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Letter — Committee on Small Business to SBA on SBDC Client Privacy Rule Changes (September 12, 2023)

Summary

The Committee on Small Business writes to SBA Administrator Guzman and Associate Administrator Purdy that the Committee is investigating the Small Business Administration's proposed changes to Small Business Development Center (SBDC) client privacy rules. The letter states that the changes would allow the SBA to disclose personally identifiable information from small businesses using SBDCs to federal or state agencies and remove the provision enabling small businesses to opt out of providing SBA this information. It requests a staff level briefing no later than September 19, 2023, and information, including a list of federal agencies that requested small business personal data from the SBDC program, no later than September 26, 2023. The signature block names Roger Williams, Chairman.

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Issuer
Congressional materials
Document type
405686 2023 09 12 Chairman Williams Pens Sba Administrator On New Pr Att0
Date
2023-09-12
Case
405686 2023 09 12 Chairman Williams Pens Sba Administrator On New Pr Att0

Cite this document

“Letter — Committee on Small Business to SBA on SBDC Client Privacy Rule Changes (September 12, 2023).” Dated 2023-09-12. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/2023-09-12-405686-2023-09-12-chairman-williams-pens-sba-administrator-on-new-pr-att0/, SHA-256 70fb346786c88cba38c690eb0bbc384a5f4f51ec13f3deb7b3e0492b52552dc3.

Full text

                                            September 12, 2023

    The Honorable Isabella Casillas Guzman                 Mr. Bruce Purdy
    Administrator                                          Associate Administrator
    U.S. Small Business Administration                     Office of Small Business Development Centers
    409 3rd Street SW                                      U.S. Small Business Administration
    Washington, D.C. 20416                                 409 3rd Street SW
                                                           Washington, D.C. 20416


Dear Administrator Guzman and Associate Administrator Purdy:

        The Committee on Small Business (Committee) is investigating the Small Business
Administration’s (SBA) proposed changes to Small Business Development Center’s (SBDC)
client privacy rules. In particular, the Committee is interested recent rule changes which will
allow the SBA to disclose personally identifiable information (PII) from small businesses
utilizing SBDCs to federal or state agencies and remove the existing provision enabling small
businesses to opt out of providing SBA this information.1 The Committee seeks to better
understand the rationale behind these rule changes and determine whether small business data
will be adequately protected.

       The Small Business Act states that “a SBDC, consortium of SBDCs, or contractor or
agent of a SBDC may not disclose the name, address, or telephone number of any individual or
small business concern receiving assistance under this section without the consent of such
individual or small business concern.”2 The Small Business Act allows for three exceptions—
disclosure by court order, financial audit of an SBDC, or client surveys conducted by the SBA.3

        However, the SBA’s proposed rule released on December 13, 2022, expands these
exceptions to allow the Administrator discretion to release this information to federal and state
agencies without consent of the small business. The proposed rule states the SBA can release the
information to federal agencies if “the Administrator considers such a disclosure to be necessary
for the purpose of conducting a financial audit of a center, not including those required under
§ 130.830, as determined on a case-by-case basis when formal requests are made by a Federal or
state agency.”4 Though these agency requests must justify and document the need for individual



1
  Small Business Development Centers, 88 Fed. Reg. 76127 (to be codified at 13 CFR Part 130.380).
2
  Small Business Act, Pub. L. No. 85-536 § 21(a)(7)(A) (emphasis added).
3
  Small Business Act, Pub. L. No. 85-536 § 21(a)(7)(A) (i-ii), (B)(ii).
4
  Id. at 1.
The Honorable Isabella Casillas Guzman
Mr. Bruce Purdy
September 12, 2023
Page 2 of 2

client contact and/or Program activity data, the determination of whether the provided
justification is valid remains solely up to the discretion of the Administrator.

        Additionally, the Committee is extremely concerned about this change in conjunction
with another proposed change in which small businesses who utilize SBDCs will no longer be
allowed to opt out of sharing their information with the SBA.5 SBDCs are required to collect the
information on Form 641 from each small business or prospective small business that receives
one-on-one counseling or advising.6 The current Form 641 has an opt out option which will not
be on the new form. We are concerned that businesses will not understand or have any way to
prevent the Administrator from sharing all their information with any other government agency
that requests the data.

        American small businesses deserve to know that their information is protected when they
visit an SBDC. We therefore request a staff level briefing on the proposed regulatory changes to
the SBDC program no later than September 19, 2023 and the following information as soon as
possible but no later than September 26, 2023:

      1. A list of all federal agencies that have requested small business personal data from the
         SBDC program over the last 10 years, including the justification provided by those
         agencies for the data.

      2. The number of businesses, if any, who have had their information shared with federal
         agencies outside of the provisions listed within the Small Business Act.

        To schedule the delivery of responsive documents or ask any related follow-up questions,
please contact Committee on Small Business Majority Staff at (202) 225-5821. The Committee
on Small Business has broad authority to investigate “problems of all types of small business”
under House Rule X. Thank you in advance for your cooperation with this inquiry.

                                               In God We Trust,




                                            Roger Williams
                                                Chairman
                                        Committee on Small Business




5
    Data Collection Available for Public Comments, 88 C.F.R. § 48941(2023).
6
    Id.

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