[House Hearing, 119 Congress]
[From the U.S. Government Publishing Office]
AI ON MAIN STREET: HOW AI IS SHAPING
THE FUTURE OF SMALL BUSINESS
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HEARING
BEFORE THE
COMMITTEE ON SMALL BUSINESS
UNITED STATES
HOUSE OF REPRESENTATIVES
ONE HUNDRED NINETEENTH CONGRESS
SECOND SESSION
__________
HEARING HELD
JULY 14, 2026
__________
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Small Business Committee Document Number 119-041
Available via the GPO Website: www.govinfo.gov
__________
U.S. GOVERNMENT PUBLISHING OFFICE
64-242 WASHINGTON : 2026
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HOUSE COMMITTEE ON SMALL BUSINESS
ROGER WILLIAMS, Texas, Chairman
PETE STAUBER, Minnesota
DAN MEUSER, Pennsylvania
BETH VAN DUYNE, Texas
JAKE ELLZEY, Texas
MARK ALFORD, Missouri
BRAD FINSTAD, Minnesota
TONY WIED, Wisconsin
ROB BRESNAHAN, Pennsylvania
BRIAN JACK, Georgia
KIMBERLYN KING-HINDS, Northern Marina Islands
DEREK SCHMIDT, Kansas
JIMMY PATRONIS, Florida
CLAY FULLER, Georgia
NYDIA VELAZQUEZ, New York, Ranking Member
MORGAN MCGARVEY, Kentucky
HILLARY SCHOLTEN, Michigan
LAMONICA MCIVER, New Jersey
GIL CISNEROS, California
KELLY MORRISON, Minnesota
GEORGE LATIMER, New York
DEREK TRAN, California
LATEEFAH SIMON, California
JOHNNY OLSZEWSKI, Maryland
MAGGIE GOODLANDER, New Hampshire
ANALILIA MEJIA, New Jersey
Sean Dillon, Majority Staff Director
Melissa Jung, Minority Staff Director
C O N T E N T S
OPENING STATEMENTS
Page
Hon. Roger Williams.............................................. 1
Hon. Gil Cisneros................................................ 2
WITNESSES
Mr. Jordan Crenshaw, Senior Vice President, U.S. Chamber of
Commerce, Washington, DC....................................... 5
Mr. Anthony Qaiyum, President, Merz Apothecary, Chicago, IL...... 6
Mr. Francis Hoang, Chief Executive Officer & Founder, BoodleBox,
Colorado Springs, CO........................................... 8
Mr. Chike Aguh, Head of Innovation & Strategy, Kapor Center,
Oakland, CA.................................................... 9
APPENDIX
Prepared Statements:
Mr. Jordan Crenshaw, Senior Vice President, U.S. Chamber of
Commerce, Washington, DC................................... 40
Mr. Anthony Qaiyum, President, Merz Apothecary, Chicago, IL.. 54
Mr. Francis Hoang, Chief Executive Officer & Founder,
BoodleBox, Colorado Springs, CO............................ 57
Mr. Chike Aguh, Head of Innovation & Strategy, Kapor Center,
Oakland, CA................................................ 64
Questions and Answers for the Record:
Questions from Hon. Velazquez to Mr. Chike Aguh and Answers
from Mr. Chike Aguh........................................ 72
Additional Material for the Record:
SHRM Letter.................................................. 75
Association for Enterprises Opportunity (AEO)................ 77
SBC Dem Report............................................... 83
ACT Letter................................................... 102
AI ON MAIN STREET: HOW AI IS SHAPING THE FUTURE OF SMALL BUSINESS
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TUESDAY, JULY 14, 2026
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, Meuser, Van Duyne,
Alford, Finstad, Bresnahan, Jack, King-Hinds, Patronis, Fuller,
Cisneros, Velazquez, Scholten, McIver, Tran, and Goodlander.
Chairman WILLIAMS. Before we get started, I want to
recognize Representative Van Duyne from the great state of
Texas to lead us in the Pledge and the prayer. Would you stand?
Ms. VAN DUYNE. Heavenly Father, we come before you with
gratitude for the privilege and responsibility of serving the
American people. Grant the Members of this committee wisdom to
discern the truth, courage to do what is right, and humility to
listen with respect to one another. Help us to seek solutions
that strengthen our nation, protect the freedoms we cherish,
and honor the first--the trust placed in us by those we
represent. We ask your blessings on our country, our
servicemembers, first responders, and all who labor for the
peace, safety, and prosperity of the United States. In your
holy name we pray. Amen.
If you please join me in the Pledge.
ALL. 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.
Chairman WILLIAMS. Good morning, everyone. I now call the
Committee on Small Business to order. Without objection, the
Chair is authorized to declare a recess of the Committee at any
time.
I now recognize myself for my opening statement.
Welcome to today's hearing, ``AI on Main Street: How AI is
Shaping the Future of Small Business.'' I want to thank our
witnesses for coming with us today and being part of this.
Artificial intelligence has quickly transitioned from a
novelty to an indispensable business tool for main street
businesses across the country. AI is streamlining
administrative tasks that once required significant time and
resources and it is allowing small businesses to focus on
growth instead of paperwork. Small businesses are using AI to
respond quickly to customers, manage inventory, strengthen
cybersecurity, and automate routine paperwork. And as a small
business owner myself, I have seen the difference these tools
can make and I know firsthand how much of that burden falls on
the owner.
Artificial intelligence is no longer something reserved for
big tech companies and Fortune 500 boardrooms. Today, nearly
three-quarters of small businesses are using AI in some form,
and this is more than triple the share from just 3 years ago.
So small businesses are closing in on technology gap with the
big corporations faster than any prior wave of innovation.
Importantly, early data is showing that AI rises, not
coming at the expense of workers. In fact, 82 percent of small
businesses using AI grew their workforce over the past year. Of
course, real barriers to broader AI adoption remain. Many
owners tell us that they simply don't know how or where to
start and that they worry about costs, so that they are unsure
how to keep their data secure.
But one of the biggest barriers in Washington is created,
it is called uncertainty. And the Biden administration took a
heavy-handed approach to AI. In October 30, 2023, they released
the executive order imposing sweeping regulatory requirements
and compliance burdens that threatened to smother AI innovation
before small businesses ever got the chance to benefit from it.
We only need to look across the Atlantic to see where that road
leads. Europe chose to regulate first and innovate later, and
today their small businesses are falling behind and the United
States cannot make the same mistake.
Thankfully, the Trump administration reversed course. They
rescinded the Biden approach and replaced it with a pro
innovation strategy through Executive Order 14179 in America's
AI Action Plan, clearing away for red--doing away with red tape
so that AI tools can be adopted with confidence. The SBA is
doing its part by also expanding access to AI through its new
main street AI Accelerator program. And, of course, the
Committee has led the way with bipartisan legislation such as
the AI-WISE Act, the AI for Main Street Act, and the SBA
Artificial Intelligence Utilization Act of 2026. So together,
these bipartisan bills ensure that entrepreneurs have access to
practical AI and the barriers to AI adoption are reduced.
Our goal is to make every small business and entrepreneur
make sure they have the opportunity to succeed in the emerging
age of AI. So when small businesses have the tools, they have
the training and freedom to innovate, they will out compete,
they will out build, and out hire anyone in the world, and our
economy will be stronger because of it.
I want to thank our witnesses again for joining us today. I
look forward to the conversation ahead.
And I now yield to Ranking Member Congressman Cisneros from
the great state of California.
Mr. CISNEROS. Good morning and thank you, Mr. Chairman, for
convening this important hearing.
Artificial intelligence will revolutionize the way
businesses work and humans operate. AI could allow main street
businesses to scale their capabilities and perform routine
tasks faster and cheaper. However, AI's many risks have
incurred costs for small firms. AI can produce false outputs, a
phenomenon known as hallucinations. Further, bias and
discrimination AI decision-making undermines its effectiveness,
unduly hurts underserved communities, and exposes users to
legal and reputational harm. And AI companies often take and
use the data and information users input into their models for
further training and sale to other parties, posing privacy
risk.
It is challenging to know exactly how to assess and address
these problems, in part because AI developers through automated
machine learning and most AI developers do not disclose their
model's training information. I support the consideration and
use of AI by our small businesses, but we need to protect our
businesses from flexible flaws.
Small businesses need to be ready to effectively evaluate
and adopt these tools. Uneven access to AI and knowledge about
how to use it and avoid its risks threaten to cut whole
segments of our population off from the benefits of AI.
Underserved people have especially fallen behind in their
understanding of AI tools, increasing the digital divide and
hurting their businesses. It is this Committee's responsibility
to address these issues.
The SBA must provide AI literacy resources to educate
entrepreneurs on the risk and potential benefits of AI. This
will reduce the digital divide and equip entrepreneurs with the
tools and information to make well-informed, thoughtful
decisions about whether AI is right for them, what AI can and
cannot do, and which specific AI tools are suitable for a
specific task.
Furthermore, the inherent risk of AI must be addressed
through smart and sensible AI regulation. Smart, well-crafted
federal regulation will minimize the risk of AI, maximize its
benefits, and prevent criminal and unethical use. These
regulations are needed to protect all Americans, especially
small business owners.
Small businesses are crucial to the technological progress
of our country. Entrepreneurs use their unique perspectives,
passion, and resourcefulness to support and grow our country's
economy. That is why we must support our small businesses by
educating them on this revolutionary technology, how to use it
effectively, and how to avoid its risk. It is important that
the federal government supports small businesses developing new
AI technologies with safety and security in mind. It is vitally
important that we do not leave small businesses behind as we
race to enhance our country's competitiveness. I look forward
to discussing how we can better assist our small businesses in
this new era.
With that, I thank the witnesses for being here today and I
yield back.
Chairman WILLIAMS. The gentleman yields back.
We will now move to witness introductions. The first
witness is Mr. Jordan Crenshaw. Mr. Crenshaw is the senior vice
president at the U.S. Chamber of Commerce Technology Engagement
Center. Before joining the Chamber, he was an attorney focused
on environmental issues and consumer privacy laws. Mr. Crenshaw
worked at McGuireWoods and also held roles in the Virginia
Senate leadership, the Office of the Attorney General of
Virginia, the U.S. Department of Labor, and the National Right
to Work Defense Foundation. He earned both his undergraduate
and law degree from the College of William and Mary. I want to
thank you for being here and look forward to our discussion.
Our next witness is Anthony Qaiyum. He is the president of
Merz Apothecary, a locally owned small business serving
customers across the Chicago area and through his online store,
smallflower.com, across the country. The Qaiyum family has
owned and operated the business for decades. And under Mr.
Qaiyum's leadership, it has grown from a neighborhood
apothecary into a nationally recognized destination for natural
health, personal care, and specialty products. Mr. Qaiyum
earned his bachelor's degree from Williams College, one of the
great schools, I might add. And I look forward to your
testimony, and thank you for you being here today.
Our next witness is Mr. France Hoang. Mr. Hoang is the
founder and CEO of BoodleBox, a collaborative AI platform that
gives small business educators and workforce programs secure,
affordable access to multiple premium AI models in a single
workspace. Prior to starting BoodleBox, Mr. Hoang served as an
executive officer of the U.S. Army Special Forces Company
during combat deployment in Afghanistan. Thank you for that.
And he also served as associate counsel of the President under
President George W. Bush. And he has been on the founding teams
of companies across the fields of law, aerospace, defense,
government services, and AI. He earned a bachelor's of science
degree from the United States Military Academy at West Point.
Beat Navy, right? And a law degree from Georgetown University.
I want to thank you for being here today and look forward to
our discussion.
I now recognize Congressman Cisneros from California to
briefly introduce our last witness appearing before us today.
Mr. CISNEROS. Thank you, Mr. Chairman. It is my honor to
introduce Mr. Chike Aguh, the head of innovation and strategy
at the Kapor Center, a tech policy focused on making the tech
industry more diverse, equitable, and inclusive. He is also the
Vice Chair of the Maryland Higher Education Commission.
Previously, Mr. Aguh was the chief innovation officer at the
last administration's Labor Department. While there, he led
efforts to use big data and emerging tech to empower and
protect American workers. Mr. Aguh also has extensive
experience in private industry, broadband access, nonprofits,
and the education system. He holds a bachelor's degree from
Tufts, master's degree in education and public administration
from Harvard, and an MBA degree from University of Penn
Wharton. A lot of education there. Thank you for being with us,
Mr. Aguh.
Chairman WILLIAMS. The gentleman yields back. And thank you
again, all of you, for being here today.
And before recognizing the witnesses, I would like to
remind them that their oral testimony is restricted to 5
minutes in length. That is a big number around here. Five
minutes, okay? And if you see the light turn red in front of
you, it means your 5 minutes has concluded and you should wrap
up your testimony. If you continue to go, you will hear this.
Okay? And it will get louder and louder.
So I now recognize Mr.--and I will say one other thing,
too. You are going to see Members going in and out. It is not
because anything you said or did. We have other hearings going
on, so there will be people coming in and out all the time.
I now recognize Mr. Crenshaw for his 5-minute opening
remarks.
STATEMENTS OF JORDAN CRENSHAW, SENIOR VICE PRESIDENT,
TECHNOLOGY ENGAGEMENT CENTER, U.S. CHAMBER OF COMMERCE; ANTHONY
QAIYUM, PRESIDENT, MERZ APOTHECARY; FRANCIS HOANG, CHIEF
EXECUTIVE OFFICER & FOUNDER, BOODLEBOX; AND CHIKE AGUH, HEAD OF
INNOVATION & STRATEGY, KAPOR CENTER
STATEMENT OF JORDAN CRENSHAW, SENIOR VICE PRESIDENT, TECHNOLOGY
ENGAGEMENT CENTER, U.S. CHAMBER OF COMMERCE
Mr. CRENSHAW. Chairman Williams, Representative Cisneros,
and distinguished Members of the Committee, thank you for the
opportunity to testify today on how artificial intelligence is
shaping the future of small business. My name is Jordan
Crenshaw and I serve as senior vice president at the U.S.
Chamber of Commerce, where I lead the Chamber's technology
policy work, including artificial intelligence, data privacy,
and emerging technologies.
For small businesses AI is not a distant idea. It is
already helping main street businesses save time, serve
customers, manage costs, and compete with larger firms. Tools
that once required large budgets and dedicated technology teams
are now available to entrepreneurs, family-owned businesses,
and small employers across the country. A retailer can use AI
to understand demand and personalize marketing. A restaurant
can improve scheduling and inventory. A professional services
firm can automate routine drafting and research. A manufacturer
can reduce waste and improve operations. In each case, AI is a
force multiplier that helps small businesses do more with
limited time, staff, and resources.
The AI adoption trend is clear. According to the U.S.
Chamber's Empowering Small Business Report in 2025, 58 percent
of U.S. small businesses reported using generative artificial
intelligence. That is up from 40 percent in 2024 and 23 percent
in 2023. That growth reflects a simple reality: small
businesses adopt technology when it delivers practical value.
One example is Henry's House of Coffee in San Francisco, a
family-owned roaster that has served its community for
generations. Its owner, Hrag Kalebjian, uses AI to improve
online product descriptions, better understand customers, and
solve production challenges. He even used AI to help design a
custom system to address static in his coffee-bagging process,
which actually helped him save time on getting coffee outside
of his e-commerce platform and to customers. That is what AI
adoption looks like on main street. Practical, entrepreneurial,
and focused on solving real problems.
AI is also creating workforce opportunities. The Chamber's
data shows that 82 percent of small businesses using AI
increased their workforce over the last year. These businesses
are not using AI to replace people. They are using IT to help
employees focus on high-value work that requires judgment,
creativity, and relationships.
Small businesses are also investing in their workers. They
need accessible training, strong partnerships and policies that
make adoption easier, not harder. It is one reason that the
U.S. Chamber and its foundation launched the Small Business
Basics Program recently to train 40,000 small businesses across
the country on AI. We also support the AI for Main Street Act
and the AI-WISE Act, both of which would help put practical AI
guidance and education within reach of more small businesses.
At the same time, barriers remain. Small businesses face
cost, technical data readiness, trust, and legal uncertainty
challenges. The greatest policy threat in front of small
businesses is a patchwork of state AI and privacy laws. A small
business selling online should not have to navigate dozens of
conflicting state rules simply to use common digital tools.
Congress should establish a clear national framework for data
privacy and AI. These frameworks should protect consumers,
promote trust, preserve innovation, and provide strong federal
preemption.
A first step is that Congress should pass the Secure Data
Act. The Secure Data Act is a comprehensive privacy legislation
that is based on a consensus of state privacy laws signed into
law by 10 Democrat governors and 15 Republican governors that
protects over 150 million Americans across the country. It
would give Americans the right to delete their data and opt out
of certain AI profiling.
With regard to AI specifically, we should adopt a risk-
based, technologically neutral, flexible, and proportionate
framework. Congress should also support the foundations of AI
adoption: workforce development, broadband access, reliable
energy infrastructure, modernized permitting, government
technology systems that reduce burdens on small businesses like
streamlined permitting.
The question before this committee is not whether AI is
going to change small business, it already is. The question
today is what policies can Congress put in place that encourage
the adoption of this technology and further maximize this
transformation to benefit small businesses? With the right
approach that provides flexibility, certainty, and a clear
standard, AI can help entrepreneurs grow, compete, and serve
their communities. The Chamber stands ready to work with this
Committee to ensure that AI works for main street, strengthens
American competitiveness, and keeps the United States at the
forefront of innovation.
Thank you and I look forward to your questions.
Chairman WILLIAMS. The gentleman yields back.
I now recognize Mr. Qaiyum for his 5-minute opening
remarks.
STATEMENT OF ANTHONY QAIYUM, PRESIDENT, MERZ APOTHECARY
Mr. QAIYUM. Chairman Williams, Representative Cisneros, and
Members of the House Small Business Committee, thank you for
the opportunity to testify today about how artificial
intelligence is helping small businesses like mine compete,
grow, and create jobs.
My name is Anthony Qaiyum and I am the owner of Merz
Apothecary, a 151-year-old family-owned business in Chicago. We
sell natural health, personal care, beauty, and fragrance
products through our historic retail store, our website, and
online marketplaces like Amazon. Altogether, we employ more
than 60 people.
When I started, I believed technology could help our unique
neighborhood store reach people across the country and around
the world. We launched our first e-commerce website in 1997 and
became one of Amazon's earliest small business sellers in 2004.
Looking back, those decisions changed the trajectory of our
business.
Today, I believe artificial intelligence represents the
next major leap forward for small businesses. AI gives
businesses like ours affordable access to capabilities that
were once available only to large corporations with
multimillion-dollar budgets.
Many of these tools offer free versions or are integrated
into existing platforms we use. For example, Shopify's native
AI can produce on-demand sales reports in just minutes that
used to take hours to build. Over the years we have accumulated
decades of emails, spreadsheets, sales records, and operating
documents in Google Workspace. We can now simply ask Gemini
where something is stored and what it says, turning our
historical institutional knowledge into something we can find
and use instantly.
In addition, AI helps us streamline repetitive
administrative work so our employees can spend more time
serving customers. Right now we are building an AI agent to
handle routine accounts payable work that takes one employee
more than 20 hours a week, hours we would rather have her
helping with strategic problems to grow our business.
Like many small businesses, we don't have the budget to
hire a full-time chief financial officer. But today I can
securely upload our financial statements into AI tools like
Claude or Gemini and receive a thorough analysis of cash flow,
inventory, investments, operating expenses, payroll trends, and
potential financial risks.
Lastly, and perhaps my favorite example of how AI is
helping us, we recently hired a national sales manager for
KOBO, our small home fragrance manufacturing business. This is
a new position. I knew what I wanted her to learn during the
first few months, but I didn't have the time to organize
everything into a structured onboarding program. Using AI voice
transcription and writing tools, I talked through my ideas and
the AI turned them into a comprehensive knowledge guide along
with a detailed 30-, 60-, 90-day onboarding plan. She later
told me it was the clearest roadmap she had ever received when
starting a new job.
All these examples illustrate the larger impact AI has had
on our business. It has helped us make better use of our
employees' time, strengthen our operations, and grow. Since we
started using AI, our headcount has increased by about 20
percent from just over 50 employees to more than 60, and we are
still hiring.
As Congress considers AI policy, I urge you to focus on
measures that help small business adopt and benefit from AI-
powered tools. First, we need a clear, balanced national
framework rather than a burdensome patchwork of conflicting
state AI and privacy laws. Navigating different rules across
all 50 states is difficult at best and expensive or impossible
at worst.
Second, AI-powered tools are just becoming affordable and
accessible for businesses like mine from features built into
platforms like Shopify to standalone tools like Claude and
Codex. If new rules make these tools more expensive or harder
to use, it could push AI-powered technology out of reach, once
again making these capabilities available only to the largest
companies.
Lastly, Congress should invest in AI literacy. SBA
programs, tax incentives, or workforce training initiatives
could help small business owners and their employees learn how
to use these tools effectively. Every employee who becomes
proficient with AI becomes more valuable, more productive, and
better equipped for the jobs of the future. Even in our
business, which is embracing AI, many of our employees lack
formal training on how to maximize its potential. With the
right support, more small businesses could help their workers
use AI confidently.
For 151 years, Merz Apothecary has adapted to changing
technologies and markets. AI is the newest chapter in that
story. It is helping us compete, innovate, hire, and better
serve our customers. I hope Congress will pursue policies that
keep AI tools accessible for American small businesses and make
it easier for millions more to adopt them.
Thank you, and I look forward to your questions.
Chairman WILLIAMS. The gentleman yields back.
I now recognize Mr. Hoang for his 5-minute opening remarks.
STATEMENT OF FRANCE HOANG, FOUNDER AND CEO, BOODLEBOX
Mr. HOANG. Thank you. Mr. Chairman, Ranking Member
Cisneros, Members of the Committee, thank you for inviting me
here today. My name is France Hoang.
In 1975, when I was a small boy, American forces evacuated
my family from Vietnam. That single act gave me a new life. It
let me graduate from West Point, serve as an associate
counselor to the President, and later deployed to Afghanistan
as the executive officer of a Special Forces company. It also
let me become an entrepreneur. Over the past 15 years I helped
start a law firm, Fluet; a defense services company, MAG
Aerospace; and today I run a collaborative AI company,
BoodleBox. Today, more than 130 small businesses run a
BoodleBox and over 100,000 students and faculty and more than
1,000 colleges use it to teach and learn.
Together, the companies I founded employed more than 1,200
Americans. So when this Committee talks about small business, I
have lived that journey multiple times.
This Committee has already done real work to help small
businesses through bills like the AI Main Street Act and the
AI-WISE Act. That work matters. But I have learned something on
the ground. Getting access to AI is no longer the hardest part.
Basic AI is cheap and it is everywhere. A small business owner
in Detroit can reach more AI computing power today for almost
nothing than a Fortune 500 company could buy 5 years ago. The
trouble is what comes next. The premium AI that delivers real
results still costs real money. And a new divide is opening up
between Wall Street and main street.
There is a second problem, and it is bigger. The most
powerful AI is useless if you don't know how to use it well.
Most small business today are handed the keys to a Ferrari and
sent down the equivalent of a muddy road. Too often, what comes
out only looks finished. And when someone has to redo it, it is
what now we call work slop. On main street today, and even more
so tomorrow, the businesses that do not learn how to
collaborate with AI will not just fall behind, they will fail.
When I sit with small business owners, I hear the same
things over and over. They are exhausted, they don't have time
to learn new tools, they don't have staff to run them, and they
don't have budget to hire help. And they fear that once their
data goes into AI tools, it stops being theirs. They are right
to be careful. It is one of the reasons we built BoodleBox to
be private by design. Not only do we have best-in-class
security, but we never allow our customers' data to be used to
train AI models. In fact, we are one of the few platforms
approved by the House's own chief administrative officer for
use by your staff. A small business owner deserves the same
assurances.
I have seen what this looks like when it is done right. The
University of Michigan runs the Detroit Neighborhood
Entrepreneurs Project. It serves more than 400 small businesses
a year. More than 9 in 10 of them are minority owned. Last
year, they put BoodleBox in the hands of all those
entrepreneurs with the coaching to use it well. One of them is
Tekeyah Gaines, who runs a company called GT Coffee. Through
BoodleBox, she picks the right AI model for each task: one to
price her products, another to build her marketing. As a
result, her average order has grown from $38 to $47. AI let her
grow before she had the resources to hire. She didn't outsource
her judgment to AI. She amplified it.
I would like to leave you with three requests. First, fund
the roads, not just the cars. Put training and real support
behind the Small Business Development Centers that the
Committee has always strengthened with the AI for Main Street
Act. Second, protect small business data so no owner fears that
using AI means giving their work away. Third, take care that
the rules meant to do good do not wall out the small.
Compliance that only the giants can afford will hand this
technology to big companies and lock out those who need it the
most.
Throughout its history, America has provided opportunities
that let small business owners thrive and prosper. In this era
of rapid change due to AI, it is our responsibility to ensure
that those opportunities not only remain, but expand. To do so,
we must not just hand small business owners a faster car. We
must help them build better roads, better roads worth driving
on. Main street, I guarantee you, will take it from there.
Thank you. I look forward to your questions.
Chairman WILLIAMS. Thank you. The gentleman yields back.
I now recognize Mr. Aguh for his 5-minute opening remarks.
STATEMENT OF CHIKE AGUH, HEAD OF INNOVATION & STRATEGY, KAPOR
CENTER
Mr. AGUH. Good morning, Chairman Williams, Ranking Member
Cisneros, and Members of the Committee. I want to thank you for
this invitation to testify today. And I will say as a former
congressional intern who walked these halls two decades ago, it
is a remarkable full circle moment and very much proof of what
is possible today in America.
My name is Chike Aguh. I serve as head of innovation and
strategy at the Kapor Center. And through the Kapor Foundation
and Kapor Capital, the Kapor Center has backed more than 200
startups and fledgling businesses since 2011 that make
healthcare, childcare, education, and housing more affordable
today in America.
Few topics matter more than the intersection of artificial
intelligence and the small businesses that power this nation.
If you remember nothing else I say today, remember this: the
rise of AI carries both promise and peril. They are both real.
Our shared responsibility is to capture that promise and
mitigate that peril.
For small businesses the promise of AI is very clear.
Generative AI and AI agents can remove many of the very
barriers that prevent entrepreneurs from starting and scaling
businesses, from market research to back office capacity to
navigating regulations.
Last year, Matt Rosenberg in California left his marketing
job to open a Thai restaurant with his wife, a fourth-
generation cook from Bangkok. When the storefront lease proved
unaffordable, AI surfaced a rare home kitchen permit they never
knew existed, cutting their startup costs by more than 90
percent and turning dense regulations into simple checklists.
This February, Bangkok Rush Thai Kitchen opened in Alameda,
California, about 12 minutes from our home office. And when
Matt was asked what he would have done without AI in this
situation, he simply said, I would have just given up. Matt's
story captures the promise of AI, making entrepreneurship
possible for all, not just for some.
But the peril is just as real. And it is threefold and it
is important to name. First is trust. Right now, AI adoption,
and there are ranging definitions and estimates of adoption,
varies across small business and it is nowhere near where I
think we want it to be. And I think what we would like to say
at the Kapor Center is technology moves at the speed of
innovation, but adoption moves at the speed of trust. And right
now that trust is still being earned by this technology in the
marketplace.
Secondly, concentration. If AI and the knowledge of how to
use it is only concentrated in the largest firms, the gap with
main street is going to only widen.
Lastly and third, fitness for purpose. If these systems are
unreliable or poorly governed, then small businesses are left
to navigate these risks alone, unable--as a former White House
Deputy National Cyber Director Camille Stewart Gloster has
warned, they would be unable to protect their intellectual
property, their consumers, or their competitive advantage.
So the promise or the peril, which will we live into? It is
easy to feel like this will happen to us, but at the Kapor
Center we like to echo President Kennedy where he says things
do not happen, they are made to happen. And so for the future
that we want, how do we make it happen? And we would say that
there are four parts to that answer.
First, we will have to ensure that small business leaders
have both AI literacy and practical guidance on where AI
creates the most value. The bipartisan AI-WISE Act and the AI
for Main Street Act are promising first steps, and we hope they
are only the beginning.
Second, we must help firms build AI-ready workforces. An
AI-ready workforce is one that is not just AI literate, but AI
native, fully comfortable working alongside these tools, but
also strengthening their unique human skills that AI for now
cannot replace: leadership, communication, interpersonal
connection, and judgment.
Third, we need a national framework for AI governance. We
believe commonsense guardrails like those in the AI Civil
Rights Act, which we endorse, build trust by preventing
unlawful AI discrimination, requiring transparency for critical
uses, and providing real accountability. We also need
consistent rules of the road on security, privacy, and
intellectual property so that entrepreneurs, this is what is so
important, can spend their time serving customers and not
navigating AI risk.
Fourth, government must be a partner and a pioneer, not a
barrier. Government should show the way by partnering directly
with AI native companies to solve societal ills and take down
the bureaucratic barriers that 6 percent of these companies say
are barriers to their scale and to them serving communities. If
those partnerships could happen and just make a 2 percent
improvement on many of the nation's biggest challenges, we
could unlock over $100 billion of GDP for this nation every
year.
At the Kapor Center, we believe that America is stronger
when there are more entrepreneurs in it, not fewer. We must
listen to them, make sure these solutions reach them,
regardless of who they are and where they live. If these
solutions that we are debating here are not felt in places like
my home county of Prince George's or El Paso, Texas, or
Appalachia or the Ozarks, we will not get the next generation
of small businesses.
And so I want to thank the Committee for having me. I want
to start that we believe this is--and say this is a time of
great promise and peril, and that we believe this future will
not just happen, it will be made to happen.
Thank you so much.
Chairman WILLIAMS. The gentleman yields back.
And we will now move to the Member questions under the 5-
minute rule. I will recognize myself for 5 minutes.
Mr. Qaiyum, Merz Apothecary has been a fixture on the
Chicago street corner, as you said, for 150 years. But through
smallflower.com you are now competing nationally. Imagine a
catalog of more than 14,000 products with a staff of around 50
and as a national retailer would have entire departments
handling that kind of merchandising, product discovery, and
online marketing. Can you walk us through briefly? AI has let
your team take on that used to require the resources of a much
larger company, and where has it closed the gap with larger
competitors and where does it still fall short?
Mr. QAIYUM. Yes, thank you for the question, Chairman.
You know, when you are running a small business, as I have
done for about 28 years, and I have worked in the corporate
world, in the corporate world you have departments who can--you
know, a department for every task. And in our business and in
most small businesses, one, two, a small handful of people are
wearing all of the hats across--that would fall across a much
larger corporation. So for us, the way we use AI is often I
think of it as we are looking for ways that we can take the
simple work and the tasks away that we have to do so that we
can focus on the deeper work that helps our business grow. So
that might be like the example I gave matching bills to
invoices, which is obviously important and we can't exist if we
don't do that. But it isn't necessarily the best use of a
human's time because we have a lot of other things to do. So
that would be a simple example.
And then in marketing, you know, nowadays, we are able to
test our marketing across the country to all types of segments.
And we used to sit there and think should we test this ad for
this segment in this part of the country or for this group of
people? And it isn't really realistic to do all the testing you
need to do to succeed as a small business. So now we are able
to use the AI to test across a lot of different creative and
target customers. And it has been a huge help for us. Those are
two examples.
Chairman WILLIAMS. Thank you. Mr. Crenshaw, research shows
that nearly three-quarters of small businesses are now using
AI, but the headline number surely hides a lot of variation.
Question is, how representative is that data across different
sectors and regions? And what separates the small businesses
that are successfully adopting AI from the ones falling behind?
Mr. CRENSHAW. As we look at the data, you know, 58 percent
of small businesses, according to our survey nationwide, are
using generative artificial intelligence. Now, if you look at
the higher adopters, that tends to be smaller tech firms, it is
around 70 percent adoption rates at that point. Entertainment
companies that are smaller, it is around 65 percent. But then
when you dig down in the numbers, you know, you still have
about half of retailers, restaurants, traditional brick-and-
mortar companies are using generative artificial intelligence
to grow and thrive.
In fact, had a chance to talk with the owner of a skincare
company in the Coachella Valley, who has been able to use
generative AI to help her cut costs by sourcing products from
places with lower tariffs or lower costs due to inflation, so
she doesn't have to pass those costs on to consumers. And so it
really is a mix of the type of companies that are using this
across all sectors.
But at the same time, what we have found, though, the
companies that are not using generative artificial
intelligence, about a third are worried about the regulatory
uncertainty that is out there. About one in five believe that
they can't find the workers who are properly trained at this
point to actually use generative AI and make it work for them.
And then another third are really, you know, still not sure how
it will work for their business. So it is one of the reasons
why it is so critically important that we establish clear
national frameworks on the regulatory side, like the Secure
Data Act on data privacy, create a national AI framework that
is workable. And we also have training programs in place, like
the AI for Main Street Act and AI-WISE Act, that help small
businesses really get their head around how to use small
business--or AI responsibly.
Chairman WILLIAMS. Mr. Hoang, in the short time that I have
got left, from your work with BoodleBox, what does AI literacy
realistically look like for a typical main street owner and
their employees? And how can platforms like yours and the
broader training ecosystem help them build those skills in a
way that supports running the business rather than becoming
another burden on their time?
Mr. HOANG. Very briefly, thank you, Mr. Chairman. I think
AI literacy has three components. First, domain expertise
piece. You have to know what questions to ask, what context to
provide to be able to evaluate AI outputs.
Second, AI enablement, knowing when and how to use AI. Not
every problem requires an AI solution, but if it does, what are
the tools and how do I use them responsibly?
And third, I would argue that in this era of AI, the things
that make us uniquely human are more important than ever:
critical thinking, collaboration, communication, creativity.
And so those combination of those three things are what we need
for today's workforce.
Chairman WILLIAMS. Okay, thank you. My time is up.
I now recognize the Ranking Member for 5 minutes of
questions.
Mr. CISNEROS. Thank you, Mr. Chairman.
Me and my colleagues and I were deeply concerned when we
saw the President's executive order on AI published in
December. There are several concerning elements to this
executive order, but the most concerning is a requirement by
establishing a uniform federal policy framework for AI that
preempts state laws on AI as well as data centers.
I support strong federal AI regulation and I think it is
important that we have that. But I am worried that this EO
punishes states like California, my home state, that are
proactive and forward-thinking enough to harness the benefits
of AI while also creating guardrails against potential harms,
especially because this EO removes all state laws without
putting any safeguards in place.
Mr. Aguh, can you share with a preemptive--can you share
why preempting state AI laws can be harmful without any strong
regulatory safeguards?
Mr. AGUH. Sure, Congressman. Thank you so much for the
question.
And I think for us, the Kapor Center, we very much think
the best way forward is a single national framework for AI
governance. In lieu of that, we do not think the best approach
is no regulation. We believe that right now, if I cannot have
national regulation, then someone needs to step in. And right
now, states are stepping forward to create those safeguards.
One can argue how optimal that is, but we would say it is more
optimal than having no regulation or protection whatsoever,
particularly for this topic that we are talking about today.
If you talk to many small businesses about why they may not
be adopting it, it is because they are unclear about what the
rules of the road are and what protections exist for them,
whether it be around their data, around their security, around
civil rights. And having those rules, even if they are state-
based rules, can actually be a tool to increase trust, which
can increase adoption, which I think we have all said on this
panel is to the benefit of small businesses in their
communities.
Mr. CISNEROS. Yeah, and, like you said, the trust is the
important thing. Right? That is what is going to allow more
people to use this tool.
So, Mr. Aguh, in your testimony you said government should
be a partner, not a barrier. Now, Rep. Jack and I introduced
the SBA IT Modernization Reporting Act to address challenges at
the SBA in carrying out IT projects that support small
businesses. I am glad to hear it unanimously passed the House
and now a Senate companion is being introduced. How
counterproductive can it be to small businesses if government
agencies like the SBA improperly utilize AI?
Mr. AGUH. Again, Congressman, thank you so much for the
question. It can be harmful in two ways. One, the government is
in some ways an influencer and a leader for so many other types
of industries across the country. When there are misuses at the
federal level, it can potentially, frankly, incentivize and
almost create cosigning for those misuses in others. That is
one.
Two, when there are bad effects of those misuses, it
creates a chilling effect for other folks who may want to
partner with AI--native AI-driven companies. And we think it is
why the SBA, we want to be pioneering, but also strategic in
terms of how they use it, so they can actually show the way for
what right looks like instead of highlighting what wrong can
look like. And we believe if that happens, more small
businesses will be able to do more at every level of government
and at every sector to improve their communities and improve
problems around the country.
Mr. CISNEROS. All right. Thank you for that.
Mr. Hoang, I loved your example about the University of
Michigan and how they are teaching companies how to use AI.
Moving forward, as you said, literacy is very important. What
role should the SBA play in this when it comes to literacy? AI
ensuring that small businesses know how to use these tools and
use them properly to their benefit.
Mr. HOANG. Yeah. As we saw in places like Detroit, when you
combine access to the tools with the training and coaching to
use them, well, that is when you see results. The SBA obviously
has the resources and the reach to provide that type of
training and resources. Obviously, private industry has a role
to play as well, but the reach of the government is much
greater and particularly in, you know, urban America, in
downtowns, in the far reaches of past the last stoplight of
rural America. I think the SBA can really make an impact in
terms of providing resources necessary for the responsible and
collaborative use of AI.
Mr. CISNEROS. Mr. Crenshaw, same question to you. What role
should the SBA play in AI literacy?
Mr. CRENSHAW. We believe that SBA should play a fundamental
role in AI literacy. It is one of the reasons why we support
the AI for Main Street Act and the AI-WISE Act.
Mr. CISNEROS. All right. Thank you for that.
Mr. Chairman, I yield back.
Chairman WILLIAMS. The gentleman yields back.
I now recognize Ms. Van Duyne from the great state of Texas
for 5 minutes.
Ms. VAN DUYNE. Thank you very much, Mr. Chairman.
You know, small businesses really do drive the economy, I
would say, throughout the country, but especially in North
Texas, and AI seems to be giving entrepreneurs new tools that
were once out of reach for all but the largest of companies. It
is helping owners save time, make better decisions so they can
focus more on serving customers and growing their businesses.
And on this Committee we are working alongside the Trump
administration to remove a lot of the barriers and to help
small businesses to put these tools to work. Washington should
be building on that progress without creating new uncertainty
or unnecessary costs for small businesses so that businesses of
every size can benefit as America continues to lead in AI.
Mr. Crenshaw, AI is already helping small businesses
compete with much larger firms. Washington needs to be careful,
as I mentioned, not to regulate away that advantage, but, at
the same time, business owners need confidence that their
customer data, the financial information, proprietary work are
secure. So as we consider some of these privacy concerns, what
do you think that we should be looking at first and how can we
address real risks without creating new compliance burdens that
will make AI less accessible to main street companies?
Mr. CRENSHAW. It is an excellent question. And, you know,
there is a reason that Texas small businesses are using AI.
Eighty-six percent of them grew their workforce, the ones who
used it, but they have concerns. Sixty-two percent of Texas
small businesses are worried about a patchwork of state AI and
privacy regulations, creating an environment where small
businesses incur the costs and don't reap the benefits and
can't compete with larger companies.
I think there are really two things that really can be
helpful in creating a regulatory environment for AI. One is
passing national data privacy legislation. The Secure Data Act
is currently in front of the E&C Committee right now. It is
legislation that is based in large part on the Texas Data
Privacy and Security Act and also, along with 19 other states
across the country, as a model for privacy legislation that
would put consumers in charge of their data and give them the
right to delete it, correct it. But at the same time, we also
do need a national AI framework as well that prevents a
patchwork from emerging.
And I think as we look at that, one of the first things we
have to do is address where is AI already regulated? We need to
do a gap analysis to see where the laws can already play a role
in protecting people. We already have laws in the books that
protect against discrimination, privacy in over 20 states,
consumer protection laws in 50 states. We have an FTC Act that
protects consumers on a national level. And then at that point,
there needs to be a real discussion about a risk-based
framework that is targeted and tailored for those areas of
harms where the law has not caught up with the technology.
One example of that is the Take It Down Act, which was
signed into law, which would have criminalized the distribution
of deep fake revenge images and also given consumers a right to
take those images off websites and off the internet. So that is
really where we feel a balanced approach is.
And I think as we look at AI regulation, it is important to
note, you know, even if there is preemption of specific AI
regulations across the country, there is still a backstop of
these laws of general applicability, like consumer protection,
discrimination, and privacy.
Ms. VAN DUYNE. I appreciate the answer, by the way. I have
asked a number of CEOs and founders to sit in the largest AI
companies, and that was the best answer I have gotten. Very
complete and well thought out. I appreciate that.
Mr. Hoang, in your testimony, you discussed the importance
of both proprietary and open models to small businesses,
including the importance of open models due to cost. Can you
kind of expand on the current state of the closed and open
model ecosystem and how small businesses use both types to
operate and build their businesses?
Mr. HOANG. Yeah. To be clear, I am neither pro open or anti
open or pro closed or anti open closed model. I believe in
choice. Choice provides competition. It provides the consumers
the opportunity to use the models that are best. We obviously
are familiar with the closed models that are kind of on the
frontier edge. There is also a number of open models that are
very close. They are driving down the cost to access these
capabilities.
I built my platform on this idea of choice. You can choose
what models you want to use in collaboration, so you can get
the best of models working together. I think we need more
competition in the sense of more access to both closed and open
models so consumers can let competition do what it does best,
which is produce the best products and services for America.
Ms. VAN DUYNE. I appreciate that very much.
And with that, Mr. Chairman, I yield back.
Chairman WILLIAMS. The gentlelady yields back.
The Chair now recognizes Mr. McGarvey from the great state
of Kentucky for 5 minutes.
Mr. MCGARVEY. Thank you, Mr. Chairman. Thank you, Mr.
Chairman, for having this hearing today. I think it is
incredibly important for us to be talking about AI as it
relates to small business.
As you all have pointed out, AI is not something that is
coming. AI is here. We see it right now in Louisville,
Kentucky. I see businesses who are successfully using AI in a
lot of the ways you all describe, right, which is actually
taking some of the more--the tasks that take hours upon hours
upon hours to do, and then freeing up their employees to
actually do the work that is central to the business. So see a
lot of good applications.
Have a lot of questions, too. Right? And see a lot of fear
from people who are afraid that AI is going to take their job
entirely. This is the kind of thing where, like, AI, I mean,
could quite literally cure cancer or potentially be used to
develop a type of biological weapon. It is the type of thing
where AI can be used to help spur creativity, but we don't want
to see it ripping off the beautiful sound of someone's voice or
taking the hard work and creative energy that goes into music
and products and taking that and taking it away from us.
How do we replace and how do we protect people whose
livelihoods are easily replaced by AI? How do we balance the
needs for privacy with the needs for safety and security? And
you guys talked about some of these things. So at the root of
each of these questions, I think, is what I spend the most time
thinking about when we think about AI right now. How do we make
sure that AI is used for good? And this is something that I
think is really important work of this body right now.
And Mr. Crenshaw, I am going to start with you because you
testified before the Science Committee all the way back in 2022
about the ethical development of AI, and I am not being
facetious when I say all the way back in 2022. When we talk
about AI, 2022 was a very, very long time ago. We could be
talking about the beginning of this year, and it might be a
long time ago in the way that AI is developing.
But I want to hear a little bit more about this, and I
wanted to hear from you. What do you think the role of Congress
is in ensuring that we develop AI that is ethical, that does
good, and is used for good? And tell me in any way if some of
your views have evolved since 2022.
Mr. CRENSHAW. It feels like a long time. A lot has
happened. A lot has changed since I testified in front of the
House Science Committee. We have now seen the rise of new types
of AI, for example, and more news about frontier models and
agentic artificial intelligence and the rise of chatbots over
the last few years.
But I think one of the things that has been helpful in
government, and was actually released during the Biden
administration was, the release of the NIST AI Risk Management
Framework, which provides a great roadmap toward businesses of
all sizes to examine and look at how they are using artificial
intelligence to address risks to things like privacy and other
potential harms that could come out. It is one of the reasons
why the Risk Management Framework is iterative and meant to be
reexamined to make sure that it is catching up with the
technology. And that is exactly what is happening right now.
NIST is currently reviewing and making changes to that Risk
Management Framework right now.
It is also putting out profiles for different use cases for
artificial intelligence. For example, just recently in the last
year released a risk profile on generative artificial
intelligence. It is now working on one on critical
infrastructure. But it is also possible that NIST could also
examine ways for small businesses to more easily look at how to
use artificial intelligence in an ethical manner.
So that is the way government is already working. But, you
know, at the same time, you know, there are other things that
we think that can be done. For example, Kentucky led the way on
data privacy legislation. A super majority of Republicans and
Governor Beshear, a Democrat, enacted Kentucky's data privacy
law, which has rights around AI. It has deletion rights. And we
think that that is the right model for the United States in
terms of passing national privacy legislation, which would be a
building block to getting us to understanding how data can be
regulated, so then we can start looking at more of the broader
AI pieces.
Mr. MCGARVEY. No, thank you. I appreciate you saying that.
And this is one where I wish, I think all of us probably wish,
we had more than 5 minutes.
And this is an issue I don't want to see get political, but
you mentioned the importance of NIST. I have to point out that
this administration, the Trump administration, has fired over
700 NIST employees and the fiscal year 2027 budget requests
proposing 53 percent of that agency's funding. I think when we
are talking about how do we use AI for good, how do we have
this framework, an agency like that really is important for
helping us develop those tools. I also appreciate you bringing
up data privacy.
Unfortunately, I am running out of time, but really
appreciate you guys being here. Appreciate the information you
provided. This is something is going to be so necessary for
small business, for everyone to be able to compete, for us to
develop the right framework. So appreciate you guys being here.
Mr. Chairman, I yield back.
Chairman WILLIAMS. The gentleman yields back.
I now recognize Mr. Alford from the great state of Missouri
for 5 minutes.
Mr. ALFORD. Well, thank you, Mr. Chairman. Good to see you
and everyone coming in today to testify on this very important
matter.
Artificial intelligence is quickly transforming the way
Americans live and work, and nowhere is that more evident than
on main street. And that is what we are concerned about here in
this Committee. What was once viewed as a technology only
available to the largest of corporations is now becoming
available and affordable for small businesses all over our
great nation. Whether it is helping a manufacturer optimize
production, allowing a family-owned retailer to better manage
inventory, improving customer service, or reducing the
administrative burden on small business owners, AI is giving
entrepreneurs new opportunities to grow, to innovate, and to
compete.
At the same time, many small businesses still face
significant challenges when it comes to adopting these tools.
Business owners often tell us that they don't know where to
begin. They worry about protecting customer data. Many simply
lack the time or technical expertise to evaluate the growing
number of AI products entering the marketplace.
We here in Congress, I think we have a very important role
to play to make sure that innovation is encouraged, not
hindered by unnecessary regulation, while also making sure
small businesses have access to the education and resources
they need to use this technology wisely to grow their
businesses.
Mr. Crenshaw, I was proud to introduce the bipartisan AI
for Main Street Act along with my colleague, Representative
Scholten. And this legislation would utilize the Small Business
Development Center network to provide practical AI training,
cybersecurity best practices, data protection guidance, and
technical assistance. The House passed this bill by an
overwhelming bipartisan vote because we recognize here in
Congress that AI adoption is about more than simply providing
access to technology. It is really about giving entrepreneurs
the confidence to use it effectively.
From your perspective, how valuable would this type of
locally delivered technical assistance be? And what additional
resources should Congress consider to make sure main street
businesses can successfully adopt AI? Sir.
Mr. CRENSHAW. Well, first and foremost, want to thank you
for your leadership and sponsorship of the AI for Main Street
Act. It is a critical step to ensuring that small businesses
know the tools available to them, know how to use them in a
proper and ethical manner. And it is a reason why it is so
important. As you look at your home state, 87 percent of
Missouri's small businesses using AI have grown their
workforce. So it is--this is why we need to get these kind of
tools in front of them.
So we think it is incredibly important that this bill pass
in the Senate along with the AI-WISE Act. And then also SBA has
the funding it needs in order to successfully promote AI
adoption for small business.
Mr. ALFORD. Thank you. Mr. Qaiyum, a big concern that I
have heard from our constituents when I am doing town hall
meetings or coffees with people in small businesses, we are in
those small businesses regularly when we are back in our
district, they are concerned about AI replacing employees,
especially entry level roles. In your experience, has AI
replaced workers or is it more of a tool to allow workers to be
more productive and more competitive for those small
businesses, competitive with the big guys?
Mr. QAIYUM. Thank you for the question, Congressman. At
Merz, in my experience, it really is a competitive advantage,
and it is, I would say, even more, it is a bandwidth advantage.
And by that I mean in my almost three decades running a small
business, I have never felt that there was a lack of
opportunity. There was just a lack of time, money, and
resources to tackle the opportunity. So for me, it feels like
what we have experienced is that using AI, my team is able to
go after bigger opportunities and help our business grow, even
the entry-level folks.
Mr. ALFORD. Thank you. Mr. Hoang, last question. What are
the biggest obstacles that small businesses face after they
decide to use AI? And what has helped your small business
customers turn AI from a project into an everyday business
tool?
Mr. HOANG. I would say, thank you for the question, two
things. First, where to begin? AI, that chat window can seem
like a lot of promise if you are an AI early adopter. For
someone who is not familiar with AI, that seems like an ocean
you get lost in. So it turns out AI is actually very good about
teaching you about AI if you use it right. It is one of the
interesting kind of components of the tool.
The second is we hear a lot about prompt engineering and
the need to be able to ask AI the right questions. In my
opinion, what I have seen the most powerful use of AI, it is
actually about context engineering. It is what you tell the AI
before it gets started. And so educating business owners on how
to use the context they are already sitting on, their customer
data records, your past performance, your past contracts, and
how to feed that into AI in a way that is safe, secure, and
private, that really unlocks the power and potential of AI.
Mr. ALFORD. Thank you. And I yield back.
Chairman WILLIAMS. The gentleman yields back.
I now recognize Mrs. McIver from the great state of New
Jersey for 5 minutes.
Mrs. MCIVER. Thank you, Chairman, and thank you, Ranking
Member, for convening this hearing today. I want to thank each
of our witnesses for joining us today on a heat wave here in
Washington, D.C., so stay hydrated.
Artificial intelligence is often described as a tool to
help small businesses become more productive and reach new
customers. But its value depends entirely on the safeguards we
put in place. Today's AI systems still reflect deep biases,
raise serious cybersecurity risk, and operate with little
transparency. While large corporations use AI to strengthen
their advantage, many small businesses are left behind. We are
not doing nearly enough to ensure that small businesses can
access and benefit from these technologies on fair terms.
AI's rapid growth depends on the massive expansion of data
centers, which place heavy burdens on local communities, local
electricity grids, water supplies, infrastructure, and people,
especially in my district in New Jersey's 10th. These projects
often move forward with little transparency or input from the
communities most effective. That is why I introduced my AI Data
Center Site Selection Transparency Act, which would bring an
end to surprise AI data center construction. If we are serious
about encouraging innovation, we have to protect small
businesses and communities that bear the cost of this
transformation.
Mr. Aguh, spent a lot of time talking about this in your
opening testimony, which I can appreciate about how AI has some
potential to increase productivity, but it also has millions of
America's workers wondering what will happen to their jobs due
to increasing AI use. I want to elaborate a little bit more of
what one of my colleagues talked about, Mr. McGarvey, about
Americans in the workforce and how AI impacts that.
Mr. Aguh, how would small businesses or how should small
businesses think about using AI to assist their employees
rather than replace them?
Mr. AGUH. First of all, Congresswoman, thank you so much
for the question. And I think this is a place where I think
history is helpful. If you think about in the past, in the
manufacturing space, and you think about when someone running a
factory was trying to figure out how to make the line run
faster, the first place they went was they went to their
employees and said, you work on the line. Tell us how we can
make this line 10 percent faster, 15 percent faster, and the
workers generally delivered. And I think the same ethos is
important here.
When business leaders are implementing AI, the people who
must be intimately involved are the workers, particularly on
the front line, who are using it. One, because that is ideally
the types of workplaces that we want. But secondly, they have,
in many ways, the best ideas for how to make sure that that AI
can be used to actually create the efficiencies that we want.
What can I take off my plate that will make me better able to
serve our customers, grow our business, serve our community? So
I think that is number one, include workers in that process.
And usually when I talk about these fronts, there are about 10
people, 20 people, many of which--and in many ways those
relationships are already being created.
I think the second piece is, and you have heard, I think,
across all the witnesses, which is we have to be investing in
their skills now. Again, how do we make folks AI native so that
they know how to use these tools? The same way that we expect
workers to be able to use Microsoft Office or Google Docs, same
way this is going to become that level of table stakes.
Therefore, how do we invest in that proactively now before it
truly is a barrier to employment?
I think the third piece, this is particularly true for
small businesses, and you heard this from my example for
Bangkok Rush Thai Kitchen, which is in many ways small
businesses need to think about what is not happening in my
business that AI can help make happen versus what is the thing
that is happening now that potentially could be done by someone
else? And when you have, again, businesses of 10 or 15 or 20
people, there are lots of things that aren't happening because
they just don't have the arms and the legs to do it.
So those are the three things that I would say: include
workers, make sure they are trained, and then thinking through
strategically what is not happening in my business that AI
could help make happen.
Mrs. MCIVER. Got it. Thank you for that. And many of you, I
think each of you actually talked about the need for AI
literacy, right, for businesses. In your opinion, what
investments in workforce training will be necessary to help
workers adapt?
Mr. AGUH. I think it is two things, or if I put it in two
buckets. One is just literally training folks on the tools,
again, the same way that there are still classes that you can
take on Microsoft Word and Excel. And you have much content out
there, a lot of it either low cost or no cost, which is good. I
think we particularly need to make sure this gets to the,
frankly, the most in need, underserved workers, the most
underserved communities, whether those be urban or rural,
because that is--because those are usually the folks who get
that information last.
I think the second piece, and I say this as someone who
used to work at the Department of Labor, is how do we make sure
that those human skills, again, leadership, communication, are
emphasized? And that is where things like work-based learning
are really important. You learn those skills not by hearing
about them, learning about them, but you learn them on the job.
So apprenticeships, hire to train, hire to train/deploy
apparatus are really, really critical. So more work-based
learning and then more targeted knowledge of how to use these
tools.
Mrs. MCIVER. Got it. Thank you so much for that.
With that, Mr. Chairman, I am out of time. I yield back.
Chairman WILLIAMS. The gentlelady yields back.
I now recognize Ms. King-Hinds from the Northern Mariana
Islands, the great islands, for 5 minutes.
Ms. KING-HINDS. The amazing Northern Marianas. Thank you,
Mr. Chairman.
Mr. Hoang, of the things that resonated with me was your
statement that, hold on, excuse me, that the tool is only the
car. The road is training, coaching, and support. And as the
Chairman has mentioned, I represent the Northern Mariana
Islands and one of our biggest challenges often, just our
remote geography and our very limited access to technical
expertise. So if Congress could do one thing to ensure that AI
doesn't widen the gap for remote, isolated communities like
mine, what would that look like? What would that investment be?
Mr. HOANG. Thank you for the question. I would say,
obviously, pass the two acts that came up from this committee,
right, the AI-WISE Act and the AI Main Street Act that
activates the, you know, SBA and the Small Business Development
Centers to provide that training and expertise, and the
government can reach all around the world, right, even to those
territories and states that are further afield. So I would say
pass those acts.
And second, continue to have these discussions, continue to
have these hearings and bring businesses small and large. The
world is changing fast. As one of the representatives noted, if
we have this discussion 6 months from now, the world is going
to be different.
Ms. KING-HINDS. Yeah, I agree. There has been a lot of--I
think most of the panelists have touched on workforce
development. And, you know, that is something I am particularly
interested in as, you know, this new technology continues to
change on a daily basis, if not by minutes. Right? And I just
kind of want to flesh out some of your thoughts on what we
should be doing in terms of investing to be able to prepare our
workforce for this new technology.
And I will start with you, Mr. Crenshaw.
Mr. CRENSHAW. Well, I think it is important to note, too,
in addition to AI training, as we are looking at building out
the infrastructure for AI, we are going to need training in
that as well, too. You know, we have seen a rise in
apprenticeship programs for things like electrical work to help
out build out the infrastructure that is necessary for
artificial intelligence. So it is a reason why many of the
companies we work with are working to get people trained in
those skills as well.
But it is also fundamentally important that we have small
business owners trained on how to use this technology. And it
is one of the reasons why the Chamber launched its Small
Business Basics program. But also, as we are looking at
education, we need to begin developing programs where K through
12 has some degree of AI built into it, postsecondary education
as well, too, building AI into those curricula, and into an
interdisciplinary approach in a lot of ways in higher ed. And
so it really is going to be an across the board strategy
necessary to ensure that we have an AI-ready workforce.
Ms. KING-HINDS. All right, thank you.
Mr. Qaiyum, did you want to chime in?
Mr. QAIYUM. Yes, thank you. Right now we are probably more
advanced than most small businesses of our size in using AI.
But that is because I happen to be into technology, and other
leaders and I in our business have been pushing ourselves and
our teams to do it. But even in our company, we feel like it is
a challenge to get the rest of the company to adopt it. So I
think that it is important to come up with programs, ideally
through the SBA or other means, that help us train workers and
let them experience the advantages that come from learning how
to use these tools well.
Ms. KING-HINDS. Mr. Hoang, did you want to say something as
well?
Mr. HOANG. Yes, thank you. We are privileged to work with
almost 170 colleges and universities on their teaching and
learning with and about AI. What artificial intelligence needs
is more actual intelligence. And it is that combination that
allows us to unlock its potential.
If you think about the nature of work, right? Defining a
problem, designing a solution, creating that solution,
validating it, AI makes those middle two steps easier and
cheaper than ever. But the key isn't those two steps. The key
is what comes before. Am I using AI for the right problem? And
what comes after? Does this solution actually work in the real
world? And so workforce readiness, maybe, ironically enough,
isn't about learning how to use AI and the tools. It is
learning how to apply them to the real problems and to solve
real problems in the world.
Ms. KING-HINDS. Mr. Aguh, you have the rest of my time.
Mr. AGUH. I think the only thing that I would add here is
more real world. You might have kind of heard it in the last
answer, which is, again, for those of us who are athletes at
any point in our lives, you didn't read a book on how to do a
jump shot or throw a football. You did it in the field with a
coach. And I think right now, AI is, ironically, showing the
need for more work, true in the field, in the place of work
training and learning, so folks can learn to use these tools in
real time. Classes are good. Real life experience is better
because we are learning how to use these tools because they are
evolving so fast.
And so I think that was the only thing I would add here,
which is how do we make sure that people, really young people,
are getting to use these in the field, not just in the
classroom.
Ms. KING-HINDS. Thank you. I yield back, Mr. Chair.
Chairman WILLIAMS. The gentlelady yields back.
I now recognize Mr. Tran from the great state of California
for 5 minutes.
Mr. TRAN. Thank you, Mr. Chairman and Ranking Member, and
thank you for our witnesses for being here.
AI is no longer a technology of the future. It is already
changing how main street does business. From helping a family-
owned business manage inventory to allowing a new startup to
reach new customers, AI has the potential to make small
businesses more productive and more competitive if we use it
well.
As someone who represents Southern California, I see both
the promise and risks every day. L.A. County and Orange County
are home to a booming AI and tech innovation ecosystem and also
home to thousands of immigrant-owned small businesses that are
worried about what AI means for their livelihoods.
There is a broad bipartisan agreement that America should
lead the world in AI innovation. But leadership also requires
rules of the road. That is where Congress has fallen short. We
still don't have a clear national framework for AI governance
that addresses safety, innovation, and equal opportunity.
Indeed, access to AI is not equal. In many minority
communities access to high-speed internet, modern devices,
digital skills, and language-accessible tools remain uneven.
This digital divide simply does not disappear during time of
rapid AI adoption. It deepens. This is why AI literacy must
come a become a national priority. Small business owners should
know not only how to use AI, but also how to identify its
risks, protect sensitive business data, recognize bias, and
make an informed decision about when AI should and should not
be used. That education has to reach every community, including
immigrant entrepreneurs, who are often among the most
innovative small business owners in the country.
The largest corporations already have the resources to
adopt AI, manage compliance, and pay for future subscription
costs. Many small businesses do not. If we fail to close that
gap, AI could accelerate market concentration and leave main
street struggling to compete. We need to make sure that this
doesn't happen. Congress needs to invest in AI literacy and
establish thoughtful federal guardrails to ensure that AI
becomes a tool for innovation and opportunity, and not another
barrier to success.
Mr. Hoang, given your background, we both know the
opportunities that this country provided our families, and we
both chose to give back through military service before
pursuing entrepreneurship. Your story is a powerful reminder of
what the American Dream can look like. In your testimony, you
make an important point that the challenge today isn't only
access to AI, it is also readiness. You say many small business
owners have been handed the keys to a Ferrari and sent down a
muddy road. I never got that Ferrari key, by the way. But can
you explain how important AI literacy is for consumer and
entrepreneurs?
Mr. HOANG. Thank you, Mr. Tran. And I appreciate your
service as well given our shared heritage.
Let me just draw that analogy a little wider. So we tend to
think of AI like a faster car. Let's just do whatever we are
doing today and just do it faster and better with AI tools. But
if you think about it, a car is not just the faster horse. All
right. A car requires, first, infrastructure. It requires
training. It requires rules of the road. A car requires you to
build the roads that can handle how fast the car can go. And
most importantly, a car can go to places horses can't. And so
in many institutions, organizations, public and private, we
treat AI like a faster car. We simply do what we were doing
before, just do it faster.
I would argue the key to AI adoption and the key to AI in
small businesses is to rethink the roads, to ask ourselves
where do we want to go? And it may be a place we could not go
to before. It may mean that a business that didn't have access
to marketing tools because they couldn't afford it, now all of
a sudden does. It may mean that a business that couldn't expand
its market, could. AI enables these new opportunities, but only
if we build the better roads, only if we build the privacy, the
data protections, only if we provide the training, and only if
we ensure that the regulatory environment doesn't overly burden
small businesses compared to large businesses.
Mr. TRAN. Let me follow up and ask you, is AI literacy a
challenge right now in this country?
Mr. HOANG. Yes, it is absolutely a challenge.
Mr. TRAN. Can I ask to read all the panelists going down,
starting with Mr. Crenshaw, if you agree?
Mr. CRENSHAW. Yes.
Mr. QAIYUM. Yes.
Mr. AGUH. Absolute yes.
Mr. TRAN. Okay. Then let me follow up with this. Should
there be a dedicated funding, federal funding, to help bolster
AI literacy nationwide?
And let's go down the panel. Mr. Crenshaw?
Mr. CRENSHAW. We should have public-private partnerships
that work together.
Mr. TRAN. Accept that.
Mr. QAIYUM. I am not an expert on how it gets done, but I
know we would appreciate it in our business.
Mr. HOANG. Same answer here. I believe public-private
partnerships and, you know, from there a wide variety where we
get AI literacy.
Mr. TRAN. Mr. Aguh?
Mr. AGUH. Yes, but we will need public investment.
Mr. TRAN. Okay. Thank you very much.
And Chairman, I yield back.
Chairman WILLIAMS. The gentleman yields back.
I now recognize Mr. Fuller from the great state of Georgia
for 5 minutes.
Mr. FULLER. Thank you, Mr. Chairman.
Mr. Hoang, and, Mr. Crenshaw, you may weigh in on this,
too, so my wife is a small business owner. I am a prosecutor by
trade. So if you remember the old caveman lawyer, your AI world
frightens and confuses me. So one of my concerns for small
businesses on main street and the Appalachian communities that
I represent is no different than the software you may use in a
business. You know, someone will sign a contract, and then
maybe a year or 2 years into it, maybe it is not delivering. I
think you used the term ``AI adoption.'' Maybe it is not what
they needed.
How can we create an industry and framework to make sure
that for that AI adoption on main street that these businesses
have the opportunity to become--get the AI that they need to
actually grow their business and not get into, you know, 24-
month contract for something that is not responding to their
needs?
Mr. HOANG. Thank you for the question. There is a lot of AI
available, some of it is free, a lot of it you can buy month-
to-month. I don't think the locking is a problem. What is a
problem is context. Right? There is going to be a fight for the
context in which we provide our AIs and the context that
emerges when we use AI. And I believe that users should have
the ability to move that context from platform to platform. We
do that inside my platform in the sense of like you can share
context between different models. So if today Claude is the
better model, you use that. If tomorrow Gemini is the better
model, you use that. And so I think being model agnostic in
what you create is the right path forward for industry
providing these types of tools.
Mr. CRENSHAW. I think it is important, too, as companies
are looking at which AI to deploy, they shouldn't have AI be
the solution for its own sake. They should actually go in with
an identified set of challenges they are trying to solve for
and then look for the AI solution that is best talented or best
positioned and targeted for solving those issues. So, you know,
I think that is one of the reasons why it is so important that
we do have facilitated AI training and education so small
businesses can get smarter about what tools might be better for
them.
Mr. FULLER. And I wanted to ask you about that, Mr.
Crenshaw. So when you are talking about a public-private
partnership, because if I am thinking about a small business in
one of my main streets, I mean they don't have the time to
think strategically and have big thoughts on like what are
those questions to help me, A, with literacy and then the
inputs that I need for the AI to improve my business because
they are worried about, hey, I can't even get someone to show
up for a shift. And that is going to, you know, ruin my
Mother's Day, which happened to my wife where someone didn't
show up to a shift, I don't have the certificate to go in and
do her shift at her business, she has got to fill it on
Mother's Day.
So for those business owners that don't have the time to
think big thoughts about what AI is appropriate for them, what
does that public-private partnership look like so you can get
that AI literacy for a small business to say, this is what I
need.
Mr. CRENSHAW. Well, I think that is one of the great things
about the AI for Main Street Act and the AI-WISE Act are put
together. They complement each other. The AI-WISE Act provides
a lot of online tools and online availability of information.
The AI for Main Street Act would work with SPDCs basically to
have more of those localized trainings and localized education
efforts as well.
It is also one of the reasons why, you know, we think it is
important that the business community itself takes a role in
providing training. We at the Chamber have worked with local
and state chambers of commerce to do trainings for local small
businesses as well on AI through the Small Business Basics
program.
But also, too, I think it is important for individual
businesses to be forward-thinking. One example is Hrag
Kalebjian, who is the coffee shop owner I mentioned in my
opening testimony, who is using AI for cutting his marketing
down by about 70 percent. But what he does is he actually has
an innovation hour with his baristas and his staff at the
coffee shop to just go through how can AI help them and kind of
going through new AI solutions to get them tooled and ready,
even if they don't stay at his coffee shop to go on somewhere
else. So it really is different aspects of the ecosystem when
it comes to AI that have a role to play.
Mr. FULLER. Thank you.
Mr. Chairman, I yield back.
Chairman WILLIAMS. The gentleman yields back.
I now recognize Ms. Goodlander from the great state of New
Hampshire for 5 minutes.
Ms. GOODLANDER. Thank you, Mr. Chairman. Thank you to our
witnesses for being here for this really important hearing.
You know, one of the through lines in this hearing has been
a very powerful point that each of you have made, which is that
getting access to AI is right now not the hard part for small
businesses. The hard part is actually ensuring that a family-
owned funeral home in Berlin or a home builder in Brookline or
a daycare in Keene can actually put this technology to use. And
equally urgent, whether 5 years from now or 5 months from now
maybe is probably more accurate, that small business will still
have the leverage over the platforms that they built their
businesses on.
Mr. Hoang, thank you for your testimony. Thank you for your
service. You know, your testimony has laid out for us a really
clear vision of what doing it right looks like, what closing
the readiness gap looks like. And I want to ask you, you know,
our resources are limited. We are fighting tooth and nail for
every dollar and many dollars that this administration is
withholding from my state of New Hampshire that could actually
go to solve and close this readiness gap. With limited
resources, how could we scale up a model like the one you
describe in your testimony, the Detroit Neighborhood
Entrepreneurs Project? How could we scale this up? What would
be your first concrete steps that we could take to scale up
this model?
Mr. HOANG. So I believe in public-private partnerships. A
lot of the work we do at BoodleBox is with colleges and
universities. They are the front door to democracy. Today's
college students are tomorrow's workers. Obviously, state and
federal funding and governments, you know, are intertwined
closely with higher education. You know, I would like to see
greater support for AI literacy at the place where it counts I
think the most, right, during the formative years of someone's
development just before they enter the workforce.
Ms. GOODLANDER. Thank you. I appreciate that.
I did want to ask about this. You make the powerful point
that we got to fund the roads, not just the cars. To me, part
of the road is connectivity itself. I represent one of the most
rural districts in the country. And access to high-speed
broadband is for many of my small businesses a core barrier to
the adoption of AI tools. Can you speak to this in the rural
small businesses you have worked with? And can you just--you
agree that connectivity is part of what it is going to require
for us to build the roads?
Mr. HOANG. Yeah. Absolutely, Representative. In my written
testimony, I talk about a rural family in Oklahoma. They live
well past the last stoplight. Because they have good
connectivity, they are able to access AI. They are able to have
a marketing team, a development team, a business development
team that is AI-powered that they would not otherwise have
access to. But obviously, if they can't access the AI, they
can't have access to those potential. And so connectivity is
really a fundamental foundation for this access to the AI
economy.
Ms. GOODLANDER. It is. And I just want to say the Broadband
Equity Access and Deployment Act, the BEAD program, has been so
mission critical. We have got $21 million that is currently
being withheld from the state of New Hampshire that could go to
exactly this problem.
Mr. Aguh, I want to ask you, thank you for your testimony
and for the powerful points that you have made about the role
of competition and the real perils that small businesses are up
against. Before I came here to Congress, I was an antitrust
enforcer. So I think a lot about what the scales have looked
like and could quickly look like for small businesses. Can you
talk to us about examples that you have seen in your work of AI
applications that have actually made small businesses better
able to compete with large dominant companies?
Mr. AGUH. Sure. First of all, thank you so much for the
question. And I think, let me step back for a second to say, I
think I have seen two things that have helped this. One, you
need to feel confident about transparency, for a small business
to be able to know: is this tool doing what I need it to do?
That is hard right now because the technology moves so quickly.
So being able on the front end to know what you mean to have
solved and then actually able to track them on a regular basis
is so important because that is the first step to know when I
need to switch.
I think secondly, to get to the answer to your question,
where we have seen the biggest advantages in a couple areas.
First, qualified lead generation. Meaning if I am a business
who sells by getting on the phone and trying to sell my wares,
getting a qualified list of who those folks might be versus
just picking up the phone book, super helpful. Using tools like
LinkedIn, that is one.
Secondly, back office capacity, whether it be accounting,
tax compliance, things like that, being able to track all that
and make sure that I am proactive versus reactive.
I think the last piece, marketing. So many small businesses
don't have a website. So many small businesses are not
advertising in any way, shape, or form because they can't hire
a designer. AI can make those things happen.
Ms. GOODLANDER. Thank you. I yield back.
Chairman WILLIAMS. The gentlelady yields back.
And I recognize Mr. Meuser from the great state of
Pennsylvania for 5 minutes.
Mr. MEUSER. Thank you, Chairman. Thank you to our
witnesses. Certainly a lot to talk about. And my apologies, we
have other Committee responsibilities, many of them today.
Mr. Crenshaw, I would like to start with you, please. You
know, in business, I used to look at technology in the early
2000s as it is either a weapon that is used against you or a
weapon that you use to benefit your company. AI certainly fits
into that category and then some. What are the challenges small
business are facing as far as, you know, of course, there is
privacy? There is, you know, cyber ransom challenges, I mean,
the onslaught; the competitive nature of AI, whether you are
there or not, and the usefulness of it. So maybe just give us a
quick 30 seconds on what main feedback you are getting from
your Members.
Mr. CRENSHAW. Uncertainty in the regulatory environment is
a major barrier. It is the reason why 57 percent of small
businesses in Pennsylvania are worried about a patchwork of
regulations that leads to uncertainty.
Mr. MEUSER. Okay.
Mr. CRENSHAW. You know, I think examples of that are we
have a good base in about 20 states for data privacy
legislation, but we see other states that are operating on the
margins and trying to take more extreme approaches to
regulation. We have seen those states, for example, craft
legislation with the intent of only having their state
attorneys general regulate to provide some certainty.
Unfortunately, we have seen instances where the trial bar, for
example, has gotten creative and used laws never designed for
consumer privacy to have gotcha lawsuits for basic things like
collecting cookies.
So if you are an auto dealer who has a chatbot just trying
to get in touch with, you know, a potential customer, we have
seen auto firms that have been sued with smaller ones for--with
demand letters from people who were never even customers using
these invasion of privacy statutes that had nothing to do with
consumer privacy. We have seen hospital systems even sued under
this as well in Pennsylvania. And it is why we need reform of
this type of litigation abuse that we are seeing across the
country.
And then it really goes to the heart of why we do need a
national AI framework as well. If we have a state-to-state
patchwork there, it will be highly problematic because only the
larger companies are going to know how to actually comply and
compete, and it is going to leave small businesses in the dust.
Mr. MEUSER. So basically, one of the most useful tools we
have had in a long while to create productivity and
efficiencies and effectiveness, one of your biggest challenges
is government involvement and intervention primarily at a state
level?
Mr. CRENSHAW. I think at this point if you look--let's look
at data privacy, for example. There was a great survey that
came out from ITIF that showed that if we have a 50-state
patchwork of data privacy laws, it will cost the American
economy $1 trillion over 10 years. Two hundred billion of that
is going to be incurred by small businesses.
Another example, I think if you look at the California
Consumer Privacy Act, there was a rulemaking that came from
that that was finalized just last year regarding automated
decision systems, regarding cyber audits, regarding privacy
risk assessments. The agency took a one line part of the
California Privacy Act and turned it into a half-billion-dollar
AI rulemaking. When you combine that with the full rulemaking
with things like privacy, the agency estimated it was going to
cost small businesses $16,000 annually to comply.
Mr. MEUSER. Wow.
Mr. CRENSHAW. So that is just one state.
Mr. MEUSER. We will take it seriously of what you are
saying here. Thank you.
You mentioned about Basel III, basically that access to
capital is--will be a very, very important right now,
particularly with what we passed in the Working Family Tax Cut
portion of the BBB where we have better bonus depreciation and
better tax incentives for investment. So clearly that is
something that is important.
I am going to move on to Mr. Qaiyum. In your business, and
congratulations, Merz Apothecary, how is AI helping you? And it
was interesting the way you said how it now allows you to
compete more so against the so-called bigger guys. Maybe you
can talk about that a little bit.
Mr. QAIYUM. Sure. Thank you, Congressman. You know, I
always--there is a mantra that when you study small business or
you look at the business leaders out there, they always say to
work on your business, not in your business. And for most small
business owners, that is just like it is a dream, but it is
never reality. And I feel like in the past year since we have
been using AI more heavily in our business, it is the first
time where I feel like our leadership team has been able to
work on the business. And when you are a small business owner,
so much of your thoughts, the reason I lose sleep is how do we
make sure something doesn't happen because it is small and you
feel like, you know, a pandemic can come along, anything can
come along and take that away, so.
Mr. MEUSER. Is the AI investment you are making cost
prohibitive or you can----
Mr. QAIYUM. Not at the moment. The privacy laws are the
biggest concern about using it right now.
Mr. MEUSER. Great. Thank you, gentlemen, very, very much.
Chairman, I yield back.
Chairman WILLIAMS. The gentleman yields back.
I now recognize Dr. Morrison from the great state of
Minnesota for 5 minutes.
Ms. MORRISON. Thank you very much, Chairman Williams and
Ranking Member Velazquez, for holding this hearing. And thanks
so much to the witnesses for being here today.
Over the past years, we have been talking about this all
morning, we have seen rapid developments in the field of AI. AI
tools of all kinds are readily available and some have the
potential to support entrepreneurs. But I do worry that as tech
giants race ahead to push out their next AI model, there is
insufficient attention on the actual utility of this technology
to our small business owners and, frankly, to the American
people.
Too often AI development narrowly focuses on finding out
what AI is capable of, rather than answering the question how
can this technology be used to improve people's lives? Now we
find ourselves in a situation where many people are asking who
even wanted this and will this technology help me or will it
actually hurt me or maybe even kill me?
Mr. Aguh, in your testimony, you highlight that technology
moves at the speed of innovation, but adoption moves at the
speed of trust, and that trust has not yet been earned. I think
this is a really important part of this whole conversation. You
go on to highlight that this lack of trust is reflected by the
majority of Americans feeling that AI's risks outweigh its
benefits and the slow adoption of generative AI by American
small businesses. You know, Rep. Tran touched on AI literacy.
Mr. Aguh, can you share steps that tech companies could
take to build America's trust in AI?
Mr. AGUH. First of all, thank you so much for the question.
I think this is a really important point.
I think I go back to a point that has been made, I think
repeatedly, which is one thing that creates trust is beyond any
company, but it is having a national set of frameworks around
what are our rules of the road around AI, from security to
privacy to bias to civil rights. Having a single set of rules
that we all know, understand, agree upon, and can trust it.
I think secondly, having more collaborations between the
public and the private sector like these companies to solve
really large issues, again around things like--some examples
here are things like the Claude Corps, basically Claude
Anthropic working with nonprofits to teach them how to use
these tools for the betterment of the work that they do in
their communities. Small example, but a good one, and we would
love to see more there in that vein.
I think lastly, helping small businesses pick the tools
that are right for them, even if those tools are not their
tools, I think that is really important. Consumers and small
business leaders having those choices is so important. I think
right now you have to make sure--it is tempting to believe that
everything is a nail and that is amenable to the AI hammer or a
particular AI hammer. And helping these small business leaders
pick the exact hammer for the exact right nail is so important.
It might be Claude, it might be ChatGPT, it might be a
Midjourney, it might be a Notion. But how do we basically
figure out what those tools are and putting that agency in the
hands of small business leaders I think is really key.
The last point, small business leaders also reflect the
feelings of their workers. So the more that workers become more
comfortable, again are involved in these decisions, figuring
out how it can benefit the business, the better off their
employers are going to be and more trusting their employees
will be with these companies.
Ms. MORRISON. Thank you so much. And I am sympathetic to
this idea that if we have a patchwork of state regulations
across the country, that creates all kinds of complications.
Could any of you give two specific examples of what a federal
framework would look like for regulating AI?
Mr. CRENSHAW. One of the notes I think important to note,
68 percent of small businesses in Minnesota are worried about a
patchwork. And one of the solutions can come out of Minnesota
is copying Minnesota's data privacy law and making it the
national standard. And so that is a----
Ms. MORRISON. Love that answer. Sorry to interrupt.
Mr. AGUH. I would say one piece that is not talked about
enough is intellectual property, meaning when a lot of
intellectual property was created, back when it was, this use
was never thought of, never considered. So whether I am
Universal Music Group, who regulates, you know, 30--has 30
percent of the world's music, or, candidly, I am a bluegrass
artist from Kentucky, I may never have thought of what happens
if my music used by this. And we need a framework to govern how
I say it can be licensed, how I am compensated, how I want to
be compensated, and by whom. Right now, we just don't have a
framework for this because back then we didn't think that this
would be possible. So that is one example of an issue that is
under talked about that is really, really key and a big trust
issue.
Ms. MORRISON. Thank you. I am running out of time, but one
quick last question. You know, before I ran for Congress, I
worked as an OB/GYN for many years. So as you might imagine,
patient confidentiality is critically important. And one of the
pieces of AI regulation that I think is crucial is that data
privacy question. And I think it is something that people are
worried about, too. And I know small business owners also have
concerns about it. How can we protect patient privacy?
Mr. Aguh, do you have any thoughts on it?
Mr. AGUH. I know I am over time, so I am looking at the
Chairman to----
Chairman WILLIAMS. I will give you a little extra time.
Mr. AGUH. Sure. I think, candidly, we already have a lot of
health privacy laws, and I think the question is how do they
intersect with this new technology? And so I think that is the
question. How do we take existing relations and expand it to
this new technology? And I will stop there out of respect to
the Chairman.
Ms. MORRISON. Thank you.
And thank you, Mr. Chair. I yield back.
Chairman WILLIAMS. The gentlelady yields back.
I now recognize Mr. Bresnahan from great state of
Pennsylvania for 5 minutes.
Mr. BRESNAHAN. Thank you, Mr. Chairman, Ranking Member, and
to all the witnesses for being here today.
Over the past few years, artificial intelligence has become
a part of nearly every corner of our economy. And small
businesses have increasingly embraced these tools to help them
compete and to grow. Whether it is summarizing research,
analyzing data, streamlining customer service, or organizing
documents, AI has allowed small business owners to compete in
minutes, which used to take hours or even days. But there is no
question these technologies can make businesses more efficient.
But we continue to adopt AI, we also have to make sure that
those gains don't come at the expense of American jobs. We need
to make sure employees have the training and skills to use
these tools efficiently and AI enhances the work rather than
replacing it.
So I am going to--my first question for Mr. Qaiyum.
Congratulations to you and your family and everyone at Merz
Apothecary on celebrating 150 years of service to your
community. My question would be, at what point did you decide
to take the initiative to start looking at different AI
implementation?
And something that I hear from a lot of small businesses
and coming from a small business background was sometimes, you
know, the local plumber, heating contractor doesn't even know
where to begin. So at what point for you in your business did
you decide that, hey, in order for us to scale, in order for us
to grow, we need to be thinking outside the box and finding
ways to implement some sort of AI technology?
Mr. QAIYUM. Thank you for the question, Congressman, and
for your congratulations.
You know, I came to the retail and small business, this
industry, through the dot-com rise in the '90s. So I have
always been into technology and so I may be a bit rare in that
sense that I view it as my--as part of my role in the business
has always been to stay ahead of the technology curve. So I
have been following it for a few years now at least, and I have
been the person testing it out on the weekends and at nights to
see what it could do, and then bringing it to the team and
saying, look at this. So I feel like for me, I happen to be
personally interested in it, but I know that that is not most
of my small business friends, the other business owners on the
block. So I think, you know, we do need support in that sense.
Mr. BRESNAHAN. So you have been around for 150 years. What
generation are you in the business?
Mr. QAIYUM. I am the fifth owner in the second family to
own the business, so.
Mr. BRESNAHAN. Wow. So what was the first piece of
technology that you implemented that was in the ecosystem of
AI? Was it just utilizing language models to respond to
inquiries or to summarize research? What was like that initial
barrier that you overcame?
Mr. QAIYUM. Yeah. You know, we used some early language
models around coming up with variations, like we would write
marketing copy and then come up with 10, 15, 20 variations on
that. And that was many years ago, but I would say ChatGPT in
the past few years was the first model that I started using
kind of, you know, as an experiment on my own.
Mr. BRESNAHAN. My last question would be, and then before I
divert over, have you actually needed to bring anyone on that
had experience in managing AI models or has that been something
that you have been able to sustain with inside of your
operations?
Mr. QAIYUM. So far we have sustained inside of our
operations. And, you know, the models are getting to the point
where when we don't know something, they can kind of often
guide us on how to do it. So I call us sort of like, you know,
pseudo techies in a way. But I think we are at the point now
where we would like to bring someone in who has more experience
because we see so much opportunity ahead.
Mr. BRESNAHAN. I think that is what we need to be
curtailing some of our educational opportunities and teaching
the next generation of workforce how to work with inside of
these parameters. But also being very conscientious of we are
not looking to replace jobs. We are looking to add jobs,
specifically to the skill set relating around artificial
intelligence. And I think when you say AI, it is a very broad
spectrum of innovation that could be implemented.
So I am going to pivot over to Mr. Hoang. What are the
biggest challenges you see small businesses facing when they
begin implementing AI? And what kind of advice could I take
back to some of my small businesses that are right on the cusp
of considering to take the leap just to kind of give them some
assurances and relieve the agita about taking that initial
plunge?
Mr. HOANG. Thank you for the question. I will try to be
brief. The main two challenges are, first, just where to get
started. What are the use cases? AI can do so much, so what is
the first thing? And I always advise businesses to start with
the problem that is most important at hand. What is the thing
that bothers them day to day? That is where to get started.
The second is AI is only as good as the information you put
into it, the context. A lot of businesses are fearful of
putting their proprietary data in. That is unfortunate because
that is how you get the best results from AI. And so the advice
I would suggest you take back is get started and find a
platform where you feel the privacy and security allow you to
use your data.
Mr. BRESNAHAN. Thank you. Garbage in, garbage out. I yield.
Chairman WILLIAMS. The gentleman yields back.
I now recognize Ms. Scholten from the great state of
Michigan for 5 minutes.
Ms. SCHOLTEN. Thank you, Mr. Chair and Madam Ranking
Member. Thank you to our witnesses today.
Our small businesses juggle a wide range of
responsibilities and tasks every day to keep their operations
running. While AI offers tools to help streamline many of these
needs, we know that many entrepreneurs simply don't have the
time or resources to utilize this technology to its fullest.
That is why I was so proud to introduce my bill, the AI-WISE
Act, which directs the Small Business Administration to create
learning modules for small businesses to help them navigate
this emerging technology. I am pleased that my bill passed the
House earlier this year. We are, of course, hoping to have it
signed into law.
Mr. Aguh, how would an SBA resource to help entrepreneurs
think about AI usage more effectively, how would that benefit
small business businesses?
Mr. AGUH. It will benefit hugely. One, because, again, we
talk about kind of the promise and the peril. You have heard, I
think, from a number of the witnesses, you need certain tools
and means to actually capture that promise. And the first thing
is knowledge. So knowing, again, where I can apply this most in
my business. Should I apply it toward my inventory issue?
Should I apply it toward my back office? Should I apply it to
my marketing first? Getting guidance on where to start with
that I think is really helpful, one.
I think, two, small businesses are unclear. Okay. How do I
introduce this with my workers? That is a hard part of this,
particularly when you are in a small business, because there is
fear, there is lack of knowledge, there is uncertainty. What
does that changed management look like?
And then I think the third piece is how do I monitor these
tools over time? The ubiquity of these tools, the amount of
these tools is only useful to the extent that I know enough to
switch when I need to. Therefore, what am I doing to monitor
these tools over time to make sure, hey, you know, what
actually is ChatGPT here versus Claude? Or I need to use a
Perplexity here versus another tool or there actually isn't a
gap. Right? There is a gap right now in terms of the market for
what I need.
I think those are three specific areas, where to apply, how
to do changed management, how to monitor over time, where a
resource like this could be really, really valuable.
Ms. SCHOLTEN. Yep. Yep. West Michigan is home to our
regional Small Business Development Center, SBDC, which served
over 500 clients last year and spurred $10.4 million in capital
formation. These centers are foundational to the success of our
local economies. And on a national level, America's SBDCs
partnered with Google AIU to facilitate training SBDC staff
across the country to assist clients with using AI in their
operations. Not sure if you are familiar with that. Michigan
now has the second highest number of staff trained in AI
literacy in the country. We are super proud.
Mr. Aguh, again, how important is it that SBDCs receive
full federal funding and support these kinds of activities? And
I will actually open it up to the whole panel. I saw some heads
nodding. You know, feel free to weigh in on usage there.
Mr. AGUH. I cannot overstate how important the resource and
not just the funds, but also the people.
Ms. SCHOLTEN. Yeah.
Mr. AGUH. Because in the end, what we find is most people,
they want to talk to people about how to use these tools. And
that does require resources.
Ms. SCHOLTEN. Additions, additional comments or thoughts on
that?
Mr. QAIYUM. I would echo that. I think with our team
oftentimes it is not enough to just keep hearing how good it is
or watch this video. I think it is having some structured
format and people who demystify it and provide a doorway in.
And my experience is that once you give someone that doorway,
then they can actually go really far.
Ms. SCHOLTEN. Yep. In my remaining time, I want to talk
about a different bill of mine, the SBA AI Adoption and
Reporting Act. It is really important for small businesses to
have the tools they need, right, to use AI effectively. But the
federal government also has the opportunity to utilize AI for
its own purposes and its own operation. The SBA is no
exception. From evaluating contracting bids to improving
research and programming, the government can take steps to
ensure AI is working for main street in every single way from
within the administration itself. That is why I introduced the
SBA AI Adoption and Reporting Act, which would direct the SBA
to implement AI use disclosure policies and procedures as
required by law and recommended by the Government
Accountability Office.
How could this help address small businesses' concerns
about the government's use of AI? Those people who might say I
was weeded out because I didn't fit the algorithm, you know, or
they have concerns about that. Any reflections from your work?
I will open it up to the panel again.
Mr. QAIYUM. Well, our business is the beneficiary of an SBA
loan--that almost didn't happen at one point because of some of
the challenges with the banks and everything. I would say that
my experience would be having transparency and help along the
way to make that an easier process would have been a huge help
for our business. And thankfully, it did work out, but I would
like to see more businesses get that opportunity that we had.
Ms. SCHOLTEN. Heard. Heard. Thank you. Thank you.
Well, thank you again, gentlemen, for coming, for your
time, and, most importantly, for your incredible work in small
businesses across the country. Thank you.
I yield back.
Chairman WILLIAMS. The gentlelady yields back.
I now recognize Mr. Jack from the great state of Georgia
for 5 minutes.
Mr. JACK. Thank you very much, Mr. Chairman.
And I would like to begin my line of question by
recognizing someone in the audience with us. Alex Mealer is in
the audience with us from Houston, Texas, the great state of
Texas. So I am delighted that she had a chance to get to see
how Committee processes work.
And I would like to start my first line of questioning with
Mr. Qaiyum. And, you know, a question I have for you, and it is
something that I hear a lot within my district, is there is a
natural fear that AI could replace workers and especially
within entry level roles. And I am just curious, in your own
experience, has AI replaced people or has it helped you bring
more people in? What is your perspective?
Mr. QAIYUM. Thank you, Congressman. In our experience, AI
has helped us bring more people in. It has created more
opportunity. So I look--you know, AI right now is this new,
exciting, potential big advantage for small business. But
ultimately, it will be software and it will become a commodity.
And I think humans are the durable advantage that you have. So
to us, we look at it as a way to--or as a method and a set of
tools to help us increase our capacity and then bring more
people on. And when we are serving our customers better and in
a specialty business knowledge--we speak, I think, 10 languages
on our staff, and have experts across various fields, including
pharmacists, makeup artists, certified herbalists, you name
it--so that is not going to be replaced. People like to talk to
people. So we see it as a creative opportunity.
Mr. JACK. Thank you very much.
Mr. Hoang, the same question to you.
Mr. HOANG. Yes, if you are a small business of one to five
employees, there is not many people to replace. Right? AI
actually enables you to grow your business faster and employ
more people.
I would also like to note there is this interesting concept
called the Jevons paradox. What it says is if you look at a
broad enough time horizon and you look across enough
industries, technology ends up creating more jobs over time
than it replaces. Technology will replace jobs. But as we saw
past technological revolutions, right, new jobs emerge.
I have an 11-, 8-, and a 6-year-old. I think I heard the
statistic that 66 percent of the jobs that a 10-year-old is
going to have don't even exist yet.
Mr. JACK. Thank you very much.
Mr. Crenshaw, I would like to speak specifically about an
initiative, specifically President Trump's SBA in collaboration
with Perplexity AI recently launched, as you may be aware, the
main street AI accelerator, which offers computing credits to
small businesses that hold SBA-backed loans. Do you believe
that a program like that is the right model when approaching
the AI gap? And what would make assistance in this capacity
most useful to owners who need it most?
Mr. CRENSHAW. I think it is incredibly important that there
is AI training and AI accelerators. So I think this is an
opportunity where small businesses can grow.
And I think--and I want to really kind of echo the points
of some of the other panelists is that, you know, as we look at
AI, AI is doing much like what we saw at the turn of the 20th
century. With the turn of the 20th century, technology brought
about an industrial revolution. Well, now we are seeing
technology create an entrepreneurship revolution where small
businesses and small companies can get off the ground and run
and grow. And 82 percent of small businesses and Georgia grew
their workforce, the ones who are using artificial
intelligence.
This is confirmed in many ways, too. We have seen some
great studies as well by Ramp, came out recently, that showed
that the more companies are investing in artificial
intelligence, they are growing their headcount at faster rates.
And then finally, I think it is really important to note,
too, that the Federal Reserve has put out really great data
over the last few years. And as you see, the number of small
business applications over the last few days decades, it was
pretty stagnant up until about 2020. That number skyrocketed
after 2020. Many thought that that was in large part due to
COVID and people kind of starting out on their own. But those
numbers have continued to go up post introduction of ChatGPT
and generative artificial Intelligence. And that has been a
sustained increase in new business starts.
And so when you look at all of that, I think we are
optimistic about the impact of AI, but it is important that we
also have training and accelerators for small businesses to
ensure they reap the full benefits.
Mr. JACK. Wonderful. In our closing 40 seconds, you
mentioned Georgia. Both my colleague Clay Fuller and I
represent districts that in some places need broadband access.
Could you speak to how imperative it is that we are able to
ensure that all of our constituents across the country have
access to broadband internet that enables them to potentially
enjoy some of these resources?
Mr. CRENSHAW. Broadband is essential to operating in the
21st century economy. A small business cannot compete without
access to connectivity and to data.
Mr. JACK. Wonderful.
Mr. Chairman, I appreciate you convening this hearing, and
I yield back.
Chairman WILLIAMS. The gentleman yields back.
I now recognize Ranking Member Velazquez from the great
state of New York for her 5 minutes.
Ms. VELAZQUEZ. Thank you, Mr. Chairman. And thank you to
all the witnesses for being here. And I am sorry I wasn't when
you were making your statements because I was participating in
another hearing on financial services.
Mr. Aguh, I concur that transparency in AI and information
on AI is crucial. And for Members of this Committee and other
committees of jurisdiction regarding AI policy, accurate data
is important in order for us to make effective AI policy.
Estimates for small business AI adoption rates vary widely. The
SBA's Office of Advocacy estimates the rate is 8.8 percent, but
the U.S. Chamber estimates that it is at 58 percent, a nearly
50 point gap. Why does this difference exist?
Mr. AGUH. Well, probably a long answer, but, candidly, it
depends on how you define adoption. Is adoption an employee who
uses ChatGPT to answer a question once or twice a day or is it
kind of working truly side by side with a number of AI tools to
do your work? That is a wide definition.
What I would say is when I think about the 200 businesses
that we support, or even ask any CEO in the private sector
currently, no one will say that AI adoption is where they want
it to be. All of them would say that their workforces are not
where they want to be to get the full value for their business
and for their community.
And so the question is, how do we increase that adoption?
And I think that goes to the trust questions, that goes to the
infrastructure questions, goes to the literacy questions. But I
think right now it depends on how you define adoption. But if
you were to ask a CEO what do they want from adoption? They
want--I want my people using AI to do the things that people
shouldn't be doing and so they can do the things that only
people can do so that our business grows, we make more revenue,
and we help our communities and grow jobs.
Ms. VELAZQUEZ. Thank you. And bias and discriminatory
decision-making are major AI risks. How can this harm small
firms and incur legal and reputational costs?
Mr. AGUH. I will use a very specific example. This actually
comes from my time when I was serving federally. But we would
hear from small businesses who were using AI-driven resume and
hiring tools to comb resumes, to begin to kind of sift out
people for that first round. And what they began to find, this
particularly became an issue during the pandemic, was at times
people who could do the job were unintentionally screened out,
which, of course, for the business created a problem of there
is an empty billet of someone who could have done a job and now
that job is not being done. That is one very specific example
where not only do we--does that type of bias offend our values,
but it also goes against kind of common sense, the interest of
the business.
So the key is how do we make sure that we mitigate bias not
just for our values, but for the sake of the business who's
actually trying to get the benefit? It is the right thing to
do, but it is also the smart thing to do.
Ms. VELAZQUEZ. So can training data be adjusted to reduce
bias?
Mr. AGUH. The answer is yes. But the important thing is
that that is not on the small business. It can't be.
Ms. VELAZQUEZ. Yeah.
Mr. AGUH. They are not making the tool. This goes to, I
think, the largest folks who are making these tools and the key
thing that I would say is it is in their interest to do such.
If I am a small business and I am creating a tool, I want it to
reflect my community so I can serve my customers better. Tools
that don't do that are not going to help me serve my customers.
So if I am a provider, an LLM provider, Hyperscale is
trying to create a tool, you want to help your customers help
their customers, and having representative data that actually
reflects reality and the outcomes that it produces is best for
everyone.
Ms. VELAZQUEZ. Thank you. Mr. Hoang, you write in your
testing testimony the principle behind the AI-WISE Act, that
federal support should remain neutral among specific tools and
vendors, is exactly right. Why? What are the consequences if
the SBA and other agencies favor certain vendors over others?
Mr. HOANG. Thank you, Ranking Member, for the question. We
are in the very early days of AI. It is too soon to start
picking winners and not winners.
In our own work with hundreds of organizations, we see that
different tools are right for different purposes and that
organizations that succeed don't just rely on one single AI
tool. They use different tools, they combine them, they bring
humans. I truly believe the future of work and teaching and
learning are multiple AIs and multiple people working together
in a collaborative environment.
Ms. VELAZQUEZ. Thank you.
Thank you, Mr. Chairman. I yield back.
Chairman WILLIAMS. The gentlelady yields back.
And I would like to thank our witnesses for their testimony
today and for appearing before us. It has been great dialogue.
Without objection, Members have 5 legislative days to
submit additional materials and written questions for the
witnesses to the Chair, which will be forwarded to the
witnesses. I ask the witnesses to please respond promptly.
And if there is no further business, without objection, the
Committee is now adjourned.
[Whereupon, at 11:56 a.m., the committee was adjourned.]
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