[Senate Hearing 119-170] [From the U.S. Government Publishing Office] S. Hrg. 119-170 USING THE 504 PROGRAM TO BUILD AMERICA'S MANUFACTURING FUTURE ======================================================================= HEARING BEFORE THE COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP OF THE UNITED STATES SENATE ONE HUNDRED NINETEENTH CONGRESS FIRST SESSION __________ SEPTEMBER 17, 2025 __________ Printed for the use of the Committee on Small Business and Entrepreneurship [GRAPHIC NOT AVAILABLE IN TIFF FORMAT] Available via the World Wide Web: http://www.govinfo.gov __________ U.S. GOVERNMENT PUBLISHING OFFICE 61-659 WASHINGTON : 2026 ======================================================================= COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP ONE HUNDRED NINETEENTH CONGRESS ---------- JONI ERNST, Iowa, Chair EDWARD J. MARKEY, Massachusetts, Ranking Member JAMES E. RISCH, Idaho MARIA CANTWELL, Washington RAND PAUL, Kentucky JEANNE SHAHEEN, New Hampshire TIM SCOTT, South Carolina CORY A. BOOKER, New Jersey TODD YOUNG, Indiana CHRISTOPHER A. COONS, Delaware JOSH HAWLEY, Missouri MAZIE K. HIRONO, Hawaii TED BUDD, North Carolina JACKY ROSEN, Nevada JOHN R. CURTIS, Utah JOHN W. HICKENLOOPER, Colorado JAMES C. JUSTICE, West Virginia ADAM B. SCHIFF, California JON HUSTED, Ohio Meredith West, Republican Staff Director Sean Moore, Democratic Staff Director C O N T E N T S ---------- SEPTEMBER 17, 2025 Opening Statements Page Joni Ernst, U.S. Senator from Iowa............................... 1 Edward Markey, U.S. Senator from Massachusetts................... 2 Witnesses Mr. Karl E. Swanson, President, PCT Ebeam and Integration, LLC, Davenport, IA.................................................. 5 Prepared Statement........................................... 7 Mr. David P. Raccio, Senior Vice President and Director of SBA Lending, CDC New England, Wakefield, MA........................ 13 Prepared Statement........................................... 15 Ms. Jean Wojtowicz, Executive Director, Indiana Statewide CDC, Indianapolis, IN............................................... 23 Prepared Statement........................................... 25 Ms. Hilda Kennedy, Founder and President, AmPac Business Capital Ontario, CA.................................................... 34 Prepared Statement........................................... 36 Additional Letters/Statements for the Record TMC Financing Testimony Dated September 17, 2025........................... 60 Questions for the Record Mr. David P. Raccio Responses to questions submitted by Senator Hirono........... 64 Ms. Jean Wojtowicz Responses to questions submitted by Senator Young............ 66 USING THE 504 PROGRAM TO BUILD AMERICA'S MANUFACTURING FUTURE ---------- WEDNESDAY, SEPTEMBER 17, 2025 United States Senate, Committee on Small Business and Entrepreneurship, Washington, DC. The committee met, pursuant to notice, at 2:31 p.m., in Room 428A, Russell Senate Office Building, Hon. Joni Ernst, chair of the committee, presiding. Present: Senators Ernst [presiding], Hawley, Husted, Markey, Shaheen, Coons, Rosen, and Hickenlooper. OPENING STATEMENT OF SENATOR ERNST Chair. I call the Committee on Small Business and Entrepreneurship to order. We are here today to discuss the role that the Small Business Administration's 504 Certified Development Company, or CDC, loan guarantee program can play in supporting investment in America's small manufacturers. Over the course of this year, the committee has examined the staggering decline of America's manufacturing sector. 40 years ago, factories across the country roared with activity, towns thrived, and America felt unstoppable. We were truly unrivaled as a nation. Today many of those same factories stand idle, communities that once depended on them fade and struggle, and millions of jobs have vanished. Today, we're seeing some of the lowest levels of manufacturing employment that we've seen in nearly a century. Sadly, we're losing more than just jobs. We're losing America's knowledge, talent, innovative edge, and tradition of industrial excellence. By neglecting our manufacturing sector and infrastructure, we've crippled our own ability to scale new technologies, leaving us less competitive on the international stage. Simply put, we've let our guard down, and it's our adversaries like China who stand to benefit. To restore our economic resilience and global dominance, we must empower our small manufacturers to lead the way. That starts by providing them with the resources they need to reverse this decline and rebuild our domestic productive capacity. In prior hearings, we have explored how we can channel more capital into American manufacturing, whether through private capital committed as part of the Small Business Investment Company program, or through 7(a) loans guaranteed by the SBA. Today, we're focused on one program that is uniquely suited to helping small manufacturers build and expand: the 504 Loan Program. The 504 Loan Program is the primary way that SBA helps small business owners buy major fixed assets like real estate buildings, equipment, and machinery, and even construct facilities from the ground up. It gives borrowers long-term fixed rate financing of up to 25 years. That kind of predictability is exactly what small manufacturers need to establish or modernize their operations. Thanks to the work of participating CDCs, the 504 Program has been able to maintain a low default rate of under one percent per year. In the last five years, it has been under half a percent. That is the hallmark of a loan program that is safe, reliable, and deeply impactful. But it isn't perfect. Stakeholders have made clear that improvements can be made to eliminate red tape in the closing process and provide more flexibility to borrowers, especially for rural businesses. This committee has continually looked at ways to build upon the program's success, including consideration of legislation introduced by Senator Young aimed at streamlining the Office of Credit Risk Management's oversight of CDCs. Another way to strengthen our manufacturing future is by passing the Made in America Manufacturing Finance Act, which I introduced in April alongside Senator Coons. The committee reported out the bill in July. This bipartisan legislation would double the 504 loan limit from $5 million to $10 million for small manufacturers who need that capital to modernize, grow, and train a new generation of American workers. I know from the countless conversations I've had with small business owners, that this makes a real difference. Many companies could have expanded faster, hired more workers, and invested in new technologies if only the loan limits had allowed it. CDCs tell us the same thing. Clients are forced to slow their growth or seek outside funding on less favorable terms simply because their needs couldn't be met by what is currently allowed. I'm grateful that we're joined today by our panel of CDC lenders and program participants. I look forward to hearing from them about how Congress can improve the 504 Program and give American entrepreneurs what they need to build a stronger, more resilient manufacturing future. And I now recognize Ranking Member Markey for his opening statement. STATEMENT OF SENATOR MARKEY Senator Markey. Thank you, Madam Chair. [Technical issue.]--manufacturers faring in the Trump economy. Well, the Institute for Supply Management reported that the manufacturing sector shrank for the sixth consecutive month in August as supply prices continue to rise. According to a July survey from the National Association of Manufacturers, small manufacturers' positive outlook for their companies has dropped to the lowest level since the height of the COVID-19 pandemic. And since Trump's so-called ``tariff liberation day'' in the beginning of April, the United States has lost more than 42,000 manufacturing jobs. They've disappeared. And we've seen this before. During President Trump's first administration, 200,000 manufacturing jobs were lost. And to hide the failing state of his economy, President Trump is following the three Ds; divert, distract, and deceive. Instead of taking responsibility, President Trump has fired the Bureau of Labor Statistics Commissioner and called to end quarterly earnings reports. But no matter how hard President Trump tries to hide the data, it is crystal clear that it is his policies that are hurting small manufacturers across our country. President Trump's tariffs are pushing up prices, making it difficult for our small U.S. manufacturers to compete. For too many small U.S. manufacturers, MAGA stands for ``manufacturers are going abroad''. In May, our committee heard from Julie Robbins, CEO of EarthQuaker Devices in Ohio. She told us that she had faced tariffs as high as 185 percent forcing her to consider moving production overseas. President Trump's attack on clean energy is also fueling America's manufacturing decline. Trump's SBA ended their Green Lender Initiative, and the big ugly bill rolled back many of the clean energy incentives in the Inflation Reduction Act of 2022. These incentives and programs contributed to the almost 700,000 manufacturing jobs added during the Biden Administration. And now, President Trump's sweeping attacks on immigrants are crushing the manufacturing workforce from the largest manufacturers to the smallest of the small manufacturers in our country. And to add to the small business' paying, President Trump's SBA is adopting draconian requirements. These requirements bar small businesses with any amount of foreign investment and small businesses, partially owned by people who are lawfully here, including DACA recipients, assignee, and refugees from getting an SBA loan. This breaks from at least a quarter of a century of SBA policy that allowed small businesses, including manufacturers, 51 percent owned and controlled by U.S. citizens, nationals, and green card holders to receive SBA loans. These changes are creating a chilling effect. In Massachusetts, one small business owner with a green card who was likely an eligible SBA borrower decided not to apply for an SBA loan because they feared their legal immigration status would be used against them in President Trump's America. If President Trump were serious about growing American manufacturing, he would be investing in our future not burning it down. So, I agree with raising the loan limits on SBA's 504 Loan Program, or as I'd like to have it be called, the Economic Development Loan Program. And I appreciate Chair Ernst and Senator Coons' leadership on this issue, and the intent of the Made in American Manufacturing Finance Act. However, we should work to ensure that the larger loans allowed under this legislation lead to good-paying jobs. We should raise SBA loan limits specifically for our clean energy manufacturers to supercharge our economy, make our communities cleaner, and to create jobs. We must return to the historic SBA lending rules that supported immigrant entrepreneurs, and we must break down barriers and create programs that are tailored to help our minority entrepreneurs access capital. So, today, I look forward to hearing from our witnesses about how we can accomplish these goals. I thank you Madam Chair for calling this hearing and the legislation which you and Senator Coons have put together. Chair. Wonderful. Thank you, Ranking Member Markey. And, again, I want to extend a warm welcome to all of our witnesses. I will now introduce our witnesses who are testifying today. I am thankful that you-all took time out of your busy schedules to join us here in DC and share your expertise on SBA's 504 Loan Program and access to capital through Certified Development Companies, or CDCs. First, we have Mr. Karl Swanson. He is the president of PCT Ebeam and Integration, which is a small manufacturer of electron beam systems in Davenport, Iowa. Mr. Swanson previously served as director of sales and marketing at PCT Engineered Systems and began his career as an automation sales specialist at Industrial Engineering Equipment Company. He received his bachelor's degree in electrical engineering from University of Illinois Urbana-Champaign, and his MBA from St. Ambrose University. And thanks for making the trip again from Iowa. Thank you, Karl. Ms. Jean Wojtowicz is the executive director of the Indiana Statewide CDC. She is also the founder and president of Cambridge Capital Management Corporation, an Indianapolis-based manager of non-traditional sources of capital for businesses. She previously served as the lead independent director on the board of directors of Vectren Corporation, a New York Stock Exchange energy holding company serving Indiana and Ohio. Ms. Wojtowicz who holds two bachelor's degrees in finance and real estate from the University of Wisconsin-Madison. I now recognize Ranking Member Markey to introduce his witnesses. Senator Markey. Thank you, Madam Chair. Mr. David Raccio has been with CDC New England located in Wakefield, Massachusetts since 2017, and is currently the senior vice- president and director of SBA lending. CDC New England is one of the most active 504 lenders in Massachusetts. He brings deep expertise in helping small businesses grow. He's also a proud U.S. Air Force veteran serving six years on active duty and in the reserves. And we thank you so much for being with us today. And Ms. Hilda Kennedy is the founder and president of AmPac Business Capital based in Ontario, California. AmPac participates in several SBA lending programs, including the 504 Program. She is a board member of the National Association of Development Companies, or NADCO, and she previously worked as the director of economic development for the City of Inglewood. And we look forward to hearing of all of the testimony that's going to be presented today. Thank you, Madam Chair. Chair. Wonderful. Thank you, Ranking Member Markey. And briefly, I'd like to take a moment just to explain our lighting system that is there on the boxes in front of you. There are three lights in front of you. Green means go. Yellow means you're running out of time. And red means to please wrap it up. I ask unanimous consent that the witness's full statements be included in the record. Without objection, so ordered. As your written testimony has been made part of the record, the committee asks that you limit your oral remarks to five minutes. And with that, Mr. Swanson, you are now recognized for five minutes for your testimony. STATEMENT OF MR. KARL E. SWANSON, PRESIDENT, PCT EBEAM AND INTEGRATION, LLC, DAVENPORT, IOWA Mr. Swanson. Chair Ernst, Ranking Member Markey, and members of the committee, I'm humbled by the responsibility to represent the interest of the hundreds of thousands of small manufacturers that fuel the American economy. As you said, my name is Karl Swanson, and I grew up on my family's farm near Rio, Illinois. Today I'm the President of PCT Ebeam and Integration located in Davenport, Iowa, which was founded in 1986. When the original majority owner was looking to retire, the most attractive option was to be acquired by a Swiss company. The integration was unsuccessful, and when the business was getting ready to close, I found eight of my long-term coworkers willing to join me and buy the company back. In November of 2018, we reached an agreement to make this a reality and embarked upon what has been a challenging and rewarding journey. We have experienced firsthand the advantages of, once again, being an American owned small business. In seven years, we have grown from 45 to 65 employees and have also reacquired many of the critical manufacturing capabilities that were divested by the previous owner. PCT is both a systems integrator and a manufacturer of industrial electron beam systems. Our ebeam machines are used in a variety of different industries where they enable energy efficient production of prepainted steel, are used in the manufacturing of advanced medical materials, and can be used to achieve more sustainable production of lithium-ion batteries. Building these specialized machines requires a skilled workforce and specific manufacturing capabilities. 50 percent of the ebeam systems we build are exported. Our foreign customers often require their advanced payments to be secured by local bank guarantees. The options for a small U.S. manufacturer to comply with these requirements are limited. For PCT, it is critical that we have access to funds to support our material and labor expenses throughout the lengthy production schedule. The Small Business Administration has been a major source of support for our business. From purchasing our commercial real estate to expanding our export efforts following our purchase of the business, we have the opportunity to also purchase our building and thus secure our company's long-term future. The SBA 504 Loan Program was recommended by our local bank and made this purchase possible. Following further success, we decided to expand our manufacturing shop. Once again, the SBA 504 was critical in helping us finance this expansion and add more production capabilities, facilitate better material flow, and increase our capacity to assemble and test more ebeam systems each time we look to invest in our long-term future. The SBA 504 gave us a financing solution that was both accessible and affordable. Our experience shows how central the SBA 504 is to long-term business growth and competitiveness. But as that growth leads to bigger opportunities and our business takes on larger and more complex projects, we have experienced limitations in SBA's financing programs that impose undue constraints on the organic and profitable growth of manufacturing firms like ours. The biggest limitation we faced was when our financing needs intersected with SBA aggregate program caps. For example, we received a multimillion-dollar order from a customer in Brazil. We needed to provide bank guarantees equal to the value of advance payments received before shipment. The SBA 7(a) Export Working Capital Program would've been the ideal solution, but after securing $2.956 million in SBA 504 financing, only $794,000 remained available under the SBA 7(a) guarantee cap. These limitations create constraints not only for our business, but also for lenders who want to support U.S. manufacturers competing in global markets. The Made in America Manufacturing Finance Act of 2025 introduced by Chair Ernst to increase the maximum total loan size to $10 million would directly address our situation. Having access to this additional loan capacity would provide PCT with a cost-effective means of supporting more export business, which in turn improves our competitiveness in foreign markets, enables us to accelerate further investments in additional staff and production equipment domestically. Another limitation we experienced was SBA loan approval times. The pace of business is fast, and America's small businesses must be able to move quickly to remain competitive. An agile SBA, equipped to scale staffing in response to loan volume and deliver timely approvals is essential to supporting the growth and success of our nation's entrepreneurs. I respectfully request that you continue your efforts to strengthen and simplify the SBA 504 Program to ensure that growing manufacturers can expand capacity, compete internationally, and create more U.S. jobs. Thank you for considering these requests to improve the valuable support the SBA provides to American manufacturers through the 504 Loan Program. [The prepared statement of Mr. Swanson follows.] [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] Chair. Thank you. And now, Mr. Raccio, you are recognized for five minutes for your testimony. STATEMENT OF MR. DAVID P. RACCIO, SENIOR VICE PRESIDENT AND DIRECTOR OF SBA LENDING, CDC NEW ENGLAND, WAKEFIELD, MASSACHUSETTS Mr. Raccio. Chair Ernst, Ranking Member Markey, and distinguished members of the committee, thank you for the opportunity to testify today. I am honored to join my colleagues from the CDC industry to discuss the SBAs 504 Loan Program. My name is Dave Raccio and I serve as the Senior Vice President and director of SBA lending at CDC New England, which is located in Massachusetts. We provide SBA 504 loans across five New England states, which include Massachusetts, Connecticut, Rhode Island, Vermont, and New Hampshire. And we are consistently ranked in the top 15 CDCs nationwide. Since our funding in 1982, we have delivered more than 1,600 loans totaling over $1 billion in SBA financing, helping to create and retain more than 25,000 jobs. The SBA program is unique. It provides small businesses with long-term, fixed rate capital for real estate and major equipment purchases while requiring measurable economic impact. In short, the program fuels growth, creates jobs, and strengthens communities, all while operating at zero subsidies to taxpayers, and a remarkably low one-year charge off rate of 0.08 percent. As an industry, CDCs are proud of these accomplishments. That said, modernization is needed. I'd like to highlight four key areas where immediate reforms could expand impact. Number one; clean energy. In June, 2025, the SBA reimplemented an arbitrary $16.5 million cap on energy projects and provided no data to support the need for such a cap. I recommend this cap be lifted to meet growing demand. We often have repeat customers, and we want to make sure they have continued access to capital to continue to grow their businesses. A prime example of a business we assisted with the 504 energy efficiency program was the SBO Sports Center in Massachusetts. This company has been an outstanding corporate partner, not only providing free clinics for children of all ages, but also generating significant economic activity and local jobs. To date, they have received three separate 504 loans and continue to grow their business. Today, in recognition of these contributions, the company was honored as a 2024 Massachusetts family-owned business of the year. Number two; manufacturing and standard 504 limits. As an industry, we support increasing the SBA 504 loan maximum from $5 million to $10 million for manufacturers. If we are serious about revitalizing U.S. manufacturing, we must provide the capital tools needed for expansion. We also must address inflation in the loan limits for traditional 504. The current statutory caps have not been raised in more than 15 years. I recommend increasing these limits to $7.5 million for standard 504 loans and $10 million for manufacturers and renewable energy projects. This will account for inflation and continue to provide businesses with the capital they need to grow and create jobs. Number three; citizen verification. New SBA rules require businesses to be 100 percent owned by U.S. citizens, nationals, or long-term lawful permanent resident. This change is already shutting out otherwise strong businesses. We recently saw a stone importer, which was 85 percent owned by a female U.S. citizen denied financing because 15 percent of the ownership was held by her father from Brazil who provided the original startup capital. This policy unfairly blocks U.S. citizens from accessing growth. Capital SBA should revert to its longstanding more reasonable guidance. Number four; down payment assistance. Our CDC provides down payment assistance designed to reach underserved borrowers and businesses in low to moderate income areas. For example, we recently helped an African American women-owned business secure $100,000 down payment to purchase her building for her school serving children with autism. With this support, she was able to move forward, and today her school is thriving, expanding, and providing stability and jobs for the families who depend on it. We also worked with a business owner in East Boston whose project qualified as both minority-owned and located in a low to moderate income community. With down payment assistance, he was able to expand his business and successfully repurpose a mixed-use property. These stories show just how powerful targeted support can be with the 504 Program. Small businesses don't just grow, they build stronger, more resilient communities. In conclusion, the SBA 504 Program is one of the most effective federal tools for supporting small business, creating jobs, and strengthening communities without taxpayer subsidy. By lifting outdated loan limits, restoring fair citizenship rules, and expanding down payment support, we can ensure the program continues to serve America's entrepreneurs for decades to come. I thank the committee for your leadership on small business issues and look forward to your questions. [The prepared statement of Mr. Raccio follows.] [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] Chair. Thank you very much, Mr. Raccio. And now, we will recognize Ms. Wojtowicz. And you are recognized for five minutes for your testimony. STATEMENT OF MS. JEAN WOJTOWICZ, EXECUTIVE DIRECTOR, INDIANA STATEWIDE CDC, INDIANAPOLIS, INDIANA Ms. Wojtowicz. Thank you, Chair Ernst, Ranking Member Markey, and distinguished members of the committee. Thank you for inviting me to join you today. I'm honored to represent the Certified Development Company industry to discuss the 504 Loan Program, which is firmly focused on economic development and job creation. My name is Jean Wojtowicz, I am the executive director of Indiana Statewide CDC. Through this entity, we have funded more than $750 million in 504 loans, and leveraged more than $2.2 billion to over 1,500 Indiana companies, many of them manufacturers and companies located in rural areas. I'm also a past chair of NADCO, the trade association that advocates for the 504 Loan Program, and serve on the board of Eagle Compliance, which is the fiscal agent that sells the debentures that fund these loans. CDCs are SBA-certified organizations dedicated to creating jobs and growing local businesses by delivering the 504 Loan Program. Many CDCs also deliver other federal, state, and local lending products and must invest in economic development beyond the 504 Program. This highly successful public-private partnership is structured with 50 percent provided by a private lender, 40 percent through the SBA backed CDC debenture, and 10 percent by the borrower. This structure supports liquidity, retention and working capital preservation as a result of the low down payment, with terms conventional lenders rarely provide. The structure and terms provide certainty and help borrowers manage cash flow fluctuations that come with expanding a business and employing more citizens in their communities. On March 10th of this year, Administrator Loeffler, along with Senator Young, and others, kicked off the Made in America tour in Indianapolis at Aerodyne Engineering, who utilized the 504 Loan Program four times to support their growth and expansion. It is companies like Aerodyne that are the backbone of growth, innovation, and the creators of jobs for citizens all over our country. The CDC lending industry is proud of the work we're doing to support these companies, and we know the 504 Loan Program can do more. We have several recommendations that would enhance the program and allow us to serve more growing businesses. Number one; pass the Made in America Manufacturing Finance Act. The CDC industry supports increasing the manufacturing loan size for borrowers to $10 million. This statutory change would support the scaling of domestic manufacturing since a $10 million 504 loan could support a total project cost of up to $25 million. Number two; reduce the equity contribution from manufacturers from 10 percent to 5 percent. Manufacturing is capital intensive, and reduced equity requirements will encourage investment and job creation while preserving critical working capital. These companies need to expand. Number three; modernize the 504 loan size limit for all borrowers. We would ask you to consider raising the cap for all borrowers to $7.5 million and index it to inflation reflecting the growth since the last adjustment was made in 2010. Number four; eliminate the extra 5 percent borrower equity injection requirement for special purpose properties. This requirement negatively impacts borrowers and SBA's charge off data shows that these properties do not present a higher credit risk. And number five; continue separating the 504 and 7(a) loan programs as they have separate purposes. The 504 Program is focused on fixed asset financing, supporting job creation, and economic development. The ``credit elsewhere test'', which is a 7(a) program requirement, should not apply to the 504 Program. In conclusion, since 1986, the 504 Program has assisted over 200,000 small businesses with nearly $140 billion in loans, and a total investment of almost $400 billion and the creation of 3.3 million jobs. And it has done so with a charge off rate of only 0.08 percent for the most recent year. Enacting these recommendations will make the program more effective and accessible, allowing more small businesses to grow, create jobs, and strengthen our economy. Thank you for your leadership on small business issues and the opportunity to testify today. I look forward to your questions. [The prepared statement of Ms. Wojtowicz follows.] [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] Chair. Thank you very much. And finally, we will hear from Ms. Kennedy. You are recognized for five minutes. STATEMENT OF MS. HILDA KENNEDY, FOUNDER AND PRESIDENT, AMPAC BUSINESS CAPITAL, ONTARIO, CALIFORNIA Ms. Kennedy. Thank you, Chair Ernst, Ranking Member Markey, and distinguished members of the committee. I'm delighted to be here as well to represent the CDC industry and is to discuss the 504 Loan Program, the agency's premier economic development program. This year, AmPac proudly celebrates 20 years of service committed to serving small businesses and targeting those who control, own, and control little productive capital. As stated in the Small Business Act of 1953, through our partnership with SBA, AMPAC has leveraged the SBA 504 Program to provide more than $2 billion in loans and creation of over 7,700 new jobs. I want to focus my comments on three primary areas; energy efficiency, down payment assistance, and citizenship. The Congressionally authorized energy policy goals signed into law by President Bush in 2007 are delivering significant results. In California, where we serve Dahdoul Textile, a family-owned wholesaler and retailer of consumer goods, is a shining example. They've used the SBA financing multiple times and have created new jobs with each expansion. In the last two years, they acquired two locations using the 504 energy public policy goal. They installed solar panels, and benefited from greater cost savings. With these two recent projects, Dahdoul created 33 new jobs, and revitalized two vacant stores. SBA's current $16.5 million cap on energy-related 504 loans limit businesses like Dahdoul from additional SBA financing to expand, reduce energy costs and create jobs. Eliminating the cap would ensure that small businesses can fully leverage energy efficiency and long-term growth and sustainability. As noted, the 504 Program follows a basic structure. 50/40/ 10. 10 percent represents borrower equity. However, many small businesses, especially first-generation entrepreneurs and first-time commercial real estate buyers, may have 10 percent down, but the working capital is not there for growth. At AmPac, we launched our first ``It Is Possible'' down payment assistance loan program to help small businesses. And I want to tell you about Jerry. He's the owner of Riggins Urban Barber College. He's a Navy veteran who's dedicated his life to giving young men and women a second chance by training them in barbering. As a first-generation entrepreneur, when he bought his building, AmPac's down payment assistance helped him to restore cash to support his expansion and add for new jobs. I recommend establishing a pilot program under the 504 loan program for first-time commercial real estate buyers to qualify with 5 percent down, which would act as a floor and not a ceiling, and allow CDCs' flexibility to make credit decisions that also maintain our 0.21 percent default rate as noted in Fiscal Year 2024. I want to also highlight recent changes in the SOP regarding citizenships. That's limited to 100-owned by U.S. citizens, U.S. nationals, and lawful permanent residents. I fully support SBA resources going to U.S. citizens, but this change has negatively impacted some majority-owned and controlled U.S. citizen businesses. One such business is a private school in Orange County, founded by three partners, two U.S. citizens, and a minority partner with 6.5 percent stake. The schools were looking for a 504 loan, but we were not able to help them because of this change. I recommend restoring the SOP language that allowed SBA financing for businesses that were majority-owned and controlled by U.S. citizens by addressing citizenship, clean energy, and down payment assistance, as well as a thoughtful adjustment such as increasing 504 size limit and for manufacturing businesses. The SBA can fulfill its Congressional mandate to fill market gaps for America's entrepreneurs and build on the economic development mission of the 504 loan program. Thank you so much for the invitation, and we welcome your questions. [The prepared statement of Ms. Kennedy follows.] [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] Chair. Wonderful. Thank you very much. And now we will go into our question and answer portion of today's hearing, and I will recognize myself for five minutes for questions. And I'll start with Mr. Swanson. So, Mr. Swanson, thank you for making the trip to Washington, and for representing Iowa small businesses. In your testimony, you describe how you bought your business from an international owner and then used the SBA's 504 loan program to both purchase your business' building, and then expand your operation in Iowa. Can you describe the investments that the 504 Program has enabled you to make, and how the program helps small manufacturers secure the capital they need to expand operations and maintain a steady pace of modernization? Mr. Swanson. Thank you, Senator Ernst. In our case, the structure of the 504 Program was essential for us as a relatively new ownership group to afford even considering the purchase of the building. And what that enabled us to do is secure the future of our business in that location within a purpose-built structure that, that met our needs very well. The expansion following behind that, again, with the 504 Program was a very attractive way that we could do that while still maintaining enough working capital continue to hire the staff that we were building back. As I indicated in my comments, additionally we were in need of bringing in more production equipment. And so, again, by having the capacity to continue to make those in incremental investments over the growth of our business, that is the end result of how we use that, the program, and how it benefited us. Chair. Wonderful. I appreciate that. And then modernization, continual modernization. Really appreciate that. Mr. Swanson. Constantly. And we've made more investments this year in some new capabilities, a laser welder, plasma table, all things that we didn't have the internal capacity to do before. And it just all helps drive more of our capabilities internally. Chair. Fantastic. Thank you. And Ms. Wojtowicz, over the last five years, we have seen demand for larger loans within this 504 Program. They've steadily increased. In Fiscal Year 2021, only four percent of loans reached the program maximum compared to over nine percent in Fiscal Year 2025. Over that same period, the share of these large dollar projects for manufacturers has grown at an even faster rate, nearly tripling. My Made in America Manufacturing Finance Act in conjunction with Senator Coons--and thank you for partnering; really appreciate that--would double the loan limits for small manufacturers. So, if you could explain for us, what are the benefits of expanding the 504 loan program's limits for small manufacturers, and how can we do that while also mitigating taxpayer risk? Ms. Wojtowicz. Thank you, Senator Ernst, and thank you for introducing that bill. We think it's going to be extremely impactful to manufacturers. Indiana is a very high level of manufacturing state. In fact, 45 percent of our 504 loans that we've made have been to the manufacturing sector. So, clearly important to our state and to the employees that work at those companies. If you think about the cost of manufacturing, much of this equipment is multimillion dollar pieces of equipment. And for a company to expand, like Mr. Swanson's has expanded, and having to continue to bring current equipment in that will increase efficiencies and keep those companies competitive, is extremely important. And so, not only do we use the higher loan limits so that they can build larger buildings and employ more people, but certainly also to purchase and put into production the very large pieces of equipment that are necessary for those companies to remain competitive and to continue to grow. So, it's extremely important to see those loan limits increased. Chair. Oh, we appreciate the feedback very much. And just very briefly, Ms. Kennedy, I've always prioritized ensuring that the SBA programs provide that meaningful support to rural small business owners who often face substantial challenges in getting adequate access to capital. We hear about that all the time. Could you just briefly walk us through any efforts you've made to support rural small business owners? Ms. Kennedy. Thank you so much, Chair Ernst. We have actually made a number of loans to rural businesses. In fact, about $70 million in 504 lending to rural businesses as well as loans to businesses for Microloans and Community Advantage loans. 2.3 million residents in California are rural, or 5.8 percent of the population. So, it's a very important part of the business that we do in the state. So, thank you for the question. Really appreciate that. Chair. Thank you. And now I recognize Ranking Member Markey for five minutes. Senator Markey. Thank you, Madam Chair, very much. And as I said in the opening, Senator Ernst and senator Coons' Manufacturing Act is one step forward. But as I also pointed out, President Trump's policies are four steps backwards for manufacturers at the same time, which is still hurting our economy. And as I mentioned in my opening, Trump's SBA new severe citizenship verification requirements are cutting off small business access to capital. These requirements specifically bar small businesses with any amount of foreign investments or ownership through individuals lawfully in the United States of America, including DACA recipients and refugees from receiving a loan. Now, to qualify for an SBA loan, small businesses must be 100 percent owned by U.S. citizens, nationals, or green card holders. Not even one percent can be owned by someone with a different legal immigration status. Let's just say your father from Brazil, one percent, you're up. Mr. Raccio and Ms. Kennedy, I'm concerned about the chilling effects that these requirements will have on entrepreneurs looking for an SBA loan. Can you expand on how U.S. small businesses and local communities are hurt by these new requirements? Mr. Raccio. Mr. Raccio. Thank you for that question, Senator Markey. It has been challenging for many small businesses. As I alluded to in my testimony, we did have the Brazilian family that was unable to obtain a loan. We also had a more recent example in your home state of Massachusetts with a 80 percent American citizen, a 10 percent two-year green card holder, as well as someone on a work visa owning the other 10 percent. That project was not able to move forward based on an ownership. So, that was difficult. While we won't be able to completely quantify who is not applying, we are confident that we are seeing businesses not applying due to the lack of 100 percent ownership of a U.S. citizen or lawful permanent resident. We would urge the committee to return to the previous rules that allowed 51 percent ownership. Senator Markey. Right. And 30 percent of all companies in Massachusetts are started by immigrants. So, that's a story across the whole country, too. So, it gets complicated. Ms. Kennedy. Ms. Kennedy. Senator Markey, we too. That matter regarding 100 percent citizenship, especially in the state of California, has been significant. And one of the examples that I included in my written testimony was a returning SBA 504 customer that we had served a local winery. Really a beautiful business, family-owned business in the community. And they have a partner that is a 30 percent owner that is a Canadian native, a Canadian citizen. And when that first loan was done, we were able to serve that business because it's majority-owned and controlled by a U.S. citizen. When they came back to us, we were not able to serve that business because of the new citizenship rule. And I agree with my colleague that if we rolled back to the requirements in the SOP that this change, we would be able to serve locally-owned, majority-owned and controlled U.S. citizens who are creating jobs here in America. Senator Markey. Okay, thank you. So, small businesses are required to use the loans to accomplish certain goals, including to reduce energy consumption, increase the use of sustainable designs that reduce greenhouse gas emissions and use renewable energy. These energy goals were passed on a bipartisan basis, signed into law by President Bush in 2007. I know because I stood over his shoulder when he signed it because I was the Democratic author of the bill. So, Mr. Raccio, can you explain how loans used to meet the clean energy goals have helped small businesses and their communities? Mr. Raccio. Absolutely. Thank you, Senator, for that question. We have had a lot of good success stories. One, as I mentioned earlier in testimony, was SBO Sport that was able to do multiple projects utilizing renewable energy. As a matter of fact, they've had such success with the solar project they've done that they're able to feed electricity back to the grid. So, it's been a very nice project where they're able to provide other small businesses energy at peak times, all while creating jobs and growing their own business by being able to sell some of this energy back. We also see many hotels that are doing this as well. They've got large flat rooftops. They are traditionally capped at the traditional 504 loan amount. So, by utilizing a renewable energy project, they're able to put solar panels on the roof, save themselves energy usage, and also move forward and obtain the financing that they're looking for. Senator Markey. Thank you, Mr. Raccio. Thank you, Madam Chair. Chair. Thank you, Ranking Member Markey. And now, I recognize Senator Jon Husted for five minutes. Senator Husted. Thank you, Chair Ernst. I want to just reflect a little bit on some of the conversations I've had with Ohio businesses over the past few months because they were grateful that they have a more stable environment to operate in this country since the passage of President Trump's budget reconciliation bill, which passed here and was signed into law on July the 4th, which included expanded pass through income deductions, a hundred percent immediate expensing of business investments, an R&D expense and deduction for domestic R&D costs so that we can invest through the private sector in advancing innovation, employer-provided childcare credits and other employee benefits. And I know that in talking with them. Like, what does this mean to you? What does it mean? It means more cash flow. It means more liquidity, lower compliance costs, greater incentives, and incentives to hire people. And because they can provide additional benefits to their employees and it encourages them to invest so they can compete with people around the globe. And I know that's hard for small businesses, but we've done a great deal, and we can do more to create a better business environment in this country. But I was reflecting on Ms. Wojtowicz's testimony here. You said something that struck me. Indiana, Ohio, we have a lot of manufacturing in our respective states, and I know Chair Ernst touched on this as well, that we want to do Made in America. We say we want more manufacturing jobs in this country. We know that all states are not made the same. Some have a high amount of manufacturing in their respective states as a part of their economy. And you said one of your recommendations--I want to give you a chance to just explain why you believe this is so important. Because I agree with you that Congress should expand access to the 504 loan program to enable manufacturers to retain more capital by reducing the borrowing equity injection from 10 percent to 5 percent. It's almost a penalty to be a manufacturer even though those sites are coveted in states like ours where people want to have access to those facilities. And just talk about how you think that this will help boost manufacturing in your state and the country. Ms. Wojtowicz. Certainly, Senator, thank you for the question. And manufacturing is critically important to our country in every state. And those states like ours that are heavy manufacturing-focused states, it's even more important in the manufacturing sector. Again, buildings and equipment are extremely expensive, and often, those companies have working capital needs that are extreme as well. So, by limiting their down payment from 10 percent to 5 percent, they'll be able certainly to have more working capital. But let me take one other step on there, because many of these manufacturing sites have rail access, which is critical to them to be able for them to deliver goods. If a rail site is on that property, it is currently classified as a special purpose property and they have to put another 5 percent down as equity. So, instead of in a typical manufacturing project being 50 percent bank, 40 percent CDC, 10 percent equity, if there's a railroad spur on that property, the borrower has to put down 15 percent and only get 35 percent of the very attractive SBA 504 financing with a long-term fixed rate. So, we're looking for all companies that are special purpose, and there are many, to not have to have that 5 percent penalty. And specifically, for manufacturers, to be able to reduce their equity contribution from 10 percent to 5 percent. Senator Husted. And if you talk to a manufacturer, they need to compete because we have higher wage rates in our country. So, to compete, they have to have the capital to buy the new machinery and equipment that they can to up their productivity gains so that they can actually compete. This is an important part of them having the capital to do that in the big scheme. Ms. Wojtowicz. Extremely important. So, they not only have to invest in that capital, and having a 10 percent down payment pulls some of the working capital out of the business. Senator Husted. I see Mr. Swanson smiling and shaking his head. I think he wants to say something here. Would like to add? Mr. Swanson. Oh, Senator, I was just nodding in agreement. There's only one pool of capital we have available as a company. We have to elect where to deploy that, whether it's on equipment purchases and modernization, or hiring more staff, et cetera. So, my colleague's point is exactly on target with that. Senator Husted. Great. Thank you. Chair. Thank you. Senator Coons. Senator Coons. Thank you, Chair Ernst, Ranking Member Markey. And thank you to our four great witnesses today. Not everybody finds manufacturing capital needs riveting, but I do. I'm excited about this hearing. I think this is interesting. We all find manufacturing exciting. Some of you know I spent a decade in manufacturing before I ever ran for office, and then as county executive, and now as Senator, work closely with the CDCs in Delaware and with those who help with capital lending, and who compete globally as small and medium sized American manufacturers. So, Mr. Swanson, Mr. Raccio, Ms. Wojtowicz, and Ms. Kennedy, thank you for what you do as small manufacturers, as CDC lenders, to help deploy the resources of the 504 Program. And thanks for helping us understand how the 504 Program helps bridge the gap, and CDCs help originate and put together and secure these. I am proud to work with Chair Ernst on the Made in America Manufacturing Finance Act, recently approved by this committee and its corollary in the House by voice vote to increase the loan size available to small manufacturers. Mr. Swanson, in your prepared testimony, you discussed the challenge of competing in foreign markets. I think you spoke earlier about competing in Brazil. How does the guaranteed lending offered by the 504 Program allow small manufacturers to successfully compete globally? Mr. Swanson. Well, thank you, Senator Coons. The starting point I would refer to would be as was discussed by allowing us to continue to invest particularly in the kinds of capital equipment. That can be extremely useful for us to offset the challenges of labor supply, and with allowing us to, in our case, the specific requirements to produce the high-tech equipment that we're manufacturing. We leverage those advantages in, in terms of the international markets that we pursue. Senator Coons. I remember meeting with Miller Metal in Bridgeville, Delaware, my first year as a Senator and seeing how both SCORE, which is an organization founded in Wilmington, Delaware of business executives who volunteer and consult, and the Manufacturing Extension Partnership Program helped this small, family-owned metal pressing and bending company figure out what capital investments they needed to make to get a cutting-edge bending, and welding, and punching machine. And then, they successfully competed against a Chinese manufacturer for a small part that went into thousands of assembled, what I would call a Hi-Fi system, but a stereo system. It was amazing to me a company from Bridgeville could compete directly with a Chinese manufacturer and win. I was concerned to hear that their funding had been held up for months, and they were beginning to lay off people federally. They have 10,000 volunteer mentors. It's the most cost-effective federal program known. I was relieved to find out today that those withheld funds are now being released and flowing. You mentioned SCORE and other resource partners in your written testimony. How do they help reinforce your work delivering capital to manufacturers? Mr. Raccio. Thank you, Senator Coons, for that question. They help on almost a weekly basis. SCORE has been a monumental partner in helping our small businesses, whether it's finding access to certain SBA programs, helping them with business plans, is often critical for our small business partners. Whether they're looking to expand or simply start and they're not sure how to go about it. Specifically, in New England, we have a lot of retired executives that have an extreme amount of industry knowledge, so it's been a really good partnership with SCORE. They'll also pair up with SBDC as well and work with them. So, they're out at events. They are a great product. Great set of people. I'm glad the funding was released. But they are out there and working with our businesses every day. Senator Coons. Last question for anyone on the panel, if I might. There have been proposals to cut the SBA workforce by as much as 40 percent. At least in Delaware, I've seen how having the SBA office and staff with connections, and resources, and experience helps facilitate access, particularly to manufacturers who tend to be overextended, and overstretched, and only know about these programs because there's staff available to help with the outreach. What sort of impact do you think we would see if they actually carry through with dramatic cuts to the total SBA staff? Anybody jump ball? Ms. Kennedy. Ms. Kennedy. Senator Coons, thank you very much for the question. You know the SBA staff is so resilient. We've just found them to be so committed to getting the work done and partnering with other economic development organizations like CDCs that we would all have to jump in because small businesses are that important to our local economies and to creating jobs. And so, certainly, cuts always hurt, but the rally for small businesses is absolutely there in our local communities, and we want to make sure that those employees are there for serving our community, but as well as having those partners like SCORE. So, that was really good news to hear. So, thank you for delivering that, too. Senator Coons. Thank you. And thank you, Madam Chair, for the chance to work with you to help provide more capital to America's small business manufacturers. Chair. I'm so glad to partner with you. Thank you. And, Senator Shaheen. Senator Shaheen. Well, thank you, Madam Chair, and thank you to all of our witnesses today. We're really delighted to have you here and to have your experience to share with us. Just following-up on Senator Coons' question about staffing shortages. One of the things that I've heard from some of my constituents in New Hampshire is that 504 approvals are taking longer in large part due to staffing cuts, and the loss of some of the experienced staff that have been working on these kinds of loans for a long time. Can any of you speak to what difference it makes when it takes longer to get a 504 loan approved? What does that mean for the small businesses who are affected? Mr. Raccio. Thank you for that question, Senator. Absolutely, it impacts our businesses and their ability to close on loans, whether it's real estate that needs to be purchased. For example, we had a recent deal where there was a 1031 real estate exchange which is a federally-timed product where we have to close. And we're waiting, and the business is very nervous if they're going to get the approval. So, that's just one example of where when there are time delays it's very sensitive to the businesses, and it often leaves them feeling anxious, noticeably so. So, anything we can do to increase turnaround time, and have that accountability and predictability for the small businesses that they know, whether it's 5 days or 10 days, that would be immeasurable to the small business to know when they start their loan application with us, in this certain amount of time, they're going to have a decision. Senator Shaheen. Thank you. Does anybody want to add to that? Ms. Kennedy. Senator, it's a great question. And again, I would say to you that SBA staff is so resilient in terms of trying to make sure they serve small business. They're committed to that. But I agree with my colleague, time matters, and time kills deals. And so, it's really important to have that level of certainty when they submit a loan that we can get that approved in a timely manner. Senator Shaheen. Thank you. I appreciate that. And I would agree with you, the SBA field staff in New Hampshire is tremendously resilient and do a great job. And my experience is that all of the other SBA folks that we've worked with are in that category. I know that Senators Young and Klobuchar have worked together on some improvements to the 504 Program. One change in particular that they've proposed that I think is really important is shifting the occupancy rates to make it easier to use a 504 loan for mixed use building. New Hampshire, like so many states is really an affordable housing crisis. There are a lot of New Hampshire towns that have main street buildings that are no longer occupied that could really benefit from investment to allow them to be used as housing, as well as commercial space. So, I know, Mr. Raccio, or at least I understood, that you may have looked into this issue and maybe others have as well. Do you think that changing those occupancy requirements would be helpful as we're looking at how do we address both small business issues but also some of the housing challenges that we have in states? Mr. Raccio. Thank you, Senator, for that question. Yes, we would absolutely love to be able to change the occupancy requirements to a 50 percent owner-occupied versus 51 for existing and 60 for ground up new construction. What that would really do is it would allow more SBA borrowers to get access to these capital funds to purchase real estate. We're often involved as a panel with customers that are buying much like you mentioned, Senator, buildings that may have two floors, you know, might have some investment space to it, which is great for our borrower to have some of that accountability. And believe it or not, sometimes, especially in New England where I lend, we have a lot of buildings that are identical up and down. So, you're stuck at 50 percent. Yes, we understand that can't move forward. So, it would be really nice to be able to have it be 50/50, and be able to have more access for capital to borrowers. Senator Shaheen. So, you said 50/50 on existing buildings, but what did you say about new buildings? Mr. Raccio. Same. 50/50. Senator Shaheen. Do others want to address that? Ms. Wojtowicz. Ms. Wojtowicz. Thank you, Senator. I would like to just add a little bit of clarification, because the current SOP also requires that even if it's at 51 percent, that over a period of time, they occupy up to 80 percent. So, that would not allow those kinds of projects to go forward unless we address both sides of that issue. Senator Shaheen. Oh, that's a really good point. Thank you very much for that. Thank you-all very much for your testimony. Chair. Thank you. Senator Rosen. Senator Rosen. Well, thank you. Thank you, Chair Ernst, Ranking Member Markey, for holding this hearing. I love to see everyone is smiling and agreeing. And this is a--you know, this committee, small businesses, the backbone of our country. And in Nevada, we have 280,000 small businesses. That's 99 percent of businesses in Nevada are small businesses. And right now, we have almost 100 approved 504 loans for, I think, over $120 million total. And we want to keep that going. So, thank you for all being here. And I know supporting clean energy businesses has been brought up by Senator Markey. I want to build on that a little bit because we know a little something about that. Nevada and some more, supporting small business in the clean energy SEC sector is beneficial for local national economies. Seeing these benefits firsthand. Nevada is a leader in clean energy with the most solar jobs per capita of any state. We got plenty of Sun. We farm the Sun, Iowa, you've got the corn. Nevada, we've got the Sun, right? We farm what we can, and we're still growing. Last year, Nevada had its greatest expansion of solar capacity in a decade, which will create even more economic opportunity for clean energy small businesses. So, this means a cancellation for funding streams like solar for all program and cuts to the clean energy tax credits in the recently enacted reconciliation bill. Well, it's going to have a devastating impact on the small businesses. We have tons of small businesses that make all the pieces and parts that go into building solar panels, a solar field, and all that support. And it's really important. We have a lot of businesses for our broader clean energy economy. So, due to these cuts, businesses in Nevada, they're uncertain. Will they close? Will they stay? Will they go? And it's a very, very stressful time for us. So, Ms. Kennedy, you mentioned in your testimony a successful clean energy project in Reno. Thank you very much. It utilizes 504, maybe one of these nearly 100 programs. Can you speak to the importance of directing investment to emerging industries like clean energy and the ways we can make it easier, especially for those? We have wind, water, solar, geothermal, that's what Nevada has, our geography and geology and we want to be able to leverage that 504 funding. Ms. Kennedy. Well, thank you so much, Senator. And we certainly agree with that. When we think about that Somerset Reno project where we were able to assist a business that had gotten multiple SBA loans in California and moved into Reno. To do another Memory Care facility that included some senior housing as well, being able to get access to the SBA energy public policy goal and open up another location, creating over 70 jobs, a very significant project in Reno. And so, being able to eliminate that cap, which was already in place in the previous administration, it really will make a difference for clean energy and energy cost, or increasing in states like California with all of the fires. And so, being able to sell back to the grid, as my colleague mentioned, being able to create that clean energy at solar and reduce energy costs is such a win-win for small businesses already dealing with so many additional costs. Senator Rosen. I agree. Thank you. And I want to move on. You talked about affordable housing, but I'm going to move on about expanding SBA loans for affordable housings because our nation is facing a severe shortage of affordable housing. It's forcing families into housing insecurity. It's creating challenges for small businesses. It's dragging down our local economies. And in order to address the housing crisis, we must support small businesses in the housing industry working to tackle this issue; home builders, contractors, all the support businesses that do that to ensure they have the capital that they need to contribute to their communities. And so, I recently sent a letter to SBA and HUD urging them to work together to better support small business in the housing industry, including by opening up SBA capital to home building those developers. Affordable housing, it really makes a difference. So, Mr. Raccio, can you give us any stories here, discuss how you're working with small businesses in the housing space, and any stories that you want to share in this time I have left? Mr. Raccio. Thank you, Senator, for that question. As I'm sure you're aware, the SBA 504 isn't able to directly provide assistance for housing. But we do on a daily basis provide financing for some of those businesses to purchase their own real estate and expand. I recently had a project up in Cape Cod, Massachusetts with a large contractor where we were able to utilize the SBA 504 refinance program and help that contractor out to refinance 19 pieces of heavy-duty equipment such as excavators and bulldozers. So, while we might not be able to directly provide funds to the end user as of today, we're certainly involved with the industry helping them out on a daily basis. Senator Rosen. That's fantastic. Thank you. Well, it's an all of be above approach. So, thank you all for being here. Thank you, Madam Chair. Chair. Absolutely. Thank you. And now I'll recognize Senator Hickenlooper for five minutes. Senator Hickenlooper. Thank you, Madam Chair. This is a treat. We're watching you on TV. You don't see us all here, but we're watching, and really appreciate. There are not that many of us left, but I'm one the--I'm an entrepreneur in my own right. I started out as a geologist, and then in the big long kind of inflation--what'd you call it? The stagflation epics of the '80s, our company got sold and we all got laid off. And I was out of work for a couple years, but ended up opening a restaurant that brew its own beer. And our lending parameters where no one--I went to 33 banks, and they turned me down every time. I was only trying to borrow 50 grand because the city would give us 125 grand, because we were at an abandoned warehouse district so they wanted to stimulate the area. And so, we finally got open after all these banks-- actually, the Women's Bank was the only bank that would give us a loan. And we had to put up about literally $150,000 worth of collateral, stock certificates, and house deeds to get a $50,000 loan. Got going and things took off, and we needed--we had all of a sudden everyone copied us, and we had all these competitors. And we had to expand, and we were going to take this big old five story warehouse and put affordable housing up on top. Minor detail was, I didn't have any money still. We had a business that was doing great and cash flowing like crazy. Anyway, the 504 program was what we used, and it allowed us to take the cash flow we have and then the asset. And we were gambling. If we put these millions of dollars into it, it would be worth this much more money. And it worked and really was--no one else would've talked to us, no one else would've given us that chance. And I think if you look at so much of the good ideas and innovations that come out of this country, it's people that are not that smart. They're just about to lose their business, and they're fretting every hour, lying awake at night figuring how you're going to make payroll, how can you get more customers, how can you get a better margin on those customers? And that's what creates that devotion to trying to solve your problems. It's is really what leads to solutions that a lot of other people benefit from. It turned out we ended up making a whole bunch of money out of it, but I never intended that. You know, the only reason I was a small business person was because I didn't want to have a boss. [Laughter.] Anyway, I appreciate very much all of you and what you've done. And let me start off with Ms. Kennedy. You know, as I said, major investments in things where you've got fixed assets. It's amazing resource for our businesses. And I think the renewable energy, obviously, we've seen a bunch of that. One of our first bills that we introduced was going to allow us to use 504 programs to invest in energy efficiency or clean energy projects. Sometimes it's hard to get that improvement in cash flow to be monetized. Now more than ever, we're seeing them use these investments to navigate the increasing costs and the new energy sources that will lower energy costs. But in this past June, the SBA put a cap on 504 financing that a business could receive for energy projects just as it were at that point where suddenly we had a bunch of projects lined up and ready to come through that ultimately, I think, were those small businesses that were so neurotic and driven that they would've come up with the innovations and the great ideas. So, Ms. Kennedy, I'd ask, how have small businesses used 504 to invest in clean energy, and what does the cap do, in candid terms? Ms. Kennedy. Thank you so much, Senator. As I mentioned in my written and oral testimony, this 504 cap will hinder small businesses from continuing to use the energy efficiency public policy goal by no longer being able to do multiple projects. Dahdoul Textile is one of the businesses I mentioned. In Somerset, Reno, is another business I've mentioned. And we have a number of businesses in California, in particular, who could benefit from removal of that cap so that they can continue to grow using the energy public policy goal. It's really critical. In California, energy costs continue to go up because of the fires, and we need to have access to this particular public policy goal without those limitations. Senator Hickenlooper. Great. Thank you. And can I steal another minute? Chair. I suppose. [Laughter.] Senator Hickenlooper. I told too long a story, and I apologize. Mr. Raccio, and I'll get rid of all the flowery preamble. But how do you describe how lenders can combine different types of financing to support businesses, and is there something we should be doing in Congress? Or is there something that we can kind of put our shoulder to the wheel, and try and get the SBA to do in terms of being innovative? I ended up with four different loans to get that project done. And one of the great things about the 504 was it really, it would go below like the city loan, which just had a--it made all the difference. Mr. Raccio. Thank you, Senator. We have an amazing tool box set of products, whether it's the 504 for a fixed capital asset or it's the 7(a) to help out with working capital, a lot of the tools that the everyday business owner is going to need. We have, I think, being able to increase some of those limits. And also, having some accountability with regards to timeframes will really help to boost where we go with those products. So, I would think the panel would agree. We've got a really good tool set. Just listening to your story, listening to Karl's story, at the end of the day, when we're able to do these loans, we can see the excitement in your face. We really do make small business owners dreams come true. And it's not every day we can say that, but we really have clients like yourself that really love what they do and are excited about taking the opportunity to purchase real estate. Senator Hickenlooper. Yeah. I appreciate that, and thank you-all. It's funny, I came very close to doing a brew pub in Indianapolis, and came very close doing one in Davenport. Rock Island actually is where we were looking, but in that Quad City stuff. So, anyway, thank you-all. I yield back. Chair. Okay. If there are no further questions, I want to thank our witnesses for being here with us today. I ask unanimous consent that the record of today's hearing remain open for two weeks for members to submit questions, revise and extend their remarks, and submit additional information into the record. Without objection, so ordered. And with that, the Committee on Small Business and Entrepreneurship stands adjourned. Thank you all very much. [Whereupon, at 3:44 p.m., the hearing was adjourned.] [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] [all]