Driving Economic Growth: SBA Lending Programs and the Vital Role of Community Banks (House Small Business Committee hearing, February 12, 2025)
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Transcript of the House Committee on Small Business hearing Driving Economic Growth: SBA Lending Programs and the Vital Role of Community Banks, on February 12, 2025, published as Small Business Committee Document Number 119–002. Chairman Roger Williams and Ranking Member Nydia Velázquez gave opening statements. Witnesses were Justin B. Hooper of First Financial Bank in Weatherford, Michael Sims of Georgia's Own Credit Union, Frank Wetegrove of Camp Bow Wow in San Antonio, and Heidi DeArment of Montana Community Development Corp, doing business as MoFi. The appendix adds statements from the Defense Credit Union Council, the National Association of Development Companies, the National Association of Government Guaranteed Lenders and the Small Business Investor Alliance.
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“Driving Economic Growth: SBA Lending Programs and the Vital Role of Community Banks (House Small Business Committee hearing, February 12, 2025).”
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DRIVING ECONOMIC GROWTH: SBA LENDING
PROGRAMS AND THE VITAL ROLE OF
COMMUNITY BANKS
HEARING
BEFORE THE
COMMITTEE ON SMALL BUSINESS
UNITED STATES
HOUSE OF REPRESENTATIVES
ONE HUNDRED NINETEENTH CONGRESS
FIRST SESSION
HEARING HELD
FEBRUARY 12, 2025
Small Business Committee Document Number 119–002
Available via the GPO Website: www.govinfo.gov
U.S. GOVERNMENT PUBLISHING OFFICE
58–899 WASHINGTON : 2025
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HOUSE COMMITTEE ON SMALL BUSINESS
ROGER WILLIAMS, Texas, Chairman
PETE STAUBER, Minnesota
DAN MEUSER, Pennsylvania
BETH VAN DUYNE, Texas
JAKE ELLZEY, Texas
MARK ALFORD, Missouri
NICK LALOTA, New York
BRAD FINSTAD, Minnesota
TONY WIED, Wisconsin
ROB BRESNAHAN, Pennsylvania
BRIAN JACK, Georgia
TROY DOWNING, Montana
KIMBERLYN KING-HINDS, Northern Marina Islands
DEREK SCHMIDT, Kansas
NYDIA VELÁZQUEZ, New York, Ranking Member
MORGAN MCGARVEY, Kentucky
HILLARY SCHOLTEN, Michigan
LAMONICA MCIVER, New Jersey
GIL CISNEROS, California
KELLY MORRISON, Minnesota
GEORGE LATIMER, New York
DEREK TRAN, California
LATEEFAH SIMON, California
JOHNNY OLSZEWSKI, Maryland
HERB CONWAY, New Jersey
MAGGIE GOODLANDER, New Hampshire
LAUREN HOLMES, Majority Staff Director
MELISSA JUNG, Minority Staff Director
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CONTENTS
OPENING STATEMENTS
Page
Hon. Roger Williams ................................................................................................ 1
Hon. Nydia Velázquez ............................................................................................. 2
WITNESSES
Mr. Justin B. Hooper, Chief Executive Officer and Chairman, First Financial
Bank, Weatherford, TX ........................................................................................ 4
Mr. Michael Sims, Chief Commercial Banking Officer, Georgia’s Own Credit
Union, Alpharetta, GA ......................................................................................... 6
Mr. Frank Wetegrove, Owner and Operator, Camp Bow Wow, San Antonio,
TX .......................................................................................................................... 7
Ms. Heidi DeArment, President, Montana Community Development Corp dba
MoFi, Missoula, MT ............................................................................................. 9
APPENDIX
Prepared Statements:
Mr. Justin B. Hooper, Chief Executive Officer and Chairman, First Fi-
nancial Bank, Weatherford, TX ................................................................... 41
Mr. Michael Sims, Chief Commercial Banking Officer, Georgia’s Own
Credit Union, Alpharetta, GA ...................................................................... 48
Mr. Frank Wetegrove, Owner and Operator, Camp Bow Wow, San Anto-
nio, TX ........................................................................................................... 59
Ms. Heidi DeArment, President, Montana Community Development Corp
dba MoFi, Missoula, MT ............................................................................... 66
Questions for the Record:
None.
Answers for the Record:
None.
Additional Material for the Record:
Defense Credit Union Council (DCUC) .......................................................... 74
National Association of Development Companies (NADCO) ........................ 83
National Association of Government Guaranteed Lenders (NAGGL) .......... 77
Small Business Investor Alliance (SBIA) ....................................................... 81
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DRIVING ECONOMIC GROWTH: SBA LENDING
PROGRAMS AND THE VITAL ROLE OF
COMMUNITY BANKS
WEDNESDAY, FEBRUARY 12, 2025
HOUSE OF REPRESENTATIVES,
COMMITTEE ON SMALL BUSINESS,
Washington, DC.
The Committee met, pursuant to call, at 10:04 a.m., in Room
2360, Rayburn House Office Building, Hon. Roger Williams [chair-
man of the Committee] presiding.
Present: Representatives Williams, Stauber, Meuser, Alford,
LaLota, Finstad, Bresnahan, Jack, Downing, King-Hinds,
Velázquez, McGarvey, Scholten, McIver, Cisneros, Latimer, Tran,
Simon, Olszewski, Conaway, and Goodlander.
Chairman WILLIAMS. Good morning to everybody. And I now
call the Committee on Small Business to order. Without objection
the Chair is authorized to declare the recess of the committee at
any time. I now recognize myself for my opening statement.
Welcome to today’s hearing, Driving Economic Growth, SBA
Lending Programs, and the Vital Role of Community Banks.
I want to thank our witnesses again for being here today and we,
our witness is going to be Zoom I believe and so she is trying, we
are trying to get her on there.
I want to know that we also know many of you have traveled
along to, a long way to share your experience and perspectives, and
we deeply value your time, and we deeply value your voice.
Now I strongly believe that starting a small business captures
the true meaning of the American Dream. Part of what makes
America so great is that anyone from any background can go out
on a limb with a dream or an idea to provide a new service or prod-
uct to the marketplace.
Our economy is dependent on small businesses, as they are our
nation’s largest job creators. It is our job here in Washington to be
main street’s biggest advocate and ensure they have the tools to
succeed. In today’s hearing, we will be exploring the triumphs and
challenges of small businesses and the community lenders that pro-
vide this support.
Under the Biden Administration, Main Street America endured
stifling regulations, record inflation, and high interest rates that
hindered the ability of small employers to hire workers, increase
wages, and reinvest back into their businesses to spur growth.
Thanks to the return of President Trump, a wave of pro-business
optimism swept over the small business community. This new ad-
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ministration has committed to not only cutting regulations across
the board for small businesses and community banks alike but also
reducing taxes and preserving the Tax Cuts and Jobs Act.
Failing to renew the small business provisions of the 2017 Tax
Cuts and Jobs Act would impact all small employers in every cor-
ner and limit their ability to stay competitive and preserve count-
less community jobs.
Throughout this Congress and alongside the Trump Administra-
tion, we will once again prioritize policies that support Main Street
America by creating an environment where small businesses can
thrive, and the full potential of community banks can be un-
leashed.
Finally, due to travel and weather delays the witness that we
said Democrats have invited to the table is unable to attend in per-
son today. We have received permission from Leader Scalise to
allow her to appear remotely. And I ask unanimous consent for the
letters between letters, Leader Scalise and I noting that this excep-
tion be entered into the record. So moved. So without objection as
so ordered.
So with that I will yield to my distinguished Ranking Member
from New York, Ms. Velázquez.
Ms. VELÁZQUEZ. Thank you, Mr. Chairman. I want to thank
you and your team for working with us on utilizing remote author-
ity to enable our witness to testify today due to weather-related
flight cancellations.
Small businesses fuel the American economy. They account for
more than 40 percent of U.S. GDP, create approximately two-thirds
of new jobs, and employ nearly half of all private sector workers.
Yet, entrepreneurs and small businesses consistently tell me that
access to capital and investment remains a pressing priority.
The SBA operates multiple capital access and investment pro-
grams to ensure entrepreneurs and small businesses have access to
the financing and investment they need to grow and scale their op-
erations. These programs are essential to small employers and en-
trepreneurs, especially those in our rural and underrepresented
communities as they struggle to obtain conventional loans and in-
vestment from a financial institution or private fund.
The SBA’s largest program, the 7(a) program, encourages SBA
authorized lending partners to provide loans by guaranteeing a sig-
nificant portion of the loan-encouraging lenders to extend credit to
small businesses that might not typically be able to obtain financ-
ing. 7(a) loans strengthen local communities, create jobs, and move
our economy forward. In fiscal year 2024, the 7(a) program sup-
ported a substantial volume of lending nationally with over $31.1
billion across more than 70,000 loans. A variation of the 7(a) pro-
gram is the Community Advantage Program delivered by mission
focused lenders. The Community Advantage Program facilitates
smaller 7(a) loans to small businesses and new businesses located
in an underserved community. I am particularly excited to hear
from one of our witnesses this morning about how the Community
Advantage Program is being utilized in our rural communities. An-
other program, the 504 CDC loan guaranteed program, which is
administered through nonprofit CDCs, provides long term fixed
rate financing for major assets such as land, buildings, and equip-
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ment. Last year the 504-program delivered almost $6,000 valued at
more than $6.6 billion. I look forward to discussing how we can bet-
ter utilize and improve all of these programs. The SBA programs
are worth protecting, especially lending programs which have prov-
en effective and efficient in how they operate while building up
main street in our communities. I will call on the SBA to work with
us to strengthen those programs. Thank you, I yield back.
Chairman WILLIAMS. The lady yields back, and I now will in-
troduce our witnesses. The first witness here with us today is Mr.
Justin Hooper. Mr. Hooper is the CEO and Chairman of Cross Tim-
bers Region of the First Financial Bank located in Weatherford,
Texas. Mr. Hooper has more than 30 years of banking experience
and began his career as a loan officer and a review analysis in Abi-
lene, Texas in 1997. Mr. Hooper moved to Weatherford as a com-
mercial leader in 2004 and was named executive vice president and
senior lender for the Weatherford region in 2012. He was promoted
to president of the region in 2017. Mr. Hooper serves a Board
Member for the Weatherford College Foundation and Trinity Chris-
tian Academy, and as a board president for the court appointed
special advocates for children in Parker County. Mr. Hooper holds
a bachelor of business administration and finance from McMurry
University and attended the graduate school of banking at Lou-
isiana State University. I want to thank you, Mr. Hooper for being
here with us today and look forward to our conversation.
Our next witness here with us today is Michael Sims. Mr. Sims
is the chief commercial banking officer of Georgia’s Own Credit
Union located in Atlanta, Georgia. Mr. Sims has well over two dec-
ades of experience in the banking industry serving as an executive
vice president for Vinings Bank, and State Bank and Trust Com-
pany and SunTrust Bank. He is skilled in portfolio management,
risk management, commercial lending, banking, and credit anal-
ysis. Mr. Sims serves as a Board Member for the Waypoint Min-
istry, as well as a Committee Member for Promise 686, an organi-
zation that mobilizes church communities to care for vulnerable
children. Mr. Sims earned a master of business administration at
the Brock School of Business at Sanford University. He also holds
a bachelor of science and finance from the University of Alabama
and a bachelor of science account from the University of Alabama
at Birmingham. I want to thank you for joining us today and I am
looking forward to the important conversation ahead.
Our next witness here with us today is Mr. Frank Wetegrove.
Mr. Wetegrove is an owner and operator of the Premier Dog Care
Service, Camp Bow Wow. Mr. Wetegrove and his wife, Tamara own
five Camp Bow Wow franchises from Austin to San Antonio, Texas.
Mr. Wetegrove is a former senior intelligence officer with over 30
years of experience for the United States Army. He has assisted
with numerous programs during his interview, during his service
including the command critical survivability program for the ren-
ovation of the Pentagon and the Air Force Intelligence, Surveil-
lance, and Reconnaissance agency as an IT specialist. Mr.
Wetegrove also has worked as a network engineer at the San Anto-
nio water system, a client services engineer at Lumeta Corporation
and an enterprise security engineer for information assurance at
MacAulay-Brown, Inc. Mr. Wetegrove is a graduate of TMI Epis-
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copal, formerly the Texas Military Institute in San Antonio, Texas.
I want to thank you for your years of service and joining us today
and I am looking forward to the important conversation ahead. And
I now recognize the Ranking Member from New York, Ms.
Velázquez to briefly introduce our next witness appearing before us
today.
Ms. VELÁZQUEZ. Thank you, Mr. Chairman. I would like to rec-
ognize Ms. Heidi DeArment who has been with Montana Finance
for over 17 years. She is an experienced small business lender and
community development professional. MoFi is committed to helping
businesses launch and create jobs in rural communities. I recognize
and respect her for the work with businesses, communities and
community banks throughout Montana, Idaho, Wyoming, and
Utah. Thank you, Ms. DeArment. It is a pleasure to have you here.
Chairman WILLIAMS. Okay. Thanks again for all of you being
here and before recognizing the witnesses I would like to remind
them that their oral testimony is restricted to 5 minutes in length.
If you see the light turn red in front of you it means your 5 min-
utes is up. You are done and conclude as you quickly can and wrap
it up. I also want to say that you will periodically see Members of
this committee leaving, coming back, going back and forth. We all
have other committees that we are involved in so if the Ranking
Member gets up and leaves or I get up and leave we are not mad
at anybody. We will be back. Okay? All right. So with that now I
would like to recognize Mr. Hooper for his 5 minute of opening re-
marks.
STATEMENTS OF JUSTIN B. HOOPER, CHIEF EXECUTIVE OFFI-
CER AND CHAIRMAN, FIRST FINANCIAL BANK; MICHAEL
SIMS, CHIEF COMMERCIAL BANKING OFFICER, GEORGIA’S
OWN CREDIT UNION; FRANK WETEGROVE, OWNER AND OP-
ERATOR, CAMP BOW WOW; HEIDI DEARMENT, PRESIDENT,
MONTANA COMMUNITY DEVELOPMENT CORP DBA MOFI
STATEMENT OF JUSTIN B. HOOPER, CEO AND CHAIRMAN,
CROSS TIMBERS REGION OF FIRST FINANCIAL BANK
Mr. HOOPER. Thank you, Mr. Chairman.
Chairman Williams, Ranking Member Velázquez, and Committee
Members, my name is Justin Hooper. I currently serve as the CEO
and Chairman for the Cross Timbers Region of First Financial
Bank comprised of 14 branches in the Fort Worth area and further
to the west. In total, First Financial, which was founded in 1890
in Abilene, Texas has total assets of just under $14 billion. Many
of our locations are in rural areas just outside, or outside larger
metropolitan areas of the state. As community bankers, our cus-
tomers rely on the bank for working capital, equipment purchases,
or potentially a mortgage or construction loan. Before turning to
the broader small business lending market, I am pleased to say
that during the COVID pandemic our bank participated in the PPP
program in the form of almost 10,000 loans with total originations
of $1.1 billion. While difficult to navigate at times the program was
very successful and allowed us to support the businesses in our
community at a time in which there was much uncertainty. First
Financial Bank, like many lenders enjoys a preferred lender status
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with SBA. This is likewise a very positive federal program but over
the years we have found that due to the complexities of navigating
all of the standard operating procedures with the SBA programs
that it was necessary to form a specialized department in Abilene
to manage our SBA loans. Nonetheless in 2024 we originated 4 mil-
lion of SBA’s 7(a) general purpose loans and 40 million of 504 SBA
loans which provide long-term, fixed rate financing for major fixed
assets. Even though we have preclearance being on the preferred
lender list, the typical turn around time on SBA loans within our
department ranges from 45 to 75 days. Of course we make many
loans to large and small businesses that are not associated with
any SBA programs. This typically allows for much quicker proc-
essing and in many case loans that can be closed in days or weeks
rather than months. It also allows for greater flexibility in our
product offerings that we can tailor to the customer’s needs. In
2024, the bank originated $294 million in commercial real estate
loans, $376 million in loans to schools, municipalities, and other
taxing entities and just over $825 million in commercial and agri-
cultural loans.
The biggest problem for community banks is the increased regu-
latory burdens to keep pace with new and ever-changing regula-
tions. Since 2021 our personnel costs in this area have doubled and
we anticipate that they will continue to rise. That number sits at
a staggering estimated $7.1 million per year. In addition to the per-
sonnel to support our audit and compliance function we also incur
legal, technology and outside audit expenses which are estimated
to be another $3.8 million. This brings our total annual cost to
manage an ever-growing compliance burden to an estimated $11
million annually, not counting the massive amount of time invested
by bank personnel such as loan officers who are not categorized as
compliance staff. 2025 will bring additional regulatory burdens.
Most notably would be those associated with the implementation of
the CFPB, small business data collection rule, Section 1071 from
personnel cost, training costs and software enhancements nec-
essary to achieve compliance we are estimating annual cost of $2.1
million for 1071 alone. We appreciate your leadership on that issue,
Mr. Chairman to see that that regulation going back on judicial
hold. Additionally with the rise of internet reliance and other tech-
nology-oriented developments we are continuing to see rising fraud
losses. In 2024 we incurred debit card losses due to fraudulent ac-
tivity of $1.5 million, check fraud losses of $735,000 which were
typically forgeries and counterfeits. To combat this we incurred
personnel cost of $2.6 million annually as well as $3.3 million an-
nually in software and technology expenses. The personnel and
technology expenses are necessary and have resulted in the bank
stopping additional fraud that would be far in excess of the expense
we actually incurred. Therefore between the actual fraud per-
petrated and the cost to combat this it comes with a price tag of
estimated $8.3 million annually. There’s not doubt that the rapid
increase in interest rates in 2023 has resulted in much higher bor-
rowing costs for our customers that is lingering into 2025 despite
a few rate cuts over the last year. This strain coupled with infla-
tionary pressure that is driving up labor costs and other items for
businesses is causing some to see cashflow diminish. In conclusion
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we are fortunate to live in a portion of the state that’s welcoming
new residents every day and there is a lot of optimism in the area
in which we live and many of our customers are contemplating new
projects and new opportunities. Thank you.
Chairman WILLIAMS. Thank you. Great timing and now I rec-
ognize Mr. Sims for his 5 minute opening remarks.
STATEMENT OF MIKE SIMS, CHIEF COMMERCIAL BANKING
OFFICER, GEORGIA’S OWN CREDIT UNION ON BEHALF OF
AMERICA’S CREDIT UNIONS
Mr. SIMS. Good morning, Mr. Chairman, and thank you very
much, Ranking Member Velázquez and Members of the Committee.
My name is Mike Sims, and I am testifying today on behalf of
America’s Credit Unions. I currently
serve as the chief commercial banking officer at Georgia’s Own
Credit Union headquartered in Atlanta, Georgia. Georgia’s Own is
a community credit union serving over 240,000 Members across
Georgia with $4.3 billion in assets. At Georgia’s Own we pride our-
selves on small, being a small business lender. We currently have
over $571 million outstanding member business loans including
both SBA 7(a) and SBA 504 program. In 2024, Georgia’s Own was
the number 1 ranked credit union in terms of 7(a) loan production
in the State of Georgia. We currently have 153 7(a) loans out-
standing totally about $153 million. We also make SBA 504 loans
and currently have 5 loans outstanding totally over $17 million.
Like many community lenders we saw a dip in interest in member
business loans and over 2023 and 2024 as inflationary concerns
caused many small businesses to pull back on capital access. How-
ever we have seen a noticeable uptick in interest and applications
in the three months since the election and expect 2025 to be a
stronger year. The MBL and SBA loan options at our credit union
allow us to work with our small businesses, small business mem-
bers to get them into a product that meets their needs. A great ex-
ample of this is the work that we did with Radiant Solar, a woman-
owned small business specializing in solar powered development
and construction, also headquartered in Atlanta, Georgia. We were
able to provide the owners with a $5 million SBA 7(a) cap line to
fund their working capital needs and have helped them earn rec-
ognition as one of the nation’s top producers in the solar industry
and we are currently working with them on a potential SBA 504
loan to help meet their needs. One of the most pressing challenges
facing credit unions is the complexity of the SBA program require-
ments. While credit unions are eager to grow their SBA loan port-
folios, many report the administrative burden make it extremely
difficult to do so. Lack of internal expertise and high cost associ-
ated with participation also remains a significant barrier. Even our
very experienced SBA lending staff at Georgia’s Own, we see these
challenges as well. We may hear the right messages from SBA
leadership about their desire to help community lenders and small
businesses but many times it does not always translate to the field.
Our day-to-day experience in contacting the SBA with questions
about loans can often be cumbersome and frustrating. It is common
for answers to take questions, questions to take days or weeks or
for us to experience delays while the SBA works to verify informa-
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tion about our borrowers. As a preferred lender under the SBA’s
delegated authority we believe we should be given greater leeway
to operate so we can get capital to our small business members. We
also believe that the SBA should provide more targeted training
and technical assistance to community lenders and credit unions
have expressed a strong interest in working with the SBA to en-
hance their operational capabilities in this space. Regular
webinars, workshops, and on demand training resources could ad-
dress gaps in expertise and empower more credit unions to partici-
pate in the SBA’s lending programs. We also would encourage the
SBA to better use regional office to engage existing program lend-
ers and potential new lenders as well. Having the regional SBA of-
fices more fully engaged in the day-to-day operational issues faced
by lenders will ultimately help streamline inefficiencies and enable
quicker access to capital for the small business members that we
serve. Without a full engaged SBA regional offices, lenders are left
to themselves to navigate a very challenging and often complex
SBA process. Finally we would encourage congress to continue to
review recent regulatory efforts that hinder small businesses, small
business lending from community institutions. We are also con-
cerned about the efforts to bring more fintech into the SBA lending
space which we believe would create more risk int eh system. Addi-
tionally, the overly broad 1071 rule from the CFPB stands to great-
ly increase burden on community lenders and we applaud the ef-
forts of Chairman Williams to repeal this rulemaking. In conclu-
sion, small businesses are the driving force of our economy, and the
key to its success. It’s important that congress and the SBA ensure
that credit unions have the right regulatory environment to meet
the needs of their small business members. I thank you for your
time and the chance to testify before you today and welcome any
questions.
Chairman WILLIAMS. Thank you. I now recognize Mr.
Wetegrove for his 5 minute opening remarks.
STATEMENT OF FRANK WETEGROVE, OWNER AND OPERATOR,
CAMP BOW WOW ON BEHALF OF INTERNATIONAL FRAN-
CHISE ASSOCIATION
Mr. WETEGROVE. Good morning, Chairman Williams, Ranking
Member Velázquez, and distinguished Members of the Committee.
My name is Frank Wetegrove, and I am a franchise owner of Camp
Bow Wow, a dog care services company that my wife and I became
franchisees of 18 years ago and have since grown our operation to
include four locations in San Antonio, Texas, and another in Aus-
tin. At Camp Bow Wow, we offer everything from dog daycare,
boarding to grooming, and training within the communities that we
operate. Our team consists of roughly 100 employees. I’m also
happy to share that we plan on opening of a 6th location within
our Texas footprint.
It’s an honor to be here today to give my perspective on the im-
pact that the U.S. Small Business Administration’s loan programs
have on small businesses especially franchisors, franchisees, and
their employees. Its impact to me is near as I utilized SBA’s 7(a)
loan program when I decided
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to become a franchise owner in 2007. As a retired colonel with
34 years of service in the Army Reserve along with 8 years in ac-
tive duty, I’d like to say my skillset came in handy when consid-
ering starting a franchise, and SBA’s 7(a) loan program was the ac-
cess to capital that gave me the opportunity to put it to good use.
Throughout my military career I held leadership positions at
every level, including Platoon Leader, Officer in-Charge, Com-
mander of Detachments, Companies, a Battalion, and a Group.
More importantly, I became a husband, a father of five, and now
a proud grandfather of four. As you can see sitting still is not in
my nature nor the word, retirement in my vernacular.
In 2005, about 20 years into my Army mostly Reserve career, I
was mobilized to work at the Defense Intelligence Agency. During
my first summer in Washington, my wife and I discussed the possi-
bility of our family spending a month there with me. However, one
major challenge arose, what would we do with our dog? He couldn’t
join us in our temporary living arrangements and around that time
my wife suggested I log into AOL, and of course I’m dating myself,
to explore a business opportunity she’d come across. That business
was Camp Bow Wow, a franchise that emphasized in doggy day
care, something I’d never heard about, but I was immediately in-
trigued. This opportunity became a true family affair. Since I was
still advancing in my career my wife took on the brunt of running
the business. I contributed after hours, on weekend, during the
holidays and this was all while we were raising our toddlers which
came to Camp Bow Wow every single day. Ultimately I knew this
endeavor would teach my family the difference between working for
someone and working for one’s self. I believe 100 percent in giving
back. I have been awarded franchisee of the year several times. I
speak to many of my peers daily. Every chance I get I speak to peo-
ple in general. I explain to them about my success story, the con-
versation starts with getting to know them, the possibility of own-
ing their own business and future and remind them of great oppor-
tunities that this country provides us including the government as-
sistant programs available. None of this would have been possible
without the support of the federal government’s SBA program. The
SBA’s assistance was instrumental in getting my business off the
ground. I know for a fact that many of my fellow franchisees and
countless other small businesses would not exist without these crit-
ical funding programs. The SBA and access to capital and its’ lend-
ing programs provided an essential part of the instrument—part of
the franchise success story. In the fiscal year 2024, the SBA guar-
anteed $31.1 billion dollars in 7(a) loan volume, $6.7 billion in 504
loan volume. Historically franchises have represented about 20 per-
cent of the SBA’s loans by dollar volume. Finally I’d like to high-
light a regulatory issue that has the potential to not only strength-
en the franchise business model but also supplement SBA lending
practices to further support franchise business performance for the
years to come. That is to permanently extend the 2020 NLRB’s
joint employer rule, recognizing the harm this would bring, both
the House and Senate voted to overturn the joint employer rule on
a bipartisan basis in early 2024 using the Congressional Review
Act, which I and other Members of the IFA commend. In March of
2024, a U.S. District judge struck down the 2023 NLRB rule and
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the joint employer standard reverted to 2020 rule. While a reprieve
from the previous NLRB’s joint employer rule has been welcome
news, I wanted to stress the importance of the current common
sense standard and federal law, labor law has on franchisees like
mine and state that any actions toward permanently preserving
the current NLRB rule would only protect both businesses and
workers but also create the regulatory conditions that allow both
franchisors and franchisees to thrive, grow, and create jobs and op-
portunities in the community that they serve. Mr. Chairman and
distinguished Members of the committee, thank you again for the
opportunity to testify and I’m happy to answer any easy questions
you might have.
Chairman WILLIAMS. Dogs or Pentagon, much harder. Thank
you very much.
Mr. WETEGROVE. Thank you. Now Ms. DeArment, is she avail-
able?
Ms. DEARMENT. Can you hear me? I am here.
Chairman WILLIAMS. Okay. Great. Well, all right. We will now
recognize Ms. DeArment for her 5 minute opening remarks? There
she is.
STATEMENT OF HEIDI DEARMENT, PRESIDENT, MONTANA
COMMUNITY DEVELOPMENT CORP DBA MOFI
Ms. DEARMENT. Chairman Williams, Ranking Member
Velázquez, and Committee Members, thank you for having me here
today and thank you for accommodating the travel problems. My
name is Heidi DeArment. I’m the President of MoFi. We’re a
nonprofit, rural, CDFI that provides small business loans and
free advisory services to people in Montana, Idaho, Utah, Wyoming,
Oregon, Washington.
MoFi partners with 126 bank and credit union systems across
that six-state region that refer thousands of their loan denials to
us annually. Between all of those denials and our Board Members
who are commercial lenders we know a lot about who banks aren’t
funding today. And that’s where we come in. We provide loans to
entrepreneurs and businesses that don’t qualify for financing at a
bank or credit union. Last year MoFi lent $40 million to successful
applicants all of whom had been denied. This is a less profitable
venture than banking, but it works. The businesses we fund build
assets, they build track record, and they ultimately go back to the
bank that referred them to us. MoFi has done this successfully for
decades and we maintain a loss rate of less than, of 1 percent over
the last ten years. That 1 percent I think tells us that these loans
aren’t risker. They’re just simply harder and longer to underwrite
so they are less desirable for a profit motivated back or a credit
union. To do this work we rely on two essential SBA programs, the
microloan program, and the Community Advantage Guarantee pro-
gram. I thought it might be easier to explain how we use these pro-
grams using one of the businesses from my home town, Missoula,
Montana. The businesses called Betty’s Devine and it’s a women’s
clothing store downtown. When the owner came to she was working
in retail and people were coming in, asking for clothing that they
didn’t sell and that you couldn’t buy in Missoula, which I think is
the perfect start to a business, seeing an opportunity and then fig-
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uring out how to build a business around that. She wrote a busi-
ness plan, she contacted a bunch of vendors, she found a lease
space, she built great financial projections that made sense she
took that all into her back and they said, you don’t have any as-
sets, you don’t have any collateral, you don’t have outside income,
you don’t have business history. She was denied. She did qualify
for an SBA microloan through us and like most of ours she became
successful and then her back refinanced her. A few later her bank-
er came back to us and said that business is doing really well and
now she wants to buy a bigger space, her own building but she
doesn’t have the down payment, would you do a partnership loan
with us where the bank does 70 year or 75 percent, and we will
fill in the gap. We do about 40 percent of our loans annually as a
partnership with banks or credit unions. She was able to buy the
building and today she is still there. That’s 20 years later. She’s
a huge success. She’s a household name. She’s a bit of community
force where we live and she’s just one of many thousands of SBA
microloans that have been funded across the country over the past
20 years that create jobs, revitalize our main streets, and fuel our
economies. The Community Advantage program is just as impor-
tant to us. MoFi uses the CA guarantee for clients who have been
denied bank financing, need up to $350,000 and they are usually
start ups. We like using them on startups because the CA program
is an amazing onramp to bankability. If you can show as a small
business owner, a new business owner that you’ve been able to
make your payments on a CA loan, your banker sees a future 7(a)
client. These are also not risky loans. Since the start of the pro-
gram in 2011, our losses have been, I think this is right, .065 of
a percent. I heard the other witnesses talk about the challenges
with some of the SBA programs and how long they take. That’s not
the case with CA. It’s a fast, efficient program that allows us to get
capital to borrowers very quickly. Today the U.S. financial system
operates on two tiers, one for those with established wealth and
one for those still building towards that future success. We need
these SBA programs for entire generation of low wealth entre-
preneurs who are going to be successful tomorrow, especially in the
rural areas we serve. Thank you for your time and for supporting
the SBA tools.
Chairman WILLIAMS. Thank you very much. And we will now
move to the Member questions under the 5 minute rule. I recognize
myself for 5 minutes.
Mr. Hooper, community banks are an essential resource for small
businesses providing a large shares of small business capital and
offering a more tailored approach to small business lending than
larger financial institutions. Unfortunately, the Biden administra-
tion added $1.7 trillion dollars in regulatory costs, disproportionally
impacting small business and small lenders. So my question is,
how has the increased regulatory burden impacted your ability to
lend to small business?
Mr. HOOPER. Thank you for that question. You know I think
probably the simplest answer is to say that due to ever increasing
budgets that we have for audit and compliance, as I mentioned
that’s almost $11 million is what we’re estimating for this next
year, it takes away from our ability to reinvest in new loan pro-
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grams, effectively market those to our customers and roll out new
programs that would benefit our clients. Additionally, other regu-
latory issues such as like the Durbin Amendment that reduced
some of our debit card interchange income also takes away from
our ability to offer low cost or free business deposit service to our
customers in many cases. You know, from a very basic perspective
the more time that we have to spend on compliance and regulatory
oversight just takes away from our time that we can spend with
our customers and in tailoring products to their needs.
Chairman WILLIAMS. Under the Biden administration the
SBA’s flag ship 7(a) loan program was altered with rule changes
that stripped away prudent lending standards that had preserved
a programmatic integrity for decades. While many of these changes
were said to simplify the 7(a) lending program, they are instead
confusing the lending community and impacting the services that
community lenders provide to borrowers. So in your testimony you
described that credit unions have expressed a strong interest in
working with the SBA to enhance their operational capabilities in
the SBA lending space but that there is a great deal to be desired
in that area. So opportunities do you see for the SBA to better
work with credit unions?
Mr. HOOPER. Thank you for the question, Mr. Williams, Chair-
man Williams. I think immediate area where we can focus our con-
centration on with the SBA is through their regional district of-
fices. If we have them as a resource to help us navigate the proc-
esses, policies, and procedures that are ever changing inside the
SOP it will help us to deliver more efficiently and more effectively
to the small businesses that we serve in our communities. The pro-
gram itself, the loan program, the 7(a) and the 504, the structures
that those programs allow are very good and very flexible. It’s the
process and the procedures and the policies and the regulation that
has dampened the effectiveness of those really good programs in
getting into the hands of the business community that needs them.
Chairman WILLIAMS. With portions of the Tax Cuts and Jobs
Act set to to expire, you are aware, small businesses across Amer-
ica are concerned that their taxes will go up. If you were able to
keep more of your cash on hand and not pay it to the government
how would you use that money?
Mr. WETEGROVE. I would definitely use it for improvements to
my business, I would also like to, you know, pay my employees a
little bit better. I think that I can only bring home so much money
these days and I would love to pass that on to my employees and
provide, you know, enriching lives to dogs to be honest.
Chairman WILLIAMS. In other words the money can be used
better by you than by the federal government?
Mr. HOOPER. Yes, sir.
Chairman WILLIAMS. You can create more taxpayers with it?
Mr. HOOPER. Yes, sir.
Chairman WILLIAMS. Okay. I now recognize the Ranking Mem-
ber for 5 minutes of questions.
Ms. VELÁZQUEZ. Good morning, and thank you, Mr. Chairman.
I have been a member of the small business committee—Ranking
Member and Chair. I have also been a member of the Financial
Services Committee and to say that regulations are impacting fi-
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nancial services institutions and that the Biden-Harris administra-
tion hindered small business formation doesn’t hold water. The
Biden-Harris administration oversaw the fastest rate of new busi-
ness applications on record with entrepreneurs filing an average of
over 440,000 applications every month, a rate that was over 90 per-
cent faster than from the pre-pandemic averages. Importantly the
small business boom of the last four years was equitably distrib-
uted among multiple segments of the population. Business owner-
ship doubled among Black households, hit a 30 year high for His-
panic households, new businesses created rates hit a 30 year high
for Asian Americans, and women owned business, a higher share
of businesses than before the pandemic. I thought that the topic
here today was about small business lending and the different pro-
grams under SBA, not making a case about tax cuts. But I know
that that is the agenda here.
Ms. DeArment, can you explain how MoFi is utilizing the Com-
munity Advantage SBLC program to provide capital to small busi-
nesses in the rural communities you serve?
Ms. DEARMENT. Yes, absolutely. Thank you. We use the Com-
munity Advantage program much like banks use 7(a) but we use
it for a different segment of the market. Borrowers who are credit
worth but who are denied at banks or credit unions. Our clients
aren’t seeing a CA loan. They’re referred to us from a bank after
the bank says, no. I think it’s really challenging in the rural areas
right now that we serve. Over time banks have consolidated and
closed some of the branches and even in the rural areas that do
still have a bank, the commercial lending officer usually isn’t there.
They’re in large cities. They don’t know the area very well and de-
cisions can be made elsewhere.
Ms. VELÁZQUEZ. What segment of the market does the Com-
munity Advantage program reach that a traditional 7(a) loan might
not?
Ms. DEARMENT. Yes. It reaches people who don’t have wealth,
assets, prior experience in a bank or high cash flow. I don’t think
you need those things. I think we’ve proven you don’t need those
things to be successful in business and be successful in paying back
a loan. But we underwrite for repayment the say way a bank does.
We just don’t use factors like wealth, assets, or prior year cash
flow. Instead we use potential industry viability and sort of hard
work and determination, and it works.
Ms. VELÁZQUEZ. Thank you. Mr. Sims, as you know I have
been supportive of raising the member business lending cap in the
past, but we need to do it in a responsible way. I also just want
to say for the record that the MBL cap is an issue for the financial
services committee and in which this committee doesn’t have juris-
diction. As a member of the financial services committee I have
made the case in terms of raising the cap. Mr. Sims, I understand
you participate in both the 7(a) loan program as the primary lender
and the 504 loan program as a partner working in conjunction with
certified development companies. With a lens on the process of both
programs would you agree with the following statements, 1, the
504 program has a unique economic development mission and, 2,
at times the 504 program can be overly complex? If so, do you have
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any recommendation to streamline the program and more effi-
ciently get capital into the hands of small businesses?
Mr. SIMS. Yes, ma’am. Thank you for the support of the member
business lending cap very much. Appreciate that. And I would
agree with your statements. I certainly do agree with your state-
ment, 1, the program provides small businesses with a very solid
financing vehicle for owner occupied commercial real estate. As you
know the 504 is best used in that environment. If you’re looking
for cash flow—or excuse me, operating capital, and other elements
of the financing, it’s not part of that program, but it is a very good
program, nonetheless. And as you know on the other side we do
work local, not-for-profit CDCs to provide the debenture on the sell
out once the loan has met its term.
Chairman WILLIAMS. Lady’s time is up.
Ms. VELÁZQUEZ. Thank you.
Mr. SIMS. Thank you.
Chairman WILLIAMS. Next I would now recognize Mr. Alford
from the great state of Missouri for 5 minutes.
Mr. ALFORD. Thank you, Mr. Chair and thank you Ranking
Member Velázquez. Today small business are working to recover
after four years of inflation, supply chain issues, workforce short-
ages, and burdensome over regulations. But I want to let you
know, I want to let main street know that help is on the way with
President Trump in office and Republicans in control of both cham-
bers of congress, we will work for you to make sure that your busi-
ness thrive. And we will cut the red tape and for you to spend more
time actually building your businesses, not just filling out paper-
work to satisfy some bureaucrat down the street. We will codify the
Trump tax cuts to protect the 199A passthroughs and to keep more
of your dollars in your own pocket and we will work with the SBA
to make sure that existing businesses have the access to capital
and counseling that they need to ensure that Americans can con-
tinue to found more small businesses in America.
Mr. Hooper, I have heard some of the same issues from our com-
munity bank where I bank in Raymore, Missouri from Bill
McDaniel, the president, that the burdens of these over regulations
among the most harmful regulations implemented during the
Biden administration are the 1071 rule implementing by the Con-
sumer Financial Protection Bureau. And thank goodness that
Chairman Williams introduced last February 5th, H.R.976 which
would repeal the CFPB’s implementation of the 1071 rules. Fin
Cen’s implementation of the beneficial ownership reporting rule
has been paused by federal courts though there are additional
pending actions in court. So my question to you is, number 1, do
you believe the CFPB is constitutional?
Mr. HOOPER. I do not.
Mr. ALFORD. I do not either. Thank you. What happens if the
1071 rules are put back into place? What effect will that have on
lending to people who need this money, the capital to start and
maintain a small business?
Mr. HOOPER. Sure. Thank you for the question. There’s a couple
of points there with 1081. There’s 81 data points that have to be
collected at the time we would take an application and then some
of those, some of that data is then published by the CFPB annually
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and so that raises all kinds of privacy concerns and things of that
nature especially relative to if there were denials and things like
that included in some of those data points. And so, you know, just
simply managing it and then also on our side the cost to implement
it is astounding. As I mentioned we’re estimate prior to it being
stayed we were looking at over $2 million in cost potentially to do
the training and everything necessary. But I will tell you most of
our customers would find that the questioning very troublesome
and difficult as well.
Mr. ALFORD. Mr. Sims, do you believe that the CFPB is con-
stitutional?
Mr. SIMS. I do not, sir.
Mr. ALFORD. Thank you. I want to continue with you, Mr. Sims.
You reached, you mentioned about regional offices, they needed to
be more proactive. I agree with that. Senator Joni Ernst introduced
a bill to relocated SBA workers in part from the office down here
in D.C., which we were at a year and a half ago and they all scur-
ried to show up when they knew we were coming and on any given
day even if the building is staffed with 100 percent of the employ-
ees in the building it is only 67 percent full. It is a waste of money
basically. We need to get these SBA regional offices out into rural
America where we have business deserts if you will so they can get
the capital and counseling they need in a lot of these areas where
we have the rural broadband to operate businesses and the people
wanting to relocate out into communities of rural America. What
are your thoughts on that and how would credit corporations, or
not credit corporations but credit unions play a vital role in that?
Mr. SIMS. Yes, sir. Thank you for the question, Mr. Alford. I
think simply levering the expertise that you would have inside of
an SBA district office and from a credit union’s perspective my
focus is on the business member and how do I figure out what’s the
best product set for that business member and to have an advocate
that has the inner working, the knowledge of the SBA process, poli-
cies, and procedures to help us when we hit a roadblock and we
have a question that has arisen as a result of a particular request
they would be able to help us navigate that process.
Mr. ALFORD. Thank you very much. And again thank you for
being here on this snowy day coming here on your own time and
your own dime. I appreciate. And I yield back.
Chairman WILLIAMS. Gentleman yields back. I recognize Mr.
McGarvey from the great state of Kentucky for five minutes.
Mr. MCGARVEY. Thank you, Mr. Chairman. I appreciate that.
I will start with a question for the panel. Are any of you all Su-
preme Court justices?
Mr. HOOPER. No, sir.
Mr. SIMS. No, sir.
Mr. WETEGROVE. No, sir.
Mr. MCGARVEY. Fantastic. I just want to point out last year in
CFPB, Community Financial Services Association of America the
Supreme Court upheld in a 7-2 decision the CFPB’s funding as con-
stitutional. If we do get to take back the Supreme Court ruling in
this committee, I would like to start with a few myself, maybe with
Dobbs and Citizen’s United. But for the moment it is constitutional
so we will keep it there.
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I want to agree with something that was said earlier, the Amer-
ican dream is alive and well and powered through our small busi-
nesses. So is the American economy powered through our small
businesses. But let us zoom out and take a macro look at what is
happening right now because even though Donald Trump came into
office campaigning on lowering costs and lowering inflation what
we are seeing right now in the number coming out today is an in-
credible rise in inflation, 3 percent over last year. In fact not just
take last year, it is the fastest growing month for inflation since
August 2023. We are seeing the cost rise in everything from gaso-
line to groceries to the things that our consumers use, which of
course has an impact on our small business community. This infla-
tion is driven at least in part by the tariff policies of the Trump
administration.
I want to read you something. In Kentucky, local store owners
are already hearing about their suppliers prices going up. One esti-
mate suggests the president’s tariffs could cost the average Ken-
tuckian up $1,200 each year and it is not just about rising prices
here at home. During the last Trump administration retaliatory
tariffs from trade partners set off a broader trade war that hit wide
swaths of American industry from agriculture to manufacturing to
aerospace and motor vehicles to distilled spirits. I am not quoting
from some liberal publication here. I am quoting from Senator
Mitch McConnell’s op-ed to the Courier Journal today. On top of
the rising prices and rising cost to consumers and our small busi-
nesses are making we are seeing the Fed not cut the interest rate,
which is going to again have an impact on our small businesses
and if that is not enough, the Trump administration last month
froze funding at every single SBA capital access program, which we
have heard time and again on this committee that our small busi-
nesses to succeed, to grow, to start use that capital access provided
by the SBA as such a lifeline. So I think we have to zoom out and
look at what is happening to our small businesses and make sure
that we are going in the right direction where there costs are in-
deed lowered so the consumers can buy things, our small busi-
nesses can grow, and our economy can continue to thrive.
I have a question for Ms. DeArment. Where you conduct business
in rural Montana, just like in my state, farmers and ranchers are
going to see their market shrink thanks to Trumps tariffs. They
will force manufacturers in my district to make the hard choice be-
tween swallowing increased in put costs and cutting jobs or passing
them along to their customers. Could you briefly explain about why
these SBA capital programs are important alternatives for small
business in this kind of restricted lending environment that we find
ourselves?
Ms. DEARMENT. Yes. One of the best things about the SBA pro-
grams that we use is that they provide capital to CDFIs and SBA
lenders like us to use in rural areas. That capital is very limited,
and it is one of the only sources we have to reach into some of the
most rural or most depressed land values, building values, de-
pressed areas. Without them fewer businesses would get funded in
rural America.
Mr. MCGARVEY. And we know that community lenders support
veterans, rural Americans, other traditionally underserved groups.
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Just briefly because we’ve got a little less than a minute left, what
would happen if rural communities lost access to these SBA re-
sources? What would it mean for farmers and ranchers in your
state?
Ms. DEARMENT. I think the biggest thing we would see is fewer
business starts. Most of the businesses we fund using these SBA
programs are business starts and banks and credit unions are
funding these businesses, so these programs are what they have.
Mr. MCGARVEY. Thank you so much. Mr. Chairman, I yield
back.
Chairman WILLIAMS. The gentleman yields back. And I now
recognize Mr. LoLota from the great state of New York for 5 min-
utes.
Mr. LALOTA. Thank you, Mr. Chairman. Thanks for hosting this
important hearing today for the witnesses for traveling here to be
with us.
Ensuring America’s small business have access to capital is fun-
damental to America’s economic success and that starts by empow-
ering community banks and credit unions not just as lenders but
as trusted partners that fuel local economies, create jobs and drive
growth. For too long burdensome regulations, inflation and mis-
guided policies have restricted the flow of capital making it harder
for small business’s to expand. Fortunately, community banks and
credit unions remain steady fast allies of America’s small business
offering personalized lending solutions and building relationships
that big banks simply can’t. Through vital federal programs like
7(a) and 504 loan programs, the Small Business Administration
partners with these lenders to create jobs, drive economic grown
and strengthen our communities. But for these programs to truly
help small businesses we must cut red tape, reduce costs, and en-
sure access to affordable capital. With the right policies we can un-
leash the full potential of America’s small businesses allowing them
to thrive, innovate, and power America’s economy moving forward.
This leads me to my first question. Mr. Hooper, thank you for being
here today, sir. You’re the CEO and Chairman of a regional bank
and in your testimony you highlighted how compliance costs at
your bank have doubled since 2021 with an estimated $10.9 million
annually spent on regulatory compliance. This committee under-
stands, sir, that regulations like the CFPB’s 1099 rule adds signifi-
cant reporting burdens making it harder for community banks to
compete with larger institutions. So my question is this, Mr. Hoo-
per, how has the 1099 rule and the broader regulatory environment
impacted your ability to provide capital to small businesses?
Mr. HOOPER. So I would say generally speaking the regulatory
environment that we have in general we spend a lot of time on that
and so a lot time, resources and frankly the 1099 rule, are you re-
ferring to the 1,099 pages of the legislation relative to, that came
from the Dodd-Frank Act?
Mr. LALOTA. Yes.
Mr. HOOPER. Okay. So, you know, we had to form an entirely
new department after the implementation of that so that we could
make sure we were compliant and could do it well and so it is in-
credibly burdensome. It’s tough on our customers especially our
small business customers who want to get a mortgage. You can just
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sense when they walk in if they own a business that they know,
you know, the reporting requirements for them is elevated and
frankly getting a mortgage is much harder for them in many cases
than it is, you know, sometimes our other, our other types of busi-
nesses.
Mr. LALOTA. And Mr. Hooper, if you didn’t have to spend those
resources doing that burdensome, onerous regulator compliance,
could you use those resources to increase the wages of your employ-
ees, decrease the cost for your consumers and otherwise invest that
money in better areas?
Mr. HOOPER. Absolutely.
Mr. LALOTA. Awesome, sir. Mr. Sims, you’re the chief of com-
mercial banking officer of Georgia’s Own Credit Union. You have
been the leading SBA lender with a strong record in both the SBA’s
7(a) and 504 loan programs. However, sir, you noted in your testi-
mony that administrative complexity and slow response times from
the SBA often create challenges for credit unions trying to effi-
ciently serve small businesses. So my question is this, what specific
or forms to 7(a) and 504 would help credit unions expand access
to capital while at the same time ensuring these programs remain
sustainable and effective, sir?
Mr. SIMS. Thank you, Mr. LaLota for the question. Again go
back to the programs. The programs themselves are very good. The
processes are not as good. I can point to specific examples within
our organization where we’ve seen a decline in our SBA production
from 2022 to 2024 to the tune of about 25 percent. The vast major-
ity of that has to do with burdensome regulatory environments and
process and procedures associated with moving applications
through the SBA process. So it’s a time drain. Money does not get
to your business member as quickly as they would like it and quite
frankly the, really the first reaction that I get when I talk to busi-
ness members about using SBA tools as a vehicle for their financ-
ing is I have to sell through the reputation that the SBA has for
inefficiency and the time to take a loan from soup to nuts.
Mr. LALOTA. Great, sir. And I only have a few moments remain-
ing, but Mr. Wetegrove I read in your bio, 34 years in the Army,
retired as a colonel. Appreciate your service, sir. Real quick with
about 15 or 20 seconds, how would you reducing unnecessary costs
and regulatory burdens impact your ability to expand, hire more
employees, make more loans, sir?
Mr. WETEGROVE. Yes. Thank you for providing the question. It
would of course allow me and others to be able to expand more ag-
gressively and be able to employ additional people and service the
community.
Mr. LALOTA. Thanks for your time, sir. Appreciate it. I yield.
Chairman WILLIAMS. The gentleman yields back. I now recog-
nize Ms. Scholten from the great state of Michigan for 5 minutes.
Ms. SCHOLTEN. Thank you, Mr. Chairman. I just want to clar-
ify that there is no CFPB 1099 rule. You know, I think that was
testimony that was getting a little muddled and it is important to
get that into the record. You know, also earlier this week we ex-
tended Fin Cen’s beneficial ownership requirements through Mr.
Nunn, a bill that passed on suspension in this house. I want to
turn to some critically important things here for West Michigan.
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Ms. DeArment, I understand that your organization is an SBA cer-
tified community advantage lender. My district in West Michigan
is home to many hub zone areas which are historically under-uti-
lized business zones. The hub zone program establishes a goal of
awarding 3 percent of federal contracting dollars to hub zone cer-
tified businesses each year. Ms. DeArment, your testimony points
out that the community advantage program was designed to enable
lenders to reach into communities that might otherwise have trou-
ble accessing the capital that they need. Can you explain how this
program can boost HUBZones like the ones that we have in West
Michigan?
Ms. DEARMENT. Absolutely, HUBZones like other low-income
communities don’t have the same asset value and they are harder
to lend in. When you go into look—for us in our experience when
we go into lend there we often have expenses going into buildings
or revitalizations that don’t then pan out in appraisals. The SBA
Community Advantage can right that ship when you’re under-
writing a loan and get capital to borrowers who don’t qualify for
a bank loan or a credit union loan that are absolutely credit worthy
to build the business, be successful, get a CA loan and eventually
graduate back into bankability.
Ms. SCHOLTEN. Thank you so much. Mr. Wetegrove, first and
foremost I want to thank you for your service to our nation and
your accomplished career in the Armed Forces. As a Co-Chair of
the congression franchise caucus, I also appreciate your story of
how you came to be and grow Camp Bow Wow. We have a number
in our district and our beloved family dog, Smokey, has utilized
those services as well. So, you noticed, you noticed the importance
of acquiring 7(a) loan to start your business. Can you explain how
this program was critical to the long-term success of your business?
Mr. WETEGROVE. Yes, absolutely. Thank you for the question.
I don’t think I could have gotten any other type of financing at the
time. And, you know, even though some of the requirements were,
they’re not as strict as the conventional type process so I, you
know, greatly appreciated that. There’s a more flexible structure in
the SBA program other than the convention process. Even though
the underwriting was very comprehensive, it was manageable at
the time. The partner that I was utilizing to give me the loan, you
know, provided me counseling along the way and was very instru-
mental in the lending process. And I just really appreciated every-
thing that kind of came to the table because I just think that
there’s so much more background in the SBA lending program.
Thank you.
Ms. SCHOLTEN. That is true. Yes. Absolutely. Thank you. And
one more for you, Ms. DeArment. The microloan program provides
up to $50,000 to help not only small businesses but certain non-
profit childcare centers to grow. As a mom of two I know all too
well how critical childcare services are in bolstering our economy
especially to those trying to grown their small businesses. Can you
speak to how the microloan program addresses the growing need
for childcare services in our country?
Ms. DEARMENT. Yes. One of the great things about the
microloan program is it provides technical assistance dollars. We
see a lot of, especially women come in and say I’d like to start a
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childcare business, but they don’t know where to start. They don’t
know how to put together a financial projections, find a facility or
use their home. These TA dollars allow us to bring an advisor in
to help write a business plan, create financial projections, find a
lease, get legal services, and get them set up for success. Once
they’re set up for success and have a microloan in place those busi-
nesses do really well. It’s a perfect program because it combines
those two components.
Ms. SCHOLTEN. Thank you. I yield back.
Chairman WILLIAMS. The gentlelady yields back. I now recog-
nize, Mr. Jack from the great state of Georgia for 5 minutes.
Mr. JACK. Well thank you very much, Mr. Chairman, and I’d be
remiss if I didn’t start by acknowledging one of my guests in the
audience today, the Chairman of Georgia’s Small Business Devel-
opment Committee in the House of Representatives, Mr. Mike
Cheokas. Chairman, thank you for being here today. And likewise
to our witnesses. Thank you very much for testifying before our
committee. As we continue to navigate the complex and evolving
challenges facing small businesses it is crucial that we recognize
the vital role credit unions and community banks plan in providing
accessible, affordable financial services to entrepreneurs, particu-
larly those in our underserved and economically disadvantaged
communities. I would like to of course because we have a Georgian
in the audience today, I would like to direct my questions to Mr.
Sims who leads Georgia’s Own Credit Union in my home state.
And first and foremost I would like to start by asking you, and I
think in your testimony you note that over 240,000 members are
served across our state of Georgia. How many employees do you
have in our state of Georgia?
Mr. SIMS. Yes, sir. We have currently over 700 employees work-
ing at Georgia’s Own Credit Union.
Mr. JACK. And with my district if I’m not mistaken I think
you’ve got two Branches. You have one in Douglas County and one
in Fayette County. Is that correct?
Mr. SIMS. Yes, sir.
Mr. JACK. So what I find interesting particularly within your
testimony is just how successful Georgia’s Own Credit Union has
been, recognized throughout the state, and the, you know, the im-
pact that you have on our community is evident. I mean one of the
areas of Georgia that is booming in growth is Fayette County,
Douglas County, as you get a little further out from Atlanta we are
seeing enormous economic growth in large part fueled by small
businesses and those small businesses are often dependent on the
credit unions much like your own. So I would like to ask, I think
in your testimony you noted that you were recognized as the num-
ber 1 credit union in the state of Georgia. You know, what are
some helpful tips and practices you would advise our committee to
engage upon to help continue to have business thrive especially in
my home state and district?
Mr. SIMS. Yes, thank you, Congressman Jack. Appreciate the
question very much and recognition of the performance of Georgia’s
Own from an SBA lending perspective inside of the state and that
is a record that we’re very proud of and we’ve been ranked number
1 credit union over the last 5 years, always in the top 5 from an
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in-state production level as well. And again I think I would get
back to the conversation that we had a little bit yesterday and also
with Chairman Williams is leveraging our local district offices. I
think there’s a great role for them to be able to play in supporting
both those of us that are in SBA lending, and you heard Mr. Hoo-
per talk about having to build the infrastructure to be able to do
that appropriately and it takes a lot of investment to do that. It
can be that investment can be mobilized and amplified with help
from our regional offices.
Mr. JACK. And for my colleagues across the committee and for
everybody watching there is a lot of debate right now over tax re-
form and some of the taxes that are coming up, can you illustrate
to all of us what the consequences would be and for not just con-
sumers, people dependent on the credit union but the broader econ-
omy if the tax exemptions currently afforded to credit unions were
to be reduced or eliminated this fiscal year?
Mr. SIMS. Yes. Thank you for that question. As you know credit
unions would turn over $36 billion to the economy annually thanks
to that tax exemption at a cost of just under $3 billion to our tax-
payers. And so there’s a multiple return on that. I think a elimi-
nating or changing the credit union tax exemption would change
the nature of how we do business and what we’re trying to accom-
plish with our business members and quite honestly I think you
would see a fewer, you would see fewer credit unions in specially
rural markets which would lead to fewer, just to deployment of
capital even underneath the SBA’s program and so I think that
would be a detriment quite frankly to small business members as
well as consumers in the market place.
Mr. JACK. Well I appreciate that. I am not going to take much
more time but I just want again illustrate as all of us are working
across this distinguished body to advance agenda that we all were
elected to advance, I think it is critical that we remember the im-
pact of some of the tax provision we are considering visa vie rec-
onciliation at the same time, too. I think we were all elected to ad-
vance pro-growth, economic policy, that is one of the reasons why
President Trump earned the historic victory that he did and why
more Americans voted for house Republicans this time than ever
before. So I am grateful for your testimony. I am grateful for all
the witnesses being here today and Chairman thank you very
much for letting me bring my own Chairman from Georgia Small
Business Committee in the House of Representatives of Georgia to
our hearing today. Thank you.
Chairman WILLIAMS. Gentleman yields back. I now recognize
Mrs. McIver from New Jersey for 5 minutes.
Mrs. MCIVER. Thank you Chairman and Ranking Member for
having this hearing today and to each of our witnesses, thank you
so much for joining us on a very snowy day and making your way
here.
Accessing capital is a critical early step that our nation entre-
preneurs must take to turn their business ideas into reality and a
much-needed push for businesses fighting to expand. As our Rank-
ing Member said, we all know the critical investments into small
businesses made by the Biden-Harris administration helped mil-
lions of business owners to start small businesses and last four
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years, in the last four years. Many of whom come from underserved
communities. We saw business ownership rates double and reach
a 30 year high among communities of color. My district alone in the
great state of New Jersey in the 10th congressional district, home
to nearly 2,000 minority owned business. They definitely benefitted
from the efforts of the last administration. As we continue through
this congress we must be mindful to protect the progress made by
these communities.
With that I would like to throw my first question to Mr. Sims
and Mr. Hooper. Each of you represent a different and critical part
of how the SBA can help small businesses access capital. This is
especially critical to protecting the gains made by underserved
communities in recent years. In your view what more can congress
do assist small businesses in accessing capital from institutions
like yours?
Mr. HOOPER. Thank you for that question. I think a couple of
ways. One is, you know, we can continue to expand the SBA re-
sources which can be a benefit for some of our customers and I
think just make the system less cumbersome. Additionally if we re-
duce the cost due to regulatory changes because it’s an ever-evolv-
ing landscape. That would allow us to then spend some of those
same dollars on bankers who actually can go and work with clients
again rather than, rather than us investing large sums in oversight
of compliance side.
Mrs. MCIVER. Thank you.
Mr. SIMS. Thank you, Ms. McIver, Congressman McIver. I would
suggest that again the programs are really good. They are very
flexible. You heard Mr. Wetegrove talk about the flexibility of the
program that allowed him to put his business together. So I would
encourage congress to encourage the SBA to focus on their core
competency and that is how can we eliminate the burden of excess
policies, processes, and procedures in order for us as the distrib-
uted lending force that’s in the marketplace that are talking with
business members on a day-to-day basis, and we understand what
they’re looking for in the structure and how do we capital into their
hands more quickly and more efficiently.
Mrs. MCIVER. Thank you for that. I would also like to ask the
panel about their thoughts on the Consumer Financial Protection
Bureau. The CFPB has recovered over $21 billion for consumers
who have been victims of abusive and illegal activity with a budget
of less than $700 million. How do you propose the government pro-
tect consumers from crooks in the open market if it no longer ex-
ists? That is to each panelist?
Mr. HOOPER. I think if the CFPB did not exist there are other
regulatory agencies that can provide similar services. We already
have several, you know, that oversee the financial industry and so
I think you could easily push some of those same, some of those
same oversight activities to some of those other agencies that al-
ready exist?
Mr. SIMS. And I would agree. I would suggest that credit unions
believe in the importance of consumer protection laws and then
having an entity to regulate otherwise unregulated entities is criti-
cally important. Don’t have a position on the CFP elimination but
the industry has long advocated for change to make consumer bu-
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reau a bipartisan commission. Unfortunately under that current
structure the Bureau has to become overly, or has become overly
political, and I think the focus needs to be on those unrelated enti-
ties that would be regulated.
Mrs. MCIVER. Okay. Any feedback from you, Mr. Wetegrove?
Mr. WETEGROVE. I would just agree with them since I don’t
know much about your question. Sorry.
Mrs. MCIVER. Okay. And I know we have, I am not sure if she
is still on, Ms. DeArment who is on?
Ms. DEARMENT. Yes.
Mrs. MCIVER. Oh okay. Would you like to chime in in the couple
of seconds that I have left?
Ms. DEARMENT. The one thing that I would say is that working
with low wealth borrowers they fall victim to predatory online lend-
ers and so we would want to make sure that that protection is ex-
tended to people regardless of whether or not they have resources.
Mrs. MCIVER. Thank you. I am out of time. Thank you.
Chairman WILLIAMS. The lady yields back. I now recognize Ms.
King-Hinds from the Northern Mariana Islands for 5 minutes.
Ms. KING-HINDS. Thank you Mr. Chair and thank you to all
the witnesses who braved the storm today. I am from the Marianas
where it is about 75 degrees right now. So this weather it not in
the business for me.
It is very encouraging to hear about the optimism and resilience
among small business across the United States. But as we have
heard optimism—as we have heard optimism alone is not enough.
It must be backed by a financial system that empowers small busi-
nesses with the capital that they need to thrive. We have seen how
entrepreneur respond to the economic optimism, taking risks and
investing in growth. But that optimism along does not drive lend-
ing decisions. It is the outlook of financial institutions that deter-
mines whether capital flows into communities and businesses.
When banks see potential for secure returns they invest. When un-
certainty looms a vicious cycle takes hold. Businesses struggle,
lending slows and economic recovery stalls. Right now my district
is caught in that very same exact cycle. In an economy where
banks see no path to recovery, even the brightest most promising
entrepreneurs find their potential stifled. Lenders hesitate, invest-
ments dry up, and businesses are left to fend for themselves. Small
businesses in my district aren’t giving up. They are fighting for re-
covery. But in speaking with business owners more and more they
are being forced to rely on high interest credit cards and personal
loans just to say afloat. Unlike the rest of the U.S. where consumer
debit is 69 percent of the size of commercial and industrial loans,
in the Northern Mariana Islands consumer debt is 180 percent of
commercial lending. That is just unstainable. Small businesses
should not have to shoulder the burden of economic recovery alone
and so, you know, I wish we had a credit union back home from
where I’m at. We only have, we have, we are down to two banks
right now, three banks and so this is more of a broad question for
Mr. Hooper. How can the federal government help small businesses
in communities where industries have collapsed or remain in de-
cline? So basically in these economic conditions where we are
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caught in this vicious cycle, how can the federal government assist
to be able to allow for access to capital?
Mr. HOOPER. You know, I think as Mr. Sims noted the SBA
programs that exist are good programs. And so I think continuing
to make those more manageable for the consumer as well as the
banks that are putting those programs into place with the cus-
tomer I think is one way, just to make it less burdensome. You
know that I would say that’s probably one of the primary ways. Ad-
ditionally if interest rates come down a little more I know many
of our customers would appreciate lower borrowing rates, which
also make it more manageable from a small business perspective
as far as them managing their budgets with other inflationary
pressures they already have.
Ms. KING-HINDS. All right. Just a quick follow up question. In
your written testimony you spoke about the fact that it is just not
just the beginning of the application process but the bank’s ability
to go and recover those SBA guarantees. Can you speak us to the
challenges with regards to that particular issue?
Mr. HOOPER. Sure. I’m actually in the middle of one right now.
We’re in our second year of trying to do the recovery. Part of the
dilemma is once you go down that road and you start through liq-
uidation you have to liquidate everything that you had as collateral
as well as pursue all other opportunities for recovery and it could
be a variety of different things. You have to do all of that before
you can go back to the SBA to get the SBA to honor the guarantee
that they gave at the inception of the loan. So the other difficulty
that exists within that is like others had mentioned getting com-
munication from SBA can prove difficult and some of the answers
we get at times are vague and so which also puts us in a precarious
position because if we don’t make the right choices as we go
through that liquidation process and that recovery process it has
the potential for the SBA to claw back potentially some of that
guarantee when we get to that stage of the process.
Ms. KING-HINDS. Which would I presume discourages lending?
Mr. HOOPER. It certainly makes it harder if we don’t have clear,
you know, expectations and understanding of how the SBA is going
to respond.
Ms. KING-HINDS. All right. Thank you. I yield the rest of my
time, Mr. Chairman. Thank you.
Chairman WILLIAMS. Gentlelady yields back. I now recognize
Mr. Cisneros from the great state of California for 5 minutes.
Mr. CISNEROS. Thank you, Mr. Chairman. Mr. Sims, you noted
in your testimony the legislative purpose of Section 1071 is to fa-
cilitate enforcement of fair lending laws and to enable commu-
nities, governmental entities, and creditors to identify businesses
and community develop needs and opportunities of women-owned,
minority-owned, and small business. We all seem to want loans
that are more transparent and more equitable and more responsive
to the needs of all borrowers. You know, in my community a lot of
our community banks have kind of been eaten up by the bigger
banks. There really aren’t too many here in California. Credit
unions have kind of helped to kind of fill that void. But I feel there
is a need to kind of protect those banks. How do we protect those?
Beside a regulatory questions what are other steps that we on the
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committee can take to ensure that community lenders are strong
and competitive to support small businesses, and I will open that
up to the panel to see whoever wants to answer?
Mr. SIMS. Thank you Congressman Cisneros. Again I get back
to the similar comments that you’ve gotten from Mr. Hooper here.
Products are good and SBA in particular products are very good.
Process is not good and the 1071 rule adds to the burden associated
with that and in many cases it’s going to be an increased cost for
us to comply, also increased cost for the business member to com-
ply. And I truly believe that you will see many business members,
business owners not seek capital to inject into their business be-
cause of the reporting requirements that we’re asking for them as
they come into to try and access capita.
Mr. CISNEROS. Anyone else care to respond? You want nothing?
Oh.
Mr. HOOPER. No. I was going to say I think Mr. Sims had a
great answer, so.
Mr. CISNEROS. Okay. Sounds good. But what other steps, I will
say in order to protect these community banks who are the lenders
to our small businesses, big banks don’t like to do small loans.
What steps can we take to make sure that we protect your interest
to ensure their survival, and they don’t get gobbled up by bigger
institutions?
Mr. HOOPER. Well I can tell you I’ve been a community banker
my entire career and I love it. It’s something that I hope never
changes and something I can do for the remainder of my career.
You know, being a community banker means that it’s the business
owners and the customers we work with are the same people I see
at church, the same people I see in the grocery store, the same peo-
ple I see at a restaurant on Friday night. It’s the people we live
with and are part of the fabric of the same community in which
we live and so their success means success for the community and,
you know, we are part of that community and success for the bank.
And so I think, you know, community banking is a necessary tool
because it starts with at the very personal relationship level. And
we walk hand and hand with our customers and are a proven fi-
nancial partner over the years for them.
Mr. CISNEROS. All right. Thank you. Ms. DeArment out there
on the Zoom. Thank you for supporting women-owned small busi-
nesses across the Northern Rockies and according to the SBA sum-
mary report last report last year, 73.8 percent of total dollar
amount for 7(a) loan approvals went to male owned businesses as
did 71.2 percent of total dollar amounts for the 504 program. The
Montana Community Development Corporation had 23 approved
microloans in fiscal year 2024 in Montana alone. SBA microloans
offer funding to traditionally underserved businesses such as
women-owned business, SBAs also fund business development cen-
ters, loan programs, federal contract opportunities among others to
focus on women and minority owned businesses. Last month the
SBA awarded $26.5 million to create 13 new women business cen-
ters and support 17 existing centers across the country. If Presi-
dent Trump isn’t stopped and doubles down these programs funded
by the SBA are at risk to be effected by a freeze in federal funds.
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What would the impact for access to capital for the women-owned
businesses have for you?
Ms. DEARMENT. Well I think what we’ve seen is that women
have some special challenges. Their credit scores often go down
when they have kids and leave the workforce. Their assets go down
when they leave the workforce. And so just like everybody else
who’s low wealth or low income they have a very hard time getting
a bank loan especially when they’re starting out. The SBA pro-
grams allow us to wrap services around these people to help them
create business plans and financial projects and get legal help and
start their business and then within a couple of years become
bankable. Without those programs the on-ramp into bankability
will not exist.
Mr. CISNEROS. All right. Thank you for the answer. I yield
back.
Ms. KING-HINDS. I now recognize Mr. Downing from Montana
for his 5 minutes.
Mr. DOWNING. Thank you, Madam Chairwoman. Community
banks are the economic life blood in rural communities across the
nation providing tailored relationship-based banking services for
small businesses. In Montana’s 2nd District, which I am proud to
represent, community banks help businesses like small farms and
local stores access the capital that they need to thrive. Regulatory
red tape and inflationary policies particularly under the Biden ad-
ministration have crippled community banks. In my home district
we have seen the number of community banks drastically decrease
hurting the ability of local employers to hire workers and reinvest
in their businesses. The Trump administration is how championing
bold reforms to how the government functions promising to cut un-
necessary regulations that have hindered entrepreneurship, and I
am incredibly optimistic about our economic future under President
Trump’s leadership. And I look forward to seeing what incoming
Small Business Administrator Kelly Loeffler will do to reinvigorate
support for our communities banks. So to start off I am going to
start with Mr. Hooper.
Through your operations in Texas to what extent do you provide
services to rural businesses such as small farms?
Mr. HOOPER. Thank you for that question. That’s one of the
unique things about the company I work for. First Financial is
spread all across the state. We have 79 locations. Many of those lo-
cations are in Far West Text and up in the panhandle and those
are predominantly agricultural, you know, communities. And so
last year alone we originated $54 million in agricultural loans,
many of those are going to be probably in the South Texas and
then up in the panhandle in West Texas. So and a lot of those are
smaller communities that we’re able to partner with those busi-
nesses owners for those Ag loans.
Mr. DOWNING. What do you see are the biggest challenges in,
you know, small farms, accessing capital?
Mr. HOOPER. Well I live in Texas. The weather is always the
biggest challenge but we can’t fix that one and so but I would say
just again if we are more accessible through the reduction of some
of the burdens we have on a regulatory side I think that it allows
us to be better bankers.
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Mr. DOWNING. And how do you see your business and, you
know, how your rural business and your partners or your small
farms, et cetera, compared to, you know, larger national banks?
What do, how do you compare those?
Mr. HOOPER. Again I think back to my comments earlier those
are the same people we live with in the community. Those are, and
that’s why we’re hand and hand with them because their success
is our success.
Mr. DOWNING. Right.
Mr. HOOPER. And so, but I think that’s something you only get
when you’re part of the same fabric of the community that they
are.
Mr. DOWNING. Yes, I agree. What in your experience are the
most effective SBA programs in promoting access to capital in rural
communities, especially local farms?
Mr. HOOPER. The 7(a) program is very good. It provides longer
terms than we might normally have on conventional financing and
the 504 program we’ve used extensively is great as well.
Mr. DOWNING. Great. Since the 2008 recession, the federal gov-
ernment has implemented numerous regulatory reforms that have
disproportionately burdened community based financial institu-
tions. So to Mr. Sims, how have these regulatory burdens hurt your
institutions?
Mr. SIMS. Thank you Mr. Downing for the question. I think it
principally manifest itself in additional staff and resources and in-
frastructure that we have to put in place in order to comply and
appropriately comply with that regulation. And honestly it takes us
away from what we do best, which is to be out in the marketplace
and trying to serve our business members in finding the right cap-
ital vehicle for them as they’re seeking to either grow, expand, buy
new businesses.
Mr. DOWNING. All right. Thank you. Mr. Hooper, anything to
add to that?
Mr. HOOPER. No, sir.
Mr. DOWNING. So to actually either one of you, how can con-
gress and the Trump administration, you know, fix this?
Mr. HOOPER. Again I think reducing the regulatory burden. It’s
just such a huge piece of what we deal with on a daily basis and
so I think that’s first and foremost one of the things that needs to
be tackled to allow us to be bankers again.
Mr. DOWNING. Appreciate that. And thank you for you an-
swers. I think your responses have demonstrated how important
community banks are in thriving rural economies. And I look for-
ward to the Trump administration eliminating unnecessary regu-
latory burdens and empowering local banks, credit unions and
other financial institutions. And on that I yield back. Thank you,
Madam Chairwoman.
Ms. KING-HINDS. Thank you. I now recognize Mr. Tran from
California for 5 minutes?
Mr. TRAN. Thank you, Madam Chair. I want to welcome and
thank the witnesses for being here. Ms. Dearment, I probably rep-
resent the largest and oldest Vietnamese community in the United
States known as Little Saigon. This community is a symbol of resil-
ience and entrepreneurial spirit and serves as a thriving center for
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Vietnamese Americans and small business and a key part of our
Orange County’s economy. Little Saigon is a successful because Vi-
etnamese people are tenacious and resourceful. However this can
only get you so far and time and time again I hear from the Viet-
namese community that because of limited language capacity and
lack of understanding of the financial system they are unable to ac-
cess capital and make that leap of faith to start a small business.
In fact we know that minority-owned businesses are less likely to
be able to obtain a bank loan and often start out with just half as
much capital as their White owned businesses. My question to you
is how does your loan underwriting process differ to accommodate
applicants with limited credit history or limited English proficiency
and what impact has that flexibility had had on increasing loan ac-
cess in underserved communities?
Ms. DEARMENT. Thank you for the question. We rely on the
microloan program to reach communities that often don’t start at
banks or banks aren’t the first place they go. They might go to
friends and family limiting their capital. The microloan program
comes with technical assistance dollars so we can get out in the
field, meet with business owners, meet with community leaders,
pastors, find folks that are in the exact situation that you talk
about. We also bring in outside folks to help them through the loan
application process in whatever language they need. And with the
flexible underwriting standards that a CDFI has we don’t rely on
wealth or assets or prior business experience. So we’re able to pro-
vide these wrap around services long proceeds as well as any type
of process they need to enter the financial mainstream. And once
they’re in one of the nice things about those microloan TA funds
is that once they’re in we are instantly trying to find a banker or
a commercial lender at a credit union that can pair with that small
business owner and overtime build a relationship to onboard them
back into the financial system. When we do that then we see their
friends and family start going to that bank and it creates a system
where we become less needed overall in that community.
Mr. TRAN. Thank you for that answer. Mr. Wetegrove, Orange
County’s economy thrives thanks to the hard work of committed,
dedicated and resourceful small business owners. As a small busi-
ness owner myself before coming to congress I can say that it is
not easy owning and running a small business and we face issues
that are uniquely different from large corporations. And issue that
I have faced and have commonly head about from small business
owners from Orange County is limited access to capital. My ques-
tion to you is on this side of the aisle we are always looking for
ways to improve awareness of SBA’s capital access programs and
the benefits they provide. As a small business owner now did you
become aware of SBA’s capital access program and how do you
think we can help improve awareness of these programs for bor-
rowers.
Mr. WETEGROVE. Thank you for the question. So when I first
started with Camp Bow Wow I was introduced to certain parties
that made me more aware of, you know, these opportunities for
seeking financial assistance. My father was an onion farmer in
South Texas, and he was always borrowing money, and I always
remember him, you know, contemplating on the terms and stuff
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like that. So but to answer your question specifically I know that
there’s small business development center. It’s at the University of
Texas in San Antonio. And I think that’s critical because I meet a
lot of people that are, that want to start their own business be-
cause they want the entrepreneurial story. Right? And so I was
pushing them to that entity in particular because I know that
they’re there for, you know, the assistance and the SBA help. But
anything that would advertise in a entrepreneurial magazine or
something like that would be extremely beneficial.
Mr. TRAN. Thank you for your answer. Mr. Sims, credit union
member business lending cap is limited by statute. The statue lim-
its both the aggregate amount of lending and lines of credit for a
commercial purpose. A credit union can make up to a specific bor-
rower as well as the aggregate amount of commercial lending a
credit union can make. Can you briefly explain the member busi-
ness lending cap and how does this affect veterans who are looking
to start and grow a small business?
Mr. SIMS. I’m sorry. Thank you, Congressman Tran. The MBL
cap has really two limitations on my business lending activity. One,
it is set at 12.25 percent of assets of my organization. So as I ap-
proach that number I have to modify my business activities in the
marketplace, which might mean for example for a veteran-owned
business I may be unable to make that loan because I have ap-
proached that cap. I think there’s a couple of things that also go
into that. The number of loans, the amount of loan that counts un-
derneath that cap is $50,000. It was established in 1998. I see your
face reacting to that. It hasn’t adjusted since that time. An exam-
ple or recommendation that I might have would be to put that at
the SBA, small business level which would be 350, so how you
would have two loans that are out there that mirror up with each
other?
Chairman WILLIAMS. Gentleman’s time is up.
Mr. TRAN. Thank you, Mr. Sims. I yield back, Mr. Chairman.
Chairman WILLIAMS. Now I would like to recognize Mr.
Finstad from the great state of Minnesota for 5 minutes.
Mr. FINSTAD. Thank you Chairman Williams for holding this
important hearing today and thank you to our witnesses for
braving this weather although I find it laughable being from Min-
nesota that this is a weather event. This is dusting back home. So
as a small business owner myself I understand the important role
our rural lenders play in allowing individual to pursue the Amer-
ican dream. We have great opportunity in the 119th Congress to
make meaningful changes that revitalize main street businesses,
ensure new business owners have access to capital. I look forward
to working with the Trump administration and the Members of
this committee and our local financial institutions to reform the
small business administration into a transparent and accountable
entity that strengthens rural communities and drives economic
growth across our nation. With that being said I year quite often
from small business across my district and across rural America
that sometimes feel like the SBA treats them like flyover land and
really a lot of times where small businesses have interfaced with
the SBA is through our lenders. You are the face of the programs
to our small businesses and so you know the programs well. So my
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question is for Mr. Sims. As you know small business across rural
American rely heavily on the 7(a) and the 504 lending programs.
Over the past four years what changes have you seen to the 7(a)
and the 504 program and what impacts have your customers felt
on these changes.
Mr. SIMS. Thank you for the question Congressman. The vase
majority of the changes that we have seen over the past four years
have to do with the standard operating procedures of the SBA lend-
ing program so the SOP. The programs themselves, the loans
themselves, the structure and the terms are very good. The process
associated with engaging with the SBA and helping our business
members navigate that, those processes is the most cumbersome
piece of the equation.
Mr. FINSTAD. Would you say those changes have made it more
usual for our small businesses to access those programs or really
burdensome and created another roadblock?
Mr. SIMS. Much more burdensome and it comes in two fashions.
One is from an SBA lender, if you recall it from Georgia’s Own spe-
cifically, we’re the number one credit union producers in the state
of Georgia so we have a really experienced staff. And as the SOP
changes on an annual basis we have constantly got to go back in
and figure out what those changes look like and in many cases
they don’t make a lot of sense. And what that does is slow down
the process. And hen we have to translate those changes to our
business members as we engage them in capital access.
Mr. FINSTAD. Do the small business that you work with have
a stable full of lawyers, compliance officers and regulation folks
that can navigate this?
Mr. SIMS. That’s probably a better question for Mr. Wetegrove
over there when he was——
Mr. FINSTAD. Do you got a stable full of lawyers and regulators
and compliance officers?
Mr. WETEGROVE. You’re looking at him I’m sure.
Mr. FINSTAD. So there poses an opportunity and a challenge for
I think this committee and this congress is to, you know, clean up
some of the stuff that just doesn’t make some sense and make
these programs again good, solid, historical programs that we know
have worked.
Mr. SIMS. Very good.
Mr. FINSTAD. but if they are sitting on a shelf because we can’t
get out of the way of ourselves then it is just a good program sit-
ting on a shelf. So I will turn this a little bit here to Mr. Hooper.
I have heard from several organizations across Southern Minnesota
regarding the confusion around the beneficial ownership rule. And
what impact has this rule had on your bank and what have you
heard from your customers on the, on the ground regarding the
limitation of this rule?
Mr. HOOPER. So I would say many of our customers just find
it intrusive because we’re digging into work through all of the dif-
ferent business owner, or the different owners of that business. I
know our new account staff spends a tremendous amount of time
making sure that they complete all the beneficial ownership forms
as well as our lending staff and so it’s just a, it’s cumbersome proc-
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ess and customers are not always appreciative of the process ei-
ther.
Mr. FINSTAD. So Mr. Hooper, I would assume that your desig-
nating staff to that all pro-bono, it is all free, you don’t have any,
I mean you’re just going to eat all that, right?
Mr. HOOPER. Absolutely.
Mr. FINSTAD. Yes. So the, you know, the cynical, I guess point
is that there is time, money and effort that is put into this and
again we have to ask ourselves in this congress, you know, who are
we afraid of in this scenario? What problem are we trying to fix?
And at the end of the day it is access to capital that’s the most im-
portant thing for rural America to thrive right now and if we con-
tinue to put roadblocks in between a good, intended government
program and the customer at the end day we will see less jobs cre-
ated, not more. I appreciate your time and Mr. Chair, I yield back.
Chairman WILLIAMS. Gentleman yields back. I know recognize
Dr. Conaway from the great state of New Jersey for five minutes.
Mr. CONAWAY. Thank you, Mr. Chairman. And thank you to
the witnesses who have presented themselves here today to offer
information on the SBA program. I want to start my time here
with some remarks. I have to say I’m most distressed to hear
America talk down and we have heard about how terrible things
are in the economy and yet some of our Ranking Members here
have quite rightly noted that we have had during the Biden-Harris
administration over the past four years entrepreneur filed more
than 20 million new business applications and saw the fast rate of
new business applications on record with entrepreneurs filing an
average of 440 applications every month, a rate that is over 90 per-
cent faster than the pre-pandemic averages. And as we’ve head we
have seen the number of Black households and Hispanic house-
holds, and Asian households hit new highs in terms of their busi-
ness ownership. Again all greater than pre-pandemic. In New Jer-
sey, we are very pleased, and I have some experience with the SBA
process. We have seen an average of, we have 28,771 approved 7(a)
loans with an average loan size of 700—I’m sorry, 430,422. And as
you know, these are essential for small business to grow and to
thrive, to advance the economic vitality of their communities. We
have heard today and in our previous hearing a lot of concern
about the 1071 program. And I have to say when I particularly as
you just heard me talk about these important improvements that
we have seen and the business ownership by a person of color and
minorities, other minorities, which I take as a sign of a vital and
America, America that includes everybody in our economic growth
and yet we hear that this program which is designed to actually
find out what is going on lending activities in the banking sector
is being, we’re being asked not to collect data. Now I am a physi-
cian. I thrive on data and taking data and producing that data and
understanding that, and using that data to make, to made help pa-
tients make decisions. This is across all businesses whether you’re
sending somebody to the moon or building a bridge, data analyzing
it and using it to make good decisions, which is important that so-
ciety has decided that it is important that fair lending take place
and that all people in our country irrespective of their color or
where they’re from have access to capital. So explain to me without
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giving the data to understand whether or fair lending rules are
being, and laws are actually working and that there is compliance
with those laws that recognizes that we’re all part of a great coun-
try. If we take away the data collecting process to find out how the
laws are working and how you in the lending community are actu-
ally, whether you’re actually in compliance with the law or not.
How do we ensure that everybody has a stake in our economy and
has a chance to start their own small business? And that’s for Mr.
Hooper and Mr. Sims.
Mr. HOOPER. Thank you for that question. You know, I would
say, you know, in my opinion it’s our responsibility as good bankers
to make loans everyone we can in our community and support the
community at large. You know, not specifically talking about 1071
but speaking about from a fair lending perspective, you know, I’m
very proud of the products that we offer now only to, you know,
specifically we have better products for those customers that live
in majority, minority Census tracks. We also have programs that
are, you know, I live in Texas and so we have people who are there
on work visas and they have an I-10 and so we’re able to provide
different home ownership options for them with lower amounts
down and additionally we try to have bilingual personnel in just
about every office that we can.
Mr. CONAWAY. I need to reclaim my time because I see the
clock is ticking. I don’t think we can make good decisions without
getting data. Data should drive our policy decisions and if we pass
a law we’re going to find out whether or not it is working. I’ll just
leave with the time I have remaining to talk about the Serve Act
that I’m a lead on with Ms. Davis and Mr. Alford. I am a veteran
myself and serve a lot of veterans in my community. I live near a
base and served on that base. But in the time remaining and I’ll
leave it for a later answer off line but tell me how the SBA is work-
ing to ensure that veterans are getting a fair shake and accessing
the lending process. Thank you, Mr. Chairman for your forbear-
ance.
Chairman WILLIAMS. Gentleman yields back and now I recog-
nize Mr. Stauber from the great state of Minnesota for five min-
utes.
Mr. STAUBER. Thank you very much, Mr. Chair, for holding
this meeting. And thank you to our witnesses for taking time out
of your busy schedules to provide insight into the challenges and
opportunities in small business lending. Access to capital is critical
for the success of small business and in rural America. small busi-
nesses depend on relationship banking, a personalized approach to
lending where community banks and credit unions excel. These in-
stitutions and the SBA backed loans programs they provide must
remain a reliable source of funding for entrepreneur. However con-
cerns have been raised about recent changes to SBA-backed pro-
grams including weakened guardrails in the 7(a) program which
could increase lending risk and lead to higher cost for taxpayers.
Mr. Sims, you have seen first hand the impact of SBA lending poli-
cies on small business borrowers. How have the SBA policy
changes affected small business loan default rates and what re-
forms are needed to prevent taxpayers from being left on the hook?
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Mr. SIMS. Thank you for the question, Congressman Stauber.
first and foremost in support of the SBA platform with every SBA
loan that is originated the borrower is charged an origination fee
for their guarantee, for the SBA’s guarantee of that loan. So that
guarantee then goes into the coffers of the SBA. Those funds are
then used for any defaults that occur underneath that program, so
from a taxpayer perspective it’s actually not a taxpayer funded or-
ganization. It’s self-sufficient with regard to the premiums that are
collected associated with new origination loans.
Mr. STAUBER. The origination fees are adequate in your mind?
Mr. SIMS. Yes, sir, they have been since the inception of the pro-
gram.
Mr. STAUBER. Mr. Wetegrove, your story is exactly what the
7(a) program is meant to do, help aspiring entrepreneurs across—
access rather the capital they need to make their dream of owning
a business a reality. Had you explored non-SBA loan options before
turning to the 7(a) program?
Mr. WETEGROVE. Yes, sir, I did.
Mr. STAUBER. And can you share a little about the process you
went through?
Mr. WETEGROVE. You know in one particular process it was a
little annoying. I asked for the SBA, I mean, sorry, the lending and
the loan and I did all my homework, I did the procedure to get my
business plan done and then all of a sudden they came back to me
and said, I’m sorry, you don’t have seven years in business. So I
spent like a month doing all this extra work and it was extremely
unfulfilling and so that is when I basically went with the SBA pro-
gram.
Mr. STAUBER. And the 7(a), briefly tell us about that, how it
went?
Mr. WETEGROVE. You know, it went very well. I mean the
lender, the lender itself just had so much information for me and,
you know, I talked to other Camp Bow Wow owners in my organi-
zation, and this is what they had done as well. So again just hav-
ing that expertise in the lending institution was phenomenal. And
a guy like me who didn’t have all that business acumen just, you
know, devoured it.
Mr. STAUBER. Your Honor, hose entrepreneur’s out there that
are across this great nation that want to take that risk sometimes
they don’t know where to go on the 7(a) with the, your local com-
munity banks or credit unions are given them that opportunity and
their the ones that change the world, literately.
Mr. WETEGROVE. Yes, sir.
Mr. STAUBER. Literally. You know, improving government effi-
ciency is a big topic around here these days. And there’s changes
the SBA could make to improve entrepreneur access to this loans.
I want to just thank you all for being here. I will tell you that the
last administration, I have been on small business since I have
been a Member of, privileged to serve as a Member of Congress.
And I tell you what, the last administration was devastating to
small business owners. I mean we’re looking at over 11,000 rules
and regulations and the money’s that small business had to put
forward just to get started or rather 11,000 regulations, rather. Not
11,00 regulations that are spread out, $20 here, $40 here. that’s
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real money to real Americans that are trying to make it, and we
need to make sure that these loans are giving out with as you said,
Mr. Wetegrove, with the information and how to do, not spend a
whole month and then they tell you you haven’t been in business
seven years. You know, your life experience matters too, right?
What you did in your life matters and it should be considered in
allowing these loans to go forward. But I can tell you that under
President Trump’s leadership the optimism amongst small business
owners is growing. He is prioritizing tax relief, regulatory reform,
and access to capital. Small businesses are the backbone of our
country, and they will continue to be the engine of our economy.
Mr. Chair, I yield back.
Chairman WILLIAMS. The gentleman yields back. I now recog-
nize Mr. Olszewski from the great state of Maryland for 5 minutes.
Mr. OLSZEWSKI. Thank you all for being here today. I will just
open with an invitation. I joined many of my colleagues on this
side. We want to be in conversation about regulations that might
be burdensome. I certainly don’t have the time here but if you want
to provide for the record for the committee’s benefit, specific regula-
tions, instead of wholesale changes. Maybe with specific example so
how that could be helpful. I would very much welcome the oppor-
tunity to have that information given to us. So I guess my question
would be it wouldn’t be something that would be viewed favorably
by customers or your clients if I were to day I want to bring 20
people and look at some of your most sensitive systems. Like I
want to have access to your systems tomorrow. I’m going—I mean
that’s not something that is good business practice or something
that your customers would take kindly to, is that a fair assess-
ment? Yes, okay. And if you wanted to be processing loans fast or
opening a new franchise, if you wanted to provide more training
you wouldn’t tell your employees to stop working? You wouldn’t
stop processing loans, is that also a fair assessments? Yes. So I ac-
tually again agree. I think we want to find ways to help SBA do
more training, help work through some of the regulations that
might slow down these processes. But I just want to point out that
that is in fact what is happening with the SBA. We have someone
who without vetting our transparency is in there, has access to
some of the most sensitive data that your partners in this work
share and, you know, just concerned about instead of finding ways
to work through these regulations we re instead telling people
across this government to stop working, to not come to work and
I think that is at odds with some of the testimony we heard today.
So but very much look forward to those specific examples and hope-
fully allowing our professionals at SBA to work through those to
partner with you and again really appreciate you making the time
to be here today. And with that I will do a rare thing, Mr. Chair-
man and actually yield back some time.
Chairman WILLIAMS. The gentleman yields back. I now recog-
nize Mr. Meuser from the great state of Pennsylvania for 5 min-
utes.
Mr. MEUSER. Well thank you very much Mr. Chairman. Thank
you all for being here and as mentioned before braving the weather
and providing some important testimony. It makes a difference so
thank you. You know, Mr. Hooper, you had stated in your opening
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testimony since 2021 personnel costs related to compliance and risk
have doubled and we anticipate that they will continue to rise, the
number sits at a staggering $7.1 million. You went on to say 2025
will bring on additional regulatory burdens. That is nice to look for-
ward to most notably those associated with implementation of 1071
directly obviously from the SBA, personnel costs, training costs,
and software enhancements necessary to achieve compliance. We’re
estimating now it will cost over $2 million. So we had a financial
service committee hearing a few days last week and it was about
making community banks great again and without a doubt the big-
gest take away was the regulatory burdens, the compliance bur-
dens, the problems. I mean just basically the weights being put on
your backs to allow small business to have access to capital. And
it just, you know, thank goodness we’ve got an administration in
here and a new SBA administrator and the majority that under-
stand small business, is going to work on doing things that are
positive for you and not negative and not deny it. It is incredible
in light of the evidence and everything else that those who sit here
and want to say how, actually how wonderful things should be for
you as opposed to what your evidentiary testimony, not just implies
but clearly states. So, you know, this, the 1071 rule, you know,
we’ve talked about it so many times with the 81 separate data
fields, has that helped anyone in any way, shape, or form? I’ll ask
you, Mr. Hooper?
Mr. HOOPER. No.
Mr. MEUSER. Mr. Sims?
Mr. SIMS. No, sir.
Mr. MEUSER. No. No consumers helped. No businesses helped.
Mr. Wetegrove, I’m sorry, I forgot how to pronounce your name,
Wetegrove, any positives coming out of that extensive amount of
data?
Mr. WETEGROVE. No, sir.
Mr. MEUSER. Yes, private data? Yes. Well we didn’t think so.
That’s why we want to eliminate it. Can you, the privacy concerns
that come with it, do your small business’s have grave concerns
surrounding the privacy as well as the costs and the uncertainty
and everything else that comes with it?
Mr. WETEGROVE. Absolutely.
Mr. MEUSER. Okay. Well that’s as well. Okay. So Mr. Sims, the
7(a) program, the Biden-Harris change the existing credit else-
where test the self-certification exercises. We know what happened
there. What degree of concern that you have that this is affected,
which it clearly has the integrity of the program?
Mr. SIMS. Yes, sir. A great example of that is the credit else-
where test. As an example of a borrower, a business member want-
ed to come to me and move their SBA loan from one institution to
another, let’s say they got tired of Mr. Hooper’s friendly fast over
here and they wanted to come to me, for me to refinance that exist-
ing 7(a) loan. Underneath the SBA policy I actually have to go to
Mr. Hooper and seek is his okay in order to refinance that and ask
him to provide for me a letter that says that I cannot provide the
financing that the borrower has requested. So from a competition
perspective it doesn’t seem like a really good thing plus the bor-
rower has indicated that as nice as Mr. Hooper is, they want to
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find a different relationship and they can’t do that without his ap-
proval.
Mr. MEUSER. Thanks. And Mr. Wetegrove, and I am pro-
nouncing it right, I hope? My apologies. I did come in late, and I
hate doing that. We did have Chairman Powell in our other, my
other committee so I had to pay some attention over there. But the
small business provisions the tax cut and job act, 199A, the bonus
appreciation, the R&D tax credits, how significant is that to your
clients, your customers, the small businesses that you serve?
Mr. WETEGROVE. I could not elaborate on that. I don’t know
the answer.
Mr. MEUSER. Okay. Mr. Sims or Mr. Hooper?
Mr. SIMS. Would you repeat the question? I’m sorry.
Mr. MEUSER. The tax cut and jobs act provisions, bonus depre-
ciation, R&D tax credit, 199A, and the carried interest and such,
how significant a blow will it be if we don’t complete that and con-
tinue those tax relief?
Mr. SIMS. Yes.
Mr. MEUSER. The business tax incentive, sur.
Mr. SIMS. I think it changes the platform and the go forward
marketplace for those small businesses and they will react accord-
ingly which would be, I’m going to stop investment. I’m not going
to seek additional capital for me to go advanced my business oppor-
tunities.
Mr. MEUSER. Thanks, well the calvary is here and we are going
to be on the side of small business. I yield back, Mr. Chairman.
Chairman WILLIAMS. The gentleman yields back. I now recog-
nize Ms. Simon from the great state of California for 5 minutes.
Ms. SIMON. It is a great state. I’m sorry.
Chairman WILLIAMS. That’s what I said.
Ms. SIMON. Thank you. You sure did. I appreciate it. Thank
you, Mr. Chairman. Thank you Ranking Member. I am actually
super excited to speak with you all today and to our witness on
Zoom. I have learned so much and there is so much more to learn,
and I love that I have background music. Listen I am in agreement
with so much of what has been said today and in fact I’m here to
actually speak on behalf of the community banks and the beautiful
12th District of California. We have over 19 community banks and,
you know, I’ve worked with these banks and the job training pro-
grams that I have developed over the past 30 years for young peo-
ple coming out of the foster care system seeking to shift their
generational poverty. I have worked with folks coming out of incar-
ceration. The community banks and our district from Beneficial
Bank, you know, to Summit Bank, they have done such incredible
work. So one I want to acknowledge them. You know, Mr.
Wetegrove, I don’t have a question for you, but I just want to thank
you so much because I actually went down a rabbit hold last night
learning about Bow Wow, and I have got to tell you as someone
with a disability who has been very linked to guide dogs from the
blind I saw the work that you have been doing with disabled folks
and their pets. Folks don’t realize when someone is going in for
long hospital stays or for surgeries they need somewhere to keep
their animal that actually keeps them alive when they are well. I
want to thank you for that. I also want to acknowledge that as a
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vet, we are talking about SBA. As a veteran and again I come from
a family of veterans on my maternal side, SBA should be doing ev-
erything in its power to streamline resources, folks, who are leav-
ing and retiring from the service many in my district are left in
poverty. They don’t deserve the bureaucracy. I 100 percent agree.
If we want to do right by our veterans SBA needs to expand its
services, making sure that you don’t have to spend six months, not
even two days getting to a representative. Just last week I was in
my district, visiting our SBA lead and they are so wonderful. Won-
derful folks who are working in community. There are, I mean I
have got the stats here. Over 26,000 small businesses in Califor-
nia’s 12th District. Less than two hours after I left the meeting
with the SBA lead these staff members who are working with low-
income business owners, business owners from technology, again to
your dry cleaners, your auto repair shops, two of these members
got lay-off notices in this time where we are talking about building
up the nations economy, particularly the backbones of our commu-
nity. I agree, Mr. Wetegrove, we need a robust system with regula-
tions that keep us from waste, fraud, and abuse but frankly as we
cut the federal workforce we will find less opportunities for our
business owners to get the resources that they need to thrive. I
want a bustling downtown. I want a transportation system that
brings folks from the suburbs to the city. We can get there. But
SBA, my God, we need to expand it. I want to say one more thing,
our small business pay local taxes. We know and those taxes sup-
port our police, our fire, in fact our school systems, while some of
that comes from the state and the feds. Our small business, when
we say life blood they keep our cities alive. So as we cut, which is
on the table, our SBA staff, we cut public safety, we damage public
schools, we prevent our vendors from accessing the resources that
they need to escape poverty once for all. We take from single moth-
ers trying to create a beauty shop, or a local consulting oppor-
tunity. We take time and resource for them, and we leave them at
the whims of the public dole. So in terms of community banks they
do what I know a lot of the big banks can’t do they support folks,
right, front, and center. They are at the desk every single day. So
I just have a quick question for, DeArment. People mispronounce
my name all the time. That’s why I ask. I have a brief question,
you know, for you. You know, your organization works on the
ground to finance small businesses, local small businesses that are
often underserved. And it sounds like community banks and non-
profit lenders, we only have a couple of seconds are filling in the
gaps. Name three gaps that they are filling in?
Ms. DEARMENT. Low wealth, low income, no business experi-
ence.
Ms. SIMON. Say that again, we have a couple of seconds.
Ms. DEARMENT. Low wealth, low income, no business experi-
ence.
Ms. SIMON. Low wealth, low income, no business experience, the
foundation of this country is built on those three demographics
being able to lift themselves up. Let’s fund, fund an SBA and com-
munity banks. Give them all the resources that they need to lift
up populations from urban to rural. I yield back.
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Chairman WILLIAMS. The gentlelady yields back. I now recog-
nize Mr. Bresnahan from the great state of Pennsylvania for 5 min-
utes.
Mr. BRESNAHAN. Thank you, Mr. Chairman. I appreciate the
opportunity here and to the witnesses for braving the inclement
weather and making it out to glorious Washington D.C. Before this
in my prior life something that brought me a lot of pleasure was
working with entrepreneurs. I was a real estate developer, and
nothing would bring me more joy than someone taking the leap,
trying to make it out on their own. And something that was unani-
mous with every conversation was how do we have accessibility of
capital and what do I need to do? Is it work with a community
bank? But there was always a barrier to try to get off the ground.
Either there wasn’t prior experience, they didn’t have the collateral
to secure a certain loan. And people would always suggest, well
what about the SBA? And what they found was it was absolutely
impossible to try to navigate. And there were some earlier ques-
tions relevant to the team of lawyers and accountants. I mean at
my company even, you know, we grew to 175 people and would
struggle to meet the SBA’s requirements sometimes to procure the
capital necessary. I couldn’t imagine a young entrepreneur trying
to hurdle these boundaries to really make a difference. What could
we do to lesson the bureaucratic red tape to really get dollars into
the hands of these entrepreneurs and young businesses that ulti-
mately will make a difference. And I guess my first question would
be for Mr. Sims.
Mr. SIMS. Thank you congressman. I honestly think the place to
start is with the SOP, the standard operating procedures of the
SBA. Again I go back to the products are good. The structure of the
products are good. The terms are very flexible and in particular as
you compare them to a traditional commercial type product set.
And so I think going through the thousands of pages of the SOP
and streamlining how a small business is able to engage with the
SBA through their local banker whether it be a community bank
or a credit union, there is where your expertise lies. We are going
to ask them questions to understand what it’s going to take for
them to be able to qualify underneath the SBA requirements. So
even Ms. DeArment said a few minutes ago, let’s go to low wealth,
low income, low business experience. The SBA has requirements
for that. So you must meet minimum debt service coverage require-
ments. You must meet minimum business experience require-
ments. And you must meet minimum collateral requirements. So
even if the, you wanted to use the SBA vehicle as an opportunity
for the type businesses that she’s providing services too, you could
not because they would not qualify. All right. So when she talks
about turning, the banks turning those down, the credit unions
turning those down, we’re following the SBA procedures. So the
place to start is to create opportunity for the type of businesses
that she’s serving where there might be a special program. For ex-
ample, we talked about an area where there may be disadvantages
or issues that are going on in that particular community, you could
create a program where those requirements were lessened, still
safe, still prudent but they’re not set at the levels that they are
today.
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Mr. BRESNAHAN. So whose responsibility would that fall
under? Would that be more in the lane of the community bank
itself?
Mr. SIMS. It would not. It would be the lane of the administrator
of the SBA and the SOP.
Mr. BRESNAHAN. And sometimes what I have noticed is we
were super involved with the community bank. It was our primary
lender for many years. And sometimes the community banks
though have availability of resource concerns and, you know, trying
to get staff analysts or being able to keep up with the demand to
supplement the applications with the actual raw material is a chal-
lenge and it becomes a pitch point and then our young business or
our entrepreneur need to find a way to get around the blockage
there in the artery and try to make a difference and ultimately it
stops them from opening their doors. May last question would just
be by a quick show of hands. Have any of you individually had to
fill out any of the beneficial ownership forms for any of your own
entities? You did? I had to fill out a 11 of them and it took me from
Harrisburg to Washington D.C. for about two and a half hours and
I did it on the online portal after it would crash more times than
I care to admit it was frustrating. And, you know, I felt that I
wanted to go through the process knowing that I was going to be
serving on this small business committee, and I thought the 87
data fields that Mr. Meuser had referenced earlier were incredibly
redundant. If you have a single member LLC you’re asked to pro-
vide the same information on three separate pages, and I think it
will again be one of those barriers for that small business to get
up and running and off of the ground. So with that I yield back.
Thank you.
Chairman WILLIAMS. The gentleman yields back. Okay. We
have one more, here she comes. Now recognize Ms. Goodlander who
made a grand entrance here so from the great state of New Hamp-
shire for five minutes.
Ms. GOODLANDER. Thank you, Mr. Chairman and my apolo-
gies. This is my first day with two hearings at the exact same time.
So I have gotten my steps into today. But I want to thank you, Mr.
Chairman, for bringing this hearing together and to our witnesses
for coming from all across the country to talk about this really im-
portant set of issues. I am so excited to be serving on this com-
mittee. New Hampshire is a great state and the overwhelming ma-
jority, more than 99 percent of our businesses are small businesses.
We are also the home of the birth of the credit union, which is very
exciting. So Mr. Sims, I wanted to ask you from your perspective
how, what priorities you would really point this committee towards
in the days ahead? You had mentioned the importance of regional
SBA staff. We are getting a lot of really unsettling reports about
SBA staff who have received termination notices and who aren’t
sure about their fate within that important government agency.
And I just want to ask you about if you could say a bit more about
your partnerships with SBA staff and the role that the SBA has
played?
Mr. SIMS. Yes, thank you for the question and I’m said to hear
that as well. Those folks in our Georgia region district office play
a vital role in my opinion can play even a greater role, play even
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a greater role in helping community banks and credit unions navi-
gate the SBA process. Again you have heard me say this a number
of time. The products are very good. They are very good. The proc-
ess leaves a great deal to be desired and often we are faced with
elongated time frames in which we would pose a question to 7(a)
questions and waiting for that question for come back. Well there
is a business member that is impacted by that time frame as well
that’s on the other end of that answer and it would really be nice
if we had a regional district office members that we could go to and
say, hey, can you help us navigate this? Here’s what we’ve done.
Here’s the questions we asked and we sure could use some assist-
ance with this. Is there someone that you could pick up inside the
phone that calls up the chain to be able to help us with that?
Ms. GOODLANDER. Well thank you for that. You know, some
of the most exciting stories that I have heard from small business
owners across New Hampshire have been the stories of microloans
that have really made all the difference across my state. You know,
one in particular, and SBA supported program that we have been
following is the Grafton Regional Development Corporation. They
have a microloan program that has really helped to bring about
what we all want on this committee which is the realization of the
American dream for hard working people. This program it has been
amazing to read the stories from hair stylists to plumbers. This
program has supported business owners all across my state. I
wanted to ask and open it up to our witnesses if you could share
a bit more about your experiences with SBA microloan programs
and what you have seen work well and any reforms that you would
point us to here in congress.
Mr. SIMS. I’ll jump in if it is okay. I’m in embarrassed to say
that I’m not familiar with many of the microloan programs and
then I would also go back to what a great conversation that that
could be with our district offices who probably are very familiar
with that. Most of my organization’s focus is on the 7(a) product
and the 504 product and as I have learned today quite frankly
through the conversation there are a lot of other different products
that I’m not currently utilizing to day so a little education for me.
And again I think we could lean on those district offices in order
for us to get more involved in those type of lending programs.
Ms. DEARMENT. I would like to jump in on
Mr. HOOPER. I would say am not——
Ms. DEARMENT.—on the microloan? Is that all right? May I
jump in on the microloan program
Ms. GOODLANDER. Please.
Mr. HOOPER. I was just going to note that I’m not familiar with
the microloan programs as well. Our primary focus has been on the
7(a) and the 504 programs.
Ms. DEARMENT. I would be happy to jump in on the microloan
program.
Ms. GOODLANDER. Thank you. That’d be great.
Ms. DEARMENT. Yes, we do a ton of microloan programs, a ton
of microloans. One of the really interesting things about lending is
if you think about someone who is getting a business loan, an small
business loan, when we look at them I think from bank or credit
union perspective you think if that business fails what are we
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going to do to get repaid? We’re going to have some outside income,
some outside wealth, some collateral. Micro loaners often don’t
have that when they look at the clients that we serve and we think
about that as a safety net, those family resources, assets, the
microloan program provides technical assistance and that allows us
to go in and make sure that they have good business planning, an
asset plan, a credit building plan, and an onramp to bankability.
It replaces that safety net by providing a loan that is wrapped in
technical assistance services, so you don’t need wealth as your an-
swer.
Chairman WILLIAMS. The gentlewoman’s time is up.
Ms. GOODLANDER. Thank you. Thank you, Mr. Chair. I yield
back.
Chairman WILLIAMS. Okay. The lady yields back. I would like
to now thank our witnesses for your testimony today and for your
appearing before us. Without objection Members have 5 legislative
days to submit additional materials and written questions for the
witnesses to the Chair which will be forwarded to the witnesses.
So I ask the witnesses to please respond promptly. If there is no
further business without objection the committee is adjourned and
thank you again for being here.
[Whereupon, at 12:17 p.m., the committee was adjourned.]
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APPENDIX
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Æ
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