[House Hearing, 117 Congress] [From the U.S. Government Publishing Office] MARKUP OF: H.R. 4256, ``INVESTING IN MAIN STREET ACT OF 2021'', H.R. 4481, ``SMALL BUSINESS 7(A) LOAN AGENT TRANSPARENCY ACT'', H.R. 4531, ``7(A) LOAN AGENT OVERSIGHT ACT'', H.R. 3469, ``VETERAN ENTREPRENEURSHIP TRAINING ACT OF 2021'', H.R. 3462, ``SBA CYBER AWARENESS ACT'', H.R. 4515, ``SMALL BUSINESS DEVELOPMENT CENTER CYBER TRAINING ACT OF 2021'', H.R. 4513, ``SMALL BUSINESS ADVANCED CYBERSECURITY ENHANCEMENTS ACT OF 2021'' ======================================================================= HEARING BEFORE THE COMMITTEE ON SMALL BUSINESS UNITED STATES HOUSE OF REPRESENTATIVES ONE HUNDRED SEVENTEENTH CONGRESS FIRST SESSION __________ HEARING HELD JULY 29, 2021 __________ [GRAPHIC NOT AVAILABLE IN TIFF FORMAT] Small Business Committee Document Number 117-029 Available via the GPO Website: www.govinfo.gov __________ U.S. GOVERNMENT PUBLISHING OFFICE 45-660 WASHINGTON : 2021 ----------------------------------------------------------------------------------- HOUSE COMMITTEE ON SMALL BUSINESS 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 JIM HAGEDORN, Minnesota 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 APPENDIX Additional Material for the Record: H.R. 4256.................................................... 20 H.R. 4481.................................................... 22 H.R. 4531.................................................... 26 H.R. 3469.................................................... 29 H.R. 3462.................................................... 38 H.R. 4515.................................................... 43 H.R. 4513.................................................... 47 Mark-up Remarks--Boots to Business submitted by Rep. Brad Schneider.................................................. 57 America's SBDC............................................... 61 MARKUP OF: H.R. 4256, ``INVESTING IN MAIN STREET ACT OF 2021'', H.R. 4481, ``SMALL BUSINESS 7(A) LOAN AGENT TRANSPARENCY ACT'', H.R. 4531, ``7(A) LOAN AGENT OVERSIGHT ACT'', H.R. 3469, ``VETERAN ENTREPRENEURSHIP TRAINING ACT OF 2021'', H.R. 3462, ``SBA CYBER AWARENESS ACT'', H.R. 4515, ``SMALL BUSINESS DEVELOPMENT CENTER CYBER TRAINING ACT OF 2021'', H.R. 4513, ``SMALL BUSINESS ADVANCED CYBERSECURITY ENHANCEMENTS ACT OF 2021'' ---------- THURSDAY, JULY 29, 2021 House of Representatives, Committee on Small Business, Washington, DC. The committee met, pursuant to call, at 10:01 a.m., in Room 2360 Rayburn House Office Building and via Zoom, Hon. Nydia Velazquez [chairwoman of the Committee] presiding. Present: Representatives Velazquez, Golden, Crow, Davids, Mfume, Phillips, Newman, Carter, Bourdeaux, Chu, Evans, Delgado, Houlahan, Andy Kim, Craig, Luetkemeyer, Williams, Stauber, Meuser, Tenney, Garbarino, Young Kim, Van Duyne, Donalds, and Fitzgerald. Chairwoman VELAZQUEZ. Good morning. With a quorum being present, I call this morning's meeting of the Committee on Small Business to order. Without objection, the Chair is authorized to declare recess at any time. I would like to begin by noting some important requirements. In accordance with the Attending Physician's most recent guidance, all Members and staff who attend this hybrid markup in person will be required to wear masks in the hearing room. Furthermore, all Members and staff who have not been fully vaccinated must also maintain 6-foot social distancing from others. With that said, Members will be allowed to briefly remove their masks if they have been recognized to speak. As required by House rule, copies of the measures have been made available to Members and the public at least 24 hours in advance. Today, we will be considering seven bipartisan bills that will make it easier for small business owners across America to launch and grow their small businesses. As we know, access to capital remains one of the biggest challenges facing small businesses today, and we will take up three bills to improve SBA programs to meet the capital needs for small firms. Besides access to capital, cybersecurity is increasingly becoming a threat to entrepreneurial success. To that end, we will consider three bills to address the increasing and evolving cyber attacks aimed at small businesses. Finally, we will also take up a bill to assist aspiring veteran entrepreneurs who have made many sacrifices for our country. Before we get down to business, I would like to thank the Ranking Member, Mr. Leutkemeyer, for his collaboration on these seven bills, as well as the staff of the Small Business Committee from both sides. I look forward to working on many more. Our small businesses depend on our bipartisanship and cooperation now more than ever. The seven bills that we are considering today are a product of the hearings and hard bipartisan work of our Members. I strongly support each of the seven bills to be marked up today. I would like to recognize the distinguished Ranking Member, Mr. Leutkemeyer, for his opening statement. Mr. LEUTKEMEYER. Thank you, Madam Chair, for holding this markup. We believe that this legislation that we are talking about today will help strengthen our nation's job creators and the Small Business Administration's programs. The SBA, along with many other Federal agencies, raced to assist the nation as COVID-19 descended upon America. Through the quick action taken by the Trump administration and Congress, numerous small business relief programs were created to help our nation's smallest firms survive the pandemic as well as the state and local shutdown orders that followed. Many of these programs included the Paycheck Protection Program, PPP, which proved to be a lifeline during many months of uncertainty. The PPP program also proved to be a major success through its partnership with private sector lenders to get money to a struggling small business more quickly and efficiently. With that being said, while our country continues to move forward toward recovery, many of SBA's COVID programs are nearing completion. For example, nearly 11 million loans disbursed under PPP are now going through the PPP loan forgiveness process. Although the PPP has been and continues to be successful through private sector lending, other programs have been hampered with countless instances of fraud, bureaucratic delays, and constitutional questions. According to the SBA's Inspector General, the Economic Injury Disaster Loan, EIDL program, which is a direct lending program through SBA, not private lenders, has been subject to rampant levels of fraud and abuse. Additionally, the Shuttered Venue Operators Grant, SVOG program, has been plagued with inexcusable delays while the Restaurant Revitalization Fund Program, RRF, has been ruled unconstitutional due to biased priority groups the Democrats created in the enacting legislation. Nevertheless, our nation's small businesses, entrepreneurs, and startups continue to face extreme obstacles throughout the recovery due to the Democrat-induced inflation, the looming labor crisis, and the potential for increased taxes for the middle class. These headwinds are putting main street, USA's recovery in jeopardy. We must fix these issues to protect the American worker. On that note, I look forward to working with all of my colleagues today and going forward to discuss pro-growth policies that will produce an environment where small businesses can operate independently without the government standing in their way. While we have these debates it is critical that we also ensure the SBA's traditional programs are operating efficiently and effectively, and that is what bring us to today's markup. In a bipartisan fashion, Members on both sides of the aisle have considered and have identified areas where this Committee can adjust existing SBA programs to better position small businesses. Many of these bills were in the works in previous sessions of Congress, but some take a new approach to provide increased oversight of the SBA's programs. With the SBA's lending programs, the Small Business Investment Company, SBIC, continues to provide small businesses across the United States with access to capital. Today's SBIC legislation will provide even more access to capital by examining the role of banks and other savings institutions within the program. Beyond the SBIC program we have two bills that examine the role of loan agents within the SBA's 7(a) Loan Program. The 7(a) Loan Program, the SBA's largest traditional lending tool which provides access to capital for small businesses that cannot find it elsewhere, as the SBA continues to use more loan agents within their programs, it is essential that the agency has a clear view of how these agents operate. According to an October 2020 report, the SBA's Inspector General stated, ``Previous OIG audits and investigations have shown SBA could not effectively identify and track loan agent involvement in its 7(a) and 504 Loan programs or portfolios and have outdated enforcement regulations. OIG investigations have also revealed a pattern of fraud by loan packagers and other fee-based agents in the 7(a) Loan Program involving hundreds of millions of dollars.'' The bills before by the gentleman from Pennsylvania, Mr. Meuser, and the gentleman from Minnesota, Mr. Phillips, will focus on loan agents and examine the SBA's oversight capabilities. The discussion of loan agents will not end today. I look forward to exploring their role within this program and other SBA programs moving forward. When it comes to our veterans, the Boots to Business Program is an important resource available to the men and women who have valiantly served our country. I commend the gentleman from Texas, Mr. Williams, and the gentleman from Illinois, Mr. Schneider, for continuing the Boots to Business effort during the 117th Congress. Lastly, the Committee will examine three separate cybersecurity bills that will address the needs of small businesses as well as ensuring that SBA has a safe and sound cyber infrastructure network. As we all heard at our cyber hearing last week, America's smallest firms are increasingly vulnerable to the exploits of cybercriminals. Often a cyber attack on a small business results in a permanent operational damage to its ecosystem. We must have the structure in place to assist these small businesses through difficult times and educate small business owners on the tools available to protect them from these cyber attacks. Again, I would like to thank the Chair for bringing these bills to the Committee. I support the approach taken by the Committee Members to address these issues. With that, Madam Chair, I yield back. Chairwoman VELAZQUEZ. Thank you very much. The gentleman yields back. Before we get into the individual bills, are there any Members present who seek recognition for the purpose of making an opening statement? Seeing none, we will move to consideration of H.R. 4256, the ``Investing in Main Street Act of 2021,'' introduced by Congresswoman Chu and cosponsored by Congressman Garbarino. This bill will harmonize the Small Business Investment Act of 1958 with the Office of the Comptroller of the Currency's national bank charter percentage requirements. I would now like to recognize the gentlewoman from California, Ms. Chu, the sponsor of the bill, for an opening statement. Ms. CHU. Thank you, Chairwoman Velazquez and Ranking Member Luetkemeyer for your support of this legislation. Also, thank you to my colleague, Representative Garbarino, for your partnership. The Investing in Main Street Act would make a simple commonsense change to small business investing laws to ensure that SBA-certified small business investment centers, or SBICs, can take full advantage of capital available from traditional banks and federal saving associations. Even though banking rules allow financial institutions to invest up to 15 percent of their capital and surplus in SBICs, small business investing rules prevent that. The Small Business Investment Act caps these investments far lower at just 5 percent of capital and surplus. The Investing in Main Street Act amends this outdated law to ensure that banks can invest the full 15 percent in SBICs, a simple change that will dramatically increase the amount of investment capital available to our country's small businesses. By raising this cap, this legislation will deliver more investments and more financing to our small businesses for whom even small investments can mean so much. Already SBICs have helped companies like Tesla, Apple, and Intel get off the ground back when they were considered small businesses. They fill a gap in the investment ecosystem and level the playing field by providing equity investments and financing opportunities to the smallest businesses which face the highest barriers to secure investments from traditional private investors. In fact, in fiscal year 2020, SBICs made nearly a quarter of their financing to underserved businesses and the nearly 300 certified SBICs in operation today have invested or committed $32 billion in small businesses nationwide. Last year, in my state of California alone, SBICs made nearly 300 financings totaling over $670 million. By raising the investment cap from 5 percent to 15 percent, we could potentially triple those numbers in the years to come. That growth will be so important as our country faces a long economic recovery ahead of us, especially as the Delta variant threatens to erase some of the hard-earned gains we made this spring and summer. America's small businesses have endured one of the most challenging periods in our country's history and now is the time to help them rebuild and grow. The Investing in Main Street Act would do just that. I urge the Committee to vote yes on this critical legislation, and I yield bank. Chairwoman VELAZQUEZ. Thank you. The gentlewoman yields back. I would now like to recognize the gentleman from New York, Mr. Garbarino, for an opening statement. Mr. GARBARINO. Thank you, Madam Chair, and thank you Ranking Member for holding today's markup on all the bills before us. I would also like to thank Representative Judy Chu from California for joining forces with me to better support the SBA's Small Business Investment Company program. The SBIC program is a unique tool that provides private equity capital to small businesses in a prudent way. In fiscal year 2020, the program helped finance over 1,000 small businesses and supported over 91,000 jobs, all while running on zero cost subsidy to the American taxpayer. However, as this program advances, its rules regarding the role of banks and savings associations are becoming increasingly outdated. H.R. 4256, the ``Investing in Main Street Act of 2021,'' will update these rules by addressing how much money a bank or other savings institutions can invest in an SBIC from 5 percent to 15 percent. Importantly, with any investment above 5 percent a bank or savings institution would need the approval from its federal financial regulator in order to proceed. The changes within H.R. 4256 would also level the SBIC rules with longstanding requirements at the Office of the Comptroller of the Currency. The SBIC program has the ability to play an important role in the long-term outlook for small businesses, but Congress must modernize its rules to keep pace. H.R. 4256 delivers modernization and provides further access to capital for small businesses in my district in New York and beyond. I look forward to continuing with my counterparts to ensure this bill makes progress and is sent to the House floor swiftly. Madam Chair, I yield back the balance of my time. Chairwoman VELAZQUEZ. The gentleman yields back. Are there any other Members who wish to be recognized for a statement on H.R. 4256? I would now like to recognize the Ranking Member. Mr. LEUTKEMEYER. Thank you, Madam Chair. I would like to thank the gentlelady from California, Ms. Chu, and the gentleman from New York, Mr. Garbarino, for working on this legislation in the 117th Congress. The changes reflected in H.R. 4256 will address and update how banks and savings institutions operate within the SBIC program. As we continue to examine the post COVID-19 small business environment it will be critically important to ensure the existing SBA program are ready for recovery. H.R. 4256 is a step in the right direction. The Investing in Main Street Act passed the House in the last two Congresses and I look forward to working with the Chair to ensure it passes again and moves forward all the way to the Senate. I urge my colleagues to support H.R. 4256. With that, Madam Chair, I yield back the balance of my time. Chairwoman VELAZQUEZ. Thank you. The gentleman yields back. I would now like to recognize myself briefly. Improving access to capital has been a top priority of mine and it is important that SBA programs and rules governing them are consistent, especially if multiple agencies have issued similar guidance. This bill improves SBA access to capital programs by harmonizing the statutory provisions of the Small Business Investment Act with similar regulations published by the OCC. Thank you, Ms. Chu and Mr. Garbarino, for reintroducing this bill. I am pleased to support it and I urge a yes vote. If there is no further discussion, the Committee will move on to consideration of H.R. 4256. The clerk will report the bill. H.R. 4256 The CLERK. H.R. 4256, ``Investing in Main Street Act of 2021''---- Chairwoman VELAZQUEZ. Without objection, H.R. 4256 is considered as read and open for amendment at any time. Does anyone seek recognition to offer an amendment? Seeing none, the question is now on H.R. 4256. All in favor, say aye. All those opposed, say no. In the opinion of the Chair, the ayes have it and H.R. 4256 is agreed to. The question now occurs on reporting H.R. 4256 favorably to the House. All those in favor, say aye. All those opposed, say no. In the opinion of the Chair, the ayes have it and H.R. 4256 is reported to the House. Without objection, Committee staff is authorized to correct punctuation and make other necessary technical corrections and conforming changes. Without objection, Members have 2 business days to file additional supplemental, dissenting, and minority views. H.R. 4481 Our second bill today is H.R. 4481, the ``Small Business 7(a) Loan Agent Transparency Act,'' introduced by Congressman Phillips and cosponsored by Congressman Meuser. This bill will establish a registration system for 7(a) agents by assigning them a unique identifier. It allows SBA to collect data to help track and evaluate the performance of loans generated through loan agent activity. I would now like to recognize the gentleman from Minnesota, Mr. Phillips, the sponsor of the bill, for an opening statement. Mr. PHILLIPS. Thank you, Chairwoman Velazquez, and greetings to my colleagues. Let me just begin quickly. I know it is in vogue to criticize one party, Democrats, for inflation right now. I want to remind everybody that after an economy is shut down because of a pandemic we should expect inflation. I think as Members of the Small Business Committee having a markup today, we should be celebrating the fact that our GDP in the United States of America now exceeds pre-pandemic levels. Let us do a little celebrating in a Committee that surely should on a day like this. I want to speak to H.R. 4481 and urge support of the bill, the ``Small Business 7(a) Loan Agent Transparency Act.'' The Small Business Administration 7(a) Loan Guarantee Program is the agency's flagship loan program. In fiscal year 2020, the SBA approved over 42,000 7(a) loans, totaling nearly $22.6 billion. The SBA also administered several subprograms within 7(a) that offers streamlined and expedited loan procedures for particular groups of borrowers, including the SBA Express and Community Advantage Pilot Programs. It was on this framework that Congress first established the Paycheck Protection Program, which has been responsible for extending more than $790 billion in relief to small businesses throughout the United States in the wake of the coronavirus pandemic. Together these programs work to fulfill the SBA's mission of aiding and protecting the interests of small businesses, particularly those that might not otherwise obtain financing under reasonable terms and conditions. The capital provided by the 7(a) program supports small businesses seeking to purchase real estate, equipment, and supplies to provide short- and long-term working capital or to refinance current business debt. Its importance cannot be overstated. In February of 2020, this Committee held a hearing to examine the management of SBA's Office of Credit Risk Management, which is responsible for the oversight of SBA lenders and its 7(a) loan portfolio. During the hearing OCRM's director testified that SBA lacks a way to uniquely identify and systemically track loan agent activity. Instead, they must rely on self-reported lender reviews to obtain information about 7(a) agents. Without these unique identifiers there is very little data that is collected about those responsible for the processing billions and billions in taxpayer funds and working with small businesses across the country. This can potentially place small businesses at risk and is an opportunity for the adoption of a bipartisan commonsense solution to help protect the hard-earned resources of Americans. The ``Small Business 7(a) Loan Agent Transparency Act'' would require OCRM to establish a registration system for 7(a) agents that collects data to help OCRM track and evaluate performance of loans generated through agent activity. OCRM will need to establish a database with the type of services performed by 7(a) agents and require the registration before an agent provides services to a lender or borrower. These provisions will improve enforcement and oversight actions and will address the increased risk introduced by loan agents, which has been cited as one of the top management and performance challenges facing SBA. While on this topic of strengthening oversight for the 7(a) program, I would also like to briefly speak in support of the bill from my friend, the gentleman from Pennsylvania, Mr. Meuser, his ``7(a) Loan Agent Oversight Act.'' That bill is a companion to my own and would require OCRM to submit a report to Congress on the performance of loans that are generated through agent activity and any risks involved in that work. I applause and celebrate Mr. Meuser's leadership on this legislation and look forward to voting in favor of it this morning as well. I want to thank the Chairwoman, the Ranking Member, and the Small Business Committee majority and minority staffs for working so diligently with us on this legislation. I also want to thank my friend and colleague Mr. Meuser for his support and coauthorship of the bill. Finally, to extent my gratitude to our cosponsors, Reps. Donalds, Garbarino, Tenney, Salazar, and Oversight Ranking Member Van Duyne. I urge the Committee to adopt this measure and its companion H.R. 4531, and report them favorably to the House. With that, Madam Chair, I yield back. Chairwoman VELAZQUEZ. Thank you. The gentleman yields back. I would now like to recognize the cosponsor of the bill, Congressman Meuser, for an opening statement. Mr. MEUSER. Well, thank you very much, Madam Chair, for holding this markup to evaluate a number of these very important bills that are very crucial, we feel, to the small business ecosystem. As we examine access for capital for small businesses it is imperative that we also look at the SBA's existing 7(a) Loan Program, as we are. I want to thank my friend, the gentleman from Minnesota, for his leadership as well and for working with me on the role agents will pay within this program. Thank you, Mr. Phillips. I do look forward to working in a bipartisan manner to ensure the SBA has the correct level of oversight in place for the growing population of agents within its flagship 7(a) Loan Program, as we all understand how important this is. So, I thank you, Madam Chair, and I yield back. Chairwoman VELAZQUEZ. The gentleman yields back. Are there any other Members who wish to be recognized for a statement on H.R. 4481? I now recognize the Ranking Member for an opening statement. Mr. LEUTKEMEYER. Thank you, Madam Chair. The utilization and role of loan agents within the SBA's government-guaranteed lending programs is critically important. This bill and H.R. 4531 will spark an important conversation on whether SBA has its eyes on who is participating in these programs. I have been told of many problems with loan agents and we are going to have to take a hard look at the role and activities of loan agents. Proper administration oversight of these programs will remain a high priority of mine as this Congress moves forward. I want to thank both gentlemen for working on these bills and proposing solutions. I urge my colleagues to support the bill in front of us today. I yield back. Chairwoman VELAZQUEZ. The gentleman yields back. Thank you. I would now like to recognize myself briefly. Our Committee has consistently heard from the agency's watchdog about the increased risk associated with loans originated through agent activity. In October 2020, SBA's IG identified increased risk introduced by loan agents as one of the top management and performance challenges facing the agency in this fiscal year. This bill sets up a registry for loan agents at SBA to help the agency monitor loan performance for loans that originated with agents. I want to really thank Mr. Phillips for introducing this bill and I am pleased to support it. I urge a yes vote. If there is no further discussion, the Committee will move on to consideration of H.R. 4481. The clerk will report the bill. The CLERK. ``H.R. 4481, the Small Business 7(a) Loan Agent Transparency Act.'' Chairwoman VELAZQUEZ. Without objection, H.R. 4481 is considered as read and open for an amendment at any point. Does anyone seek recognition to offer an amendment? Seeing none, the question is now on H.R. 4481. All in favor, say aye. All those opposed, say no. In the opinion of the Chair, the ayes have it and H.R. 4481 is agreed to. The question now occurs on reporting H.R. 4481 favorably to the House. All those in favor, say aye. All those opposed, say no. In the opinion of the Chair, the ayes have it and H.R. 4481 is reported to the House. Without objection, Committee staff is authorized to correct punctuation and make other necessary technical corrections and conforming changes. Without objection, Members have 2 business days to file additional supplemental, dissenting, and minority views. H.R. 4531 The next bill under consideration is H.R. 4531, the ``7(a) Loan Agent Oversight Act,'' introduced by Congressman Meuser and cosponsored by Congressman Phillips. This bill will require an annual report by SBA on the performance of and risks associated with loans generated through loan agent activity. I would now like to recognize the gentleman from Pennsylvania, Mr. Meuser, the sponsor of the bill, for an opening statement. Mr. MEUSER. Thank you very much, Madam Chair. As I mentioned earlier, it is imperative that the SBA has the oversight capabilities in place to manage its access to capital programs. With that in mind, Congress must be in a position to determine if congressional intent is being followed. Without accurate information we cannot perform that oversight that is so needed to safeguard and protect American taxpayer dollars. While Mr. Phillips' bill, H.R. 4481, takes the steps to ensure the SBA can track the role of agents within the SBA's largest traditional lending program, my bill, H.R. 4531, the ``7(a) Loan Agent Oversight Act,'' will ensure Congress receives the data it needs to conduct proper oversight. H.R. 4531 would provide information on how many loans have been processed with the assistance of loan agents and the default rates of loans that are associated with loan agents. Additionally, the legislation requires the SBA to perform a risk analysis on agents who operate within the program. At the end of the day, these are government programs that were developed to assist main street, USA for access to capital. Given this important mission, Congress and the SBA must conduct the appropriate level of oversight. The information that will be provided to Congress under H.R. 4531 will be paramount as we measure the effectiveness of these programs and whether the SBA has the correct oversight requirements in place to administer such a significant program. As more small businesses utilize the SBA's programs, it is increasingly important for Congress to understand how different groups assist small businesses and lenders through the lending process. Madam Chair, thank you for bringing these bills forward and I look forward to working with my colleagues to further enhance the small business environment in Pennsylvania and across the nation. I yield back. Chairwoman VELAZQUEZ. Thank you. The gentleman yields back. Are there any other Members who wishes to be recognized for a statement on H.R. 4531? I will now recognize the Ranking Member. Mr. LEUTKEMEYER. Thank you, Madam Chair. SBA's Inspector General has spoken clearly on loan agents within the SBA programs. The bills before us today heed the warnings of the Inspector General, who lists loan agents as a top management and performance challenge for the agency. With documented fraud totaling hundreds of millions of dollars, H.R. 4531 will shed light on what is truly happening within this program and provide Members of Congress the information they need to continue to safeguard these programs. I look forward to examining the role of loan agents within the traditional programs of SBA and the COVID relief programs that were created and activated during the pandemic. I commend Ranking Member Meuser of the Subcommittee on Economic Growth, Tax, and Capital Access for crafting this legislation with Chairman Phillips of the Oversight, Investigations, and Regulations Subcommittee. Madam Chair, with that, I urge my colleagues to support H.R. 4531, and I yield back. Chairwoman VELAZQUEZ. Thank you. The gentleman yields back. Now I would like to recognize myself briefly. To complement the loan agent registration established under Mr. Phillips' bill it is important for the agency to also report back to Congress and the public on the performance of this loan. This bill requires such a report on an annual basis. I want to thank Mr. Meuser for introducing this bill and I am pleased to support it. I urge a yes vote. If there is no further discussion, the Committee will move on to consideration of H.R. 4531. The clerk will report the bill. The CLERK. H.R. 4531, the 7(a) Loan Agent Oversight---- Chairwoman VELAZQUEZ. Without objection, H.R. 4531 is considered as read and open for amendment at any time. Does anyone seek recognition to offer an amendment? Seeing none, the question is now on H.R. 4531. All in favor, say aye. All those opposed, say no. In the opinion of the Chair, the ayes have it and H.R. 4531 is agreed to. The question now occurs on reporting H.R. 4531 favorably to the House. All those in favor, say aye. All those opposed, say no. In the opinion of the Chair, the ayes have it and H.R. 4531 is reported to the House. Without objection, Committee staff is authorized to correct punctuation and make other necessary technical corrections and conforming changes. Without objection, Members have 2 business days to file additional supplemental, dissenting, and minority views. H.R. 3469 We will now move on to H.R. 3469 introduced by Congressman Schneider and cosponsored by Congressman Williams. H.R. 3469 makes improvements to SBA's Boots to Business program as well as offering certainty to transitioning veterans by authorizing the program for 5 years. I would now like to recognize the gentleman from Texas, Mr. Williams, for an opening statement. Mr. WILLIAMS. Thank you, Madam Chair. I represent Fort Hood, one of the largest military bases in the world, and it is a great honor to fight on behalf of these brave individuals every day in Washington. Our veterans and servicemembers play a vital role in our entrepreneurship economy. These honorable men and women who served their country deserve to be equipped with the training and expertise to make a successful career transition from the military. Many of them already have the leadership. They have got problem-solving, their communications skills are the best, and we have in the armed forces skills that translate well into entrepreneurial and business success. The Boots to Business entrepreneurial education and training program administered by the SBA's Veterans Business Outreach Centers is a valuable resource for transitioning servicemembers looking to start their own businesses. This program is about more than just getting a job. It is about getting a career and that is what is important, and ensuring our veterans can successfully transition from the battlefield to the business world. That is why I am proud to co-lead with Congressman Schneider the ``Veterans Entrepreneurship Training Act of 2021,'' which codifies the Boots to Business program for 5 years. It will provide our veterans and military families with a curriculum to lead them through key steps for creating business concepts and give them the foundational knowledge to bring their plan into fruition. Additionally, this legislation facilitates the sharing of materials with Departments of Defense and Veterans Affairs to include on their websites, manuals, and local facilities and further expand the impact of this program. This legislation passed the House with almost unanimous support last Congress and I urge my colleagues to support our veteran entrepreneurs again this Congress with H.R. 3469. With that, Madam Chair, I yield my time back. Chairwoman VELAZQUEZ. Thank you. The gentleman yields back. I would like to enter into the record Mr. Schneider's statement. Without objection, his statement is entered for the record. I would like to recognize the Ranking Member. Mr. LEUTKEMEYER. Thank you, Madam Chair. It is an honor to support legislation that empowers our veterans in their quest for entrepreneurship. Last year, the Boots to Business program supported over 20,000 veterans, servicemembers, and military spouses worldwide through the Introduction to Entrepreneurship course. Our servicemembers are our nation's best and brightest, and this bipartisan legislation will codify the Boots to Business program for 5 years to further assist transitioning servicemembers in launching and growing their own small businesses. With that, Madam Chair, I urge my colleagues support and I yield back. Chairwoman VELAZQUEZ. Thank you. The gentleman yields back. I now would like to recognize myself briefly. Starting a business after leaving military service provides an opportunity for veterans to not only build a new career, but to secure their livelihoods. Authorizing the Boots to Business program for the next 5 years will provide more than 18,000 new servicemembers each year with the counseling, training, and technical assistance necessary to launch and grow their small businesses. The skills they develop in the military--leadership, perseverance, resourcefulness, and discipline--make them ideal business owners. They are dedicated to their local communities and play a critical role in boosting economic growth. I want to thank Representative Schneider and Representative Williams for their bipartisan work on this bill. I urge a yes vote for those military servicemembers who have served this country honorably. If there is no further discussion, the Committee will move on to consideration of H.R. 3469. The clerk will report the bill. The CLERK. H.R. 3469---- Chairwoman VELAZQUEZ. Without objection, H.R. 3469 is considered as read and open for amendment at any time. Does anyone seek recognition to offer an amendment? Seeing none, the question is now on H.R. 3469. All in favor, say aye. All those opposed, say no. In the opinion of the Chair, the ayes have it and H.R. 3469 is agreed to. The question now occurs on reporting H.R. 3469 favorably to the House. All those in favor, say aye. All those opposed, say no. In the opinion of the Chair, the ayes have it and H.R. 3469 is reported to the House. Without objection, Committee staff is authorized to correct punctuation and make other necessary technical corrections and conforming changes. Without objection, Members have 2 business days to file additional supplemental, dissenting, and minority views. H.R. 3462 We will now consider H.R. 3462, the ``SBA Cyber Awareness Act,'' introduced by Congressman Crow and cosponsored by Congresswoman Young Kim. This bill directs the SBA to issue reports on its cybersecurity infrastructure and in the event of cyber threats, breaches, and cyber attacks at the agency. I would now like to recognize Congressman Crow from Colorado, the sponsor of the bill, for an opening statement. Mr. CROW. Madam Chairwoman, thank you for the opportunity to speak in support of H.R. 3462, the ``SBA Cyber Awareness Act.'' Our small businesses are the backbone of our economy, but are increasingly the target of cyber attacks and theft of data and intellectual property. Unfortunately, federal agencies are not immune to such attacks either. According to the SBA's Office of the Inspector General, IT security is one of the most serious management and performance challenges facing the agency in more than 20 years. Over the course of the COVID-19 pandemic, unprecedented demand for relief programs, like PPP and EIDL, have overwhelmed SBA's legacy systems. As a result, the glitch in the EIDL application system led to an exposure of personal information of over 8,000 applicants with no public announcement of the data breach until weeks later. The SBA Cyber Awareness Act would direct the SBA to issue an annual report assessing its cybersecurity infrastructure. The bill also requires the SBA to report cyber threats, breaches, and cyber attacks to the committees of jurisdiction and notify affected individuals within 30 days of an incident. Cyber attacks are one of the biggest threats to our economy and small businesses. This bill would ensure that we are doing everything we can to protect the millions of small businesses the SBA serves and prepare them for 21st century threats. I urge my colleagues to support the ``SBA Cyber Awareness Act'' and I thank the Chairwoman for the opportunity to speak on its behalf, and I yield back. Chairwoman VELAZQUEZ. Thank you. The gentleman yields back. Now I would like to recognize the gentlelady from California, Ms. Kim, for an opening statement. She is the cosponsor of the bill. Ms. YOUNG KIM. Thank you, Madam Chair. I would like to be recognized to talk in support of the bill, H.R. 3462. I want to thank the Chairwoman and Ranking Member for holding this important markup. I appreciate our Committee's focus on cybersecurity with the hearing last Tuesday as well as today with several cybersecurity bills before us. One of the discussion points raised in last Tuesday's cybersecurity hearing was the concern small businesses have with the government's own cybersecurity measures. Many of us sitting in this room have been the victims of a cyber attack on a government agency, like the OPM data breach in 2015. We know how critical it is for the government to protect its networks and safeguard our own personal information that we disclose to the government. This is important data, like our birthdays and Social Security numbers. Fifty percent of small businesses with 500 or less employees say that it is likely that they will experience a cyber attack in the next 12 months. One in four are experiencing more cyber attacks compared to a year ago. That is why I am voicing my support for H.R. 3462, the ``SBA Cyber Awareness Act.'' I want to thank my colleague and my friend, Mr. Crow, for working with me on this important legislation. The ``SBA Cyber Awareness Act'' promotes transparency within the SBA, so that Congress and affected individuals with data housed in SBA systems are timely notified in the event of a cyber incident. When the SBA discovered a flaw in its EIDL application system, leading to the exposure of personal information for up to 8,000 individuals, the agency failed to make any public announcement of the breach. It was not until weeks later that the SBA notified affected individuals or even Members of Congress. This was simply unacceptable and I believe the urgent necessity of this legislation is very clear. In addition to timely notification, the bipartisan bill requires an annual cybersecurity report from the SBA, detailing any cyber incidents and remediation efforts undertaken as well as an assessment of the SBA's information technology and cybersecurity infrastructure. Such measures can only enhance the cybersecurity measures in place at the SBA and may even eleviate some of the concerns small business owners and entrepreneurs might have in engaging with the agency. With that, I urge my colleagues to support this legislation, and I yield back. Chairwoman VELAZQUEZ. Thank you. The gentlelady yields back. Are there any other Members who wish to be recognized for a statement on H.R. 3462? I would now like to recognize the Ranking Member. Mr. LEUTKEMEYER. Thank you, Madam Chair. The government arguably has the greatest responsibility of any entity in this country to protect its data and implement robust cybersecurity protections. The SBA is a part of that. Small business owners depend on the SBA to keep the personal information that they have disclosed safe and secure. This legislation contains the necessary accountability and transparency measures small businesses need when interacting with the federal government. I support the bipartisan bill and urge my colleagues to do the same. With that, Madam Chair, I yield back. Chairwoman VELAZQUEZ. The gentleman yields back. I would now like to recognize myself briefly. For more than 20 years, the SBA's Office of Inspector General has listed IT security as one of the most serious management and performance challenges facing the agency. The demand for the Paycheck Protection Program and the Economic Injury Disaster Loan programs inundated SBA's legacy system, leading to backend system crashes, portals operating slowly, and a glitch that led to a data breach of applicants' personal information. SBA failed to make any public announcement about the data breach. It took weeks for the agency to send paper notifications to affected individuals. We trust that SBA has taken the necessary steps to recover, but we want a notification system in place before the next cybersecurity incident. This bill sets new reporting requirements to ensure congressional and public awareness. I want to thank Mr. Crow and Mrs. Young Kim for this vital legislation. I urge a yes vote. If there is no further discussion, the Committee will move on to consider H.R. 3462. The clerk will report the bill. The CLERK. H.R. 3462---- Chairwoman VELAZQUEZ. Without objection, H.R. 3462 is considered as read and open for amendment at any point. Does anyone seek recognition to offer an amendment? Seeing none, the question is now on H.R. 3462. All in favor, say aye. All those opposed, say no. In the opinion of the Chair, the ayes have it and H.R. 3462 is agreed to. The question now occurs on reporting H.R. 3462 favorably to the House. All those in favor, say aye. All those opposed, say no. In the opinion of the Chair, the ayes have it and H.R. 3462 is reported to the House. Without objection, Committee staff is authorized to correct punctuation and make other necessary technical corrections and conforming changes. Without objection, Members have 2 business days to file additional supplemental, dissenting, and minority views. H.R. 4515 We will now consider H.R. 4515, the ``Small Business Development Center Cyber Training Act of 2021,'' introduced by Congressman Garbarino and cosponsored by Mr. Evans, Ms. Houlahan, and Mr. Chabot. This bill helps Small Business Development Centers become better equipped to assist small entities with their cybersecurity needs. I would now like to recognize the gentleman from New York, Mr. Garbarino, the sponsor of the bill, for an opening statement. Mr. GARBARINO. Thank you, Chairwoman. The use of information technology in this modern age is inescapable. We rely on it to do everything from the mundane to the miraculous. This can, however, be a double-edged sword. As indispensable as it is to our everyday lives, it also exposes us to a host of new vulnerabilities. Just a few short weeks ago, a series of widely reported ransomware attacks caused significant disruption and damage to thousands of individuals and businesses, including small businesses. Cyber criminals are, unfortunately, targeting small businesses precisely because of their lack of knowledge and awareness of proper cyber hygiene as a result of weak and nonexistent cybersecurity measures. The outcome of a cyber attack can be catastrophic for small business owners, leaving many unable to recover from the loss of their intellectual property and resources. This is why this legislation introduced by myself, Congressman Evan, Congresswoman Houlahan, and former Ranking Member Chabot is so critical. Congressman Phillips and Congresswoman Tenney are also cosponsors and they are on this Committee and I want to thank them. H.R. 4515, the ``Small Business Development Center Cyber Training Act of 2021,'' utilizes the far reach and resources of the SBDCs across the country to assist small businesses with planning and implementing cybersecurity measures to defend against cyber attacks. This bipartisan bill establishes a cyber counseling certification program for SBDC staff to ensure that they are properly educated and trained on the latest cyber threat developments, so that the information may be shared with small businesses seeking assistance from the SBDCs. The cyber assistance offered by trained SBDC staff would be provided at no or low cost to small businesses. By leveraging the expertise of SBDCs and their partner agencies, small businesses can take a more proactive and defensive approach to cybersecurity. Understanding that this will require resources, the legislation authorizes the SBA to reimburse SBDCs for employee certification costs up to $350,000 per fiscal year. The bill also utilizes existing federal resources to cover the reimbursement costs. Small businesses are in dire need of assistance to combat rapidly evolving cyber threats and this commonsense, bipartisan legislation will help them get there. I urge my colleagues to support this measure, and I yield back. Chairwoman VELAZQUEZ. Thank you. The gentleman yields back. I would now like to recognize the gentleman from Pennsylvania, Mr. Evans. Mr. EVANS. Thank you, Madam Chair and Ranking Member. And thank you, Madam Chair, for your leadership of this Committee. Thank you for what you have done and I thank my co-leaders in terms of this particular issue. As you know, I consider small businesses to be the foundation of our community. They are the engines that drive innovation, inventiveness, investments, and economic development. They are the pillars that prop up our community. Yet, as technology makes things easier, it is also open to vulnerabilities. The same tools that are making our lives better are also making our personal information easier to access for both good and bad actors. The FBI 2020 Cyber Crime Report showed that attacks on business email accounts cost $1 trillion and this doesn't represent the future picture. As many businesses do not report these cyber attacks, around 60 percent of firms go out of business within 6 months after a data breach. However, good cybersecurity does not come cheap. It can cost tens of thousands of dollars to establish a good defense against cyber attacks. Because of the evolving world of cyber threats, cybersecurity is an ongoing cost. As a result, it is critical we help our small businesses that are the backbone of our nation's economy and ensure that they are given the training they need to defend themselves from cyber attacks. I thank you, Madam Chair and Ranking Member, for your leadership on this, and I yield back. Back to you. Chairwoman VELAZQUEZ. The gentleman yields back. Now I recognize the gentlelady from Pennsylvania, Ms. Houlahan, cosponsor of the bill. Ms. HOULAHAN. Thank you, Madam Chair. I want to make the following really clear to everyone on this Committee and the American people if it hasn't been already clear, if we aren't protecting our small businesses, then we are not protecting our economy. The rise in cyber attacks against our economic infrastructure should be the cause for very serious alarm. We need to be doing everything our power to not only shore up our defenses, but also to equip our small businesses and business owners with the tools that they need to be able to defend their businesses. I am really proud to partner with Representative Chabot, Evans, and Garbarino on this effort to support the passage of the Small Business Development Center, or SBDC, Cyber Training Act of 2021. We have to ensure that SBDCs are equipped to help our nation's small businesses and that they have the resources and the guidance that they need to respond to cyber threats. I urge my colleagues to join me in full support of this bill. Thank you and I yield back, Madam Chair. Chairwoman VELAZQUEZ. The gentlewoman yields back. Are there any other Members who wish to be recognized for a statement on this bill? I recognize the Ranking Member. Mr. LEUTKEMEYER. Thank you, Madam Chair. It is abundantly clear that no business, regardless of size or the amount of available resources, is 100 percent safe from cyber threats. If large businesses can become victims of cybercrimes, small businesses are even more vulnerable. This bipartisan legislation will make it possible for small businesses to receive guidance and counseling from the SBDCs on the most up-to-date cybersecurity practices at virtually no cost. This is exactly what small businesses need. I urge my colleagues' support. Madam Chair, with that, I yield back. Chairwoman VELAZQUEZ. The gentleman yields back. I would like to make a statement myself. Small businesses are especially vulnerable to cyber attacks due to limited resources and technical knowledge. SBDCs are ready, willing, and able to fill this gap. H.R. 4515 will establish a cyber counseling certification program in SBDCs to provide specific, free-of-charge cyber training for small businesses. Congress and the SBA must meet the demand for cybersecurity training and resources. Thank you to my colleagues for reintroducing this bill. I urge a yes vote. If there is no further discussion, the Committee will move on to consideration of H.R. 4515. The clerk will report the bill. The CLERK. H.R. 4515, the Small Business Development---- Chairwoman VELAZQUEZ. Without objection, H.R. 4515 is considered as read and open for amendment at any point. Does anyone seek recognition to offer an amendment? Seeing none, the question is now on H.R. 4515. All in favor, say aye. All those opposed, say no. In the opinion of the Chair, the ayes have it and H.R. 4515 is agreed to. The question now occurs on reporting H.R. 4515 favorably to the House. All those in favor, say aye. All those opposed, say no. In the opinion of the Chair, the ayes have it and H.R. 4515 is reported to the House. Without objection, Committee staff is authorized to correct punctuation and make other necessary technical corrections and conforming changes. Without objection, Members have 2 business days to file additional supplemental, dissenting, and minority views. H.R. 4513 We will now take up the bill on the final bill on the agenda, H.R. 4513, the ``Small Business Advanced Cybersecurity Enhancements Act of 2021,'' introduced by Congressman Donalds and myself, Congresswoman Houlahan, and Congressman Chabot. This bill will provide additional resources and protection for small employers and encourage good faith collaboration with the federal government. I would now like to recognize the gentleman from Florida, Mr. Donalds, the sponsor of the bill, for an opening statement. Mr. DONALDS. Thank you, Madam Chair, and thank you as well, Ranking Member. I would also like to thank you, Madam Chair, for holding last Tuesday's Committee hearing on the cybersecurity posture of America's small businesses. The testimony we heard from the witnesses made it abundantly clear that having a consistent, rapid flow of information between the private and public sectors is critical in the fight against cybercrime. Because small businesses are targeted by cybercriminals nearly half of the time, these businesses collectively have a wealth of critical information that could be utilized to identify, prevent, and mitigate future attacks. Unfortunately, as we learned in the hearing, small businesses are often reluctant to disclose to anyone, especially the government, any information about cyber attacks that may have been sustained. This ultimately leaves our national cybersecurity posture in a weakened state and vulnerable to attack. The federal government has recognized this dilemma and has taken steps to both prevent and mitigate cyber attacks on small businesses. However, small business reluctance and unwillingness to engage still exists. We must give small businesses the confidence that they need to engage with the federal agencies tasked with protecting them, which is why the Chairwoman and I, along with Congresswoman Houlahan and former Ranking Member Chabot introduced H.R. 4513, the ``Small Business Advanced Cybersecurity Enhancements Act of 2021.'' This bipartisan legislation safeguards small businesses from cyber attacks by establishing the Small Business Development Centers as a primary liaison for information sharing for small businesses seeking to report cyber threats. This bill authorizes the free flow of information from the SBDCs to cybersecurity experts at the Department of Homeland Security and, importantly, expands the Cybersecurity Information Sharing Act, or CISA, protections for small businesses. By expanding liability protections and giving small businesses a readily accessible and local resource to tap into when dealing with cyber threats, the bill removes many of the barriers small business owners are facing when confronted with a cyber attack. I urge my colleagues to support this bill, and I yield back. Chairwoman VELAZQUEZ. The gentleman yields back. Are there any other Members who wish to be recognized for a statement on this bill? I would like to recognize the Ranking Member. Mr. LEUTKEMEYER. Thank you, Madam Chair. Cybercrime is a booming industry and cybercriminals are strongly incentivized to come up with new methods of attack. We know when small businesses are attacked they may be reluctant to disclose such information to the government agencies tasked with helping them. The more we know, the better prepared we can be, both defensively and offensively, against future cyber attacks. H.R. 4513 encourages small businesses to work with the federal government instead of fearing it. I urge my colleagues to support the bill before us. With that, Madam Chair, I yield back. Chairwoman VELAZQUEZ. The gentleman yields back. Thank you. I would now like to recognize myself. Protecting our nation from malicious cyber actors is a top priority of this Committee. It is vital that the federal government work closely with the private sector, not just the large corporations and contractors, but also the small firms that drive our supply chains. Everyone has a role to play. Last week, experts detailed the cybersecurity landscape for small firms and the tangled web of public and private support mechanisms. This bill facilitates regular collaboration between small businesses and the federal government, and ultimately fortifies our nation's cyber defenses. Thank you, Mr. Donalds, for reintroducing this bill. I am pleased to be an original cosponsor. I urge my colleagues to vote yes. If there is no further discussion, the Committee will move on to consideration of 4513. The clerk will report the bill. The CLERK. H.R. 4513---- Chairwoman VELAZQUEZ. Without objection, H.R. 4513 is considered as read and open for amendment at any point. Does anyone seek recognition to offer an amendment? Seeing none, the question is now on H.R. 4513. All in favor, say aye. All those opposed, say no. In the opinion of the Chair, the ayes have it and H.R. 4513 is agreed to. The question now occurs on reporting H.R. 4513 favorably to the House. All those in favor, say aye. All those opposed, say no. In the opinion of the Chair, the ayes have it and H.R. 4513 is reported to the House. Without objection, Committee staff is authorized to correct punctuation and make other necessary technical corrections and conforming changes. Without objection, Members have 2 business days to file additional supplemental, dissenting, and minority views. I want to thank all of the Members for their participation today. If there is no further business to come before the Committee, without objection, this meeting is adjourned. [Whereupon, at 11:02 a.m., the committee was adjourned.] A P P E N D I X [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] [all]