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




 
             SMALL BUSINESS ADMINISTRATION'S FY 2023 BUDGET

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

                                HEARING

                               before the

                      COMMITTEE ON SMALL BUSINESS
                             UNITED STATES
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED SEVENTEENTH CONGRESS

                             SECOND SESSION

                               __________

                              HEARING HELD
                             APRIL 27, 2022

                               __________

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]                         
                               

            Small Business Committee Document Number 117-053
             Available via the GPO Website: www.govinfo.gov
                   HOUSE COMMITTEE ON SMALL BUSINESS
                   
                   
                   
                             ______

             U.S. GOVERNMENT PUBLISHING OFFICE 
47-393                 WASHINGTON : 2022                  
                   
                   
                   
                   
                   
                   

                 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
                        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. Nydia Velazquez.............................................     1
Hon. Blaine Luetkemeyer..........................................     2

                                WITNESS

Hon. Isabella Casillas Guzman, Administrator, United States Small 
  Business Administration, Washington, DC........................     4

                                APPENDIX

Prepared Statement:
    Hon. Isabella Casillas Guzman, Administrator, United States 
      Small Business Administration, Washington, DC..............    46
Questions and Answers for the Record:
    Questions from Hon. Velazquez to Hon. Guzman and Answers from 
      Hon. Guzman................................................    55
    Questions from Hon. Golden to Hon. Guzman and Answers from 
      Hon. Guzman................................................    56
    Questions from Hon. Phillips to Hon. Guzman and Answers from 
      Hon. Guzman................................................    57
    Questions from Hon. Houlahan to Hon. Guzman and Answers from 
      Hon. Guzman................................................    58
    Questions from Hon. Luetkemeyer to Hon. Guzman and Answers 
      from Hon. Guzman...........................................    60
    Question from Hon. Fitzgerald to Hon. Guzman and Answers from 
      Hon. Guzman................................................    72
    Questions from Hon. Van Duyne to Hon. Guzman and Answers from 
      Hon. Guzman................................................    72
    Questions from Hon. Salazar to Hon. Guzman and Answers from 
      Hon. Guzman................................................    74
    Questions from Hon. Meuser to Hon. Guzman and Answers from 
      Hon. Guzman................................................    77
Additional Material for the Record:
    Credit Union National Association (CUNA).....................    79
    Letter to Hon. Merrick B. Garland, Attorney General, United 
      States Department of Justice from Hon. Blaine Luetkemeyer..    81
    Letter to Hon. Richard Delmar, Acting Inspector General, 
      United States Department of the Treasury from Hon. Blaine 
      Luetkemeyer................................................    83
    National Association of Federally-Insured Credit Unions 
      (NAFCU)....................................................    86
    U.S. Small Business Administration Office of Advocacy........    88


        SMALL BUSINESS ADMINISTRATION'S FISCAL YEAR 2023 BUDGET

                              ----------                              


                       WEDNESDAY, APRIL 27, 2022

                  House of Representatives,
               Committee on Small Business,
                                                    Washington, DC.
    The committee met, pursuant to call, at 10:00 a.m., in Room 
2360, Rayburn House Office Building, Hon. Nydia Velazquez 
[Chairwoman of the Committee] presiding.
    Present: Representatives Velazquez, Golden, Davids, Mfume, 
Phillips, Newman, Bourdeaux, Carter, Chu, Evans, Delgado, Andy 
Kim, Craig, Luetkemeyer, Williams, Stauber, Meuser, Tenney, 
Garbarino, Young Kim, Van Duyne, Donalds, Salazar, and 
Fitzgerald.
    Chairwoman VELAZQUEZ. Good morning. I call this hearing to 
order.
    Without objection, the Chair is authorized to declare a 
recess at any time.
    I would like to begin by noting some important 
requirements. Standing House and Committee rules continue to 
apply during hybrid proceedings. All Members are reminded that 
they are expected to adhere to these rules, including decorum.
    House regulations require Members to be visible through a 
video connection throughout the proceeding, so please keep your 
cameras on. Also, remember to remain muted until you are 
recognized to minimize background noise.
    In the event a Member encounters technical issues that 
prevent them from being recognized for their 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 they have returned to the proceeding.
    I want to thank Administrator Guzman for appearing before 
the Committee today. When your tenure began, small businesses 
were experiencing a once in a lifetime crisis. Since your 
confirmation, you and the staff at SBA have worked tirelessly 
to stand up new programs, institute new protections against 
fraud, and handle unprecedented demand for traditional SBA 
programs.
    Today, the worst of the pandemic is believed to be behind 
us and there is some good news to report. Since President Biden 
took office, our economy has added over 7.4 million jobs, 
unemployment is down to 3.6, and entrepreneurs have started new 
businesses at record rates. With that said, the deep wounds 
inflicted by the pandemic and the conflict in Ukraine continue 
to fester. As small employers work towards a full recovery, 
they will need our utmost support.
    Moving forward, we must utilize the SBA to drive success 
and empower entrepreneurs. That is why SBA programs must have 
the funding necessary to meet the needs of small business 
owners. We have an opportunity to discuss the SBA's 2023 budget 
request and learn how it will help our main streets flourish. 
The administration's proposed budget lays out the investments 
needed to build a stronger, better, and more equitable America.
    The funding outlined in this plan will help lower costs for 
families, create good-paying jobs, and drive our recovery 
forward. The proposal also places a strong emphasis on 
supporting the needs of entrepreneurs with three overarching 
goals: ensuring equitable design and delivery of programs, 
building resilient businesses and a sustainable economy, and 
implementing strong stewardship of resources.
    The pandemic taught us that access to critical resources is 
often unequal among businesses, particularly those owned by 
women and people of color. The SBA's focus on equity will help 
ensure that all firms have access to the resources they need to 
succeed. I am also pleased to see that the proposal includes 
funding and investments in key programs, modernization, 
customer service, and core contracting initiatives.
    I am eager to discuss how the money requested in this 
budget will strengthen and improve initiatives that increase 
access to capital, improve disaster assistance, and create more 
government contracting opportunities for small firms.
    Administrator Guzman, you have been at the forefront of the 
recovery effort and your work has kept millions of businesses 
open and people on the payroll. I look forward to hearing from 
you about the specifics of this request and the agency's top 
priorities for the upcoming year.
    I would now like to yield to the Ranking Member, Mr. 
Luetkemeyer, for his opening statement.
    Mr. LUETKEMEYER. Thank you, Madam Chair, and thank you, 
Administrator Guzman, for joining us in person this morning to 
discuss the Biden administration's Fiscal Year 2023 budget 
request.
    The SBA has played an outside role in assisting the 
American economy recovery from the COVID-19 pandemic. As the 
nation moves away from the emergency period of the pandemic and 
into recovery, it is critical that we evaluate SBA's role 
moving forward. To do so requires a full and complete 
evaluation of the agency's performance, including the critical 
pandemic relief programs.
    Unfortunately, a full evaluation of one of the largest 
pandemic relief programs, the Paycheck Protection Program, 
continues to be hindered by Secretary Yellen's failure to 
appear before this Committee. In the CARES Act, the Department 
of Treasury was charged with onboarding new lenders into the 
program. Yesterday, on the 1-year anniversary of Secretary 
Yellen missing her first deadline to testify before this 
Committee, and thus America's small businesses, I sent two 
letters requesting follow-up investigations in this matter. The 
first letter I sent was to Attorney General Garland asking for 
a Department of Justice Investigation into whether Secretary 
Yellen remains in violation of the law by failing to appear 
before this Committee. The second letter I sent was to the 
Department of Treasury's Acting Inspector General, Richard 
Delmar, requesting an investigation into the department and 
Secretary Yellen.
    I ask unanimous consent to enter into the record these 
letters, Madam Chair.
    Chairwoman VELAZQUEZ. Without objection, so ordered.
    Mr. LUETKEMEYER. Thank you.
    It has been just over a year since you assumed the role of 
administrator and you have faced no small task, Administrator 
Guzman, from unprecedented state and local shutdown orders that 
forced small businesses to either operate at a reduced capacity 
or close their doors entirely to rising inflation, labor 
shortages, and supply chain disruptions. The SBA has its work 
cut out for it. So if there is ever a time for the agency to 
rise to the occasion, this is it.
    Despite the country moving toward recovery, American small 
businesses continue to feel repercussions thanks in no small 
part to the actions and failures of this administration. 
Headwinds are blowing stronger by the day, and if that sounds 
familiar, it is because economic indicators were bad the last 
time you were here in November and since then have only 
continued to go in the wrong direction. Prices are now rising 
at the highest rate in 40 years. Job openings continue to rise, 
even in just a few months since you last testified, and 
creating staffing headaches for small business owners across 
the nation.
    If it is not the labor shortage, it is a supply chain issue 
as more and more small businesses are finding it nearly 
impossible to obtain goods and products. Add to that the 
concern among small business owners when they hear of tax 
increases this administration is routinely proposing, and it is 
no wonder so many small business owners have begun to question 
who is supposed to be standing up for small business?
    I can answer that question, Madam Administrator. It is you. 
You are the one who should be advocating for small businesses 
in this administration. If a policy or regulation creates red 
tape or a cost for small businesses, it is you who should be 
pointing this out to the president.
    The American Action Forum has studied the regulatory costs 
associated with the Biden administration's first year in 
office. Unfortunately, those costs come to a staggering $201 
billion. Let me repeat that, $201 billion in just 1 year of 
compliatory costs. This is unacceptable.
    If the Biden administration continues to impose tax 
increases, you should be pointing out that no matter how they 
spin that increase, the impact on small businesses is, in fact, 
going to be hurting them. Now more than ever, we need a Small 
Business Administration that is responsive to the nation's 32 
million small businesses, entrepreneurs, and startups. Yet, we 
continue to see the same thing.
    This hearing is scheduled, and magically, our letters and 
inquiries start to receive responses. The speed at which our 
concerns are being addressed is improving but more work needs 
to be done. With $1.2 trillion flowing through the agency's 
doors, the American public needs accountability and 
transparency. Plain and simple, the SBA needs to be improved 
and I have a plan to do it.
    Now, more than ever, small businesses need an SBA that is 
responsible and fulfills the statutory mission day in and day 
out. The core responsibilities that are outlined in law need to 
drive the agency's decision making. Anything else is 
irresponsible. Unfortunately, that is what we see with your 
budget, more spending without outcomes for main street USA.
    Moreover, fraud is fraud, Madam Administrator. As 
Republican leader of this Committee, I do not care when it 
happened, it needs to be addressed. The integrity of the SBA's 
programs need to be restored fully and comprehensively. I stand 
ready to work with anyone and everyone to ensure the SBA has 
the oversight and metrics in place to deter and catch bad 
actors. The agency must be cleaned up.
    And that brings us to voting. There is no place in the 
Constitution that supports the SBA getting involved in 
elections. That is squarely in the state's purview. With a 30 
percent fraud rate on one of your loan programs, and having to 
close two of your women's business centers because of dubious 
activities, what makes you think the SBA would be able to 
protect the integrity of voting? It is a question we are going 
to have to answer.
    With that, Madam Chair, I look forward to today's 
conversation, and I yield back.
    Chairwoman VELAZQUEZ. The Ranking Member yields back.
    With that, I will now introduce our distinguished witness, 
The Honorable Isabella Casillas Guzman. Administrator Guzman is 
currently serving as the 27th Administrator of the Small 
Business Administration. Her previous experience includes 
serving as Director of the California Office of the Small 
Business Advocate and Deputy Chief of Staff at SBA. Outside of 
her time in government, Administrator Guzman has advised 
entrepreneurs and owned her own small business, giving her 
extensive insight into the needs of entrepreneurs. 
Administrator Guzman earned a Bachelor of Science from the 
University of Pennsylvania Wharton School of Business.
    Welcome, Ms. Guzman. Ms. Guzman, you are now recognized for 
5 minutes.

     STATEMENT OF THE HONORABLE ISABELLA CASILLAS GUZMAN, 
   ADMINISTRATOR, UNITED STATES SMALL BUSINESS ADMINISTRATION

    Ms. GUZMAN. Thank you, and good morning, Chairwoman 
Velazquez, Ranking Member Luetkemeyer, and distinguished 
Members of the Committee. Thank you for the opportunity to 
appear before you today to discuss President Biden's Fiscal 
Year 2023 budget request for the U.S. Small Business 
Administration.
    The president's budget requests a total of $1.06 billion to 
foster growth and opportunity across America's economy by 
supporting the SBA's critical small businesses programs and 
disaster assistance. This funding level generates practical 
investments in economic progress, and with your support, allows 
us to continue delivering crucial programs and services for a 
surging wave of new American entrepreneurs.
    Over the past year, I have visited small businesses across 
28 states and Puerto Rico. I have had the opportunity to visit 
many of the communities you represent and witness the strength 
and resilience of American entrepreneurship firsthand.
    Despite hardships from the pandemic, America's small 
businesses and innovative startups are creating new jobs, 
powering our economy, strengthening our global competitiveness, 
and supporting working families.
    And Americans are launching businesses at record rates. 
Business applications have risen more than 30 percent from pre-
pandemic levels, and in 2021 alone, 5.4 million Americans 
applied to start a business.
    One of this administration's top priorities is making sure 
the opportunities of this growing economy are reaching all 
Americans. President Biden often says that ability is spread 
evenly but opportunity is not, and that is important because 
building equity, ensuring access and opportunity are open to 
all, is not just the right thing to do, it is good for 
business.
    Thanks to historic legislation passed by Congress, the SBA 
has been able to deliver critical relief and help millions of 
small businesses, especially in the hardest hit communities, 
survive the pandemic.
    In Fiscal Year 2021, the SBA distributed more than $450 
billion in financial relief through the Paycheck Protection 
Program, the COVID Economic Injury Disaster Loan and Advance 
programs, the Restaurant Revitalization Fund program, and the 
Shuttered Venue Operators Grant program. Those vital relief 
funds saved jobs in every community in the country.
    Now, we are delivering on the promise of PPP forgiveness. 
To date, 87 percent of all eligible PPP recipients have 
submitted forgiveness applications, and nearly all, 99.4 
percent of qualified applicants have had their loans partially 
or fully forgiven.
    SBA has not only delivered on pandemic relief, but our core 
capital programs, which support hundreds of thousands of jobs 
are also breaking records. Demand for SBA capital support is 
outpacing the resources available with a 62 percent increase in 
7(a) loans and a 41 percent increase in 504 loans approved.
    Given the high demand for SBA's capital programs and their 
effectiveness for our small businesses, President Biden is 
requesting a 13 percent increase over our core programs for a 
total of $71 billion.
    In addition, the budget recognizes that SBA needs 
additional support to service those $361 billion in COVID-EIDL. 
The budget requests authority to reprogram existing balances in 
targeted COVID-EIDL funding to advance to support and service 
loans for the 3.9 million borrowers.
    A large percentage of these borrowers will start making 
payments in the months ahead, requiring SBA to shift from 
origination to servicing. As we enter this new phase of 
recovery, SBA must provide borrowers with needed resources and 
the quality customer service that they deserve.
    While my written testimony outlines other budget 
priorities, one additional key area I want to highlight is our 
efforts to upgrade our systems and processes to detect and 
prevent fraud. During this administration, the SBA has acted 
quickly to protect taxpayer dollars, first by restoring 
controls and deploying new technology to mitigate fraud. Our 
work to implement or enhance fraud control has been recognized 
by federal accountability agencies and watchdogs.
    I also recently announced the creation of a new Fraud Risk 
Management Board to replace the Fraud Risk Management Council. 
This new board provides the oversight and agency-wide 
coordination recommended by the GAO. Additionally, I designated 
a Special Counsel for Enterprise Risk to work directly in my 
office to further limit fraud and risk across the agency in 
coordination with our established fraud management framework. 
To recover taxpayer funds, we are working closely with the 
Office of Inspector General and other federal authorities to 
refer suspected fraud to law enforcement. Effective stewardship 
is necessary for the SBA to achieve our mission. I am committed 
to working with stakeholders, including Congress, to protect 
SBA's programs from abuse and ensure that legitimate businesses 
have a clear path to access the financial resources Congress 
has created for them.
    Thank you again, Chairwoman Velazquez and Ranking Member 
Luetkemeyer, and distinguished Members of the Committee for the 
opportunity to appear before you today. And I look forward to 
the questions.
    Chairwoman VELAZQUEZ. Thank you, Administrator Guzman.
    I will begin by recognizing myself for 5 minutes.
    Ms. Guzman, access to capital, as you know, is critical to 
small businesses and the SBA loan programs have had a banner 
year. How will you continue this success and also expand to 
employee-owned businesses and cooperatives as mandated by 
statute?
    Ms. GUZMAN. Our capital access team is positioning and 
their whole agency is positioning to make sure that we can 
serve not only those new 5.4 million entrepreneurs but all of 
our firms across the country. And we know that access to 
capital remains a really important issue for so many of them to 
overcome. In particular, around the Main Street Act, we are 
really committed to making sure that all businesses have 
pathways to accessing capital, including those that are 
employee-owned and those ESOPS. And so we have worked with the 
advocates in the industry to see what we can do to assess and 
adapt our programs to fit their needs and we have made some 
important changes. And we will continue to assess those 
programs as we move forward and as we see more loan volume 
coming through so that we can work with ESOPs and work with 
cooperatives. We know that as small businesses exit, employee 
ownership is a good pathway in many cases to transition and 
exit their firms successfully. And we would like to make sure 
that capital is available.
    Chairwoman VELAZQUEZ. How is SBA using new technology to 
streamline loan processes and focus outreach to promote the 
programs, particularly to the undeserved?
    Ms. GUZMAN. Across all of our loan programs we, of course, 
rely on our 68 district offices, our over 1,300 resource 
partners, and now our newly established community navigators to 
really reach out to more small businesses to get them capital 
ready. In addition, we have a strong network of lenders and 
have looked to expand that with the Community Advantage pilot 
program that we recently overhauled, as well as opening it up 
so that we can allow new licensees to come into the program, 
especially those mission lenders.
    Chairwoman VELAZQUEZ. Thank you.
    Fraud controls previously removed in 2020 to expedite 
relief were reinstituted under your leadership. At our hearing 
in January, the IG commended SBA for its action implementing 
his recommendations. Can you expand on your efforts to prevent 
fraud and abuse related to the agency's COVID and relief 
programs?
    Ms. GUZMAN. President Biden is really committed to making 
sure funds get into the hands of those businesses it was 
intended to serve, and the administration early on, we ensured 
that we could put in those controls, some of those across our 
COVID-EIDL program, of course, in which that was a unique case, 
a tale of 2 years, truly. We have also leveraged technology so 
that we can assess our portfolios and make sure that fraud is 
indicated. And created strong partnerships in collaboration and 
transparency with the IG, as well as the GAO. We want to make 
sure that we are implementing fraud detection at inception of 
design and that is what we have committed to do.
    Chairwoman VELAZQUEZ. How often are you meeting with the 
IG?
    Ms. GUZMAN. I meet with the IG biweekly to make sure that 
we are coordinated on all of the reports and that we are ahead 
of the game because obviously fraud is an iterative process and 
we need to continue to evolve. And then with the GAO, I meet on 
a quarterly basis and just recently met with Comptroller 
General Dodaro to discuss the SBA.
    Chairwoman VELAZQUEZ. Thank you.
    SBA is requesting $20 million to implement the VA-SBA Act, 
which mandated SBA to become the sole provider of formal 
certifications for all veteran-owned small businesses. What is 
SBA's plan to stand up this certification program and why is 
this funding critical?
    Ms. GUZMAN. Within our funding request, our budget, we are 
requesting $20 million in 2023 to continue our efforts. We have 
been collaborating with the VA on this transition and we are 
looking forward to it. In talking to the veteran stakeholders 
across the country, we have found that they are looking forward 
to the transition and that SBA has a host of services and 
offerings that they can access. Going to a one stop shop in 
essence will be beneficial to them. Working closely with the 
VA, we have made sure that we are aligned on transitioning 
personnel, technology, and that we can have a seamless 
transition so there is no interruption of service for veterans 
and we can expand it to more veterans across the government.
    Chairwoman VELAZQUEZ. Thank you.
    Now, my time basically has expired even though I have other 
questions.
    The Ranking Member, Mr. Luetkemeyer, is now recognized for 
5 minutes.
    Mr. LUETKEMEYER. Thank you, Madam Chair.
    I would like to begin with something that I mentioned 
earlier in my opening statement, Ms. Guzman. The SBA has just 
come through 2 years of unprecedented activity. The attention 
on SBA has been heightened and with that your actions should 
carry a lot of weight with this administration. I want to focus 
on this.
    When reports come out by groups that identify over $200 
billion in regulatory costs that were added by President 
Biden's first year in office, what has been your response? Have 
you discussed these numbers and their impact with the White 
House?
    Ms. GUZMAN. I continue to track, especially through our 
Office of Advocacy, as you know, which tracks all regulation, 
any impact on small business and continue to travel around the 
country to make sure that I am----
    Mr. LUETKEMEYER. The question, I am sorry to interrupt, but 
the question is, have you discussed the impact with the White 
House?
    Ms. GUZMAN. We continue to, you know, share learnings about 
small business with our partners across the whole of 
government, including the White House.
    Mr. LUETKEMEYER. What has been their response when you tell 
them that $200 billion worth of increased compliance costs is 
crushing small business? What has been their response?
    Ms. GUZMAN. I cannot speak to that specifically, that 
number, but I can share with you----
    Mr. LUETKEMEYER. That number is the administration's 
number. We pulled that from each agency when they propose a 
rule, it also has to give the cost of that. When you total 
those things up it is $201 billion last year, Ms. Guzman. That 
is devastating to small businesses.
    Ms. GUZMAN. What I can share with you, Ranking Member, is 
that, of course, we have our Ombudsman office that works with 
all small businesses that have to navigate regulatory issues so 
that we can continue to support them on the back end on the 
front end of the Office of Advocacy.
    Mr. LUETKEMEYER. My point of the question, let me claim my 
time, my point of the question is that you should be advocating 
for small businesses and tell the administration stop the 
onslaught of rules and regulations. It is killing small 
businesses. If you truly have been to 28 states I think you 
said a while ago----
    Ms. GUZMAN. Correct.
    Mr. LUETKEMEYER.--over the last year, and you have talked 
to small businesses, you have got to come back with a sense 
that rules and regulations are one of the top things that they 
are concerned about. The costs of those things are enormous. I 
can tell you in my district this is a concern of it. Inflation 
is the next one. Are you talking at all with the administration 
about the effects of inflation and high energy costs on our 
small business community?
    Ms. GUZMAN. Yes. The president is, of course, very 
sensitive to the fact that the inflationary pressures and cost 
pressures impact American families as well as small businesses. 
And I continue to track what those impacts are.
    Mr. LUETKEMEYER. Have you talked to them about the impact 
of this? Have you advocated and offered solutions to this 
problem?
    Ms. GUZMAN. The president's actions speak for themselves. 
He is trying to address these costs----
    Mr. LUETKEMEYER. Oh, my gosh, ma'am.
    Ms. GUZMAN.--for our small businesses and their families.
    Mr. LUETKEMEYER. They speak for themselves? They're 
devastating. He adds more fuel to the fire. He continues to 
allow energy prices to go through the roof. He adds $200 
billion worth of regulatory costs. He adds more money to the 
money supply, which is extremely important when it comes to 
inflation. That is one of the drivers of inflation. Are you 
talking at all about those things with him and say, please, Mr. 
President, stop the onslaught of these nonsensical things that 
are under your control?
    Ms. GUZMAN. I tis important to note that there are multiple 
impacts on our small businesses and we continue to track and 
share them and make sure that our small businesses get the 
support that they need.
    Mr. LUETKEMEYER. I assume the answer is no. I cannot get a 
yes or no from you this morning, ma'am, Ms. Guzman, so I assume 
the answer is no, you have not talked to the president about 
this. You are an advocate for small business. You should be 
standing in front of his office once a week. Say, Mr. 
President, the businesses that I oversee are struggling. Please 
help me to help them by stopping the nonsense of your office 
continuing to support and enhance inflation in this country 
through all the things that they are doing. If you are not 
doing that, then you are not doing your job, Ms. Guzman.
    One more quick thing here. The last 2 years have seen the 
agency has gone under stress and there is no question what 
agency is under stress. You can also see some of the problems 
and weakness of that agency. Fraud and oversight metrics are a 
weakness of this agency. You mentioned a minute ago that you 
are trying to work on fixing them. But fraud is fraud. It has 
got to be addressed somehow, some way. And I know that, it 
would appear to me that with regard to the PPP loan program and 
with regard to the EIDL program, there seems to be a difference 
in the ability of those two programs to operate. Would you 
agree that the private sector lenders that initiated the PPP 
loans were more efficient at delivering these dollars and 
deterring fraud than the SBA's direct EIDL program?
    Ms. GUZMAN. Our lending partners on PPP have been very 
effective. In the COVID-EIDL instance, it is a tale of 2 years. 
As I had said earlier, COVID-EIDL, in 2020 when the majority of 
the loans were through and where you see the IG and GAO reports 
on, had no controls. And so in 2021, we have reinstituted the 
controls. We have leveraged technology to ensure----
    Mr. LUETKEMEYER. So your answer is yes. The private sector 
did a really good job of getting the money out the door, almost 
three times as much money as what the EIDL program did with 
probably one-sixth of the fraud rate.
    Ms. GUZMAN. I would add that PPP3, which was implemented in 
2021, had the loan volume higher than in 2020, also had 
controls and speed in place and thanks to the administration's 
actions to put those controls in place. And so my answer was 
not yes but that we are implementing controls----
    Mr. LUETKEMEYER. If it cannot be yes, you are not doing 
your job if that is the case. You are totally misunderstanding 
the question or you are misunderstanding how your agency runs 
if your answer is not yes, unfortunately.
    Ms. GUZMAN. What I am saying is that----
    Mr. LUETKEMEYER. My time is up. I yield.
    Ms. GUZMAN. Thank you.
    Chairwoman VELAZQUEZ. Now the Chair recognizes the Chairman 
of the Subcommittee on Oversight, Investigations, and 
Regulations, Mr. Phillips.
    Mr. PHILLIPS. Thank you, Madam Chair. Welcome, Ms. Guzman.
    I am sorry for how you were treated with disrespect by 
certain Members of this Committee.
    I am a small business owner. I know what it takes to build 
a business. I know how tough it is, especially recently. I have 
traveled the world in the business world. There is no place in 
the world in which small businesses can thrive like the United 
States. Are we perfect? No. Is there a lot we all can do? Yes. 
I hope we can do it together.
    I actually admire what you have done and your team in 
extraordinary time with little preparation, and frankly, little 
experience amongst any of us to face the circumstances that we 
have. And I want to thank you, and I hope you extend our 
gratitude to everybody that works at the SBA for doing the best 
with what we had with the time we had. And frankly, saving 
millions of jobs and hundreds of thousands of small businesses. 
Thank goodness. And we did so in a bipartisan fashion and we 
should continue to do so.
    As Chairman of the Subcommittee on Oversight, I also 
applaud the creation of the Fraud Risk Management Board. I 
think it is a great step. We have to use taxpayer dollars well. 
Every dollar that we have lost to fraud is a dollar that has 
not gone to the very businesses that you look out for and all 
of us want to see succeed.
    I want to also applaud the increased funding for the 
Entrepreneurial Development program. By the way, I hope that is 
something that we can all talk about bringing into high schools 
in this country to teach entrepreneurship at some point, but 
perhaps that is for another day.
    Our nation's small businesses and owners deserve the best 
opportunity to access financing and counsel from their 
government and support so that we can ensure that the American 
dream is accessible to everybody, whether they live in 
Brooklyn, New York or Brooklyn Park, Minnesota that I 
represent, or even little tiny Brooklyn, Texas.
    So with that in mind, many of us believe deeply in economic 
equity and racial equity. I do not think we talk enough about 
geographic equity. What can the SBA do to ensure that the 
programs that we support, that we discuss, that we provide 
oversight for can serve entrepreneurs in the tiniest parts of 
this country that are often overlooked?
    Ms. GUZMAN. Thank you so much for your comments and your 
question.
    I could not agree with you more. During the pandemic, we 
found that connection was key, and being able to be aware of 
resources and prepare to access those resources was really 
critical. And so that is why you see within our budget request 
an increase within our Entrepreneurial Development programs and 
why in addition we launched the Community Navigator pilot 
program so that we can better reach the 32.5 million small 
businesses and the newly created firms that are being birthed 
every year.
    Rural communities, geographic equity is really important to 
me, and I continue to ask that we distribute our resources and 
make sure that we are reaching into those communities. I think 
we will go a long way with broadband being built up in 
communities so that every community can have high-speed 
Internet. More micro entrepreneurship occurs when there is 
high-speed Internet according to studies. And so I was pleased 
that nearly half of the Community Navigators are focusing on 
rural communities and making sure that they have services to 
deliver and connect to those communities. And as we expanded 
our women's business centers, as well as focused on our SBDCs, 
we commit to making sure that we can serve those communities.
    Mr. PHILLIPS. Terrific. Also, I am a deep believer in 
employee ownership. I think that also is a bipartisan notion. 
That is the American dream, in fact.
    What can the SBA do better to reduce barriers, to employee 
ownership, to promote the concept, to educate small business 
owners especially as it relates to succession planning? How can 
we do better in that area with the resources available to you?
    Ms. GUZMAN. In my home state of California, we actually 
looked at this issue quite extensively as communities were 
finding with a lot of retiring small businesses, they wanted to 
be able to retain those businesses and look at employee 
ownership as an option. There are folks focused especially on 
manufacturing where we do not want to see businesses close 
down. We want to see businesses take over, and some are 
focusing on ESOPs in particular. I think we can highlight those 
activities to show small businesses a path forward for exists 
through ESOPS or employee ownership. Our SBDCs actually have 
expertise around the country that are focusing on this and so 
we need to continue to cultivate that, build best practices, 
and share them across the country.
    Mr. PHILLIPS. And what can we do in Congress to support 
that?
    Ms. GUZMAN. And I would look forward to partnering more 
with you on that to try to identify some of those best 
practices on training because it does take quite a bit to 
transition a business to employee ownership and we need to help 
and support the owner. So funding that additional 
entrepreneurial development support will help us expand that 
type of technical assistance. But in addition, on the capital 
front, we are continuing to monitor the additional changes that 
we have made on our capital programs in compliance with the 
Main Street Act and we look forward to continuing to have 
discuss about that with those borrowers to see what we can do 
to do more for them.
    Mr. PHILLIPS. Thanks, Ms. Guzman.
    I yield back the balance of my time.
    Chairwoman VELAZQUEZ. The gentleman's time has expired.
    Now we recognize the gentleman from Texas, Mr. Williams, 
Vice Ranking Member of the Committee.
    Mr. WILLIAMS. Thank you, Ms. Guzman, for being here.
    I want to say for the record I have been to Brooklyn, 
Texas. You need to go to Brooklyn, Texas, and find out what 
they think about the SBA.
    Ms. GUZMAN. I would love to.
    Mr. WILLIAMS. You need to go talk to those people.
    Also, I think that the head of the SBA, regardless of party 
preference or whoever the president is, should always be for 
less taxes and less government. You should always stand for 
that regardless of who nominated you.
    I am a small business owners. Have been for 51 years. 
Hundreds of employees today I employ. And so I feel like I am 
Main Street America.
    So, I have a few questions to start. It will be simple. 
Keep your answers to a quick yes or no.
    First of all, the rollout of the Save Our Stages program 
which you mentioned, it was disastrous. The delays and 
dysfunctions your agency faced during the implementation 
prolonged critical aid to small businesses. Indeed, many of 
them could not stay in business waiting for you. This is 
unacceptable, and main street businesses want answers.
    So quickly, yes or no, have you held anyone accountable for 
the failed rollout of the Save Our Stages program that delayed 
billions of dollars in emergency aid?
    Ms. GUZMAN. I was not happy with----
    Mr. WILLIAMS. Yes or no.
    Ms. GUZMAN. Yes, I transitioned the program.
    Mr. WILLIAMS. Okay. Thank you.
    Ms. GUZMAN. Thank you.
    Mr. WILLIAMS. While our economy faces a looming recession, 
you still publicly support the Biden administration's tax hikes 
saying it will clearly affect large corporations.
    So yes or no, would you support raising taxes on small 
businesses or individuals earning less than $400,000 per year?
    Ms. GUZMAN. President Biden's plan----
    Mr. WILLIAMS. Yes or no.
    Ms. GUZMAN.--will not affect any businesses under $400,000.
    Mr. WILLIAMS. Yes or no. Do you believe in raising taxes to 
small businesses? It is a simple question.
    Ms. GUZMAN. I agree with the president. Yes.
    Mr. WILLIAMS. Okay. You will raise taxes. Let the record 
show----
    Ms. GUZMAN. No, that President Biden will not raise taxes 
under $400,000.
    Mr. WILLIAMS. Okay. Well, that is not true. And then do not 
forget inflation. He has already raised taxes. Okay? And done 
nothing about that.
    So we are here today to discuss the Biden administration's 
SBA budget request of $1 billion, a $135 million increase from 
Fiscal Year 2021. However, this proposal outlines initiatives 
that go beyond your agency's core responsibilities. You must 
want to get into everybody's business.
    The SBA is tasked with aiding, assisting, and advising 
small businesses across the country; correct?
    Ms. GUZMAN. Correct.
    Mr. WILLIAMS. Which is why it is unclear to me and many 
others why you would request more taxpayer dollars for climate 
change within the SBA.
    So in lieu of directing more money to actually small 
businesses' aid, this request is further proof that President 
Biden's SBA is completely out of touch with main street.
    Businesses in my district are concerned about their ability 
to compete in the future and are looking at the SBA to be a 
nonpartisan, which we do not have, resource that has their best 
efforts to be looked at in mind.
    Administrator Guzman, why should Congress increase funding 
for your agency without first addressing underlying problems 
such as your failure to rollout business saving aid, the 
significant fraud we have talked about with the SBA programs, 
and general underperformance? Why should we give you more money 
to just continue to do that?
    Ms. GUZMAN. SBA has successfully scaled to meet the needs 
and really helped millions of businesses, over 8 million unique 
businesses during COVID relief. Done a remarkable job in your 
districts, across our 68 field offices to support small 
businesses.
    Mr. WILLIAMS. Well, not in my district and not in Brooklyn, 
Texas.
    Ms. GUZMAN. And in addition, we have implemented fraud 
controls so that we can better get the funds into the hands of 
the businesses it was intended to serve.
    Mr. WILLIAMS. Well, okay.
    Ms. GUZMAN. And we are committed to making sure that they 
have the capital that they need, the market access they need, 
and the technical assistance that they need. That funding for 
climate is about making sure that businesses can prepare and 
mitigate----
    Mr. WILLIAMS. But you do not control that. You have no 
business being----
    Ms. GUZMAN. It is not for me to engage in climate but for 
me to give loans----
    Mr. WILLIAMS. Well, that is fine.
    Ms. GUZMAN.--to help mitigate.
    Mr. WILLIAMS. I am running out of time. Let me move on.
    Ms. GUZMAN. Thank you.
    Mr. WILLIAMS. But you do not need to be in everybody's 
business. Take care of the people that you are required to take 
care of--the small business owner; the guy trying to make the 
payroll; the guy that signs the front of the check, not the 
back of the check; the guy who is drawing a line of credit. 
Help him. He needs help. He does not need to worry about the 
climate change which is not even part of what you are staffed 
to do.
    So small businesses across the United States are still 
desperate to fill job openings. These labor shortages are 
hindering business operations and they are a driving factor in 
the supply chain model and inflation issue. I can tell you all 
about that.
    A recent report by the Jobs Opening and Labor Turnover 
Survey found that President Biden's worker shortage remains at 
historic highs with more than 11 million job openings.
    So Administrator Guzman, that is nearly a 4 percent 
increase since the last time you testified before this 
Committee. Main street businesses are bearing the weight of 
this unsustainable worker shortage and their optimism is very, 
very low. So, real quick, what recommendations are you making 
to small business owners, like me, who have open jobs that they 
cannot fill?
    Ms. GUZMAN. When SBA provides services to support small 
businesses----
    Mr. WILLIAMS. But you can tell me. I am a small business 
owner.
    Ms. GUZMAN. I appreciate that.
    Mr. WILLIAMS. So I would like to know what to do.
    Ms. GUZMAN. I appreciate that, Congressman. And I 
appreciate your expertise having run and successfully built a 
business with hundreds of employees. The small businesses that 
we serve, obviously, are facing workforce shortages and 
challenges and have had to compete in this marketplace, this 
tight labor market. We are prepared by providing them with 
technical assistance. About half of our time of our small 
business development centers and our women business centers is 
often spent on workforce development issues, as well as 
strategic planning for the businesses.
    Mr. WILLIAMS. I believe my time is up.
    Ms. GUZMAN. So we are committed to helping those businesses 
survive.
    Chairwoman VELAZQUEZ. Time has expired.
    I would ask the Members, please, stop badgering the 
witness. Treat her with the respect that she deserves. Allow 
her to answer your questions. We never got into this when we 
were in the minority. We always treated the witnesses with 
respect with Ranking Member Mr. Chabot.
    Mr. LUETKEMEYER. Madam Chair----
    Chairwoman VELAZQUEZ. Let's have a decent, respectful 
discussion.
    Mr. LUETKEMEYER. Madam Chair, the reason that we are having 
to interrupt her responses is she is not responsive. She is 
taking a page out of the Secretary Yellen, the Federal Reserve 
folks who sit there and tap dance around every single question. 
We cannot get a straight answer. So the only way to talk to her 
is to request our time back and then redo the question. If she 
will give us a straight answer, we will be glad to continue to 
have a dialogue with her. But we cannot have a dialogue when 
she will not answer the question.
    Chairwoman VELAZQUEZ. She is answering the questions.
    Mr. LUETKEMEYER. She is not answering the questions. With 
all due respect, Madam Chair----
    Chairwoman VELAZQUEZ. When it comes to fraud and abuse, 
fraud happened because fraud controls were taken away from the 
previous administration. She reinstituted that and now you 
continue to raise the issue of fraud while the IG and the 
Office of the Comptroller has stated for the record that they 
have access to the administration, that they have been 
implementing their recommendations, and you just continue to 
bring the same talking points.
    Mr. LUETKEMEYER. If you want to talk about the Inspector 
General report, let's talk about the entire report. The entire 
report when he was here, we asked the question, okay, are those 
changes being implemented? He said yes. Why are we not seeing a 
drop in the problem with fraud? Because the employees are not 
adhering to the new principles, the new protocols in place. 
That is a problem.
    Chairwoman VELAZQUEZ. Okay.
    Mr. LUETKEMEYER. That goes back to leadership. That is what 
we are trying to get at.
    Chairwoman VELAZQUEZ. The Chair recognizes the 
congresswoman from Georgia, Ms. Bourdeaux, for 5 minutes.
    Ms. BOURDEAUX. Thank you, Chairwoman Velazquez, and thank 
you for holding this hearing. And thank you, Administrator 
Guzman, for your continued work as SBA administrator and for 
joining us here today.
    The president's budget request of Fiscal Year 2023 includes 
a 21 percent increase in SBA funding levels for a total of $914 
million in discretionary funding. And much of this funding is 
aimed at increasing access to SBA resources and services in 
communities like mine which have historically had difficulty 
accessing some of the critical tools that the SBA provides to 
entrepreneurs and would-be entrepreneurs.
    The budget also includes several indications about the 
SBA's priorities for Fiscal Year 2023 and areas for potential 
collaboration with Congress. The administration's Fiscal Year 
2023 budget in particular says that SBA is establishing an 
agency priority goal to increase the number of community 
financial institutions in SBA's lender match portal, something 
I am very pleased to see. Each of the federal bank regulators, 
however, have offices dedicated to CDFI and MDI engagement and 
have initiatives to support their activities.
    So my first question is, do you think a similar office at 
the SBA would help the SBA get more community-based lenders 
into programs like the 7(a) program? And what else is being 
done concretely to really engage the CDFI and MDI community?
    Ms. GUZMAN. Thank you so much for that question as we know 
that access to capital is a big issue. Forty-four percent of 
small businesses get their funding through a bank and we would 
like to leverage SBA's programs to expand that.
    Within our Office of Capital Access, we do have an office 
dedicated to working with mission-based lenders through our 
Microlending program, as well as our Community Advantage 
program. And so we feel that we are well prepared to be able to 
expand with this group of lenders who serve underbanked, as 
well as unbanked and underserved small businesses.
    We are currently making efforts to streamline our programs. 
We have launched with the Community Advantage overhaul which 
included an expansion of licenses that we will be able to 
extend to CDFIs and CDCs to expand our Community Advantage 
program and really focus on small dollar lending and ensuring 
that we can fill those gaps as that has been in decline as 
well. So we look forward to working with you and your offices 
as well as all of the Members to make sure that we can expand 
the number of lenders who participate and can reach into 
communities and geographies that are not served.
    Ms. BOURDEAUX. Wonderful. We are very excited about this 
initiative.
    One other question. SBA data shows that most PPP borrowers 
who have not yet applied for forgiveness are the smallest of 
businesses. And these are borrowers with loans of $50,000 or 
less. In my district, I know this includes many minority 
immigrants, women-owned small businesses, and I just wanted to 
touch bases with you again about what the SBA is doing to 
address this gap in forgiveness of these applications.
    Ms. GUZMAN. We definitely want to deliver on the 
forgiveness of PPP to all the communities and borrowers. We 
have done a couple things. Firs and foremost, of course, we 
wanted to make sure that our lenders were equipped to deal with 
this next phase of PPP and we set up a streamlined offering of 
technology for them to be able to utilize over 1,000 banks, and 
lenders have signed up to use our technology to process 
forgiveness. And we have also, of course, streamlined for 
$150,000 and under as per the statute. So we are working hard 
to make sure that all of our borrowers can access these 
programs through the lenders.
    However, we know that some of that requires technical 
assistance. Our Community Navigators are working hard, many of 
them to work with PPP borrowers to make sure that they can 
access forgiveness, as are all of our centers.
    Ms. BOURDEAUX. Thank you. Thank you so much. And thank you 
for your service to our small business community and for your 
service to the country.
    I yield back.
    Chairwoman VELAZQUEZ. The gentlelady yields back.
    Now we recognize the gentleman from Pennsylvania, Mr. 
Meuser, Ranking Member of the Subcommittee on Economic Growth, 
Tax, and Capital Access.
    Mr. MEUSER. Thank you, Madam Chairwoman, very much. 
Administrator, thank you very much for being with us again. We 
appreciate it.
    Clearly, there is maybe some misunderstanding of the 
frustrations that exist because I spend a lot of time with my 
small businesses in my district. I do tours probably twice a 
week when we are in district and visit with five, six, seven, 
or eight in a row. And it is usually the same feedback. The 
feedback is that they are struggling. Their sales might be up. 
Their margins are weaker, are constricted, and they cannot get 
people to work. And they are concerned about inflation. They 
are concerned about gasoline price spikes. They are concerned 
about the deliveries that do not come in because of the supply 
chain issues. And they are concerned about the added 
regulations. And I think when speaking with you since you are 
the advocate for the small business, if we are not hearing that 
these issues are being addressed, we are the voice of those 
businesses. We represent them and advocate for them. So we have 
got to provide the oversight and ask these questions for them. 
That is the purpose of this hearing and that is why I very much 
appreciate you being here.
    Now, with the budget plan, inflation is rising as we stated 
at record paces, 1991 paces. Right? Labor shortages, supply 
chains. I went through it. Many plagues of small business. Yet, 
in the budget that we saw for the SBA, we are not seeing any 
solutions to these very serious issues that are not going away 
anytime soon, by the way. Okay? But we do see a lot of climate 
change. Okay? Which is terrific, but not the issue that people 
are bringing up when we are visiting them and what is keeping 
them perhaps from going out of business.
    We are also stating that you want to be the first federal 
agency to get the designation as a voter agency. Okay? This is 
just off the grid of what truly is important on main street.
    So do you believe that these requests and initiatives 
illustrate a sufficient focus on your mission, on the advocacy, 
on finding solutions for the small businesses that make up 75 
percent of the employment throughout my district and most 
districts throughout the country? If you would not mind 
answering that question.
    Ms. GUZMAN. Thank you. Thank you for the question. And I 
agree with you that our small businesses are facing those 
inflationary pressures, workforce shortages. They tell me about 
the individual prices that they are paying higher within their 
product mix. And so they have had to adapt and pivot and change 
their model and access capital in order to survive during this 
time. So I appreciate what the SBA can do specifically on these 
issues. We know that for small businesses, they need that 
advisory service to make sure that their financial management, 
their supply chain management, their strategic sourcing and 
strategic planning overall is really strong during this time 
because those businesses recognize that the only constant for 
them is going to be change and they need to be very adaptive. 
And so our technical assistance and that request for increases 
is supportive of small businesses to help them. I will speak to 
the----
    Mr. MEUSER. But it is not in the budget. I do not want to 
interrupt you but let's just focus on inflation if we would. 
Okay?
    Ms. GUZMAN. Sure.
    Mr. MEUSER. What are some of the solutions to help small 
businesses and help America reduce inflation? Because the only 
thing that comes up in the budget regarding inflation is how 
wages need to stay up with inflation. That is the only time it 
is mentioned.
    So what are we doing about the high gasoline prices, and 
heating prices, and increase of delivery costs, and so much 
manufacturing that goes up because of the high fossil fuel, 
domestic fossil fuel increases? What are we doing about that?
    Ms. GUZMAN. Well, the president's budget really tries to 
address and create a more productive economy to improve our 
supply of goods here in the United States which will help in 
the long term as we look towards supply. He is also trying to 
address some of those pocketbook issues, like childcare, and 
that is where SBA also has a role. We are trying to train up 
more childcare facilities around the country. Those 
entrepreneurs. We offer bootcamps for childcare entrepreneurs 
so that they can start those businesses. Those costs are 
meaningful to our small businesses, to families across the 
country.
    And the president, consistently, is trying to address 
energy costs as well. But when we go to what the SBA authority 
is and what we can do, you know, obviously, we are the agency 
that provides capital and technical assistance and tries to 
give market access. So we are also working to try to increase 
the revenue side of the equation.
    Mr. MEUSER. And I believe childcare is important. Most 
private businesses tend to deal with that and that is a story 
in itself.
    I am running out of time but I would like to get from you 
later on the 504 lenders getting to the Express program, why 
has that been delayed?
    Madam Chair, I know I am over my time but administrator, if 
I can get an answer on that, because that would be really 
helpful for many small businesses if that Express program could 
be finalized and created ASAP.
    Thank you. I yield back.
    Chairwoman VELAZQUEZ. The gentleman yields back.
    Now we recognize the gentleman from Pennsylvania, Mr. 
Evans, for 5 minutes.
    Mr. EVANS. Thank you, Madam Chair.
    I am dedicated to increasing minority entrepreneurship, 
especially Black entrepreneurship. Small business ownership is 
a tool in the economic toolbox to help lift communities out of 
poverty.
    Early this month, SBA released its Equity Action Plan in 
conjunction with the Executive Order to advance racial equity 
and support for underserved communities through the federal 
government.
    Can you expand on some of the details of this plan? And how 
can Congress support these efforts?
    Ms. GUZMAN. Thank you so much for that question on equity, 
congressman.
    Obviously, we know that the face of entrepreneurship is 
changing. That women and people of color are starting 
businesses at the highest rates, and that is across the 
country. And so we want to make sure that our programs are 
accessible and available to all. So that is underlying 
everything we do. And our equity plan is focused on ensuring 
that we can get capital distributed to all of our 
entrepreneurs. And you saw the increase in our focus on the 
Community Advantage program to focus on small dollar loans 
where our small businesses are facing the largest gaps in the 
financial services marketplace.
    In addition, we want to focus on the revenue side of the 
equation because we think that, you know, of course, small 
businesses need to grow their revenues and be able to compete 
in order to deliver the products and services that we all 
depend on. And so with that, we are focusing in on the federal 
contracting space. We are the largest buyer in the world and 
making sure that there is equity in government contracting and 
that all small businesses can access contracts. We have seen a 
40 percent decline in the number of small businesses doing 
business with the federal government and that is not good for 
our industrial base or innovation. And so we are focused on 
making sure that emerging entrepreneurs and all entrepreneurs 
can access contracting. As well as the technical assistance. 
And obviously, the Community Navigators pilot program has 
enabled us to level up our outreach into more communities, 
build bridges to underserved communities across the country so 
that they can better access the resources of the federal 
government, in particular, the SBA and the capital programs and 
the contracting and other market access programs we provide.
    So with those actions, we hope to continue to expand our 
reach, and beyond that though. Of course, this is a moment for 
the SBA to step into a broader role in entrepreneurship. We are 
seeing increased rates of entrepreneurship. We want to leverage 
the attention through the Paycheck Protection program and all 
of our relief programs to now better reach and serve and build 
trust in communities that we have seen come into the SBA's 
programs. I said over 8 million unique small businesses have 
tapped into those relief programs. More sole proprietors and 
mom and pops where we know people of color are over indexed and 
we want to make sure that we are serving them with the products 
and services that meet their needs and meet them where they 
are.
    Mr. EVANS. Community development financial institutions 
were critical to getting PPP loans to small businesses in my 
home city of Philadelphia. During the pandemic, several 
minority-owned were turned away from larger banks. The budget 
says SBA is establishing an aging priority call to increase the 
number of community financial institutions in SBA. Each of the 
federal banks where they have offices dedicated to CDFIs and 
Minority Depository Institutions. Do you think a similar office 
would help SBA get more community-based lenders into the 7(a) 
program?
    Ms. GUZMAN. We have within the Office of Capital Access, a 
team dedicated to growing lenders in our communities starting 
with the Microlending Intermediary program and then as well 
with our Community Advantage attracting CDFIs and CDCs. We have 
increased and strengthened our relationship with the key CDFI 
organizations to ensure that they have access to our programs 
and are familiar. We also offer technical assistance across to 
all lenders, community banks, and CDFIs and others to make sure 
that they can access our programs. And we know that the most 
important thing is to simplify our programs across our 
portfolio. We have started with the Community Advantage program 
in trying to simplify eligibility in underwriting to make sure 
that we can support the lending institutions with these small 
dollar loans that are just as expensive as doing larger dollar 
loans.
    And so we want to enable the industry to better support 
small businesses through our programs and we believe that the 
existing structure that we have in place will allow us to do 
so.
    Mr. EVANS. I want to thank you sincerely for coming to 
Philadelphia and walking down 52nd Street. I really appreciate 
your leadership and the way that you are operating. And I thank 
the Chairperson who also was in Philadelphia and spent time 
with us. So again, I thank this collective leadership. Us, 
working together collectively, it is in our interest for the 
sake of small businesses being Small Business National Week. I 
thank you again.
    And I yield back to you, Madam Chair.
    Chairwoman VELAZQUEZ. The gentleman yields back.
    Now we recognize the gentlelady from California, Ms. Kim, 
Ranking Member of the Subcommittee on Innovation, 
Entrepreneurship, and Workforce Development, for 5 minutes.
    Ms. YOUNG KIM. Thank you, Chairwoman Velazquez. And I want 
to thank Administrator Guzman for joining us today to discuss 
the administration's Fiscal Year 2023 budget request for SBA.
    Small businesses that you represent are facing many 
economic headwinds with supply chain disruptions, record-
setting inflation numbers, and increase in gas prices. I am 
sure you saw the report from NFIB that reports that the number 
of small business owners expecting business conditions to 
improve in the near future has fallen to the lowest level in 
nearly 5 decades. And that is a troubling report considering 
small business owners are some of the most optimistic people 
that we know.
    Back in my district in Orange County, the average gas price 
is close to $6 now. That is $2 more than what it was a year 
ago. So, Administrator Guzman, my question to you is, can you 
tell us if there is anything in the budget request for SBA that 
specifically helps small business owners overcome some of the 
issues that they are facing with high inflation, labor 
shortages, and energy costs? And what are you and your 
department, SBA, doing to regain the confidence from small 
business owners moving forward?
    Ms. GUZMAN. I thank you so much for that question. As I 
know, I share that empathy with small businesses and the 
challenges they are facing, and I am hearing from small 
businesses that they have these issues. I know that within the 
SBA's budget specifically, you know, we try to make sure that 
we are offering support for our small businesses for all the 
impacts to their bottom line and helping them to ensure that 
they are strategically positioned around their pricing 
strategies, around ways that they can improve operational 
efficiency, their staffing strategies, so that they can 
navigate any challenges that come their way.
    And so within our budget, we are expanding entrepreneurial 
development across our key program offices. And importantly, 
within some of our grant programs that hope to improve their 
revenue creation as well. The 7(j) grant program is about 
making sure that our businesses are contract ready and can grow 
their businesses, bring in the revenue through federal 
contracting, as well as fast grants which, of course, support 
innovation to strengthen economies locally. So I do believe 
that those are really core to helping small businesses and our 
advisor network around the country do work daily with small 
businesses, helping them to ensure that their business models 
are strong to navigate and to connect them to capital when that 
is a solution for them.
    Ms. YOUNG KIM. Glad to hear that. But are you deploying any 
SBC resources such as SBDC, women business centers, the veteran 
business centers, as well as SCORE mentors, how are you 
deploying those?
    Ms. GUZMAN. So what we have asked them to do is to come up 
with specialized programming. One of the SBDCs has a 
specialized program on supply chain and they are trying to 
share those best practices around the country so that they can 
better train businesses on supply chain management. Others, 
there is a veterans focused center that is working with local 
military spouses to connect them to businesses for employment 
so that we can help with those wage pressures. So there are 
specific programs within our centers that focus targeted on 
these issues.
    Ms. YOUNG KIM. Thank you.
    I want to talk about the recent report of the Office of the 
Inspector General that some loans totaling $66.4 billion that 
SBA did not meet the 90-day statutory requirement to remit the 
forgiveness payments to lenders. Additionally, the report 
states that SBA did not meet the 90-day requirement for over 98 
percent of those loans over $2 million.
    So can you talk about why is it that SBA is failing to meet 
that 90-day statutory requirement? What is your plan to develop 
a plan to ensure that the forgiveness reviews and remittances 
are completed within the 90 days as required by the law?
    Ms. GUZMAN. The Office of Capital Access continues to work 
with the lending institutions to make sure that they get the 
technical assistance they need to follow through on all the 
forgiveness requirements. We continue to support our lending 
institutions on that front as well as on the backend try to 
help with the small business preparedness. And so we will----
    Ms. YOUNG KIM. Can you give us a little more specifics on 
that?
    Ms. GUZMAN. I can have my team follow up with your staff, 
as I know, to make sure that we give you the full plan on 
forgiveness.
    Ms. YOUNG KIM. Okay. Well, thank you very much. My time is 
up.
    Chairwoman VELAZQUEZ. The gentlelady yields back.
    Now we recognize the gentleman from Maine, Mr. Golden, 
Chairman of the Subcommittee on Underserved, Agricultural, and 
Rural Business Development for 5 minutes.
    Mr. GOLDEN. Thank you, Madam Chair.
    One thing I want to ask about is the Office of Advocacy. 
You talked about that office a little earlier. Earlier this 
year, the Office of Advocacy actually put out a recommendation 
that the Department of Correction--not Department of 
Correction, Department of Commerce, revisit the timeline for 
implementation of some regulations that were first announced 
under the previous Administration but this administration is 
still moving forward with. This has to do with right whale 
regulations and our fisheries in New England, and specifically, 
in Maine.
    So, I wanted to ask, the Office of Advocacy does not 
frequently just put out these positions. I think they cross 
their Ts and dot there is and in this instance what they have 
said is the market really does not have the equipment necessary 
to comply and therefore, the Department of Commerce should 
delay the deadline. We have yet to see that recommendation 
adhered to or really had any engagement from Commerce about it.
    So what role does SBA play working with the Office of 
Advocacy to make sure that when they put out a recommendation 
that it is consumed and hopefully acted upon?
    Ms. GUZMAN. The Office of Advocacy is an independent office 
that reports directly to Congress, as well as me and the 
president. As they track these regulations that are being 
promulgated by the different agencies, they flag when there are 
small business concerns so that they can take into account 
those issues and final rule. On this specific issue, I would 
need to follow up with my chief advocate, acting chief 
advocate, Major Clark, to understand a little bit more and see 
if there is something that the SBA can do to support.
    Mr. GOLDEN. Thank you. I appreciate that very much. And the 
suspense on that is pretty tight. I think it is a May 15 
deadline.
    Ms. GUZMAN. Thank you. My team will follow up for sure with 
your staff.
    Mr. GOLDEN. Thank you.
    I really appreciate the focus on trying to identify fraud 
where it is taking place through some of these programs, 
particularly the ones related to COVID programs. Obviously, 
very important to put in good, new standards to prevent that 
from being an ongoing problem in the future. But I think 
finding the right balance is really important, too. And I am 
thinking specifically about a constituent back home who has an 
EIDL loan that is pending and it has been quite a long time 
now. Small businesses really I think need a timely response as 
much as they also need it to be adjudicated correctly.
    So how do you see the SBA finding the right balance between 
doing what we need to do to prevent the fraud and make sure we 
identify any that has taken place and hopefully pursue working 
with the other partners? How do you find the right balance to 
make sure that you are going to be able to process these loan 
applications quickly enough for them to be helpful?
    Ms. GUZMAN. Thank you so much.
    We believe that you do have to have speed and certainty, 
and so a balance of both. We want to make sure that the 
customer service experience is also really strong. And with the 
programs that I have been able to control for the full 
environment, like the Restaurant Revitalization Fund program or 
after we have made changes on Shuttered Venues, you know, we 
feel that we have tried to put the customer experiences at the 
forefront as much as possible. With COVID-EIDL, regrettably, 
although we have been putting out still an average of $700 
million a day through June when I made all the significant 
changes to overhaul the process and move it to my Office of 
Capital Access, we put out $1 billion a day, as high as $3 
billion a day. The largest banks in America put out $1 to $2 
billion a month on all loans, including credit cards. And so, 
our scale and the amount of support that we have been able to 
give to small businesses has been large. But I know that there 
are still a few thousand businesses that remain. On average, it 
is taking 2 to 3 weeks to process every loan under $500,000. 
Above $500,000, up to a month. Most of the cases for those who 
are remaining are through their second or third request for 
reconsideration. And so we are taking all of those 
reconsideration requests seriously. But it is important to note 
that a lot of the borrowers that were processed in 2020 without 
any controls have now had to come back to the table and provide 
tax documentation and clear some of the fraud controls.
    We are happy to work with your team on specific constituent 
requests to see if we can help shepherd any issues that they 
might be having.
    Mr. GOLDEN. Thank you. I appreciate that very much. And we 
will follow up.
    Ms. GUZMAN. Thank you.
    Chairwoman VELAZQUEZ. The gentleman yields back.
    Now we recognize the gentleman from Wisconsin, Mr. 
Fitzgerald, for 5 minutes.
    Mr. FITZGERALD. Thank you, Administrator Guzman, for being 
here today.
    On April 7, the House passed H.R. 3807, which I will be 
kind, I think it was a disingenuous piece of legislation. I 
will be kind and not call it an all-out fraud on the restaurant 
industry, the relief for restaurants and some of the other 
small businesses that were directly affected. And basically, I 
think you are probably well aware, it provided $44 billion in 
appropriations for restaurant revitalization. An additional $13 
billion to stand up some of the brand new grant programs, I 
guess, is the best way to describe them. And then it was sold 
as, you know, this was going to be paid for with EIDL and PPP 
fraud monies recovery.
    And so I think the most recent estimate is, and this is 
from Secret Services, that $1.1 billion in the fraudulent 
pandemic loans has been recovered. So with the total estimated 
$84 billion in fraudulent payments, I mean, I hope we can agree 
that there is not enough time or money or personnel to possibly 
get that number to match up and recover the $57 billion.
    So let me ask you this. Is it fair to say the SBA does not 
currently have the capability to recover the $57 billion needed 
to pay for the bill that the House has already passed?
    Ms. GUZMAN. My understanding is that that bill would 
rescind funds from COVID-EIDL targeted advance and advance that 
were remaining, not on the fraud side. It is remaining funds 
from those unused programs as well as, you know, Shuttered 
Venues and EIDL.
    Mr. FITZGERALD. Yeah. Well, let me interrupt you. Because 
the ENTREE Act is what was introduced by my colleagues here on 
the Committee. And in fact, you know, the Committee for 
Responsible Government is saying there is still $884 billion 
out there that could be recovered, that could be brought back. 
But that does not seem to be happening at all. And I think what 
we are frustrated by is that there is this idea that this 
product is being sold out on the street as, hey, no problem. We 
are going to do the due diligence on this and the fraud and we 
are going to recovery all these funds and then it is going to 
be readily available for the restaurants. But the math does not 
add up at this point and I am wondering what your comment is on 
that.
    Ms. GUZMAN. What I would also share is that the SBA works 
closely with the IG and other federal authorities who actually 
recover funds. We report fraud. We collaborate with them.
    Mr. FITZGERALD. That is great. That is great. I am asking 
you more about the numbers though. It is just not going to 
happen though, is it? Can you admit that it is not going to 
happen?
    Ms. GUZMAN. They are going to be working really hard to 
investigate all of this potential fraud and actually prosecute 
their final----
    Mr. FITZGERALD. Well, that is awesome but like I said, I do 
not think that gets the job done. And this is the frustration I 
think. It is like some of my colleagues said earlier, we have 
got to go back to the district. And when you talk to these 
restaurateurs, they are like, well, I just read in the paper 
yesterday that the money is coming. But the fact of the matter 
is there is no way to et these two figures to match up. The 
recovery, the amount of fraud and abuse recovery that is 
happening out there does not match up with what restaurants are 
being told throughout this nation is going to be available to 
them.
    Ms. GUZMAN. Well, I know that the IG himself has not 
completely estimated how much would be recovered. I know they 
work hard every day to ensure that that happens. Our budget 
request actually requests a nearly 30 percent increase for the 
IG budget so that they can continue to manage to those resource 
constraints.
    Mr. FITZGERALD. So I am just going to make the assumption 
that it is not going to happen. That you are not going to be 
able to recover those funds at a rate that is going to fund 
H.R. 3807.
    So what would the strategy be from this point moving 
forward? How would we address that once it is obvious that 
there is a shortfall and that the wheels fall off of this 
entire thing?
    Ms. GUZMAN. The SBA stands ready to implement the program 
if it is moved forward by Congress. And in terms of the 
decisions from any remaining funding or any other sources of 
capital, I would not be able to speak further about that.
    Mr. FITZGERALD. I mean, you know, clearly, I think that the 
speaker put the Bill 3807 on the floor to develop some 
political cover for her Members. And I think there are even a 
few Republicans who have voted for it. Shame on them. Because 
it is disingenuous. It is not going to happen. And the 
restaurants of this nation need to hear that and need to find 
that out. And I would hope that the SBA be part of not only 
disseminating that but lowering the expectations that this 
bailout is coming any time soon.
    Ms. GUZMAN. What we are trying to do is continue to support 
our restaurants. We know, we agree with you, they have been 
impacted and continue to struggle and face challenges. And we 
would stand ready to implement anything Congress decides on.
    Mr. FITZGERALD. Thank you, Madam Chair. I yield back.
    Chairwoman VELAZQUEZ. Time has expired.
    Now we recognize the gentlelady from Illinois, Ms. Newman.
    Ms. NEWMAN. Thank you, Madam Chair. And good morning to 
everyone.
    So first of all, Administrator Guzman, thank you so much 
for your tremendous work. I know you were handed a proverbial 
hot mess and you have done a really good job. So thank you from 
this Committee, but all of Congress.
    A couple of other clarifying comments. You know, I hated 
taxes when I was a small business owner as well. Absolutely 
hated it. I thought it was unfair and all of that. But as we 
know, and as you articulated very clearly, that largely small 
businesses will not be affected by President Biden's new tax 
model. So I just want to be clear and reiterate that again for 
the record that that is not true that small businesses will be 
affected adversely. In fact, what it does do is will make large 
businesses pay at a fair rate and do their job and be good 
patriots and Americans in this country.
    So a couple of other clarifying comments before I get to my 
question about access to capital and a few other things.
    So, you know, I am very certain you are talking to the 
president all the time about advocating. So thank you for your 
advocacy on behalf of small business. I truly appreciate it.
    I do want to make a comment about climate. Climate change 
is everybody's business. It is small business's business. It is 
my business. It is everybody's business. So, the fact that you 
are supporting green entrepreneurs, I am introducing a green 
incubator act pretty soon that will coordinate with the SBA. 
And it is critically important that we all engage. So thank you 
for your advocacy there.
    So my question. Staying consistent with the topic of 
capital access, I would like to segue into poor climate 
decisions. How does the SBA intend to update policy on 
addressing small business capital access needs on climate 
crisis issues within the existing 504 program or the Microloan 
program?
    Ms. GUZMAN. Thank you so much for your comments and the 
question. I will agree that small businesses, according to the 
Treasury 97 percent of them would be not impacted by the taxes.
    With the climate, specifically, the request that was made, 
we would hope to shore up our lending specifically. We know 
that small businesses and communities that are increasingly 
impacted by disasters are the ones that are hardest hit and 
they have the hardest time recovering. They need to mitigate 
for future disasters, especially when you look at communities 
that have been hit time and time again and continue to have to 
draw disaster assistance. They need to mitigate so that they 
can have less damage. So that funding would go a long way 
towards helping small businesses mitigate. I have repositioned 
my Office of Disaster Assistance to focus on resilience and 
really make sure that small businesses are aware of these 
resources, and communities. Because, obviously, we do 
homeowners and renters as well within our disaster programs. 
So, we would definitely want to lean in on supporting small 
businesses in that effort.
    As well as across our 504 program. It is a perfect example 
as well. As we are funding, we would want to level up and allow 
them to make those mitigation changes as they develop property 
to make sure that they are prepared for any natural disasters 
on the horizon. And of course, within the 504 program, it is a 
really critical asset-building resource for small businesses as 
they expand in property.
    I think within the programs that SBA offers on innovation, 
that is why there is also quite a bit of excitement around 
climate. We are funding technologies overall within the federal 
government on the SBIR-STTR program and SBA is the one that 
channels those funding supports to small businesses and helps 
with education. We will continue to lean in on that and all the 
issues that are challenging our nation and the world, whether 
it is health, agtech, or climate, or any other issue.
    Ms. NEWMAN. And then I have one final question I am going 
to sneak in at the end here. Anti-trust related.
    In light of President Biden's most recent executive order, 
do you feel like the SBA has enough money to fund, study, and 
report on the federal government's effort to protect small 
business competition through anti-trust enforcement?
    Ms. GUZMAN. Well, the SBA, obviously, we have requested an 
increase in our budget of 2.5 percent just to support all of 
our activities around entrepreneur development and capital 
access. We continue to just provide advisory services and 
support to small businesses. And that is the purpose of our 
focus around the entrepreneurial support and continue to try to 
position them to compete and expand our productive capacity 
within this country.
    Ms. NEWMAN. And just very quickly, Administrator, because 
it is important to note, and that is terrific and I so 
appreciate that, but there is no specific money identified to 
really reckon with the fact that large businesses are always 
first in line for business in general. So, we are not studying 
that right now?
    Ms. GUZMAN. Not within the core SBA budget funding. So we 
are, of course, always working with small businesses to better 
compete in government contracting and better position them. And 
that is the extent of our work.
    Ms. NEWMAN. So we have work to do and I yield back.
    Chairwoman VELAZQUEZ. The gentlelady yields back.
    Now we recognize the gentlelady from Texas, Ms. Van Duyne, 
Ranking Member of the Subcommittee on Oversight, 
Investigations, and Regulations.
    Ms. VAN DUYNE. Thank you very much, Madam Chair, and to the 
Ranking Member for holding this hearing today. And thank you, 
Administrator Guzman, for appearing before us.
    This has been interesting and entertaining comments that I 
have heard from some of my colleagues. But to say that the 
president's proposed tax plan does not negatively affect small 
businesses is just completely not only disingenuous but 
dishonest. To believe that small businesses do not get a pass-
through cost from large businesses or that small businesses are 
not paying more as a direct result of this administration's war 
on the oil and gas industry, it is not only naive but it is 
completely dishonest and it is completely wrong. But again, it 
has been entertaining.
    Before I begin, I wanted to thank you, Administrator 
Guzman, for coming to visit Texas 24 earlier this year to hear 
directly from our businesses and their current challenges. If 
you recall, one of the restaurant owners, she highlighted 
exactly how difficult it was right now. And I think you heard 
from almost everybody at that table to find labor. Labor that 
was willing to work and not just leave after a few days on the 
job or demand a wage that would bankrupt them. I think you also 
heard from one of our local homebuilders who discussed just how 
costly the skyrocketing energy costs have been as they disrupt 
every single aspect of business.
    So again, to say that somehow this administration's 
policies are not affecting small businesses is completely 
dishonest. But I think we both know that these concerns 
continue to consist today. And I am really hoping that you 
benefitted from your time down in District 24 and that you 
heard these things directly from those business owners.
    I do want to talk to you about the EIDL program and some of 
the fraud and direct lending issues that we have seen from SBA. 
SBA gave out approximately $369 billion in the EIDL program. 
Within the EIDL program, the OIG identified approximately $84 
billion in potentially fraudulent activity associated with 
direct loans and direct grants from within the program. So 
almost one out of four of the loans were considered fraudulent.
    And based on that fraud rate, do you think it is best that 
SBA expand direct lending in other programs?
    Ms. GUZMAN. Thank you so much, Congresswoman, and I 
appreciated visiting with your businesses and learning about 
their challenges. So, I really appreciate that time that you 
took with me.
    With the COVID-EIDL program, it is a tale of 2 years in 
terms of implementation as well. And the 2020 EIDL without 
controls limited the agency's ability to control for fraud 
completely. In 2021, thanks to the Economic Aid Act, we were 
able to then reinstitute reviewing tax documentation from all 
these businesses. And that is, of course, help to the Agency 
limit fraud as well as we now again checked the Treasury's do 
not pay list.
    Ms. VAN DUYNE. I just have a question since you brought it 
up. Between 2020 and 2021, can you tell me how much money was 
fraudulently released in 2021?
    Ms. GUZMAN. The IG and GAO reports largely address the 2020 
funding. And so----
    Ms. VAN DUYNE. Do we know how much money was fraudulently 
released in 2021?
    Ms. GUZMAN. The IG is still monitoring and assessing----
    Ms. VAN DUYNE. I mean, your statement that all these things 
happened in 2020 and then you had controls in 2021, how do you 
know how to compare if we do not have the 2021 numbers yet?
    Ms. GUZMAN. What I have is that the IG and GAO have been 
pleased by the controls that we have implemented and agree that 
that will go a long way towards addressing fraud and----
    Ms. VAN DUYNE. So the idea is that when we get those 
numbers that they are going to be considerably, substantially 
lower than in 2020?
    Ms. GUZMAN. That is the expectation from the watch dogs as 
well as the agency based on what we are seeing. And keep in 
mind that----
    Ms. VAN DUYNE. Do you know when we can expect those numbers 
to come out?
    Ms. GUZMAN. No, I do not have any assessment on that. So, 
we continue to work with the IG very closely and as I know he 
does with you as well to make sure that you receive that 
information in a timely manner. But with the EIDL program----
    Ms. VAN DUYNE. And I know I have only got 45 seconds left. 
Since you are talking about fraud, I also want to mention that 
there is over $100 billion of fraud estimated in various small 
business relief programs. One hundred billion going overseas, 
to put it plainly, our federal government dollars literally to 
billions of taxpayer dollars and handed it over to fraudsters 
who put in minimal effort to obtain those funds. And as you 
know, this fraud limited the amount of access that well-
deserving businesses had to relief. This is all unacceptable.
    But Administrator, how does the SBA relieve fraud--how do 
you estimate that will end to sending money outside of the 
U.S.? I mean, it seems like we have already had a quarter of 
the money going out illegally for the EIDL program, and now we 
are sending hundreds, you know, billions of dollars overseas 
fraudulently.
    Tell me how the SBA is going to be handling that in the 
future.
    Ms. GUZMAN. We have implemented the super robust fraud 
controls, as well as mitigation. And recently, I announced a 
Fraud Risk Management Board to replace the Fraud Risk 
Management Council to ensure that across the whole of agency, 
across all of our key program offices, we are putting in fraud 
at the design of programs, as well as ensuring that the 
controls are strong across the agency. So, we feel with these 
added measures, we can have strong controls for all the funding 
to be controlled.
    Ms. VAN DUYNE. Well, I look forward to getting those 
numbers for 2021. Thank you very much.
    I yield back.
    Chairwoman VELAZQUEZ. Time has expired.
    Now we recognize the gentlelady from Kansas, Ms. Davids, 
Chairwoman of the Subcommittee on Economic Growth, Tax and 
Capital Access.
    Ms. DAVIDS. Thank you, Chairwoman. Thank you again, 
Administrator Guzman, for joining us here today to talk about 
our Fiscal Year 2023 SBA Budget proposal. The SBA is requesting 
$4 million for the manufacturing hub proposal, which is a new 
initiative to address supply chain deficiencies that have been 
both exacerbated and made more visible during the COVID-19 
pandemic. I am really interested to hear more about this effort 
on expanding and strengthening our small business manufacturing 
bases. It is going to be incredibly important as part of our 
diversification of and building up of our supply chains. That 
is something I have been particularly focused on. I am very 
fortunate to have been named a conferee alongside Chairwoman 
Velazquez as we look at the supply chain and manufacturing 
legislation that we are hoping is going to actually address 
some of this stuff.
    I am curious if you could elaborate a bit on the scope of 
the manufacturing hub proposal and how that will work or the 
intention behind it. And then, you know, what the proposal will 
involve in terms of the resources being requested.
    Ms. GUZMAN. Thank you, congresswoman. And this is SBA's 
effort and contribution in trying to expand the productive 
capacity in the United States. We know that 75 percent of 
manufacturers are 20 and under employees. Still over 90 percent 
small overall. And so, we want to make sure that we support 
them and give them access to especially government contracting.
    We focused this initiative within the government 
contracting business development space because we want to make 
sure that the government is buying from Made in America, and so 
we are hoping to expand our outreach, our training, as well as 
technical assistance to more manufacturers to engage in 
government contracting. But in addition, beyond that, we want 
to make sure that we are deploying resources to help more 
businesses interested in manufacturing in the United States.
    Just recently, I met with a small business owner who was 
specifically wanting help in trying to manufacture her products 
here in the United States as she is having to deal with supply 
chain global issues in her business currently. And so, these 
are the types of businesses that we want to support by giving 
them the technical assistance around manufacturing in the 
United States.
    Ms. DAVIDS. Thank you. And I am sure our office will be in 
touch as that program gets stood up and starts moving forward. 
There are a lot of smaller, like 75 percent of manufacturers 
being under 20 employees. There certainly are a lot in the 
Kansas 3rd that fit into that criterion.
    I wanted to switch over really quickly to the Fraud Risk 
Management Board that we have heard a bit about this morning. I 
think getting those guardrails in place, making sure that 
moving forward we are addressing and preventing fraud.
    Can you talk a little bit about what kind of structures are 
being implemented through the board? And then kind of what they 
are replacing?
    Ms. GUZMAN. With the Fraud Risk Management Board, I hoped 
to integrate a more holistic approach to fraud risk management 
so that all of our program offices would be engaged. All of 
them have a role in setting up programs and making sure that 
they design them with good controls.
    And so, the management of the Fraud Risk Management Board 
includes all my key program office leads, as well as it is 
chaired by my CFO. So that is an important addition. We want to 
make sure that controls are guided by the organizations that 
deliver our capital access programs, our disaster assistance 
programs, our government contracting, and entrepreneurial 
development.
    But in addition to that, as well as building a more 
collaborative effort across the agency, I wanted to make sure 
that the framework complied with the GAO standard. And this new 
Fraud Risk Management Board does that and ensures that we 
satisfy that requirement of the GAO. The structure itself, it 
will report in through the Enterprise Risk Management Board 
that was established back in 2015 and reports directly to me. 
In addition, my Special Counsel for Enterprise Risk will sit as 
an advisor on the Fraud Risk Management Board to ensure that 
there is a constant tracking of their activities. And 
importantly, we embedded fraud risk management into the 
performance of all the key members of the Fraud Risk Management 
Board, which I think also goes a long way to ensuring that they 
know that the agency takes this seriously.
    Ms. DAVIDS. Thank you.
    Chairwoman VELAZQUEZ. Time has expired.
    Ms. DAVIDS. I yield back.
    Chairwoman VELAZQUEZ. The gentleman from New York, Mr. 
Garbarino, is recognized for 5 minutes.
    Mr. GARBARINO. Thank you, Madam Chair. Administrator 
Guzman, thank you for being here today.
    We have already heard a lot of questions about the fraud, 
dealing with the EIDL. And when they say possibly $86 billion, 
that was the last report, and I think a new report is going to 
come out which is probably going to raise that number. I do not 
think you can talk about it enough, about how bad this fraud 
was with these programs, with the COVID-programs.
    I am hearing in my office people who have still had 
applications in over a year. We have had to deal with a couple 
of cases where people have had EIDL applications in for COVID 
over a year and you said before you are getting some 
applications done with another program with maybe 2 weeks to a 
month. Why is it taking over a year for some of these 
applications to be processed? I understand that not everyone is 
back to work yet? Career employees are still working from home 
or have the option. Could that be leading to it? I mean, why 
are these taking over a year to get them?
    Ms. GUZMAN. Actually, the COVID-EIDL program is the program 
I was referencing in which the average turnaround time is 2 to 
3 weeks for $500,000 and under. And it is about a month for 
those above. And that is the one that we are processing about 
$700 million a day and have been on average since the summer, a 
billion dollars a day. Within COVID EIDL, I was not happy with 
the way it was and I actually moved it to my Office of Capital 
Access to streamline processes. In the fall, we also changed 
the customer service contractor so that we could improve 
customer service to the small businesses.
    With those borrowers that you are finding, who have been in 
the system for that long, they are under multiple 
reconsiderations. In other words, they have been denied and 
have come back for further reconsideration. In many cases, the 
majority of their cases, they did not have their 2019 taxes 
filed or reported or needed a modification. And so that adds 
some additional time but it should not be a full yar.
    So, what our district offices are doing, we have also 
empowered them to access the information about the EIDL 
program. We are happy to work with you and your team to 
investigate any specific cases that we can unstick in the 
process.
    Mr. GARBARINO. I would appreciate that.
    The teams have been helpful when we reach out but everybody 
does not call their congressman every time, so it moves once we 
call but small businesses are dealing with a lot of other 
things that having to get in touch with us.
    Ms. GUZMAN. If I could add, we have added a lot of 
resources to those pending applications so that we can continue 
to get them down as we close out this program.
    Mr. GARBARINO. I appreciate that. Thank you.
    Now, are all the SBA employees back to work or are you 
still having people work from home?
    Ms. GUZMAN. We have had a return to work stance in February 
and we are still transitioning with our union employees but we 
are, you know, a majority of our headquarters have returned to 
work. But that has not impacted. Obviously, we have scaled to 
put out $1.2 trillion in relief and have been very productive 
over these past 2 years.
    Mr. GARBARINO. What would you say a majority is, 51 
percent? How many people are back to work and not working from 
home anymore?
    Ms. GUZMAN. In the headquarters area, it is over 70 
percent.
    Mr. GARBARINO. Okay. Thank you.
    I notice as part of the budget, also, the administration is 
requesting authority to transfer $320 million from the targeted 
COVID-EIDL Advance account to support loan servicing and other 
related programs. I think there has already been over $4 
billion has been used for salaries and whatnot for servicing. 
Why do you need another $320 million?
    Ms. GUZMAN. The COVID-EIDL program is, of course a 30-year 
loan. And so, we will now be servicing $3.9 borrowers. And the 
SBA anticipates needing additional funding to continue to 
manage this portfolio into the future and make sure that they 
have the resources and the customer service that is expected.
    Mr. GARBARINO. How much has been put, I mean, it has been 
over $4 billion though, has it not, that has been put towards 
the program already and you are transferring another $320 
million?
    Ms. GUZMAN. The program has disbursed nearly $4 billion in 
funding correct loans to small businesses.
    Mr. GARBARINO. I am just going to switch to one more 
question since I have a little bit of time left. From small 
business, what is the top issue that you are hearing? What is 
their biggest concern?
    Ms. GUZMAN. Across the board, we need small businesses. And 
note that we have also had a surge of new entrepreneurs as 
well.
    Mr. GARBARINO. Just top issue. I have got 20 seconds.
    Ms. GUZMAN. The top issues are multiple though. So Capital 
Access is always one of the top issues. And in addition, when 
managing their business----
    Mr. GARBARINO. Anybody talking, sorry to interrupt, but 
anybody----
    Ms. GUZMAN.--supply chain, inflation----
    Mr. GARBARINO. Inflation. That is what I am hearing.
    Ms. GUZMAN.--and workforce issues across the board.
    Mr. GARBARINO. Inflation.
    Ms. GUZMAN. So I would put all of those four.
    Mr. GARBARINO. But inflation is what I am hearing a lot 
from all different businesses. And I am running out of time but 
what does this budget do to address inflation?
    Ms. GUZMAN. for SBA in particular or broadly? The 
president----
    Mr. GARBARINO. SBA.
    Ms. GUZMAN. For SBA, specifically, we are leaning in to 
entrepreneurial support, to help small businesses navigate the 
issues that they have had to face. Obviously, we look towards 
helping them with strategic planning, and financial management, 
supply chain management, and our centers offer specific 
targeted support and technical assistance in those areas.
    Mr. GARBARINO. I am out of time. Thank you very much.
    Chairwoman VELAZQUEZ. The gentleman's time has expired.
    The gentleman from Louisiana, Mr. Carter, is recognized for 
5 minutes.
    Mr. CARTER. Madam Chair, thank you very much for the 
opportunity to address, and Administrator Guzman, I would like 
to personally thank you for touring my district and having the 
kind of attention to deal that my constituents certainly 
deserve and certainly appreciate that you undoubtedly provide, 
and the care that you give. We know that you have a very tough 
job but we certainly appreciate the hard work that you and the 
Members of your team are providing for the people of American.
    One observation and two questions. First observation is 
that there were comments that were made earlier that suggest 
that somehow climate change was not a part of SBA and it should 
not be a part of the discussion. I would like to very 
respectfully challenge that premise.
    In my district, we have had substantial impacts from 
climate, whether it is hurricanes, floors, or tornadoes that 
have incredibly impacted our small businesses to the tune of 
people having to borrow money. To only have to come back and 
borrow money again from SBA because of natural disasters that 
were no doing of their own. So, climate change is very much a 
part of the world that SBA plays in helping businesses, 
particularly small businesses, stand back up after these 
horrific natural disasters.
    So, I thank you. I thank your administration. The 
administration, the Biden administration, and certainly your 
administration, Ms. Guzman, for being very attentive.
    So, one quick question. Is a real life issue that happened 
in my district. There was an individual that applied for an 
EIDL grant, received notice that she had been approved, and 
that money had been transmitted to her account.
    Now, I have been in communication with a number of your 
staff people. But I want to bring this to your attention 
because we have not gotten a positive result yet, but I think 
one should be in order. She applied for an EIDL grant. Was 
approved for the EIDL grant, was notified by SBA that the funds 
were being transferred to her account.
    Several days go by. She realized the money has not. It was 
determined by SBA that there was a glitch and that the money 
was supposed to have been transferred but never made it to her 
account. By the time she brought that to their attention to the 
time that they attempted to correct the glitch, meaning to then 
send the money to the proper account, she was told that, oh, 
the program rules have changed and you are no longer eligible 
for the funds that you previously, only a week earlier, had 
been approved for.
    Well, listen, that seems terribly wrong. If the person was 
approved and then somewhere in the process there was a rule 
change, I think it is only reasonable that some exception be 
made to assist this individual. I will not give her name or any 
of that information on an open line, but your staff is well 
aware of this and I will share it again to your office.
    Can you talk about that very briefly? And I suspect that 
this is not a one-off. This may have happened to other people 
throughout the country, but certainly, it is a travesty and it 
is no fault of the applicant but they should be made whole.
    Ms. GUZMAN. Thank you so much for the time that you spent 
with me in your district. It was very informative, especially 
with the businesses impacted by repeat natural disasters.
    I will say on the COVID-EIDL program, as well as the 
Advance program, we obviously, you know, those programs closed 
December 31. We continue to administer funding on any 
modifications for the EIDL program. I am happy to explore this 
further. My team will follow up immediately with your staff on 
this constituent request in particular. I am not pleased with 
the EIDL program overall and obviously made some significant 
changes over the summer to move it, reposition it, add new 
processes and procedures, and in the fall, changed the customer 
service support.
    Mr. CARTER. And I am sorry to cut you off, Madam, because 
my time is going to go up. I want to be very clear and 
complimentary of your staff. The Region 6 administrator has 
gone as far as he could with trying to explore this. Your 
people have looked at it and have been extremely helpful, 
albeit not getting it over the goal post. So, your extra 
attention to this would be critically important, particularly 
to my constituent in Louisiana who has been very patient but 
has clearly been wronged.
    And with my final 10 seconds, I want to just once again 
make a play for something that I have spoken to you before and 
others, and again, I want to thank you. And that is individuals 
who have had to apply for SBA loan each time there is another 
natural disaster. I would ask again that you would consider 
some loan forgiveness.
    Chairwoman VELAZQUEZ. Time has expired.
    Mr. CARTER. And I thank you.
    I apologize for overrunning.
    Could she at least answer that, ma'am, speak to that?
    Chairwoman VELAZQUEZ. Time has expired so if you could 
answer in 5 seconds.
    Ms. GUZMAN. We do not have forgiveness authority on the 
disaster programs so we will continue to follow up with your 
office on any specific requests.
    Mr. CARTER. Thank you.
    Chairwoman VELAZQUEZ. Now we recognize the gentleman from 
Florida, Mr. Donalds, for 5 minutes.
    Mr. DONALDS. Madam Administrator, it is good to have you 
back. Thank you for being here. I will say in all honesty, 
Administrator Guzman, I do appreciate you coming. We are still 
waiting for Secretary Yellen to materialize in the halls of 
Congress. Not quite sure where she is. I see her on CNBC. I see 
her on TV randomly. She somehow finds her way to the Senate but 
she has not appeared in this Committee, which she actually has 
responsibility to do. But I do appreciate you taking this 
responsibility being here, answering questions from the 
Committee.
    I want to start here. Obviously, the president's entire 
budget has come out. Yes, we are focused on the small business 
budget. But the small portion of the president's budget 
obviously impacts businesses, large and small, Americans, 
whether they are rich, whether they are middle income, whether 
they are poor. Under the president's tax proposals, he is 
calling for rises in the top marginal tax rate back to, I 
believe, 39.6. He is calling for tax rate increases from 21 to 
28 percent on the corporate income tax side. Essentially, 
undoing the Tax Cut and Jobs Act. Is it the opinion of the 
Small Business administration that these tax increases are 
going to be to the betterment of small businesses in the United 
States.
    Ms. GUZMAN. Thank you so much for your comments and 
question. I will say that we know from Treasury's analysis that 
97 percent of small businesses would not be affected by any tax 
increases. And the president has been committed to ensuring 
that nobody under 400,000 would be impacted. And so, we 
continue to try to support our small businesses with all their 
bottom line impacts at the SBA and providing the technical 
assistance and capital access and market access to help them 
thrive in any economy.
    Mr. DONALDS. I am glad you mentioned Treasury because once 
again I will say, where is Secretary Yellen? Because this 
actually falls right into her wheelhouse. It will be great to 
have this dialogue with her, somebody with an economic mind. We 
can have that jujitsu, if you will. But what I would ask is, 
obviously, maybe small businesses, they incorporate many 
different ways. Some of them are C corporations. Obviously, 
they would be directly hit by a raise in the corporate income 
tax rate. A lot of them are S corporations. Or they are sole 
proprietorships. So, the business income actually falls to 
their personal income taxes. So, I go back to my time in 
banking. A lot of small business owners, their business income 
actually flows through their personal income taxes which would 
put them in the window of paying higher taxes because the top 
marginal rate would increase.
    The only other thing I would add to that is even under the 
president's budget, the $400,000 number is for a couple. But if 
it is individuals, you are talking more than $215,000. If you 
are somebody who is single and runs a small business and you 
are earning more than $300,000, your taxes are going up. And 
typically, if you are earning over $300,000, you are probably 
employing maybe less than 10 people. So, we are talking about 
the smallest of the small businesses who operate a sole 
proprietorship, maybe partnerships, that are going to be hit by 
rising taxes. Do you think that is problematic?
    Ms. GUZMAN. Well, again, I mean, those 3 percent of the 
businesses that would be affected, 4 percent are C corps, and 
of course, those pass-through entities as well. But again, only 
3 percent would be impacted, and my position is to continue to 
try to support small businesses with the programs that SBA has 
available for them--capital access, as well as market access, 
and technical assistance.
    Mr. DONALDS. Well, I think it is important to understand 
that we can quibble on what the percentages are. I think it is 
obviously more than 3 percent. I would love for Secretary 
Yellen to actually dig into this a lot more for us. But let's 
be also very clear. Some of those businesses in that 3 percent, 
I am going to use your number, they employ the vast majority of 
people in the United States.
    I am going to move on.
    Obviously, inflation is a big issue dealing with everybody, 
whether you want to talk about individuals or the fact that the 
producer price index, the thing that does not get talked as 
nearly as much about is up around 12 percent year over year 
which is catastrophic for businesses across the United States. 
Have you and your administration had a conversation with 
President Biden, Chief of Staff Klain, VP Harris, or the 
Council of Economic Advisors? Have you had conversations with 
them about the impact inflation is having on small businesses 
in the United States and on the ability for businesses to repay 
the EIDL loans that have been actually executed by SBA?
    Ms. GUZMAN. Whenever I engage with those individuals, as 
well as the White House, we continue to share insights on small 
businesses and the impacts that they are having around 
inflation and supply chain. That is why we focus on----
    Mr. DONALDS. I have got 23 seconds left. I do not mean to 
cut you off. But let me ask you this question. This is a better 
question. What do they say? What do they say the remedies are? 
What do they say they are going to do to help small businesses? 
I would like to know what the president's opinion is on this.
    Ms. GUZMAN. The president has expressed concern with the 
rising costs on American families, as well as small businesses, 
and he is taking actions to try to address those pocketbook 
issues, as well as supply chain----
    Mr. DONALDS. What actions?
    Ms. GUZMAN.--to expand our productive capacity with----
    Chairwoman VELAZQUEZ. The gentleman's time has expired.
    Mr. DONALDS. All right. Thank you again, ambassador--
Administrator. I gave you another promotion. Thank you, 
Administrator Guzman.
    Chairwoman VELAZQUEZ. The gentlelady from California, Ms. 
Chu, is recognized for 5 minutes.
    Ms. CHU. Administrator Guzman, I would like to make a 
statement about the 504 program and then ask a question about 
SBICs and then Community Advantage.
    We know that SBA's 504 loan program is so critical to 
helping small businesses with startup costs like purchasing 
commercial buildings or expensive equipment. And in fact, last 
year, SBA saw a 41 percent increase from the previous year. 
Unfortunately, that same year the program exceeded its $ 7.5 
billion lending authority in September and was forced to pause 
lending for the remainder of the year, meaning that eligible 
small businesses were left without funding.
    This year, the 504 program is again going to run out of 
funds by summer. And that is why I strongly support the 
president's budget for 2023, which includes a $1.5 billion in 
lending authority. And SBA's request for flexibility and the 
authority to raise the 504 program's cap by up to 15 percent, 
which is the same flexible authority for SBA's 7(a) loan 
program. I think it is so important to make sure that everyone 
can get the loans that they need and that there is not a 
disruption in dispensing them.
    And then my question about SBIC. I am a big supporter of 
the Small Business Investment Company. I am proud that my 
legislation to allow more capital to be invested in SBICs, the 
Invest in main street passed the house in December and that 
this Committee included these provisions in the reconciliation 
package that passed the House in December.
    Certified SBICs are one of the government's lowest risks, 
highest impact tools to grow the businesses, but it is not 
doing enough to reach our most underserved small businesses. In 
2021, in fact, only 6.9 percent of the companies receiving SBIC 
financing were women, minority, or veteran owned.
    So, could you talk about how the 2023 budget request would 
diversify the SBIC so that there would be greater 
representation?
    Ms. GUZMAN. Thank you, congresswoman. And I agree with your 
earlier statements on 504. It is an important program that we 
continue to try to focus. And to an earlier question that was 
asked as well, we are looking to promulgate rules on the 
Express 504. We have implemented that already.
    On the SBIC program, I agree wholeheartedly that we want to 
make sure that that capital is accessible across the country, 
whether that is rural communities, diverse communities, as well 
as veterans. We want to see capital spread equally across the 
nation. The SBIC program, we are looking at from an outreach 
perspective, as well as the actual rules and regulations and 
the SBICs themselves to diversify and ensure that they are 
diversifying across not only the types of borrowers that they 
are supporting across the country but as well in the types of 
funding. We want to make sure that at all stages of a 
business's development, that they are able to access capital.
    And so, we have been working closely with the industry to 
make sure that we can support an expansion of the servicing and 
offerings to the SBICs across the country.
    Ms. CHU. Well, if I may, I also wanted to ask about 
Community Advantage, which has been very powerful in reaching 
significantly more female and minority small businesses than 
traditional lending programs. So, I introduced legislation to 
make this program one of SBA's core lending program which the 
House passed last year.
    Earlier this month, SBA noticed that it would be extending 
the pilot for another 2 years, opening up the program to new 
lenders and making some reforms to the program. However, there 
is currently still no official notice or new Community 
Advantage participant guidance reflecting these changes.
    So, can you tell us when Community Advantage lenders should 
expect to see reviewed participant guide and what the content 
would be?
    Ms. GUZMAN. That is in process. Of course, we put the 
federal registered notice about, you know, less than 30 days 
ago and we will be putting out those rules so that we can 
expand the program as soon as possible.
    Ms. CHU. Do you know when that will be?
    Ms. GUZMAN. That is in the coming weeks. We are working on 
that and prioritizing that now.
    Ms. CHU. And how about there was also an evaluation on 
whether the program should remain permanent. And I thought that 
the program had proven itself
    Ms. GUZMAN. I know that there was a statutory proposal to 
make it permanent. We have extended it within the priority of 
the pilot.
    Chairwoman VELAZQUEZ. The gentlelady's time has expired.
    Now, we recognize the gentlelady from New York, Ms. Tenney.
    Ms. TENNEY. Thank you, Madam Chairwoman and Ranking Member 
Luetkemeyer. We are grateful, Administrator. Thank you for 
being here in person.
    As a small business owner for many years, I know what I 
hear from my own employees, from my own colleagues, and from 
other small business owners. Inflation, labor shortages, 
subsidies by big government to other big companies, high 
regulations, high taxes, particularly coming from a state like 
New York are what we see as small business owners really 
hurting us. And so, when we see these items coming from 
government and this huge spending and we look to the Small 
Business Administration for help to rescue us because we cannot 
afford compliance costs. We cannot afford to manage the big 
business advantages that they have. We look to the Small 
Business Administration, and sometimes I hear today in this 
meeting things that look like mission creep away from small 
businesses and helping large businesses, and businesses that 
may not even be considered a small business. And I worry about 
that because of how vitally important it is as you, as an 
administrator, and all of us to really be careful in how we 
spend taxpayer dollars, particularly in inflation and small 
businesses have to scrimp and save for every penny, just to 
survive in this situation.
    So, administrator, I want to jump to something really 
important right now in terms of a small business looking at a 
big business, gaming and getting advantage in the system. Would 
you say that Planned Parenthood affiliates are in the same 
category as a hotel or a restaurant?
    Ms. GUZMAN. You know, with Planned Parenthood, I am 
assuming you are talking about the Paycheck Protection Program.
    Ms. TENNEY. Right. Would you say that a Planned Parenthood 
operation, an affiliate, is in the same business and same 
relationship as a hotel or a restaurant?
    Ms. GUZMAN. My understanding is that Planned Parenthood 
affiliates are independent and are individual entities within 
that community.
    Ms. TENNEY. Right. And you know why I am asking this 
question because obviously we sent you a letter in February. 
Thank you, we got it yesterday, so we appreciate at least 
finally getting an answer. Because, as you know, under the 
Paycheck Protection Plan created by the CARES Act, Congress 
specifically stated that companies could not, particularly SBA, 
could not issue forgiveness for PPP loans to any entity with 
over 500 employees unless that affiliate was a hotel or a 
restaurant. So that is why I asked you the question. So, I 
think we can agree that Planned Parenthood is not a hotel or 
restaurant. And the question is whether or not they are 
considered an affiliate. But 34 individual loans, totaling over 
$67 million, were given to affiliates of Planned Parenthood, 
the Planned Parenthood Federation of America. And as you know, 
Planned Parenthood is not just an innocent bystander. They are 
the nation's largest abortion provider with over 16,000 
employees, well beyond the 500 employee threshold established 
by Congress for this PPP eligibility.
    So, I wanted to clarify that assessment that you have about 
Planned Parenthood because they clearly are not an affiliate 
like a hotel or restaurant. They do not fit within that 
exception. And so, you sent me a letter indicating, it was very 
vague, actually, about whether or not this affiliation status 
indicated that there was control by the national affiliate for 
Planned Parenthood. And so, Planned Parenthood did have 
exercise and control over its affiliates. And let me give you a 
couple of examples.
    First, becoming a Planned Parenthood Federation of America 
affiliate requires a certification by the PPFA corporate board. 
That is the national affiliate controlling the 16,000 jobs. 
Second, each affiliate is governed by written bylaws which must 
conform to the PPFA's corporate policies nationally. That looks 
like control to me. And finally, the PPFA's corporate 
headquarters imposes affiliation mandates on local affiliates.
    Anyone who is looking at this control statute, and I have 
it in front of me, clearly talks about the power to control has 
to exist. It does not necessarily mean that it exists but there 
are numerous examples of this happening with Planned Parenthood 
and its affiliation where they exert that control, not just 
that the control exists, where they exert it.
    So, would you not agree that it is inappropriate for the 
SBA to issue these exemptions and forgiveness for loans for the 
Planned Parenthood Federation affiliates?
    Ms. GUZMAN. I can share with you that the Trump 
administration issued a preliminary determination letter. Any 
of those borrowers, there were multiple, beyond Planned 
Parenthood, only Planned Parenthood received that specific 
attention. Anyone within that hold code, I put back into the 
normal processing. And so, of course, our review teams 
thoroughly reviewed all of those loans with those specific hold 
codes, not just Planned Parenthood, all of them in order to----
    Ms. TENNEY. Right. This is my time. You are mincing words. 
I mean, this looks like we are doing an end run around a law to 
fit a political agenda, not actually good stewardship of 
taxpayer dollars. And specifically, prohibiting a law in place 
that prohibits the ability of these types of national entities 
with 16,000 employees to be able to take precedence over small 
business community members who were left without the resources 
because we prioritized a political agenda.
    Chairwoman VELAZQUEZ. The gentlelady's time has expired.
    Ms. TENNEY. Thank you.
    Ms. GUZMAN. I will be happy to follow up with your office.
    Ms. TENNEY. Thank you. I would appreciate that.
    Thank you. I yield back.
    Chairwoman VELAZQUEZ. The gentlelady from Minnesota, Ms. 
Craig, is recognized for 5 minutes.
    Ms. CRAIG. Thank you so much, Madam Chair. And thank you in 
particular to Administrator Guzman for your testimony today and 
for your dedication to America's small businesses.
    I would be remiss if I did not mention how proud I am of 
the work of several Members of this Committee in long overdue 
passage of the Relief for Restaurants and Other Hard-Hit Small 
Businesses Act. I hope to see the Senate act in short order on 
this necessary bill.
    Administrator Guzman, I have been hearing from several of 
my constituents who have been waiting for months, some nearly a 
year, to see their COVID-EIDL applications approved. These are 
everyday small business owners like Donald Wineland of DRW, 
Inc., an Air Force Veteran from Prior Lake, and John Huseth of 
Clay View Dairy from Dennison. In total, my constituents are 
waiting on nearly $2.2 million worth of decisions from the SBA. 
Can you give us a little bit of an update as to when COVID-EIDL 
funds may run out? And how many applications remain under 
review? These are vital dollars to my constituents, their 
businesses, and the communities that they serve.
    Ms. GUZMAN. Thank you so much for that question. We have on 
COVID-EIDL, obviously, it is a program that we are heightened, 
our attention is on as we round out this funding. There still 
is funding remaining that we are using for loan modification 
requests as well as any reconsiderations. It sounds like the 
constituents are in the fold of reconsideration. We have just a 
few thousand that remain in that bucket of reconsideration that 
we are working through urgently every day just to make sure 
that funding gets into the hands of the businesses that are 
eligible for this funding. And we are happy to follow up with 
your office on the specific constituent requests to make sure 
that we are tracking them.
    Ms. CRAIG. Thank you. I really appreciate that. And again, 
anything you and your staff can do to help expedite these 
applications I would be grateful.
    As a Member of the Oversight Subcommittee, I would also 
appreciate if you could provide the Committee with an update on 
SBA's current anti-fraud efforts, especially with respect to 
PPP and EIDL. All of us here have deserting constituents and 
businesses in our district in need of these loans. And of 
course, we all need to know that our taxpayer dollars are not 
going to bad actors.
    Ms. GUZMAN. Yes, I am happy to do so. From day one, we have 
implemented strong controls in the Biden-Harris administration 
to make sure that we could avert fraud. We have been working 
collaboratively with the IG and the GAO to ensure that their 
recommendations are implemented and that we continue to track 
best practices as our response to fraud is iterative.
    With the framework that we have recently solidified, 
strengthened by replacing the Fraud Management Council with the 
Fraud Risk Management Board, we have launched a strong 
leadership approach to fraud for the years ahead. We are 
ensuring that our senior leaders within our program offices 
have accountability as well as can share insights, as well as 
implement best practices across the agency. I really value the 
leadership of my career team that has been working on this 
issue for the past year and ensuring that we have been 
implementing the strongest controls, as well as leveraging 
technology to assess our platform and continually report fraud 
to the IG and collaborate with them to ensure that we can 
support their recovery.
    Ms. CRAIG. Madam Administrator, I just want to end my 
comments by saying thank you. I know that the SBA has been 
asked to step up and perform under enormous pressure during a 
public health crisis. And as much as we sit here and we say 
let's make sure there is no fraud, absolutely, let's make sure 
that our taxpayer dollars are being used appropriately, 
absolutely, I do not want any of us to not think about every 
single day just the extraordinary effort your team over the 
last couple of years has gone to starting in the previous 
administration, into this administration, we have asked a lot 
of you in a short amount of time, and I, for one, as I travel 
my district and I see so many of my small businesses that would 
otherwise be out of business still going strong and expanding 
and creating jobs, I just could not be more proud. So, I want 
to say thank you for the work that your team has done, 
especially here locally. I want to call out Brian McDonald here 
from our region who has just been an extraordinary partner 
during a very difficult time.
    And with that, Madam Chair, I yield back.
    Chairwoman VELAZQUEZ. The gentlelady yields back.
    Now we recognize Ms. Salazar from Florida, Ranking Member 
of the Subcommittee on Contracting and Infrastructure.
    Ms. SALAZAR. Thank you. And wonderful to see you again, 
Isabelle Guzman. And thank you for your visit to my District 
No. 27, City of Miami. It was a highly productive visit I 
should say and I am sure that from now on my small business 
owners are going to be enjoying the best service that SBA can 
provide. So, thank you for that. Thank you for taking the time 
and catching a plan and going to Miami. Very grateful.
    I just want to share a few small glitches that we have. One 
of them, for instance, is $140 billion problem. And what is 
that? It is the COVID testing. Every time someone comes to this 
country, an international tourist, that person needs to get 
tested 24 hours before getting on that plane and that measure 
is killing the tourism industry in Florida. Specifically, in 
Miami. And you know, Miami is the hub of international tourism 
in Florida.
    So, could you please tell the president next time you see 
him in one of those Cabinet meetings that we need to do away 
with that measure? Will you be able to do that?
    Ms. GUZMAN. I will definitely relay your concerns to the 
White House and our team will continue to flag this issue and 
work with you to see what we can do to help better support our 
travel and industry small businesses which we know have been so 
impacted by so many factors.
    Ms. SALAZAR. Because, you know, Florida is open for 
business and my small business community is eager to be selling 
those services. But if you do not have people, then you cannot 
make the payroll at the end of the month. So, you understand 
that. So, since you are there with the president, I would very 
much appreciate it if you can tell him that this is killing us.
    Ms. GUZMAN. I continue to advocate for our small businesses 
and I appreciate that in particular.
    Ms. NEWMAN. But will you do that? Could you, will you able 
to tell the president in one of those cabinet meetings that 
this is happening and it is crushing our small business 
entrepreneurs?
    Ms. GUZMAN. I will definitely flag for the White House the 
issue.
    Ms. NEWMAN. Thank you. All right.
    So, you have a pretty good budget, over $1 billion, and it 
is getting bigger probably next year. But we discovered 
something that is troubling, Madam Guzman, is that the budget 
assigned for salaries, for regional and district offices is 
going down, not up. But in the meantime, your decision has been 
to increase the money in the hands of the Washington 
bureaucrats.
    I believe that someone who is sitting in D.C. cannot serve, 
understand, or care as one of your guys sitting in one of those 
district offices that the budget is getting cut for the 
salaries in those. And even more, I am going to share with you 
what is happening in Miami, or in Tampa, is that we only have 
one district office in South Florida for 2 million small 
businesses. We do not even have a permanent district director.
    So, any reasoning behind cutting money at the regional 
level and giving it to D.C.?
    Ms. GUZMAN. Over time as we have had to increase salaries 
and benefits and decrease some of these positions, you know, I 
understand that all of our offices have been impacted. This 
budget would allow us to retain some of those positions across 
the agency, and we have continued to try to empower the field 
to make sure that we gather those key insights that our team on 
the ground can share with us.
    Ms. NEWMAN. But you empowered them by hiring more people 
and paying them good salaries. But right now, you know, you are 
cutting those budgets.
    Ms. GUZMAN. We are, you know, committed to making sure that 
we can help improve our staffing plan across the field. And 
that includes trying to ensure that their positions are 
maintained and that they are receiving the benefit of our 
expansion.
    Ms. NEWMAN. Finally, I have 1 more minute. I just want to 
ask you a personal question. You are one of the most prominent 
Latinas in this administration so we have the same cultural 
code. Your parents are Mexicans. You understand the border. You 
know what is happening down there. Are you not concerned? That 
is the concern that I have. That what is happening at the 
border is giving a very bad rap to the Hispanics, to the 
Latinos, because we do not have any type of legality down 
there. And my concern is that it could be changing the 
favorable perception that other groups have of us, the largest 
minority in the country. So, when you sit with the president, 
do you not express that from a very personal point of view 
because your parents are of Mexican descent? Mine are Cuban. 
So, we belong to the same minority. Please give me your 
personal thoughts if you want to share them with us.
    Ms. GUZMAN. Well, what I would share is that I continually 
advocate and make clear that the face of entrepreneurship is 
changing and I would like to portray Latinos as the ones who 
are leading on that because they are starting businesses at the 
highest rates and across most states according to McKinsey 
studies. And so that entrepreneurship and that face of 
entrepreneurship is what needs to be important.
    Ms. NEWMAN. And we know that. But we create, probably we 
are the highest creators of jobs. But when it comes to the 
border, that could be harming the rest of our plans and wanting 
to live the American dream. Yes or no, do you not think that 
that is happening right now?
    Chairwoman VELAZQUEZ. The gentlelady's time has expired.
    Ms. GUZMAN. I agree that I would want everyone to know that 
small businesses, the face of the Latino community is 
entrepreneurship.
    Chairwoman VELAZQUEZ. The gentleman from New Jersey, Mr. 
Kim, is recognized for 5 minutes.
    Mr. ANDY KIM. Thank you, Madam Chair. And thank you, 
administrator, for taking the time to be able to come before 
us.
    As we had a conversation before in pervious hearings about 
the path and the trajectory of SBA, coming out from this 
pandemic and talking through what comes next, one thing that I 
wanted to relay is as I have talked to different businesses 
that engaged in the Paycheck Protection Program, and honestly, 
that was their first time engaging with the SBA, engaging with 
government services when it comes to small businesses, I have 
asked them, are you going to be able to continue with SBIR? Are 
there other types of support that you need? Have you been able 
to learn about some of the other offerings? And many of them 
said that they still do not know too much about what SBA has to 
offer about different avenues that they might be able to 
benefit going forward beyond just the Paycheck Protection 
Program.
    So, I guess I wanted to ask you as we are coming out from 
this pandemic, SBA has been in touch and connected and helped 
so many more businesses than ever before, has there been a 
formal process in following up with those businesses that 
engage in the Paycheck Protection program or EIDL and others in 
terms of informing and educating and working with them, if 
there are other needs that they might have that might be 
serviced by other aspects of what SBA does?
    Ms. GUZMAN. Yes. And on the eve basically of National Small 
Business week which starts next week, I want to say that the 
SBA has tried to leverage this moment to better serve small 
businesses, that awareness of SBA and its offerings is higher 
than any other time in history. And I think that we do need to 
leverage this moment. So, across our resource partners, our 
Community Navigators, as well, we have charged them with trying 
to make sure that the small businesses are aware of the capital 
programs, the technical assistance, and the market access 
resources that we have at the SBA to support businesses. And I 
would welcome the opportunity to partner with you on that to 
ensure that more businesses in your district are aware of SBA 
resources and it is critical that they build awareness. Of 
course, we do not have a CMO or huge funding for that type of 
outreach, but we can leverage our district office, leverage our 
partners, leverage our lenders to better connect to those small 
businesses. And we have started to systematically focus on 
these new businesses that we have served through PPP and COVID-
EIDL.
    Mr. ANDY KIM. So I am glad that that kind of outreach is 
happening and that, you know, if there is additional funds or 
resources needed for that, please let me know. I would like to 
work with you on that.
    But just more specific, I did want to just follow up. So, 
there has been formal follow up, like has there been an email 
or what to businesses that had the Paycheck Protection program 
about like laying out some of the other aspects? I am just 
trying to get a sense if there has been something of that 
nature so I can flag it for these businesses in case they 
missed it?
    Ms. GUZMAN. Within the EIDL program, which is our direct 
program, of course, we have had extensive outreach to our 
businesses. Our new portfolio on PPP, we work with our lenders 
on a regular basis to make sure that they are providing all of 
SBA insights. They are familiar with our programs but PPP was 
administered through the lending network. And so, our direct 
contact is not there. So, as we do forgiveness and support 
those businesses, of course, we have those contacts and will 
reach out.
    Mr. ANDY KIM. Okay. That is helpful context in terms of 
understanding. And like I said, I would like to try to see if 
there are some creative solutions for this, especially for 
those paycheck protection plan ones dealing with lenders and 
maybe getting towards the businesses.
    But that raises the other aspect of this, is that, you 
know, I saw recently a really extraordinary statistic about how 
prior to the pandemic there were about 1,900 different lenders 
participating in different SBA programs but that during the 
pandemic, over 5,000 lenders were participating in the Paycheck 
Protection Program.
    I guess I wanted to as a similar type of question. When it 
comes to the lender side, has there been ability to grow the 
number of lenders participating in more forma SBA programs? 
Drawing from that pool that was working on the Paycheck 
Protection program. I am curious if this has been sort of a 
forced multiplier and whether or not there has been a sizeable 
increase already in terms of the lenders that are at the 
disposal of the SBA.
    Ms. GUZMAN. Our goal across our network is to increase the 
number of lenders. We have seen a decline in small dollar 
lending. We want to expand the number of lenders in our network 
to make sure that we can get more capital to businesses. And so 
formally, of course, we are expanding to the Community 
Advantage lenders, so more CDFIs who participated in PPP can 
participate in SBA's programs. Those new to SBA lenders, we 
want to try to bring in and provide technical assistance. But 
more importantly, we need to simplify our capital access 
programs so that it is easy for a lender to come in and access 
SBA guarantees. And so that is what we are aiming to do is to 
replicated the successes of PPP and the simplicity.
    Mr. STAUBER. Time has expired.
    Chairwoman VELAZQUEZ. Now we recognize the gentleman from 
Minnesota, Mr. Stauber, for 5 minutes.
    Mr. STAUBER. Thank you, Madam Chair. Thank you to Ranking 
Member Luetkemeyer for holding this hearing. And I know this 
hearing is about the budget. But I would like to use my time to 
talk about WOTUS, the Waters of the United States.
    As everyone well knows, small business owners, farmers and 
ranchers, were very negatively impacted by the Obama Waters of 
the United States rule. It expanded federal jurisdiction far 
beyond what was authorized by Congress and resolved it in the 
burdensome requirements and widespread certain for Americans 
across this nation and small businesses.
    The Trump administration rightly chose to heed the concerns 
of these small businesses and entities and created the 
Navigable Waters Protection Rule.
    Unfortunately, the EPA is back to interpreting the waters 
rule and actually announce their intention to revise the waters 
rule and make it even worse.
    Administrator Guzman, given that you are supposed to be the 
leading champion for small business, can you give me specific 
examples of what you have done to speak with small businesses 
on this topic. And furthermore, can you give me an example, of 
an incidence where you have heard a comment from a small 
business owner and actually conveyed that concern to another 
agency like the EPA in this case as they look to review their 
role?
    Ms. GUZMAN. Thank you. We do have our ombudsman office that 
works regularly with small businesses through regulatory 
fairness boards across the country. And they have received 
concerns about this and continue to work with small businesses. 
So not directly. I have not spoken to any of those businesses 
directly.
    Mr. STAUBER. Madam Administrator, so you cannot give me an 
example?
    Ms. GUZMAN. I have not spoken directly to a business on 
this issue but know that my ombudsman office has connected with 
small businesses. In addition, as you know, the Office of 
Advocacy tracks our regulations.
    Mr. STAUBER. Have you reviewed the small business Office of 
Advocacy's numerous concerns with the EPA's handing of the 
Waters Rule?
    Ms. GUZMAN. I am familiar with Office of Advocacy's work 
and have seen some of their statements and have spoken to our 
acting advocate, Major Clark.
    Mr. STAUBER. And are you aware that they have yet to 
convene an official small business panel in accordance with the 
Regulatory Flexibility Act?
    Ms. GUZMAN. I am not aware that he has not yet done that 
but we connect regularly with the Office of Advocacy. I have a 
regular meeting and so I will make sure that I can relay your 
concerns.
    Mr. STAUBER. And then you will have them hold an official 
business panel?
    Ms. GUZMAN. I will talk to them about that. Yes. And follow 
up with your team as well to find out that timing.
    Mr. STAUBER. I appreciate that.
    And then can you explain for the Committee, as Mr. Clark 
from the Office of Advocacy did for our Subcommittee a few 
weeks ago, why going through an official SBREFA panel is so 
important to understanding the significant economic impacts the 
Waters Rule will have on small businesses and small entities?
    Ms. GUZMAN. I can follow up with you on that and provide 
more specifics but I would not be able to comment further on 
it.
    Mr. STAUBER. Do you believe that a SBREFA panel is 
important to recognize the small business concerns?
    Ms. GUZMAN. I am not familiar. I need to follow up with you 
on that. And I definitely will.
    Mr. STAUBER. Okay. Will you commit to working with the EPA 
to ensure the SBREFA panel is held?
    Ms. GUZMAN. On this issue specifically, now that you have 
flagged it for me and I know it is an issue that Advocacy 
continues to track and it is a significant one for small 
businesses, I will definitely follow up as well.
    Mr. STAUBER. Thank you.
    And then, Madam Chair, I would like to enter into the 
record the comments of the Office of Advocacy submitted to the 
EPA regarding the proposed rule revisions to Waters.
    Chairwoman VELAZQUEZ. Without objection, so ordered.
    Mr. STAUBER. Thank you very much.
    I have a little over a minute yet. Congressman Donalds 
asked you a question and he ran out of time so I will just ask 
it again. What has the Biden administration taken to help the 
middle class and small businesses reference the inflation?
    Ms. GUZMAN. The president has taken action on energy costs, 
as well as trying to focus on pocketbook issues within this 
budget.
    Mr. STAUBER. Tell me what energy costs.
    Ms. GUZMAN. He has made available the million dollars a day 
to try to control some of the gas costs which we know are 
affecting our small businesses.
    Mr. STAUBER. Right.
    Ms. GUZMAN. But there is also pocketbook issues, and the 
budget directly addresses some of those such as child care.
    Mr. STAUBER. Is strategic petroleum reserve what you are 
referring to?
    Ms. GUZMAN. Correct.
    Mr. STAUBER. One hundred eighty million barrels?
    Ms. GUZMAN. A million barrels a day, I believe, through 
June.
    Mr. STAUBER. One hundred eighty days?
    Ms. GUZMAN. Correct.
    The strategic petroleum reserve really should be held for 
national emergencies, not failed policies. I think you 
recognize that.
    So my concern right now is the administration is not acting 
quick enough with the inflationary costs going up on small 
businesses. And I think that we need to, we are really looking 
for your leadership when you are in the meetings with President 
Biden and his cabinet to really support small businesses. So I 
look forward to the hearing.
    Mr. STAUBER. And my time is up, Madam Chair. Thank you.
    Ms. GUZMAN. Thank you.
    Chairwoman VELAZQUEZ. I want to thank Administrator Guzman 
for appearing before the Committee again today, and for all the 
work you do every day for our nation's small business 
community.
    Small firms are the backbone of the economy and the 
communities they operate in. By empowering the SBA, we empower 
entrepreneurs to thrive and grow.
    Without objection, Members have 5 legislative days to 
submit statements and supporting materials for the record.
    If there is no further business to come before the 
Committee, without objection, we are adjourned.
    [Whereupon, at 12:16 p.m., the committee was adjourned.]
    
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