[Senate Hearing 117-153] [From the U.S. Government Publishing Office] S. Hrg. 117-153 NOMINATION OF ISABELLA CASILLAS GUZMAN TO BE ADMINISTRATOR OF THE U.S. SMALL BUSINESS ADMINISTRATION ======================================================================= HEARING BEFORE THE COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP OF THE UNITED STATES SENATE ONE HUNDRED SEVENTEENTH CONGRESS FIRST SESSION __________ FEBRUARY 3, 2021 __________ Printed for the Committee on Small Business and Entrepreneurship [GRAPHIC NOT AVAILABLE IN TIFF FORMAT] Available via the World Wide Web: http://www.govinfo.gov COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP __________ U.S. GOVERNMENT PUBLISHING OFFICE 46-625 PDF WASHINGTON : 2022 ----------------------------------------------------------------------------------- ONE HUNDRED SEVENTEENTH CONGRESS ---------- BENJAMIN L. CARDIN, Maryland, Chairman RAND PAUL, Kentucky, Ranking Member MARIA CANTWELL, Washington MARCO RUBIO, Florida JEANNE SHAHEEN, New Hampshire JAMES E. RISCH, Idaho EDWARD J. MARKEY, Massachusetts TIM SCOTT, South Carolina CORY A. BOOKER, New Jersey JONI ERNST, Iowa CHRISTOPHER A. COONS, Delaware JAMES M. INHOFE, Oklahoma MAZIE K. HIRONO, Hawaii TODD YOUNG, Indiana TAMMY DUCKWORTH, Illinois JOHN KENNEDY, Louisiana JACKY ROSEN, Nevada JOSH HAWLEY, Missouri JOHN HICKENLOOPER, Colorado ROGER MARSHALL, Kansas Sean Moore, Democratic Staff Director William Henderson, Republican Staff Director C O N T E N T S ---------- Opening Statements Page Cardin, Hon. Benjamin L., Chairman, a U.S. Senator from Maryland. 1 Padilla, Hon. Alex, a U.S. Senator from California............... 1 Paul, Hon. Rand, Ranking Member, a U.S. Senator from Kentucky.... 5 Witness Guzman, Ms. Isabella Casillas, of California, to be Administrator, U.S. Small Business Administration.............. 8 Alphabetical Listing and Appendix Material Submitted America's Small Business Development Centers Letter dated January 20, 2021................................ 96 Associated General Contractors of America Letter dated January 19, 2021................................ 97 Cardin, Hon. Benjamin L. Opening statement............................................ 1 Coalition of Small Business Organizations Letter dated January 15, 2021................................ 98 Feinstein, Hon. Dianne Prepared statement........................................... 101 Guzman, Ms. Isabella Casillas Testimony.................................................... 8 Prepared statement........................................... 10 Responses to questions submitted by Ranking Member Paul and Senators Cantwell, Hirono, Duckworth, Rosen, Rubio, Ernst, Inhofe, Young, and Kennedy................................. 42 Hispanic Association of Colleges and Universities Letter dated February 1, 2021................................ 103 Independent Community Bankers of America Letter dated February 3, 2021................................ 104 National Association of Development Companies Letter dated February 1, 2021................................ 106 National Small Business Association Letter dated February 2, 2021................................ 107 Padilla, Hon. Alex Opening statement............................................ 1 Paul, Hon. Rand Opening statement............................................ 5 Small Business Majority Letter dated January 21, 2021................................ 108 U.S. Chamber of Commerce Letter dated February 3, 2021................................ 36 U.S. Hispanic Chamber of Commerce Letter dated February 1, 2021................................ 109 NOMINATION OF ISABELLA CASILLAS GUZMAN TO BE ADMINISTRATOR OF THE U.S. SMALL BUSINESS ADMINISTRATION ---------- WEDNESDAY, FEBRUARY 3, 2021 United States Senate, Committee on Small Business and Entrepreneurship, Washington, DC. The Committee met, pursuant to notice, at 10:30 a.m. in Room 301, Russell Senate Office Building, Hon. Ben Cardin, Acting Chairman of the Committee, presiding. Present: Senators Cardin, Cantwell, Shaheen, Markey, Booker, Coons, Hirono, Duckworth, Rosen, Paul, Rubio, Scott, Ernst, Inhofe, Young, Kennedy, and Hawley. OPENING STATEMENT OF HON. BENJAMIN L. CARDIN, ACTING CHAIRMAN, A U.S. SENATOR FROM MARYLAND Chairman Cardin. The Small Business Entrepreneurship Committee will come to order. The purpose for today's hearing is to hear from our nominee for the Administrator of the Small Business Administration, Isabella Guzman, and I would like to welcome her here this morning. I know she came in from California and we appreciate very much her being here today. I want to start by thanking Chairman Rubio for his generosity in scheduling this hearing and allowing me to chair the hearing. I also want to thank Senator Paul for his cooperation in allowing this hearing to take place and for me to have the opportunity to chair this hearing. Ms. Guzman, it is good to see you again. Welcome to the Committee, and I thank you for your willingness to serve. I am going to first recognize our newest Senator from California, Senator Padilla, who is here today to introduce our nominee. Senator Padilla. STATEMENT OF HON. ALEX PADILLA, A U.S. SENATOR FROM CALIFORNIA Senator Padilla. Thank you, Senator Cardin, Senator Paul, other members of the Committee, for the opportunity to introduce Isabel Guzman. At a time when small businesses across the country are facing unprecedented challenges and economic hardship, we need a strong leader who will bring experience and deep understanding of the issues to the Small Business Administration, and I am confident that Isabel Guzman is that leader. As the daughter of a small business owner, Isabel grew up experiencing first-hand the entrepreneurial spirit and resilience of America's small businesses. She knows the dreams that small businesses represent and the opportunities they create for families and communities. After earning her undergraduate degree from the University of Pennsylvania's Wharton School of Business, Isabel has dedicated her career to helping small businesses grow and succeed. Isabel, herself, was a small business entrepreneur. Isabel already has a deep understanding of the Small Business Administration, having served both as a senior advisor and as Deputy Chief of Staff during the Obama administration. She oversaw the agency's adoption of new technologies and programs that made the SBA more accessible to entrepreneurs of all backgrounds. She currently serves as the Director of the Office of the Small Business Advocate for the State of California, the most populous state in the Nation, which makes up the largest economy of any state in the Nation, and home to more than 4 million small businesses. Among the many uncertainties of the COVID-19 pandemic, Isabel has worked with small businesses to weather the pandemic and has helped implement the largest relief effort of any state in the Nation. In addition to overseeing a network of small business centers, Isabel's office has launched a Shop Safe, Shop Local initiative aimed at helping small businesses reopen safely, as well as the Get Digital California initiative, to help small businesses adopt new technologies to safely and successfully operate during the pandemic. Having successfully navigated the high volume and sophisticated business environment in California, I am confident that Isabel understands the urgent and complex needs of this moment. Her expertise is critical to our Nation's economic recovery. She is ready to hit the ground running and will assure the SBA helps small businesses across America not only survive the pandemic but build back better than before. Respectfully, I urge the Committee to support her nomination. Thank you, Senator Cardin. Chairman Cardin. Senator Padilla, thank you very much for your introduction and we very much appreciate that and we certainly welcome you to the United States Senate. It is nice to be your colleague. You are free to go. We are going to continue the hearing. I know you have a busy schedule, so if you need to leave please feel free to excuse yourself. Senator Padilla. Thank you. Chairman Cardin. Before I get started I do want to welcome Senator John Hickenlooper to our Committee. He is virtually with us today and he will be our newest member of the Committee, and we just welcome him to the Small Business Committee. Our Committee has a great tradition of bipartisan cooperation, which we are continuing today in the manner in which this hearing is taking place, so we very much welcome the participation of all members. I want to start again by thanking Ms. Guzman for your willingness to serve our Nation during this extremely challenging time. Serving in public life is not easy, and certainly is not easy particularly in this environment. So we thank you and your family for your willingness to serve our Nation as the Administrator of the Small Business Administration. The SBA has played an oversized role in COVID-19. It was tasked with important aspects of the COVID relief package. SBA was called upon to provide an enormous amount of help in setting up new programs. The staff worked extraordinarily hard, nights and weekends, in order to get these programs up and running. Eight hundred twenty billion dollars was run through the SBA in COVID relief, establishing a new program, the Paycheck Protection Program, and an EIDL advance program, both new, and, of course, the eligibility of COVID pandemic for the EIDL loan program. There was a close working relationship between the SBA and this Committee. I particularly want to thank Senator Rubio, Senator Shaheen, and other members of this Committee as we worked very closely with the SBA in not only setting up this program but how it was initially administered. And we hope that that close cooperation will continue under the Biden administration. There were certainly many challenges as a result of COVID- 19. We all recognize, on this Committee, that small businesses are the growth engine of America as far as job creation and innovation, but the resiliency for small businesses is not as strong as larger companies. So when there is a recession or there is a challenge in our economy, we need to pay particular attention to small businesses, and that is exactly what we did in establishing these new programs. The first effort was to get money out quickly to protect payroll, and we were successful in getting that done. We now need to target the relief to those small businesses that have the greatest need. We learned, during the initial rollout of the program, that we have a challenge in reaching the underserved communities, the underbanked communities, minority small businesses, and we welcome your thoughts as to how you, if confirmed, would deal with making sure we get the relief to the small businesses that need it the most. It is critically important in the SBA Administration to have a confirmed Administrator as quickly as possible to provide steady leadership and permanent leadership during these very challenging times. Let me, if I might, I want to talk a little bit about your background and get your commitments as to how you will proceed if confirmed as our Administrator. I am looking forward to hearing from you about how your background and record of working with and supporting small businesses has prepared you to lead the SBA. I am especially looking forward to hearing about your most recent position as California's Director of the Office of Small Business Advocate, as well as your prior service helping to lead SBA as a deputy chief of staff and senior advisor during the Obama administration. I also want to hear more about how working for your family business shaped the way you go about supporting small businesses, because that is an experience that I and countless Americans have shared. My grandfather emigrated to America and started a small store. He was able to find a better way to do business, and over the years that small store grew to become a very large company. In the process, he was able to contribute to his community and the economy by creating good-paying jobs. That is the American story, and for far too many families right now the pandemic is threatening that American dream. When I was negotiating the small business provisions of the CARES Act and subsequent relief bills family businesses as well as the millions of families that rely on small businesses for their paycheck were front of mind. I am proud of what we have been able to do so far, but clearly more needs to be done. In my home State of Maryland, which boasts the highest concentration of minority-owned, primarily Black-owned and women-owned businesses in the country, the programs created and funded by the CARES Act have provided billions of dollars of aid to hundreds of thousands of small businesses. To date, nearly 100,000 Maryland businesses have received approximately $328 million in EIDL advance grants, and the most recent data from the SBA shows that approximately 65,000 Maryland small businesses have received $3.4 billion in EIDL loans. And my colleagues here, from the states they represent, we would see similarly large numbers of the small businesses that have benefited from the tools we have available. I have had conversations with many of those small business owners and they have told me that the small business aid that they received empowered them not only to weather the storm of the pandemic but also to retool their businesses for the new normal that will follow. Just two months ago, the members of this Committee heard testimony from one of my constituents, Mrs. Iman McFarland, who said, ``PPP and EIDL did more than just keep our businesses afloat. It created a rising tide to support lifting up five employees I was able to bring back, as well as the broader community we have been able to serve.'' While PPP and EIDL worked for Mrs. McFarland and many other small business owners, we also know prior to the passage of the CARES Act that small businesses in underserved and underbanked communities struggled to access PPP due to their minimal to non-existent relationship with traditional financial institutions. It was with this inequality in mind that Senator Shaheen and I drafted the language in the CARES Act instructing the SBA and the Treasury Department to issue guidance to financial institutions participating in the Paycheck Protection Program to prioritize loans for underserved small businesses. This issue struck such a chord that a group of advocates from the U.S. Black Chambers to the Hispanic Chamber of Commerce and Native Women-Led formed the Page 30 Coalition to try and get the guidance implemented. Unfortunately, the Trump administration did not issue that guidance, which led to the SBA IG's finding that the implementation of the PPP did not fully align with the congressional intent of the CARES Act. So as we negotiate a COVID relief package that passed in December, my colleagues and I once again pushed for provisions to ensure that small businesses in underserved communities were not left behind. I am proud that the initial data that we have looked at, in regards to the PPP loans being issued in January, we see that they are going to smaller small businesses, and the size of the loans are smaller. That is a good indication that we are getting a better targeting. But we want to know how you will use the position, if confirmed, to reach this target group that has traditionally been left out of SBA priority programs because of their lack of connection to the banking community. No one knows exactly when the pandemic will end so I am grateful that the Biden-Harris administration has laid out an aggressive plan, the American Rescue Plan, to defeat COVID-19 by funding vaccination and containing the virus while delivering aid to the hardest hit communities and small businesses. Because to truly help small businesses recover we must defeat this virus. If American consumers do not want to go out of their homes, we are not going to help small businesses. If schools do not reopen, parents are not going to be able to fully participate in our economy and help small businesses. Ms. Guzman, as we in Congress enact an American Rescue Plan we will be relying on data and insight from the SBA. Here we have had bipartisan concern by the way the SBA has made that information available to Congress. And, by the way, also the General Accounting Office has been unable to get that information. We need that demographic information on how the program is working so we can adjust it to reach the targeted communities that have been traditionally underserved. So we are going to be looking for your commitment to make sure that you get that information and share that information with those of us in Congress. Thank you once again for your commitment to serving the Nation during this difficult moment in our history, and I look forward to hearing your testimony this morning. At this time I would yield--I am the Acting Chairman today but the Acting Ranking Member, Senator Paul. OPENING STATEMENT OF HON. RAND PAUL, A U.S. SENATOR FROM KENTUCKY Senator Paul. Thank you, Mr. Acting Chairman. Welcome, Ms. Guzman. I enjoyed our conversation yesterday, and I do wish you the best of luck. I think the job will be bigger than the job has ever been in the past. Philosophically, I have been opposed to borrowing such extraordinary amounts of money, and I think it has been a false choice in the sense that we say either the economy collapses in ruin or we bail it out with money that we do not have. There has always been another choice, and that is examining whether or not the economic lockdowns have been beneficial. There is no evidence, really, that any of the COVID lockdowns have affected the trajectory of the virus. Even President Biden, in the last week, has admitted as much. The virus is doing what it wants to do, regardless of any of our interventions. In fact, there was a Stanford study that looked at ten different countries and with a variety of economic mandates, from very severe to voluntary. I really found no difference in the trajectory of the virus. In fact, if you look at the trajectory of the daily incidence of COVID-positive patients it is growing exponentially, despite any of the mandates that we have put in place. If you look at state-to-state, between the states that have lax parameters to the states that won't let you go anywhere, you have to wear a mask outside, or you cannot dine inside or outside, there is really not much difference. In fact, the states with the severest mandates really often have some of the highest incidence. So Florida versus California, the incidence in California, on a per-person or a pro rata ratio, is actually much higher in California than Florida, despite California having the harshest lockdown. The reason I bring this up is that there has been a choice, and still is a choice, on how we help business in our country and small businesses. The small businesses have been devastated by government policy, primarily Governors' policy, but they have been devastated by these rules. So the choice is not just shake the free money tree, print up money, and give everybody money, or nothing. The other choice would have been, could have been, and still is let's free these businesses up. Let's get rid of the mandates that are crippling our business. Even with the mandates causing such harm to restaurants and hotel industry and travel industry, overall unemployment, actually, in Kentucky, is actually lower than it was in seven of the eight years of President Obama's two administrations. So I think we do need to put things in perspective, and those who say this is an existential thing and we have just got to borrow whatever, and the debt be damned, and we just have to do whatever and not worry about the consequences of the future, I think we do. Lord Maynard Keynes was sort of one of the early promoters, and most prominent promoters, of the free money stimulus, government stimulus, where we borrow money and pass it out. He was asked, ``Well, it, you know, it seems to work in the short run but what about the long term?'' And his response was, ``Well, in the long term we will all be dead anyway.'' And I think that is sort of a callous way to look at the future of our country and not worry about what we are doing to the currency and what we are doing to the underpinnings of our economy by borrowing so much money. So I think we should keep that in perspective in the debate that we continue to have in Washington over what is best to be done. The programs that have been put out before us, PPP and the others that are, many of them gradually being shifted from being loans to grants, I think actually gives more incentive for more corruption. And we are already finding people who have bought expensive luxury cars, Lamborghinis, things like that, with their PPP money. Some of them are being caught. The more of these loans that are turned into grants and have less oversight and the people have less verification of what they have done with the money, the more corruption we will get. So I would argue that within the parameters of the law that you will have to obey the law, but let's try not to expand and use any authority as the Administrator to try to convert things from actually having oversight, such as loans, to things that have no oversight. Now Congress has changed some of these parameters and we will live with that, but I really do fear that a lot of corruption is going to happen, and more corruption will happen as more of this is turned into grants. So as we move forward, Mr. Chairman, I think it is important that we continue to have a debate over what works and what does not work. And the virus has been devastating in many ways to so many people. You know, I have friends who have died from the virus. I have friends who are currently sick with it. But simply saying, oh, we must do things, where there is no evidence that these things are working, I think it is important that we re-evaluate them, and we re-evaluate whether or not giving monies to states actually encourages them to open the economy or discourages them from opening the economy. I, for one, think that the only thing that will change the trajectory of this is the vaccine, and I look forward to the time when we get the vaccine out to more people. The states that are utilizing private entities to help them get it out are doing better. In Florida they are using Publix pharmacies. I would suggest that we need to very rapidly gear this thing up. In my home state, if you call the Public Health Department and you want a vaccine you will get a 20-minute message. You will be unlikely to find a person, and the first thing they tell you on the message is, ``Oh, if you know somebody not wearing their mask, let us know their name so we can have the police go talk to them.'' Nowhere on the machine or on the Public Health website is any place where you can sign up for a vaccine. You know, I think what we should be doing is having large sign-up sheets with your name, your age, and trying to get people on a list where we can call them in to get the vaccine instead of being so intent on trying to punish or harass people that you do not think are adhering to whatever mandates that really do not seem to be appearing to change the trajectory of the virus. So I think as we continue to have this debate I hope you will work very hard. I am hopeful that you will try to oversee the administration of these loans without letting them get out of hand. And I wish you the best of luck. Thank you. Chairman Cardin. Thank you, Senator Paul. I appreciate your opening statement. Ms. Guzman, if you would rise. It is the tradition of our Committee to swear in the nominees for the Administrator of the SBA. If you would raise your right hand and repeat after me. Do you solemnly swear to tell the truth, the whole truth, and nothing but the truth, so help you God? Ms. Guzman. I do. Chairman Cardin. You may be seated. I have two questions that are asked again to all nominees to be Administrator of the SBA. Should you become confirmed as Administrator, are you willing to appear and testify before any duly constituted committee of Congress when requested to do so? Ms. Guzman. Yes, I will. Chairman Cardin. Are you willing to provide such committee as is requested by any such committee the information that they request? Ms. Guzman. Yes, I will. Chairman Cardin. Thank you. You may now give us your opening statement. Thank you. STATEMENT OF ISABELLA CASILLAS GUZMAN, OF CALIFORNIA, TO BE ADMINISTRATOR, U.S. SMALL BUSINESS ADMINISTRATION Ms. Guzman. Thank you so much. Good morning, incoming Chairman Cardin, as well as incoming Ranking Member Paul, members of the Committee. It is an honor to appear before you today, and thanks to Senator Padilla for introducing me to the Committee. I am very proud that he is representing California. As a product of and lifelong advocate for America's small businesses, I am honored and profoundly grateful that President Biden has nominated me to serve as the next Administrator of the U.S. Small Business Administration. I am deeply committed to helping support our Nation's small businesses and entrepreneurs and would be proud to lead the SBA and help small businesses start, operate, grow, and be resilient. Let me tell you about my background. I grew up in a small business family in California, visiting and working with my dad at his veterinary hospital. What I remember more than anything, I loved the connection he had with the clients he served every day. At a young age, I experienced first-hand how important small business owners are to the communities they serve and why we rightly call them the fabric of our neighborhoods. They enliven our Main Streets, create the products and services that enrich our lives, and innovate to solve the world's problems. If confirmed, I pledge to serve as their voice and represent the enormous diversity across our small businesses, from independent contractors and sole proprietors to startups and innovative technology and science-based firms to Main Street and manufacturing, of all sizes and all stages of development, and all entrepreneurs from diverse backgrounds and geographies. At over 30 million strong, small businesses power our economy. They represent vastly all of our Nation's total businesses and employ nearly half of the private workforce. But they are facing an unprecedented crisis and need our support to survive and thrive again. As this Committee knows so well, small businesses across the country have been devastated by the pandemic and economic downturn. I feel a sense of urgency that we need to work harder than ever, think more creatively than ever, and build more collaboration than ever to meet this moment. Throughout my career, I have started businesses and helped entrepreneurs launch and grow their firms, and I appreciate and understand the challenges they face every day. We all know a small business owner who works so hard, wearing multiple hats to tenaciously pursue their dreams, the American dream. As California's current Small Business Advocate I have also seen the impossible situations and intense frustrations small business owners are experiencing as they attempt to survive the COVID-19 pandemic. Many have experienced revenue drops, increasing debt, and shrinking cash flows as a result of the health and safety guidance and lockdown restrictions and changing marketplaces. Small businesses need a team behind them. SBA must be a part of that team, helping them access capital and connecting them to marketplaces to build revenues and to networks that can help them navigate resources to improve outcomes so that they can do what they do best: create our Nation's jobs and help spur our economy. I am confident that I can hit the ground running and deliver the recovery policies of the Administration and this Committee. President Biden is committed to addressing inequities in our economy and providing relief to those who are struggling during the pandemic. He has focused on building our economy back better and strengthening our small businesses. And America's small businesses are counting on effective and equitable implementation of COVID-19 relief and recovery programs passed by Congress and implemented by the SBA, because their survival is at risk. If confirmed, I would leverage my prior experience serving in leadership at the SBA and commit to working diligently to be a good steward of its programs. I am committed to ensuring the agency has the right systems, technology, and operating processes in place to advance its mission and reach all our small businesses. Most importantly, I will work to ensure funds get into the hands of the small businesses who have been hurt the most by the pandemic and economic crisis through no fault of their own. I also pledge to be transparent, responsive, and accessible to this Committee about SBA's operations and needs. President Biden has committed to advancing racial justice and equity for all Americans. If confirmed, I am committed to helping the SBA advance opportunity for all, including our underserved entrepreneurs who have faced historic barriers to start and grow their businesses. I am deeply honored by the President's nomination and look forward to getting to work immediately with the mission-driven civil servants at the SBA to help all of America's small businesses build better futures for their families and their communities. Their success is our country's success. Thank you, Mr. Incoming Chairman. I look forward to all of the Committee members' questions. [The prepared statement of Ms. Guzman follows:] [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] Chairman Cardin. Ms. Guzman, thank you very much for that opening statement, and I particularly appreciate your comments about working with our Committee and transparency issues that, in general, worked well with the Trump administration. We had a very fine relationship with sharing of information and implementing the new laws that were passed in the CARES Act and reinforced by subsequent legislation. There was one notable exception, and I mentioned it in my opening statement. We had a very difficult time getting the granular information on the loans in order to do our oversight in Congress as well as to adjust the program to make sure that the funds were getting to the small businesses in an equitable manner, particularly those in underserved communities. We introduced legislation, made requests to require demographic information be supplied by the borrowers so we could determine where the loans were going from the point of view of communities, whether the underserved communities were really being treated fairly. And we were basically unable to get that information. Just very recently, we got some information. On January 31st, the SBA released data on the performance of the 2021 PPP program--this is one that just was passed in December--and unfortunately less than 22 percent of the borrowers completed the demographic questionnaire. So my question to you is, what will you do to improve the transparency that you mentioned in your statement so that we can get the data we need to make sure that the programs that we have created are reaching the intended small businesses in an equitable manner, particularly those who have traditionally been underserved? How are we going to make sure we get that demographic information in order to evaluate and oversight the program as well as adjust it moving forward? Ms. Guzman. Thank you, Senator, for that question. I do believe wholeheartedly that managing with data and information is critical. I agree with you that decisions rest on performance, and so it would be my priority to ensure that communication and collaboration is open on that information, you know, further that we are leveraging our technology fully and our systems and processes to ensure that we can provide insights as we move along for any adjustments as we proceed. So it is definitely a priority, especially in ensuring strong oversight and control. Chairman Cardin. I would just urge you to work with the staffs of our Committee on this issue, because it has been a real challenge for us, and we have been working in the blind in crafting legislation. We had a hard time getting information even on the drawdown on the program, when it first started up, to make sure there was adequate funding provided. So I take your commitment to work with us in a way that we can share information so that, as policymakers, we can support your mission with timely information to make adjustments, if needed. Ms. Guzman. Yes, I would completely. Thank you. And I would make sure that my staff is available as well to collaborate with the Committee and staff and individual members as concerns are raised. Chairman Cardin. Thank you. I want to deal with eligibility for SBA programs for those who have criminal records, and I start here because as the Paycheck Protection Program was implemented, SBA adopted an entirely new exclusion for partial owners convicted of any felony within the last five years. Now we raised objections, bipartisan objections. I worked with Senator Portman and Senator Lankford and others to try to get an adjustment on that. We thought it should be eliminated in its entirety. The Treasury and SBA made an adjustment to reduce that to one year, but they still did not deal with those accused of crime, before their convictions, and still had prohibitions that we thought were against what was the intent of Congress. Tell me how you feel about returning citizens being eligible for SBA programs if their criminal convictions had nothing to do with any type of an economic crime or they are just accused of a crime and they have not yet had their day in court. Ms. Guzman. Thank you, Senator. Actually, when I served at the Small Business Administration we focused on the re-entry population, looking at how we could expand the programs to ensure that we were working to spur entrepreneurship in this community. So if confirmed it would be my pleasure to return to that, to some of those programs analysis, and figure out how we can continue to support entrepreneurship with the re-entry population. Chairman Cardin. And then, lastly, let me just call your attention to two bills that I have filed with other colleagues, one dealing with venture capital in minority businesses and emerging markets, the other dealing with partnerships with our HBCUs and minority institutions to help in regards to incubator and accelerator programs. And I would just encourage you to take a look at these bills, see whether we can work together on this. Some of this may be able to be handled administratively, which is consistent with your statement on helping the underserved community. And I just call that to your attention and hope we can work together on those issues. Ms. Guzman. Thank you. I will definitely pay attention to those two pieces and look at the SBA programs and how we can fully utilize those programs. Chairman Cardin. For the benefit of the members of the Committee, we will proceed by seniority order, because I do not know when people got on the--we were joined by many people that are on the internet. So first on my list would be Senator Scott. Let's see how we get you connected here. Senator Scott. Senator Cardin? Chairman Cardin. We got you. You are on, Senator. Senator Scott. Okay. Excellent. Good morning, Senator Cardin. Thank you for introducing me, and Ms. Guzman, thank you for your willingness to serve. Without much of a question this is a really important time to be serving as the Small Business Administrator. And I will say to Senator Cardin's last comment, as it relates to those who are formerly incarcerated, who have paid for their deeds for their crimes, it really is important for us to make sure that they are acclimated and then assimilated into the line for the access to the Small Business Administration, the Paycheck Protection Program. And I will note that Senator Booker and myself, we were able to get guidance from the previous Administrator of the SBA to make sure that those folks who were not involved in financial crime, as Senator Cardin just alluded to, had an opportunity to avail themselves to the loans, be it the EIDL loan or the PPP loans. That is a really important part of creating jobs and opportunity and growing equity in this country, for those who were formerly incarcerated. One of the other issues that is really important to me, Ms. Guzman, is the fact that 30 million-plus small businesses around the country depend on you to be their voice, to be the person that is at the table within this administration when talking about some of the common sense priorities that must be understood from the prism of a small business owner's perspective. I thank you for working as a small business owner yourself in your father's business. I certainly am a former small business owner and understand and appreciate that the more you increase cost, the fewer jobs you create, and the devastating impact that it can have in the middle of a pandemic. That said, I am very concerned that the small businesses around the country need a voice at the table as it relates to this minimum wage debate that we will be having for the next several weeks, if not several years. I am hoping that you will be a voice of reason at that table, especially having been a part of a small business. I will say that last week I had the opportunity to visit a restaurant here in Washington, DC, in the Union Market District, a restaurant called Bidwell. I had a chance to speak with the owner, Chef John, and the bar manager, who did a wonderful job of distilling the importance of not increasing the minimum wage, particularly in the midst of a pandemic, when we have already seen 110,000 restaurants close their doors permanently, and thousands, if not millions of others are holding on by a thread. By increasing the cost of labor you actually reduce the number of businesses, and according to the Congressional Budget Office the number of businesses that we could see lost is in the hundreds of thousands, which will lead to up to almost 4 million lost jobs in the economy, and those numbers were pre- pandemic. I can only imagine that those numbers are infinitely worse in the middle of the pandemic, and my question to you is, as you take all those facts into consideration can we count on you being a voice of reason, trying to find a way to explain the plight of 30 million small businesses? And I will say that that is a really important consideration that small businesses would love to understand and appreciate your position on. Ms. Guzman. Thank you, Senator. You know, I know that out of this pandemic we need a shared recovery. In California, I actually work closely with multiple organizations. I believe in hearing all voices, and I believe strongly in being the voice of small business, that they really do power my work, and those stories mean a lot to me, of the different restaurants and bar owners and service industry folks that I have met in my service. And so those stories are really what propel my work, and so I do intend on being the voice of small business at the table and utilizing the resources, if confirmed, at the SBA, including the Office of Advocacy that does extensive research and is an independent agency, to make sure that I am aware of the issues and can voice those concerns. And then in addition, the SBA has great programs to help small businesses adapt to the marketplace, and I would want to be sure that I can help them navigate through any challenges and be---- Senator Scott. Thank you very much. Yes, ma'am. Absolutely. I will make this my last note since my time is running out, that the reality of the minimum wage conversation and debate really should be one that is concerned from a regional perspective. In states like South Carolina, our cost of living is about 5.8 percent lower than the average, where in New York it is about 52 percent higher, and in California it is 46 percent higher, and here in D.C. it is 57 percent higher. So when you are having a conversation about increasing the cost of business, you are not only lowering the number of employees, you are also having a national conversation about something that has a more regional feel. Thank you for your time and I will submit other questions for the record. Thank you, Ms. Guzman. Thank you, Senator Cardin. Chairman Cardin. Thank you, Senator Scott. Senator Shaheen. Senator Shaheen. Thank you, Mr. Chairman, and to Ms. Guzman, thank you for being willing to be considered for this nomination at this critical time. I think everyone has pointed out the importance of the Small Business Administration in helping our small businesses get through this emergency that we are experiencing because of COVID. And I very much appreciate all the hard work that those at SBA did after the passage of our bills last year to help small businesses. But I would like to begin with agreeing with Senator Cardin that one of the biggest challenges we had was trying to get information from SBA about how the PPP program and the EIDL programs were working. And it is not clear to me if the challenge is that there are not systems in place to provide that data or everyone was so overworked that they were not able to get it for us. But I hope you will commit today to--I heard you say you will talk to the staff and make sure that they produce whatever reports are requested by the Committee. I hope you will also agree to come before us and to ensure that any staff that is requested come before us as well, to discuss concerns that we might have. Ms. Guzman. Thank you. Yes, no, I do appreciate that this collaboration with the Committee is very important, and so I would completely respect that and work hard to do that. Senator Shaheen. Great. Thank you. One of the programs that was created in the most recent COVID bill, back in December, was a new program to help with live entertainment venues. They have been particularly hard hit in New Hampshire and across the country, because most of them do not have a large number of full-time employees. They have part-time employees and so the PPP dollars, as you know, did not work quite the same way for those venues. And under the program, SBA is authorized to make up to $15 billion in grants, but we still have not seen any of the guidance from SBA on how those grants will be made available, and we are hearing a great deal of concern from small businesses in New Hampshire who are interested in applying and are really getting desperate. So can you talk about how you might get this program up and running as soon as possible? Ms. Guzman. Thank you, Senator. If confirmed, my priority will be on--number one priority will be on ensuring that COVID relief is implemented efficiently, quickly, as well as equitably, including the Shuttered Venues Grants. So this would be one of the day one priorities, is to understand where they are at with this process and make sure that this is implemented as quickly as possible. Senator Shaheen. Great. Thank you. We had the opportunity to talk a couple of weeks ago, which I very much appreciated, and one of the things we talked about was the STEP program to help states with small businesses with exporting their goods. And it is legislation that I care a lot about, because I helped to introduce it and see it get passed. And when it is working well it is very effective, but as you may be aware the GAO identified several outstanding issues with the STEP program that I would just call to your attention. First that a significant portion of funding has been returned to SBA because administrative requirements are too burdensome, and that is what I hear on a regular basis, that there is not enough flexibility in the program, the paperwork that is required is very difficult for, as you know, for many of these small businesses they do not have somebody who can fill out burdensome administrative requirements. And so it has been really challenging, and there is a whole list of concerns that GAO expresses. Inconsistent program guidance--our small businesses hear from other businesses in other states that they have been allowed to do things that our folks in New Hampshire are being told they are not allowed to do under the grants. Lack of flexibility. Just a whole range of things. So can you talk about what you might be able to do as Administrator to help address some of those long-time problems within the STEP program? Ms. Guzman. Thank you, Senator. Yes, twofold, I am both familiar from my work at the SBA with the STEP program. I did implement programs and priorities on behalf of the Administrator, operationalizing the vision, and STEP was one of those that I worked extensively on, so I do understand some of those challenges. In addition, as a recipient in California, we administered the program, and I have heard directly from small businesses who have had challenges. So I would use those two past experiences to really dive in and try to ensure that we implement that program as efficiently as possible, and across all these programs it would be simplification, understanding the experience of small business. Senator Shaheen. Well, so given your insights, why has it been such problem with this program? Ms. Guzman. I understand that there were lots of programmatic issues when they first established it and in terms of making really strong controls and measures. And so balancing that with efficiently and effectively getting the program out is, I think, the challenge. And so I would need to dive back in and understand where they are at with some of those changes to see if there are ways to simplify the program. Senator Shaheen. I appreciate that very much. You know, my recollection is that this legislation was passed in 2010, so after 10 years it seems like these problems should have been worked out. So we will stay in touch and I can assure you I will continue to ask questions to see how we can make progress and stand ready to help you with that. Thank you. Ms. Guzman. Thank you. Chairman Cardin. Senator Ernst. Senator Ernst. Thank you, Mr. Chairman, very much, and is it Guz-mon [phonetic] or Guz-man? Ms. Guzman. Guz-mon [phonetic.] Senator Ernst. Okay. Thank you, Ms. Guzman. I really enjoyed our conversation the other day and thank you for making time for that. I really do appreciate the fact that you are stepping up to serve our small businesses across the United States, especially during a really difficult time of COVID-19. And for nearly a year the members of this particular Committee have worked tirelessly to find solutions for the very significant challenges that are facing our small businesses, and they have been battered, just relentlessly, by COVID-19, and you understand that quite well. So we really have a great deal of pride in the Paycheck Protection Program. We do think it has been very helpful. There have been a few hiccups here and there, but again, we are just grateful to have come together in providing vital assistance to our small businesses and saving millions of jobs across the United States. And so, Ms. Guzman, if confirmed, I really do look forward to working with you and your team. We have got to strengthen and improve these programs and find ways to continue to bring assistance to all of these wonderful entrepreneurs and small businesses across Iowa and across the country, as we continue on that path to recovery. There is one hiccup that I would like to ask you about, which is very concerning to a number of us. In the CARES Act, Congress made it very, very clear that SBA's affiliation rules must apply to nonprofit organizations in determining the eligibility for the Paycheck Protection Program. So in order to receive that first draw, those small businesses or nonprofits could not employ more than 500 people across each of their affiliations. For the second draw on the loan they could not employ more than 300 people. Despite employing more than 16,000 people nationwide, reports emerged last year that many Planned Parenthood affiliates illegally applied for and received those PPP loans. So as Administrator, will you commit to upholding the CARES Act and ensuring that those who violate SBA rules are held accountable? Ms. Guzman. I would definitely commit to being a good steward of the program as the rules and regulations have been spelled out, and would look forward to discussing affiliation with you further, if confirmed. Senator Ernst. Yes, thank you. And we will have additional discussions on that. We want to make sure that those businesses, those nonprofits that truly do have a need and meet the rules are those that are receiving. Senator Shaheen also mentioned the Shuttered Venue Operators grant program. Really important in Iowa as well. So I am very glad that you will be taking time and attention to work on the rules there. One of the topics that we touched on during our call last week was the topic of child care, and it is so important that we address this issue. We have a lack of affordable child care across the State of Iowa, and the role the SBA could play in helping these child care entrepreneurs, we really want to develop and explore that. So in the last Congress, by colleague, Senator Rosen, and I introduced legislation that would allow nonprofit child care centers to utilize SBA capital access programs. Can you speak to the role that you believe the SBA should play in addressing the child care crisis and helping child care operators, especially in our rural areas? Ms. Guzman. Thank you, Senator, for that question. I know President Biden has prioritized the Care Economy, and we know how important child care is, especially to our women entrepreneurs, in order for them to succeed. The SBA does have programs that it can utilize as well as I would welcome the opportunity to explore ways that we can better serve the child care facilities. So in addition to the current loan programs and the Small Business Development Center targeted programming that exists, in California there are some great best practices of intensive training for child care providers, and I would welcome the opportunity to make sure that we are leveraging those, scaling those, as well as looking at other opportunities to help. Senator Ernst. Well, I appreciate that, and I am running out of time. I do want to take a moment to say, though, that I did enjoy our conversation. I was thoroughly impressed with your knowledge of the various programs through SBA, and, Ms. Guzman, I look forward to supporting your confirmation, so thank you very much. Ms. Guzman. Thank you so much, Senator. Chairman Cardin. Thank you. Senator Markey by WebEx. Senator Markey. Great. Thank you so much, and welcome, Ms. Guzman. I enjoyed our conversation last week and I am absolutely confident that President Biden made an excellent choice to be the new head of the SBA. Massachusetts is a huge beneficiary of the SBIR and STTR programs. Here are some of the numbers. Since the program was created, Massachusetts companies have received 22,000 of the grants, and last year alone 593 awards valued at over $350 million went to Massachusetts companies, which has really helped to create an ecosystem of innovation in the State of Massachusetts. We talked during our conversation last week about how strongly I believe that we must ensure that the SBIR program is available to truly small businesses. For a long time there have been efforts to open up the program more and more so that venture capital-backed companies can access the funding. I am concerned that if we open up this program too much to venture capital funding we will crowd out access to funding needed by truly small businesses. Do you have any thoughts on proposals to increase venture capital involvement in the SBIR program? Ms. Guzman. Thank you, Senator Markey, and I did enjoy our conversations about this and other topics. The SBIR program, or America's Seed Fund, is one of the most critical programs that the SBA has. I agree that with the impact great companies have come out of that program. You know, I know that ensuring that small businesses have access to the Federal research dollars is a priority and I would commit to being a good steward to ensure that our small businesses, and not only that but the underserved communities, including our rural as well as women and people of color, have access to this program. I think that there are great ideas that exist around our country and ensuring that there are these available grants to spur that innovation as well as help businesses commercialize is really a priority. So I would look forward to partnering to figure out how we can maintain that strength of the program and improve it. Senator Markey. Okay. And again, my question actually goes to obviously the role of the venture capital world, which has access to plenty of capital it wants to play in moving into this sector as well, which I catch arched eyebrows that hit the ceiling as I look at their interests in this program, knowing how well it is already serving the smallest businesses, the entrepreneurial, the innovative businesses in our country. And, Ms. Guzman, I would ask for your commitment to ensure that the SBIR program continues to be based on merit, and I would also ask for your thoughts on how we can provide more funding for small businesses across the country who may not have access to a Massachusetts or a California business university type of ecosystem. Ms. Guzman. The program is a great program, and if there is an opportunity to continue to expand capital to early stage venture companies as well as early stage researchers who are trying to formulate these great innovations I think that is a strong program that we should deliver against. And in terms of the specifics of merit, I think the program is very strong, and we need to make sure that we are investing in the best ideas across the country. Senator Markey. Yeah, thank you. There is always a kind of an uncertainty about the funding for the SBIR program. Do you support making the SBIR program permanent? Ms. Guzman. Thank you for that, Senator, and if confirmed I know SBIR reauthorization is right around the corner. You know, it is a program that has been emulated, respected across the globe, and I do think it is a very critical program that I would like to see continued at the SBA. Senator Markey. Okay. And do you believe that just 3 percent of Federal R&D for startups and entrepreneurs is adequate, or would you support an increase in the allocation percentage that goes to startups and entrepreneurs? Ms. Guzman. My role will always be to be the voice of small business and advocate on their behalf. In addition, I would be a good steward of the programs as implemented by Congress, as well as the priorities of the administration. Senator Markey. And I am glad that you are going to be taking this job and I am very heartened by the level of support that you are clearly going to bring to ensure that minority- owned businesses have the same access to capital as other businesses, and it is very heartening to me to hear your level of commitment to that goal. Ms. Guzman. Thank you, Senator. Senator Markey. Thank you. Thank you, Mr. Chairman. Chairman Cardin. Senator Inhofe. Senator Inhofe. Thank you, Mr. Chairman, for hosting this meeting, and Ms. Guzman, I enjoyed our visit. We had a chance to talk about some of the--and this is so important to me. I think I impressed upon you that Oklahoma is--we are a small business community. In fact, I questioned my staff when they said that we had statistical data that showed that 99 percent of the businesses in Oklahoma are small businesses employing over half of the workers in Oklahoma. So I think we are the ones that really need this program. There are two problems with it, that have nothing to do with the pandemic but things I want to call to your attention, because they are things that we need to be addressing that you may not have thought of before. And I agree with the comments that have been made about the Paycheck Protection Program, and it is--has been very helpful. A problem that we have in my State of Oklahoma, and, of course, maybe I am partly to blame, is that our businesses do not know what resources are out there, but the SBA does, what their mission is, what is available to them. And I have not been able to--sometimes I get a response of surprise that resources are out there. Do you have any ideas on what you could do to maybe work together to lift the awareness of what SBA is all about and what is there for our small businesses? Ms. Guzman. Thank you, Senator Inhofe. I agree that connection to resources is one of the biggest challenges for small businesses. President Biden has prioritized establishing navigators in communities, so local voices who can connect to small businesses and inform them of the resources that exist. If confirmed, I would want to leverage SBA's field offices, resource partners, as well as extensive partnerships across chambers and other organizations to help to that end. Senator Inhofe. So he has talked to you about this? Ms. Guzman. The President has mentioned several times navigators in terms of his priorities, and so yes, for the Small Business Administration that would be one of our priorities. Senator Inhofe. And sometimes we run into this in government. There are opportunities and they reach a level of perfection and yet it is not reaching the ones that are supposed to be reached. Because I think there are some things that maybe as members, maybe some of my fellow members are doing things I am not doing, but I have not been successful in doing this and this is something I think really should be a pretty high priority. So I look forward to working with you on that. Now another program that has been promoted, and not just due to the pandemic but the program ongoing, is the EIDL program. That is the Economic Injury Disaster Loan program, as you are fully aware of. It was designed originally for natural disasters. Now in my State of Oklahoma we have had more than our share of natural disasters, and so this has been very helpful. But we do hear, quite often, that the EIDL program has experienced a lot of delays in process, and also heard of significant issues of fraud inside the program, and I believe that is true. In fact, one constituent shared that her husband did not apply for an EIDL and yet an application appeared and information was used fraudulently and used in an application. Now I do not know how that happened, but we do hear that it does happen. Have you addressed the fraud and abuse problem in that particular program? Ms. Guzman. Thank you, Senator. If confirmed, I would prioritize the reduction of fraud, waste, and abuse as well as implementing controls and systems and leveraging the technology systems, the new technology systems they implemented to ensure this program gets into the hands of the small businesses who need it. I have heard those same stories in California. Very frustrated small businesses are those who could not receive it or get an answer, and I want to prioritize making sure that we---- Senator Inhofe. So in your experience you have had personal experience with this? Ms. Guzman. Correct. Senator Inhofe. Well, that is good and I am glad that you are aware of that. And the last thing I wanted to bring up is the fact that we are aware that some businesses are afraid to reopen because of frivolous lawsuits, and our businesses cannot stay closed because they are afraid of being sued. And these businesses will continue to play a central role in rebuilding our local economies. I think it is something that we need to be looking at, and I would just ask you to agree with me on the importance of providing liability protections to these businesses, to ensure our businesses are not at risk over frivolous lawsuits. Ms. Guzman. Thank you for that, Senator. I know that liability is a big concern for small businesses, and ensuring that we are addressing the pandemic and making it safe for people out in the marketplace is really critical. I will be the voice of small business and express their concerns and use their stories to be elevated and share those experiences. Senator Inhofe. Well, that is good, and I am looking forward to working with you in the future and supporting your nomination. Ms. Guzman. Thank you so much, Senator. Senator Inhofe. Thank you, Mr. Chairman. Chairman Cardin. Senator Coons. Senator Coons. Thank you, Chairman Cardin, and Senator Rubio, and I would like to thank the Committee staff, Meredith and Sean, for working so hard to schedule this Committee hearing quickly, and Mrs. Guzman, it is a delight to be with you today. I really enjoyed our call, and I look forward to supporting your nomination and to working closely with you as you lead the Small Business Administration going forward. The crisis that our Nation is enduring at the moment, this pandemic and the recession associated with it, is hitting restaurants particularly hard, as you well know. And last summer Senators Sinema and Wicker, Graham, and I introduced the Restaurants Act to provide direct grants, not just loans, to hard-hit independent restaurants. I heard just yesterday from Sasha Aber, a friend who runs Home Grown Cafe in Newark, Delaware. She is a regular at the annual Taste of Delaware that we do in the Kennedy Caucus Room, and I hope you will join us next year. Sasha was telling me this weekend just how hard-hit her business has been and how she and her employees, and many other restaurants in my State, need more help. I am really encouraged by President Biden's focus on helping restaurants in the American Rescue Plan, and I would be interested in how you think we can best deliver that, why you think grants are more important than loans, and how significant you think it is to target assistance to sectors like restaurants that have had a particularly difficult time of it. Ms. Guzman. Thank you, Senator. I had the pleasure of serving on the Governor's Task Force on Business and Jobs Recovery during the COVID response, and with the California Restaurant Association chairman on small business issues specifically, so I have heard from him, you know, many stories about how this is affecting California restaurants as an example, and that is a microcosm of what is happening across the country. You know, a lot of these businesses are straddled with debt, have limited cash flow, and so grants have been in high demand across multiple sectors. So I recognize that for small businesses to survive this grants are needed as well, as well as targeted relief to ensure that our small businesses who really need it are able to survive this pandemic. So I would look forward to working with you collaboratively on this issue. Senator Coons. I was struck to see this morning, in the Delaware Business Times, that Delaware is so far coming in last in terms of the second round of PPP loans, in terms of the count and volume. To my knowledge, and to my staff's knowledge, that is not due to any deficiency on the part of Delaware's lenders or businesses. I think it is important the SBA monitor the geographic distribution of funds. I hope you will work with me on that. I think part of it may be because audits for first- round PPP loans are more cumbersome than may be necessary. There have been days of back-and-forth between auditors, lenders, and borrowers, even for loans as small as $10,000. How will you balance the important priorities of program integrity and efficiency, in terms of speed? Ms. Guzman. Thank you for that. I do think that that is the challenge of that balance. You know, I am quite familiar with the programs, and if confirmed I would look forward to figuring out how we can push as much as possible to make these simple for our small businesses to understand and leverage, because it is very difficult for them to go through mountains of papers to try to figure things out. So, you know, I know that we can better use our field, our resource partners, and get communications out there that help small businesses. Senator Coons. And as we spoke about, those resource partners can be absolutely critical. Particularly to smaller businesses, for those that are women-owned, minority-owned, accessible advice and counseling is vital, particularly to navigate a crisis like this and to understand SBA's programs. Shawnee Inn in Greenwood, Delaware, is an example. It is operated by Diane Eby, and Diane asked Cindy Small at Delaware's SBDC for help early in the pandemic, and Cindy helped her get not just a PPP loan but FEMA approval to house Federal employees, which then helped her get through. I would be interested in how you see SCORE and SBDCs and other resource partners working to make sure that our small businesses can access the great programs SBA provides. Ms. Guzman. Yes, and as a small business owner I used SCORE myself. I learned all about patents from one of their advisors, so I know that there are some great resources out there in the community. In California, we actually match and leverage the Federal resource partners, and they have been critical on the ground in informing small businesses. So I would look forward to being a good steward of those programs and making sure they are reaching communities. Senator Coons. As you know, SCORE was founded in Delaware, and I look forward to working with you to strengthen it. My last question, we discussed the urgent need to support new entrepreneurs, entrepreneurs of color, women entrepreneurs, those living in distressed communities, and you mentioned the lack of runway capital as a major barrier. Please explain that problem and the consequences of leaving it unaddressed. I am hopeful that the next generation Entrepreneurship Act, which Senator Scott and I co-authored, could be a part of the solution to this challenge. Ms. Guzman. Well, as President Biden has said, our talent and our spirit of entrepreneurship, as well as our ideas, come from all parts of the country, and unfortunately there are many communities that face barriers to capital or have experienced historic racism or barriers that have prevented them from building the wealth that is needed for accessing capital or relying on friends and family. And so these entrepreneurs, and their great ideas, need to be supported as well for our economy to grow and for job creation to happen. So I think it is really critical that we look at all of our programs from that lens of equity and make sure that we are reaching our underserved populations. Senator Coons. Well, Mrs. Guzman, I look forward to supporting your confirmation and to working closely with you. This has been one of the most functional, productive committees I serve on in the Senate, and I am hopeful we will get a great deal done together during this period when our small businesses need you and the SBA so much. I am so grateful to our incoming Committee Chairman for his leadership as well. Thank you. Ms. Guzman. Thank you, Senator. Chairman Cardin. I now call on Senator Young via WebEx. Senator Young. Ms. Guzman, welcome to the Committee and thank you for your interest in serving our country in this capacity. Congratulations on your nomination. Yesterday I reintroduced the Small Business Innovation Voucher Act with Senator Cortez Masto. This bill would require the SBA to establish the Innovation Voucher Grant Program, the first of its kind, to support small businesses in carrying out R&D or commercialization of new or innovative products and services. Now unlike other SBA grant programs, my voucher program would achieve a different outcome by reallocating Federal funds from larger, later-stage grants to more small, early stage grants, and from older firms and regular winners of these grants to younger firms and first-time applicants. By building on current models, it is our belief that we can facilitate public-private partnerships between small businesses and our world-renowned research institutions, giving our entrepreneurs expanded access to drive innovation. We have seen this model work in a number of states, particularly my home State of Indiana. Indiana's Innovation Voucher Program has proven itself to be quite successful. Going forward, small businesses, we believe, will be the key to post- COVID recovery, but the pandemic has already exacerbated, as you well know, several challenges preventing firm footing in the marketplace. So, Ms. Guzman, I ask you, will you commit to working with me and my office, as well as Senator Cortez Masto, to focus on legislation such as our Innovation Voucher Program, to facilitate these public-private partnership? Ms. Guzman. Thank you, Senator, and I enjoyed my conversation with you as well as Senator Cortez Masto about this issue. I think I shared with you that I implemented a small innovation grant in California through the Department of Defense program around cybersecurity, and studied those programs across the state. So I am familiar and look forward to discussing it further with you and working with you. Senator Young. Well, thanks so much, and we will look forward to following up with you should you be confirmed, as I believe you will. What are some other ways that you might share with the Committee that you would like to see small businesses supported to bring innovative ideas to the market, as we have seen a decrease in the number of young firms and their survivability rate of our smaller firms over the years? Ms. Guzman. Well, young firms are really critical. They are the large contributors to that two-thirds of net new job number that is often cited. They are creating jobs. And, if confirmed, I would be the voice of all small businesses, including these younger firms and early startups. And so I would look forward to partnering to make sure that SBA's programs are leveraged and utilized extensively by these small businesses. Senator Young. Thank you. I am going to pivot, Ms. Guzman, to talking about fintech, financial technology services, these online banking platforms that are of such great utility to so many Americans now. Unfortunately, some of our smallest businesses, such as those with fewer than ten employees, have trouble accessing traditional banking networks to obtain SBA- backed loans. As part of the CARES Act, numerous CDFIs, minority depository institutions, and fintechs were approved to provide PPP loans, so that is a good thing. As a short-term option, allowing fintech companies to administer PPP loans during a crisis, and therefore offering business owners more seamless options, was critical to keeping many businesses afloat. However, fintech companies do not have preferred lender status, meaning businesses will still be required to access other options if SBA loans are out of reach in the future. So would you kindly, Ms. Guzman, speak to whether you see fintechs as a new, emerging tool for the Small Business Administration in its loan programs? Ms. Guzman. Thank you for that. Adoption of fintech across the banking sector as well as with these new fintech companies and our CDFIs, even, is really critical. I think expanding distribution for capital will improve access. And so I look forward to partnering with the lending institutions broadly, to ensure that we can keep them engaged in SBA programs. This has been a record high number of different lenders engaged in SBA than ever before, and I think we need to take advantage of that. Senator Young. Excellent. Well, on that issue as well I will look forward to working with you and your staff, should you be confirmed. Lastly, in my remaining amount of time, and I am unable to see the clock but it will be less than a minute here, I would like to mention the RESTART Act. The RESTART Act was a bipartisan piece of legislation that I developed with Senator Michael Bennet, receiving 60 bipartisan co-sponsors in the Senate, a couple hundred in the House. It would create a long- term working capital loan to our hardest-hit businesses, measured by the amount of revenue loss they experienced on account of the pandemic. And then there would be a forgiveness element based on, once again, the economic impact these businesses have faced on account of the pandemic. It is industry neutral in its approach, and, look, we all recognize that there are a number of businesses who are still reeling on account of the COVID-19 pandemic. My own belief is that it is likely that some additional assistance will still be required for these businesses. Do you believe that future support programs should be modeled after a sort of industry- neutral, long-term working capital loan program, like the RESTART Act proposes, so that we can target those hardest-hit businesses? Ms. Guzman. If confirmed, I do look forward to evaluating all of SBA's lending products. We do have a variety of options, from the 7A and 504, and, you know, other programs that we can constantly ensure that small businesses are able to access in order to get capital, you know, whether it is that long-term patient capital or otherwise. So I would look forward to exploring options as we go through that analysis and working with this Committee and you and your staff to ensure that we are able to support all of these businesses. Senator Young. Well, I am out of time. It sounds like you are open to the RESTART Act. Thank you very much. Chairman Cardin. Senator Booker. Senator Booker. Thank you, Mr. Chairman. Ms. Guzman, thank you so much for taking time to meet with me. I am so excited about your nomination and I look forward to supporting you on the floor when it comes to your confirmation vote. I was kind of excited that my colleagues have already brought up this issue, Senator Cardin and Senator Scott, the issue of justice-involved individuals. In 2019, there was more marijuana possession arrests in our country than all violent crime combined, and those people with criminal convictions for doing things that two of the four last Presidents admitted to doing would be excluded from a lot of the loan programs that we have seen in PPP and other SBA financing. That is ridiculous to me. And I just want to put a finer point on what I am looking for, which is just you can do it with the stroke of a pen, can empower folks. And you know marijuana laws are disproportionately enforced against who? Ms. Guzman. People of color. Senator Booker. People of color. So we literally have college kids, with impunity, smoking pot, but people who are Black and brown are four times more likely, even though their usage rates are no different. So that ultimately affects, as the ABA says, 40,000 collateral consequences, and that is one of the reasons why there is such a wealth disparity between communities of color, because they are over-policed and over- conflicted for things that are just unjust. And so I am really hoping, with a sweep of a pen, that you would change this. It is an administrative function, and I know it is something the Vice President and I have worked on these issue when she was a Senator. The President and I have talked about these issues ad nauseum. I know where their heart is on these issues. And so I hate to put you on the spot, but would you commit to reversing this guidance and creating justice for Black and brown folks who have been over-incarcerated for these nonviolent drug crimes, to allow them to have access to these loan programs? Ms. Guzman. Thank you, Senator. I believe I shared with you as well that during my time at the Administration we did focus on this reentry population as well as making some administrative changes to simply access. And so I would immediately be willing to dive in and explore what administrative changes I could make to open up these loans. Senator Booker. Well, I hope we have a conversation on that when you stroke that pen, write that out. If you want to see the most ridiculous happy dance you have ever witnessed, you can have me there, and I will be happy, because this is something that is just so painfully wrong. The universe is not that big, but you could really become a model for the whole Executive branch, where just somebody got in there and quickly did right, and I know communities would celebrate as much as I will, should and when that happens. I am still concerned about Black and brown businesses, you know, really benefiting from PPP in sort of the second draw. Part of the issue is that we simply just lack the data to understand the scope of this sort of issue that a lot of our businesses are doing. And over the summer the SBA released what little data they had on PPP lenders. About 86 percent of the 661,218 loans made at the time had failed to provide any information about race or ethnicity of the business owner. But we know the Black and brown business owners across the country are simply not getting the help they need, and I know you are intimately aware with that. One analysis, by Accountable.US, found that districts with the highest Black populations received up to $13 billion less in PPP dollars. While we have heard about the improvements to the PPP distribution since December, it is clear that there is more to be done to make PPP lending more equitable. And so I would love to offer my assistance in that. To me, I think it is something that you could really be a champion of. But I would love to jump really quick to something I think you, in your incredible career, have a lot of experience with, which is just this idea that these local loan funds, from your work in California you have seen this, that really small businesses don't have banking relationships, but I really think that these local loan funds, one of which you sort of helped to administer, could really be the source of a lot of making of changes. So I put together a bipartisan bill called the RELIEF for Main Street Act, that would seed and scale efforts like the one you ran in California particularly aimed at businesses with 20 employees or less. My bill, which I have worked on with the Chairman and other members of the Committee, would fund about $15 billion in the Heroes 2 bill that passed the House last Congress, and I am pleased to see that President Biden's American Rescue Plan included a $15 billion designation for the kind of flexible funds that you ran, which is now something that has me really excited. And so I just wonder, in the last seconds I have, could you maybe talk about why getting money into the funds like you ran in California really provided better advantage for businesses that don't have those kind of banking relationships? Ms. Guzman. Well, the California Rebuilding Fund, or the iBank programs that are administered as loans in California have been effective in both leveraging dollars as well as working with local CDFIs and mission lenders to advance access to capital to underserved communities, specifically. So they have had great track record. These are local lenders on the ground with connections to communities, so I do think they are great programs. And then, of course, the California relief grants that I have been administering as well, through CDFI networks, through our technical assistance providers, have been able to reach underserved communities at really high rates as well. So I would look forward to bringing those learnings here in D.C. and seeing how we can scale and leverage programs like that to help our underserved communities. Senator Booker. That is great. Well, I want to just put one marker down, as I pass it back to the Chairman. One of the big concerns I have, and I have seen this in bipartisan conversations I have had with other members of this Committee, is just the challenge we have with the vulnerability of our supply chains in this country. And a lot of times it takes a lot of money, up-front capital, and ten-year projections to build manufacturing capacity here for things that we now know are critical, from penicillin to PPE. And I think this is something that I know the administration is interested in, and I hope that you could partner with members of this Committee, because I believe one of the lasting legacies of President Biden's Build Back Better could be actually strengthening manufacturing, which would have not only an economic plus to us but it would give us a national security edge should we face crises in the future, whether they be pandemics or, God forbid, military conflicts for us, not to be so dependent upon adversary nations for critical manufacturing. Ms. Guzman. Thank you for that. Yes, in California we did look closely at on-shoring, near-shoring, and I worked in partnership with the California Manufacturing Technology Association while I was on the Governor's task force, and it is a critical issue. We want to shore up our supply chains and give small businesses an opportunity to access those supply chains too, with contracting. So procurement and supply chain are very important issues for me, and if confirmed I would take that passion to the SBA. Senator Booker. Thank you. I look forward to giving a very hearty yes when it comes to the vote on the floor, and thank you very much. Ms. Guzman. Thank you very much. Chairman Cardin. Thank you, Senator Booker. We will now go to Senator Kennedy by WebEx. Senator Kennedy. Thank you, Mr. Chairman. Mr. Chairman, I cannot see the clock, so if you would let me know when I have 30 seconds left. Ms. Guzman, congratulations. I want to ask you about our tax code first. In 2007, as you probably know, Congress changed the way we tax pass-through entities. I am talking about LLCs, LLPs, sub-S corporations, partnerships, sole proprietorships. Congress exempted 20 percent of income from those pass-through entities from the Federal income tax. Was that a good idea? Bad idea? What do you think? Ms. Guzman. Thank you for that, Senator. You know, I would work in partnership with the Office of Advocacy on issues like this, to understand some of the research they have done as well as be the voice of small business. While I do not have a specific opinion on that I would love to get back to you and talk to you further about it. Senator Kennedy. Well, are you familiar with it? Tell me how it works. Ms. Guzman. I am familiar that, you know, there has been some tax benefits for these types of organizations, but, you know, I would need to get back to you on that, in terms of, you know, as it relates to SBA and the programs. I would basically be the voice of small business, of course, and tax issues, regulation issues, all these are of concern, but I do not have specifics on that. Senator Kennedy. Well, but, I mean, obviously your job is to help small businesswomen, small businessmen, and taxes represent a cost of doing business, just like your electricity bill or your insurance bill. Do you think this provision in the law has helped small business, or has it hurt it---- Ms. Guzman. Senator---- Senator Kennedy [continuing]. or are you just not familiar with it? Ms. Guzman. Senator, thank you for flagging it. I am not as familiar with the research in terms of whether or not it has been effective or beneficial. So, you know, rather than answer without any specific knowledge of a research study I would rather research that further and get back to you on this issue. Chairman Cardin. Senator Kennedy, could I interject for one minute? I will not take it out of your time. Senator Kennedy. Okay. Chairman Cardin. Because you are raising a very important point about the tax code impact on small businesses. We don't have jurisdiction over the tax code, but I will be in conversation with Senator Wyden as to whether we can't have some opportunity, either a joint hearing to look at the tax code impact on small businesses, because your point is very well taken. The pass-through, as I understand it, was a rough justice to deal with the C rate reductions, since most small businesses use the C rates rather than the corporate rate--they used individual rate rather than the corporate rate in their taxes. And I think we do need to get more information on this, because my own personal view is that small businesses have not benefited to the same extent that larger companies that use a corporate tax rate from the 2017 tax bill. I just interject on that because I think this is a subject our Committee needs to take a greater look at, and I thank you very much for raising today, at this nomination hearing. Senator Kennedy. Well, I appreciate that, Mr. Chairman. Many of the small businesses in Louisiana are not C corps, which, as you know, has the disadvantage of double taxation. Many of the small businesses in my state are pass-throughs. So this is a very important provision, and I, at some point, since Ms. Guzman is going to be the champion for small business, I would kind of like to know what her position is on that. I am going to submit a question in writing, if that is appropriate, Mr. Chairman. Ms. Guzman, let me ask you about, are you familiar with Small Business Innovation Research grants? Ms. Guzman. Yes, Senator, I am. Senator Kennedy. And I assume then you are familiar with Small Business Technology Transfer awards. Ms. Guzman. Correct, yes. Senator Kennedy. Okay. Are you familiar with the FAST program that we started? FAST is an acronym for a Federal and State Technology partnership program. Are you familiar with that program? Ms. Guzman. Yes, Senator, I am. Senator Kennedy. As I understand, the FAST program was set up to try to level the playing field and make sure that these grants and these awards are more evenly distributed. How has the FAST program worked? How well has it worked, in your opinion? Ms. Guzman. Thank you for that question, Senator. It is a really critical issue that we ensure that SBIR and STTR is able to be utilized across the country. There is definitely disproportionate use in certain geographics. And so I know that beyond FAST grants, there's FAST grants as well as agencies that participate in SBIR have extended outreach and assistance programs to try to reach communities who don't traditionally access these programs. And so all of them are priority areas for ensuring access to underserved businesses and underserved small businesses who want to utilize this America's Seed Fund. In terms of---- Senator Kennedy. Well, can I interrupt you just a second-- -- Ms. Guzman. Sure. Please, Senator. Senator Kennedy [continuing]. because I am about to run out of time. I hate to interrupt people. I am going to come see you, Ms. Guzman. I don't think the FAST program has worked. It is still not leveling the playing field. But we will save that topic for another day. If I could ask you--and I interrupted you because I want to really give you time to answer this question. What is the better way, as a matter of policy, to increase people's wages? A minimum wage increase or an increase in the earned income tax credit? Ms. Guzman. Senator, I don't have a--you know, I know that my responsibility will be to take the research and the data and be the voice of small business, as well as the small business stories around this issue. I intend to do so, if confirmed, and, you know, to evaluate and look at the research from both sides. You know, it has been my practice in California to convene working groups with various organizations, with difference of opinion, just so that I can hear and listen to all the opinions across these issues. Senator Kennedy. Well, yes, ma'am, and I appreciate that. But in your opinion, what is a better way to increase wages without impacting business--minimum wage increase or an earned income tax credit increase? Ms. Guzman. Senator, I would need to evaluate that. It is similar to my response to you on the previous tax question, that I would need to further, you know, research the matter and share with you, you know, at a different time. So thank you for the question. Senator Kennedy. How does the earned income tax credit program work? Ms. Guzman. Well, SBA would--you know, in terms of the impact on small businesses, I really honestly could not share with you at this time. Senator Kennedy. No, just how does the whole program work? Ms. Guzman. With the earned income tax credit? I mean, businesses are--all of these programs are trying to ensure that small businesses are able to, you know, take the tax benefits and credits, you know, that can support their businesses. You know, again, I cannot offer you anything further. Sorry. Senator, I know that this is really a critical issue, and I would look forward to partnering with you and your office in the future to discuss this further, if confirmed. Senator Kennedy. Well, it is a critical issue, Ms. Guzman, and I would encourage you to learn more about the earned income tax credit. I mean, if we raise the minimum wage to $15 an hour, the Congressional Budget Office says it is going to cost us 1.3 million jobs in the middle of what some of my colleagues say is a recession, during the pandemic. An earned income tax credit change--and I am not advocating here; I am trying to understand your position on it, because you are going to have to be a champion for small business. A change in the earned income tax credit, which would also put more hands in low- income workers, if we paid for it with an offset or a pay for in the Federal budget, would increase people's income without causing people to be laid off. Chairman Cardin. Senator Kennedy, your time is pretty well expired. Senator Kennedy. Okay. Did I go over by a lot, Mr. Chairman? Chairman Cardin. Well, I took some of your time, so I am trying to equalize it. But I think you are over by about two minutes right now. Senator Kennedy. Well, I am sorry. Consider this plane landed. Chairman Cardin. Thank you very much, and I will just repeat again, on the tax issues I really do think we need to weigh in and we need to have a view on how that tax code is affecting small businesses. So I look forward to working with you, Senator Kennedy, on that issue. I serve on the Finance Committee so I will take that message to the Senate Finance Committee. Senator Kennedy. And I am sorry I went over, Mr. Chairman, but I cannot see the clock. Chairman Cardin. Senator Hirono, via WebEx. Senator Hirono. Thank you, Mr. Chairman. I, too, cannot see the clock, so you need to let me know when I have 30 seconds left. Ms. Guzman, it is a pleasure to see you again and thank you very much for the chance to talk with you a few days ago. I ask these two fundamental questions of every nominee who comes before any of the committees on which I sit, and while you answered a similar question to the committee questionnaire I am going to ask you these questions. Since you became a legal adult, have you ever made unwanted requests for sexual favors or committed any verbal or physical harassment or assault of a sexual nature? Ms. Guzman. No, I have not, Senator. Senator Hirono. Have you ever faced discipline or entered into a settlement related to this kind of conduct? Ms. Guzman. Yes, I have not. Senator Hirono. When I had a chance with you, you made a commitment to making sure that underserved small businesses, in particular, would have adequate access, maybe more access at this point, to the $284 billion for PPP that Congress recently approved. Do you have any specific kinds of things that you would do to make sure that minority businesses and businesses with fewer than ten employees, for example, would have access to PPP? Ms. Guzman. Thank you, Senator, for that question. It is a priority of the Administration to ensure that our underserved businesses are able to access resources, and I believe that we can better deploy the community-based resources, our resource partners, as well as our field offices to ensure that there is strong communication, strong awareness, strong training so that more businesses can access this program equitably. Senator Hirono. And also when we had a chat I mentioned that there are a lot of small businesses who have a really hard time with all of the paperwork and requirements, so they should be as understandable as possible. So I hope you will take a look at that. I have a question regarding 8(a), the 8(a) program, and I think you have a familiarity with that, because we advocated for an extension, an additional year for businesses to participate in 8(a) programs and you had advocated for this extension. So the 8(a) programs support, for example, Native businesses, Native Hawaiian businesses, Alaska Native businesses. So I would like you to reinforce that. Do you have a commitment to making sure that the outreach to 8(a) programs and support for the 8(a) program remains a commitment on your part? Ms. Guzman. Thank you, Senator Hirono. I would definitely commit to ensuring that all of our programs are utilized fully, including the 8(a) program, and that that outreach is conducted extensively. Senator Hirono. And sometimes the 8(a) participants need a little bit more time, more flexibility to meet various requirements, so I hope that the 8(a) businesses that may have difficulty meeting their business activity targets for commercial or non-Federal revenues, that they would be given adequate time to meet those requirements. Ms. Guzman. Yes. Thank you, Senator. I would look closely at that program and make sure that it is aligned with the situation that so many of these contractors are facing right now, during COVID and on an ongoing basis, so that they can fully leverage the program and grow to be successful firms. Senator Hirono. So since last year, the Senate Republicans have been working to prevent Planned Parenthood local chapters from receiving PPP loans. They are trying to disqualify these chapters from receiving loans, based on basically an ideological perspective. And you signed a letter to SBA arguing that local chapters should be eligible for these loans, and hear continuing concerns about how SBA tried to apply its affiliate rules to disqualify certain nonprofit organization from participating in PPP. So I hope that you will commit to ensuring a fair, mutual, and consistent application of program rules for similarly situated entities and not seek to disqualify any organizations based on ideological reasons. Ms. Guzman. Senator, if confirmed, I would work hard to implement the program as per the rules and regulations outlined. Senator Hirono. You mentioned that you would look to your local resource partners, and we had a chat about that, and it is good to know that you intend to fully use your local resource partners to get the word out to especially minority- owned and other small businesses as to the availability of PPP loans. I think my time is up. I see a clock up there now. Chairman Cardin. Yes, your time is up. Senator Hirono. I can barely see it. Okay. Thank you so much, Mr. Chairman. Chairman Cardin. Thank you. Senator Hawley? I am not sure your mic is on. Senator Hawley. How about that? Chairman Cardin. Better. Senator Hawley. There we go. Thank you. Let me just start, actually, with where Senator Hirono just left off, and I know that Senator Ernst asked you about the affiliation rule as well. So I just wanted to be clear on the answers that you gave to Senator Ernst and now just to Senator Hirono. The CARES Act explicitly says, in the text of the Act, that nonprofits are eligible for PPP funds only if they and their affiliate organizations have no more than 500 employees. Now Planned Parenthood employs approximately 16,000 people across the country, and according to their own financial statements each and every one of its offices, both regional and national, each one is affiliated. They are all affiliated together, which means that each office is ineligible to receive funds under the text of the Act. So I just want to be clear that I understand your position on this. You will enforce, if confirmed, you will enforce the affiliation rule. Is that correct? Ms. Guzman. I would implement all the rules and regulations as applies to SBA's programs, and I welcome the opportunity to discuss affiliation and its application in these instances. Senator Hawley. Good, and just on Planned Parenthood in particular, can you commit to ensuring that Planned Parenthood affiliates, that are affiliated per the CARES languages, will not receive funding under PPP? Ms. Guzman. The SBA affiliation rule addresses all of these issues quite extensively, and I would welcome the opportunity to review that with your office as well as with the SBA staff, if confirmed, to ensure that we are following all the rules and regulations. Senator Hawley. Do you regard it as an open question? I mean, the Planned Parenthood issue, do you regard that as an open question, Mrs. Guzman? Ms. Guzman. Senator, I would need to dive into the specifics around affiliation and the control. It is about independence and control. And so I would definitely need to dive into this specific case. I couldn't give you a specific opinion about one individual entity at this point. Senator Hawley. Let me ask you about a different set of nonprofits, religious nonprofits. After the passage of the CARES Act, my office, we were inundated with requests from churches and other religious nonprofits in my state, the State of Missouri, saying that they had been told by some local and regional SBA offices that they were not eligible to participate in PPP, this despite very clear language in the CARES Act that makes religious nonprofits, 501(c)(3)s, eligible for assistance, again, provided they have fewer than 500 employees. This eligibility was explicitly preserved in the December relief bill that Congress passed. And my question to you is, can you commit to applying that law and ensuring the churches and other religious nonprofits continue to be eligible to receive PPP funding? Ms. Guzman. Yes, Senator, in this case as well I would commit to applying the rules and regulations as defined by Congress and implementing them at the SBA. Senator Hawley. Very good. And you can commit today to ensuring that churches and religious nonprofits receive equitable treatment, on the same level playing field as every other nonprofit under the rules. Is that fair to say? Ms. Guzman. I would want to ensure that all of our district offices and our research partners have the communication and understanding of the programs so that they could equitably distribute these funds. Senator Hawley. Good. Thank you. The Economic Injury Disaster Loan program, you and I visited about this yesterday. I expressed my concern based on the number of folks in Missouri who had come to me, who are eligible, under the terms of the program, but who had a terrible time receiving funding, and then, of course, as I said to you yesterday, to see the October OIG report that suggested that that program, the EIDL program, was rife with waste, fraud, and abuse is particularly--particularly--frustrating, given the meritorious applicants who either had significant delays or weren't able to get the funding. So I know you are aware of the issue. Let me just ask you what steps you will take to ensure the EIDL's program integrity and make sure that legitimate small businesses are not getting crowded out by fraud and abuse. Ms. Guzman. Thank you, Senator, for that question, and I did enjoy the conversation about that, as we have seen it in California as well. But the controls and oversight are really critical in these programs so we can ensure that the right businesses, who are suffering, get these funds. And so I would prioritize implementation of the relief funding across the board to ensure that that is the case. Senator Hawley. Very good. Thank you very much for your time. Congratulations on your nomination. Thank you, Mr. Chairman. Chairman Cardin. Thank you. Senator Duckworth by WebEx. Senator Duckworth. Thank you, Mr. Chairman. Ms. Guzman, I appreciated the opportunity to meet with you a couple of weeks ago, and I am grateful for the expertise and experience that you will bring to this role. We are obviously at a critical juncture in our Nation's small businesses, and I want to focus today on how we make sure that SBA is at the forefront of helping small business owners of every demographic get back on their feet. My first question is going to be about the SBA microloan program. I think it is one of the most important tools for expanding access---- Chairman Cardin. Senator Duckworth, I think we have a problem on your connection. Let's see if we can get that re- established. [Pause.] Chairman Cardin. While we are waiting for Senator Duckworth, let me make a couple of announcements, if I might. At the conclusion of this hearing the record will stay open until 5 p.m. on Friday for questions for the record, and I would encourage the nominee to try to respond to those questions as quickly as possible. Once they are completed, I will then query the offices to see whether we can't schedule a floor consideration as quickly as possible. So your cooperation in responding to the questions for the record would be extremely helpful, and I would encourage you to do that. Secondly, I am going to concur in many of the letters of recommendations that we have received from various groups, including receiving today the letter from the U.S. Chamber of Commerce in support of Mrs. Guzman's nomination being confirmed. And they point out that it is very important that we act on the nomination as soon as possible. Well, I concur in the Chamber's view, and without objection will make that letter part of our record. [The U.S. Chamber of Commerce letter follows:] [GRAPHIC NOT AVAILABLE IN TIFF FORMAT] Chairman Cardin. You have heard, I think, a consistent message from the members of this Committee. We want to make sure that the existing tools that the SBA has are targeted to those companies that need it the most, particularly during this health care pandemic, and that we want to fine-tune it and provide the resources and help to make sure that they are available. And then in regards to new opportunities and tools, we want to work with you to see what we can do to provide additional help to the small business community in our Nation. We have a particular concern about the underserved community, the underbanked community, those in minority communities, women- owned small businesses, that traditionally had a more difficult time in accessing these tools, and as Senator Inhofe pointed out, looking at ways that we can get into the community in a more effective way to get that information out. And I know that President Biden has talked about the community navigators. We have the resource partners under the SBA that all need to be reinforced. I was pleased that this year, in this past year, in Maryland, we were able to go from one Women's Business Center to three Women's Business Centers. That is going to help a great deal in reaching demographics that need help in accessing the tools that are available. So we want to make sure that we provide that type of assistance. The bottom line is working together we think we can really help the small business community, and that is why it is so important that we share information and we work together. I have been informed that Senator Duckworth offers her apologies. The video is not working on her computer, and therefore she will not be able to ask questions in person at this year, and can certainly take advantage of the questions for the record. I have been told that Senator Rosen is likely to join us very shortly, so we are going to stay, if you don't mind, in a brief recess, to see if Senator Rosen can be here. We will hold this hearing open for ten minutes to see if Senator Rosen can come by to ask questions. If you don't mind, we will just take a brief recess. Ms. Guzman. That would be fine. That would be fine. Thank you so much. [Recess.] Chairman Cardin. The Small Business Entrepreneurship Committee will resume its session, and at this time I would recognize Senator Rosen by WebEx. Senator Rosen. I was just questioning in another committee so I am trying to juggle that around. Mrs. Guzman, I just want to thank you for being here today, and your commitment to serving our Nation. We really had a productive phone call, a productive meeting, just last week, and I look forward to your plans to revive our Nation's economy, to create those jobs, and really just keep our Nation's small businesses afloat. You know, amidst a global pandemic it has really devastated our small business community, not just in Nevada but across this Nation, and I urge this Committee to have a swift confirmation of Mrs. Guzman so we can let her get immediately to the hard work of bringing our businesses back. But I want to talk about something really important to Nevada, and, of course, so many other states in the Nation, but it is access to PPP loans for gaining small businesses. Last year, when the SBA rolled out the Paycheck Protection Program that Congress created, small business that earned more than one-third of their revenues in legal gaming, operations were excluded from the program. This had the potential to starve Nevada's small businesses of critical support when they needed it most. As you know, not all casinos are big businesses. Many, including some of our hotel casinos, are small businesses, and they employ large numbers of workers who make up the backbone of Nevada's economy. Moreover, while people assume that gaming only means casinos, in our state there is gaming equipment inside restaurants, grocery stores, convenience stores, gas stations, and the like. Bans on loans to gaming in businesses also affects our gaming equipment manufacturers in Nevada as well. But thankfully, Senator Cortez Masto and I, along with the House delegation, were able to convince the SBA, under the last administration, to abandon this misguided policy, and the agency's guidance for the next round of PPP also allows gaming businesses to access relief. So, Mrs. Guzman, given the importance of gaming to Nevada's economic recovery, will you commit to working with me to be sure that the legal gaming small businesses continue to have access to PPP, SBA loans, and the like, as they try to stay afloat and revive themselves as we reopen our economy? Chairman Cardin. I am not sure your mic is on. Ms. Guzman. Apologize. My mic was off. Thank you so much, Senator. I appreciated meeting with you and I enjoyed the conversation. I am very happy to commit to ensuring that the program is as accessible as possible to all of our small businesses who qualify, and I look forward to partnering with you. I have noted the concern and I will be sure to follow up with your staff and coordinate anything in the future that you have concerns about specific to those types of businesses. Senator Rosen. Thank you. I appreciate it. I also want to talk about lifting the caps on EIDL loans and grants. You know, my office helped directly nearly 1,200 Nevada small businesses with their COVID relief programs, and the complaint that we most frequently heard about was the SBA's $1,000-per-employee cap on the EIDL advance grants, and the $150,000 cap on the EIDL loans. These borrowing caps were not Congress' intent when we allocated these funds, and some of our businesses have not been able to survive because these caps were inadequate. Last year, I introduced, with bipartisan legislation, EIDL For Small Business Act that eliminates the borrowing cap on the EIDL loans and the EIDL grants, and it replenished the funding for the EIDL program. And so can you commit this session to work with us to fully remove the caps on EIDL loans and grants, and invest the new dollars that are needed, 99 percent of businesses in Nevada, small businesses, that are needed to give that support that our businesses so desperately need? Ms. Guzman. Thank you, Senator. Yes, I heard similar concerns from small businesses in California, and if confirmed I look forward to diving in quickly into all the CARES Act support to make sure that we are reaching the businesses that need it, at the levels the Congress has allowed. And so I would look forward to partnering with you and your staff on ensuring that that happens. Senator Rosen. I know I just have a few seconds left, so we do have legal state cannabis businesses, and so I am just going to--we can speak about this offline and I will submit some questions. But will you work with our office to commit to consider providing legally operating cannabis small businesses equal access to SBA resources, the loans, counseling, mentoring, and training? Ms. Guzman. I commit to further understanding those rules and regulations and seeing how we can partner with your office to serve all the small businesses who are in need. Senator Rosen. Thank you. I appreciate that. Thank you again, Mr. Chairman. Chairman Cardin. Thank you, Senator Rosen. That will complete our hearing, but once again, let me just remind the members that we will keep the record open until 5 p.m. tomorrow, Friday--5 p.m. Friday, excuse me--for questions for the record, and would encourage Ms. Guzman, if you would respond to those questions as quickly as possible so that we can work to schedule Committee action on your nomination as quickly as possible. Ms. Guzman. Yes, Senator, I will. Chairman Cardin. With that the hearing will be adjourned. Ms. Guzman. Thank you so much. [Whereupon, at 12:34 p.m., the Committee was adjourned.] APPENDIX MATERIAL SUBMITTED [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] [all]