[House Hearing, 117 Congress]
[From the U.S. Government Publishing Office]


                  A REVIEW OF THE SBA'S GRANT PROGRAMS

=======================================================================

                              HEARING

                             BEFORE THE 
                               
       SUBCOMMITTEE ON OVERSIGHT, INVESTIGATIONS, AND REGULATIONS

                                 OF THE

                      COMMITTEE ON SMALL BUSINESS
                             UNITED STATES
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED SEVENTEENTH CONGRESS

                             FIRST SESSION

                               __________

                              HEARING HELD
                              MAY 27, 2021

                               __________

[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
                               

            Small Business Committee Document Number 117-016
             Available via the GPO Website: www.govinfo.gov
             
                                __________

                    U.S. GOVERNMENT PUBLISHING OFFICE                    
44-923                     WASHINGTON : 2021                     
          
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                   HOUSE COMMITTEE ON SMALL BUSINESS

                 NYDIA VELAZQUEZ, New York, Chairwoman
                          JARED GOLDEN, Maine
                          JASON CROW, Colorado
                         SHARICE DAVIDS, Kansas
                         KWEISI MFUME, Maryland
                        DEAN PHILLIPS, Minnesota
                         MARIE NEWMAN, Illinois
                       CAROLYN BOURDEAUX, Georgia
                         TROY CARTER, Louisiana
                          JUDY CHU, California
                       DWIGHT EVANS, Pennsylvania
                       ANTONIO DELGADO, New York
                     CHRISSY HOULAHAN, Pennsylvania
                          ANDY KIM, New Jersey
                         ANGIE CRAIG, Minnesota
              BLAINE LUETKEMEYER, Missouri, Ranking Member
                         ROGER WILLIAMS, Texas
                        JIM HAGEDORN, Minnesota
                        PETE STAUBER, Minnesota
                        DAN MEUSER, Pennsylvania
                        CLAUDIA TENNEY, New York
                       ANDREW GARBARINO, New York
                         YOUNG KIM, California
                         BETH VAN DUYNE, Texas
                         BYRON DONALDS, Florida
                         MARIA SALAZAR, Florida
                      SCOTT FITZGERALD, Wisconsin

                 Melissa Jung, Majority Staff Director
            Ellen Harrington, Majority Deputy Staff Director
                     David Planning, Staff Director
                            
                            C O N T E N T S

                           OPENING STATEMENTS

                                                                   Page
Hon. Dean Phillips...............................................     1
Hon. Beth Van Duyne..............................................     3

                               WITNESSES

Ms. Cheetie Kumar, Chef and Owner, Garland, Raleigh, NC, 
  testifying on behalf of The Independent Restaurant Coalition...     6
Ms. Esther Baruh, Director of Government Relations, National 
  Association of Theatre Owners, Washington, DC..................     8
Mr. Chris Montana, Owner and Chief Executive Officer, Du Nord 
  Craft Spirits, Minneapolis, MN, testifying on behalf of the 
  American Craft Spirits Association.............................     9
Mr. Mark Maguire, Owner, Maguire's Kitchen & Catering, Dallas, 
  TX, testifying on behalf of the National Restaurant Association    11

                                APPENDIX

Prepared Statements:
    Ms. Cheetie Kumar, Chef and Owner, Garland, Raleigh, NC, 
      testifying on behalf of The Independent Restaurant 
      Coalition..................................................    25
    Ms. Esther Baruh, Director of Government Relations, National 
      Association of Theatre Owners, Washington, DC..............    29
    Mr. Chris Montana, Owner and Chief Executive Officer, Du Nord 
      Craft Spirits, Minneapolis, MN, testifying on behalf of the 
      American Craft Spirits Association.........................    32
    Mr. Mark Maguire, Owner, Maguire's Kitchen & Catering, 
      Dallas, TX, testifying on behalf of the National Restaurant 
      Association................................................    36
Questions and Answers for the Record:
    Questions from Hon. Scott Fitzgerald to Ms. Esther Baruh and 
      Answers from Esther Baruh..................................    41
Additional Material for the Record:
    Chocolate Touring, LLC.......................................    43
    Fiddler on the Roof..........................................    45
    National Federation of the Blind.............................    47

 
                  A REVIEW OF THE SBA'S GRANT PROGRAMS

                              ----------                              


                         THURSDAY, MAY 27, 2021

              House of Representatives,    
               Committee on Small Business,
                         Subcommittee on Oversight,
                           Investigations, and Regulations,
                                                    Washington, DC.
    The Subcommittee met, pursuant to call, at 1:01 p.m., via 
Zoom, Hon. Dean Phillips [chairman of the Subcommittee] 
presiding.
    Present: Representatives Phillips, Craig, Chu, Davids, Van 
Duyne, Hagedorn, Meuser, and Donalds.
    Chairman PHILLIPS. I want to thank everybody, especially 
our witnesses for joining us today for a remote hearing. I want 
to make sure to note some important requirements first.
    Standing House and Committee rules and practice will 
continue to apply during our remote proceedings and all members 
are reminded that they are expected to adhere to these standing 
rules including decorum when they are participating in any 
remote event. With that said, technology, of course, requires 
us to make some modifications to ensure that members can fully 
participate in these proceedings.
    House regulations require that members to be visible 
through a video connection throughout the proceedings, so 
please keep your cameras on. And, if you are not speaking, 
please keep your microphones off. If you have to participate in 
another proceeding, please exit this hearing and log back on 
later when you are available.
    In the event a member encounters technical issues that 
prevent you from being recognized for your questioning, I will 
move to the next available member of the same party and I will 
recognize that member at the next appropriate time slot 
provided that they have returned to the proceeding. Should a 
member's time be interrupted by technical issues, I will 
recognize that member at the next appropriate spot for the 
remainder of their time once those issues have been resolved. 
In the event a witness loses connectivity during testimony or 
questioning, I will preserve their time as staff address their 
technical issues. I may need to recess proceedings to provide 
for time for the witnesses to reconnect.
    And finally, please remember once again to remain mute 
until you are recognized to minimize background noise.
    In accordance with the rules established under H.Res. 965, 
staff have been advised to mute participants only in the event 
that there is inadvertent background noise. Should a member 
wish to be recognized, they must unmute themselves and seek 
recognition at the appropriate time.
    Now that we are done with the fun part of the hearing, I 
will move on to my opening statement.
    COVID-19 sparked a once in a lifetime, at least we hope, 
crisis for America and our small businesses. As cases rose, 
COVID forced small firms all across the country to shut their 
doors to protect their customers and employees and to slow the 
spread of the virus. By April 2020, the number of active small 
business owners had dropped by 22 percent, almost a quarter of 
our nation's small businesses, the most significant drop on 
record in our nation's entire history. Since the dire situation 
emerged, members of the Committee have worked tirelessly in a 
bipartisan fashion to get small businesses the relief that they 
need to stay afloat, to keep the lights on.
    In March of 2020, Congress created the PPP program, the 
Paycheck Protection Program and the COVID EIDL program, 
Economic Injury Disaster Loan Program, to provide small 
businesses with forgivable or low-interest loans to help them 
make it through the pandemic. But for many small business 
owners, too many small business owners, including many in the 
district that I represent and have spoken with on many 
occasions, taking on additional debt was not feasible during 
these uncertain times. This was especially true of businesses 
in the entertainment and hospital sectors that had their entire 
business model disrupted by the pandemic.
    Recognizing the need for alternative relief options, 
Congress and this very Committee have worked to provide direct 
economic relief to small firms that cannot afford to weigh down 
their balance sheets with additional debt.
    For today's hearing, I would like to focus on two major 
program that Congress designed to reach the hardest hit small 
businesses in some of the most impacted sectors of the economy. 
The Shuttered Venue Operators Grant Program (SVOG) and the 
Restaurant Revitalization Fund (RRF) are two programs that 
launched in 2021 and will deliver up to $50 billion in relief 
to small firms. This has been a monumental task by any measure 
for the SBA, and I would like to impress upon all of us today 
that Congress and the SBA have worked hard to ensure that 
struggling small businesses do have access to this 
unprecedented direct financial support. I hope that by taking a 
closer look at these programs we can gain a better 
understanding of the challenges that federal grant programs 
face, as well as the important relief that the programs are 
providing to struggling small business owners across the 
country.
    The SVOG provided the SBA with $15 billion in grants to 
various entities across the hard-hit events industry that could 
demonstrate revenue loss. The implementation of SVOG was no 
small task for SBA, of course, and as we examine the program, 
it is essential to consider the complexity in launching a brand 
new federal grant program of that size and magnitude and that 
expeditiously. Unlike other programs, SVOG required that the 
SBA create an effective program for both for-profit and 
nonprofit eligible entities that often have different revenue 
generation and accounting systems.
    So I do hope today's hearing allows us to explore benefits 
that businesses are hoping to receive from the SVOG and find 
ways to help the SBA administer the program effectively, 
efficiently, and get relief to struggling entities 
expeditiously. As COVID continues to wreak havoc on the dining 
and hospitality sectors, earlier this year in particular, 
Congress stepped in and delivered much-needed relief through 
the Restaurant Revitalization fund. The RRF provided almost $30 
billion, $28.6 billion, to the SBA for grants to qualifying 
food and beverage establishments. The program also took steps 
to ensure that funds reached the most vulnerable small 
businesses in the country, including instituting a $5 billion 
set-aside for small firms with less than $5,000 in gross 
receipts and an initial 21-day prioritization period for women, 
veteran, and underserved small businesses. These measures 
proved to be an effective way at getting aid to small 
businesses that have been neglected during previous relief 
efforts and have borne the brunt of the pandemic. As of May 
20th of this year, over half of all applicants of RRF were 
women, veterans, and socially and economically disadvantaged 
business owners.
    On May 18th, SBA announced that RRF had distributed $6 
billion to nearly 38,000 applicants. At the same time, they 
reported that RRF received 303,000 applications with a total 
demand of more than $69 billion. So without additional funding 
for this program, eligible entities requesting billions of 
dollars in need for relief are going to go unfulfilled. It is 
those that we have in mind today.
    Since the beginning of the pandemic, members of this 
Committee have worked to improve relief programs to meet the 
needs of small businesses and get relief to those who need it 
the most. So I hope today's hearing allows us to explore these 
programs' challenges and triumphs and steps that this Committee 
can take to improve both.
    With that, I will now yield to our Ranking Member for her 
opening statement. So Ms. Van Duyne?
    Ms. VAN DUYNE. Thank you very much, Chairman Phillips.
    Good afternoon. Thank you all for taking the time to be 
with us to discuss the SBA's grant programs, specifically the 
Shuttered Venue Operators Grant and the Restaurant 
Revitalization Fund Programs. I am looking forward to hearing 
your thoughts as to how we can improve both of these programs.
    In the early days of 2020, as the COVID-19 pandemic took 
hold of the American economy, Congress and the Trump 
administration worked collaboratively and expediently to 
establish the Paycheck Protection Program (PPP) and fortify the 
Economic Injury Disaster Loan Program (EIDL). Within weeks, 
much needed funds were being delivered to our nation's smallest 
employers to keep their employees on the payroll, pay their 
mortgage, and keep their lights on. And through no fault of 
their own, small businesses owners' livelihoods were destroyed 
and the businesses they had invested their entire life towards 
were forced to shut. The state and local public health mandates 
necessitated the swift actions taken by Congress and the Trump 
administration to keep our smallest employers alive.
    At the end of 2020, Congress passed, and President Trump 
signed the Consolidated Appropriations Act for Fiscal Year 
2021. Included in this legislation was the SVOG program, which 
was designed to provide grants to small businesses that rely on 
mass gatherings and thus experienced severe hardships during 
COVID-19. Unfortunately, the Biden administration waited until 
early April to implement this program and even worse, when it 
did launch, the SBA portal crashed, forcing the SVOG program to 
cease operations the very same day it opened on April 8th. The 
SBA has since reopened the program, but much needed funding has 
yet to reach these hard-hit businesses.
    Earlier this year, Congress passed the so-called American 
Recovery Plan Act of 2021, and due to the amount of unnecessary 
spending and bitter partisanship included in this legislation, 
it was forced through Congress using the budget reconciliation 
process which required a simple majority in both chambers and 
very little collaboration.
    There is one thing the plan got right. It created the RRF, 
which is a lifeline to struggling restaurants across the 
nation. Unfortunately, while the program had Republican 
support, it was crafted with zero Republican input. And in 
fact, during the Small Business Committee markup of the 
reconciliation package, Republican Committee members offered 
several amendments, including ones that would have doubled 
funding for the RRF and made it more accessible to all small 
restaurants, we were unable to garner a single Democratic vote. 
Not a single one.
    And why is this important? The RRF is now out of money and 
only certain small businesses have been able to apply for it 
successfully. We will hear from one of my constituents on the 
panel who has done everything right from the beginning, 
utilizing existing programs to keep his employees on the 
payrolls, bills paid, and lights on. He submitted his 
application to the RRF as soon as possible, working through the 
process exactly as it was designed. It has been weeks and he 
still has not heard back. And this is unacceptable.
    As we move forward, we absolutely must find these 
chokepoints that are leaving our small businesses twisting in 
the wind. They deserve better. They deserve bipartisan 
solutions that will work because they did during the early days 
of the pandemic. And finally, we must ensure that we utilize 
these dollars, taxpayer dollars, not free money, as efficiently 
as possible.
    Vigorous oversight of these programs by our Subcommittee is 
critical as we move forward. I was incredibly proud to take a 
step in that right direction this week by partnering with 
Chairman Phillips and six other members of the Small Business 
Committee to introduce the Restaurant Recovery Fairness Act, 
which will provide the vital oversight we are talking about for 
the Restaurant Revitalization Fund. I look forward to more 
collaborative oversight actions by this Committee as we 
continue to stamp out fraud and abuse and make sure our funds 
are going where they are needed the most. I look forward to 
more collaborative oversight as we stamp out fraud and abuse 
and make sure that our resources are going to small employers 
that need it the most. And again, thank you all for being with 
us. I look forward to today's discussion and I yield back.
    Chairman PHILLIPS. Thank you, Ms. Van Duyne.
    And now I will just take a moment to explain how the 
hearing will proceed.
    Each witness is going to have 5 minutes to provide a 
statement, and each Committee member will have 5 minutes for 
questions. Please ensure that your microphone is on once again 
when you begin speaking and that you return to mute when you 
are finished.
    With that, I would like to introduce our witnesses. 
Starting with our first, Ms. Cheetie Kumar, the chef and owner 
of Garland, a restaurant in Raleigh, North Carolina. Ms. Kumar 
is a self-taught cook who studied recipes while perusing a 
career as a musician. In addition to Garland, Ms. Kumar is also 
the owner of the music venue, King's, and the cocktail lounge, 
Neptune's Parlour. She has been nominated for the James Beard 
Award, Best Chef of the Southeast from 2017 to 2020, and was a 
finalist in 2020. So we welcome you, Ms. Kumar.
    Our second witness is Ms. Esther Baruh, the director of 
Government Relations for the National Association of Theater 
Owners. In this capacity, she works with theater owners and 
operators and directs federal and state policy strategy. Ms. 
Baruh has been working closely with theater owners and public 
health officials in addressing theater industry's response to 
the pandemic. And we thank you for joining us, Ms. Baruh.
    Our third witness, a man after my own heart who has got the 
best background I think in Zoom history, and a Minnesota Gopher 
banner behind him is Chris Montana, the owner and CEO of Du 
Nord Craft Spirits, located in my district, Minneapolis, 
Minnesota. Mr. Montana started the Du Nord as a family 
business, bringing together his experience growing up in 
Minneapolis with his wife Chanel's rural upbringing on a cold 
spring Minnesota farm. Du Nord is committed to diversifying the 
craft alcohol community and actively recruits underrepresented 
people to join the Du Nord family. I appreciate you joining us, 
Chris, and welcome you as well.
    With that, I will turn it back over to our Ranking Member, 
Ms. Van Duyne, to introduce our final witness.
    Ms. VAN DUYNE. Thank you.
    Our final witness is Mr. Mark Maguire, owner of three very 
popular eateries, including one restaurant and two cafes in the 
North Dallas area, two of which are in my district, Texas 24. 
And I wish you had a more exciting background there, Mark, but 
maybe next time. After starting and managing several successful 
entertainment businesses across the country, Mr. Maguire was 
hired by Walt Disney World Company to lead the team that 
launched the Pleasure Island Entertainment Complex, which 
included two restaurants. Several successful restaurant and 
entertainment endeavors later, he was ready to strike out on 
his own, and in 1999, he opened Maguire's Regional Cuisine in 
Dallas. He has been a staple of the North Dallas community ever 
since. Mr. Maguire has served on a number of nonprofit boards, 
including the North Texas Food Bank and Hunger Busters. He has 
been heavily involved in restaurant advocacy and has served as 
a director and officer in the Texas Restaurant Association for 
over 20 years, including Dallas president and Texas president. 
Today, Mr. Maguire is testifying on behalf of the National 
Restaurant Association. Mr. Maguire, we welcome your 
participation at today's hearing.
    Mr. MAGUIRE. Thank you.
    Chairman PHILLIPS. All right. And with that we will begin 
today's hearing by recognizing Ms. Kumar for 5 minutes for your 
statement.

 STATEMENTS OF CHEETIE KUMAR, CHEF AND OWNER, GARLAND; ESTHER 
 BARUH, DIRECTOR OF GOVERNMENT RELATIONS, NATIONAL ASSOCIATION 
  OF THEATRE OWNERS; CHRIS MONTANA, OWNER AND CHIEF EXECUTIVE 
OFFICER, DU NORD CRAFT SPIRITS; MARK MAGUIRE, OWNER, MAGUIRE'S 
                       KITCHEN & CATERING

                   STATEMENT OF CHEETIE KUMAR

    Ms. KUMAR. Chairman Phillips, Ranking Member Van Duyne, and 
members of the Subcommittee, thank you for inviting me to talk 
about the successful launch of the Restaurant Revitalization 
Fund and the need independent restaurants still have for help.
    Let me start by thanking Chairman Phillips and Chair 
Velazquez for all the support you have shown independent 
restaurants throughout this pandemic.
    I am the chef and co-owner of Garland in Raleigh, North 
Carolina, and in the same building as our restaurant is our 
music venue and basement cocktail bar.
    I immigrated from India to the Bronx at the age of 8 and 
eventually settled in the South, here in Raleigh, to play music 
and open my restaurant. My story is not very different from so 
many others in the restaurant industry. Women, minorities, 
single parents, veterans, and so many others get their start in 
restaurants, build their lives in restaurants and make a career 
working in restaurants. Frankly, restaurants represent America 
more than any other industry.
    Last March, I joined the then newly formed Independent 
Restaurant Coalition, which is a group of chefs and independent 
restaurant owners who have built a nationwide, grassroots 
movement to secure vital protections for the nation's half a 
million independent restaurants and the more than 11 million 
restaurant and bar workers impacted by the coronavirus 
pandemic. Since then, we have advocated for a standalone 
restaurant grant program to help recover some of the estimate 
$280 billion in losses sustained by our industry because of the 
pandemic.
    We want to help save our employees and their families, to 
help make our suppliers and landlords whole, and most of all to 
save restaurants. I am proud that our small restaurant survived 
this far in the pandemic. We have cut, crimped, pivoted, 
closed, opened, closed again, opened again, pivoted again, done 
takeout, served an outdoor sidewalk patio through the winter, 
and a myriad of other things to get this far.
    Both rounds of the Paycheck Protection Program funding 
helped us to get through. We were closed for weeks last spring 
and did not do hot takeout through the summer, but instead 
pivoted to launch a prepared meal program so that we could make 
sure my staff was able to work safely. Frankly, as terrified as 
I was for my business, I value people and their health over 
commerce. We have been able to stay open and provide more jobs 
because of the help we received. Without that help, Garland, 
Neptune's Parlour, and King's would be lost to the history of 
Raleigh. But Congress and the administration threw us a 
lifeline and I am here to ask that you do the same for every 
independent restaurant in America to ensure we do not have an 
extinction event.
    We are not out of the woods yet. Fifteen months of losses 
will not be recouped by a few weeks of full indoor dining 
capacity. For restaurants like ours, this pandemic is not over 
by a longshot. The RRF experience was really smooth for me. I 
applied on the first day and got word about our acceptance a 
couple of weeks later. I was lucky most of my financials were 
straightforward and the guidance was spot on for me. I know 
others have not been as lucky, but I am also happy to report 
that the SBA has been working hard to treat everyone fairly and 
equitably during this process.
    The SBA closed the RRF application portal after 3 weeks of 
overwhelming demand. As of this week, over 370,000 restaurants 
and bars have applied, requesting over $79 billion in funds. 
Two hundred eight thousand of those applicants were women, 
veterans, and socially and economically disadvantaged 
individuals.
    I am proud to be one of the first recipients of the RRF 
grant. I applied at 11:30 a.m. before the portal was even 
supposed to be open. I just checked and got my application in, 
but I had spent days before that preparing. A lot of people in 
my position are having something like grantee guilt. We feel 
really bad for having gotten a grant when so many others are 
still facing a terrifying and uncertain future without this 
grant.
    A friend of mine told me not to feel guilty but to make my 
business healthy and then work tirelessly to ask Congress for 
more money for this program, so that is exactly what I intend 
to do. I believe that for every restaurant in the country to be 
made whole, the program could need as much as $140 billion 
more. This is not reflective in the statistic because not every 
restaurant knows about the program and not everyone applied 
knowing that $28.6 billion would not be enough, so they simply 
gave up on this lifeline.
    Congressman Blumenauer, Congressman Fitzpatrick, Senator 
Sinema, and Senator Wicker plan to introduce a bill soon to put 
more money into the RRF. The restaurant community could not be 
more thankful for these four heroes for standing up in our very 
darkest days.
    In closing, I want to emphasize one last, crucial point. I 
sit here today, not on behalf of Garland, but to stand for the 
11 million restaurant workers and 500,000 independent 
restaurants to say both thank you and more help is needed. 
Every single one of you has a struggling restaurant in their 
districts and every single one of you will have some 
restaurants that do not get an RRF grant for which they 
applied. Please help all restaurants look like post-pandemic 
success like Garland, knock on wood, and please add more money 
to the RRF.
    Thank you for the opportunity to appear before you today.
    Chairman PHILLIPS. Thank you, Ms. Kumar.
    And Ms. Baruh, now you are recognized for 5 minutes for 
your opening statement.

                   STATEMENT OF ESTHER BARUH

    Ms. BARUH. Thank you. My name is Esther Baruh, and I am 
here on behalf of the National Association of Theater Owners 
representing movie theaters operating 90 percent of the movie 
screens across the United States.
    Thank you Chairman Phillips, Ranking Member Van Duyne, and 
members of the Subcommittee for the opportunity to testify 
today regarding the Shuttered Venue Operators Grant program, or 
SVOG. This program is a critical lifeline for movie theaters, 
live music venues, and arts organizations that were completely 
shuttered by the pandemic and are only now beginning to rebuild 
toward recovery.
    I would like to open by thanking the many members of 
Congress, their staff, and the administration who were and are 
instrumental in standing up this program. We were thrilled to 
hear SBA Administrator Guzman say yesterday that SVOG have 
begun to go out. Our organization has not received any reports 
from our members about notification of grant awards but we hope 
they will be imminent.
    A word about why movie theaters are so important to our 
culture and economy. Cinemas employ over 153,000 individuals 
nationwide in support and boost millions of additional jobs in 
surrounding retail and restaurants and the cinema supply chain. 
Ninety-six percent of theater operators are small businesses. 
Moviegoing is one of the most affordable out-of-home activities 
and is especially popular among minority groups. Theaters were 
devastated by the pandemic. Ninety-six percent of independent 
theater operators lost over 70 percent of revenue last year and 
those losses have continued into this year. Our industry lost 
63 percent of jobs, although we are hopeful that these jobs 
will rebound as we continue to reopen.
    We deeply appreciate Congress's recognition of the 
difficulties our industry experienced by including us in the 
Save Our Stages Act, now known as the Shuttered Venue Operators 
Grant Program. We have every confidence that the SVOG program 
will help thousands of theater operators and other businesses 
and organizations to keep their doors open.
    Per the last updates from SBA, the number of grants and the 
funding amount requested track almost exactly with what we 
expected. In addition to being able to fund initial grants, 
this also means that there will be sufficient funding for 
supplemental grants as intended in the legislation, which we 
were also glad to hear the administrator confirm in her 
testimony yesterday.
    However, the implementation process has not been without 
some significant challenges. I refer the Subcommittee to my 
full testimony for details on that.
    Today, I want to focus on two key issues, the first being 
the opportunity to appeal, and the second being the 
supplemental grants process. With regard to the opportunity to 
appeal, as the Chairman mentioned, the SVOG program is complex 
and its application is also complex. It required reams of 
paperwork to complete. The good news is that we believe that 
because of this, the instances of fraud associated with this 
program will be extremely low. The number of supporting 
documents required for the application should make it virtually 
impossible for a nonqualified entity to apply. This also means, 
however, that there are many opportunities to make a mistake, 
especially since the SBA's guidance changed considerably and 
frequently as the program was set to open and changed again 
even after thousands of applications were submitted. We are 
still waiting on clarification of certain outstanding questions 
that impact complete and correct applications. But 
unfortunately, applicants have no opportunity to cure their 
applications and very little information about what mistakes 
they may have made.
    We strong urge the SBA to allow appeals. If eligible 
applicants are denied these grants, they will have no options 
left, and their businesses will be forced to close permanently 
or go bankrupt.
    Second to ensuring that all eligible applicants are able to 
access initial grants, we also urge the SBA to move 
expeditiously on the supplemental grants process. These 
additional grants were made available by Congress because 
entities that experienced more than 70 percent of revenue loss 
in the first quarter of this year require additional funding to 
survive.
    We do not have an update from the SBA yet on this process 
but the good news is that the application for the initial grant 
included all the information necessary to evaluate and process 
supplemental grants. So, we hope that as soon as initial grants 
begin to be disbursed, the SBA will work on supplemental 
grants.
    I am confident that the SVOG program will do a lot of good. 
We urge the SBA to provide an opportunity to appeal and to get 
the supplemental process going so it is not subject to too much 
delay.
    Thank you again for the opportunity to testify and I 
welcome your questions.
    Chairman PHILLIPS. Thank you, Ms. Baruch.
    And next, Mr. Montana, the next 5 minutes are yours.

                   STATEMENT OF CHRIS MONTANA

    Mr. MONTANA. Mr. Chair and distinguished members of the 
Committee, unlike previous testifiers, it may be less obvious 
why a distiller would be here speaking to you from my 
distillery discussing these programs. And it is because many 
distilleries, mine included, owe their continued existence to 
the PPP, EIDL, and the RRF programs.
    In early March of 2020, I had a conversation with my 
cocktail room staff and they told me that they did not feel 
safe operating the cocktail room during COVID. I shut the 
cocktail room that night. More than 60 percent of Du Nord's 
revenue came from the cocktail room and closing it likely meant 
the end of the business. To compound matters, 2 days later the 
second blow came as all bars and restaurants closed. Our 
biggest customers are bars and restaurants, and their closure 
meant a significant blow to our small wholesale business. We 
are a breakeven company. To losing 60 to 80 percent of our 
business was a death sentence. So we decided to go down 
swinging. We had alcohol, and that is what was needed to make 
hand sanitizer, so we, like hundreds of other small 
distilleries in cities and communities across the country, 
pivoted to making hand sanitizer. Our initial batch was donated 
to police, letter carriers, Meals on Wheels, homeless shelters, 
and congregate care facilities. Later, we would find a market 
for the sanitizer and those sales helped us stay afloat and 
enabled us to continue donating sanitizer to those who needed 
it most.
    I am proud to say that our sanitizer was distributed to 
nearly every childcare center in the state of Minnesota at no 
cost to them. And through our partnership with other Twin 
Cities distilleries, we were able to donate tens of thousands 
of gallons of sanitizer to those who needed it most.
    While this story is, I believe, extraordinary, it could 
have been told by many other distilleries across the country 
because they, too, responded when their community needed them 
and converted their stills and tanks to sanitizer production. 
They, too, are of their community and respond when their 
community needs them.
    Of the hundreds of distilleries nationwide that pivoted to 
sanitizer production, I do not know of a single one that did 
not donate substantial amounts. And after the events of 2020, I 
have never been prouder to call myself a distiller, and that is 
why it is so humbling to be given the honor to represent them 
here today.
    It is an honor that I previously held as the president of 
the American Craft Beers Association, and in that role I had an 
opportunity to learn from hundreds of distilleries across the 
country about the challenges they faced. Perhaps most 
enlightening was learning that like me, most of them relied on 
their cocktail rooms to survive.
    The lifeblood of the American micro distillery has for many 
years been the cocktail room. It is a place where people can 
come and gather and buy our products that we make right there 
on site, and it is often our only opportunity to make a sale 
directly to our consumer. Unlike most businesses, we are not 
typically allowed to sell directly to our consumer. We are 
required by law to sell to a distribution company, that then 
sells to a retail company, that then sells to a retail company, 
that then sells to the consumer. In fact, only a fraction of 
the price that you pay on the shelf makes it back to the 
distiller.
    So when these cocktails rooms had to close because they, 
like other restaurant and bars represented a substantial and 
unjustifiable risk of community spread of COVID-19, the 
industry took a body blow that I was not sure it could recover 
from.
    As is often the story with major disasters, big business is 
usually able to bounce back. They are well insured, well 
capitalized, their pockets run deep. But we do not have those 
deep pockets. So when a disaster strikes small businesses, we 
do not usually come back, and we did lose distilleries, but not 
as many as I would have thought in those moments in March. And 
it is because those businesses, like my business, were able to 
avail themselves of programs specifically designed to keep them 
afloat.
    We would not have made it to the point where we could make 
hand sanitizer without the infusion of capital we received by 
the Payroll Protection Program. When those sales dried up in 
the absence of more than 70 percent of our business, the second 
Payroll Protection Program, the EIDL loan and the Restaurant 
Revitalization Fund kept us going. And now as things begin to 
open up, the future is starting to look brighter. But at the 
time when the outlook was bleakest, our government gave us a 
hand much in the way that we gave our communities a hand when 
we switched to sanitizer production.
    If nothing else I say today sticks with this Committee, I 
hope that it will be this one thing. On behalf of the micro 
distilleries across the country, thank you for stepping up for 
us. When we stepped up for our communities, we did not do it 
because we wanted a handshake or a pat on the back or a cookie, 
we did it because that is what you do. You use the resources 
that you have to do what you can to help the people who need 
helping. And I am proud to say that that is what my government 
did, too. The fact that my business has survived to reach today 
is traceable directly back to the PPP, EIDL, and Restaurant 
Revitalization programs, and I know there are many other micro 
distilleries across the nation who would say the same.
    So thank you for your time and for the honor of addressing 
this Committee.
    Chairman PHILLIPS. Thank you, Mr. Montana. I think I speak 
for everybody when I say we would trade a cookie for a martini.
    With that, Mr. Maguire, the next 5 minutes are yours.

                   STATEMENT OF MARK MAGUIRE

    Mr. MAGUIRE. Thank you, Chairman Phillips, and Ranking 
Member Van Duyne, and the other members of the Subcommittee. My 
name is Mark Maguire, and I am the founder, co-owner, and 
managing partner of Maguire Restaurant Holdings and CORE F&B in 
Dallas. We operate Maguire's Kitchen and Catering, a fine 
dining restaurant that opened in North Dallas in 1999, as well 
as two Gather Coffee Cafe locations, both of which are located 
in Ranking Member Van Duyne's district. Thank you for allowing 
me to testify today on behalf of my business, the National 
Restaurant Association, and the Texas Restaurant Association.
    I would also like to thank the other witnesses who are 
testifying today as well. Your stories are compelling and the 
heartache is familiar. Each of our businesses is unique and I 
know we have all struggled mightily and are anxious to have the 
opportunity to rebuild.
    Like so many restaurants across the U.S., my businesses 
were severely impacted by COVID-19. Even in Texas where now we 
are allowed to operate at 100 percent and consumer demand is 
getting stronger by the day, we are far from normal. Ms. Kumar 
mentioned pivoting and other witnesses have mentioned pivoting. 
I am past the pivoting now and I am into full pirouettes. We 
are spinning like a top on a daily basis trying to deal with 
these new obstacles that are coming our way. Labor shortages, 
product costs, increases in available, supply chain chaos. My 
example, since January of this year, in less than 5 months, we 
have had 40 to 50 percent increases on our proteins, cooking 
oils are up over 50 percent, paper goods and to-go supplies up 
to 70 percent increases.
    What does this do to us? Well, as mentioned, we are 
spinning like a top trying to keep up with it. I will give you 
an example. During the 5 years prior to the pandemic, my 
restaurant in North Dallas had one menu price increase in those 
5 years. Since March 20th of this year, we have had to increase 
our menu prices twice in 5 months. And that is not because we 
are finding a way to make a profit. We are just trying to find 
a way to keep our heads above the water. We have not even come 
close to scratching out a profitable month since before this 
all began.
    Sadly, I know I am not alone in this experience. 
Collectively, as mentioned, the restaurant industry has lost 
$290 billion in revenue during this pandemic. The relief 
programs that Congress has provided have been a lifeline to my 
business and to many others. In fact, one of my restaurants was 
less than 30 days from total shutdown when we received our 
second PPP. So thank you very much. And, the PPP worked exactly 
as Congress and SBA had intended. It provided immediate relief 
that allowed us to keep our people working and the lights on.
    But the PPP was always intended to provide short-term 
assistance. Nobody could possibly have seen how long this 
pandemic effect would last and how deeply it would cut into the 
American economy. But now my business and many other 
restaurants need relief that fits a pandemic that has created 
waves of challenges for 15 months and counting.
    We all hope that the Restaurant Revitalization Fund can be 
that solution. I believe it still can if it is funded to 
provide the support for which it was created and intended for 
everyone who is in need. Last night we learned that the SBA has 
received applications for about $75 billion in grants from a 
fund with $28.6 billion. That is easy math, $46 billion 
deficit. Unfortunately, my businesses are likely to fall within 
this deficit gap. Even though Maguire's has had an incredibly 
difficult year, we did not qualify for the RRF because of our 
PPP proceeds. My two cafes do qualify but they do not meet any 
of the priority classifications. So without additional funding, 
the RRF assistance is unlikely to come my way.
    I know there is a bipartisan commitment to the RRF within 
Congress, so I am hopeful the funding deficit and eligibility 
concerns can be remedied. Our flagship Maguire's Kitchen has 
seen numbers increase every week but we are still digging out 
from a deep deficit. And with so much chaos in the supply chain 
and instability in the labor market, we are counting on the RRF 
to provide some runway to allow us to work through this new 
minefield and get to a point where we can actually manage and 
plan proactively to rehire and rebuild. If my RRF is funded, 
for example, for my cafes, I will be able to reopen the one 
cafe that has been closed since October and bring back as many 
as 14 to 16 Texans into the workforce.
    Finally, I will just add that restaurants are more than a 
business. It is true we employ a lot of people and that is 
important to our economy. But it is also true that we play an 
important role in our communities. Just consider all of the 
interactions you have had at restaurants and venues with 
business associates, friends, and family over the years. Can 
you imagine life without that?
    A sincere thanks to this Committee, the SBA, and other 
members of Congress who have worked to continue with bipartisan 
focus to provide programs that have been immeasurably helpful 
to my businesses, as well as many others across the country. I 
appreciate your leadership and ongoing support.
    Thank you so much for allowing me to testify. I am happy to 
answer any questions.
    Chairman PHILLIPS. Thank you, Mr. Maguire.
    And to all of our witnesses, I just want to say, too, to 
the two of you who are in the restaurant business, as the owner 
of three coffee shops in Minneapolis who did not solicit or 
accept PPP money, I can empathize, deeply empathize with the 
struggles you are facing. I know them firsthand and rest 
assured, my Committee joins me in trying to assist all of you.
    I will start the questioning with myself for 5 minutes and 
recognize myself.
    And my first question is to you, Mr. Montana. The 
Restaurant Revitalization Fund as we all know had an initial 
21-day period, priority period, for grants to women-owned 
businesses, veteran-owned businesses, and other socially and/or 
economically disadvantaged small business concerns. Reports 
from the SBA indicate that the program received almost 150,000 
applications--147,000 from these priority groups requesting 
more than $29 billion in relief funds. So given the unique 
challenges facing such communities and business owners, please 
share some perspectives with the Committee about why you 
believe that priority period was an important part of this 
grant program.
    Mr. MONTANA. Thank you for the question. I would first go 
back to our experience with the PPP and the experience that I 
know is shared from a number of my colleagues. We were not able 
to get the PPP the first time that we attempted, and we did not 
exactly know why. We would later find out that you needed to 
have some deeper rooted connections and longer running 
established relationships with banks. And that is not the case 
for a number of particularly minority-owned businesses, and 
myself included. And so I think that instead of having history 
repeat itself, it was important to make sure that this fund got 
that piece right. And so I do think it made sense. I know that 
it has helped us significantly. Again, I would not be standing 
here, this place would not be open but for those funds. And I 
think that the real challenge here is not so much to focus on 
the fact that instead of being left out again, this population 
did get a chance, a fair chance at those funds. I think instead 
the focus should be on how can we make sure that everyone now 
gets that same access. And so I would hope, the funds have 
helped me in such a way, and I am fortunate I received them. I 
would hope that everyone else gets the same opportunity. And so 
I really do help that this Committee and this Congress finds a 
way to fully fund the program.
    Chairman PHILLIPS. Thank you, Mr. Montana.
    Ms. Baruh, creating and standing up multi-billion dollar 
programs such as this one is no small task. Our agencies were 
ill-prepared, poorly staff, and resourced to do so, of course, 
but the SBA has worked hard to build an online application 
portal as you know and worked with the private sector to manage 
the tools and technology to make the application process at 
least reasonably successful. The SBA also created education and 
outreach materials as we all know, worked with resource 
partners and engaged with stakeholders to ensure that eligible 
entities were aware of the program requirements and were 
prepared to apply for the program.
    So perhaps you could share with the Committee about how 
your engagement with the SBA during the process has gone and 
have they been forthcoming in your estimation with information, 
updates, and support? We welcome your perspective.
    Ms. BARUH. Congressman, thank you so much for the question, 
and for acknowledging that, yes, SVOG has been a complex 
program to stand up and we know that many people at the SBA 
have been working hard.
    You know, the SBA was very forthright with stakeholders 
early on in the process that they wanted our feedback. And we 
worked really hard to provide that feedback. As they issued 
frequently asked questions every week, we responded with 
updates, questions about the questions, feedback that we were 
getting from our members in the field. So we tried to be a 
resource to the SBA. As you had mentioned, there are a lot of 
entities that qualify for this program and we are all a little 
bit different and our requirements are all a little bit 
different. So I know that we at NATO and the other stakeholder 
groups all tried to be resources to SBA, provide them with as 
much information as we could about the specific intricacies of 
our industries and how the program should be stood up correctly 
so that as many eligible entities as possible could access it.
    The SBA has held a number of stakeholder meetings since 
April 8th and onward, and we would just urge the SBA to keep 
maintaining those open lines of communication, to maintain two-
way communication with the stakeholders. Let us continue to be 
a resource to them. When we report questions from the field or 
ambiguities or things that have come up, to continue to engage 
with us directly so that we can make sure that our members have 
correct and complete applications and get access to this 
funding.
    Chairman PHILLIPS. Thank you, Ms. Baruh.
    It looks like my time is winding down so with that I will 
yield to Ms. Van Duyne, who is now recognized for 5 minutes.
    Ms. VAN DUYNE. Thank you very much, Chairman Phillips.
    Mr. Maguire, in your written testimony, you talked about 
the additional rate of inflation on your business. You talked 
about the poultry increases by 40 percent, meat over 30 percent 
increase, cooking oils at 50 percent increase. In addition to 
these inflationary pressures, do you see anything coming out of 
Washington that could further pump the brakes on your business, 
say in the tax or regulatory realm?
    Mr. MAGUIRE. Well, that is a pretty broad based question, 
and the answer to it I will give you is broad based as well. 
Now is not the time for anything coming out of Washington to 
provide any kind of a negative impact on our P&Ls and taxes are 
included. Any regulatory demands or actions that come from D.C. 
right now that in any way put a financial or operational or 
regulatory burden on our businesses, now is not the time for 
that.
    Ms. VAN DUYNE. Okay. Earlier this week, the Chairman of 
this Subcommittee, Dean Phillips and I introduced the 
bipartisan Restaurant Recovery Fairness Act to ensure that only 
proper entities receive funding under the multi billion dollar 
program. Safeguarding American taxpayer dollars will remain a 
high priority for me. It was great to see in your testimony 
that you mentioned program integrity. Would you agree that a 
balanced approach on oversight that does not create burdens as 
you were mentioning earlier, or rather safeguards that oversee 
the program would be beneficial?
    Mr. MAGUIRE. Absolutely. I think that integrity in the 
program is obviously something that is extremely important, and 
I would fully support that. My experience with the PPP and the 
RRF has been pretty positive from the standpoint that I am 
qualified to comment on how to establish integrity in 
developing these programs. But certainly, the application 
process and the documentation that has been required along with 
the required documentation for forgiveness has been substantial 
and very thorough. And I feel pretty good about the way these 
programs have been set up and the integrity that has been 
established to ensure that they are properly followed.
    Ms. VAN DUYNE. I appreciate that.
    In listening to your testimony and from talking to business 
owners just across this district, it is clear that the enhanced 
unemployment benefits have had very large negative impacts and 
effect on small employers' ability to hire staff. In fact, 
yesterday, I called one of our local barbeque places that I 
have been to a number of times over several decades and they 
actually had a voice greeting that said they were closed due to 
a national labor shortage.
    Can you speak to what you are seeing in the workforce? I 
cannot go to any restaurant, honestly, that is open fully 
because they do not have the staff. What are you seeing?
    Mr. MAGUIRE. Well, we are no different. We are in the same 
boat. We are lucky in Texas that we have been open 100 percent 
and we have seen a strong return in consumer demand. And there 
have been nights that our restaurants have had to go on waits. 
And they have gone on waits with empty tables. And the reason 
they have gone on waits with empty tables is not because of 
social distancing requirements. It is because we do not have 
the staff to service them. That is definitely a knife in the 
back considering what we are trying to climb our way out of. 
And the labor issue is real. It is real for many reasons. One 
is the way the unemployment benefits have been structured, but 
there are a lot of other factors that are involved that are 
making it challenging to get employees back into our business. 
We lost a lot of people out of our industry to other industries 
during this crisis because we could not provide the jobs and 
there were other industries that were thriving during the 
pandemic that they moved into. And so now we have got to try to 
find a way to get them back into our business and we are doing 
that by creating opportunities for high wages and for flexible 
schedules and for great work cultures. And that is on us to 
provide to entice those people back to our industry.
    Ms. VAN DUYNE. I appreciate that.
    I have got time for just one more quick question.
    What has your experience been with the RFF thus far? And 
can you compare your experience with the Restaurant 
Revitalization Fund to your experience with PPP?
    Mr. MAGUIRE. Well, my experience has been vastly different. 
The PPP, while it was new to everybody the first time, 
certainly, by the second time everybody had a pretty good 
understanding of the process and the documentation that was 
involved. And the portals that I applied through were very 
communicative in regards to letting me know where in the 
process my application stood. The RRF was much more difficult. 
I think the information that was put out as far as how to 
complete the application, what documentation was necessary was 
pretty confusing to me until the National Restaurant 
Association produced a document that kind of walked us through 
step by step. So we got through the application process but now 
my application was submitted on May 4th and it has been sitting 
in an under review status for the last 22 days, 23 days. And I 
have not been able to get any kind of idea or communication 
from anybody as to the status of that application, although I 
do know that because I do not fit any of the priority 
classifications, it is very unlikely that I will see any money 
unless this thing is funded.
    Ms. VAN DUYNE. Thank you.
    Chairman PHILLIPS. Your time is expired. Thank you, Ranking 
Member Van Duyne.
    And now we will turn to the gentlelady from California, Ms. 
Chu, for 5 minutes.
    Ms. CHU. Thank you.
    Ms. Baruh, movie theaters and live venues were among the 
first businesses to close their doors at the start of the 
pandemic and will be amongst the last to reopen. That is why I 
am so concerned about the SVOG delays, especially as theaters 
like the ArcLight in Pasadena, which is in my district, have 
recently closed for good. I know that our top priority must be 
getting funds out the door to struggling businesses. But we 
also have to ensure that the program's rules are written in a 
way that will allow eligible entities to get through the 
application process smoothly.
    So as a member of the Ways and Means Committee, I am also 
concerned about the way the tax structure of these theaters 
might impact their eligibility for relief programs. 
Specifically, I understand that there is a Form 4506-T required 
by SBA that poses serious challenges for theater owners with 
multiple locations. So could you expand on these concerns and 
talk about how we can ensure the application process works for 
all eligible entities, including theaters?
    Ms. BARUH. Thank you so much, Congresswoman. And yes, we 
were devastated for the loss of the ArcLight Pacific Theaters 
that closed because of the circumstances of the pandemic and 
probably because some of the SVOG funding, it has not arrived 
quickly enough.
    With regard to the tax issues that you mentioned and the 
4506-T form, yes, it is a very complex form. This form was 
required by the SBA so that the IRS could pull applicant tax 
returns so that they could be used to verify applicant identity 
and revenue streams. The SBA actually revised the guidance to 
the 4506-T after many thousands of people had submitted their 
applications. And unfortunately, their guidance is still 
incomplete. There are entities that are organized as 
disregarded entities for the purpose of tax filing who cannot 
fill out the 4506-T form per the guidelines of the SBA. And 
what this means is if they cannot file the 4506-T, their 
application is not complete. They will not be considered for 
SVOG.
    And so what we really need the SBA to do, and we have 
flagged this with them, is to put out the full guidance about 
all the various tax types that are eligible for this program, 
that the SBA has made eligible for this program so that 
everybody who is eligible can get their application in, have it 
be complete, and get the funding flowing.
    So I would be glad to work with you and your team on the 
specific tweaks that we need to see in the guidance so that we 
can get these correct 4506-Ts in as quickly as possible.
    Ms. CHU. Yeah, we would certainly like to work with you on 
that.
    And also, Ms. Baruh, you mentioned in your testimony that 
SVOG applicants will not have the opportunity to appeal if 
their application is rejected by SBA even if it is for a reason 
outside of their control like these form 4506-T issues that you 
just talked about. So as Chair of the Subcommittee in the last 
Congress, I was closely monitoring SBA's response to fraud 
risks in pandemic programs and I do appreciate the level of 
care that they took and that they are taking to reduce fraud. 
But we also have to ensure that eligible small businesses are 
still able to fully participate in the program, especially 
industries that are as hard hit as yours.
    So could you elaborate on why you support an appeals 
process? Give us an example of why this is needed and discuss 
how SBA can implement such a program without increasing fraud 
risk in it.
    Ms. BARUH. Sure. Thank you, Congresswoman. And I just want 
to state, we also support the goal to reduce and prevent fraud. 
It would be terrible, frankly, if this funding ended up in the 
hands of the wrong entities.
    We think it is really important to have an appeals process 
for a couple of reasons. One is that there were technical 
issues associated with the application. And I will give you a 
couple examples of that. This sounds small, but if you uploaded 
a document, you could not delete it. So the little trashcan 
icon did not work. So if you uploaded a document by mistake, 
you could not delete it and there were a limited number of 
slots of documents that you could upload. So virtually, 
everything as part of the application required documentation to 
prove it. So again, if you could not delete a wrong document, 
we do not know that a reviewer is going to understand that this 
was just a mistake. So that is from the technical side.
    From the policy side, even going into the application, 
after the SBA redid all the guidance and reopened the portal, 
there were still a bunch of issues that were very ambiguous. 
Among them, how you should fill out the date your entity began 
operations. If you opened after January 1, 2019, your grant 
amount might calculate incorrectly if you did not have the 
right date in that box. But the guidance on how to fill it out 
was very ambiguous. And so I know that we have members who 
probably had their applications miscalculate their grant amount 
because of this ambiguity. So given that we had technical 
issues and policy issues, all of this is explainable. Right? As 
soon as two people can have a dialogue about it, you can 
explain it and understand it and fix it. So we would just 
really ask the SBA to provide that opportunity so that these 
mistakes which were just errors that people made because of 
ambiguities or technical problems could be rectified and they 
can still get the grant and again, without in any way 
infringing on any fraud issues.
    Chairman PHILLIPS. The gentlelady's time is expired.
    I just ask everybody, Committee members and witnesses to 
try to keep track of the time if you might.
    With that, I recognize the fellow gentleman from Minnesota, 
Mr. Hagedorn for 5 minutes.
    Mr. HAGEDORN. Chairman, thank you. I appreciate the 
opportunity. Thanks for holding this hearing.
    I am going to direct the first part of my remarks to Mr. 
Maguire if I could. Yesterday, sir, we were able to discuss 
these issues with the SBA Administrator Ms. Guzman, and I 
talked with her about the Restaurant Revitalization Fund and 
how the Democrats with President Biden and the members of 
Congress decided to have a priority group that included every 
single type of bar and restaurant owner except people who 
happened to be White men. And I asked her also about how if she 
could assure us that illegal aliens were not receiving funds 
through the Restaurant Revitalization Fund before U.S. 
citizens. In both cases, first of all, she could not really 
explain how it was not discriminatory or racist to exclude 
White men from the process, the initial process, which now 
there is no funding left for anybody else who was not part of 
the priority group, and secondarily, she could not really 
assure us that illegal aliens were not receiving these monies 
before U.S. citizens.
    So I am not going to ask you to comment on any of that 
because clearly you see where I am coming from. But I will ask 
you, you are a business owner. You are a restaurant owner. You 
understand all the competitive natures of your business. You 
have seen what everyone in the industry has gone through the 
last year. As a member of Congress, I think our goal is to make 
sure everybody gets treated equally. That we get all 
businesses, all restaurants and bars from one side of the 
coronavirus to the other, and that I do not think we should be 
picking winners and losers here. But as a person in the 
business, it would be a big competitive advantage for your 
neighbor who has a similar business to get money from the 
government and you to be shut out simply because you did not 
fit on their priority list; correct?
    Mr. MAGUIRE. Well, I would agree with you from the 
standpoint that I am disappointed that it does not look like I 
am going to have an opportunity at this time to receive any 
funding. However, my take on that is that it has very little to 
do with how the program is structured and everything to do with 
how the program is funded. There was not enough money to fund 
all of the priority classifications alone, so we did not even 
get through the priority classifications, whether I fit into 
them or not. Had I been a White male veteran, I would have been 
in that priority classification. Unfortunately, I did not have 
an opportunity to serve my country. But to me the problem is 
funding, and it has been funding since day one. It is something 
that we have been trying to work through right from the 
beginning on this. I think everybody knew that $28.6 billion, 
while it is a gigantic number, was not going to even make a 
dent in what was needed for this and we clearly saw within 21 
days that it is probably going to end up being less than a 
quarter of what was needed. So hopefully, we can find a way to 
get back to the drawing board and find a way to get the funding 
for everybody that needs it because whether you are in that 
priority class or not, if you need it, you need it. I need it.
    Mr. HAGEDORN. So to reclaim my time. So actually, the 
priority list was almost completely funded by [inaudible] 
dollars. Representative Van Duyne, our ranking Republican did 
mention that Republicans offered an amendment to put another 
$20 billion into the program that was rejected, unfortunately, 
by the majority.
    I also would like to associate my comments with 
Representative Van Duyne, who was talking about unemployment 
compensation and how it is especially hurting getting albor5 
for this sector of the economy. I talk with business owners, 
especially restaurant and bar owners across the district here 
in Southern Minnesota all the time and this extra $300 a week 
federal unemployment compensation is a deterrent for people to 
return to work. Representatives Emmer, Stauber, Fischbach, and 
myself of Minnesota wrote our governor a letter a couple of 
weeks ago asking that he join about 20 to 25 governors across 
the country in order to reject that extra money and have 
incentives to get people back to work. Also in Minnesota, we 
are encouraging our governor to reopen our state, give up his 
emergency powers, and make sure that we can get all businesses 
and schools fully operational with kids back in school because 
that will free up people to get back to work and not be at home 
all the time taking care of the kids. So it just seems to be 
kind of commonsense in those areas.
    But with that, I will yield back.
    Chairman PHILLIPS. The gentleman yields back.
    And now I recognize Ms. Davids from Kansas, the Chairwoman 
of the Economic Growth, Tax and Capital Access Subcommittee of 
the Small Business Committee. Ms. Davids, you are recognized 
for 5 minutes.
    Ms. DAVIDS. Thank you, Chairman Phillips. And thanks for 
holding this hearing today to focus on some of the newest SBA 
relief programs that we are seeing for our small businesses. 
And it has been referenced a couple of times already. 
Yesterday, we held a Full Committee hearing with Administrator 
Guzman and I know I asked her about the need to provide 
additional funds for the Restaurant Revitalization Fund. 
Obviously, the RRF is oversubscribed at this point, and I have 
appreciated some of the comments by Mr. Maguire about the need 
to properly fund the program. And also, I know Ms. Kumar, in 
your testimony mentioned the impact of the Restaurant Relief 
Fund.
    I am curious if one or both of you, I would love to hear 
from both of you, about how the return to things like greater 
indoor capacity, like really fully opening up, is impacting you 
and what the RRF can do about that. But also, kind of 
fundamentally looking forward, I know Mr. Maguire, you actually 
talked a bit about none of us expected this to go on this long. 
And now we are seeing, we need to be thinking about addressing 
this, we are 16, 18 months, like this is going not impact us 
for a while. Can you talk a little bit about just how you are 
planning for that and what you think the RRF needs to look like 
and how we need to adapt?
    Mr. MAGUIRE. Well, I think the most challenging word in 
that whole commentary was planning. And there really is just no 
such thing as that. I have been in this business since I was 18 
years old. I managed or owned or operated for 35 years. I have 
managed P&Ls that whole time. I have never seen anything like 
this in my entire career. The price increases that we have seen 
in the last 45 days are unprecedented and there is no playbook 
for how to deal with this. What I am looking for from the RRF 
is to provide financial support that will allow a runway for us 
to get to the point where we can start planning and being 
strategic in what we do because right now there is really--I am 
not exaggerating when I say I wake up and say, okay, what is 
coming my way today? And what are my prices on this? And am I 
going to have to change my menu? And will I be able to offer 
everything? And am I going to have enough staff to meet the 
demand of the consumer? And that is a daily issue. That is not 
something that any of us have ever had to deal with.
    Ms. KUMAR. Thank you for that.
    I just want to state that yes, our restaurant is open for 
indoor dining now. We are still practicing safety. But it is 
not as simple as just unlocking our doors and going back to the 
way things were. I do not think things are going to be the same 
for a really long time. And the grant money, the period that it 
covers, the expenses are covered from February of 2020 till 
March of 2023. So while the grant awards might seem large and 
the fund, it sounds like it is a lot of money, and it is, we 
are required to plan, and planning again is the operative word. 
We cannot go back to the same way of doing business. We have 
thousands of dollars that we owe to our landlords, for example, 
if we were lucky enough to reach a deferred agreement with 
them. A lot of us still owe money to our suppliers. And a lot 
of people took out EIDL loans that they are going to be making 
payments for 30 years because of this pandemic that put us in a 
situation that was like no fault of our own. And in the best of 
times before the pandemic, our profit margins were 6 to 9 
percent in a really good year. Like 9 percent we were jumping 
up and down with joy. And now we are seeing again higher 
supplier costs. Myself and our company, we are committed to 
much higher wages for our employees and to make this a 
sustainable career for people to come back to, to lure them 
back to work. I know a lot of people really wanted to stay in 
the industry but they just simply could not afford to do it. 
And that is an expensive commitment that we are willing to make 
but we do need the support in order to sustain this industry 
and make it a viable place for people to be employed.
    Ms. DAVIDS. Yeah, thank you for that.
    And just really quickly, Ms. Baruh, we are going to follow 
up with you about some of the commentary that you made earlier. 
Obviously, it is a huge issue if disregarded entities are 
having hurdles the way they are to get access to the programs. 
Thank you so much.
    Chairman, I yield back.
    Chairman PHILLIPS. Thank you, Ms. Davids.
    And next I recognize the gentleman from Pennsylvania, Dan 
Meuser, the Ranking Member of the Economic Growth, Tax, and 
Capital Access Subcommittee. I recognize you now, Dan, for 5 
minutes.
    Mr. MEUSER. Thank you, Chairman Phillips. I appreciate that 
very much, and Ranking Member, Van Duyne, for holding this 
hearing. And I certainly thank all the witnesses for being with 
us today which is very likely a nice day in Texas and North 
Carolina and the other places that you are. So I appreciate it. 
And for your testimony that has a touch of optimism to it but a 
lot of reality because that is what business is all about. A 
lot of reality. There is no fooling yourself in business. If 
you do, you go out of business.
    So Mr. Maguire, being that you are in Texas and Ms. Kumar, 
you are in North Carolina, our experience here in Pennsylvania 
has been pretty rough for small businesses, for restaurants. We 
were at 25 percent capacity from January 4th through April 4th, 
25 percent indoor capacity. On April 4th, we went to 50 percent 
capacity. And on May 31st, we will go to 75 percent capacity. 
Or check that. Since April 5th, we have been in 75 percent 
capacity. So as you can see, restaurants in particular were hit 
hardest. Our small businesses were hit pretty hard, too. But of 
course, PPP was very, very important, and my guess is, and from 
your testimonies and statements that you all were able to gain 
PPP. Now, I also know that restaurants have some part-time 
employees so the PPP was not very significant even though in 
PPP 2 we increased it to a 2.5 percent ratio. So I know that 
was helpful. But that is why the RRF was so essential, and we 
allocated $27.5 billion, I believe. And with prioritization. 
That is all well and good if there would have been enough to go 
around, if you will. And there definitely was not. In my 
district, I have virtually every restaurant I hear from has not 
received the RRF, and not to point fingers but Republicans did 
ask for an amendment of an added $20 billion to the RRF fund 
which did not get passed, did not get accepted. Now, of course, 
we are trying to find additional funds for the RRF which are 
very, very important. So that will continue.
    Now, I would like to just ask, let me start with Cheetie 
Kumar, if I can. Ms. Kumar, you would describe your experience, 
but where are you now with, you said the PPP was very helpful. 
The RRF was there for you. How are you with a percentage of 
where you would like to be or where you were prior to the 
pandemic?
    Ms. KUMAR. Thank you for that. Our company suffered a 70 
percent reduction in revenue from the start of the pandemic 
until now. We have been operating with indoor dining and 
maintain our patio and we are seeing definitely increased 
revenue but it is going to take us many, many, many months to 
get back to the original level of revenue that we had before. 
And so 3 or 4 weeks of good restaurant business does not really 
cover 15 months of extreme losses. And it is going to be 
probably, I mean, I do not foresee seeing a profit this year, 
this calendar year. My husband is my partner and we are still 
drawing a really conservative salary. We did not pay ourselves 
at all until PPP 2, and we are projecting making maybe $45,000 
a year as a guaranteed salary, if we are lucky, if there are no 
more dips in the roller-coaster. We do not have amnesia about 
what has happened already in the last year so we are kind of 
bracing ourselves and holding onto that money and being very 
conservative minded about how we spend that money in the coming 
months.
    Mr. MEUSER. Okay. And as far as government assistance, that 
is somewhat in the rearview mirror now; right? I mean, we are 
in recovery mode. And so now at least you do not want 
government giving you any additional headwinds such as the 
unemployment compensation we know is going until September. Is 
that a negative, is that a little bit of a headwind for you, or 
what are your thoughts there?
    Ms. KUMAR. Well, for me in North Carolina, the average 
unemployment benefit, even with the federal assistance, is less 
than $500 a week. And for our restaurant, that is not a 
competitive deterrent for people to come back to work. We offer 
a living wage and we are proud to do so. For us personally, we 
are not a low wage, hourly, part-time kind of restaurant.
    Mr. MEUSER. That is great. I appreciate that. That is good. 
That is very good to hear. It truly is.
    Mr. Maguire, your thoughts on the UC supplement.
    Chairman PHILLIPS. Mr. Meuser, your time has expired. I am 
sorry.
    Mr. MEUSER. I am sorry, Mr. Chairman. I yield back. Thank 
you.
    Chairman PHILLIPS. Okay. Thank you. Thank you, Dan.
    And now I recognize the gentleman from Florida, Mr. 
Donalds, for 5 minutes.
    Mr. DONALDS. Thank you, Mr. Chairman. Thank you to the 
Ranking Member.
    First of all, I just want to associate myself with the 
comments of Mr. Meuser and the Ranking Member specifically when 
it comes to the fact that we did try to put more money into the 
Restaurant Fund. And we all know what happened on the 
Committee, so we will just move on.
    But real quick, Mr. Maguire, I know Representative Meuser 
had a question for you so I actually would like to just allow 
you to give you time to answer Representative Meuser's previous 
question.
    Mr. MAGUIRE. The question regarding the headwind caused or 
potentially caused by the UI benefit?
    Mr. DONALDS. Yes.
    Mr. MAGUIRE. Well, as I mentioned before, it is certainly a 
component of what is contributing to the labor shortage. There 
is no doubt about that. I can give you very specific examples 
within my staff that has chosen to continue working or not 
working and collecting the UI benefit. However, there are some 
considerations there that are beyond their control and what I 
have told them is, look, when I need you back to work, you are 
going to have to come back to work or I cannot guarantee that I 
am going to give you a job. But the bottom line is right now UI 
is a huge contributor to the labor shortage. People moving out 
of our industry is a huge contributor to the labor shortage. 
People not being able to get childcare coverage to work the 
hours we want them to is a huge contributor. And these issues 
are ongoing and we are going to collectively find a way to work 
together to overcome them. But the UI benefits certainly need 
to be addressed.
    Mr. DONALDS. Thanks for that.
    Real quick, I want to jump into a couple of things because 
obviously we could talk about what the programs have been. I 
understand that they have been helpful. The enterprises have 
been able to take advantage of it. But we are also having to 
consider new policies that are coming down.
    So Mr. Montana, I want to ask you real briefly, considering 
the administration's putting out the idea of raising corporate 
income taxes and also their policy that they wanted to put 
through of raising the minimum wage, the federal minimum wage 
to $15 an hour, what would be the impacts of that on your 
enterprise?
    Mr. MONTANA. Representative Donalds, thanks for the 
question.
    So as to the minimum wage, there is no one who works for Du 
Nord Craft Spirits that makes the minimum wage. They all make 
more than the minimum wage and that is on purpose because we 
want people to have a living wage and it is in large part 
because of that that we do not have any kind of a labor 
shortage. We have people who are trying to come back. I think 
people should like their jobs and not just have to work their 
jobs.
    The other side of that, when you talk about the tax 
implications, one thing to keep in mind when you think about 
it, I am coming to you from a distillery. This is a unique 
perspective. Many distilleries are in a growth phase, which is 
a polite way of saying that most of us lose money. And so when 
we are looking at income taxes, well, that is not really where 
we pay our taxes. We pay our taxes in excise taxes. So we pay a 
tax just to be able to sell. And so that is where the tax 
burden typically is for us. But I am not particularly concerned 
about the percentages moving up or down. Here or there. That is 
not what holds my business back. What is holding my business 
back is that I am required by law to use middlemen and I do not 
have a route to my customer. And so if someone is looking to 
help out my business, a craft distillery, make it so that I can 
sell just like anybody else directly to my customer. And the 
day that that happens, you are going to see distilleries take 
it to the next level and really thrive in this country.
    Mr. DONALDS. All right.
    Mr. Maguire, real quick, I have got about a minute left, 
you stated in your written testimony that you have only raised 
prices once in 6 years. You have had to raise them twice in the 
last year. You have 52 seconds. Why?
    Mr. MAGUIRE. Why have I had to raise them twice?
    Mr. DONALDS. Yes, sir. Why?
    Mr. MAGUIRE. Because of the unprecedented increases in our 
product costs in the last 45 days. We did not see 10 to 15 
percent increases on any of our product cost during the 
pandemic outside of the paper and to-go supplies and the PPE 
equipment and supplies. Our commodity pricing has gone 
absolutely berserk in the last 2-1/2 months and really in the 
last----
    Mr. DONALDS. Mr. Maguire, real quick. Real quick because I 
have got now 24 seconds. What have your suppliers said in 
relation to these price increase?
    Mr. MAGUIRE. Most of the suppliers are saying it is 
happening at the manufacturing level and the manufacturing 
level is happening because of labor shortages.
    Mr. DONALDS. I yield back. Thank you, Mr. Maguire.
    Chairman PHILLIPS. Thank you, Mr. Donalds.
    Are there any other members that wish to continue to a 
second round of questioning? If so, just raise your hand either 
virtually or physically.
    Nobody? Okay.
    I want to thank our witnesses. I learned a lot from each of 
you. Mr. Montana, having come from the distilling business, I 
surely understand what that three-tier system does and does not 
do, and I understand efficiencies and inefficiencies. To all of 
you in hospitality, rest assured a great deal of empathy from 
all of us. So I want to thank you. You have all endured a lot 
over the last year and the effort just to get to this day is 
nothing short of incredible to me. Your testimonies illuminated 
the benefits and drawbacks of the SBA programs as they 
currently operate and illuminated some ways that we can improve 
them. Hopefully, we will not have to do this again to this 
magnitude, but should we, we will be better prepared and we 
have opportunities to improve existing programs, perpetual 
programs as well. As the voice of small businesses in 
Washington, this Committee has to work to improve these 
programs to meet the needs of entrepreneurs better, plain and 
simple.
    So I look forward to working with fellow members of the 
Subcommittee on a bipartisan basis to help find ways to make 
these programs operate more effectively and more efficiently.
    I would ask for unanimous consent that members have 5 
legislative days to submit statements and supporting materials 
for the record.
    Without objection, that is so ordered.
    If there is no further business to come before the 
Committee, we are now officially adjourned. Thanks, everybody.
    [Whereupon, at 2:16 p.m., the Subcommittee was adjourned.]
                           
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