[House Hearing, 117 Congress] [From the U.S. Government Publishing Office] A DISCUSSION WITH SBA ADMINISTRATOR ISABELLA CASILLLAS GUZMAN ======================================================================= HEARING BEFORE THE COMMITTEE ON SMALL BUSINESS UNITED STATES HOUSE OF REPRESENTATIVES ONE HUNDRED SEVENTEENTH CONGRESS FIRST SESSION __________ HEARING HELD NOVEMBER 16, 2021 __________ [GRAPHIC NOT AVAILABLE IN TIFF FORMAT] Small Business Committee Document Number 117-041 Available via the GPO Website: www.govinfo.gov __________ U.S. GOVERNMENT PUBLISHING OFFICE 46-064 PDF WASHINGTON : 2022 ----------------------------------------------------------------------------------- HOUSE COMMITTEE ON SMALL BUSINESS NYDIA VELAZQUEZ, New York, Chairwoman JARED GOLDEN, Maine JASON CROW, Colorado SHARICE DAVIDS, Kansas KWEISI MFUME, Maryland DEAN PHILLIPS, Minnesota MARIE NEWMAN, Illinois CAROLYN BOURDEAUX, Georgia TROY CARTER, Louisiana JUDY CHU, California DWIGHT EVANS, Pennsylvania ANTONIO DELGADO, New York CHRISSY HOULAHAN, Pennsylvania ANDY KIM, New Jersey ANGIE CRAIG, Minnesota BLAINE LUETKEMEYER, Missouri, Ranking Member ROGER WILLIAMS, Texas JIM HAGEDORN, Minnesota PETE STAUBER, Minnesota DAN MEUSER, Pennsylvania CLAUDIA TENNEY, New York ANDREW GARBARINO, New York YOUNG KIM, California BETH VAN DUYNE, Texas BYRON DONALDS, Florida MARIA SALAZAR, Florida SCOTT FITZGERALD, Wisconsin Melissa Jung, Majority Staff Director Ellen Harrington, Majority Deputy Staff Director David Planning, Staff Director C O N T E N T S OPENING STATEMENTS Page Hon. Nydia Velazquez............................................. 1 Hon. Blaine Luetkemeyer.......................................... 3 WITNESS The Honorable Isabella Casillas Guzman, Administrator, United States Small Business Administration, Washington, DC........... 5 APPENDIX Prepared Statement: The Honorable Isabella Casillas Guzman, Administrator, United States Small Business Administration, Washington, DC....... 49 Questions and Answers for the Record: Questions from Hon. Velazquez and Answers from Hon. Guzman... 59 Question from Hon. Mfume and Answer from Hon. Guzman......... 65 Questions from Hon. Carter and Answers from Hon. Guzman...... 66 Questions from Hon. Luetkemeyer and Answers from Hon. Guzman. 68 Questions from Hon. Meuser and Answers from Hon. Guzman...... 95 Questions from Hon. Tenney and Answers from Hon. Guzman...... 97 Questions from Hon. Van Duyne from Hon. Guzman............... 99 Additional Material for the Record: AFSA - American Financial Services Association............... 122 CUNA - Credit Union National Association..................... 124 ICBA - Independent Community Bankers of America.............. 126 Letter from Hon. Angie Craig to Hon. Nancy Pelosi and Hon. Steny Hoyer................................................ 129 Letter from Hon. Young Kim to Hon. Isabella Guzman........... 131 Letter from Alfredo Ortiz, President and CEO of the Job Creators Network to the Committee on Small Business........ 133 MHI - Manufactured Housing Institute......................... 135 NAFCU - National Association of Federally-Insured Credit Unions..................................................... 137 U.S. Travel Association...................................... 139 Questions submitted for the record from the hearing dated May 26, 2021................................................... 140 Questions submmitted for the record from the hearing dated October 6, 2021............................................ 154 A DISCUSSION WITH SBA ADMINISTRATOR ISABELLA CASILLAS GUZMAN ---------- TUESDAY, NOVEMBER 16, 2021 House of Representatives, Committee on Small Business, Washington, DC. The committee met, pursuant to call, at 10:01 a.m., in Room 2360, Rayburn House Office Building and via Zoom, Hon. Nydia Velazquez [chairwoman of the Committee] presiding. Present: Representatives Velazquez, Golden, Davids, Mfume, Phillips, Newman, Bourdeaux, Chu, Evans, Delgado, Houlahan, Mr. Kim, Craig, Luetkemeyer, Hagedorn, Stauber, Williams, Meuser, Tenney, Garbarino, Ms. Young Kim, Van Duyne, Donalds, Salazar, and Fitzgerald. Chairwoman VELAZQUEZ. Good morning. I call this hearing to order. Without objection, the Chair is authorized to declare a recess at any time. I would like to begin by noting some important requirements. Standing House and Committee rules and practice will continue to apply during hybrid proceedings. All Members are reminded that they are expected to adhere to these standing rules including decorum. House regulations require Members to be visible through a video connection throughout the proceeding, so please keep your cameras on. Also, please remember to remain muted until you are recognized to minimize background noise. In the event a Member encounters technical issues that prevent them from being recognized for their questioning, I will move to the next available Member of the same party and I will recognize that Member at the next appropriate time slot provided they have returned to the proceeding. For those Members and staff physically present in the Committee room today, in accordance with the attending physician's most recent guidance, all Members and staff who attend in person will be required to wear masks in the hearing room. With that said, Members will be allowed to briefly remove their masks if they have been recognized to speak. Now, let's turn to why we are here today--a discussion with the Small Business Administration Administrator. First, I would like to welcome Administrator Guzman. Thank you for being here today. We appreciate you coming in for another appearance before this Committee during your short time as administrator. Back in March when you were confirmed small firms were still reeling from 2020, a year when around 800,000 small businesses permanently closed their doors--roughly 30 percent more than in a typical year. Since then, you and the dedicated staff at the SBA have worked tirelessly to administer the relief programs that Congress created and help entrepreneurs get back on their feet. The work of the agency should not go unheralded today. Small firms across the country are in a better place thanks to the American Rescue Plan and the economic relief programs Congress passed. The economy has added an average of 620,000 jobs per month since President Biden took office, and small firms are leading the way. These figures would not have been possible without the historic relief measures that this Committee put in place and the work of the SBA. In addition to massive demand for the relief programs, the agency has had to operate its traditional lending offerings and core programs. I was pleased to see your recent announcement that traditional SBA loan programs provided a record amount of funding to small firms in fiscal year 2021--$44.8 billion in financing through more than 61,000 loans, to be exact. These numbers are evidence of the extraordinary potential that the agency has to help entrepreneurs get back on track. I look forward to hearing more about your vision for the agency and how we can all work together to highlight efforts that have been successful and thoughtfully examine the programs that need improving. This will require a substantive, focused, and measured conversation on SBA's programs and the issues facing us today. America's small employers deserve nothing less. They do not have time for accusations, gotcha questions, and partisan bickering. They are 100 percent focused on their survival and future. I, too, want to look to the future. With COVID cases falling and vaccination rates rising, we are steadily putting COVID behind us. This new post-COVID economy may be unfamiliar for many entrepreneurs, but it also presents a great deal of opportunity. I believe these opportunities will only increase with President Biden's agenda to build back better and correct decisions made in the previous administration that has led to many of the crises we face today--such as inflation, workforce shortages, supply chain disruptions, inequity in health care and childcare, and worst of all a slow recovery. So much time was wasted last Congress but now we are course correcting to address many of these issues by investing in America. Earlier this month, House Democrats and a handful of our Republican colleagues finally delivered on the promises of infrastructure week by passing the Infrastructure Investment and Jobs Act. This legislation will rebuild roads and bridges, expand broadband access, and generally prepare the American economy to grow from the bottom up in the 21st century. The bill will also allow small firms to play a role in revitalizing American infrastructure by creating many good- paying jobs that cannot be sent overseas. In fact, Republican Senator Rob Portman described these investments as adding ``to the supply side of the economy and will be counter-inflationary at a time of rising inflation.'' Democrats are also busy providing small businesses with a substantial $5 billion investment through the Build Back Better Act. The bill will tackle core small business issues by improving access to capital, boosting underrepresented firms, and creating opportunities for small contractors. The legislation will pave the way for recovery in the short term and prosperity in the future. Taken together, the Infrastructure Investment and Jobs Act and the Build Back Better Act amount to a generational commitment to the success of American small businesses. You and the staff at SBA are a key component to these initiatives. I look forward to hearing your testimony and discussing these issues today. I now yield to the Ranking Member, Mr. Luetkemeyer, for his opening statement. Mr. LUETKEMEYER. Thank you, Madam Chair. Thank you for joining us in person today to discuss the current small business landscape. As you very well know, small businesses across the country have been facing a multitude of challenges, many of which have been caused by the overreaching grasp of the federal government. The Small Business Administration is tasked with assisting these struggling firms, especially in the wake of the pandemic. However, month after month, we have witnessed quite the opposite coming from this administration's SBA and other agencies. Treasury Secretary Yellen, who is legally required to testify before our Committee, continues to ignore us. It appears that she has time to do many events even on the campaign side and meet with a variety of people, but she still refuses to fulfill her legal duty to testify before this Committee. Secretary Yellen's inability to appear before us is an insult to small business owners across this nation. She is blatantly turning her back on a sector of the economy that produces nearly two out of every three jobs and contributes just under half this nation's gross domestic product. Small businesses, entrepreneurs, and startups are an essential factor to America's economy and she still refuses to testify. This is unacceptable. We are glad, however, that you are here representing the primary and sole federal agency that was created to defend and protect small businesses. It is no secret that the nation's smallest firms are still working tirelessly to recover from the everchanging and overreaching state and local shutdowns ordered during the pandemic. If it was not bad enough, now they are facing some of the strongest economic headwinds in recent memory with the Biden and the Democrats' massive spending agenda. As Members of the Committee, we hear from small business owners every day. When we are back in our home district, we visit with their storefronts and listen to their stories. Unfortunately, the reports coming from main street USA are far from positive. Prices are soaring at the sharpest rate in over 30 years. Supply chain disruptions are making it nearly impossible to obtain good and products. Americans are refusing to get back to work because the government is paying them to stay home creating a labor shortage crisis. Main street is still facing a looming vaccine mandate requirement for their already depleted worker pool, and now small business owners are being threatened with increased taxes due to the trillions of dollars this administration plans to spend at the expense of middle class Americans. These are monumental issues that deserve a full and comprehensive discussion. You can look at some of the recent small business surveys and they show the exact same thing. The top issue small businesses are struggling with today are the severe economic conditions that they face. Take for example the Job Creators Network Monthly Monitor Poll. Inflation is the top challenge reported by small business owners. Or the NFIB Jobs Report that shows 49 percent of small business owners cannot fill the open job positions they then have. These are fundamental and core issues to our country's distressed small business landscape. I ask that you put yourselves in the shoes of a small business owner just for a moment. Your inventory is low because your products are stuck on a ship that is sitting off the cost of Los Angeles. You are forced to raise prices during the critical holiday season, and you cannot find any workers. With all these issues combined, I do not see how small business can be successful. And what have we heard from the administration as a response? You plan to force through trillions of dollars in spending all on the back of small business owners. And as a reminder, a recent study from the left-leaning Tax Policy Center found that this administration's far-left spending spree would raise taxes on the middle class of our American friends and colleagues by 30 percent. Additionally, instead of allowing our small businesses to operate independently, this administration is imposing more mandates and regulations. So the question remains, who is actually standing up for the nation's job creators within the Biden administration? Ms. Guzman, that is your duty. The Small Business Administration has a duty to defend these small business owners. I plead with you to listen to them and hear what they have to say. These men and women are not asking for new programs so they can receive a direct loan from the federal agency. They want common sense, pro-growth policies that will provide them with the ability to run a well-rounded, efficient operation, free from the hand of government. Ms. Guzman, if you took the time to hear from small businesses in urban, suburban, and rural areas of the United State you would hear a lot and learn a lot. Today, I look forward to having a conversation on all of these topics and we expect our questions to be answered. Before we begin, I must note that simply saying that your agency will get back to us in writing will not stand. I would like to ask for unanimous consent to enter into the record more than 60 questions the Republicans submitted to Administrator Guzman after appearing before our Committee in May and more than 60 questions for the record the Republicans submitted to Administrator Mark Madrid after his appearance between our Committee in September. Chairwoman VELAZQUEZ. Without objection, so ordered. Mr. LUETKEMEYER. Thank you, Madam Chair. I will note for the record that we have not received an answer to any of these questions thus far. And it is not just our questions during Committee hearings that go unanswered. My colleagues have asked numerous questions posed to you on behalf of their small business constituents and they do not receive any responses. One of the many examples, questions about Economic Injury Disaster Loans go unanswered. If it is your desire for this administration to be a direct lender, why is your current direct lending tool such a disaster? Not only is EIDL a black hole when it comes to customer service, but it is also riddled with fraud according to the SBA Inspector General. I will say it again. The SBA, which pushed through approximately $1 trillion the last 18 months had better wake up. If you ignore and refuse to answer the representatives' questions that we were sent here on behalf of our constituents and our small businesses to ask. You have refused to implement countless recommendations from the Inspector General and your actions do not match what the small businesses say are the top concerns facing their operations. Over $32 billion small businesses across the United States deserve better. Main street USA deserves better. And Madam Chair, with that, I yield back. Chairwoman VELAZQUEZ. Thank you, Mr. Luetkemeyer. The gentleman yields back. With that, I will now introduce our distinguished witness, the Honorable Isabella Casillas Guzman. Administrator Guzman is currently serving as the 27th administrator of the Small Business Administration. Her previous experience as director of the California Office of the Small Business Advocate, coupled with her position as senior advisor and deputy chief of staff at SBA make her uniquely qualified to take the helm. Not only does she have the knowledge needed to assist small businesses in their recovery, but as a former small business owner and advisor to entrepreneurs, she has the understanding to advocate on their behalf. Administrator Guzman earned a Bachelor of Science from the University of Pennsylvania Wharton School of Business. Welcome, Administrator Guzman. You are recognized for 5 minutes. STATEMENT OF ISABELLA CASILLAS GUZMAN, ADMINISTRATOR, U.S. SMALL BUSINESS ADMINISTRATION Ms. GUZMAN. Good morning, Chairwoman Velazquez, Ranking Member Luetkemeyer, and distinguished Members of the Committee. Thank you for the opportunity to be here to discuss the important work of the U.S. Small Business Administration and what we are doing to help America's 32.5 million small businesses and innovative startups continue to propel our economy forward. Though we have made considerable progress fighting COVID and reopening small business and our economy thanks to the American Rescue Plan, the Delta variant has lingering impacts and many small business still need the SBA's help as a result and we continue to deliver billions of dollars in relief. At the same time, the American entrepreneurial spirit is stronger than ever with more than 9 million new businesses applying for filing since January 2020. At the SBA, we are working hard to ensure small businesses continue to drive our economic recovery. Over the course of the pandemic, our agency has scaled from 40 billion per year output to distribute more than $1.1 trillion in emergency relief. Alongside our core programs, many of which have also delivered at record levels, today, the SBA is continuing to deliver for millions of small businesses. In the 8 months of my leadership, we have leveraged technology to streamline, automate, and deliver relief to small businesses with a customer service and an equity focus. We are working across our programs and services to better meet the needs of all small businesses, especially those that were left out of early rounds of relief, often our smallest businesses and those owned by women and people of color and other underserved small businesses. In 2021, we have made important gains. After making key programmatic changes to the nearly $800 billion Paycheck Protection Program, 96 percent of PPP loans went to small businesses with fewer than 20 employees with strong performance and low to moderate income communities and rural communities. In addition, a recent GAO report found that our reforms helped close those capital gaps in PPP. Now, we are delivering on the promise of forgiveness for PPP loans. We have ensured this process is being carried out at the highest standards and with utmost integrity. We launched the SBA PPP Direct Forgiveness Portal to offer a pathway to relief for the 6.5 million small business owners who took out loans of $150,000 or less. We have seen similar positive results with our reforms and improvements to the COVID Economic Injury Disaster Loan Program, the last and most flexible of our SBA COVID lifelines with billions more available. We have approved more than 3.8 million COVID EIDL loans for a total of more than $295 billion, plus an additional $26 billion in COVID EIDL grants both targeted and supplemental. And we expanded our reach while protecting against fraud, waste, and abuse. We brought back tax record verification consistent with our historic approach. We have also implemented additional measures to help ensure good stewardship of this program's resources. We are taking steps to improve outreach across all of our programs to small businesses in every corner of the nation, including our underserved communities. We recently announced the Community Navigator pilot program grantee organizations, which will deploy trusted community partners in underserved communities to better connect small business owners to government resources. As the nation emerges from the COVID pandemic, the SBA will help try to path forward to a thriving and equitable economy that lifts all small businesses and innovative startups in communities across American building from the bottom up and the middle out to leave no one behind. Access to capital remains one of the most critical factors for small business success. Yet, small businesses, particularly those from underserved communities lack access to the small dollar loans they need to survive and grow. The president's Build Back Better framework will help us increase access to capital for small businesses by creating a direct lending product that leverages the strength of our incredible growing lender network. We are also working to close the opportunity gap by increasing the number of small businesses that do business with the federal government. The Build Back Better framework will help us build equity in government procurement with nationwide investments in business incubators and innovation accelerators and a specific program for veteran entrepreneurs. Now is the right time to ensure that more small businesses will be able to take part in the $1.2 trillion in historic investments in the rebuilding of our nation's infrastructure made possible through the bipartisan infrastructure deal. We know that many challenges remain. In the months ahead we will continue to harness the power of the entrepreneurial spirit to drive our economy and our nation forward. Thank you so much, Chairwoman Velazquez, Ranking Member Luetkemeyer, and distinguished Members of the Committee, for the opportunity to appear before you, and I look forward to your questions. Chairwoman VELAZQUEZ. Thank you, Administrator Guzman. Now we will turn to questions. I will recognize the gentleman from Maine, Chairman of the Subcommittee on Underserved, Agricultural, and Rural Business Development, Mr. Golden, for 5 minutes. Mr. Golden, you are muted. Mr. Golden, we cannot hear. I will then recognize the gentlelady from Kansas, Ms. Davids, Chairwoman of the Subcommittee on Economic Growth, Tax, and Capital Access. Ms. DAVIDS. Thank you, Chairwoman. And thank you for holding this hearing today. Administrator, it is good to see you. I appreciate you recently coming to visit the Kansas Third. You know, half of my job is spreading the good word of Kansas and so it was a pleasure to have you come visit alongside the First Lady where you heard firsthand stories of entrepreneurs and small business owners who are reeling from the effects of the pandemic. I think that there is a couple of things. One, I would be very curious, and we will follow up about the assertion that you have not responded to nearly 60 questions submitted by Members of the House. And we will follow up just to discuss that with you. Our experience in my office has been a lot of response whether we agree on the issues that we are dealing with or not. So I want to kind of turn to the programs that existed previously and the ones that we have seen emerge because of the pandemic, namely the Paycheck Protection Program. The SBA 7(a) and 504 loan programs have existed for a while and prior to the Paycheck Protection Program there were about 1,900 lenders engaged in those programs. With the Paycheck Protection Program coming online, we saw that there were 5,000 new lenders that participated in that. I am curious what ways you all are looking at to kind of leverage the increase in participation by lenders, by the private sector with this federal program, and just what we need to be thinking about as we move forward and how we can assist in leveraging that. Ms. GUZMAN. Thank you so much, Congresswoman, for the question. We do think it is a historic opportunity to take advantage of these expanded networks, not only in our lending circles but just broadly the attention on small businesses and that is what we have been focused on. Across our lending network, we have been able to really develop our relationships with community financial institutions, as well as community banks and others who require that technical assistance with the SBA as well. And so my Capital Access team stands ready to support them in using all of your products, transitioning from PPP to the 7(a) and 504 so that we can better distribute our loans into communities across the country. And we look forward if there are any lenders in particular that your office is focused on that we could pay attention to. It is partially why we launched the Director Forgiveness portal to simplify for those smaller banks that maybe did not have the technology to streamline processing of PPP so that they could take advantage of it and offer it to their constituents, their customers. Ms. DAVIDS. So that is the lender side. I am also curious about ways that additional engagement or support has been given to the new entrants into all of these programs across the board during what has been a pretty chaotic time, not just for the SBA but for lenders and the entrepreneurs and small business owners. I am curious what you all are doing to facilitate additional growth and leverage the new engagement that we are seeing. Ms. GUZMAN. It is definitely our goal to try to serve more of those 32.5 million small businesses. So across our network of resource partners, some of them have seen up to a 10x increase in the amount of businesses coming to them. We want to continue to direct individual businesses to them. We have recently launched the Community Navigator pilot program. Those grantees are trusted organizations that can authentically reach communities focusing on women, people of color, veterans, rural communities, and broadly try to further enhance our services, especially for these highly entrepreneurial communities that are starting up at the highest rates. And so we plan to expand those connections to small businesses, build more bridges so that they can work with the SBA. We want to be part of their team and let them know that resources are available to them. Ms. DAVIDS. Thank you, Administrator. And Madam Chair, I yield back. Chairwoman VELAZQUEZ. The gentlelady yields back. Now we recognize the Ranking Member, Mr. Luetkemeyer, for 5 minutes. Mr. LUETKEMEYER. Thank you, Madam Chair. Just a quick housekeeping situation here. We have got two of my Members today actually have birthdays, Ms. Van Duyne and Mr. Fitzgerald. So congratulations. You made it to another momentous day here. Chairwoman VELAZQUEZ. Happy birthday. Yeah. Mr. LUETKEMEYER. With regards to Ms. Guzman, thank you for coming today. You and I had a conversation this last week and I am going to be true to my word here. We are very concerned about the kind of communications or lack thereof that we are getting out of your office. You seem to ignore our letters and requests. In fact, I got a letter yesterday to my requests already several months ago. Still missing one from April 16th. There is a letter that I asked. Still no response to that. I know some of our Members got letters yesterday to their letters which were a long time ago were asked. So apparently, we need to have you scheduled every week for 5 minutes before this Committee so we can get letters responded to from the previous week. Is that what is going to have to happen from now on? Ms. GUZMAN. I can assure you that my team is working diligently. We have had about 90 requests and have responded to 80 of them and we continue to try to increase that pace as we do want you to have the information you need. Mr. LUETKEMEYER. Okay. Well, we need to increase it a little more because getting a letter 6 months late does not answer my question. That is not acceptable. You have got to do better than that. Also, from the standpoint that your testimony, we did not get it until 3 o'clock yesterday afternoon. And by the rules of this Committee, we are supposed to get it 72 hours. That is not acceptable either. Also, with regards to Ms. Yellen and my testimony, and I mentioned it to you the other day, what have you done to contact her to have her live up to her responsibilities? The PPP program is a Treasury program. She is in charge of that program. The banks are administered from the standpoint of executing the program and SBA is administering the program. Have you talked to her at all about showing up at this Committee? Ms. GUZMAN. We talk about small business issues. We have not talked about this---- Mr. LUETKEMEYER. Why have you not addressed that issue that is by law she is required to show up? Ms. GUZMAN. Apologies. I know that the invitation went out to her and I am sure that her team will respond to you. I cannot respond on her behalf. Mr. LUETKEMEYER. Six and a half months now she is past due at showing up at this Committee. That is not going to get it, Ms. Guzman, saying that her team is going to take care of it. She has totally checked out. She is not going to come to this Committee. You, as the SBA Chairman, Administrator, need to contact her and say, Ms. Yellen, you need to show up here. Ms. GUZMAN. The SBA is working diligently to actually administer the PPP and the direct lending and so we can continue to report to you. I know that my team shares over 4 weekly reports with the Committee, including on PPP forgiveness, and so we will continue to provide the information you need. Mr. LUETKEMEYER. Two more situations here. Number one, the IG report. And we had a meeting with the IG. And he indicated to us that even now a lot of the, you know, they gave you a lot of suggestions on how to clean up the mess, especially in the EIDL program. This direct lending is a disaster quite frankly and when you have 30 percent, almost 30 percent of the program is fraudulent, that cannot happen. Cannot stand. And we do not need to put another direct lending program within your jurisdiction if that is what is going to happen to it as well. So one of the comments that he made to me in our little group when we were discussing it is that even though he puts these programs in place and suggestions in place and you say they are going to execute them, the staff does not execute on those recommendations. They refuse to do it. That is his words, not mine. How are you going to address that situation to get your staff to actually do their job to execute---- Chairwoman VELAZQUEZ. Would the gentleman yield? Mr. LUETKEMEYER. Sure. Chairwoman VELAZQUEZ. So I---- Mr. LUETKEMEYER. As long as it does not take away from my time. Chairwoman VELAZQUEZ. No, no, no. I will let you go on for a little more. We requested a bipartisan briefing with the IG and you did not accept that. Mr. LUETKEMEYER. We had our meeting with the IG, Madam Chairman. Chairwoman VELAZQUEZ. Yes, you did. The version that you are presenting here is totally different from the version that he presented to us. Let's bring the IG here and let's discuss-- -- Mr. LUETKEMEYER. That would be great. Chairwoman VELAZQUEZ.--the fraud that occurred under the Trump administration. This is Administrator Guzman. Mr. LUETKEMEYER. That is not my point. The point is that we have SBA staff that do not adhere to the recommendations that the administrator accepts from the IG. And as a result, those things are not getting done. The safeguards that we need to put in place are not being put in place and executed. This cannot happen. There is a reason for those recommendations. Ms. GUZMAN. I meet biweekly with Inspector General Ware to ensure that we can be coordinated and that my team knows that we are sincere about implementing. We have satisfied multiple IG recommendations at this point and we continue to implement. And per the IG, the conversations I have had with him, we are making great progress towards that aim. And I will point out that COVID EIDL, specifically since you brought that up, previously in CARES the administration made decisions not to select 4506T transcripts. Those are the tax documents that we need to prevent fraud. Those have all been corrected per the IG's recommendation and thanks to the Economic Aid Act. And so I appreciate this Committee's advocacy to make sure we could do that. Mr. LUETKEMEYER. Along that line, the IG as of 11-15, this is their report. They have 35 recommendations and 20 of them still remain open. And it has been like this for months. So there has to be some execution on your part to get this done and have the staff execute as well. I have one more quick question before we leave you here. With regards to the portal. It is not a bad idea and it works if they want to take advantage of it. The problem is, one of your staff Members threatened--I have an email--threatened the bankers and said if you do not use this portal, we are going to have--what was his exact word here? We are going to threaten an enhanced audit of you if you do not use this. What do you think about that? Ms. GUZMAN. That was misconstrued. That was not a threat towards the bank. Mr. LUETKEMEYER. I read the email, Ms. Guzman. It was pretty explicit. Ms. GUZMAN. So what we have informed our banks is that we want to make sure that they are following the process and actually going through the forgiveness process for the loans. We saw some delays happening across our lending partners and we wanted to ensure that those delays were not impacting our small businesses and that they could process those forgiveness loans so we did not---- Mr. LUETKEMEYER. Ms. Guzman, all of my questions and all my comments this morning point to a lack of leadership at the top with regards to communication and oversight over your staff that lends to one of two things. Either you have a disdain for us. We have somebody here that just commented they have responses from you. Our side does not get them. Is that what is going on here? Ms. GUZMAN. Absolutely not, Congressman. Mr. LUETKEMEYER. Either it is disdain for our side or it is incompetence. It is one of the two. You cannot continue to do this and be expected to get something done with this agency. This is an extremely important agency. Our job here is not just legislative, it is oversight. And from our standpoint of oversight, you have failed with a true F. I yield back. Chairwoman VELAZQUEZ. Your time has expired. Now we recognize the gentlelady from Illinois, Ms. Newman. Ms. NEWMAN. Thank you, Madam Chair. And thank you, Ranking Member. And thank you, Administrator Guzman. So good to see you. So first of all, thank you for all your leadership. I have seen a steady incline in activity and the information disbursal of various PPP issues and EIDL issues. So thank you for all your help. Have heard it across the board on both sides of the aisle by the way. And then secondly, I do have a question for you regarding the 504 program. So we know that a record has been made in 2021 that the SBA has approved $8.2 billion I believe in loan value in fiscal year 2021, exceeding the $7.5 billion cap. Is the $7.5 billion enough to meet the increased demand for the 504 loans? And if there is and if you can share a little bit of editorial around it that would be great. Thank you. Ms. GUZMAN. Thank you for that question. The 504 program is an important economic development program creating jobs. We have that $7.5 billion cap on the program and we exceeded it last year. So those additional loans, nearly a billion, did have to sit for up to 3 weeks waiting for us to enter into the new cycle. So we definitely feel that there is heightened demand on this product. It is a very popular product and our lenders are doing great work ensuring that their businesses are served, so we support the efforts to potentially increase the cap or have flexibility, just as we do on the 7(a) to adjust that if demand is increased towards the end of the year. And so we support both measures in terms of flexibility for the administration to adapt to the marketplace demands. Ms. NEWMAN. Thank you, and I yield back. Chairwoman VELAZQUEZ. The gentlelady yields back. Now, we recognize the gentleman from Texas, Mr. Williams, Vice Ranking Member of the Committee for 5 minutes. Mr. WILLIAMS. Thank you. Administrator, I am a small business owner currently. I am a main street America guy. I have got a few simple questions, yes or no. Number one, do you support the Bild Back Better Act? Ms. GUZMAN. Yes, I do. Mr. WILLIAMS. Do you support raising taxes on small businesses particularly as businesses continue to recover from COVID-19? Ms. GUZMAN. The Build Back Better Act does not raise taxes on small businesses. Mr. WILLIAMS. No, my question is do you support raising taxes on small businesses? Ms. GUZMAN. I support the Build Back Better's raising taxes on large corporations. Mr. WILLIAMS. Let the record show Administrator Guzman supports raising taxes. Ms. GUZMAN. On large corporations. Yes. Mr. WILLIAMS. Do you support President Biden's vaccine mandate on small businesses with over 100 employees? Ms. GUZMAN. Over 98 percent of businesses, small businesses would not be affected by that. Mr. WILLIAMS. Do you support that? Ms. GUZMAN. And yes, I do support---- Mr. WILLIAMS. Yes or no, do you support that? Ms. GUZMAN. I do support that we should vaccinate as much as possible. Mr. WILLIAMS. Okay. Are the current supply chain disruptions having a negative impact on small businesses? Ms. GUZMAN. I am sorry; can you repeat the question? Mr. WILLIAMS. Supply chain. Is it having disruption, a negative disruption on small business? Ms. GUZMAN. Yes, supply chain is affecting small businesses. Mr. WILLIAMS. All right. Administrator Guzman, you are tasked with leading the SBA, yet you do not know what policies will hurt or help small businesses. You just showed that a minute ago. You continue to back the Biden administration's claim that the Build Back Better plan would not raise taxes on individuals earning less than $400,000 per year. However, a recent report by the bipartisan Joint Committee on Taxation debunked that pledge, exposing that this plan would have a significant tax increase for Americans of all income levels. Higher taxes force business owners to decide whether to reduce capital, lay off employees or pass the cost along to the consumers in order to offset increased costs and maintain profit margins. The bottom mathematics tells you 20 percent is more than 30 percent. So these are difficult decisions businessowners should not be forced to make and you should be protecting them. On top of the looming tax increases, the NFIB reports that 49 percent of small business owners continue to struggle to find workers to fill open positions. Meanwhile, the Biden administration is imposing overreaching and unconstitutional vaccine mandates that will cause businesses to lose more employees. We are already facing a labor shortage and it hurts even more. So as the administrator of the SBA, you are charged with aiding, assisting, and advising small businesses across the country but at every juncture it seems, at every juncture you have imposed or supported policies like this Biden administration things that we see that let businesses down and make doing business even more difficult. This administration's actions will lead to more layoffs and more inflation. Your failure to quickly implement or roll out critical business- saving programs like the Save Our Stages we talked about had dire consequences for main street businesses who had nowhere left to turn, and you continue not to assume any accountability for that failure. You have refused to respond in a timely manner we have heard today to Members of this Committee who have had urgent questions for businesses in their districts setting the tone that you and other bureaucrats that work at the SBA are above the taxpayers you represent is very poor service. So my last question, Administrator, why should America's small business owners like myself and others, why should we put our trust in the SBA or you even and believe you have their best interest in mind when you have not demonstrated a single action that serves their best interests while promoting higher taxes and bigger government? How can we rely on you? Ms. GUZMAN. The SBA has effectively delivered programs to small businesses that are helping them even navigate supply chain challenges, navigate the workforce issues that they are facing, as well as navigating the rising costs due to the pandemic. Further, we have been supporting them with access to markets, making sure that they can increase their revenues, access the federal government. So we believe the SBA is strongly positioned to help small businesses. Mr. WILLIAMS. The SBA believes that. Okay. So let me move on. The SBA believes that. Not small business. Not main street America. So, look. This Committee is charged with overseeing the SBA, and I strongly urge your administration to put the needs and concerns of America's small business first. And do what Chairman Luetkemeyer asked you to do. The SBA should be nonpolitical. It should be nonpolitical. You should be fighting every single day to cut taxes. You should be fighting every single day to cut regulations to help small business. It should be nonpolitical but you do not do that. Your support for the Biden administration's higher taxes, vaccine mandates and bigger government will shutter small businesses. We need to turn the SBA around before it is too late for main street America. You mentioned about history. History will show that this Small Business Administration gave small business and main street a gut punch when we needed a lift more than ever. I yield my time back. Chairwoman VELAZQUEZ. The gentleman yields back. Now we recognize the gentlelady from Georgia, Ms. Bourdeaux, for 5 minutes. Ms. BOURDEAUX. Thank you, Chairwoman Velazquez. And thank you, Administrator Guzman, for taking the time to join us today. As we continue to recover from the COVID-19 pandemic, it is critical that SBA provide the resources and information necessary to support the growth of innovative job creating small businesses. I believe the Community Navigators program and its grantees will play a critical role in that and I really commend this Committee and Administrator Guzman for your leadership and the creation and implementation of that program. My district office has helped to recover over $15 million for constituent small businesses through diligent work with SBA's Georgia District Office. So thank you so much for that. We do have a concern that has come up. We have begun to hear in recent weeks from small businesses about the EIDL program. The deadline is approaching on December 31st, and so just a couple questions with respect to that. First of all, does SBA have a plan to process the EIDL applications which are pending in queue between now and December 31st? And will you continue to process the applications after December 31st? Additionally, we are seeing some problems where small businesses cannot apply because of holdups and delays in the IRS processing of their 2019 returns. So they are kind of caught in this bind so the other part of this is SBA working with the IRS to expedite the processing of these returns or is there something that Congress can do to ensure some small businesses do not miss out on this needed relief? Ms. GUZMAN. Thank you so much for the question. When I arrived, I looked at all of our programs from top to bottom just to see what improvements could be made, especially focusing on customer service technology for process improvements. COVID EIDL is a program that had challenges but has delivered nearly $300 billion to businesses across the country. It is affordable patient capital for our businesses. I have moved the COVID EIDL program to our Office of Capital Access to ensure that we could leverage industry best practices and improve the processing time. In fact, we went from 2,000 processed applications a day to 37,000. Over the summer, as a result, we were able to clear 600,000 in backlogs on the COVID EIDL program. And further, we were able by the fall to clear a total of a million across the entire COVID EIDL package, including the grants and the loans. This program, unfortunately, was challenged with issues in terms of not only processing but in terms of fraud as was mentioned earlier and we were able to reinstate a lot of the policies that have been in the EIDL program, the traditional disaster loan program for years where we have successfully put out $67 billion of disaster loans over the years effectively without fraud. So we were very pleased to be able to reinstate these longstanding fraud controls onto our program and start to improve customer service as well, which speaks to your point in terms of being able to process the full demand by the end of the year. We feel good that we have billions available and that we will be able to distribute those effectively through the communities and we look forward to working with you and all your constituents in processing. We currently do not have a backlog. The challenges that are in the system for individual borrowers that you might be hearing from oftentimes are due to appeals, multiple appeals. They are oftentimes due to fraud flags. Again, we have instituted new fraud controls and so these people may have gone through the system previously without any fraud checks and so we are now going through that. So we do feel good about processing the applications. The will be allowed to apply through December 31st and then we will process them after that. So that is the deadline. The same for the targeted advance, that $10,000 grant. Businesses can apply all the way through December 31st. The supplemental targeted advance is the only one that will have to be processed and distributed before December 31st. So that means your constituents who are eligible for that additional $5,000 grant will need to apply by approximately December 10th. In terms of the IRS processing, we have, as I have said, cleared the backlog on this important program. And so we have effectively been able to administer it. We do feel that, unfortunately, for those who did not file 2019 taxes, the processing time for a paper application without errors is about 30 days. We are seeing that that could be much longer, up to 20 weeks if they have an amendment. So unfortunately for that, processing times, they are going to need to coordinate closely with the IRS and make sure that all their documents are in order, but if they have their 2019 taxes, we are able to process them efficiently thanks to the improvements and the gains that we have made on the program. Ms. BOURDEAUX. If we can continue to work with you on that because we are getting a ton of complaints into our office right now where people, I absolutely support the anti-fraud measures, of course, but also want to make sure we are actually able to get things done for the small businesses. But thank you so much for the answer. I yield back. Chairwoman VELAZQUEZ. The gentlelady's time has expired. Now, we recognize the Ranking Member of the Subcommittee on Underserved, Agricultural, and Rural Business Development from Minnesota, Mr. Hagedorn. Mr. HAGEDORN. Thank you, Madam Chair, and Ranking Member Luetkemeyer. I appreciate the hearing. Administrator, it is good to see you. I used to be a congressional relations officer for two nonpartisan Treasury agencies and I would always tell my boss, you know, before we go testify on Capitol Hill, let's make sure that we answer the questions of the Members that we are going to go testify in front of. What we actually tried to do was answer their questions. You did not do that. It looks like you did like kind of a data dump. You just got all of our letters that have been sitting around for months and months and then sent us back a form letter. I sent you a letter on May 20th talking about the Restaurant Revitalization program. A pretty important program which is still out there. A lot of America's restaurant owners are hurting. You did not send anything back talking about that. And then I asked, well, what is going on with this Biden Executive Order on equity? How are you going to be revamping things down at SBA in order to meet that? Again, I got nothing back. I got two paragraphs of just a bunch of form stuff. So Madam Chair, I would like to introduce these into the record if I could at this time. Chairwoman VELAZQUEZ. Without objection, so ordered. Mr. HAGEDORN. But I think what is going on here is I really do not probably need an answer anymore to figure out what is happening with the whole equity exercise down at SBA because the Restaurant Revitalization Fund was really the first part of the woke agenda. That was the fund where it was decided there were going to be about $28.5 billion for restaurant owners who were hurt during the COVID situation and the Democrats and Biden decided they were going to have a priority list. And everybody on the priority list could get their application in early and get their money first and the people who were not on the priority list, well, they had to wait in line and hopefully they get some money sometime. The people on the priority list were pretty much everybody but white males. And lo and behold, all sorts of applications came in, all sorts of money went out. A lot of people were paid, and of course, the monies ran out and Congress and the administration, nobody has done anything about it since. There are hundreds of thousands of people out there who own restaurants and bars who happen to be white males who never received any money. Now, the people who did receive the money on the priority list, and I am for that. I want them all to get the money, but everybody should be treated equally. We should not be discriminating one way or the other. Every person who is a restaurant owner should be treated the same way. I think that is what everybody wants. But the folks that did get the money, do you know what they used it for? They went out and hired staff. They fixed up their restaurants. They paid bills. They did a whole bunch of things. Maybe advertised. They did everything they could to bring the customers back in the store. The people who did not get the money, some of them might be across the street, they probably went broke. They are hurting. They do not have that money to lure in new staff, increase their wages and so forth. Do you think that is fair, Administrator, that people on the priority list were given this money and the people not on the priority list were not? Do you think that is fair? Ms. GUZMAN. Thank you, Congressman. And just to address the letter concern, we will definitely continue to be in correspondence with your office, and I welcome any calls that you want to place to me. I know that several of you have been connecting with my staff but I will definitely make sure that those are addressed. In terms of the Restaurant Revitalization Fund program, the SBA worked diligently to try to administer the program as quickly as possible working in close collaboration with key stakeholders like the NRA and others. We administered the program that was laid out by Congress. Mr. HAGEDORN. I asked you if it was fair. Is it fair that some restaurant owners were given money and other restaurant owners still do not have it? It is an unfair competition; right? Ms. GUZMAN. Well, my charge is to administer the programs that are given to me and ensure that---- Mr. HAGEDORN. Okay. Well, part of your charge then was to put together a bill with the administration which had the priority list in there which gave people an advantage over other restaurant owners. Totally unfair. We do not need this in America. We want everybody to be treated equally. This whole equity stuff needs to go away. This woke stuff needs to go away. Treat every American citizen, every American business the same way. If you are going to be giving out government grants, let's make sure that everyone has the same opportunity. I think that is what America is all about. At least that is what I think. Now, you are traveling the country quite a bit; right? You are getting around. I am, too, in the district in Minnesota. Can you tell me any small business owners that have come up to you in the last 4 or 5 months about this Build Back Better bill that want higher taxes, more regulations, that want higher energy costs through this Green New Deal stuff that is coming along? Is anybody begging for that? Ms. GUZMAN. What small businesses are telling me is that they are having trouble finding workforce. That healthcare costs are high. Childcare costs are high. And Build Back Better will address those issues to try to help our small businesses with their workforce---- Mr. HAGEDORN. Well, you have not heard any business owner say please raise my taxes, increase my regulations, and make my energy costs go up; correct? Ms. GUZMAN. Small businesses have not---- Mr. HAGEDORN. Thank you. I yield back. Chairwoman VELAZQUEZ. The gentleman yields back. Now, we recognize the Chairman of the Subcommittee on Oversight, Investigations, and Regulations from Minnesota, Mr. Phillips, for 5 minutes. Mr. PHILLIPS. Thank you, Madam Chair. And greetings, Administrator Guzman. I want to thank you for your work on behalf of small businesses. I know how tough these days have been for small businesses all around the country and for you and your team at the SBA. You have played an integral role in America's recovery from the pandemic and most of us are grateful, especially small business owners. I want to begin with the RRF, the Restaurant Revitalization Fund. When it was first opened to applicants as we all know, Congress reserved the first 21 days of the application period for priority groups, including women and veterans and socially and economically disadvantaged entrepreneurs, the people that needed the support the most. My colleague from Minnesota argues that we have got to get rid of equity. I just happen to believe that we should support those who have been denied access and opportunity. I think America is at its best when we support those who have big dreams, especially entrepreneurs, especially veterans. And when I talk about equity, not just economic and racial, but geographic, rural America. We should be supporting entrepreneurs in those parts of the country as well. And while the SBA, of course, succeeded in distributing billions of dollars to disadvantaged groups, we all know that the lawsuits ruled that those were unlawful, and 3,000 priority applicants were left in the cold due to depletion of the funds. I know that you were frustrated by this because, of course, the guiding purpose of the SBA in my estimation is to promote entrepreneurship and help underserved small businesses, the very ones that were denied funds. So my first question is a simple one. Should we consider additional financial relief to the most hard-hit industries and small businesses in categories that have been denied funding? Ms. GUZMAN. With similar programs like the Restaurant Revitalization Fund, the Shuttered Venues Operator Grant that we have been able to effectively distribute over $12 billion in relief, these hard-hit industries do need additional assistance. As I am meeting with businesses around the country, they still need relief, which is why we are thankful that we have the COVID Economic Injury Disaster Loan to offer them but this is a loan, not a grant. And so we continue to try to support them though with resources and these loan offerings. And if Congress were to fund hard-hit industry grants, SBA would focus on effectively distributing them as equitably as possible. Mr. PHILLIPS. Okay. And Administrator, do you know how much additional funding would be necessary to fully replenish the RRF and ensure that those that were denied funding that otherwise qualified can still receive it? Ms. GUZMAN. Within the RRF, we still had a pending of over $44 billion, $44.1 billion of requests within the system. Mr. PHILLIPS. So theoretically, small businesses that qualified but simply were denied because we did not allocate enough; is that fair? Ms. GUZMAN. We did not finish processing all of those applications. Mr. PHILLIPS. Okay. Ms. GUZMAN. And so those are the pending, what we deem, what we can guess at eligible businesses that were not immediately remoted. Mr. PHILLIPS. Okay. With my remaining couple of minutes, Administrator, I want to acknowledge in a very bipartisan fashion that one of our fundamental responsibilities on this Committee is oversight, especially considering the size of the support programs that Congress has initiated during the pandemic and the ones that you are administering. Every fraudulent dollar that goes out is one less that we can allocate to businesses that qualify. We would all agree with that. So what can our Committee do to support oversight of the SBA programs, especially the recent pandemic programs, whether that be congressional directives or additional resources? Ms. GUZMAN. SBA has been able to utilize administrative funding to continue to try to build in strong processes and technologies as well as controls to make sure that these funds get into the hands of the businesses it was intended to serve. We will continue to work with the IG closely and the GAO to make sure that we are implementing the remainder of the recommendations that are in place across our COVID EIDL, PPP, and all of our relief programs, as well as our CORE programs. And so that continued support and collaboration is what we deem necessary to continue to support anti-fraud measures. Mr. PHILLIPS. Okay. And we all know that, of course, you are working hard and others to identify fraud and those who inappropriately received funding. What is the current process and what is the timeline for clawing back those fraudulent loans and disbursements? Ms. GUZMAN. My apologies. Is that on a specific program, Congressman or just---- Mr. PHILLIPS. More of a broad question because I know there is fraud in a variety of programs. Ms. GUZMAN. Yes. Mr. PHILLIPS. But just in broad strokes, especially through the more recent programs. Ms. GUZMAN. Thank you, Congressman. Yes, we are working closely with the IG and the Department of Justice to make sure that if there is identified fraud that they are able to fully prosecute and recover those funds. The IG has already worked to recollect millions of dollars across the PPP program and the COVID EIDL program and we continue to support their work as they do so across all of our programs. Mr. PHILLIPS. Thank you. I see my time has expired. I yield back. Thank you so much. Chairwoman VELAZQUEZ. The gentleman's time has expired. We recognize the gentleman from Minnesota, Mr. Stauber, for 5 minutes. Mr. STAUBER. Thank you very much, Madam Chair. Administrator Guzman, thank you for being here to testify. I have to say it has been difficult getting some response from you or your office. But as you recall, back in May, when you were in front of this Committee over 6 months ago, I asked you a series of questions regarding the Biden administration's small business tax increase proposals that you could not answer. You said to me in this Committee at the time that you would follow up with my office with answers to my questions. It has been 6 months. No follow up to me or my staff. So at that time I was asking you about proposals but now we have in writing the tax increase the Biden administration plans to impose on small businesses. Given you have had 6 months to figure out a response, I am going to ask you once again these questions. How many small businesses are organized as a subchapter C corporation? Ms. GUZMAN. The majority of businesses are not organized as C corporations. I do not have the exact number of those businesses. Mr. STAUBER. Does the Build Back Better legislation increase the corporate tax rate? Ms. GUZMAN. The Build Back Better framework actually focuses on leveling the playing fields. And I agree with the 3/ 4 of small businesses polled who want to see large corporations pay their fair share. And so the Build Back Better framework focuses on that, making sure that our large corporations, those that pay zero including are the ones who are covering for this. Mr. STAUBER. The question was does the Build Back Better legislation increase the corporate tax rate? Ms. GUZMAN. It provides for a minimum corporate tax rate of 15 percent that will affect less than 200 large corporations so it will not affect our small businesses. Mr. STAUBER. It will not affect the small businesses at all? Ms. GUZMAN. It will affect less than 200 of the largest corporations, the 15 percent corporate tax. Correct. Mr. STAUBER. So the Build Back Better legislation is going to increase the corporate tax rate as you just said on small businesses subchapter C. According to the Tax Foundation, this tax increase is going to reduce the GDP and cost about 25,000 jobs. How many small businesses are organized as pass-through businesses? Ms. GUZMAN. Many more are pass-through entities. A majority of them are. Mr. STAUBER. So the majority, 95 percent? Ms. GUZMAN. I do not have those exact numbers. Mr. STAUBER. Well, the answer is nearly 95 percent of all small businesses that you oversee in this country are pass- throughs. Does the Build Back Better legislation increase taxes on pass-through taxes? Ms. GUZMAN. President Biden's plan never focused on the--I am assuming you are talking about the 199A. And no, it did not ever propose that. President Biden's proposal in this current framework does not include the 199A either. Mr. STAUBER. So you are telling us that legislation will not increase taxes on 95 percent of the businesses that are pass-through; is that correct? Ms. GUZMAN. The current BBB proposal does not increase-- does not affect the 199A. So small businesses will not be affected by that. Mr. STAUBER. According to the Tax Foundation, this tax increase is going to eliminate 16,000 jobs. Do you agree with that? Ms. GUZMAN. I know that economists are still debating what those final impacts are. We believe strong that the Build Back Better plan will actually crease jobs and will help small businesses, especially when it comes to their workforce, educating their workforce, creating workforce development opportunities, lowering the cost of childcare so we can get more people back to work. Those are really important things to small businesses, as well as the cost of healthcare which is rising and this Build Back Better framework will decrease those costs. Mr. STAUBER. Have you ever owned a small business? Ms. GUZMAN. I have, yes. Mr. STAUBER. As a pass-through? Ms. GUZMAN. Yes; correct. Mr. STAUBER. Okay. Do you still own it? Ms. GUZMAN. No, I do not. Mr. STAUBER. Okay. Another thing I would like to have a short conversation with you. You were in our great state of Minnesota just a few months ago and we appreciate that. You came with my democratic colleagues to Minneapolis. There are two of us that sit on this Committee that were not invited. Was it for political reasons that we were not invited to celebrate and encourage small businesses in the state of Minnesota? Can you tell us why you did not reach out to us? Ms. GUZMAN. Congressman, I would welcome a visit with you. And if an invitation is extended, I would love to travel with you to meet with your small businesses and see how we can further help them. Mr. STAUBER. Did you even think about inviting us in rural Minnesota? You talk about rural America. We represent rural Minnesota. We were not even invited by somebody such as your stature to come into Minnesota and celebrate small businesses. Would you agree maybe that was a misstep on your part by not inviting us, two Members of the Small Business Committee? Ms. GUZMAN. While I was not in your district? I would welcome the opportunity to extend my stay or go directly just with you in the future. Mr. STAUBER. Last thing is--okay, my time is up. I yield back. Thank you, Madam Chair. Chairwoman VELAZQUEZ. The gentleman's time has expired. Now we recognize the gentlelady from California, Ms. Chu, for 5 minutes. Ms. CHU. Administrator Guzman, I believe that the Build Back Better bill will truly help small businesses. And in fact, I am proud that it includes $275 million for the authorization and funding for the Community Advantage program. We know that Community Advantage is an effective tool for increasing access to capital for underserved small businesses with SBA data showing that the program reaches significantly more female and minority businesses. That is because Community Advantage lenders have the necessary relationships within their communities to facilitate lending to the small businesses that need it most. These mission-driven lenders are not only skilled inn localized character-based lending but also provide hands-on coaching to borrowers, many of whom are overlooked by big banks. Can you talk about how you see Community Advantage figuring into SBA's long-term recovery plans, particularly your plans to improve capital access for underserved businesses? Ms. GUZMAN. Yes. Thank you so much for that question. Community Advantage is an important pilot program that the Office of Capital Access administers and it does allow us to better reach those underserved communities through great community financial institutions like the CDFIs. We want to continue to expand all of our lending partnerships as we have been able to during PPP and continue to grow that. Permanence of the Community Advantage program will mean certainty for these lenders and that is what they need to continue to expand in the program and we look forward to Build Back Better's proposal to do that as well as fund it for a 10-year basis and definitely support our smallest entities and those underserved communities and have a far reach within every corner of our nation. In addition, that actually also helps us to fortify those banking relationships which we rely on to distribute our loans. They were great partners for us during PPP with the acceptance of fees and as we look towards direct lending we will rely on that strong network of community financial institutions to deploy small dollar loans into communities across the country. Ms. CHU. Thank you for that. And there is another very positive thing that Build Back Better does for our small businesses and that is provide $60 million to improve the program's outreach with the Small Business Investment Company or SBIC program. And I am proud that my legislation to allow more bank capital to be invested in SBICs, the Investing in main street Act did pass the House earlier this month and, in fact, would enable these banks to invest up to 15 percent of their capital and surplus in SBA licensed small business investment companies which will significantly help startups that have grown into companies like Tesla and Apple. So could you talk about how the SBIC program can help our small business recovery and discuss how the Build Back Better Act's investment can strengthen the program over the long-term? Ms. GUZMAN. Thank you. Yes, we believe that the Build Back Better will strengthen our SBIC program. Right now we have 300 private SBICs distributing capital across the nation to our small businesses. We really want to focus on making sure small businesses outside of those venture capital rich areas of the nation and private equity rich areas have access to capital through our SBICs. And so with emerging managers as well as micro funds, we will be able to further expand our SBIC pipeline of strong private equity and venture firms to be able to support our small businesses with leverage from the federal government. Ms. CHU. And finally, let me ask about the Community Navigator program. I understand that the grants have been awarded to 51 HUB organizations but it was very competitive. And I have heard from disappointed organizations like community groups and mission-based lenders who were not selected but remain eager to contribute to the program. I know that the Community Navigator program relies on community groups that can reach the hardest to reach businesses. Can these mission-based lenders still be part of the Community Navigator program? Ms. GUZMAN. Thank you. Yes, we received over 700 applications for the Community Navigator pilot program and I think that really is exciting because it speaks to the heightened attention on small business development across our cities and counties and nonprofits across our ecosystems. We believe that we can continue to integrate all partners within that hub and spoke framework, whether they are working directly as a spoke with one of those grantee organizations or as part of an ecosystem leveraging any of our programs, whether it is the capital programs or other grant programs. So we look forward to continuing to build that out with all of those community financial institutions and others. Chairwoman VELAZQUEZ. The gentlelady's time has expired. Now, we recognize the gentleman from Pennsylvania, the Ranking Member of the Subcommittee on Economic Growth, Tax, and Capital Access, Mr. Meuser for 5 minutes. Mr. MEUSER. Thank you very much, Madam Chairwoman. And thank you to our Ranking Member Luetkemeyer. Thank you, Administrator, for being here. So small businesses are struggling. In spite of the high level of consumer spending that is taking place, small businesses are making less. They are dealing with inflation. All this should be nothing new to you. Organizations like the NFIB are stating this as loudly as they can to the administration. There are workforce shortages. Serious workforce shortages. Every small business I walk into, and I am sure you, too, is beside themselves with being so busy and making less and trying to figure things out. Supply shortages. Their shelves, their inventory, their warehouses are much less than they would prefer. Energy costs are baffling them. Gasoline prices, heating, you name it for their trucks, for their deliveries. Everything is going up. Wages are going up. That is usually a good thing but in this case it is going up a little bit too fast. These mandates that are being discussed are very, very unclear and it is really making many businesses very, very nervous as to what to do. You know all this. Potential tax increases. Now, Administrator, you said small businesses will not be facing any tax increases. That just is not accurate. The 3.8 percent Medicare surtax, which expands the Medicare surtax to invest in individuals actively involved in S corporations or partnerships. So in other words, if a company with 50 employees was bringing in $10 million in revenues, they will maybe net $1 million at the end of the year. They will be paying 3.8 percent on that $600,000, the delta between the 400. So, now it is a pass-through. So that business will be paying that extra. Now, he might be paying himself, or she, $100,000, $200,000, $250,000, $350,000 a year but they are still being taxed as a pass-through business. So stating that small business is not paying more tax--and by the way, that is a big number. That 3.8 percent, if I believe offhand, that is in the neighborhood of $300 billion of new taxes, of revenues. So I do not know how we can say small business is not getting any new taxes when you are scoring it at $300 billion. And then, of course, NOL is being changed. The IRS enforcement. That is going to be wonderful for small business. I was former revenue secretary of the Commonwealth of Pennsylvania. The last thing you do without making it a higher quality level of information for those auditors to work off of is just add 87,000 new people and think they are going to go out and shotgun approach on small business because they are the easiest victims, to go in and audit them randomly. And the idea that it would raise $400 billion is absolutely nonsense. Come on. You went to the Wharton School of Business. I mean, it just came back CBO I think said $120 billion. That is about right. So there is a lot of phony-baloney stuff in here. So I just want to ask you, do you advocate for small businesses? When you talk to the president, do you say, Mr. President, these taxes, inflation, gasoline prices, you know, you have your spokesperson Jen Psaki and a new potential controller of the banks saying how it is a great thing to ruin fossil fuel companies and oil companies and gasoline companies. Somehow that is a good thing because then we move into green energy. I mean, do you say, hey, we have got to rethink some of these things, Administrator? Ms. GUZMAN. My responsibility is to, of course, administer the programs of the SBA as well as visit with these businesses and hear their concerns which, of course, I agree with you the supply chain and the workforce issues have been challenging for them. We have been focusing on getting them support so that they can navigate these issues. In terms of some of the specific issues that you addressed, like the Medicare tax loophole, that really again is still focused on those individuals making more than $400,000. So the majority of small businesses will not be affected and that really what it does is focus on making sure that investments are treated the same way as your business income. And so whatever the issue might be, the note that this Build Back Better agenda is focused on leveling the playing field and that is where small businesses have free---- Mr. MEUSER. I do not think it held any ROI whatsoever for the economy and you have got economists agreeing with me. The lending product you bring up. Now, we had two test programs, the RRF and the EIDL, all run by the SBA. And I think you have got a good staff. In Pennsylvania you have got a good staff. But they are completely understaffed. They have nowhere near the IT systems and the RRF was a disaster. Let's face it. And the EIDL had $67 billion plus in fraud and yet you are saying you want a self-run, internally run lending product within the SBA to add onto what we know is already a disaster? Ms. GUZMAN. The SBA has been doing direct lending for over 68 years. We have had a $67 billion portfolio within our disaster products without these incidences of fraud. These are unique to the COVID EIDL product as a result of the CARES Act requiring that the SBA not collect tax documentation. Mr. MEUSER. I am sorry, I have to yield back. But a joint partnership with banks and the SBA clearly worked a lot better. I yield back, Madam Chairwoman. Chairwoman VELAZQUEZ. The gentleman yields back. Now we recognize the gentlelady from Pennsylvania, Ms. Houlahan for 5 minutes. Ms. HOULAHAN. Thank you, Madam Chair. And thank you very much for being here as well. My question is going to be forward-looking at a future program I am hoping and I very much thank you for being with me in our community. The last time we saw one another we were walking in the streets of Philadelphia and we were talking to small business owners back there. Sadly, since then, since your visit, my district was hit hard not just by the pandemic and supply chain constraints which I know a lot of folks have been hitting on today but also by Hurricane Ida, and we are under a federal state of emergency. So today, I want to talk about relief for our small businesses and owners who have been impacted by natural disasters that are not pandemic. Following this devastating storm, I heard from many of our small businesses in our community who are continuing to recover through no fault of their own from the pandemic and now from this natural disaster. One of these businesses was Animated Brewing, a brewery in Coatesville. And during the visit to their business, the co- owners expressed their hesitancy around applying for an SBA loan. While they very much appreciated a low or no-interest option, they simply did not have the capacity at that time to pay it back. Their losses from the storm were too great and their losses from pandemic as well. And another business similarly informed my office that they would rather be closing their doors in the coming months rather than incurring yet another bill to pay. These businesses represent nationwide concerns with the lack of direct aid that is available to small businesses that follow a natural disaster. Natural disasters, as we have mentioned, are not dissimilar to the shocks such as a pandemic and according to the Federal Emergency Management Agency, almost 40 to 60 percent of small businesses are never able to reopen their doors after such a disaster. Which leads me to a question that I have heard over and over again since Hurricane Ida has hit my region. Why can there no be a loan forgiveness or grant program available similar to PPP to help small businesses recover from natural disasters just as Congress has provided to respond to the public health crisis of COVID? Given the anticipated increase in frequency of climate change-related natural disasters such as Hurricane Ida, I am interested in this concept and interested in your response. Do you think that the status quo is sufficiently meeting demand for natural disaster experiences by small businesses? Should the SBA play a bigger role in supporting small businesses that are recovering from a natural disaster beyond low interest rate loans? Ms. GUZMAN. Thank you. Yes, we do agree that recovery is a long tail for communities and for businesses, and I would like to see the SBA engaging more in that recovery and providing support, whether it is connecting to affordable capital, if that is the right fit, or providing some other technical assistance to help those communities recover. Ms. HOULAHAN. Or potentially similar to PPP loan programs that become grants with certain conditions met. So Congress set up a PPP program in recognition of the importance to small businesses to the overall economy of communities nationwide and to the unique and historic nature of the pandemic. Perhaps maybe there could be a federal emergency protection program similarly that parallels something like this. Do you see the parallels that exist between incidents of climate-related disasters or natural disasters and pandemic? Ms. GUZMAN. Businesses are dramatically affected during disasters. I mean, the FEMA data shows that if they do not reopen in 5 days, 80 percent chance that they will be closed within a year. So the effects are devastating which is why it is so important to invest in climate solutions and why we would want to continue to support our small businesses with whatever tools Congress provides to us. Ms. HOULAHAN. Thank you. And what are the biggest lessons you think that we learn from PPP that could be considered when crafting a similar program for natural disasters? Ms. GUZMAN. Well, one thing that we found is 11 million loans, and seen a lot of sole proprietors especially come into the program in 2021 and small employers, 20 and under that were not served previously. We think that those are key lessons learned to demonstrate that there is a demand out there for capital and that businesses can leverage capital to grow effectively which is why direct lending is such an important product because we are seeing that there is a decline in small dollar loans out there available to our smallest entities and we would like to try to solve for some of those huge market gaps. Ms. HOULAHAN. Administrator Guzman, one of the things that I was struck by with the crisis of pandemic and with the PPP having been stood up so rapidly but also expanded as you mentioned to a vast array of businesses that would not have historically been considered in these sorts of opportunities and programs, we have created the neuropathways and the memory mechanisms. We have created the business banking relationships that small businesses now have with each other. We have also created the relationships that the SBA now has with the banking industry. We really ought to be able to take advantage of this and pivot this to what will be inevitably in the future increasingly more and more natural disasters and more people needing help with this. Thank you so much once again for visiting our community and I yield back. Chairwoman VELAZQUEZ. The gentlelady yields back. Now we recognize the gentlelady from New York, Ms. Tenney, for 5 minutes. Ms. TENNEY. Thank you, Madam Chairwoman. And also to the Ranking Member. And thank you, Administrator, for being here today. I did send you a list of questions in May and I am hoping that at some point you will follow up since I have not received an answer yet. I know you are getting yourself organized in the position but we really have pressing questions that we need to ask. My first question I want to ask you is during your confirmation hearing in the Senate, you promised to investigate why the SBA wrongfully approved small business loans for multiple Planned Parenthood affiliates. However, since the SBA has proceeded to confirm an additional six loans for Planned Parenthood affiliates, including $10 million for Planned Parenthood of Greater New York. As you are aware, and as this legislation states, federal funds cannot be used to pay for abortions and all applicants for PPP loans must abide by affiliation rules and size standards. Since Planned Parenthood has over 16,000 employees nationwide that makes them ineligible. Has the SBA forgiven any of the PPP loans that have gone to Planned Parenthood? Ms. GUZMAN. I do not have a status on individual loans to share with you. Ms. TENNEY. Have any of them that you know generally been forgiven? Ms. GUZMAN. That I am not aware of. I know that we have continued to process those loans in the order. And as you know, borrowers attest under PPP for their eligibility. Ms. TENNEY. Will you forgive those loans? I started to reclaim my time. But will you forgive those loans at this point? Is that a policy that you are taking? Ms. GUZMAN. Fortunately, it is not up to me to determine individuals loans. There is a process in place for all loans. Ms. TENNEY. But you as the administrator have the ultimate say. Will you actually not allow those loans, not allow their forgiveness, and will you ask them to pay the money back? Ms. GUZMAN. They will be processed according to the rules that were administered by the SBA that have been made public and that have been shared with our lenders. Ms. TENNEY. So what you are saying is that based on the rules and based on the rules of the legislation that you will be denying that forgiveness and you will also be requiring them to pay back based on a rules based? Ms. GUZMAN. I am not speaking to any individual PPP eligibility. Ms. TENNEY. But can you say that based on the rules that we just outlined, the fact that they are not eligible, that you would say in a reasonable estimate that those loans would not be forgiven and therefore, you would ask for that money to be paid back? Ms. GUZMAN. I am not the one who individually investigates specific eligibility. Ms. TENNEY. I am asking you as the administrator. You obviously have a position. You would ultimate make this decision if it came to your desk; right? Ms. GUZMAN. My positions and my political choices are not at play here. It is really just the process and the rules that are in place for both the borrowers to attest to their eligibility and for the lenders to determine if they will process based on that eligibility and that attestation. Ms. TENNEY. Right. And so---- Ms. GUZMAN. Further---- Ms. TENNEY. Can I just add? Ms. GUZMAN. Sure. Ms. TENNEY. I do not mean to harp on this but if it was determined by your people and the people that work under you that they were actually forgiving the loans, would you overrule that decision because it is not based on the rules that are set forth in the statute? Ms. GUZMAN. I would not overrule the processing that is in place that is abiding by the rules. So the process does abide by the rules and determines eligibility. Again, the borrower attests to the eligibility. The bankers are then processing those PPP loans. Ms. TENNEY. Do you know the rules that say that they are not eligible. Is that something you are aware of? Ms. GUZMAN. I know our affiliation rules broadly but I have not investigated any particular loans of the 11 million loans that we have processed at the SBA. Ms. TENNEY. Okay. Just one more question because I have a little time left. In your remarks, you talked about gaps in access to capital and you make no mention of SBA initiatives addressing the fact that most venture capital and early stage funding flows to just a few cities around the country and many are left behind, including my upstate rural suburban district. And you make no mention of the fact that very little investment, including SBA's own programs goes to innovative capital-intensive businesses that are in the manufacturing sector that once supported our middle class. Is that something you are going to be considering as adding more options and supporting the legislation that I have and others that would give more loans to businesses that have long-term prospects, long-term manufacturing, and would rebuild and reindustrialize the regions such as mine that were once the home of the beginning of the industrial revolution? Ms. GUZMAN. Yes. We completely support building up a manufacturing base in America. The Made in America initiative focuses on that and we have key programs to support that, whether it is on our lending program or encouraging manufacturing support within our SBIC program. Ms. TENNEY. One last thing that my colleague alluded to. The current nominee for control of the currency is talking about ending private bank accounts and putting them in the hands of the federal reserve. Do you support that initiative? Ms. GUZMAN. I just support that small businesses have options to find banking institutions that can support them or lenders that support them and my job as the administrator is to make sure that those---- Ms. TENNEY. So you do not support them giving their bank accounts over to the federal reserve? Ms. GUZMAN. I do not have information on that to share anything further. Ms. TENNEY. Thank you. Chairwoman VELAZQUEZ. The gentlelady yields back. Now, we recognize the gentleman from New Jersey, Mr. Kim, for 5 minutes. Mr. KIM. Thank you. Thank you, Madam Chairwoman. Administrator, thank you for coming today. I hope you take away from this hearing that there is a lot of bipartisan engagement when it comes to our restaurants. That this is something that I think we need to make sure that we are prioritizing to the level that we are hearing. I want you to know that from my district that is still the number one issue that I hear about when it comes to small businesses. And the job is not done. I wish we were able to put in additional funds into the Restaurant Revitalization Fund. I certainly supported that from the outset to avoid the problem that we had that was foreseeable. We knew there was going to be a challenge there. And I want to find a way to fix it. But you know, you have talked about this already, but we talked about it in terms of the amount of money to be able to put in. And I certainly support funding this more. But I also wanted to ask you what flexibility does SBA need from Congress in statute if we were able to provide additional funding for the Restaurant Revitalization Fund. We want to make sure that we ensure that no applicant at the end of the queue is left off without relief again. My understanding it is not just about the funding; that there are other elements here that we need to be considering here. So I just wanted to get your take on this. Ms. GUZMAN. Congress would need to fully fund the Restaurant Revitalization Fund program so that we could support the remainder of the restaurants who have applied or put a cap on the program so that whatever the funds allocated to lessen the $44.1 billion would be enough to cover those applications in the pool. We would be happy to work with you to further look at those numbers. Mr. KIM. Yeah. Because I think we are hearing, again, in a bipartisan way a desire to make sure that our restaurants and our communities are getting that kind of support. And I hope that my colleagues across both parties work together to be able to do that. I certainly stand ready to do that myself. What I also wanted to talk to you about is just as you were talking to my colleague about sort of the long road to recovery head that we have when it comes to small businesses. And I agree with you that right now we are certainly having a crisis point. But I think we understand that this is not going to just go away overnight. This is going to be a long road to recovery. So I guess I wanted to just get a sense from you how you see this unfolding here. There are particular industries and small businesses that you think are going to have a longer road to recovery and a tougher time. How do you sort of see this unfolding over the course of the next few years, over the course of the next couple years of this administration for instance? Ms. GUZMAN. Small businesses polled, as well as those that I meet with project that there will be months of uncertainty still remaining for them as we fight the pandemic. The number one thing is to fight the pandemic and make sure that we can get more people vaccinated so that people start to consume services as much as they have been consuming our products and goods. And so that first and foremost has to be the priority. Saving our small businesses means vaccinating and implementing strong protocols to help recover from the pandemic which is underlying as economists agree the supply chain challenges and the workforce challenges that including our small businesses are facing. So as we move forward, we really believe that we need to have the tools in place around access to capital to make sure that we are supporting small businesses, especially those startups, those over 9 million business applications I referenced earlier. We want to make sure that they can be equipped with the technical assistance, the capital, and the access to markets that they need to grow strong businesses for our communities and for our economy. Mr. KIM. Look, I am glad to hear that, and the reason why I mentioned this question is I was reading through your testimony and you used a phrase to describe SBA. You said it was first responders. And I understand what you are getting at with that, saying that SBA is the first responder in terms of this crisis and certainly the struggles that have been there. But I think I would like to push back with you a little bit on that. What I have heard from the small businesses in my district is that it is about a relationship. It is about a deeper engagement. A lot of the small businesses in my community up until the last 18 months had very little, if any, connection with SBA. Had very little understanding of what SBA, what tools you had and things like that. You now have an opportunity here not just to connect with them for the Restaurant Revitalization Fund or the Paycheck Protection Program, but I urge you to build off of that. Now that you have connected with so many small businesses in their time of need, build off of that in terms of letting them know what next. As a first responder, yes, you provide that kind of initial support but I do not want you to think that they are just going to then move on off and that is not your responsibility. And I just want to make sure that we are engaged on that over the course of the long term. Thank you. I yield back. Ms. GUZMAN. Yes. I would be happy to do that. Chairwoman VELAZQUEZ. The gentleman yields back. Now we recognize the gentleman from New York, Mr. Garbarino, for 5 minutes. Mr. GARBARINO. Thank you, Madam Chair. Thank you, Administrator, for being here today. I have been watching the hearing in my office and I walked over. My colleague before had asked you if you had spoken to the president and let them know whether you agree with some of the policies that are coming back in BBB and your answer was your job is to administer programs and to meet with small businesses and hear their concerns. So what do you do with those concerns after you hear them? Where do they go? I mean, you are hearing their concerns. Do you just not share them with the president or---- Ms. GUZMAN. No, that was perhaps taken out of context or not fully communicated properly. But yes, of course, I share what I am hearing in the field from our small businesses, from our district offices, from our resource partners to relay that they are having supply chain concerns. That they are having workforce challenges. This is a whole of government approach to fighting this pandemic and making sure that we implement solutions to help our small businesses, as well as our economy broadly recover from COVID. And of course, I share as much as I can in terms of that outreach that I have been doing and the results that I receive. Mr. GARBARINO. So with Build Back Better coming and as you said, small businesses are coming out of COVID, one of the increases in taxes which small businesses are going to see even though they are saying there is going to be no increase on small businesses is the permanent extension of the loss limitation deduction. I mean, that is something that right now it is law but this would extend that. And spend $167 billion by extending this permanently. How is that not seen as a tax increase, especially for businesses that are coming out of this COVID debacle which everything was shut down and they could not make any money. They have probably taken tons of losses. How is making this loss limitation deduction permanent not an increase on taxes on small businesses, something that they were probably planning on getting back? Ms. GUZMAN. Businesses will definitely continue to be able to take their business losses against their business. This was dealing with investments specifically. And the most important thing is that this is broadly about leveling the playing field for our small businesses and they do agree that large corporations, those 55 large corporations, profitable corporations that paid zero was just not enough. They would like to see parity and I agree that that should be the case that everyone pays their fair share and that we are able to ensure that the resources are available to support our infrastructure as well as build back better with strengthening our care economy and fighting climate change. And so I believe wholeheartedly that small businesses will benefit greatly from Build Back Better and that they will not see the effect. They will see a level playing field instead. Mr. GARBARINO. So you do not think raising taxes on certain corporations which other small businesses do business with, whether it is energy or transportation, that when these businesses have to pay more in taxes, these major corporations you call them have to pay more in taxes, you do not think they are going to have to pass that down to the small businesses and increase their costs for those small businesses that do work with them or that do business with them in addition to taxes and not having a loss deduction which we are making permanent here and some other things? They are already dealing with inflation. They are already dealing with high cost of products going up, supply chain issues. Now, their business partners, whether they deal with energy or transportation issues, those costs are going to go up with these additional taxes. Are they not concerned about that? Or have they not shared their concerns with you about that? Ms. GUZMAN. I have not heard those concerns and I know that there are even large corporations that will be affected that believe that this could still, nonetheless, be a strong positive impact on our economy because they know that it will strengthen the people. It will strengthen the workforce. It will strengthen care economy and healthcare economy as well. So I know that that 15 percent corporate minimum tax is, again, only affecting less than 200 corporations and those are not small businesses and they will not be impacted. Mr. GARBARINO. Okay. You talk about the workforce and strengthening the workforce. In your meetings with all the small businesses, I am sure you have heard about how they cannot hire people, they cannot get the proper workforce to do the jobs. Has anybody brought up to you their concerns about the new OSHA ruling? And I know you do not oversee OSHA with the vaccine mandates, but you deal with small businesses. You said yourself you meet with them daily, or weekly, or whenever. They have to be concerned about what this is going to do to small businesses and the fact that they already cannot staff, they are already having trouble staffing their businesses, this additional vaccine requirement of OSHA, what are you hearing and what are you sharing with the president about maybe this is not the best idea right now? Ms. GUZMAN. Well, I mean, first to consider is that 98 percent of the businesses would not be affected because of that 100 employee rule. So your mom and pops, your main street businesses, you know, those businesses also, and for the most part small businesses support vaccine mandates. They support facemasks. They want to keep their employees safe. They want to also attract customers who want safe environments. And so I think that from the majority of what we have heard is that small businesses support this. They know that we need to fight the pandemic and that this is the way to do that. Mr. GARBARINO. I think we are talking to different small businesses but I will yield back because I am out of time. Ms. GUZMAN. Thank you. Chairwoman VELAZQUEZ. The gentleman yields back. Now, we recognize the gentleman from Pennsylvania, Mr. Evans, for 5 minutes. Mr. EVANS. Thank you, Madam Chair. Thank you for this opportunity to talk to the administrator. The question I would like to ask earlier this month, the Committee held a hearing on entrepreneurship, and we learned that the applications to start new businesses increased significantly in 2020, more than any other year over the past 50 years. As someone who is on the ground talking with new businesses every day, what happened during the pandemic that led to so many people starting a new business? Ms. GUZMAN. I believe it was a mixture of both opportunity entrepreneurship, as well as necessity entrepreneurship. For those who were either part of that, either decided to go on a different course and wanted to find a different opportunity as so many people left their professions. And so amongst this group though, we are still seeing high trends across women and people of color starting businesses at really high rates and it is across the country. Mr. EVANS. How can SBA and Build Back Better programs help those budding entrepreneurs survive and thrive in a post- pandemic economy? Ms. GUZMAN. Access to capital is always one of the top issues that small businesses share and is a challenge for them. Obviously, they are trying to expand and grow and enter new markets and so they need not only the capital but also the technical assistance and SBA is uniquely positioned to support these small businesses as they start up and launch their firms with capital and as well as technical assistance. Better connecting, especially through the Community Navigator pilot program small businesses to resources that exist strengthening local ecosystems so small businesses can be supported. So the SBA is working hard to make sure that we are building those relationships extensively across the country to support especially underserved businesses who have not been able to necessarily connect in the same way, and we are trying to expand our product pool as well so that we can fill some of the market gaps that we see out there especially in small dollar loans or in investment capital as we see these businesses and know that they are going to need support to create the jobs that they do. They create 2/3 of net new jobs and 40 percent of our output and we need to continue to support them with that charge. Mr. EVANS. I would like to also thank you for the visit that you did to Philadelphia and talking down 52nd Street was a very important part. A lot of things have happened in that neighborhood just recently, along with an organization called Phila TEC entrepreneur Della Clark, along with Wells Fargo Bank that like rebuilding the businesses on the corridor. And certainly, your presence was very important just to show people, to give a sense of hope and optimism. So again, I thank you for your leadership of coming down and walking down the street. So I want to personally say on record thank you. And I yield back, Madam Chairperson. Chairwoman VELAZQUEZ. The gentleman yields back. Now we recognize the gentlelady from California, Mrs. Young Kim, Ranking Member of the Subcommittee on Innovation, Entrepreneurship, and Workforce Development. Mrs. YOUNG KIM. Thank you, Chairwoman Velazquez, and Ranking Member Luetkemeyer, and Vice Ranking Member Williams. Thank you very much for holding this hearing. I would like to thank Administrator Guzman for joining us today. Yesterday, California gas prices hit yet another record with $4.70 per gallon. This is the highest in the country. To further compound the higher prices facing Californians in my district, our country is confronting a deep labor shortage and a supply chain crisis disrupting small businesses' inventories and pushing prices even higher. Administrator Guzman, with your main function as the most important small business advocate in the Biden administration, how often are you in direct communication with President Biden to counsel him and with the White House staff regarding some of the challenges small businesses are facing with labor shortages and an inflation rate not seen in 31 years? And does your office perform economic analyses of how different policies impact small businesses? Ms. GUZMAN. We are coordinating with the White House on a daily basis across various taskforces and communicating to the National Economic Council and the Domestic Policy Council regularly in terms of the programs that we see that could help on our supply chain or on workforce issues. So that---- Mrs. YOUNG KIM. When you say regularly, how often is that-- weekly, daily? Ms. GUZMAN. Daily. Daily we have been communicating with the White House, various components because there are so many, of course, important issues and taskforces that we are trying to---- Mrs. YOUNG KIM. What about the economic analysis? Ms. GUZMAN. The Office of Advocacy within the SBA conducts economic analysis and research on a regular basis. And we rely on them for those insights. And so they regularly publish with notices the intended economic research so that different institutions can fulfill that and they publish those results. Mrs. YOUNG KIM. Well, thank you. President Biden's supply chain announcement mentioned his commitments from large companies like UPS, FedEx, Walmart, and Target to use expanded hours to move those goods. As you know, small businesses lack the pricing flexibility and purchasing power to compete with the big businesses. And so from the small trucking companies, supply houses, small business operations and storefronts, small businesses continue to be harmed and left out in times of supply chain shortages. So what solutions are you offering small businesses during these disruptions? And how are we using the entrepreneurship programs to help small businesses navigate through the supply chain crisis? Ms. GUZMAN. On the capital front that is really key for businesses to navigate disruption. As an example, a Texas manufacturer that was able to secure our loan to acquire a manufacturer because the part that they were getting from abroad was taking too long. And so they built that and had actually 30 percent savings and that was as a result of an SBA loan. Another aerospace exporter in the Northeast was able to use one of our loans recently to be able to drive down that price because they were able to, with our export financing, prepay for goods and so that enabled them to get the goods faster. So capital is really important, as well as entrepreneur development. And SCORE chapters, SBDCs, WBCs have been increasing their support around vendor relationships and financial management and supply chain. Mrs. YOUNG KIM. Thank you. I want to turn my attention to another matter. Last month, this Committee passed reconciliation instructions that included $2 billion funded over the next 10 years to allow SBA to offer direct lending options. Can you talk to the Committee about the intent of the program? And my question is more, why are we moving away from a public-private lending partnership that we know is more efficient in preventing fraud than direct lending programs like EIDL? Ms. GUZMAN. SBA would not move away from its current programs. The 7(a) and 504 portfolios are strong programs and we will continue to work with our direct lenders. Where we see gaps is on small dollar loans. Note that less than 50 percent-- I think it is 43 percent of businesses have been able to access a bank loan when seeking capital. You see people going more and more to online fintech lenders for financing. There are gaps in this marketplace of small dollar loans and the direct lending program focuses on addressing those gaps. Even within our lending programs, although we had a record year of $44 billion, we only did 18,000 loans under $150,000. Our own SBA loans are in decline and there are less lenders willing to do those loans. Mrs. YOUNG KIM. Well, thank you, but when SBA lowers interest rates, it is unfair competition if the government is offering lower interest rates and is putting smaller local lending institutions out of business. So I would urge you to analyze the direct lending provisions and its impact on smaller businesses before considering its implementation. And thank you for joining us today. Ms. GUZMAN. Thank you. Thank you. Chairwoman VELAZQUEZ. The gentlelady yields back. Now we recognize the gentlelady from Texas, Ms. Van Duyne, Ranking Member of the Subcommittee on Oversight, Investigations, and Regulations. Ms. VAN DUYNE. Thank you very much for your time. It seems like you have been all around the country with my Democrat colleagues. You have visited their areas. You have talked to their small businesses. You have taken their questions and you have answered them. I appreciate that for those folks. But I am going to take you up on your officer. I have offered this before numerous times. Come to my district. Come talk to the businesses that I am talking to. Listen to what their concerns are. Because from your testimony here today and your testimony in the past, I have no idea who it is that you are talking to because it is not what I am hearing. On Friday, I had over 30 small businesses come at a roundtable and tell me about what they are experiencing right now. Their number one complaint was the blockades that the federal government continues to put in their way as they are trying to open back up. You said that you saw that most small businesses are supportive of the vaccine mandate. Are you aware that 90 percent of small business employers are concerned that they are going to have to actually lose workers? Workers are going to quit over the vaccine mandate? Are you aware of that? Ms. GUZMAN. Well, 98 percent of those businesses would not even be affected by the mandate, so---- Ms. VAN DUYNE. Ninety percent of small businesses are concerned that they are going to lose employees because of this vaccine mandate. Forty-nine percent of small business employers have job openings that they cannot fill. We have lost 5 million people out of the workforce in the last several months. Five million. We are at what, 61 percent now. Have you done any kind of impact about what this vaccine mandate is going to mean to small businesses? Ms. GUZMAN. And I appreciate the invitation to come to your district. And yes, my understanding is that 98 percent of all the---- Ms. VAN DUYNE. No, no, I am asking has the SBA done any kind of a fiscal impact report on what the vaccine mandate will mean to small businesses? Ms. GUZMAN. Our Office of Advocacy has not yet done that analysis. Ms. VAN DUYNE. Okay. So we are already starting about putting this in and we have not even given any advice. We have no idea what the financial impacts are going to be. Supply chain. Ninety percent of small businesses are impacted by supply chain shortages right now. What we are looking at is an administration who is supporting killing our energy industry and increasing those costs, a vaccine mandate that is actually going to get truckers and folks who are delivering packages and logistics even later. I mean, those are businesses that have been dying for workers. Cannot find them now and we are going to fire them. Have you done any fiscal impact statements on what the supply chain effects are going to be on small businesses? Ms. GUZMAN. SBA, specifically, no. But of course, the Biden-Harris administration has economists---- Ms. VAN DUYNE. I have not seen them. Have you seen them? Because we wrote to your office and we asked. And we have not gotten a response back. Ms. GUZMAN. Well, economists have weighed in that, in fact, the bipartisan infrastructure deal is going to make huge impacts in terms of improving our supply chain. Ms. VAN DUYNE. Huge. Do we have any numbers? Ms. GUZMAN. Well, I mean, that still does not apply to the immediate needs that I know small businesses are strained with. And so I think it speaks back to what the SBA can do around capital access---- Ms. VAN DUYNE. It would be great if we knew this. If we actually knew the numbers. So the newest spending spree is going to be about $400 billion in taxes on small businesses. That is going to result when you look at all the increases of a top federal tax rate increase of approximately 50 percent. Fifty percent. Are you aware that small businesses actually purchase regular gas and that has gone up 50 percent in costs? Ms. GUZMAN. I am aware. I am---- Ms. VAN DUYNE. Trucks rentals are up almost 40 percent. Energy costs are up almost 30 percent. We have seen the highest inflation level in over 30 years. Inflation is taxation. And yet, from the SBA, we still cannot get any reports on what those impacts are going to be to small businesses. Ms. GUZMAN. We know that pandemic-induced inflation is affecting our small businesses. And economists largely agree that this is something that will go away in the coming months and we continue to try to implement---- Ms. VAN DUYNE. And I hear that and I appreciate that. The last time you were here I asked you a number of questions about what the financial impacts were going to be on small businesses and you told me that you would get back with me. You have not. What you told me over and over again, and we have heard from other people from this administration, is that none of these effects are supposed to be on anybody over than $400,000 or large businesses. The fact that the SBA has not even looked into the fiscal impacts shows how completely out of touch you are with the needs of the small businesses and the impacts, the consequences that are going to happen with these fiscal policies that continue to go down. And I have to ask, if you cannot give me those answers, who is advising this administration on what costs their policies are having on small businesses? Ms. GUZMAN. The analysis, I continue to share information about our small businesses and the impacts that---- Ms. VAN DUYNE. Information is great, but fiscal impacts are important. And if you, as the administrator of the SBA, do not have the answers to these immensely significant questions, who in the administration does? Who is advising the president of the financial impacts of these fiscal policies? Who is advocating for the 31 million small businesses across the country? These are basic questions. Trillions of dollars are being spent and they are being shoved down the throats of small businesses and we cannot even tell you what the impacts are going to be. Ms. GUZMAN. The Department of Treasury has analyzed. And again, the largest corporations, those less than 200, will be impacted. Ms. VAN DUYNE. Fifty percent. Fifty percent. I yield my time. Thank you. Chairwoman VELAZQUEZ. The time has expired. Now we recognize the gentlelady from Minnesota, Ms. Craig, for 5 minutes. Ms. CRAIG. Thank you so much, Madam Chairwoman. It is a real honor to be back here in the Committee room and thank you, Administrator Guzman, for your testimony today, and for your dedicated service to America's small business owners. You and I had a chance to visit together with Representative Phillips in Minnesota this summer, and we were able to get together several small business owners from across our districts to hear about the struggles that they have continued to face. I would just pause to make sure that my colleagues across the aisle understand that 98 percent of small businesses are fewer than 100 employees. Ninety-eight percent. So I appreciate your tolerance of some of the past testimony here today. Look, we have worked tirelessly to keep small businesses open and frankly, on a bipartisan basis over the last couple of years. I am very grateful to see that we have had such strong take up of the Shuttered Venues Operator grant program. I know we talked a lot about that when you were in Minnesota. That program, quite frankly, had a bit of a rough start and I was glad to see the administration worked to tirelessly to get that on a better path. That program has been an absolute lifeline for many, many of our small businesses. But there is a clear need to do more, and I want to make sure that this Committee understands that COVID is not over. The way we get to COVID being over is COVID is still here. Minnesota has some of the highest positivity rates in the country right now. In fact, yesterday, I think we were the highest. And our businesses are just going to extraordinary lengths to keep my constituent safe on a day-to-day basis. But I am hearing from business owners and local leaders in the district about those businesses that have been left out of the recovery. It is not any fault of their own but it is really important that the Small Business Committee not choose winners and losers. So I really do hope, Madam Chair, that this Committee can come together in a bipartisan manner again just like we did under the previous administration, to make sure that we do not lose any more of our small businesses that make up really the fabric of our local communities. And I will pause here to say 98 percent of small businesses are less than 100 employees. Just yesterday, I sent a letter to House leadership urging support for a small business relief package to come together for businesses that have been left out of our previous efforts and to replenish other programs like the Restaurant Revitalization Fund. There were some of us on this dais today who said that the amount of money in the American Rescue Plan was never going to be sufficient for the demand and the cost. So Administrator, if you have been touring the country, I am sure you have heard from businesses that are saying the same thing as you heard in Minnesota's 2nd District. Do you see need for further action from Congress to ensure businesses are not left out of these programs, especially as the holiday season comes into full swing? Ms. GUZMAN. We would welcome the opportunity to continue to work with you and your district to make sure that the COVID EIDL program in particular and those grants that are available for small businesses get into the hands of those who have not been able to benefit from recovery and we are making great efforts to try to increase our outreach on those programs in particular. We know that there was unmet demand with the Restaurant Revitalization Fund. It looks like Shuttered Venues will have enough funding for not only the initial grants but also the supplemental, but we know that these high-impact industries are still being impacted and we would happily administer any program that Congress would see fit to pass. Ms. CRAIG. Let me just make sure I make the point that the support we gave to the economy, to small businesses on a bipartisan basis, as well as Americans under the CARES Act, the previous administration, as well as the American Rescue Plan, that is one of the reasons why we are seeing such a strong recovery of demand. People are out trying to spend their money. And, of course, we have seen a once in a lifetime global pandemic which has disrupted our supply chains. Can you say a little bit more about what the administration is doing to help with those supply chain disruptions, the increased gas prices, more expensive shipping and overhead costs like rent and utility increases? We have to be honest with ourselves in that we have a challenge here. We have got a lot of demand and we do not have the supply to meet it right now. Ms. GUZMAN. We have definitely had global pandemic shifts in our supply chain that have affected our small businesses and their ability to get inventory. And as well, of course, influencing inflation and the demand, the prices, rather. So for our small businesses, obviously, they fit within the overall administration's priorities of trying to improve the supply chain, the investments in the bipartisan infrastructure deal that will be made over the year will go a long way to improving, of course, some of those bottlenecks, our ports and our roads and our bridges. And so we are looking forward to those key investments. On an immediate basis, of course, the administration took immediate action to try to solve some of those bottlenecks as well. Ms. CRAIG. Sadly, my time is expired so I will yield back. Chairwoman VELAZQUEZ. The gentlelady yields back. Now we recognize the gentleman from Florida, Mr. Donalds, for 5 minutes. Mr. DONALDS. Thank you, Madam Chair. Thank you, Ranking Member Luetkemeyer, and the Committee for this important hearing. Real quick a couple things. It has kind of been debated amongst the Members about how 98 percent of the 31 million small businesses in our country are less than 100 employees. Obviously, that is true. But also, the other truth is that with the OSHA mandate, which is unconstitutional, by the way, this OSHA vaccine mandate being pushed by the administration would start at 100 employees. The administration has already signaled that they want to push it to all small businesses, not just stopping at those with 100. So let's be very clear for the record what the intention of Joe Biden and his presidency is. I actually want to thank the 5th Circuit and any other courts that have struck down that mandate because it is unconstitutional. Congress never gave OSHA any authority whatsoever to tell employers what they must require employees to inject into their body. We have such a thing called HIPAA in the United States. It is surprising to me that we have forgotten our HIPAA laws considering the fact that we are largely dealing with COVID-19 in the best possible ways. Secondarily, I think it is also important to note that any president that has the authority to make you take an injection is frankly a totalitarian president and that flies in the face of our constitution the way it was written, the way it was drafted, the way it was conceived. Even the very framework of our nation. So it is unconstitutional. That thing is going to go away. Hopefully, the courts continue to do that and the Supreme Court follows suit in short order. Real quick, Administrator Guzman, thanks so much for coming. I do appreciate you being here. You mentioned earlier you believe inflation is pandemic induced. Do you hold the view that it is purely pandemic induced? Can you explain that? Ms. GUZMAN. I am relying on our economists who are sharing with us and most agree that the pandemic is causing these supply chain disruptions globally. Mr. DONALDS. Do you think it is that the pandemic is causing it or do you believe that it is now work-related issues associated with massive social spending and also in conjunction with environmental policy in the State of California which has made it harder for truckers to access the ports of Long Beach and Los Angeles? Ms. GUZMAN. The pandemic is underlying all of the inflation. Yes. Mr. DONALDS. Is there any reason why the social spending that frankly this Congress and this president started back in February, if we did not actually continue that social spending, do you think that we would have employees basically sitting at home or taking less hours? Ms. GUZMAN. What I am hearing from small businesses and I am not sure what you are hearing in your district, but their workers are staying out because of care issues, because of healthcare concerns. Because there also was---- Mr. DONALDS. So quick question. When a local 7-Eleven down the street from my house has in the window that they want to give somebody a $500 signing bonus to come to work, that is because they are concerned about care issues or is it because they are concerned about money? Or is it that there is now a bargaining chip from the federal government that gives them more money than actually going in and taking more hours at work? Which one is it? Ms. GUZMAN. What I was about to say as well is the final thing is, you know, what I heard recently when I was convening a group of resource partners at the Institute for Veterans and Military Families that there is this great resignation as well and people are shifting careers. So these are the more dominant factors that are affecting our workforce. And yes, they are in control in terms of the opportunity that they have to demand higher wages. Mr. DONALDS. Let me ask you this question because I know you said earlier you support obviously the budget reconciliation package, Build Back Better, Build Back Broke. You know, everybody likes their little acronyms. Come on. This thing is building us back broke. You can acknowledge that. But I digress. Do you think that the social spending aspects of that bill will make it easier or harder for small business owners to find employees? Ms. GUZMAN. I think actually it will make it easier. And there are key investments within the Build Back Better framework that involve workforce development, apprenticeships, as well as---- Mr. DONALDS. I almost gave you a title increase. Administrator, can we honestly have a conversation and sit here that if you do something like Child Tax Credit which will give people $300 per child that that is going to make it easier for them to go back to work or is it going to make an economic decision where they are going to make the choice of, you know what, maybe I do not need the additional 5 hours. If you cascade that through an economy across the 31 million small businesses in the United States, do you think it is going to be easier or harder for small businesses to staff their companies in order to be effective for their customers? Ms. GUZMAN. As President Biden says---- Mr. DONALDS. Well, we all know President Biden does not know much about the economy. We know this. Ms. GUZMAN.--against the American people and workers who want to work, who want to have the protections in place and the care for their elders or for their children that is affordable---- Mr. DONALDS. Administrator Guzman, the President of the United States has never worked a day in his life outside of Washington, D.C. You have done more than he has. Come on now. You were a small business owner. If the federal government was providing outside spending that competed directly with your ability to pay people to come to work, do you think it would make it harder for you as a small business owner which you were, not an administrator now in the administration, would it make it easier or harder for you to keep people under your employ? Ms. GUZMAN. Again, these investments in Build Back Better will strengthen---- Chairwoman VELAZQUEZ. If you will excuse me. Ms. GUZMAN. Apologies. Chairwoman VELAZQUEZ. Decorum is important in this Committee and respecting---- Mr. DONALDS. Madam Chair, I was just referring to the president---- Chairwoman VELAZQUEZ. Respecting the President of the United States is part of that. Mr. DONALDS. Madam Chair, the President of the United States has never worked in our economy. Those are facts. That is not about decorum. That is the truth of the matter. He has never worked a day in our economy. He has always worked in Washington, D.C. So to point out that fact, and to illustrate the fact that we are talking about major economic policies that do impact the 31 million small business owners in our country is not about decorum. I did not trash the man. I am just speaking facts. Chairwoman VELAZQUEZ. Your time has expired. Mr. DONALDS. I yield. Chairwoman VELAZQUEZ. Now we recognize the gentlelady from Florida, Ms. Salazar. Ms. SALAZAR. Thank you. Thank you, Chairman Velazquez and Ranking Member Luetkemeyer, for holding this necessary hearing. And I also want to thank you, Administrator Isabella Guzman, for being present and willing to answer our questions. Because unfortunately, Madam, your people, the SBA office in my district just do not answer the phones. And I have consulted with other congressional offices and the same thing. A small business owner is desperate looking for a loan and he just cannot get through. Let me just give you an example. His name is Marquis McLemore. He lives in South Miami and he finally reached a human being, not a machine. The SBA lady who answered the phone was unaccountable and unable to answer basic questions. And I know the situation very well, Madam Guzman, because in my district office I created a division called the Prosperity Center to help my people achieve the American Dream, and for us immigrants it is to have their own business. And you know the SBA is instrumental for that Prosperity Center. There are other scenarios. When an individual who has been able to start the process, thank God, but gets stuck in the middle of it because every time they call there is a new person to talk to, they have to re-explain their problems, they have to reupload the documents. You know, Madam, SBS is not a MasterCard or a Visa to be bouncing people around. People have a choice to get another credit card but in this case there is no other SBA for small business. And your agency can make it or break it for millions and millions of small businesses in America. Let me tell you so bad that my congressional office and my Prosperity Center has a hard time getting information from your agency. So just imagine if a congressional office cannot get through, what about Rosa Lopez from Little Havana or John Rogers from Cutler Bay? Madam Guzman, I understand that you are responsible for this and I also understand that this is uncomfortable, very uncomfortable for you for what I am describing but it is more painful to lose your business because of a bureaucrat. And I am sure you agree with me. These are real people and these are real life-changing problems. Let me just give you one more piece of information and then maybe you can answer me. There are 2 million small business owners in South Florida. Two million. There is one office. One office that serves 2 million people. During the pandemic, as you have said, the SBA received 3 billion to hire more people and provide a better service. Now, let me ask you something. How many people have you hired in the last 10 months? How many of those in South Florida? How many new call centers and how many of them are bilingual? Ms. GUZMAN. Thank you for that. We do value customer service experience and that has been a priority of mine since I came in which was what instigated our overhaul. And I think you are referencing mostly to the COVID EIDL program where it has been very challenging to get answers. So we have---- Ms. SALAZAR. So you know that we have a problem with customer service? Ms. GUZMAN. We completely agree with you and we are trying to fix it. And what we have done so far is we have three times the amount of customer service resources that we have available. We have switched vendors as well and we have, of course, bilingual capacity is available within this network. We have also tried to increase in the field and so we will take back your concerns about the Florida District Office in particular. Ms. SALAZAR. Thank you. Ms. GUZMAN. We have also tried to increase the district connection to our platform. Previously, they did not have---- Ms. SALAZAR. I am going to get back to you in 30 days and I am going to tell you if my Small Business Administration office in South Florida is working according to what you are telling me. Let me just give you one more concern. A month ago, and this is even worse, a month ago the General Inspector, or Inspector General I should say, the Inspector General found that women and minorities, you and me, women and minorities are not getting their fair share of receiving small business government contracts. For me that is lethal because I promised this to my constituents through my Prosperity Center and I have to deliver, Madam. And the SBA has to help me because it is instrumental. My question is how are you going to fix this, that we do get the fair share of what we need? Women and minorities. Ms. GUZMAN. Thank you for the question. Yes, government contracting is a priority and equity across our programs. We want to make sure all of our small businesses access the federal government. And right now we have seen over the past 10 years a decline of 40 percent. Ms. SALAZAR. Those are stats. What are you going to do in order to right now under your administration being able to, for women and minorities, to get more government contracts? Ms. GUZMAN. So we have a multi-prong approach. The first is working collaboratively with the White House and OMB on the policies like category management and other policies to make sure that businesses can access all contracts across the federal government. We have increased the budget for the president's request for an increase on the government contracting business development teams resources so that we can increase outreach and get more---- Ms. SALAZAR. Can you give me in 30 days a report of what have you done in South Florida in order to improve the access for these women and minorities? Ms. GUZMAN. We would be happy to sit down with you and your team to go over specific initiatives that we can implement. Ms. SALAZAR. To help my constituents. Thank you, Madam. Chairwoman VELAZQUEZ. Time has expired. Now we recognize the gentleman from Wisconsin, Mr. Fitzgerald, for 5 minutes. Mr. FITZGERALD. Thank you, Madam Chair. And thank you, Administrator Guzman. Back in I think it was February-March timeframe, we started to get some numbers back on just exactly what did the PPP loan program look like and hindsight is 20/20. I think you would find agreement that there was a lot of successes and may have saved main street. Also, obviously, at the same time we were getting the reports that the direct loans made by the SBA were not only a high percentage that resulted in fraud and that money that was being distributed after individuals--crooks--I do not know how else to explain this--had gotten into the portal and obviously, you know, put in bogus facts and figures and got a check in the mail. We then had discussions with the IG and with others in law enforcement saying that they were working on claw backs and that SBA was working on claw backs and that also there had been some individuals ultimately who had been charged for fraudulent activities. So like I said, hindsight is 20/20. We learned our lesson. We kind of know, we have always known, that direct loan programs by the federal government result in a high percentage of fraudulent claims. So as we move forward and after this Committee was involved in, and this was referred to by some of the other Members here today, when the SBA got the $2 billion in loans directly to the borrower, you said earlier that financial institutions do not necessarily want to get involved with loans of 150 or less, but I am not finding that that is the case. Just a couple of weeks ago, Wisconsin Bankers Association, I think the credit unions are saying, whoa, whoa, whoa. Time out. Why would we not be involved in this, especially because the due diligence was done by those financial institutions and we now know that that makes for a much more legitimate process. And it seems like you are abandoning that and it does not make much sense to me right now. Ms. GUZMAN. Thank you so much for that. Well, one of the first things, just to mention on COVID EIDL and the fraud that the IG had outlined, that was all affecting, that was all reviewing 2020 loans. And so controls have been restored thanks to the Economic Aid Act. The SBA was given again the right to collect tax documents, which we have. And so we have $67 billion in disaster portfolio over the years of SBA that does not have high incidence of fraud. So our direct lending programs across EIDL programs broadly do not suffer from that same effect and that is specifically to deal with COVID EIDL and the restrictions that were placed on the Agency at the time and the administration's choices. Mr. FITZGERALD. So do you believe that, in fact, there were vulnerabilities that now have been addressed and if we get together a year from now that you will be able to say that stuff was fixed and that is not going to be the case again? Ms. GUZMAN. Yes. And we have been working with the IG closely to make sure that we are implementing all the recommendations. So not just the tax document collection but other identity verifications across the COVID EIDL program. And we are making great progress. Within the direct loan proposal specifically, some banks are still doing those loans. I said 18,000 within the SBA's portfolio last year. We just continue to see large gaps. Of course, we have 32.5 million small businesses and especially as we have seen the footprint of so many banks shrink across the country where there are actual banking deserts, half of them in rural communities, we need to make sure that there are alternatives and that all our small businesses can connect to capital. And so we believe that SBA has a role to play to work with the lending partners similar to how we did with PPP, and with a fee-based program, distribute these loans through our lenders as well as directly. Mr. FITZGERALD. Let me shift gears real quick for a final question. There has been a lot of discussion about the vaccines and the 100-person mandate. What is the magic behind 100 employees? I have not been able to figure this out. I have been lectured. Everyone in America has been lectured about follow the science, follow the science. What is the 100-person threshold? And if we have an employer that has got 105 employees and another one that has got 95 and they are side by side, some of them would be subject to fines and others would not. I mean, what is the logic behind that? Ms. GUZMAN. Of course, with the proposed rule there will be comments and so we will find out more about how people feel about that analysis but my understanding was that it was done based on where they thought a company of that size would have the capacity to be able to administer a program like that and be able to comply. That is my understanding. Mr. FITZGERALD. So it has nothing to do with health or COVID itself or science? Ms. GUZMAN. As well as that. Yes, correct. You are correct, sir, that there is, of course, you know, in larger. Mr. FITZGERALD. I do not get it. I do not understand why 100 is the magic number. Ms. GUZMAN. In larger facilities there have been, you know, of course there are more concerns of COVID outbreaks and so being able to control for vaccines and that matter would be helpful. Mr. FITZGERALD. Okay. I yield back. Chairwoman VELAZQUEZ. Time has expired. Now I will be asking questions. I will recognize myself for 5 minutes. Ms. Guzman, the Department of Defense administered 17 different vaccines and children are required to get vaccines prior to enroll in school. I just cannot see what the issue is with the vaccine mandate when we know that because of it we have been able to control the spread of COVID-19. Also, when people use the argument that it is impacting small businesses more than any other sector, 98 percent of small businesses are exempt from the 100 employee rule. There are other issues that were raised and I just want to give you an opportunity to answer. Administrator, since you have been in office as the head of the SBA, have you refused to provide access to data or information requested by the IG? Ms. GUZMAN. We have a very transparent and collaborative relationship with the IG and our teams meet regularly and we have disclosed all information that they have requested. Chairwoman VELAZQUEZ. When people talk about fraud in the EIDL program, that fraud was connected to the fact that the guardrails and protections under the previous administration were lowered. What steps have you taken to put those guardrails in place? Ms. GUZMAN. Yes. The IG report was focused on 2020 where the guardrails did not exist. We have implemented the collection of tax documents across the portfolio as well as implemented additional identity measures to make sure that our overall fraud control framework is in place and that we are following suggestions of the IG and the GAO. Chairwoman VELAZQUEZ. Let's talk about taxes and how in the BBB Act it impacts small businesses. People this morning have been referring to the tax provision under the Build Back Better Act and how those provisions will be impacting small businesses. I have here the Committee's Ways and Means section by section of the bill and I invite my colleagues to read it so that we can make the statement or the questions related to small businesses. I want to know how many small businesses will be impacted by the provision of the 15 percent corporate minimum tax to those businesses that are making $1 billion a year in profits. How many small businesses? How many businesses are operating overseas because of the global minimum tax for large multinational corporations, and how many small businesses will be impacted by that provision? How many businesses that have income over $25 million will be impacted with the surcharge of the wealthiest .02 percent of businesses? How many small businesses have a structure where they do corporate stock buybacks? Nowhere in this bill can you find where corporate or individual tax rates have been modified or will be modified. Let's go to the print so that we can say and have an honest discussion as to how those provisions will be impacting small businesses. Then, the Medicare surcharge closes the loophole that allows some wealthy taxpayers to avoid paying the 3.8 Medicare tax on their earning. Those are not pass-through. Let's go to the source because it seems to me that people are discussing a bill that does not exist. Let's go now to some of the programs under SBA and the Build Back Better Act. Administrator, you discussed how the data shows small dollar loans have declined significantly as a share of the 7(a) portfolio with loans of less than $150,000 down by almost 53 percent over the past years. The average 7(a) loan has more than doubled over a decade. Do you agree that a direct loan product will help fill this gap in the 7(a) program? Are you confident that the agency will be able to stand up and deliver this product in a timely manner? Ms. GUZMAN. Yes. We definitely have seen that gap in the marketplace and we believe the SBA is equipped, especially having learned from the great lessons of PPP and EIDL and implemented some incredible private sector best practices and expanded our network. We do have the tools to implement this effectively. Chairwoman VELAZQUEZ. What steps will you take to cure potential fraud in a direct loan program? Ms. GUZMAN. As we have on our previous disaster loan programs a $67 billion portfolio where fraud was not an issue, we will continue to follow those great standards as well as implementing new technologies as fraud evolves to make sure that we are fighting fraud on a regular basis and getting the funds into the hands of those businesses it was intended for. Chairwoman VELAZQUEZ. The USDA Business and Industry Loan program--and this is an important topic for me--so the USDA Business and Industry Loan program does not require co-ops to provide a personal guarantee but the SBA still does which prevents them from getting 7(a) loans. Instead of requiring a personal guarantee, USDA requires co-op Members to sign a profit nondistribution covenant. If this works for USDA issued work for the SBA, why will the SBA not provide this option for co-ops? Ms. GUZMAN. I know that, you know, thanks to your main street Act we have been exploring the options to expand the use of the 7(a) products across our ESOPs and our worker cooperatives broadly. I am happy to explore this a little bit further. We have made some changes within the program to open it up to ESOPs and co-ops and we have committed to making sure that we can continue to see how those loans perform and make additional changes. Chairwoman VELAZQUEZ. Will you commit to working with this Committee to ensure co-ops can access 7(a) loans? Ms. GUZMAN. Yes. I think it is a priority for us to make sure that there are options for especially exiting businesses to have a success plan that can work. Chairwoman VELAZQUEZ. Data shows that Black and Hispanic borrowers only received 3 and 6 percent of 7(a) dollars lent in 2021, respectively. CDFIs and MDIs are better able to reach small businesses owned by people of color. They are recording that PPP is the latest example. How do you plan to bring more CDFIs and MDIs into the 7(a) program? Ms. GUZMAN. The Community Advantage pilot program that would be made permanent within the Build Back Better will help create certainty within a program that attracts our CFIs and enables them to leverage our 7(a) portfolio. We would use that, as well as other tools, to make sure that we are engaging with them and continuing the relationships fortified during PPP. Chairwoman VELAZQUEZ. Thank you. Every Member has had their 5 minutes. I just want to really thank you. I am looking forward to working with you and the Committee in terms of how we can strengthen the programs we have under SBA and the new programs that will be implemented. I really want to thank you and your staff for your service on behalf of American small businesses. I also appreciate your willingness to appear before and work with this Committee. Transparency, accountability, and responsiveness are critical to a positive working relationship between the agency and this Committee. When I say ``this Committee,'' I mean all of the Members of this Committee. Everyone in the room today has the same goal--to help our main street employers. I look forward to collaborating with you and all of the Committee Members as we work to get small businesses to full recovery. This is not a small task. We have laid out complicated issues today that need addressing. Given the monumental obstacles that SBA has overcome over the past 18 months, I am confident that you can correct these problems and make these programs better serve entrepreneurs. I ask unanimous consent that Members have 5 legislative days to submit statements and supporting materials for the record. Mr. LUETKEMEYER. Madam Chair? Chairwoman VELAZQUEZ. Yes, sir. Mr. LUETKEMEYER. You went over 2 minutes and 34 seconds and now you have had a closing statement. I think I get time to be able to rebut that. Chairwoman VELAZQUEZ. To rebut what? Mr. LUETKEMEYER. To rebut your 2 minutes and 34 seconds versus my 5. And now you have had a closing statement so I have another closing statement. Chairwoman VELAZQUEZ. I always give a closing statement. You never have. Mr. LUETKEMEYER. That was a lengthy closing. It is one thing to do 30 seconds but that was about 2 minutes worth of closing statement. Chairwoman VELAZQUEZ. I am the Chair of this Committee. I run this Committee and I try to run this Committee in a bipartisan way. I did it with Mr. Chabot. I have got to tell you, this has been the most partisan Committee ever, and I resent that because I try to be fair and balanced. Mr. LUETKEMEYER. Well, Madam Chair---- Chairwoman VELAZQUEZ. I have always made a closing statement. As Chair, I have---- Mr. LUETKEMEYER. That is wonderful you made a closing statement but I think if you are going to have a lengthy one-- it is one thing to say thank you to the witnesses and just a recap, a small recap, but for---- Chairwoman VELAZQUEZ. Reclaiming my time, sir, I have always given a closing statement. It does not have to be 2 minutes long or 3 minutes long or 1 minute long. I just simply---- Mr. LUETKEMEYER. If you have a closing statement of a significant length, I have the option to be able to have a closing statement as well. Chairwoman VELAZQUEZ. You are not the Chair. Mr. LUETKEMEYER. That is in the rules. That is not the Chair's prerogative. It is in the rules. Chairwoman VELAZQUEZ. You are not the Chair. So---- Mr. LUETKEMEYER. So you are going to do it because you can. Is that what you just said? Chairwoman VELAZQUEZ. Well, I am the Chair, sir. I am the Chair. Mr. Chabot never gave---- Mr. LUETKEMEYER. So next term, whenever I am the Chair, you are going to sit here and we will just make sure you have 5 minutes and not go on for 20. Is that what you just said? Chairwoman VELAZQUEZ. I gave you the right to run your minority Members. I give you access in terms of your budget. I am the Chair. I give a closing statement and that has always been the tradition of the Committee. Mr. LUETKEMEYER. Madam Chair, with all due respect, there are rules in place to allow each---- Chairwoman VELAZQUEZ. You want to give an opening? You want to give a closing statement? Make a closing statement, sir. You are recognized. Mr. LUETKEMEYER. Okay. Very good. Chairwoman VELAZQUEZ. You are recognized. Mr. LUETKEMEYER. Thank you. We could have been out of here 5 minutes ago if we would have just recognized it right off the bat but here we are. Chairwoman VELAZQUEZ. You know---- Mr. LUETKEMEYER. Again, going through some of the last comments by the Chairman, the vaccine mandate, I think Ms. Guzman, you said 98 percent of small businesses are exempt. The problem is only about 40 percent. About 35 to 40 percent of the people are going to be exempt from that. There is about 60 to 65 percent according to what our information is that are going to be affected by the vaccine mandate. So let's be honest about your statistics here. The Chairman talked about guardrails on things and I think that is great. We need to have guardrails on what is going on, especially in the EIDL program and some of the direct lending programs. The program is the staff do not follow the guardrails. The IG report says that this is happening so therefore, we need to make sure that the staff does its job, which is to adhere to the new challenges, new guardrails, new protocols that are in place. That is your job, Madam Administrator. One of the things that is frustrating to me is when you make these wild statements about we are going to raise taxes on the wealthy, in this BBB there is a huge tax break for the wealthy. It is called SALT. You cannot take on one side and give on the other and get away with just saying part of what is going on and not explain what is going on on the other side of this argument. So it is very frustrating to see that a lot of the information is not necessarily given in a frank form for both sides to understand the depth and problems that we have. Again, I thank you for being here, Ms. Guzman. I think that you have got a large job ahead of you. I think you found this morning the concerns that we have on this side of the aisle with regards to the inability to answer questions, the inability to provide studies to show that you are actually doing your job and making sure that the information you are giving us is actually done by a think tank or a study of some sort, that you can verify and back up what you are saying. This is very important. You talk about the COVID thing and right here I have got something from the Job Creators Network that says higher prices inflation by 40 percent versus 14 percent is the number one issue for small businesses. I hope that you have information like that because that is what you need to be able to make good decisions. So I am very concerned with the direction that we are going. This Committee hearing has not allayed my fears and we are going to be watching very carefully and providing what we are supposed to do, oversight. Thank you for being here, and with that, Madam Chair, I yield back. Chairwoman VELAZQUEZ. Yes. Let me remind the gentleman that almost every economist in this country is saying, including Senator Portman yesterday in his speech, that when it comes to inflation, no better to make investment in the infrastructure of this country. You know what is the problem here? That for the last 40 years America has been expecting an infrastructure bill. People and previous presidents make pronouncements of infrastructure bills and this one delivered. The President of the United States delivered yesterday. I ask unanimous consent that Members have 5 legislative days to submit statements and supporting materials for the record. Without objection, so ordered. If there is no further business to come before the Committee, we are adjourned. Thank you. [Whereupon, at 12:29 p.m., the committee was adjourned.] A P P E N D I X [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] [all]