[Senate Hearing 117-241] [From the U.S. Government Publishing Office] S. Hrg. 117-241 REVIEW OF SBA ENTREPRENEURIAL DEVELOPMENT PROGRAMS AND INITIATIVES ======================================================================= HEARING BEFORE THE COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP of the UNITED STATES SENATE ONE HUNDRED SEVENTEENTH CONGRESS SECOND SESSION __________ FEBRUARY 1, 2022 __________ Printed for the Committee on Small Business and Entrepreneurship [GRAPHIC NOT AVAILABLE IN TIFF FORMAT] Available via the World Wide Web: http://www.govinfo.gov __________ U.S. GOVERNMENT PUBLISHING OFFICE 47-360 PDF WASHINGTON : 2022 ----------------------------------------------------------------------------------- COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP ONE HUNDRED SEVENTEENTH CONGRESS ---------- BENJAMIN L. CARDIN, Maryland, Chairman RAND PAUL, Kentucky, Ranking Member MARIA CANTWELL, Washington MARCO RUBIO, Florida JEANNE SHAHEEN, New Hampshire JAMES E. RISCH, Idaho EDWARD J. MARKEY, Massachusetts TIM SCOTT, South Carolina CORY A. BOOKER, New Jersey JONI ERNST, Iowa CHRISTOPHER A. COONS, Delaware JAMES M. INHOFE, Oklahoma MAZIE HIRONO, Hawaii TODD YOUNG, Indiana TAMMY DUCKWORTH, Illinois JOHN KENNEDY, Louisiana JACKY ROSEN, Nevada JOSH HAWLEY, Missouri JOHN HICKENLOOPER, Colorado ROGER MARSHALL, Kansas Sean Moore, Democratic Staff Director William Henderson, Republican Staff Director C O N T E N T S ---------- Opening Statements Page Cardin, Hon. Benjamin L., Chairman, a U.S. Senator from Maryland. 1 Paul, Hon. Rand, Ranking Member, a U.S. Senator from Kentucky.... 12 Witnesses Panel 1 Madrid, Mr. Mark, Associate Administrator, Office of Entrepreneurial Development, U.S. Small Business Administration, Washington DC.................................. 4 Panel 2 Rowe, Mr. C.E. ``Tee'', President and CEO, America's SBDC, Burke, VA............................................................. 26 Hendrix, Mr. Michael, Senior Fellow, Manhattan Institute, New York, NY....................................................... 40 Hodges, Ms. Corinne, CEO, Association of Women's Business Centers, Washington DC......................................... 48 Edwards, Mr. Chris, Director of Tax Policy Studies, Cato Institute, Washington, DC...................................... 59 Weston, Ms. Bridget, CEO, SCORE, Herndon, VA..................... 71 Cox, Ms. Hannah, Brand Ambassador, Foundation for Economic Education, Co-Founder and Host, BASEDPolitics, Atlanta, GA..... 85 Alphabetical Listing and Appendix Material Submitted Cardin, Hon. Benjamin L. Opening statement............................................ 1 Cox, Ms. Hannah Testimony.................................................... 85 Prepared statement........................................... 87 Edwards, Mr. Chris Testimony.................................................... 59 Prepared statement........................................... 61 Hendrix, Mr. Michael Testimony.................................................... 40 Prepared statement........................................... 42 Hodges, Ms. Corinne Testimony.................................................... 48 Prepared statement........................................... 50 Responses to questions submitted by Senators Hirono, Hickenlooper, and Marshall................................. 124 Madrid, Mr. Mark Testimony.................................................... 4 Prepared statement........................................... 6 Responses to questions submitted by Chairman Cardin and Senators Hirono, Hickenlooper, Young, and Marshall......... 100 Paul, Hon. Rand Opening statement............................................ 12 Rowe, Mr. C.E. ``Tee'' Testimony.................................................... 26 Prepared statement........................................... 29 Responses to questions submitted by Senators Hirono, Hickenlooper, and Marshall................................. 114 Weston, Ms. Bridget Testimony.................................................... 71 Prepared statement........................................... 73 Responses to questions submitted by Senator Marshall......... 128 REVIEW OF SBA ENTREPRENEURIAL DEVELOPMENT PROGRAMS AND INITIATIVES ---------- TUESDAY, FEBRUARY 1, 2022 United States Senate, Committee on Small Business and Entrepreneurship, Washington, DC. The Committee met, pursuant to notice, at 2:31 p.m., in Room SR-301, Russell Senate Office Building, Hon. Ben Cardin, Chairman of the Committee, presiding. Present: Senators Cardin, Cantwell, Shaheen, Coons, Hirono, Rosen, Hickenlooper, Paul, Scott, Ernst, Inhofe, Young, Hawley, and Marshall. OPENING STATEMENT OF HON. BENJAMIN L. CARDIN, CHAIRMAN, A U.S. SENATOR FROM MARYLAND Chairman Cardin. The Small Business and Entrepreneurship Committee will come to order. Senator Paul will be here shortly. He said it was okay for us to start the hearing. We have two panels today, and there is currently a vote on the floor of the United States Senate, and there will be a second vote. So we will have some interruptions. We are going to try to keep the hearing moving throughout the process so that members will be floating in and out. So I hope everyone understands that. This is a hearing to review the SBA's entrepreneurial development programs and initiatives, and it is a great pleasure to welcome the Associate Administrator, Office of Entrepreneurial Development in the Small Business Administration, Mark Madrid. It is nice to have you with us today. The programs that come under Mr. Madrid's administration are critical to the support of small businesses. We are talking about the Small Business Development Centers Program, which is one of the principal resources available to small business in our community. We are talking about the Women's Business Centers that are again critically important, particularly for underserved and disadvantaged women-owned small businesses. And then, the services that come under the Office of Entrepreneurship Education, which is an array of programs that all provide essential services to our small business, from the SCORE program, which is one of our mentoring programs that involve a lot of volunteers, to the brand new Community Navigator Pilot Program that was approved under the American Rescue Plan, the online learning centers, the Regional Innovation Clusters, and the Emerging Leaders Initiative. And the list goes on and on and on. These are programs that help entrepreneurs start and grow successful businesses, and mentoring and training and access to resources otherwise difficult to obtain, and COVID-19 has really underscored the importance of all of these programs. We know small businesses provide the greater innovation into our economy and the job growth that we need to grow our economy, but we also know that they operate on razor-thin margins. So they do not have the resources to hire high-priced business consultants to do their work as far as finding out what the right avenue is to get the help that they need. The resource partners come in here and fill the void, and that is why these programs were established. They are the lifeline. And I think small--thank the Small Business Administration for new resource partners in the State of Maryland, the Veterans Business Outreach Center that opened during this past year and two new Women's Business Centers located in my State. Let me just give you one example why these resource partners are critically important, and I will talk about the Small Business Development Centers. Last November, with the help of the Maryland Southern Region Small Business Development Center, operated by the College of Southern Maryland, the Salinas family opened a Hispanic grocery store in Waldorf, one of the fastest growing communities in our State. The SBDC helped them develop their brand, secured financing, and established their operations. The family wanted to create a store that genuinely connected with customers and catered to their needs, and they have done so successfully. For entrepreneurs like the Salinas family, access to these programs can be the difference between success and failure. The SBDC was critical to the startup of that company. Data shows that small businesses created by entrepreneurs who receive at least three hours of SBA counseling have a higher survival rate than small businesses created by entrepreneurs who receive less counseling or not at all. Because of this strong record of success and impact, Senators Shaheen, Collins, Rubio, and I included a provision in the CARES Act to provide the SBA entrepreneurial development programs with $265 million to increase their capacity to serve more small businesses, and I hope we will have a chance during this hearing to learn how that $265 million has been allocated and what progress we have as a result of those additional funds. The funds help the programs deepen their expertise to help small businesses understand, prepare for, and mitigate the effects of the pandemic on supply chains, distribution, and overall business operations. President Joe Biden's American Rescue Plan went even further than the CARES Act by establishing a Community Navigator Pilot Program that has created a holistic network to eliminate barriers entrepreneurs face in assessing the support they need. This is a new program, and again, we welcome your-- this hearing where we have a chance to delve into how that program has worked. The program was launched on December 1st of last year, and I am looking forward to receiving the updates on the progress. Thanks to the additional capacity, expertise, and connectivity the SBA has developed during the pandemic, it was able to support the record-breaking surge of entrepreneurships that have occurred during the pandemic. This is an amazing success story. We have seen record numbers of new small businesses during this pandemic, again showing the creativity and innovation of small business owners. The U.S. Census Bureau reports that 4.4 million new businesses created in 2020 is the highest total on record and represents a 24 percent increase from 2019 as well as a 51 percent increase above the annual average between 2010 and 2019. Entrepreneurs in Black and Hispanic communities are driving the surge. They are outpacing the other businesses. So we are reaching the traditionally underserved. The data is showing a 38 percent increase in the number of new Black business owners between February 2020 and August 2021. As we shift our focus to the years ahead and Building Back Better, the SBA must be well equipped to support these entrepreneurs and emerging markets. This is especially important in Maryland, which has the highest concentration of minority-owned businesses in the country as well as one of the strongest innovation sectors in the country due to the presence of SBA resource partners as well as many renowned public and private research institutions. I am looking forward to learning more from all our witnesses about how we can build stronger partnerships between the SBA and underserved areas, especially with our Nation's Historically Black Colleges and Universities and minority serving institutions. HBCUs are a vital part of Maryland's entrepreneurial ecosystem, with Bowie State University hosting an innovation center and Morgan State University hosting one of the Women's Business Centers that opened during the pandemic. Our State has successfully leveraged these institutions' relationships with minority communities to get these critical services to entrepreneurs who would benefit from them the most. As the American economy continues to recover, we must ensure that all communities are able to partake in the recovery, and it is clear that entrepreneurship will play a very large role in that effort. I hope to leave this hearing with a much better understanding of the best policies that we could put forward to maximize the opportunity and produce a truly inclusive recovery by supporting the SBA entrepreneurial development programs. With that, we will start with our first panel, and let me now formally introduce the Associate Administrator of the Small Business Administration, Mark Madrid. Mark serves as the Associate Administrator for the Office of Entrepreneurial Development at the U.S. Small Business Administration. In this role, Mr. Madrid leads the OED, which is the SBA's technical assistance arm, with a national resource network including the Small Business Development Centers, Women's Business Centers, SCORE, and the Office of Entrepreneurship Education. Mr. Madrid previously served as CEO of Latino Business Action Network at Stanford University and was named the 2019 Silicon Valley Nonprofit CEO of the Year by the Silicon Valley Business Journal. He is an Honorary Colonel of the United States Army and a Jefferson Award Recipient. Mr. Madrid, it is a pleasure to have you here, and you may proceed. Your full testimony will be made part of our record. STATEMENT OF MARK MADRID, ASSOCIATE ADMINISTRATOR, OFFICE OF ENTREPRENEURIAL DEVELOPMENT, U.S. SMALL BUSINESS ADMINISTRATION, WASHINGTON, DC Mr. Madrid. Great afternoon, Chairman Cardin, Ranking Member Paul, and distinguished members of the Committee. Thank you for the invitation to discuss the SBA's Office of Entrepreneurial Development (OED). I am energized to be here. Our mission is to help small businesses start, grow, and expand by providing quality training, counseling, and access to resources. We achieve this through the Resource Partner Network, grants, the Community Navigator Pilot Program, and entrepreneurship education. We are honored to spearhead this portfolio under the exceptional and strong leadership of Administrator Isabella Casillas Guzman. I am a product of entrepreneurship. Like many of our U.S. small business owners, my dad was unrelenting in changing the course of our family's destination as he built his welding business from the ground up in the Texas Panhandle. We are proud of my dad for his evolution from hoeing cotton in the cotton fields to being his own boss. Mi Papa (my dad) died from COVID-19. Thus, I consider supporting small businesses like my father's during this time the honor of a lifetime, and I have a proven track record of doing so on the ground. The last two years have tested America's entrepreneurs. Yet, I am proud to report that entrepreneurship, as you mentioned, Senator Cardin, is booming in 2021; 5.4 million Americans took that courageous American step of starting a business in 2021. This record pace of new business creation is a credit to the thriving entrepreneurial spirit in this country, resilient in the face of a global pandemic. It is also thanks to the strong emergency support provided by Congress. OED is honoring that investment through action. The millions of new businesses are as diverse as they are numerous and so is the range of their counseling needs. Some small businesses benefit most from women-specific counseling. Others need an experienced business mentor. Yet, others need technical assistance from a university setting or an organization with strong community ties. OED's newest program, the Community Navigator Pilot Program, is designed to close resource gaps for small businesses in urban and rural America, including those owned by veterans, women, and socially and economically disadvantaged individuals. Funded by the American Rescue Plan, it provides $100 million in grants to 51 rigorously selected grantees that work with hundreds of community organizations to connect U.S. small businesses to SBA and Federal, State, and local resources. SBA's resource partners are also ultimately critical. Small Business Development Centers have tremendous reach via 62 lead centers and over 900 service centers. SBDCs utilized $192 million in CARES Act funding to train over 818,000 clients and jumpstart over 26,000 new small businesses in 2021. One of those clients is Saskia Foley. She is the CEO of Radius Corporation in Kutztown, Pennsylvania. I had the opportunity to visit Saskia. Radius makes sustainable toothbrushes. And because of the Kutztown SBDC, Saskia was able to access an Economic Injury Disaster Loan and two draws of PPP, enabling Saskia to retain her 29 employees and to compete with major brands on Walmart shelves. Our network of Women's Business Centers also creates gateways for women entrepreneurs. The $48 million in CARES Act funding enabled WBCs to assist more than 87,000 small businesses and help start over 3,300 new small businesses in 2021. SCORE is another resilient technical assistance pillar, with over 10,000 volunteer mentors working through 250 chapters. In 2021, SCORE mentored over 570,000 clients. Through our Office of Entrepreneurship Education, we deliver an expansive e-learning and in-person training portfolio to small businesses, including the underserved, underrepresented, and underaccessed. OEE's portfolio includes the Emerging Leaders Initiative. In December, we graduated 759 small business owners from this intensive executive-style program, and multimonth, I may add. Collectively, these leaders, small business owners, account for over $1.2 billion in annual gross revenues. This program represents why we do what we do in OED. Finally, we are proud to support small businesses in Indian Country through the Office of Native American Affairs. America's small businesses are tenacious, and we admire their resilience and their optimism. We are honored, as you are, to support them as they recover, persist, and thrive. And we share your commitment to entrepreneurs and strengthening the support we provide them, collectively, particularly at this inflection point. I, and the strong team at OED and the SBA, look forward to further collaborating with you. Thank you. [The prepared statement of Mr. Madrid follows:] [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] Chairman Cardin. Thank you, Mr. Madrid, for your testimony but more importantly for your service. At this time, I will recognize the Ranking Member, Senator Paul, for any comments he may want to make. OPENING STATEMENT OF HON. RAND PAUL, A U.S. SENATOR FROM KENTUCKY Senator Paul. As we review the tumultuous first year of the Biden SBA, some trends have emerged. Time and time again, the SBA has conducted itself in a manner to prefer one set of Americans over others. Whether it is the unconstitutional way the SBA tried to distribute Restaurant Revitalization Fund money through the use of racial and gender quotas, until they were struck down by the Judiciary, or it is the awarding of Community Navigator Program money to many organizations that overwhelmingly donate to Democrats and the Democratic Party, the SBA seems more focused on political virtue signaling rather than fulfilling its mission, helping American small business thrive. Such a focus is unconscionable when the Federal Government all but demanded the cessation of economic activity, putting the livelihoods of small business owners and their employees at risk. While the SBA's mind was elsewhere, the Agency allowed much of the Office of Entrepreneurial Development's core function to rot from within. Emblematic of that rot is a recent report from the Inspector General. The report looked at what SBA did with $25 million allocated to develop a website for small businesses to learn about Federal COVID programs and to fund training on those programs for mentors. Turns out, less than 1 percent of small businesses accessed the website during 2020, and just 62 of 14,000 counselors received any training at all. Simply put, as is so often the case, government is doing more harm than good. According to SBA's own polling of entrepreneurs' experiences, over two-thirds of entrepreneurs were unconvinced that the services they received from SBA resource partners benefited their bottom lines. The irony, that a government agency devoted to help small businesses thrive in the marketplace cannot satisfy its customers, should not be lost on anyone. The SBA's resource partners can tout their aggregated, rather than their client-specific, data and anecdotal success stories, but the clients have spoken. The resource partners provided largely useless advice. For every three, quote unquote, success stories they cite, data suggest there are roughly seven stories of failure. Frankly, I am not surprised. The idea that bureaucrats from a government that incessantly demands compliance with burdensome and costly regulations would then deign to educate the innovators and entrepreneurs of this country on how to run a business is, frankly, absurd. The best thing Federal, State, and local governments can do is get out of the way, lift the burdensome regulations creating barriers to entry for pre-venture and seed stage entrepreneurs, ease the cost of attempting to untangle the extensive web of compliance rules existing entrepreneurs face, and most of all, stop needlessly shutting down or restricting businesses through lockdowns and vaccine passports. Only then would government truly allow small business to thrive. Chairman Cardin. Let me thank Senator Paul for his cooperation in putting together this hearing. We will now go to approximately five-minute rounds of questioning. As I have indicated earlier, there is a vote on, on the floor of the Senate. So members will need to come in and out, and we will try to keep the hearing moving forward. With that in mind, let me start the questioning. Mr. Madrid, as I indicated, under the CARES Act, bipartisan support, the entrepreneurship programs were given several hundred millions of dollars of additional resources. Now, when I take a look at the results and see the significant increase in small business growth during the pandemic, that gives me a degree of confidence that we were helpful, particularly during a pandemic, when we know that the valuable help that the resource partners can give can help small businesses that otherwise would not have been able to get that type of assistance. So I still believe we have a major need in regards to emerging markets, and I know that is an area of focus that you have within your division. There has been legislation and efforts by the administration, as well as members of Congress, to do an uplift program, to develop ways that we can work with the HBCUs and minority-serving institutions, in order to try to help emerging technologies and companies to be able to get the type of initial help that they need. My question to you is: What additional support do you need in order to provide opportunities for traditionally underserved communities so that they can take advantage of the opportunities that are emerging in America? Mr. Madrid. Thank you, Chairman Cardin. As a point of reference, just to look at the CARES Act funding results--and I am glad to see the resource partners here--between SCORE, the SBDCs, and the Women's Business Centers: With the SBDCs, during the period that we are taking about, particularly through the pandemic, over 800,000 clients served; 26,000 new businesses started. With the WBCs, 87,000 clients served; 3,300 new businesses. And with SCORE, over 570 clients mentored. And so that is extraordinary. And I do echo your sentiment about the booming entrepreneurship, with over 5.4 million new applications and starts in 2021, which is a record by a million. So these resources I--when you were asking your question, I wrote the name, Yaeli. Yaeli is a bread manufacturer in Miami, Florida, and she owns a company called Anny's Bread Factory, specializing in brioche rolls. And she--her goal a couple years ago was just to get--meet the $250,000, you know, annual gross revenue mark. And when she did, she turned to the local district office, and they told her about the Emerging Leaders Program which is under the purview of OED. She took that program because she qualified, and in the process she met the Florida International University (FIU) SBDC. And I am glad that she did because she secured counseling and one-on-one coaching and she was able, through the pandemic, because of this support system, to access an EIDL loan. And under this administration, that loan carried to the $500,000 mark. And because of that she was able to put bread on the shelves in the likes of Target and grocery chains quicker than the big brands and now she is developing protein bread. So that is the spirit of entrepreneurship and why these resources are so critical. Think about 5.4 million new Yaelis across the country and Puerto Rico, and we need to support them with these resource partners and the Community Navigator Pilot Program. Chairman Cardin. Well, I appreciate that answer. I want to--the other area that additional resources were provided was for the Navigator program. This is new. We had not had this before. And the administration just recently announced the implementation of the Navigator program by using a hub-and- spoke system with three-tier participation. And I have looked at the 51 hubs that have been selected and see a good variety of nonprofit-type entities that are marshaling the Federal funds and then reach out for partners in local communities, so sometimes as small as just one county, sometimes a State. In my State of Maryland, oh, I think we have somewhere around 10 spokes that are currently operating under 4 national hubs. You have had now a little bit of time to assess how the program is working. It was originally conceived in order to direct small businesses to where they could get the help they needed with the tools that are available under--for small businesses, which sometimes would be SBA, but sometimes it is local government; sometimes it is private sector help. Can you share with us the initial assessment of how the Navigator program is operating? Mr. Madrid. Thank you, Chairman Cardin. The boots are on the ground I am happy to report. And thank you for mentioning the coverage in Maryland. We have coverage in 50 states and Puerto Rico through the Navigators with the hub-and-spoke system. The 51 grantees represent not only geographic diversity but diversity in coverage and sectors served. We have rural America covered through the likes of such like the Abilene Chamber of Commerce, for instance, and we have our diversity segments. We are so proud of that work. We have Tier 1 grantees with the National Urban League, with the United States Hispanic Chamber of Commerce, U.S. Black Chambers. We have the Institute of Veterans and Military Families out of Syracuse serving military, you know, veteran entrepreneurs and their spouses. We have the Oweesta Corporation serving small businesses in Indian Country, the U.S. Pan Asian American Chamber focusing on the AAPI community. Also, women entrepreneurs are being served, rural entrepreneurs. So we are very, very excited. And I will give you an example with the Institute of Veterans and Military Families (IVMF) in Syracuse. All they are doing is scaling the support that they have given. One in particular, a veteran opened a business recently to help other veterans with benefits, and he turned to the IVMF to scale that business. And we are happy to report that it is working and that is the type of services that will be rendered by IVMF with multiple states. And when you look at the State of Maryland, we are excited about the Disability Institute. Who does not want to serve disabled small business owners? And so that focus of the Disability Institute in their mind, they issued to us and shared with us that until now disability small businesses felt invisible. So that is an example of the work that is being done on the ground. We have other examples. Recently, I did travel to Abilene, Texas, and took a look at their footprint in terms of the spoke arrangement that they have with the Cisco Community College there, and they are looking specifically in that area as well to serve women-owned businesses and also the veterans at that base. And we were also delighted to have the Abilene Black Chamber of Commerce. That is the second oldest Black Chamber in the State of Texas. Chairman Cardin. So let me follow-up just briefly on this as far as how the accountability works. You mentioned National Disability Institute. They are one of the hub grantees. They have a spoke in Maryland, Griffin-Hammis Associates. How does that relationship work as far as the accountability to make sure the services are really going as intended? Mr. Madrid. Absolutely. Thank you for the question, Senator Cardin. So we have a robust technology platform that is real- time that is between the spokes and the hubs. The hubs are the aggregator of the data that is reported back to our team at the Office of Entrepreneurship Education and grants management team there and our grants management specialists and supporting team. So this is real-time data that is being supported and aggregated through the hubs, and the hubs are submitting the data to us for evaluation. And that will be done every quarter, but we also have real-time acquisition of that data. Chairman Cardin. Thank you. Senator Paul. Senator Paul. Do you believe the taxpayer has a right to know how you spend their money? Mr. Madrid. Senator Dr. Paul, thank you for that question. We--in the Office of Entrepreneurial Development, our purview is helping our small businesses navigate through their taxes. We are not in tax policy. Senator Paul. No, no, we are not talking about tax policy. I am talking about the citizens. Do the citizens of the United States have a right to know how you are spending their money? Mr. Madrid. Well, in our area, we are focused on developing entrepreneurs. Senator Paul. No, no. This is a transparency question. Do you think the citizens of the United States, through their representatives, have a right to get information from you and your department about how you are spending the money? Mr. Madrid. We--my purview is to assist our resource partner network and the Community Navigator---- Senator Paul. It is a sort of a ``yes'' or ``no.'' I do not think you are getting the question. It is a real simple question. The answer is ``yes, of course, the citizens do,'' but you cannot say that? Mr. Madrid. I can attest to what we are doing at the Office of Entrepreneurial Development. Senator Paul. No. But, I mean, it is a more general question. Do the citizens of the United States have the right to know how you are spending their money? Mr. Madrid. Dr. Paul, I can shine the light on what we are doing at OED and, you know, in terms of tax preparation, materials that we have---- Senator Paul. This is a really general question just on transparency. Do the citizens of the United States, through their representative, have the right to ask questions about how you are spending their money? Mr. Madrid. I am here to answer any questions that you have on the Office of Entrepreneurial Development. Senator Paul. It is a ``yes'' or ``no.'' Can you acknowledge that, yes, citizens have a right and an expectation to know how their money is spent by organizations? That is why you come here. It is for oversight. It is a very general question. It is not accusing you of anything. It is just saying, do citizens have the right to know how you are spending their money? Mr. Madrid. Dr. Paul, I would love to just shed some more light on the Office of Entrepreneurial Development. Senator Paul. But you cannot answer whether or not citizens have the right to know how you are spending the money? Mr. Madrid. I would be happy to talk about our tax preparation classes with our resource partners. Senator Paul. But you cannot acknowledge, yes or no, whether citizens have the right and the expectation, through their representatives, Republicans and Democrats, to ask you for information on how money is spent? That is a yes-or-no question. It is about--it is a very basic question about transparency, but I am not hearing you answer a ``yes'' or ``no.'' Mr. Madrid. Dr. Paul, I would love to tell you more about what we are doing at the Office of Entrepreneurial Development. I am energized to be here and talk about our programs throughout the country. Senator Paul. But it sounds like you are obfuscating the issue and you are not willing to answer that there is sunlight and that you are open to any kind of scrutiny by representatives as to how you are spending the money. You do not believe that citizens have the right to understand how you are spending money and to ask questions through their representatives about how you spend the money? Mr. Madrid. Dr. Paul, I am here to answer any questions that you have on---- Senator Paul. But I am asking you, do citizens have the right to know that, and you are giving me some other answer that is not an answer to the question. This is a question: Do citizens have the right to expect you to answer questions about how your money is spent? Mr. Madrid. Dr. Paul, I am here to answer any questions that you have on the fulfillment of our OED programs that include the resource partner footprint, the Community Navigator. Senator Paul. Let the record show that the witness is refusing to answer a very basic question about transparency. The reason I ask this question is we sent you questions back in the beginning of the summer about the Community Navigator Program. These are not political questions that I know of. How many organizations applied for funds under the Community Navigators Program? That question was asked in the beginning of last summer. We asked again in November, and we have not had answers. I think your staff decided to send us some piece of paper today or yesterday still not answering that question. What is the geographic distribution of states and localities covered by each grantee? These are not even politically charged questions that we sometimes encounter, but you cannot even answer whether or not citizens have an expectation to get answers from you, and then when we ask questions you do not answer them. That, to me, is serious breach of your duty as a civil servant. You cannot answer a question on sunlight, and then when we send you written questions of an objective nature you refuse to answer the question. You do not even respond to us. I mean, that is utterly contemptuous and disregarding of representative government. Mr. Madrid. Dr. Paul, we did answer your letter. So I would be happy to answer---- Senator Paul. When was the answer? When were the questions answered? Mr. Madrid. We will get back to your office, but I know that we answered. Senator Paul. No. The questions that I just asked you, the two questions. We got something yesterday or today from your office, when you knew you were going to be here and have to answer some questions. You resisted for months sending any answer, but you still have not answered the two questions I just outlined. I do not believe we have got an answer for either one of those questions. Mr. Madrid. Well, Dr. Paul, we believe in transparency, and we did respond to your question. Senator Paul. No more questions. Chairman Cardin. Let me point out I believe the Community Navigator Program started in December. So it is a relatively new program. So the information is just, I think, becoming available in a way that it is going to be meaningful for us to be able to obtain the type of information that Senator Paul has requested. Senator Hickenlooper. Senator Hickenlooper. There. Great. Thank you, Mr. Madrid, for appearing today but also for your extensive public service. And I think your father's story is obviously an inspiration to you but I think can be an inspiration to all of us. We saw, somewhat surprisingly, a dramatic increase in entrepreneurship during COVID, almost 24 percent. How are the entrepreneurial development programs--how are they handling that, and how is--how are they supporting these new businesses? Mr. Madrid. Well, thank you, Senator, for your question. I mean, it is an entrepreneurship boom for sure, 5.4 million new businesses applications. And when you think about that ecosystem in conjunction with the repeat customers of the SBA, those that were going to our resource partners, our SCORE chapters, our SBDCs and Women's Business Centers, and then you think about the customers that came to the SBA for the first time during the pandemic, so you have three ecosystems that were supported. And they need to be served just like I was mentioning the Yaelis of the world. And we have so many examples that small businesses--we all know that 20 percent of small businesses that are formed die in the first year. That is a fact. That data supports it. So we all need to work together to support them. After all, they do create almost half of our jobs, and that is just a resounding tick of new entrepreneurship in the midst of a global pandemic. So we look forward to supporting them through the networks that I have described. Senator Hickenlooper. Great. And I want to just kind of follow-up on that because I do know as a small business person myself. I spent 20 years in small business and did avail myself of an SBA 504 loan and went through that whole process after, I guess, I had been in business three or four years. The thing that most surprised me--and I was tremendously, and unto this day, appreciative--was the counseling, that in the process of applying for a loan how much small business advice I got. My dad died when I was a little kid. I did not have any family members who were in business. I was really kind of--I mean, I had to go to the library on how to write a business plan. I did not--honestly, I was a geologist. I did not know what the word ``pro forma'' meant. And the staff at the Small Business Administration really bent over backward to make sure that not only did I understand the programs but that I thought, you know, they had concrete suggestions on how I might think about marketing and how I might think about expanding my business, which were invaluable. Part of their advice was about staffing, hiring personnel, and I think certainly when I--I opened in an abandoned part of downtown Denver, and we had a very diverse workforce. And I think today we see more and more women-owned businesses, more and more minority-owned businesses also dealing with a diverse workforce and right now with real trouble, real challenges in terms of their hiring. And one of those issues that I experienced back then, and I think people are experiencing today, is the skills gap. And how do your entrepreneurial development programs address--or, how can we do a better job of addressing--the issue of reskilling? And how do we help people get those skills that allow you to upskill existing employees but actually make sure that incoming employees have the necessary skills? Mr. Madrid. Thank you, Senator, for that question. And I chuckled at ``pro forma'' because I was also a business owner many years ago and I did not know what that meant either until I learned from going to one of these Small Business Development Centers. Upskilling and workforce development is critical. I was visiting with a small business owner in the Lehigh Valley area of Pennsylvania, in Reading, Pennsylvania, Johanny Cepeda, the owner of Mi Casa Su Casa. And she said: ``Mark, when the COVID- 19 happened and lockdown happened, I had no idea how to transform my restaurant business into a digital business, whether I should go with one of the DoorDashes of the world. And that required education. That required technology.'' And so she talked about taking care of her workforce, keeping them safe. She talked about quality childcare and access to resources and also education. So all those buckets we fulfill at OED, whether it is the resource partners that pivoted to be virtual. Also, that is a rural area. So she was able to lean into the district office and the SBDC and that whole network, and now she is leaning into Community Navigators as well that will be servicing that service portfolio in that particular area. Senator Hickenlooper. Great. Thank you very much and thanks for all your work. Mr. Madrid. Thank you. Senator Hickenlooper. Back to the Chair or the Ranking Member. Senator Paul [presiding]. Senator Marshall is no longer here. Senator Ernst? Senator Ernst. Yes, thank you so much. First off, I just want to say that I really do appreciate the Small Business Administration's programs, especially in the area of entrepreneurship, whether that is for our veterans or women that are looking for opportunities. But I do want to say I am a little dismayed at the lack of an answer to our Ranking Member, Mr. Madrid. We are accountable to our constituents. They provide taxpayer dollars for many of the programs, most of the programs at SBA. And it should be easy for us to state back to them that we believe in transparency and, yes, they should have the ability to know how their taxpayer dollars are being spent. I think it is incredibly important that we provide transparency to those folks so that we know we are watching out for their dollars at every opportunity. So over the last couple of weeks, I have been in Iowa and doing a 99-county tour that I do every single year. And many of those constituents are telling me that their small businesses are really struggling under the impact of inflation in their businesses, they are struggling with supply chain issues, this is hurting them, it is hurting their employees, it is hurting their families. So on February 10th, I will be introducing the PRICE Act, and that would require all proposed spending to include a report detailing the impact on inflation and household incomes to provide American families the economic stability they need against this administration's reckless spending. So again, this is a transparency measure. We want people to know and understand how those taxpayer dollars are being spent. So what is the SBA doing to help these small businesses navigate these escalating prices and to prevent those costs from being passed along to consumers? How can the administration help us respond to inflation to help struggling small businesses? Mr. Madrid. Thank you for your question, Senator. And I did invest some time in Fort Dodge, Iowa, visiting with the Iowa SBDC when they launched their Inclusivity for All Challenge, and it was an unbelievable honor to be there in the Des Moines area, in Fort Dodge, and visiting with those rural entrepreneurs. What I would say is our resource partner footprint, specifically some of the SBDCs on the ground are looking at prices, specifically through supply chain education. For example, we have an SBDC at Rutgers University that is looking at inventory management and making sure that the supply chain, along with the Made in America Initiative, is driving down cost. And so we are excited about that work that is being done across our footprint, and that includes the Women's Business Centers as well. Senator Ernst. And, thank you. And I think there is a lot of other ideas that we can come up as well. So we will continue working on that. And so you did mention kind of Made in the USA. So maybe talk a little bit more about any assistance for helping those small businesses source domestically produced alternatives as we are going through the supply chain issue? Mr. Madrid. Absolutely. Under President Biden's leadership, we are looking at opening more ports and getting more inputs on the ground, specifically with our small business owners. And so that training that I talked about with the SBDCs are Rutgers University is looking exactly at that, using--there is a motto: Get business for each other and do business with each other right here in the U.S.A. And so they are looking at, you know, peer-to-peer management systems where they can drive down those costs. So that is an example of one of the efforts that is happening on the ground. Senator Ernst. One of the issues that I heard while I was in Iowa visiting a furniture manufacturer was the issue with the ports, and so I do think we have to have greater capacity at the ports. So while it is getting those ships in, unloading them, getting that cargo stored in containers there at those port yards--but what I am also hearing is the shortage of CDL drivers and then the ability of drivers to go into those ports when they are nonunion drivers. Is that something that the SBA could be pushing with the Administration? Opening up those ports to all drivers. If you have a CDL, you have passed the requirements. So the excuse that we had heard through this business, what they had been told is that nonunion drivers were not considered safe. So some of those ports were not allowing nonunion drivers to come in and pick up containers, which is exacerbating the supply chain issue. So I am a little concerned that this Administration needs to find other avenues of opening up the flow of goods to help our small businesses. Is that something that the SBA can communicate to the Administration? Mr. Madrid. We look forward to continuing to help our small businesses. We would love to hear from your office on this issue. Senator Ernst. Thank you. That is all I have. Senator Paul. Senator Rosen by Zoom. Senator Rosen. Yes, yes. Thank you, Ranking Member Paul. Appreciate you calling on me. Thank you for holding this important hearing to review the SBA's entrepreneurial development programs and its initiatives, and I want to thank the witnesses here for the testimony today. I want to talk a little bit about support for startups because Nevada is home to more than 280,000 small businesses, which actually make up over 99 percent of businesses in our State. Over the past two years, Nevada has seen a spike in new startups, creating jobs, of course, and great new economic opportunities. And according to the Economic Development Authority of Western Nevada, the Reno-Sparks Metro Area alone, nearly 100 startups have launched since the beginning of the pandemic. Startups, we know, are an integral part of the American economy, and they are increasingly becoming part of Nevada's economic resurgence from the pandemic. And as a strong advocate for entrepreneurship, I want to ensure that this surge continues. So, Mr. Madrid, how is SBA encouraging new startups in the midst of the pandemic, and how can Congress help you improve the startup ecosystem, particularly in the emerging startup markets beyond Silicon Valley, markets like Las Vegas and Reno? Mr. Madrid. Thank you, Senator, for the question. I am happy to report that one of Administrator Guzman's charges is to focus on innovative startups. So thank you for your question. Innovative startups. Given that stat of 5.4 new business applications in 2021, which is 1 million more than the previous year and a record, this is absolutely essential when we look at the job creation potential and also considering that 20 percent of new businesses die in the first year. So we are excited. I am glad you mentioned, you know, Nevada there. We recently visited with an entrepreneur there that is in utilities. It is Live Electric. And she was a graduate of our Emerging Leaders Program, and she talked about her startup phase and the journey of becoming a woman-owned certified business and her journey in terms of procuring with the utilities companies. And she would not have been able to do it as quickly or as efficiently without the support of the resource partners. And so we are excited to continue that storyline and the storyline that I mentioned with the 5.4 million potentially Yaelis of the world and their startup phase because we do not want one to fail, much less 20 percent. Senator Rosen. Thank you. I want to move on and talk about expanding our program eligibility because, you know, there has been a lot of economic challenges brought on by the pandemic. It has been devastating for small businesses, of course, not just in Nevada but everywhere. But Nevada, we still have the second highest unemployment rate in the Nation. So for some of my constituents, without additional relief or at least access to the SBA's traditional support programs, their businesses could end up closing their doors. It is why I have made a priority to expand SBA program eligibility to all small businesses in Nevada and nationwide. And last year, Senator Ernst, who was just before me, she and I have bipartisan legislation to allow nonprofit, small-business childcare providers to participate in all SBA programs. I have also advocated for state-legal cannabis small businesses to receive equal support from the SBA. So again, Mr. Madrid, as the U.S. faces a childcare crisis, what can the SBA do to ensure that nonprofit childcare providers get the entrepreneurial development support that they need? And separately, in Nevada and so many other states, we do have legalized marijuana, and what can we do to ensure that legal businesses, including state-legal cannabis business, small businesses, can take advantage of these entrepreneurial programs as well? Mr. Madrid. Thank you, Senator, and thank you for mentioning the criticality of childcare. We are very interested at the agency level to help small business and invest in working small businesses so that they can have quality and affordable childcare. Thank you for your efforts with childcare businesses specifically in Nevada. And we will continue to look at that. We would love to work with your office, of course. So thank you for mentioning that and overall just about your sentiments on startups and specifically taking a look at the coalition building that is taking place in Nevada. We feel that the resource partners, with their nuanced specialty programs and building coalitions together and creating a cross referral network, including the Community Navigators, is going to be essential. It is going to be essential in Nevada as well. Senator Rosen. Thank you. I see my time is just about 10 seconds. So, Mr. Chair, I will yield back. Chairman Cardin [presiding]. Senator Hawley. Senator Hawley. Thank you very much, Mr. Chairman. Thanks for being here, Mr. Madrid. Before I start, I do want to come back to I am flummoxed by your exchange with Senator Paul. I cannot understand your position on this. Why is it that you think that taxpayers should not be able to have an accounting of how you are spending money? Mr. Madrid. Senator Hawley, great to see you. We do believe in accountability and transparency. Senator Hawley. But that is not my question. My question is: Why don't you think they should be able to see how you are spending the money? It is their money, not your money. And I just do not understand. Why is it you think they should not receive an accounting of how your office is spending the money, how SBA is spending its money? What is the--there must be some philosophical objection here. I just do not understand what it is. Mr. Madrid. You should be able to see everything that we report and through our public reporting. So we do believe in accountability and transparency. Senator Hawley. Oh, so you do think then that the public should be able to see what you spend and what you do. Is that right? Mr. Madrid. I am replying in terms of our footprint at OED and our public reporting on our resource partners. Senator Hawley. So, okay, I got it. So the locus of your disagreement with Senator Paul is you just do not want to answer the questions he asked you. That is the real answer. Is that right? Mr. Madrid. Senator, thank you for your question. I am here to--you know, I am here to report on the Office of Entrepreneurial Development and my purview, and so that is what I will continue to do. Senator Hawley. Yes, the reason I think it is so irritating, frankly, is because this administration and this SBA has repeatedly and consistently stonewalled this Committee, and in particular the Republicans on this Committee, for going on a solid year now. It is really extraordinary. So to have you come in here and say that you do not think that you ought to have to give an accounting for taxpayer money is really extraordinary. So I just want the record to reflect that, that I completely agree with Senator Paul and Senator Ernst that your position on this, this administration's position on this, is just really frankly unbelievable, and I am startled that you are taking the positions you are. Let me ask you about some other accountability. For this fiscal year, fiscal year 2022 I should say, SBA submitted budget justifications that request funding increases for most of the programs and initiatives that we are here to discuss. I want to know about some of the data, however, that has been published about how effective these various programs are. For example, Small Business Development Centers, according to data collected by the SBA's Office of Entrepreneurial Development in their annual studies from 2003 to 2012, only 20 percent of program participants reported that the services they received enabled them to retain current staff, only 16 percent reported that services received enabled them to hire new staff, and only 29 percent of participants said that the services they received had a positive impact on their profit margin. So let me just ask you, Mr. Madrid, does the Office of Entrepreneurial Development continue to conduct annual studies of program participants to assess the impact and effectiveness of these programs? Mr. Madrid. We report on our outcomes and our goals, and that is standard per the statute. So we report on the metrics and the goals annually, and those are publicly available. Senator Hawley. But do you do studies to assess the impact of the programs? I mean, we know that SBA did from 2003 to 2012. My staff has not been able to find any reports published, I think, past 2012. So this is just a factual question. Do you conduct annual studies of your program participants to assess the impact or no? Mr. Madrid. Senator, we issue public reports. So we would be happy to work with your office on the data that we do have and the reporting that we do have. Senator Hawley. But do you conduct annual studies of program participants? That is my question. Mr. Madrid. We report on the data that is aggregated from our resource partners. Senator Hawley. So that is a ``yes'' or that is a ``no?'' Mr. Madrid. We can report on the---- Senator Hawley. When was the last time you published an annual study? Mr. Madrid. We can work with your office to give you our reporting that we have on our---- Mr. Madrid. But when was the last time you published an annual--I am just trying--these are not gotcha questions. I am just trying to establish some basic questions--some basic facts so I can ask you some questions about them. So either you are not prepared or you are not here to answer my questions, which goes back to what we talked about earlier. So let us try again. When was the last time you published an annual report? And you can read the memo your staff keeps giving. Maybe we should have the staffer come testify. He seems to be the one who is giving you the answers. We could probably make room at the table. If somebody is willing to answer questions, I would love to hear from them. Go ahead. Mr. Madrid. Senator, thank you for your question. We report publicly, annually, on the metrics that are per the statute, and we would be happy to work with your office to supply them, the most recent ones. Senator Hawley. Okay. So those are--you survey the participants of the program annually? Mr. Madrid. This is the data that we receive through our resource partners, like capital infusion, unique clients served, et cetera. We would be happy to work with your office-- -- Senator Hawley. Well, have the performance metrics that you have seen, have they improved since the publication of the 2013 report? Mr. Madrid. I am sorry? Senator Hawley. Have the performance metrics that you have seen--you say that you collect performance metrics. Mr. Madrid. Yes, they have. There are some of the metrics that have improved, and I would be happy to supply them to your office. Senator Hawley. Give me--well, give them to me. I mean, what--so in 2012, only 20 percent of program participants said that the services they received helped them retain current staff. So what is the number now? Mr. Madrid. I can give you what we do have in terms of the capital infusion, and I would be happy to work with your office. Senator Hawley. Okay. I wish I could say this was productive, but it is manifestly not. And I do not know what to say, Mr. Chairman, other than that we will give you a bunch of questions for the record. But if we are going to have these hearings and be able to do any kind of oversight, you are going to have to prepare and you are going to have to come prepared to answer questions. And this performance today, frankly, is just ridiculous. Thank you, Mr. Chairman. Chairman Cardin. Let me just reinforce a couple comments that have been made. First, every member of this Committee is entitled to as much information as we can get for oversight. We do believe in transparency, as Mr. Madrid has said, and we want to make sure that every member has access, as well as the taxpayers have access, as to how the programs at any Federal agency, including the Small Business Administration, is handled. I am aware of several requests that were made by the Minority for information from the Small Business Administration, and I am also aware of that information being made available to the Minority members. Whenever I have been asked by the Minority for information, I have tried to facilitate that information being made available, and I think we have been successful in getting that information to the Minority. So I just want to go on record to indicate that we have had cooperation from the Small Business Administration in providing members of this Committee detailed information. Now admittedly, a lot of this is not involved in the entrepreneurship programs. This is other areas that have been more of interest to the Republican members. But in regards to the entrepreneurship programs, many of these are, as I said particularly on the Navigator program, a new program. And we do really want to oversight that, so we do want to make sure that we get timely information. And let me just reinforce one of the messages from my Republican colleagues. During the last administration, we had significant challenges in getting information as to how the new programs set up under the CARES Act were being administered, and we needed that information as we were adjusting the policy and deciding whether to replenish the funds. And we could not get that information. We knew there was something needed to be adjusted, but we did not have the specific information in order to do it even though we were certain that the SBA had that information. It just was not making it available to us. So as an effort to try to correct that, we actually put language in the statute to require timely information to Congress so that we could adjust policies. So this has been a constant challenge in regards to those who administer the programs and getting information to Congress, and it is critically important that we get timely information so that if resources are needed or adjustments in policies are needed or something is not going right, we can work together to make sure that the funds are used in a most cost-effective way. Let us be pretty clear about this. The SBA was charged during COVID-19 with an unprecedented amount of responsibilities. Over a trillion dollars of assistance was given out under the umbrella of the SBA. They had never before come anywhere close to that amount of money being allocated over multiple years. So this was a new challenge, and I think by and large we were very proud of the manner in which these programs were stood up, the amount of extraordinary work the staff put in to make sure these timely aids could be gotten. So I just really want to make it clear that despite some of the questions and the tone of the questions I do believe we have had cooperation from the SBA. I would like to see more timely information made available to us so that we can do our responsibility and would urge the administration to be sensitive not just to the Inspector General but to Congress to make sure that we get timely information in order to properly be able to review programs. With that, Mr. Madrid, thank you very much for your testimony, and we are going to turn now to the second panel. Mr. Madrid. Thank you very much. Chairman Cardin. As I explained at the beginning of this hearing, there are votes going on, on the floor of the United States Senate. So Senator Paul was kind enough to stay here so I could cast my vote. He is now back voting on the Senate floor. We have six witnesses on the second panel. I believe Senator Paul may wish to make some additional comments in regard to three of these witnesses that were invited at his request. So what I will do is give brief introductions for all six but recognize that Senator Paul may very well wish to supplement that in regards to the three witnesses that he invited to the panel. So let me welcome all six of our witnesses. What I will do is try to introduce this, if I can, in the order in which we will be asking you to speak. Our first witness will be ``Tee'' Rowe, who is the President and CEO of America's Small Business Development Centers. Mr. Rowe has a long history of legislative and advocacy experience on behalf of the small business community. Prior to joining America's SBDC, he served as the Associate Administrator for Congressional Legislative Affairs for the United States Small Business Administration from 2005 to 2009. Next would be Mr. Michael Hendrix, who is a senior fellow and Director of State and Local Policy at the Manhattan Institute. His writings have appeared in various national publications, including the National Review, the City Journal, and National Affairs. He holds a master's degree in international relations from the University of St. Andrews. Our third witness would be Corinne Hodges, who joined the Association of Women's Business Centers as CEO in January 2019 and is charged with bringing about enhanced sustainability and increased capacity to the Association and its members. Her immediate priority is the modernization and reauthorization--an issue I want to talk about--of the Women's Business Center Program while building capacity throughout their growing network of 135 Women's Business Centers. She resides in beautiful Brunswick, Maryland, with her husband of 16 years and her 14 year old child. Our fourth witness is Chris Edwards. Chris Edwards is the Director of Tax Policy Studies at CATO Institute and serves as a member of the Fiscal Future Commission of the National Academy of Sciences. Prior to joining CATO, he served as a senior economist at the Joint Economic Committee, a manager with PricewaterhouseCoopers, and an economist with the Tax Foundation. He holds a bachelor's in economics from the University of Waterloo and a master's in economics from George Mason. Our fifth witness is Bridget Weston. Bridget Weston is the CEO of the SCORE Association, where she provides executive leadership and works directly and collaboratively with the board of directors to establish the vision and direction of SCORE. Additionally, she has served as a member of the Futures Task Force that created SCORE's vision for 2025 and has been a leader in the fiscal year 2020 tactical plan for SCORE. And rounding out the panel is Hannah Cox, Content Manager and Brand Ambassador for the Foundation for Economic Education and the host of the podcast BASEDPolitics. Her work revolves around the defense of free markets, individual liberty, and limited government. Before turning to the witnesses, let me recognize the Ranking Member, Senator Paul, if he wants to make any comments in regards to these--he is fine, okay. I hope I did a good job introducing your witnesses. I did the best I could. We will start off with Mr. Rowe. STATEMENT OF C.E. ``TEE'' ROWE, PRESIDENT AND CEO, AMERICA'S SBDC, BURKE, VA Mr. Rowe. Thank you, Chairman Cardin. Chairman Cardin. I should point out, without objection, your full written testimony is being made part of the record. You may proceed as you wish. Mr. Rowe. Thank you, Chairman Cardin, Ranking Member Paul, Senators. Thank you for inviting me to testify. I am the President of America's SBDC, the association of Small Business Development Centers. For over 40 years, SBDCs have been providing services to small business owners throughout the Nation. We operate out of our host institutions and operate statewide. But while SBDCs may be headquartered at colleges and universities, our centers are in the communities. That is why you will find SBDCs at the St. Mary's County Economic Development Office, the city hall in Berea, Kentucky, or the Boulder Public Library. SBDCs help all small businesses at all stages. Roughly 50 percent of our clients are women, 10 percent of our clients are veterans, and minority clients comprise about 38 percent of our client base. In an average year, we provide over 1.5 million hours of counseling and training to over 500,000 small business owners and their employees, and that assistance has generated results. From 1990 to 2020, our clients accessed $82 billion in capital, increased their sales by $144 billion, and created 4 million jobs, and that helped generate over $11 billion in tax revenue. And as I laid out in my written statement, we offer a wide variety of assistance. So I would really like to just focus on a few things. First, our COVID pandemic response. Over the last year and a half, SBDCs have done over three years' worth of work. We participated in over 3,500 webinars and assisted over 315,000 people just in the first few months of the pandemic. Our networks opened new centers, like the nine in Pennsylvania, hired new advisors, and pivoted to provide specific services aimed at helping small businesses weather the pandemic. We assisted them with billions in financing through PPP, EIDL, SVOG, and Restaurant Revitalization. And now, hopefully coming out, our client surveys show us that the most urgent need is finding new customers, which was also their most frequent challenge during the pandemic. Of course, they also still need help with strategic planning, digital marketing, supply chain flexibility, and employee retention. Going forward, we see small businesses increasingly reliant on technology. That is why we teach cybersecurity as well as social media. We have based our cybersecurity program on the DOD Cybersecurity Maturity Model. The Delaware SBDC's DatAssured Program covers all facets of that DOD guidance, to provide basic education for small businesses, and it was nationally recognized by the Department of Homeland Security and has been adopted by over a dozen SBDC networks. Now these changes are going to present significant challenges in communities, underserved communities, particularly with limited broadband access, and those are both urban and rural communities. And to overcome that, SBDCs are increasing our outreach, working with Urban League chapters, Black and Hispanic Chambers, to ensure that we are reaching everyone. And we have centers at 21 Historically Black Colleges and Universities. And to further that effort, we have begun the Inclusivity Challenge based on our Northern California SBDC's Inclusivity Project. The Inclusivity Challenge is all about helping all entrepreneurs overcome impediments to their success. That effort is complementary, we believe, to the Community Navigators Program. In fact, several SBDCs are already engaged in Community Navigators. We are dedicated to finding the most effective ways to deliver services to small business, and to that end we strongly support reauthorization of the entrepreneurial development programs. We think it is time to review and renew the commitment to assisting small business. I have one final item, and that is the need for collaboration and cooperation between all small business programs. Now our three programs work well together, but there are so many more across the Federal Government. And frankly, we need to integrate all those activities so we can all be more effective and cut out what I consider to be unnecessary friction and siloes. That concludes my testimony. I look forward to any questions you all might have. Thank you. [The prepared statement of Mr. Rowe follows:] [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] Chairman Cardin. Thank you. Michael Hendrix. STATEMENT OF MICHAEL HENDRIX, SENIOR FELLOW, MANHATTAN INSTITUTE, NEW YORK, NY Mr. Hendrix. Chairman Cardin, Ranking Member Paul, members of the Committee, thank you for the honor of participating in today's hearing. My name is Michael Hendrix, and I serve at the Manhattan Institute. And today, I want to be clear at the outset. Entrepreneurial success makes the American dream a reality. New businesses create jobs, foster opportunity, help build vibrant communities, and empower marginalized Americans. And the SBA, through its resource partners, has committed to assisting these entrepreneurs, and they should be applauded for their worthy mission. But my message today is also simple. The SBA's entrepreneurial development programs and initiatives are too often opaque, ineffective, and duplicative. We must find a better way to serve America's entrepreneurs. First of all, the track record and oversight of the SBA's entrepreneurial development program is spotty at best. If these programs helping small businesses were small businesses themselves, they would have failed. I have visited these offices before. At one, at a startup hub, I was told my first step as a technology entrepreneur was to visit the library to learn Microsoft Word and after that to write a business plan which I could design with MS Paint and clip art. Not only was this advice clearly out of date; it was also out of context. Worse yet, the SBA and their partners are barely keeping track of whether their work actually works. The SBA's Inspector General has found again and again the Agency has poor oversight over its resource partners and the taxpayer dollars they are spending. For instance, they were not accurately measuring or reporting whether SCORE was achieving any goals or, quote, assessing whether the program achieved its intended purpose. I cannot imagine they would advise their clients to do the same, nor would I hope that they would recommend their own management practices. The SBA's recent multimillion-dollar hub for educating small businesses during the COVID-19 pandemic ended up helping just 1 percent of the businesses it was intended to serve. And out of 14,000 resource partner counselors, only 62 completed any of the training intended to help them help businesses. Just 62 out of 14,000. The SBA's resource partner network is also duplicative, plain and simple. When the SBA program and programs like SCORE were launched, there were not many resources like them available, but there are now. Today, if you would like a free business plan, Google gives you 3.5 billion results. The Harvard Business Review will show you ``How to Write a Winning Business Plan'' alongside Google's 57 million video results answering the same question. If you are in need of mentoring, there is a long list of organizations now ready to help. We see programs in the private sector helping entrepreneurs without the need for government subsidies. Meanwhile, the Agency's Small Business Development Centers, Women's Business Centers, Veterans Centers, SCORE chapters, they all provide similar services, and that is according to the SBA's own Inspector General. Many of these facilities are also located close to one another. For instance, 95 percent of Women's Business Centers are within 25 miles or less of an SBDC or SCORE office. When the SBA's own Inspector General came before this Committee in 2011, she had a simple message, reduce this duplicative business counseling, and that is a quote. For nearly 60 years, the SBA's entrepreneurial development program has yielded questionable results and mounting inefficiencies. During this same time, new business formation has plummeted, not risen. Yet, every new decade has brought new initiatives, new requests for new funding. The folks in these organizations are well-intentioned. They have a worthy mission. They are good people. But ideally, groups like SCORE and others should be able to stand on their own two feet without tens of millions of dollars in Federal subsidy. They should compete just as their clients must. Of course, ultimately, we must ask: Is the Federal Government best placed to offer entrepreneurs advice? Thank you. [The prepared statement of Mr. Hendrix follows:] [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] Chairman Cardin. Thank you for your testimony. We will now hear from Corinne Hodges. STATEMENT OF CORINNE HODGES, CEO, ASSOCIATION OF WOMEN'S BUSINESS CENTERS, WASHINGTON, DC Ms. Hodges. Thank you, Chair Cardin, Ranking Member Paul, and members of the Committee for convening today's hearing. On behalf of 140 Women's Business Center grantees and nearly 100,000 entrepreneurs served by our network, I appreciate the opportunity to share the ongoing efforts and benefits of our program in catalyzing women's business ownership. The Committee needs no reminding that the success of the American economy depends on a robust entrepreneurial system. By any metric--net new jobs, GDP, share of innovation--it is dynamic small businesses that drive economic growth, and women have contributed heavily to that growth for the past several decades. Since today's hearing is intended to review the government support of this sector and technical assistance, I am here to say that investing in women business owners through the Women's Business Center Program is delivering well worth the return on investment. Even with the COVID crisis, every Federal dollar invested in the Women's Business Center Program in 2020, at least $2.28 flowed back into the economy from $61,769,695 in business revenue generated by those served. As the front line of technical assistance for our Nation's 13 million women business owners, we help start and grow their businesses by providing counseling, training, mentoring, networking opportunities, as well as access to capital. In years past, policymakers questioned investment of taxpayer dollars into the programs represented today. Indeed, one of my colleagues on this panel suggests there is little need for our program thanks to other actors like philanthropy and State governments, which is helpful albeit inconsistent. So why should the government be involved in supporting business creation and growth? Well, simply put, it is the greatest economic imperative our country has. It is why entrepreneurship, commerce, and intellectual property are cemented in the U.S. Constitution. Now, in this defining moment of crisis and resilience, we should be doubling down on our investment, not shortchanging it. The critical support of Women's Business Centers in the CARES Act, for which we are grateful to this Committee, was a perfect experiment. With additional funding, Women's Business Centers' impact skyrocketed across every metric, including a 36 percent increase in the number of clients served, despite the challenges that were presented to them in remote work. But beyond the macroeconomic imperative, entrepreneurship is one of the most effective ways to close the wealth gap and produce longstanding generational wealth among women, minority groups, and veterans. So this dual benefit of the program far outweighs the relatively small investment in the context of the Federal budget. We must not overlook the importance of consistency that our program provides as a reliable source of counseling and support, no matter the circumstances. To best serve their communities, Women's Business Centers' doors must remain open in the good times along with the bad. But that is not to say that programs should be etched in stone. Indeed, we are pleading for this Committee to modernize it. In the last Congress, legislation that would have better prepared Women's Business Centers for COVID-19 passed the House, but it stalled in the Senate. We hope this Committee and its counterpart across the Capitol can address statutory anachronisms and flaws and bring our program literally into the 21st century. I urge this Committee to consider introduction of complementary legislation to the bipartisan bill recently introduced in the House of Representatives, H.R. 6441, the Women's Business Centers Improvement Act of 2022, which addresses longstanding requests of Women's Business Centers, of this Committee, and of SBA. It increases the grant cap and indexes it to inflation and, finally, reauthorizes the program for fiscal years 2022 through 2025. The bill addresses several deficiencies cited in OIG reports by strengthening coordination between AWBC and SBA and, most critically, creating an accreditation program to ensure uniform standards across the program. Notably, this is something our peer resource partner has; yet, it continues to be a disparity for women entrepreneurs. Women's Business Centers not only survived the last two years but brought forward more than 170,000 women entrepreneurs and helped them leverage well over three-quarters of a billion dollars in capital, a significant contribution to the small business ecosystem and the American economy. We are proud of our achievements, and we urge Congress and this administration to continue to entrust us with this vital work. We stand ready to work with this Committee and pass much needed legislation to modernize the program. Thank you so much for this opportunity to testify, and I am happy to answer questions. [The prepared statement of Ms. Hodges follows:] [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] Chairman Cardin. Thank you for your testimony. We will now go to Chris Edwards. STATEMENT OF CHRIS EDWARDS, DIRECTOR OF TAX POLICY STUDIES, CATO INSTITUTE, WASHINGTON, DC Mr. Edwards. Thank you very much, Chairman Cardin and Ranking Member Paul. The Chairman is right that entrepreneurship is a bright spot in the economy. Since the summer of 2020, the number of U.S. business startups has soared. However, I am worried that rising inflation, possible tax and regulatory increases, could undermine this startup boom. Startups are crucial to the economy. They add competition. They drive innovation. And we are all agreed on that. I am skeptical that governments need to fund entrepreneurial development, however. Many private institutions, as Michael was talking about, fill similar functions as SBA's entrepreneur programs. For example, America has 335,000 angel investors, who are wealthy people that invest in startup businesses. Angels are in every city and town in the Nation, and they provide advice and guidance to entrepreneurs. So government can spur entrepreneurship with policies favorable to angel investment, and as I have written, low capital gains taxes are crucial to angel investors. Many private foundations fund entrepreneurship programs. The Kauffman Foundation spends $100 million a year on training for entrepreneurs. I noticed recently that the PNC Foundation, the banking company, recently gave $16 million to create the National Center for Entrepreneurship at Howard University, supporting Black entrepreneurship. The Blackstone Charitable Foundation, the Coleman Foundation, and many others spend millions of dollars a year on entrepreneurship programs focusing on disadvantaged communities. The National Foundation for Teaching Entrepreneurship says that it reaches 100,000 students a year. Entrepreneurship degrees and certificates are offered at over 500 colleges today. And as Michael touched on, there is a huge array of free entrepreneurship courses online and on YouTube. So these growing efforts for entrepreneurial development cast doubt on the need for Federal involvement, I think. Let me switch over to regulations for a few minutes. Efforts to boost entrepreneurship, either by SBA or by the private sector, are undermined by barriers to startup. Economists generally agree that the regulatory barrier on small businesses is much larger relatively than on large businesses. Regular surveys of small business by CNBC, the NFIB, and others find that regulation is a major concern of small businesses although recently inflation has risen to the top concern of small businesses. I recently conducted a study on State and local regulations on startups, and I will give you a few examples of how regulations really undermine--can really undermine startups at the State and local levels. Occupational licensing. Most of us are aware of this issue. The share of U.S. jobs requiring an occupational license has risen from just 5 percent a few decades ago to over 20 percent today. Licenses cost time and money that young people with modest incomes may not be able to afford. So occupational licensing restrictions are restrictions on startup businesses. Alcohol licensing. This is a really surprisingly big issue. Alcohol licensing is a big hurdle to restaurants startups. In my study, I found 18 states that strictly cap the number of liquor licenses in towns and cities. The caps can make restaurant startups very costly or block them entirely. In these 18 states, entrepreneurs may have to pay literally hundreds of thousands of dollars to get a liquor license. Those high costs favor corporate restaurant chains over independent and moderate-income entrepreneurs. Cities with tight alcohol license caps can strangle economic development, particularly in poorer neighborhoods because in those neighborhoods the entrepreneurs cannot afford these expensive licenses. This is a big problem in New Jersey; it is a big problem in Massachusetts. There is, interestingly, a similar problem in some of the states that have legalized marijuana. California has tightly restricted its marijuana licenses. So if you do not have a lot of money or inside political connections, it is very hard to get a legal license for marijuana in California. Home-based businesses are another issue. Millions of Americans run businesses out of their homes: daycare providers, small-scale food producers, artists, yoga teachers, many, many others. But local governments impose zoning rules that ban, restrict, or raise costs for home businesses. This is a particular problem for lower-income entrepreneurs because for them home businesses allow them to run a business and saving the cost from commuting, from rental commercial space, from getting childcare, and that sort of thing. So reforming local zoning laws to allow more home-based businesses would be a way to expand entrepreneurship. Finally, the connection between deregulation and entrepreneurship can be seen with the huge success of the craft beer industry in recent decades. And I note one of the members of your panel here, Senator Hickenlooper, of course, is a pioneer in the craft brew industry. President Jimmy Carter signed legislation in 1978 legalizing home brewing. That was followed by many states deregulating the rules for brew pubs and allowing small, independent brewers to self-distribute to retailers. The number of breweries in America exploded from 100 in 1980 to more than 8,000 today. So, from nothing, the craft beer industry is now a $22 billion industry, thriving with entrepreneurship, and so that was a pro-entrepreneur, deregulatory success. Thank you very much. [The prepared statement of Mr. Edwards follows:] [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] Chairman Cardin. Thank you for your testimony. We will now go to Bridget Weston. STATEMENT OF BRIDGET WESTON, CEO, SCORE, HERNDON, VA Ms. Weston. Chairman Cardin, Ranking Member Paul, and members of the Committee, thank you for the opportunity to offer testimony on SCORE's impact, including our response to the COVID pandemic and the funding challenges we currently face in effectively serving American small businesses. SCORE is the Nation's largest network of volunteer expert business mentors of which 100 percent are required to take our mentoring methodology course and annual code of ethics training. These 10,000 volunteers are offering free and confidential advice as well as educational workshops to current and aspiring small business owners. Founded in 1964 as a resource partner of the SBA, SCORE has now helped more than 11 million entrepreneurs start, grow, or troubleshoot their businesses. When the pandemic began in 2020, many more business owners reached out for SCORE's help than ever before as evidenced by a 30 percent increase in our services. We quickly pivoted to delivering 100 percent virtual mentoring and education without missing a day of service. And during this time, SCORE sought much-needed additional funding from the CARES Act to support our efforts. However, we did not receive any additional dollars. We were not deterred. SCORE saw a critical need to help business owners navigate the challenges they are facing with the pandemic. So we worked to launch the Small Business Resilience Hub. Two months after the pandemic hit, SCORE's Small Business Resilience Hub was available to help business owners navigate Federal and local government programs, adapt to change, launch new businesses, and attract and retain clients, all using SCORE's existing resources and mentors. To date, this hub has had nearly 900,000 visitors, and this is in addition to our website www.score.org, which reaches over 4 million people annually. Now many business owners told us they would not have applied for PPP or EIDL without a SCORE mentor to walk them through the process step by step. In fact in fiscal year 2020, the first year of the pandemic, SCORE delivered over 840,000 mentoring or educational services. It is through these efforts that SCORE helped our clients to stay in business; 82 percent of our in business clients stayed open and added nearly 75,000 jobs. And we helped another 45,000 businesses start. It was through our work with these business owners that SCORE saw firsthand how the pandemic significantly and negatively impacted small businesses, and the date SCORE collected shows that some businesses, such as Black- and Hispanic-owned, have been more negatively impacted than others. Because SCORE serves a diverse range of small business owners, with 60 percent of our clients being women and 46 percent minority, we knew SCORE was uniquely positioned to ramp up efforts to help those business owners most impacted. One of SCORE's key areas of focus continues to be fostering diversity, equity, and inclusion both for clients and for volunteers. Expanding our volunteer corps to reflect the communities we serve has resulted in 40 percent of our volunteers being women or minorities. With the support of SCORE, our volunteer strategic partnerships, both nationally and locally, we launched our SCORE for All Initiative to help disadvantaged business owners address their specific needs. SCORE was hopeful that the Community Navigator grant would help to amplify these successful programs. However, SCORE was not awarded a Community Navigator grant. Nevertheless, we know we must continue these efforts. SCORE has reached out to those who did receive Community Navigator awards and offered to support in any way. We have already signed an MOU with the U.S. Hispanic Chamber of Commerce to be a part of their program. SCORE did all of this without any additional funding. Further complicating SCORE's situation, SCORE has experienced problems with the SBA's EDMIS system, culminating in recent EDMIS outputs that have dramatically underestimated SCORE's impact. The EDMIS reports do not reflect the SCORE data being entered into the system, which is different from SCORE's salesforce-based system and our annual survey of client impact and engagement. SCORE has also been operating without any Federal funding for 4 months as we are still waiting on our notice of award. We continue to work closely with the SBA to resolve these issues but feel it is important to note these challenges limiting our ability to more fully deliver our mission. SCORE is proud of our ability to serve over 300,000 people each year, but these efforts are simply not sustainable at our current funding levels. It is why we continue to respectfully request an increase of $9.5 million in funding for a total appropriation of $21.7 million. With this investment, we can provide even greater value to business owners and the economy. This increased funding would allow us deliver more than half a million additional client services with a projected outcome of 100 additional new businesses started or jobs created. SCORE volunteers and the small business centers they serve need to see a commitment to, and an investment made in, them so we can sustain SCORE's efforts and help even more businesses survive and thrive. Thank you for your time, and I look forward to your questions. [The prepared statement of Ms. Weston follows:] [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] Chairman Cardin. Thank you for your testimony. Ms. Hannah Cox. STATEMENT OF HANNAH COX, BRAND AMBASSADOR, FOUNDATION FOR ECONOMIC EDUCATION, AND CO-FOUNDER AND HOST, BASEDPOLITICS, ATLANTA, GA Ms. Cox. Thank you, Chairman Cardin, Ranking Member Senator Paul, and members of the Committee. When I was born on December 30th of 1987, it was not yet legal for me as a woman to secure a business loan without a male co-signer in most states. That was merely 34 years ago. In 1963, when my mother was born, she could not yet obtain a credit card without a man. Women have faced unique challenges in this country, but they are challenges that we face because our government first upheld a system that treated us as second- class citizens under the law for centuries and erected financial barriers we have had to tear down. Due to this, we have some catching up to do in the business world. But since receiving equal financial footing, the number of women-owned businesses increased by 31 times, rising from 402,000 businesses in 1972 to 12.3 million business, or 40 percent of all firms, by 2018. Today, women face the same struggles when it comes to entrepreneurship as men, struggles that, it must be pointed out, continue to be created by our government and its meddling in the market. True feminism means the advocacy of women's rights on the basis of the equality of the sexes. So I am here to advocate for men in business every bit as much as I am to advocate for women because what the government is currently doing hurts all of us. What entrepreneurs need to be successful is not a government handout. What we need is for the government to get out of our way. Entrepreneurs are being choked to death by the Federal Government's expansive regulatory apparatus. Between 1995 and 2017 alone, there were 88,899 rules and regulations implemented. Government agencies and unelected bureaucrats have run amok and are throttling our economy while Congress fails to rein them in. As a result, business owners are forced to spend the bulk of their time jumping through legal hoops and wasting their profits on compliance. This is despite laws like the Small Business Regulatory Enforcement Fairness Act, which is supposed to ensure Federal agencies help small businesses comply with statutes and regulations. This has largely not happened, and American entrepreneurs receive little relief when it comes to maneuvering this framework. The Federal Government also makes it increasingly difficult to succeed in business as it renders our currency void through reckless spending policies that drive the printing of new dollars and as it excessively taxes us at every turn. We are being pillaged by your policies. This includes the $4.9 trillion in new spending under the CARES Act, which led to rampant inflation. Prices have risen 7 percent, representing the largest increase in a 12-year period in the last 4 decades. For entrepreneurs, that is a tremendous hidden tax. It is money they no longer have to hire, expand, or save. And it also means consumers have less money to spend. You have stacked the deck against us. Not only that, but the Federal Government continues to pick winners and losers, giving our tax dollars to big business competitors and rigging the playing field against entrepreneurs. You do this through subsidies, selective tax breaks, regulations, and programs that prioritize some business owners over others. As one example, the Restaurant Revitalization Fund administered by the SBA prioritized awarding funds to small businesses owned by women, veterans, or disadvantaged individuals despite the fact that unconstitutional government lockdowns harmed all restaurants. This is only scratching the surface when it comes to the ways that the Federal Government serves as a barrier to entrepreneurship. The Federal Government purports to promote competition and entrepreneurship with its right hand while its left is the primary source strangling the free market. The Federal Government is one of the last entities that should oversee entrepreneurship programs. And we have seen no numbers, no proof of efficacy in their work to counter that point. In fact, the research we have shows the opposite. The Office of Inspector General evaluated the SBA's handling of the CARES Act grant to train, counsel, and educate small businesses on Federal resources. Under this grant, partners were given $18.6 million to create an informational and training hub. Yet, the Office's report found that less than 1 percent of the 30 million small businesses this was intended for used the portal and only 62 of approximately 14,000 resource partner counselors and mentors completed any of the training modules. That is a tremendous amount of our tax dollars being wasted, tax dollars that entrepreneurs could do a lot more with if they were left in our pockets. The SBA recently announced it intends to elevate the Office of Women's Business Ownership, and in a statement on the reorganization staff claimed this was indicative of the Biden Harris administration prioritizing recovery for small businesses and addressing longstanding inequities for women entrepreneurs. I find this offensive. You cannot claim that the Federal Government cares about female entrepreneurs after it worked to shut down our businesses, close schools, leaving women in the workforce scrambling for childcare, and mandated vaccines and COVID policies that have cost billions of dollars. The same is true as it always was. The government is the main roadblock to our success. The only role the Federal Government has to play in entrepreneurship is in removing the onerous burdens it has placed on the backs of every hardworking American. Women need the government to quit fantasizing itself our knight in shining armor when in reality it is more akin to a wicked stepmother locking us away from opportunities. We need the government to remove itself from the market so that we can actually take up space and use the dollars currently being wasted for innovation and growth. Thank you. [The prepared statement of Ms. Cox follows:] [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] Chairman Cardin. Let me thank all six of our witnesses for their patience and their testimony. With Senator Paul's consent, I am going to go to Senator Inhofe first, who has a conflict on time. Senator Inhofe. Well, thank you very much, Mr. Chairman. I appreciate that. It was very important for me to get over and ask a couple questions. Ironically, I got here just in time to hear Ms. Cox. I am not sure I need to do that now. However, I just want to make sure to emphasize the problems that we are having in my State of Oklahoma and other states are having the same types of problems. We talk about inflation up to 7 percent, the highest it has been in 40 years, the small businesses that are having the effect of this. Is there anything that you can add? I actually have two questions I wanted to ask you. How would the radical spending plans only serve to hurt the small businesses and hinder entrepreneurship? Ms. Cox. Thank you, Senator. It is important to remember that every dollar spent by the government is dollars that entrepreneurs do not get to keep in their pockets, that they could actually invest into their own companies, hire more people with, save. And so we continue to see this hurt small business across the country. They are demanding relief. I talk to small businesses and entrepreneurs across this country, and one of the main things they say they need are tax cuts or, at the very least, a simplification of the tax codes that they do not have to spend so much time jumping through hoops to meet compliance from the government. So I would suggest that the government look into those two items first and foremost. Secondarily, I suggest they quit spending money recklessly and give it back to the actual entrepreneurs who know, on the ground, how to invest the dollars better than the Federal Government could from so far away. Senator Inhofe. And I think that pretty much addresses the second question I would ask on how can this administration advocate for policies that actually help benefit the playing field and ensure all entrepreneurs have a fair shot. Ms. Cox. Yes, I would love to see an actual review of all the regulations currently in play in various industries. I think it depends on which industry we are looking at, but if you examine any given one at a certain moment you are bound to find a number of ways the Federal Government is preventing entrepreneurship and hurting small businesses. I will use one bill that comes to mind within the agriculture industry right now. The PRIME Act is seeking to make it to where small farmers can merely just sell their meat without having to jump through the hoops the Federal Government has laid out for them to process their cows. That is a ridiculous burden on them that actually makes them lose money and have to kill their cows and waste product. That kind of thing can be found in virtually every industry in our economy, where the Federal Government has come in and put in silly requirements that people have to jump through merely just to do their job. So I would love to see the Biden administration actually go through and figure out what those regulations are and start to remove some of these things so that people can just get back to work. Senator Inhofe. That is particularly a great statement to make from my State of Oklahoma because that is a problem I have heard from other people and it is serious. So I think we understand that these are serious problems that small states, ag states, are having problems with, and that is what this is all about. We have these people here. You have your own problems. And I appreciate those comments very much. And that is primarily the message I wanted to add, Mr. Chairman. And both of you, I appreciate you. Thank you. Chairman Cardin. Thank you, Senator Inhofe. Let me again thank our witnesses. There is, you know, clearly different views. There is different views on this Committee, but what I like about this Small Business Committee is historically we have worked together in a bipartisan way in order to carry out our role in the United States Senate on behalf of small businesses. So during the pandemic, we got together, Democrats and Republicans, and we passed through this Committee and through overwhelming majorities on the floor of the Senate and House relief for small businesses that was unprecedented. And as I have traveled through the State of Maryland and I have traveled through this country--and I have heard the same thing from my Republican colleagues--business after business said they would not be open today but for the help that was provided by Congress as a result of the COVID relief packages that we passed. So I just point that out, that we have this tradition of listening to each other. We have different views, and we respect each other's views, and we try to come out with policies that are consensus policies that represent the best interests for the small business community. And I do think that we are getting to a consensus here among at least the witnesses that are before us today that Congress needs to speak in regards to the entrepreneurship programs. After all, the Small Business Development Center program was authorized in 1980 and has not been comprehensively reviewed by legislation since that time. The Women's Business Centers was last reauthorized in 2005. The SCORE program goes back to 1997. So we should carry out our responsibility. It is one thing to say you do not have the resources you need, et cetera, or you think there is misuse of resources. If Congress has not acted--we are the policy arm. We have that responsibility. So I would suggest first that we really do have responsibility as a committee and as a Senate to review these statutes and try to update them and feel what is best, listening to both Democrats and Republicans, and see whether we cannot come to what we think the current policy should be in regards to these resource partners. Now the question I am going to ask deals with a view that I have that may differ from Senator Paul and other members of this Committee. I look at the commercial banks and their record of providing assistance in disadvantaged communities, and it is not a good record. And we all agree that we want to use the talent in every community and the energy in every community to build not only personal wealth and accomplishment but also economic strength for our whole country. So it was for good reason that we established access to capital programs for disadvantaged communities or for smaller businesses because the private sector was not providing that opportunity. So we developed the 7(a) program and the 504 program, the largest programs of access to capital through the SBA, but when you look at the record--and when I first came to the Senate in 2007 I got the numbers in Maryland, and I was appalled because the number of 7(a) loans made in disadvantaged communities was so small compared to the demographics of small businesses located in disadvantaged communities. I knew we could do better. Now, yes, we did develop other programs such as the Community Advantage 7(a) program and the microloan programs, and they work much better; they do. There is much better participation in all communities in those programs. But I mention that because we want to provide opportunities to all communities. So as I look at our resource partners, I want to know what you are doing because you are the services that we are providing particularly to the vulnerable small businesses. So tell me how your program is providing opportunities to small businesses who otherwise may not be given an opportunity to survive, how you are able to do that under an existing program, and if you need additional help, please let me know. Why don't I start with Mr. Rowe in regards to the SBDCs? Mr. Rowe. Thank you, Mr. Chairman. As I said in my testimony, we work with the Urban League and the Black and Hispanic Chambers. And I will tell you that, honestly, if we look at 7(a) and 504 they came about not just because we were not--the banking community was not fulfilling its, you know, duty to the disadvantaged communities. But they were also being hampered by things like the Basel policies, the Basel regulations, international banking regulations, and reserve requirements that, frankly, sit harder on community banks than they might on a big regional bank. And we are working now--and I will just throw this out because I agree with Ms. Cox. Today in D.C., our SBDC is holding--helping small businesses do their taxes today. And it is kind of sad that the tax system is so complicated that we have to help people pay their taxes. You know, you have got a situation where a small business owner who may have 1099 employees has to deal with 20 different 1099s, and so then they have to fill out a 1096. And if they fill out that 1096, they cannot download that off of IRS's website because if you try and download the form off their website it does not scan properly. So if you send it in to the IRS, you get penalized. So when we are--we are in the same boat when we are working with the disadvantaged communities, whether it is in the District or, you know, any community, in a rural community. Helping people speak ``banker'' sometimes is most of what we do, helping people understand what they have got to go through just to get a loan. You know. And we keep trying. We will keep pushing out with the Urban League, like I said, and through the HBCUs, through the Community Navigator Program, whether it is as a hub or a spoke, just because we are trying to help everyone. But if I was going to say we were living in an uncomplicated world, I would be a flat-out liar. Chairman Cardin. Ms. Hodges, how is the Women's Business Center carrying out its mission to help underserved, disadvantaged businesses located in disadvantaged communities? Ms. Hodges. Thank you, Chairman. Yes, Women's Business Centers are inclusive. They are open for all, but we do reached the underserved. Of the individuals Women's Business Centers served in 2020, 70 percent were women; 56 percent of those that reported demographic data were people of color; and of those in 2020 who identified as people of color, 51 percent were African American, 33 percent were Latinx, 10 percent were Asian, 2.7 percent were Native American-Alaskan Native, 1.2 percent were Native Hawaiian. You get the idea here. So the Women's Business Center Program continues to expand its reach. We have even added 24 new Women's Business Centers just since March 2021. Now three of those were on campuses with Historically Black Colleges and Universities, one of those in your State of Maryland. We have some Women's Business Centers who collect more robust data, and those Women's Business Centers are tracking that more than 90 percent of individuals served are represented by categories of underrepresented or underserved, meaning women, minorities, or low-income households. And I would like to share an anecdote as well, if I could, which is that in the State of Kentucky, in Georgetown, an African American, woman-owned business just in 2012 opened her business and explained to me in November she struggled to secure a $5,000 startup loan without the signature of her husband and if not for the Women's Business Center of Kentucky's Lexington office she would not be in business today. She has since survived the COVID pandemic, has given birth to twins, and is on the top 10 bakery list with a business employing 12 employees. Chairman Cardin. Thank you. Ms. Weston, on SCORE? Ms. Weston. Thank you for the question. SCORE has always placed a high value on helping underserved business owners; 60 percent of our clients are women, 46 percent minority, 11 percent veterans. We have formed strategic partnerships at the national and local levels to help reach and inform these underserved business owners of the resources available: U.S. Hispanic Chamber of Commerce, the Latino Coalition, U.S. Black Chambers, BIPOC Support Foundation. And our 240 chapters, with 10,000 volunteers across the country, have formed partnerships at the local level with banks and credit unions, economic development centers, colleges and universities, all with the intent of reaching these business owners and aspiring entrepreneurs who can benefit from the resources and guidance that SCORE provides. We were told and saw firsthand during the pandemic the problems and the impact that this pandemic has had on all small business owners but some more negatively than others. We saw that Black and Hispanic business owners applied for more--for loans more often but received less. So what SCORE is doing is building and expanding our SCORE for All initiative, which brings unique content that speaks to their specific needs--financial literacy, broadband, whatever it is depending on that specific market--to help them increase their chances of success. We heard that these programs can be confusing and overwhelming and that they would not have applied for them without a SCORE mentor guiding them along the way. And we hope to be able to expand this program and continue to make, you know, more of an effort for these underserved communities, hopefully with more funding from Congress. Chairman Cardin. And just concluding, Mr. Edwards, I want to agree with you in regards to the regulatory burdens that can prevent smaller entrepreneurs from entering a field. We need to look at that. And you gave the craft brewing industry as a good example, and I agree with you completely, and I am proud of legislation I have authored to make it easier for craft brewers to be able to survive. And I cannot match Senator Hickenlooper for owning a brewery, but I will match any member of Congress for the number of craft brewers I have been to and enjoyed. It is my normal Friday afternoon visit to a Maryland business was always going to be a craft brewery or a winery on a Friday afternoon. So I thank you for that point because I do think the regulatory environment, the tax environment, is a very important point for encouraging small business entrepreneurs, and I thank you for that. Mr. Edwards. Can I add a comment on that? I talked about some areas where regulation, I do think, has a disproportionate negative impact on lower-income and disadvantaged communities: the alcohol licensing and marijuana licensing, the occupational licensing, the home-based businesses. I think the SBA could serve a really positive role here. It has an Office of Advocacy, the SBA--I assume that you have oversight over it--that, you know, their role is to examine other government rules and regulations and to find out what is too onerous. And in fact, I mean for example, I discussed home based businesses. They did a fantastic report a decade or so ago about home-based businesses and some of the burdens that they face from local government zoning. So I think that reinvigorating that office would be a great way, you know, to shine a light on some of these regulations that disproportionately hurt some communities. Chairman Cardin. Good suggestion. There is no question that particularly those with less capital have very little opportunity to contest a lot of these issues or compete for licenses. I think your point is well taken. Senator Paul? Senator Paul. I think Mr. Edwards makes a good point. You know, one of the examples they often use is for hair-braiding. They are often immigrants to our country, many from Africa or Jamaica. And States put them out of business with $1,500 licensure, and you got to go two years to learn how to braid hair. And it is like, really, you think the customer cannot decide whether you can braid hair well or not? But that runs throughout our economy, and a lot of those are State laws. But there have been some good groups. Institute for Justice has fought a lot of these cases over time and has won quite a few of them. But absolutely, regulations. When you think about it, the richer I am the more I can evade a regulation. In fact, people talk about it as rent-seeking. So the big corporations love regulation often. They come to us. They do not want the craft brewers. So the big people come to us. They are all for regulating the small guy at a business. But I think too often we do not look at how regulations--removing them would actually disproportionately help lower-wage and people who have historically had more trouble getting loans. Mr. Hendrix, on the--often capitalism is sort of described as creative destruction, that to get a loan, to stay in business, you know, only the best survive. I mean, it really is this strong sort of you have to make a profit. And there is a definite difference between sort of a government extending a loan and a private entity extending a loan. And the private entity, if they keep making mistakes, will not have any more money to loan. The government seems to have an infinite amount. Can you describe that a little bit, the difference between private and public loans and how one may breed more excellence or better results? Mr. Hendrix. The private sector is built around finding the right sort of businesses to invest in and finding the right partners to help grow the economy, to grow those businesses to serve customers. And banks, financial institutions, community institutions, they are best placed to do that. The government has certainly extended help to many businesses over the years, but their track of finding winners, good businesses, ones that will stay afloat is spotty at best. And they also do not have a clear mission of what sort of businesses they are supposed to serve. It is sort of all over the place. It is scattershot. So what we should be doing is helping the businesses that do exist, the banks that do exist, the community institutions that are built to serve their neighbors, helping them to do their job rather than competing with them when we know our track record is not good. Senator Paul. Same question, Mr. Edwards, and any kind of disadvantages to leaving this role to government as far as other businesses that do not get funded. Mr. Edwards. One thing I am worried about, you know, with all of these issues is government crowd-out. When the government enters an area, they tend to push out, you know, private sector solutions. And I think with the SBA loan guarantees, you know, either they are just replacing stuff that the private sector generally would have done itself or they are extending loans probably to people that maybe should not get the loans. We saw that with the housing crisis over a decade ago. So as Michael said, you know, the private sector lenders want to lend. That is how they earn a return. And you know, I went into detail about--in my testimony, my written testimony, about angel investors. There is 300,000 of them out there in America, in every town and city. They are looking for young entrepreneurs to invest in, and they will invest, and they will hold their investment for 5 or 10 years, waiting patiently for returns. It is a very risky business. And so it is fantastic, you know, it seems to me, that a lot of wealthy people do this very high-risk investment, take these chances on unknown entrepreneurs. Senator Paul. When there is a feedback loop, you get information and you make decisions based on the information. Are they profitable? Did I make a mistake here? Did I do a good investment or a bad investment? You give more to the good investments; you give less to the bad investments. That does not exist in government, and so that is sort of the problem. And government can do the wrong thing for decades. I mean, I remember William Proxmire talking about them spending $50,000 on a study to see what makes people happy. That was 50 years ago. Congress just funded a study last year wanting to know if you take selfies and look at the selfie of yourself smiling if that makes you happy. We have been doing it for 70 years. The learning curve is really steep around here. Ms. Cox, I appreciate you putting forward some of the legal impediments that did exist for women at one time, and I think it is important to remember that both with gender and race there were legal impediments to people in business. I think, unfortunately, as we have removed those, people keep thinking something else has to be done, something else has to be done. But are you aware of a legal or systemic bias against women in business that currently exists? Ms. Cox. No, I am not aware of any bias that currently exists. If there is any bias, it is in our favor. I continue to see women get elevated as if we need special favors from the government or we need help. Again, we do not need special favors. We do not need government to give us money. We need the same thing as male entrepreneurs. We need them to get out of our way so that we can compete and actually live in a meritocracy. I am a strong believer in capitalism, but we have a problem where a certain number of entrepreneurs, a certain number of businesses are expected to actually compete in the market and then others get bailouts from the government, others get regulatory insulation from competitors and then some get special handouts like we see under these SBA grants. And I think that is offensive, and I think Americans are increasingly fed up with that system, where their tax dollars are taken from them and given to others. That is not a society that will stand for long. Senator Paul. You know, I think if you talk to many women in corporate America or African Americans in corporate America, you actually find that even without government telling the businesses what to do businesses are actually very eager to advance African Americans who are in the business place, as well as women. And I think we get stuck in statistics, you know, of how many CEOs there are or this or that. But really, as far as impediments, I do not think there are legal impediments. And so I think if you wanted to make the loan program more efficient you just would not have women's centers at all. Just judge people--we could have human business centers. You know. I mean, I do not think we really--I think it is demeaning, actually, to women or people of race to think somehow that you are inferior or incapable of doing exactly the same work. And so I think we are like 40 years beyond the time when we should be judging people on the color of their skin or their gender. We really should be, you know, proud of judging people equally before the law. You know, equality before the law. But I appreciate you all coming today, and that is all the questions I have. Chairman Cardin. Thank you. I want to ask one additional question, if I might. In response to the resource partners reaching out to disadvantaged communities, you mentioned, at least one or two of you, the partnerships with HBCUs. And we have Women's Business Centers located at HBCUs. We have in the other programs direct partnerships with HBCUs. In Maryland, we have four HBCUs that are all involved in entrepreneurship programs in order to expose their students to the opportunities of entrepreneurship. So I want to just hear from you briefly, if I might, how relevant or important it is to utilize the HBCUs in trying to carry out your missions of entrepreneurship. Again, I will start off with Mr. Rowe. Mr. Rowe. I think it is absolutely essential. We work with, I think--what did I say? Twenty-one different HBCUs in 14 different states. They are a valuable part of our effort to make sure that we are fulfilling our statutory mission, which is to serve everyone in the State or region that the SBDC is assisting. And the HBCUs are a valuable tool for us in part of what we do, which is pedagogy on entrepreneurship. We are working regularly with programs, for example in Alaska, K through 12, just to teach kids about having a business, what it means. So we think it is absolutely essential to work with the HBCUs. Chairman Cardin. Ms. Hodges, I know that Morgan State University has an entrepreneurship center and recently coupled that with the Women's Business Center. Ms. Hodges. Yes, sir, that makes six now Women's Business Centers located on Historically Black College and University campuses. We find it is incredibly important for Women's Business Centers to be available everywhere potential businesses are, inclusive of places like HBCUs and minority- serving institutions. We just really need to be accessible and available to all women entrepreneurs, especially minority groups. I mentioned the three that had opened previously, and you know, we would like to see continued growth in that area in the future. Chairman Cardin. Thank you. Ms. Weston? Ms. Weston. SCORE has recently formed a relationship with Tougaloo Foundation, a research and development foundation, which is a collaboration of HBCUs across the country. We are working with them to make sure that HBCUs have access to SCORE mentors and our educational materials regardless of where they are in the country. Many of the local HBCUs do partner with our SCORE chapters and have used our educational materials and courses as well as helped us be an avenue to let people know about the mentors and resources that SCORE brings to these--to anyone looking to start or grow a small business. Chairman Cardin. Thank you. Senator Paul? [No audible response.] Chairman Cardin. Well, once again, let me thank our witnesses. I think your testimony will help us as we move forward in regards to legislative oversight and action. So with that, the Committee will stand adjourned, with our thanks. [Whereupon, at 4:30 p.m., the Committee was adjourned.] APPENDIX MATERIAL SUBMITTED [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] [all]