Florida, Aaron Bean, to lead 
us in the Pledge and a prayer.
    Mr. BEAN. Thank you very much, Madam Chair.
    A very good morning, Small Business Committee. Let's go to 
the Lord in prayer.
    Heavenly Father, we are just truly grateful for the 
blessings of liberty and choosing our own way. We know, Lord, 
that it is not easy to have freedom, and we ask for wisdom and 
courage to do great things that we can just continue to live in 
a great country. We ask that those winds of freedom continue to 
blow around the world. We are with the people in Israel that 
are still suffering from just horrendous attacks, and so we are 
with them, and hostages and families. And we are grateful for 
those that help defend that freedom, and have defended that 
freedom, and will defend that freedom. So all this we ask in 
your name. Amen.
    Join me in the Pledge, ladies and gentlemen. And here we 
go.
    I pledge allegiance to the flag of the United States of 
America. And to the Republic for which it stands, one nation 
under God, indivisible, with liberty and justice for all.
    Ms. VAN DUYNE. I now call the Committee on Small Business 
to order. And without objection, the Chair is authorized to 
declare a recess of the Committee at any time.
    I now recognize myself for an opening statement.
    First, I want to thank our witness, Associate Administrator 
Madrid, for joining us today. I hope this hearing will continue 
a productive dialogue on how we can ensure SBA resources are 
being used to reach the largest amount of small businesses 
across our country.
    Owning your own small business is one of the most rewarding 
careers in America. And you get to put your time and effort 
into something that you are passionate about and fulfill a need 
in the marketplace.
    We all know that to be a successful small business owner 
you do not need government assistance. However, for some people 
that do not know where to begin their entrepreneurial journey 
the SBA can help. Through a network of resource partners, the 
SBA offers assistance to businesses in all stages of their life 
cycle. Whether it is a small business owner that is unsure 
about which lending product would be best suited for their 
business or someone looking to hire additional workers from 
local community colleges, the SBA has resources that can be 
utilized.
    Since we are spending taxpayer dollars on providing these 
resources to entrepreneurs, it is our duty to make sure that 
these programs are operating effectively and efficiently. 
Unfortunately, we have seen the SBA stray away from the 
programs that have a known track record of success.
    For example, in 2021, the Small Business Development Center 
assisted over 306,000 clients, costing roughly $400 per client. 
During the same period, the Community Navigator Program 
assisted 16,312 clients, costing more than $7,000 per business 
helped. The metrics of these two programs speak for themselves. 
One of these programs is simply not worth the money.
    However, in President Biden's 2024 budget request, the SBA 
wants to take funds away from the SBDC and give it to the 
Community Navigator Program. As with any taxpayer-funded 
program, money should be allocated toward what we know works, 
and this Committee has focused on spotlighting duplicative or 
wasteful programs within the SBA.
    Outside of just the Community Navigator Program, I hope 
today we can learn more about the general structure of many of 
the other entrepreneurial development programs offered by the 
agency. I want to know how the programming being offered by 
small business development centers, women's business centers, 
SCORE Program, and regional innovation clusters are serving 
different needs.
    We see multiple OIG reports highlighting the duplicative 
nature of some of these programs, and it is our duty to 
evaluate how these resources could be best tailored to service 
our nation's small businesses.
    Additionally, we must ensure that the services being 
offered to small businesses are relevant to their current 
needs. The last few years we have consistently heard from small 
businesses that inflation, regulations, and worker shortages 
have been a main concern, and I am eager to hear today how the 
SBA resource partners are advising our nation's small 
businesses on how to deal with those various challenges.
    As a Committee, we remain focused on putting Main Street 
America first.
    Associate Administrator Madrid, I want to thank you again 
for being here with us today. And I am looking forward to 
today's conversation.
    With that, I yield to our distinguished Ranking Member from 
New York, Ms. Velazquez.
    I now recognize the distinguished Ranking Member for her 
opening remarks.
    Ms. VELAZQUEZ. Thank you, Madam Chair.
    America's 33 million small businesses are the foundation of 
our nation's economy. They account for two-thirds of new jobs 
and have powered our post-pandemic recovery.
    Launching a small business though is not for the faint of 
heart. When it comes to turning a great idea into a thriving 
business, entrepreneurs can face a number of challenges. To 
assist entrepreneurs, SBA offers a range of free or low-cost 
entrepreneurial counseling and training services. The services 
are delivered through the small business development centers, 
women business centers, and SCORE. They counsel approximately 1 
million small business owners every year.
    Entrepreneurial development initiatives have proven to be a 
great return on investment. Studies have shown that small 
businesses receiving 3 or more hours of counseling have higher 
survival rates than firms that do not receive assistance.
    Unfortunately, these services are only reaching a small 
fraction of our nation's small businesses and certain 
communities can be left behind.
    A recent report by the Office of Advocacy confirms that 
large and persistent racial disparities in business ownership 
and outcomes have existed for some time in the United States 
and are well known. Only 5 percent of Blacks and 8 percent of 
Latino owned small businesses compare to more than 10 percent 
of non-Latino Whites. Moreover, Black and Latino owned 
businesses have lower average sales and hire fewer employees.
    A well-known challenge for women, minority, and rural 
entrepreneurs is lack of access to capital and mentorship.
    Today, I hope to learn what your office is doing to address 
these challenges and increase counseling to communities that 
need it most. I would also like to know what is working well 
and what needs to be improved at the Office of Entrepreneurial 
Development. It will be helpful to hear your views on the 
pending legislation such as the SBDC Improvements Act of 2023, 
the Women's Business Centers Improvement Act of 2023, and the 
SCORE for Small Business Act. These bills easily passed the 
House in each of the last two Congresses.
    My democratic colleagues and I are fully committed to 
serving America's entrepreneurs and providing resources that 
put them in the best position to survive and thrive. My hope is 
that we will be able to reauthorize these programs and provide 
adequate levels of funding. With that said, we are days away 
from a potential republican government shutdown, and small 
businesses deserve to know that the SBA will be open for 
business.
    Welcome, Mr. Madrid. I look forward to hearing your 
testimony.
    And with that, Madam Chair, I yield back. Thank you.
    Ms. VAN DUYNE. I will now introduce our witness, Mr. Mark 
Madrid.
    Mr. Madrid is the associate administrator for the Office of 
Entrepreneurial Development at the Small Business 
Administration located here in Washington, D.C. The Office of 
Entrepreneurial Development helps educate entrepreneurs on how 
to start and grow their businesses through a network of 
resource partners. Prior to serving at the SBA, Mr. Madrid 
served as the CEO of Latino Business Action Network, a national 
501(c)(3) organization. He was named the 2019 Silicon Valley 
Nonprofit CEO of the Year by the Silicon Valley Business 
Journal. He also serves on the Board of Trustees for 
Scholarship America and is an honorary colonel of the U.S. Army 
and Jefferson Award recipient. Mr. Madrid attended the 
University of Texas at Austin for undergrad and later earned 
his master's degree in nonprofit administration from the 
University of Notre Dame.
    Mr. Madrid, thank you for joining us today for this 
important hearing, and we look forward to the conversation 
ahead.
    Mr. MADRID. Good morning, Madam Chair and----
    Ms. VAN DUYNE. But before recognizing the witness I would 
like to remind you that you have got 5 minutes for your 
comments. And if you see the red light turn on it means that 
your 5 minutes have concluded and you just need to wrap up your 
testimony.
    I now recognize Mr. Madrid for his 5 minute opening 
remarks.

 STATEMENT OF MARK MADRID, ASSOCIATE ADMINISTRATOR, OFFICE OF 
ENTREPRENEURIAL DEVELOPMENT, U.S. SMALL BUSINESS ADMINISTRATION

    Mr. MADRID. Good morning, Madam Chair, Ranking Member 
Velazquez, and distinguished Members of the Committee. Thank 
you for the invitation to discuss the SBA Office of 
Entrepreneurial Development (OED).
    I came to the Small Business Administration from the 
private and nonprofit sectors, and I have seen firsthand the 
way that public-private sector partnerships can benefit our 
small businesses. Prior to SBA, I led the Stanford University 
Latino Entrepreneurship Initiative/Latino Business Action 
Network. And as a proud Texan and the son of a small business 
owner, I previously served as CEO of the Greater Austin 
Hispanic Chamber of Commerce and COO of the Houston Hispanic 
Chamber of Commerce. Since 2021, I have been privileged to lead 
the OED, the SBA's technical assistance arm on the ground that 
helps our small businesses access training, counseling, and 
other resources. Under Administrator Guzman's leadership, OED 
has made great progress in working to help small business 
owners grow through a customer-centric and technology-forward 
approach.
    Our goal is to nurture long-term relationships enduring 
through respective business lifecycles.
    The U.S. economy continues to experience a record small 
business boom with more than 14 million new small businesses 
applications since January 2021. More Americans are starting 
small businesses than ever before--acts of hope as President 
Biden called them in the State of the Union Address.
    SBA OED leads the THRIVE Emerging Leaders Reimagined 
Program, which provides executive-level training designed to 
accelerate growth of small businesses. More than 8,000 small 
businesses have graduated from this initiative since 2008, 
supporting nearly $1 billion in new financing and over $4 
billion in government contracting.
    SBA amplifies its reach through a network of resource 
partners, the largest of which is the SBDC Program, which are 
affiliated with state universities, economic development 
agencies, and other partners, have notable reach via 63 Lead 
Centers and nearly 900 Service Centers. The SBDC network 
counseled over 306,000 clients in fiscal year 2022 and helped 
them start over 20,000 new small businesses and obtain over 
$7.8 billion in capital.
    Our nation's record small business boom is being led by 
women, particularly women of color. In fiscal year 2022, WBCs, 
our women's business centers served more than 84,000 clients 
with a range of services from counseling, business planning, 
capital readiness, and government contracting. This led to more 
than 2,800 new business starts and over 8,350 loans. Under this 
administration we have tripled the number of WBCs at 
historically Black colleges and universities, Hispanic-serving 
institutions, and other MSIs.
    Another critical partner during this record small business 
boom is SCORE. Celebrating its 60th anniversary next year, 
SCORE provides free mentoring, personalized coaching, and 
education to our small businesses from volunteer experts who 
have a demonstrated track record and distinguished knowledge. 
With more than 10,000 volunteers across 50 states, Puerto Rico, 
and U.S. territories, SCORE served more than 322,000 unique 
clients in fiscal year 2022 alone. Importantly, SCORE has also 
expanded their reach to ensure that underserved entrepreneurs 
have access to services.
    And finally, I highlight the impact of Community 
Navigators. In the first 18 months of the program, Community 
Navigators served nearly 29,000 unique clients and helped them 
access $249 million in approved funding. More than 294,000 
individuals attended a training session hosted by Community 
Navigators and service provided 175,000 hours of training and 
counseling services.
    In closing, I am energized to lead OED with our delivery of 
critical and timely services for our resilient and diverse U.S. 
small businesses. With Administrator Guzman's whole-of-SBA 
approach, we will continue to increase entrepreneurial and 
capital readiness support for America's small businesses. Just 
as my dad and mom built a Texas Panhandle welding business from 
the ground up in the Texas Panhandle, our nation's small 
businesses are building and serving as the backbone of our 
economy every single day. Personally, I have never met a more 
resilient group than our U.S. small business owners no matter 
how small they are, what they look like, where they come from, 
or where they operate. It is truly the highest honor imaginable 
serving them.
    It is an honor to appear before you today and thank you 
very much.
    Ms. VAN DUYNE. Thank you very much.
    We will now move to the Member questions under the 5 minute 
rule, and I will recognize myself for 5 minutes.
    Mr. Madrid, recently the Office of Small Business 
Development Centers published a final rule for the SBDC Program 
which allows private business data to be shared with the 
government. This rule also gives the SBA administrator the 
discretion to share data about companies who have sought 
assistance from an SBDC with other federal agencies and state 
governments.
    Mr. Madrid, looking at the public comments for this rule 
there were about 50 for the proposed privacy change. Of the 50 
comments received, how many SBDCs have expressed support for 
this expanded privacy regulation?
    Mr. MADRID. Thank you, Madam Chair, for the question.
    This is about oversight when it comes to privacy. We have 
clarified what this could mean in terms of a state or federal 
entity audit if they are doing business with the SBDCs, which 
is the case beyond the federal government working and the SBA 
working with the SBDCs. In terms of the public comments and the 
SBDC regs, over 75 percent of the comments were approved but 
there is this position on privacy.
    Ms. VAN DUYNE. So for the 50 that had questions with 
privacy how many expressed concern of the 50 that you received?
    Mr. MADRID. To be complete and accurate I would have to get 
back to you through our Office of SBDCs.
    Ms. VAN DUYNE. About, percentagewise?
    Mr. MADRID. About 75 percent of the comments from the SBDCs 
were approved.
    Ms. VAN DUYNE. How many expressed concerns for the 
regulation?
    Mr. MADRID. There were concerns about privacy as you 
mentioned. And we----
    Ms. VAN DUYNE. Do you know what percentage----
    Mr. MADRID. I don't know the percentage. I would have to 
get back to you on that----
    Ms. VAN DUYNE. Okay. That would be great.
    Mr. MADRID.--to be complete and accurate.
    Ms. VAN DUYNE. So can you tell me which state government or 
federal agencies have ever requested information data from the 
SBA regrading companies that use its SBDC services?
    Mr. MADRID. To my knowledge, I do not have any knowledge of 
that. This is more of oversight.
    Ms. VAN DUYNE. So can you help me understand then, if we 
have never had a request, then what is the need for this rule? 
Because if it has never been asked for then why move forward 
with another burden when businesses are already struggling to 
stay afloat?
    Mr. MADRID. Madam Chair, we share your views in terms of 
the importance of privacy, and we protect privacy voraciously 
in terms of FISMA standards and also encryption of data. In 
this case, we just wanted to improve actually the safeguards of 
privacy in the case of a federal or state agency auditing a 
center which we----
    Ms. VAN DUYNE. But to your knowledge it has not happened, 
so why the need for the bill, for the additional regulation?
    Mr. MADRID. We just want ot make sure that we are, you 
know, oversight is something that is important to the American 
taxpayer dollar, it is important to the public, so this is 
about oversight.
    Ms. VAN DUYNE. Okay. So there are so many more things that 
we could be doing. It seems like you have a solution but there 
is no problem.
    So how can the Committee be sure that the SBA will not 
share client data with other agencies or state governments as a 
tool to get around constitutional subpoena and warrant 
requirements?
    Mr. MADRID. We take privacy seriously. As mentioned 
previously, we are FISMA compliant. We encrypt the data, 
whether it is at storage or rest. The SBDC regulations by the 
way have not been updated since 1995. So we are also bringing 
them up to code because we had temporary band-aids when it came 
to 2 CFR requirements which are, in layman's term, grantmaking 
requirements that have been updated 17 times since 1995. So 
that was also a measure to update this, to bring them up to 
code from the Small Business Act.
    Ms. VAN DUYNE. So we are updating the tools that would be 
in place that could protect data from being taken by 
unauthorized users but we do not have it yet?
    Mr. MADRID. Representative, what I was referring to was the 
2 CFR guidelines. This aspect is one----
    Ms. VAN DUYNE. Well, you just said that they are outdated.
    Mr. MADRID. The regs are updated.
    Ms. VAN DUYNE. But the technology is already in place and 
ready to go?
    Mr. MADRID. I am sorry; I am not sure if I am understanding 
the question.
    Ms. VAN DUYNE. What specific tools are you talking about 
that are in place to ensure that this data would not have 
unauthorized access?
    Mr. MADRID. Sure. I am talking about encryption through our 
Office of CIO.
    Ms. VAN DUYNE. Okay.
    Mr. MADRID. And also our FISMA standard compliance.
    Ms. VAN DUYNE. Okay. So all of that is already in place?
    Mr. MADRID. Yes, Representative.
    Ms. VAN DUYNE. So nothing needs to be updated?
    Mr. MADRID. The technology to protect our data is in place, 
Representative.
    Ms. VAN DUYNE. Have we had any issues with SBA and access 
being given when it is not supposed to be or information being 
sent out when it was not supposed to be?
    Mr. MADRID. Madam Chair, I am not aware of a situation but 
I could get back to you.
    Ms. VAN DUYNE. That would be great.
    Mr. MADRID. I want to be complete and accurate.
    Ms. VAN DUYNE. That would be great. We are aware of several 
situations where information has been shared when it was not 
supposed to be. And if you could find out more information I 
would really appreciate it.
    Mr. MADRID. Absolutely.
    Ms. VAN DUYNE. So I now recognize the Ranking Member for 5 
minutes of questions.
    Mr. MADRID. Thank you.
    Ms. VELAZQUEZ. Thank you, Madam Chair.
    Mr. Madrid, resource partners provide training to 1 million 
small businesses every year, which is a small fraction of the 
33 million small businesses nationwide. What steps have you 
taken to increase the awareness of these services, particularly 
in underrepresented and rural communities?
    Mr. MADRID. Ranking Member, thank you for the question.
    There are several things that we have embarked upon. One 
was an ad campaign that generated almost $1.9 billion generated 
hits to our website, including 5.4 million new users. In 
addition, we have increased our multilingual services, so there 
are more pages that are translated in languages besides 
English, as well as with the Community Navigator Pilot Program, 
70 percent of those clients said they have not done business 
with the SBA in the last 5 years.
    And lastly, we have increased our WBC footprint in 
historically and Black universities, HBCUs and MSIs and HSIs. 
And SBDCs have increased their footprint over 10 percent with 
MSIs.
    Ms. VELAZQUEZ. Okay, thank you.
    Well, I am glad to hear that you are conducting an outreach 
campaign, especially to underrepresented communities.
    In your previous appearance before the Committee, you 
testified that SBA was migrating to EDMIS-Next Generation to 
increase its data collection capabilities. Can you update us on 
that progress?
    Mr. MADRID. Thank you for the question.
    Our updated and modernized technology goes live on November 
20. It is Project Nexus. And what the system is going to do, it 
is going to be more accurate. It is going to cost less. And it 
is going to provide more capabilities both on the back end at 
the Office of Entrepreneurial Development, as well as with our 
stakeholders. And notably, they have been involved with us 
every step of the way. So America's SBDC, the Association of 
Women's Business Centers and SCORE, we have had over 25 
meetings about this project.
    Ms. VELAZQUEZ. What can you tell us about this new system? 
How will the new system increase SBA reporting capabilities and 
allow the agency to better assess the quality of the counseling 
services?
    Mr. MADRID. Well, the technology--thank you for the 
question--is going to improve the speed of information, the 
accuracy. The EDMIS system, although we appreciated it, we had 
to keep customizing it. We had to graduate from EDMIS to EDMIS-
NG, Next Generation. So this provides more of a long-term 
solution that will sustain the reporting over time and the 
growing concern of the SBA, the agency.
    Ms. VELAZQUEZ. Can you share more information about SBA's 
creation of a data collection working group and how it has 
improved the process for collecting information with the 
updated system?
    Mr. MADRID. Yes. In terms of Form 641, we had a data 
collection group. We met over 25 times. And that included our 
OED leadership. It included our IT manager and representation 
from the leadership of SBDCs, WBCs, and SCORE. So over 25 
meetings in the spirit of collaboration, just like with the 
Nexus platform.
    Ms. VELAZQUEZ. Timely reimbursement for grant payments is 
vital for the resource partners, particularly women's business 
centers. Have you experienced any delays? And if yes, what were 
the reasons for those delays and what steps have you taken to 
improve the process?
    Mr. MADRID. Thank you for the question.
    Payment reimbursement is very important to us. In full 
transparency, we have had some staff turnover in terms of 
grants management specialist staff. So what we are doing is we 
are in the final stages of interviewing a selection of grant 
management specialists. We are also excited in the deputy role 
that we have somebody that the room knows well, that has solid 
grant management experience. So we are looking forward to 
making sure that payments are reimbursed on a timely basis.
    The other item of note is that we also are working with our 
women's business centers and the Association of Women's 
Business Centers in terms of training. So we had recently a 
training session called How to Submit an Error Free Financial 
Report. That is going to be important because WBCs of different 
sizes, new entrants, will need that training.
    Ms. VELAZQUEZ. Okay. How would a potential government 
shutdown affect reimbursement for the resource partners?
    Mr. MADRID. Thank you.
    We would have furloughed staff. So the payments could be 
requested but could not be processed. And they would not be 
paid.
    Ms. VELAZQUEZ. Thank you.
    I yield back.
    Ms. VAN DUYNE. Thank you, Ms. Velazquez.
    I now recognize the gentleman from Pennsylvania, Mr. 
Meuser, for 5 minutes.
    Mr. MEUSER. Thank you, Madam Chairwoman, very much.
    And Mr. Madrid, thanks for being with us.
    So somewhat succinctly, can you tell me what your office 
does for small business?
    Mr. MADRID. Absolutely. So we have three major offices. The 
Office of SBDCs that oversees our small business development 
centers, Office of Women's Business Ownership that oversees our 
WBCs, our women's business centers; our Office of 
Entrepreneurship Education oversees SCORE, the Community 
Navigator Pilot Program; our online tools, as well as online 
components like Ascent and other government contracting 
curriculums; our THRIVE Program, which is our executive level 
series for small businesses across the country; and our efforts 
with Rural Affairs as well and cybersecurity.
    Mr. MEUSER. Okay. And your background, you were in the 
financial sector, JPMorgan; is that correct?
    Mr. MADRID. That is right. I was in the financial sector 
and then pivoted in 2009 in the middle of the Great Recession 
to supporting small businesses on the ground. That is where I 
have been ever since.
    Mr. MEUSER. Right. With the Latino Bureau of Commerce?
    Mr. MADRID. I was at the Greater Austin Hispanic Chamber of 
Commerce.
    Mr. MEUSER. That is great. We work with them quite a bit.
    So what challenges--you must talk with entrepreneurs quite 
a bit--what challenges over the last year or two have they 
expressed to you that is helpful for you to help them?
    Mr. MADRID. Absolutely. Thank you for the question.
    I am from a small business as mentioned. And from a rural 
place in the Texas Panhandle, Friona, Texas. So I have traveled 
over 30 states since I was appointed in February 2021. So here 
are the issues that I have been hearing from South Carolina to 
Texas to Florida to Boise, Idaho, and other places, Sioux 
Falls, South Dakota, is workforce development is an issue. 
Certainly, access to capital is an issue. People are trying to 
realize how to diversify their businesses in current 
environments.
    Mr. MEUSER. They did not mention inflation and energy 
costs?
    Mr. MADRID. Well, certainly global inflation is an issue.
    Mr. MEUSER. How the guardians 29:18xx are being squeezed 
and how difficult it is to stay in business and how they are 
working far longer hours? Because I could go talk to 50 small 
businesses in my district because I am from the business world 
as well, and every single one of them will tell me that. It is 
just interesting that you do not mention that.
    Mr. MADRID. Well, I hear a series of issues from our small 
business owners, and our office is here to support them. So I 
am fortunate to be with these networks that we oversee, 
including our educational programs.
    Mr. MEUSER. Okay. Yeah, but we need reality. We do not need 
etiology; do you not agree?
    So let me ask you this. The Congressional Budget Office, 
you are basically slashing SCORE and small business and the 
SBDCs which have proven effective by 40 percent cut to SCORE, 
13 percent cut to SBDC, pretty sizable reductions and yet you 
are pouring it on for the Community Navigator Program, which is 
suspect for various reasons, particularly since the CBO has 
stated that it started less than 500 businesses, which is not 
bad but at a rate of $7,355 per client, while the SBDC assisted 
306,000 clients at a cost of $457. So I would just think the 
ROI for one is far better than the idea that you just like one 
over the other. Or is there a business reason why you are 
making that decision?
    Mr. MADRID. Representative, every American deserves a 
chance at small business, and I think we can all agree upon 
that. So if there was $249 million----
    Mr. MEUSER. Every American does not deserve taxpayer 
dollars that get wasted.
    Mr. MADRID. The small businesses supported by the likes of 
the Institute for Veterans and Military Families, the National 
Urban League, the U.S. Hispanic Chamber, the U.S. Black 
Chambers, they are mustard seeds. Seventy percent of the 
Community Navigator clients had not done business with the SBA 
in the last 5 years. So the evolving nature of entrepreneurship 
is changing and I should know. I have been supporting small 
businesses on the ground for the last 15 years.
    Mr. MEUSER. You are in the position. You get to make the 
decisions but we get to provide the oversight and those numbers 
are accurate. So please just keep that in mind. Right? SBDCs 
throughout Pennsylvania anyway do very well and my 
understanding is the Community Navigator Program is not doing 
all that well and yet that is where you are allocating far more 
funds and actually removing them from an area that has proven 
effective. So that is a concern to me. So I just want you to 
know that. And I think it is a concern to this Committee.
    I have got limited time. Just on the women's business 
centers, I understand that there was a recommendation by the IG 
to recover more than 800,000 probably spent funds from the 
program. I am out of time so perhaps you can provide the 
Committee with a copy of the plan to recoup some of that 
funding if that is something you are working on.
    I yield back, Madam Chair.
    Ms. VAN DUYNE. Thank you very much, Mr. Meuser.
    I now recognize the gentleman from Maine, Mr. Golden, for 5 
minutes.
    Mr. GOLDEN. Thank you.
    I am going to stick with small business development centers 
for a little bit.
    The Community Navigator Program was set up through I 
believe the American Rescue Plan and is a pilot program. My 
understanding was that the Committee never really viewed this 
as an effort to supplant our traditional programs like SBDCs or 
women-owned small business centers or the vet centers. But the 
budget request seems to suggest that is the way the 
administration looks at it. You are almost dollar for dollar 
cutting into SCORE and SBDCs in order to increase funding for 
the Navigator Program. Is there a reason why you have gone that 
route?
    Mr. MADRID. First and foremost, condolences for Lewiston, 
and thank you for your leadership.
    When it comes, Representative, to the Community Navigator 
Pilot Program, we do not look at it as a competition with the 
resource partners. In fact, some of the SBDCs are Community 
Navigators. Most notably, a week and a half ago we heard from 
the Springfield, Ohio SBDC and in their own words they said we 
have been able to expand our footprint and work with people 
beyond seeing them at galas and annual events. We are actually 
deepening and leveling the playing field here so the footprint 
is nonduplicative. And in terms of your question, we do not 
look at it as one in favor of the other. We look at supporting 
and wraparound services for the entire entrepreneurial 
community that includes underserved communities that we need to 
frankly support.
    Mr. GOLDEN. Thank you.
    I want to ask what the administration's position is on the 
SBDC Improvement Act of 2023, which would help SBDCs better 
market their services. I am sure you have heard plenty of 
testimony or seen data around the gaps around awareness of some 
of these programs and statutorily, SBDCs are not even allowed 
to market their existence to their potential clientele. So this 
bill would address that. Is that something the administration 
has taken a look at and is there a position of support or 
opposition?
    Mr. MADRID. Representative, thank you for the question. We 
know you have been working on that for a while.
    Our office of SBDC and leadership does not have a problem 
with the language per se on the marketing but there are some 2 
CFR requirements that we need to look at. As well, we 
appreciate the collection working group portion of the bill so 
our commitment is to continue to work with you on that. So 
thank you very much for your efforts.
    Mr. GOLDEN. Thank you.
    And let me just kind of put out there looking ahead to the 
next budget request, I personally would like to see full 
funding requested at the previous level for SBDCs and SCORE. I 
mean, SCORE in particular is, I think, a great program, a 
proven program that works and has a lot of uptake in Maine. So 
it would be a shame to see any reductions in funding or 
staffing in Maine and I am sure that is true elsewhere.
    Mr. MADRID. I am thinking of that Maine retailer that I 
visited in Portland, Maine, that said she could not have done 
it without a SCORE mentor. So thank you very much for that 
reference.
    Mr. GOLDEN. I yield back.
    Ms. VAN DUYNE. Thank you very much, Mr. Golden.
    Votes have been called so the Committee will now take a 
brief recess subject to the call of the Chair. We will resume 
shortly after votes conclude.
    [Recess]
    Chairman WILLIAMS. Okay. I now call the Committee on Small 
Business back to order.
    And I recognize myself for 5 minutes.
    Members on both sides of the aisle already expressed 
concerns regarding the duplication of the Community Navigator 
Program with SBDCs. However, the duplication does not stop 
there. The Office of Entrepreneurial Development is currently 
operating two online programs. One is called the Learning 
Center; the other called Ascent. Both of these platforms 
provide substantially similar information. In total, these two 
programs are funded at $13 million annually. This seems like a 
very high price to keep two online resources operational when 
they provide substantially similar information.
    So again, Mr. Madrid, good to see you. Good to have a Texan 
looking at me.
    Why does your office keep both of these websites active 
when it appears they could easily be combined to reduce costs 
and increase efficiency?
    Mr. MADRID. Chairman Williams, great to be with you.
    In terms of fiscal year 2024, $4.5 million is projected for 
the THRIVE Program, which is our executive style program that 
trains 800 entrepreneurs per year, and also our online content 
that you mentioned, Chairman Williams, which includes the 
online Learning Center, which is more about startups, and then 
the Ascent Program, which is a series of journeys that include 
government contracting curriculum. So that is $4.5 million that 
is projected for all those programs together.
    Chairman WILLIAMS. On top of the $100 million originally 
authorized for the Community Navigator program, the SBA 
provided an additional $75 million to set up a call center so 
the program could conduct outreach. However, given the low 
performance of the Community Navigator Program, it seems again 
like this is another waste of taxpayer dollars.
    So Mr. Madrid, how many calls did this call center receive? 
And was the $75 million used on anything else?
    Mr. MADRID. Chairman Williams, thank you for the question.
    So the $75 million was also used for an ad campaign that 
the Office of Entrepreneurial Development was responsible for. 
With that ad campaign there was 1.9 billion impressions and 
over 5.4 million new users to our website. And so I can account 
for the ad campaign that included also actual small business 
owners, not actors, that were seen all across the country.
    Chairman WILLIAMS. Okay. In my time remaining, as a small 
business owner myself with 52 years--still am, it will be 53 
next week--I understand the importance of showing up in person 
to work every day. Customer service depends on in-person 
interactions and working from home is not a reality for many 
small business owners who must decide between staying home or 
staying in business.
    In September, the Biden administration announced a new 
policy requiring employees to only show up to the office 4 days 
during a pay period. This means the taxpayer dollars are going 
to waste as federal office buildings sit empty for more than 
half of the month. The SBA works for the American people and we 
need to ensure the agency is showing up for our nation's 
entrepreneurs.
    So Mr. Madrid, quickly, how is the Office of 
Entrepreneurial Development complying with this new guidance? 
And how often is your staff in person?
    Mr. MADRID. Chairman Williams, thank you for the question.
    So right now, SBA leaders and managers are reporting to the 
office 5 days per pay period. And starting in January of 2024, 
all headquarter personnel will be reporting 4 days per pay 
period. So we are following that guidance. And part of that is 
because of union negotiations. I, myself, with 45 FTEs, over 50 
percent are collective bargaining employees.
    Chairman WILLIAMS. But why can they not work every day, 
like I do, like everybody does, comes to work? In my business, 
the car business, people work every single day. They have no 
choice to not come to work or not.
    Mr. MADRID. Chairman Williams, our folks are working every 
day. I admire my SBA colleagues and so their work continues.
    Chairman WILLIAMS. But if they are not there, you cannot 
see them working.
    Mr. MADRID. We have meetings all the time, virtual 
meetings, and I value, by the way, an in-person experience. 
When I am not on the road I am in the office, and so we 
continue to follow the guidance set forth by the agency.
    Chairman WILLIAMS. But let me ask you this. You grew up in 
an environment--I know where you are from--work is everything; 
right? You did not take days off; you took days on. Why can 
that not be the norm with the SBA? I mean, why cannot everybody 
just work?
    Mr. MADRID. We are working every day. I can assure you of 
that. I see my employees regularly, whether it is in the office 
or remotely, so I look forward to seeing them in person 
following the guidance that we have.
    Chairman WILLIAMS. But back home in your town people do not 
take 3 days. They do not work 3 days. They do not work 4 days. 
They work every day. And it should be the same up here. So we 
will talk some more about that.
    Next, I want to recognize Representative Davids from the 
great state of Kansas, for 5 minutes.
    Ms. DAVIDS. Thank you, Chairman. And thank you, Associate 
Administrator Madrid, for appearing before the Committee today.
    Mr. Madrid, in your opening testimony you touched on the 
importance of the Small Business Administration's Women's 
Business Center Program. And the success of, in my opinion, the 
success of the women's business centers and that program cannot 
be overstated. Across the country there are 160 women's 
business centers offering business counseling, training, 
technical assistance, mentoring, and so much more to our 
nation's entrepreneurs.
    Each year these centers serve more than 80,000 clients. 
They help launch thousands of new businesses and leverage 
hundreds of millions of dollars in capital. And certainly, the 
Kansas City Women's Business Center is no different. It is 
headquartered in the Kansas Third District. I get to represent 
them and they reached more than 800 clients last year.
    And I just want to kind of touch on that. With the help of 
the Association of Women's Business Centers, every single state 
has a small but committed staff that is dedicated to ensuring 
that the entrepreneurs that they serve can thrive no matter 
where they live. And I do think that it is time that Congress 
help unleash that program in a more robust way.
    And to that end I have introduced the bipartisan Women's 
Business Centers Improvement Act multiple times since I came to 
Congress. And this is in my view a vital piece of legislation 
that has passed the House with overwhelming bipartisan support 
multiple times and it does a number of things including 
creating an accreditation process for the women's business 
centers; increases oversight of the program to ensure that we 
are not seeing waste, fraud, and abuse; and it also strengthens 
the SBA's relationship with the Association of Women's Business 
Centers.
    And then maybe finally, we also would see a cap on the 
grants for women's business centers increased which has not 
been done since the program's creation.
    So am curious if, Mr. Madrid, if you could, kind of speak 
to that, the support for women's business centers barely 
changing since the program's inception and what you think the 
importance of and reauthorization of this program can mean for 
our entrepreneurs across the country.
    Mr. MADRID. Thank you, Representative, for the question and 
your strong support of women-owned businesses in your area, and 
of course, across the country.
    The small business boom that we are experiencing with 14 
million new business applications is being powered by women. 
And so certainly we look forward to continuing to work with you 
on that. Certainly, the accreditation items, the work with the 
Association of Women's Business Centers. And thank you to 
Corinne and her team working together. I mean, we are working 
together at the bill capacity to also look at exporting 
opportunities for the women's business center network. 
Certainly, the reporting requirements and increasing the 
capacity we are all in favor of. So we look forward to 
continuing to work with you on this.
    Ms. DAVIDS. Yeah, of course, I want to continue to be 
supportive and not only increase the level of funding because 
it has a significant return on investment, but I am also 
wondering if you could speak to a different portion of the bill 
that I have reintroduced. It creates a standardized process for 
establishing women's business centers and helps ensure 
important oversight measures are included.
    In 2021, the program was audited and the SBA was given 10 
recommendations about how to improve the WBC program operation. 
And I am curious if you could speak to the progress on those 
recommendations, where you are at, and if any are outstanding 
maybe a timeline on what that looks like.
    Mr. MADRID. Thank you, Representative.
    So we have eight outstanding recommendations. There are 
five that involve oversight and the completion of a SOP, a 
standard operating procedure. We are excited that we have a 
deputy that has deep grant management experience across the OED 
footprint. So we look forward to closing these recommendations 
near the front end of the calendar year of fiscal year 2024.
    The three remaining recommendations have a timeline to be 
satisfied or closed by the fall of 2024 that include recoupment 
of funds. So we look forward to working with the IG, our 
internal IG, and of course, the women's business center network 
in closing them in fiscal year 2024.
    Ms. DAVIDS. Okay. Thank you. That is really helpful. And my 
office will follow up about the timeline and make sure we are 
all on the same page.
    Thanks so much and I yield back, Chairman.
    Mr. MADRID. Thank you.
    Chairman WILLIAMS. The gentlelady yields back.
    I now call on Representative Crane from the great state of 
Arizona for 5 minutes.
    Mr. CRANE. Thank you, Mr. Chairman. Thank you, Mr. Madrid, 
for coming today.
    I was looking over some of the requests from your 
organization. Is it true that you all are seeking $10.2 million 
for SCORE in fiscal year 2024, $121 million for SBDC, $27 
million for WBC, $44.5 million for other initiatives; is that 
correct?
    Mr. MADRID. Representative, the values are correct for the 
SBDC, the WBDCs and SCORE. That $44 million includes Community 
Navigators and our educational programs like THRIVE and our 
online educational content.
    Mr. CRANE. So that is about $200 million; right?
    Mr. MADRID. That is correct.
    Mr. CRANE. All right. And where does that $200 million come 
from?
    Mr. MADRID. Where does that come from?
    Mr. CRANE. Yeah. Who pays for it?
    Mr. MADRID. Well, the American taxpayers pay for it and we 
are excited about we have a lot of work to do to address the 
needs of our evolving ecosystem of entrepreneurs.
    Mr. CRANE. I understand. Hold on a second.
    So $200 million that comes from the American taxpayer for 
these programs right here.
    Sir, do you have any idea how much national debt we have 
right now?
    Mr. MADRID. Representative, what I can tell you is the 
support that we give for our small businesses that are----
    Mr. CRANE. That is not what I asked.
    Do you know what the national debt is right now?
    Mr. MADRID. Sir, with all due respect, I know that there is 
debt. What I am here to talk about is we are supporting our 
small business owners through this footprint, through the $200 
million that you described.
    Mr. CRANE. Okay. All right. So we have about $33 trillion 
in national debt right now. Any idea what the annual deficit is 
right now? How much more money we are spending than we are 
taking in annually?
    Mr. MADRID. Well, I can tell you how we are supporting the 
small businesses with this footprint.
    Mr. CRANE. Okay.
    Mr. MADRID. I would like to talk about that.
    Mr. CRANE. All right. Now, I noticed you came in here and 
you were championing the Biden economy. I am just going to give 
you some stats on the Biden economy.
    Real disposable income is down 8.3 percent. Homeownership 
affordability down a whopping 35.2 percent. Credit card debt is 
up 35.5 percent. Monthly savings is down 81.7 percent. And some 
of my other colleagues have also talked about some of the 
burdens that small business owners are dealing with including 
inflation and also worker shortage.
    So I notice that you were not talking about any of those 
issues when you were touting the Biden economy right now. Is 
there a reason that you were not talking about any of those and 
how those are impacting small business?
    Mr. MADRID. Well, I did talk about--thank you for the 
question, Representative. I did talk about how I visited over 
30 states in the last 3 years, and I did talk about how some 
small businesses have talked to me about the rising prices, as 
well as supply chain vulnerabilities, workforce development. I 
can go on and on about the different businesses that I visited 
on the ground.
    Mr. CRANE. Mr. Madrid, what do you think are the causes of 
the rising inflation?
    Mr. MADRID. I am not an economist so I cannot get very 
specific. I can tell you what the small businesses are telling 
me about inflation and what we are doing to support them in 
terms of diversifying their product lines, their revenue 
streams, their bottom lines. We are looking into exporting, 
digitizing, government contracting.
    Mr. CRANE. Do you think you need to be an economist, Mr. 
Madrid, to understand what the rising inflation and some of 
these economic pressures are? Do you think it has anything to 
do with this country and this government continuing to print 
more and more money that we do not even have?
    Mr. MADRID. Well, Representative, I am rooted in small 
business like I am grounded in these boots. I grew up in a 
small business in the rural country, in the rural part of the 
country in the Texas Panhandle, and I hear their concerns every 
single day. I have been supporting them for the last 15 years 
and will continue to support them with the wonderful support 
that we have including with people in this room and you all. We 
share that passion.
    Mr. CRANE. Yeah. I am rooted in small business myself. I do 
not need to be an economist to know that if you continually 
print money that you do not have and then flood the economy 
with that money it always increases inflation. And that is one 
of the biggest drivers of inflation. It is one of the reasons 
that our small businesses are getting hammered.
    So maybe if we care so much about small business we can 
actually look at the reality of the situation, quit being 
partisans, and do something to help small businesses. And I 
know you guys are trying to do something to help small 
business, but if you are not even willing and able to look at 
some of the root causes of inflation and some of the things 
that are crushing small business, the chances of you guys 
solving and really helping on this issue, it is pretty 
farfetched.
    Thank you. I yield back.
    Chairman WILLIAMS. The gentleman yields back.
    I now recognize Representative Gluesenkamp from the great 
state of Washington for 5 minutes.
    Ms. GLUESENKAMP PEREZ. Thank you, Mr. Chairman.
    Mr. Madrid, thank you for being here with the Committee 
today, and thank you for the work that you do.
    So this Committee spends a lot of time talking about ways 
that we can improve SBA programs, especially access to capital 
to make them work better for real people trying to start or 
grow their own businesses.
    So I actually, before coming to Congress, applied for an 
SBA 504 loan for my auto repair shop, and it took a year to 
navigate that. I actually do have a degree in economics and 
English is my first language. And that entire year that I was 
applying for the 504 loan, I was watching commercial properties 
get snapped up, industrial spaces getting turned into coffee 
shops and tattoo parlors and things that, I mean, I like 
coffee, I like tattoos, but those are not often durable family 
wage jobs. And I actually did find SCORE to be helpful in 
navigating that process.
    But the thing that I was thinking about was that people 
working in SCORE and your partner organizations, like they are 
kind of the boots on the ground of seeing what the hangups are, 
what the difficulties are, what is preventing small businesses 
from accessing these programs effectively and efficiently. And 
I am wondering how they are mutually informative. Like, are you 
getting information back from your partner organizations about 
where the hangups are, what the biggest challenges are? And how 
is that informing and refining your processes?
    Mr. MADRID. Thank you for the question and mentioning the 
504 Program.
    So some of the feedback that we have received is that our 
small business owners need to know more about eligibility, 
whether it is a microloan, their efforts with CDFIs, whether it 
is 7(a) or 504. Sometimes we have to use repeat messaging as 
our friend in terms of talking to some small business owners 
about the changes that we have had with the 504. We do not want 
it to take a year is the bottom line.
    I just talked to a small business owner that has been in 
operation 30 years with some major bulk printing business out 
of Los Angeles, a woman-owned business. And she said that the 
504 loan transformed not only her business but her family and 
her community. But she had the wraparound support of going to 
our district office.
    Ms. GLUESENKAMP PEREZ. So do you have a mechanism in place 
for your SCORE people, for them to come back and say to you 
like here is a problem that we are seeing repeatedly?
    Mr. MADRID. Yes. Absolutely. So we meet with all of our 
associations regularly in terms of the OED leadership. I do as 
well. So I meet with Bridget Weston. I meet with the America's 
SBDC Board, with the Association of Women's Business Centers. 
So there is that feedback loop.
    Ms. GLUESENKAMP PEREZ. Okay. So what kinds of reforms have 
come out of that feedback?
    Mr. MADRID. With SCORE, for instance, I will talk about a 
current example. In Hawaii, with Lahaina and what is happening 
with our whole of SBA disaster recovery approach, SCORE came 
back and said we are here on the ground. Kat Shepherd, who 
leads our SCORE chapter, these are all volunteers in the West 
Coast. She is based out of California. She said I am here on 
the ground and I am ready to help.
    We have got an enterprise system where mentors are 
available nationwide. We learned what we could do in Vermont 
with the Vermont floods, and we are ready to scale. So that was 
the feedback that we received from them in terms of wanting to 
be involved and taking it to the next level.
    With the SBDCs, with cybersecurity, we have teamed up in 
terms of making sure that our small businesses understand the 
navigation of AI, which is very difficult. What does that mean 
beyond a trending term? And with the WBCs and working with the 
Association of Women's Business Centers we learned we want to 
do some more exporting. We actually want to understand not only 
procurement readiness but also certification readiness which I 
have procurement of bone marrow in terms of all that that takes 
sometimes and the support needed to get ready.
    Ms. GLUESENKAMP PEREZ. So I represent southwest Washington, 
and we actually do not have a women's business center in my 
district. The nearest one is across the river in Portland and 
they are shutting down. And you know, you guys are looking for 
the next home. But I am wondering, in this time when my 
constituents are left without this service, how does your 
office prioritize where those centers will be located? For 
instance, rural communities where we are often underserved and 
we are losing a lot of our small businesses, how do you 
prioritize reaching into those communities and establishing 
services there?
    Mr. MADRID. Well, we go through a formal notice of finding 
opportunity process. In terms of rural America, I am from a 
rural part of the country and grew up in a small business so 
rural affairs and what we are doing at OED, I look forward to 
sharing with the Committee what we are doing there in terms of 
with the USDA. Also, financial literacy and FDIC and other 
endeavors that we have planned.
    Ms. GLUESENKAMP PEREZ. Okay. Thank you.
    Mr. MADRID. Thank you.
    Ms. GLUESENKAMP PEREZ. Mr. Chairman, I yield back.
    Chairman WILLIAMS. Thank you.
    I now recognize Rep. Stauber from Minnesota for 5 minutes.
    Mr. STAUBER. Thank you very much. Thank you, Chairman, 
Ranking Member, for holding the hearing today. And thank you to 
Associate Administrator Madrid for taking time to help shed 
light on this important topic.
    My home state of Minnesota, rural, has a rich history of 
entrepreneurship from the industries that established a 
foundation of lumber and mining to emerging industries of 
technology and healthcare. Minnesotans have always been known 
for their ingenuity and their willingness to take risks.
    Entrepreneurs are the backbone of our economy as you know. 
They are the innovators, job creators, and the driving force 
behind economic growth. In Minnesota, small businesses account 
for over 99 percent of all businesses and employ over half of 
the workforce. It is no exaggeration to say that the success of 
our economy is tied to the success of our small business 
entrepreneurs.
    The SBA OED has the opportunity to play a vital role in the 
development of small businesses across the country by providing 
a range of resources and programs necessary to grow. But in 
recent years, many have said the programs offered are not 
effective and waste taxpayer dollars.
    Today we are here to talk about these duplicative programs 
and the policies that further make the SBA inefficient.
    The SBDC Program has proven to be successful in counseling 
and training small businesses across the country. Yet, despite 
the success, the Biden administration created the Community 
Navigator Program to do the same thing. What is worse is this 
duplicative program is lower performing and more inefficient. 
This is just one example, Mr. Madrid, but investments in 
unneeded, wasteful, and ineffective programs are a pattern with 
this administration.
    So my question is, what is the need the SBA OED sees in 
extending the Community Navigator Program where we have SBDCs 
and women business centers, SCORE?
    Mr. MADRID. Thank you, Representative, for the question.
    First and foremost, we value the work of all of our 
resource partners, the SBDCs, women's business centers, and 
SCORE. In terms of Community Navigator Pilot Program, 70 
percent of the clients said that they had not done business 
with the SBA in the last 5 years. We consider these mustard 
seeds. Some of them are not ready. They do not know what an 
SBDC is or women's business center.
    We have seen nonduplication in terms of the SBDCs 
themselves, in the women's business centers that are either 
hubs or spokes.
    Mr. STAUBER. Excuse me. You made me think of a question.
    So if many of these businesses, you said 70 percent do not 
know what SBDCs and WBCs. Whose fault is that?
    Mr. MADRID. Thank you for the question.
    I have been serving small businesses for the last 15 years 
and as a chamber of commerce CEO, I was a spoke. And so 
learning the small businesses, whether they were producing ties 
or restaurants, owners, whatever the case might be, they did 
not know that there was a resource available. So it is not 
really anybody's fault. In some cases, people just do not know. 
They start enlivening a passion. They want to open a small 
business like my father did. But my father did not know that 
there was an SBA district office or a resource partner. And 
what my father ended up doing was creating jobs there in the 
Abilene area. Also, San Angelo and the Texas Panhandle. So 
these are mustard seeds that if they are nurtured grow into 
big, large trees. And the likes of businesses served by the 
Institute of Veterans and Military Families, the National Urban 
League, the U.S. Black Chambers, the U.S. Hispanic Chambers, we 
should not turn our back on them because they are going to reap 
reward not only with the $249 million of approved funding.
    Mr. STAUBER. Mr. Madrid, I agree with you. We cannot turn 
our back on the entrepreneurs and that is why I talk almost on 
a weekly basis of the $320 billion of additional regulations 
put on American small businesses. You cannot agree with that, 
can you?
    Mr. MADRID. Can you be more specific?
    Mr. STAUBER. Do you agree with an additional $320 billion 
on American small businesses over the last 3 years under this 
administration? And by the way, these are not my numbers. These 
are the administration's numbers.
    Mr. MADRID. Well, Representative, we believe in common 
sense regulations. We work with our Office of Advocacy.
    Mr. STAUBER. Mr. Madrid, this is a real simple question. 
Your father as a small business owner. I was a small business 
owner for almost 30 years. I just asked you a simple question. 
Three hundred twenty billion. That is with a B. Three hundred 
twenty billion additional dollars on American small businesses 
in the last 3 years. These are not my numbers. These are the 
administration's. As the deputy administrator, you cannot agree 
with that, can you? Do you agree with punishing our small 
businesses, especially coming out of COVID?
    Mr. MADRID. Representative, none of us believe in punishing 
small businesses. So we continue to work with our Office of 
Advocacy.
    Mr. STAUBER. But here is the question. Mr. Madrid, I have a 
few seconds. Can you answer the question? Is it good for 
American small businesses to have $320 billion--that is with a 
B--additional dollars put on them? Yes or no?
    Mr. MADRID. Representative, we look forward to common sense 
regulations and continue to work with our Office of Advocacy.
    Mr. STAUBER. Mr. Madrid, I appreciate the political answer. 
I will answer it for you. It is not good for American small 
businesses to have $320 billion of additional regulations put 
on them. It is not right. It is not fair. And I yield back.
    Chairman WILLIAMS. The Chair now recognizes Rep. Scholten 
from Michigan for 5 minutes.
    Ms. SCHOLTEN. Thank you, Mr. Chair.
    And Mr. Madrid, if you needed an additional 30 seconds or 
so to respond I am happy to give that to you.
    Mr. MADRID. Well, thank you, Representative. I just want to 
speak to the fact that our--and I have lived this the last 15 
years--our entrepreneurship landscape is changing every single 
day. And with the small business boom and 14 million new 
applications, we need as much support as possible. And we want 
to create lifelong customers at the SBA.
    And I will close with this. A veteran from Upstate New York 
created 10 jobs in East Syracuse. A business was closing down. 
And he said, ``I needed everything. I needed the district 
office, I needed my SCORE mentor, and I needed my Navigator and 
my SBDC because they each provided me something different.'' 
And he created 10 jobs.
    Ms. SCHOLTEN. Yeah. Absolutely. We could not agree more. I 
want to be on the record as saying we know that you are not out 
to hurt small businesses and we are here to ensure that your 
agency has the tools and resources to provide those supports in 
the most efficient and effective way possible.
    I had the honor of welcoming the SBA administrator to my 
district earlier this summer. We toured the Michigan Small 
Business Development Center headquartered in my district at 
Grand Valley State University, a real source of pride for us. 
She got to meet the amazing staff that makes this incredible 
work possible.
    We also had the opportunity to hear from SBDC clients that 
shared the challenges that they are facing as business owners. 
Truly a wide array of small businesses. Whether it was a 
Mexican takeout restaurant, home healthcare service providers, 
or an energy-efficiency technology company, the message was the 
same. The services that the SBDC provides are crucial.
    My question for you is, knowing this importance, the fiscal 
year 2024 SBA budget requests funding cuts to the SBDC Program 
by approximately 14 percent. Can you explain why the Biden 
administration proposed to reduce funding for the SBDC Program? 
And will you commit to supporting full funding for this 
important entrepreneurial development program?
    Mr. MADRID. Well, Representative, thank you for the 
question. And certainly it is a great SBDC there in the state 
of Michigan through their lead center and service centers.
    This is not a competition between the SBDCs and the 
Navigators or the SBDCs and the WBCs or SCORE. We look forward 
to you all making your appropriations decisions and funding 
your priorities. But I come back to the fact that we need as 
many resources as possible for our small businesses that have 
different needs.
    So I could share so many stories and I do not need a binder 
or index cards or anything to tell you about how each one of 
these partners has serviced a particular lane. And more 
broadly, how the SBDCs themselves who are Navigators, including 
our Navigator, the Florida International University SBDC, who 
happens to be our Service Center of the Year, how they, 
themselves, have said that this program has deepened their 
reach into their communities.
    Ms. SCHOLTEN. Well, we agree that there are a wide array of 
services needed, but in particular the 14 percent cut to the 
SBDC is of particular note to a district like mine. And I am 
wondering if you could just shed any more light on why the cut 
is there as opposed to other areas. And if those are needed, 
why that was suggested.
    Mr. MADRID. Thank you, Representative.
    We were looking at the entire ecosystem and making sure 
that there is wraparound support for including the smallest of 
the small businesses. As previously stated, some of the 
Community Navigator is served by the U.S. Black Chambers and 
the National Urban League, U.S. Hispanic Chamber, the Local 
Initiative Support Corporation. Some of those businesses and 
the U.S. Pan-American Chamber of Commerce as well, some of 
those businesses had not been served by the ecosystem. And it 
was not somebody's fault. It is just that we need to put a 
focus on those businesses as well. They should not be left 
behind. People with disabilities served by the National 
Disability Institute as well.
    Ms. SCHOLTEN. I could not agree with you more on that.
    In my remaining time I want to just note one thing in 
particular the SBDC is doing is a competition called Pitch 
Black, which is a pitch competition for Black-owned businesses 
in West Michigan. Supporting these minority entrepreneurs is a 
high priority of mine as it is for the SBDC. What is your 
office doing ot make sure that there is awareness of these 
types of programs that SBDCs in particular are providing?
    Mr. MADRID. Absolutely. We love to share success stories 
from the SBDCs, including their expanded footprint and MSIs and 
will continue to do so. I have had the fortune of working for 
small businesses on the ground the last 15 years. And when I 
was in essence a spoke, as the CEO of the Chamber of Commerce, 
depending on the situation, I would refer people to the SBDC 
and other cases to WBCs, but we will continue to share the 
impact of SBDCs proudly.
    Ms. SCHOLTEN. We would appreciate that very much. Thank 
you.
    Mr. MADRID. Thank you.
    Ms. SCHOLTEN. Mr. Chair, I yield back.
    Chairman WILLIAMS. The gentlelady yields back.
    I now recognize Representative Pappas from the great state 
of New Hampshire for 5 minutes.
    Mr. PAPPAS. Thank you very much, Mr. Chairman. And Mr. 
Madrid, thanks very much for your leadership and your comments 
here today about entrepreneurial development.
    And I also want to explore some issues with SBDC and some 
concerns that I have been hearing from my district.
    One of the hallmarks of working with an SBDC is that every 
client session is confidential. And client privacy is an SBA 
requirement. It is set in statute. It is something that our 
SBDC takes very seriously in New Hampshire, and I hear about it 
from member businesses that are working directly with them.
    So privacy requirements help create a higher level of trust 
between the small businesses and the advisors. At SBDC, 
businesses share detailed information obviously about their 
finances, their growth strategies, new product or service 
ideas. They also share demographic and business information 
with the SBDCs such as gender, race, location, veteran and 
disability status. So protecting this data is critically 
important now and will be more so in the future as we see 
growing issues around cybersecurity.
    So an issue of concern that I have heard recently is that 
protecting this client confidentiality may be in question. It 
is my understanding that there will be some new information 
that SBDCs are required to upload through the new Nexus 
platform. There is a concern that this information is paired 
with existing uploaded information and it could increase the 
likelihood that a client could be identified. It is an issue 
that I am hearing about from businesses in rural communities 
like mine in New Hampshire. So clients who up until now have 
had the option to opt in to sharing data may not want to sign 
up for advising if they are worried about their privacy being 
in question and not being protected.
    So I am wondering if you could discuss this topic. I know 
it has been addressed earlier in this session about protecting 
SBDC client data in more detail and under what circumstances 
could the administrator be allowed to share client data more 
broadly?
    Mr. MADRID. Well, thank you for the question, 
Representative.
    We take privacy seriously. In terms of the form dynamics 
that you were talking about, we had over 25 meetings with our 
stakeholders, including America's SBDC leadership, the 
Association of Women's Business Centers and SCORE. When it 
comes to the demographic information on the form they were a 
part of these meetings. This is optional information so you 
could prefer not to state. But what we have done is we have 
added demographic information in terms of if you are a person 
with disabilities, if you are a veteran or military spouse. 
Where I come from on the ground it is important to know thy 
audience. But that is optional.
    I was at Gallaudet University recently with deaf and blind 
entrepreneurs. And if you have not had a chance to go there I 
would recommend that you do. And those entrepreneurs said we 
want to be heard. We will gladly state wherever we can that we 
have disabilities because we do not want to be left behind. We 
do not want to be turned away from any opportunity and we are 
creating jobs for this country.
    In terms of the specific times when we would be privy to 
PII or privacy data they are very specific. It would be a court 
order. It would be a case where an audit would be taking place 
for a federal or state agency that is auditing the work of a 
center, so we believe strongly in oversight so it is more about 
oversight than anything else. So I hope I have addressed your 
questions about privacy.
    Mr. PAPPAS. Well, I know that the statue states that under 
an audit or a court order that SBDC can give up client data but 
I know that the new rule allows the administrator to ``consider 
such disclosures necessary on a case by case basis.''
    So I am wondering if you can help us understand what that 
means in terms of the administrator's discretion here.
    Mr. MADRID. Absolutely. The case by case basis is tied to 
the audit of federal and state entities. So that is clearly 
defined in that section when it comes to the audit.
    Mr. PAPPAS. Well, I also want to add my voice to what 
Representative Scholten said earlier about funding cuts that 
were proposed to small business development centers. I want to 
reiterate how important all the entrepreneurial development 
programs are to small businesses in New Hampshire, including 
SBDC, which supports thousands of businesses, helped them 
access tens of millions of dollars in capital with an overall 
economic impact in the hundreds of millions of dollars, which 
makes a big difference in an economy like ours.
    Over the years, we have asked our small business 
development centers to do more for their clients and 
communities, particularly over the last few years. And given 
the pressures that our small businesses face right now it just 
does not seem like the opportune time to be cutting back or 
scaling back support for this critical program. And so I am 
hoping that you will reassess this as we think about funding 
for SBA moving forward and some of its programs. I hope that 
SBDC will be funded at a very robust level.
    I see my time is almost up. So thank you very much for your 
comments here today. I look forward to working together to 
support all of our small businesses. And with that I yield 
back.
    Chairman WILLIAMS. Thank you. The gentleman yields back.
    And I would like to thank our witness today for being here. 
God bless Texas. I want to add that. And I want to thank you 
for your testimony.
    And without objection, Members have 5 legislative days to 
submit additional materials and written questions for the 
witness to the Chair which will be forwarded to the witnesses. 
I would like to ask the witness to please respond promptly if 
that happens. Okay?
    And if there is no further business, without objection the 
Committee is adjourned.
    [Whereupon, at 11:57 a.m., the committee was adjourned.]
                            
                            
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