[House Hearing, 117 Congress] [From the U.S. Government Publishing Office] SMALL BUSINESS ADMINISTRATION'S FY 2023 BUDGET ======================================================================= HEARING before the COMMITTEE ON SMALL BUSINESS UNITED STATES HOUSE OF REPRESENTATIVES ONE HUNDRED SEVENTEENTH CONGRESS SECOND SESSION __________ HEARING HELD APRIL 27, 2022 __________ [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] Small Business Committee Document Number 117-053 Available via the GPO Website: www.govinfo.gov HOUSE COMMITTEE ON SMALL BUSINESS ______ U.S. GOVERNMENT PUBLISHING OFFICE 47-393 WASHINGTON : 2022 NYDIA VELAZQUEZ, New York, Chairwoman JARED GOLDEN, Maine JASON CROW, Colorado SHARICE DAVIDS, Kansas KWEISI MFUME, Maryland DEAN PHILLIPS, Minnesota MARIE NEWMAN, Illinois CAROLYN BOURDEAUX, Georgia TROY CARTER, Louisiana JUDY CHU, California DWIGHT EVANS, Pennsylvania ANTONIO DELGADO, New York CHRISSY HOULAHAN, Pennsylvania ANDY KIM, New Jersey ANGIE CRAIG, Minnesota BLAINE LUETKEMEYER, Missouri, Ranking Member ROGER WILLIAMS, Texas PETE STAUBER, Minnesota DAN MEUSER, Pennsylvania CLAUDIA TENNEY, New York ANDREW GARBARINO, New York YOUNG KIM, California BETH VAN DUYNE, Texas BYRON DONALDS, Florida MARIA SALAZAR, Florida SCOTT FITZGERALD, Wisconsin Melissa Jung, Majority Staff Director Ellen Harrington, Majority Deputy Staff Director David Planning, Staff Director C O N T E N T S OPENING STATEMENTS Page Hon. Nydia Velazquez............................................. 1 Hon. Blaine Luetkemeyer.......................................... 2 WITNESS Hon. Isabella Casillas Guzman, Administrator, United States Small Business Administration, Washington, DC........................ 4 APPENDIX Prepared Statement: Hon. Isabella Casillas Guzman, Administrator, United States Small Business Administration, Washington, DC.............. 46 Questions and Answers for the Record: Questions from Hon. Velazquez to Hon. Guzman and Answers from Hon. Guzman................................................ 55 Questions from Hon. Golden to Hon. Guzman and Answers from Hon. Guzman................................................ 56 Questions from Hon. Phillips to Hon. Guzman and Answers from Hon. Guzman................................................ 57 Questions from Hon. Houlahan to Hon. Guzman and Answers from Hon. Guzman................................................ 58 Questions from Hon. Luetkemeyer to Hon. Guzman and Answers from Hon. Guzman........................................... 60 Question from Hon. Fitzgerald to Hon. Guzman and Answers from Hon. Guzman................................................ 72 Questions from Hon. Van Duyne to Hon. Guzman and Answers from Hon. Guzman................................................ 72 Questions from Hon. Salazar to Hon. Guzman and Answers from Hon. Guzman................................................ 74 Questions from Hon. Meuser to Hon. Guzman and Answers from Hon. Guzman................................................ 77 Additional Material for the Record: Credit Union National Association (CUNA)..................... 79 Letter to Hon. Merrick B. Garland, Attorney General, United States Department of Justice from Hon. Blaine Luetkemeyer.. 81 Letter to Hon. Richard Delmar, Acting Inspector General, United States Department of the Treasury from Hon. Blaine Luetkemeyer................................................ 83 National Association of Federally-Insured Credit Unions (NAFCU).................................................... 86 U.S. Small Business Administration Office of Advocacy........ 88 SMALL BUSINESS ADMINISTRATION'S FISCAL YEAR 2023 BUDGET ---------- WEDNESDAY, APRIL 27, 2022 House of Representatives, Committee on Small Business, Washington, DC. The committee met, pursuant to call, at 10:00 a.m., in Room 2360, Rayburn House Office Building, Hon. Nydia Velazquez [Chairwoman of the Committee] presiding. Present: Representatives Velazquez, Golden, Davids, Mfume, Phillips, Newman, Bourdeaux, Carter, Chu, Evans, Delgado, Andy Kim, Craig, Luetkemeyer, Williams, Stauber, Meuser, Tenney, Garbarino, Young Kim, Van Duyne, Donalds, Salazar, and Fitzgerald. Chairwoman VELAZQUEZ. Good morning. I call this hearing to order. Without objection, the Chair is authorized to declare a recess at any time. I would like to begin by noting some important requirements. Standing House and Committee rules continue to apply during hybrid proceedings. All Members are reminded that they are expected to adhere to these rules, including decorum. House regulations require Members to be visible through a video connection throughout the proceeding, so please keep your cameras on. Also, remember to remain muted until you are recognized to minimize background noise. In the event a Member encounters technical issues that prevent them from being recognized for their questioning, I will move to the next available Member of the same party and I will recognize that Member at the next appropriate time slot provided they have returned to the proceeding. I want to thank Administrator Guzman for appearing before the Committee today. When your tenure began, small businesses were experiencing a once in a lifetime crisis. Since your confirmation, you and the staff at SBA have worked tirelessly to stand up new programs, institute new protections against fraud, and handle unprecedented demand for traditional SBA programs. Today, the worst of the pandemic is believed to be behind us and there is some good news to report. Since President Biden took office, our economy has added over 7.4 million jobs, unemployment is down to 3.6, and entrepreneurs have started new businesses at record rates. With that said, the deep wounds inflicted by the pandemic and the conflict in Ukraine continue to fester. As small employers work towards a full recovery, they will need our utmost support. Moving forward, we must utilize the SBA to drive success and empower entrepreneurs. That is why SBA programs must have the funding necessary to meet the needs of small business owners. We have an opportunity to discuss the SBA's 2023 budget request and learn how it will help our main streets flourish. The administration's proposed budget lays out the investments needed to build a stronger, better, and more equitable America. The funding outlined in this plan will help lower costs for families, create good-paying jobs, and drive our recovery forward. The proposal also places a strong emphasis on supporting the needs of entrepreneurs with three overarching goals: ensuring equitable design and delivery of programs, building resilient businesses and a sustainable economy, and implementing strong stewardship of resources. The pandemic taught us that access to critical resources is often unequal among businesses, particularly those owned by women and people of color. The SBA's focus on equity will help ensure that all firms have access to the resources they need to succeed. I am also pleased to see that the proposal includes funding and investments in key programs, modernization, customer service, and core contracting initiatives. I am eager to discuss how the money requested in this budget will strengthen and improve initiatives that increase access to capital, improve disaster assistance, and create more government contracting opportunities for small firms. Administrator Guzman, you have been at the forefront of the recovery effort and your work has kept millions of businesses open and people on the payroll. I look forward to hearing from you about the specifics of this request and the agency's top priorities for the upcoming year. I would now like to yield to the Ranking Member, Mr. Luetkemeyer, for his opening statement. Mr. LUETKEMEYER. Thank you, Madam Chair, and thank you, Administrator Guzman, for joining us in person this morning to discuss the Biden administration's Fiscal Year 2023 budget request. The SBA has played an outside role in assisting the American economy recovery from the COVID-19 pandemic. As the nation moves away from the emergency period of the pandemic and into recovery, it is critical that we evaluate SBA's role moving forward. To do so requires a full and complete evaluation of the agency's performance, including the critical pandemic relief programs. Unfortunately, a full evaluation of one of the largest pandemic relief programs, the Paycheck Protection Program, continues to be hindered by Secretary Yellen's failure to appear before this Committee. In the CARES Act, the Department of Treasury was charged with onboarding new lenders into the program. Yesterday, on the 1-year anniversary of Secretary Yellen missing her first deadline to testify before this Committee, and thus America's small businesses, I sent two letters requesting follow-up investigations in this matter. The first letter I sent was to Attorney General Garland asking for a Department of Justice Investigation into whether Secretary Yellen remains in violation of the law by failing to appear before this Committee. The second letter I sent was to the Department of Treasury's Acting Inspector General, Richard Delmar, requesting an investigation into the department and Secretary Yellen. I ask unanimous consent to enter into the record these letters, Madam Chair. Chairwoman VELAZQUEZ. Without objection, so ordered. Mr. LUETKEMEYER. Thank you. It has been just over a year since you assumed the role of administrator and you have faced no small task, Administrator Guzman, from unprecedented state and local shutdown orders that forced small businesses to either operate at a reduced capacity or close their doors entirely to rising inflation, labor shortages, and supply chain disruptions. The SBA has its work cut out for it. So if there is ever a time for the agency to rise to the occasion, this is it. Despite the country moving toward recovery, American small businesses continue to feel repercussions thanks in no small part to the actions and failures of this administration. Headwinds are blowing stronger by the day, and if that sounds familiar, it is because economic indicators were bad the last time you were here in November and since then have only continued to go in the wrong direction. Prices are now rising at the highest rate in 40 years. Job openings continue to rise, even in just a few months since you last testified, and creating staffing headaches for small business owners across the nation. If it is not the labor shortage, it is a supply chain issue as more and more small businesses are finding it nearly impossible to obtain goods and products. Add to that the concern among small business owners when they hear of tax increases this administration is routinely proposing, and it is no wonder so many small business owners have begun to question who is supposed to be standing up for small business? I can answer that question, Madam Administrator. It is you. You are the one who should be advocating for small businesses in this administration. If a policy or regulation creates red tape or a cost for small businesses, it is you who should be pointing this out to the president. The American Action Forum has studied the regulatory costs associated with the Biden administration's first year in office. Unfortunately, those costs come to a staggering $201 billion. Let me repeat that, $201 billion in just 1 year of compliatory costs. This is unacceptable. If the Biden administration continues to impose tax increases, you should be pointing out that no matter how they spin that increase, the impact on small businesses is, in fact, going to be hurting them. Now more than ever, we need a Small Business Administration that is responsive to the nation's 32 million small businesses, entrepreneurs, and startups. Yet, we continue to see the same thing. This hearing is scheduled, and magically, our letters and inquiries start to receive responses. The speed at which our concerns are being addressed is improving but more work needs to be done. With $1.2 trillion flowing through the agency's doors, the American public needs accountability and transparency. Plain and simple, the SBA needs to be improved and I have a plan to do it. Now, more than ever, small businesses need an SBA that is responsible and fulfills the statutory mission day in and day out. The core responsibilities that are outlined in law need to drive the agency's decision making. Anything else is irresponsible. Unfortunately, that is what we see with your budget, more spending without outcomes for main street USA. Moreover, fraud is fraud, Madam Administrator. As Republican leader of this Committee, I do not care when it happened, it needs to be addressed. The integrity of the SBA's programs need to be restored fully and comprehensively. I stand ready to work with anyone and everyone to ensure the SBA has the oversight and metrics in place to deter and catch bad actors. The agency must be cleaned up. And that brings us to voting. There is no place in the Constitution that supports the SBA getting involved in elections. That is squarely in the state's purview. With a 30 percent fraud rate on one of your loan programs, and having to close two of your women's business centers because of dubious activities, what makes you think the SBA would be able to protect the integrity of voting? It is a question we are going to have to answer. With that, Madam Chair, I look forward to today's conversation, and I yield back. Chairwoman VELAZQUEZ. The Ranking Member yields back. With that, I will now introduce our distinguished witness, The Honorable Isabella Casillas Guzman. Administrator Guzman is currently serving as the 27th Administrator of the Small Business Administration. Her previous experience includes serving as Director of the California Office of the Small Business Advocate and Deputy Chief of Staff at SBA. Outside of her time in government, Administrator Guzman has advised entrepreneurs and owned her own small business, giving her extensive insight into the needs of entrepreneurs. Administrator Guzman earned a Bachelor of Science from the University of Pennsylvania Wharton School of Business. Welcome, Ms. Guzman. Ms. Guzman, you are now recognized for 5 minutes. STATEMENT OF THE HONORABLE ISABELLA CASILLAS GUZMAN, ADMINISTRATOR, UNITED STATES SMALL BUSINESS ADMINISTRATION Ms. GUZMAN. Thank you, and good morning, Chairwoman Velazquez, Ranking Member Luetkemeyer, and distinguished Members of the Committee. Thank you for the opportunity to appear before you today to discuss President Biden's Fiscal Year 2023 budget request for the U.S. Small Business Administration. The president's budget requests a total of $1.06 billion to foster growth and opportunity across America's economy by supporting the SBA's critical small businesses programs and disaster assistance. This funding level generates practical investments in economic progress, and with your support, allows us to continue delivering crucial programs and services for a surging wave of new American entrepreneurs. Over the past year, I have visited small businesses across 28 states and Puerto Rico. I have had the opportunity to visit many of the communities you represent and witness the strength and resilience of American entrepreneurship firsthand. Despite hardships from the pandemic, America's small businesses and innovative startups are creating new jobs, powering our economy, strengthening our global competitiveness, and supporting working families. And Americans are launching businesses at record rates. Business applications have risen more than 30 percent from pre- pandemic levels, and in 2021 alone, 5.4 million Americans applied to start a business. One of this administration's top priorities is making sure the opportunities of this growing economy are reaching all Americans. President Biden often says that ability is spread evenly but opportunity is not, and that is important because building equity, ensuring access and opportunity are open to all, is not just the right thing to do, it is good for business. Thanks to historic legislation passed by Congress, the SBA has been able to deliver critical relief and help millions of small businesses, especially in the hardest hit communities, survive the pandemic. In Fiscal Year 2021, the SBA distributed more than $450 billion in financial relief through the Paycheck Protection Program, the COVID Economic Injury Disaster Loan and Advance programs, the Restaurant Revitalization Fund program, and the Shuttered Venue Operators Grant program. Those vital relief funds saved jobs in every community in the country. Now, we are delivering on the promise of PPP forgiveness. To date, 87 percent of all eligible PPP recipients have submitted forgiveness applications, and nearly all, 99.4 percent of qualified applicants have had their loans partially or fully forgiven. SBA has not only delivered on pandemic relief, but our core capital programs, which support hundreds of thousands of jobs are also breaking records. Demand for SBA capital support is outpacing the resources available with a 62 percent increase in 7(a) loans and a 41 percent increase in 504 loans approved. Given the high demand for SBA's capital programs and their effectiveness for our small businesses, President Biden is requesting a 13 percent increase over our core programs for a total of $71 billion. In addition, the budget recognizes that SBA needs additional support to service those $361 billion in COVID-EIDL. The budget requests authority to reprogram existing balances in targeted COVID-EIDL funding to advance to support and service loans for the 3.9 million borrowers. A large percentage of these borrowers will start making payments in the months ahead, requiring SBA to shift from origination to servicing. As we enter this new phase of recovery, SBA must provide borrowers with needed resources and the quality customer service that they deserve. While my written testimony outlines other budget priorities, one additional key area I want to highlight is our efforts to upgrade our systems and processes to detect and prevent fraud. During this administration, the SBA has acted quickly to protect taxpayer dollars, first by restoring controls and deploying new technology to mitigate fraud. Our work to implement or enhance fraud control has been recognized by federal accountability agencies and watchdogs. I also recently announced the creation of a new Fraud Risk Management Board to replace the Fraud Risk Management Council. This new board provides the oversight and agency-wide coordination recommended by the GAO. Additionally, I designated a Special Counsel for Enterprise Risk to work directly in my office to further limit fraud and risk across the agency in coordination with our established fraud management framework. To recover taxpayer funds, we are working closely with the Office of Inspector General and other federal authorities to refer suspected fraud to law enforcement. Effective stewardship is necessary for the SBA to achieve our mission. I am committed to working with stakeholders, including Congress, to protect SBA's programs from abuse and ensure that legitimate businesses have a clear path to access the financial resources Congress has created for them. Thank you again, Chairwoman Velazquez and Ranking Member Luetkemeyer, and distinguished Members of the Committee for the opportunity to appear before you today. And I look forward to the questions. Chairwoman VELAZQUEZ. Thank you, Administrator Guzman. I will begin by recognizing myself for 5 minutes. Ms. Guzman, access to capital, as you know, is critical to small businesses and the SBA loan programs have had a banner year. How will you continue this success and also expand to employee-owned businesses and cooperatives as mandated by statute? Ms. GUZMAN. Our capital access team is positioning and their whole agency is positioning to make sure that we can serve not only those new 5.4 million entrepreneurs but all of our firms across the country. And we know that access to capital remains a really important issue for so many of them to overcome. In particular, around the Main Street Act, we are really committed to making sure that all businesses have pathways to accessing capital, including those that are employee-owned and those ESOPS. And so we have worked with the advocates in the industry to see what we can do to assess and adapt our programs to fit their needs and we have made some important changes. And we will continue to assess those programs as we move forward and as we see more loan volume coming through so that we can work with ESOPs and work with cooperatives. We know that as small businesses exit, employee ownership is a good pathway in many cases to transition and exit their firms successfully. And we would like to make sure that capital is available. Chairwoman VELAZQUEZ. How is SBA using new technology to streamline loan processes and focus outreach to promote the programs, particularly to the undeserved? Ms. GUZMAN. Across all of our loan programs we, of course, rely on our 68 district offices, our over 1,300 resource partners, and now our newly established community navigators to really reach out to more small businesses to get them capital ready. In addition, we have a strong network of lenders and have looked to expand that with the Community Advantage pilot program that we recently overhauled, as well as opening it up so that we can allow new licensees to come into the program, especially those mission lenders. Chairwoman VELAZQUEZ. Thank you. Fraud controls previously removed in 2020 to expedite relief were reinstituted under your leadership. At our hearing in January, the IG commended SBA for its action implementing his recommendations. Can you expand on your efforts to prevent fraud and abuse related to the agency's COVID and relief programs? Ms. GUZMAN. President Biden is really committed to making sure funds get into the hands of those businesses it was intended to serve, and the administration early on, we ensured that we could put in those controls, some of those across our COVID-EIDL program, of course, in which that was a unique case, a tale of 2 years, truly. We have also leveraged technology so that we can assess our portfolios and make sure that fraud is indicated. And created strong partnerships in collaboration and transparency with the IG, as well as the GAO. We want to make sure that we are implementing fraud detection at inception of design and that is what we have committed to do. Chairwoman VELAZQUEZ. How often are you meeting with the IG? Ms. GUZMAN. I meet with the IG biweekly to make sure that we are coordinated on all of the reports and that we are ahead of the game because obviously fraud is an iterative process and we need to continue to evolve. And then with the GAO, I meet on a quarterly basis and just recently met with Comptroller General Dodaro to discuss the SBA. Chairwoman VELAZQUEZ. Thank you. SBA is requesting $20 million to implement the VA-SBA Act, which mandated SBA to become the sole provider of formal certifications for all veteran-owned small businesses. What is SBA's plan to stand up this certification program and why is this funding critical? Ms. GUZMAN. Within our funding request, our budget, we are requesting $20 million in 2023 to continue our efforts. We have been collaborating with the VA on this transition and we are looking forward to it. In talking to the veteran stakeholders across the country, we have found that they are looking forward to the transition and that SBA has a host of services and offerings that they can access. Going to a one stop shop in essence will be beneficial to them. Working closely with the VA, we have made sure that we are aligned on transitioning personnel, technology, and that we can have a seamless transition so there is no interruption of service for veterans and we can expand it to more veterans across the government. Chairwoman VELAZQUEZ. Thank you. Now, my time basically has expired even though I have other questions. The Ranking Member, Mr. Luetkemeyer, is now recognized for 5 minutes. Mr. LUETKEMEYER. Thank you, Madam Chair. I would like to begin with something that I mentioned earlier in my opening statement, Ms. Guzman. The SBA has just come through 2 years of unprecedented activity. The attention on SBA has been heightened and with that your actions should carry a lot of weight with this administration. I want to focus on this. When reports come out by groups that identify over $200 billion in regulatory costs that were added by President Biden's first year in office, what has been your response? Have you discussed these numbers and their impact with the White House? Ms. GUZMAN. I continue to track, especially through our Office of Advocacy, as you know, which tracks all regulation, any impact on small business and continue to travel around the country to make sure that I am---- Mr. LUETKEMEYER. The question, I am sorry to interrupt, but the question is, have you discussed the impact with the White House? Ms. GUZMAN. We continue to, you know, share learnings about small business with our partners across the whole of government, including the White House. Mr. LUETKEMEYER. What has been their response when you tell them that $200 billion worth of increased compliance costs is crushing small business? What has been their response? Ms. GUZMAN. I cannot speak to that specifically, that number, but I can share with you---- Mr. LUETKEMEYER. That number is the administration's number. We pulled that from each agency when they propose a rule, it also has to give the cost of that. When you total those things up it is $201 billion last year, Ms. Guzman. That is devastating to small businesses. Ms. GUZMAN. What I can share with you, Ranking Member, is that, of course, we have our Ombudsman office that works with all small businesses that have to navigate regulatory issues so that we can continue to support them on the back end on the front end of the Office of Advocacy. Mr. LUETKEMEYER. My point of the question, let me claim my time, my point of the question is that you should be advocating for small businesses and tell the administration stop the onslaught of rules and regulations. It is killing small businesses. If you truly have been to 28 states I think you said a while ago---- Ms. GUZMAN. Correct. Mr. LUETKEMEYER.--over the last year, and you have talked to small businesses, you have got to come back with a sense that rules and regulations are one of the top things that they are concerned about. The costs of those things are enormous. I can tell you in my district this is a concern of it. Inflation is the next one. Are you talking at all with the administration about the effects of inflation and high energy costs on our small business community? Ms. GUZMAN. Yes. The president is, of course, very sensitive to the fact that the inflationary pressures and cost pressures impact American families as well as small businesses. And I continue to track what those impacts are. Mr. LUETKEMEYER. Have you talked to them about the impact of this? Have you advocated and offered solutions to this problem? Ms. GUZMAN. The president's actions speak for themselves. He is trying to address these costs---- Mr. LUETKEMEYER. Oh, my gosh, ma'am. Ms. GUZMAN.--for our small businesses and their families. Mr. LUETKEMEYER. They speak for themselves? They're devastating. He adds more fuel to the fire. He continues to allow energy prices to go through the roof. He adds $200 billion worth of regulatory costs. He adds more money to the money supply, which is extremely important when it comes to inflation. That is one of the drivers of inflation. Are you talking at all about those things with him and say, please, Mr. President, stop the onslaught of these nonsensical things that are under your control? Ms. GUZMAN. I tis important to note that there are multiple impacts on our small businesses and we continue to track and share them and make sure that our small businesses get the support that they need. Mr. LUETKEMEYER. I assume the answer is no. I cannot get a yes or no from you this morning, ma'am, Ms. Guzman, so I assume the answer is no, you have not talked to the president about this. You are an advocate for small business. You should be standing in front of his office once a week. Say, Mr. President, the businesses that I oversee are struggling. Please help me to help them by stopping the nonsense of your office continuing to support and enhance inflation in this country through all the things that they are doing. If you are not doing that, then you are not doing your job, Ms. Guzman. One more quick thing here. The last 2 years have seen the agency has gone under stress and there is no question what agency is under stress. You can also see some of the problems and weakness of that agency. Fraud and oversight metrics are a weakness of this agency. You mentioned a minute ago that you are trying to work on fixing them. But fraud is fraud. It has got to be addressed somehow, some way. And I know that, it would appear to me that with regard to the PPP loan program and with regard to the EIDL program, there seems to be a difference in the ability of those two programs to operate. Would you agree that the private sector lenders that initiated the PPP loans were more efficient at delivering these dollars and deterring fraud than the SBA's direct EIDL program? Ms. GUZMAN. Our lending partners on PPP have been very effective. In the COVID-EIDL instance, it is a tale of 2 years. As I had said earlier, COVID-EIDL, in 2020 when the majority of the loans were through and where you see the IG and GAO reports on, had no controls. And so in 2021, we have reinstituted the controls. We have leveraged technology to ensure---- Mr. LUETKEMEYER. So your answer is yes. The private sector did a really good job of getting the money out the door, almost three times as much money as what the EIDL program did with probably one-sixth of the fraud rate. Ms. GUZMAN. I would add that PPP3, which was implemented in 2021, had the loan volume higher than in 2020, also had controls and speed in place and thanks to the administration's actions to put those controls in place. And so my answer was not yes but that we are implementing controls---- Mr. LUETKEMEYER. If it cannot be yes, you are not doing your job if that is the case. You are totally misunderstanding the question or you are misunderstanding how your agency runs if your answer is not yes, unfortunately. Ms. GUZMAN. What I am saying is that---- Mr. LUETKEMEYER. My time is up. I yield. Ms. GUZMAN. Thank you. Chairwoman VELAZQUEZ. Now the Chair recognizes the Chairman of the Subcommittee on Oversight, Investigations, and Regulations, Mr. Phillips. Mr. PHILLIPS. Thank you, Madam Chair. Welcome, Ms. Guzman. I am sorry for how you were treated with disrespect by certain Members of this Committee. I am a small business owner. I know what it takes to build a business. I know how tough it is, especially recently. I have traveled the world in the business world. There is no place in the world in which small businesses can thrive like the United States. Are we perfect? No. Is there a lot we all can do? Yes. I hope we can do it together. I actually admire what you have done and your team in extraordinary time with little preparation, and frankly, little experience amongst any of us to face the circumstances that we have. And I want to thank you, and I hope you extend our gratitude to everybody that works at the SBA for doing the best with what we had with the time we had. And frankly, saving millions of jobs and hundreds of thousands of small businesses. Thank goodness. And we did so in a bipartisan fashion and we should continue to do so. As Chairman of the Subcommittee on Oversight, I also applaud the creation of the Fraud Risk Management Board. I think it is a great step. We have to use taxpayer dollars well. Every dollar that we have lost to fraud is a dollar that has not gone to the very businesses that you look out for and all of us want to see succeed. I want to also applaud the increased funding for the Entrepreneurial Development program. By the way, I hope that is something that we can all talk about bringing into high schools in this country to teach entrepreneurship at some point, but perhaps that is for another day. Our nation's small businesses and owners deserve the best opportunity to access financing and counsel from their government and support so that we can ensure that the American dream is accessible to everybody, whether they live in Brooklyn, New York or Brooklyn Park, Minnesota that I represent, or even little tiny Brooklyn, Texas. So with that in mind, many of us believe deeply in economic equity and racial equity. I do not think we talk enough about geographic equity. What can the SBA do to ensure that the programs that we support, that we discuss, that we provide oversight for can serve entrepreneurs in the tiniest parts of this country that are often overlooked? Ms. GUZMAN. Thank you so much for your comments and your question. I could not agree with you more. During the pandemic, we found that connection was key, and being able to be aware of resources and prepare to access those resources was really critical. And so that is why you see within our budget request an increase within our Entrepreneurial Development programs and why in addition we launched the Community Navigator pilot program so that we can better reach the 32.5 million small businesses and the newly created firms that are being birthed every year. Rural communities, geographic equity is really important to me, and I continue to ask that we distribute our resources and make sure that we are reaching into those communities. I think we will go a long way with broadband being built up in communities so that every community can have high-speed Internet. More micro entrepreneurship occurs when there is high-speed Internet according to studies. And so I was pleased that nearly half of the Community Navigators are focusing on rural communities and making sure that they have services to deliver and connect to those communities. And as we expanded our women's business centers, as well as focused on our SBDCs, we commit to making sure that we can serve those communities. Mr. PHILLIPS. Terrific. Also, I am a deep believer in employee ownership. I think that also is a bipartisan notion. That is the American dream, in fact. What can the SBA do better to reduce barriers, to employee ownership, to promote the concept, to educate small business owners especially as it relates to succession planning? How can we do better in that area with the resources available to you? Ms. GUZMAN. In my home state of California, we actually looked at this issue quite extensively as communities were finding with a lot of retiring small businesses, they wanted to be able to retain those businesses and look at employee ownership as an option. There are folks focused especially on manufacturing where we do not want to see businesses close down. We want to see businesses take over, and some are focusing on ESOPs in particular. I think we can highlight those activities to show small businesses a path forward for exists through ESOPS or employee ownership. Our SBDCs actually have expertise around the country that are focusing on this and so we need to continue to cultivate that, build best practices, and share them across the country. Mr. PHILLIPS. And what can we do in Congress to support that? Ms. GUZMAN. And I would look forward to partnering more with you on that to try to identify some of those best practices on training because it does take quite a bit to transition a business to employee ownership and we need to help and support the owner. So funding that additional entrepreneurial development support will help us expand that type of technical assistance. But in addition, on the capital front, we are continuing to monitor the additional changes that we have made on our capital programs in compliance with the Main Street Act and we look forward to continuing to have discuss about that with those borrowers to see what we can do to do more for them. Mr. PHILLIPS. Thanks, Ms. Guzman. I yield back the balance of my time. Chairwoman VELAZQUEZ. The gentleman's time has expired. Now we recognize the gentleman from Texas, Mr. Williams, Vice Ranking Member of the Committee. Mr. WILLIAMS. Thank you, Ms. Guzman, for being here. I want to say for the record I have been to Brooklyn, Texas. You need to go to Brooklyn, Texas, and find out what they think about the SBA. Ms. GUZMAN. I would love to. Mr. WILLIAMS. You need to go talk to those people. Also, I think that the head of the SBA, regardless of party preference or whoever the president is, should always be for less taxes and less government. You should always stand for that regardless of who nominated you. I am a small business owners. Have been for 51 years. Hundreds of employees today I employ. And so I feel like I am Main Street America. So, I have a few questions to start. It will be simple. Keep your answers to a quick yes or no. First of all, the rollout of the Save Our Stages program which you mentioned, it was disastrous. The delays and dysfunctions your agency faced during the implementation prolonged critical aid to small businesses. Indeed, many of them could not stay in business waiting for you. This is unacceptable, and main street businesses want answers. So quickly, yes or no, have you held anyone accountable for the failed rollout of the Save Our Stages program that delayed billions of dollars in emergency aid? Ms. GUZMAN. I was not happy with---- Mr. WILLIAMS. Yes or no. Ms. GUZMAN. Yes, I transitioned the program. Mr. WILLIAMS. Okay. Thank you. Ms. GUZMAN. Thank you. Mr. WILLIAMS. While our economy faces a looming recession, you still publicly support the Biden administration's tax hikes saying it will clearly affect large corporations. So yes or no, would you support raising taxes on small businesses or individuals earning less than $400,000 per year? Ms. GUZMAN. President Biden's plan---- Mr. WILLIAMS. Yes or no. Ms. GUZMAN.--will not affect any businesses under $400,000. Mr. WILLIAMS. Yes or no. Do you believe in raising taxes to small businesses? It is a simple question. Ms. GUZMAN. I agree with the president. Yes. Mr. WILLIAMS. Okay. You will raise taxes. Let the record show---- Ms. GUZMAN. No, that President Biden will not raise taxes under $400,000. Mr. WILLIAMS. Okay. Well, that is not true. And then do not forget inflation. He has already raised taxes. Okay? And done nothing about that. So we are here today to discuss the Biden administration's SBA budget request of $1 billion, a $135 million increase from Fiscal Year 2021. However, this proposal outlines initiatives that go beyond your agency's core responsibilities. You must want to get into everybody's business. The SBA is tasked with aiding, assisting, and advising small businesses across the country; correct? Ms. GUZMAN. Correct. Mr. WILLIAMS. Which is why it is unclear to me and many others why you would request more taxpayer dollars for climate change within the SBA. So in lieu of directing more money to actually small businesses' aid, this request is further proof that President Biden's SBA is completely out of touch with main street. Businesses in my district are concerned about their ability to compete in the future and are looking at the SBA to be a nonpartisan, which we do not have, resource that has their best efforts to be looked at in mind. Administrator Guzman, why should Congress increase funding for your agency without first addressing underlying problems such as your failure to rollout business saving aid, the significant fraud we have talked about with the SBA programs, and general underperformance? Why should we give you more money to just continue to do that? Ms. GUZMAN. SBA has successfully scaled to meet the needs and really helped millions of businesses, over 8 million unique businesses during COVID relief. Done a remarkable job in your districts, across our 68 field offices to support small businesses. Mr. WILLIAMS. Well, not in my district and not in Brooklyn, Texas. Ms. GUZMAN. And in addition, we have implemented fraud controls so that we can better get the funds into the hands of the businesses it was intended to serve. Mr. WILLIAMS. Well, okay. Ms. GUZMAN. And we are committed to making sure that they have the capital that they need, the market access they need, and the technical assistance that they need. That funding for climate is about making sure that businesses can prepare and mitigate---- Mr. WILLIAMS. But you do not control that. You have no business being---- Ms. GUZMAN. It is not for me to engage in climate but for me to give loans---- Mr. WILLIAMS. Well, that is fine. Ms. GUZMAN.--to help mitigate. Mr. WILLIAMS. I am running out of time. Let me move on. Ms. GUZMAN. Thank you. Mr. WILLIAMS. But you do not need to be in everybody's business. Take care of the people that you are required to take care of--the small business owner; the guy trying to make the payroll; the guy that signs the front of the check, not the back of the check; the guy who is drawing a line of credit. Help him. He needs help. He does not need to worry about the climate change which is not even part of what you are staffed to do. So small businesses across the United States are still desperate to fill job openings. These labor shortages are hindering business operations and they are a driving factor in the supply chain model and inflation issue. I can tell you all about that. A recent report by the Jobs Opening and Labor Turnover Survey found that President Biden's worker shortage remains at historic highs with more than 11 million job openings. So Administrator Guzman, that is nearly a 4 percent increase since the last time you testified before this Committee. Main street businesses are bearing the weight of this unsustainable worker shortage and their optimism is very, very low. So, real quick, what recommendations are you making to small business owners, like me, who have open jobs that they cannot fill? Ms. GUZMAN. When SBA provides services to support small businesses---- Mr. WILLIAMS. But you can tell me. I am a small business owner. Ms. GUZMAN. I appreciate that. Mr. WILLIAMS. So I would like to know what to do. Ms. GUZMAN. I appreciate that, Congressman. And I appreciate your expertise having run and successfully built a business with hundreds of employees. The small businesses that we serve, obviously, are facing workforce shortages and challenges and have had to compete in this marketplace, this tight labor market. We are prepared by providing them with technical assistance. About half of our time of our small business development centers and our women business centers is often spent on workforce development issues, as well as strategic planning for the businesses. Mr. WILLIAMS. I believe my time is up. Ms. GUZMAN. So we are committed to helping those businesses survive. Chairwoman VELAZQUEZ. Time has expired. I would ask the Members, please, stop badgering the witness. Treat her with the respect that she deserves. Allow her to answer your questions. We never got into this when we were in the minority. We always treated the witnesses with respect with Ranking Member Mr. Chabot. Mr. LUETKEMEYER. Madam Chair---- Chairwoman VELAZQUEZ. Let's have a decent, respectful discussion. Mr. LUETKEMEYER. Madam Chair, the reason that we are having to interrupt her responses is she is not responsive. She is taking a page out of the Secretary Yellen, the Federal Reserve folks who sit there and tap dance around every single question. We cannot get a straight answer. So the only way to talk to her is to request our time back and then redo the question. If she will give us a straight answer, we will be glad to continue to have a dialogue with her. But we cannot have a dialogue when she will not answer the question. Chairwoman VELAZQUEZ. She is answering the questions. Mr. LUETKEMEYER. She is not answering the questions. With all due respect, Madam Chair---- Chairwoman VELAZQUEZ. When it comes to fraud and abuse, fraud happened because fraud controls were taken away from the previous administration. She reinstituted that and now you continue to raise the issue of fraud while the IG and the Office of the Comptroller has stated for the record that they have access to the administration, that they have been implementing their recommendations, and you just continue to bring the same talking points. Mr. LUETKEMEYER. If you want to talk about the Inspector General report, let's talk about the entire report. The entire report when he was here, we asked the question, okay, are those changes being implemented? He said yes. Why are we not seeing a drop in the problem with fraud? Because the employees are not adhering to the new principles, the new protocols in place. That is a problem. Chairwoman VELAZQUEZ. Okay. Mr. LUETKEMEYER. That goes back to leadership. That is what we are trying to get at. Chairwoman VELAZQUEZ. The Chair recognizes the congresswoman from Georgia, Ms. Bourdeaux, for 5 minutes. Ms. BOURDEAUX. Thank you, Chairwoman Velazquez, and thank you for holding this hearing. And thank you, Administrator Guzman, for your continued work as SBA administrator and for joining us here today. The president's budget request of Fiscal Year 2023 includes a 21 percent increase in SBA funding levels for a total of $914 million in discretionary funding. And much of this funding is aimed at increasing access to SBA resources and services in communities like mine which have historically had difficulty accessing some of the critical tools that the SBA provides to entrepreneurs and would-be entrepreneurs. The budget also includes several indications about the SBA's priorities for Fiscal Year 2023 and areas for potential collaboration with Congress. The administration's Fiscal Year 2023 budget in particular says that SBA is establishing an agency priority goal to increase the number of community financial institutions in SBA's lender match portal, something I am very pleased to see. Each of the federal bank regulators, however, have offices dedicated to CDFI and MDI engagement and have initiatives to support their activities. So my first question is, do you think a similar office at the SBA would help the SBA get more community-based lenders into programs like the 7(a) program? And what else is being done concretely to really engage the CDFI and MDI community? Ms. GUZMAN. Thank you so much for that question as we know that access to capital is a big issue. Forty-four percent of small businesses get their funding through a bank and we would like to leverage SBA's programs to expand that. Within our Office of Capital Access, we do have an office dedicated to working with mission-based lenders through our Microlending program, as well as our Community Advantage program. And so we feel that we are well prepared to be able to expand with this group of lenders who serve underbanked, as well as unbanked and underserved small businesses. We are currently making efforts to streamline our programs. We have launched with the Community Advantage overhaul which included an expansion of licenses that we will be able to extend to CDFIs and CDCs to expand our Community Advantage program and really focus on small dollar lending and ensuring that we can fill those gaps as that has been in decline as well. So we look forward to working with you and your offices as well as all of the Members to make sure that we can expand the number of lenders who participate and can reach into communities and geographies that are not served. Ms. BOURDEAUX. Wonderful. We are very excited about this initiative. One other question. SBA data shows that most PPP borrowers who have not yet applied for forgiveness are the smallest of businesses. And these are borrowers with loans of $50,000 or less. In my district, I know this includes many minority immigrants, women-owned small businesses, and I just wanted to touch bases with you again about what the SBA is doing to address this gap in forgiveness of these applications. Ms. GUZMAN. We definitely want to deliver on the forgiveness of PPP to all the communities and borrowers. We have done a couple things. Firs and foremost, of course, we wanted to make sure that our lenders were equipped to deal with this next phase of PPP and we set up a streamlined offering of technology for them to be able to utilize over 1,000 banks, and lenders have signed up to use our technology to process forgiveness. And we have also, of course, streamlined for $150,000 and under as per the statute. So we are working hard to make sure that all of our borrowers can access these programs through the lenders. However, we know that some of that requires technical assistance. Our Community Navigators are working hard, many of them to work with PPP borrowers to make sure that they can access forgiveness, as are all of our centers. Ms. BOURDEAUX. Thank you. Thank you so much. And thank you for your service to our small business community and for your service to the country. I yield back. Chairwoman VELAZQUEZ. The gentlelady yields back. Now we recognize the gentleman from Pennsylvania, Mr. Meuser, Ranking Member of the Subcommittee on Economic Growth, Tax, and Capital Access. Mr. MEUSER. Thank you, Madam Chairwoman, very much. Administrator, thank you very much for being with us again. We appreciate it. Clearly, there is maybe some misunderstanding of the frustrations that exist because I spend a lot of time with my small businesses in my district. I do tours probably twice a week when we are in district and visit with five, six, seven, or eight in a row. And it is usually the same feedback. The feedback is that they are struggling. Their sales might be up. Their margins are weaker, are constricted, and they cannot get people to work. And they are concerned about inflation. They are concerned about gasoline price spikes. They are concerned about the deliveries that do not come in because of the supply chain issues. And they are concerned about the added regulations. And I think when speaking with you since you are the advocate for the small business, if we are not hearing that these issues are being addressed, we are the voice of those businesses. We represent them and advocate for them. So we have got to provide the oversight and ask these questions for them. That is the purpose of this hearing and that is why I very much appreciate you being here. Now, with the budget plan, inflation is rising as we stated at record paces, 1991 paces. Right? Labor shortages, supply chains. I went through it. Many plagues of small business. Yet, in the budget that we saw for the SBA, we are not seeing any solutions to these very serious issues that are not going away anytime soon, by the way. Okay? But we do see a lot of climate change. Okay? Which is terrific, but not the issue that people are bringing up when we are visiting them and what is keeping them perhaps from going out of business. We are also stating that you want to be the first federal agency to get the designation as a voter agency. Okay? This is just off the grid of what truly is important on main street. So do you believe that these requests and initiatives illustrate a sufficient focus on your mission, on the advocacy, on finding solutions for the small businesses that make up 75 percent of the employment throughout my district and most districts throughout the country? If you would not mind answering that question. Ms. GUZMAN. Thank you. Thank you for the question. And I agree with you that our small businesses are facing those inflationary pressures, workforce shortages. They tell me about the individual prices that they are paying higher within their product mix. And so they have had to adapt and pivot and change their model and access capital in order to survive during this time. So I appreciate what the SBA can do specifically on these issues. We know that for small businesses, they need that advisory service to make sure that their financial management, their supply chain management, their strategic sourcing and strategic planning overall is really strong during this time because those businesses recognize that the only constant for them is going to be change and they need to be very adaptive. And so our technical assistance and that request for increases is supportive of small businesses to help them. I will speak to the---- Mr. MEUSER. But it is not in the budget. I do not want to interrupt you but let's just focus on inflation if we would. Okay? Ms. GUZMAN. Sure. Mr. MEUSER. What are some of the solutions to help small businesses and help America reduce inflation? Because the only thing that comes up in the budget regarding inflation is how wages need to stay up with inflation. That is the only time it is mentioned. So what are we doing about the high gasoline prices, and heating prices, and increase of delivery costs, and so much manufacturing that goes up because of the high fossil fuel, domestic fossil fuel increases? What are we doing about that? Ms. GUZMAN. Well, the president's budget really tries to address and create a more productive economy to improve our supply of goods here in the United States which will help in the long term as we look towards supply. He is also trying to address some of those pocketbook issues, like childcare, and that is where SBA also has a role. We are trying to train up more childcare facilities around the country. Those entrepreneurs. We offer bootcamps for childcare entrepreneurs so that they can start those businesses. Those costs are meaningful to our small businesses, to families across the country. And the president, consistently, is trying to address energy costs as well. But when we go to what the SBA authority is and what we can do, you know, obviously, we are the agency that provides capital and technical assistance and tries to give market access. So we are also working to try to increase the revenue side of the equation. Mr. MEUSER. And I believe childcare is important. Most private businesses tend to deal with that and that is a story in itself. I am running out of time but I would like to get from you later on the 504 lenders getting to the Express program, why has that been delayed? Madam Chair, I know I am over my time but administrator, if I can get an answer on that, because that would be really helpful for many small businesses if that Express program could be finalized and created ASAP. Thank you. I yield back. Chairwoman VELAZQUEZ. The gentleman yields back. Now we recognize the gentleman from Pennsylvania, Mr. Evans, for 5 minutes. Mr. EVANS. Thank you, Madam Chair. I am dedicated to increasing minority entrepreneurship, especially Black entrepreneurship. Small business ownership is a tool in the economic toolbox to help lift communities out of poverty. Early this month, SBA released its Equity Action Plan in conjunction with the Executive Order to advance racial equity and support for underserved communities through the federal government. Can you expand on some of the details of this plan? And how can Congress support these efforts? Ms. GUZMAN. Thank you so much for that question on equity, congressman. Obviously, we know that the face of entrepreneurship is changing. That women and people of color are starting businesses at the highest rates, and that is across the country. And so we want to make sure that our programs are accessible and available to all. So that is underlying everything we do. And our equity plan is focused on ensuring that we can get capital distributed to all of our entrepreneurs. And you saw the increase in our focus on the Community Advantage program to focus on small dollar loans where our small businesses are facing the largest gaps in the financial services marketplace. In addition, we want to focus on the revenue side of the equation because we think that, you know, of course, small businesses need to grow their revenues and be able to compete in order to deliver the products and services that we all depend on. And so with that, we are focusing in on the federal contracting space. We are the largest buyer in the world and making sure that there is equity in government contracting and that all small businesses can access contracts. We have seen a 40 percent decline in the number of small businesses doing business with the federal government and that is not good for our industrial base or innovation. And so we are focused on making sure that emerging entrepreneurs and all entrepreneurs can access contracting. As well as the technical assistance. And obviously, the Community Navigators pilot program has enabled us to level up our outreach into more communities, build bridges to underserved communities across the country so that they can better access the resources of the federal government, in particular, the SBA and the capital programs and the contracting and other market access programs we provide. So with those actions, we hope to continue to expand our reach, and beyond that though. Of course, this is a moment for the SBA to step into a broader role in entrepreneurship. We are seeing increased rates of entrepreneurship. We want to leverage the attention through the Paycheck Protection program and all of our relief programs to now better reach and serve and build trust in communities that we have seen come into the SBA's programs. I said over 8 million unique small businesses have tapped into those relief programs. More sole proprietors and mom and pops where we know people of color are over indexed and we want to make sure that we are serving them with the products and services that meet their needs and meet them where they are. Mr. EVANS. Community development financial institutions were critical to getting PPP loans to small businesses in my home city of Philadelphia. During the pandemic, several minority-owned were turned away from larger banks. The budget says SBA is establishing an aging priority call to increase the number of community financial institutions in SBA. Each of the federal banks where they have offices dedicated to CDFIs and Minority Depository Institutions. Do you think a similar office would help SBA get more community-based lenders into the 7(a) program? Ms. GUZMAN. We have within the Office of Capital Access, a team dedicated to growing lenders in our communities starting with the Microlending Intermediary program and then as well with our Community Advantage attracting CDFIs and CDCs. We have increased and strengthened our relationship with the key CDFI organizations to ensure that they have access to our programs and are familiar. We also offer technical assistance across to all lenders, community banks, and CDFIs and others to make sure that they can access our programs. And we know that the most important thing is to simplify our programs across our portfolio. We have started with the Community Advantage program in trying to simplify eligibility in underwriting to make sure that we can support the lending institutions with these small dollar loans that are just as expensive as doing larger dollar loans. And so we want to enable the industry to better support small businesses through our programs and we believe that the existing structure that we have in place will allow us to do so. Mr. EVANS. I want to thank you sincerely for coming to Philadelphia and walking down 52nd Street. I really appreciate your leadership and the way that you are operating. And I thank the Chairperson who also was in Philadelphia and spent time with us. So again, I thank this collective leadership. Us, working together collectively, it is in our interest for the sake of small businesses being Small Business National Week. I thank you again. And I yield back to you, Madam Chair. Chairwoman VELAZQUEZ. The gentleman yields back. Now we recognize the gentlelady from California, Ms. Kim, Ranking Member of the Subcommittee on Innovation, Entrepreneurship, and Workforce Development, for 5 minutes. Ms. YOUNG KIM. Thank you, Chairwoman Velazquez. And I want to thank Administrator Guzman for joining us today to discuss the administration's Fiscal Year 2023 budget request for SBA. Small businesses that you represent are facing many economic headwinds with supply chain disruptions, record- setting inflation numbers, and increase in gas prices. I am sure you saw the report from NFIB that reports that the number of small business owners expecting business conditions to improve in the near future has fallen to the lowest level in nearly 5 decades. And that is a troubling report considering small business owners are some of the most optimistic people that we know. Back in my district in Orange County, the average gas price is close to $6 now. That is $2 more than what it was a year ago. So, Administrator Guzman, my question to you is, can you tell us if there is anything in the budget request for SBA that specifically helps small business owners overcome some of the issues that they are facing with high inflation, labor shortages, and energy costs? And what are you and your department, SBA, doing to regain the confidence from small business owners moving forward? Ms. GUZMAN. I thank you so much for that question. As I know, I share that empathy with small businesses and the challenges they are facing, and I am hearing from small businesses that they have these issues. I know that within the SBA's budget specifically, you know, we try to make sure that we are offering support for our small businesses for all the impacts to their bottom line and helping them to ensure that they are strategically positioned around their pricing strategies, around ways that they can improve operational efficiency, their staffing strategies, so that they can navigate any challenges that come their way. And so within our budget, we are expanding entrepreneurial development across our key program offices. And importantly, within some of our grant programs that hope to improve their revenue creation as well. The 7(j) grant program is about making sure that our businesses are contract ready and can grow their businesses, bring in the revenue through federal contracting, as well as fast grants which, of course, support innovation to strengthen economies locally. So I do believe that those are really core to helping small businesses and our advisor network around the country do work daily with small businesses, helping them to ensure that their business models are strong to navigate and to connect them to capital when that is a solution for them. Ms. YOUNG KIM. Glad to hear that. But are you deploying any SBC resources such as SBDC, women business centers, the veteran business centers, as well as SCORE mentors, how are you deploying those? Ms. GUZMAN. So what we have asked them to do is to come up with specialized programming. One of the SBDCs has a specialized program on supply chain and they are trying to share those best practices around the country so that they can better train businesses on supply chain management. Others, there is a veterans focused center that is working with local military spouses to connect them to businesses for employment so that we can help with those wage pressures. So there are specific programs within our centers that focus targeted on these issues. Ms. YOUNG KIM. Thank you. I want to talk about the recent report of the Office of the Inspector General that some loans totaling $66.4 billion that SBA did not meet the 90-day statutory requirement to remit the forgiveness payments to lenders. Additionally, the report states that SBA did not meet the 90-day requirement for over 98 percent of those loans over $2 million. So can you talk about why is it that SBA is failing to meet that 90-day statutory requirement? What is your plan to develop a plan to ensure that the forgiveness reviews and remittances are completed within the 90 days as required by the law? Ms. GUZMAN. The Office of Capital Access continues to work with the lending institutions to make sure that they get the technical assistance they need to follow through on all the forgiveness requirements. We continue to support our lending institutions on that front as well as on the backend try to help with the small business preparedness. And so we will---- Ms. YOUNG KIM. Can you give us a little more specifics on that? Ms. GUZMAN. I can have my team follow up with your staff, as I know, to make sure that we give you the full plan on forgiveness. Ms. YOUNG KIM. Okay. Well, thank you very much. My time is up. Chairwoman VELAZQUEZ. The gentlelady yields back. Now we recognize the gentleman from Maine, Mr. Golden, Chairman of the Subcommittee on Underserved, Agricultural, and Rural Business Development for 5 minutes. Mr. GOLDEN. Thank you, Madam Chair. One thing I want to ask about is the Office of Advocacy. You talked about that office a little earlier. Earlier this year, the Office of Advocacy actually put out a recommendation that the Department of Correction--not Department of Correction, Department of Commerce, revisit the timeline for implementation of some regulations that were first announced under the previous Administration but this administration is still moving forward with. This has to do with right whale regulations and our fisheries in New England, and specifically, in Maine. So, I wanted to ask, the Office of Advocacy does not frequently just put out these positions. I think they cross their Ts and dot there is and in this instance what they have said is the market really does not have the equipment necessary to comply and therefore, the Department of Commerce should delay the deadline. We have yet to see that recommendation adhered to or really had any engagement from Commerce about it. So what role does SBA play working with the Office of Advocacy to make sure that when they put out a recommendation that it is consumed and hopefully acted upon? Ms. GUZMAN. The Office of Advocacy is an independent office that reports directly to Congress, as well as me and the president. As they track these regulations that are being promulgated by the different agencies, they flag when there are small business concerns so that they can take into account those issues and final rule. On this specific issue, I would need to follow up with my chief advocate, acting chief advocate, Major Clark, to understand a little bit more and see if there is something that the SBA can do to support. Mr. GOLDEN. Thank you. I appreciate that very much. And the suspense on that is pretty tight. I think it is a May 15 deadline. Ms. GUZMAN. Thank you. My team will follow up for sure with your staff. Mr. GOLDEN. Thank you. I really appreciate the focus on trying to identify fraud where it is taking place through some of these programs, particularly the ones related to COVID programs. Obviously, very important to put in good, new standards to prevent that from being an ongoing problem in the future. But I think finding the right balance is really important, too. And I am thinking specifically about a constituent back home who has an EIDL loan that is pending and it has been quite a long time now. Small businesses really I think need a timely response as much as they also need it to be adjudicated correctly. So how do you see the SBA finding the right balance between doing what we need to do to prevent the fraud and make sure we identify any that has taken place and hopefully pursue working with the other partners? How do you find the right balance to make sure that you are going to be able to process these loan applications quickly enough for them to be helpful? Ms. GUZMAN. Thank you so much. We believe that you do have to have speed and certainty, and so a balance of both. We want to make sure that the customer service experience is also really strong. And with the programs that I have been able to control for the full environment, like the Restaurant Revitalization Fund program or after we have made changes on Shuttered Venues, you know, we feel that we have tried to put the customer experiences at the forefront as much as possible. With COVID-EIDL, regrettably, although we have been putting out still an average of $700 million a day through June when I made all the significant changes to overhaul the process and move it to my Office of Capital Access, we put out $1 billion a day, as high as $3 billion a day. The largest banks in America put out $1 to $2 billion a month on all loans, including credit cards. And so, our scale and the amount of support that we have been able to give to small businesses has been large. But I know that there are still a few thousand businesses that remain. On average, it is taking 2 to 3 weeks to process every loan under $500,000. Above $500,000, up to a month. Most of the cases for those who are remaining are through their second or third request for reconsideration. And so we are taking all of those reconsideration requests seriously. But it is important to note that a lot of the borrowers that were processed in 2020 without any controls have now had to come back to the table and provide tax documentation and clear some of the fraud controls. We are happy to work with your team on specific constituent requests to see if we can help shepherd any issues that they might be having. Mr. GOLDEN. Thank you. I appreciate that very much. And we will follow up. Ms. GUZMAN. Thank you. Chairwoman VELAZQUEZ. The gentleman yields back. Now we recognize the gentleman from Wisconsin, Mr. Fitzgerald, for 5 minutes. Mr. FITZGERALD. Thank you, Administrator Guzman, for being here today. On April 7, the House passed H.R. 3807, which I will be kind, I think it was a disingenuous piece of legislation. I will be kind and not call it an all-out fraud on the restaurant industry, the relief for restaurants and some of the other small businesses that were directly affected. And basically, I think you are probably well aware, it provided $44 billion in appropriations for restaurant revitalization. An additional $13 billion to stand up some of the brand new grant programs, I guess, is the best way to describe them. And then it was sold as, you know, this was going to be paid for with EIDL and PPP fraud monies recovery. And so I think the most recent estimate is, and this is from Secret Services, that $1.1 billion in the fraudulent pandemic loans has been recovered. So with the total estimated $84 billion in fraudulent payments, I mean, I hope we can agree that there is not enough time or money or personnel to possibly get that number to match up and recover the $57 billion. So let me ask you this. Is it fair to say the SBA does not currently have the capability to recover the $57 billion needed to pay for the bill that the House has already passed? Ms. GUZMAN. My understanding is that that bill would rescind funds from COVID-EIDL targeted advance and advance that were remaining, not on the fraud side. It is remaining funds from those unused programs as well as, you know, Shuttered Venues and EIDL. Mr. FITZGERALD. Yeah. Well, let me interrupt you. Because the ENTREE Act is what was introduced by my colleagues here on the Committee. And in fact, you know, the Committee for Responsible Government is saying there is still $884 billion out there that could be recovered, that could be brought back. But that does not seem to be happening at all. And I think what we are frustrated by is that there is this idea that this product is being sold out on the street as, hey, no problem. We are going to do the due diligence on this and the fraud and we are going to recovery all these funds and then it is going to be readily available for the restaurants. But the math does not add up at this point and I am wondering what your comment is on that. Ms. GUZMAN. What I would also share is that the SBA works closely with the IG and other federal authorities who actually recover funds. We report fraud. We collaborate with them. Mr. FITZGERALD. That is great. That is great. I am asking you more about the numbers though. It is just not going to happen though, is it? Can you admit that it is not going to happen? Ms. GUZMAN. They are going to be working really hard to investigate all of this potential fraud and actually prosecute their final---- Mr. FITZGERALD. Well, that is awesome but like I said, I do not think that gets the job done. And this is the frustration I think. It is like some of my colleagues said earlier, we have got to go back to the district. And when you talk to these restaurateurs, they are like, well, I just read in the paper yesterday that the money is coming. But the fact of the matter is there is no way to et these two figures to match up. The recovery, the amount of fraud and abuse recovery that is happening out there does not match up with what restaurants are being told throughout this nation is going to be available to them. Ms. GUZMAN. Well, I know that the IG himself has not completely estimated how much would be recovered. I know they work hard every day to ensure that that happens. Our budget request actually requests a nearly 30 percent increase for the IG budget so that they can continue to manage to those resource constraints. Mr. FITZGERALD. So I am just going to make the assumption that it is not going to happen. That you are not going to be able to recover those funds at a rate that is going to fund H.R. 3807. So what would the strategy be from this point moving forward? How would we address that once it is obvious that there is a shortfall and that the wheels fall off of this entire thing? Ms. GUZMAN. The SBA stands ready to implement the program if it is moved forward by Congress. And in terms of the decisions from any remaining funding or any other sources of capital, I would not be able to speak further about that. Mr. FITZGERALD. I mean, you know, clearly, I think that the speaker put the Bill 3807 on the floor to develop some political cover for her Members. And I think there are even a few Republicans who have voted for it. Shame on them. Because it is disingenuous. It is not going to happen. And the restaurants of this nation need to hear that and need to find that out. And I would hope that the SBA be part of not only disseminating that but lowering the expectations that this bailout is coming any time soon. Ms. GUZMAN. What we are trying to do is continue to support our restaurants. We know, we agree with you, they have been impacted and continue to struggle and face challenges. And we would stand ready to implement anything Congress decides on. Mr. FITZGERALD. Thank you, Madam Chair. I yield back. Chairwoman VELAZQUEZ. Time has expired. Now we recognize the gentlelady from Illinois, Ms. Newman. Ms. NEWMAN. Thank you, Madam Chair. And good morning to everyone. So first of all, Administrator Guzman, thank you so much for your tremendous work. I know you were handed a proverbial hot mess and you have done a really good job. So thank you from this Committee, but all of Congress. A couple of other clarifying comments. You know, I hated taxes when I was a small business owner as well. Absolutely hated it. I thought it was unfair and all of that. But as we know, and as you articulated very clearly, that largely small businesses will not be affected by President Biden's new tax model. So I just want to be clear and reiterate that again for the record that that is not true that small businesses will be affected adversely. In fact, what it does do is will make large businesses pay at a fair rate and do their job and be good patriots and Americans in this country. So a couple of other clarifying comments before I get to my question about access to capital and a few other things. So, you know, I am very certain you are talking to the president all the time about advocating. So thank you for your advocacy on behalf of small business. I truly appreciate it. I do want to make a comment about climate. Climate change is everybody's business. It is small business's business. It is my business. It is everybody's business. So, the fact that you are supporting green entrepreneurs, I am introducing a green incubator act pretty soon that will coordinate with the SBA. And it is critically important that we all engage. So thank you for your advocacy there. So my question. Staying consistent with the topic of capital access, I would like to segue into poor climate decisions. How does the SBA intend to update policy on addressing small business capital access needs on climate crisis issues within the existing 504 program or the Microloan program? Ms. GUZMAN. Thank you so much for your comments and the question. I will agree that small businesses, according to the Treasury 97 percent of them would be not impacted by the taxes. With the climate, specifically, the request that was made, we would hope to shore up our lending specifically. We know that small businesses and communities that are increasingly impacted by disasters are the ones that are hardest hit and they have the hardest time recovering. They need to mitigate for future disasters, especially when you look at communities that have been hit time and time again and continue to have to draw disaster assistance. They need to mitigate so that they can have less damage. So that funding would go a long way towards helping small businesses mitigate. I have repositioned my Office of Disaster Assistance to focus on resilience and really make sure that small businesses are aware of these resources, and communities. Because, obviously, we do homeowners and renters as well within our disaster programs. So, we would definitely want to lean in on supporting small businesses in that effort. As well as across our 504 program. It is a perfect example as well. As we are funding, we would want to level up and allow them to make those mitigation changes as they develop property to make sure that they are prepared for any natural disasters on the horizon. And of course, within the 504 program, it is a really critical asset-building resource for small businesses as they expand in property. I think within the programs that SBA offers on innovation, that is why there is also quite a bit of excitement around climate. We are funding technologies overall within the federal government on the SBIR-STTR program and SBA is the one that channels those funding supports to small businesses and helps with education. We will continue to lean in on that and all the issues that are challenging our nation and the world, whether it is health, agtech, or climate, or any other issue. Ms. NEWMAN. And then I have one final question I am going to sneak in at the end here. Anti-trust related. In light of President Biden's most recent executive order, do you feel like the SBA has enough money to fund, study, and report on the federal government's effort to protect small business competition through anti-trust enforcement? Ms. GUZMAN. Well, the SBA, obviously, we have requested an increase in our budget of 2.5 percent just to support all of our activities around entrepreneur development and capital access. We continue to just provide advisory services and support to small businesses. And that is the purpose of our focus around the entrepreneurial support and continue to try to position them to compete and expand our productive capacity within this country. Ms. NEWMAN. And just very quickly, Administrator, because it is important to note, and that is terrific and I so appreciate that, but there is no specific money identified to really reckon with the fact that large businesses are always first in line for business in general. So, we are not studying that right now? Ms. GUZMAN. Not within the core SBA budget funding. So we are, of course, always working with small businesses to better compete in government contracting and better position them. And that is the extent of our work. Ms. NEWMAN. So we have work to do and I yield back. Chairwoman VELAZQUEZ. The gentlelady yields back. Now we recognize the gentlelady from Texas, Ms. Van Duyne, Ranking Member of the Subcommittee on Oversight, Investigations, and Regulations. Ms. VAN DUYNE. Thank you very much, Madam Chair, and to the Ranking Member for holding this hearing today. And thank you, Administrator Guzman, for appearing before us. This has been interesting and entertaining comments that I have heard from some of my colleagues. But to say that the president's proposed tax plan does not negatively affect small businesses is just completely not only disingenuous but dishonest. To believe that small businesses do not get a pass- through cost from large businesses or that small businesses are not paying more as a direct result of this administration's war on the oil and gas industry, it is not only naive but it is completely dishonest and it is completely wrong. But again, it has been entertaining. Before I begin, I wanted to thank you, Administrator Guzman, for coming to visit Texas 24 earlier this year to hear directly from our businesses and their current challenges. If you recall, one of the restaurant owners, she highlighted exactly how difficult it was right now. And I think you heard from almost everybody at that table to find labor. Labor that was willing to work and not just leave after a few days on the job or demand a wage that would bankrupt them. I think you also heard from one of our local homebuilders who discussed just how costly the skyrocketing energy costs have been as they disrupt every single aspect of business. So again, to say that somehow this administration's policies are not affecting small businesses is completely dishonest. But I think we both know that these concerns continue to consist today. And I am really hoping that you benefitted from your time down in District 24 and that you heard these things directly from those business owners. I do want to talk to you about the EIDL program and some of the fraud and direct lending issues that we have seen from SBA. SBA gave out approximately $369 billion in the EIDL program. Within the EIDL program, the OIG identified approximately $84 billion in potentially fraudulent activity associated with direct loans and direct grants from within the program. So almost one out of four of the loans were considered fraudulent. And based on that fraud rate, do you think it is best that SBA expand direct lending in other programs? Ms. GUZMAN. Thank you so much, Congresswoman, and I appreciated visiting with your businesses and learning about their challenges. So, I really appreciate that time that you took with me. With the COVID-EIDL program, it is a tale of 2 years in terms of implementation as well. And the 2020 EIDL without controls limited the agency's ability to control for fraud completely. In 2021, thanks to the Economic Aid Act, we were able to then reinstitute reviewing tax documentation from all these businesses. And that is, of course, help to the Agency limit fraud as well as we now again checked the Treasury's do not pay list. Ms. VAN DUYNE. I just have a question since you brought it up. Between 2020 and 2021, can you tell me how much money was fraudulently released in 2021? Ms. GUZMAN. The IG and GAO reports largely address the 2020 funding. And so---- Ms. VAN DUYNE. Do we know how much money was fraudulently released in 2021? Ms. GUZMAN. The IG is still monitoring and assessing---- Ms. VAN DUYNE. I mean, your statement that all these things happened in 2020 and then you had controls in 2021, how do you know how to compare if we do not have the 2021 numbers yet? Ms. GUZMAN. What I have is that the IG and GAO have been pleased by the controls that we have implemented and agree that that will go a long way towards addressing fraud and---- Ms. VAN DUYNE. So the idea is that when we get those numbers that they are going to be considerably, substantially lower than in 2020? Ms. GUZMAN. That is the expectation from the watch dogs as well as the agency based on what we are seeing. And keep in mind that---- Ms. VAN DUYNE. Do you know when we can expect those numbers to come out? Ms. GUZMAN. No, I do not have any assessment on that. So, we continue to work with the IG very closely and as I know he does with you as well to make sure that you receive that information in a timely manner. But with the EIDL program---- Ms. VAN DUYNE. And I know I have only got 45 seconds left. Since you are talking about fraud, I also want to mention that there is over $100 billion of fraud estimated in various small business relief programs. One hundred billion going overseas, to put it plainly, our federal government dollars literally to billions of taxpayer dollars and handed it over to fraudsters who put in minimal effort to obtain those funds. And as you know, this fraud limited the amount of access that well- deserving businesses had to relief. This is all unacceptable. But Administrator, how does the SBA relieve fraud--how do you estimate that will end to sending money outside of the U.S.? I mean, it seems like we have already had a quarter of the money going out illegally for the EIDL program, and now we are sending hundreds, you know, billions of dollars overseas fraudulently. Tell me how the SBA is going to be handling that in the future. Ms. GUZMAN. We have implemented the super robust fraud controls, as well as mitigation. And recently, I announced a Fraud Risk Management Board to replace the Fraud Risk Management Council to ensure that across the whole of agency, across all of our key program offices, we are putting in fraud at the design of programs, as well as ensuring that the controls are strong across the agency. So, we feel with these added measures, we can have strong controls for all the funding to be controlled. Ms. VAN DUYNE. Well, I look forward to getting those numbers for 2021. Thank you very much. I yield back. Chairwoman VELAZQUEZ. Time has expired. Now we recognize the gentlelady from Kansas, Ms. Davids, Chairwoman of the Subcommittee on Economic Growth, Tax and Capital Access. Ms. DAVIDS. Thank you, Chairwoman. Thank you again, Administrator Guzman, for joining us here today to talk about our Fiscal Year 2023 SBA Budget proposal. The SBA is requesting $4 million for the manufacturing hub proposal, which is a new initiative to address supply chain deficiencies that have been both exacerbated and made more visible during the COVID-19 pandemic. I am really interested to hear more about this effort on expanding and strengthening our small business manufacturing bases. It is going to be incredibly important as part of our diversification of and building up of our supply chains. That is something I have been particularly focused on. I am very fortunate to have been named a conferee alongside Chairwoman Velazquez as we look at the supply chain and manufacturing legislation that we are hoping is going to actually address some of this stuff. I am curious if you could elaborate a bit on the scope of the manufacturing hub proposal and how that will work or the intention behind it. And then, you know, what the proposal will involve in terms of the resources being requested. Ms. GUZMAN. Thank you, congresswoman. And this is SBA's effort and contribution in trying to expand the productive capacity in the United States. We know that 75 percent of manufacturers are 20 and under employees. Still over 90 percent small overall. And so, we want to make sure that we support them and give them access to especially government contracting. We focused this initiative within the government contracting business development space because we want to make sure that the government is buying from Made in America, and so we are hoping to expand our outreach, our training, as well as technical assistance to more manufacturers to engage in government contracting. But in addition, beyond that, we want to make sure that we are deploying resources to help more businesses interested in manufacturing in the United States. Just recently, I met with a small business owner who was specifically wanting help in trying to manufacture her products here in the United States as she is having to deal with supply chain global issues in her business currently. And so, these are the types of businesses that we want to support by giving them the technical assistance around manufacturing in the United States. Ms. DAVIDS. Thank you. And I am sure our office will be in touch as that program gets stood up and starts moving forward. There are a lot of smaller, like 75 percent of manufacturers being under 20 employees. There certainly are a lot in the Kansas 3rd that fit into that criterion. I wanted to switch over really quickly to the Fraud Risk Management Board that we have heard a bit about this morning. I think getting those guardrails in place, making sure that moving forward we are addressing and preventing fraud. Can you talk a little bit about what kind of structures are being implemented through the board? And then kind of what they are replacing? Ms. GUZMAN. With the Fraud Risk Management Board, I hoped to integrate a more holistic approach to fraud risk management so that all of our program offices would be engaged. All of them have a role in setting up programs and making sure that they design them with good controls. And so, the management of the Fraud Risk Management Board includes all my key program office leads, as well as it is chaired by my CFO. So that is an important addition. We want to make sure that controls are guided by the organizations that deliver our capital access programs, our disaster assistance programs, our government contracting, and entrepreneurial development. But in addition to that, as well as building a more collaborative effort across the agency, I wanted to make sure that the framework complied with the GAO standard. And this new Fraud Risk Management Board does that and ensures that we satisfy that requirement of the GAO. The structure itself, it will report in through the Enterprise Risk Management Board that was established back in 2015 and reports directly to me. In addition, my Special Counsel for Enterprise Risk will sit as an advisor on the Fraud Risk Management Board to ensure that there is a constant tracking of their activities. And importantly, we embedded fraud risk management into the performance of all the key members of the Fraud Risk Management Board, which I think also goes a long way to ensuring that they know that the agency takes this seriously. Ms. DAVIDS. Thank you. Chairwoman VELAZQUEZ. Time has expired. Ms. DAVIDS. I yield back. Chairwoman VELAZQUEZ. The gentleman from New York, Mr. Garbarino, is recognized for 5 minutes. Mr. GARBARINO. Thank you, Madam Chair. Administrator Guzman, thank you for being here today. We have already heard a lot of questions about the fraud, dealing with the EIDL. And when they say possibly $86 billion, that was the last report, and I think a new report is going to come out which is probably going to raise that number. I do not think you can talk about it enough, about how bad this fraud was with these programs, with the COVID-programs. I am hearing in my office people who have still had applications in over a year. We have had to deal with a couple of cases where people have had EIDL applications in for COVID over a year and you said before you are getting some applications done with another program with maybe 2 weeks to a month. Why is it taking over a year for some of these applications to be processed? I understand that not everyone is back to work yet? Career employees are still working from home or have the option. Could that be leading to it? I mean, why are these taking over a year to get them? Ms. GUZMAN. Actually, the COVID-EIDL program is the program I was referencing in which the average turnaround time is 2 to 3 weeks for $500,000 and under. And it is about a month for those above. And that is the one that we are processing about $700 million a day and have been on average since the summer, a billion dollars a day. Within COVID EIDL, I was not happy with the way it was and I actually moved it to my Office of Capital Access to streamline processes. In the fall, we also changed the customer service contractor so that we could improve customer service to the small businesses. With those borrowers that you are finding, who have been in the system for that long, they are under multiple reconsiderations. In other words, they have been denied and have come back for further reconsideration. In many cases, the majority of their cases, they did not have their 2019 taxes filed or reported or needed a modification. And so that adds some additional time but it should not be a full yar. So, what our district offices are doing, we have also empowered them to access the information about the EIDL program. We are happy to work with you and your team to investigate any specific cases that we can unstick in the process. Mr. GARBARINO. I would appreciate that. The teams have been helpful when we reach out but everybody does not call their congressman every time, so it moves once we call but small businesses are dealing with a lot of other things that having to get in touch with us. Ms. GUZMAN. If I could add, we have added a lot of resources to those pending applications so that we can continue to get them down as we close out this program. Mr. GARBARINO. I appreciate that. Thank you. Now, are all the SBA employees back to work or are you still having people work from home? Ms. GUZMAN. We have had a return to work stance in February and we are still transitioning with our union employees but we are, you know, a majority of our headquarters have returned to work. But that has not impacted. Obviously, we have scaled to put out $1.2 trillion in relief and have been very productive over these past 2 years. Mr. GARBARINO. What would you say a majority is, 51 percent? How many people are back to work and not working from home anymore? Ms. GUZMAN. In the headquarters area, it is over 70 percent. Mr. GARBARINO. Okay. Thank you. I notice as part of the budget, also, the administration is requesting authority to transfer $320 million from the targeted COVID-EIDL Advance account to support loan servicing and other related programs. I think there has already been over $4 billion has been used for salaries and whatnot for servicing. Why do you need another $320 million? Ms. GUZMAN. The COVID-EIDL program is, of course a 30-year loan. And so, we will now be servicing $3.9 borrowers. And the SBA anticipates needing additional funding to continue to manage this portfolio into the future and make sure that they have the resources and the customer service that is expected. Mr. GARBARINO. How much has been put, I mean, it has been over $4 billion though, has it not, that has been put towards the program already and you are transferring another $320 million? Ms. GUZMAN. The program has disbursed nearly $4 billion in funding correct loans to small businesses. Mr. GARBARINO. I am just going to switch to one more question since I have a little bit of time left. From small business, what is the top issue that you are hearing? What is their biggest concern? Ms. GUZMAN. Across the board, we need small businesses. And note that we have also had a surge of new entrepreneurs as well. Mr. GARBARINO. Just top issue. I have got 20 seconds. Ms. GUZMAN. The top issues are multiple though. So Capital Access is always one of the top issues. And in addition, when managing their business---- Mr. GARBARINO. Anybody talking, sorry to interrupt, but anybody---- Ms. GUZMAN.--supply chain, inflation---- Mr. GARBARINO. Inflation. That is what I am hearing. Ms. GUZMAN.--and workforce issues across the board. Mr. GARBARINO. Inflation. Ms. GUZMAN. So I would put all of those four. Mr. GARBARINO. But inflation is what I am hearing a lot from all different businesses. And I am running out of time but what does this budget do to address inflation? Ms. GUZMAN. for SBA in particular or broadly? The president---- Mr. GARBARINO. SBA. Ms. GUZMAN. For SBA, specifically, we are leaning in to entrepreneurial support, to help small businesses navigate the issues that they have had to face. Obviously, we look towards helping them with strategic planning, and financial management, supply chain management, and our centers offer specific targeted support and technical assistance in those areas. Mr. GARBARINO. I am out of time. Thank you very much. Chairwoman VELAZQUEZ. The gentleman's time has expired. The gentleman from Louisiana, Mr. Carter, is recognized for 5 minutes. Mr. CARTER. Madam Chair, thank you very much for the opportunity to address, and Administrator Guzman, I would like to personally thank you for touring my district and having the kind of attention to deal that my constituents certainly deserve and certainly appreciate that you undoubtedly provide, and the care that you give. We know that you have a very tough job but we certainly appreciate the hard work that you and the Members of your team are providing for the people of American. One observation and two questions. First observation is that there were comments that were made earlier that suggest that somehow climate change was not a part of SBA and it should not be a part of the discussion. I would like to very respectfully challenge that premise. In my district, we have had substantial impacts from climate, whether it is hurricanes, floors, or tornadoes that have incredibly impacted our small businesses to the tune of people having to borrow money. To only have to come back and borrow money again from SBA because of natural disasters that were no doing of their own. So, climate change is very much a part of the world that SBA plays in helping businesses, particularly small businesses, stand back up after these horrific natural disasters. So, I thank you. I thank your administration. The administration, the Biden administration, and certainly your administration, Ms. Guzman, for being very attentive. So, one quick question. Is a real life issue that happened in my district. There was an individual that applied for an EIDL grant, received notice that she had been approved, and that money had been transmitted to her account. Now, I have been in communication with a number of your staff people. But I want to bring this to your attention because we have not gotten a positive result yet, but I think one should be in order. She applied for an EIDL grant. Was approved for the EIDL grant, was notified by SBA that the funds were being transferred to her account. Several days go by. She realized the money has not. It was determined by SBA that there was a glitch and that the money was supposed to have been transferred but never made it to her account. By the time she brought that to their attention to the time that they attempted to correct the glitch, meaning to then send the money to the proper account, she was told that, oh, the program rules have changed and you are no longer eligible for the funds that you previously, only a week earlier, had been approved for. Well, listen, that seems terribly wrong. If the person was approved and then somewhere in the process there was a rule change, I think it is only reasonable that some exception be made to assist this individual. I will not give her name or any of that information on an open line, but your staff is well aware of this and I will share it again to your office. Can you talk about that very briefly? And I suspect that this is not a one-off. This may have happened to other people throughout the country, but certainly, it is a travesty and it is no fault of the applicant but they should be made whole. Ms. GUZMAN. Thank you so much for the time that you spent with me in your district. It was very informative, especially with the businesses impacted by repeat natural disasters. I will say on the COVID-EIDL program, as well as the Advance program, we obviously, you know, those programs closed December 31. We continue to administer funding on any modifications for the EIDL program. I am happy to explore this further. My team will follow up immediately with your staff on this constituent request in particular. I am not pleased with the EIDL program overall and obviously made some significant changes over the summer to move it, reposition it, add new processes and procedures, and in the fall, changed the customer service support. Mr. CARTER. And I am sorry to cut you off, Madam, because my time is going to go up. I want to be very clear and complimentary of your staff. The Region 6 administrator has gone as far as he could with trying to explore this. Your people have looked at it and have been extremely helpful, albeit not getting it over the goal post. So, your extra attention to this would be critically important, particularly to my constituent in Louisiana who has been very patient but has clearly been wronged. And with my final 10 seconds, I want to just once again make a play for something that I have spoken to you before and others, and again, I want to thank you. And that is individuals who have had to apply for SBA loan each time there is another natural disaster. I would ask again that you would consider some loan forgiveness. Chairwoman VELAZQUEZ. Time has expired. Mr. CARTER. And I thank you. I apologize for overrunning. Could she at least answer that, ma'am, speak to that? Chairwoman VELAZQUEZ. Time has expired so if you could answer in 5 seconds. Ms. GUZMAN. We do not have forgiveness authority on the disaster programs so we will continue to follow up with your office on any specific requests. Mr. CARTER. Thank you. Chairwoman VELAZQUEZ. Now we recognize the gentleman from Florida, Mr. Donalds, for 5 minutes. Mr. DONALDS. Madam Administrator, it is good to have you back. Thank you for being here. I will say in all honesty, Administrator Guzman, I do appreciate you coming. We are still waiting for Secretary Yellen to materialize in the halls of Congress. Not quite sure where she is. I see her on CNBC. I see her on TV randomly. She somehow finds her way to the Senate but she has not appeared in this Committee, which she actually has responsibility to do. But I do appreciate you taking this responsibility being here, answering questions from the Committee. I want to start here. Obviously, the president's entire budget has come out. Yes, we are focused on the small business budget. But the small portion of the president's budget obviously impacts businesses, large and small, Americans, whether they are rich, whether they are middle income, whether they are poor. Under the president's tax proposals, he is calling for rises in the top marginal tax rate back to, I believe, 39.6. He is calling for tax rate increases from 21 to 28 percent on the corporate income tax side. Essentially, undoing the Tax Cut and Jobs Act. Is it the opinion of the Small Business administration that these tax increases are going to be to the betterment of small businesses in the United States. Ms. GUZMAN. Thank you so much for your comments and question. I will say that we know from Treasury's analysis that 97 percent of small businesses would not be affected by any tax increases. And the president has been committed to ensuring that nobody under 400,000 would be impacted. And so, we continue to try to support our small businesses with all their bottom line impacts at the SBA and providing the technical assistance and capital access and market access to help them thrive in any economy. Mr. DONALDS. I am glad you mentioned Treasury because once again I will say, where is Secretary Yellen? Because this actually falls right into her wheelhouse. It will be great to have this dialogue with her, somebody with an economic mind. We can have that jujitsu, if you will. But what I would ask is, obviously, maybe small businesses, they incorporate many different ways. Some of them are C corporations. Obviously, they would be directly hit by a raise in the corporate income tax rate. A lot of them are S corporations. Or they are sole proprietorships. So, the business income actually falls to their personal income taxes. So, I go back to my time in banking. A lot of small business owners, their business income actually flows through their personal income taxes which would put them in the window of paying higher taxes because the top marginal rate would increase. The only other thing I would add to that is even under the president's budget, the $400,000 number is for a couple. But if it is individuals, you are talking more than $215,000. If you are somebody who is single and runs a small business and you are earning more than $300,000, your taxes are going up. And typically, if you are earning over $300,000, you are probably employing maybe less than 10 people. So, we are talking about the smallest of the small businesses who operate a sole proprietorship, maybe partnerships, that are going to be hit by rising taxes. Do you think that is problematic? Ms. GUZMAN. Well, again, I mean, those 3 percent of the businesses that would be affected, 4 percent are C corps, and of course, those pass-through entities as well. But again, only 3 percent would be impacted, and my position is to continue to try to support small businesses with the programs that SBA has available for them--capital access, as well as market access, and technical assistance. Mr. DONALDS. Well, I think it is important to understand that we can quibble on what the percentages are. I think it is obviously more than 3 percent. I would love for Secretary Yellen to actually dig into this a lot more for us. But let's be also very clear. Some of those businesses in that 3 percent, I am going to use your number, they employ the vast majority of people in the United States. I am going to move on. Obviously, inflation is a big issue dealing with everybody, whether you want to talk about individuals or the fact that the producer price index, the thing that does not get talked as nearly as much about is up around 12 percent year over year which is catastrophic for businesses across the United States. Have you and your administration had a conversation with President Biden, Chief of Staff Klain, VP Harris, or the Council of Economic Advisors? Have you had conversations with them about the impact inflation is having on small businesses in the United States and on the ability for businesses to repay the EIDL loans that have been actually executed by SBA? Ms. GUZMAN. Whenever I engage with those individuals, as well as the White House, we continue to share insights on small businesses and the impacts that they are having around inflation and supply chain. That is why we focus on---- Mr. DONALDS. I have got 23 seconds left. I do not mean to cut you off. But let me ask you this question. This is a better question. What do they say? What do they say the remedies are? What do they say they are going to do to help small businesses? I would like to know what the president's opinion is on this. Ms. GUZMAN. The president has expressed concern with the rising costs on American families, as well as small businesses, and he is taking actions to try to address those pocketbook issues, as well as supply chain---- Mr. DONALDS. What actions? Ms. GUZMAN.--to expand our productive capacity with---- Chairwoman VELAZQUEZ. The gentleman's time has expired. Mr. DONALDS. All right. Thank you again, ambassador-- Administrator. I gave you another promotion. Thank you, Administrator Guzman. Chairwoman VELAZQUEZ. The gentlelady from California, Ms. Chu, is recognized for 5 minutes. Ms. CHU. Administrator Guzman, I would like to make a statement about the 504 program and then ask a question about SBICs and then Community Advantage. We know that SBA's 504 loan program is so critical to helping small businesses with startup costs like purchasing commercial buildings or expensive equipment. And in fact, last year, SBA saw a 41 percent increase from the previous year. Unfortunately, that same year the program exceeded its $ 7.5 billion lending authority in September and was forced to pause lending for the remainder of the year, meaning that eligible small businesses were left without funding. This year, the 504 program is again going to run out of funds by summer. And that is why I strongly support the president's budget for 2023, which includes a $1.5 billion in lending authority. And SBA's request for flexibility and the authority to raise the 504 program's cap by up to 15 percent, which is the same flexible authority for SBA's 7(a) loan program. I think it is so important to make sure that everyone can get the loans that they need and that there is not a disruption in dispensing them. And then my question about SBIC. I am a big supporter of the Small Business Investment Company. I am proud that my legislation to allow more capital to be invested in SBICs, the Invest in main street passed the house in December and that this Committee included these provisions in the reconciliation package that passed the House in December. Certified SBICs are one of the government's lowest risks, highest impact tools to grow the businesses, but it is not doing enough to reach our most underserved small businesses. In 2021, in fact, only 6.9 percent of the companies receiving SBIC financing were women, minority, or veteran owned. So, could you talk about how the 2023 budget request would diversify the SBIC so that there would be greater representation? Ms. GUZMAN. Thank you, congresswoman. And I agree with your earlier statements on 504. It is an important program that we continue to try to focus. And to an earlier question that was asked as well, we are looking to promulgate rules on the Express 504. We have implemented that already. On the SBIC program, I agree wholeheartedly that we want to make sure that that capital is accessible across the country, whether that is rural communities, diverse communities, as well as veterans. We want to see capital spread equally across the nation. The SBIC program, we are looking at from an outreach perspective, as well as the actual rules and regulations and the SBICs themselves to diversify and ensure that they are diversifying across not only the types of borrowers that they are supporting across the country but as well in the types of funding. We want to make sure that at all stages of a business's development, that they are able to access capital. And so, we have been working closely with the industry to make sure that we can support an expansion of the servicing and offerings to the SBICs across the country. Ms. CHU. Well, if I may, I also wanted to ask about Community Advantage, which has been very powerful in reaching significantly more female and minority small businesses than traditional lending programs. So, I introduced legislation to make this program one of SBA's core lending program which the House passed last year. Earlier this month, SBA noticed that it would be extending the pilot for another 2 years, opening up the program to new lenders and making some reforms to the program. However, there is currently still no official notice or new Community Advantage participant guidance reflecting these changes. So, can you tell us when Community Advantage lenders should expect to see reviewed participant guide and what the content would be? Ms. GUZMAN. That is in process. Of course, we put the federal registered notice about, you know, less than 30 days ago and we will be putting out those rules so that we can expand the program as soon as possible. Ms. CHU. Do you know when that will be? Ms. GUZMAN. That is in the coming weeks. We are working on that and prioritizing that now. Ms. CHU. And how about there was also an evaluation on whether the program should remain permanent. And I thought that the program had proven itself Ms. GUZMAN. I know that there was a statutory proposal to make it permanent. We have extended it within the priority of the pilot. Chairwoman VELAZQUEZ. The gentlelady's time has expired. Now, we recognize the gentlelady from New York, Ms. Tenney. Ms. TENNEY. Thank you, Madam Chairwoman and Ranking Member Luetkemeyer. We are grateful, Administrator. Thank you for being here in person. As a small business owner for many years, I know what I hear from my own employees, from my own colleagues, and from other small business owners. Inflation, labor shortages, subsidies by big government to other big companies, high regulations, high taxes, particularly coming from a state like New York are what we see as small business owners really hurting us. And so, when we see these items coming from government and this huge spending and we look to the Small Business Administration for help to rescue us because we cannot afford compliance costs. We cannot afford to manage the big business advantages that they have. We look to the Small Business Administration, and sometimes I hear today in this meeting things that look like mission creep away from small businesses and helping large businesses, and businesses that may not even be considered a small business. And I worry about that because of how vitally important it is as you, as an administrator, and all of us to really be careful in how we spend taxpayer dollars, particularly in inflation and small businesses have to scrimp and save for every penny, just to survive in this situation. So, administrator, I want to jump to something really important right now in terms of a small business looking at a big business, gaming and getting advantage in the system. Would you say that Planned Parenthood affiliates are in the same category as a hotel or a restaurant? Ms. GUZMAN. You know, with Planned Parenthood, I am assuming you are talking about the Paycheck Protection Program. Ms. TENNEY. Right. Would you say that a Planned Parenthood operation, an affiliate, is in the same business and same relationship as a hotel or a restaurant? Ms. GUZMAN. My understanding is that Planned Parenthood affiliates are independent and are individual entities within that community. Ms. TENNEY. Right. And you know why I am asking this question because obviously we sent you a letter in February. Thank you, we got it yesterday, so we appreciate at least finally getting an answer. Because, as you know, under the Paycheck Protection Plan created by the CARES Act, Congress specifically stated that companies could not, particularly SBA, could not issue forgiveness for PPP loans to any entity with over 500 employees unless that affiliate was a hotel or a restaurant. So that is why I asked you the question. So, I think we can agree that Planned Parenthood is not a hotel or restaurant. And the question is whether or not they are considered an affiliate. But 34 individual loans, totaling over $67 million, were given to affiliates of Planned Parenthood, the Planned Parenthood Federation of America. And as you know, Planned Parenthood is not just an innocent bystander. They are the nation's largest abortion provider with over 16,000 employees, well beyond the 500 employee threshold established by Congress for this PPP eligibility. So, I wanted to clarify that assessment that you have about Planned Parenthood because they clearly are not an affiliate like a hotel or restaurant. They do not fit within that exception. And so, you sent me a letter indicating, it was very vague, actually, about whether or not this affiliation status indicated that there was control by the national affiliate for Planned Parenthood. And so, Planned Parenthood did have exercise and control over its affiliates. And let me give you a couple of examples. First, becoming a Planned Parenthood Federation of America affiliate requires a certification by the PPFA corporate board. That is the national affiliate controlling the 16,000 jobs. Second, each affiliate is governed by written bylaws which must conform to the PPFA's corporate policies nationally. That looks like control to me. And finally, the PPFA's corporate headquarters imposes affiliation mandates on local affiliates. Anyone who is looking at this control statute, and I have it in front of me, clearly talks about the power to control has to exist. It does not necessarily mean that it exists but there are numerous examples of this happening with Planned Parenthood and its affiliation where they exert that control, not just that the control exists, where they exert it. So, would you not agree that it is inappropriate for the SBA to issue these exemptions and forgiveness for loans for the Planned Parenthood Federation affiliates? Ms. GUZMAN. I can share with you that the Trump administration issued a preliminary determination letter. Any of those borrowers, there were multiple, beyond Planned Parenthood, only Planned Parenthood received that specific attention. Anyone within that hold code, I put back into the normal processing. And so, of course, our review teams thoroughly reviewed all of those loans with those specific hold codes, not just Planned Parenthood, all of them in order to---- Ms. TENNEY. Right. This is my time. You are mincing words. I mean, this looks like we are doing an end run around a law to fit a political agenda, not actually good stewardship of taxpayer dollars. And specifically, prohibiting a law in place that prohibits the ability of these types of national entities with 16,000 employees to be able to take precedence over small business community members who were left without the resources because we prioritized a political agenda. Chairwoman VELAZQUEZ. The gentlelady's time has expired. Ms. TENNEY. Thank you. Ms. GUZMAN. I will be happy to follow up with your office. Ms. TENNEY. Thank you. I would appreciate that. Thank you. I yield back. Chairwoman VELAZQUEZ. The gentlelady from Minnesota, Ms. Craig, is recognized for 5 minutes. Ms. CRAIG. Thank you so much, Madam Chair. And thank you in particular to Administrator Guzman for your testimony today and for your dedication to America's small businesses. I would be remiss if I did not mention how proud I am of the work of several Members of this Committee in long overdue passage of the Relief for Restaurants and Other Hard-Hit Small Businesses Act. I hope to see the Senate act in short order on this necessary bill. Administrator Guzman, I have been hearing from several of my constituents who have been waiting for months, some nearly a year, to see their COVID-EIDL applications approved. These are everyday small business owners like Donald Wineland of DRW, Inc., an Air Force Veteran from Prior Lake, and John Huseth of Clay View Dairy from Dennison. In total, my constituents are waiting on nearly $2.2 million worth of decisions from the SBA. Can you give us a little bit of an update as to when COVID-EIDL funds may run out? And how many applications remain under review? These are vital dollars to my constituents, their businesses, and the communities that they serve. Ms. GUZMAN. Thank you so much for that question. We have on COVID-EIDL, obviously, it is a program that we are heightened, our attention is on as we round out this funding. There still is funding remaining that we are using for loan modification requests as well as any reconsiderations. It sounds like the constituents are in the fold of reconsideration. We have just a few thousand that remain in that bucket of reconsideration that we are working through urgently every day just to make sure that funding gets into the hands of the businesses that are eligible for this funding. And we are happy to follow up with your office on the specific constituent requests to make sure that we are tracking them. Ms. CRAIG. Thank you. I really appreciate that. And again, anything you and your staff can do to help expedite these applications I would be grateful. As a Member of the Oversight Subcommittee, I would also appreciate if you could provide the Committee with an update on SBA's current anti-fraud efforts, especially with respect to PPP and EIDL. All of us here have deserting constituents and businesses in our district in need of these loans. And of course, we all need to know that our taxpayer dollars are not going to bad actors. Ms. GUZMAN. Yes, I am happy to do so. From day one, we have implemented strong controls in the Biden-Harris administration to make sure that we could avert fraud. We have been working collaboratively with the IG and the GAO to ensure that their recommendations are implemented and that we continue to track best practices as our response to fraud is iterative. With the framework that we have recently solidified, strengthened by replacing the Fraud Management Council with the Fraud Risk Management Board, we have launched a strong leadership approach to fraud for the years ahead. We are ensuring that our senior leaders within our program offices have accountability as well as can share insights, as well as implement best practices across the agency. I really value the leadership of my career team that has been working on this issue for the past year and ensuring that we have been implementing the strongest controls, as well as leveraging technology to assess our platform and continually report fraud to the IG and collaborate with them to ensure that we can support their recovery. Ms. CRAIG. Madam Administrator, I just want to end my comments by saying thank you. I know that the SBA has been asked to step up and perform under enormous pressure during a public health crisis. And as much as we sit here and we say let's make sure there is no fraud, absolutely, let's make sure that our taxpayer dollars are being used appropriately, absolutely, I do not want any of us to not think about every single day just the extraordinary effort your team over the last couple of years has gone to starting in the previous administration, into this administration, we have asked a lot of you in a short amount of time, and I, for one, as I travel my district and I see so many of my small businesses that would otherwise be out of business still going strong and expanding and creating jobs, I just could not be more proud. So, I want to say thank you for the work that your team has done, especially here locally. I want to call out Brian McDonald here from our region who has just been an extraordinary partner during a very difficult time. And with that, Madam Chair, I yield back. Chairwoman VELAZQUEZ. The gentlelady yields back. Now we recognize Ms. Salazar from Florida, Ranking Member of the Subcommittee on Contracting and Infrastructure. Ms. SALAZAR. Thank you. And wonderful to see you again, Isabelle Guzman. And thank you for your visit to my District No. 27, City of Miami. It was a highly productive visit I should say and I am sure that from now on my small business owners are going to be enjoying the best service that SBA can provide. So, thank you for that. Thank you for taking the time and catching a plan and going to Miami. Very grateful. I just want to share a few small glitches that we have. One of them, for instance, is $140 billion problem. And what is that? It is the COVID testing. Every time someone comes to this country, an international tourist, that person needs to get tested 24 hours before getting on that plane and that measure is killing the tourism industry in Florida. Specifically, in Miami. And you know, Miami is the hub of international tourism in Florida. So, could you please tell the president next time you see him in one of those Cabinet meetings that we need to do away with that measure? Will you be able to do that? Ms. GUZMAN. I will definitely relay your concerns to the White House and our team will continue to flag this issue and work with you to see what we can do to help better support our travel and industry small businesses which we know have been so impacted by so many factors. Ms. SALAZAR. Because, you know, Florida is open for business and my small business community is eager to be selling those services. But if you do not have people, then you cannot make the payroll at the end of the month. So, you understand that. So, since you are there with the president, I would very much appreciate it if you can tell him that this is killing us. Ms. GUZMAN. I continue to advocate for our small businesses and I appreciate that in particular. Ms. NEWMAN. But will you do that? Could you, will you able to tell the president in one of those cabinet meetings that this is happening and it is crushing our small business entrepreneurs? Ms. GUZMAN. I will definitely flag for the White House the issue. Ms. NEWMAN. Thank you. All right. So, you have a pretty good budget, over $1 billion, and it is getting bigger probably next year. But we discovered something that is troubling, Madam Guzman, is that the budget assigned for salaries, for regional and district offices is going down, not up. But in the meantime, your decision has been to increase the money in the hands of the Washington bureaucrats. I believe that someone who is sitting in D.C. cannot serve, understand, or care as one of your guys sitting in one of those district offices that the budget is getting cut for the salaries in those. And even more, I am going to share with you what is happening in Miami, or in Tampa, is that we only have one district office in South Florida for 2 million small businesses. We do not even have a permanent district director. So, any reasoning behind cutting money at the regional level and giving it to D.C.? Ms. GUZMAN. Over time as we have had to increase salaries and benefits and decrease some of these positions, you know, I understand that all of our offices have been impacted. This budget would allow us to retain some of those positions across the agency, and we have continued to try to empower the field to make sure that we gather those key insights that our team on the ground can share with us. Ms. NEWMAN. But you empowered them by hiring more people and paying them good salaries. But right now, you know, you are cutting those budgets. Ms. GUZMAN. We are, you know, committed to making sure that we can help improve our staffing plan across the field. And that includes trying to ensure that their positions are maintained and that they are receiving the benefit of our expansion. Ms. NEWMAN. Finally, I have 1 more minute. I just want to ask you a personal question. You are one of the most prominent Latinas in this administration so we have the same cultural code. Your parents are Mexicans. You understand the border. You know what is happening down there. Are you not concerned? That is the concern that I have. That what is happening at the border is giving a very bad rap to the Hispanics, to the Latinos, because we do not have any type of legality down there. And my concern is that it could be changing the favorable perception that other groups have of us, the largest minority in the country. So, when you sit with the president, do you not express that from a very personal point of view because your parents are of Mexican descent? Mine are Cuban. So, we belong to the same minority. Please give me your personal thoughts if you want to share them with us. Ms. GUZMAN. Well, what I would share is that I continually advocate and make clear that the face of entrepreneurship is changing and I would like to portray Latinos as the ones who are leading on that because they are starting businesses at the highest rates and across most states according to McKinsey studies. And so that entrepreneurship and that face of entrepreneurship is what needs to be important. Ms. NEWMAN. And we know that. But we create, probably we are the highest creators of jobs. But when it comes to the border, that could be harming the rest of our plans and wanting to live the American dream. Yes or no, do you not think that that is happening right now? Chairwoman VELAZQUEZ. The gentlelady's time has expired. Ms. GUZMAN. I agree that I would want everyone to know that small businesses, the face of the Latino community is entrepreneurship. Chairwoman VELAZQUEZ. The gentleman from New Jersey, Mr. Kim, is recognized for 5 minutes. Mr. ANDY KIM. Thank you, Madam Chair. And thank you, administrator, for taking the time to be able to come before us. As we had a conversation before in pervious hearings about the path and the trajectory of SBA, coming out from this pandemic and talking through what comes next, one thing that I wanted to relay is as I have talked to different businesses that engaged in the Paycheck Protection Program, and honestly, that was their first time engaging with the SBA, engaging with government services when it comes to small businesses, I have asked them, are you going to be able to continue with SBIR? Are there other types of support that you need? Have you been able to learn about some of the other offerings? And many of them said that they still do not know too much about what SBA has to offer about different avenues that they might be able to benefit going forward beyond just the Paycheck Protection Program. So, I guess I wanted to ask you as we are coming out from this pandemic, SBA has been in touch and connected and helped so many more businesses than ever before, has there been a formal process in following up with those businesses that engage in the Paycheck Protection program or EIDL and others in terms of informing and educating and working with them, if there are other needs that they might have that might be serviced by other aspects of what SBA does? Ms. GUZMAN. Yes. And on the eve basically of National Small Business week which starts next week, I want to say that the SBA has tried to leverage this moment to better serve small businesses, that awareness of SBA and its offerings is higher than any other time in history. And I think that we do need to leverage this moment. So, across our resource partners, our Community Navigators, as well, we have charged them with trying to make sure that the small businesses are aware of the capital programs, the technical assistance, and the market access resources that we have at the SBA to support businesses. And I would welcome the opportunity to partner with you on that to ensure that more businesses in your district are aware of SBA resources and it is critical that they build awareness. Of course, we do not have a CMO or huge funding for that type of outreach, but we can leverage our district office, leverage our partners, leverage our lenders to better connect to those small businesses. And we have started to systematically focus on these new businesses that we have served through PPP and COVID- EIDL. Mr. ANDY KIM. So I am glad that that kind of outreach is happening and that, you know, if there is additional funds or resources needed for that, please let me know. I would like to work with you on that. But just more specific, I did want to just follow up. So, there has been formal follow up, like has there been an email or what to businesses that had the Paycheck Protection program about like laying out some of the other aspects? I am just trying to get a sense if there has been something of that nature so I can flag it for these businesses in case they missed it? Ms. GUZMAN. Within the EIDL program, which is our direct program, of course, we have had extensive outreach to our businesses. Our new portfolio on PPP, we work with our lenders on a regular basis to make sure that they are providing all of SBA insights. They are familiar with our programs but PPP was administered through the lending network. And so, our direct contact is not there. So, as we do forgiveness and support those businesses, of course, we have those contacts and will reach out. Mr. ANDY KIM. Okay. That is helpful context in terms of understanding. And like I said, I would like to try to see if there are some creative solutions for this, especially for those paycheck protection plan ones dealing with lenders and maybe getting towards the businesses. But that raises the other aspect of this, is that, you know, I saw recently a really extraordinary statistic about how prior to the pandemic there were about 1,900 different lenders participating in different SBA programs but that during the pandemic, over 5,000 lenders were participating in the Paycheck Protection Program. I guess I wanted to as a similar type of question. When it comes to the lender side, has there been ability to grow the number of lenders participating in more forma SBA programs? Drawing from that pool that was working on the Paycheck Protection program. I am curious if this has been sort of a forced multiplier and whether or not there has been a sizeable increase already in terms of the lenders that are at the disposal of the SBA. Ms. GUZMAN. Our goal across our network is to increase the number of lenders. We have seen a decline in small dollar lending. We want to expand the number of lenders in our network to make sure that we can get more capital to businesses. And so formally, of course, we are expanding to the Community Advantage lenders, so more CDFIs who participated in PPP can participate in SBA's programs. Those new to SBA lenders, we want to try to bring in and provide technical assistance. But more importantly, we need to simplify our capital access programs so that it is easy for a lender to come in and access SBA guarantees. And so that is what we are aiming to do is to replicated the successes of PPP and the simplicity. Mr. STAUBER. Time has expired. Chairwoman VELAZQUEZ. Now we recognize the gentleman from Minnesota, Mr. Stauber, for 5 minutes. Mr. STAUBER. Thank you, Madam Chair. Thank you to Ranking Member Luetkemeyer for holding this hearing. And I know this hearing is about the budget. But I would like to use my time to talk about WOTUS, the Waters of the United States. As everyone well knows, small business owners, farmers and ranchers, were very negatively impacted by the Obama Waters of the United States rule. It expanded federal jurisdiction far beyond what was authorized by Congress and resolved it in the burdensome requirements and widespread certain for Americans across this nation and small businesses. The Trump administration rightly chose to heed the concerns of these small businesses and entities and created the Navigable Waters Protection Rule. Unfortunately, the EPA is back to interpreting the waters rule and actually announce their intention to revise the waters rule and make it even worse. Administrator Guzman, given that you are supposed to be the leading champion for small business, can you give me specific examples of what you have done to speak with small businesses on this topic. And furthermore, can you give me an example, of an incidence where you have heard a comment from a small business owner and actually conveyed that concern to another agency like the EPA in this case as they look to review their role? Ms. GUZMAN. Thank you. We do have our ombudsman office that works regularly with small businesses through regulatory fairness boards across the country. And they have received concerns about this and continue to work with small businesses. So not directly. I have not spoken to any of those businesses directly. Mr. STAUBER. Madam Administrator, so you cannot give me an example? Ms. GUZMAN. I have not spoken directly to a business on this issue but know that my ombudsman office has connected with small businesses. In addition, as you know, the Office of Advocacy tracks our regulations. Mr. STAUBER. Have you reviewed the small business Office of Advocacy's numerous concerns with the EPA's handing of the Waters Rule? Ms. GUZMAN. I am familiar with Office of Advocacy's work and have seen some of their statements and have spoken to our acting advocate, Major Clark. Mr. STAUBER. And are you aware that they have yet to convene an official small business panel in accordance with the Regulatory Flexibility Act? Ms. GUZMAN. I am not aware that he has not yet done that but we connect regularly with the Office of Advocacy. I have a regular meeting and so I will make sure that I can relay your concerns. Mr. STAUBER. And then you will have them hold an official business panel? Ms. GUZMAN. I will talk to them about that. Yes. And follow up with your team as well to find out that timing. Mr. STAUBER. I appreciate that. And then can you explain for the Committee, as Mr. Clark from the Office of Advocacy did for our Subcommittee a few weeks ago, why going through an official SBREFA panel is so important to understanding the significant economic impacts the Waters Rule will have on small businesses and small entities? Ms. GUZMAN. I can follow up with you on that and provide more specifics but I would not be able to comment further on it. Mr. STAUBER. Do you believe that a SBREFA panel is important to recognize the small business concerns? Ms. GUZMAN. I am not familiar. I need to follow up with you on that. And I definitely will. Mr. STAUBER. Okay. Will you commit to working with the EPA to ensure the SBREFA panel is held? Ms. GUZMAN. On this issue specifically, now that you have flagged it for me and I know it is an issue that Advocacy continues to track and it is a significant one for small businesses, I will definitely follow up as well. Mr. STAUBER. Thank you. And then, Madam Chair, I would like to enter into the record the comments of the Office of Advocacy submitted to the EPA regarding the proposed rule revisions to Waters. Chairwoman VELAZQUEZ. Without objection, so ordered. Mr. STAUBER. Thank you very much. I have a little over a minute yet. Congressman Donalds asked you a question and he ran out of time so I will just ask it again. What has the Biden administration taken to help the middle class and small businesses reference the inflation? Ms. GUZMAN. The president has taken action on energy costs, as well as trying to focus on pocketbook issues within this budget. Mr. STAUBER. Tell me what energy costs. Ms. GUZMAN. He has made available the million dollars a day to try to control some of the gas costs which we know are affecting our small businesses. Mr. STAUBER. Right. Ms. GUZMAN. But there is also pocketbook issues, and the budget directly addresses some of those such as child care. Mr. STAUBER. Is strategic petroleum reserve what you are referring to? Ms. GUZMAN. Correct. Mr. STAUBER. One hundred eighty million barrels? Ms. GUZMAN. A million barrels a day, I believe, through June. Mr. STAUBER. One hundred eighty days? Ms. GUZMAN. Correct. The strategic petroleum reserve really should be held for national emergencies, not failed policies. I think you recognize that. So my concern right now is the administration is not acting quick enough with the inflationary costs going up on small businesses. And I think that we need to, we are really looking for your leadership when you are in the meetings with President Biden and his cabinet to really support small businesses. So I look forward to the hearing. Mr. STAUBER. And my time is up, Madam Chair. Thank you. Ms. GUZMAN. Thank you. Chairwoman VELAZQUEZ. I want to thank Administrator Guzman for appearing before the Committee again today, and for all the work you do every day for our nation's small business community. Small firms are the backbone of the economy and the communities they operate in. By empowering the SBA, we empower entrepreneurs to thrive and grow. Without objection, Members have 5 legislative days to submit statements and supporting materials for the record. If there is no further business to come before the Committee, without objection, we are adjourned. [Whereupon, at 12:16 p.m., the committee was adjourned.] A P P E N D I X [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]