Long-Lasting Solutions for a Small Business Recovery (House Small Business Committee hearing, July 15, 2020)
Summary
Transcript of a July 15, 2020 House Small Business Committee hearing, Small Business Committee Document Number 116-086, on lasting measures for small business recovery from the pandemic. Chairwoman Nydia Velázquez and Ranking Member Steve Chabot opened. Witnesses were Brett Palmer of the Small Business Investor Alliance, Amanda Cohen of Dirt Candy for the Independent Restaurant Association, Lisa D. Cook of Michigan State University and Pete Blackshaw of Cintrifuse in Cincinnati. Added material includes a Blueprint for Restaurant Revival and letters from the International Franchise Association, NAFCU, the National Independent Venue Association and several small businesses.
Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used
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“Long-Lasting Solutions for a Small Business Recovery (House Small Business Committee hearing, July 15, 2020).”
Original at www.govinfo.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/long-lasting-solutions-for-a-small-business-recovery-house-small-busin-3baae411e0/
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LONG-LASTING SOLUTIONS FOR A SMALL
BUSINESS RECOVERY
HEARING
BEFORE THE
COMMITTEE ON SMALL BUSINESS
UNITED STATES
HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTEENTH CONGRESS
SECOND SESSION
HEARING HELD
JULY 15, 2020
Small Business Committee Document Number 116–086
Available via the GPO Website: www.govinfo.gov
U.S. GOVERNMENT PUBLISHING OFFICE
41–297 WASHINGTON : 2021
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HOUSE COMMITTEE ON SMALL BUSINESS
NYDIA VELÁZQUEZ, New York, Chairwoman
ABBY FINKENAUER, Iowa
JARED GOLDEN, Maine
ANDY KIM, New Jersey
JASON CROW, Colorado
SHARICE DAVIDS, Kansas
KWEISI MFUME, Maryland
JUDY CHU, California
DWIGHT EVANS, Pennsylvania
BRAD SCHNEIDER, Illinois
ADRIANO ESPAILLAT, New York
ANTONIO DELGADO, New York
CHRISSY HOULAHAN, Pennsylvania
ANGIE CRAIG, Minnesota
STEVE CHABOT, Ohio, Ranking Member
AUMUA AMATA COLEMAN RADEWAGEN, American Samoa, Vice Ranking Member
TROY BALDERSON, Ohio
KEVIN HERN, Oklahoma
JIM HAGEDORN, Minnesota
PETE STAUBER, Minnesota
TIM BURCHETT, Tennessee
ROSS SPANO, Florida
JOHN JOYCE, Pennsylvania
DAN BISHOP, North Carolina
MELISSA JUNG, Majority Staff Director
JUSTIN PELLETIER, Majority Deputy Staff Director and Chief Counsel
KEVIN FITZPATRICK, Staff Director
(II)
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CONTENTS
OPENING STATEMENTS
Page
Hon. Nydia Velázquez ............................................................................................. 1
Hon. Steve Chabot ................................................................................................... 3
WITNESSES
Mr. Brett Palmer, President, Small Business Investor Alliance, Washington,
DC .......................................................................................................................... 5
Ms. Amanda Cohen, Chef and Owner, Dirt Candy, New York, NY, testifying
on behalf of the Independent Restaurant Association ...................................... 7
Dr. Lisa D. Cook, Professor, Michigan State University, East Lansing, MI ...... 9
Mr. Pete Blackshaw, CEO, Cintrifuse, Cincinnati, OH ........................................ 11
APPENDIX
Prepared Statements:
Mr. Brett Palmer, President, Small Business Investor Alliance, Wash-
ington, DC ..................................................................................................... 33
Ms. Amanda Cohen, Chef and Owner, Dirt Candy, New York, NY, testi-
fying on behalf of the Independent Restaurant Association ..................... 61
Dr. Lisa D. Cook, Professor, Michigan State University, East Lansing,
MI ................................................................................................................... 67
Mr. Pete Blackshaw, CEO, Cintrifuse, Cincinnati, OH ................................ 70
Questions for the Record:
None.
Answers for the Record:
None.
Additional Material for the Record:
Blueprint for Restaurant Revival .................................................................... 73
City Farm Corp ................................................................................................. 83
International Franchise Association (IFA) ..................................................... 84
Jaime A. Guzman-Fournier ............................................................................. 86
Konza Valley Capital, Inc. ............................................................................... 89
Le Poisson Rouge (LPR) ................................................................................... 95
National Association of Federally-Insured Credit Unions (NAFCU) ........... 97
National Independent Venue Assocition (NIVA) ........................................... 99
The Paper Box NYC ......................................................................................... 104
Small Business Legislative Council Statement ............................................. 106
Town Stages ...................................................................................................... 109
U.S. Hispanic Chamber of Commerce (USHCC) ............................................ 133
(III)
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LONG-LASTING SOLUTIONS FOR A SMALL
BUSINESS RECOVERY
WEDNESDAY, JULY 15, 2020
HOUSE OF REPRESENTATIVES,
COMMITTEE ON SMALL BUSINESS,
Washington, DC.
The committee met, pursuant to call, at 1:03 p.m., via Webex,
Hon. Nydia M. Velázquez [chairwoman of the Committee] pre-
siding.
Present: Representatives Velázquez, Finkenauer, Kim, Mfume,
Chu, Evans, Schneider, Delgado, Houlahan, Craig, Chabot, Hern,
Stauber, Burchett, Spano, and Bishop.
Chairwoman VELÁZQUEZ. Good afternoon. I call this hearing to
order. Without objection, the Chair is authorized to declare a recess
at any time.
I want to thank everyone for joining us this afternoon for this of-
ficial remote hearing. I want to make sure to note some important
requirements.
Let me begin by saying that standing House and committee rules
and practice will continue to apply during remote hearings. All
Members are reminded that they are expected to adhere to these
standing rules, including decorum.
With that said, during the covered period as designated by the
Speaker, the committee will operate in accordance with H.R. 965
and the subsequent guidance from the Rules Committee in a man-
ner that respects the rights of all Members to participate.
House regulations require Members to be visible throughout a
video connection during the proceedings, so please keep your cam-
eras on. Also, if you have to participate in another proceeding,
please exit this one and log back in later.
In the event a Member encounters technical issues that prevent
them from being recognized for their questioning, I will move to the
next available Member of the same party, and I will recognize that
Member at the next appropriate time slot, provided they have re-
turned to the proceedings.
Should a Member’s time be interrupted by technical issues, I will
recognize that Member at the next appropriate spot for the remain-
der of their time once their issues have been resolved.
In the event a witness loses connectivity during testimony or
questioning, I will preserve their time while staff addresses the
technical issue. I may need to recess the proceedings to provide
time for the witness to reconnect.
Finally, remember to remain muted until you are recognized to
minimize background noise.
(1)
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In accordance with the rules established under H.R. 965, staff
have been advised to mute participants only in the event there is
inadvertent background noise. Should a Member wish to be recog-
nized, they must unmute themselves and seek recognition at the
appropriate time.
Thank you.
Since February, the outbreak of COVID-19 has taken a signifi-
cant toll on the entire U.S. economy. This crisis has hit America’s
small businesses especially hard. Three out of four small busi-
nesses have been experiencing a decrease in revenue since March,
and an estimated 7.5 million small businesses are at risk of perma-
nent closure as a result of this crisis.
As Members of this committee and as legislators at the federal
level, we have a responsibility to secure funds to help America’s
small businesses survive this crisis. So far Congress has allocated
over $669 billion in grants and loans through the Paycheck Protec-
tion Program, the Economic Injury Disaster Loan program, also
known as EIDL, and a new EIDL emergency grant program.
From the outset, Congress intended for the PPP and EIDL pro-
grams to provide immediate relief for small businesses to with-
stand the initial economic shock caused by this pandemic. As we
approach August, we cannot ignore the reality that the COVID-19
pandemic has morphed into a much more devastating and exten-
sive crisis than even some experts had anticipated, and the rhetoric
coming from this administration downplaying the seriousness of
COVID-19 undoubtedly led many states to rush to reopen, ulti-
mately exacerbating the problem.
We must be prepared with long-term solutions that will meet the
magnitude of this crisis as we push forward to heal as a Nation
and find better days ahead. We can start by examining the policies
adopted during and in the aftermath of the Great Recession as a
model moving forward.
While we must recognize the inherent differences in these two
devastating events for our nation, we must also remember that
back in 2008 the outlook for small businesses was similarly uncer-
tain.
In response to the Great Recession, Congress stepped in and
passed a series of bills that provided $1.2 billion for small busi-
nesses through the SBA lending programs. This critical step un-
locked tens of billions of dollars in guaranteed loans to small busi-
nesses that could not otherwise access capital when traditional
credit markets froze.
Policies enacted then proved to be a critical lifeline for thousands
of small businesses in danger of closing their doors.
At the same time the Obama administration focused on how
small businesses could help contribute to America’s recovery by ac-
celerating entrepreneurship and unlocking capital for the nation’s
smallest and youngest businesses.
This money was well spent as small businesses were some of the
largest contributors to job growth in the recovery, especially minor-
ity-owned and women-owned businesses who alone were respon-
sible for the addition of 1.8 million jobs from 2007 to 2012.
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The nation’s investment in entrepreneurship paid off as the
United States saw more than 550,000 new businesses open since
2011 and the economy continued to grow.
Because of the economic contributions from small employers and
independent contractors after the Great Recession, it is imperative
for this committee to explore those proposals and how we can mod-
ify them for the COVID-19 era.
I also welcome any discussion of any new ideas brought to the
table by Members to address the challenges our small businesses
are facing today.
Whether it is utilizing traditional SBA programs or instituting
innovative ideas, long-term recovery requires us to think out of the
box, but also come together in a bipartisan fashion to provide relief
to small employers.
As Congress works to explore additional ways to help America
reopen and recover, I hope we continue to prioritize the smallest
of small businesses, minority-owned and women-owned businesses,
the ones that helped rebuild our nation the last time we found our-
selves knee-deep in what felt like an insurmountable crisis.
Again, I want to thank the panelists for joining us here today.
I now yield to the Ranking Member, Mr. Chabot, for his opening
statement.
Mr. CHABOT. Thank you, Madam Chair. And thank you for
holding this hearing today.
On this Committee we know how important small businesses and
startups and entrepreneurs are to the economy. However, one of
the consequences of this global pandemic is that our Main Streets
are in very real danger of long-lasting damage or, in the worst
case, permanent closure.
Some have warned we could be in only the beginning of the
worst wave of small business bankruptcies and closures since the
Great Depression. We must be proactive and effective in our at-
tempts to not only sustain but recover and expand the influence of
America’s small businesses and Main Streets all over the country.
Recent research from universities such as Harvard, the Univer-
sity of Chicago, the University of Illinois, and others have found
that some small businesses, especially microenterprises, may be
the most susceptible to permanent closure. We must work together
and listen to those like our witnesses here today who know and ap-
preciate that critical segment of our economy.
As communities reopen, we hope to find solutions that lead to
fewer headlines indicating small businesses are closing and focus
more on the recovery on which we are about to embark.
I look forward to the testimony of all our witnesses here today
and to our continued partnership on this Committee.
And I thank the Chairwoman for again working with me and for
our side of the aisle in making this, I think, the most bipartisan
Committee in Congress. And that is why we are so effective in, for
example, for putting together the PPP program and trying to re-
form the EIDL loan program and so many other things.
So I want to thank the Chairwoman for her continued coopera-
tion.
And I yield back. Thank you.
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Chairwoman VELÁZQUEZ. Thank you, Ranking Member. It is a
pleasure, and it has been an example of how we need to do the job
on behalf of the American people.
Now I would like to take a moment to explain how this hearing
will proceed. Each witness will have 5 minutes to provide a state-
ment and each committee Member will have 5 minutes for ques-
tions. Please ensure that your mic is on when you begin speaking
and that you return to mute when finished.
With that, I would like to thank our witnesses for taking time
out of their busy schedules to join us.
Our first witness is Mr. Brett Palmer, the President of the Small
Business Investor Alliance. In this role he works to foster a healthy
environment for small businesses investing in a strong and profit-
able lower middle market.
Mr. Palmer served in the executive branch from 2002 through
2005 as a Presidential appointee in the Commerce Department as
Assistant Secretary for Legislative Affairs, and as Deputy Assistant
Secretary for Trade Legislation. He holds a history degree from Da-
vidson College.
Our second witness is Ms. Amanda Cohen. Ms. Cohen is a James
Beard-nominated chef and owner of Dirt Candy, the award-winning
vegetarian restaurant in New York City’s Lower East Side in my
district. Her restaurant was the first vegetable-focused restaurant
in the city and is a pioneer of the vegetable-forward movement and
is included on the list of the ten restaurants that changed America.
She received two stars from The New York Times and was recog-
nized by the Michelin Guide 5 years in a row.
Welcome.
Our third witness is Dr. Lisa Cook. Dr. Cook is a professor of ec-
onomics at Michigan State University. Prior to joining the faculty
at Michigan State, she was a senior economist at the President’s
Council of Economic Advisers from 2011 through 2012. She also
held positions at the National Bureau of Economic Research, the
Federal Reserve Banks of Minneapolis, New York, Philadelphia,
the World Bank, the Brookings Institution, and the Hoover Institu-
tion.
Welcome, Ms. Cook.
Now I would like to turn it over to the Ranking Member, Mr.
Chabot, to introduce our last witness.
Mr. CHABOT. Thank you very much, again, Madam Chair.
And our final witness is a fellow Cincinnatian, Pete Blackshaw.
Mr. Blackshaw is CEO of Centrifuse, a startup incubator created
by Proctor & Gamble, or P&G as a lot of people refer to it, Kroger
and Western & Southern and other major entities in our greater
Cincinnati community.
He previously served as global head of digital marketing and so-
cial media at Nestle’s global headquarters in Switzerland. He re-
cently served as Chairman of the board of the National Council of
Better Business Bureaus and is now chairing a recently chartered
supply chain and new commerce restart committee.
Pete is a graduate of Harvard Business School and the Univer-
sity of California, Santa Cruz.
I recently had the pleasure of meeting with Pete via an online
platform with the Cincinnati Chamber of Commerce and I was
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truly impressed with his forward thinking ideas on the recovery. I
hope he was impressed, too, on the call.
I know he will provide valuable insight to the Committee, and I
look forward to hearing all the witnesses here today.
And I yield back.
Chairwoman VELÁZQUEZ. Thank you, Mr. Chabot.
Thank you all for being here today.
I would now like to begin by recognizing Mr. Palmer for 5 min-
utes.
STATEMENTS OF MR. BRETT PALMER, PRESIDENT, SMALL
BUSINESS INVESTOR ALLIANCE, WASHINGTON, DC; MS.
AMANDA COHEN, CHEF AND OWNER, DIRT CANDY, NEW
YORK, NY, TESTIFYING ON BEHALF OF THE INDEPENDENT
RESTAURANT ASSOCIATION; DR. LISA D. COOK, PROFESSOR,
MICHIGAN STATE UNIVERSITY, EAST LANSING, MI; AND MR.
PETE BLACKSHAW, CEO, CINTRIFUSE, CINCINNATI, OH
STATEMENT OF BRETT PALMER
Mr. PALMER. Thank you, Madam Chairwoman. Thank you to
the Committee for giving me the chance to share SBIA’s view on
how the small business investment companies can accelerate the
recovery and create jobs for the long-term.
My name is Brett Palmer and I am president of the Small Busi-
ness Investor Alliance, a trade association representing small busi-
ness investors, including SBICs. SBICs are SBA-regulated venture
capital and private equity funds that provide long-term capital into
American small businesses.
For many, but not all, our economy was doing well prior to the
pandemic and the ensuing government-mandated shutdowns. The
economic disruption has exposed, amplified, and intensified pre-
existing problems faced by the Nation’s small businesses. It has
also created new ones. These amplifications affect vast numbers of
small businesses but the pain is not evenly spread by geography,
industry sector, stage of business, or even race.
It is also important to remember that the job losses and business
injury we have experience are only first-order effects of the pan-
demic. There is more coming, but we just don’t know what.
We have faced hardship before. We know what good public policy
can do to help bring the economy back faster and stronger and to
benefit more Americans.
Now is the time to improve existing government programs to
make sure they provide maximum benefit to as many Americans
as possible. So policy adjustments should be made to address the
immediate needs of small business in a way that takes into account
past efficiencies and also meets future needs.
Instead of normal stimulus spending where the benefit is tem-
porary, Congress now has the chance to focus on the long term and
to empower and amplify the private sector that provides outsized
job creation and sustainable benefits to communities by fully uti-
lizing the SBIC program.
Our economic problems are intense and will be long-lasting, but
access to patient capital is the core to many of the solutions to the
challenges we face.
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Improving the SBIC program will address some of these prob-
lems that previously existed:
Challenges accessing patient capital, which is particularly acute
in low-income areas, both rural and urban, and even more acute for
equity capital;
The massive concentration of venture capital and growth capital
in only a couple of areas of the country, leaving the rest of us be-
hind;
Large disparities in accessing startup and growth equity;
Underinvestment in domestic manufacturing and domestic pro-
duction;
Underrepresentation by women and minorities in both funds and
in small businesses accessing capital;
And there are too few small funds which provide smaller invest-
ments that would fit in smaller communities and less dense com-
munities.
There are a host of new problems as well: massive unemploy-
ment and failure of many small businesses. And some estimates
are that 22 percent of small businesses are now out of business,
with the catastrophic failure of minority-owned small businesses
with some estimates of 32 percent of Hispanic-owned businesses
and up to 41 percent of Black-owned businesses lost. That is a na-
tional catastrophe.
The American entrepreneurial spirit is strong, but to reemerge
and recover, small businesses will need to access patient capital.
And patient capital is equity capital. It is long-term debt and eq-
uity-like debt, which is capital that can sustain the ups and downs
and the fits and starts in any economy, even the pandemic.
We also need to remove unintentional barriers to minorities and
women forming SBIC funds, and more SBIC funds need to be
formed that are smaller and serving more parts of the country, be-
cause smaller funds really are able to handle smaller markets and
serve smaller businesses.
So the SBA’s framework is a good one, but this experience is a
very different experience than the last recession and needs a tai-
lored response to meet both the old needs that were unfulfilled and
the new needs. So modifying the existing programs is faster and
more affordable and effective than a lot of other things we could
be doing.
So SBIA proposes a couple of changes to the existing program,
not creating new programs, just modifying them. We would ask
Congress to authorize an on-ramp to forming more first-time
SBICs. A MicroSBIC license would remove unintentional barriers
to minorities and women entering the program, while providing
needed smaller-dollar investments across the country.
The SBIC program should also be modified to enable SBICs to
provide more of the most patient, the most impactful, and the most
job-creating capital: equity. When the Library of Congress looked
at the SBIC program, they found that equity investments by small
business investment companies commonly created over 400 or
sometimes over 500 new jobs per investment, and we need those
jobs.
There are also existing SBIC tools that provide patient equity-
like capital, but they are currently limited by geography. These ge-
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ographic restrictions should be lifted and made available to all
small businesses?
And SBA should encourage and enable SBICs to look for opportu-
nities to make investments in underserved communities, both rural
and urban, by making additional leverage available for investments
in LMI areas and in underserved communities.
And, finally, it would be very if SBA’s Office of Investment and
Innovation would be fully staffed and have the technology they
need to be fully effective. They have been held back from that for
years, and I think there is an opportunity for us to do more, and
that would be a long-term investment that would provide long-term
benefits.
I would also like to thank the Committee for having an oversight
hearing on the SBIC program last fall. It was probably an over-
sight committee the likes of which I know I have never seen before
in 25 years, but it was very helpful. And under Administrator
Carranza’s leadership it has been transformative and positive, and
she has brought in Christopher Weaver to run the program, and
it is really turned around and doing great.
So thank you for your oversight. Thank you for this hearing. I
look forward to answering any questions.
Chairwoman VELÁZQUEZ. Thank you, Mr. Palmer.
Now I would like to recognize Ms. Cohen.
Please let me remind Members you need to keep your cameras
on. Thank you.
Welcome, Ms. Cohen, for 5 minutes.
STATEMENT OF AMANDA COHEN
Ms. COHEN. Chairman Velázquez, Ranking Member Chabot,
and distinguished members of this Committee, thank you so much
for inviting me to testify today about my experience with the Pay-
check Protection Program, the experience of other independent res-
taurants, and what this industry needs to survive the rest of the
year and beyond.
My name is Amanda Cohen, and I am the chef and owner of Dirt
Candy on the Lower East Side of Manhattan. Chairwoman
Velázquez has been a longtime advocate for business owners like
me, and I am honored to appear today as a voice for so many voice-
less businesses.
Dirt Candy is a fine dining vegetarian restaurant in New York
with about 40 seats and a bar. We started back in 2008 with just
18 seats but quickly outgrew our first location. And in 2015, we
moved to this new one on the Lower East Side.
I am also honored to represent the leadership team of the Inde-
pendent Restaurant Coalition, a newly formed coalition of thou-
sands of chefs and restaurateurs across the country in every con-
gressional district who organized for the first time in response to
the pandemic.
We represent America’s nearly 500,000 restaurants and nearly
three-quarters of all dining establishments in the country who
don’t have the same access to significant debt instruments or pri-
vate equity as corporate-owned businesses.
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Today I am going to share the story of independent restaurants,
how we use the PPP, and what we need to do to survive, which is
really your help.
Dirt Candy reopened a week ago today for outside seating, the
first time since New York’s shutdown orders. Outdoor dining has
forced us to dramatically alter our menu and processes for serving
customers. A number of our dishes are really not conducive to heat,
the rain, wind. And our seating is on a ramp to the Williamsburg
Bridge, which really isn’t the most romantic location.
I wasn’t able to pay my employees during the shutdown. So
many went on to unemployment or took other jobs. While I re-
ceived a Paycheck Protection Program loan, I chose not to use the
money at the start because it was unclear when we could reopen
again. And if my fixed costs of running a business don’t change and
demand for dining out remains low, there is absolutely no way Dirt
Candy can survive because there is a larger issue: Going out to a
restaurant is not considered to be safe.
When the pandemic hit, I laid off all 35 employees at Dirt Candy.
About 6 weeks ago, I rehired one person to help get the restaurant
ready to reopen in its current form. As of today, I have only rehired
17 percent, or six, of my employees, and I don’t plan on rehiring
others for the foreseeable future.
This was only possible because of the PPP. In fact, the changes
to the effective date of the PPP that this Committee worked on and
which went into effect in June are the only reason I could afford
to reopen Dirt Candy at all.
But even if my doors are open, there are still 29 more people who
used to count on Dirty Candy for their well-being who are out of
work.
Some independent restaurants cannot access the PPP because
their bank took care of other customers first or rejected their appli-
cations. Others were afraid to use the loans they received and re-
turned them because they could not afford to make a mistake and
take on more debt.
Those who received and used the PPP loans are seeing them run
out or not bridge the time needed to fund operations in this unique-
ly affected industry.
The one thing that would be enormously impactful for the res-
taurant industry is passing Congressman Earl Blumenauer’s RES-
TAURANTS Act. The Chairwoman has cosponsored this bill, for
which I am exceptionally grateful, as have eight more members of
this Committee.
Independent restaurants generate $271 billion in direct and indi-
rect economic activity. Passing this bill would reduce the unem-
ployment rate by 2.4 percent. As many as 85 percent of inde-
pendent restaurants say they will close without direct help. Pass-
ing this bill would help avoid this disaster.
Restaurants need your help. As you can see from my testimony
above, the PPP, with the significant changes Congress made in late
spring, is an 8-week solution to an 18-month problem for res-
taurants. My PPP loan allowed me to reopen, but it is not going
to allow me to stay open even if it is forgiven.
And Dirt Candy does not stand alone in this. Our restaurant
support farmers, vintners, brewers, liquor purveyors, and an entire
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supply chain. Most other restaurants can add fishers, ranchers,
and other parts of the supply chain to this list.
And imagine planning a trip to New York, Chicago, San Fran-
cisco, Charleston, Atlanta, or Washington, D.C., without being able
to visit the great restaurants that they are known for.
Independent restaurants draw millions of tourists from all
around the world. In 2019, total spending by domestic and inter-
national travelers on food services in the United States was $279
billion. That is more than double the amount spent on either recre-
ation or retail.
Thank you again for the opportunity to be here and to share the
story of independent restaurants with you. I sincerely hope that
you will find a way to help independent restaurants with all the
hard work you are doing on behalf of small businesses across the
country.
Chairwoman VELÁZQUEZ. Thank you, Ms. Cohen.
Now I would like to recognize Dr. Cook for 5 minutes.
STATEMENT OF LISA D. COOK
Ms. COOK. Chairwoman Velázquez and Ranking Member
Chabot, thank you for the opportunity to address the Committee on
Small Business on the topic of ‘‘Long-Lasting Solutions for a Small
Business Recovery.’’
The coronavirus pandemic and the resulting human, economic,
and financial crises are unfolding at breakneck speed, and, as a re-
sult, small firms are in crisis. The quick action of Congress has
gone some way to lessen or postpone the pain associated with this
pandemic-induced recession.
Specifically, assistance to small businesses to keep paying for
employees through the $670 billion Paycheck Protection Program,
PPP, the largest ever investment in small businesses, was a critical
lifeline for many small businesses.
Prior to the pandemic, most small firms reported being in good
shape and 73 reported that their financial health was good or sta-
ble. Nonetheless, the financial health of small firms varied greatly,
depending on the race or ethnicity of the owner. Compared to 27
percent of small White firms reporting that they were at risk or in
distress, 49 percent of small Hispanic firms and 57 percent of small
Black firms reported being at risk or distressed. Black and His-
panic firms were less prepared to weather an adverse shock like
this pandemic.
According to the Federal Reserve, distressed firms are three
times more likely to close relative to healthy firms due to a 2-
month revenue shock. Further, the concentration of small minority-
owned firms in certain sectors makes them more vulnerable in the
wake of COVID-19. These sectors in which many small minority-
owned firms are overrepresented are accommodation and food serv-
ices, personal and laundry services, and retail.
By early May, it is estimated that 100,000 small businesses, or
2 percent of small businesses, had already closed. By mid-June, of
the businesses that are listed on Yelp, 140,000 of those closing
since March 1 were still closed by mid-June. Thirty-five percent of
shopping and retail businesses listed have closed their doors tem-
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porarily. Fifty-three of restaurants listed have closed their doors
permanently.
The burden of small business closures is also unevenly distrib-
uted. Forty-one percent of African American businesses reported
being closed compared to 35 percent overall.
In the only survey providing demographic data on PPP loan re-
cipients, the Color of Change reports that 45 percent of Black and
Latino businesses will close by the end of the year without more
relief.
Minority-owned businesses also report not being able to access
PPP loans due to the heavy reliance on large banks, with whom
they have had historically poor relationships.
Over a third of small businesses reported paying reduced rent or
deferred rent payments.
In FiveThirtyEight’s most recent survey, the majority of macro-
economists believe that there will be a partial rebound in economic
activity and a slow recovery, rather than a V-shaped sharp recov-
ery.
With a slower-than-anticipated recovery and with the experience
of PPP, I would urge this Committee to consider what it might do
in the short and long run to address the small business crisis.
Now, I would support policy action that would modify PPP to
work alongside the enhanced unemployment insurance benefits
under the CARES Act. The Rebuilding Main Street Act, from Sen-
ators Van Hollen, Merkley, and Murphy, proposes such a modifica-
tion. This would provide grants to especially hard-hit small firms
to cover fixed costs and expenses if the employers use short-term
compensation arrangements or a system such that the employers
avoid layoffs and instead reduce hours worked by each employee at
the firm. Employees would then continue to receive unemployment
insurance on a prorated basis to compensate for reduced wages.
No matter what the modification, demographic data should be
collected at the loan or grant application phase in any future modi-
fied PPP effort, not just on the back end of the program. These
data were supposed to be tracked such that the most vulnerable
firms would be prioritized. Not only should these data be collected,
any current and additional relief should be targeted at these firms.
Policymakers should consider in the long run distribution chan-
nels for aid in the future that could provide aid to small firms di-
rectly rather than via banks or other lenders.
Most importantly, the human and technological capacity of the
SBA to process and implement swiftly and efficiently such a pro-
gram as the PPP should be increased significantly.
Given the longstanding importance of small businesses as an
entry point to the middle class and their contribution to the econ-
omy overall, this capacity building should have happened long ago.
And this won’t be the last natural disaster or economic and finan-
cial crisis, and SBA will need to be better equipped to meet these
challenges.
Thank you.
Chairwoman VELÁZQUEZ. Thank you, Dr. Cook.
Now let’s recognize Mr. Blackshaw for 5 minutes.
Welcome. Thank you.
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STATEMENT OF PETE BLACKSHAW
Mr. BLACKSHAW. Thank you, Chair Velázquez, Minority Rank-
ing Member Chabot, members. Thanks for the opportunity.
I just have one core message, and that is that the best way to
help small business owners thrive in this very uncertain world is
to help them think and act like startups.
And When I say startups, I don’t mean Silicon Valley or Ivy
League entrepreneurs. I am referring to the next generation taking
on big, unsolved challenges in every sector of our society and turn-
ing them on their head.
And many of the startup founders are women and minorities. A
growing percentage, I say with pride, are coming from the Midwest.
And we are living in an age of unending just disruption in which
economic, social, health-related shocks are going to become more
common.
Some call this VUCA—volatile, uncertain, complex, and ambig-
uous—and a VUCA world requires VUCA leadership, precisely
what a startup mindset enables.
To be clear, there are urgent needs, as we have heard today.
Small business owners need help right now, paycheck protection,
access to capital, streamlined regulation and policies, all critical
and necessary.
But we also need to look beyond the present to a future that is
going to be even more demanding than the moment that we are liv-
ing in today and to do so with urgency.
Now, many of us talk about reskilling or even upskilling. Neither
in my view is enough. We need startup skilling.
A startup mindset prizes speed, rapid prototyping, constant
iteration, failing fast to learn fast. It is obsessed with data, what
to see in it, and how to exploit it. It is very, very digital.
I think startup skilling should be a national priority, led perhaps
by the SBA and involving corporations, universities, and startup
ecosystems.
Now, what does startup skilling look like? First, it is showing
small business owners how they can apply startup thinking, tech-
nologies, and practices to their own ventures.
So, for example, at Cintrifuse we hosted a program called
NITRO! in partnership with JPMorgan Chase. Over one weekend,
we startup skilled several dozen minority-led businesses. We gave
them access to mentors. We showed them how to leverage tech-
nologies. We brought in Google. We taught them the principles of
startup leadership. And I think this is something that we should
be doing constantly, every weekend, in fact.
We are also seeing a promising movement in what is known as
micro-credentialing, aimed at urban and rural areas. Miami Uni-
versity of Ohio, for example, is one such school that is kind of tak-
ing their faculty outside of the ivory tower, bringing them into the
community with different types of credentialing, focused on new
business skills, basic skills in finance, marketing, and accounting.
We need a lot more of this. We need to encourage the universities
to do that.
Second, I think it is about learning from the digital natives, the
kids who have grown up digital. As we speak, Cintrifuse is spon-
soring a virtual summer entrepreneurial academy. It is way over-
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subscribed. And these students, high schoolers and college, they are
developing startup ideas to help address pressing challenges re-
lated to COVID, sustainability, social justice. And we are chal-
lenging them to explore ways in which radically more transparent
supply chains might be part of a better future.
Thirdly, I want you to think about mobilizing and re-platforming
small business services. Don’t shoot the messenger, but I spent
hours before this testimony reviewing government and SBA digital
apps and websites—you name it. And I think the SBA in particular
needs a digital startup infusion.
I would encourage you to consider: why can’t government create
an open innovation platform to crowdsource easier, less bureau-
cratic online solutions for small businesses. It is not just about
money. It is about time and simplicity. So why not take greater ad-
vantage of audience-rich big tech, Google, Microsoft, Amazon?
Facebook, for example, has more than 3 billion users, including
tens of millions of small business users. And I know they are tak-
ing lots of heat for issues I am not going to get into here. But why
not invite them to codevelop the next generation hub for small
business services and startup skilling, not a page or an ad cam-
paign, but SBA on steroids? That would be a game changer over-
night.
My final observation is that I think there is little distinction be-
tween a tech startup and a mom-and-pop small business. They are
both based on an idea, a problem that needs to be solved, an entre-
preneurial spirit, and the desire to take a shot and carve out your
own path. And whether we are talking about scalable technology
or small-town service, we are talking about the same things.
Business is built on the ingenuity, passion, and persistence of
people who simply want to make the country better by finding a
better way. That is American entrepreneurialism. And I would say
the bumper skill is ‘‘Let’s Startup Skill America.’’
Thank you.
Chairwoman VELÁZQUEZ. Thank you, Mr. Blackshaw.
Now I recognize myself for 5 minutes.
Dr. Cook, Congress responded to the Great Recession by making
a couple of changes to SBA loan programs, including increasing the
guarantee on 7(a) loans and reducing fees in both the 7(a) and 504.
As Congress weighs long-term recovery proposals for small busi-
nesses, would you recommend similar changes to SBA lending pro-
grams right now going forward?
Ms. COOK. I would, because this has to be encouraged. Take-up
has to be encouraged.
But I would also echo what Mr. Blackshaw would say, that the
digital transformation of SBA is something that I was promoting
when I was at the White House in 2011/2012. I think this has ab-
solutely, given the speed of this crisis, I think this has got to be
matched with the speed of digital infrastructure and human capac-
ity building at SBA, yes.
Chairwoman VELÁZQUEZ. This is one of the things that we
need to keep in mind, especially the administration when they sub-
mit the budget, because it takes resources in order for them to im-
plement those changes.
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Ms. Cohen, as the virus continues to spread in our country, we
have seen states who had once reopened restaurants and bars now
shut them down again. How have the multiple closures impacted
the hospitality industry?
Ms. COHEN. Madam Chairwoman, multiple closures are dev-
astating for restaurants. We lose staff. We lose food. We lose our
customers’ good will. We lose our hope. A second round of full clo-
sures will finish off a number of independent restaurants perma-
nently.
Chairwoman VELÁZQUEZ. Thank you.
There have been calls for proposals targeted to certain sectors
that may face a long road to recovery or who may face reoccurring
shutdowns like the hospitality industry. Why do SBA’s current eco-
nomic relief programs not address the hospitality industry needs?
Why is targeted relief necessary?
Ms. COHEN. The hospitality industry has unique issues. We de-
pend on gathering a lot of people in a small place to generate rev-
enue.
So long as people are not in my restaurant, I will not be able to
pay suppliers, continue to employ my staff, or generate revenue. I
cannot take on any more debt with any of these other programs.
I need something that specifically—or we need something that spe-
cifically works for the restaurant industry that allows us to get
back up on our feet without any debt. Some of the programs have
worked.
Chairwoman VELÁZQUEZ. Thank you. Thank you.
We have a short period of time to ask all the questions that we
need to ask.
Mr. Palmer, the congressional efforts that we have seen so far to
provide relief for small businesses have focused on bank financing,
specifically the PPP program.
As our local economies begin to slowly reopen and recover, can
you walk us through what some small businesses will need in
terms of long-term capital and the role that the Small Business Ad-
ministration, or SBIC, program can play for providing that capital?
Mr. PALMER. Thank you, Madam Chairwoman.
I think Amanda, the other witness, nailed it pretty well. A lot
of businesses are up to their eyeballs in debt, and they are really
going to be looking for patient capital. They are going to need
something that isn’t going to cause the banks, that are already in
forbearance and calling on their loans, to provide capital. And they
are going to need either equity or they are going to need equity-
like capital.
And there is some tools that exist in the SBIC platform, particu-
larly the LMI debenture, that are very patient, where you can draw
a loan but there is no payments for 5 years and then you pay after
that. And that operates at zero subsidy. That is a proven tool right
now, but it is limited in geography. So a lot of places can’t use it.
Opening up some tools like that, I think, would be very helpful
in the recovery of businesses. As you add more SBICs, being able
to offer those I think would be even more beneficial.
Chairwoman VELÁZQUEZ. Thank you.
My time has expired. Now I would recognize the Ranking Mem-
ber, Mr. Chabot.
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Mr. CHABOT. Thank you, Madam Chair.
And I will begin with Mr. Palmer.
Mr. Palmer, you have testified before our Committee many
times. We appreciate you being here again today.
How important is it that we evaluate current government pro-
grams to reduce duplication in order to ensure that our programs
are the most effective that they can be?
Mr. PALMER. I think it is critical, and I think right now Con-
gress has the time to really focus. When the CARES Act was cre-
ated the PPP was a lifesaver, and it is a brilliant program and
thank you for doing it, but certainly there were some problems
with it because it was written at the front end of an economic tor-
nado hitting.
Now you have the time to really look at it and make sure things
are effective, not duplicative, and that they are really adjusting to
the different industry sectors and geographies that need different
types of capital. So I think it is necessary.
Mr. CHABOT. Thank you.
I think I will go to Mr. Blackshaw next.
How can the NITRO! program that you mentioned serve as an
example for future efforts? And was there anything that you felt
could have been improved or any recommendations that you would
make to us?
Mr. BLACKSHAW. Thank you for the question.
My first regret is that we treated it episodically, in just one
weekend. But looking back, I mean, we can do that nonstop.
And I want everyone here to think about, just think about this
hearing right now. Our ability to kind of scale services and scale
intimacy in the form of any type of training has gone up exponen-
tially.
So it is really easy to parachute in an expert who can help a
small business owner to pick up a critical skill. And there are very
critical, foundational types of entry, digital capabilities that even
the ice cream shop needs to understand to be competitive in the
marketplace today.
So I think the big opportunity revolves around scaling. I think
there is a big opportunity to get more companies to subsidize the
effort. This isn’t just about getting the government to kind of pay
for it. I think there is a win-win for everyone.
But we have to bring that startup mindset, more for less, digital
kind of agility. And then definitely leverage this power of virtual.
Not to take away from the offline, there is still some power there,
but we can serve a lot of critical needs really, really fast.
Mr. CHABOT. Thank you very much.
And I think I will go to Ms. Cohen next.
Ms. Cohen, in your testimony you discussed how people still feel
unsafe going to restaurants. The same can be said for the tourism
industry as well.
What can we do to help people to feel a sense of safety and secu-
rity again so that your restaurant and others will be moving in the
right direction?
Ms. COHEN. Unfortunately, I am not sure we can get anybody
to feel safe until we have a vaccine. I mean, that is the reality.
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In the meantime, not forcing restaurants to have to open up
more tables than they feel comfortable with, or hotels or anybody.
We cannot congregate too many people in one place. We have to
make people feel safe.
It is my job as a restaurateur to make my customers feel safe
and to know that I have made my employees feel safe so everybody
can come and dine and feel relaxed, which is what they should do
in a restaurant. But I can’t do that if I am looking at my bottom
line instead of my payroll.
Mr. CHABOT. Thank you.
Dr. Cook, you had said that you felt that we were likely to expe-
rience a slow recovery. If you had to pick just one thing to change
that, what would it be?
Ms. COOK. I would echo the sentiments of Amanda Cohen, that
there has to be attention paid to COVID-19 first. That is absolutely
it. There is, like, there is nothing else. If I had to choose one thing,
it would be that we would provide, say, relief to businesses, to the
American people that had to do with addressing the healthcare cri-
sis.
Mr. CHABOT. Thank you.
And I think I have got time to squeeze one more question in.
So, Mr. Blackshaw, I will go back to you again. We are obviously
both in the Midwest here, and you mentioned the Midwest. What
specifically is encouraging startups in our part of the country in
the Midwest, at least prior to the COVID crisis, and how can we
continue to fuel that startup culture that we have been seeing?
Mr. BLACKSHAW. I think it is critical to lower barriers of entry
for entrepreneurs. Cost structure contributes to that. I am a native
Californian, so I don’t want to disparage my former State. But
there is a cost structure that can get in the way of being able to
kind of jump in early, test, and learn.
I located my first startup in Cincinnati. The burn rate extended
much longer. I think there is a quality of life that typically gets
overlooked. And there is a wonderful synergy, especially in greater
Cincinnati but also northern Kentucky with the large companies
that are very, very open in a very humble way, if I may.
Let’s work with startups because they can solve big challenges
that we can’t figure out. Maybe we are too bureaucratic and we
need an external focus that I am seeing more in the Midwest than
I have seen in other locations.
I think those are just a few of the factors that really play out.
I think wherever you are, building a supportive ecosystem is crit-
ical, and that is public, that is private universities. Those formulas
can work.
Mr. CHABOT. Thank you.
Chairwoman VELÁZQUEZ. Thank you. The gentleman’s time
has expired.
Now we recognize the gentleman from Maryland, Mr. Mfume, for
5 minutes.
Mr. MFUME. Thank you very much. Madam Chair, I want to
thank you, I want to thank the Ranking Member, obviously, for
convening this particular hearing. I think it is an extremely for-
ward-looking topic that has to be dealt with after, I agree, we have
been able to deal with the major topic, which is this pandemic.
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Madam Chair, I apologize for just getting on. Recently, as you
know, the Democratic Caucus is underway. And I am on the hear-
ing of the Oversight Committee. So I jumped on be on. It has been
an interesting discussion. I would reserve any time or the right to
ask questions at this moment so that I am not deliberately or
undeliberately redundant in what I would like to talk about.
And I will yield back and welcome the discussion that continues.
Chairwoman VELÁZQUEZ. The gentleman yields back.
I now recognize the gentleman from Oklahoma, Mr. Hern, for 5
minutes.
Is Mr. Hern on? Okay.
Mr. Stauber, the gentleman from Minnesota, is recognized for 5
minutes.
You need to unmute.
I think that he is having technical difficulties.
Mr. STAUBER. Again, Madam Chair, can I get back in, in a
minute?
Chairwoman VELÁZQUEZ. Sure.
Mr. Burchett is recognized for 5 minutes.
Mr. BURCHETT. Can you all hear me?
Chairwoman VELÁZQUEZ. Yes.
Mr. BURCHETT. Thank you. I appreciate the testimony, and ap-
preciate the Chairlady and Ranking Member.
Dr. Cook answered this question for me, but I would like to know
from Mr. Palmer, in your testimony you mentioned that up to 22
percent of the small businesses will fail due to the COVID-19, but
that number rises to an estimated 41 percent of Black-owned small
businesses.
That is a huge disparity and that troubles me greatly. My whole
life I have worked in and around our community and business com-
munity and lots of Black folks and I am concerned about that. How
do you think we could address or rectify the problem?
Mr. PALMER. It is a real problem. And once we sort of get the
economy stabilized with health, which is sort of the foundational
issue—and I will just set that aside—I think we really need to look
at really equity capital.
There was an excellent article by Eddie Brown in The Wash-
ington Post this last week, the founder of Brown Capital, and he
called equity capital the rocket fuel for job creation and he high-
lighted how little of it is in the hands of Black entrepreneurs.
I think we need to form more SBIC funds that have more Black
fund managers and more women fund managers. And that is part
of that SBIC, the MicroSBIC model, where we can form funds by
broadening out the funnel of who can come in, and then we can
harness the private investment that comes in and amplify it in a
way that really creates jobs and ownership of businesses.
But we have to be deliberate about the real barriers, because
most Black entrepreneurs just have less capital. The amount of
startup capital that a Black entrepreneur has versus a White en-
trepreneur is about 1/36th, and that is a barrier. And so they need
external capital.
We need more small private venture funds and more small pri-
vate capital funds around the country and not just concentrated in
the three areas where they spend most of it now.
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So I think getting more of those that are regional or local will
be of very beneficial help.
Mr. BURCHETT. What I have found a lot of the time here is
that in Tennessee is that funds are available but, dadgummit, no-
body knows how to get to them. And I guess you have got the good
old boy network, but also it is just a method of educating folks, and
we do that through the Urban League or chambers of commerce or
what have you.
I just see a huge duplication, and I don’t see anything getting
done. I just see the people in these organizations driving nice cars
and having nice offices, and I am not seeing anything done.
Mr. PALMER. I think that there have been some studies done
that a lot of Black entrepreneurs don’t get loans and part of it is
because they don’t ask for them because they think they are going
to be turned down. They don’t have that connection in the commu-
nity or in that region.
And I think that the financial providers, both SBIC funds and
banks and others, need to do a far better job of doing outreach and
letting folks know how to access the capital, because it is there in
many cases.
Mr. BURCHETT. What do you think nonprofits in the private
sector can do to increase access to capital and promote recovery?
Mr. PALMER. I think the private sector is the driver for it. Non-
profits, there are lots of different nonprofits that can be facilitators
and educators and provide roles. And Mr. Blackshaw, as a witness,
is an example of that as far as training those entrepreneurs about
how to access that capital, how to ask for the right kinds of capital,
the right amounts, how to be prepared for it to increase your likeli-
hood of success.
But ultimately we need tax policy and regulatory policy that
really encourages and augments and doesn’t create barriers to ac-
cessing that capital.
So we need both working together in a deliberate fashion.
Mr. BURCHETT. Okay. Thank you.
Ms. Cohen, I dig your enthusiasm. I have never been to New
York before, as you can probably tell from my accent. I am not even
from the north part of Tennessee.
But I was wondering about the ripple effect that will occur in our
communities with the restaurant industry operating below full em-
ployment. What can we do to limit these effects and make our
economy recover faster, ma’am?
Ms. COHEN. Well, first off, you are invited to my restaurant
anytime that you are in New York.
Mr. BURCHETT. Did you say is it a vegetarian restaurant?
Ms. COHEN. It is a vegetarian restaurant. It is a vegetable res-
taurant. But it is delicious.
Mr. BURCHETT. Okay. If you say so.
Ms. COHEN. So the best thing you can do is actually support our
RESTAURANTS Act. That will put more money back into my res-
taurant and then I can put it back out into the economy and I can
start supporting my suppliers again. That is what I really need to
do, I need to help get them back up on their feet, and the only way
I can do that is if I have some money to spend on them.
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Mr. BURCHETT. How much time do I have left, Chairlady?
Have I run over?
Chairwoman VELÁZQUEZ. Almost. Two seconds.
Mr. BURCHETT. Do what?
Chairwoman VELÁZQUEZ. Two seconds.
Mr. BURCHETT. Okay. Well, I will yield back the remainder of
my time. And thank you so much. And, once again, I am glad that
my wife is not here to see you because if she saw that wonderful
outfit you are wearing, I knew on the way home I would have to
be looking for that.
Chairwoman VELÁZQUEZ. Thank you.
Mr. BURCHETT. Thank you so much, ma’am. And you are al-
ways so hospitable to me. Thank you, ma’am.
Chairwoman VELÁZQUEZ. The gentleman’s time has expired.
Now the gentlelady from California, Ms. Chu, is recognized.
Ms. CHU. Yes. Mr. Palmer, I am so glad that you are here to
express how important SBIC is and how much more potential it
has to address our COVID-19 economic crisis.
Since its inception, SBICs have created or sustained nearly 10
million jobs, and yet this program operates at extremely low risk
to the taxpayer. Even though there is an SBA guarantee the pri-
vate investors’ capital has to be completely exhausted before that
guarantee is even impacted and, as a result, this program operates
at zero subsidy.
So because of this success, I introduced H.R. 116, the Investing
in Main Street Act, to allow banks to invest more of their capital
in SBICs, and the legislation passed the House in this Congress
but it still awaits further action in the Senate.
Can you explain what made the SBIC program so successful dur-
ing the last economic recovery and how the investing community
made SBICs more effective as our economy recovers from the
COVID pandemic?
Mr. PALMER. Well, thank you very much for that question and
for your support of SBICs and making that correction that would
allow more banks to put capital into SBICs.
And I will mention that there are a couple of reasons why the
program works. First, it works because it passes all the private sec-
tor requirements. And second, it works because it fills a public pol-
icy purpose.
The program really puts the taxpayer in second loss position and
the private capital in first loss position as it always should be, and
I think that makes it work.
I really think right now one of the things that is coming out, we
have the pandemic, but we also have massive social unrest and an
awakening to some problems that existed before. We need more
smaller SBIC funds and I think we need more smaller funds serv-
ing minority communities. And you have the banks that are very
interested in doing that now. And so we want to take away any
barriers that would be in place that might limit the ability for cap-
ital providers to get capital where it is clearly needed and recreate
those jobs that have been lost and restart up those businesses that
may be mothballed at the moment and re-empower those entre-
preneurs.
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So that is what we do. We would like to do more of it. And your
legislation is a critical part of it. So thank you very much for your
support of it.
Ms. CHU. Thank you so much.
Dr. Cook, people of color have suffered disproportionate health
and economic impacts during the COVID-19 pandemic. As you
mentioned, business owners of color are at higher risk of perma-
nent closure, which makes SBA’s failure to collect adequate demo-
graphic data on participants in recovery programs like the Pay-
check Protection Program especially harmful.
For example, SBA failed to collect any racial demographic data
for 94 percent of the nearly 500,000 PPP loans under $150,000 that
were made in California. That means they only collected on 6 per-
cent of the businesses that actually got those loans, while given
California’s diverse population. That is unacceptable.
One thing I know, these businesses need help. So I plan to intro-
duce legislation to authorize SBA’s Community Advantage Loan
Program, which provides access to affordable government-backed
capital to underserved markets, and under this legislation busi-
nesses owned by minorities, women, and veterans, and also provide
some technical assistance.
Can you talk about the role of the programs that programs de-
signed to reach underserved small businesses should play in our
long-term recovery?
Ms. COOK. Well, one of the key features of entrepreneurship in
America is that it has been a path to the middle class, and it has
been a path to wealth. And certainly for minority businesses, given
the losses they suffered—minority suffered—especially blacks and
Hispanics suffered—during the Great Recession, this would go
some way to close the racial wealth gap.
So I think entrepreneurship is just so critical to the American ex-
perience to both income and wealth. The kind of attention that
would be given to it, I think, would be well worth it.
Ms. CHU. And why is the demographic information so impor-
tant?
Ms. COOK. I am sorry. I didn’t hear the last part, why is the
demographic——
Ms. CHU. Information so important to have.
Ms. COOK. Oh, it is because, as I mentioned in my delivered re-
marks, the Black and Hispanic businesses especially were already
vulnerable. So if you want to really make sure that you are making
sure that the recovery is even, they should be targeted. And this
was—I mean, you all articulated that they should be prioritized
and for good reason. So I think any extension, any additional relief
going to small businesses, make sure to target these businesses
and collect the data, the demographic data.
Ms. CHU. Thank you.
Chairwoman VELÁZQUEZ. The gentle lady’s time has expired,
and now we recognize the gentlemen from Minnesota, Mr. Stauber.
Mr. STAUBER. Thank you, Madam Chairwoman Velázquez, and
Ranking Member Chabot.
Mr. Blackshaw, how do you think we most effectively bring the,
quote, ‘‘STARTUP-SKILL’’ you mentioned in your testimony to
rural America?
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Mr. BLACKSHAW. Thank you for the question. The first thing
we need to continue to take a close look at, internet, broadband ac-
cess in rural districts, and I think anything we can do to kind of
equalize access, I think, is really important.
I think in the State of Ohio, there is a big concerted effort on
that, and I think that is good for any type of kind of startup layer.
There is no question that digitalization pervades everything, and so
I think getting that piece work is absolutely critical.
I think one of the great things about what we are all experi-
menting with right now is if the digital infrastructure is in place,
there is infinite access to training, experts parachuted in, virtual
mentoring, you name it. And I just challenge us to think about how
we can move that new environment what we are doing right now,
on steroids, into a completely different model of access even in
rural communities where I think the one opportunity in certain
rural districts is, you are going to get to invent everything from
scratch. You are not burdened by a lot of legacy practices in terms
of how technology is used.
You basically put in a whole new broadband pipe and you are
kind of inventing, almost as a startup would, with a clean sheet of
paper, so.
I am very bullish about the opportunity there, but there is clear-
ly some investment on technology required and obviously probably
some funding as well.
Mr. STAUBER. Yeah. You know, one of the biggest issues that
has been exposed during this pandemic is limited access to
broadband in rural America. It has been talked about for many
years, but many are seeing just how bad it is for the very first
time.
So when we come to these hearings and hear the many wonder-
ful ideas of how we can help businesses pivot their models and help
them mobilize and re-platform, it feels that the businesses in rural
America are not considered. And I think it is high time that we ac-
tually take that step forward and start investing. We need to take
steps to bring parity to these rural businesses so they can be more
resilient in, and as you mentioned, Mr. Blackshaw, a volatile, un-
certain, complex, and ambiguous world. It is critically important.
And I would just say from your words, Mr. Blackshaw, let’s defi-
nitely work together to bring that start, quote, ‘‘STARTUP-SKILL,’’
to rural America.
We are seeing the digital divide, the negative effects of the dig-
ital divide. We have schoolchildren in rural America that have to—
their parents have to drive them to a bus that is a hotspot, so they
can download their homework and get their homework. That is un-
acceptable.
Mr. BLACKSHAW. I agree.
Mr. STAUBER. And we also know that rural America, this
broadband is going to help keep our rural schoolchildren competi-
tive, our rural hospitals open, and it is going to bring the rural
economy. People are going to move to rural America for our quality
of life, and I think we have to—it is time now to invest in rural
America and the broadband to bring those STARTUP-SKILLS to
everyone, including, and not only rural Minnesota, but rural Amer-
ica, and would you agree with that?
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Mr. BLACKSHAW. Not only that, I am signed up to help in any
way. I think it is critically important, it is overdue, and the oppor-
tunity and the upside, the pay-out, will be massive if we make that
effort.
Mr. STAUBER. Yep. That is an investment that needs to hap-
pen.
And Madam Chair, I yield back. Thank you.
Chairwoman VELÁZQUEZ. The gentleman yields back. I now
would recognize the gentleman from Pennsylvania, Mr. Evans.
You need to unmute, Mr. Evans.
Mr. EVANS. Thank you, Madam Chair.
Ms. Cohen, many of my constituents in Philadelphia are res-
taurant owners like yourself and are barely surviving. Coming from
a city where nearly half of the population are minorities, I am in-
terested in solutions that can help as many groups as possible.
That is why I support the Restaurant Act.
Minorities make up over 40 percent of the overall restaurant
workers. Restaurants employ more minority managers than any
other industry. One in three restaurant owners come from a minor-
ity background.
Ms. Cohen, can you tell me why do you think the Restaurant Act
would be more beneficial to restaurants than the EIDL or the PPP
program?
Ms. COHEN. I think that it is more beneficial to us—and thank
you for the question—because both those programs put us into
debt. And restaurants operate willingly on a very slim margin. We
put a ton of money back into the economy. And I think it is unfair,
at this moment, to ask us to take on more debt.
So the Restaurant Act allows us to receive money without debt,
and put it back into the economy, and that is why it is the best
program for restaurants at this moment.
Mr. EVANS. Okay. Mr. Palmer and Dr. Cook, the Benjamin
Franklin Technology Partners, which is an initiative of the Penn-
sylvania Department of Commerce and Economic Development,
suggested an idea to my office on how to increase SBIC investment.
The SBIC investments have a low, fixed interest rate while private
investors often negotiate a much higher interest rate for its portion
of the investment.
However, private investors must wait until the SBA has been
fully repaid on this portion of the investment before they can start
to receive investment. This means that private investors often wait
years before seeing any return. Can you give me your reaction to
that idea?
Mr. Palmer or Dr. Cook.
Mr. PALMER. Sure. I don’t know the full details, but I think
that—I am actually working with Benjamin Franklin partners to
use the SBIC program more broadly and make it more accessible
to small venture funds like theirs across the country.
The private investors that drive these things, who do demand a
certain rate of return, and we need to make sure that whatever
products we are offering actually passes the market filter there to
drive that private capital to them, to make sure that the capital
is there. Because if it is not, they just won’t do it.
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But I don’t know the specific structure, but I would be happy to
work with you and your staff on it, because I think Benjamin
Franklin Funds serve Pennsylvania well. I think they are a model
for lots of other States, and we would love to make the SBIC pro-
gram more flexible to serve more funds like that in more places in
Pennsylvania.
Mr. EVANS. Dr. Cook, any reaction?
Ms. COOK. I would say that anything that pushes private inves-
tors to invest in African American entrepreneurs, in particular, is
well worth it.
Only 1 percent of African American founders receive venture cap-
ital funding. So anything that will increase that, that kind of pri-
vate capital, I think, would be well worth it.
Mr. EVANS. Okay. Mr. Palmer and Dr. Cook, real quick, three
States—California, Massachusetts, and New York—saw over 70
percent of all venture capital investment from 2014 to 2018. In that
same period, my home State of Pennsylvania received less than 5
percent of the total venture capital. What suggestions would you
have that we could do in Pennsylvania to make it more appealing?
Mr. PALMER. I would suggest, and not just for Pennsylvania but
to the diversification and democratization of venture capital is, re-
imagine an equity platform for the SBICs. When the SBICs were
able to do more early stage plat—investing, they were all over the
country, in much smaller cities, and outside those three con-
centrated areas.
We can do that in a way that is protective of the taxpayer and
that would fix a lot of that problem. I think that is one of the
things that the SBA can do and that you have authority on this
Committee over.
Mr. EVANS. Dr. Cook, real quick, do you have any thoughts on
that?
Ms. COOK. I would say that one of the things that would attract
capital to areas like yours, like mine in Michigan, like Blackshaw’s
in Ohio, would be to invest in digital infrastructure. I hate to keep
going back to this.
I work on the economics of innovation, but the digital divide be-
tween rural and urban, for example, or from the coast and other
places in the country, it is critical that this be built out. We are
not going to be competitive—any kind of a competitive economy if
we don’t do this. So I think this is a deep investment that has to
be made and be made quickly.
Mr. EVANS. Thank you, Madam Chair. I yield back.
Chairwoman VELÁZQUEZ. The gentleman’s time has expired.
Now we recognize the gentleman from North Carolina, Mr.
Bishop, for 5 minutes.
Mr. BISHOP. Thank you, Chairwoman Velázquez and Ranking
Member Chabot. Thank you for the hearing. Thank you to the wit-
nesses for lending their expertise. I appreciate the interesting dis-
cussion about some new and long-term solutions, some of them po-
tentially expensive, but I hope to address briefly one beneficial pol-
icy change we can make right away to an existing program so more
small businesses remain standing once this crisis is over.
Two weeks ago our Committee heard from SBA Associate Admin-
istrator James Rivera on the implementation of the Economic In-
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jury Disaster Loan Program in the course of the pandemic. To be
frank, I believe SBA’s rationale for limiting the size of EIDL loans
to $150,000, to have left a great deal to be desired.
This decision not only sorely disappointed the expectations of
businesses hoping to receive relief, it was an incomprehensibly bad
credit decision. After all, if a business’ intrinsic financial cir-
cumstances warrant the $2 million loan, to extend it a $150,000
loan is a futile act, which guarantees not only failure of the busi-
ness but, of course, a default on the inadequate loan as well. And
that, in turn, negatively impacts U.S. taxpayers.
Unfortunately, it is up to Congress to fix SBA’s error. When re-
flecting upon our hearing and talking to constituents, one idea sug-
gested was to allow EIDL borrowers to go back for a second EIDL,
or modify the EIDL loan balance to receive a higher amount. The
idea would be, if the business received an EIDL for less than the
appropriate amount, it could receive a supplemental loan for the
difference between the appropriate amount, according to SBA un-
derwriting standards, and the amount previously loaned under
SBA’s misguided $150,000 limitation.
For example, if company X would have qualified for an EIDL for
a million dollars to help it weather this crisis but only received
$150,000, Congress would allow that business to reply for a second
EIDL worth up to $850,000.
To restore constituents’ faith in our relief efforts and those of
SBA, it is important, I submit, that we provide them the relief that
was promised to them on the front end.
To the panel, Mr. Palmer, we have had good conversations. You
have always supported and been open about commonsense solu-
tions. Do you think this idea of allowing businesses effectively to
double-dip on EIDL would help more businesses to weather the
short-term storm?
Mr. PALMER. I am not sure I would call it double-dipping be-
cause the statutory language, I think, was a $2 million cap. I
mean, I think there is an obligation for agencies to follow the ex-
plicit language of the law written by the legislative branch.
Chairwoman VELÁZQUEZ. That is correct.
Mr. PALMER. One thing, I think it is just the right thing to do
legally, we are a Nation of laws, but two, there is clear expecta-
tions from small businesses. If small businesses were dedicating
their limited time and resources to accessing amount that the law
specifically allowed and didn’t know they could—but they really
couldn’t access it, that is not really fair to them.
And this disaster has gone on longer than expected. So I think
allowing people to go back to get the caps that they need, knowing
the damages that they have, seems perfectly reasonable to me.
Mr. BISHOP. Thank you, Mr. Palmer.
And I agree. I think my choice of term is probably a poor one.
It really is a simply going back and allowing them to have what
was intended in the first instance.
Dr. Cook, would you agree with Mr. Palmer’s assessment of that
idea?
Ms. COOK. Yes. Yes, I would.
Mr. BISHOP. Ms. Cohen, I heard what you said about the res-
taurant legislation that would provide grants, and I am sure that
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would be your preference, but do you know of any additional res-
taurants that could take advantage of the ability to go back and
get the full EIDL amount, or something closer to it, depending on
its own circumstances, that that would be a welcome opportunity
for some?
Ms. COHEN. I can’t speak for all restaurants, but I certainly
know that no restaurant I know at the moment could possibly sort
of fathom the idea of taking on more debt while we are still trying
to climb out of the situation that we are in, unfortunately.
Mr. BISHOP. Do you think if they had a choice between addi-
tional indebtedness that would allow them to operate and capital
to continue, or not receiving any benefit, they would prefer they
would like to have that opportunity?
Ms. COHEN. That is a tough choice.
Mr. BISHOP. Yeah, okay.
Ms. COHEN. Little bit of a Sophie’s Choice there. I am not sure.
I mean, yes, I think most restaurateurs would like to stay open,
but I also know that it seems impossible to work with this unbe-
lievable debt hanging over your head——
Mr. BISHOP. Right.
Ms. COHEN.—at a time it seems like we might never be able to
actually open at full capacity again.
Mr. BISHOP. Yeah. Thank you, Ms. Cohen.
I think ultimately that choice is—that debt is going to be hang-
ing over somebody’s head, over the taxpayers or over the business
owners.
Thank you, Madam Chairwoman. My time is expired, I think or
just about.
Chairwoman VELÁZQUEZ. The gentleman’s time has expired,
and now we recognize Mr. Schneider from Illinois.
Mr. SCHNEIDER. Thank you, Madam Chairwoman, and I want
to thank you and the Ranking Member for having this hearing and
obviously the witnesses for sharing your perspectives today. I know
this is a difficult situation for everybody. For anyone who is going
through the health crisis and has lost somebody, it is
unfathomable.
But it is also an economic crisis, and the impact it is having on
our businesses, but in particular, our small businesses, as was
noted earlier, I think it is somewhere upwards of 75 percent of all
businesses have had a negative impact on their revenues, on their
business.
None more so, Ms. Cohen, than what you talked about in the res-
taurant industry, especially our local restaurants, that are so much
a part of the neighborhoods, the communities that we all live in,
and they are struggling. And I am happy to be a cosponsor of the
Restaurant Act because I understand how important that is.
But I also will say share the thought with Mr. Bishop. And, Mr.
Palmer, thank you for saying it is not double-dipping, that the law
said that these businesses had an opportunity to get loans up to
$2 million. The $150,000 decision was an arbitrary decision. I often
use the analogy is, if you build a bridge halfway across the river,
you may feel good for a while, you are still going to get wet, and
not make it to the other side.
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We have got to provide a bridge for our economy. Our economy
is made up of the businesses and the workers in those businesses.
We have got to be doing everything we can to help them.
And Ms. Cohen, what you were saying, I can’t think of any small
restaurant that is in a position to take on more debt. They are just
trying to barely hang on, whether it is takeout service, delivery
service, a few are able to open. But it is going to be fits and starts.
Mr. Blackshaw, I loved your acronym, VUCA, volatility, uncer-
tainty, complexity—you might add ‘‘chaos’’ into it right now—and
ambiguity. It is a tough time, and having been in business, I un-
derstand that, and we are looking forward.
And I forget who said it, but the idea of an 8-month solution
for—or 8-week solution for an 18-month problem is one of our chal-
lenges. So maybe I will turn to the two business owners, Ms. Cohen
and Mr. Blackshaw.
Looking forward with this uncertainty, what can Congress do to
help give some stability, some confidence to help you make the
hard choices to risk capital, to risk your and your employees’ future
to try to make it to the other side?
Ms. COHEN. Well, first of all, thank you so much for supporting
the Restaurant Act. I am deeply grateful for that. And not to sound
like a broken record, but the best thing that Congress can do is
support the Restaurant Act. Let’s get more members to support the
Restaurant Act. That is the only way that I know and other res-
taurants know that we can open up safely. We don’t have to put
too many people in our dining room at once. We can keep our em-
ployees safe, and we can keep our customers safe.
Mr. SCHNEIDER. Mr. Blackshaw, you are in a different type of
business. What would you suggest?
Mr. BLACKSHAW. Listen, I think anything Congress can do to
reward, recognize, credential—you know, innovation in this envi-
ronment is critically important, and some of that is just really eyes
wide open to what is already happening. I think a lot of the an-
swers are out there. We just need to really smartly graft the ideas
that are taking place maybe in a lesser known region and turn it
into a big national idea.
That is what I love about the digital Natives. You know, whether
we like TikTok or Instagram or not, they are brilliant at finding
sources of inspiration across the world and scaling it. And I think
we have this golden opportunity to find those programs, those ini-
tiatives, those more-for-less ways of delivering services and turn
them into big opportunities.
Congress can play a very, very key role, shining a light on that.
I think that the whole issue of reinventing your platforms is so im-
portant. It is not enough to say that the SBA site is improving 20
percent per year, because we have all, in this VUCA world we have
gone from, like, a hockey stick on how we use Zoom. The expecta-
tions are so much higher, and how do we bring out a clean sheet
of paper on how services are delivered, how you apply for loans on-
line.
And it is all doable. We can learn, and I think a lot of these big
tech players will probably gladly co-invest. I think they are looking
for opportunities to show goodwill and—but I think they are also
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genuinely concerned on the issue and they bring know-how, and I
think Congress can really make a lot of those outcomes real.
Mr. SCHNEIDER. Thank you. And just with my last few sec-
onds—thanks for that—I like the idea of the STARTUP mentality.
We need to create that STARTUP. The challenges we face I would
describe it not just a hockey stick. It is a hockey stick on a spring,
bouncing on a trampoline.
The rate of change is so dynamic and so fast, government has to
keep up. In fact, we need to make sure the SBA isn’t just keeping
up but leading the way, and I look forward to working with my col-
leagues on this Committee to try to do that.
Once again, I thank everyone. I know how hard it is, try and get
there, keep working, together we are going to get through this cri-
sis.
Thanks so much. My time is expired. I yield back.
Chairwoman VELÁZQUEZ. The gentleman’s time has expired.
I now recognize the gentle lady from Pennsylvania, Ms.
Houlahan.
Ms. HOULAHAN. Hi. I hope that you can hear me.
Chairwoman VELÁZQUEZ. Yes, we can.
Ms. HOULAHAN. And I would also like to echo my appreciation
to the panelists and to the Committee. And I know, as an entre-
preneur myself, how very, very difficult it is in the best of times
to be an entrepreneur, and particularly I can’t even imagine how
hard it is now.
And so please take my questions just as questions because I am
trying to be as thoughtful and probative as I can be on behalf of
the people that I represent.
And so my first question is regarding the restaurant bill. You
know, shortly after this call, I will be going back and sitting with
my team, with a legislative lens on, trying to figure out what bills
to get behind and what bills to not get behind. And let me just
posit this to you, to Ms. Cohen possibly, would probably be the
most likely person to answer my question.
Many, many, many businesses have a situation that you have
right now, where you have taken the PPP loan. You may or may
not be able to use it or open on time. You may or may not have
to go in and out of operating your business over this period of time.
I am just west of Philadelphia, and my community just barely
opened and may be closing back again in the foreseeable future.
Our businesses like live venue, live theater, are just a few of those
thanks that I could name that need just as much help as the res-
taurant industry does but may not have quite as much of a lob-
bying power as the restaurant industry does.
Why does this restaurant industry need the help different than
any other company? And why wouldn’t it be more appropriate, per-
haps, if the PPP program has been effective, to be able to have trig-
ger mechanisms maybe for certain industries, maybe for certain re-
gions or zip codes, as we come in and out of this problem? Why
wouldn’t we better be served by taking something that is working
and tweaking it for everyone, rather than one industry?
Ms. COHEN. Thank you so much for the question, Congress-
woman.
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For one, the PPP, even if it were to be extended, is still just a
bridge. It is not a long-term solution for us. And the restaurant in-
dustry is uniquely and completely reliant on social gatherings to
generate revenue, which is why the pandemic and public health
shutdowns affected us more than any other business.
Unlike airlines or big retailers, independent restaurants do not
have access to debt or capital markets. And as a result, inde-
pendent restaurants face the perfect storm that will force more
than 85 percent of them to close without intervention. That would
be disastrous for our Nation’s roughly 500,000—500,000 inde-
pendent restaurants and the over 11 million employees that they
employ.
Ms. HOULAHAN. But wouldn’t you agree that something like
live music or live theater or really almost anything live is in just
as dire straits as your industry is?
Ms. COHEN. I am not advocating against any other industry re-
ceiving money. But I do think that we have less access to capital.
In particular, independent restaurants.
Ms. HOULAHAN. And in the situation where you would be able
to evolve the PPP loan to be able to be, as it is currently, if you
use it a certain way, it is not a loan, it is a grant, and there is for-
giveness, why wouldn’t we do the same and have tranches have
multiple times, multiple dips as Representative, I believe it was
Bishop was talking about with EIDL, but actually genuinely in this
case, PPP, multiple opportunities to access this bucket of capital,
would that not in the case were it to be converted to a grant, would
that not satisfy the restaurant industry and other industries simi-
larly?
Ms. COHEN. I cannot speak on behalf of other industries unfor-
tunately.
Ms. HOULAHAN. Sure.
Ms. COHEN. But I think for restaurants, part of the PPP is
about getting employees back on the payroll, and it is predicated
on that. And that is very hard for what I am looking at, for an 18-
month problem, where we are going to have employees come on
and off. And I don’t want to—on and off our payroll. And I don’t
want to put employees back on my payroll and then have to take
them off again. I would rather slowly build up to a time where we
can actually get fully up and running.
Ms. HOULAHAN. And I appreciate that. I really don’t mean to
put you on the spot. I am just trying to noodle over kind of what
our opportunities are.
Do any of the other panelists, with the 39 seconds that I have
left, have anything to add or offer to that question?
Mr. PALMER. I would add something, is that, you are right, it
is not,—I mean, restaurants are taking it on the chin. They are a
massive employer. They are a significant local economic jobs multi-
plier. But there are other businesses that—in particular, staging or
lighting—they really have taken it on the chin. So your proposal
on having tailored PPP now that we have time to be thoughtful
and deliberative about how we are going to structure these things,
makes some sense.
And this isn’t based on the Restaurant Act, I know nothing about
the Restaurant Act. But if we can be deliberate about how we de-
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fine injury, what they can use it for, what their needs are, what
they—make it a deductible expense—a permitted expense under
PPE for forgiveness, for example, to make your business safe, if you
are getting one of these loans.
There is lots of things we can do, or we could even for some of
these other grant programs, have it where there is no payments for
the first 2 years. It is still a loan, but there is no payments for the
first 2 years because the 10-year Treasury right now is running at
what, 20 basis points?
You can do a significant amount for a very small amount of time,
and then you pay the regular payments after the first 2 years to
give businesses a chance to recover that are currently totally shut
down. There are lots of creative ways we can look at these things,
but we do have the time but not a ton of time.
Ms. HOULAHAN. Thank you. I yield back. I appreciate it.
Chairwoman VELÁZQUEZ. Sure. The gentle lady from Min-
nesota, Ms. Craig, is recognized.
Ms. CRAIG. Thank you so much, Madam Chairwoman.
Dr. Cook, I just want to maybe just make a quick comment on
your point related to the healthcare crisis, the public health crisis,
that we are in here today.
My point from day one has been that if we handle the public
health crisis side of this well, that the economic crisis will take
care of itself.
So I just wanted to say, I heard you in your testimony and in
your Q&A about how critical it is that even though we are on the
House Committee on Small Business that the Congress continues
to focus on coming up with a more robust strategy as it relates to
how we handle the healthcare crisis of COVID-19.
Ms. Cohen, I also wanted to say to you that I am a strong sup-
porter of the Restaurants Act. I am on Representative
Blumenauer’s bill. My only regret is that I didn’t author the bill
first, so thank you for your advocacy of that bill.
I did, however, introduce a bill that the Chairwoman was kind
enough to also become an original on, that would allow folks who
have seen a 50 percent reduction in revenue, as a result of COVID-
19, as well as have 100 or fewer employees to come back and get
a second forgivable loan.
Can you tell me how you think about a bill like that, which obvi-
ously is less industry-specific, versus the Restaurants Act, and sort
of compare and contrast the value of those two actions from the
part of the Congress?
Ms. COHEN. Thank you so much for sponsoring the bill, our bill,
and I think that is actually a terrific bill. I think that the Res-
taurant Act takes care of more of our needs and that it allows us
to pay back our suppliers, actually, get us back up on our feet and
not just put our money—I mean, putting our money into payroll is
incredibly important, and I want to get all my 35 employees back
on my payroll.
But I would also really, really like to be able to open my business
and put money back into the economy through my suppliers.
Ms. CRAIG. Thank you so much for that. And I will just, a quick
follow-up for you is, I know, as we have reopened here in Min-
nesota, many of my restaurant owners, independent owners, have
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been asked to undertake safety measures, obviously to keep cus-
tomers more safe and limit the spread of COVID-19.
I am hearing from them, even though they serve far fewer cus-
tomers, that they are required to put in place higher staffing levels
to open those doors. What can Congress and the SBA do to help
lower those burdens, at the same time, ensuring that your employ-
ees and your customers remain safe?
Ms. COHEN. I am not sure what more that can be done. We do
have to—we have more people employed. For me, personally, I
have somebody who monitors the bathroom. We don’t even have
dine-in service, but I have guests who come in, and I want to make
sure that the bathroom is as clean as possible. That is not normal.
I don’t usually have a bathroom attendant in my 40-seat res-
taurant.
So I am not sure what more actually can be done, unless we get
money that we can specifically use for things like the PPP—the
PPE or for hiring those extra people, and extra cleaning, all those
extra stuff.
Ms. CRAIG. Thank you so much. And I just really appreciate
your advocacy on the part of independent restaurants.
And then finally, Mr. Palmer, very quickly, do you think certain
industries, moving forward, will face unique challenges post-
COVID-19, into this recovery phase, and you know, any thoughts
that you have on specifically what Congress can do to continue to
help business recover?
Mr. PALMER. Absolutely. There is going to be definitive vari-
ations, hospitality and events industries. Anyone who has to do
long-term planning, because right now, we just don’t have any idea
what 2 months are going to look like—things are going to look like
2 months from now, much less a year from now.
I think we need to be providing patient capital as much as we
can. I think Congress really needs to revisit our policies as it re-
lates to manufacturing and domestic production.
One of things that became clear out of this is that our inability
to create PPP and other critical infrastructure, the fact that we
still can’t get Lysol disinfectant wipes in a supermarket 5 months
later because we don’t have the chemicals, or whatever is causing
those type of shortages is kind of crazy.
So I think we need to revisit our access to equity capital, the pa-
tient capital, and we need to make sure we are making this a hos-
pitable place for manufacturing in the United States.
Ms. CRAIG. Mr. Palmer, thank you so much. I am a founding
member of the Supply Chain Caucus of the Congress, and who
would have thought that that would be a sexy topic. With that——
Mr. PALMER. Thank you for doing it.
Ms. CRAIG. Madam Chairwoman, I yield back.
Chairwoman VELÁZQUEZ. The gentlelady yields back.
I will go to Mr. Mfume from Maryland if he has any questions.
Mr. MFUME. I do, and I hope everyone can hear me. Thank you
for returning back to me, Madam Chair. I just have a couple of ob-
servations, which, to me, are significant and maybe even poignant.
It was my pleasure to serve on this Committee for 10 years during
my first stint in the Congress, before I decided I would just vol-
untary leave and go do something else in life.
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But one of the things interesting about that is that much has
changed, and yet much still remains with respect to the topical
areas that we are dealing with, Madam Chair. And I would—again,
as I said earlier, this notion of lasting solutions is a key phrase be-
cause this will be over one day. The question becomes, what hap-
pens to the small businesses of America.
And lasting solutions are going to require ingenuity and cre-
ativity but also access to capital and access to credit, which was the
major driving force in hearings like this in 1989 and throughout
the 1990s, Madam Chair, when you were a member of the Com-
mittee. It is still a driving issue.
And I think about SBICs, which we created as a Congress in
1958, and I think about all the other initiatives, and I was very in-
terested in hearing the phraseology about, we need an SBA on
steroids. We really do, because we really always have needed that.
But there are some other things that I would think
observationally that we might want to consider as we go down the
road on this topic in future hearings, one of which is that—and by
the way, Mr. Palmer, I appreciate your commentary and your infor-
mation. I would slightly disagree with you on one matter. You said
that minority businesses in many instances were not applying for
some of the structured loans and other programs that are out
there, whether it is SBIC or something else, because they didn’t al-
ways have the knowledge.
I would suggest to you that many have not applied because they
know that they are going to get turned down, as they have been
turned down repeatedly, over and over and over again. And so my
argument here is that we have to be deliberate in terms of what
we do going forward, that we need a deliberate tax policy, a delib-
erate banking policy, a deliberate SBA policy, that we have got to
find a way to create small venture capital, as someone said earlier,
which is absolutely crucial. That is within the domain of the Con-
gress itself.
And we have got to look at some of the other smaller things, like
overly burdensome bonding requirements, the little things that cre-
ate and push businesses sometimes to the edge.
So I am looking forward, Madam Chair, actually to this discus-
sion continuing and going on, and I appreciate your leadership and
the leadership of the Ranking Member on this. It is something that
has fascinated me for a long time.
And now after having watched this unfold for the last 31, 32
years, since I first took an oath of office, it is perplexing how this
issue is not only vexing, but it is repeating itself over and over and
over again. So there is a lot of work to do in this area.
This notion about making sure that we are taking care of urban
versus rural businesses is important also. I always say ‘‘urban and
rural,’’ and whether we are talking about minority-owned or
women-owned businesses, there are a lot of niches here that we
have the ability, I think, under your leadership in this Committee,
to kind of cull together and put forward a kind of policy that many
of our colleagues in the House would appreciate.
So, again, Madam Chair, thank you very, very much for your
leadership. I am going to stop filibustering as if I were on the other
side of the building right now and yield back the time that I have.
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Chairwoman VELÁZQUEZ. Thank you so much and thank you
for your contributions and your history of fighting for fairness, and
especially civil rights, criminal justice reform. How do we con-
tribute to make an economy that is just for everyone in this coun-
try?
Mr. Chabot, do you have any other question?
Mr. CHABOT. Madam Chair, I think this has been a very inter-
esting hearing. I think the witnesses did a great job, all of them
and—learned a lot, and hopefully on a bipartisan basis, we will put
some of this into action.
So thank you for holding this.
Chairwoman VELÁZQUEZ. Thank you. Thank you.
Let me just say to all the panelists, thank you for your contribu-
tions, shedding light onto what is happening, and helping us put
together an agenda that really reflects the unprecedented crisis
that we are witnessing.
People love to say that small businesses are the backbone of
America, that small business is the engine that fuels our economy,
and this is a time that has shown that they need help. Otherwise,
a lot of them are going to close their doors forever.
Dr. Cook, I am going to take an opportunity here in my closing
remarks, to ask you a question. There are two issues that I want
to raise, and one was raised by Mr. Bishop. He is frustrated be-
cause the EIDL program provides for loans of up to $2 million.
However, the administration never expected the unprecedented
numbers of loan applications, and rather than coming back to us
to ask for an increase in the funding for the EIDL, they decided
to cap it to $150,000.
We are working on bipartisan legislation that will address this
issue, and Dr. Cook, right now, there is, roughly, $130 billion in the
pipeline regarding the PPP, and I would like to see that 50 percent
of that money is carved out for minority businesses and women-
owned businesses.
One of the issues that we are confronting is that we don’t know
how well the PPP is working, because the data was not provided
to us until last Friday at midnight.
Not only that, but by going through the data, we are finding a
lot of errors. How do you assess the possibility of us setting aside
50 percent of the $130 billion so that mission-based lenders will
have an opportunity to make those loans? What impact would that
have?
Ms. COOK. I think that would be critical, and I think it would
be critical for several reasons. They were at the back of the line
for many reasons that Ms. Cohen was outlining, but also because
of these historical relationships, because of what Congressman
Mfume was talking about, the systemic issues that have not yet
been addressed. But I think that, yes, setting aside 50 percent, I
think, would be extremely useful.
But I think the other thing that is being missed here—I am sorry
I didn’t say it earlier—is that the micro enterprises, the newest
businesses, are where innovation comes from in America, and they
are also being left behind.
So we could have a permanent ding on economic growth if we are
not attending to those that don’t yet have relationships with banks.
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So I think for minorities, for the smallest businesses, I think we
really have to do more. And they should be grant-based. There
can’t be this uncertainty that Ms. Cohen is talking about, because
they don’t have the capacity to figure all this stuff out, and we
shouldn’t put that burden on them.
Chairwoman VELÁZQUEZ. Right. Micro lenders provide capac-
ity-building for those businesses. We fought to get them as part of
the mission-based lender in the second tranche of money that we
passed.
Well, let me again thank all of the witnesses for your participa-
tion. I look forward to working together as a committee to help
guide our country’s small business owners through these unprece-
dented times.
I ask unanimous consent that Members have 5 legislative days
to submit statements and supporting materials for the record.
Without objection, so ordered. If there is no further business be-
fore the committee, we are adjourned. Thank you.
[Whereupon, at 2:43 p.m., the committee was adjourned.]
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APPENDIX
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VerDate Mar 15 2010 15:23 Mar 03, 2021 Jkt 000000 PO 00000 Frm 00105 Fmt 6602 Sfmt 6602 F:\DOCS\41297.TXT DEBBIE
102
Insert offset folio 102 here 41297.070
SBD026 with DISTILLER
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103
Insert offset folio 103 here 41297.071
SBD026 with DISTILLER
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104
Insert offset folio 104 here 41297.072
SBD026 with DISTILLER
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105
Insert offset folio 105 here 41297.073
SBD026 with DISTILLER
VerDate Mar 15 2010 15:23 Mar 03, 2021 Jkt 000000 PO 00000 Frm 00109 Fmt 6602 Sfmt 6602 F:\DOCS\41297.TXT DEBBIE
106
Insert offset folio 106 here 41297.074
SBD026 with DISTILLER
VerDate Mar 15 2010 15:23 Mar 03, 2021 Jkt 000000 PO 00000 Frm 00110 Fmt 6602 Sfmt 6602 F:\DOCS\41297.TXT DEBBIE
107
Insert offset folio 107 here 41297.075
SBD026 with DISTILLER
VerDate Mar 15 2010 15:23 Mar 03, 2021 Jkt 000000 PO 00000 Frm 00111 Fmt 6602 Sfmt 6602 F:\DOCS\41297.TXT DEBBIE
108
Insert offset folio 108 here 41297.076
SBD026 with DISTILLER
VerDate Mar 15 2010 15:23 Mar 03, 2021 Jkt 000000 PO 00000 Frm 00112 Fmt 6602 Sfmt 6602 F:\DOCS\41297.TXT DEBBIE
109
Insert offset folio 109 here 41297.077
SBD026 with DISTILLER
VerDate Mar 15 2010 15:23 Mar 03, 2021 Jkt 000000 PO 00000 Frm 00113 Fmt 6602 Sfmt 6602 F:\DOCS\41297.TXT DEBBIE
110
Insert offset folio 110 here 41297.078
SBD026 with DISTILLER
VerDate Mar 15 2010 15:23 Mar 03, 2021 Jkt 000000 PO 00000 Frm 00114 Fmt 6602 Sfmt 6602 F:\DOCS\41297.TXT DEBBIE
111
Insert offset folio 111 here 41297.079
SBD026 with DISTILLER
VerDate Mar 15 2010 15:23 Mar 03, 2021 Jkt 000000 PO 00000 Frm 00115 Fmt 6602 Sfmt 6602 F:\DOCS\41297.TXT DEBBIE
112
Insert offset folio 112 here 41297.080
SBD026 with DISTILLER
VerDate Mar 15 2010 15:23 Mar 03, 2021 Jkt 000000 PO 00000 Frm 00116 Fmt 6602 Sfmt 6602 F:\DOCS\41297.TXT DEBBIE
113
Insert offset folio 113 here 41297.081
SBD026 with DISTILLER
VerDate Mar 15 2010 15:23 Mar 03, 2021 Jkt 000000 PO 00000 Frm 00117 Fmt 6602 Sfmt 6602 F:\DOCS\41297.TXT DEBBIE
114
Insert offset folio 114 here 41297.082
SBD026 with DISTILLER
VerDate Mar 15 2010 15:23 Mar 03, 2021 Jkt 000000 PO 00000 Frm 00118 Fmt 6602 Sfmt 6602 F:\DOCS\41297.TXT DEBBIE
115
Insert offset folio 115 here 41297.083
SBD026 with DISTILLER
VerDate Mar 15 2010 15:23 Mar 03, 2021 Jkt 000000 PO 00000 Frm 00119 Fmt 6602 Sfmt 6602 F:\DOCS\41297.TXT DEBBIE
116
Insert offset folio 116 here 41297.084
SBD026 with DISTILLER
VerDate Mar 15 2010 15:23 Mar 03, 2021 Jkt 000000 PO 00000 Frm 00120 Fmt 6602 Sfmt 6602 F:\DOCS\41297.TXT DEBBIE
117
Insert offset folio 117 here 41297.085
SBD026 with DISTILLER
VerDate Mar 15 2010 15:23 Mar 03, 2021 Jkt 000000 PO 00000 Frm 00121 Fmt 6602 Sfmt 6602 F:\DOCS\41297.TXT DEBBIE
118
Insert offset folio 118 here 41297.086
SBD026 with DISTILLER
VerDate Mar 15 2010 15:23 Mar 03, 2021 Jkt 000000 PO 00000 Frm 00122 Fmt 6602 Sfmt 6602 F:\DOCS\41297.TXT DEBBIE
119
Insert offset folio 119 here 41297.087
SBD026 with DISTILLER
VerDate Mar 15 2010 15:23 Mar 03, 2021 Jkt 000000 PO 00000 Frm 00123 Fmt 6602 Sfmt 6602 F:\DOCS\41297.TXT DEBBIE
120
Insert offset folio 120 here 41297.088
SBD026 with DISTILLER
VerDate Mar 15 2010 15:23 Mar 03, 2021 Jkt 000000 PO 00000 Frm 00124 Fmt 6602 Sfmt 6602 F:\DOCS\41297.TXT DEBBIE
121
Insert offset folio 121 here 41297.089
SBD026 with DISTILLER
VerDate Mar 15 2010 15:23 Mar 03, 2021 Jkt 000000 PO 00000 Frm 00125 Fmt 6602 Sfmt 6602 F:\DOCS\41297.TXT DEBBIE
122
Insert offset folio 122 here 41297.090
SBD026 with DISTILLER
VerDate Mar 15 2010 15:23 Mar 03, 2021 Jkt 000000 PO 00000 Frm 00126 Fmt 6602 Sfmt 6602 F:\DOCS\41297.TXT DEBBIE
123
Insert offset folio 123 here 41297.091
SBD026 with DISTILLER
VerDate Mar 15 2010 15:23 Mar 03, 2021 Jkt 000000 PO 00000 Frm 00127 Fmt 6602 Sfmt 6602 F:\DOCS\41297.TXT DEBBIE
124
Insert offset folio 124 here 41297.092
SBD026 with DISTILLER
VerDate Mar 15 2010 15:23 Mar 03, 2021 Jkt 000000 PO 00000 Frm 00128 Fmt 6602 Sfmt 6602 F:\DOCS\41297.TXT DEBBIE
125
Insert offset folio 125 here 41297.093
SBD026 with DISTILLER
VerDate Mar 15 2010 15:23 Mar 03, 2021 Jkt 000000 PO 00000 Frm 00129 Fmt 6602 Sfmt 6602 F:\DOCS\41297.TXT DEBBIE
126
Insert offset folio 126 here 41297.094
SBD026 with DISTILLER
VerDate Mar 15 2010 15:23 Mar 03, 2021 Jkt 000000 PO 00000 Frm 00130 Fmt 6602 Sfmt 6602 F:\DOCS\41297.TXT DEBBIE
127
Insert offset folio 127 here 41297.095
SBD026 with DISTILLER
VerDate Mar 15 2010 15:23 Mar 03, 2021 Jkt 000000 PO 00000 Frm 00131 Fmt 6602 Sfmt 6602 F:\DOCS\41297.TXT DEBBIE
128
Insert offset folio 128 here 41297.096
SBD026 with DISTILLER
VerDate Mar 15 2010 15:23 Mar 03, 2021 Jkt 000000 PO 00000 Frm 00132 Fmt 6602 Sfmt 6602 F:\DOCS\41297.TXT DEBBIE
129
Insert offset folio 129 here 41297.097
SBD026 with DISTILLER
VerDate Mar 15 2010 15:23 Mar 03, 2021 Jkt 000000 PO 00000 Frm 00133 Fmt 6602 Sfmt 6602 F:\DOCS\41297.TXT DEBBIE
130
Insert offset folio 130 here 41297.098
SBD026 with DISTILLER
VerDate Mar 15 2010 15:23 Mar 03, 2021 Jkt 000000 PO 00000 Frm 00134 Fmt 6602 Sfmt 6602 F:\DOCS\41297.TXT DEBBIE
131
Insert offset folio 131 here 41297.099
SBD026 with DISTILLER
VerDate Mar 15 2010 15:23 Mar 03, 2021 Jkt 000000 PO 00000 Frm 00135 Fmt 6602 Sfmt 6602 F:\DOCS\41297.TXT DEBBIE
132
Insert offset folio 132 here 41297.100
SBD026 with DISTILLER
VerDate Mar 15 2010 15:23 Mar 03, 2021 Jkt 000000 PO 00000 Frm 00136 Fmt 6602 Sfmt 6602 F:\DOCS\41297.TXT DEBBIE
133
Insert offset folio 133 here 41297.101
SBD026 with DISTILLER
VerDate Mar 15 2010 15:23 Mar 03, 2021 Jkt 000000 PO 00000 Frm 00137 Fmt 6602 Sfmt 6602 F:\DOCS\41297.TXT DEBBIE
134
Insert offset folio 134 here 41297.102
SBD026 with DISTILLER
VerDate Mar 15 2010 15:23 Mar 03, 2021 Jkt 000000 PO 00000 Frm 00138 Fmt 6602 Sfmt 6602 F:\DOCS\41297.TXT DEBBIE
135
Æ
Insert offset folio 135 here 41297.103
SBD026 with DISTILLER
VerDate Mar 15 2010 15:23 Mar 03, 2021 Jkt 000000 PO 00000 Frm 00139 Fmt 6602 Sfmt 6011 F:\DOCS\41297.TXT DEBBIE
File and source
- File
- CHRG-116hhrg41297.pdf
- Size
- 8,675,014 bytes
- SHA-256
- bdf75f85d56663e2ec05f3ad3cb843adf6ef8bd36d83e110cd578adb7599a54e
- Our copy
- CHRG-116hhrg41297.pdf
- Original
- www.govinfo.gov