COVID-19's Impact on Small Business — Senate Small Business Committee Hearing

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U.S. GOVERNMENT PUBLISHING OFFICE
WASHINGTON : 
43–666 PDF 
2023 
S. HRG. 116–604 
PERSPECTIVES FROM MAIN STREET: COVID–19’s 
IMPACT ON SMALL BUSINESS 
HEARING 
BEFORE THE 
COMMITTEE ON SMALL BUSINESS 
AND ENTREPRENEURSHIP 
UNITED STATES SENATE 
ONE HUNDRED SIXTEENTH CONGRESS 
SECOND SESSION 
JUNE 3, 2020 
Printed for the Committee on Small Business and Entrepreneurship 
( 
Available via the World Wide Web: http://www.govinfo.gov 

(II) 
COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP 
ONE HUNDRED SIXTEENTH CONGRESS 
MARCO RUBIO, Florida, Chairman 
BENJAMIN L. CARDIN, Maryland, Ranking Member 
JAMES E. RISCH, Idaho 
RAND PAUL, Kentucky 
TIM SCOTT, South Carolina 
JONI ERNST, Iowa 
JAMES M. INHOFE, Oklahoma 
TODD YOUNG, Indiana 
JOHN KENNEDY, Louisiana 
MITT ROMNEY, Utah 
JOSH HAWLEY, Missouri 
MARIA CANTWELL, Washington 
JEANNE SHAHEEN, New Hampshire 
EDWARD J. MARKEY, Massachusetts 
CORY A. BOOKER, New Jersey 
CHRISTOPHER A. COONS, Delaware 
MAZIE K. HIRONO, Hawaii 
TAMMY DUCKWORTH, Illinois 
JACKY ROSEN, Nevada 
MEREDITH WEST, Republican Staff Director 
SEAN MOORE, Democratic Staff Director 

(III) 
C O N T E N T S 
OPENING STATEMENTS 
Page 
Rubio, Hon. Marco, Chairman, a U.S. Senator from Florida ...............................
1 
Cardin, Hon. Benjamin L., Ranking Member, a U.S. Senator from Maryland ..
4 
WITNESSES 
Shamess, Mr. Joe, Co-Founder, Flags of Valor, Ashburn, VA .............................
8 
Evans, Ms. Connie, President and CEO, Association for Enterprise Oppor-
tunity, Washington, DC .......................................................................................
18 
Strain, Mr. Michael, Director, Economic Policy Studies, American Enterprise 
Institute, Washington, DC ..................................................................................
27 
Rudolph, Mr. Nick, Baltimore Regional Director, Maryland Capital Enter-
prises, Inc., Salisbury, MD ..................................................................................
44 
ALPHABETICAL LISTING 
Cardin, Hon. Benjamin L. 
Opening statement ...........................................................................................
4 
Evans, Ms. Connie 
Testimony ..........................................................................................................
18 
Prepared statement ..........................................................................................
20 
Responses to questions submitted by Chairman Rubio and Senator 
Hirono ............................................................................................................
77 
Inhofe, Hon. James M. 
Prepared statement ..........................................................................................
91 
MetLife & U.S. Chamber of Commerce 
Small Business Coronavirus Impact Poll .......................................................
92 
Rubio, Hon. Marco 
Opening statement ...........................................................................................
1 
Rudolph, Mr. Nick 
Testimony ..........................................................................................................
44 
Prepared statement ..........................................................................................
47 
Responses to questions submitted by Chairman Rubio and Senator 
Hirono ............................................................................................................
82 
Shamess, Mr. Joe 
Testimony ..........................................................................................................
8 
Prepared statement ..........................................................................................
11 
Responses to questions submitted by Chairman Rubio and Senator 
Young .............................................................................................................
72 
Strain, Mr. Michael 
Testimony ..........................................................................................................
27 
Prepared statement ..........................................................................................
30 


(1) 
PERSPECTIVES FROM MAIN STREET: COVID– 
19’s IMPACT ON SMALL BUSINESS 
WEDNESDAY, JUNE 3, 2020 
UNITED STATES SENATE, 
COMMITTEE ON SMALL BUSINESS 
AND ENTREPRENEURSHIP, 
Washington, DC. 
The Committee met, pursuant to notice, at 10:04 a.m., in Room 
SR–301, Russell Senate Office Building, Hon. Marco Rubio, Chair-
man of the Committee, presiding 
Present: Senators Rubio, Scott, Ernst, Inhofe, Young, Romney, 
Cardin, Cantwell, Shaheen, Booker, Hirono, Duckworth, and 
Rosen. 
OPENING STATEMENT OF HON. MARCO RUBIO, CHAIRMAN, A 
U.S. SENATOR FROM FLORIDA 
Chairman RUBIO. Today’s hearing on the Senate Committee on 
Small Business and Entrepreneurship will come to order under dif-
ferent circumstances. We are really far from one another, and you 
guys are here online, and we have never been in this room before. 
But I appreciate everyone joining us, those that are in person, of 
course, those that are here attending virtually, which I think is 
something we are going to get used to for some period of time. We 
welcome our witnesses as well. The title of the hearing is ‘‘Perspec-
tives from Main Street: COVID–19’s Impact on Small Business.’’ 
There is no doubt that this pandemic has impacted our lives in 
every day imaginable. For some, the impact has been tragically on 
their health or the health of a loved one. I personally know mul-
tiple families, including someone who was my physician for a pe-
riod of time who recently passed away as a result of this. 
For others, it has affected their day-to-day way of life. There is 
virtually no impact of our day-to-day life that has not been altered 
by it, and of course, for some, that means they have lost their jobs 
or they have lost their businesses. 
The economic fallout from this pandemic has had an unprece-
dented historic impact on millions of Americans. By April of this 
year, the unemployment rate had increased 14.7 percent. Only 2 
months before that in February, the unemployment rate was only 
3.5 percent. 
In the first quarter of this year, the United States saw a 5 per-
cent decrease, decrease in the annual real GDP rate, compared to 
the fourth quarter of 2019 which reported a 2.1 percent increase. 
And our Nation’s small businesses have, without a doubt, been 

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among the hardest hit. I would argue the hardest hit from an eco-
nomic perspective by this pandemic. 
The Small Business Administration estimates that in 2019 near-
ly 30 million small firms were operating in the United States, and 
they employed about 47 percent of all the workers in our country, 
which amounts to about 60 million Americans. 
Now after this pandemic, it is estimated that 54 percent, so over 
half of those small business jobs, are considered what you would 
call highly vulnerable, and I think that is especially true in indus-
tries like hotels and accommodation, the food service industry. As 
I have said, I believe that those industries, unfortunately, will be 
the first ones into the crisis and the hardest ones to get out of it. 
There was a recent SNAP survey by the Census Bureau, and it 
reported in data that they collected between April 26th and the 
2nd of May that 83.5 percent—83.5 percent of small businesses 
that were surveyed within this industry of accommodations and 
food service, they reported that they had experienced a very large 
negative effect due to the pandemic. Of course, I do not think any 
of us from an anecdotal and real-life perspective needed the Census 
Bureau to do that in order for us to know that. 
But I think this is true in multiple sectors across our economy. 
That same survey suggests that, throughout the month of May, the 
number of firms reporting large negative impact had decreased 
from more than 51 percent of firms to 45 percent of firms. 
Similarly, the number of small businesses having reported de-
creased revenue or decrease in employees has also gone down in 
the last 4 weeks, and as these statistics have decreased, the num-
ber of firms having reported that they received financial assistance 
in the form of either a Paycheck Protection loan or an Economic In-
jury Disaster Loan, a grant, have begun to increase substantially. 
So according to the most recent data provided by the Small Busi-
ness Administration, whose Administrator along with the Sec-
retary, I hope, of the Treasury will be here next week before this 
Committee—according to their data, there are more than 4.4 mil-
lion PPP loans that have been made for a total of over $510 billion. 
The average loan size is now about $114,000. So I think when we 
look at those numbers, particularly the average loan of $114,000, 
I think that is what those of us who crafted this program had envi-
sioned what the program would look like when all was said and 
done. 
There are also more than $700,000 Emergency Injury Disaster 
Loans that have been made for $55 billion, although that program, 
of course, has had its own set of complications, as has been well 
documented. 
While the process of establishing and administering the PPP pro-
gram was not without faults, as would be expected from a program 
that is brand new and of this size and scope, crafted over 6 days 
and implemented with the rules and so forth over 6 days, that we 
have to remember that on April 3rd of this year was the first time 
ever that anyone in the world had ever applied for a PPP loan, 
processed a PPP loan, or approved one. So despite all of that, the 
program has had immense and positive impact on the small busi-
ness community. 

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The program was created to provide these small businesses and 
their employees with emergency funding so they could sustain their 
business, particularly their payroll, during the uncertainty of this 
time. It was designed to allow them to keep their workers on pay-
roll and to make it possible for firms to once again be able to oper-
ate after the crisis had passed. 
So following the passage of the CARES Act, demand for the pro-
gram was unbelievably high. I think it exceeded everyone’s expec-
tations. It was so high that the first round of funding, we reached 
the guarantee cap in less than 2 weeks, and it required Congress 
to come back and appropriate another $310 billion. 
Millions of additional small businesses in addition to inde-
pendent contractors and sole proprietors were able to participate 
due to this additional funding. 
There was a recent survey by the National Federation of Inde-
pendent Business that had noted that 77 percent of surveyed small 
business owners had applied for a PPP loan, of which 93 percent 
had received their funding. 
Just speaking from my home State of Florida, we have approxi-
mately 336,000 PPP loans for more than $30 billion. Each one of 
those loans represents a business surviving and a worker receiving 
a paycheck during this incredibly trying time. It is a lifeline to 
American business who has suffered through no fault of their own, 
and these statistics are, of course, encouraging. But we recognize 
that small firms and communities throughout our Nation are still 
struggling. 
Just last week, the Small Business Administration and the 
Treasury Department announced that they would be increasing 
their efforts to ensure that the PPP program is successful and 
reaching small businesses in all of our Nation’s communities by 
agreeing to set aside an additional $10 billion of PPP funds for 
community development financial institutions, or CDFIs for short. 
This effort to improve CDFI’s ability to administer PPP loans and 
to set aside funding for their use is meant to, hopefully, ensure 
that underserved communities can better access the benefits of the 
program. 
This is work of tremendous importance. The Ranking Member 
and many others were very involved in making this possible, and 
I also thank the SBA and the Treasury for moving on this after 
hearing all these requests. 
I want to close by saying I think it is impossible to gather here 
today on any topic and not acknowledge what we have seen take 
place across the country, including in my home town of Miami and 
my home State of Florida, but right here where we work in Wash-
ington, D.C., as well as in New York City and Minneapolis, Cali-
fornia, all across the country. 
I do not think anyone can dispute that the murder of Mr. Floyd 
was an outrage and a crime and that there must be justice and ac-
countability for it. 
I do think, however, that for far too long in this Nation, we have 
ignored the fact that a significant percentage of the American fam-
ily feels like their lives are not valued to the same extent and their 
problems are ignored because of the color of their skin. No nation 

4 
can be successful when a substantial percentage of your population 
feels that they are treated unfairly as a matter of course. 
The anger and the frustration that we see is, I believe, not sim-
ply isolated to one very tragic instance of a murder, but it goes be-
yond it. And it is more than just the other incidents that we have 
seen pile up over the years. 
I think it also includes issues like the already disproportionate 
harm to communities of color, which have come about as a result 
of this pandemic and of other economic situations that have 
emerged that have led to what when you look at the numbers are 
clearly disparities and inequities in our society that fall along ra-
cial and ethnic lines. 
So in the context of the jurisdiction of this Committee, ensuring 
that the worker focused economic relief of the PPP makes it to 
small business in these communities was a priority before the last 
few days and I think takes on heightened importance now. 
The work of this Committee has its own part to play in helping 
address the economic disparities facing Americans of color during 
this crisis and beyond. 
So I want to thank the Ranking Member for his longstanding 
and continued leadership in advocating for underserved commu-
nities and for his partnership on this front. I look forward to con-
tinuing that partnership. I think it takes on added urgency because 
this cannot be another one of those instances in which we turn the 
page and move forward without addressing the lingering cancer 
that hangs over us of racial inequality in our country, which in-
cludes, obviously, how minority communities feel they are treated 
by authorities but is not just limited to that. 
Today’s hearing will allow members of the Committee the oppor-
tunity to explore what the small business landscape currently looks 
like in various industries and in various communities, and while 
this is our first formal Committee hearing following the passage of 
the CARES Act, it will certainly not be our last. 
I assure everyone that while I have taken on a second job for the 
same base pay that I was getting before, I remain actively engaged 
along with the members of this Committee and the Ranking Mem-
ber and so many other great partners in oversight over the imple-
mentation of the programs in Title I of the CARES Act, and we are 
committed to continuing to conduct vigorous oversight over these 
programs to make sure that they are operating the way Congress 
intended, including addressing the issues of fraud and the misuse 
of funds, which always comes every time government provides as-
sistance of any kind. 
Our oversight efforts, as I said, are going to continue next week 
on the 10th of June when this Committee will welcome the SBA 
Administrator and the Treasury Secretary for our next hearing. 
And with that, I want to now recognize the Ranking Member, 
Senator Cardin. 
OPENING STATEMENT OF HON. BENJAMIN L. CARDIN, 
RANKING MEMBER, A U.S. SENATOR FROM MARYLAND 
Senator CARDIN. Well, Mr. Chairman, first, let me just join you 
and thank you for your comments on the tragic death of Mr. Floyd, 
the impact it has on the Civil Rights in this country but also the 

5 
economic issues, which are also Civil Rights. I thank you for your 
comments. 
I am going to be speaking on the floor later today in regards to 
Mr. Floyd’s tragic death. 
I also want to, on behalf of the Democratic members but I think 
all members of this Committee, thank your caucus for giving you 
a waiver so that you could continue as the chair of this Committee 
and also take on the added responsibilities on the Intelligence 
Committee. You have led this Committee in an extremely produc-
tive, bipartisan manner. So we are glad that you can continue in 
that dual role. 
We do recognize that although your pay will remain the same, 
your per hourly rate will decline significantly, but thank you for 
your service. 
I think every member of this Committee recognizes the impor-
tance of small businesses. We know that they create more net pri-
vate sector jobs. We know that they find innovative ways to deal 
with economic challenges, which are going to even be more impor-
tant in the post-COVID–19 environment, but we do know that they 
are more vulnerable to economic disruptions. 
So when the economic cost of COVID–19 became clear, we in 
Congress and on this Committee especially recognized that we had 
to take special effort to support America’s 30 million small busi-
nesses. 
I was proud to be part of the bipartisan Small Business Task 
Force that negotiated and wrote the small business provisions of 
the CARES Act along with you, Mr. Chairman, and your leader-
ship, Senator Shaheen, and Senator Collins. Together, we created 
three economic relief programs for small businesses: the Paycheck 
Protection Program; a new grant program under the Economic In-
jury Disaster Loan Program; and a debt relief program which cov-
ers the principal and interest payments on new and existing SBA 
7(a), 504, and microloans for 6 months. 
The program that has received the most attention in funding, 
PPP, was stood up seemingly overnight, and I want to compliment 
the employees of the Small Business Administration and the Treas-
ury Department for rapidly increasing their capacity to get these 
critical loans to small businesses. 
In the past 2 months, as you have pointed out, over 4.4 million 
loans worth more than $510 billion have been made. While this is 
a laudable accomplishment, there have been many major chal-
lenges. 
First, when we initially created PPP, we though that our eco-
nomic would be performing at a much higher level than it is today. 
So an 8-week period for small businesses to spend their loans 
seems reasonable. As communities began the process of reopening, 
it is now clear that most small businesses will not be up and run-
ning at the end of the 8-week period. 
Mr. Chairman, I am proud that the task force was able to come 
together to agree on legislation to extend the 8-week period and 
give small businesses more flexibility to use their loans for busi-
ness expenses other than payroll. I hope that we will be able to get 
that bill to the finish line within the next few days since we know 
that the 8-week period for the original loans that were issued will 

6 
be coming due very shortly, and business owners need to know 
what the rules are in regards to forgiveness. 
Second, there are important questions about the SBA’s mis-
management of the EIDL and emergency grant program. EIDL is 
a preexisting disaster loan program intended to deliver low-inter-
est, long-term loans to small businesses directly from the Federal 
Government. Because we knew that small businesses needed cash 
fast, we created the emergency grants to provide rapid capital infu-
sion worth up to $10,000 to EIDL applicants. 
As everyone on this Committee knows, PPP, EIDL and emer-
gency grants, and the debt relief program were all created to work 
together. PPP helps keep employees on payroll. EIDL provides low- 
interest working capital. Emergency grants provide quick infusion 
of cash for businesses that need it urgently, and debt relief covers 
the interest and principal payments on existing and new SBA loans 
for 6 months. 
I am discouraged that EIDL, a tool that has great potential to 
help small businesses seeking to adapt the new reality of the post- 
COVID economy, has reached fewer small businesses than we had 
hoped due to the administration’s mismanagement of the program. 
Small businesses need these funds. Similarly, the emergency grant 
program currently has nearly $10 billion that should be in the ac-
counts of small businesses around the country. 
EIDL serves a particular role for businesses. It can be used for 
working capital needs, and it may be more desirable for the small-
est small businesses that do not have many employees. Unfortu-
nately, SBA has not administered the EIDL program in a manner 
that it makes it a reliable source for small businesses. 
Third, we need to do a better job of targeting funding for small 
businesses that are truly in need, including minority, rural, and 
women-owned businesses. 
On May 8th, at my and Senators Schumer and Brown’s request, 
the SBA IG issued a flash report, which found that the SBA’s im-
plementation of PPP did not fully align with the congressional in-
tent of the CARES Act, because the agency failed to issue guidance 
to prioritized underserved and rural markets in the program. 
We have specifically put that into the statute. The reduced aver-
age PPP loan amount in the second round of funding indicates that 
by securing $60 billion in PPP funding for smaller lenders, includ-
ing minority depository institutions and community development fi-
nancial institutions, we ensure that PPP served more underserved 
and new small businesses, which are at the most risk of perma-
nently closing during the crisis. We should not stop there. 
Last month, Senator Booker and I released a plan that would ad-
dress the historical systematic disparities in access to startup and 
operating capital as well as technical training and mentorship so 
underserved small businesses have the resources they need to 
adapt their businesses to the changes caused by COVID–19 and so 
they can thrive after the pandemic. 
Failing to help these vulnerable small businesses runs the risk 
of extending this economic crisis, while also limiting our economy’s 
ability to recover after we defeat COVID–19. 
Lastly, Mr. Chairman, we need to have transparency and data 
related to how these programs are working. Yes, we wanted to get 

7 
the money out to small businesses quickly, which we did in PPP, 
but expediency cannot come at the expense of transparency and ac-
countability. 
On April the 17th, I joined with Senator Schumer, Senators Sha-
heen and Wyden in a letter to Secretary Mnuchin and Adminis-
trator Carranza asking for this information to be made available on 
a regular basis. To date, we have still not received that informa-
tion. I also introduced legislation that would require that informa-
tion to be made available. 
We on this Committee have heard promises that information 
would be made available, yet we are still not getting the granular 
information that is necessary for us to properly evaluate this pro-
gram. We need to get that information. We need to have trans-
parency, and we need to have accountability. 
I want to compliment the Chairman for his efforts in making 
sure that we could get that information. He has been tenacious in 
talking with the administration to make it clear that that informa-
tion must be made available, and I will join the Chairman today 
in a letter incorporating what we hope will be a solution to this 
issue. 
But as we look forward to what comes next, we are going to need 
a second round. When we did the PPP program, we thought 8 
weeks would be enough. We now understand that 8 weeks later, 
our economy is not back up to the level of performance that we had 
hoped, and as we look at what comes next, we need to have the 
information in order to make the proper judgment. 
I am working with Senator Shaheen and Senator Coons on an-
other round that would target money. Originally, we wanted to give 
the money out quickly, but as we look to a second round, we should 
look to target it to the smaller of the small businesses that really 
need help, that have had dramatic revenue losses, and I look for-
ward to working with all members of this Committee as we have 
in the past to determine what additional legislation is necessary to 
help our small businesses. 
I want to thank our witnesses for joining us this morning to help 
us better understand how these programs are working as well as 
how they are not meeting the needs of small businesses. The testi-
mony you provide this morning is vital for our understanding of the 
successes and failures of these programs as we continue to conduct 
oversight on these programs. 
And then, lastly, Mr. Chairman—and I mean lastly—thank you 
for arranging for the hearing next week for Secretary Mnuchin and 
Administrator Carranza. We desperately need them before this 
Committee for our oversight function. It is critically important that 
we continue aggressively on oversight and continue the great 
record of this Committee working together to help the small busi-
nesses of America. 
Thank you, Mr. Chairman. 
Chairman RUBIO. Thank you. 
Let me introduce our witnesses. Joe Shamess is a veteran, spe-
cial operations pilot, and a co-founder of Flags of Valor in Ashburn, 
Virginia. Flags of Valor is a veteran-owned, veteran-operated, vet-
eran-made small business which crafts wooden products that re-
flect American values, and it was founded on the principles that 

8 
combat veterans deserve an opportunity and that made in America 
mattered. 
Connie Evans is the president and CEO of the Association for 
Enterprise Opportunity, which supports microbusiness develop-
ment throughout the United States. Ms. Evans specializes in inter-
national development and social entrepreneurship and founded the 
Women’s Self-Employment Project, the first urban microbusiness 
development organization in the United States. She also founded 
WSEP Ventures, a social enterprise hybrid organization, and 
CSolutions Consulting. 
Dr. Michael Strain is the director of Economic Policy Studies at 
the American Enterprise Institute, where he oversees AEI’s work 
in economic policy, financial markets, welfare economics, and re-
lated areas, and before joining AEI, Dr. Strain worked at the U.S. 
Census Bureau and the Federal Reserve Bank in New York. 
Nick Rudolph is the Baltimore regional director of Maryland 
Capital Enterprises, a 501(c)(3) nonprofit organization working to 
support community development through small business creation 
and growth. He also serves as the MCE Women’s Business Center 
Baltimore coordinator. 
I thank you all for being here. 
Let me just begin with Mr. Shamess, because he is here in per-
son, sitting really far away at the other end of the table. I think 
the camera will go to him now when his microphone is activated. 
Thank you for being here, and then next, after that, I will turn to 
Ms. Evans and then the order in which I introduced you all. 
So, Mr. Shamess, we will begin with you. Thank you. 
STATEMENT OF JOE SHAMESS, CO–FOUNDER, FLAGS OF 
VALOR 
Mr. SHAMESS. Thank you, Mr. Chairman. Thank you, Senators. 
It is an immense privilege to be here on behalf of the men and 
women at Flags of Valor, the U.S. Chamber of Commerce, and to 
represent some of the small businesses in the United States. 
I can tell you that our business is a little bit different. You men-
tioned some of it, Mr. Chairman, in your opening remarks. We are 
both a retailer and a manufacturer. So we are experiencing two dif-
ferent parts of the pandemic, but on top of that, our entire mission 
is a little bit different than some businesses because we are really 
geared towards empowering combat veterans postservice. In fact, 
many of the people that we seek are the ones that are often the 
hardest to fit in most parts of the economy, and so we take a great 
deal of pride in that. 
So in maintaining our employees when you talk about some of 
the programs that we are going to discuss today is of critical impor-
tance to us. 
I will say that it is bad out there. In early March, we woke up 
one day to having two-thirds of our revenue gone, and as you can 
imagine, based on the dialogue that has taken place within this 
Committee, that is devastating. Two-thirds when most businesses 
are running at 10 to 20 percent bottom-line profit if they are lucky, 
it is hard to come back from. 
So are things improving? Sure. The things that you have done, 
particularly with the Paycheck Protection Program, have been 

9 
termed ‘‘lifeline,’’ ‘‘lifesaver,’’ ‘‘business saver.’’ You are saving busi-
nesses with that program, no doubt. We are one of them. The li-
quidity that provided us to retain our employees, to repatriate 
them back to work, to support our rents and some of the other 
overhead expenses we have has kept us afloat. We are fighting 
today because of it. 
Was it perfect? No. But you got pretty darn close with the way 
you laid it out, with very little information for that. We are incred-
ibly grateful. 
But I have to say that the Government support is not going to 
be enough, not that we need more Government support, per se, but 
that we as business owners have to innovate our way through this. 
We cannot rely solely on something that comes from the Federal 
Government to keep us alive, and so innovation has to take place, 
and some businesses are doing that more than others. 
For us, we could not transition to creating masks and face 
shields and respirators based on our manufacturing process. There 
is a lot of dust in wood manufacturing, as you can imagine, but we 
did create something that allowed us to solve another problem, 
which was kids being home with their parents, schools shut down, 
and you need something meaningful to do. With that, we created 
the kids’ Build Your Flag kit, which I have one here today. My son, 
Gabriel, made this, and he is really proud of it, and I am proud 
of him for doing it. But something as simple as this allowed us to 
create a solution to bring families together to talk about something 
other than COVID for a minute, to talk about what this means, 
and it has been enormously impactful for us, and we have been 
able to interact with thousands of families in the country with that. 
So that type of innovation is taking place outside of Flags of 
Valor. Other companies are doing things, whether it is creating 
PPE, whether it is changing their entire business model so that 
they can serve customers outside their walls, but that does not 
work for everybody. Some companies fundamentally cannot operate 
in this environment, and I think it is important for us to be mind-
ful of that. 
The number one thing that we would ask for if we could help in-
fluence this going forward is to help provide certainty and sim-
plicity in the system. There is a lot of legislation that is already 
in the works. Some of it, I know was mentioned being voted on 
later this week that will provide additional simplicity. 
The certainty we need is to know that the Paycheck Protection 
Program or other lending functions that you have enacted will ac-
tually run the way that we were told, so that our loans will be for-
given if we follow the rules and do the right thing. I think that is 
really important. 
The other thing is certainty that if we follow CDC guidelines and 
we take care of our employees and we run our businesses respon-
sibly, at some point, we are not going to be held accountable that 
someone contracted COVID–19 on our premises. That is really im-
portant. That liability protection gives us the confidence that we 
can continue to operate. 
Then the last part with simplicity is understanding that the way 
that this was laid out—I will speak specifically about the Paycheck 
Protection Program. I cannot believe—we say 8 weeks might not 

10 
have been enough. We did not think it would be shut down this 
long. Okay, true. It is pretty good. It is pretty good, not that we 
got it right, but that you thought that this would be longer term, 
because I thought it would be 2 or 3 weeks as a business owner. 
I thought I would be shut down for a little bit, power down, and 
we would power right back up. 
But if we can elongate that time period, it is already being dis-
cussed, and second, change the ratios from 74/25 because that just 
simply does not fit many of the small businesses. 
The small business demographic is incredibly diverse. Every 
major company in S&P 500 one day started as a small business. 
They are here now in the small business arena. That is the first 
stop on the way to becoming a big business, and they look different. 
They all look different. So helping them make decisions best allow 
them to stay alive, and in my case, I would say save the patient. 
If the business does not survive, there is nothing for the employee 
to come back to. So help them survive. 
With that, thank you. 
[The prepared statement of Mr. Shamess follows:] 

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Chairman RUBIO. Thank you very much. 
Ms. Evans, thank you for joining us. 
[No response.] 
Chairman RUBIO. I do not know if we have her. Is your volume 
on? It says that you are muted. Try now. 
STATEMENT OF CONNIE EVANS, PRESIDENT AND CEO, 
ASSOCIATION FOR ENTERPRISE OPPORTUNITY 
Ms. EVANS. Can you hear me? 
Chairman RUBIO. Now we can hear you. 
Ms. EVANS. Thank you. Thank you, Mr. Chairman, Chairman 
Rubio, Ranking Member Cardin, and distinguished members of the 
Committee. My name is Connie Evans, and I am president and 
CEO of Association for Enterprise Opportunity, AEO, the leading 
voice of innovation in microfinance and microbusiness in the 
United States. 
Today’s hearing comes at a time as the Nation struggles to com-
bat a twofold crisis—the economic downturn sparked by a global 
pandemic and the structural inequities and injustices that dis-
proportionately impact communities of color. This pandemic has ex-
posed and enlarged the structural disparities in a new way. 
In late March, Congress passed the CARES Act, which has de-
ployed more than $500 billion to small businesses since early April. 
The legislation also called for the prioritization for underserved 
businesses. Despite this unprecedented attempt to safeguard the 
Nation’s 30 million small businesses, lawmakers’ intentions have 
not fully addressed the most vulnerable in our country. 
In early May, the FDA Inspector General found that regulations 
failed to ensure the prioritization of underserved businesses. While 
SBA and Treasury worked to correct these initial flaws, the dam-
age is already beginning to set in for many overlooked businesses, 
particularly Black- and Latin-owned businesses. 
Take, for example, the irreparable damage for Kwame Onwuachi, 
owner of Kitch and Kin, a Black-owned restaurant that closed and 
laid off 70 employees in the process. Historic Ben’s Chili Bowl even 
struggled to receive a PPP Loan due to an overwhelmed implemen-
tation system. 
Before I continue with my prepared remarks, as an advocate for 
millions of minority-owned businesses, I must address the broader 
environment of race relations in this country. This past week has 
shown us that America continues to struggle with discrimination in 
every aspect of life. The avoidable and tragic deaths that continue 
to befall African Americans only deepens divides. While Main 
Street cannot solve these problems, the outrage that follows these 
senseless killings very much plays out on Main Street. Economic 
opportunity for all communities, including entrepreneurial oppor-
tunity, will help heal these deep wounds. 
This Committee’s work to ensure that Black-owned businesses 
survive the current economic crisis may very well help that heal-
ing. 
AEO stands ready to help Main Street prosper. Through our 
Mainstreet RISE program, we are helping thousands of businesses 
directly. Today, we are launching two new reports focused on com-
bating food disparity and addressing high recidivism rates in un-

19 
derserved communities, and we have launched a new survey of 
small businesses to allow policymakers to hone in on what policy 
proposals might be most impactful. 
But we need policy changes as well. We must modernize many 
of the programs at SBA in desperate need of reauthorization. The 
outdated statute is limiting the ability of the programs to success-
fully respond to this crisis. AEO has testified before this Committee 
about the importance of removing the 1/55th rule in the microloan 
program, which also needs increased liquidity. The PRIME pro-
gram and Resource Partners programs also need expansion. 
We commend this Committee and Senator Duckworth for leading 
this effort and hope to see that work progress, despite the crisis we 
face. 
Congress should also substantially increase FY 2021 funding for 
mission and community-based programs like Community Advan-
tage and the microloan program as well as increase the CDFI fund 
to $1 billion. 
We have several recommendations to strengthen the PPP Loans. 
We recommend making CDFIs automatically eligible lenders and 
guarantee all loans made by CDFIs to low, moderate income, and 
minority businesses. This can help build on the congressional in-
tent this Committee included in the CARES Act on page 30 of the 
legislation. 
AEO along with 50 other leading organizations founded the Page 
30 Coalition in response to your leadership to ensure the 
prioritization of underserved community is realized. 
The coalition asks Congress to eliminate the PPP first-come-first- 
serve rule, extend the PPP, provide additional PPP funding only for 
firms with 10 or fewer employees, and improve data collection. 
We also support the Cardin-Booker Equity in COVID–19 Recov-
ery White paper. 
And, finally, I must use my time before Congress to insist that 
you use congressional review authority to undo the OCC’s proposed 
CRA reforms that would only further damage the engagement of 
lending institutions in underserved areas. 
I want to thank you for your efforts on behalf of millions of 
minority- and women-owned businesses and for the opportunity to 
testify today. I look forward to answering any questions. Thank 
you. 
[The prepared statement of Ms. Evans follows:] 

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Chairman RUBIO. Thank you very much. Thank you. We look for-
ward to engaging with you here in a moment. 
Dr. Strain, are you ready? 
STATEMENT OF MICHAEL STRAIN, PhD, DIRECTOR, ECO-
NOMIC POLICY STUDIES, AMERICAN ENTERPRISE INSTI-
TUTE 
Mr. STRAIN. Yes, Mr. Chairman. Thank you. 
Chairman RUBIO. Can we zoom in on Dr. Strain just so we can 
see what books he has there on his shelf? 
Mr. STRAIN. Let me tell you the best one, right here. You are 
quoted, my latest book. 
Chairman RUBIO. A shameless plug. All right. Go ahead. 
[Laughter.] 
Mr. STRAIN. Chairman Rubio, Senator Cardin, and members of 
the Committee, thank you for the opportunity to appear before you 
today to discuss COVID–19’s impact on small business. It is an 
honor. 
The U.S. economy is in bad shape. My back-of-the-envelope cal-
culation finds that GDP is being reduced by roughly $80 billion per 
week because of the pandemic recession. 
In just 2 months, the unemployment rate increased by a factor 
of 4 to 14.7 percent in April, higher than any month since the 
Great Depression. 
According to my calculations, 27.5 percent of workers were unem-
ployed or underemployed in April. That is over one-quarter of the 
workforce. 
Small businesses have been hit very hard by the shutdown or-
ders and by decreased demand for their goods and services. Many 
small businesses operate with low-profit margins, making it dif-
ficult to absorb a large decline in revenue sustained over several 
months. Cash buffers can allow business operations to continue in 
the absence of revenue, but half of small businesses have fewer 
than 15 days of cash liquidity, and only 40 percent of small busi-
nesses have more than 3 weeks of a cash buffer. 
A new Census Bureau survey that the Chairman referred to in 
his opening remarks of small businesses shows that the expecta-
tions of small business owners, about the length of time it will take 
to fully recover are souring, with the share of owners who expected 
to take longer than 6 months to return to normal increasing signifi-
cantly between April and May. 
The survey asks respondents in the last week if the business had 
a change in the number of paid employees. The results here are ac-
tually somewhat encouraging. In late April, about a quarter of 
firms decreased employment in the previous week. By mid-May, 
that had fallen to 16 percent. This is trending in the right direc-
tion. If businesses are increasing their payrolls at a greater rate, 
you would expect their revenues to be improving as well. The Cen-
sus survey shows exactly this. The share of firms reporting revenue 
declines in the previous week dropped by 21 percent between late 
April and mid-May, falling to 60 percent from 75 percent. 
What is the overall takeaway here? I draw two conclusions. First 
of all, businesses is both dire and improving. A situation in which 
revenue and employment declines are this widespread represents a 

28 
national emergency. At the same time, the small business economy 
has made considerable strides in the past few weeks. 
Congress enacted the Paycheck Protection Program as part of the 
CARES Act to keep workers attached to their employers and to en-
sure small business continuity during the shutdown. 
As of May 23rd, 5,500 lenders have made nearly 4.4 million PPP 
loans for a total of $511 billion lent. The average loan size was 
$116,000. Over 99 percent of PPP loans were for less than $2 mil-
lion, and 79 percent were for less than $100,000. Of the total dol-
lars lent in the program, 79 percent were lent as part of loans of 
less than $2 million. As of mid-May, nearly 70 percent of small 
businesses surveyed were receiving financial assistance from PPP, 
according to the new Census survey. 
The ultimate test of PPP’s effectiveness will be if it is shown to 
mitigate small business closure and support employment. It is too 
early to tell whether PPP is having these effects. The magnitude 
of lending and the take-up rate among small businesses suggests 
that it is well positioned to do so and suggest it is succeeding. In-
deed, PPP will likely be the main and the most effective measure 
that Congress has passed to address the pandemic. Between the 
CARES Act and the subsequent Paycheck Protection Program and 
Health Care Enhancement Act, PPP has become the largest compo-
nent of Congress’ response to the pandemic recession. 
Unfortunately, PPP’s success has been held back by the Treasury 
Department’s implementation. For example, the 75 percent rule, 
which is not in the statute, fully is a mistake. It lessens the pro-
gram’s effectiveness and allows the program to benefit some small 
businesses over others in an arbitrary fashion. The Treasury De-
partment justifies the rule by arguing that it keeps the focus of 
PPP on workers, but a business that cannot pay its rent also can-
not continue paying its workers. 
Small businesses could also turn to the Federal Reserve’s Main 
Street Lending Program, which is open to businesses with up to 
15,000 employees. The Treasury Department is required to approve 
the parameters of the program, and Congress appropriated $454 
billion to Treasury as part of the CARES Act to support Fed lend-
ing under this program and under several other lending programs. 
Here again, Treasury’s implementation is hurting small business. 
The Treasury is not taking enough risk with that capital. 
Under the parameters Treasury set for the Main Street program, 
it may discourage borrowers and lenders from participating in the 
Main Street program at all. 
The economy will need fiscal support for quite some time. This 
summer and fall could witness historic annualized rates of quar-
terly economic growth and percentage declines in the unemploy-
ment rate, but it will take many more months of strong economic 
performance to return to where the economy as in February of this 
year. 
The Congressional Budget Office, for example, forecasts very 
strong economic growth in the second half of 2020, beginning in 
July, but CBO also expects the unemployment rate will be over 10 
percent in the fourth quarter of 2020 and 8.6 percent in the fourth 
quarter of 2021. 

29 
Small businesses will need support from Congress, in particular. 
The goal of this support should be to preserve the productive capac-
ity of the small business sector in large part by ensuring small 
business continuity and preserving the ecosystem of knowledge and 
relationships that drive productivity. In this way, the needs of 
small businesses are similar to what they were in mid-March when 
Congress enacted PPP. 
At the same time, public policy should avoid impeding the proc-
ess of sectoral reallocation in which some industries shrink and 
others expand and in which workers move across industries. Public 
policy should allow small businesses to reorganize the way they 
produce goods and services to take into account changes in pref-
erences, logistics, and supply chains. This represents a different 
challenge than Congress addressed when creating PPP. With PPP 
set to expire soon, the need to address that challenge is urgent. 
Thank you. 
[The prepared statement of Mr. Strain follows:] 

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Chairman RUBIO. Thank you. 
Mr. Rudolph, thank you for being with us. I see you are on the 
screen. Thank you. You are on. 
STATEMENT OF NICK RUDOLPH, BALTIMORE REGIONAL 
DIRECTOR, MARYLAND CAPITAL ENTERPRISES, INC. 
Mr. RUDOLPH. Thank you very much. Thank you, Chairman 
Rubio, Ranking Member Cardin, and the distinguished members of 
the Committee for inviting me to testify. 
As said, my name is Nick Rudolph, and I am the Baltimore Re-
gional Director of Maryland Capital Enterprises, a small CDFI 
serving Maryland. We provide technical assistance, trainings, and 
access to capital for entrepreneurs in Maryland, and now thanks 
in part to Senator Cardin’s advocacy for additional Women’s Busi-
ness Centers, we are also an SBA Women’s Business Center, or 
WBC. 
I am here today to share the experiences of our small business 
clients during the COVID–19 pandemic and discuss ways future 
aid packages could provide the additional resources America’s 
smallest businesses need to survive. 
Unsurprisingly, we have seen an astounding increase in requests 
for services because of the pandemic. Increasingly, the clients are 
approaching us with greater despair and fear in their future sta-
bility. 
Since WBCs provide services specifically to women and other un-
derserved entrepreneurs, we have been able to ascertain what a 
typical client needs moving forward. 
In addition to securing emergency loans and grants, they are re-
questing funding to retrofit their stores for virus mitigation, rental 
assistance, and guidance or training on surviving in a post-COVID 
economy with a focus on opening and operating safely and re-
sources to provide health care to owners and employees. Our cli-
ents are resilient, and they clearly want and are willing to adapt, 
but they need support to do so. 
I think the experience of a woman-owned comic book shop in Bal-
timore is typical of many of our clients. The current owner of the 
store purchased the existing business in 2019 and spent a year ren-
ovating and building a client base. She has launched a successful 
popular summer camp gaming program, has nightly events, and 
has partnered with other local businesses. But when it became 
clear that nonessential businesses would be closed, she reached out 
for assistance, first for the PPP program where she realized she 
was not eligible because she did not have payroll. Hers is a true 
mom-and-pop shop. Her and her husband were lucky to be able to 
save, knowing that they would not be paying themselves in the 
first year as they expanded. 
So, instead, she decided to focus on the EIDL loan and grant pro-
gram. She applied in March and received confirmation that the ap-
plication was accepted and under review but heard nothing until 
mid-May when, thankfully, she received a $40,000 loan, but be-
cause she had no payroll, none of it was a grant portion. 
As soon as she heard about the approval, the closing process was 
almost immediate. She very much appreciates it. 

45 
While awaiting a decision, she was able to negotiate with her 
landlord for partially reduced rent for 3 months, but she will have 
to pay that difference eventually. She also worked with local offi-
cials to allow for contactless delivery of comic books so there would 
be some revenue during this time. However, she told me that she 
is working three times as many hours as usual for about a quarter 
of the revenue, and it is not sustainable financially, physically, or 
mentally. 
She was using some of her loan funds to help build out an online 
platform and expand her gaming business since that is what cus-
tomers are requesting, and she would be able to spend more, but 
she feels she needs to horde it because she fears that there is no 
more assistance coming. And she will have to pay back her current 
and back rent. 
When I asked her what microenterprises like hers needs to sur-
vive, she responded that rent relief is key because once she is able 
to reopen, she is expecting less revenue because of a possible slow-
down and the fact that people would just feel less comfortable shop-
ping in person. Her rent is soon returning to normal, and without 
additional assistance, her business will likely fail, leaving her job-
less and in debt. I think her story underscores the need for flexible 
and easily available resources for businesses with 10 or fewer em-
ployees. 
The EIDL program is particularly impactful for these businesses 
because it has low interest, long terms, eased credit requirements, 
and the fact that collateral is not required. 
In a perfect world, all approved applicants would receive the full 
grant portion regardless of number of employees, and additional 
products like EIDL will be key in the short-term success in the 
coming months as well as the next 3 to 5 years, as our small busi-
nesses continue to work to stabilize themselves and adapt to a 
post-COVID environment. 
These entrepreneurs are going to be hurt by a likely downturn. 
Their credit is going to be impacted, and lowering housing values 
may eliminate what collateral they have. 
Now, MCE is not a PPP lender, but we have worked with a num-
ber of PPP clients. Again, the PPP program is a great product, but 
understandably, there are some things that could be changed to 
make it more friendly to microentrepreneurs. 
It was very difficult to find banks that would service loans that 
the client did not have an existing lending relationship with the 
bank. Many of the businesses were afraid to apply in the first place 
because they were confused by the documentation needed for for-
giveness, and they were just not in a position to take on additional 
debt. There was great confusion about what was needed to apply 
and who was eligible, and they regularly expressed concerns about 
the time frame for spending the funds, fearing that they would not 
be able to open in time. 
In fact, two of our clients who were approved for the loans de-
cided to return the funds out of this fear. Perhaps out-of-the-box 
ideas like making the first $100,000 of any PPP loan or grant or 
accepting the signed assurances of compliance as proof of forgive-
ness for smaller borrowers might be some of these concerns. 

46 
It is very important that both PPP and EIDL products are avail-
able and continue to be available. Funding the Small Business Re-
lief Program that funnels funding to states is a key to ensuring all 
small businesses have access to the resources they require to re-
open because things are different in different states, and localized 
support is the way to get that to the businesses. 
Additionally, funding for technical assistance for CDFIs and 
other service providers will be critical to overcoming challenges be-
cause of an increased need for services from existing businesses 
and entrepreneurs who see a niche that they can fill. One thing 
that is an imperative to allow CDFIs to focus on our work with our 
clients is that we assume no additional servicing the loans from fu-
ture small business assistance packages because we expect a num-
ber of these will default due to a slowing economy. 
In conclusion, it is our small business entrepreneurs who will 
provide innovation, solutions, and what is necessary for all of us to 
succeed in a post-COVID economy and reality. We need you to pro-
vide us with the tools and guidance to support these businesses for 
this once-in-a-lifetime challenge. The hard truth is that there is no 
easy, perfect, or one-size-fits-all solutions, but one thing is for cer-
tain. It is going to be significantly expensive, but there is no way 
America can afford to lose the small business community that is so 
vital to our economy, local identities, and American way of life. 
The resources provided by the CARES Act and guidance, commu-
nication, and assistance from the SBA have been instrumental in 
allowing us to serve our clients at this time, and while the rollout 
has not been perfect, it is more than understandable because we 
needed to get those monies out on the street quickly, and full poli-
cies and procedures just could not have been created. 
We are grateful for the hard work that this Committee and the 
SBA is doing during this scary and confusing time, and we look for-
ward to working with you to solve these problems. 
I would like to thank you for this opportunity to share my experi-
ence, and I will do my best to answer the questions you have. 
Thank you. 
[The prepared statement of Mr. Rudolph follows:] 

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Chairman RUBIO. Thank you, and I am going to defer my open-
ing questions until the end. And I am going to defer them to Sen-
ator Scott because I know he needs to run. 
Senator Scott, are you there? 
[No response.] 
All right. He does not have his camera on. That probably means 
he is still wearing shorts. When my camera is not on, that is what 
it means. 
All right. Do we know if he is on? 
The CLERK. He has not turned on his video yet. 
Chairman RUBIO. Or his audio. All right. Well, then I will just 
turn it over to the Ranking Member, Senator Cardin. 
Senator CARDIN. Well, thank you, Mr. Chairman, and let me 
thank all of our witnesses for their testimony. I found it to be ex-
tremely helpful. 
Mr. Shamess, let me just comment about your creativity on the 
flag issue. That is exactly what small businesses do. They figure 
out a better way to deal with the realities, so congratulations on 
that. 
I also want to make the observation about why we support giving 
additional flexibility in regards to the current program, that is, 8 
weeks to 24 weeks and flexibility on the use of funds, because you 
raise a very valid point. And that is small businesses are very di-
verse. They have different needs, and we need to give that type of 
flexibility. 
But I would argue that there are many small businesses that 
cannot survive with just 8 weeks of help. You have small busi-
nesses whose revenues have been very much damaged, restaurants 
that depend upon in-service serving meals that cannot do that, ca-
tering establishments that have not been able to be open, enter-
tainment facilities that cannot operate, museums that cannot oper-
ate. 
So as we look at what comes next, I am interested on how we 
are going to be able to target it. So I want to ask Ms. Evans a ques-
tion, if I might. I will start with Ms. Evans, and that is, first of 
all, thank you for your testimony. Thank you for the list of areas 
that we could help expand in order to provide meaningful help to 
underserved communities. There are a lot of challenges that we 
have in our society, as we have seen play out during this past 
week, but for over a long period of time. If we are going to deal 
with the disparities of wealth, entrepreneurship is one of the key 
areas that we can really make advancement. So serving under-
served communities is particularly helpful. 
I noticed that you mentioned that the next round, we should look 
at smaller small businesses. Can you just tell me why if we target 
it to the smaller small businesses, it is a more effective way to get 
help to the underserved communities? 
Ms. EVANS. Thank you, Senator Cardin, for the question. 
We are recommending that you target the businesses that are 10 
employees or below because these are the businesses that, number 
one, were hit the hardest. They were also the businesses that are 
referenced in page 30 of the legislation. Most business owners that 
are Black, Brown, Native, women, all of that group of businesses, 
even rural, that you prioritize tend to be small business, the small-

51 
est of businesses, and so if we really are intentional about trying 
to prioritize the benefits to this segment of business owners, we 
really need to make sure that we have channeled the funds directly 
to businesses with 10 or fewer. They make up 96—over 90 percent 
of these businesses really are 10 employees or less, and so we think 
this is an important piece in, again, fulfilling what your intentions 
were originally in the CARES Act. 
Senator CARDIN. I thank you for that, which is a segue to Mr. 
Rudolph, if I might. When you were referring to the fact that the 
dollar amount of the EIDL loans at $1,000 per employees, which 
is not in the statute—that is how the SBA administered the origi-
nal grants under EIDL—and the fact that the business that you 
are referring to did not get their funds until mid-May, which is a 
long time to wait for the capital that you need, and then did not 
get any grant funds at all, I assume because of limitations per em-
ployee—they did not have employees—can you just comment as to 
what impact it has had that the EIDL program has not been more 
available and that they have limited the grant program to $1,000 
per worker? 
Mr. RUDOLPH. Absolutely. Thank you for the question. 
So to carry on with what Ms. Evans said, a lot of our smallest 
businesses and the businesses that need the most are 10 employees 
and less and often are sort of no employees. It is just mom and pop, 
and so that $10,000 of forgivable grant loan money would have 
given more businesses the confidence to apply because they would 
have this debt going on, and it would also sort of give them just 
more confidence moving forward that we were here to support 
them. Of course, they need the money to open and to pay their em-
ployees. 
As far as the difficulty getting grants and loans, really what it 
is is that a lot of people sort of put the applications out into the 
ether, did not really understand what was going on, and had al-
ready accepted other grants by the time they heard about their 
EIDL. And so they were not able to get those funds. 
Senator CARDIN. Thank you. 
Thank you, Mr. Chairman. 
Chairman RUBIO. Senator Young. 
Senator YOUNG. Thank you, Chairman. 
Clearly, the United States remains the global leader in so many 
fronts. We are facing the greatest economic challenge, however, cer-
tainly in my lifetime, arguably in many generations, and I am 
proud of how Congress responded in a bipartisan fashion, putting 
together this Paycheck Protection Program in short order. 
At the time of passage, we anticipated PPP to be a bridge to the 
back end of this current public health situation. We had all hoped 
that this would be a short-term economic challenge for the Nation, 
but we are discovering that this virus will be with us. And we are 
going to need continued attention to our businesses, our not-for- 
profits, and it is likely they will require some form of assistance for 
assessing exactly how to scope that assistance right now. 
We do know that sales remain low. As I travel around the State 
of Indiana, that is clearly the case. Consumer spending is way 
down in an economy that is built for better or for worse on con-
sumer spending, and as our various states continue their process 

52 
of reopening, we are going to have to consider some sorts of pro-
grams. 
I have put forward a solution that I think is viable, and I have 
received very positive feedback from boutiques, hardest-hit res-
taurants, gyms, and other such enterprises, many of which were 
not even able to open up during the 8-week period in which they 
were asked to deploy the Paycheck Protection monies for forgive-
ness. 
So I am glad we are holding this hearing. I am glad we are look-
ing at this. The RESTART Act in addition to extending the Pay-
check Protection Program time for deployment of funds, which I 
think there is broad bipartisan agreement needs to happen, would 
provide flexible loans, up to 6 months in duration, to pay for pay-
roll expenditures, ongoing fixed operating expenses, and it would 
be offered to profitable and not-for-profit businesses alike that em-
ploy 5,000 employees or less. 
Loan amounts would be based on gross revenue, and forgiveness 
would be based on revenue loss. So we would not have a situation 
where companies were taking advantage of these loans and they 
really did not need them. 
So I feel like what Senator Bennet and I put together is a re-
sponsible and responsive approach to the needs of our current busi-
nesses. We will have to see as we get more clarity in the coming 
month or so exactly what is needed, but I really hope my colleagues 
on both sides of the aisle will give strong consideration to this 
measure. 
Dr. Strain, in your testimony, you acknowledge the benefits of 
PPP but also the man unintended issues. Can you elaborate on the 
importance of expanding the PPP program, like my RESTART pro-
posal, and its benefit for a recovering economy? And then maybe 
speak to the need for flexibility with respect to covered expenses 
and how loan forgiveness should be calculated. 
Mr. STRAIN. I think we can clearly see the need to expand the 
PPP program. I think that has been clear for some time. 
If you look at how small businesses are doing, you still see a very 
large share that is still experiencing revenue decline every week, 
a large share that is still worse. The layoffs have not ended yet. 
That is still an ongoing process, and the demand is just not back 
up to where it was in February. We could come from a situation 
perhaps where a business was having 20 percent of normal revenue 
or having 60 percent of normal revenue. That is a dramatic im-
provement, but even 70 percent of normal revenue, most small 
businesses survive for any period of time. So the program, I think, 
clearly needed to be extended. 
There are many good features with what you described. Focusing 
on revenue makes a lot of sense, for example, as opposed to focus-
ing on payroll. It gives firms the flexibility to use the money as 
they best need it. That, I think, is critical at this juncture. 
Senator YOUNG. Thank you so much, Dr. Strain. 
I sense some choppiness in the presentation. That, of course, 
were technical challenges. I think you just affirmed the strength of 
the RESTART proposal, and so we will get that transcribed. 
And I will yield back to the Chairman. Thank you so much. 
Chairman RUBIO. Senator Cantwell. 

53 
We were doing seniority today because of the web, but if you 
want to defer the time to—— 
Senator CANTWELL. Oh. 
Chairman RUBIO. If not, you are on. 
Senator CANTWELL. Thank you, Mr. Chairman, and I thank all 
my colleagues here who have worked so hard on the Paycheck Pro-
tection Program. 
I just want to join the chorus on the expansion of the program 
because I think it is vital that we have a further expansion. We 
are hearing from businesses that the forgiveness period and the ex-
tension through December would give us the best flexibility. 
And I also so appreciate the changes to the program. I have 
heard a lot. Some of the witnesses were talking about this already 
this morning about having an existing banking relationship was 
helpful. 
I have heard from a lot of small businesses with the CDFI 
change that they were helping businesses that even had an exist-
ing banking relationship and still were shut out of the process. 
So I think the fact that we got more capital out in lots of dif-
ferent ways and that we have the CDFI community being more ag-
gressive in contacting businesses since we put money through that 
channel, I found some very, very interesting results there, and I 
think it is something that we should think about. It is just a lot 
of capital going out in a system, and I hope that next week when 
we have the Treasury Secretary and the SBA Administrator—is it 
next week, Mr. Chairman?—that we can ask them what is their in-
ventory of what the banking system actually put out because, 
again, I am just continuing to hear stories. I am talking well-estab-
lished businesses that definitely got left out of financing because 
their banks just did not participate, and so I think we have to keep 
moving on this. 
I wanted to ask Mr. Rudolph or Dr. Strain. The SBA decided that 
75 percent of the loan must go to the expenses, and we are looking 
for ways to increase flexibility. The recently House-passed bill low-
ered that to 60 percent, allowing 40 percent of the loan to be used 
for rent and other nonpayroll cost, giving people a little flexibility 
again. Depending on the structure of your small business and the 
expense of that, it can vary greatly. So I wanted to get people’s 
input about that, this particular reform to the system, either of the 
witnesses. 
Mr. RUDOLPH. Sure. On the ground for a few talks that we talked 
to, I think that moving it to 60 from 40 percent is great. I would 
think any business would say in an ideal world that they could 
spend it 100 percent one way or the other way, but I think 60 from 
40 is the right direction. This usually helps businesses like a res-
taurant that tends to have a large staff when they can actually be 
open inside, but now that so many of them are carry out and deliv-
ery and outside tables, they cannot bring on their whole staff. So 
having more money to help with their rent and costs like that is 
a very good thing. I am sure that all of them would like to see that 
continue. 
And, again, while I think 60 to 40 is great, you know they would 
be asking for more flexibility anytime they can. 

54 
Mr. STRAIN. Senator, I think that certainly is a step in the right 
direction. I would prefer to take it even lower than 60 percent. 
You know, the challenge that Congress confronted when creating 
the PPP program was to try to freeze the economy in place, create 
a bridge, as Senator Young said, to the other side of the economic 
shutdown, and then kind of turn the economy back on. 
I think that right now we are—and so that in that world made 
a lot of sense to require businesses to keep all their employees on 
payroll, and I fully supported that goal. At the time, it was the 
right goal. 
The world that I think we are in now is a different world. Con-
sumers’ preferences will have changed. People are likely not going 
to go to movie theaters for a while. They are going to want to 
stream movies into their home instead. People may want to have 
table service at restaurants less and takeout more. All sorts of 
things are going to be different over the next 6 months and over 
the next year and maybe even longer than that. 
Public policy should not serve to impede the process that busi-
nesses have to go through to figure out what does it mean to be 
a viable business in this new marketplace. Many businesses are 
going to decide that they need to shrink their payroll as a con-
sequence of the new marketplace. Policies should not hold them 
back from doing that. 
Of course, other sectors are going to need to expand their 
workforces like delivery sectors and transportation and other sec-
tors of the economy. So that process really needs to take place. At 
the same time, Congress needs to continue giving support to these 
businesses, and so one way to do that is to just make the use of 
being flexible. Then either 75 percent or 60 percent is helpful. 
Senator CANTWELL. Thank you, Mr. Chairman. 
I would just clarify that I am sure Treasury in the beginning 
though this would cover the businesses, and the key thing was to 
make the pledge to carry the employees. But if you are borrowing 
and then looking for loan forgiveness and you are off 10 percent be-
cause rent is more expensive than what you calculated or utilities 
cost or what have you, then you are not going to take the loan. So 
then you have lost the whole opportunity. 
So I am for more flexibility. I do not know that you would give— 
I think we should engage with Treasury on this. I think more flexi-
bility is good. 
Thank you, Mr. Chairman. 
Chairman RUBIO. Thank you. 
Senator Ernst. 
Senator ERNST. Thank you, Mr. Chair, and thanks to our wit-
nesses as well for being here today. We have heard from the wit-
nesses about the bumps along the way with the Paycheck Protec-
tion Program, but overall, I think it has been a resounding success, 
at least for Iowa businesses and their workers. We have been able 
to save thousands of jobs through that program. 
According to a Census Bureau survey that was done in mid-May, 
77 percent of Iowa small businesses had applied for PPP, and 76 
of them actually received PPP. So, again, it was a success, at least 
in Iowa. 

55 
However, with some of those bumps as described, we have heard 
from some of those Iowa businesses, including just as Senator 
Cardin had pointed out, restaurants, those event venues, hotels. 
They will need more than 8 weeks of the PPP loan to actually 
make it through this. 
For example, my office did hear from an Iowa sportswear busi-
ness that creates apparel for pro sports teams to sell at their var-
ious venues at the ball parks, the arenas, but they have seen a 96 
percent decline in their revenue. And they have been able to keep 
their 27 employees on payroll because of the PPP, but the 8-week 
period expires this week. And they will now be forced to furlough 
those 27 folks. 
So additional time and flexibility, I think many of us agree that 
those businesses who have received the PPP, they may need addi-
tional flexibility. There are many more that still may need addi-
tional assistance in the future. There are gaps that we have to 
close up, and I think it is important that we are talking about it 
today to make sure these distressed businesses can survive and re-
tain their employees. 
So we understand the issues with PPP. We are glad it is there. 
There are some corrections to be made. I think we can do that. 
I would like to discuss EIDL a little bit as well because we have 
pointed out there are issues there too. Mr. Strain, I will direct this 
to you. In your testimony, you cited research showing that 50 per-
cent of small businesses have fewer than 15 days of cash liquidity, 
and only 40 percent have more than 3 weeks of a cash buffer. So 
this shows how important it is that we get assistance to small busi-
nesses as quickly as possible. 
So the PPP has been effective in that regard, but the Main Street 
Lending Program and the Emergency Injury Disaster Loan have 
not. I have heard from many Iowa small business owners that sub-
mitted EIDL applications over 2 months ago, and they still have 
not heard anything back from SBA. 
So could you maybe discuss the implications of these delays for 
those small businesses, in particular, with EIDL and Main Street 
Lending? 
Mr. STRAIN. Thank you, Senator. It is a real concern. I think 
delays in processing these applications and getting these programs 
online are putting hardships on businesses. 
As you said, businesses can cover some period of time without 
revenue or without normal revenue, but really that period of time 
for most businesses is measured in weeks and not in months. It 
has taken 2 months for the Main Street program to get online. 
There are serious problems with getting EIDL applications passed. 
Businesses do not have zero revenue. They are receiving some rev-
enue or at least most of them are, and the amount of revenue they 
are receiving each week seems to be going up, at least according 
to some new Census Bureau survey results. 
They can hold on for a month or two or three or something like 
that, but at some point, they are going to need to lay off all their 
workers. And at some point, something even more severe could 
happen to these businesses. They really could go out of business if 
they cannot fill that revenue hole. So it really is imperative that 

56 
these programs be administered correctly and get online as quickly 
as possible. 
With respect to the Main Street program, that is a Fed lending 
facility, but under the law, the parameters of that program have 
to be approved by the Treasury Department. And I have serious 
concerns that the parameters that the Treasury Department has 
put in place will lead to no one using the program. There will not 
be borrowers or lenders. 
Under Treasury’s parameters, lenders have to apply normal cred-
it standards—or they are incentivized to apply normal credit stand-
ards for loans through this facility because they have to hold be-
tween 5 and 15 percent of any loan that they make. Why would a 
bank participate in this facility if it has to apply or it is encouraged 
to apply normal lending standards? 
The same thing goes with borrowers. Which borrower could get 
a loan through a program for a commercial loan? I think this has 
to be looked at pretty seriously if the program is going to succeed, 
and I think it is not off to a good start. 
Senator ERNST. Thank you very much. I appreciate the comment. 
And, Mr. Shamess, I wanted to acknowledge something that you 
said that really resonated with me, and that is businesses need to 
be innovative as they move forward. Innovation will be the key to 
our success. We cannot simply exist the way that we have in the 
past, but we need to utilize innovation. We are an innovation na-
tion, and our businesses can also find creative ways to move 
through. So thank you for mentioning that. I really do appreciate 
it. 
And thank you, Mr. Chair. I appreciate your time. 
Chairman RUBIO. Thank you. 
All right. Senator Shaheen. 
Senator SHAHEEN. Well, thank you, Mr. Chairman and Ranking 
Member Cardin. Thank you for holding this hearing today and for 
all of the work to address helping our small businesses. 
I have to say, though, that while I am appreciative that we are 
going to hear from Secretary Mnuchin and SBA Administrator 
Carranza next week, I am disappointed it has taken them so long 
to come before this Committee. 
We are looking at a third iteration of these small business pro-
grams, as you point out, over $500 billion that has gone out, and 
yet we are still struggling to get data from the Small Business Ad-
ministration, from the Treasury Secretary, as we are thinking 
about the changes that we need to make. 
We have heard from our witnesses today, and I very much appre-
ciate your being here and your testimony. 
We have heard some of the challenges, and we have certainly 
heard in our office some of the challenges that our small businesses 
in New Hampshire have faced, but we do not have the data to back 
up what should really be guiding the policy as we move forward. 
That is why we need to hear from the Administrator and from the 
Treasury Secretary, and I hope when they come next week, they 
will bring with them a lot of the data that we need as we are look-
ing at what kinds of additional changes we should make to the pro-
gram. 

57 
I think we all agree that we need to change the 8-week period, 
that we need to provide more flexibility in the 75/25 ratio, which 
was not there to start with. Actually, that was imposed outside of 
the legislation, and that we need to look at the payback period. 
In New Hampshire, we have had over 22,000 businesses receive 
over $2.5 billion, and for many of them, it has been critical in stay-
ing afloat. 
Now, sadly, as in other places, we have a number of businesses 
who are about to run out of their PPP money. They applied early. 
They were successful. They played by the rules, and come next 
week, they are going to run out of those dollars. So I am really 
pleased to hear all of the people on the Committee talking about 
the need to extend the program or provide some additional help for 
those businesses that are going to run out of funding. 
Ms. Evans, I guess my first question is really for you. You talked 
about the importance of small businesses, under 10 employees, and 
obviously, that is a critical issue for us in New Hampshire where 
we have so many very small businesses. But we also have a num-
ber of businesses in the tourism and hospitality industry who were 
the first to close their doors and are still, many of them—in fact, 
most of them still have their doors closed because we are still 
under a stay-at-home order in New Hampshire for most of our 
businesses. 
So the question that I have is as we are thinking about how we 
extend funding to help the smallest of businesses who have been 
hurt, should we not also look at some of those industries that have 
been hardest hit, the hospitality industry, restaurants, tourism, 
where they are going to run out of money next week, they are going 
to be forced to lay off those employees that they have kept on the 
payroll, and they are going to be out of luck unless we do some-
thing in the next several weeks? So can you speak to the balancing 
between number of employees and the industry that people are in? 
Ms. EVANS. Certainly. Thank you, Senator, for your question. 
I think we can look at policies and regulations that do both. 
What we found is that oftentimes, the businesses—for example, 
Black-owned businesses represent about 40 percent of the hardest- 
hit industries in this pandemic. So I think we are talking about 
moving forward with the flexibility and thinking about industries 
and still being able to target the individual business owners that 
are across the industries that you mentioned. 
Part of what AEO has done, for example, is our research is a re-
port called ‘‘The Tapestry of Black Business Ownership’’ in this 
country, and when we look at the industries, the 2.5 million, 2.6 
million Black-owned businesses across America, you will see that 
there is a tracking in terms of the same industries that you just 
mentioned, transportation, entertainment which includes res-
taurants and food businesses. Again, those are the industries, as 
you have mentioned, that have been the hardest hit, and again, 
they represent about 40 percent of Black-owned businesses, and 
their venue, of course, is going down drastically. 
So I think you will find that we can do both by still targeting 
those small businesses that are hardest hit, and they too will be 
represented in the businesses that are across industries that are 
also being hit the hardest. 

58 
Senator SHAHEEN. Thank you. 
In New Hampshire, we have a very small minority community, 
however, and so targeting a specific amount of funds at that minor-
ity community misses a lot of other businesses that would not be 
able to apply. 
Again, I think we have got to look at a balance as we are think-
ing about what we are doing, and I appreciate your comment. 
Thank you. 
Chairman RUBIO. Thank you. 
Senator Hawley would be next. I am not sure he is on yet, al-
though he has dialed in. He is still on mute. 
All right. So we are going to go to Senator Duckworth. Again, we 
are going by seniority. So people are popping in as their turn comes 
up. There you go. 
Senator DUCKWORTH. Hello, Mr. Chairman, I am here. 
Chairman RUBIO. You are on. 
Senator DUCKWORTH. All right. Wonderful. Thank you so much, 
Mr. Chairman. I want to begin by thanking you and Ranking Mem-
ber Cardin and Senators Coons and Risch for their support in pass-
ing my Small Business Lending Continuity Act of 2020 through the 
Senate a couple weeks ago. 
I understand that our legislative language was included in the 
larger House package that unfortunately failed to garner the nec-
essary two-thirds support to pass under a suspension. As the Sen-
ate and House work to negotiate a solution to enhance trans-
parency in the Paycheck Protection Program, my hope is that we 
can convince the House to swiftly pass a bipartisan Senate bill that 
eliminates any threat of SBA 7(a) loan guarantee program shutting 
down. It is vital that we provide the small business community 
with confidence and certainty that SBA’s flagship loan program, 
guarantee program will continue to operate independent of the PPP 
funding levels. 
My first question is for Ms. Evans. I first want to say that it is 
so wonderful to see a fellow Illinoisan at our Committee hearing 
today. I hope you and your family have been staying safe and 
healthy during this time. 
I know that AEO has been a strong supporter of my Microloan 
Program Enhancement Act of 2019, and several provisions of that 
legislation have now been included in the HEROES Act, which the 
House of Representatives passed last month. 
Ms. Evans, can you discuss how critical it is for us to expand 
SBA’s microloan program now more than ever? Particularly, how 
would repealing the 1/55th rule, increasing technical assistance 
dollars, raising lending authority to intermediaries, and providing 
an overall increase in funding with the program better help small 
businesses survive the economic downturn caused by this pan-
demic? 
Ms. EVANS. Thank you, Senator Duckworth, and thank you for 
asking about my family. As an Illinoisan, I am very proud to be 
here, and we are doing fine. Thank you so much for your question 
as well and your leadership and introducing the legislation that 
would strengthen the microloan program. 
Fixing the program and its challenges including liquidity ad-
dressed by the 1/55th rule and under statutes as well as providing 

59 
increased technical assistance funding to go along with the loans 
will help in this crisis because microloan intermediaries are trusted 
sources of information and capital in communities that are really 
struggling at this time. 
This program far outpaces the others in minority- and women- 
owned engagement and participation, and it should be maximized 
as a tool to be used now during this crisis that we find ourselves 
in to really help these communities. So we encourage you and real-
ly appreciate moving forward with that legislation. 
Senator DUCKWORTH. Thank you. 
Last month, Senator Markey and I introduced legislation that 
would increase PPP funding by $10 billion and set those funds 
aside for community development financial institutions and minor-
ity depository institutions. I was really pleased to see that a few 
weeks ago, SBA and Treasury set aside additional funding solely 
for CDFIs, a positive step in the right direction. 
However, more must be done to make PPP more accessible, par-
ticularly to businesses seeking small-dollar loans. That is why I am 
leading a letter to Administrator Carranza and Secretary Mnuchin 
asking them to create a streamlined loan forgiveness certification 
for borrowers with loans of $100,000 or less and to create reason-
able safe harbors for those borrowers. 
Mr. Rudolph, can you explain how such actions would be helpful 
to these borrowers, and what Congress, SBA, and Treasury could 
do to make PPP work better for small-dollar borrowers, especially 
minority-owned small businesses? 
Mr. RUDOLPH. Absolutely. Thank you for the great question. 
Generally speaking, I would say a streamlined or even forgive-
ness for our small businesses, which are often women- and minor-
ity-owned businesses, would give them the security and the help 
that they need to survive with a PPP loan. 
The truth is that since they are so small, their bookkeeping is 
often, you know, pencil and paper or maybe just a spreadsheet, and 
if they cannot turn in one—that they would be on the hook for 
their entire loan. So I think streamlining it, doing things like that, 
would be absolutely great. 
For other ways I think we can help, I think, as I said, an ex-
panded EIDL, disaster loan, or similar program for 3 to 5 years 
after the pandemic subsides is going to be very much needed. 
There is going to be limited credit, limited capital out there, and 
our folks are going to be hurt the most by this. These small busi-
nesses already—their owners do not have—so having a product for 
them is helping small businesses succeed. 
And then one more small thing that I think is going to be helpful 
for restaurants and our retail and our sort of movie theater estab-
lishments is—they are already hurting. They cannot afford to ret-
rofit their business to be safe in a post-COVID economy, and grants 
directly to have them retrofit their businesses would help them 
open earlier and get that revenue flowing. 
Thank you. 
Senator DUCKWORTH. Thank you so much. 
I yield back, Mr. Chairman. 
Chairman RUBIO. Thank you. 
Senator Hawley, are you ready? 

60 
The CLERK. No, he is not ready. 
Chairman RUBIO. Still not ready? Okay. Then we will go to Sen-
ator Hirono. 
Senator HIRONO. Thank you, Mr. Chairman. 
I have a number of questions for Ms. Evans. Ms. Evans, in your 
testimony, you discuss the challenges faced by businesses in under-
served communities, particularly minority-owned businesses in 
these communities. Can you elaborate on the challenges these busi-
nesses face in accessing programs like PPP? What changes should 
we consider to address these challenges, and how can we better 
support underserved businesses? A two-part question. 
Ms. EVANS. Yes. Thank you, Senator, for the question. 
I think what we have seen in terms of the challenges, many of 
the—using the banking system, the traditional banking system 
originally as the distribution channel was a big challenge because 
those relationships just did not exist in many cases and in most 
cases for these smallest of businesses. 
So one of the solutions that you have alluded to—and we are urg-
ing that they be increased—is making sure that all CDFIs and mis-
sion-focused entities are prioritized for lending through the PPP 
program. 
Another challenge that we also noted was that the first-come sit-
uation, that businesses were locked out of. These smallest busi-
nesses were just locked out of, and so, again, we need to be able, 
as AEO is recommending, to target the smallest of businesses, tar-
get and dedicate businesses with 10 or fewer employees so that 
they are able not only to eventually get in line but to be the line 
and be in front of that line. 
And then the third challenge, I think, many of the businesses 
faced was just having clear information. Again, they did not have 
the information. They did not have a trusted entity to go to, and 
so by now working through CDFIs, by now making sure that the 
smallest of these businesses get in the line and are first and only 
in the line, I think, will go far in addressing the challenges that 
we saw many of these small businesses face. 
Senator HIRONO. Ms. Evans, have we done enough to ensure that 
CDFIs have the money that they can get a loan to the small busi-
nesses? Have we done enough, or is that still something we need 
to address in the next COVID bill? 
Ms. EVANS. Yes. It is definitely something you still need to ad-
dress. 
We are grateful that there was a priority of CDFIs, but one of 
the recommendations from AEO and our Page 30 Coalition is to 
deal with the appropriation of $1 billion to CDFIs. They need this 
money, and again, many of the CDFIs are also participating as 
microloan intermediaries. So increasing technical assistance, many 
of the businesses need both. They need the lending, but they also 
need technical assistance and trusted guidance, which also can 
come from CDFIs and other mission-focused toward nonprofit orga-
nizations. 
I think also, lastly, that extension and the flexibility of guaran-
tees to the CDFIs that actually make loans in low-income commu-
nities, making sure that all of those loans have guarantees are also 
necessary. 

61 
Senator HIRONO. Ms. Evans, I am glad you mentioned the need 
for technical assistance for the smaller businesses because what 
happens is that without that kind of assistance, they really do not 
have as much of a wherewithal to access the loan programs and 
the EIDL programs, any of the programs. 
So should we have set aside some money for technical assistance 
to be provided to the small businesses that you are referring to? 
Ms. EVANS. Yes. Definitely, Senator, we need a set-aside for in-
creased technical assistance. 
As you just mentioned, they desperately need this help as they 
are trying to pivot and deal with their own business plans, how 
they are trying to make all the changes to be able to open and re-
open and stay in business. They really need mentors and technical 
assistance, and so the increase in that in this program even would 
be greatly appreciated and necessary. 
Senator HIRONO. Mr. Chairman, do I have time for another ques-
tion? 
Chairman RUBIO. Yes, go ahead. 
Senator HIRONO. I cannot tell. 
Chairman RUBIO. Yes. 
Senator HIRONO. So in addition to the technical assistance, which 
I think is really important, otherwise these businesses are really 
behind the line, especially in a first-come-first-serve situation. 
Should there be, Ms. Evans, some sort of ombudsman or some-
body who can help them navigate the kind of complexities that we 
understand SBA and Treasury has put out for PPP loans? 
Ms. EVANS. Yes. We actually support very strongly the setup that 
Senator Cardin and others have recommended that we have a new 
office for emerging businesses within the program. We think that 
will actually be very helpful in ensuring that these businesses actu-
ally have access to the services and resources they need, since they 
are truly the hardest hit. So such a program, we are very much in 
favor for. 
Senator HIRONO. Thank you, Ms. Evans. 
Thank you, Mr. Chairman. 
Ms. EVANS. Thank you. 
Senator HIRONO. You bet. 
Chairman RUBIO. Thank you. 
Senator Booker, are you on? 
The CLERK. He left. 
Chairman RUBIO. He left us. All right. Senator Rosen not on 
and—— 
Senator ROSEN. Oh, I am on. 
Chairman RUBIO. You, you are? There you go. Okay. 
Senator ROSEN. I am here. Thank you. Thank you, Mr. Chair-
man, for holding this, and Ranking Member Cardin, and I want to 
thank all of the guests for being here today. 
I want to talk a little bit about EIDL reform. Over the past few 
months, of course, the coronavirus pandemic has devastated small 
businesses like you have heard and you know across the country, 
putting millions out of work. In Nevada—I keep saying this over 
and over again—on top of a list that we do not want to be number 
one of. The unemployment rate is highest in the Nation at over 28 

62 
percent. Las Vegas proper is even over that, I think, over 30 per-
cent. 
Given that more than 99 percent of our businesses in Nevada are 
small businesses, it is abundantly clear that the steep unemploy-
ment rate is a reflection of the overall impact the pandemic has 
had on small business in our state. 
My office has directly helped more than 500 of these small busi-
nesses with their questions about the CARES Act, PPP, and EIDL, 
but one common complaint we have repeatedly received from small 
business owners has been about the SBA’s arbitrary $1,000 per em-
ployee have on EIDL advance grants and its $150,000 cap on EIDL 
loans. 
As I am sure Chairman Rubio can attest, these limits were not 
Congress’ intent when we passed the CARES Act. They were not 
part of any deal for many small business owners when they applied 
for EIDL support, and that is why I have been working with Sen-
ator Cornyn and others to try to get SBA to abandon this mis-
guided policy and why I have raised this issue with both SBA Ad-
ministrator Carranza and Secretary Mnuchin in the past. 
Mr. Strain, I was interested in your written testimony when you 
acknowledged that reviving our small businesses may not be as 
simple as, of course, just turning on a switch. 
My home State of Nevada relies heavily on travel and tourism, 
and turning on the switch alone does not reopen our economy. It 
does not bring visitors back to Nevada, and so, of course, Mr. 
Strain, I am going to ask you first but then to everyone on the 
panel. For our small businesses, how are these arbitrary caps, the 
$1,000 per employee, the maximum of $150,000—how do we face 
an economy that is not yet ready for our small businesses? What 
can we do to support them? 
I will ask Mr. Strain to go first and Mr. Rudolph, Ms. Evans, and 
Mr. Shamess, please. 
Mr. STRAIN. Thank you for the question. I agree it is an impor-
tant consideration. 
I think what is really needed is flexibility on the part of Congress 
to adapt public policy to the needs of the moment. Many of these 
programs are legacy programs whose parameters as of February no 
longer make sense here in June. Some of the programs like PPP 
are great programs, but even there, the economy is changing so 
rapidly. What made sense in mid-March needs to be altered in 
June, even though it has only been a couple of months. 
So I think Congress has shown really remarkable, I think, flexi-
bility and creativity in dealing with this crisis. I give Congress very 
high marks for the CARES Act and for the measures that Congress 
has taken to address the pandemic. 
What I would urge is Congress to be very cognizant of the fact 
that this is not over, even though we are reopening and even 
though we are likely to have a very strong summer of economic 
growth. Businesses will need support from Congress and from pub-
lic policy for months and months and months to come, and Con-
gress is going to have to be nimble and flexible with the param-
eters of those programs. 
Senator ROSEN. Thank you. 
Mr. Rudolph. 

63 
Mr. RUDOLPH. Thank you. I do think it is a great question, and 
going back to what was said about technical assistance, how we do 
our work and we help businesses survive and thrive is by not just 
giving them money and holding them through preloan and 
postloan. How we do that is by building trust with our businesses. 
When EIDL came out, everybody was excited about the fact that 
they were going to get a $10,000 grant on top of the first portion 
of their loan through that project, and then many of them found 
that they either got just a thousand dollars per employee or be-
cause the way their business was set up, they did not get any grant 
at all. 
Ultimately, they were able to still work with us and were happy 
to get the loan. The little things like that promote trust between 
a business and a service provider, and so if we had known ahead 
of time how that was going to work and we were not telling folks 
that they were going to get $10,000 as a grant, I think that might 
have mitigated that concern. 
As far as the $150,000 cap goes, I can see where that will be a 
major problem for sort of a little bit larger small business. Mary-
land Capital Enterprises works with businesses that have 10 and 
less employees, and our maximum loans generally are about 
$50,000. So that has impacted our clients, but just anecdotally 
across the state, especially with sort of larger manufacturing or 
larger farm-type businesses, the ability to borrow more through 
this EIDL program would definitely be a great help. 
Senator ROSEN. Thank you. 
I believe my time is up, but I appreciate you mentioning trust. 
And, of course, our businesses need predictability to thrive. So 
thank you. 
Chairman RUBIO. Senator Booker, are you ready? 
Senator BOOKER. I am ready if you can hear me. 
Chairman RUBIO. We can hear you. 
Senator BOOKER. I really appreciate that. Thanks so much. 
I want to first just start off by saying I am excited. We have done 
a lot of good work on this Committee, and I am grateful for the 
folks that are involved. 
We have had 4.5 million PPP loans that have literally put out 
over half a trillion dollars, and the New Jersey data is solid. I 
mean, we have seen New Jersey, the SBA has processed 131,000 
loans that has helped literally so many of our businesses, so many 
of our communities that rely on those businesses, so many jobs that 
rely on that, to the tune of $16.8 million in our state. So I am 
happy about that. 
But there is a particular problem that concerns me, which is Fed-
eral assistance has provided relief to a lot of businesses, but just 
again, disproportionately, our smallest businesses are being left 
out. And they are being left out because they still do not have rela-
tionships to institutions that can get them that capital, and often 
that is being left out from banks and more. 
So I am excited about the potential to do another sort of COVID 
emergency package that could help level the playing field, level the 
access, and help a lot of these critical businesses that are core pil-
lars of our entire towns and communities. 

64 
I have talked to mayors across the State of New Jersey who just 
tell me painful stories about what happened if on their Main 
Streets, you had a store close up, board up, and the challenges that 
that would have. 
So I am excited that there is a bipartisan proposal that I have 
been working on with Senator Daines to help fill the gap by scaling 
up relief funds that have emerged across this country that are tar-
geting those very small businesses, and we are excited because 
those businesses are located in low-income areas or rural areas to 
poor urban areas and really could be the bridge to help make sure 
that there is a lot more equity in these programs. 
And the local relief programs that are out there are just doing 
great. The data, for example, on the EDA in New Jersey, the New 
Jersey ESA, is incredible. In April, they made grants available to 
the smallest businesses, 10 employees or less, was five times over-
subscribed for the state-run program within 75 minutes. That is 
what the demand was. 
From Indianapolis to Miami, which I know our Chairman knows 
a lot about, Chicago, we are seeing the same thing. These ground- 
up solutions are getting it done for small businesses, but they are 
way oversubscribed and way overfunded. And that is why our RE-
LIEF for Main Street Act, which would put $50 billion to provide 
direct assistance to these funds, to scale them up and to seed them, 
the funding would trust local leaders and community organizations 
that are connected to these businesses. 
So I just would like to ask for the panel—you know, there are 
a lot of fixes to PPP that are being proposed, changing the 75/25 
rule, extending the forgiveness period, and my question for the 
panel, very simply, is, is the program that I am describing to you 
for a lot of the underbanked communities, a lot of minority busi-
nesses that are underbanked, who are just distrustful even of the 
main banking systems—is this not a great way to get the flexible 
funding more directly to small businesses that are out there to help 
ultimately when we look back on this as a Committee 5 years from 
now, it will show a much more equitable distribution, especially to 
the smallest businesses in America? Anybody on the panel can pick 
that up. 
Mr. STRAIN. Senator Booker, I think you are highlighting a really 
important issue. 
I would just briefly comment that when Congress passed the 
Paycheck Protection Program, it explicitly included language to 
hold lenders harmless in the event that borrowers misrepresented 
themselves on their applications, and it really viewed banks as a 
conduit to get money into the hands of small businesses. That was 
clearly the intent. 
Banks are very skittish after some of the things that happened 
with FHA and the financial crisis, and banks needed a lot of reas-
surance that they would actually be held harmless, and that the 
spirit of the statute would be executed by the Treasury Department 
and by the executive branch. 
I do not think the Treasury Department did enough when imple-
menting PPE to make banks feel comfortable that they would, in 
fact, be held harmless. There was some sort of misrepresentation 
or something like that, and what that did was it led banks to focus 

65 
lending on existing customers. And as you say, that left out many 
of the most vulnerable small businesses. I think that is something 
that Congress should take very seriously when considering reau-
thorizing the program or modifying the program. I think that is 
one of the most important parts of this. 
And I think PPP got it right. I just think the administration’s 
implementation of it did not succeed as well as it should have. 
Senator BOOKER. I appreciate that, and that is, again, what Sen-
ator Daines and I are really trying to get at here in these sort of 
local-level platforms which are designed specifically to help smaller 
businesses in states and cities across America and rural areas as 
something that I am really excited about as promising. 
Being I know that our Chairman runs a tight ship and I have 
no clock in front of me, I am going to try to just tread upon his 
grace and his goodwill, his kindness, and try to force one more 
question in there and hope that that buttering up actually worked. 
I am concerned, as we see right now, about challenges we have 
with racial justice in America, and a lot of these challenges in 
America are being exposed by the coronavirus, being exposed by a 
lot of protestors lay bare as we see the greater struggle for just 
equality of opportunity in America. 
We know that Black Americans entered this crisis financially 
vulnerable prior to the pandemic. We knew that a White family in 
America was likely to have $10 for every $1 a Black family has. 
A study in Boston found that the average White family had a net 
worth of about $250,000 compared to $8 for a Black family. 
One of the truths about America is entrepreneurship is a way to 
close the racial wealth gap, and we know that, unfortunately, 
COVID–19 has savaged communities of color. And that has been 
another impact upon minority entrepreneurs and minority busi-
nesses, one of the primary ways, again, that people of color gain 
wealth. 
So minority businesses are just proportionately in the industries 
most affected by COVID–19, accommodation and food services, per-
sonal laundry, retail, and according to a recent Color of Change 
and Unidos survey, among the minority-owned businesses who 
were still open and operating, nearly half of them expect to close 
within the next 6 months if conditions do not change, another rea-
son why what Senator Daines and I are working on is so impor-
tant. 
As Congress considers what to do next, it is hard not to overstate 
the stakes for these businesses that might close in the next 6 
months if we do not act boldly with a focus affirmatively in support 
of very small minority-owned businesses. We could see Black Amer-
ica, Latino America being set back decades as well as urban cores 
and rural Main Streets really going back to being vacant and 
blighted, where they are just hurting already and seeing chal-
lenges. 
So my question to Dr. Strain or anybody on the entire panel, 
frankly, is I joined Senator Cardin to release a proposal aimed at 
preventing underserved and underbanked businesses from falling 
further behind in the COVID crisis. 

66 
I just want to say I believe we must devote the same attention 
to investment and to supporting new businesses, new entre-
preneurs as well. 
Is that something that you guys agree with that as we emerge 
from this economic and public health crisis, we actually have an 
opportunity to build a new economy? That means that this is a crit-
ical time to create opportunities for new business starts, especially 
for underserved entrepreneurs. Is that something you would agree 
with? And anybody can answer that. I do not want to contain it to 
just one. 
Ms. EVANS. This is Connie Evans, Senator Booker. 
AEO really does support exactly what you are speaking to. 
I think the Daines and Booker proposal is one that is based on 
equity as well as the Cardin-Booker Equity in COVID–19 Recovery 
white paper that called for things like making permanent the Com-
munity Advantage Loan Program and other features in that white 
paper that we strongly, strongly support. 
But in my oral comments, remarks earlier, we also pointed out 
through the Page 30 Coalition that we are strongly recommending 
the focus and intention on programs that reach rural, women, vet-
erans, and other low-income and minority communities, where I 
think you will see these startups coming from. 
As you know, entrepreneurs are amazingly resilient. A res-
taurant may close and not be able to keep going, but that entre-
preneur may keep going. They are resilient and may try something 
new. So being able to have resources, capital and other resources, 
where they can get started and they can move to their second or 
their third business is also very important for them. The capital 
and the other resources to do that is something that we definitely 
will support, particularly again focus on those businesses that have 
10 or—1 or 2 employees, 10 or less employees. This is where we 
think you are going to find that innovation and that ability to be 
a resilient business owner, even though they might move to a dif-
ferent business and start up again. 
Senator BOOKER. So let me just say in closing, there is no doubt 
the spirit of the statute is right on that we are sort of advancing 
around here, but it is the implementation I know that you are con-
cerned about. And that is why I believe strongly we need new 
channels of capital distribution in states and localities to begin to 
balance these scales in an important way. 
So I am grateful for your testimony. I am grateful for the panel 
as a whole and really grateful, Mr. Chairman, for the bipartisan 
work we see in trying to address these issues. All of America is 
stronger when we have entrepreneurs from all backgrounds and all 
communities, from rural to urban. There is strength and power in 
America when we can stimulate entrepreneurialism, especially in 
disadvantaged communities that are often left out of the capital 
equation of opportunity. 
So thank you, everybody. 
Chairman RUBIO. Thank you, Senator Booker. You have got to 
back up off that camera. Your face is this big. 
[Laughter.] 

67 
Senator BOOKER. I think you heard this, Mr. Chairman, but I am 
what they call a ‘‘40-footer.’’ I look at a lot better from 40-feet 
away. 
[Laughter.] 
Chairman RUBIO. Me too. We are all 40 feet apart these days. 
All right. Thank you. 
We have one more Senator. Senator Inhofe has joined us. Sen-
ator Inhofe, you are recognized. 
Senator INHOFE. Well, thank you very much, Mr. Chairman, and 
I will be brief. 
I have become a real fan of this PPP program. It has been very 
successful. 
Mr. Shamess, it is nice that I can talk to someone who is live 
and in here. I appreciate that. I want to thank you for your service 
to our country and to the economy. Expanding a two-person oper-
ation to a national manufacturing company is no small feat, and 
I greatly appreciate your work. Your testimony highlights the bene-
fits of the PPP loan provided to your business and employees. 
Similarly, in my State of Oklahoma, in the town of Owasso, lo-
cated just north of Tulsa, the Owasso Auto Care was able to receive 
this SBA loan and keep their four employees on the payroll. It was 
already doomed, they thought, at that time, and while these two 
operations may vary in size and mission, you both have one thing 
in common. And that is the success from this program. 
So I would say that—can you discuss some of the ways your busi-
ness was able to utilize this program and the fact that large and 
small businesses can use it and what you envision as the next step 
for businesses like yours and our Owasso Auto Care operation? 
Mr. SHAMESS. Thank you, Senator, for the question. 
I will make one opening comment. I had the pleasure of serving 
in the Air Force in your state at Vance Air Force Base under the 
71st Flying Training Wing. That was a great privilege. I am a big 
fan of Oklahoma, an amazing State. 
Senator INHOFE. What year were you there? 
Mr. SHAMESS. I was there from 2004 through 2009. 
Senator INHOFE. I have every reason to believe that you and I 
met around the 2005 time frame. 
Mr. SHAMESS. Yes, sir. 
Senator INHOFE. I chair the Armed Services Committee, the Sen-
ate Armed Services Committee, and at that time, I was not chair-
man. But I was very, very active in it. We had done a great job 
at Vance. I do not know whether you have seen some of the things 
recently that they have been doing, but it is a real success story. 
Mr. SHAMESS. Yes, sir. 
So to answer your question, I think there is a hybrid approach 
that is necessary here. I feel like we have to be somewhat careful 
about the level of funding that is available now or may be available 
in the future. 
When we entered the COVID pandemic in early March, our posi-
tion was there is no help coming. We have to figure this out, and 
we are blessed to have an incredible team that is very, very de-
voted to that. So everything that came later with the Paycheck Pro-
tection Program and the other assistance that is being offered was 
fantastic. 

68 
But there is still a burden on small businesses to lead, to lead 
the organizations, and to take care of their people. It is not some-
thing that can be solved with a limitless number of dollars or pro-
grams. We have a responsibility. I have a responsibility to care for 
my employees and to innovate and to find ways to be successful in 
an economy that none of us has ever experienced before. 
There is still economic activity taking place. It is growing, and 
I can validate that inside our organization. And I hope that the 
business you are referencing is starting to feel that as well. 
So what I would say as a challenge to all of us small business 
owners is be as disciplined as we possibly can, take care of our peo-
ple, and start finding ways that we can function as best as possible 
in this environment. And then anything that comes from this 
panel, from this Committee, form the Federal Government is only 
going to give us that greater durability, that bridge that we need 
to get to the other side. 
Senator INHOFE. I will tell you what would be a good idea, I 
think, because that actually approaches on the other question I had 
to ask you, and that is, what should we—what are some of the as-
pects that Congress should keep in mind as we go forward? And 
while you have given some ideas there, it might be a good idea, Mr. 
Chairman, if he were to give us a white paper on some specific 
things to look for and why and judging from your experiences. 
I will go ahead and make that request, but any comments on 
that you might have right now? 
Mr. SHAMESS. Specific to steps that could be taken in small busi-
ness, sir? 
Senator INHOFE. Yes. 
Mr. SHAMESS. Well, I can tell you what happened with us. We 
rallied our entire team very early on. We made some really, really 
tough decisions, and there is this sense of sacrifice that especially 
those in uniform that is a shared sacrifice, and that everyone has 
to row together. 
I am about to be out of time, but I will share a sentiment. I was 
at Dover receiving the remains of one of my friends who was killed 
overseas, and his father was there with me, who was a Vietnam 
veteran. And he said, ‘‘When joy is shared, it is multiplied, and 
when sorrow is shared, it is divided.’’ And I think about that in the 
context of where we sit today, and I think companies have to think 
the same way. 
The funding is great, but if I cannot sustain a business that is 
relevant today and potentially in 6 months, then I am not saving 
anything. So it is a shared sacrifice inside those organizations, I 
think. Everyone has to take a hit, and in our organization, we all 
did. We had to furlough some of our team. We are happy to have 
them back, another part of our team. Everyone else took a 50 per-
cent decrease in compensation, and that is on top of losing two- 
thirds of our revenue. That was what we had to do just to say, ‘‘I 
can make it to the end of March. I can make it to April 15th.’’ 
So what I would say—and I am happy to put much of this in 
writing and share it with you, sir—is we have an obligation to lead 
inside our organizations and strive to get to the other side in the 
best position we can so we can still be relevant. 

69 
Senator INHOFE. That would be great. That would be very help-
ful. Thank you very much. 
Thank you, Mr. Chairman. 
Chairman RUBIO. Thank you. 
And the bad news is we are hitting up on the clock here because 
we have a vote at 12:00. We do not have this room all day because 
of the way they are juggling the rooms. So I do not think I will 
have time for my questions. The good news is virtually everything 
I was going to ask was asked by the other members, which is even 
better, because that shows you the level of interest and participa-
tion. 
I do appreciate the time all of you have given us, almost 2 hours 
here under these conditions, being online and so forth, and of 
course, you, Mr. Shamess, for being here as well. And your testi-
mony is very important. 
Before I adjourn, I do want to ask consent to include a written 
statement from the National Federation of Independent Businesses 
in today’s record hearing, which I think will be helpful. 
[The information follows:] 
Chairman RUBIO. Again, I want to thank you all and all the 
members who have popped in. As we have noticed, when it is on-
line, the attendance is a lot higher from our members, but it is 
good. You can see the level of interest and passion and bipartisan 
cooperation and opportunity that exists, not just on what we have 
done, but on what we have a chance to do moving forward. So 
thank you again. 
The record for this hearing will stay open for 2 weeks. Any state-
ments or questions for the record should be submitted by the 17th 
of June at 5:00 p.m., and with that, this hearing is adjourned. 
Thank you. Thank you all. 
[Whereupon, at 12:00 p.m., the Committee was adjourned.] 


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