[Senate Hearing 117-210] [From the U.S. Government Publishing Office] S. Hrg. 117-210 THE PANDEMIC RESPONSE AND THE SMALL BUSINESS ECONOMY: AN UPDATE FROM 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 __________ MAY 26, 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 __________ U.S. GOVERNMENT PUBLISHING OFFICE 46-999 PDF WASHINGTON : 2022 ----------------------------------------------------------------------------------- COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP 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 Paul, Hon. Rand, Ranking Member, a U.S. Senator from Kentucky.... 3 Witness Guzman, Hon. Isabella Casillas, Administrator, U.S. Small Business Administration, Washington, DC........................ 61 Alphabetical Listing and Appendix Material Submitted Cardin, Hon. Benjamin L. Opening statement............................................ 1 Guzman, Hon. Isabella Casillas Testimony.................................................... 61 Prepared statement........................................... 64 Responses to questions submitted by Ranking Member Paul and Senators Duckworth, Rosen, Rubio, Scott, Ernst, Inhofe, Young, and Kennedy......................................... 113 Let Them Learn in Jefferson County Public School Grassroots Letter dated May 6, 2021..................................... 50 National Association of Federally-Insured Credit Unions Letter dated May 26, 2021.................................... 110 Paul, Hon. Rand Opening statement............................................ 3 Secretary Yellen's Public Engagements March 2, 2021-May 25, 2021................................... 58 U.S. Senate Committee on Small Business and Entrepreneurship to Administrator Guzman Letter dated April 15, 2021.................................. 75 U.S. Senate Committee on Small Business and Entrepreneurship to Administrator Guzman Letter dated May 10, 2021.................................... 78 U.S. Senate Committee on Small Business and Entrepreneurship Roundtable Transcript dated May 6, 2021................................. 5 U.S. Senator Rand Paul to Secretary Janet Yellen Letter dated May 6, 2021..................................... 57 U.S. Small Business Administrator Guzman to Hon. Paul Rand and Committee Members Letter dated May 25, 2021.................................... 100 U.S. Small Business Administration Letter to Planned Parenthood of Delaware, Inc. Letter dated May 19, 2020.................................... 92 U.S. Small Business Administration Letter to Planned Parenthood of Metropolitan Washington, Inc. Letter dated May 19, 2020.................................... 88 THE PANDEMIC RESPONSE AND THE SMALL BUSINESS ECONOMY: AN UPDATE FROM THE U.S. SMALL BUSINESS ADMINISTRATION ---------- WEDNESDAY, MAY 26, 2021 United States Senate, Committee on Small Business and Entrepreneurship, Washington, DC. The Committee met, pursuant to notice, at 1:30 p.m., via Webex and in Room 215, Dirksen Senate Office Building, Hon. Ben Cardin, Chairman of the Committee, presiding. Present: Senators Cardin, Cantwell, Markey, Booker, Hirono, Duckworth, Rosen, Hickenlooper, Paul, Scott, Ernst, Hawley, and Marshall. OPENING STATEMENT OF HON. BENJAMIN L. CARDIN, CHAIRMAN, A U.S. SENATOR FROM MARYLAND Chairman Cardin. The Small Business Committee will come to order. Let me thank our Ranking Member, Senator Paul, for accommodating the change in time. As I think some are aware, there is a markup starting this afternoon in the Senate Finance Committee that some of our members need to be at, and there are a lot of other things going on. So we appreciate the change in schedule. It may affect some of our members' ability to be here in person. Administrator Guzman, I want to thank you also for the accommodation so that we could start this hearing at 1:30. It has been 14 months since Congress passed the CARES Act, and the SBA had really stood up to the challenge. Over $1 trillion in aid has been provided to American small businesses. In the Paycheck Protection Program alone, over 11 million forgivable loans have been issued, and the latest number was to the tune of about $791 billion. There is now optimism among small businesses with the rollout of the COVID-19 vaccine that businesses may be returning to a more normal volume. So let me first thank Administrator Guzman for your leadership. You hit the ground ready to go, and you were particularly focused on our most vulnerable small businesses, and you made a real difference. I also want to thank your workforce, because it was an extraordinary challenge for our Federal workers at the Small Business Administration. You have supervised the expansion of the Paycheck Protection Program and the EIDL Advance program, and you have stood up new programs, the Shuttered Venue Program, the Restaurant Revitalization Fund, the Community Navigator Pilot Program. The key has been Congress and the administration, open lines of communication, working together to implement these tools for small business. Transparency is absolutely essential and sharing information timely. And unlike in the previous administration where Treasury took a good part of the lead in regards to the administration and implementation of the tools for small business, under the Biden administration it has been the Small Business Administration that has had the principal responsibility. And I want to thank you for the transparency and information that you have made available to all the staff here on the Small Business Committee and to us personally, and sharing information in a very timely way. The coordination between Congress and the Executive branch is incorporated into the Economic Aid Act, which was passed this past December. Your presence here today, and the Treasury Secretary's appearance before this Committee, was included in that Act. So I want to thank you for being here today and carrying out that legislative responsibility. We will arrange for a convenient time for Secretary Yellen to appear before our Committee. We have had some discussions and we are looking for a date in which she will be able to testify before the Small Business Committee. So I am looking forward to this hearing and your update as to how these programs are working. The traditional lending programs were enhanced by the Economic Aid Act in December, so I am curious as to how those modifications worked. We have changed the eligibility of the PPP program, both by legislation and by administrative actions, so I am curious as to how those changes have been implemented. The EIDL Advance program, which is really one aimed at our most challenged small businesses, we need to know what outreach is being given so that those that could benefit from this program have an opportunity to participate, because we are concerned that they do not have the same avenues of information as other small businesses might have, and might be left behind. The Community Navigator Pilot Program, information notice was sent on March 3rd. We would be interested to see how that program is moving forward. The Shuttered Venue Program, applications opened on April 26th, and you had, I believe, somewhere around 13,000 applications, so we will be interested in that program. The Restaurant Revitalization Fund, you started accepting applications on May 3rd. I understand as of the middle of this month you had over 300,000 applications for the Restaurant Revitalization Act. Fifty-seven percent were businesses of women, veteran-owned, or socially and economically disadvantaged individuals, which is the priority in 21 days. It is my understanding that the funding there is not going to be enough to meet the demand, and we appreciate your assessment as to where we are in regards to the moneys that have been appropriated versus the demand as shown by the applications that have been filed. And just to let you know how important these programs are, last week Administrator Guzman joined me and the Second Gentleman, Doug Emhoff, in a roundtable discussion, to listen to restauranteurs in Annapolis, Maryland. And I must tell you, they made it very clear that they would not be here today but for the PPP program, the EIDL program, and now the Restaurant Revitalization Fund. Let me just relate some of what I heard during that visit. Monica Alvarado told about the harrowing experiences of deciding whether she could keep her restaurant opened or not. There were days that she thought she would not be able to make it. But the tools allowed her to get through that period. She became more creative in online and delivery orders, in addition to in-person dining, and today her future looks very bright. She was named Annapolis Person of the Year because of her leading efforts with other restaurant owners to help feed a community that desperately needed food during the pandemic, and helped her neighbors, neighbors helping neighbors, and we certainly know that from our small business community. And then there is Spencer Jones, who owns Chick and Ruth's. I mention that because that is an iconic restaurant in Annapolis. I spent 20 years of my life in the State legislature in Annapolis. He had to take over suddenly after he lost his dad. He is optimistic thanks to the SBA tools, and said he had the busiest week he has had since the pandemic. So things are coming back, and I think we can take pride in the fact that we helped that come along. We now have another opportunity, the American Jobs Plan, a once-in-a-generation investment in our infrastructure. So how can we use that opportunity to help underserved and disadvantaged communities? Last week, in a hearing on this Committee, we heard about what we could do to help women-owned businesses and minority-owned small businesses. This must be our priority as to how we are going to help the underserved entrepreneurs. Administrator Guzman, you are the voice of small businesses, particularly those who have been underserved in the Biden administration. So we look forward to your testimony and how we can work together to support our Nation's small businesses in the months and years to come. With that let me turn to Senator Paul. OPENING STATEMENT OF HON. RAND PAUL, A U.S. SENATOR FROM KENTUCKY Senator Paul. Thank you, Mr. Chairman. After more than a year of arbitrary lockdowns and other unnecessary government regulation, Americans are finally getting some of their freedoms back. Just a few weeks ago, the CDC started to follow the science and admit to the public that there is no need for those who have been vaccinated to continue wearing masks. Public officials across the Nation are finally beginning to allow businesses to reopen and children to get back to school. These actions should have been taken months ago, and are only the first step as we begin to try to heal our Nation and the economy from government's unnecessary intervention in our day-to-day lives. As inflation rises to the highest level since the Great Recession, it appears that we are starting to realize the cost of rampant government spending. I have heard it from many small businesses who are having trouble filling positions and experiencing exorbitant increases in the cost of materials. Earlier this month I held a roundtable with Kentucky small business owners from a number of different industries. The message was clear: economic lockdowns, the closures of our schools, and rehiring workers are the greatest challenges that small businesses face today. Mr. Chairman, I ask for the unanimous consent to submit the transcript of the roundtable into the record today. Chairman Cardin. Without objection, it will be included in the record. [The information referred to follows:] [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] Senator Paul. Since the beginning of the pandemic, the Federal Government has spent $4.2 trillion on COVID-19 relief. Small Business Administration has been authorized to spend just under $1 trillion, making it one of the largest spenders in the COVID economy, second only to the Department of Treasury. Unfortunately, Treasury Secretary Yellen is not here today to answer for her Department's use of those funds. Despite being required by law--I repeat that, required by law--in a bill that was passed overwhelmingly to be here, she is not here today. Earlier this month I sent Secretary Yellen a letter reminding her of that obligation, yet I have received no reply. Mr. Chairman, I ask consent to submit that letter for the record, along with a list of the public events Secretary Yellen has recently chosen to participate in instead of coming to this Committee. Chairman Cardin. Without objection, it will be included in the record. [The information referred to follows:] [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] Senator Paul. I also hope you will join me in calling on her to testify, including voting on a subpoena, if necessary. Now I would like to welcome Administrator Guzman. A few months ago, at your nomination hearing I supported your nomination, in good faith, with the expectation that you would be responsive and cooperative as the Committee fulfills its oversight responsibilities. Unfortunately, this has not been the case. Since March, I have sent five letters requesting data and information necessary for the Committee to conduct adequate oversight over the SBA's COVID-19 programs. To date, we have received only two responses, which fail to provide the complete information we have requested. The question we have at hand is whether or not groups in our country are receiving money illegally, against the policy of the Small Business Administration. We have these questions on legality, and you are stonewalling us. This is money that is being given to the Planned Parenthood organization. We found at least six different loans that have been given. Among the letters that we sent were multiple requests for specific information about PPP loans, illegally made to Planned Parenthood affiliates. Since you have been confirmed, we found that at least six additional PPP loans have been made to Planned Parenthood, for $17.6 million. This money is all in contravention to the SBA policy that it is illegal to give money to Planned Parenthood. In the previous administration, they made a ruling that Planned Parenthood was not eligible, and Planned Parenthood was directed to send the money back. But this administration is continuing to send money to an organization that the previous administration set a policy that was consistent with a longstanding policy on affiliates getting funds. When your deputy was here the last time we asked him, ``Have you changed the policy?'' He said, ``No, the policy is still the same,'' and yet we cannot get any explanation from you. We have given you the questions in advance. These loans were approved in defiance of the law, not in accordance with the law, and are just one of the many glaring issues with Small Business Administration programs. But unfortunately we cannot be sure, due to the continued failure on your part to be transparent and provide the committee with the information we need to do our job. I look forward to hearing your testimony, and I am hopeful that we can find answers to our numerous outstanding questions. Chairman Cardin. Thank you, Senator Paul. Administrator Guzman, it is a pleasure to have you before our Committee. Your full testimony will be made part of our record. You may proceed as you wish. STATEMENT OF HON. ISABELLA CASILLAS GUZMAN, ADMINISTRATOR, U.S. SMALL BUSINESS ADMINISTRATION, WASHINGTON, DC Ms. Guzman. Thank you so much. Good afternoon, Chairman Cardin, Ranking Member Paul, and members of the Committee. Thank you for the invitation to be here and for the opportunity to discuss SBA's programs in response to the COVID-19 pandemic. When I appeared before you as a nominee recently I did mention how this unprecedented crisis has impacted our Nation's 30 million small businesses and innovative startups, and it really created a sense of urgency for me, as well as my team, to work harder, think more creatively, and build more collaboration to meet the desperate need presented by this moment. In my 2 1 / 2 months as SBA Administrator, I can tell you that my motivation to deliver for our entrepreneurs has only intensified, and I have to share how proud I am of my incredible mission-driven team at the SBA, who despite having had to scale at such a high intensity over the past 14 months remain incredibly committed to our Nation's entrepreneurs. They have been working around the clock to deliver the American Rescue Plan's crucial relief programs to ensure our small businesses can survive this disaster and get on the path to recovery, growth, and resilience. We are making significant progress, particularly in our efforts to reach small businesses owned by women and people of color, who, because of longstanding barriers to capital markets and networks, suffered disproportionately from this pandemic, and by many accounts were not able to access relief. We are seeing the impact, and the latest economic reports do show that small business jobs have begun to rebound, and proprietors' income levels have begun to recover. And we are hearing from the small businesses we serve that both our traditional and our new relief programs have created vital lifelines. Earlier this month, we successfully launched the $28.6 billion Restaurant Revitalization Fund. As of Monday, when the application portal closed, we have received more than 372,000 applications, representing over $76 billion is requested funds, and more than half of those applications came from food and beverage businesses owned by women, veterans, and people of color who, as directed by Congress, received priority access to the program. And we are reaching the smallest of the small food and beverage businesses, with one-third of the total funds set aside just for them, including a specific set-aside I created for businesses with revenues of $50,000 and under. I am proud of how we rolled out this program in under two months while focusing on my key priorities of meeting small businesses where they are and integrating a customer-first, technology-driven and equitable approach. We also launched the $16.2 billion Shuttered Venue Operators Grant Program. As of May 25th, the SVOG program has received more than 13,000 applications for approximately $11 billion in requested funds. We started awarding our SVOG funds this week and we hope to continue to help our Nation's venues hold on until they can bring back the performances and experience that are the life blood of our American culture. Through our Paycheck Protection Program and Economic Injury Disaster Loan Programs we have now gone beyond $1 trillion in relief, and so far, in 2021, 95 percent of PPP loans have gone to small businesses with fewer than 20 employees. Our priority across all our relief programs is to get funds into the hands of small businesses swiftly, efficiently, and equitably. At the same time, we are also committed to maintaining a high level of oversight to minimize fraud and abuse while elevating transparency and open communication. We have implemented controls and oversight to better achieve that balance and reverse some of the previous fraud challenges that initially plagued the PPP and EIDL programs. I was pleased to hear both GAO's Bill Shear and SBA's Inspector General Mike Ware in a recent House committee hearing that transparency at the SBA has improved under my watch and that our relationship is off to a very good start. There is a lot of work to do, but we are working diligently to ensure this relief gets into the hands of the businesses for whom it was intended. Beyond our COVID relief programs we are also looking to the future and our Nation's economic recovery, with an eye toward equity. Small businesses are starting to reopen but they are still reeling from major revenue losses, and most expect recovery to take more than six months. This means that we will continue to see the need for capital, which is why SBA is exploring all options to open up capital access, including direct lending. Additionally, we know that the best thing we can do for our small businesses is to help our Nation recover from COVID and get our marketplaces and Main Streets back to normal. With more than 61 percent of adult Americans who have taken at least one shot of the COVID vaccine, we are making progress. The SBA is doing its part by getting the word out about the American Rescue Plan's tax credit available to small businesses that provide paid leave to employees receiving or recovering from COVID vaccinations. There is so much more work to do. As the voice for America's 30 million small businesses, I will be leveraging every tool at my disposal to bring businesses back, create jobs, and build an equitable economy that works for everyone. I look forward to partnering with you to give all entrepreneurs the tools they need to start, sustain, and grow into the future. Thank you, Mr. Chairman, Ranking Member Paul, and all the members of the Committee for the opportunity to appear before you today. [The prepared statement of Ms. Guzman follows:] [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] Chairman Cardin. Thank you for your testimony. Let me just follow-up on the Restaurant Revitalization Fund. You have just given us the most up-to-date information, which looks like we are oversubscribed by a substantial amount over what Congress has provided. Now, I must tell you, this is a bipartisan proposal. The original numbers that I saw were somewhat in excess of $100 that was going to be needed. So the fact that you have applications at $76 billion is not really a surprise. I think that is understood. And you are saying about 50 percent are coming from the target group of women, veterans, and disadvantaged communities, and you have that set-aside for the very small businesses. It looks like you will have enough resources to handle the 21-day priorities in the set-aside, but you are not going to have much beyond that unless Congress provides additional funds. Is that accurate? Ms. Guzman. That is correct. Chairman Cardin. Well, we need to work on that, and I hope that you will try to fine-tune this as to who is benefiting from the current program, who has been left out, and how much more we need in order to carry out the intent of the American Rescue Plan. Ms. Guzman. We would be happy to share that data as we continue to award funds. Chairman Cardin. Now on the Shuttered Venue Program, it looks like to date you have enough resources in that program to meet the need. If I understand correctly, you still could accept up to, it looks like about $5 billion more if the applications come in. Am I correct on those numbers? Ms. Guzman. Correct. We can have new applicants, and then, of course, there is the supplemental. Chairman Cardin. Absolutely. So I want to get to an issue that came up in some of my conversations, and that is the length of time it takes on a PPP forgiveness. We have heard from some small business owners that they have been waiting a long time, they do not understand the delay, that they have not been kept informed. Congress took action in December to streamline the process for the smaller of the PPP loans--I should not say smaller--those that are not big of the PPP loans. Is there a reason why there is a delay in approving the PPP forgiveness that we need to know about? We know you have to audit. We know that you have some where the first applications were rejected and now they filed a second and you put a hold on it. I know there are reasons that you have holds, but could you just share with us if there is any administrative reason why it would take so long to approve those forgivenesses? Ms. Guzman. No, and in fact, over 60 percent of those applicants in 2020 have applied for forgiveness and been processed, and it is less than 1 percent are within those hold categories that we are discussing. It is, on average, taking the SBA six days to process once a lender submits that final approval and forgiveness. And so we feel strongly that the current system is working with those being expedited under $150,000. We know, however, that more forgiveness loans need to come soon. There will be many businesses applying, and so the SBA is readying, talking to lenders to figure out a simplified process as possible to help all of the loans, regardless of size, be expedited through the process. Chairman Cardin. Well, a six-day processing time is certainly very reasonable, so I am glad to hear that. Is there a way where a business owner who has not heard within a reasonable period of time can get the status of why the PPP forgiveness form has not been processed? Ms. Guzman. All of our communication does go through the lender portal, so via the lender. We do not directly engage with borrowers, and so we rely on the lender to share information about the requests that SBA has for additional information, if that is the case. In some of the cases it is a lender hold. Chairman Cardin. And one last question. Can you just inform me as to the update on the Navigator Pilot Program, how that is proceeding, and whether you have been able to identify partners and how that is likely to be unfolded? Ms. Guzman. We have done extensive outreach to start readying partners across the country, and the Notice of Funding Opportunity was published yesterday and blasted out. So we will continue to try to hopefully bring in as many applicants as possible within the next 45-day window and report back to you once we have some navigator partners across the country. Chairman Cardin. Well, we will be very interested in working with you on that, because on the second round I am going to ask you about the EIDL Advance, and that is one area where we might be able to get help is through navigators to connect with more businesses who otherwise are not aware of what they are entitled to under the EIDL Advance program. Senator Paul? Senator Paul. Administrator Guzman, I have sent two letters to you, signed by 50 percent of the Committee members, requesting specific information regarding PPP loans to Planned Parenthood affiliates. We have not gotten a response so far. How many first-draw PPP loans have been approved to Planned Parenthood affiliates? Ms. Guzman. So specifically on specific borrowers, the SBA has not commented on specific borrowers. Senator Paul. Well, I am asking you. I am in charge of oversight over your trillion-dollar agency, and I am asking you, how many have been approved? Ms. Guzman. We do not publicly release that information, and one thing---- Senator Paul. So you are in defiance of Congress? You will do what you want and not what Congress wants? Ms. Guzman. We have provided you a full listing---- Senator Paul. You have not provided us with any listing of Planned Parenthood affiliates who have received money. This is an ongoing problem. The previous administration said it was unlawful. This is a big deal. The previous administration said it was unlawful and told them to return the money. Your administration is now giving them money. This is a legal question. This is a big deal. This is not something you come to Congress and just say, ``I am not going to answer the questions.'' Ms. Guzman. Not at all. While I cannot discuss specific borrower information---- Senator Paul. No one is stopping you from discussing this. In your written testimony, you discussed an individual recipient of money through the program, so you are willing to talk about individual recipients. You are just not willing to talk about Planned Parenthood. But there is a legal question here. We want to know how many first-draw loans were given. We want to know how many second-draw loans. We want to know, since Patrick Kelley, your associate, came here and told us that the affiliate rule has not been reversed. The affiliate rule predated, as far as I am concerned, the Trump administration. It goes back decades, because it was done to protect small businesses, so small business programs were supposed to go to small businesses, not big businesses. So Planned Parenthood has 16,000 employees. The previous administration determined that they are a big business, and yet you continue to give them money, and you will not tell us how much you are giving. You will not tell us if you have reserved your policy. Have you reversed the longstanding affiliate policy that has been part of the Small Business Administration for decades? Ms. Guzman. No, we have not, and if I may, what we did provide to you is the full listing of all of the PPP loans. We do not have a specific PPP file, but we did provide to your staff the full listing so that you could look at all of that information, including any Planned Parenthood. You know, specifically on the affiliation rule, nothing has changed with that regard. However, what I would say is that, you know, specifically on affiliation what applies here is management. Senator Paul. Apparently the data you sent us that was in collection was sent months ago and does not include the new loans. So we want to know about the new loans. I think we discovered the old loans, and now we would like to know about the new loans. But then we have to have an answer. If it is illegal, according to the Small Business office, to give money to Planned Parenthood, how did it become legal if you have not changed the policy? So the previous administration said they are a big business. They said give the money back. You are giving money to the people that the Small Business Administration said it was illegal to give money to. That is a conundrum. That is a real problem. Ms. Guzman. And if I could speak to that letter, that letter was not a policy statement. It was not processed. In fact, the letter does not exist in SBA systems as it is not a formal process. Senator Paul. Which letter? Ms. Guzman. The letter that you referenced before in your letters to us about this issue specifically. And so we do not have---- Senator Paul. But what are you talking about? What letter are you talking about? You are talking about the policy? Ms. Guzman. Right, which I would say is not a policy. How PPP---- Senator Paul. So you are saying that the previous administration, when they denied funds to Planned Parenthood they did not refer to a policy? They did not refer to the affiliate policy, which is the policy--you are saying that the affiliate policy is not a policy? Ms. Guzman. The affiliation rule is a policy. What they were referring to was general, the affiliation rule, as we shared with you in our recent letter to you--and I apologize, that was yesterday, so I am not sure if you have had a chance to review it--but affiliation arises under certain circumstances. Some of them do not apply to nonprofits, in the case of ownership or stock options or relations, identity of interest, which is more for foundations. But where this does apply is on management, and that is either where there is control of the officers---- Senator Paul. You can see how common sense would dictate that you would put something forward saying that you have now reinterpreted the policy to say Planned Parenthood is no longer a big business but a small business, because you are working in direct contradiction to the previous Small Business Administration that said they are a big business. They went through all the same rules you are listing for me, and they concluded that yes, Planned Parenthood had direct control over the affiliates, that the policies and the actions were dependent on the national branch, and that they did not meet the definition of a small business. And so you are aware that not only is Planned Parenthood a politically controversial entity, but it is also one that the rest of government has controls on. We have put the Hyde Amendment in for decades to try to prevent taxpayer money from paying for abortion. But now you are going around the Hyde Amendment, giving them money, but then you are also reclassifying them as not a big business, as a small business, but you are not being forthright. Ms. Guzman. And if I may, I did not say that the--I am not judging on the policy specifically with affiliation for a specific borrower, because again, we do not do that. I am sharing the affiliation rule with you, for your guidance. However, basically the borrowers attest to certain eligibility, and the lenders can rely on that attestation. The SBA does not directly---- Senator Paul. But they were ruled illegal by the Small Business Administration, and you are reversing that policy, and you are saying, ``Oh, we don't ever look at this. It is a self- attestation.'' Well, someone determined that they were illegally getting the money and told them to get it back, and now they are getting the money. I do not know how that can happen without an explanation from the Small Business Administration. Ms. Guzman. And then, just to add onto that, the point at which SBA would look at that would be at the point of forgiveness. And so that prior relationship is attestation by the borrower to the lender---- Senator Paul. But in, I think, Patrick Kelley, when he testified he said you had thousands of ones that you had reviewed for honesty, and whether or not they had been honest, and there were lists of people that had not been, and apparently Planned Parenthood was on the list. They are still on the list. So they are on a list of people illegally getting it. The policy was send it back, and now you are sending them more. You can see how it does not make sense to us. And then you are unwilling to comment on it, and you are unwilling to give us information. So my conclusion is that you believe you are above the law. And my only conclusion is that we still want the information. We are here for oversight, and that our next step would be to subpoena you. But that is a disappointment to me, because when I voted for you I thought you said you would be transparent, and it looks like you are specifically hiding this information from us. Ms. Guzman. And just one other thing to note is that, again, as we go through forgiveness, the SBA then starts to look at these loans. That is when hold codes can arise as well. Under those circumstances, you know, we would be happy to work with your staff to provide further information. But again, SBA, at this point in the loan processes, is obviously relying on the attestation of the borrowers as well the lenders. Senator Paul. So today no Planned Parenthood has been forgiven. No Planned Parenthood loan has been forgiven. Ms. Guzman. That is correct. Senator Paul. So see, you know the information. You are just not willing to reveal it. So you know all about their information. The record should state you are unwilling to give the information to Congress. [The information referred to follows:] [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] Chairman Cardin. I will certainly support Senator Paul's request for reasonable information for oversight. I think that is important for the Ranking Member and any member of this Committee to get us the information for oversight. I do want to clarify, for the record, since I was in the room when the drafting was done on the CARES Act, and it was done in a very careful, bipartisan manner, Treasury was also in the room at the time, Small Business was, under the Trump administration, and we knew that we had a challenge in expanding SBA program to nonprofits, since nonprofits were not included in most of the tools available under the Small Business Administration. And there was a lot of give-and-take as to how we would handle nonprofits, and specific nonprofits were mentioned. And we made it clear we were not going to carve out for specific nonprofits, so we wanted one rule to apply. So the affiliate rule was by design to apply as SBA had applied the affiliate rule previous the CARES Act, which applied mainly to for-profit entities, not for nonprofit entities. So we recognized that going in, and you are correct in that there they attest to their certifications and we wanted SBA to accept that because we wanted to get money out quickly. So I just really wanted to clarify that for the Committee. There was no effort made to target into one specific group. We wanted the rules to apply to all nonprofits the same, and the former affiliation rules that were used by the SBA. With that let me recognize Senator Rosen, via Webex. Let me recognize Senator Hirono, in person. Senator Hirono. Thank you. So, Ms. Guzman, it is good to see you again. Whenever we talk about Planned Parenthood there are all kinds of allegations and perspectives tossed around, but I know that we were not planning to carve out or single out Planned Parenthood or any other nonprofit for any special kind of treatment. So SBA was supposed to apply the affiliation rule in a nondiscriminatory way, not depending on the political or any kind of leanings of a particular entity. But my understanding of the questioning that I just listened to is that the SBA, I suppose under the previous administration, wanted the previously awarded funds to the various Planned Parenthood affiliates back. Is that right? They sent a letter or something, the previous administration's SBA? Ms. Guzman. That is my understanding from the information Dr. Paul shared. Senator Hirono. And when they did that, was some procedure supposed to be followed, or does the SBA Administrator or somebody there just decides that we are going to get this money back, and we are just going to send out letters? Is that what happened, or are there not supposed to be procedures for a reassessment of a previous decision that the SBA had made? Ms. Guzman. Procedures and process were put in place, and that was previous to that and did not follow that, correct. Senator Hirono. So I have serious concerns about why that was not followed, and who was this person who sent out these letters saying to the Planned Parenthood affiliates that suddenly money that had been awarded to them under the program in an objective way needed to be sent back? Who is this person who did that, who signed those letters? Do you know? Ms. Guzman. Previous administration. Senator Hirono. Is there a name? Ms. Guzman. Unfortunately, I know that the document exists as it was included in the documents provided by Dr. Paul, but that letter does not exist in SBA. Senator Hirono. Mr. Chairman, there should be a letter signed by an actual person in the SBA, in the previous administration, asking for all this money back. I would request that this Committee get this letter. Chairman Cardin. We will do our best. Senator Hirono. And did you say that there is no record of such a letter within your files? Ms. Guzman. Within our formal process, our procedures, it was not a formal process or procedure. Senator Hirono. See, I find that totally amazing, that they want to get back millions of dollars without having followed the proper procedure. And then as far as the use of the term like the previous administration had deemed that this was an illegal application, the word ``illegal'' is a legal term, and I would not apply that term to what was going on with the SBA and Planned Parenthood. Let's face it, there are people in this body that would like to defund Planned Parenthood at every turn. So let's get back to the PPP program. Before I get to that, let me ask you about the Community Navigator Pilot Program. Yesterday, SBA launched the Community Navigator Pilot Program, and I am very excited about this program because it will provide an opportunity for businesses to learn about resources that are available as they continue to recover from this pandemic. And the program is also a great opportunity for SBA and others to engage with minority businesses, including Native Hawaiian businesses. So what should potential community navigators know before they apply for the program, and how will SBA reach out to potential navigators, including those that work with minority businesses? Ms. Guzman. We have been doing outreach via our field offices as well as through various nonprofits who are collaborating with us, to make sure that this information gets out to as many businesses, as well as the mayors, to make sure that entities can apply. And there is guidance on our website as well as in the Notice of Funding Opportunity, with specific advice. Senator Hirono. I think that is one of the concerns that we have. Whenever the SBA puts out any new program that there really has to be quite a lot of outreach, and then making the parts of the program very understandable for people who are going to apply to it. Because I know you have heard from many of us, who have heard from small businesses who have a hard time understanding what is required, what documents, what information, et cetera. So that is an ongoing concern for you folks. And then there have been some programs that were so heavily subscribed that your website crashed. I do not know if was the Restaurant Rescue Program where you experienced that. I know for one of the other programs--I cannot remember, was for places that do---- Ms. Guzman. The Shuttered Venues. Senator Hirono. Yes, Shuttered Venues. That site crashed. So that is an awareness that you have and you are doing everything you can prevent those things from happening. Ms. Guzman. Yes, of course, and this will not be at the same scale. They actually will apply through grants.gov. Senator Hirono. Thank you. My time is up. Chairman Cardin. I have been informed by Senator Paul that the letter in question was made part of our record, so we will get a copy of that made available to you. Senator Ernst? Senator Ernst. Thank you, Mr. Chairman, and thank you, Ms. Guzman, as well, for being here today to testify on the Small Business Administration's response to the COVID-19 pandemic. And our Nation's small businesses continue on their very long path to recovery, and it is critical that this Committee continues its work with the SBA to ensure that the COVID relief programs we have worked on so hard over the past year, whether it is the Paycheck Protection Program, our Shuttered Venue Operators Grant Program, and the Restaurant Revitalization Fund are administered effectively and with transparency. And I know we are having a very lively discussion today. I am going to just point out that the Planned Parenthood issue that is being discussed is very important to a number of us. Senator Paul, the Ranking Member, has gone through a number of those issues. And we do want to make sure that these funds have been directed to small businesses. So I would just echo the thoughts, we would love your participation and to be able to sort through this and get to the bottom of it. So please let's continue to look into that. I would like to go ahead, since it has been discussed, we can continue with this conversation as we look for additional information. But I would like to go on to the issue of the Economic Injury Disaster Loan fraud that has been raised. There are a number of reports coming from the OIG, and it says that the SBA Office of Inspector General has released multiple reports regarding potential fraud and identity theft within the EIDL program, along with recommendations for tracking identity theft complaints. Can you give us an update on how the SBA is actually working to combat this fraud and identity theft within this specific program? Ms. Guzman. Yes. Definitely, you know, reducing the risks of fraud and waste and abuse across the board are a priority, and I have informed my team to be very transparent with the IG and GAO. We are working collaboratively to ensure that controls are in place. And beyond that, I have asked them to please consider all those controls at the onset, at the design. A lot of these problems with EIDL fraud did occur in the past year, as originally they were required to issue these loans without tax documents. And so that led to a lot of challenges in their ability to provide oversight. But that was changed in December and implemented in this new year, and so we are seeing a sharp decline in those rates. But in the meantime we are collaborating with the IG as well as the GAO to make sure that best practices for controls, fraud controls, and compliance checks are in place across EIDL. And then specifically with identity theft, in February we did launch a process for businesses who were victims of identity theft to be able to work through those issues with the SBA directly. And so there is now an avenue and a procedure for them to work through those issues. Senator Ernst. Okay. So those who have had their identity stolen, you are working with them directly. Are there ways then to recoup the dollars that have already gone out the door to those fraudulent applicants? Are you working with law enforcement agencies? How exactly does that work? Ms. Guzman. We have increased the number of individuals within our EIDL fraud team as well, and so we have about 160 people that work collaboratively on investigations with the IG, and then, of course, the IG, the DOJ pursues any specific matters that we find. So we are working collaboratively and to hopefully that end, to collect the funds. Senator Ernst. Okay. And again, I know that there have been so many programs to push, not just from this Committee but so many other committees. But specifically the programs that we have been working on here, they went out the door very quickly, and there was necessity to do that. So now we are going through the very difficult task of oversight and making sure that not only government funds are protected but the individuals as well. So identity theft is very concerning. It is serious. We have had some Iowans affected by that, and hopefully we will be able to work through a number of those issues. I have very little time remaining. I do want to bring up the Restaurant Revitalization Fund as well. I know that we still have a number of those types of venues that are really struggling, and I hope that we can continue to work through that as well, as we are getting our economy back up and going. But again, thank you for appearing in front of us today, Administrator Guzman, and I look forward to working further with you on some of these very concerning issues. Ms. Guzman. Thank you, Senator. Chairman Cardin. Senator Cantwell. Senator Cantwell. Thank you, Chairman Cardin, and thank you and Senator Rand for this important hearing. We all have a lot going on today, but we are all here right now because of this issue that Senator Cardin brought up, Senator Ernst brought up. I did not hear what Senator Paul said but my guess is we all are very concerned about the Restaurant Fund running out of money as of yesterday, I guess, the $20 billion, before the majority of people really had time to apply. So I know my colleague asked you about this so I am sorry if I am going over some detail here. If Congress would approve more funds, how long would it take to get assistance to those restaurants? And if they have already been in the application process, will they receive priority over people who had not already filled out paperwork? Ms. Guzman. When we first began outreach on the Restaurant Revitalization Fund we encouraged businesses to apply immediately, regardless of their priority or set-aside category, because it is a first-in, first-out. And so if we received more funding we would be able to leverage those existing applicants so that we could speedily get these funds out to those who have applied. Senator Cantwell. Do you have any idea how many applicants you have that were unserved? Ms. Guzman. Not the specific number of applicants, because we are still working through the specific awards, so there obviously will be an excessive number. We have $76 billion in requests. Senator Cantwell. Do you have any idea how many restaurants that you are going to serve versus how many applicants you have left? I mean, just any idea, like, you know, there is 30 percent more applicants that we did not serve? Ms. Guzman. You know, I do not have the specific numbers on how many we estimate at this point, but I can follow-up and get that to you---- Senator Cantwell. Okay. Thank you. Ms. Guzman [continuing]. Based on the awards made to date. Senator Cantwell. That would be great. I would love to see those numbers. And so you are saying that fairly quickly, is what you are saying, you could get the dollars out the door fairly quickly---- Ms. Guzman. Yes. Senator Cantwell [continuing]. To those who had already applied. Right? Okay. So I also, in April, I think my entire Washington delegation sent you a letter about a technical barrier that prevented 120 Washington State distillers from accessing the Restaurant Revitalization Fund. In order to be considered for the grants, entities must have derived at least 33 percent of their revenue from onsite sales. Washington State law limits distilleries to gain no more than 30 percent of their revenue from onsite consumption. In my State, distillers sell more through local distribution to restaurants than in tasting rooms. Could the SBA address this problem and could you revise the eligibility criteria for Restaurant Fund to accommodate a limited number of distillers, such as those in Washington? Ms. Guzman. We spoke with stakeholders in order to understand what the marketplace needs were, and we would welcome guidance on that if any additional fund is created. Senator Cantwell. What does ``guidance'' mean? I am giving you guidance. I am giving you guidance that it would be great to solve this problem. Ms. Guzman. If it could be addressed in statute, that would be great. Senator Cantwell. Okay. And then how can we improve the communication with the venue application process? How can we improve that? Ms. Guzman. With the Shuttered Venues we encouraged everyone to apply up front. We have a sizable group in both the first priority, second priority, and third priority. We are processing through those applications as quickly as possible. It is a very complex program by statute with various types of entities, which has created a lot of various eligibility requirements along the way, and it requires intensive applicant-by-applicant review. But we have started awarding funds. We have been in communication regularly with the stakeholders. In fact, my team just met with them again this week to give them an update. We will continue to give them updates as frequently as possible, as well as this Committee. Senator Cantwell. So you would be surprised then if somebody had submitted an application, you know, a month ago, and had not heard anything? Ms. Guzman. We are still in the process of reviewing, so no, I am not surprised by that, as we, obviously, in the initial launch, had some technical difficulties, and then beyond that have been working through processing and finalizing the technology to run through the review and award disbursement side. Senator Cantwell. Well, I think this is really important on the communication side. Look, we get the complexity of these and we are moving fast, but it would be great if people could say, ``Yes, your application was received and it was completed and we are reviewing and we will get back to you,'' if they could get that. Ms. Guzman. I will verify with the team. Senator Cantwell. Yes, I think that would be helpful. Anyway, I know this is challenging in the complexity of the various programs, given how much SBA played a key role in everything, but I hope that we will continue to look at this revenue side of the equation for restaurants and for other entities, and make sure that we are continuing to move quickly, as we did on other aspects of the economy. Thank you, Mr. Chairman. Chairman Cardin. Senator Cantwell, as I pointed out a little bit earlier, we recognize this is a bipartisan proposal in regards to restaurants. I have already alerted the leadership that we need a vehicle in order to deal with this, and I know that the leader's office is looking at this now. So we will get the specific information as a follow-up to this hearing, but I do think we are going to need additional funds in this program. We know we need additional funds in this program, and I am certain we are going to have strong bipartisan support for that. We will see whether we cannot find a way to make that a reality. And I also want to just underscore the points you made about knowing the status of an application. I think that is very, very important. Senator Marshall? Senator Marshall. Okay. Thank you, Chairman, and welcome, Administrator. Welcome back to the Committee. The Restaurant Revitalization Fund is an example of a government solution to a problem, but as I talk to many restaurants, and really any small businesses for that matter, the biggest challenge they describe to me is getting people to come back to work. And they describe to me one of the barriers is we are paying people $15 to $20 an hour to stay at home and not come back to work. I signed a paycheck every other week for 25 years for a group of 300 people, as many as 300 people, and so the obvious comeback is, ``Well, we just need to pay them more to come back to work.'' But there are certain break points where you just cannot afford to--you know, in the restaurant industry I do not think you can make a profit if you are paying all your starting employees $20 an hour. Are you hearing that, and don't you agree that if we would end the Federal supplement that we would be helping these restaurants out quite a bit? Ms. Guzman. I am actually hearing a combination of things, and what I have heard is, first and foremost, very debilitating, is the ability to attract workers because they have children at home. And so getting the marketplaces and Main Streets back to normal I think is really tied to those vaccination rates, and so I know that is why President Biden is really pushing to that 70 percent rate. As people are vaccinated it becomes safer for everyone to go back to schools, go back to normalcy, and then be able to have the freedom to be able to work. So I know that is affecting a lot of especially women in the workforce. But in addition, across the board, it has been challenging for businesses to restart up, including attracting workers, but I am actually hearing a mix of things as well. So what I would say is that, you know, we want to continue to try to support them as they grow. I mean, obviously, this influx of funding in the economy has spurred our economic growth as well and enabled people to spend. So I think I will leave it to the economists to fully evaluate the best path forward on that. Senator Marshall. Okay. Do you feel Planned Parenthood should receive PPP funds? Ms. Guzman. I am not in the business of picking winners and losers, and I follow the policies that are in place at the SBA on that front. Senator Marshall. So you are the Administrator now. You have read the policy. Is Planned Parenthood, in your opinion, eligible for PPP funds? Ms. Guzman. I wouldn't even be the one to assess whether or not they are affiliated or not. I know that we have 80,000 similarly situated type nonprofits, and SBA, of course, this is the first time that we have had to deal with this many nonprofits. But the affiliation rules that apply are most around management, and we have provided Ranking Member Paul and those who also joined him on that letter some specific outlines, guidance, on how the SBA applies the affiliation rule. In the case of PPP, as I shared earlier, you know, the borrower attests to their eligibility, and the bank is allowed to rely on that. Senator Marshall. That's good. That is kind of my next question. What penalties are currently in place for borrowers who misrepresent themselves on a PPP loan or an EIDL loan application? Ms. Guzman. I'm sorry? Senator Marshall. What are the penalties? Ms. Guzman. Penalties. Well, I mean, it depends on if they were honestly misrepresenting, if they were fraudulently misrepresenting or not. SBA provides investigative support to the IG, who would then pursue action with DOJ and others. Senator Marshall. What are the potential penalties, though, for misrepresenting themselves? Ms. Guzman. I do not know the dollar amounts. I would have to follow-up with you to find out what those have been, what outcomes we have had. Senator Marshall. Okay. Let's talk about the Shuttered Venue Operators Grant Program for just a second. It sounds like the first grants are going out this week. Can you describe any other specific issues that remain that could prevent grants from being approved and distributed? Ms. Guzman. Just that it is a slow process, as we have shared with our stakeholders. Unfortunately, it is an arduous review process for eligibility as well as reviewing all the tax documents and everything else strong fraud controls. So we continue to work through those issues but do not anticipate any specific issues. Senator Marshall. Okay. Let's talk about the Community Navigator Program, and just my concern about it getting out to rural communities. How are you ensuring it is getting out to rural communities? What are you doing, I guess, to market it and get it out there where people that are living, you know, two, three, four hours away from the main offices? Ms. Guzman. Mm-hmm. Yes, those are definitely the individuals we hope to help with the Community Navigator Pilot Program. Our district offices are sharing with their networks broadly, and we have asked them to prioritize reaching communities that are underserved, both rural and urban, so that we can get these navigators funded locally and then getting the information out. So it is just a lot of outreach on our part through existing organizations that are in our network, and we would welcome an opportunity to work with your office to amplify it further. Senator Marshall. Okay. Thank you so much, Mr. Chairman. I yield back. Chairman Cardin. Thank you. Before I recognize Senator Duckworth via Webex let me recognize the Ranking Member for some UCs. Senator Paul. I would just like to ask unanimous consent. I think we have entered these before, but just to make sure they are there for people. These are the letters to the Planned Parenthood of Washington and Delaware. They are from the Associate Administrator of the Small Business Administration, under the previous administration, and I am told that these letters are not sent without a process. Everyone has to review and sign off on these papers. There is a paper trail. And so it was said earlier that there was no paper trail, there is not a paper trail. And this was an official policy of the Small Business Administration, and I would like to ask unanimous consent that they be entered into the record. Chairman Cardin. Without objection, so ordered. [The information referred to follows:] [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] Chairman Cardin. And Senator Paul, I am going to ask that the Administrator's response to your letter dated May 25th, yesterday, be made part of the record. And it does answer Senator Marshall's inquiry about the penalties, and they are pretty severe. For false statements it is prison time and heavy fines. Depending on which section is violated it can be as much as 30 years and $1 million. But the false statements to SBA generally fall into the 5-year maximum, $250,000 fine range. So we will make that part of the record as well. [The information referred to follows:] [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] Chairman Cardin. Senator Duckworth. Senator Duckworth. Thank you, Mr. Chairman. Thank you for having this hearing. Administrator Guzman, as has been discussed today, millions of small businesses are struggling and they have survived the most trying times of the deadly COVID-19 pandemic, and they are starting to see light on the other side. Moving forward, programs established under the American Jobs Plan, including the Restaurant Revitalization Fund and the Shuttered Venue Operators Grant Programs, which we have already discussed here today, will be vital in achieving a sustained recovery in my home State of Illinois, and in communities across the country. The high demand for participation in these small business recovery programs is evidence of the need for continued Federal support. However, I am troubled by the prospect of some businesses still being left out if funding runs dry before all eligible entities can apply for relief. In addition, we know that certain sectors of our economy have been hit especially hard and comprise those businesses struggling the most trying to recover. For example, gym and fitness facilities are estimated to have lost roughly 1.4 million jobs, 44 percent of their industry, and tens of billions in revenue as a result of the pandemic. And despite aggressive COVID-19 relief programs, many gym-based businesses have failed to achieve the financial stability due to months of closures, high overhead costs, and weakened demand. Administrator Guzman, during the worst depths of the pandemic, many in the fitness industry did their part in closing up shop to protect their employees and customers and communities. Would you agree with me that now is the time for Congress to do our part in making sure that this industry receives the helping hand that will enable these small businesses to stabilize and recover? Ms. Guzman. We definitely agree, and in California I saw the same thing, and I have heard it across the Nation. I mean, many industries are hardest hit, including the gyms, and so we would welcome the opportunity to partner with you to provide you whatever information and support that you need to do that analysis. Senator Duckworth. Thank you, and I do concur that we must support these businesses, and that I was proud to introduce the bipartisan Gyms Act with Senator Moran. Based on SBA's experience witnessing how much demand exists for targeted assistance among small businesses that were not well-suited for PPP relief, Administrator Guzman, please address how providing $30 billion for the particularly hard-hit fitness and gym industry would support small business owners and their employees while also driving local economic activity. Ms. Guzman. I would not be able to speak to the specifics but we know that many small businesses are still hard hit. You know, obviously we are focused on trying to get the targeted EIDL Advance program out as well, that would provide grants to small businesses and leverage all of our programs to support these smaller entities or these businesses that have seen massive revenue loss over the past year-plus. Senator Duckworth. Thank you. So I would like to just have my final question be on minority-owned businesses. While we are addressing hard-hit businesses, I want to express my strong support for enhancing efforts to provide relief to minority- owned small businesses. You know, despite efforts to prioritize disadvantaged small businesses in these Federal relief programs, the reality is that we have a long way to go in delivering required support to Black, Latinx, and AANHPI small businesses. I commended the Biden administration for improving SBA programs to better support minority-owned small businesses and the communities that they serve, but I firmly believe that Congress can do so much more to accelerate these economic justice efforts. Administrator Guzman, in your view what is the most important action that Congress could take to supercharge SBA's efforts to achieve economic justice for historically disadvantaged small business interests? Ms. Guzman. There are, of course, critical small business proposal included in the American Jobs Plan. We know that our businesses have a long road ahead of them to recover in the economy, and we want to make sure that they have access to capital, access to markets, including government contracting as well as access to networks, those resources, those connection points that will allow them to grow their businesses. And so we look forward to supporting and administering any programs that are able to come out of that plan. Senator Duckworth. Thank you. I yield back, Mr. Chairman. Chairman Cardin. Thank you. Senator Markey by Webex. Senator Markey. Thank you, Mr. Chairman, very much. We have a great opportunity here with President Biden's American Jobs Plan to really help small businesses in our country. If you just look over in the climate area for installation of solar panels, insulating homes, bringing them up to a higher standard of efficiency. There are millions of jobs that can be created. So could you tell me what you are doing inside of the Administration to advocate for small businesses to be able to fully participate in the American Jobs Plan, especially because they have such incredible job creation potential? Ms. Guzman. SBA has a wealth of resources, as you all know, that can support innovation as well as those businesses that would be engaging in any infrastructure proposals. We know that small businesses are held back by our aging transportation infrastructure, in particular, and see opportunities both for growth in terms of market access as well as growth in terms of contracting opportunities. So we continue to provide information in terms of the type of impact we have seen with our contracting programs as well as our capital programs and our innovation programs, the SBIR/STTR programs that are so valuable to spur innovation across the country. Senator Markey. Thank you so much. And for these small businesses, you know, broadband is going to be absolutely indispensable in terms of their ability to fully participate in hopefully an incredibly expanding economy over the next decade. So, you know, it is absolutely imperative that every small business have access to high-speed broadband in the years ahead. So talk a little bit about why you believe that small businesses have to be central in any national broadband rollout that we add to the statute books of our country over the next year. Ms. Guzman. Especially with COVID, we have seen that small businesses have adopted technology at high rates. E-commerce continues to grow around the world, and the United States' ability to compete in those marketplaces is really dependent on our businesses having full access to broadband, just as a case on the revenue side, the market side access. So for that alone it is really imperative that small businesses are put at the forefront of broadband discussions. Senator Markey. And SBIR programs, and STTR programs have been absolutely incredible in Massachusetts, but in every state in the union as being incubators that have led to massive job creation in our country. Tens of thousands, if not hundreds of thousands of jobs in Massachusetts have been created through that program. Could you talk about what an increase in SBIR and STTR programs could mean for small businesses and job growth in our country? Ms. Guzman. We know the SBA does play a large role in coordinating efforts of our R&D agencies around SBIR/STTR, and we know how valuable that is to furthering the R&D and innovation goals of the United States, the Federal Government, as well as ensuring startups, that commercialization happens, and that businesses benefit from that growth. We know that innovative startups, science-based or technology-based companies have a 5x job growth rate, and so we definitely want to encourage that type of innovation across the United States, and those programs are really critical in helping to ensure that. Senator Markey. Thank you so much. Thanks for your great work. Thank you, Mr. Chairman. Chairman Cardin. Administrator Guzman, I would like to-- Senator Hickenlooper is available through Webex. Now that I see that he is on the line we will recognize Senator Hickenlooper. Senator Hickenlooper. Great. Thank you, Mr. Chair, and I appreciate the opportunity to get caught up on some of this. I have been, like many people, concerned about the slow response with the Shuttered Venues money going out, and I heard something about the IRS is somehow part of the reason that even now I do not think any grants have been made, even to those venues that suffered 90 percent losses. And I might have missed this because I was in another meeting--I apologize. What are some of the details here, and is there anything we can do to try and facilitate getting these venues back in business? Ms. Guzman. Yes. I did share earlier that the Shuttered Venue Operators Grant Program, that we have started to make awards. It is a slow process, but we have been working closely with our colleagues at Treasury to make sure that any initial challenges with accessing tax information have been overcome. We feel strongly that that collaboration is going to yield strong results, and as we already have seen we have started to make awards. So we are feeling good about the program and our ability to start disbursing awards soon. Senator Hickenlooper. Great. Well, I think that is wonderful news. Do we think that once we spend a couple of weeks getting those worst-hit venues, that next tranche I think is those venues that suffered 70 percent losses in revenue. Can we get to them in fairly short order? In other words, once we have figured out one logjam and gotten that resolved that we can move and get that next batch out in, let's say, 14 days? Ms. Guzman. There is definitely learnings and efficiencies that we hope to try to leverage. Of course, each of these applications is complex to review from our team, and we do follow a rule-of-two as well. So we will try to move as quickly as possible to get to those applicants in the pipeline. Senator Hickenlooper. Good. I appreciate that. Those were my most pressing questions. I do want to say, I think that the SBA has done a remarkable job throughout the entire pandemic, transforming itself into an enterprise that was willing to evolve in very rapid transitions. You know, I applied for an SBA 504 loan back in, gosh, I guess it was 1991, and the process was somewhat onerous. And just to see how much more flexible and nimble the SBA had become really was gratifying. We proposed a package of four bills to try and help expand the SBA's capacity to give more access to a more diverse group of borrowers and recipients of support, and I hope that as we go forward we will be able to work in partnership on getting some of these, once we get the bills passed, making sure that they get implemented properly. Ms. Guzman. Yes, thank you. I would welcome that opportunity. Senator Hickenlooper. I yield the rest of my time, Mr. Chair. Chairman Cardin. Thank you, Senator Hickenlooper. I can tell you, I concur in your observations about the ability of the SBA to stand up these programs and to implement them. It was a herculean task and it made a huge difference in our economy for small businesses, no question. Administrator Guzman, I want to, and maybe we will continue this through a more informal process, but to get an update as to how we are dealing with the EIDL grant program. I am really concerned. This is really the only program for low-income communities, and it is a challenge. So I hope either through the Navigator Program or through the other resources at SBA and your resource partners we will make an effort to reach this hard-to-serve, underserved community, because this is a lifeline, and we want to see these businesses survive, and we think these grants, particularly the two levels of grants, are important for the survival of disadvantaged small businesses. So I would ask you to work with us as to how we can do a better outreach to get this program in a more used way. We have resources available, and we want to see them go to the intended purpose. Ms. Guzman. Yes. Thank you for that. And we concur and we have been evaluating what we can do to improve the outreach and improve outcomes. Obviously, we have done the initial outreach to the priority groups first. Those were those who had already applied. And we sent over 10 million emails, sent another over 3 1/2 follow-up emails with a pretty good open rate. And so we continue to try to work with those constituents, and then in early June we will be opening up the platform so that those applicants, after December 27th, in the pipeline as well as just the general public of those eligible businesses can apply, so low income with those losses. We are continuing to look at how we can simplify for the process. Obviously providing tax documents and that revenue history is a challenge, so as much as we can help them walk through that process, we will. Chairman Cardin. And please keep us informed. We want to work with you together on that issue. My last request is that I would be interested, as the PPP program is coming to an end, how well the administrative changes on returning citizens and those with student debt, how they were utilized. I would be interested in seeing the results from that administrative change. And then the changes we made in December to your core programs, how effective that has been in making the core continuing programs of the SBA more useful to particularly vulnerable small businesses. If you could get us that information I would appreciate it. Ms. Guzman. Yes, we would be happy to. Chairman Cardin. Senator, Hirono, anything else? With that we thank you very much. The record will remain open for two weeks for questions, and we ask that you try to respond as quickly as possible. And with that the Committee will stand adjourned, thanking the Administrator for her accommodations today. Ms. Guzman. Thank you. Thank you for your time. [Whereupon, at 2:45 p.m., the Committee was adjourned.] APPENDIX MATERIAL SUBMITTED [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] [all]