[House Hearing, 116 Congress]
[From the U.S. Government Publishing Office]
A DISCUSSION WITH SBA ADMINISTRATOR JOVITA CARRANZA: CURRENT ISSUES AND
THE FY2021 BUDGET
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HEARING
BEFORE THE
COMMITTEE ON SMALL BUSINESS
UNITED STATES
HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTEENTH CONGRESS
SECOND SESSION
__________
HEARING HELD
FEBRUARY 26, 2020
__________
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Small Business Committee Document Number 116-073
Available via the GPO Website: www.govinfo.gov
__________
U.S. GOVERNMENT PUBLISHING OFFICE
39-766 WASHINGTON : 2021
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HOUSE COMMITTEE ON SMALL BUSINESS
NYDIA VELAZQUEZ, New York, Chairwoman
ABBY FINKENAUER, Iowa
JARED GOLDEN, Maine
ANDY KIM, New Jersey
JASON CROW, Colorado
SHARICE DAVIDS, Kansas
JUDY CHU, California
MARC VEASEY, Texas
DWIGHT EVANS, Pennsylvania
BRAD SCHNEIDER, Illinois
ADRIANO ESPAILLAT, New York
ANTONIO DELGADO, New York
CHRISSY HOULAHAN, Pennsylvania
ANGIE CRAIG, Minnesota
STEVE CHABOT, Ohio, Ranking Member
AUMUA AMATA COLEMAN RADEWAGEN, American Samoa, Vice Ranking Member
DAN BISHOP, North Carolina
TROY BALDERSON, Ohio
KEVIN HERN, Oklahoma
JIM HAGEDORN, Minnesota
PETE STAUBER, Minnesota
TIM BURCHETT, Tennessee
ROSS SPANO, Florida
JOHN JOYCE, Pennsylvania
Melissa Jung, Majority Staff Director
Justin Pelletier, Majority Deputy Staff Director and Chief Counsel
Kevin Fitzpatrick, Staff Director
C O N T E N T S
OPENING STATEMENTS
Page
Hon. Nydia Velazquez............................................. 1
Hon. Steve Chabot................................................ 2
WITNESS
The Honorable Jovita Carranza, Administrator, U.S. Small Business
Administration, Washington, DC................................. 3
APPENDIX
Prepared Statement:
The Honorable Jovita Carranza, Administrator, U.S. Small
Business Administration, Washington, DC.................... 29
Questions for the Record:
None.
Answers for the Record:
None.
Additional Material for the Record:
None.
A DISCUSSION WITH SBA ADMINISTRATOR JOVITA CARRANZA: CURRENT ISSUES AND
THE FISCAL YEAR 2021 BUDGET
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WEDNESDAY, FEBRUARY 26, 2020
House of Representatives,
Committee on Small Business,
Washington, DC.
The Committee met, pursuant to call, at 11:32 a.m., in Room
2360, Rayburn House Office Building. Hon. Nydia Velazquez
[chairwoman of the Committee] presiding.
Present: Representatives Velazquez, Finkenauer, Golden,
Kim, Davids, Chu, Schneider, Delgado, Houlahan, Craig, Chabot,
Balderson, Hern, Hagedorn, Stauber, Burchett, Spano, Joyce and
Bishop.
Chairwoman VELAZQUEZ. Good morning. The Committee will come
to order.
Today, we have the opportunity to welcome the Honorable
Jovita Carranza, the 26th Administrator of the Small Business
Administration, to our Committee.
While there are many political and ideological differences
represented on this Committee, one thing we all agree on is the
importance of small businesses to our nation's economy.
America's 30 million small businesses are the cornerstones of
our communities.
When a Main Street business succeeds, America succeeds. Not
only do hard-earned dollars get reinvested back into our
neighborhoods, but we also see robust job creation and
innovation.
However, launching a business is not easy. It can be
inherently risky. Even the most careful planner can
underestimate the costs associated with bringing an innovative
idea to the marketplace. Sadly, too many fail in the first 18
months.
That is why in 1953, Congress created the Small Business
Administration. The SBA is the only federal agency tasked
specifically with helping small businesses grow and succeed.
Through its extensive network of field offices and resource
partners, SBA connects entrepreneurs with technical assistance,
capital, and Federal contracting opportunities. It is
imperative that the agency operates effectively so that small
businesses can get the most out of these programs.
To that end, we have held numerous hearings to see what is
working and what can be improved. We have learned that one of
the biggest challenges facing small businesses is access to
capital, which is critical for a new business owner to start
up, hire employees, and expand operations. Without adequate
resources, small businesses fail to realize their full
potential.
The SBA can play a vital role in filling the gaps through
its loan programs. The Committee has long supported the
Microloan program, and more recently, the Community Advantage
program. These two initiatives have gone a long way in reaching
women, minorities, and veterans, who otherwise will not be
served by private sector lenders or even the 7(a) program. I
hope we can work collaboratively to support and expand these
initiatives.
With that said, the lending needs of women, minority, and
veteran-owned businesses are a top priority for me. I know Ms.
Carranza has expressed an interest here as well, and I look
forward to hearing more about the steps you will take to reach
more of these entrepreneurs.
Similarly, increasing contracting opportunities for small
businesses, especially from underserved communities, is a
shared goal that I hope we can leverage to improve the 8(a) and
HUBZone programs. When small businesses win contracts, they
scale up quickly and create good paying jobs. The result is a
win-win for everyone.
Just like contracting and lending, the SBA provides
invaluable counseling services through its nationwide network
of resource partners. They provide expert advice on how to
develop a business plan, market a product, and sell their goods
overseas. Despite the incredible success of the programs, the
administration proposed to slash entrepreneurial development by
a staggering $97 million or 36 percent. Helping small
businesses succeed and educating the underserved and rural
areas will require a real investment in SBA counseling and
training programs, not cutbacks.
I think it is safe to say we all agree that small
businesses are a cornerstone of our economy and deserve our
full support. However, that requires more than lip service. It
involves a real commitment to invest in its program and
programs that really work.
With that, I look forward to hearing from the administrator
regarding her priorities for the agency on the FY21 budget
proposal.
I now yield to the Ranking Member, Mr. Chabot, for his
opening statement.
Mr. CHABOT. Thank you, Madam Chairwoman. And thank you,
Madam Administrator, for coming before us today to share your
vision of the SBA moving forward.
As most of I think people in this room know, we think this
is the most bipartisan Committee in Congress. Both Ms.
Velazquez and I have had the opportunity to lead this Committee
in recent years, and regardless of who is in charge, we have
worked together in a bipartisan fashion to advance the goals of
America's small business community.
Today, we have the opportunity to hear from the President's
newest cabinet member, The Honorable Jovita Carranza, the 26th
Administrator in the history of the SBA.
Ms. Carranza was confirmed by the Senate last month by an
overwhelmingly bipartisan vote, becoming the highest-ranking
woman of Latin American heritage in the Federal Government.
I have to say the President and the Senate got it right. I
have had the pleasure of sitting down with our new
Administrator, and I was impressed by her ideas on how to
modernize and streamline the agency that is the only go-to
resource and voice for small businesses backed by the strength
of the Federal Government.
Ms. Carranza brings a wealth of experience and a remarkable
resume with her to the SBA. Her Federal Government experience
includes her position as the Treasurer of the United States--
her name is literally on our money--as well as serving as the
SBA's Deputy Administrator from 2006 to 2009 during former
President George W. Bush's administrator.
Before her work at the SBA, she had a distinguished 30-plus
year career with UPS, the United Parcel Service, where she
broke barriers as the highest-ranking Latina in the company's
history after starting as an hourly dock worker. So, she worked
her way up to the top.
Following her UPS career and initial SBA service, she
founded her own small business, the JCR Group, a consulting
firm that focused on business development and optimization.
Administrator Carranza, we want to thank you again for
taking your time to be with us. I am looking forward to hearing
your testimony and participating in the ensuing discussion.
And thank you, Madam Chair, for holding this. And I yield
back.
Chairwoman VELAZQUEZ. Thank you, Mr. Chabot. The gentleman
yields back.
If Committee Members have an opening statement, we would
ask that they be submitted for the record.
I would now like to introduce our only witness today.
Our witness is the Honorable Jovita Carranza, the 26th
Administrator of the Small Business Administration.
Administrator Carranza has an inspiring background. Born in
Illinois to an immigrant family from Mexico, she began her
career at UPS as a part-time nightshift box handler, ultimately
rising through the ranks to become president of Latin America
and the Caribbean operations. After a distinguished career at
UPS, Administrator Carranza founded the supply chain company,
JCR Group. In 2006, President Bush tapped her to become the
Deputy Administrator for the Small Business Administration, and
most recently, she was the Treasurer of the United States.
Welcome, Administrator Carranza. You are recognized now for
5 minutes.
STATEMENT OF JOVITA CARRANZA, ADMINISTRATOR, U.S. SMALL
BUSINESS ADMINISTRATION
Ms. CARRANZA. Thank you very much.
Good morning and thank you for inviting me to testify
today.
In the time we have today, let me share my priorities for
the agency, and update you on my activities since being sworn
in as the administrator of the Small Business Administration on
January 14th.
First, I would like to share with you some background on my
work and life experiences which helped me shape these
priorities, some of which you have already covered.
As you may recall from our recent conversations, I was
raised in Chicago, but my work career began in California as a
single mother raising a child and working part-time loading,
yes, trucks, for UPS.
Over the years that followed, I was honored by public
service opportunities in two administrations as SBA deputy
administrator, as U.S. Treasurer, and now as a Cabinet Member.
Throughout my career, I have seen the importance of small
business to our economy and in communities across the country.
This perspective guides me now in my focus and priorities
at the agency. A top priority of mine is to continue the
success of our Disaster Assistance program. Previously, as the
SBA's Deputy Administrator, I helped create the first Disaster
Recovery Plan, one that the agency still uses today. SBA plays
a key role in helping disaster survivors recover from a
disaster event. I can assure you that when a disaster strikes
in your state or district, SBA is ready to help and will
continue to be prepared under my leadership.
Another priority of mine is to maximize our lending and
Federal contracting opportunities and outreach to small
businesses in underserved communities. It is imperative that
SBA programs and services reach those that might not otherwise
have access to capital, contracts, or counseling.
In just my first month as Administrator, I have already
taken steps to encourage a greater focus on entrepreneurs from
underserved communities. First, I have been working with our
Capital Access office to assess how we might grow our Microloan
program and further its success. I know that this is a goal for
many of you as well.
I also have been working closely with our Contracting
office to explore how we can exceed all our government-wide
small business contracting goals and create further
opportunities for minority, women, and veteran-owned small
businesses.
And I have been working closely with our Field Office
leadership to ensure we are committed to our rural outreach and
initiatives with HBCUs and minority-serving institutions. We
need to reach those aspiring entrepreneurs, identify skill
gaps, and help foster next-generation workforce.
Another priority is to optimize our agency program
operations. SBA programs and services need to be available,
accessible, and successful for small business owners. If not,
then we need to change things, and I am committed to do so
without hesitation.
One area of focus is with our SBIC program. We need to do
better for those looking to invest in small businesses, and I
am bringing an individual on Monday from the Treasury
Department to help me objectively assess the program and
identify areas for improvement.
In the interim, I have prioritized staffing and outreach to
better support program applicants and better identify future
participants. Across the entire agency, I have looked at
vacancies, and I am expediting hiring actions for critical
staffing needs like those in our Field Operations. I have been
meeting extensively with our contracting and IT offices to
assess our recertification infrastructure. I know that this is
essential for the small business contracting community.
We will stand up our Women-Owned Small Business
certification program in May, and as soon as possible we will
complete our IT infrastructure enhancements to support all our
certification programs. My message to our staff has been clear
and direct--get it fixed and get it done.
Finally, to support this examination of our program
operations, one of my first meetings was with the SBA Inspector
General. I developed a good working relationship with the IG
and GAO in my previous positions, and I will continue that
constructive engagement as Administrator.
As I close, let me reflect again on my life experiences
which frame who I am today and serve as a guide to my tenure as
Administrator. It has been a rewarding journey to have been
taught the value of a hard-earned dollar as a young girl and to
later in life be able to sign my name on every U.S. dollar as
Treasurer. Now, as SBA Administrator, I have the chance to work
with inspiring men and women entrepreneurs that are so
essential to our economy. Like so many of them, I am a product
of hard work, mentorship, and opportunity. I bring that
perspective to this new job and will be a tireless advocate for
America's small businesses.
Thank you, Madam Chairwoman and the members of the
Committee. I look forward to answering any questions you might
have.
Chairwoman VELAZQUEZ. Thank you, Administrator Carranza.
I will begin by recognizing myself for 5 minutes.
Administrator, the SBA 2021 budget proposes an 18 percent
cut to the overall budget and a whopping 37 percent cut to the
entrepreneurial development programs. These cuts make it clear
that we cannot--let me just say this. On the one hand we cannot
say that this administration is for small businesses, that you
care deeply about providing resources and enabling small
businesses to take their businesses to the next step, and then
on the other hand proposing a budget that basically renders
inoperative many of the programs that are so crucial. So, in
light of the huge tax cuts given out to big businesses, how do
you reconcile these steep cuts with your stated priorities to
help more women, minority, and veteran entrepreneurs?
Ms. CARRANZA. One of the first things I did, Chairwoman,
was to take the budget and meet with the CFO, as well as all
the key stakeholders in the SBA program offices. And line by
line, identified what was requested in 2020 and what was
enacted and what was requested this time. And in particular,
the Office of Entrepreneurial Development was of major concern
because the SBDC--and I am not going to shy away from that
particular figure because it is one that has realized a cut
from 2020 request to the request in 2021--which is Small
Business Development Centers. And to face it head on, I did
attend their SBDC Summit to demonstrate to them that we were
very serious about providing the support that they greatly need
and that I am closely reviewing the budget and how we can
explore opportunities for them to be just as effective with the
$87 million.
Chairwoman VELAZQUEZ. So where is the beef?
Ms. CARRANZA. That is about a 13 percent reduction.
Chairwoman VELAZQUEZ. So where is the beef?
Ms. CARRANZA. Pardon me?
Chairwoman VELAZQUEZ. You went to the SBDC conference. You
talked to them. You promised them that you will provide the
resources. As we see, this is a steep cut. Do you intend to
discuss this priority with Mr. Mulvaney and say to him that
this will affect the work and the mission of the SBA
tremendously?
Ms. CARRANZA. Chairwoman, what I did at the conference was
to not only introduce my priorities and clarify that I was very
much aware of the budget submission. What I was very encouraged
about was that not only in the SBDC cuts but where did we also
make an addition, an increase? And I was very encouraged at the
veterans' outreach, which is really at the top of our
priorities. But with the SBDC, I still must get close into the
mechanics of how they are going to apply the budget.
Chairwoman VELAZQUEZ. Thank you. Thank you for your answer.
I just want to be very clear that I reject such a steep cut
to this and that we will do everything within our power to
fight that. We have done it before, and we will continue to do
it. We cannot continue to add more responsibilities to the
SBDCs, like cybersecurity and other legislation that we passed
here and expect for them to do more with less. It sounds good,
but it does not work. It did not work before. It will not work
going forward.
Ms. CARRANZA. I would like to look forward to coming back
to tell you how we are going to manage that.
Chairwoman VELAZQUEZ. Sure. In terms of the Disaster Loan
program, Maria in Puerto Rico, the OIG report for Hurricane
Maria revealed a lack of Spanish translators caused significant
delays in the post-Maria response. What is your plan to make
sure that there are adequate translators this time and in the
future?
Ms. CARRANZA. Chairwoman----
Chairwoman VELAZQUEZ. Let us remind everyone, Members of
this Committee, that the US territories are part of the United
States and that in Puerto Rico, we have 3.5 Spanish-speaking,
and we could have the best program, but if they are not
provided in their own language it will not do any good.
Ms. CARRANZA. Well, I want to assure you, Chairwoman, that
I looked deeply into this issue of the IG--all IG and GAO
audits. But in particular this one because we are still working
with Puerto Rico. We have 90 staff people there. We have 16
offices, and we have learned that a $50,000 bilingual software
program or consultants was not going to meet the needs of what
happened in Puerto Rico. So, they have invested, we have
invested a $2 million contract to ensure that we can blow up or
scale up to the level of need in Puerto Rico and I advise all
other agencies to do the same.
Chairwoman VELAZQUEZ. Thank you.
Ms. CARRANZA. You are welcome.
Chairwoman VELAZQUEZ. My time has expired, and now I
recognize the Ranking Member for 5 minutes.
Mr. CHABOT. Thank you, Madam Chair.
Madam Administrator, as you know, President Trump recently
signed a very important trade agreement with our neighbors,
Mexico and Canada, the USMCA Trade Agreement. As the first and
only U.S. trade agreement that maintains a distinct small
business chapter, how will the SBA work with our neighbors to
the north and south to ensure that American small businesses
will benefit from increased access to both Mexican and Canadian
markets?
Ms. CARRANZA. That is a great question, Ranking Member
Chabot. And I do not want to mess up names because I did that
in my Senate hearing, so I want to make sure I am methodical
and very deliberate about that.
What I have learned at SBA, they have dedicated resources
that are doing very significant and targeted and strategic
outreach to banks to ensure that access to capital and
understanding of the programs that we have in our Office of
International Trade, and that we have a what you call a public
and private partnership, more strategic. And so, they are
ensuring that we make personal contacts on sites with these
lending institutions.
In addition to that, I have traveled between Pennsylvania
to the harbor or the port I should say, in New Orleans to
verify that small businesses are also getting a cut in any
export growth or input growth. And when I say ``cut,'' they are
part of the market.
Mr. CHABOT. Part of it.
Mr. CARRANZA. Yes.
Mr. CHABOT. Not a reduction.
Mr. CARRANZA. Yeah. Cut is probably not the most
appropriate word. What I was pleased to see in New Orleans was
that the ports are investing significantly. I saw four loading
cranes. They are going to expand it to seven loading cranes.
What really impressed me, and Chairwoman, you are going to be
impressed with this, is that the cables that are serviced on
those cranes are serviced by a woman-owned small business. So,
as the exports grow, the equipment on the ports expand, and we
are looking to ensure that small businesses have a role in
that. So, I think it is going to be a win-win the more outreach
and the more onsite visits we perform.
Mr. CHABOT. Thank you very much.
Small businesses have responded positively to President
Trump's historic Tax Cuts and Jobs Act, which passed the House
and the Senate a couple years back. Not only are small
businesses better off these days with the small business 20
percent passthrough tax provision but communities and small
businesses also stand to benefit from opportunity zones.
Under your leadership as administrator, what will you do to
ensure small businesses are aware and take advantage of these
beneficial tax provisions?
Ms. CARRANZA. I believe there are 200 funding
opportunities, throughout the entire Federal Government that
are aligned to support the Opportunity Zone underserved
markets. When I have spoken to, whether it is at the 8(a)
conference or large groups of small business gatherings, I
share that there are 8,700 tracks in the underserved market. We
have HUBZone. We have Microloan lenders. We have the
Opportunity Zones, and now we are looking at concentrating not
only resources but appropriate funding for those communities.
So, we are looking at it in an ecosystem other than just one
program called the Opportunity Zone. It is how can we marry or
align all others to reinforce, and that the small businesses
are aware that they have an opportunity in those areas.
Mr. CHABOT. Thank you very much.
I think I have time for about one more question. So, let me
ask you this.
You have got a very impressive background, both in the
government and in the private sector. How does your experience
in the private sector, whether it is UPS or otherwise, you
know, starting your own small business, how has that affected
your ability to bring those skills, those resources to the
public sector, and specifically now as our top person in the
Small Business Administration?
Ms. CARRANZA. The very early lessons that I learned in the
private sector were understand the mission and align everyone
to pursue that mission. Clarify it. So, communication is very
key. I also worked with thousands of employees, which led to
learning about developing strong teams, which is very necessary
to really see the results. And there is also a need to measure
impact. And so those are the three components that I am looking
at--optimizing our resources, measuring their outputs, and
making sure that we are meeting the needs of our stakeholders.
We would say shareholders in the private sector, but in this
case, it is our taxpayers and our small businesses.
Mr. CHABOT. Thank you very much. My time has expired but on
behalf of I think Members on both sides of the aisle here, both
Democrats and Republicans, we look very much to working with
you and making sure that your time as top SBA official is
successful, so we want to work with you.
Ms. CARRANZA. Thank you very much.
Mr. CHABOT. Thank you.
Ms. CARRANZA. I look forward to it.
Chairwoman VELAZQUEZ. The gentleman's time has expired.
Now we recognize the gentlelady from California, Ms. Chu,
Chairwoman of the Subcommittee on Investigations, Oversight,
and Regulations, for 5 minutes.
Ms. CHU. Administrator Carranza, I would like to touch on
the ongoing outbreak of COVID-19 or the 2019 novel coronavirus,
which has had a negative impact on the small businesses in my
district in Los Angeles. My district has one of the largest
Chinese-American populations in the Nation, and I have heard
firsthand of xenophobia directed at Asian-Americans and in
avoidance of Asian-American owned small businesses, especially
restaurants, but based on misinformation about the disease.
And just as some examples, when this first started
happening, there was a flyer that was handed out, and you can
see here it has a gigantic ``fake'' on it because it actually
dared to have the locals of the World Health Organization, the
County of Los Angeles, and then said that there was a
coronavirus outbreak and named five small businesses to avoid.
But it was totally fake. And yesterday, CNN did interviews and
articles with a restaurant in New York's Chinatown and it
showed that it had no customers despite the fact that there
were zero cases of novel coronavirus in the state of New York.
And in fact, the restaurant owner said that now her restaurant
is suffering a 70 to 80 percent loss of business. This is
actually pretty typical of many of the Asian restaurants,
certainly in my area, that caused us to have a press conference
to say there is a lot of misinformation going on. Please do not
believe it.
The fears are misguided. The U.S. CDC says at this the
virus is not currently spreading in the community of the united
States and dispels many of the myths that are out there.
So, Administrator Carranza, I think that the SBA can play a
very, very important part in combatting this misinformation and
supporting the small businesses that have been unfairly
targeted. Would you consider offering an official statement
urging SBA's resource partners and audience to combat the
spread of misinformation that has resulted in xenophobia
echoing what the official comments of the U.S. CDC is about the
truth of the coronavirus?
Ms. CARRANZA. Congresswoman, I will do something better. I
have already called on my Disaster Assistance Preparedness
leader to hold a conference with all of SBA on Friday. We are
going to assemble a steering committee to anticipate what role
can we play, and you have already stated, we can serve as a
communicator. We have 1,000 offices. We have 2,000 executives,
so we definitely have a strong voice and support communicating
the truth and being very timely about it. So, on Friday we are
going to address, as if we had a disaster, what proactive
measures can we take. You know, what essential staff do we need
to identify? Because our first concern is our employees and
then our businesses and then, of course, any mandates that we
have from the Administration.
So, I look forward to working with you, especially the
California perspective. And so, I look forward, again, to
coming up with a strategy. But I agree. I think SBA could play
a significant role, so much that we are going to launch a
meeting on this Friday, this week. And we will keep you posted.
Ms. CHU. Well, thank you. Yeah.
Ms. CARRANZA. You are welcome.
Ms. CHU. Thank you for that timely response, and hopefully,
a statement can come out of it that dispels the misinformation.
Well, thank you for that. And let me also say that one of
the most pressing issues for our small business owners and
entrepreneurs in my district is access to in-language services
and materials. Too often, immigrants and non-native speakers
are simply unaware that the SBA offers services like
entrepreneurial development programs at no cost to them. So, I
am encouraged that the agency improved its Spanish language
offerings, but in districts like mine there are communities
that are rich with entrepreneurs whose primary language is
Chinese, Korean, Vietnamese, and other languages. So, can you
discuss how SBA plans to improve language access, particularly
for these other languages in its written material services and
outreach?
Ms. CARRANZA. I know that our Office of Entrepreneurial
Development has a library of languages that are available. I
cannot tell you exactly which ones, but they are in the teens.
So, what I do know at this point, and it is evolving, is our
lender match, which is really access to capital, which is
really key for small business. That is going to launch in
Spanish so that they can identify a potential lender match
within 48 hours. So, I will add other languages to that, and we
will report back to you. At this point, I do not know what is
in the queue as to what other languages, but Spanish is being
launched very soon.
Chairwoman VELAZQUEZ. Time has expired.
Ms. CHU. Thank you.
Chairwoman VELAZQUEZ. The gentlelady yields back.
Now we recognize the gentleman from Minnesota, Mr. Stauber,
Ranking Member of the Subcommittee on Contracting and
Infrastructure, for 5 minutes.
Mr. STAUBER. Thank you very much, Madam Chair.
I am the Ranking Member of the Contracting and
Infrastructure Subcommittee. The Chairman of that Committee is
Congressman Jared Golden. He and I have heard from small
businesses across the country of some of the challenges that
they face with the Federal procurement space.
A couple of questions. What is your vision for improving
contracting opportunities for our small businesses? And then,
what is your strategy moving forward to ensure that we
eliminate much of the fraudulent behavior or detecting and
removing ineligible firms from our contracting programs?
Ms. CARRANZA. Those are discussion topics that I have had
since the first week I arrived, government contracting, because
of the WOSB and Certify.gov issues in technology and
transparency; and also because there are discussions about the
safe and soundness and fraudulent situations that have
occurred. I inquired as to the schedule of reviews, and I have
been told that typically they will review about 500 of those
certified firms. They may find about 12 firms that are crossing
the line and require further review, so I know that we have a
strategic team that is looking at that but I think we can
provide better solutions from an automation perspective where
we can detect issues early on. Right now it is a latent process
where it is all manual and it is a particular group of firms
that are reviewed, and I need to get further involved in
exactly how that is processed so I can be a little bit more
thorough with you. But I do know that they have systems in
place but are they sufficient is the question.
Mr. STAUBER. And I think that you know that any time a
small business does not get the contract because of fraudulent
applications that it is a considerable insult to the small
businesses because we have to be the protector of the small
businesses and your agency has to be a part of it as well.
Ms. CARRANZA. Yes, Congressman, there is a protest process
and it is exercised. The timeliness is one thing. The other a
loss of revenue and that is what I am targeting. Any time we do
not detect an issue, we are preventing or impeding job growth
and wage growth and fairness in the system.
Mr. STAUBER. And a couple of other comments. The access to
capital is really, really important for our small businesses.
As I go through Minnesota's 8th Congressional District, rural
district in northern Minnesota, that is one of the number one
things they talk about is the access to capital, making it a
bit more easier for them to attain that capital, and I think
that is extremely important.
The last comment or question I will have is, Administrator
McMahon visited all 68 SBA district offices in the 50 states.
Do you anticipate you will continue that legacy of cross-
country outreach?
Ms. CARRANZA. Let me share that I had a town hall meeting
with my workforce the second week I was there and I was asked
that question by my districts like, are you going to do, and
they reiterated what you indicated. And I said no, because my
goal within these short months is to cover every region and
small businesses within those regions, like either government
contracting or in trade, so I am going to be very strategic. I
do not want to falsely say that, yes, I am going to visit all
68 districts. I am going to visit the 10 regions and I am also
going to visit the small businesses that have strategic needs,
whether it is trade, whether it is Puerto Rico. I have a plan
to travel to Puerto Rico. I have a plan to travel to the Port
of Miami, and so I will visit small businesses there. So, my
visits are going to be very strategic and multifaceted. But my
outreach is going to be very healthy.
Mr. STAUBER. Administrator, would you commit to Minnesota?
Ms. CARRANZA. Absolutely. Thank you, Congressman. Yes.
Mr. STAUBER. Thank you.
Ms. CARRANZA. After New York and after Puerto Rico. Thank
you.
Mr. STAUBER. Thank you, Administrator, for your time, and I
really appreciate it.
Ms. CARRANZA. And Ohio and Iowa.
Mr. STAUBER. And I appreciate your leadership in many areas
of not only private business but our Nation as well.
Ms. CARRANZA. It is a real honor. Thank you.
Mr. STAUBER. Madam Chair, and I yield back.
Chairwoman VELAZQUEZ. The gentleman yields back.
Now we recognize the gentlelady from Kansas, Ms. Davids,
for 5 minutes.
Ms. DAVIDS. Thank you, Chairwoman. And thank you for being
here to testify today, Administrator. I look forward to working
with you to make the SBA the best possible agency that it can
be.
So, I was happy to see in your testimony an emphasis on
increasing and improving counseling services for accessing
capital for women and minority entrepreneurs. Those are major
priorities of mine and I will take my time today to focus on
those critical areas.
So, I represent the third district in Kansas. I do not know
where we are in the queue for a visit, but Ms. Finkenauer and I
were just talking about a Midwest swing, so we would welcome
you there.
So we are, in addition to the vibrant entrepreneurial
ecosystem that we have in the Kansas City Metro area, my
district is home to the Women's Business Center. It is located
in Fairway, Kansas. That is the Women's Business Center for the
State of Kansas, and it does a little bit of work across the
border with our neighbor, Missouri.
The WBC, as many folks know, and I know you are aware, does
counseling for women business owners and entrepreneurs, and I
am doing everything that I can to help be supportive of that
program. In fact, Congressman Hagedorn and I introduced the
Women's Business Center Improvements Act of 2019 to make sure
that we increase the support for the Women's Business Centers.
So, getting to the question here, with the importance of
that type of program, I was a bit disappointed to see that in
the President's proposed budget there were cuts to
entrepreneurial development programs, including a 23 percent
cut to the WBC program. I guess I am curious, how do you plan
to support these important programs like WBC's Small Business
Development Centers Regional Innovation Clusters given the
stance of the administration and the cuts that were proposed in
the budget that was sent over?
Ms. CARRANZA. Thank you, Congresswoman.
Based on the numbers, I may be incorrect, but I believe
that what was requested in 2020 for Women's Business Centers
was $17.4 million and we requested the same amount. What was
enacted and requested is the difference that you are
highlighting.
But at this time, because my focus, and I said it in my
opening statement and when I was in the nomination process and
when I met individually with the Chairwoman and her committee
members, as well as the Senate, the focus is women. Women right
now reflect for the past 2 years, especially in 2019, we have
exceeded the male workforce for the first time. And that is a
significant fact. The other is that our trajectory of small
business growth happens to be very strong in the women. So, as
a result of that, and I know that our staffing on the Women's
Business Centers is being reviewed. I am conducting interviews
to identify a very talented candidate to run those centers so
that we can be responsive and relevant to our communities,
Kansas being one.
I visited three women's businesses in the STEM area. An
architect in the STEM area, an architect, and an engineer; each
one of them had their business development specialist from the
SBA District Office, and they said, I do not know where I would
be without this support. So, I know that that outreach, the
handholding is very essential.
But let me share what I learned in Pennsylvania. I visited
a woman who took over her family's business, four restaurants,
wanted to expand by two restaurants. Got an SBA loan for $2.4
million to expand with the potential of hiring 150 employees. I
said this is a win-win proposition. I asked her what other
services has she accessed? She did not know about Women's
Business Centers. She did not know about SBDCs, and she did not
know about SCORE. So, we immediately connected her with them.
That happens too often. And when I speak to Hispanic women
business owners and ask how many of you have accessed the
resource partners or the services and products of the SBA,
maybe a third of them will say yes. And I said that is too few.
And so, I lead the sba.gov, that is my new name. But I am
agreement with you, and I look forward to working with you on
how, if you have some recommendations, how more we can exploit
that opportunity for women.
Ms. DAVIDS. Thank you very much. Thanks for your response.
And I am sure our office will be reaching out to you so that we
can continue the conversation.
Ms. CARRANZA. Okay. Very good.
Ms. DAVIDS. I yield back.
Chairwoman VELAZQUEZ. The gentlelady yields back.
Now we recognize the gentleman from Florida, Mr. Spano, who
is the Ranking Member on the Subcommittee on Investigation,
Oversight, and Regulations.
Mr. SPANO. Thank you, Madam Chair, very much. I appreciate
that. And thank you, Administrator Carranza, for being here
with us. And good luck in your responsibilities, and I am sure
you are going to do a great job. I know it is a lot to take in.
You were formerly the Deputy Administrator of the SBA, so I
guess my first question to you is can you share with us what
you learned as deputy administrator that coming in you are
like, all right, this is what I learned on the ground as Deputy
Administrator that I am going to implement or I am going to do
or I am going to focus on or an attitude that I am going to
come into this with. If you could share that with us, please.
Ms. CARRANZA. Well, I was very encouraged that what we
worked very hard at improving, which was government contracting
for small businesses, had taken a very positive trajectory the
past 10 years or so. So, we did not lose a lot of ground there.
I was very encouraged there. That the focus for women finally
took hold and that we have now very concrete systems in the
government contracting, such as WOSB and certify.gov. So, we
are looking at ways of engaging and interacting digital-wise.
So, we are becoming much more automated. That was a win-win
because we were so archaic back them.
The other focus is that every office is looking for more
efficient ways of providing the services and products. For me,
it is the taxpayer impact, the return on investment, and I
believe that every office at SBA is very committed to doing
that.
We have exceptional institutional knowledge at SBA. We have
employees that have been there 10, 20, 30 years that are
technocrats when it comes to government contracting, SBICs
(Small Business Investment Corporations), access to capital,
every kind of loan portfolio you can think of, microloan. So, I
am just very enthused that no one has taken their sights off
the mission, which was really to develop and strengthen, start,
grow, and expand small businesses.
Mr. SPANO. Thank you. I appreciate that.
Then, when we met several weeks ago now it has been, we
were introduced.
Ms. CARRANZA. Yes.
Mr. SPANO. It is amazing how quick time flies.
But I mentioned a concern that I had with respect to the
veteran-owned small business set-asides for government
contractors, and I spoke to one of your staff members about, at
least as it was explained to me, that when an application for a
contract is submitted, or maybe it is in the process of
becoming qualified, you verify, or you do not even verify, you
state that you are a veteran-owned small business, and then at
that point it is referred when the contract is awarded, if I am
not mistaken, to the small business, and then it is the Small
Business Administration's then job or responsibility to verify
or confirm or do the legwork to ensure that that is, in fact, a
veteran-owned small business.
I had, as I shared when we met last, I had a gentleman I
met with from my district, a veteran-owned small business, and
at least it was his position that he characterized it as stolen
valor. He said there were individuals who were just stating,
hey, I am a veteran-owned small business and they are getting
contracts. And, you know, there are three sides to every story
usually; right? What I want to make sure is that if I can maybe
get some follow up on the issue, I would love to have some
confirmation so when I get confronted with constituents, and
particularly this gentleman, that I can say, no, we are
ensuring that the veteran-owned small businesses that are
applying for these set-asides are, in fact, veteran-owned small
businesses and that they are not being used by individuals
unscrupulously, fraudulently. You know, that they really are
being set aside for the people that we intended them for.
Could you just speak to that for a moment?
Ms. CARRANZA. Yes, Congressman. I took heed to every
member's concerns for the veterans contracting. And so, I think
it is in a week, if not 2 weeks from now, I will be attending a
veteran's conference. I will be articulating all the changes
that we are making, the resources that we have identified, the
systems that we are reevaluating. And then, of course, target
these particular issues. I am not the type of person, nor is
anyone in the Government Contracting Office, shy from admitting
that we have shortfalls, and then also be transparent enough to
discuss, and these are our action plans to correct. So, before
I attend that conference, I will share the information with the
members here.
Mr. SPANO. Well, I thank you for that, and I appreciate
your commitment to look into that and trying to resolve those
issues if, in fact, there are problems there.
And I yield back.
Ms. CARRANZA. Yes.
Chairwoman VELAZQUEZ. The gentleman yields back.
Now we recognize the gentlelady from Iowa, Ms. Finkenauer,
Chairwoman of the Subcommittee on Rural Development,
Agriculture, Trade, and Entrepreneurship for 5 minutes.
Ms. FINKENAUER. Thank you, Madam Chair. Happy to be here,
and also happy to have you here, Administrator Carranza. It
means a lot to be able to talk about these issues that matter
so much on our Committee here.
And as the Chairwoman said, I am the Chairwoman said, I am
the Chair, or the Chairwoman of Rural Development, Agriculture,
Trade, and Entrepreneurship, one of our Subcommittees, the
right Committee. I joke that next year we need to add Growth to
it, and we can be the Great Committee because it is something
that matters a lot to my state in particular, especially when
it comes to trade.
I am from Iowa, and Iowa's 1st Congressional District, and
I wake up thinking about trade. I go to bed thinking about
trade. In the middle of the day I am talking about trade,
especially, again, after the last 18 months that our state has
been through given some of the decisions from this
administration. I will go into that a little bit more later.
But I do want to highlight something that has been really
important to me and also to our Ranking Member, my Republican
colleague, Dr. Joyce, as well. We have been fighting really
hard to actually increase the funding for the Small Business
Administration's entrepreneurial development programs. We
actually brought 47 members together, both Republicans and
Democrats, to request funding, and we succeeded in that. These
programs have bipartisan support and I will be frank, I was
shocked to see the Trump Administration decided to slash this
budget and funding for fiscal year 2021. I was especially
surprised to see that nearly 60 percent was cut from the State
Trade Expansion Program. See, the STEP program is something
that matters a great deal to my state and to states all across
the United States, but very again specific to Iowa. When we
have been getting hit on all sides, especially our farmers,
from again, this ongoing trade war with China and uncertainties
in markets, I mean, I have had farmers into my office telling
me that they are looking at filing for bankruptcy, dipping into
401(k)s. We had a woman testify saying that she is telling her
three sons not to go into farming because she is so worried
about their future. On top of that, our ag economy in Iowa and
our manufacturing are very closely tied together. So, if our
farmers are not doing well, they are not buying John Deere
tractors, which are made in our district, and John Deere is not
then working with our local contractors, also small businesses
in my district. This is, again, why I wake up thinking about it
and go to bed thinking about it.
And so on top of all of this, you know, this is a time when
we should be caring about making sure that our small businesses
have access to foreign markets and making sure that our small
business administration has the tools that they need and the
funding that they need to be able to provide that access or to
provide that support for our small businesses.
So, you know, this is again something that we have been
highlighting. We have been working across the aisle on. It is a
program that was developed by Democrats, funded by Republicans,
and then a Democrat and Republican have sat here this last year
trying to make it better. It is not a perfect program. We saw
actually inefficiencies that were not working well, whether it
was some of our states, especially in Iowa, not being able to
get the programs being required or they would issue a request,
not hear back. I mean, there were deadlines not being hit by
the Small Business Administration. These were things that we
should fix, and that also I realize does require funding to
make sure that we have the right folks there being able to fix
this and make these programs work like they should. These are
being used.
We held a hearing--actually, not a hearing but a roundtable
in my district where we had a gentleman named Ryan show up. He
works with Marion Process Solutions, and they have been using
STEP since 2015 and actually, in 2019, were actually able to
use it to launch a new technology at an international trade
show in Nuremberg, Germany, in April of 2017. This is the time,
again, when we need to be investing, not cutting. And my
question, especially when it comes to this program, and I know
hearing about the agency's strategic plan to increase the value
of small business export sales, how do you intend to do that if
we are cutting STEP's funding by $11 million? How do you intend
to increase the value----
Ms. CARRANZA. I have a question. I am sorry. Oh, I am
sorry. No, I do have a question.
Ms. FINKENAUER. Yes.
Ms. CARRANZA. The focus that I have had is not only the
budget but where it is going to impact performance and what do
we have to do to rectify this perception that we are not going
to be overall effective at SBA as a result of this current
budget. We have operating expenses and we have grant programs,
and the grant programs I have learned historically are
appropriated or they are statutory or they are not a firm
fixture, unfortunately. Some have. And so, I am looking at ways
of how we can efficiently and more effectively provide the
services and products. At the same time, work with this budget
without compromising any of the services that you are referring
to. The STEP program is active.
Ms. FINKENAUER. Eleven million is quite a bit to cut
though; correct? I mean, the program started with 18 million.
We were able to plus it up to 19 million, and now 11 million is
going to be cut from it.
Ms. CARRANZA. What I am looking at is that there are only
two programs that have experienced a request reduction, and it
is not significant. You know, a million here. You know, when
you look at the budget overall, we will be able to manage all
the services, keep the staff that we have, revisit the staff
that we are contemplating bringing on board. It is an overall
evaluation and I look forward to getting back to you once I
have a deeper dive in every one of these indices.
Ms. FINKENAUER. This again, I will tell you again, coming
from Iowa, this is another it feels like a slap in the face
from this administration when it comes to trade and what our
state has gone through when, again, we need to be investing,
making sure that our folks have more markets. And what we have
dealt with in our state has been devastating.
Ms. CARRANZA. But Congresswoman, we have over $800 million
dedicated to providing services and products to small
businesses.
Ms. FINKENAUER. And trade is incredibly important. And I am
not happy to see the 11 million be cut.
Ms. CARRANZA. Absolutely. Yes.
Ms. FINKENAUER. I understand my time is up. Thank you,
Chairwoman.
Chairwoman VELAZQUEZ. Time has expired. Yes.
Now, we recognize the gentleman from North Carolina, Mr.
Bishop, for 5 minutes.
Mr. BISHOP. Thank you, Madam Chair.
Mr. CHABOT. Would the gentleman yield for just a moment?
Mr. BISHOP. I certainly would.
Mr. CHABOT. I appreciate the gentleman yielding.
Just to clarify a couple of things that have been
mentioned, and I do not want to take much of the gentleman's
time. But we have talked this morning, and the gentlelady from
Iowa was just talking about cuts in the President's budget.
Every administration puts out a budget. They are
suggestions. We oftentimes hear the term ``dead on arrival.''
By the time Congress gets done with these things, we very
seldom cut anything. We have got a $23 trillion debt hanging
over our heads. The President is making an attempt to actually
be responsible, but by the time we get done with this, these
will all be plussed up and maybe some things will be----
Chairwoman VELAZQUEZ. Will the gentleman yield?
Mr. CHABOT. Well, it is his time but----
Chairwoman VELAZQUEZ. Okay, would you yield?
Mr. BISHOP. To the Chairman? Chairwoman? Yes, I will.
Chairwoman VELAZQUEZ. We want to be responsible. The
President wants to be responsible. Why pass a trillion-dollar
tax cut that favors big corporations and small businesses are
an afterthought? That is being responsible?
Mr. CHABOT. Would the gentleman yield again?
Mr. BISHOP. I am not sure I am going to get to ask much
today. I certainly will yield to the Ranking Member.
Chairwoman VELAZQUEZ. Thank you for yielding.
Mr. CHABOT. Thank you.
Larger businesses did get their tax cuts. Small businesses
got their tax cuts. Eighty-five percent of the American people
got their tax cuts.
Chairwoman VELAZQUEZ. Sunsetted. They will expire 2025.
Mr. CHABOT. I know my colleagues on the other side of the
aisle like raising taxes. We like cutting taxes. It helps the
economy. But getting back, I will yield back.
Mr. BISHOP. Reclaiming my time.
Mr. CHABOT. We will see where these all wind up by the
time----
Mr. BISHOP. I thank the Chairman and the Ranking Member,
and I may not get an opportunity to do much more than express a
concern, I will connect it to the conversation in saying that
we can do just as much devastation and thoughtless regulation
as we can by inadequate appropriations.
Chairwoman VELAZQUEZ. Would the gentleman yield?
You will have one minute more.
Mr. BISHOP. Thank you, Madam Chair. And I certain will
then.
I am sorry; were you asking me to re-yield again, Madam
Chair?
Chairwoman VELAZQUEZ. Just to let you know that I am
extending your time.
Mr. BISHOP. Oh, thank you. Thank you, Madam Chairman. I
appreciate that.
I wanted to focus a moment on a topic that is important to
my congressional district. I have mentioned before how
important the poultry farming industry is in North Carolina 9.
The 2017 U.S. Agricultural Census ranks my district 29th in
total sales of poultry at more than $1.5 billion, more than
1,500 producer farms in my district.
The SBA Inspector General has created sort of a great deal
of uncertainty by suggesting that poultry farms are ineligible
for 7(a) loans because of the agency's affiliation standards,
i.e., affiliations between small farmers and integrators that
produce poultry. And on February 10, a final interim rule was
published. And I am glad it does not explicitly eliminate
poultry farms from 7(a) eligibility, and in fact, the final
interim rule explicitly said it was not the SBA's intent to do
that, to eliminate lending to poultry and other livestock
farms. But I am concerned that SBA chose to reinstate a
standard that had previously been removed just in 2016 because
this totality of the circumstances rule was so vague that it
created uncertainty and potentially chilled that area of
lending.
I can tell you that one of the most hard-pressed forms of
small business is a small livestock farmer who is under market
circumstances working with an integrator. And I guess I would
just say, because I think I have got to reduce my questions or
condense them here, Madam Administrator, I want to sensitize
you to that issue because we are still supposed to be doing
poultry lending, poultry farmer lending I understand, but I am
concerned that there has been created so much uncertainty and
vagueness in the standard under the rule that it will be
untenable for lenders to do that. And I would like to know
whether you are focusing on that and whether you have a plan to
make that a tenable area of SBA lending.
Ms. CARRANZA. Thank you, Congressman.
One of the first topics that was discussed or reviewed with
me before I went through my nomination was the poultry issue.
And since then I have been brought up to speed. I understand
that the 7(a) program and lending opportunity is still
appropriate and still available, and it was more about the
independence between at that point it was the chicken industry
that we were referring to and also the chicken farmers. So it
is about protecting the chicken farmers and their ability to,
as they access capital, that they have the independence and the
ability to repay and so that the industry is not demanding or
having more control than necessary that would influence or
impact. So, it is a fairness issue, and I would look forward to
discussing with you in your office exactly how we are
approaching this. I believe that there is still a 60-day
comment period available and so it goes into effect a couple of
weeks from now but there is a 60-day comment period so that we
can have greater input. I look forward to working with you on
that.
Mr. BISHOP. Thank you, Madam Administrator. And I look
forward to being in conversation with you on an ongoing basis
about that issue. It is a critical one, and these are hard-
pressed small businesses that need to have access to capital.
And thank you for the additional time, Madam Chairman, and
Ranking Member. I yield back.
Chairwoman VELAZQUEZ. You are welcome. The gentleman yields
back.
Now we recognize the gentleman from Maine, Mr. Golden,
Chair of the Subcommittee on Contracting and Infrastructure.
Mr. GOLDEN. Thank you, Madam Chair.
Last month, the Committee held a hearing to review the
operations of the Office of Field Operations, and we are aware
that the historical FTE count for the office has approximately
been 800 employees. Today, that stands at about 690. Looking at
the President's budget proposal, it requested more funding for
the salaries and expense account. And I wanted to ask if that
is going to be targeted toward increasing staff in the Office
of Field Operations.
Ms. CARRANZA. Congressman, the quick answer is yes. I have
about 160 people in the pipeline right now to be considered for
employment. The priorities are in the field offices, as well as
one other targeted program office.
Mr. GOLDEN. Thank you very much.
Ms. CARRANZA. You are welcome.
Mr. GOLDEN. I appreciate that. And obviously, when you are
able to, could you send any of that, a summary of how you
expect to spend those priorities?
Ms. CARRANZA. Yes, absolutely.
Mr. GOLDEN. Thank you.
Ms. CARRANZA. As a matter of fact, some of the priority
offices that we have discussed today have a weekly update, and
I would be glad to share any progress reports with you.
Mr. GOLDEN. We would like to see that. Thank you.
Just following up on the field aspects a little bit. I
represent Maine. I have the second most rural district in the
House of Representatives and the largest east of the
Mississippi River. It is a big territory. Rural America
encompasses about 72 percent of the Nation's total land and
about $46 million residents. We all know it plays a critical
role in our economy. Recognizing this, Congress established the
Office of Rural Affairs at SBA in 1990, but it was not until
the middle of last year that the office received a director,
essentially going over 20 years without any attention
whatsoever. So that is not to blame this on the Trump
Administration but rather many administrations under the
leadership of both parties, as well as a failure on the part of
Congress to pay attention to what it clearly identified as a
priority in the 1990s, and it is no less a priority than today.
Now, that was a new position, the director for this office.
It was staffed only after members of this Committee and others
in Congress sent a letter pointing out this discrepancy between
the statute and the reality. Director Michelle Christian was
appointed in August of 2019. Our Committee has been sending
letters over to SBA asking for details about how we plan to use
the office and the position. I have had the director in my
congressional district.
If you go to the website and look at some of the proposed
work, there is a real emphasis on opportunity zones and helping
businesses maximize that opportunity. That is, I think,
absolutely great, but it is not nearly enough. I think it falls
far short of what that office should be capable of doing to
help small businesses. In fact, I have been working on
legislation to allow opportunity zones that are not getting
invested in rural communities to be moved. You know, Democrats
here at not all opposed to tax opportunities and incentives
where we see that it makes for good policy. But I have also
written legislation to reauthorize Small Business Development
Centers. There are great sources out there that rural Americans
pay taxes. They pay taxes that create these programs and they
deserve to know that they exist and that there are free
services there to help business owners and entrepreneurs in
rural America.
So, this is just a long way of asking, what are you going
to do with this office? What kind of resources are you going to
give it? Because from August of 2019 up until now, there is
only the director and some part-time assistants. The
President's budget requested nothing for the office whatsoever.
It looks as though to me they responded to a request from
Congress and this Committee to prioritize rural America, but
they have not followed up to show how they are actually going
to make it a priority. So, I am asking you how you envision
using this office? What kind of resources are you going to give
the director? Because if there are none, it is like setting
her, I, and the office up to fail.
Ms. CARRANZA. Congressman, I agree with the focus on the
rural. I made reference to it in many of my conversations that
rural and underserved women, veterans, broadband in the rural,
is very necessary. I understand there has just recently been
some significant investments in broadband in the rural area,
and we have done the same at SBA, not from a technical
broadband perspective but support. And what I am looking at,
and I am going to answer your question in two manners. Yes,
Michelle Christian is a dedicated resource to rural, but she is
not the sole individual. We have, you mentioned 690 people in
the field. I am planning to augment their role by also adding
rural as part of their portfolio which has been ignored since
1990. And there is a great need.
I am also looking at when there is a district office that
either the lease is out or we have to revisit, should that
particular district office be there, or a resource partner
office be open closer to a rural area? Because now that is a
focus and that has not been in the past, so I am kind of
redirecting resources to ensure that rural is a priority. And
every District Director, if you want to check, has rural as an
indices to track.
Mr. GOLDEN. Thank you very much.
Ms. CARRANZA. Thank you.
Chairwoman VELAZQUEZ. Time has expired.
Now we recognize the gentleman from Tennessee, Mr.
Burchett, for 5 minutes.
Mr. BURCHETT. Thank you, Chairlady, and Ranking Member. And
I will try not to say anything that I will need to be
interrupted by anyone. I will just ask you some straight-up
questions. Thank you, ma'am, for being here.
I was county mayor for 8 years. I was in the state
legislature back in Tennessee for 16 years. And we cut
programs. We cut things and I understand. You cut duplication,
things are antiquated, and it seems like especially in county
government, every one of those has a constituency and it is
generally a county commissioner's cousin or something like that
that is involved with it. And why are you cutting their
program? And I understand that.
But can you explain what some of the top objectives are to
help decrease duplication in programs across the SBA and other
government agencies?
Ms. CARRANZA. I appreciate the question, Congressman. And I
am glad you pointed out that you were a former mayor because I
believe that we can do a better job of integrating our
resources and our efforts with mayors and governors.
I attended an event with mayors, about 100-plus mayors, and
then also, and women mayors, to see what kind of reinforcement
they needed, support and knowledge with SBA. I also had two
roundtables with governors, and their top of mind subject was
small businesses. And so, I believe that if we can optimize
public-private relationships, we do not have to add more brick
and mortar that we cannot support. So, redundancy is an issue
for us.
If we have strategic collaboration with the other agencies
such as HUD, such as Commerce and whatnot, we can do a lot more
with a lot less. So, I look at efficiencies in scale. And I am
also looking at the talent that we are bringing on to SBA so
that they can be more visionaries and have greater capacity to
align themselves with the needs of a market.
I look at, and I shared this with the staff, the GDP of
small business is almost $11 to $12 trillion a year, and so we
have to be better at servicing that kind of GDP in the United
States, and that is my goal.
Mr. BURCHETT. Okay. Well, and this is, I guess, the
million-dollar question. What can we do as Congresspeople to
remove some of the roadblocks that are placed in the way of
small business and your administration?
Ms. CARRANZA. Well, that is a very loaded question because
I do not know which roadblocks I am facing right now but I am
sure I will be working with your office if I approach some. But
I believe it is a matter of working together in a very
bipartisan way which I believe this Committee does really,
really well. Small business is big business. And Congress can
always look at ways that small businesses have a seat at the
table when working on trade or working on legislation, that we
should always be at the table, especially when we contribute
that significant amount of GDP.
Mr. BURCHETT. Okay. I am going to run out of time. But
specifically, dealing with entrepreneurial development, how
will your office enforce accountability of the SCORE program
and the reform efforts at the SBA and at the SCORE Association?
Ms. CARRANZA. That has already begun, Congressman. I have
reviewed some of the metrics that have been further developed,
as well as the reporting mechanism. That is to say, not only on
paper and online but on site. In other words, reporting to the
individual, the AA who is responsible for those resource
partners.
Mr. BURCHETT. Thank you, Chairlady. I yield back 1 minute
and 5 seconds if you and the Ranking Member want to battle it
out a little more.
Chairwoman VELAZQUEZ. The gentleman's time has expired.
Mr. BURCHETT. Please go ahead on my time.
Ms. CARRANZA. Thank you, Congressman.
Chairwoman VELAZQUEZ. The gentleman's time has expired.
Now we recognize the gentleman from Minnesota, Mr.
Hagedorn, for 5 minutes.
Mr. HAGEDORN. Thank you, Chair, and Ranking Member. It is a
pleasure to have you here, Administrator. It is nice to see you
again.
I want to follow up just a little bit on what
Representative Davids said about the Women Business Centers. We
do have a bill to improve that, to expand it. And my wife is a
business owner, and from many other small business owners that
I have spoken with, they said sometimes it can be a very
daunting task to get things up and running or to expand. And so
I think what you are doing there at SBA and others with the
program is very effective and we would like to gain your
support for our legislation which has passed the House, and
hopefully we can continue along those areas.
Do you have any words of wisdom that you would like to say
about what you are doing at SBA to continue on with the Women
Business Centers?
Ms. CARRANZA. I appreciate the question because that, as I
indicated earlier, it is a focus of mine. It is not just in
words but in action as well. I plan to visit the Women's
Business Centers myself, not just reading the shortfalls in an
IG report. They are a very necessary entity in the community,
especially now. There are discussions about childcare. There
are discussions about workforce development, and I think they
are going to be essential.
We are working with HBCUs and we are targeting HBCUs
perhaps being the future entrepreneurs or the future interns at
SBA or the future new District Director. So, we are looking for
opportunities to really diversify not only in sector but in
demographics as it relates to the leadership.
Mr. HAGEDORN. Thank you.
Ms. CARRANZA. Thank you.
Mr. HAGEDORN. A couple of weeks ago I had an array of small
business owners in my office, so minority businesses, women
businesses, veteran-owned, and this is what they tell me: They
tell me that a lot of 8(a) contracts, they have concerns with
the SBA on how things are administered. That sometimes in the
approval of what is called the contractors teaming agreements--
I had to write that one down--is delayed so bad that they miss
the opportunity to even participate in the request for
proposal. And so, is there something that you are working on in
this area to make sure that the bureaucracy does not slow down
the process so much for them that they cannot even participate
and put in their bid?
Ms. CARRANZA. I appreciate the feedback, and I would really
like to get closer to that particular issue----
Mr. HAGEDORN. All right.
Ms. CARRANZA.--so I can go back and check the root cause
and analyze. But I do know that there are shortfalls. There is
an IG report that demonstrates, articulates the gaps and we are
working with the Government Contracting Office to address all
those IG issues.
Mr. HAGEDORN. All right. Well, we would like to follow up
with you and your staff on that.
Ms. CARRANZA. Absolutely.
Mr. HAGEDORN. And give you some examples if needed.
Ms. CARRANZA. I look forward to meeting with you. Thank
you.
Mr. HAGEDORN. And see how we can fix that.
And also, in the past, the United States Department of
Agriculture and the Small Business Administration had an
agreement where they were going to try to expand operations and
do things in rural areas, rural communities. Do you intend to
continue to work with USDA on that? Or have you met with
Secretary Purdue, for instance or do you have that on the
horizon?
Ms. CARRANZA. We spoke about a future meeting to discuss
that MOU. I know about it. It occurred recently; I think in
2018 if I am not mistaken.
Mr. HAGEDORN. I think that is right.
Ms. CARRANZA. Yes. So, I look forward to implementing it in
a great way. Very strategic, so.
Mr. HAGEDORN. I appreciate it.
Ms. CARRANZA. You can commit that I will be working with
him in the very near future.
Mr. HAGEDORN. Thanks for your leadership and your time
today.
Ms. CARRANZA. Thank you.
Mr. HAGEDORN. We will follow up on that other issue.
Ms. CARRANZA. Yes.
Mr. HAGEDORN. Yes, ma'am.
Ms. CARRANZA. Thank you.
Mr. HAGEDORN. The gentleman yields back, and now we
recognize the gentleman from Illinois, Mr. Schneider.
Mr. SCHNEIDER. Thank you, Madam Chair. And I want to thank
you and the Ranking Member for having this hearing today.
Administrator Carranza, welcome. As a fellow Chicagoan, it
is good to have you here.
Ms. CARRANZA. Yes.
Mr. SCHNEIDER. And I wish you much success as we continue
to work to support, nurture, and grow our small business
sector.
Representing Chicago suburbs, the communities I represent
are already facing the increasing impact of climate change. In
fact, in just the past number of years, we have faced three
100-year floods. Eleven years, three 100-year floods, including
instances that have, indeed, triggered the SBA's Disaster Loan
Assistance Program.
We had a field hearing in the district last summer that
examined the strains on this program. In our case, we were
focused on the impacts of an upstream development just across
the border in Wisconsin that it would have in my community.
Wisconsin, to attract Foxconn, built a major facility there,
irresponsibly waived critical environmental reviews, risking
exacerbated downstream flooding in our communities, directly
impacting communities that are dependent on their small
businesses.
While we mentioned climate change at the hearing it very
well could have been the central focus of the entire hearing. I
am concerned that the Federal disaster programs are not keeping
pace with the increase in severe weather that we are already
seeing as a result of climate changes.
Administrator Carranza, the SBA's fiscal 2021 budget
justification does not even mention climate change or the
expected impact it will have on the Disaster Loan Assistance
Program. How is the SBA taking into account the expected strain
that climate change is expected to have on the program?
Ms. CARRANZA. That is a good question, and I look forward
to working with you on the Wisconsin suburb situation.
I do not have a specific strategy or position on the
climate change Disaster Office. I will have to get closer to
that. I do not know if it is part of their current portfolio,
it has been asked in previous administrations, but at this
point we have been looking at Puerto Rico. Our focus has been
there. And then also with the coronavirus.
Mr. SCHNEIDER. And I understand it is a relatively news
position, but having spent my career before coming to Congress
working with small businesses doing strategic planning, looking
to the future, making decisions where to invest and when to
invest, the uncertainty of climate change is going to be a
burden. The need to address it is going to be critical. I think
there is an important role for your agency, for the entire
government to play to help address that.
Switching gears to talk about women-owned small businesses.
It is so critical to help these businesses prosper and grow,
like all small businesses. We have made the decision to have
set-asides distributed throughout the variety of Federal
contracts not be relegated to just a select few categories. A
company in my district raised concerns which I have shared with
the SBA that these set-asides are not representative of certain
NAICS codes, particularly industries where women-businesses are
underrepresented. We know the SBA has a set government-wide
goal of 5 percent for Federal contracts with women-owned small
businesses. The SBA's budget justification notes that the
Federal Government spent 4.75 percent of small business
eligible contracting dollars on women small businesses, women-
owned small businesses in fiscal year 2019.
Administrator, how will the SBA continue working toward the
goal of 5 percent?
Ms. CARRANZA. Thank you for the question.
It is to improve the relationships and the oversight with
all of the other Federal procurement agencies. We have been
asked to also look at how we can facilitate it. It is very
difficult for small businesses, as you have been told, to
contract with the Federal Government. And so we are trying to
partner with the states also that as we are looking at
streamlining our approaches, our regs, could the states also
look at ways, because small businesses usually contract with
states before they contract Federal to get the experience and
the evaluation. So, I look forward to working with you on ways
that we can improve that.
Mr. SCHNEIDER. Thank you. And as I have said from this
chair before, we have, and will continue to have workshops in
the district on contacting for the Federal Government, for all
small businesses, as well as women-owned and minority-owned
small businesses. It is an oftentimes torturous process that if
we could simplify and streamline that would be wonderful for
everyone involved. But in the meantime, making sure that these
companies have the skills and resources they need to reach that
goal, but making sure that for your department, as well as all
of us here, that we focus on the goals. We measure progress
towards those goals, and ultimately, find paths to achieve
those goals.
With that, I yield back. Thank you.
Ms. CARRANZA. Thank you, Congressman.
Chairwoman VELAZQUEZ. The gentleman yields back.
Now we recognize the gentleman from Oklahoma, Mr. Hern,
Ranking Member of the Subcommittee on Economic Growth, Tax, and
Capital Access.
Mr. HERN. Thank you, Madam Chair, Ranking Member Chabot.
Administrator, thank you so much for being here today.
As a small business owner for the past 35 years before
coming to Congress and in Congress, I am excited to see how you
will be able to help American small businesses throughout the
tenure at the SBA.
That said, I am also the Ranking Member, as the Chairwoman
mentioned, who overseas the SBA's 7(a) loan program and have
questions regarding its recent rulemaking on this program.
In the SBA's interim final rule on express loan programs
and affiliation standards, the SBA modified the regulations
surrounding the 7(a) program. This rule includes a new test for
determining whether two entities are considered affiliated.
However, the rule has several dates tied to it. the SBA's
comment period lasts until April 10th, but the changes go into
effect on March 11th. That is kind of a problem.
For the record, there are only two things that have come
before this Committee that have made me somewhat angry. One was
the SBA asking for a $99 million subsidy on an unreleased
arcane formula. The second is this.
Just a few questions. Why is the SBA making these changes
take effect before the comment period is even closed?
Ms. CARRANZA. Congressman, I would like to get back to you
on how that was derived. I just learned that that is how it is
going to be implemented.
Mr. HERN. Well, I would hope with your new leadership role
that we would, I think without making you go on the record, I
think you would find that somewhat problematic for a rule to go
into effect. So, it would indicate you do not care about what
the comments are. When I say ``you,'' I am saying your
organization. And I reserve comment on your leadership yet
until we continue to see how this plays out. But I would
appreciate you getting back to us. Because I want to ask you a
question for the record. My assumptions are that you consider
farmers as business owners; correct?
Ms. CARRANZA. Yes. As a matter of fact, the details that I
have on the particular rule, as I mentioned, it is a 60-day
comment period extension. We worked with the Department of
Agriculture, as well as OMB, to position this, and so it is a
matter of like really getting into the details to get back to
you on this, Congressman.
Mr. HERN. Well, I appreciate your thoughts and your
comments, and I am assuming that you will work to extend that
so that we have the opportunity to actually listen and for
people to comment and look at the rule to make sure that it is
something that we can work with and to give you actual comment
that matters.
Ms. CARRANZA. I look forward to it.
Mr. HERN. Okay. And, you know, as we work on fixing these
things throughout your tenure, there is also an issue with
banking. As the founder of a small bank, I am interested in the
CFPB's rulemaking, which will affect our banking industry and
their ability to lend to our Nation's small businesses. The
CFPB is promulgating a section 1071 rulemaking which requires
financial institutions to collect data on lending to women and
minority-owned small businesses with a goal to better screen
for discrimination. This is an important goal, but the rules
must be calibrated so that the data collection does not burden
or force our leaders out of the small business lending market.
And given the SBA's substantial expertise, would you agree to
work with CFPB on the significant policy decisions in this
rulemaking?
Ms. CARRANZA. Of course. Yes.
Mr. HERN. And then lastly, since the recession, community
banks have seen their share of small business lending stall,
and nonbank lenders have gained market share even though small
business expressed lower customer satisfaction with the service
provided by nonbanks. Once the CFPB's 1071 rule takes effect,
banks will face a provision for data accuracy requirements and
fair lending analysis while nonbanks will likely not have the
same level of scrutiny.
Are you concerned about this unlevel playing field between
the two different types of lenders?
Ms. CARRANZA. I would have to look at the CFPB. I know of
it. We have worked with them closely when I was at Treasury but
at SBA have not really delved into that and I look forward to
working with you in that area.
Mr. HERN. Well, thank you. Again, I want to state for the
record that I am a huge supporter of SBA and what you do for
small business owners and helping them get the capital to start
a business, create jobs, put Americans to work. As you know and
have seen in your short time in the job there are a lot of
unanswered issues out there and we have been very critical of
past people who have come and testified from the organization,
from your organization, who have been not quite informed on
being able to answer our questions. We look forward to having
you back here as quickly as possible to answer the many
questions you have gotten today because they are very critical
to the people who are out there trying to make this economy
work for them and help people get jobs and start on the pathway
to create the next big company, the next big thing in America.
Ms. CARRANZA. Well, Congressman, I can assure you that the
first few weeks that I have been on board I have met with the
banking trade associations, as well as women's trade
associations to get input from them as to what they have
realized, what are their members sharing with them, and also
how particular regs are affecting them. I have to definitely
get closer to working with them because it is a matter of a
meet and greet. You do not really get an opportunity to break
down specifically what needs to be fixed, but I look forward to
continuing to meet with NAGGL, because I met with them already.
Am I sure there are other associations and other members that
would like to speak with me. Thank you.
Chairwoman VELAZQUEZ. Time has expired.
Mr. HERN. Thank you, Madam Chair.
Chairwoman VELAZQUEZ. Now we recognize the gentlelady from
Pennsylvania, Ms. Houlahan, for 5 minutes.
Ms. HOULAHAN. Thank you, Madam Chair. And it is a pleasure
to be introduced with you. My name is Chrissy Houlahan. I
represent Pennsylvania 6th, which is just outside of
Philadelphia. I have spent most of my life as an entrepreneur.
I am obviously a woman. I happen to also be a veteran. So, it
is a pleasure to be talking to you about these essential
issues.
And so, if it is okay, my first questions have to do with
access to capital, which as a small business owner was
definitely an issue. I remember putting my house on the line
for signing a lease for a copier at one point in time, and I
particularly am intrigued and interested in access to capital
for underserved areas. My community also includes a city called
Coatesville and a city of Reading, both of which are
opportunity zones.
And so I read in preparation for this, and this is just
directly from the report, the first strategic objective in
SBA's strategic plan of fiscal year 2018 and 2022, is to
increase the number of loans by 5 percent to small businesses
in socially and economically disadvantaged urban and rural
areas. In fiscal year 2019, 20,527 SBA-backed loans were made
to small businesses in socially and economically disadvantaged
urban communities in rural areas. The agency fell short of its
projected goal of 26,749 loans by 23 percent. You have
apparently stated publicly that creating more opportunities for
women, minority, and veteran-owned small businesses will be a
priority of yours. And so, I was wondering if you could comment
on how we possibly fell short on our goal by 23 percent? What,
if anything, you are aware of we could have done so that we
could have access to more capital be possible, and also, you
know, how you are going to reconcile the fact that we already
fell short with the idea that we should increase that idea.
Ms. CARRANZA. The approach that I have used in learning of
any program performance, deficiencies, or areas of opportunity
would be to speak with the entire staff of those particular
offices, the Office of Capital Access.
As in any review, you are told about all of the great
things that we have done and all of the billions that have been
made available to small businesses and the number of jobs they
have created, but there is always an opportunity, there is more
that we can do. So that is my investigative role to ensure, not
only to meet the government contracting targets but to exceed
them because this is our window of opportunity. We have a great
economic boom. I think there is a tax kind of, not haven but
opportunities for small businesses to take advantage of, and we
should be there with all our loan portfolios to support.
Ms. HOULAHAN. Yeah, I definitely agree that in my
experience measuring what matters is really important and it
feels as though sometimes we do not ask the right questions but
we get the answers that we deserve because we do not ask the
right questions.
And I also feel as though you kind of led me into the next
question. In terms of those opportunity zones, my impression in
my first year here is that my community of Coatesville and
Reading, many of the folks who are already there as small
entrepreneurs are not being allowed to have access to those
loans, or do not know that they exist at all because, frankly,
of more predatory, more opportunistic folks who are coming into
the community and taking advantage of those opportunities from
a small business perspective.
Can you reflect on that at all, and how can we make sure
that people in the community are able to access these loans?
Ms. CARRANZA. I will do a dual head on that, Congresswoman,
as I respond.
Earlier, we were talking about access to capital as it
relates to the overall underserved market. And we identified
the underserved market as being the women and the veterans and
minorities. That is why we are working with HBCUs to dive
deeper into those communities. The Opportunity Zone is an
opportunity for small businesses to really be able to grow and
see perhaps an injection of investment from these huge funds.
But the other area with regard to women's access to capital is
the CDFI. I served on the CDFI Board, and I do not know if we
really maximize their network or their opportunity, because I
think the more alternative lenders there are--I am talking
about micro lenders--the greater penetration we can have.
Because the microloans are anywhere from $15,000 to $25,000.
Not everyone wants a $250,000 loan.
I spoke to a group of 100 Hispanic women and I told them
typically who we borrow from is our grandparents or our dad or
something to that effect, or a credit card. And so, we would
like to start eroding that and have more microlenders
available. And I think there is an opportunity there. That is
going to be a strategy that I would like to build further with
my leadership.
Ms. HOULAHAN. I look forward very much to working with you
on these particular issues.
And my time has expired. I yield back. Thank you.
Ms. CARRANZA. Thank you.
Chairwoman VELAZQUEZ. The gentlelady's time has expired.
With that, we conclude the Committee work today.
I want to take this opportunity to thank you, Administrator
Carranza, for being here with us and sharing your priorities
for the SBA. The Committee greatly appreciates your commitment
to improve SBA's program and services for America's small
businesses. We really look forward to working with you to see
that progress is being made in certain areas as you heard from
our Committee Members.
With that, I will ask unanimous consent that Members have 5
legislative days to submit statements and supporting materials
for the record.
Without objection, so ordered.
If there is no further business to come before the
Committee, we are adjourned. Thank you.
[Whereupon, at 1:03 p.m., the committee was adjourned.]
[Hon. Jovita Carranza did not submit her Responses to
Questions in a timely manner.]
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