[House Hearing, 116 Congress] [From the U.S. Government Publishing Office] ACCESS DENIED: CHALLENGES FOR WOMEN- AND MINORITY-OWNED BUSINESSES ACCESSING CAPITAL AND FINANCIAL SERVICES DURING THE PANDEMIC ======================================================================= VIRTUAL HEARING BEFORE THE SUBCOMMITTEE ON DIVERSITY AND INCLUSION OF THE COMMITTEE ON FINANCIAL SERVICES U.S. HOUSE OF REPRESENTATIVES ONE HUNDRED SIXTEENTH CONGRESS SECOND SESSION __________ JULY 9, 2020 __________ Printed for the use of the Committee on Financial Services Serial No. 116-102 [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] ______ U.S. GOVERNMENT PUBLISHING OFFICE 43-195 PDF WASHINGTON : 2021 HOUSE COMMITTEE ON FINANCIAL SERVICES MAXINE WATERS, California, Chairwoman CAROLYN B. MALONEY, New York PATRICK McHENRY, North Carolina, NYDIA M. VELAZQUEZ, New York Ranking Member BRAD SHERMAN, California ANN WAGNER, Missouri GREGORY W. MEEKS, New York FRANK D. LUCAS, Oklahoma WM. LACY CLAY, Missouri BILL POSEY, Florida DAVID SCOTT, Georgia BLAINE LUETKEMEYER, Missouri AL GREEN, Texas BILL HUIZENGA, Michigan EMANUEL CLEAVER, Missouri STEVE STIVERS, Ohio ED PERLMUTTER, Colorado ANDY BARR, Kentucky JIM A. HIMES, Connecticut SCOTT TIPTON, Colorado BILL FOSTER, Illinois ROGER WILLIAMS, Texas JOYCE BEATTY, Ohio FRENCH HILL, Arkansas DENNY HECK, Washington TOM EMMER, Minnesota JUAN VARGAS, California LEE M. ZELDIN, New York JOSH GOTTHEIMER, New Jersey BARRY LOUDERMILK, Georgia VICENTE GONZALEZ, Texas ALEXANDER X. MOONEY, West Virginia AL LAWSON, Florida WARREN DAVIDSON, Ohio MICHAEL SAN NICOLAS, Guam TED BUDD, North Carolina RASHIDA TLAIB, Michigan DAVID KUSTOFF, Tennessee KATIE PORTER, California TREY HOLLINGSWORTH, Indiana CINDY AXNE, Iowa ANTHONY GONZALEZ, Ohio SEAN CASTEN, Illinois JOHN ROSE, Tennessee AYANNA PRESSLEY, Massachusetts BRYAN STEIL, Wisconsin BEN McADAMS, Utah LANCE GOODEN, Texas ALEXANDRIA OCASIO-CORTEZ, New York DENVER RIGGLEMAN, Virginia JENNIFER WEXTON, Virginia WILLIAM TIMMONS, South Carolina STEPHEN F. LYNCH, Massachusetts VAN TAYLOR, Texas TULSI GABBARD, Hawaii ALMA ADAMS, North Carolina MADELEINE DEAN, Pennsylvania JESUS ``CHUY'' GARCIA, Illinois SYLVIA GARCIA, Texas DEAN PHILLIPS, Minnesota Charla Ouertatani, Staff Director Subcommittee on Diversity and Inclusion JOYCE BEATTY, Ohio, Chairwoman WM. LACY CLAY, Missouri ANN WAGNER, Missouri, Ranking AL GREEN, Texas Member JOSH GOTTHEIMER, New Jersey FRANK D. LUCAS, Oklahoma VICENTE GONZALEZ, Texas ALEXANDER X. MOONEY, West Virginia AL LAWSON, Florida TED BUDD, North Carolina AYANNA PRESSLEY, Massachusetts DAVID KUSTOFF, Tennessee TULSI GABBARD, Hawaii TREY HOLLINGSWORTH, Indiana ALMA ADAMS, North Carolina ANTHONY GONZALEZ, Ohio, Vice MADELEINE DEAN, Pennsylvania Ranking Member SYLVIA GARCIA, Texas BRYAN STEIL, Wisconsin DEAN PHILLIPS, Minnesota LANCE GOODEN, Texas C O N T E N T S ---------- Page Hearing held on: July 9, 2020................................................. 1 Appendix: July 9, 2020................................................. 39 WITNESSES Thursday, July 9, 2020 Busby, Ron, Sr., President and CEO, U.S. Black Chambers, Inc..... 5 Castillo, Carmen, Chairwoman, Board of Directors, U.S. Hispanic Chamber of Commerce............................................ 7 Kerrigan, Karen, President and CEO, SBE Council.................. 8 Ross, Jenell, President, Bob Ross Auto Group..................... 10 APPENDIX Prepared statements: Busby, Ron, Sr............................................... 40 Castillo, Carmen............................................. 46 Kerrigan, Karen.............................................. 77 Ross, Jenell................................................. 83 Additional Material Submitted for the Record Beatty, Hon. Joyce: Written statement of the Asian/Pacific Islander American Chamber of Commerce and Entrepreneurship................... 87 Written statement of the Association of Women's Business Centers.................................................... 90 Written statement of Clever Girl Finance..................... 91 Written statement of Creative Investment Research............ 95 Written statement of Include Ventures........................ 100 Written statement of Fund Humanity........................... Written statement of the National Bankers Association........ 115 Written statement of United Bank............................. 118 ACCESS DENIED: CHALLENGES FOR WOMEN- AND MINORITY-OWNED BUSINESSES ACCESSING CAPITAL AND FINANCIAL SERVICES DURING THE PANDEMIC ---------- Thursday, July 9, 2020 U.S. House of Representatives, Subcommittee on Diversity and Inclusion, Committee on Financial Services, Washington, D.C. The subcommittee met, pursuant to notice, at 12 p.m., via Webex, Hon. Joyce Beatty [chairwoman of the subcommittee] presiding. Members present: Representatives Beatty, Clay, Green, Gottheimer, Lawson, Pressley, Adams, Dean, Garcia of Texas, Phillips; Wagner, Mooney, Kustoff, Gonzalez of Ohio, and Steil. Ex officio present: Representative Waters. Also present: Representatives Garcia of Illinois and Porter. Chairwoman Beatty. The Subcommittee on Diversity and Inclusion will come to order. Without objection, the Chair is authorized to declare a recess of the subcommittee at any time. Also, without objection, members of the full Financial Services Committee who are not members of the subcommittee are authorized to participate in today's hearing. Members are reminded to keep their video function on at all times, even when they are not being recognized by the Chair. Members are also reminded that they are responsible for muting and unmuting themselves, and to mute themselves after they are finished speaking. Consistent with the regulations accompanying H. Res. 965, staff will only mute Members and witnesses as appropriate when not being recognized by the Chair, to avoid inadvertent background noise. Members are reminded that all House rules relating to order and decorum apply to this remote hearing. Today's hearing is entitled, ``Access Denied: Challenges for Women- and Minority-Owned Businesses Accessing Capital and Financial Services During the Pandemic.'' I now recognize myself for 5 minutes to give an opening statement. Good afternoon. Small businesses are critical to the United States' economic growth. They contribute 65 percent of all new jobs, and they are a critical tool for wealth creation and increasing employment. But minority- and women-owned businesses face numerous unique and disparate barriers to market entry. We must act to eliminate the systemic and racial barriers that impede the formation and competitiveness of minority- and women-owned businesses. These barriers create an uneven playing field when it comes to accessing capital, leveraging loans, and other credit products necessary to fund and sustain their business. In today's hearing, we will discuss how easing impediments on African-American access to capital will result in economic and employment growth in minority communities, and in the United States overall, and examine the historical and systemic challenges faced by minority- and women-owned businesses, such as a lack of access to capital and systemic racism, and how those persistent challenges have led to closure at a disproportionate rate during the COVID-19 pandemic. Small businesses experienced a 22-percent closure rate as the result of the COVID-19 pandemic from February to April of 2020. But the closure rate for minority-owned businesses was significantly higher, with 41 percent of Black-owned businesses, 32 percent of Latinx-owned businesses, and 20 percent of Asian-owned businesses closed over the same period. In April of this year, the Federal Reserve Bank of New York reported that minority- and women-owned businesses are significantly more likely to show signs of limited financial health, and are twice as likely to be classified as at risk, or distressed, than non-minority small businesses. Further, distressed companies are 3 times as likely as healthy businesses to close because of the 2-month revenue shot. The Paycheck Protection Program (PPP) was established under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, and administered by the Small Business Administration (SBA) and Treasury, as funding lifelines for distressed businesses responding to the COVID-19 pandemic. But a recent analysis by Color of Change in the United States found that only 1 in 10 African-American and Latinx- owned businesses received the requested funds through the program. I have heard from many minority-owned businesses who did everything right. Yet, they did not get a loan number or a loan in the first round. Many minority businesses shared that the Enhancement Act was not adequately designed to enhance, or assist, small businesses. Thanks to the partnership of Financial Services Committee Chairwoman Maxine Waters, and Small Business Committee Chairwoman Nydia Velazquez, adjustments were made in the second round of funding. On June 30th, the Small Business Administration announced that 4.9 million loans totaling $521 billion have been granted by the PPP. So now, let me just say that I look forward to hearing from our distinguished witnesses who will share key insights regarding the ongoing plight of minority- and women-owned businesses, and what steps Congress and the private sector can take to ensure necessary and fair inclusion in the economy. The Chair now recognizes the ranking member of the subcommittee, my good friend, colleague, and someone whom I am delighted to see, although it is on Zoom today, Ranking Member Ann Wagner. Mrs. Wagner. Thank you, Madam Chairwoman, and it is a delight to see you and all of our subcommittee here this afternoon, and thank you for holding this hearing. I want to welcome our witnesses and thank them for testifying about the obstacles that women- and minority-owned businesses face when it comes to accessing capital and financial services. When this pandemic began, and businesses were forced to close their doors in order to prevent the spread of the coronavirus, Congress took swift action to stabilize the economy, to keep Americans employed and businesses from closing, and to give our healthcare workers the resources that they needed to combat the disease. Those actions included providing regulatory relief to lenders, and access to emergency programs through the Federal Reserve, and the Small Business Administration. I want to highlight a few specific solutions that Congress has provided during this pandemic to ensure that U.S. businesses continue to have access to the relief they need. We have lowered the community bank leverage ratio to give community banks the ability to continue lending as cash deposits have increased. We have given flexibility to banks that would have been required to comply with the Current Expected Credit Loss (CECL) accounting standards, that would have locked up billions of dollars for financial institutions and hindered their ability to lend to those who need assistance the most. Finally, we authorized some $660 billion in forgivable loans under the Paycheck Protection Program (PPP), which has supported more than 51 million American jobs, and over 80 percent of all small business employees. The Program included a set-aside amount of $10 billion for community financial institutions. When it comes to ensuring that women- and minority-owned businesses can access PPP loans and other funding, I am glad to see that some lenders have taken the initiative. Lenders, including Citigroup, JPMorgan Chase, and Bank of America, have provided data highlighting their work to ensure that PPP is available to a diverse group of customers. For example, JPMorgan set up a new program to focus on underserved entrepreneurs. And Bank of America is conducting extensive outreach to small business clients in low- and moderate-income neighborhoods to raise awareness about PPP and other loan facilities. But it is not just our nation's biggest banks that are helping those in need. Let me tell you about what happened in St. Louis last month, with a banker from Midwest BankCentre. He was getting his hair cut when he overheard that the African- American woman barbershop owner had taken out a $5,000 payday loan to pay bills. The banker offered to assist her in applying for PPP loans. That interaction eventually led, most importantly, to the bank signing a deal with the National Minority Supplier Business Development Council, a group which helps minority-owned businesses access PPP loans. I commend these professionals for their outreach, and I urge other firms in the industry to follow suit if they have not done so already. I have also introduced the Calculate PPP Forgiveness Act, with my friend and colleague from Missouri, Congressman Clay, which instructs SBA and Treasury to create or certify a loan forgiveness calculator to resolve confusion between lenders and small businesses over what costs should be calculated, and to help small businesses complete their forgiveness forms. This bill has the support of U.S. Black Chambers, Inc., the Heartland St. Louis Black Chamber of Commerce, the National Federation of Independent Business (NFIB), the Independent Community Bankers of America (ICBA), the Missouri Bankers Association, and so many, many others. It is especially important for businesses that don't have the resources to hire outside consultants to help them with the forgiveness process. While this hearing is about access to capital during the pandemic, this subcommittee must also focus on permanent regulatory reforms to lift and strengthen minority- and women- owned businesses beyond the pandemic. These businesses benefit when we cut unnecessary costs and expand opportunities for investors to put their money to work. Thank you, Madam Chairwoman. And I yield back. Chairwoman Beatty. Thank you. The Chair now recognizes the Chair of the full Financial Services Committee, Chairwoman Maxine Waters. It is indeed an honor for me to introduce someone who really needs no introduction. She is an advocate for the people and, as we talk about the PPP plan today and other financial services issues, please know that her fingerprints, and her footprints, are all over it, and she has been recognized for her great leadership. No further words are needed. Chairwoman Maxine Waters from the great State of California, I recognize you for 1 minute, or as much time as you may consume. Chairwoman Waters. I want to thank you so much, Chairwoman Beatty, for all of the work that you are doing to really get the whole discussion of inclusion and diversity in the national eyesight. You are doing a wonderful job, and I thank you for convening this important hearing on the struggles that women- and minority-owned businesses face in accessing capital. Before the COVID-19 crisis began, as you have said, minority- and women-owned businesses had serious challenges in accessing capital. For example, 2018 data showed that minority business owners were less likely to be approved for loans or were approved for lower loan amounts and higher interest rates than their White counterparts. Forbes also reported that when women- and minority-owned business owners applied for loans, they were often rejected due to a lack of assets caused by the widening racial and gender wealth gaps. Despite these challenges, women- and minority-owned businesses have grown 10 times faster than all other U.S. small businesses. However, we will never close the racial and gender gap and provide for expanded entrepreneurship opportunities for women and people of color until we can address these capital challenges. So, I am very pleased to be with you today, and I look forward to hearing from our witnesses. I thank our witnesses for being here, and I am looking forward to hearing their views on how to help solve this challenge. Thank you, Chairwoman Beatty. And I yield back the balance of my time. Chairwoman Beatty. And I thank you, Madam Chairwoman. Today, I am honored to welcome the testimony of our four witnesses. Our first witness, Mr. Ron Busby, Sr., is President and CEO of the United States Black Chamber of Commerce. Ron is a former CEO and serves on the Pfizer Small Business Council and the White House African American Leadership Council. Our second witness, Ms. Carmen Castillo, is Chairwoman of the Board of Directors of the United States Hispanic Chamber of Commerce. Carmen is also the President and CEO of SDI International, which she founded in 1992. Our third witness, Ms. Karen Kerrigan, is President and CEO of the Small Business & Entrepreneurship Council. Karen has been appointed to numerous Federal advisory boards, including the National Women's Business Council, the U.S.-Iraq Business Dialogue, and the United States Treasurer's Taxpayer Advisory Panel. Our final witness, Jenell Ross, is President of Bob Ross Automotive Group. She is the only second-generation African- American woman dealer in the country. Jenell also serves as the Chair of the Board of Directors for the Cincinnati branch of the Federal Reserve Bank of Cleveland. Witnesses, you are reminded that your oral testimony will be limited to 5 minutes. A chime will go off at the end of your time, and I ask that you respect the members' and other witnesses' time by wrapping up your oral testimony. And without objection, your written statements will be made a part of the record. Mr. Busby, you are now recognized for 5 minutes to give an oral presentation of your testimony. Thank you. STATEMENT OF RON BUSBY SR., PRESIDENT AND CEO, U.S. BLACK CHAMBERS, INC. Mr. Busby. Thank you, Chairwoman Beatty, Ranking Member Wagner, Chairwoman Maxine Waters, and distinguished members of the subcommittee, for the opportunity to share testimony with you today. My name is Ron Busby, and I serve as the President and CEO of the U.S. Black Chambers, Incorporated, the nation's leading voice for Black businesses across the country. We represent 145 Chambers in 42 States, with a membership base of over 332,000 Black-owned businesses, founded on our five pillars, which are: advocacy; access to capital; contracting opportunities; entrepreneur training; and Chamber development. The U.S. Black Chambers, better known as USBC, for the past decade has been providing committed visionary leadership and advocacy and the realization of economic empowerment. Through the creation of resources of initiatives, we support African- American Chambers of Commerce and business organizations in the work of developing and growing Black businesses. Clearly, minority- and women-owned business enterprises (MWBEs) are critical components of the nation's vast economy. These funds collectively provide upwards of $1 trillion in annual receipts, and contribute nearly 9 million jobs to the country's labor market. MWBEs have been cited as the fastest- growing segment of businesses, whose results created 40 percent of America's new jobs in recent decades. Despite this extraordinary impact, it is Black business owners and entrepreneurs that history and data shows face systemic barriers to entrepreneurial resources and access to capital, among other daunting challenges. In light of these facts, we believe that strategically engineered policy can put a stop to continuing disparities experienced by Black-owned businesses. Our participation in today's virtual hearing underscores the critical role of continued advocacy through the establishment of public policy that addresses continuing challenges in accessing capital and financial services. Amidst the ongoing health and economic crisis, the most permanent disparity exists within Black America. Case in point, the country lost 3.3 million small businesses in the first and second quarter of the year, but the number of Black entrepreneurs declined 41 percent. Nearly 450,000 Black-owned businesses were closed between the months of February and April. In addition to this disproportionate decline, Black America suffered the brunt of the labor lost during the pandemic. The Black unemployment rate peaked nearly to 17 percent last month. Despite the number of Black-owned businesses located in the nation's fastest growing markets, these enterprises faced economic derailment and revenue loss prior to the pandemic in part because Black firms are overwhelmingly represented among the high-impact industries and, in part, because they were already in weaker financial positions. The pandemic simply exacerbated these challenges. Even though congressional action resulted in nearly $700 billion in relief to small businesses through the Payroll Protection Program, this week's SBA and Treasury records show that the case of structural discrimination against Black business owners remains prevalent. In the Program's more than 650,000 PPP loans made above $150,000, only 143 Black firms received a loan of that size, and 90 percent of the members of the U.S. Black Chambers have reported that they have found far less of what they asked for, or none at all. Fortunately, we here at the U.S. Black Chambers are working to address these disparities by creating resources and funding that bridges the gaps in effective Federal policy. To jump- start recovery, our organization recently launched a transformative initiative called the, ``Buy Black'' platform, which focuses on supporting the millions of Black businesses by providing grassroots assistance to the smallest Black firms in one digital marketplace. USBC is also forging ahead with a group of industry-leading technology partners to announce a Black business certification program aimed at increasing contract awards from both the Federal Government and corporate America. These programs will put the corporate and government sectors' rhetoric to the test and truly improve investments within our community. These are just a few actions that the USBC is taking to ensure that Black Americans weather this storm. We welcome Federal legislation that will foster, not overlook, Black America, and close the expanding racial wealth gap. We welcome the challenges that the Chamber has passed the HEROES Act, but believe legislatures who understand the importance of safeguarding the Black community must embrace equitable policies that will include reforming the 8(a) program to make sure that the most vulnerable and impacted Black firms receive priorities focused between 2021 and 2026; reauthorizing the Obama-era QuickPay initiative to guarantee that Black government contractors are paid within a 15-day period; and also, ensuring that within the discussion of a new infrastructure bill, that Black and local businesses are included in the contract opportunities, reconsidering the OCC's new CRA proposal to certify that changes truly benefit Black America, and prioritizing legislation that will provide Black- owned businesses with additional access to SBA loans, training and education programs, and tax incentives to invest in startups. Finally, lawmakers must pass legislation that will codify the MBDA into law, increase-- Chairwoman Beatty. I must remind the gentleman that his time is up. But thank you very much. Mr. Busby. Thank you. [The prepared statement of Mr. Busby can be found on page 40 of the appendix.] Chairwoman Beatty. Thank you. I now recognize Ms. Castillo for 5 minutes to give an oral presentation of your testimony. STATEMENT OF CARMEN CASTILLO, CHAIRWOMAN, BOARD OF DIRECTORS, U.S. HISPANIC CHAMBER OF COMMERCE Ms. Castillo. Thank you, Chairwoman Waters, Chairwoman Beatty, and members of the subcommittee, for the opportunity to share testimony on behalf of the U.S. Hispanic Chamber of Commerce (USHCC). I am the President and CEO of SDI International, one of the largest minority- and women-owned businesses in the United States. My team has been providing opportunities in business services to Fortune 500 companies for the last 27 years. I am an Hispanic immigrant, and an advocate for women- and minority- owned businesses. Today, I am honored to represent the U.S. Hispanic Chamber of Commerce as the chairwoman of the board of directors. The USHCC is America's largest Hispanic business organization. We operate as an umbrella for more than 250 local Hispanic chambers and business associations nationwide. We represent over 4.7 million Hispanic business enterprises that contribute an estimated $800 billion annually to the U.S. economy. The Hispanic community has been affected the most economically by COVID-19. A study made by Stanford University shows that 65 percent of Latino-owned companies in the U.S. report that they will not be able to continue operating beyond 6 months. This is the reason why 60 percent of Latino families have lost jobs and suffered pay cuts since the pandemic began. Furthermore, working from home is not an option for over 84 percent of Latinos, making our community extremely vulnerable to the challenges our country is facing. According to a U.S. Latino survey, millions of Latino families and businesses did not receive any support from the Coronavirus Aid, Relief, and Economic Security (CARES) Act, including 48 percent of households earning less than $25,000 a year. Due to the severity and urgency of the situation, we would like to collaborate with congressional leaders to participate in the creation of legislation that will economically impact Hispanic businesses. We are advocating for the following: expand opportunities for our business community to participate in Federal procurement contracting with fundraising to serve as a technical assistance bridge to provide necessary education for our members; forgive all 2019 payable taxes for America's 30 million small businesses; provide an additional $65 billion for a minority equity fund to support minority business enterprises through economic relief programs implemented by Treasury, the Federal Reserve, and the Small Business Administration (SBA); expand lending for Minority Depository Institutions (MDIs) and Community Development Financial Institutions (CDFIs); and more transparent reporting on the Paycheck Protection Program and other disaster relief programs. As Congress continues to allocate stimulus funding, minorities need to be included in the management, distribution, and grant allocation of these funded programs with the same access to Congress as any large company. Allow undocumented business owners and undocumented workers who can prove that they have paid U.S. taxes in 2018 to take advantage of the CARES Act and other stimulus funding. I wanted to share statistics related to the economic impact. Prior to COVID-19, Latinos started businesses at 3 times the rate of the national average. Latinas started businesses at 6 times that rate. One out of every four small businesses is run by an Hispanic entrepreneur, and 60 million Hispanic Americans account for $2.3 trillion of the U.S. economic activity. If Congress encourages financial institutions to provide capital for our community to scale up, an additional $1.38 trillion will be generated for the U.S. economy. If we fail to support our businesses, our economy will shrink by billions, we believe, far exceeding the investment needed from the Federal Government in order to rescue them. I thank you for your time, and we look forward to collaborating with you to create a lasting change. Thank you. [The prepared statement of Ms. Castillo can be found on page 46 of the appendix.] Chairwoman Beatty. Thank you very much. Ms. Kerrigan, you are now recognized for 5 minutes to give an oral presentation of your testimony. STATEMENT OF KAREN KERRIGAN, PRESIDENT AND CEO, SBE COUNCIL Ms. Kerrigan. Thank you very much. And good afternoon, Chairwoman Beatty, Ranking Member Wagner, and, of course, Chairwoman Waters, and members of the subcommittee. Thank you for the opportunity to be a part of this hearing today, and for focusing on the critical issue of access to capital for women- and minority-owned businesses, particularly during this unprecedented period of time for all small businesses and, indeed, all Americans. SBE Council is an advocacy, research, and education organization dedicated to protecting small businesses, and promoting entrepreneurs. And for more than 25 years now, we have worked on a range of issues, including access to capital to strengthen the ecosystem for start-up activity and small business growth. As noted by my fellow witnesses, closed financial networks, longstanding financial institutional biases, and underserved markets work against the efforts of women and minority entrepreneurs who need capital to start up, operate, and grow their businesses. While the bipartisan CARES Act got money out the door quickly and helped many small businesses, the distribution channels of the first tranche of the funding underscored how the traditional financial system leaves many small businesses behind, particularly women- and minority-owned businesses. That is why very early on, before the launch of PPP, we were vocal advocates to bring Fintech lenders into the program to reach the kind of businesses that the PPP was also intended to reach, including women- and minority-owned businesses. Bringing Fintech into the PPP program certainly helped in reaching many small businesses that were falling through the cracks. But even when you account for their participation, along with the late involvement of the CDFIs, significant numbers of women- and minority-owned businesses have been left without the capital they need, or needed, to weather and navigate the COVID-19 crisis. As I noted in my written testimony, this was likely related to the design of PPP, which many self-employed sole proprietors felt was not structured for them. As we know, as many as 95 percent of Black entrepreneurs are sole proprietors, and 88 percent of women-owned businesses fall into this category as well. We know that Congress is looking at some additional fixes from perhaps a P4 program, with many of the elements that we support, to address these shortfalls. And SBE Council is engaged in these discussions. Support is obviously still needed, given the uncertainty of the pandemic and how it is and will continue to affect reopenings and the economy moving forward. In a recent survey by the National Association of Women Business Owners (NAWBO), 45 percent of respondents stated that they still need access to capital in the form of grants or loans. We see the private sector, large companies, successful entrepreneurs, as well as State and local Governments, stepping up to meet the capital needs of struggling small businesses and we hope this continues because the need is vast. And we were pleased to see the SEC advance the temporary and conditional rule that eases some of the red tape and costs associated with regulated crowdfunding. Small businesses are just learning of this temporary rule, which, unfortunately, expires August 31st, and we are asking that it be extended at least through the end of the year. The rule was truly was designed to help small businesses, and the feedback that I am getting from several of our online platform members that we work with, who largely serve women- and minority-owned businesses, is that the relief is making a difference in terms of making this method of financing more accessible to these firms. With respect to investment crowdfunding in general, there is a tremendous potential and momentum behind this approach to financing for women and minority entrepreneurs. We believed another proposed rulemaking moving through the SEC, which allows for testing the waters, lifting the cap that can be raised from $1 million to $5 million, the use of special- purpose vehicles as passed by the House in legislation, sponsored by Chairwoman Waters, and demo day clarification, will simplify and improve the crowdfunding offering framework, which will make it more accessible and cost-efficient for women and minority entrepreneurs. We are also exploring the concept of a crowdfunding public- private partnership, whereby the Federal Government can match successful raises up to a certain dollar amount, along with investment tax credits. They do this in the U.K., and it has been very successful in that country. At the end of the day, there is an extraordinary amount of private capital out there, and SBE Council is very committed to policy innovations and incentives that unleash that capital and get it into the hands of women- and minority-owned businesses. There is a lot of work to do, and I look forward to our discussion today. Thank you very much. [The prepared statement of Ms. Kerrigan can be found on page 77 of the appendix.] Chairwoman Beatty. Thank you so much for your testimony. And now, Ms. Ross, you are recognized for 5 minutes to give an oral presentation of your testimony. And first, let me say that I would also like to congratulate you on the 23rd anniversary of you leading Bob Ross Automotive Group. STATEMENT OF JENELL ROSS, PRESIDENT, BOB ROSS AUTO GROUP Ms. Ross. Thank you, Chairwoman Beatty, and thank you, Chairwoman Waters and the members of the subcommittee, for the opportunity to share my story with you today. My name is Jenell Ross, and I am the President of the Bob Ross Auto Group in Centerville, Ohio, which is the only Mercedes-Benz and Buick-GMC dealership owned by an African- American woman in the United States. My father, Robert P. Ross, Sr., was selected to be in the first class of the General Motors Minority Dealer Development Academy in 1972. My father was the first in his class to purchase a dealership, and it was the only one, when he passed away, to still be in business. My father became the first African-American automobile dealer in the States of Indiana, Ohio, Kentucky, and West Virginia, along with being the first African-American International Harvester Dealer in the U.S. in 1974. In 1979, my father purchased a Buick and Mercedes-Benz dealership in Centerville, Ohio, and he became the first African-American Mercedes-Benz dealer in the world. In 1997, my mother, Norma J. Ross, assumed command of the dealerships after my dad's untimely death. At 27-years-old, I was thrust into running the day-to-day operations as vice president/dealer principal. Imagine walking into an automobile dealership meeting as, sometimes, the only female and/or person of color in the room who didn't work for the manufacturer or the travel company that set up the meeting. I became president of the Bob Ross Auto Group in 2010 as the result of my mother's passing. It has been 23 years this week that I have led our organization, and I hate to say that the diversification of the automobile dealer body is no better than when I started. According to the National Association of Minority Automobile Dealers (NAMAD), at the end of 2019, there were a total of 1,243 ethnic minority automobile dealerships in the United States out of 19,000. The breakdown is as follows: African American, 265; Hispanics, 585; Asian, 283; and Native American, 110. Ethnic minority women represent 72 of the 1,076 women-owned automobile dealerships. Only four of these women are African American--Gail Martin, Juanita Baranco, Eillaena Fairhurst, and myself. Since the initial launch of PPP and EIDL programs, several financial institutions explained to many small businesses that they were excluded from gaining access to these financial opportunities because of the, ``know your customer'' rule, even if the business had a banking relationship without having a credit lending history with them. NAMAD states that PPP left over 60 percent of the minority dealer body without bank approval and/or were told to seek another financial institution to apply for funding in the first round. Historically, access to capital has been the leading concern of women- and minority-owned businesses to survive, and during this pandemic, it has been no different. Even though the Bob Ross Auto Group has a very strong relationship with our financial institution, I, too, faced obstacles when applying for the PPP loan. After several days of waiting for proper information to submit our application, I, too, was instructed to go elsewhere. Fortunately, I was able to approach another financial institution, and in a matter of 48 hours, I was given approval. I, unlike many women- and minority-owned businesses, had the reserves and the safety net through financial relationships to fall back on. Despite these preparations and adjustments of our business operations during the pandemic, we are continuing to invest thousands of dollars to ensure the safety of our employees, clients, and facilities. I still feel a heightened sense of uncertainty, much like other women- and minority-owned businesses, of not knowing if we will be able to survive in the short term. In the end, the PPP program has allowed small businesses to keep our doors open, and to help reduce the amount of employee layoffs and business closures. The majority of all ethnic minority auto dealers are located in rural areas, and provide a significant amount of resources and financial support to local businesses, civic, and community-based organizations. NAMAD's concern is, once these funds run out, will these small businesses be forced to lay off employees, once again, who had to get rehired to participate in the PPP program? As women- and minority-owned companies continue to pivot their operations during the pandemic and navigate a new normal, it is imperative to utilize multiple resources to help drive their sustainability and growth. Being certified through the Women's Business Enterprise National Council (WBENC) and the National Minority Supplier Development Council (NMSDC) allows business owners to develop relationships with corporations and businesses who value diversity and inclusion and are looking to partner with like-minded companies. We have been awarded many contracts from the State of Ohio Minority Set Aside Bid regarding their vehicle needs. We continue to work with our regional partners to help grow our business and yield success of winning bids to add revenue to our operation. At the end of the day, without access to capital, a sound financial relationship, and education, the wealth gap for women- and minority-owned businesses will continue to widen. Thank you. [The prepared statement of Ms. Ross can be found on page 83 of the appendix.] Chairwoman Beatty. Again, I thank all of the witnesses for your testimony. I now recognize myself for 5 minutes for questions. Recently, the Federal Reserve Bank of New York found that approximately 60 percent of minority- and women-owned businesses are considered at risk or distressed. We also read that many of them use their personal funds. Our committee has held hearings to examine the cause and impact of racial wealth disparities. To our two Chambers leaders of the African American Chamber and the Hispanic Chamber, how does the racial wealth gap impact access to emergency funding for minority-owned businesses during periods of financial challenges, such as we are going through now with COVID-19? So, that will be to the two of you. And then, Ms. Ross, do you believe the racial wealth gap impedes the success of minority- and women-owned businesses? I will start with you, Mr. Busby. And I will then go to you, Ms. Castillo. Mr. Busby. Thank you for the question, and thank you, again, for allowing us to give our testimony. That is a great question and as we talk to our business members across the country, the number one concern that they all have-- Chairwoman Beatty. Would you speak up a little bit, Mr. Busby? Mr. Busby. Thank you, again, for allowing us to have this testimony. As we talk to our members across the country, the number one concern that they all have is access to capital. There was a survey that was done that said that the average Black family had roughly $400 in savings for an unexpected emergency, and those same homeowners, many of them, are now business owners. So you are placing the burden of having excess capital to get them through tough times with very limited resources collectively. The second thing, the access to capital, the cost of that capital is extremely expensive. The average African American is paying twice the rate of our White peers, and only about 33 percent of our businesses actually have a line of credit. Chairwoman Beatty. I am going to have to interrupt you to go to the other two, because I only have a few minutes left. So, I will go to the next witness. Thank you. Ms. Castillo? Actually, I will go to you, Ms. Ross, because my time is ticking down. Ms. Ross. Yes. Can you repeat the question, Chairwoman Beatty? Chairwoman Beatty. Yes. Do you believe that the racial wealth gap impedes the success of minority- and women-owned businesses? Ms. Ross. It comes all back to education. And without the opportunities to educate minority- and women-owned businesses, it does put us at a hindrance in terms of continuing to move forward. And if we have the opportunities, we have definitely shown that we deserve to be at the table and be in the room; but without those opportunities, and for people not thinking that we should be, then that continues to create the problems that we have. Chairwoman Beatty. Thank you. To all of the witnesses--and we will start with you, Ms. Kerrigan, and then go backwards. I am very proud that all of you talked about the disparities and the challenges, and I was really pleased to hear you all mention the small businesses, the gigs, the 1099, et cetera. Early on, I went to the House Floor and advocated for those, and I would like to believe it had an impact on our second round of funding. The question is: What would you say to corporate America and to banks right now in this space we are in? People are really putting in more value. Majority companies are coming to us with money. Maybe some of it is guilt dollars. What would you say to them to help put more African-American and other minority businesses into the hopper? Ms. Kerrigan? Ms. Kerrigan. I would say to put your money where your mouth is, generally, and to really make a concerted effort to outreach to this community, and to look at the process by which you are outreaching and any type of the systems, the application process, whatever, that you may have for accessing capital, potential loans, potential dollars, and to simplify it as much as possible. One size does not fit all, and you really have to meet the needs of these entrepreneurs where they are, and a lot has to be simplified, and understanding that they are not all the same businesses. Chairwoman Beatty. Okay. We will try you again, Ms. Castillo, if you are unmuted. Is there anything in 10 seconds you would like to add? Ms. Castillo. Yes, pretty much, I totally agree with Ms. Kerrigan. In our community, only $3.7 billion from PPP went to our community, and the average loan was about $54,000, so I would just put-- Chairwoman Beatty. Thank you. I like that. I am going to end with, put your money where your mouth is. Don't worry, to the other witnesses. We will have plenty of other questions coming from my colleagues. At this time, I would like to recognize the distinguished ranking member of the subcommittee, Mrs. Wagner, for 5 minutes. Mrs. Wagner. Thank you, Madam Chairwoman. Ms. Kerrigan, from your work with entrepreneurs and startups, what sort of regulatory barriers--and you touched on this briefly--have you experienced that have made it difficult to access capital and financial services? Ms. Kerrigan. The biggest barrier right now is actually getting clear, if you are talking about investment capital, is actually accessing and getting access to the investors. But when you are talking about--a lot of them look at equity and debt-based crowdfunding, and they see it has great potential. There are two things I think are holding them back. The first is some of the red tape and a lot of the burden in terms of the first forms, filling it out, what comes next. And the second, which I found very interesting, and we are learning more about, is this temporary relief that the SEC did. Most of these businesses are looking for debt financing, and so, the crowdfunding rules are treating all businesses the same, as one-size-fits-all, and I think we have to look at this a little differently and say, well, the information that the SEC needs or the intermediaries have to collect, does it have to be as intense as, say, an equity raise versus a debt raise? And can we look at the structures and say, do you need to be a corporate structure in order to access the finances as they do right now or can they be an LLC or can they be sort of a sole proprietor because they know they can be a bank loan? But right now, obviously, Congresswoman, the climate is so different than it was pre-COVID-19. I don't know if you are talking about the PPP loan or Main Street lending but-- Mrs. Wagner. Ms. Kerrigan, if I could interrupt you, in your testimony you mentioned the idea of creating a public- private partnership fund, and I am very interested in learning more about this co-investment model and how it could provide increased access to capital for women- and minority-owned businesses. Could you go into further detail about this fund? You also mentioned that the U.K. has a co-investment model. If you have any specific data on the success of the program for women- and minority-owned businesses, I am very interested. Ms. Kerrigan. Yes, and I will follow up with more specific information and data. I'm just beginning to talk to our members and sort of the crowdfunding community about the existing way. It has been very successful, so much so that they are increasing the fund. Most startup ecosystem raises its money online now, because there are tax credits, and U.K. policies do support investment crowdfunding. The whole notion of the public-private partnership is that the Federal Government will, if a small business raises X amount, come in and match that. But they will work with the existing platform. So, the government is not picking winners and losers. They are picking who the crowd believes, the investors believe is a business that can make it. And we do know that with crowdfunding in general, women entrepreneurs have more success at crowdfunding raises, and we do know that there are many more minority businesses that are using crowdfunding, going through their local community in order to keep those businesses in those communities and giving their customers for the first shot at investing in their businesses. Mrs. Wagner. Okay. And let me interrupt you just in the interest of time here. Ms. Castillo, and Ms. Kerrigan, but Ms. Castillo, if you could go first, I was proud to introduce the bipartisan Calculate PPP Forgiveness Act with my colleague, Congressman Lacy Clay, as I mentioned in my opening statement. This bill would direct the Small Business Administration to create or certify a PPP loan forgiveness calculator that is free and accurate, so small businesses can more easily populate their loan forgiveness applications. It would also help resolve tensions between lenders and small businesses over what payroll expenses should be covered, et cetera. Would this benefit your members as they navigate forgiveness applications, Ms. Castillo? Ms. Castillo. Yes, I think that it would. I really think it would. They do need quite a lot of education as well, but I do like what you just proposed, yes. Mrs. Wagner. Ms. Kerrigan? Ms. Kerrigan. Yes, because it would promote certainty across the financial--we are all using the same calculator, right? And I think having it as simple so that businesses know what the government is putting out there, and what will be forgivable. I think it is very important. Mrs. Wagner. We are going to try to include it in the next package going forward. So, I thank you for your input. Madam Chairwoman, I am out of time, so I yield back. Chairwoman Beatty. Thank you very much. The Chair now recognizes the distinguished Chair of the full Financial Services Committee, Chairwoman Maxine Waters. Chairwoman Waters. Chairwoman Beatty, let me just say that as I am sitting here watching you, I am thinking about how important diversity and inclusion is. If it was not for diversity and inclusion, I would not be sitting here with you in this very, very important hearing. You would not be sitting here as the Chair of the Subcommittee on Diversity and Inclusion. And we would not have been here at a time when we have COVID-19, where we were able to exercise some power in order to do everything that we could to try and get resources out, liquidity into the agencies that should have the kind of resources so that they could make the loans. So, I am very appreciative for your work, and you were primed for this task based on your work with the Office of Minority and Women Inclusion (OMWI) and the way that you came to this Congress, indicating your support for opening up this opportunity. Now, we have been confronted with COVID-19 and PPP, and we have learned an awful lot that we had not expected. First of all, I want to thank those banks that participated and did it the right way, but I want to tell you that some of the biggest banks in America literally opened up portals for their concierge clients early, and they spent millions of dollars, maybe billions of dollars funding those concierge clients, their big private clients. And somehow, in the legislation for the CARES Act, it had opened up the opportunity for SBA loans that were normally for those businesses, 500 and under, to now be spread out to restaurants and hotels, et cetera, who had many locations and franchises, et cetera, and they were able to get millions of dollars. That was not intended. And so, we know about that, we have learned an awful lot about that, and we have to shut that down, so that will not continue to favor the high-income private clients of banks. In addition to that, we learned an awful lot about what was going on with our Minority Business Development Agency that was created by an executive in 1969, for minority business development agencies. It was supposed to be tasked to foster growth of minority-owned businesses in America but it is at the whim of Presidents and Secretaries of Commerce because it is not in the law. I heard you when you talked about that, Mr. Busby. We are going to take care of that because we want every opportunity for our small businesses and our minority businesses, our women-owned businesses to have access to capital, or we won't survive. I heard you when you talked about the 8(a) Set-Aside program. That was a very successful program. Minorities had gotten involved with it, and did well. But guess what? That got shut down because you did too well. After you reached a certain level, they excluded you from the program. We have to open up 8(a) Set-Aside all over again. I convened a lot of our CDFIs who did not have access to capital, and learned that they were operating on at such different levels. For example, you have some that had no liquidity. They were dealing with some joint venture-type opportunities. We had some with just a small amount of resources that were begging for more. But that is under the Treasury Secretary, who has the opportunity to fund through that CDFI Fund, and we are going to increase that and open up more opportunities for CDFIs. Also, we have been working for a long time with MDIs, and it is very important for you to know that, because of Ms. Velazquez and myself, we were able to get that $60 billion and target it so that $10 billion of it went right to the MDIs, and to the CDFIs, and to our credit unions and community banks. It would not have happened had it not been minority women sitting there. That is why opening up opportunity and diversity and inclusion is so important everywhere, in the private sector, in the government sector, everywhere. Unless you have people who not only understand these issues, but have been the victims of these issues, and see how wealth has not been able to be accumulated in our communities, you will never get the opportunities to open up. So I am pleased that we were able to get right to Mr. Mnuchin, and right to Mr. Powell, so that we were able to change some of the ways that they were doing things. I won't go into all of that now, but we absolutely changed the way that the Main Street Facility was operating with the Federal Reserve. We absolutely were able to get the $60 billion and direct more to the CDFIs. So, I am so thankful for your work, Ms. Beatty. I am so thankful for this hearing. I am so thankful for the witnesses who are telling us how we can even do better, and I am looking forward to correcting some things, but looking at the Fintechs to open up another opportunity. I yield back the balance of my time, and I thank you for allowing me this time. Chairwoman Beatty. Thank you very much, Chairwoman Waters. Now, the Chair recognizes the gentleman from West Virginia's 2nd District, Mr. Mooney. Mr. Mooney. I don't have any further comments. Thank you. Chairwoman Beatty. Thank you. The gentleman yields back. Now, it is my distinct honor to recognize the gentleman from Missouri, Mr. Clay, who is also the Chair of our Subcommittee on Housing, Community Development, and Insurance, for 5 minutes. Mr. Clay. Thank you, Madam Chairwoman, and I thank you and Ranking Member Wagner for conducting this most important hearing, and let me thank the witnesses for their participation today. The racial and gender wealth gap has been a persistent challenge for this country, and has increased over the past 50 years, and limits the ability of women and minority would-be entrepreneurs from starting new businesses. And according to a racial wealth gap analysis by McKinsey & Company, African- American and Latino families have approximately one-tenth the wealth of White families. Startup businesses need capital. Unfortunately, minorities are not as likely to have access to generational wealth and personal assets as the funding source for new business formation as a result of the wealth. My question is to Ms. Castillo and Mr. Busby. What have your members shared about how the lack of familial wealth affects the startup of minority-owned businesses? We will start with Ms. Castillo. Ms. Castillo. In my community, as you know, I think they are the most affected every time they go to a bank, just because we are Latin. They don't have the same facilities. They don't have the same advantages. When I started my business, it took me quite a while to get a loan. On our board of directors, we have several financial institutions, and those financial institutions are very committed to our community. They do have special programs, for example, JPMorgan and Goldman Sachs and Wells Fargo do have special programs just for us, and they certainly treat us more equally. Mr. Clay. Thank you for your response. Mr. Busby, how has the lack of familial wealth affected the startup of minority-owned businesses? Mr. Busby. Thank you, Representative Clay, for your question. Again, if you ask any small business owner what their number one concern is, they will say access to capital. But when you ask a Black business owner, he or she will say,that the number one, number two, and number three concerns are access to capital, not just the access, but the affordability as well as the availability of capital, to be able to start and sustain their businesses, and not just through pandemics, but through normal business practices. It is extremely difficult for Black businesses to be able to access the capital. And the reason that it is important is that we lost 450,000 Black-owned businesses during this last 3 months, which means they all have customers, clients, vendors, and employees. And for those existing Black-owned businesses, we need to look at mergers, acquisitions, and joint ventures, to be able to take advantage of those lost businesses, to be able to merge those into our existing Black-owned businesses. At the U.S. Black Chamber, I have heard the conversation about Fintech. We believe that the future of Black-owned businesses is going to be with traditional Black and minority CDFIs. During this pandemic, they told us to go to your existing bank to ensure that you had a relationship to get the funds. If we don't establish banking relationships now, then in the future, our businesses will be hit twice as hard. So for us, we are looking for capital, but also, we are looking for financial institutions to ensure that they lower or remove the barriers to credit and make sure that it is affordable for our businesses. Mr. Clay. Thank you so much for that. And I heard Representative Wagner's example of a barber shop owner having to go to a payday lender. Ms. Ross, I believe, mentioned one of the instructions in the PPP program was with not having loan activity with an institution. Could any of the witnesses respond to that? Quickly, does anyone want to talk about the challenges that the businesses had when they went for the PPP? Mr. Busby. Well, first if the name of the program was the Paycheck Protection plan, and of the 2.6 million Black-owned businesses, only 2.5 million have no employees, that left roughly 100,000 Black-owned firms that would have even qualified to go and get the additional funding that they needed, so just in the name of the program, many of our businesses said that it did not include them. Second, you had to have a banking relationship with the lending officer, and only 30 percent of our businesses had that. Third, if they made the program available on a Friday-- Mr. Clay. I am having a little trouble hearing you, Mr. Busby. Chairwoman Beatty. I have to remind the gentleman that his time is up. I'm sorry. Mr. Clay. No problem. I yield back. Chairwoman Beatty. Thank you. The gentleman yields back. The Chair now recognizes the gentleman from Tennessee's 18th District, Mr. Kustoff, for 5 minutes. Mr. Kustoff. Thank you. I want to thank the chairwoman for convening today's hearing, and the ranking member as well. I certainly appreciate all of the witnesses coming before us to testify today. Ms. Kerrigan, if I could, last I checked, there is around $130 billion left in the Paycheck Protection Program, and of course we know that as of now, it goes through August 8th. Last week, we had testifying before our committee Treasury Secretary Mnuchin and Federal Reserve Chairman Powell. Secretary Mnuchin, in his remarks, said that he wanted to repurpose the remaining money to assist what he characterized as especially hard-hit businesses. My question to you is, if you had 15 minutes directly with Secretary Mnuchin or Fed Chairman Powell, what would you tell them about specific ways to use this leftover money to provide additional relief, specifically to minority-owned businesses or women-owned businesses. Ms. Kerrigan. I think as the program went on, and as there were changes made and they began to onboard Fintechs and CDFIs and the distribution channels, I think it had gotten better in terms of reaching more women and minority entrepreneurs and self-employed businesses. And all of those types of businesses that didn't have those commercial relationships with their banks. But I would say this, I think, in acknowledging and recognizing that they do want to address the hardest hit and those businesses that weren't able to capitalize or use the Program the first time around, they are on the right track. And if we are repurposing the money, there does need to be some of that money that will be sort of set aside for employers with 10 employees or less, that we do need to look at, yes, those industries that have been hard hit and perhaps allow some of those businesses to come back for another PPP loan. But I would also say that you need to broaden the uses of what can be forgiven, the 75/25 rule that became 60/40, that was very restrictive to many types of small businesses, those with high overhead, with those self-employed people. So, we need to change that. You need to include a lot more forgivable expenses, PPE, cloud services, all of the things that businesses have had to expend money on in order to survive COVID-19. And then finally, I would say you really need to simplify the whole process. And if you are going to start the Program and it is going to be repurposed from the get-go, there has to be clear guidance. It can't continually change, because that confused so many businesses. So, a simple application process, reaching more businesses, dedicated and targeted to the smallest of businesses, broad usage. And I forget the last one. But I have already said it in my remarks--oh, guidance. When you come out of the program, when you launch out of it, the guidance has to be clear. It is very, very important. Mr. Kustoff. Thank you. Ms. Ross, in your testimony you talked about the difficulty you had trying to first apply for, and then ultimately you got the PPP loan. How confusing did you find the guidance that was given to you during the course of the process? Ms. Ross. Being a small business owner as things were evolving and changing daily and trying to make sure that the health of our employees was first important to us, but the guidance, as Karen said, continued to change. And ultimately, the application wasn't as bad, but now looking at the forgiveness application, it is like 4 times or probably 8 times the length of the original application. So with that, we have spent a lot of time, my management team and I, in trying to make sure that we are following the guidelines in terms of getting the most forgiven, but those keep changing, so it is what we worked on a month ago has changed for today. And I received an actual email last week that said we are still not in a position to really go forward with the application on the forgiveness and that we should have that in another month or so. So, it has taken a lot of time away from us, having to navigate and pivot and change our organization. And being an automobile dealership during a pandemic with a number of touch points of us involved with vehicles and getting people to understand that has been increasingly difficult from a compliance perspective. It has just added to the uncertainty and the anxiety of making sure that we are following all of the guidelines, in addition to health and safety guidelines as well. Mr. Kustoff. Thank you so much. I yield back. Chairwoman Beatty. Thank you. The gentleman yields back. The Chair now recognizes the gentleman from Texas' Ninth District, Mr. Green, who is also the Chair of our Subcommittee on Oversight and Investigations, for 5 minutes. Mr. Green. Thank you very much, Madam Chairwoman. I would like to associate myself with your initial comments. But I also would like to thank the Chair of the Full Committee. It is an honor to serve under her leadership. And I especially associate myself with the comments that she made with reference to the Minority Business Development Administration Act, something that I will be working on with her. I think a little bit of history is appropriate. In 1979, under a Republican Administration, Richard Nixon, by way of Executive Order 11458, created the Advisory Council for Minority Business Enterprise. And then, under a Democratic Administration, President Carter, in 1979 the Office of Minority Business Enterprise became the Minority Business Development Agency. I am mentioning both of these Administrations because it seems to me that what the chairwoman has proposed, and I am having the honor of working with her on, is something that should appeal across party lines, to both Democrats and Republicans. Because in fact, what this agency will do, if established as an independent agency as opposed to an extension or arm of another part of the government, if it is an independent agency, it will provide bootstraps in the form of grants. Many of our small businesses were not able to take advantage of the PPA because they were not prepared with the technical assistance necessary to apply for these loans. They just didn't get in line fast enough. And those who had lawyers, and accountants, and CPAs were in line and ready to go from day one. As a matter of fact, truth be told, they were ready before day one. They were waiting for day one to arrive. And upon the arrival of day one, all that was done was to hit send and your application was in, for all practical purposes. Well, what we would like to do is provide these small businesses with the bootstraps necessary to compete when opportunities are available. It is a wonderful thing to know that opportunities are available, but it is an even better thing to be able to take advantage of opportunities when they are available. This Administration would provide just such an opportunity. It would become a standalone entity, very similar to, but not the same as the SBA. The SBA does marvelous work, and I salute the SBA. This entity would be given a similar opportunity as it relates to providing what I call the bootstraps in the form of grants. So today, let me ask the panelists, understanding what this agency would metamorphose into, is this something that you believe you can support? I will start with the witnesses with the Chambers. Let's start with the Black Chamber, please. Is this something that you can support? Mr. Busby. Mr. Green, yes. This is Ron Busby with the U.S. Black Chamber, and we were the 2016 advocate of the year for the Minority Business Development Agency (MBDA). We believe in their mission. We have seen the results of their ability to receive additional funding in the second round of the stimulus package and we saw what they were able to do with the funding. It has made an impact. They have awarded the U.S. Black Chambers and the U.S. Hispanic Chamber and other minority business organizations with the resources and the funding that they need, to then turn around and make our businesses have the resources that they need-- Mr. Green. Quickly, I will ask this of you, you hear people quite frequently talk about pulling yourself up by your bootstraps. Are these grants the kind of bootstraps that we need so that our businesses cannot only survive, but thrive? Mr. Busby. Yes. And it is not just the capital, Representative, it is also the technical assistance that our businesses need. We need both the resources of funding, as well as administrative and technical assistance to not just be able to get the bootstraps, but we need the boots themselves, to make sure that we can walk through the difficult and uphill battles that we are facing throughout not just this pandemic, but life in general. Mr. Green. Well said. Let me say again, well said, and move to the Hispanic Chamber. Would you kindly express your concerns? Could you support this legislation? Ms. Castillo. There is a successful relationship with the MBDA agency. We are very happy. We have been working with them for the last 2 years, and we are very, very happy. And yes, we do support your legislation. Mr. Green. Thank you, Madam Chairwoman. You have been very generous with the time. I yield back. Chairwoman Beatty. Thank you so much. The gentleman yields back. The Chair now recognizes the gentleman from Ohio's 16th District, Mr. Gonzalez, for 5 minutes. Mr Gonzalez of Ohio. Thank you, Madam Chairwoman. And thank you, everybody, for your participation in today's very important hearing. Ms. Castillo, I want to start with you. I am the son of a Latino business entrepreneur,and on the PPP, you talked about the difficulty that our community had in accessing the loans. I guess I have two questions. Number one, is that still the case now that we have changed the Program and extended it? And if it was and is, was that because of the structure of the Program or because there was something happening in the application process that was sort of weeding out Hispanic business owners? Ms. Castillo. At the beginning, naturally our community didn't get that much, it really didn't. Now, once you fix it, they get another amount of like 54,000 loans, so it is better. And I think the issue is that our businesses are very small businesses, as you know. It is a lot of having a line of credit, of having even the education to go and apply. The process was complex. And as you know, most of the PPP loans in the first year went to top corporations, corporations with lawyers, corporations that have the resources. Our community just doesn't have those kinds of assets. But I must say, it is getting better. I think that our community has gotten almost 7-something-billion total. But on average, again, a small average of like, $54,000, or $55,000 Mr. Gonzalez of Ohio. That is consistent with Mr. Busby and what you said, right? And I think what this hearing has sort of shined a light on is something we knew, which is that the PPP program is not perfect. And I think also it shines a light on the fact that it just didn't hit our minority communities in a way that maybe we would want. And so as we go forward, I think retooling it or having a different program probably makes the most sense frankly. Ms. Ross, I want to transition to you. You have such an amazing personal story and I thank you for sharing it. And one of the things you highlighted is the difficulty that we have getting diversity in the automotive space and entrepreneurship in general. And I guess I would like to ask you, just sort of broadly speaking, what do you think we could be doing a better job on as a society but also congressionally to support women and minority entrepreneurs who are taking that big risk? Ms. Ross. It goes back to what I said in my statement. But the access to capital has historically limited minorities, and specifically in the automobile business, due to the heavy investment that is needed in order to become an automobile dealer. And within our industry, there are a lot of generational families who have been able to pass down their dealerships. And from an African-American perspective, we have not had that. For me to be the only female, African American, second- generation automobile dealer just speaks to that volume, where there are hundreds of Caucasian women who would be able to be in that position. And I give kudos to NAMAD to starting an organization to help the next generation to try to facilitate that from an earlier perspective. But it does come back to the access to capital, just a huge investment that is needed to become an automobile dealer. And the manufacturers need to take the responsibility of assisting, and widening, and broadening their programs that they are offering, because there are a lot of individuals who are capable and can perform to the level of nonminority dealers if given the opportunity. Mr. Gonzalez of Ohio. Thank you. And then, Ms. Kerrigan, with my final 40 seconds, are there any statutory or regulatory barriers that you see that limit this access to capital that we could remove either temporarily or in full as we navigate the crisis? Ms. Kerrigan. I do. I think we are big on equity and debt- based crowdfunding, we lead the whole effort. We made that legal to begin with. And I just think there is tremendous opportunity for committees to support the businesses in those communities. And thankfully, the SEC is addressing, I think some of the rulemakings to lower the barriers, but there is more that Congress can do as well, in terms of lifting it up in terms of the accredited investors and making sure we treat debt and equity the same. And I think that is going to have to come through congressional action because most small businesses are looking for debt and not for equity. And again, I think we are at the point where the community wants to support these small businesses. And small businesses definitely have the customers and the families who can support them. We have a list of things I can share with you, Congressman. And thank you for that question. Mr. Gonzalez of Ohio. Thank you, and I yield back. Thank you, Madam Chairwoman. Chairwoman Beatty. Thank you. The Chair now recognizes the gentleman from Florida's Fifth District, Mr. Lawson, for 5 minutes. Mr. Lawson. Thank you, Madam Chairwoman. And I would like to also thank the witnesses for appearing here today. I have been working with minority businesses from the standpoint of being in the insurance business. But also I think, Mr. Busby, you might know about the publication called the Black Pages. In fact, I have done it in this area for over 30 years. One of the problems that I found, and maybe you can elaborate on it to a certain extent, is that it has been a very difficult keeping that publication going for 30 years, because we have a hard time getting minority businesses to advertise. Not only am I a member of the Black Chamber of Commerce, I am also a member of the main Chamber of Commerce and I have served on their board. I am saying that to say this, when we started having these problems and sometimes--Chairwoman Waters might want to respond to this too-- I found out that those businesses, where if they were attorneys, or consulting firms, and so forth that seemed to be more in the mainstream of everything, they immediately applied for the PPP. But when the people that I was concerned about might be calling grocery stores, barbers and beauticians, and people of that nature--I know Ms. Ross might have some concerns to add and I don't want to take up all of the time--I had a lot of difficulty in trying to get them to even apply, because it seemed almost it was that tier there. And so by the time they got ready to apply, they said that all of the money was gone. And I know right now there is about 100-some billion dollars still in there. I want to ask Mr. Busby, how do you respond to that as being over the Black Chamber of Commerce, do you experience some of the same kind of results? Mr. Busby. Sure. And that's a great question. I would say that we lost 450,000 businesses. I want to keep saying that, because we have $130 billion left. Had that $130 billion been made available and accessible to those 450,000 businesses, the majority of them would still be in business. The payroll protection plan when it came out, again the name said payroll protection, so that meant to a business owner that did not have full-time employees, they felt that it was written for them. The second piece, if you look through the pieces, in the legislation, the 700-plus pages, the words ``Black'' or ``African American'' were never listed. And so again, when our communities heard about the stimulus package, they felt like it wasn't necessarily for them. Third, when they said go to the bank, again the majority of our business members across the country may know their teller, may even know who cashes their check, have a checking account, a debit card, but they didn't have a lending relationship with the bank and so they felt like they were displaced in the opportunity. And then lastly, it was just application fatigue. So now, when you go back to business owners and say, there is money still available, they are nervous, because they have now heard that the Internal Revenue Service has placed additional funding--Internal Revenue agents to go out to make sure that the small businesses that may have gotten a couple of extra thousand dollars are now being audited and are facing extra scrutiny. And so many of them have said, hey, I think I have made it through the most difficult times. We are getting ready to reopen and so I have to think about the future as opposed to what has happened in the last 3 months. We are trying to educate our businesses that there are funds still available, but it really is about them understanding how to go about it, and making sure that the banks and community CDFIs that they have relationships with understand it as well. Mr. Lawson. Okay. And thank you. Madam Chairwoman, I just wanted to say, since you are here on this call, how do we get this message out to them in language, what Mr. Busby just talked about, to try to inform them, and I know Ms. Ross might have some ideas, and I don't want my time to run out. But I am just going to cut it off, because there seems to be a great deal of problems in communication. Mr. Busby. It was really unclear coming out initially, who, how, when, and where. And so for our community, it just took them a few days longer. And during the course of those few days, they heard that the funding was gone. I think that as you discussed, there are great opportunities through Black Pages, Black online, Black media, and Black news to ensure that our businesses understand how, where, and what is responsible for getting the additional dollars. Mr. Lawson. My time has run out. And I yield back, Madam Chairwoman. Chairwoman Beatty. Thank you. The Chair now recognizes the gentleman from Wisconsin's First District, Mr. Steil, for 5 minutes. Mr. Steil. Thank you very much, Madam Chairwoman. Thank you for calling today's hearing on a really important topic. I want to build on what was just being discussed there, and would like to go back to you, Mr. Busby. One of my good friends was the President and CEO of the Milwaukee African American Chamber of Commerce, Dr. Eve Hall. She now runs the Urban League in the City of Milwaukee. And I have spoken with her and others. And earlier, we were talking about capital formation, and Representative Ann Wagner dove in there. And then later, you had comments about boots and bootstraps, that I think is very topical. Not only do you need access to the capital formation, but sometimes you need to have some knowledge and some mentorship. And I know the African American Chamber of Commerce was very involved in creating those types of relationships. Could you just share what you think are some of the best practices, making sure that we are getting information out, not only broadly, but in particular in the African-American community as well? Mr. Busby. Great question. I do know Dr. Eve Hall. She is a graduate of Florida A&M University, which is also my alma mater. When you speak to her again, tell her I said hello. I think the Urban League, as well as the U.S. Black Chamber and other local institutions play a critical role. We are the voice of Black business here at the U.S. Black Chamber. So we make sure that we try to develop great relationships with our local communities and local business owners, but we still have challenges. In many communities, they are facing challenges that don't reach Washington, D.C. And so, when they hear about what is happening here in the Nation's Capital, they don't understand the impact that it has on their local business and or local community. So, it is our role through our local chambers to really be the mouthpiece for our local communities here in Washington, as well as from Washington back to our local Black and Latin businesses that operate across the country. But I think we just have to be transparent. When we were asking for data early on about who was getting the loans, no one was able to share that. When we were yelling at the top of our lungs that we were going to lose 35 to 40 percent of our Black-owned businesses, no one heard that. And then the data came out that we had actually lost 41 percent. And now, Congress and other folks are saying, ``Wow, we didn't see it coming.'' It is about having a realistic conversation as opposed to having one that is based on emotion. And so we are saying, we need transparency early on, from contracts, to loans, as well as opportunities. And then the third piece, I just want to make sure that I get an opportunity to say, when we are talking about government, as well as corporate America now saying, hey, we want to do more business with Black-owned businesses, we have to make sure that there is a certification to ensure that these businesses are actually Black-owned, so that corporate America can actually certify and say, yes, I am supporting a Black- owned business. Because right now, we all fall under the umbrella of minority business. And we are not just minority businesses, we are Black businesses, we are Hispanic, Asian, and other, but we are not all Hispanic. And right now, when we are facing a pandemic that has a trifecta on the Black community, we need to be isolated out in reference to our support and as referenced to the dollars that are being spent from both corporate America, as well as the Federal Government. Thank you. Mr. Steil. Thank you very much. I appreciate your passion on the topic. Thank you for sharing your insight. I want to shift gears slightly and ask Ms. Kerrigan a question. One of the things I think we have seen during the broader pandemic is the ability of us to leverage in the technology, to make sure that we are getting access to people who may not have an easy time getting access to bank loans. And as we are thinking about kind of online notaries and some of the other legislative reforms that we can do, I would ask you to comment on what you see as the role of leveraging some of the financial technology services that are available to make sure that we are getting access to those who may not traditionally have a seat at the table. Ms. Kerrigan. Oh, it is critical. I think it is so critical. And thankfully, but unfortunately at the end of the first tranche of those PPP funds, the Fintechs were brought on board. And once they were, I think they made a pretty big difference in terms of these 21 lenders that did a significant amount of lending. So, it makes a big difference because they have the automation, they have the artificial intelligence (AI), they have actually between them all of the customer lists that they were able to outreach to them. So yes, we need to have the modern systems. As we like to say to our business owners and entrepreneurs, you have to meet customers where they are. We know they are using social media, they are using cloud services, they are using platforms. This is a platform-based economy. And in fact, the pandemic accelerated the movement to this platform economy. So that is why Fintech and technology is going to become even more important, so the government does have to recognize that and not be an afterthought. This has to be done at the beginning of any program. Mr. Steil. Thank you very much, Ms. Kerrigan. I appreciate you holding today's hearing, Madam Chairwoman. And I yield back. Chairwoman Beatty. Thank you so much. The Chair now recognizes the gentlewoman from Massachusetts Seventh District, Ms. Pressley, for 5 minutes. Ms. Pressley. Thank you, Chairwoman Beatty and Chairwoman Waters. I do believe that these are old fights, but it seems that we might be on the precipice of ushering in a new moment, and it has everything to do with the vigilance and the leadership of both of you. So thank you for your leadership, and thank you to all of our witnesses for joining us today. While this crisis is unprecedented, the disparities revealed in our economic system and subsequent Federal response are unfortunately very familiar. From the Homestead Act to New Deal programs in the GI Bill, Black Americans have historically been locked out of large-scale government intervention and investment. We must not repeat exclusionary policies of past Federal responses. So, what does that mean? That means requiring the disclosure of racial data to better inform our allocation of resources for everything from testing and treatment to small business relief. And I appreciate very much seeing data on who actually received PPP loans, but the data we need is on who didn't receive PPP funding, who was denied and why, and why was it late? The National Bureau of Economic Research found that 41 percent of Black businesses have shuttered since the pandemic began. From the onset, experts estimated that up to 95 percent of Black women business owners would be left out of the Program. Mr. Busby, could you speak specifically to the challenges faced by Black businesses, and that PPP funding and access to it was conditioned on access to banking? Mr. Busby. Yes. Again, when we first heard about the payroll protection plan, it was discussed on a Friday afternoon. By that Monday morning, the majority of the dollars had been already presented to 50 publicly traded firms in the amount of $250 billion. And so, many Black firms did not find out about the opportunity until the 11th hour. We also know that again, as I stated earlier, it was based on having a banking relationship. Ms. Pressley. Preexisting. Mr. Busby. A lending program and many of our businesses just did not have a loan currently because of the cost, as well as the inability to be able to get credit from an existing bank, so we did not. Ms. Pressley. Thank you. So, just reiterating that, since the majority of minority-, immigrant-, and women-owned businesses are micro in size--beauty salons, barbershops, bodegas, they are the backbone of our local economies. Yet, we just heard from struggling owners throughout the district based on the very point that you underscored there. So, the relief was nowhere to be found. And this includes Murray's Kitchen in Dorchester, which applied for PPP assistance back in May and has yet to hear back. Organizations in my district like BECMA, Commonwealth Kitchen, Amplify, Latinx, JPNDC, EforAll, and so many others have stepped up to provide businesses with support, but ultimately this is about Federal Government relief. As I said, these are old fights in a new moment. I hope this new moment is about new action. I introduced, in partnership with Senator Kamala Harris, the Saving Our Street (SOS)Act, to provide micro business owners with direct grants, not loans, of up to $250,000. We have to be intentional. And this bill requires 75 percent of the micro business assistance fund set aside for minority- and women-owned businesses. Mr. Busby how does the SOS Act correct some of the challenges of previous relief efforts? And why is it so critical to provide relief in the form of grants instead of loans? Mr. Busby. Well, we heard from Black Americans that the United States just wrote nearly a $2 trillion check in response to a stimulus that was needed from a pandemic. Black Americans have been saying we have been facing a pandemic for hundreds of years, and we want to have a conversation, and not necessarily just about reparations, but about equity. And so, as we would talk about a stimulus package that is geared towards micro businesses, the U.S. Black Chamber is definitely in favor of that. Ms. Pressley. Thank you. Mr. Busby. We want to make sure that the dollars go to the businesses as well as the sectors that need it the most: 40 percent of all Black business revenue comes from 5 industries, and those 5 industries were the industries that were hit the hardest, and many of them were the same types of businesses that you have there in your district--restaurants, beauty salons, nightclubs, and social media types of places where you would normally go to gather are now closed. And many of those businesses don't see the future, but they definitely need the income as well as the grants to be able to have sustainability. Ms. Pressley. Thank you, Mr. Busby. Again, it is just clear that it is not a one-size-fits-all approach. We have to be targeting and very precise in the same way that we have codified disproportionate hurt, we can codify through law making justice and equity, and so I thank you for endorsing the legislation and we look forward to continuing to advocate for it, and to see it passed. Thank you. Mr. Busby. Thank you. Ms. Pressley. And I yield back. Chairwoman Beatty. Thank you. The Chair now recognizes the gentlewoman from North Carolina's 12th District, Ms. Adams, for 5 minutes. Ms. Adams. Thank you, Chairwoman Beatty, and thank you to Chairwoman Waters as well. You both have done an absolutely outstanding job. This is an issue that we have been dealing with here in my district. Let me ask my first question. The Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act provided $1 billion in emergency appropriations to the CDFI Fund and established a further set aside of either 25 percent of the remaining PPP funds or $10 billion for community financial institutions, including CDFIs and MDIs. As some of you have outlined, their limitations to the PPP to that program for our CDFIs and MDIs mainly that these banks or financial institutions are limiting their ability to lend based on their existing deposits or reserves. For example, in my State, one of our leading MDIs had to cap their PPP loans at $14 million. However, if this MDI and CDFI were able to receive a direct infusion of funding, they could continue to provide the assistance that was needed. I have introduced H.R. 7121 to address this issue. It would provide $5 billion to CDFI funds and set aside $2 billion for minority lending institutions. So Ms. Kerrigan and Mr. Busby, could you please highlight the significance of greater CDFI and MDI participation in the PPP? And how could it impact minority- and women-owned businesses? Ms. Kerrigan. I will go first. It's critical. We saw that once CDFIs were on board, additional dollars were provided, and the difference that they made in getting money to those underserved businesses, to minority entrepreneurs. So, it is a distribution channel that works. And again, CDFI it should not have been an afterthought. They should have been there from the beginning just like Fintechs and some of the other lenders to make sure we have the broadest distribution channels possible. So, it's very, very critical. And if we are going to do another round, another tranche or a phase for a package, they definitely should be included and funds should be re-upped because they made a huge difference. Ms. Adams. Great. Thank you. In response to the global financial crisis and the Great Recession of 2008, Congress established the State Small Business Credit Initiative (SSBCI) in 2010 to provide $1.5 billion in funding for State and territory programs that support access to credit for small businesses. This temporary program--and it was administered by the Treasury Department--expired in 2017. It provided awards to 47 States, 5 Territories, Washington, D.C., municipalities, and 3 States. Unfortunately, the expiration of the program has left a void in the marketplace for affordable small business loans. Madam Chairwoman, I would like to enter two letters into the record from the North Carolina community banks. Chairwoman Beatty. Without objection, it is so ordered. Ms. Adams. Thank you. Ms. Castillo, Mr. Busby, how could reauthorization of the SSBCI help minority-owned businesses during this pandemic? And do your organizations support the State Small Business Credit Initiative Renewal Act? Mr. Busby. I will go first. This is Ron Busby, U.S. Black Chamber. I will say in our 2020 Blackprint, we have somewhat outlined and addressed your bill specifically. I will also say that we believe that as many avenues that we can put access to capital in our States and local communities, we are in favor of that. We feel like that as many options as we have available to us, especially our CDFIs and our Black-owned banks, we know that they make 70 percent of their loans to Black homeowners and to Black businesses in local Black communities. That is the way we are going to have to have sustainability-- Ms. Adams. We have 45 seconds. So, I will have the other speaker respond. Ms. Castillo. I pretty much agree with what Mr. Busby said. I totally echo his words. I think putting more money on the CDFIs would really, really help. Thank you. Ms. Adams. Thank you. Madam Chairwoman, I am going to yield back. Thank you. Chairwoman Beatty. The gentlewoman yields back. I now recognize the gentlewoman from Pennsylvania's 4th District, Ms. Dean, for 5 minutes. Ms. Dean. Thank you, Madam Chairwoman. Can you hear me? Chairwoman Beatty. Yes. We can hear you. Ms. Dean. I apologize. I have had some connection issues, but I am delighted to be here. I thank you Chairwoman Beatty, and I want to thank the entire panel of witnesses for joining us virtually today to talk about access and equity for minority- and women-owned businesses, specifically for helping inform us on how we move forward to support the American people as best as we possibly can, not just during a pandemic and an economic crisis, but for the long haul. Chairwoman Beatty, since you have allowed me to be a part of your subcommittee, I have taken my responsibility very seriously, and I have had the the chance to travel around my district, meeting with minority- and women-owned businesses. And I heard about some of the systemic barriers, pre-pandemic. But in light of the pandemic, I have had the chance to follow up. Just yesterday, I visited four different minority-owned businesses and women-owned businesses in my area. And some of the common themes that you hear beginning with when they were starting their businesses, not during a pandemic, but they had good robust business plans, and the difficulty of getting adequate startup capital was one recurring theme. A second recurring theme during the pandemic has been access to capital as well. I know we have discussed a lot about PPP. In particular, I spoke yesterday with a woman who heads the Norristown Chamber, Kym Ramsey; she has her own business. And she talked about mentoring others, particularly during this pandemic in terms of business plans, in terms of applications for relief, but also the serious lack of capital support. I am going to ask a broad question for any member of the panel, I was wondering if you could speak to these often recognized systemic barriers, some are systemic, some may be anecdotal but many are systemic, and what actions we should take beyond PPP, what actions we should take to help ensure access to support systems? And I would open that to anyone who would care to answer that. Ms. Castillo. Thank you for the question, Congresswoman Dean. I think that minority- and women-owned businesses, and I am certified as both, need to be included in the management, distribution, and brand location of any funds that Congress allocates to the stimulus. Really get us involved. Give us a seat at the table. I don't think the problem will be solved until Congress really engages us, engages Mr. Busby, engages the USHCC, and the NMSDC. You have to have either an advisory council or just some kind of council that is there with you, sharing the issues with you and helping you to write the right legislation, just to make sure it really does work in the communities. Ms. Dean. I appreciate that. One other issue that came up often as I visited businesses during COVID, that has been exacerbated, is a bias by financial institutions in lending to women, and in lending to minority businesses and enterprises. Can you speak to that, and how do we break down those biases? Mr. Busby. Thank you. I will answer that. I think again the access to capital is a concern by all minority-owned, particularly Black-owned businesses. The fastest growing sector of business owners in the country is Black women. And when you ask Black women their concerns, they will say, it is possible to get credit, yes, but they pay an exorbitant price for that credit. So, it is more than just having monies go into banks and banks then make loans. It needs to also be affordable so that the same business owner who is a White man, is paying the same rate based upon the same credit score, and the same criteria as any minority, particularly Black-, or Brown-, or women-owned businesses. We have to remove the barriers so that all of us have access to it. It is already difficult enough to run a business, and when you don't have the funding to grow to get through difficult times, it makes it that much more difficult. Ms. Dean. Now with your permission, Madam Chairwoman, I will pitch two bills that I have initiated. One is called the Restore America's Main Street Act, which would be direct liquidity to businesses not based on payroll so that the business itself could understand and use that money where it is needed. And then the other is my NRSRO bill, which I am very happy for the cosponsorship of many on this committee to get access to other credit institutions. I see my time has expired. Thank you very much, Madam Chairwoman, and thank you to our witnesses. Chairwoman Beatty. Thank you so much. The Chair now recognizes the gentlewoman from Texas' 29th District, Ms. Garcia, for 5 minutes. Ms. Garcia of Texas. Thank you, Madam Chairwoman. And I too want to thank you for bringing a topic to the table that is so important, particularly during this time of crisis, in knowing that so many small businesses are hurting and continue to hurt. And as most of our witnesses have said, unless they get help, they may not survive. I first want to associate myself with the history and comments from my colleague, my good friend from Houston, Congressman Green. I think making the MBDA an independent agency is a step in the right direction. And obviously, it is important to get those bootstraps, but I think the boot is also important. And so, I want to start with Mr. Busby. I thought that was a very creative way of illustrating what the dilemma is. Tell me, why does it matter that we get all of those technical resources and the help that small business needs, not just the capital but the assistance that can be provided in some of these centers? Mr. Busby. Currently, there are over 2.6 million unemployed Black people in America today. Ms. Garcia of Texas. Right. Mr. Busby. That is the bad news. The good news is there are 2.6 million African-American-owned businesses today. If those 2.6 million businesses have access to capital, access to opportunity, then they hire Black people within their community. If that is done across the country, we don't have an unemployment conversation for Black people in America. That is a concern. As you grow the wealth of Black people, as consumers, we are the best and biggest consumer in the country. As we earn dollars, as we grow our businesses, we spend our dollars within our local and State businesses, that is only going to boost the economy for America. So when you invest in Black-owned businesses, you are investing in ultimately-- Ms. Garcia of Texas. Right. But I wanted to get to the illustration of the boot, what should the boot contain in terms of technical services to make sure that those businesses can thrive and grow, because then, obviously, the community grows with it and employment increases. Mr. Busby. I think technical assistance is very important. Again, if you look at the majority of Black-owned businesses, they don't have continuing education, thus the majority of Black-owned businesses are doing less than $100,000. But those businesses that are doing continuing education, online training, they are all are doing above $1 million. And so, we have to invest in the opportunities for our businesses to have technical assistance and that is coming out of the gate. That is not waiting until they have already established themselves, that is from pre-starting your business all the way through the existence of that business. That is how they will continue to be able to grow and have sustainability. That looks like-- Ms. Garcia of Texas. Thank you. And Ms. Castillo, do you have anything to add to that and what that boot looks like? Ms. Castillo. Thank you. Yes, I do. Actually, we know that technology is here and is here to stay forever. And I totally agree with what Mr. Busby says. I think our community certainly needs that education because most of the businesses, even if it is a little mom and pop, like a restaurant, they don't have computers, they don't how to use assistance. So I am totally, totally in agreement that our community does need the-- Ms. Garcia of Texas. They also would be accountants and lawyers. I remember as a lawyer helping someone with their-- Ms. Castillo. Yes. I think center of excellence to educate them in how to use the computer, and how to complete an application, and how to really run the business. That is crucial for our community. Because we know-- Ms. Garcia of Texas. Ms. Kerrigan, did you have anything to add? Ms. Kerrigan. I will say that for future startup activity and for entrepreneurship in general, that technical information is so critically important. Again, not only for existing businesses, because the world is changing every day, and there is social media, and it is this platform-based economy, you are going to need those types of modern support and that ongoing support in order to navigate, not only the pandemic, but also sort of this ever-changing economy. So, it is very, very vital. And again, young entrepreneurs particularly, and I think across-the-board and across demographics say that access to technical information is not access to capital, access to technical information is the number one thing that they need in order to start their businesses. They don't know where to go to. So yes, it is vital, very important. Ms. Garcia of Texas. Thank you. I only have one second left, and I would say to Ms. Ross, congratulations, and you go girl. Ms. Ross. Thank you. Ms. Garcia of Texas. With that, I yield back. Chairwoman Beatty. Thank you very much. The Chair now recognizes the gentleman from Minnesota's Third Congressional District, Mr. Phillips, for 5 minutes. Mr. Phillips. Thank you, Madam Chairwoman, and I thank our witnesses. I think it is fair to say that the pandemic will surely precipitate the failure of far too many businesses. Mr. Busby already noted, I think, that 450,000 have already closed and more are sure to follow suit. But prospectively, it is also going to present an opportunity for new businesses to be created once the pandemic passes. But just like so many of my colleagues have shared, including our witnesses, the hurdles to securing capital are terribly high, and often too high for women and minority entrepreneurs. And that is the focus of my forthcoming efforts and also my questions. Starting with Ms. Castillo and Mr. Busby, I want to ask first about inspiration and then capitalization. First, how do we inspire? And are there any programs on which you are working or you are familiar with to inspire young people to consider entrepreneurship and starting their own small businesses? I would love to hear your thoughts on that and save some time for how we are going to capitalize them. Ms. Castillo. Thank you so much, Representative, for the question. Definitely, young kids now are very entrepreneurial. I think that technology has really helped to make them more entrepreneurial. And it's the reason why they can work from anywhere. They have these great ideas. And I really think that technology has really triggered that in those individuals. And also, because the market is so tough, jobs are difficult to get. And the pandemic certainly has accelerated that increase. So I think that young people are more motivated than ever to really start their own businesses, because especially if they are technologically savvy, because they can run a business from a very tiny cell phone. They pretty much just have an idea and run a business. Mr. Phillips. And Mr. Busby, are you seeing the same things among your members and perhaps future generations? Mr. Busby. Yes, what we have done is we have partnered with the Historically Black Colleges and Universities to create Chambers of Commerce on the University campuses in the future, so that they can get an entrepreneurial experience and education firsthand before they leave college. Often, many young people say, I want to start a business, at 19- or 20-years-old, but they don't have the experience or the exposure. They end up messing up their credit or their parents' credit, they end up messing their name and an opportunity. We want those young people to partner with a mentor in an industry very similar to the idea or the concept that they have so they have a better chance of doing two things, long-term sustainability. What we also see is that many of our successful businesses don't have a succession plan. So you will find businesses that have been in business for 10, 20, or 30 years and then fall off the map because they haven't had anyone to pass it off to. And so we are asking many of our young people not to necessarily start a new business but to go find an existing business where you can bring your talents and skills that you currently are just coming out of college with, bring that to some of our existing businesses and allow them to have sustainability, as well as allow you to be able to get into a business earlier and have a longer term of success. Mr. Phillips. I love that. And as the witnesses might know, and my colleagues, I authored a bill called the New Business Preservation Act, which would form a $1.5 billion allocation through the Treasury Department, to partner with States throughout the country to set up especially investment funds focused on women-owned and minority-owned setups with a one to one matching component in which venture capitalists can be matched with these funds to provide capital to startups. Is that the kind of program and initiative that you, Ms. Castillo and Mr. Busby in particular, feel is necessary to inspire that kind of new startup environment. Ms. Castillo. Absolutely. I think that is a great idea. I think any fund, any way to get financing when you are starting your business is absolutely crucial. I support your idea 100 percent. Mr. Phillips. Wonderful. And Mr. Busby? Mr. Busby. Yes, I believe in the public-private partnership. What we are asking for from our corporate partners is if you have $100 million in assets, to take 15 percent of your assets that are sitting in a bank, and invest those assets in a Black-owned bank, which then turns around and invests in Black-owned businesses. And lastly as a president of the local chamber, the United States Black Chamber, invest in us, because we then turn and give technical assistance, and the access to capital, as well as the contracting relationship opportunity of many our businesses which are Black-owned. Mr. Phillips. I love that, because money without mentorship is like an engine without fuel. I thank you all for your time. I yield back, Madam Chairwoman. Chairwoman Beatty. Thank you. The Chair now recognizes the gentleman from Illinois' Fourth District, Mr. Garcia, for 5 minutes. Mr. Garcia of Illinois. Thank you, Madam Chairwoman, for allowing me to participate in such an important hearing, and I thank Ranking Member Wagner as well. I represent a working-class immigrant district in Chicago. Small businesses are everywhere in my community. Before the pandemic, if you just drove down two of the main retail corridors, you would find restaurants, hardware stores, and supermarkets owned by immigrants. But when the pandemic passes, I am not sure what will still be there. Businesses shut down temporarily in March, but more and more are announcing that they will be closed for good. We need to act fast to fix that. First of all, our businesses need revenue, they need customers. The people in my community are worried about how they can pay the rent and pay their medical bills. If the Senate doesn't pass the HEROES Act, and Congress doesn't do more to ensure that people can stay in their homes and meet their needs, then no amount of loans can save these businesses. Small and minority-owned businesses also need access to credit. Before the PPP program, there were not many SBA lenders who operated in my community. After PPP was launched, it was not easy for additional lenders to get approval to make loans under the Program. We have talked a lot about how hard it was for minority- owned businesses to get credit in the early days of PPP, and in my community, this is a reason why. Ms. Castillo, do you think the small, minority-owned lending institutions have built a better relationship with the Small Business Administration through the PPP program or has the implementation of the Program added new hurdles? Ms. Castillo. I think they have built a good relationship lately. I think when the program was implemented, they didn't. But I think likely, yes. Mr. Garcia of Illinois. Okay. Good for you. SBA released data about those who would access loans from the PPP program. Unfortunately, the main revelation from this release is that the SBA needs to do a better job of collecting data on this program. How can we act in Congress and in our communities to encourage better data collection by the SBA so that we can understand who benefited from these programs? Ms. Kerrigan? Ms. Kerrigan. Data is critical. And it starts at the very beginning in terms of collecting that data in the application process. I know it was voluntary. It wasn't required. I don't know what the legal hurdles are in terms of making that required information, but we need to have that data in order to see who benefited and where we go moving forward. Data drives decision-making. And I think that would help Congress do what they need to do to target the program better. So we are all about data disclosure and transparency, particularly when it comes to taxpayer dollars. So we fully support anything that we can do to get more data so that you all can make your decisions in a much more informed way. Mr. Garcia of Illinois. Any suggestions about what Congress can do to help produce that data on the part of SBA? Ms. Kerrigan. I think the more that you ask, hopefully, the more that you will get. In terms of any demographic data or anything relative to race, there are things that were voluntary, right? So, I think it would have to be an Act of Congress that makes that mandatory, as part of legislation. Again, that is something we would have to look into it but I think a lot of it was voluntary and not mandatory and, that being the case, you just do not have the data that you need at this point. So, it probably would have to be some type of Act of Congress to make that happen. Mr. Garcia of Illinois. Okay. Thank you, Madam Chairwoman. I yield back. Chairwoman Beatty. Thank you. The Chair now recognizes the gentlewoman from the 45th District of California, Ms. Porter, for 5 minutes. Ms. Porter. Thank you so much, Madam Chairwoman. As the only single mom in Congress with young kids, and as a person who is working from home as much as I can, I know that single moms are being asked to do the impossible right now. This isn't new, but the pandemic is certainly making it so much worse. Ms. Kerrigan, pre-COVID-19, what were the margins like for a normal small business, say a bakery owned and managed by a single mom who has two or three employees? What were those profit margins like? Ms. Kerrigan. Thin, thin, thin. I mean, really on the day- to-day, very thin. Ms. Porter. That was back in normal times. Ms. Kerrigan. That is right. Ms. Porter. What would happen if this bakery saw the price of flour double? Ms. Kerrigan. It would be an enormous impact, not only in terms of prices going up but demand going down. Ms. Porter. What if the price of eggs were to triple? What would that do to the profit margins? Ms. Kerrigan. It would probably wipe many of them out. Sugar, any of the inputs that you are using in that bakery, you are really carefully monitoring those expenses, right? Ms. Porter. What about the cost of child care quadrupling, the child care that allows that bakery owner to come to work every day and bake? What does that do to the business? Ms. Kerrigan. It would probably kill the business because it would be impossible to do that, very, very difficult. Ms. Porter. And that is what is happening, by the way, when people have to go from paying, for example, for after-school child care to full-time child care. It causes one of the inputs of your business, which is the ability of the owner/operator or the employees to go to work, to essentially quadruple. And what we are seeing right now is all of that is happening at the same time that the number of customers is dropping, and that is going to push these businesses into the red. Do you think that this child care crisis is a crisis for our small business community? Ms. Kerrigan. Oh, absolutely, and the Small Business Roundtable on Facebook did a survey, The State of Small Business Report, and that was one of the biggest pressure points that they found was just sort of the enormous pressure that was being put on entrepreneurs, particularly women entrepreneurs, to juggle both. So absolutely, it is a crisis for working women and entrepreneurs, both. Ms. Porter. And working parents, but it falls particularly hard on those businesses with the thinnest margins which often are women-owned and minority-owned companies who have micro businesses and those very thin margins, just like they can't absorb a price shock of 4 times the cost of inputs like flour, they can't afford what is in essence a 4 times price shock in the cost of their own ability to contribute to that business, to put in the sweat equity by having to find child care. Do women business owners have easy access to capital to help them get through these tough times? Are you aware of anyone who makes loans to women business owners or to working parent business owners so that they can pay for the cost of child care? Ms. Kerrigan. No. The women entrepreneurs and business owners who have been able to get a PPP loan, have, done so because of the relationship they may have had established with the bank, and so they had a commercial relationship which was very few, and then through Fintech lenders, but if you are asking specifically and directly for child care, then no. Ms. Porter. So there is no assistance, no program. Can you use PPP funds to pay for child care for your employees, to provide that, for example, to them? Ms. Kerrigan. No, it is not a forgivable expense. Ms. Porter. Do you think the economy can fully recover if working parents, and particularly single parents, are trying to be full-time parents, assisting with emergency distance learning and work full time in their businesses to deal with all of the adjustments and struggles and changes that coronavirus survives? Can we have a full economic recovery in that kind of environment? Ms. Kerrigan. It is very difficult. It is very difficult to juggle, too. Not everything can be done out of the home in terms of a business. But even if you are in the home, working in the business, you have a home-based business and you have also the responsibility of educating your kids, if they are not going back to school, it would be extremely, extremely difficult, absolutely. No, it would be very difficult to get back to full economic recovery, back to ``normal'' with that scenario. Ms. Porter. So would you agree that we ought to be thinking about supports for child care and helping businesses deal with these and would employees deal with this cost of child care as part of how we think about economic recovery, they are hand-in- glove issues? Ms. Kerrigan. I do. Just as we looked at PPP in terms of forgivable loans for, say, both payroll and healthcare expenses, yes, I think we need to have some very creative solutions because you are right. We cannot get back to full economic recovery without having that addressed. I agree with you, and I look forward to maybe working with you to see what we can do to make that happen. Ms. Porter. Thank you so much. And I yield back. Chairwoman Beatty. Thank you so much. I would like to thank all of the Members for their questions. And certainly, I would like to thank all of the witnesses for their testimony--Mr. Busby, Ms. Castillo, Ms. Kerrigan, and Ms. Ross. Without objection, I am submitting the following statements for the record: the Asian-American/Pacific Islander Chamber of Commerce and Entrepreneurship; Clever Girl Finance; Funds for Humanity; Include Ventures; and the National Bankers Association. Without objection, it is so ordered. The Chair notes that some Members may have additional questions for this panel, which they may wish to submit in writing. Without objection, the hearing record will remain open for 5 legislative days for Members to submit written questions to these witnesses and to place their responses in the record. Also, without objection, Members will have 5 legislative days to submit extraneous materials to the Chair for inclusion in the record. This hearing is now adjourned. [Whereupon, at 2:10 p.m., the hearing was adjourned.] [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]