Implementation of Title I of the CARES Act (June 10, 2020)

Issuer: Congressional materials
Document type: Congressional Hearing
Date: 2020-06-10
Case: 2020 06 10 Senate Small Business And Entrepren Hearing Transcript Govinfo Implementation Of Title I Of The Cares Act Govinfo Pdf

Summary

The printed record of a June 10, 2020 hearing of the Senate Committee on Small Business and Entrepreneurship, Implementation of Title I of the CARES Act, S. Hrg. 116–605, with Chairman Marco Rubio presiding and Benjamin L. Cardin as Ranking Member. The witnesses are Treasury Secretary Steven Mnuchin and SBA Administrator Jovita Carranza. In his opening statement Chairman Rubio says appropriated funds for the Paycheck Protection Program stood at $670 billion, that 4.5 million businesses had received loans of over $500 billion, and that the average loan size was $112,000. Senator Cardin cites Senate passage of legislation letting borrowers use PPP loans over a 24-week period rather than an 8-week period. The appendix lists responses to senators' questions and statements from groups including the Independent Community Bankers of America.

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Full text

S. HRG. 116–605

IMPLEMENTATION OF TITLE I OF THE CARES
ACT

HEARING
BEFORE THE

COMMITTEE ON SMALL BUSINESS
AND ENTREPRENEURSHIP
UNITED STATES SENATE
ONE HUNDRED SIXTEENTH CONGRESS
SECOND SESSION

JUNE 10, 2020

Printed for the Committee on Small Business and Entrepreneurship

(
Available via the World Wide Web: http://www.govinfo.gov

U.S. GOVERNMENT PUBLISHING OFFICE
43–667 PDF WASHINGTON : 2023
COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP

ONE HUNDRED SIXTEENTH CONGRESS

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

(II)
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
Mnuchin, Hon. Steven, Secretary of the Treasury, U.S. Department of the
Treasury, Washington, DC .................................................................................. 7
Carranza, Hon. Jovita, Administrator, U.S. Small Business Administration,
Washington, DC ................................................................................................... 12

ALPHABETICAL LISTING
American Council of Life Insurers
Statement dated June 10, 2020 ....................................................................... 92
Cardin, Hon. Benjamin L.
Opening statement ........................................................................................... 4
Carranza, Hon. Jovita
Testimony .......................................................................................................... 12
Prepared statement .......................................................................................... 14
Responses to questions submitted by Ranking Member Cardin and Sen-
ators Shaheen, Scott, Booker, Ernst, Coons, Young, Hirono, Kennedy,
Duckworth, and Rosen .................................................................................. 52
Independent Community Bankers of America
Statement dated June 10, 2020 ....................................................................... 94
Mnuchin, Hon. Steven
Testimony .......................................................................................................... 7
Prepared statement .......................................................................................... 10
Responses to questions submitted by Ranking Member Cardin and Sen-
ators Shaheen, Scott, Booker, Ernst, Coons, Young, Hirono, Kennedy,
Duckworth, and Rosen .................................................................................. 52
National Associated Federally Insured Credit Unions
Letter dated June 9, 2020 ................................................................................ 97
Rubio, Hon. Marco
Opening statement ........................................................................................... 1

(III)
IMPLEMENTATION OF TITLE I OF THE CARES
ACT

WEDNESDAY, JUNE 10, 2020

UNITED STATES SENATE,
COMMITTEE ON SMALL BUSINESS
AND ENTREPRENEURSHIP,
Washington, DC.
The Committee met, pursuant to notice, at 10:00 a.m., in Room
SR–301, Russell Senate Office Building, Hon. Marco Rubio, Chair-
man of the Committee, presiding
Present: Senators Rubio, Risch, Scott, Ernst, Young, Kennedy,
Romney, Hawley, Cardin, Cantwell, Shaheen, Booker, Coons, and
Rosen.
Also present: Senator Collins.
OPENING STATEMENT OF HON. MARCO RUBIO, CHAIRMAN, A
U.S. SENATOR FROM FLORIDA
Chairman RUBIO [In process]. As nationwide lockdowns shut
down the economy, we, who worked on this, every member of this
Committee and those outside of it, have two main priorities—the
size of it, we wanted to make sure it reached enough businesses
and people, and we needed to do it fast. This was not something
we had weeks or months to work on. And I am proud that both of
those goals were met.
The scope of the lockdown meant we needed sizeable relief. The
appropriated funds for this program are now at $670 billion. It
sounds—it is a lot of money. It is larger than any other program
enacted by the CARES Act. It is larger than the 2008 stimulus bill.
By some estimates, it is the largest program since the New Deal.
But the speed of the lockdown also meant we needed to get funds
to small businesses quickly. The CARES Act, just to walk every-
body through this, was signed into law on March 27th. Exactly
seven days later, thanks to extraordinary and tireless work, which
is easy to criticize for some who are watching from the outside, but
we are talking about people that were there overnight, 4, 5, 6, 7
in the morning, you know, barely time to get home, shower and
change their clothes—thanks to the tireless work of people working
under Secretary Mnuchin, and the Secretary himself, people work-
ing under Administrator Carranza, and herself, the Paycheck Pro-
tection Program began approving loans seven days after Congress
passed it and the President signed it.
Small businesses received PPP funds before, millions of Ameri-
cans received tax refunds before people started receiving unemploy-
ment checks, and other lending programs run through the Federal
(1)
2

Reserve are only just now beginning to operate. That is not a criti-
cism of those things. That is just to describe the extraordinary ef-
fort that it took to stand up a program that did not exist in just
seven days.
When this program began on April 3rd, no one on Planet Earth
had ever made a PPP loan, had ever approved a PPP loan, had
ever processed a PPP loan, or had ever applied for one, and in
seven days that began.
The achievement of these priorities came at the expense of oth-
ers. Some companies who should not have received the loans re-
ceived them. We have read all about it. It should not have hap-
pened. They represent the minuscule percentage of the overall pro-
gram, however, and most have since returned them. Computer sys-
tems were strained under unprecedented levels of activity. Guid-
ance released to solve problems created unanticipated problems.
But again, I want to be clear. The bumps in the road were and
are the price to pay, unfortunately, for a program that, in hind-
sight, we now know is among the most successful programs that
government has ever done to rescue an economy.
Economists and financial forecasters predicted last month that
May 2020 would be the worst month for job losses during the dura-
tion of the pandemic. It was expected. This is what everyone ex-
pected—eight million Americans would lose their jobs in May. They
predicted that unemployment would be 20 percent. Some even
speculated that it might end up surpassing the Great Depression’s
24 percent rate.
What would that have looked like, and what would that have
looked like given everything else that is going on in the world and
our country right now? Well, I can tell you, on an economic point,
it would have bankrupted the central promise of economic oppor-
tunity in our Nation. Without PPP’s temporary lifeline, tens of mil-
lions of Americans would have been permanently separated from
their livelihoods and stripped for long periods of time from the op-
portunity of dignified work. Many would quickly be condemned to
poverty, some over generations. Parents would be unable to provide
for their families, tied indefinitely to government assistance.
Without PPP, we would have faced the extinction of small busi-
nesses we know, and countless blocks of urban and suburban
America would have been hollowed out. Vast expanses of empty
lots with brick-and-mortar stores once stained communities. It is
tough out there. There is still a lot of suffering, economic pain, and,
of course, the pain related to this terrible disease.
But the most catastrophic visions did not come to pass. Instead,
forecasters—to the surprise of forecasters and everyone, last
month, 2.5 million Americans got their jobs back. The over $500
billion in Paycheck Protection Program funds disbursed through
April and May enabled businesses to keep or to quickly rehire
workers as conditions allowed.
To date, 4.5 million American businesses have received loans
equal to over $500 billion, and this—we will know more when the
forgiveness begins to come in—but this is equal to 50 million jobs.
The average loan size is now down to $112,000, an amount that,
based on eligibility criteria, means that the average business re-
ceiving a PPP loan would one with 10 employees.
3

A recent survey by the National Federation of Independent Busi-
nesses noted that 77 percent of surveyed small business owners
had applied for a PPP loan, and of that 77 percent, 93 percent had
received funding.
As of June 6th, there are currently 424 community development
financial institutions and minority depository institutions now in
the program. They have accounted for more than 190,000 loans,
valued at $15.8 billion. And the SBA and Treasury have also set
aside $10 billion in PPP funds for CDFIs to continue to lend.
This is the record of a successful program, and again I want to
thank everyone—the Secretary, the Administrator, all the members
of the Senate, and our partners in the House, and, of course, the
President—for not just passing this but working to implement it.
I do want to comment on the Economic Injury Disaster Loan pro-
gram. The SBA, for the first time in its history, administered a na-
tionwide disaster and grant advance program through an expanded
version of the EIDL program, offering direct government lending
and grants to eligible entities suffering injury due to the pandemic.
To date, the SBA has approved more than $1.13 million loans,
of these loans, emergency loans, totaling about 79, almost $80 bil-
lion, and 3.1 million emergency EIDL advances totaling another
$10.2 billion. The program has realized numerous challenges, both
previously in responding to regional disasters, and, of course, under
this current one.
In drafting the CARES Act, I raised concerned with the defi-
ciencies of the existing EIDL program as a whole, which only ac-
counts for roughly 2 percent of the disaster loans made by SBA. In
particular, I was concerned that it would be challenging for the
agency to handle a disaster of this extraordinary magnitude. As
such, the concept of using traditional lenders instead of direct gov-
ernment loans to ensure capital was reaching the hands of small
businesses as fast as possible was one of the reasons that gave rise
to PPP.
I commend the agency for standing up the EIDL program nation-
wide to respond to an unprecedented volume of applications within
a very short period of time. Today, unfortunately, we see similar
and new EIDL challenges for borrowers, including long processing
and disbursement timelines and communication issues. As many
businesses are also relying on assistance through EIDL to rebuild
after the economic disruptions caused by this pandemic, we look
forward to the agency addressing the current EIDL challenges and
how Congress, how we, on this side, can work to support the agen-
cy in making improvements to this program.
Today is an oversight hearing. There are many issues that my-
self and members of this Committee would like to raise to help
keep this program running smoothly, especially as some businesses
approach filing for loan forgiveness as early as this month. But we
should begin by putting these issues in perspective and recognizing
the choices that Congress and the administration had to make in
order to make this program succeed.
With that I now recognize the Ranking Member, Senator Cardin,
for his opening statement.
4
OPENING STATEMENT OF HON. BENJAMIN L. CARDIN,
RANKING MEMBER, A U.S. SENATOR FROM MARYLAND
Senator CARDIN. Well, Mr. Chairman, first thank you for con-
vening this hearing, but more importantly, thank you for your lead-
ership in the role that this committee has played in a nonpartisan
manner in order to help the small businesses of America. This has
been a proud moment of our Senate careers in working together to
develop three very, very important programs to help small busi-
nesses during COVID–19. We did that in a way that put the inter-
est of our Nation first and the interest of small business and their
workers.
Secretary Mnuchin, welcome to the Committee. I personally want
to thank you for your availability. You have been always available
to talk with us, to try to work out how this program could be ad-
ministered in a seamless way. And I thank you for your personal
leadership to make these programs work as effectively as we can
through the administration and then working with Congress as to
the need for legislative changes.
Administrator Carranza, please accept our appreciation for the
incredible work of your agency. As Senator Rubio pointed out, you
stood up a program literally overnight that has provided 4.5 million
loans, over $510 billion, in an incredible effort, and we thank you
very much for the hard work of the members of your agency.
This Committee helped craft, and I was proud to be part of a
drafting committee consisting of four Senators—Senator Rubio,
Senator Collins, who is with us today, Senator Shaheen, and my-
self—that put together and listened to all the members of this
Committee and the Senate and stood up three programs—the PPP
program that has received most of the attention, but also the EIDL
grant program, as well as the loan forgiveness program.
When we initially created the 8-week-long PPP program in
March, we thought that our economy would be performing at a
more normal level than it is today. So an 8-week period for small
businesses to spend their loan seemed reasonable. As communities
began the process of reopening, it is now clear that many small
businesses will not be up and running at the end of the 8-week pe-
riod, which, for many, as Chairman Rubio has pointed, will occur
this month.
I was proud to see the Senate act responsibly last week, passing
bipartisan legislation that gives businesses with existing and new
PPP loans the discretion to use those loans over a 24-week period,
rather than the 8-week period.
PPP is working for many employers, and the May monthly job
report released by the Labor Department last Friday is proof. Of
the 2.5 million jobs added back to the American economy last
month, more than 1.4 million were jobs of employers in the food
service industry, many of whom secured loans through our pro-
grams.
However, the depth of the economic challenge facing this country,
the National Bureau of Economic Research announced this week
that the United States economy is in a recession, and that the un-
employment rate remains at a historic high level, 13.3 percent, a
level that we have not seen since the Great Depression. For minori-
ties, the unemployment rates are even much higher.
5

While the PPP’s success is a laudable accomplishment, there
have been challenges in the program that have come into sharper
focus, given the massive protests our Nation has witnessed over
the past two weeks. The protests sparked by the death of George
Floyd has raised the awareness of the disparate public health and
economic consequences of the COVID–19 pandemic on communities
of color, black Americans in particular.
Civil rights is still the unfinished business in America. More
than 50 years ago, the Kerner Commission created by President
Lyndon Johnson warned of the negative consequences of continued
inequality. That was 50 years ago. The Commission wrote in its re-
port that America was headed toward two societies, one black and
one white, separate and unequal.
Mr. Chairman, there is no question that our country has made
strides in the decades since the Kerner Commission released its re-
port, but there remains an economic divide between black and
white America. In 1968, a typical middle-class black family had
less than one-tenth of the wealth of a typical middle-class white
family. It is the same today, and it exists at every level of edu-
cation attainment. A 2018 report found that there are no actions
that black Americans can take unilaterally that will have much of
an effect on reducing the racial wealth gap.
For black small business owners and other underserved entre-
preneurs, the wealth gap is even made worse by the difficulty in
getting lending. Minority business owners are two to three times
more likely to be denied loans than non-minority business owners,
and are more likely to receive less funding and pay higher interest
rates on the loans that they do receive.
It is with this inequality in mind that Senator Shaheen and I
drafted language in the CARES Act instructing the SBA and Treas-
ury to issue guidance to financial institutions participating in the
PPP program to prioritize loans from underserved small busi-
nesses. We wanted to prevent history from repeating itself, because
we knew that during the 2008 financial crisis, small business lend-
ing to minority-owned businesses fell dramatically and never fully
recovered.
Secretary Mnuchin and Administrator Carranza, these well-docu-
mented disparities are why I was so disappointed to read, in the
SBA IG’s recent Flash Report, which was prepared at the request
of Senators Schumer, Brown, and myself, the report found that the
SBA’s implementation of PPP did not fully align with congressional
intent of the CARES Act, because the SBA did not provide guid-
ance on prioritizing underserved and rural markets.
Further, the report found that the SBA has failed to collect de-
mographic information for small businesses seeking SBA loans.
While I appreciate the SBA will be collecting demographic informa-
tion on loan forgiveness forms, and has set aside an additional $10
billion, that the Chairman mentioned, and Secretary Mnuchin an-
nounced in regards to the CDFIs, it is important that the SBA fol-
low the Inspector General’s call to provide guidance to lenders that
prioritize underserved markets.
Underserved markets often do not have access to traditional
banking institutions. That is why the SBA’s existing Economic In-
jury Disaster Loan and grant programs are so important. I remain
6

discouraged that these programs, which have great potential to
help small businesses seek to adapt to the new reality of the post-
COVID economy, have reached fewer small businesses than we had
hoped.
We are not alone in this. We have a copy of a letter from all the
members of the House Small Business Committee, all the Demo-
crats and Republicans, expressing their frustration on the adminis-
tration of the EIDL program, the slowness of getting grant applica-
tions approved, the closing of the window in regards to non-agricul-
tural applications, the arbitrary cap that was put on the program,
as well as the fact of the lack of transparency.
We need to do better. EIDL serves a particular role for busi-
nesses. It can be used for working capital needs and may be more
desirable for the smallest of small businesses that do not have
many employees. The program is especially important for minority-
owned and other underserved small businesses, which are less like-
ly to have more than one employee, and have fewer employees on
average.
Unfortunately, the administration has not administered EIDL in
a manner that makes it a reliable resource for small businesses.
The administration has put in place requirements and limitations
without notifying borrowers, such as a decision to cap the loans at
$150,000, even though the statute allows the loans to go up to $2
million.
In May, the administration also made the decision to stop taking
applications from non-farm small businesses, meaning restaurants,
retailers, and other mom-and-pop establishments have not had ac-
cess to EIDL since mid-April. Small businesses are relying on you
to make EIDL loans more accessible. The administration must be-
come more transparent. In the months since the passage of the
CARES Act, Congress has been pushing for additional data on who
is receiving this aid, and I appreciate that Chairman Rubio and I
have joined together in making that request, and we have worked
with the administration, and we have gotten some of the informa-
tion, but we need more of the information.
We are extremely disappointed to learn that GAO has had the
same problems that we have had, and has not gotten the informa-
tion they need to carry out their oversight function in the Execu-
tive branch, as well as the difficulties we have in the Legislative
branch. How can we know which businesses still need help if we
do not know which businesses have received help?
Senators Coons, Shaheen, and I are pursuing legislation to help
those most in need to receive additional PPP funding, but we need
the data to ensure this assistance is as effective as possible. I think
we all agree there is going to be a need for a second round, but
how are we able to get that second round if we do not have the
full information on how the first round has operated?
We believe that the aid should go to the smaller of the small
businesses. We believe it should go to those that are most in need.
There should be a needs test. We believe it should go to the under-
served communities, particular rural areas, minority businesses,
but we need to have the data in order to make those decisions.
Finally, we must do more to ensure that underserved small busi-
nesses have the tools and resources they need to adjust to the long-
7

term economic effects of COVID–19. I was proud to work with Sen-
ator Booker to release a plan outlining steps Congress can take to
provide greater help for small businesses in underserved commu-
nities with regard to start-up and operating capital, as well as
technical training and mentorship.
The aim of our plan is to ensure that when we make it through
this pandemic and when we have the next economic downturn we
have institutions, programs, and knowledge to support small busi-
nesses, underserved small businesses in a timely way.
Mr. Chairman, I am under no illusions about the tall tasks
ahead of the Senate as we work to finally rid our Nation of these
inequalities. Before we can begin to make further progress we must
work hard to secure the progress we have already made, which is
at risk in regards to COVID–19.
Last week, at our hearing, Connie Evans of the Association of
Enterprise Opportunity, told our Committee that the economic con-
sequences of COVID–19 are projected to erase decades of minority
enterprise growth in the underserved markets. We cannot let that
happen.
The Wall Street Journal headline today says ‘‘Virus Obliterates
Black Job Market.’’ We need to take action to make sure this does
not happen.
I look forward to this hearing and learning more from Secretary
Mnuchin and Administrator Carranza about what the Trump ad-
ministration is doing to ensure that minority-owned and other un-
derserved businesses are not left behind during this crisis.
Thank you, Mr. Chairman.
Chairman RUBIO. Thank you. I will now turn to our witnesses.
Secretary Mnuchin, welcome to the Committee and thank you for
joining us here today.
STATEMENT OF HON. STEVEN MNUCHIN, SECRETARY OF THE
TREASURY, U.S. DEPARTMENT OF THE TREASURY
Secretary MNUCHIN. Chairman Rubio, Ranking Member Cardin,
and members of the Committee, thank you for this opportunity to
highlight the efforts of the Treasury and the SBA to provide relief
to businesses and their workers through the Paycheck Protection
Program. We are committed to working with you to ensure that
every American gets back to work as quickly as possible.
America’s economy has begun to rebound and our recovery is un-
derway. While estimates predicted nearly 8 million jobs lost in the
month of May, the actual data showed 2.5 million jobs gained, the
largest one-month jobs gain in recorded history. Both the jobs that
were saved and the jobs that were hired are a large extent as a
result of this program, so thank you very much.
Several other indicators show that we are well-positioned for a
strong, phased reopening of our economy. The U.S. Chamber of
Commerce announced last week that 79 percent of small businesses
are at least partially open, with half of the businesses that remain
closed planning to reopen very soon.
The personal savings rate, released on May 29th, had a record
high 33 percent of disposable income, indicating that people have
built up cash reserves during the pandemic and will be in a posi-
tion to resume consumer activity as businesses open.
8

This economic positioning is the direct result of the administra-
tion and Congress working together to pass bipartisan legislation
to provide necessary liquidity to workers and markets. The PPP
has kept tens of millions of employees connected to their jobs. The
National Federation of Independent Business found that 73 percent
of its members surveyed rehired or retained workers due to the
PPP. Economic Impact Payments and enhanced unemployment in-
surance are providing relief to millions of families and workers ex-
periencing distress. The announcement and implementation of the
Federal Reserve lending facilities are also enhancing the flow of
credit for industries across the economy.
We continue to monitor conditions closely, as certain industries
are rebounding more quickly than others. For example, after losing
nearly 1 million construction jobs in April, nearly half of those jobs
returned in May. By contrast, retail lost over 2 million jobs in April
and 16 percent of those positions returned in May. We remain con-
fident that the overall economy will continue to improve dramati-
cally in the third and fourth quarters of this year.
Turning to the PPP, the SBA and Treasury worked together to
launch this unprecedented program in a very, very short period of
time. In less than two months, the PPP is supporting the employ-
ment of approximately 50 million workers and more than 75 per-
cent of the small business payroll in all 50 states. This is an ex-
traordinary achievement and we appreciate the work of this Com-
mittee.
As you might expect with a program of this magnitude executed
on a national scale in record time, we initially experienced some
complications. We resolved them quickly. To implement this pro-
gram, our teams have worked with Members of Congress on a bi-
partisan basis to issue a series of rules and guidance to provide
clarity to the members of the public, as well as borrowers and lend-
ers. By standing up the program quickly, we were able to support
tens of millions of workers who may have otherwise been laid off
or furloughed.
Aside from the administration’s implementation efforts, we have
worked closely with Members of Congress in both parties to pass
two subsequent pieces of critical legislation. We reached agree-
ments on a second round funding for over $300 billion, providing
businesses with more time and flexibility to keep their employees
on the payroll, and ensure continued operations as we safely re-
open. Thank you, Mr. Chairman, and the other members of this
Committee for your work in building this program and helping
workers and families throughout our Nation.
I would note that while the PPP is a very important part, it is
only one part of the CARES Act, but the single largest economic
relief effort in history. Treasury has been hard at work:
Economic Impact Payments. We have distributed nearly 160 mil-
lion payments worth more than $260 billion, in record time.
Programs to Support Aviation and other Eligible Businesses. We
have approved the disbursement of over $27 billion to more than
500 airlines and other businesses, preserving hundreds of thou-
sands of jobs.
The Coronavirus Relief Fund. We have disbursed nearly all of
the $150 billion appropriated for state, local, and tribal govern-
9

ments. In doing so, we have provided recipients with as much flexi-
bility as possible under the statute.
And with the Federal Reserve Facilities, we have committed ap-
proximately $200 billion in credit support for Federal Reserve lend-
ing facilities under the CARES Act. That money that is going to
promote the flow of credit to businesses, households, and state and
local governments, as well as to restore liquidity and funding to
credit markets. The Federal Reserve, in consultation with the
Treasury, has modified the terms of the lending programs since
they were announced to ensure broad access to credit and liquidity.
We have over $250 billion remaining to create new or expanded
programs with the Fed, as needed.
In conclusion, I am proud of the work we have done with all of
you. We will overcome the unprecedented challenges before us to-
gether and make sure that every American gets back to work as
quickly as possible. I look forward to your questions. Thank you.
[The prepared statement of Secretary Mnuchin follows:]
10
11
12

Chairman RUBIO. Thank you. And Administrator Carranza, wel-
come back to the Committee.

STATEMENT OF HON. JOVITA CARRANZA, ADMINISTRATOR,
U.S. SMALL BUSINESS ADMINISTRATION
Ms. CARRANZA. Thank you, Chairman. Good morning, Chairman
Rubio, Ranking Member Cardin, and members of the Committee.
Thank you for inviting me to testify on the progress in imple-
menting the CARES Act.
The CARES Act created extraordinary programs for the agency.
Our work over the last three months has been unprecedented. Let
me provide you with some perspective on the historic work that the
SBA has been engaged in over the last several months.
SBA, in very close coordination with Treasury, stood up the
multi-billion-dollar Paycheck Protection Program in a matter of
days. The dedicated and professional staff at SBA helped to launch
the program three days ahead of the 10-day deadline imposed by
the CARES Act. In fact, during the first round of funding, SBA
processed more than 14 years’ worth of loans in less than 14 days.
In order to help businesses who needed assistance, we also created
a simple, two-page application for borrowers, to streamline the
process.
Since late March, we issued 16 interim rules and 48 Frequently
Asked Question documents, while providing your offices with reg-
ular reports on daily lending data, coupled with detailed program
overviews.
As of today, the PPP has approved over 4.5 million loans for over
$511 billion in much-needed financial relief to America’s small
businesses.
We administered this program with an eye focused on recog-
nizing that this pandemic had been particularly harmful to socially
and economically disadvantaged businesses. In fact, 45 percent of
the PPP loans, both in terms of volume and total value were dis-
bursed in low-income areas.
To achieve this, we also reduced administrative roadblocks so
that more lenders could participate in the program. The agency
signed up 3,600 new lenders, including community banks, credit
unions, fintech companies, farm credit lenders, and hundreds of
CDFIs and MDIs that specialized in providing liquidity in unprece-
dented communities—in underrepresented communities.
As of today, the PPP still has $130 billion in available funds. I
ask for your assistance in continuing to raise awareness among
your constituents that funds are still available for small businesses
that need assistance. In our Entrepreneurial Development Pro-
gram, the agency worked closely with the resource partner associa-
tions as well as Committee staff to allocate dollars for 62 SBDCs
and 113 Women Business Centers. We also allocated funds and
worked with the associations on deployment of a web site now
available for all small businesses to utilize.
With our Disaster Assistance Program, the Agency worked
around the clock to create and implement a new system for EIDL
advances. This was a first for the Agency, and we have now proc-
essed and disbursed monies to all businesses requesting an emer-
13

gency grant, except for certain businesses that still need to clarify
their information.
With our EIDL loans, we have distributed more dollars for
COVID than for all disasters combined in the 67-year history of the
Agency. All of you remember the devastation created in 2017, by
Hurricanes Harvey, Irma, and Maria, three of the costliest storms
on record. SBA disbursed over $7 billion. That amount represented
8 percent of the total COVID-related disaster funding approved by
the Agency since mid-March.
With respect to the debt relief provisions of the Act, SBA issued
guidance and conducted outreach to lenders and borrowers. The
Agency has provided over $2 billion in principal and interest pay-
ments on current SBA business loans over the last two months.
Before I close, let me briefly discuss how we are improving SBA’s
operations. Under my leadership, we have managed all the CARES
Act programs while also continuing to build an organization. I have
created an internal oversight plan for each CARES Act program,
and to manage the millions of business and disaster loans. The
Agency has brought on thousands of staff to support our COVID
disaster operations, while still servicing 175 natural disaster dec-
larations.
We have hired a new CFO, CIO, General Counsel, and Program
Director for the Office of Faith-Based Initiatives. I have also over-
seen changes within our contracting and investment programs,
which many of you raised with me previously. For instance, in
March, I changed leadership in the Office of Investment and Inno-
vation, streamlined the licensing process, and licensed our first ac-
tive SBIC in Puerto Rico in over two decades. We are also on track
to fund new licenses for women and minority firms.
I have partnered with other Federal agencies, among them
USDA, CFPB, Treasury, GSA, and FEMA. They have helped in-
form our immediate economic response efforts and several continue
to advise us on the important task of long-term small business eco-
nomic recovery, and we have done all this while operating on a
telework status, as many of you have.
Thank you again, Mr. Chairman and members of the Committee,
for the opportunity to testify today.
[The prepared statement of Ms. Carranza follows:]
14
15
16
17
18
19

Chairman RUBIO. Thank you to both of you. I am going to defer
the balance of my questions so we can get to all the members. I
just have one sort of matter I want to clear up.
Secretary Mnuchin, in a joint statement you released with the
Administrator this week you indicated that borrowers which failed
to spend 60 percent of their loan on payroll costs will continue to
be eligible for partial loan forgiveness. Can you confirm that this
statement means that borrowers failing to meet the 60 percent re-
quirement will still receive loan forgiveness equal to their payroll
costs and a proportional amount of non-payroll costs?
Secretary MNUCHIN. Yes.
Chairman RUBIO. Thank you. To the Ranking Member, Senator
Cardin.
Senator CARDIN. Once again, thank you both for your work and
for being here today. I want to ask my first question on the EIDL
program, and we have talked about this, but I just want to under-
score why this is so important to us. And I am going to give you
a specific example of a Maryland Small Business owner, Nick John-
son, who runs a small furniture company, 28 workers. He applied
for a PPP loan and got it. He applied for the EIDL, because he
needed the funds for working capital and it gave him a 30-year
loan program so that he could use it for working capital.
He applied for it immediately, in March. Two months later, he
heard he was eligible to receive $380,000 under the formula, but
was capped at $150,000, rather than $380,000. As a result of not
being able to get those funds, he had to go into his PPP funds and
lay off workers.
So we intended for the EIDL program and the PPP program to
work together. And Madam Administrator, I appreciate the fact
that you have issued so many EIDL loans compared to the historic
record, but we have never had a universal disaster before. And the
volume level, as we understand it, only 15 percent of the loans
were processed and that there is still a huge backlog in processing
these loans. And we made significantly more capacity available to
you through the appropriation process so that you could issue a lot
more of these loans.
You put a cap on the program. We do not understand why. You
have delayed the applications of those that have already been filed,
and you have closed the window on non-agricultural programs.
Why is the EIDL program not being used to its full capacity, and
what can we expect in the future, moving forward?
Ms. CARRANZA. Senator Cardin, I agree with your frustration and
your assessment of the delayed process. However, let me start out
with the agricultural, small farms and the co-ops. We have since,
when it was announced that we were able to accept the ags, over
146,000 ag concerns. They have several billion, close to $2 billion
in loan value. They have also taken advantage of the advance, the
grant.
The average loan that we are experiencing currently is $68,000.
We expected them to really be the community that was going to ac-
cess the $150,000.
We were averaging about—we were anticipating about $83,000
in average loan and they are coming in at $63,000, $65,000.
20

Senator CARDIN. But what is the rationale for $150,000 cap when
the law says—the statute says up to $2 million?
Ms. CARRANZA. Well, when we first opened up the portal to ac-
cept disaster, or EIDL COVID applications back in March, we went
from 85,000 loans in one day, and in four days the input, the de-
mand increased to 3.8 million applications.
Senator CARDIN. But as I understand it, with the additional ap-
propriations you can go up to $350 billion in EIDL loans, and I do
not think you are anywhere close to a fraction of that today.
Ms. CARRANZA. Yes, but at that time, sir, we had $7 billion avail-
able. We exhausted those $7 billion to the subsidy, given the ap-
proval——
Senator CARDIN. The same thing was true with PPP. We made
money available. The window opened quickly. You processed the
new loans quickly. You have not done that for EIDL. We made
more funds available and they have not been processed.
Ms. CARRANZA. I understand, sir, but when you look at an EIDL
government loan program it is exactly that, whereas PPP was de-
signed with various distribution channels. So if you go from 1,800
banks in the PPP up to about 5,400 banks, they now have—the
small businesses have over 5,000 access channels, whereas——
Senator CARDIN. I understand that. So let me just point out, the
PPP applications have slowed down. We have not seen the EIDLs
pick up. This is unacceptable. The EIDL program has to operate at
a much more efficient level. You need to let us know if you need
more help.
Secretary Mnuchin, I want to ask one question in regards to
those who had criminal records. You issued a regulation that pre-
vented them from participating in the PPP program. We have
talked about this. There is bipartisan legislation and broad support
in the Senate to allow those that have repaid their debt to society
to be able to participate in the PPP program, with the exceptions
of those that have committed economic fraud type offenses.
We have been trying to do this administratively. Can we get it
done administratively, or are we going to have to pass a bill?
Secretary MNUCHIN. So thank you, and first of all we appreciate
all the communication we have had with you on this issue and
other issues. We are actually in the process of putting out guidance
that I think will come out today, reducing it from five years to
three years, as a result of your input, and we are happy to work
with you and the Chairman to see if we should reduce it even
more.
Senator CARDIN. Well, I appreciate that. I did not appreciate it
was put in in the first place, but I appreciate the fact that we have
made some progress. I can assure you that we would like you to
go probably further than that. We will have those conversations,
and if we have an opportunity let’s work together on legislation so
we do not run into this problem in the future. It is bipartisan.
Senator Portman, Senator Lankford and others have all joined in
this legislation. The Chairman has interest. So let’s see whether we
cannot work that out.
Thank you, Mr. Chairman.
21

Secretary MNUCHIN. And I would suggest, I am happy to speak
to you and Chairman Rubio tomorrow, and if you want us to short-
en it we will consider that even more quickly.
Senator CARDIN. Thank you. I appreciate it.
Chairman RUBIO. Senator Risch.
Senator RISCH. Well, Secretary Mnuchin, I think this is a histor-
ical moment, the first time we have had the Secretary of the Treas-
ury before this Committee, I think.
Chairman RUBIO. I think it was the change in leadership.
Senator RISCH. Yeah, I think it is probably the strength of the
leadership of the Committee that has caused that. But anyway——
Chairman RUBIO. He was up here——
Senator RISCH. He knows that. Steven, when they write the his-
tory of this, I think you are going to have your own chapter in that
history book. You know, I have spent all my life in public service,
one way or another, and I have got to tell you, when this whole
thing hit, this was a tremendous challenge for the United States
of America. And I always am reticent to believe that the govern-
ment can step in and fix things easily. Sometimes they make
things worse than what they are.
But I have to tell you, I have just been incredibly impressed by
your leadership as we have gone through this. I do have some in-
side information, because Senator Crapo and I are very, very close
personal friends, and I know you and he are on speed dial with
each other and talk regularly. And I had some issues with it, with
the program, like everybody did, and I was just absolutely stunned
at the way that you stepped up, personally, to take on these issues,
and the team that you put around you to take on these issues, and
your willingness to be flexible as far as making these things work.
This has been a great success. You do not read that in the media
or hear it on cable news. They are focused on the glitches, and
when you are talking about throwing $3 trillion against the wall
there are certainly going to be glitches.
They are focused on that.
But I can tell you, as I get out there and talk with the business
people in Idaho, and for that matter around the country, there is
tremendous appreciation for what the government has done, par-
ticularly appreciation for what the United States Treasury has
done administering these programs. And there are millions of busi-
nesses and there are tens of millions of people who are a lot better
off, because of your leadership and the administration’s leadership
in taking this thing on head-on.
So thank you for what you did. I want you to know that notwith-
standing a lot of the stuff you read, there is great appreciation
amongst the American people. I think history is going to judge you
very favorably as we go forward.
I have got just a couple of quick questions for you. Number one,
are you as surprised as I was as to how the economy is bouncing
back? I mean, if somebody would have told me 60 days ago that
the NASDAQ was going to set a new record in early June, I would
have bet the farm against that. Were you as surprised as a lot of
people that the economy is coming back as quickly as it is coming
back, admittedly with some sectors more so than others. What are
your thoughts on that?
22

Secretary MNUCHIN. Well, let me just say, first of all, thank you
for those kind words. As I have repeatedly said, this was a unique
situation. This was not due to economic issues. This was due to
government action and shutting down the economy as the result of
COVID–19. So as I have said before, the traditional economic mod-
els are not good at predicting things. I was somewhat surprised,
and very pleasantly surprised, by the recent numbers. I thought
that we were going to actually bottom in June and not May.
But let me just say, as it relates to the markets and the economy
in these numbers, this is a direct result of the bipartisan work of
the Senate and the House in responding in unprecedented fashion.
So not only the $3 trillion that we pumped into the economy but
the money that you entrusted to us to work with the Federal Re-
serve has unlocked markets. And without spending a dime of tax-
payer dollars, companies like Boeing, who we thought would have
to come to the government for help, were able to raise $25 billion
in the markets. Thank you.
Senator RISCH. Well, thank you. I am just absolutely amazed
that the tools that really have been developed over the years were
used as well as they were used in this regard, and the fact of the
matter is that, really, it was the first test of them. The fact that
they worked so well is just stunning.
I have written to you about creating a little bit more simple proc-
ess for PPP loan forgiveness. I hope you have gotten that commu-
nication. Seeing as how you have looked at everything else, I have
no doubt you are going to look at that. We are getting some input
from the sector that the process and the application is overly com-
plicated. If you would have a look at that, I would sincerely appre-
ciate it.
Secretary MNUCHIN. Let me just comment. As a result of the safe
harbor that is in the new bill, we will be writing new guidance and
new forms which will make it substantially easier——
Senator RISCH. Thank you.
Secretary MNUCHIN [continuing]. For people to check the safe
harbor.
Senator RISCH. We appreciate that, and I have no doubt—I had
no question that you would probably do that.
Let me just say, Administrator Carranza, my time is up, but you
are getting the same kind of kudos out there from the small busi-
ness community, as far as being able to make the programs work
that you have had, so we appreciate that. And I want you to know
that appreciation is there for you too.
The criticisms that have been made, you guys have stepped up,
both of you, and America sincerely appreciates it. Accept America’s
thanks, both of you, for what you have done.
Ms. CARRANZA. Thank you, Senator Risch, and I am very pleased
to announce that by next week all of the EIDL loans will be in the
process, in the loan portal. So all of the 5 million applications that
we have, that actually represent over 7 million employees, and ob-
viously 5 million small businesses, will actually be in the loan por-
tal. There are two sections to that portal. One is the application
and the other one is the loan processing, which means within a
week’s time that those loans will be processed and we will be over
with the EIDL.
23

Senator RISCH. Well, again——
Ms. CARRANZA. I feel really encouraged by that.
Senator RISCH. In closing, just let me say that, again, the media
has really focused on some glitches, but the big story here—and it
is a big story—is how successful all this has been. And you are to
be commended for it. You will not get the credit that you deserve
for it, at least now. Maybe you will in the history books. But again,
thank you for what you have done.
Thank you, Mr. Chairman.
Chairman RUBIO. Thank you.
Senator Cantwell.
Senator CANTWELL. Thank you, Mr. Chairman. Well, let me add
my thanks to you, Mr. Chairman, and Ranking Member Cardin, for
your bipartisan effort, and to those who are also participating, Sen-
ators Shaheen and Collins, for all the work that has gone into the
small business agenda. It is really historic to show this bipartisan
level, and frankly, we need it. We are not through this and we need
it to come through again.
Access to capital is a persistent issue for small business, and one
of the great things, I was proud that our side focused on, was the
CDFI issue. I can see, in my state, where the CDFIs are basically
getting out and marketing themselves and getting access to capital
to, frankly, small businesses who just got turned down by banks.
So I know you cannot guarantee how banks operate, but obviously
this has been a problem, and we need to figure out solutions. Peo-
ple with good banking relations got turned down, and people with-
out good banking relations probably never had a chance. So the
CDFI process has been working, and we should figure out how to
continue it.
The issue that comes before us now today is that there are a lot
of women- and minority-owned businesses, always also a pervasive
problem with access to capital, and this Committee has done good
work with that in the past, prioritizing smaller loan grants and a
whole variety of things to get capital.
But I do think that we should be looking at what my colleagues,
Senators Cardin and Shaheen, are recommending that we
prioritize smaller-sized small businesses. I particularly think 10
and under, but make sure that we are getting access to capital.
There are a lot of women and minorities that are small businesses
under, you know, 10 employees, and again, how do they keep that
business going if they do not have access to capital?
So I hope in this next round we will prioritize that, and I hope
both of you will agree on that.
I can say, because I worked a lot on various aspects of other
parts of the bill, in addition to the small business, that I saw Sec-
retary Mnuchin many hours, day and night, working around the
clock on these provisions, so I thank him for that.
I want to ask you—so do you both agree that we should
prioritize—figure out some way to make sure we are sending a
message that we want small businesses prioritized, under 10 peo-
ple?
Ms. CARRANZA. Yes, absolutely. There is a focus at SBA—and I
apologize for jumping in—there is a focus at SBA with sole propri-
etors and independent contractors, because they are really not ones
24

that are going to aggressively pursue loans. And so we have a task
force at SBA dedicated to those particular communities, as well as
dedicated resources to look at how we can optimize the CDFI com-
munity. We have done really well up to 400, 430-plus, but we can
do more.
Senator CANTWELL. Thank you. I have two questions for you, Mr.
Secretary of the Treasury, Secretary Mnuchin, and that is, when
we were doing the aviation part of the bill we definitely thought
that the aviation supply chain was critical to America’s security.
We thought of that as the aviation commercial supply chain, not
just the defense supply chain.
So we have had a couple of hearings in Commerce, and we want
the dollars to go out the door to someone who is in the supply
chain, who is making commercial manufacturing parts for the sup-
ply chain. We think that those dollars should be eligible to them.
Do you agree?
Secretary MNUCHIN. I am more than happy to follow up with you
and talk to you about that. Many of the aviation supply chain is
getting advances we have been monitoring, but to the extent there
are specifics, I am happy to address them with you.
Senator CANTWELL. Well, the $17 billion that was there, we be-
lieve the definition of important to national security is commercial.
You did not have to be engaged in a defense contract, that keeping
the commercial supply chain is critical to our national security, be-
cause if we do not have an aviation sector it is going to impact us.
So definitely want those dollars out the door, and there seems to
be a problem.
Another area that there are problems with is $8 billion for our
Tribal governments, and as somebody who represents 29 different
entities in the Northwest, definitely want to see those dollars out
the door. Can you tell me when the $8 billion for Tribal govern-
ments will be distributed?
Secretary MNUCHIN. Yeah. I will tell you, the second tranche of
that money is going to go out tomorrow, and that the only thing
that is going to be held back at that point is the litigation issue
associated with Alaska.
Senator CANTWELL. Okay, on the Tribal issue, you are saying.
Secretary MNUCHIN. Yes.
Senator CANTWELL. Okay. Thank you.
Secretary MNUCHIN. Yeah, but the money—the first tranche
went out.
The second tranche is literally going out tomorrow.
Senator CANTWELL. Thank you.
Secretary MNUCHIN. Or actually maybe Friday. I apologize. It is
either tomorrow or Friday. But it is going out this week.
Senator CANTWELL. Okay. Well, then I am going to follow it up
with aerospace, and again, everybody, let’s keep working in a bi-
partisan basis but let’s not forget those that are getting left behind.
It is complex. It has always been a problem. Getting access to cap-
ital, for those who are small, is always hard. Thank you.
Chairman RUBIO. Senator Scott.
Senator SCOTT. Thank you, Mr. Chairman, and thank you to the
panel for being with us this morning. I certainly appreciate both
of you all’s commitment to making sure that we have the resources
25

available to really help small businesses survive the economic crisis
that they have never seen in their lifetimes. Every single small
business owner that I spoke to around the country had the exact
same words, that without the Paycheck Protection Program they
would not have survived.
So survival was the key and the focus, but now the focus turns
from survival to recovery. And so as we think about recovery, my
question is, as June 30th comes sooner than some would like, many
are asking about a second bite of that apple. Is there an oppor-
tunity, as you all think through where we should go, is there an
appetite for folks to perhaps see another four weeks of the PPP in
addition to what they already have, and/or are there any other
ideas that are on the table that speak to the recovery aspect of
where we are and not simply the survival mode that we have been
in?
To either panelist.
Secretary MNUCHIN. Senator Scott, thank you, and I appreciate
all of your help. I definitely think we are going to need another bi-
partisan legislation to put more money into the economy. I think
as we have said, we do not want to rush into that, because we want
to be both careful, at this point, in seeing how the money is in the
economy. A lot of the money is still not in it. And two, I think we
need to be much more targeted at this point.
So I think at the point when we were in an emergency we had
to put a lot of money in the economy, and we know that it would
not be perfection. But I think whatever we do going forward needs
to be much more targeted, particularly to the industries and small
businesses that are having the most difficulty in reopening as a re-
sult of COVID–19. And we look forward to working with you and
the rest of the Committee over the next few weeks as we think
about that.
Senator SCOTT. Thank you. Administrator, as we rolled out the
program, one of the—perhaps one of the more exciting aspects of
the roll-out included taking the 7(a) program from a few, 800 lend-
ers to I think over 5,000 ultimately were engaged in the process,
which was phenomenal from our perspective.
The fintech world also provided a lot of traction to smaller busi-
nesses that may not have had that relationship. I certainly think
that we are emerging into a new part of the process where fintech
and unorthodox folks should be a part of that process going for-
ward. What was your experience, and how should we anticipate the
use of fintech as a part of the next wave of opportunities?
Ms. CARRANZA. Thank you for your question, Senator, because
this allows me an opportunity to share with the Committee that we
had dedicated resources to work with the fintech companies that
approached us and indicated that they could provide microloans to
thousands of people in the underserved markets. And so that
seemed like a real appeal for us and a way to really penetrate the
underserved community.
So I will not mention their names but we had four fintech compa-
nies. We had two dedicated resources, one from Treasury, and the
other from CFPB, to be focused in on working with Treasury to get
them licensed or authorized to be a preferred lender for us. So it
really worked well. And they are still in play.
26

Senator SCOTT. Excellent. My final question to either, as Senator
Cantwell discussed, CDFIs, that was not one side of the aisle or the
other side of the aisle. That was frankly just common sense from
both sides of the aisle. But perhaps America needs to see a little
bit more common sense from both sides of the aisle.
Secretary, you and I had many conversations, that I recall, on
MDFIs as well as CDFIs and MSIs. And I hope that as we look into
the future with the new fintech platform, looking for ways to serve
minority communities that have had a challenging time of having
access to capital, that that will be a part of our forward looking.
And the ability to help fund some of the MSIs to market, as we did
through the Minority Business Development Agency, to provide re-
sources for the marketing of these resources in minority commu-
nities also proved to be helpful as well. So more of a comment than
a question.
Secretary MNUCHIN. If I could just comment on, you know, the
technology and working with the CDFIs is very important. I want
to give a shout-out to Robert Smith, who spent a lot of time with
us, and has dedicated technology without making any fees to those
CDFIs, so that they can outreach more people. But he and his com-
pany have been very accessible, and I think we have done a good
job, but we need to do a much better job going forward.
Senator SCOTT. Yes, sir. Thank you. Any final thoughts, Adminis-
trator?
Ms. CARRANZA. I was just going to comment on Robert Smith,
but you beat me to it. We were collectively working with that enti-
ty.
Senator SCOTT. Robert has a very busy phone because he keeps
calling because he has good ideas, and they actually work. So
thank you all for being receptive to the private sector being en-
gaged in this process. I think it was one of the bright spots of the
relief package, without question. Thank you.
Thank you, Mr. Chairman.
Chairman RUBIO. Thank you.
Senator Shaheen.
Senator SHAHEEN. Thank you, Mr. Chairman and Ranking Mem-
ber Cardin, and thank you both for being here this morning. I cer-
tainly applaud, as all of us do, the important difference that the
small business programs made, the PPP programs and the EIDL
programs have made for businesses in New Hampshire. We have
had 22,000 businesses that have received over $2.5 billion.
Senator Cardin, though, very eloquently expressed my frustra-
tion at not being able to get information, as we were looking at
changes that we need to make to the program, so that we could en-
sure that what was working continued and what was not working
could be changed. And so it is like closing the barn door after the
horse has gotten loose, but I think all of us would like to feel like
we are getting regular information, so that as we are trying to per-
form not just our oversight mission but to look at what we need
to do to make changes, that we have that data in front of us. And
so I hope that that will be more forthcoming in the future than it
has been in the past.
I want to follow up on Senator Scott’s question about a second
round of help, because we are hearing—our office is hearing from
27

a lot of small businesses in New Hampshire who got the original
PPP loans, who are about to run out of money this week or next
week. They did everything that was prescribed in the program. You
know, they hired back their people, they, you know, have been
waiting to start up their businesses, many in the hospitality and
tourism industry, which are the last to open up, and in New Hamp-
shire that is a significant part of our economy.
And now they are about to run out of money, about to be in the
position of having to lay off those employees again, and are worried
about whether they are going to go under in the next couple of
weeks.
So I have been—Senator Cardin talked about the legislation that
he and Chris Coons and I have been working on to try and look
at a second round. When we have got $140 billion still remaining
in the PPP program, I would hope that we could all agree that this
is an opportunity that we should take advantage of for those busi-
nesses that need continued help.
I know the jobs numbers were better than expected last week,
but 13 percent unemployment is still not acceptable, and we do not
want another whole round of layoffs because we have small busi-
nesses who got help and now cannot get additional help when they
need it.
So I hope you will both be open to that. I do not know if you have
a view. You talked, Secretary Mnuchin, about needing some more
time to look at that, but for some of these small businesses they
do not have extra time.
Secretary MNUCHIN. Again, let me just emphasize, we are 100
percent committed to making sure that people that have lost their
jobs get back to work, and people that have their jobs can keep
their jobs. That is an absolute priority of ours. As you have said,
the unemployment rate is still way too high, no fault of their own,
and there is no question that small businesses in many industries
are going to need more help.
So we looking forward to working with the Committee and the
rest of the Senate, on a bipartisan basis, to include incentives, and
whether it is through the PPP or others or tax credits, we are open
minded. But we absolutely believe small business, and, by the way,
many big businesses——
Senator SHAHEEN. Sure. Absolutely.
Secretary MNUCHIN [continuing]. In certain industries are abso-
lutely going to need more help.
Senator SHAHEEN. Thank you. Administrator Carranza, you
talked about the effort to move the EIDL loans through the pro-
gram, and I think that is probably the program that we have heard
the most frustration from businesses in New Hampshire about.
And we are still hearing from them on a daily basis, that they can-
not get information about the status of the EIDL loans.
So you talked about expecting all of the ones that are in the
queue to be approved by next week, or to be acted on by next week.
What can we tell those businesses that are calling our office about
how to get information, because they are not able to get through
on the toll-free line and the SBA to get answers to their questions.
Ms. CARRANZA. Senator, I will emphasize the amount of re-
sources that we have added at the phone center. There are 3,000
28

versus the few hundred that we had a couple of months ago, and
then we have added approximately another 1,000 when we talk
about the paralegals and whatnot, to reconcile some of the loans.
With regards to—and I will—I am going to get in the weeds a
little bit to explain——
Senator SHAHEEN. Good.
Ms. CARRANZA [continuing]. Why the visibility of a loan is not re-
alized with this new automated system. What we understand, on
the traditional legacy system, it had a lot of visibility. That is the
system that would manage all of the natural disaster loans. When
we had to ramp up and do a surge processing, input and through-
put, what was not built was what we call a loan tracking visibility,
and that is why it has limited visibility. We have visibility on the
intake, and then when they get notified by email that their loan
is progressing, and now it is a matter of they make a decision
whether they want to pursue the loan and whatnot.
So there is this gap that there is no visibility. We did not have—
because of time, because of the urgency to just get that machinery
up and running, we did not allow the engineer to build that piece.
And so now it requires particular loan officers to view that. We are
in the process of fixing that, because we are now being prepared
to accept more applications, besides the ag, and we have a few hun-
dred thousand waiting in the queue, and we would like to take
them on. We have learned a lot—the amount of communication
that is necessary, the amount of personal face-to-face contact, not
just emails. Because we have made available up to nine contacts
within the time frame that we are speaking to, about a loan status.
We have about 65,000 that want to re-enter and be reconsidered
for more funds, and we are working through that as well. So there
are about two or three portfolios we are working through to make
sure that we provide a lifeline. It may not be the $2 million, but
what we can provide is a lifeline to many more at that particular
cap. And so we are looking to active that.
When I made reference to applications being all in the queue by
next week, all of the 5.4 million applications that we have had
since March to this date are now going to be in that loan portal,
which they are making an assessment on. And the reason we are
able to do that is that we went from a production where a loan offi-
cer processed about 3 to 5 loans a day, to now 50 loans a day. And
so because of that surge we are realizing more efficiency, and I look
forward to resolving those issues very quickly.
And I do look forward to communicating with you now more
often. We did have conference calls with the Committee and mem-
bers, such as the Chairman and the Ranking Member, Senator
Cardin. It was not frequent enough. But I have pulled away from
the operations and now I will be able to personally meet with ev-
eryone and update you much more frequently.
Senator SHAHEEN. Well, thank you. I think that is very impor-
tant, and I am out of time. But the more transparent we can be,
the more people understand what is going on with the program, the
less frustration and the more understanding we will have.
So thank you both, and I hope we can continue to have a bipar-
tisan approach to helping the small businesses in this country.
Thank you.
29

Chairman RUBIO. Senator Kennedy.
Senator Kennedy.
Senator KENNEDY. Yes, sir.
Chairman RUBIO. Unless you have nothing to say, which I doubt.
Senator KENNEDY. Thank you, Mr. Chairman. Thank you, Mr.
Secretary and Madam Administrator. I have had some oral sur-
gery, as you can probably tell, so my speech is—my accent is the
same but my speech is a little impaired. That is a blessing or a
curse.
Mr. Secretary, do you have economists on your staff that can put
a value on the amount of damage that was done to businesses from
the looting and the burning from the rioting, not the economic im-
pact of the peaceful protests, protests in America, or as American
as baseball, but felony looting is not. Do you have economists that
can put a value on the economic impact of those small and larger
businesses?
Secretary MNUCHIN. I do have economists. I will ask them
whether they have data that they can look at and do that, and get
back to you. I do not know the answer.
Senator KENNEDY. Okay. We have about, what, $130 billion we
have not disbursed for the PPP program. Is that correct?
Secretary MNUCHIN. That is.
Senator KENNEDY. So it would appear we are going to have some
money left over. Is that correct?
Secretary MNUCHIN. It is.
Senator KENNEDY. I am going to introduce a bill that I would
like you and your very able—and I mean that sincerely—colleagues
at Treasury to look at, to take some of that money and make it
available to the businesses, mostly small businesses, but to the
businesses that have been lost as a result of the burning and the
looting and the felony rioting. I think they are going to need help.
Secretary MNUCHIN. We are more than happy to look at that
with you.
Let me just comment on the——
Senator KENNEDY. Pull that mic closer for me, if you would, Mr.
Secretary.
Secretary MNUCHIN. I said we are more than happy to follow up
with you on that. And let me just comment on the extra money.
As you recall, Congress gave us an extra $60 billion, more than we
needed, because everybody was so skeptical that we were going to
run out. So some component of this extra money we did not antici-
pate we would be able to put to work, but we look forward to work-
ing with you on potentially repurposing it.
Senator KENNEDY. Well, I am going to introduce that bill—we
are drafting it now—and if we do have an additional coronavirus
bill I would like to consider—I would like you to consider making
that a part of it.
Secretary MNUCHIN. We will absolutely work with you, Mr. Sen-
ator.
Senator KENNEDY. And I would like, if you could put some of
your best minds, you and the Administrator, to quantifying the
damage done from the rioting.
Secretary MNUCHIN. I will——
30

Senator KENNEDY. I would envision that we have arrested a lot
of people, our law enforcement authorities, who caused this, who
did the burning and looting, and I would, we are probably going to
put a provision in our bill where the authorities have to go after
them for civil liability, basically take their assets and offset the
money that taxpayers would have to spend. But I would like you
to take a look at that.
Secretary MNUCHIN. We will. Thank you.
Senator KENNEDY. And talk to the President about it.
Number two, I want to cut to the chase here. If you were king
for a day, what would you put in the next coronavirus bill, other
than the idea I just articulated to you?
Secretary MNUCHIN. If I were king for a day I would say we
should spend the next 30 days looking at a lot of different things
that will be in that bill.
Senator KENNEDY. Yes sir, but—I know you have been thinking
about it, and I would like to get your general thoughts now of what
we should be thinking about.
Secretary MNUCHIN. I think that, one, we are going to need
money for business, to encourage businesses to rehire people, espe-
cially in areas that have been most impacted. So whether it is the
travel, leisure, restaurants. You cannot get hotel capacity back up
to speed without hiring people first. I will just use that as an exam-
ple.
Senator KENNEDY. What else?
Secretary MNUCHIN. I think we are going to need to fix unem-
ployment. So we knew there were issues with the enhanced unem-
ployment, where, in certain cases, we were paying people more not
to work than work. I think we have seen, from the recent numbers,
that did not have a big impact because people want their jobs. But
we will have a significant amount of unemployment and we are
going to need to look at doing something that. I think we are going
to seriously look at whether we want to do more direct money to
stimulate the economy.
But I think this is all going to be about getting people back to
work, and we look forward to working with the entire Senate on
this.
Senator KENNEDY. What about—and I am going to try to be
quick here—what about incenting investors to invest in the econ-
omy, capital gains treatment that would be relaxed, that sort of
thing?
Secretary MNUCHIN. It is something we have discussed. My opin-
ion right now is that the Fed facilities have unlocked the capital
markets. There is a lot of liquidity for investment. That is some-
thing we will look at. But I think we are much more targeted at
getting people back to work, and I think investors are prepared to
invest a lot of liquidity that they have right now.
Senator KENNEDY. Well, the Federal Reserve has done a great
job, and yes, they have unlocked the credit markets, but at great
expense. We can talk another day about the size of the balance
sheet now at the Federal Reserve. But, look, I think Jay Powell is
a rock star. I think he did great.
Final thought. A lot of the banks and the small businesswomen
and businessmen think that the Federal Government is going to
31

double-cross them on the forgiveness of these loans. You need to be
mindful of that. You and the Administrator need to take some of
those smart minds in your office, and you have plenty of them, and
try to reduce that 11-page form to about half. And you both need,
in my opinion—I am not trying to tell you how to do your job, but
articulate to the businesspeople out there that the Federal Govern-
ment is not looking for ways to catch the banks or the businesses
who took this money in a minor mistake so the loans can be turned
into loans.
Secretary MNUCHIN. I assure you that is the case. And let me
just emphasize, in the recent bill there is an extension from 2 years
to 5 to 10 years, but I do not expect businesses are going to need
to use that, because I think the majority of this money is going to
be forgiven in the next few months, and that is our intent. And I
would just highlight——
Senator KENNEDY. And know that, Mr. Secretary, but they do not
trust us.
Secretary MNUCHIN. I understand——
Senator KENNEDY. And for good reason.
Secretary MNUCHIN [continuing]. And that is why we are going
to get the job done quickly. And there is also—let me just give a
little pitch—there is a third-party calculator that you can put in all
the information and you can get the forgiveness forms done in 15
minutes. And as I said, with the next legislation, with the safe har-
bor, it is going to be even easier.
So trust me. I have had people ask us about the form EZ, Sen-
ator Collins and others. You know, I would like to make this as
easy as possible. We do have a law that we are required to work
within. But I want to assure people that have taken this money,
our intent is to get this stuff processed quickly.
And I should have also mentioned, you know, we have been
speaking with you and others, obviously, on the state issue, and I
know you have potential legislation, so I should have also put that
on the list, obviously, that we will address on a bipartisan basis.
Senator KENNEDY. Think about helping the businesspeople who
were hurt from the looting and the burning.
Secretary MNUCHIN. Thank you.
Senator KENNEDY. Thank you, Mr. Chairman.
Chairman RUBIO. Senator Coons.
Senator COONS. Thank you, Mr. Chairman, Ranking Member
Cardin, and thank you, Secretary Mnuchin and Administrator
Carranza. As many of my colleagues have remarked, this is a rare
bright spot of bipartisanship and of partnership that has delivered
a lot of relief to millions of businesses and lots of households and
families. There are some aspects of our work together that have not
been realized as quickly as many of us had hoped. The EIDL loans
have ended up being a challenge to deliver. There are others where
there is more work to be done together to make the forgiveness
process swift and clear and appropriate.
I want to focus for a few minutes on a piece of the CARES Act,
the Small Business Debt Relief Act that maybe has not gotten the
visibility it needs and where we could, I think, make some more
progress.
32

Before COVID–19, African American business owners were typi-
cally denied bank loans at triple the rate of non-minority business
owners, and some of the pressures of this recession are
compounding preexisting inequalities, and that is exactly one of the
core reasons I worked, and many colleagues worked to get the Debt
Relief Act into CARES Title I. It gives six months of principal, in-
terest, and free relief for 7(a), 504, and microlending programs, pro-
grams that, by definition, existed in order to help those who were
denied loans elsewhere.
Just a quick example. Orange Theory Fitness in Pike Creek,
Delaware, right near where I grew up, is a black-owned business
that is now saving $9,000 a month because of this automatic debt
relief program. I spoke to its owner, Yvonne Gordon, last week,
who has been working tirelessly to reopen her small business and
to go back to serving customers.
But I am concerned that there are not enough small businesses
that are required, not just eligible but required by law to receive
this benefit. There are some remaining who have not.
So Administration Carranza, if you would, has the SBA identi-
fied all the businesses eligible to receive this automatic relief and
who their lenders are, and what are you doing to make sure that
every single covered borrower is fully participating in this auto-
matic relief program of six months?
Ms. CARRANZA. We have seen an uptick. It started off with about
one and a half billion and now it is up to two billion that have rec-
ognized the principal and the interest and coverage. And the email
was sent out. We spoke to the banks, but we have to do a better
job of that, another level of outreach. We saw the increase, and we
need to do a better job of not only tracking the businesses but also
making sure we work with the lenders. It is supposed to be an
automatic transaction and it has occurred for many, but I believe
knowledge is power and we will have to do a better job in that
area, sir.
Senator COONS. Thank you, Administrator. I do think we are still
falling short in reaching every business. The businesses I have
heard from in Delaware that have benefited from this, it has made
a critical and timely difference.
There is also a question that Senator Duckworth wanted me to
ask. She is at an Armed Service Committee hearing. We have both
worked on—it is a small technical issue. It was a drafting error,
I am convinced, in the CARES Act—but the cap for 7(a) and PPP
are tired. We passed, on a bipartisan basis here in the Senate, a
technical fix. It has been held up in the House. Just if you would
speak briefly to how important is it to avoid a shutdown of the 7(a)
loan program because of this drafting error?
Ms. CARRANZA. We do not see an exposure on the 7(a) shutting
down. We actually have available funds for that particular pro-
gram. So I need to get back to you on that. I have not heard of any
such position at this point. We are actually doing really well on our
504 and our Community Advantage. We are looking to develop an-
other loan option for our underserved communities. So I look for-
ward to getting back to you on that.
Senator COONS. I am happy to talk to you about it.
Ms. CARRANZA. Please.
33

Senator COONS. I know it is a minor issue but it has been flagged
by staff on both sides of the aisle, and I think we can work through
it.
Three more quick questions, if I can. The CARES Act gave $200
million to the GAO for oversight. The Ranking Member, Senator
Cardin, referenced this. The SBA makes data on individual loans
available on its web site for the 7(a) loan program, and the admin-
istration says it plans to do so for PPP loans at a future date.
Why have you not made individual loan PPP data available, and
can you assure that the GAO is going to get the access to the data
they need to do their job of oversight within the Executive branch?
Secretary MNUCHIN. I can comment on that.
Senator COONS. Thank you, Mr. Secretary.
Secretary MNUCHIN. First of all, let me just say we absolutely be-
lieve in transparency and we were very clear across the programs
on agreeing to significant transparency, especially in the Fed facili-
ties, which were not required.
As it relates to the names and amounts of specific PPP loans, we
believe that that is proprietary information, and in many cases for
sole proprietors and small businesses is confidential information.
So the reason why we are not disclosing the names and individual
amounts, unlike in the 7(a) program, is because of that issue, but
we are working with the GAO from an oversight to make sure that
they are comfortable and they do have access to information.
Senator COONS. Thank you, Secretary. I do think it is critical
that GAO have access to all the data they need to do their job. And
a quick question for you, Mr. Secretary, to follow up on something
Senator Kennedy referenced. As retail and hospitality are reopen-
ing, there are supply chains which often rely on credit, or finding,
you know, three months later there is a lot of concern about the
cost. There is much more liquidity. But credit insurance and factors
are becoming key blockages.
I have heard from a number of restauranteurs and folks in retail
that rely on credit to finance restarting, that they are really having
difficulty. I hope you are looking at credit insurance and sort of the
backstop end of the credit side of those supply chains.
Secretary MNUCHIN. Yes, and I am happy to follow up with you
and your office on that.
Senator COONS. Thank you. Your engagement has been terrific.
If I could ask just one last question.
Secretary MNUCHIN. Have you looked at the clock?
Senator COONS. I am. I am a minute and 45 over, and in 15 sec-
onds I will simply say I hope for a positive response on a bill ref-
erenced by Senators Cardin and Shaheen that we are introducing
for a Prioritized Paycheck Protection Program. For a genuinely
small business that has suffered significant revenue loss, it would
give them a chance for another PPP loan if they have responsibly
completely one, given that we have $140 billion in unused funds.
Thank you for your forbearance.
Chairman RUBIO. Senator Romney.
Senator ROMNEY. Thank you, Mr. Chairman. I want to subscribe
to the comments that Jim Risch indicated about support across our
country for the help that your respective agencies has provided for
our economy and for the people who work in our economy. I also
34

recognize there have been more than a few glitches and concerns
and errors that have occurred. I am thinking about the banana
stand on Arrested Development. If they went from 2 customers to
2,000 customers, it would make it kind of difficult for the guy dip-
ping the bananas in the chocolate sauce, and the peanuts, and so
forth. And you have had to staff up very quickly, and I think what
you have done has been to rescue many, many jobs for our country,
and I appreciate that very much.
What I hear as I talk to people in our small business community
is how much they appreciate these loans, but also they are begin-
ning to be concerned about whether or not they are going to be
qualified for forgiveness. And they note that in some cases they
tried to rehire employees. They found it hard to do so. In some
cases, people are making more by not working than they were by
working, so they are not able to get them back, or others have
moved elsewhere to get employment or opportunity elsewhere with
family.
I hope, and underscoring what Senator Kennedy said, that as
you look at ways to determine if people qualify for forgiveness, that
we are not sticklers, that we instead are looking to help people get
forgiveness as opposed to exacting penalties on that.
That being said, in terms of loan forgiveness, I am concerned
about circumstances where businesses applied for a loan, received
money, but actually saw no reduction in revenues at all, and re-
main fully profitable. And I hear about those circumstances. I see
them written about in various journals. And I believe that given
the fact that in the loan application you noted, quote, ‘‘that this
loan is necessary to support ongoing operations,’’ that if a business
did not see a reduction in revenue that it should not qualify for for-
giveness, that it should be maintained as a loan.
Is that something which you think guidance can be provided on,
or do you subscribe to that thought?
Secretary MNUCHIN. So, Senator Romney, thank you, and, you
know, I personally had the opportunity to talk to you about these
issues and many others. I know that the revenue test was some-
thing that the Committee actually considered when this was writ-
ten at the time, and I think the general idea we had was so many
people were going to be impacted by this, not to include the rev-
enue test.
Now as I have said publicly, when we put in that certification we
thought that people would self-select appropriately, and unfortu-
nately there were a number of companies that were high profile
that took the loans, and I publicly came out against that. We did
get about $12 billion returned. I think to a large extent it was from
large public companies and some large sporting teams that I am
a big fan of.
You know, and I had many discussions with many people on this
Committee on a bipartisan basis about this test on the certification.
We made a judgement that the majority of the small businesses,
98 percent by number, were under $2 million, and most likely le-
gitimately took it, so we issued a safe harbor. And on 2 percent of
the loans, that are the larger loans, we will do a review. Some of
that will be an automated review. And we hope to have the proper
balance on that.
35

Away from that there will be a more general audit, just to make
sure that people—there is not fraud in other things. But I look for-
ward to speaking to you and others on this issue.
Senator ROMNEY. Thank you. Mr. Secretary, you noted in your
opening comments that we expect a strong, phased recovery in the
third and fourth quarter, that there has been substantial cash re-
sources of our consumers, and that we expect a dramatic improve-
ment in Quarter 3 and Quarter 4.
So I am puzzled by the statement that you make that we are
going to need a stimulus to get the economy going again. I under-
stand very much that there are going to be certain sectors of the
economy—hospitality and so forth—that will need ongoing help,
but there may be small businesses that will need help and, there-
fore, we may want to extend the PPP program beyond the end of
the month.
But do you believe that we are going to need a stimulus, or is
the economy poised to come back—again, with those outliers, is the
economy poised to come back without further stimulus?
Secretary MNUCHIN. Well, I said it is one of the things we want
to consider, and the reason not to jump into CARES 4 is hopefully
we will not need a CARES 5 and a CARES 6. I do think the econ-
omy is going to rebound significantly, but I would also say there
is still significant damage in parts of the economy. And we are
going to consider using all of our fiscal tools, working with Con-
gress, to make sure that we restore this economy back to where it
was and where it should be, and to make sure that the many
Americans that still do not have job get back their jobs.
So we look forward to your business experience and working with
you and others to make sure we do this appropriately.
Senator ROMNEY. Thank you, Mr. Chairman.
Chairman RUBIO. Thank you. And before I turn it over to Sen-
ator Booker, I just want to comment on the revenue thing. We
talked about it quite a bit, and Senator Cardin, Collins, and Sha-
heen will recall. We had two concerns about it. The first, on the
front end, is that it would create all this paperwork. The small
business would have to accumulate all of this paperwork to show
what the revenue was so they could compare it. So I was concerned
it would slow down that process. Because I know at first blush, es-
pecially, we were all very—I am very sympathetic to this argument
that if you are making a bunch of money, why do you need this
loan?
The other thing we were concerned about is what is a business
do, and sometimes they get creative and they reinvent themselves
in a crisis. For example, maybe you made clothes but now you are
making masks and PPP, not just to keep people employed but re-
invent themselves and provide a need. And we did not want to dis-
courage or punish people from doing it. It is a complicated issue.
I think it is one we should continue to talk about. We certainly do
not want people taking advantage of it.
But those are some of the things we were worried about when
we were talking about all this at the front end. Senator Booker.
Senator BOOKER. Thank you very much. I just, first of all, want
to just echo a lot of the comments that have been made by people
on both sides of the aisle about the work that not just the two of
36

you have done in this really difficult time in American history but,
frankly, your teams, the civil servants that work under you. Your
agencies have been able to do things that we could not even imag-
ine just at the end of last year. So I just want to give my gratitude
for the difference it has made in my state. It has just been extraor-
dinary, and there are a lot of folks that are happy.
And I just want to echo, also, the pride I have in working in such
a bipartisan way. We have seen people on both sides of the aisle
on this Committee come together and just do really good work, I
think. In Senator Rubio’s opening comments he talked about the
fact that so many of us rose to the occasion, put aside politics, and
really focused on people and businesses. So I am really thankful for
that.
I come at this next issue in a very personal way but also a very
bipartisan way. A lot of it is my own faith in Matthew 25, just
being concerned with people who are often marginalized. Eighty-
seven of us Senators voted to think that a lot of the sentences we
give to people are just too dag-nab long.
And we are, in a bipartisan way, doing a lot on criminal justice
reform. I worked with the administration, talked to Jared. My Fair
Chance bill passed, about people coming out of prison and elimi-
nating that box that they often have to check. And so I am still
perplexed, though I am grateful that you, Secretary Mnuchin, of-
fered to revisit this issue.
And I am grateful, again, in a bipartisan way, Senators Portman,
Cardin, Lankford, and others put together legislation to eliminate
the restrictions that are preventing people from getting access to
these loans, incredible entrepreneurs in cities and communities all
across America who are now denied the aid, or seeing their small
businesses collapse, which are often critical pillars in many com-
munities. This bipartisan issue, it has been endorsed and sup-
ported by everybody from the ACLU to the American Conservative
Union, and FreedomWorks.
And so I just, again, Mr. Secretary, want to know, do you believe
in an individual who has started a business, is contributing to the
local economy, is creating jobs, who has prior unrelated convictions,
should really be barred from participating in the PPP program?
Secretary MNUCHIN. Well, first let me say we want to work with
you and others to fix this and fix this really quickly. As I said, the
original 7(a) program had seven years. We reduced it to five years.
We thought we would reduce it. We are happy—if there is bipar-
tisan support we are happy to make the change this week and re-
duce it even more.
So again, I know there is—we obviously have some issue about
people who were convicted for financial crimes and other things.
Senator BOOKER. You and I both know that is an easy thing to
eliminate, the financial crimes.
Secretary MNUCHIN. Again, this is—we are happy to be respon-
sive on this.
Senator BOOKER. I am grateful. I have limited time so I will just
say that this is not a small issue. This is thousands of people, af-
fecting tens of thousands of jobs. This just basic ideal of justice. It
seems incredible.
37

And to that extent I would like to put something else on your
radar screen, something called pretrial diversion. We know what
pretrial diversion is, but for those who may not, these are specifi-
cally designed programs to allow individuals to plead guilty, and
subject to completion of certain court-mandated programming their
guilty plea is vacated, and they do not have that mark of a crimi-
nal record, which has 40,000 collateral consequences if you have a
criminal conviction.
It is a good program. And it only happens when the judge, the
prosecutor, and the defense attorney, all components of our crimi-
nal justice system, agree. They come together and agree that the
individual should not have to suffer those collateral consequences
associated with a criminal conviction.
So despite the consensus of the entire criminal justice commu-
nity, we are doing the contrary. We are denying people that are in
these pretrial diversion programs, who are entrepreneurs, contrib-
uting to our economy, employing other Americans, we are denying
them what prosecutors, judges, and defense attorneys all agree
should not be a bar, should not be a bar on collateral consequences.
The PPP program is being denied to those folks, and this should
shock the conscious of us all.
Secretary MNUCHIN. Yeah. Let me just say, I am not aware of
that but I will work with the Administrator, and if that is the case
we will make that fix immediately.
Senator BOOKER. Oh, hallelujah. Thank God. Pass the collection
plate. Thank you, sir. I really appreciate that. That commitment is
noted, and I am really grateful.
I want to be respectful of the time. In 10 seconds, I just want
to echo what a lot of my colleagues have already said about still
not an equitable distribution of the funds. A lot of minorities are
falling out of this program, and a lot of it is just because small
businesses, the smallest sort of, as we call them, mom-and-pop
shops, are not. Senator Daines and I have mentioned it to you be-
fore, have a bill to help those funds that are started up—New Jer-
sey has one through our Economic Development Authority, they
are all across our country—to seed them with resources to help, be-
cause they are better targeted toward those smaller mom-and-pop
shops. It will address issues of equity and getting a lot of funds out
the door.
I just, again, make that appeal to my colleagues on this, to look
at our bipartisan effort to do this. And again, I respect and appre-
ciate your willingness to help this. But thank you very much for
the comments you just made about people in pretrial diversion. It
makes me extraordinarily happy. So thank you.
Thank you, Mr. Chairman.
Chairman RUBIO. Thank you, and thank you for raising that
issue.
And, in fairness, the Secretary has told us, in numerous con-
versations, that if we could come up with bipartisan language that
we support, he would be more than happy to facilitate it on the
criminal justice issue. I think we are fairly close on that, and I
think time is of the essence, given the June 30th date that awaits
on the cutoff of the program.
38

Secretary MNUCHIN. Yeah, and I will reiterate that, on behalf of
the Administrator and I. If we get a letter from the Chair and the
Ranking Member, we will institute the changes. We had said that
on the call. So again, we will make your change immediately, but
in regards to other changes on this issue, we are happy to imple-
ment them as soon as we get guidance from both of you.
Senator BOOKER. Thank you very much.
Chairman RUBIO. Thank you.
Senator Ernst.
Senator ERNST. Thank you, Mr. Chair, and I would like to asso-
ciate myself as well with the concerns of Senator Booker. In Iowa,
of course, we are very short in our labor pool, and we truly value
those that have served their time, their commitment to the great
State of Iowa and those that want to find a positive path forward
through entrepreneurship, and starting small businesses. So cer-
tainly I think that a number of us would want to engage in those
activities to make sure that we are extending opportunity for ev-
eryone that does deserve that opportunity.
But thank you, Chairman, and thank you, Secretary, very much,
for being here. And we are seeing some strong numbers coming for-
ward, and I am thrilled. And I think because of the work that has
been done through the Small Business Administration, through the
Treasury, through especially the Paycheck Protection Program, we
have been able to save, preserve a number of small businesses and
jobs across the United States, and that has been reflected in the
numbers that we are seeing. In May, it was projected that we
would lose 8 million jobs, and instead we were able to add back 2.5
million. And again, I credit so much the program that you have put
into place, that we have enacted, in playing a key role for a really
stunning turnaround in the economy, so thank you for that.
I do appreciate your hard work in implementing the program.
There is still a lot of work to do, things that have been identified,
just as Senator Booker did. But we are definitely heading in the
right direction.
I do have a question, Administrator. Last month we found out
that Planned Parenthood affiliates received $80 million through
PPP, despite the fact that SBA’s affiliation rules disqualify them.
What actions are being taken to ensure that Planned Parenthood
returns those funds and is held accountable for the violation of
SBA rules?
Ms. CARRANZA. Well, SBA takes the affiliation rules very—we
look at it very closely and very fairly. And at this point I would
just say that all affiliations are being looked at, and I am not in
a position to speak about any one particular borrower at this point.
Senator ERNST. But they will be reviewed, not just Planned Par-
enthood but all of the other affiliations that have unfairly taken
advantage of the SBA.
Ms. CARRANZA. Yes. The necessary course of action, yes.
Senator ERNST. Okay. Thank you.
Ms. CARRANZA. Thank you.
Senator ERNST. And then, as well, for the Secretary, forgiveness,
of course, has become a large issue now that we are moving into
a state of recovery. The PPP forgiveness application, it is very com-
plicated, and I hear that from Iowans time and time again, where
39

the application process was fairly simple for them, but the forgive-
ness portion of that application process is very confusing.
Our banks and our small businesses have told us that a team of
lawyers and accountants would be necessary just to help those
businesses fill out that forgiveness application, which puts our
smallest businesses at a significant disadvantage.
Do you believe that Treasury and SBA have the authority to sim-
plify the application for small borrowers, and if not, would you be
willing to work with the Committee on this issue?
Secretary MNUCHIN. First of all, let me just tell you, I personally
looked at and helped design the application form, and I personally
reviewed the forgiveness form, and I do not want this to be any
more complicated than all of you do. There are requirements in the
bill that make it difficult on the forgiveness. I do think, in the new
law, the safe harbor, for people who check the safe harbor, will
make it significantly easier, and will not have to do most of the cal-
culations.
And we are coming out with new forms for people who check
that.
And again, I would also just advertise, there is a third-party cal-
culator that if you put in all the information it fills it out in 15
minutes, but I can assure you we will work with you very closely.
We want to make this easy for people to do, and now with the safe
harbor most people will have the benefit of that.
Senator ERNST. Very good. I appreciate that. Thank you very
much.
Chairman RUBIO. We just got a call from the lawyers and the ac-
countants. They are upset at what you just said.
[Laughter.]
Senator Rosen. Senator Rosen. The light is on, but I think it——
Secretary MNUCHIN. I figured out in the beginning it works with-
out the light.
Senator ROSEN. All right. You can hear me now, anyway. I want
to thank you, Chairman Rubio, for always taking my call. Ranking
Member Cardin, Administrator Carranza, Secretary Mnuchin, you
know, you have really provided leadership in helping our small
businesses; especially for those of us in Nevada, you really helped
us with that critical support that we needed during these chal-
lenges and unprecedented times. I want to really thank you in pub-
lic for your willingness to provide our small Nevada gaming busi-
ness up and down the state. People think of just the big hotels and
the strip, but it is up and down our state everywhere, and everyone
is very, very appreciative.
But I want to talk a little bit about EIDL reform, and over, of
course, the past few months, the coronavirus pandemic has just
devastated small business in Nevada: 99 percent of our business is
small business. We also have, unfortunately, the highest unemploy-
ment rate, 28 percent, up over 24 percentage points from last year.
And so it is clear that our unemployment rate, of course, is a reflec-
tion of the overall state that the pandemic has had on small busi-
ness.
My office has directly helped more than 560 of these small busi-
nesses with their questions with the CARES Act. I am going to give
a shout-out to our Small Business Administrator, Joe Amato. He
40

has done over his hundredth webinar. I have been able to partici-
pate on a lot of those. But the one common complaint that we have
received repeatedly is about the SBA’s $1,000 per employee cap on
EIDL advance grants and its $150,000 cap on the EIDL loans. That
is a 93-percent reduction from the $2 million level that we author-
ized in the CARES Act.
Many Nevada businesses, of course, have contacted my office,
telling me that the $150,000 just is not enough, does not provide
enough support, and they are going to probably have to perma-
nently close their businesses.
So Ranking Member Cardin earlier spoke about this. These filing
caps were not the intent of Congress when we passed the CARES
Act. They were not part of any deal that small business owners
thought when they applied for their EIDL support. Senator Cornyn
and I and others, we have sent a letter recently on this same issue
back in April. I have raised it up. I raised it a few weeks ago when
we were on the phone.
So, Administrator Carranza, following up on the Ranking Mem-
ber’s question earlier, why has the SBA placed that $150,000 bor-
rowing limit on the EIDL loans? How did you come up with that
number? And if the reason is funding, why didn’t you come back
to us for support?
Ms. CARRANZA. Senator Rosen, I appreciate your question be-
cause it has been raised, and I have been dealing with it personally
because small businesses approach my office as well. I mean, I get
personal emails and follow-up on their requests. So I am very close
to the situation.
But I want to reassure every member on this Committee that it
was not an arbitrary number. It was a matter of realizing that we
had over 5 million applications in the queue, and thanks to this
Committee and thank you, Senator Cardin, for providing the coun-
cil the opportunity to speak with you and the Chairman about
what was in the pipeline, the fact that we had already exhausted
the $7 billion that we had in the pipeline, and then also what we
had available was to ensure that we gave not just something but
based on 6 months of operating cost, that is basically how the for-
mula is calculated. And the average loan at that given time was
being realized at about $83,000, so we thought if I can manage
that—the decisions were made that if we could manage the 5 mil-
lion applicants that were already in the queue, that had been wait-
ing for the funds, that we could cover all with the $50 billion sub-
sidy.
Senator ROSEN. And the $1,000 per employee, that has also been
extremely difficult.
Ms. CARRANZA. Well, the grant was the same calculation in the
sense that we looked at $1,000 per employee. The first applicants,
where there were about 700,000 that were sole proprietors, they
had one to four employees, and, again, to allocate that many appli-
cants a grant, we needed to scale to cover——
Senator ROSEN. So how will you be assessing this going forward
so my businesses in Nevada, over nearly 300,000, which only about
83,000 have been able to take advantage of PPP or EIDL.
Ms. CARRANZA. Yes, Senator Rosen. We did not want to discour-
age anyone in that queue, in the EIDL queue, and we sent them
41

a couple of emails indicating and demonstrating the comparison of
EIDL, what was available, and what they could achieve with the
PPP program because there were still sufficient funds in the pro-
gram up to this point. And that is the other option we tried to clar-
ify, that there is another loan option that they can consider if they
are in need of greater funds.
At this time, as I mentioned earlier, there are individuals that
miscalculated their operating costs from 6 months to 3 months. We
are revisiting those particular businesses——
Senator ROSEN. I had a chance to reply.
Ms. CARRANZA. Yes, yes. And so we have about 65,000 of those
that we are reconciling, so that if they needed up to 150,000, we
have it available to them. And as of next week, we will be taking
in new applicants as well, the non-ags.
Senator ROSEN. Thank you.
Ms. CARRANZA. You are welcome.
Senator ROSEN. We are not a very large ag state. We have some
but not as much as others, and so that has hurt us disproportion-
ately.
Ms. CARRANZA. But I look forward to working with your office.
If there is a particular sector that is really problematic, I look for-
ward to working with you on that.
Senator ROSEN. Thank you. I appreciate it.
Ms. CARRANZA. You are welcome.
Chairman RUBIO. Thank you. All right. Just to update you, we
have a nearly perfect attendance today. We have Senator Hawley,
Senator Collins, and then if there are any wrap-up items, I will ask
them, and then we will send you on your way.
Senator Hawley.
Senator HAWLEY. Thank you very much, Mr. Chairman. Thanks
for holding this hearing.
I have been closely monitoring the implementation of the relief
programs, the various relief programs Congress has established,
and I have to say I am thrilled, given last week’s job numbers, I
think, that the PPP has played a vital role, has been a vital lifeline
during the shutdowns. It has clearly helped to stop the economic
hemorrhaging and put us in a place now for recovery. And so that
is, I think, a great success story, and I want to thank the Chair-
man for his outstanding work on this.
I do have some questions about EIDL, following up on what Sen-
ator Rosen was just asking about. I want to come back to those.
Let me start, Administrator Carranza, with you, just on the
Planned Parenthood issue. Planned Parenthood has 16,000 employ-
ees. And this is not a gray issue; it is a black-and-white issue. They
talk about it in all of their organizing documents. I am just won-
dering. When 37 Planned Parenthood offices, 37 separate offices,
applied for PPP funds, why did the internal system at the SBA not
flag the applications?
Ms. CARRANZA. Senator, our system accepts applications and as-
signs a loan number, and then loan arrangement is made between
the borrower and the lender. So when you have about 5 million ap-
plications being injected into our system, we do not have a system
that flags affiliations or any particular industry. It just assigns a
loan number, and that is why it is very important for us that when
42

we looked at sectors—and some sectors had certain tendencies and
certain loan values, we then—and the affiliations were one of
them—we started to assess, you know, the value of how they exer-
cised or interpreted the——
Senator HAWLEY. So what you are telling me is that the SBA did
not have any safeguards in place on this particular question. You
did not have any system in place to flag applications like——
Ms. CARRANZA. At that given time, that is correct.
Senator HAWLEY. Despite the fact, I might add, that the affili-
ation rule was pretty fiercely debated as part of the PPP package,
as part of the CARES package, amended several times.
Tell me about the Planned Parenthood affiliates that wrongly re-
ceived funds. How many of those has SBA contacted now.
Ms. CARRANZA. At this point I would not be able to speak about
a particular loan situation, so——
Senator HAWLEY. Why?
Ms. CARRANZA. It is proprietary information, and it is——
Senator HAWLEY. I am not asking you about a loan situation. I
am asking you how many you have contacted. The SBA has put out
a statement saying that you have contacted the affiliates. You have
sent letters. That has been publicly reported. How many?
Ms. CARRANZA. The office did receive your letters, and we acted
accordingly. But at this point, given the detail on a particular bor-
rower would just not be——
Senator HAWLEY. So you can confirm for the record that you
have sent letters to Planned Parenthood affiliates, but you will not
tell us how many? That is your testimony?
Ms. CARRANZA. No. I am saying that the affiliation or any bor-
rower that we are taking a course of action is that indeed, and I
do not talk about the particulars.
Senator HAWLEY. How many Planned Parenthood affiliates have
returned the funds?
Ms. CARRANZA. Again, I have to take the position that I am not
able to share that borrower information at this——
Senator HAWLEY. When are you going to be able to? And how are
we going to conduct oversight if you will not give us the informa-
tion?
Ms. CARRANZA. I look forward to speaking with you in your——
Senator HAWLEY. I am sorry?
Ms. CARRANZA. I look forward to meeting with you and dis-
cussing the situation, but at this point, I will not be able to speak
to it publicly.
Senator HAWLEY. Well, what is different between discussing it
with me in person and discussing it here when you are under oath?
Ms. CARRANZA. Just to clarify, again, the SBA position, I would
not be able to divulge any of the details, just explain what our
practice and our policy is.
Senator HAWLEY. Well, how are you going to provide this Com-
mittee with information about this breach of the rules that are in
the statute so that we can conduct oversight? How are we going to
conduct our oversight if we do not know any of the details? And
since you will not do it now, when will you do it? What are the
guidelines that you will follow in disclosing this information?
43

Ms. CARRANZA. Well, Senator, what I would like to do is to re-
view with you the controls that we have put in place and the
course of action that we take with all affiliations, not just——
Senator HAWLEY. Okay. We will follow up with you. For the
record, I would like to state it is important that this Committee
conduct its oversight of rules that are written in the statute, and
I want answers about how Planned Parenthood, which it is forbid-
den by the statute that this Congress wrote and passed into law—
it is not a rule; it is not a regulation. It is in the statute. I want
to know how it happened that $80 million was diverted to Planned
Parenthood affiliates that is plainly not permissible under the stat-
ute. This Committee has an obligation to perform oversight, and I
want answers on that. And I will not accept that you cannot tell
us or that you do not know. So I want answers.
So we will follow up with you. We will follow up with the Depart-
ment of Justice. But I am just saying for the record it will not be
acceptable to me that you are not going to tell us, you are not going
to get back to us, you are not going to be responsive.
Ms. CARRANZA. No, Senator——
Senator HAWLEY. And, frankly, the pattern of unresponsiveness
from the SBA throughout this process has been disturbing, which
I have said for the record and I will say it again today, I am dis-
turbed by it.
Mr. Chairman, one other question, if I could, just on——
Ms. CARRANZA. Senator Hawley, if I——
Senator HAWLEY. I have got to move on. You have made your po-
sition clear——
Ms. CARRANZA. I want to let you know that I do know the sta-
tus——
Senator HAWLEY [continuing]. And you are not being responsive.
Let me ask you another question while I have got you here. On
the EIDL applications, you answered an earlier question that EIDL
applications are now in the portal. I would like to know the
timeline of when they will be processed. I have had applicants in
my state that have waited 80 days—8–0 days—for any kind of a
response on their EIDL applications. Senator Rosen was just talk-
ing about there are similar problems in her state. When will they
be processed. We have repeatedly asked for answers. They cannot
get answers. I cannot get answers. When will they be processed?
And when will these good folks get some response to their applica-
tion?
Ms. CARRANZA. Senator Hawley, I can extract all of the applica-
tions that pertain to your particular state, and I can review with
you the status of them. At this current time, we have about 2.5
million applications that have been processed. There is a high num-
ber of declines. We are reinstating those particular declines once
they fix their information. The other two and a half will be injected
by next week, so all of the 5.4 million applications that we had in
the queue since March will now be in what we call the ‘‘loan proc-
essing portal.’’
I will have visibility when that loan is positioned there, and I can
share with you exactly where your loan portfolio stands.
44

Senator HAWLEY. My time has expired. I will follow up with you.
I just want to emphasize again that it is absolutely vital for people
who have been waiting for 80 days plus that——
Ms. CARRANZA. I agree with you, Senator.
Senator HAWLEY [continuing]. Their application be processed.
And they do not care what you label the queue, you are in this
queue or that queue. They just want it processed. They need an an-
swer. They are waiting on a vital lifeline. So we look forward to
working with you on that.
Thank you, Mr. Chairman.
Ms. CARRANZA. Thank you, Senator.
Chairman RUBIO. Thank you.
Senator Collins.
Senator COLLINS. Thank you, Mr. Chairman.
Mr. Chairman, let me start by thanking you for the invitation to
join your Committee today. I also want to say what a rewarding
experience it was to work with you, with Senator Cardin, and Sen-
ator Shaheen in developing the PPP program, which has been of
tremendous benefit to more than 4 million small businesses and
their employees.
I want to turn to our witnesses, and, first, I want to emphasize
a point that many other Senators have brought up today, and that
is that many small businesses are reaching the end of their 8-week
loan period. And yet they are still unable to fully reopen because
of state restrictions. For example, in the State of Maine, there are
three counties that still are under tough restrictions where they
cannot have in-restaurant dining.
I want to read to you the words from a restaurant owner in Port-
land which really summarizes it well. It is a woman-owned res-
taurant, a great place to eat. She writes: ‘‘The PPP is the only
thing that has kept us in business up to this point. Our staff has
been so grateful. It has not only allowed us to pay them and open
for business, but allowed us to pay our rent in full. There is no
question without the PPP we would not be operating right now and
would have furloughed all of our staff. With that being said, we did
just run out last week. We now have curbside and only six outdoor
tables, and we can only serve a maximum of 28 people a night.’’
She writes that she lives in fear of a rainy night, in which case
she cannot serve anybody in those outside tables. And she says,
‘‘Without the State easing the restrictions on indoor seating, I just
do not see how we can continue much longer.’’
This is an extremely viable business that was doing very well
until the state restrictions and the coronavirus hit. So we now
know that we have $130 billion of funding for this program that
remains available. So I want to press you a little bit more. I know
you have said that you do think that there should be more support.
But would you support allowing small borrowers in heavily affected
sectors, such as the tourism industry, that cannot fully reopen be-
cause of state restrictions, to seek additional PPP funds, apply
again or extend perhaps for another 4 weeks, so that they can just
make it through this period where they are forced to be closed? Be-
cause they are viable businesses, and it is not their fault.
Mr. Secretary.
45

Secretary MNUCHIN. Well, first of all, I want to personally thank
you for your involvement in this, and we have become texting bud-
dies, so all of your help along the way. I am especially sympathetic
to the restaurants. I would just say we had a large number of res-
taurant owners and industry people come in and meet with the
President, and we heard the 24-week issue. And I am very pleased
that Congress responded to that.
As I said before, I think that restaurants, and hotels in par-
ticular, do need more help. We have taken great pride in the bipar-
tisan work, so if there is support for you in the Committee on a
bipartisan basis, we are very seriously going to look at that issue.
And let me just give a pitch on indoor seating. I am happy that
in D.C. they have now allowed restaurants open. I have tried to
support restaurants. I do not see why on an indoor basis socially
distanced that restaurants cannot be serving indoors, particularly
in parts of the country where COVID is under control. So I agree
with you this distinction between indoor and outdoor seems a bit
random, and I do not know what people would do when it rains.
Senator COLLINS. Thank you.
I have one technical question, if the Chairman would indulge me.
It is a very quick question for the Secretary, and that is, I am get-
ting a lot of questions about the timing for seeking forgiveness, and
there are some businesses that have gone through the 8 weeks.
They are reopened, and they would like to close it out now. But
they are wondering, with the extension to 24 weeks, if they have
to wait until the 24 weeks. Can they close out at any time?
Secretary MNUCHIN. If you have used all your money, you can
apply for forgiveness. The 24 weeks is only meant to be an option
for you. If you have not used your money, specifically if you are not
open or otherwise, you can extend it. But, no, we would encourage
people that, as they have used all their money properly, please
seek forgiveness so we can process these loans and get them off of
the books.
Senator COLLINS. And that would be helpful for workload pur-
poses for both of you as well. Thank you very much, and thank you
both.
Thank you, Mr. Chairman. Thank you, Senator Cardin.
Chairman RUBIO. Thank you. Since I reserved my time, I am just
going to touch on some quick points here. We will go to the Rank-
ing Member who has some additional thoughts, and we have a vote
that starts at 12:15 so we are almost done here, and very nearly
perfect attendance today, which is—we have not had that before,
so I appreciate you both coming in.
Just a quick question. After the changes that were made last
week with the additional flexibility, down to 60 percent for payroll,
24 weeks to pay it back, have we seen businesses that said the old
PPP did not work for me, but the new one does? Have we seen any
sort of uptick or any indication that there are more businesses lin-
ing up now to use the program as a result of that change?
Secretary MNUCHIN. My expectation is that we will definitely see
businesses that were on the sidelines and now take it, especially
restaurants that had issues. But, yes, I would expect we will see
that.
46

Chairman RUBIO. So we just do not know on the nightly numbers
if that has been reflected yet?
Ms. CARRANZA. We do not have actual numbers at SBA, but
there has been expressions of relief that there is more time, so it
is worthwhile for——
Chairman RUBIO. I guess the curiosity is whether—I am con-
fident that people have already gotten the loan or feel better about
being able to use what they already have. I am curious whether
there are people out there or businesses out there now who think
this works for us and may access this. We will keep a close eye on
that as we get down the stretch here with about 21⁄2 weeks left be-
fore the June 30th cut-off.
The observation, I am glad you talked about targeted relief and
what we do moving forward. One of the things that does concern
me is a disparity in the recovery. I will just give you one example
of what I just read awhile back, not long ago, earlier today, on
what was what a recent study estimated. It is pretty shocking. It
found that in majority African American neighborhoods, 95 percent
of small businesses in those neighborhoods had a cash buffer of less
than 2 weeks. In majority white neighborhoods, non-white, non-
Hispanic neighborhoods, 30 percent had less than 2 weeks cash on
hand. Clearly, the 30 percent in those neighborhoods need help.
There is no disputing that. But 95 percent versus 30 percent is a
big disparity.
And so one of the things that I think we need to think through
as we structure this, is avoiding those—[audio system cuts out]—
is that what it is? They cut out the microphones?
So this is something we want to keep an eye on.
I think we are up to 5,400 total lenders, something around that
number, something over 5,000. And about 4,400 to 5,400 appear to
be smaller community-based lenders, nonbank lenders. And I
would just say as we move toward future efforts, whether it is a
program like this or some things we do in the future, this is, I
think, a really important infrastructure that has been created for
delivering relief that I do not think we should abandon the mecha-
nism, that we should look for opportunities to repurpose for just
general operations but for any additional relief. To this is an im-
pressive stable of participants that I think is going to matter a lot.
I have two questions for the Administrator. First, it was the clear
intent of us who sat around and wrote this up that you use them
both PPE and EIDL, that you use them both as long as they were
not for the same purpose. We specifically discussed the case of
someone who had already applied for EIDL before PPP was cre-
ated, and we wanted to make sure that once PPP came online they
had the opportunity to go back and either get PPP or swap it out
or what have you. We still do not have any guidance, we are await-
ing guidance on how these two programs are supposed to intersect.
When are we going to have guidance, Administrator, on these two
programs and how they would work together and particularly busi-
nesses in that predicament?
Ms. CARRANZA. Yes, our staff has been working all weekend to
process that. I believe that has been released. Yes, that has been
released.
47

Chairman RUBIO. Do we have that guidance? Okay. We say we
have not seen that. You say we haveB
Ms. CARRANZA. No, Senator, I am corrected by my assistant ad-
ministrator. We have worked on it. It has not been released but we
are soon releasing it.
Chairman RUBIO. All right. That is important.
Ms. CARRANZA. Yes.
Chairman RUBIO. And my last question is GAO has reached out
to numerous congressional offices, including my own, as recently as
yesterday, and here is what they are saying. They are telling us
that the SBA is preventing the GAO from accessing the informa-
tion it needs to fulfill, something we required in the statute, and
that is that they report to Congress. So the CARES Act requires
the GAO to issue bimonthly reports to Congress on agency imple-
mentation of the act with the first report due on June 25th, which
is coming up. This is what they are telling us. They are saying that
of all the agencies, the SBA is the only one that has not cooperated
and that lack of cooperation has impacted their efforts to gather in-
formation that they need to fulfill the mandated reporting require-
ment that we put in place in the law.
I imagine you have heard the same thing from them. What is
happening there? Because we need to get that solved.
Ms. CARRANZA. Chairman, I spoke to Chairman Quigley yester-
day from Appropriations, and I expressed to him that by next week
we should be able to resolve some data that his staff has been ask-
ing for. So I told him that we would be very punctual with it and
as thorough as we possibly can. So we had a meeting of the minds
yesterday and clarified what the delay—the reasons for the delay.
But that should not continue.
Chairman RUBIO. So your expectation is that at some point next
week——
Ms. CARRANZA. Yes.
Chairman RUBIO [continuing]. This should no longer be an issue?
Ms. CARRANZA. We are preparing the data for the DATA Act, and
so that is in about a week or two, max, yes. Chairman, I will keep
you posted on when that is going——
Chairman RUBIO. Yeah, we just need to get that fixed. That is
something that is in the law, and it reflects poorly on——
Ms. CARRANZA. Absolutely.
Chairman RUBIO. Okay.
Ranking Member.
Senator CARDIN. Well, let me thank both of our witnesses again.
This was very, very helpful. A couple observations.
First, on the EIDL program, you are hearing from all the mem-
bers of this Committee that it is not working at the level that we
anticipated it. I think we can understand that initially there were
certain administrative decisions that had to be made because of the
volume. But two things have happened that are really not accept-
able, and that is, people, business, have been left in the dark as
to the status of their EIDL loans and have been delayed beyond it
being useful for them to plan their businesses during this period
of time. That needs to be corrected.
And, secondly, the cap that was put on, the $150,000, really
makes no sense today. I will be very surprised if the final numbers
48

of loans given out under EIDL come anywhere close to the capacity
that you have as authorized by Congress. So I would just urge you
to look at correcting the program as quickly as possible from the
timely status of applications and the dollar volume.
The second thing, there seems to be a growing consensus of a
need for a second round for small business, and, Mr. Secretary, in
response to one of our members, I could not agree with you more.
We had to get money out quickly on the first round. The second
round we can be more discerning. So I hope that we can start that
conversation now about how we could configure a second round for
small business. I understand you might have beyond small busi-
nesses, but it would be helpful, I think, to try to get those discus-
sions started now because, as the Senate normally operates, as
Congress normally operates, we usually get panicked around a
deadline. So it would be nice if we could flesh this out a little bit
earlier.
We took a little bit earlier lead on small business than the other
parts of the CARES Act, and it allowed us to have, I think, a more
thoughtful draft legislation than some of the other sections.
The third point is that it seems to me, in regards to those that
have criminal records, there is a consensus, and I would hope that
this week we could get all of us together and try to resolve that
issue in a broader manner, as we have talked about at this hear-
ing.
The last point I want to mention is Senator Hawley’s comments
in regards to the affiliate rules. I could not disagree with him more
as it relates to the conclusory statements he made in regards to
Planned Parenthood, and I appreciate the Administrator not talk-
ing about a specific case, which I think is appropriate. So I agree
with you on that.
But let me just point one of the reasons we would like to get
more granular data so that we can understand the scope of the
issues. We wrestled with how to deal with affiliates for the new
categories of businesses that qualify for the PPP program that did
not qualify for the traditional 7(a) program, including the nonprofit
and veterans organizations. And we specifically put the provision
in the CARES Act that said the provisions applicable to affiliations
under Section 121.103 of Title 13, Code of Federal Regulation, to
a nonprofit organization or veterans organization in the same man-
ner as with respect to a small business concern. So we expected
you to use the same affiliate rules that you use currently to quality
for 7(a) loans for the for-profit community for the new eligible PPP
7(a) borrowers.
So it would be helpful for us—and then we were concerned when
publicity arose under the Planned Parenthood that we do not start
imposing an ideological test on affiliation, and the Democratic
members of the Senate wrote a letter in May to you saying it is
critical that the SBA implement the PPP as Congress directed
without ideological efforts to treat certain nonprofit organizations
from others.
So I just really want to put that in the record in regard to Sen-
ator Hawley’s comments, but it does underscore how important it
would be for us to get the granular information as to the number
of loans that are issued to affiliates and so that we can get a feel
49

for how many organizations would not have qualified if we included
all the affiliates in the numbers for the 500.
But it is also true in the NIC code exception. It would be nice
for us to have that granular information. It might also be helpful
for us to have that information in regards to use that use the alter-
native test for determining the number of employees to qualify for
a small business loan.
So the more of that type of information we can get, we can then
analyze what those exceptions mean. But we should not draw a
conclusion that one particular organization was treated differently
than any of the other organizations because of their organizing
mission, and that is one thing that I would just urge us to be very
careful that we do not start to discriminatorily implement ways of
implementing laws that are passed by Congress.
Ms. CARRANZA. I understand that, Senator, and I look forward to
meeting with you to discuss the process that we have found.
Senator CARDIN. Thank you. Thank you, Mr. Chairman.
Chairman RUBIO. Thank you. Look, we are very grateful that you
came in today. It is important. As you saw, the level of interest is
extraordinary in the Senate, across the country, and obviously, we
have got some follow-up to work through. But we appreciate the
answers you gave us here today. They are important.
As a housekeeping item, the hearing record will remain open,
and any statements or questions for the record should be submitted
by Wednesday, July 1st, at 5:00 p.m. And, with that, thank you
both and this hearing is adjourned.
Ms. CARRANZA. Thank you.
Secretary MNUCHIN. Thank you.
[Whereupon, at 12:19 p.m., the Committee was adjourned.]
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